ML19225C535

Examination Rept for FY78

ML19225C535
Person / Time
Site:	Wolf Creek
Issue date:	12/31/1978
From:	AFFILIATION NOT ASSIGNED
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ML19225C529	List: ML19225C528 ML19225C534 ML19225C535
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NUDOCS 7907310365
Download: ML19225C535 (11)

Text

' 3 KANSAS ELECTRIC POWER COOPERATIVE, INC.

TOPEKA, KANSAS EXAMIN ATION REPORT FOR THE PERIOO 1978 TO DECEMBER 31. 1978 JANUARY 1.

SCHMIDT & COMPANY ,)

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{itg CERTIFIEli PUBLIC ACCOUNTANTS KANSAS CITY, MISSOURI q 907 310366 n

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KANSAS ELECTRIC POWER COOPERATIVE, INC.

Topeka, Kansas EXAMINATION REPORT For The Period January 1, 1978 to December 31, 1978 442 0:0 Scaess+0 f 4 Ctansamv. Ceefer.e3 %euc accountaart Sc4 3ich3b5

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} Kansas Electric Power Coooerative Inc.

I Tooeka. Kansas INDEX Page Trustees, Alternates and Executive Committee. ...... . . ...... ...... 1 Accountants' Report... . ............................................. 2 Exhibit A Balance Sheet as of December 31, 1978.................. 3 Exhibit A-1 Comparative Balance Eheet December 31, 1977 and December 31, 1978................ 4 Exhibit A-2 Statement of Changes in Financial Position Statement of Changes in Working Capi t al . . . . . . . . . . . . . . . . 5 Exhibit B Utility Plant........... .............................. 6 History and Organization.................... ... ................ .... 7 Balance Sheet Comments............... ... ..... . ..... ... . ....... 7 442 02l SCasessOf & Consp.ev CR4tiFita puetsC ACCovava.ts

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, Kansas Electric Power Coooerative. Inc.

i Tooeka, Kansas l

BOARD OF TRUSTEES Cooperative Trustee Alternrl '

Altamont, Kansas L. G. Dulavey Lestor Murphy, J.

Belleville, Kansas Everett L. Ledbetter F. J. Raleigh Burlington, Kansas Dean Martin Alfred Meyer Cedar Vale, Kansas Walter David Robert Brown Cheney, Kansas Jack S. " tchinson Gene Porter Clay Center, Kansas Charles W. Ellis Raymond James Council Grove, Kansas Gerald Ri tenour Wilmer Tisenhauser Dodge City, Kansas Ray Sprenkle Ralph V. Sherer El Dorado, Kansas Wilbur C. Read Wayne Seward Ellsworth, Kansas A. D. Paull Larry D. Kili an Em pori a , Kansas R. D. Speece Larry Scott Fredonia, Kansas Howard L. Sell Marvin Freidline Girard, Kansas Ray Taylor Marvin Lewis Great Bend, Kansas Jack D. Goodman L'Vern Eacher Horton, Kansas Dale Bodenhausen Alva Amca Hutchinson, Kansas Wesley Nunemaker Cu.cis Steabe Iola, Kansas Wesley R. Clendenen Elmer Nichols Lindsborg, Kansas Verner E. Lundquist Cilbert Lengston Mankato, Kansas Clarence Beck Jim Gouldie Meade, Kansas Otes Allison H. L. Murphey McLouth, Kansas W. A. Ousdahl Fred Johnson Norton. Kan3as Phil Lesh Lynn uforford Pratt, Kansas Robert Ahrens Frederic Moore Solomon, Kansas James F. Schmidt William McCallum Wamego, Kansas Kenneth L. Erickson Lester Marten Welli ngt on , Kansas Max Kolarik Garland Price EXECUTIVE COM'.IITTEE Charles W. Ellis President James F. Schmidt Vice-President Phil Lesh Secretary Allen D. Paull Treasurer Max Kolarik Otes Allison Wilbur Reed MANAGEMENT Charles Ross Executive Vice-President h2 -

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SCHMIDT & CO M P ANY I C ERTIFICO F'USLIC AC C C U NTANTS ass 7 =am 3 rater KANS AS CITY, MISSCURI 641C8

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,:t.<,,.es .u.uc c: x < - . t e'e> az' de za January 29, 1979 B o a r .- 'f Directors Kansas Electric Power Cooperative, Inc.

Topeka, Kansas Gentlemen:

We have exa.nined the balance sheets of the Kansas Electric Power Cooperative, Inc.

Topeka, Kansas as of December 31,1978 and 1977 and the related statements of changes in financial position for the years then ended. Our examinations were made in accordance with generally accepted auditing standards, and accordingly included such tests of the accounting records and such other auditing procedures as we considered necessary in the circumstances.

In our opinion, the financial statements referred to above, present fairly the financial position of the Kansas Electric Power Cooperative, Inc., Topeka, Kansas, at December 31, 1978 and 1977, in conformity with generally accepted accounting principles applied on a consistent basis.

SCSIIDT & COMPANY

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3 Exhibit A i

j Kansas Electric Power Coooerative. Inc.

l l Tooeka. Kansas BALANCE SHEET December 31, 1978 ASSETS AND OTHER DEBITS Plant General plant $ 24,112.72 Less: Accumulated depreciation 11,269.37 Depreciated Value $ 12,843.35 Investments Equities in other organizations 9,880.50 Current Assets Cash 7,755.67 Accounts receivable 17,439.29 Prepaid expenses 1 440.17 Total Current Assets 26,635.13 Deferred Debits Organization expense 1,067.50 Research and development j '3,827.61 Total Deferred Debits 1,874,895.11 TOTAL ASSETS AND OTHER DEBITS $1,924,254.09 MEMBERS' EQUITY AND LI ABILITIES Capital Equities Memberships $ 2,700.00 Current Li abili ti es Notes payable (CFC) $1,352,000.00 Accounts payable 10,602.62 Accrued property taxes 1,013.59 Accrued withholding tax 635.40 Employee savings 21.88 Total Current Liabilities 1,364,273.49 Deferred Credits Advances for research and development 557,280.60 TOTAL MEMBERS ' EQUITY AND LIABILITIES $1,924,254.09 l i

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Exhibit A-1 !

Kansas Electric Power Coooera cive. Inc.

Tooeka. Kansas COMPARATIVE BALANCE SHEET December 31 December 31 Increase 1978 1977 (Dec rea se)

ASSETS Plant General plant S 24,112.72 S 22,524.54 $ 1,588.18 Less: Accumulated depreciation 11,269.37 ,,

6,756.67 4,512.70 Depreciated Value 12,843.35 _ 15,767.87 (2,924.52)

Investments Equities in other organizations 9,880.50 3,649.50 6,231.00 Current Assets Cash 7,755.67 2,648.12 5,107.55 Accounts receivable 17,439.29 17,489.11 (49.82)

Prepayments 1,440.17 1,347.67 92.50 Total 26,635.13 21,484.90 5,150.23 Deferred Debits 1,874.895.11 1,502,832.67 372,062.44 TOTAL ASSETS S1,924,254 &Q9 S1,543,734.94 S3801_519.15 MEMBERS' EQUITY AND LI ABILITIES Capital Equiti,es Memberships S 2,700.00 S 2,700.00 S 0-Current Liebilities Notes payable 1,352,000.00 860,00t.00 492,000.00 Accounts payable 10,624.50 26,837.05 (16,212.55)

Accrued taxes 1,648.99 1,312.04 336.95 Total 1,364,273.49 888,149.09 476,124.40 Deferred Credits 557,280.60 652,885.85 (95,605.25)

TOTAL ME11BERS' EQUITY AND LIABILITIES S1,924.254.09 S1,543,734.94 S380,519,15 l

442 025 scanseOf a consene, caen gO 8.'9vC accountants

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, Exhibit A-2

Kansas Electric Power Cooceratisa, Inc.

i g eka, Kansas STATEMENT OF CHANGES IN FINANCI AL POSITION For The Year 1978 FUNDS RECEIVED Loans from CFC $492,000.00 Total Funds Received $492,000.0_0 FUNDS APPLIED Office furniture & ecuipment S 1,588.18 Increase in working c_ tal 21,025.83 Research & Development:

Der E xhibit A-1 $372,062.44.

Add:

Member advances applied 95,605.2f.

Capital credits applied 6,231.g 473,898.69 Deduct:

Depreciation included 4.312.70 Funds devoted to research 469,385.99 TOTAL FUNI)S APPLIED $492,000.00 STATEMENT OF CHANGES IN WORKING CAPITAL INCREASE y WORKING CAPITAL Increase in cash $ 5,107.55 Increase in prepaia expenses 92.50 Decrease in accounts payable 16,212.55 Total S 21,412._60 DECREASE IN WORKING CAPITAL Decrease in accounts receivable S 49,82 Increase in accrued taxes 336.95 Total S 386.77

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sxhibit 3 i

' Kansas Elec tric Power Coopera tive. Inc.

Tooeka, Kansas UTILITY PLANT Balance Balance 1-1-78_ Additions Retirements 12-31 78 General Plant Transportation equipment $14,538.92 S $ $14,538.92 Office furniture & fixtures 7,985."2 1,588.18 9,573.80 Total 22,524.54 1,588.18 24,112.72 Depreciation Transportation equipment (1) 5,309 89 3,634.73 8,944.62 Office furniture & fixtures (2) 1,446.78 877.97 2,3,24.75 Total 6,756.67 4,512.70 11,269.37 Depreciated Value $ 12 . 84 3 . 3_5, (1) 2 5 '70 declining balance (2) 107.

442 027 SC w D f a C0a.84=v. Ct e t*8 8 0 *b kC ACCOwn'antg

j History and Oreanization l

A rtic le s of Incorporation adopted by six electric distribution cooperatives of .

Kansas were filed with the Secretary of State, February 13, 1975 for the Incorporati on of Kansas Electric " _.e. Cooperative, Inc., pursuant to the Electric Cooperative Act, K. S. A. 17-4601 r.nd othe applicable laws. It is a nonprofit cooperative with perpetual existence. Bylaws of the corporation do not restrict membership to electric cooperatives. Each active member has a representative on the Board of Trustees. The membership fee is $100 and at audit date the corporation had twenty-six active members.

Balance Sheet Comments Plant E xhibi t B, page f. of this report pre-General plant $24,112.72 sents a detailed statement of general Less: Depreciation 11,269.37 pl nt fccilities and changes in the Deprecirted Value $_1_2 1 843.35 plant accounts during 1978 Acqui si-tions include two calculators, two desks, two chairs and twu bookcases.

Investments Equities in other organiza-Equities in other organizations $9,880.50 tions include the f ollowing:

Nationni Rurr.1 Utilities Cooperative Finance Corporation Washington, J. C.

Membersbip $1,000.00 Capital credits 8.778.00 $9,778.00 Kansas Electric Cooperatives, Inc.

Topeka, Kansas Membership 10.00 National Rural Electric Cooperative Association W as hi n gt o n, D. C.

Membe rs hi p 10.00 Federated Rural Electric Insurance Corporation Madison, Wisconsin Preferred stock 82.50 Total $9.880.50 Cash The general fund of the coopera-Working f und S 50.00 tive is in the custody of the General fund 7,705.67 Total $7.755.67 '

Topeka, Kansas. We examined all checks honored by +he bank during 1978 and t" aced the checks to detailed computer listings. Special attention was directed to authorized signatures and to classi fi-cation of the expenditures. We reconciled the bank statement with the cooperative's

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• 3 books and compared our reconciliation with one prepared by the cooperative.

j Particular attention was directed to the outstanding checks at the beginning and end of the year. Written confirmation of the bank balance was obtained from the bank, a ne=ber of the Federal Deposit Insurance Corporation.

l Accounts Receivable $17,439.29 We reviewed the subsidiary ledger of accounts receivable and determined it was in balance with the ledger control account. Accounts re-ceivable consist primarily of expenses incurred by KEPCo assisting its members in wholesale rate cases and travel advances to KEFCo staf f members:

Member cooperatives Less than thirty days old $14,611.15 Thirty to ninety days old 506.73 Over ninety days old 1,967.60 17,085.48 Due from KEC 353.81 Total S17,439.2_9 Negative confirmation requests were mailed to the extent deemed necessary.

Prepaid Expenses Insurance policies were Unexpired insurance S 640.17 examined and the unexpired Travel advances 800.00 insurance premiums computed.

Total $1_440.17 We listed the policies, ob-served they were made payable to the cooperative and ascertained all were in ef fect at audit date.

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'CMenOf 4 Coespany, cger # 50 #LSL C ACCCw stages a -

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Thd type of insurance and the amount in effect at audit date were as follows

Type of Insurance Amount General public liability Bodily injury $ 500 /1,000,000 Property damage 200/200,000 Workmen's compensation Statutory Fidelity insurance (blanket crime) 50,000 Automobile Bodily injury 500/1,000,000 Property damage 200,000 Collision $100 deductible Fire and extended coverage Contents of rented office 7,500 Travel advances included:

Joe Hamman $150.00

0. W. Taylor 150.00 Jerry Haahr 150.00 Dave Larson 50.00 Joe Mulholland 150.00 Hoburg Lee 150.00 Total $800t00 Deferred Debits Kansas Electric Power Organization expense $ 1,067.50 Cooperative, Inc., was Research k development 1,873.827.61 rganized to provide Total $1, 874 . 895.11 additional power. The cooperative selected Southern Engineering Company to provide engineering services and the firm of Kassebaue. and Johnson to provide legal services. It is hoped that this ef f ort will result in acquisition of generation capacity and transmission capabilities in cooperation with other utilities in the state. Costs have been incurred with a number of projects and four projects are involved at audit date.

Financing of these projects is provided by member assessments and by short-term loans f rca National Rural Utilities Cooperative Finance Corporation (CFC),

Washington, D. C.

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Until it is determined whether actual construction results from the effort, costs i are being deferred and consist of the f ollowing as of December 31, 1978:

Research Projects KCPLL KP&L KGE Hydro CTU Labor $ 563.85 $ 300,888.22 $ 1,499.83 $ 45,334.03 Payroll taxes 10.48 27,186.71 90.95 4,736.62 Employee benefits 81.29 3P,653.84 240.40 5,862.18 Travel 435.79 49,526.71 96.10 9,407.09 Public relations 347.71 2.07 Rent 42.79 9,629.20 91.89 2,119.76 Building costs 35.73 10,355.35 70.34 1,991.56 Leasing & maintenance 14.34 8,994.27 62.84 2,096.35 Depreciation 30.70 19,240.60 90.22 5,946.35 Insurance 7.05 2,170.93 21.07 473.20 Property tax 7.91 3,010.65 71.14 735.02 Meetings 23.65 84,427.37 4,618,38 Engineering 351,131.27 14,722.56 Computer 25,594.57 Supplies 31.65 17,264.26 54.28 2,625.32 Postage 24.64 9,979.79 82.24 1,545.73 Telephone 45.27 19,672.85 132.13 3,355.82 Legal 275.00 509,380.67 5,134.60 Contingencies 725.00 S ubsc ri pt i ons 87.09 3,648.33 232.43 Interest 179.96 153,424.90 423.31 863.93 Audicing 1,300.00 Personnel costs 5.35 75,173.27 11.05 11,743.26 Consultants 234.82 15,879.82 7,500.00 Total ($1, 873 ,827. 61 ) $.22 4_84, 98 $1,7 3 7,_2_55 . 5 8 $1_0mS3 9._86 $1232 544.19 Capital Equities Membership certificates have Memberships $g , 700 . 0_0 been issued to twenty-seven cooperatives in Kansas. One member dropped its membership but the fee was not refunded.

Current Li abili ti es We examined invoices paid Notes payable $1,352,000.00 subsequent to the audi t date, Accounts payable 10,602.62 Accrued property tax 1,013.59 de inquiries concerning Accrued withholding tax 635.40 possible unrecorded liabili-

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$1,364,27.1.49 ties and in the opinion of the cooperative's attorneys, the association had no contingent liabilities at audit date.

The cooperative has a line of credit with the National Rural Utilities Cooperative Finance Corporation (CFC) in the amount of $2,500,000.00 and at audit date had borrowed $1,352,000.00. Interest on the short-term loan varies monthly with market ffl9 tL

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" 11 and*at December 31, 1978 wac 11.75'o. The li ne of credit is arranged on a yearly baats and both the line of credit and any amounts advanced become due

} March 23, 1979. Members of KEPCo have guaranteed payment to CFC for any amounts advanced to KEPCo plus interest. We obtained written confirmation of the notes payable to CFC at audit date. Interest is paid quarterly, Inasmuch as KEPCo is operated under common management with KEC, overhead costs incurred by KEC applicable to KEPCo are billed to them at the enc of each month.

The amount billed and unpaid at December 31, 1978 amounted to $10,602.62. Property taxes payable represent one-half of the 1978 taxes assessed per statements on file in the cooperative's office. Wi t hh oldi ng tax was withheld from employees during the last quarter of 1978 and is payable to the State of Kansas.

Deferred Credits Advances for research & development $,557,280.60 Capital for KEPCo, f ormerly KEC's power and energy department, is provided by member assessments and by short-term loans from CFC. One agreement provided f or five assessments of $600.00 per member plus $0.15 per KWH sold by the member in 1972. Sunflower Electric Cooperati re and its members are to pay 75% of this amount.

The other agreement provided for assessments of $0.25 per KW. The first agreement was to provide funds to operate the department, while the second was to fund engineering, legal, etc. costs involved i n negotiations with other utilities.

In 1976 the Board of Directors of KEPCo charged $96,649.40 of deferred research and development costs against capital derived under the first agreement and in 1978 KEPCo charged another S95,605.25 against advances provided by members.

442 032 SCa OT 4 Consense, CE eF E3 #4 34 C aCCOW 44'l

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Pursuant to the Atomic Energy Act of 1954, as amended, the Energy Reorganization g Act of 19 law 93-438), and subject to the conditions and hmitations incorporated herein, the Nuclear y; Regu f4

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Mr. Robert J. }lanley LICENSE NO. 5 0 P - 2860-3 lt 4( -

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