ML19309A270

Annual Financial Rept 1977

ML19309A270
Person / Time
Site:	Rancho Seco
Issue date:	12/31/1977
From:	SACRAMENTO MUNICIPAL UTILITY DISTRICT
To:
Shared Package
ML19309A269	List: ML19309A268 ML19309A270
References
NUDOCS 8003270590
Download: ML19309A270 (19)

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FINANCIAL HIGHLIGHTS j

1 AL 4

'EeN.'neYaY 1977 1976 Customers at Year End 296,541 282,621 l

KWH Sales (Millions) 4,767*

4.607*

Peak Demand (MW) 1,354 1,330 Net Revenue (Thousands)

$ 18,319

$ 18,692 l

Construction Expenditures (Thousands)

$ 48,712 5 38,632 g

Capitahzation at Year-End (Thousands)

$798,435 5795,719 4

oon.w e uccm.,,.

• Encludes sa'es of surplus power.

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tereccet Vee Pres 4*nt Jarmers.19?$1 s

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. oAatt-hours to of he' Northern Cah-to SMUD planners who must meet the New SMUD Consumers famia communittes Some 10 milnon increasing demand for power that a barre!s of oit woulo have had to be growing commun:ty places on the l977:13,9204 4,q,.gy*:r g.]

burned to equal the energy output of electoc service this plant during 1977.

[959*:13348 /'4 NO #' j The fadure of one of the plant s two Conservation

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marn transformers in January 1978 has o.wted tho output from Rancho Whde long-term solutions to f uture

' Average 1972-76;9,6997 'j Seco to approximately 70 percent of generating requirements continued t

normal This limitation will be rernoved to be sought. the importance of ettec-

'Prewous record growth year when trantformer repairs have been live energy Conservation programs completed now and in the future was empha-Regional generating reserves sized by SMUD dipped as low as five percent in early Dunng the year. SMUD's Board of September due to reduced hydro-Directors adopted a formal conserva-I e?ectnc generating capacity caused tion pohcy setting forth the Distnct s by the drought in California SMUD commitment to prudent use of energy cooperated with other electncal resources The Board s action resulted utihties serving Northern Cabfornia in format.on of a Department of Con-by appeahng to the pubhc for reduced sersation for th,e Distnct Planning and use dunng peak penods and service impiementat;on of a wide range of interruptions were avoided prog ams designed to assist a4 l

Maintaining the reliability of the types of energy consumers from elecincal system serving SMUD con-large industnal to residential is tne sumers is a long-term concern of the responsibihtyof thisnewSMUD group District Plans for a 150.000 kdowatt Among the Conservation Depart-gas turbine peaking project to meet ment's eady efforts is SMUD's " Invest future capacity deficiencies were de-In losulation" campaign. This retrofit layed by a Sacramento County Air program offers free attic inspections Po!!ution Control Distnct ruhng to homeowners on request if the attic SCAPCD denied a construction per-inspection indicates more insu!ation mit for the plant which was to be is needeo. a SMUD-approved con-located near Rancho Seco, because tractor is made available to bnng the the Sacramento Valley already ex-home up to R-19 standards Low-ceeds state pollutant hmits dunng interest, long-term financing is also certatn times of the year. Emission made available by the District tc standards for the generating equip-

'luahtying homeowners ment being considered are excellent.

To determine the potentia! salue o' but the plant would be most needed Icad hmiting equipment as a means of dunng times when pollution levels reducing peak demand for power, tne already exceed legallimits The Distnct installed a radio-controtted District is currently studying means system on some 300 homes which is of reducing existing pollution levels so that gas turbine generation can be employed-Increased Construction Recorded SMUD continued to insestigate New construction means increased the potentia! for geothermai power demand for power in the future. The generation dunng 1977 Harnessing Sacramento area building industry re-this energy source is of prime interest corded a year of major growth in 1977.

{

1977 REVIEW C:n:truction SMUD's Carmichael Substation in by the generat ng record of Rancho 1977 Two transmission hnes connect-Seco nuclear power station Dunng For SMUD.1977 was a record growth year More consumers joined the ing this bulk power substation w+th 1977, the 913,000 kifowatt nuclear SMUD system tnan in any previous two existing substations are now facihty in southeastern Sacramento under construction w.th completion County generated 5 9 behon kdowatt-year New construction and con.

sumer growth go hand in hand with planned for 1980 The 230.000-vo!!

hours. Rancho SeCo produced more increased elecincal demand Both kne connecting the Carmichael and energy dunng the first seven months coninbuted to a new peak demand of Hurley Substations combines both of the year than any of the more than 1.354.000 knowatts on September 6.

overhead and underground transmis-200 operating nuclear plants through-To meet new demands placed on sion circuits to minimize the project s out the world the District in the future. SMUD con-

'mpact on residential r s The The nuclear plant recorded a sec-1.nued to expand and improve its 230.000-voit hne con' ng the ond moestone during the year wnen e'ectncal distnbution system Carmichael and Orai svale Sub-it'was refueled for the first time Dur-A major, new substation loca'ed stations will be constructed entirely ing this outage, the plant's massive directly Dehind the D. strict's head.

underground turbine generator also recewed a quart (rs budding was energized in A citizens advisory committee was complete overhaul.

1977 The East City Substation's cen.

tormed to estabhsh a working pohcy Energ'/ generated at Rancho Seco trahzed iocat on decreases energy which can be used by the Distnct in serves both the Distoct s consumer-j iosses thereby :ncreasing destnbution siting future transmission knes The owners and other Northern Cahto nia ethciency and advancing energy Distnct has adopted pohcies in hne energy markets By, year's end.

witn the recommendations of the Rancho Seco had met the enernv comervaSon Existing transmisr. ion unes aere employed to bnng the $3 4 committee requirements of SMUD consumers mohon facihty on kne, making addo and provided an add:tiona! 2 9 bdhon l

tiona' transmission knes unnecessary Generation I

Construction of new transmission For SMUD, I;ke much of the west.

faciht;es to meet increasing electncal 1977 was a disappointment in terms SMUD Generation;1977 l

load is of paramount importance to f h dr electnc generation. Cahfor-3 the future rehaoshty of the ShiUD ni 's second consecut gggg. ggg'gg-drought leh the Dastoct(ve year of

-g-3 system Work on transmission projects s reservoirs saiued at 52.7 mdhon was under way in the Sierra Nevadas at record low dunno 1977 This included the hnking' levels Dunng an average water year, SMUD Hydro:.2 billion kilowatt-hours of three existing bulk power sub-the Distnct s 650.000 kdowatt hydro-stahans with nNw 115.000 volt trans-ehetnc project in the Crystal Range mission knes This pmciwillincrease system rehabihty by providing addi, generates 18 bdhon kilowatt-hours Dunng 1977, only.2 bdhon kdowatt-tionat power sources for the centra!

City bulk power substations. Althoug' h hours were generated at the project's

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six powerhouses Aork on these hnes was initiated in Heavy rain and snow in late 1977 1977. it wd! not be completed untd 1979 Construction also continued on and early 1978 promise greatly improved hydroelectnc generation in the coming year. The water content of y

Meeting Today's Energy Needs the snowpack in the Crystal Range

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watershed where SMUD's hydro.

j Keeping power flowing through the hnes serving SMUD consumers is a electnc project is located was esti-p never ending task Shm hydroelectnc mated to be 140 petcent of normal

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r.scurces made SMUD's nuclear powered on January 3t.1978

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generation from Rancho Seco more vital Fortunately.1977's reduced hydro-thin cver.

electnc output was more than offset l

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Meeting Tomorrow's Energy Needs play a vital role in the cornmunity they SMUD's search for power to meet future serve, whether they work with young generation requirements has taken many minds to fashion a better understand-directions. Energy from geothermal steam ing of the use of energy. or the mas-wells can be difficult to hamess, but the Live machinery whlCh bnngs power Distnct is investigating such a resource into schoc!s homes and factories for the future.

Rccognizing the importance of this community role. SMUD s Board of Directors appointed an Affirmative used to cycle air conditioning dunng Action Committee dunng 1977 to penods when the greatest demand is make certain that the District is placed on the SMUD system. SMUD representative of the public it serves.

is currently evaluating the initial Both SMUD employees and members results gathered dunng the first year of the general pubhc are on the of testing Through expansion of this committee. Its goal is to assist SMUD testing program. SMUD hopes to in developing and mainta:ning strong answer severalimportant questions affirmative hinng and employment about the value of such equipment ohcies.

and acceptance of its use, by

-Ti.e average number of equiva!ent consumers y. -fuhttyne employees amounted to in March, SMUD co-sponsored 1.514 dunng 1977. Monthly rated Sacra,nento s first Energy Expo in employees received an 8 5 percent cooperation with another utility. Over wage increase in June following 220.000 visited the conservation-negotiations with the Organization of onented trade show during its four.

SMUD Employees The hourly rated day run. Billed as a do-it yourselfer s employees represented by the Inter-answer to energy conservation-national Brotherhood of Electrical Energy Expo offered a wide vanety of Workers received a 7.5 percent wage informative displays staffed by increase effective January 1.1978.

experts in energy-related fields.

The Distnct's annual payroll for 1977 As the year drew to a close the rose to over $27.5 million. represent-Distoct was embarking on several

,ng a major contribution to the area's new conservation dnves designed to economic well-being.

invoNe all the people served by SMUD. Reachina tomorrow's rate payer, for example, will be the job of Litigation a new energy road show This mobile Rancho Seco nuclear power station unit is another extension of the expenencea lengthy outages in 1975 Distnct's expanding conservation and 1976 as a result of turbine and effort, and will include school assem-generator failures. Both Pacific Gas bly presentations performed by and Electric Company and Westing.

SMUD Generating Resources SMUD staff members.

house Corporation filed claims against SMUD as a result of these Nuclear 48 percent outages.

Personnel PG &EJs claim for damages 4 Hydroeiectric a3 percent in the final analysis, it is the Dis-exceeding $70 milhon addresses the trict's people and their concentration lost generation which resulted from on excellencewhich keeps the SMUD the Rancho Seco outages and the

• k (Purchased Power 19 percent U.S. Dept. of Energy) system in operation. These people more costly means employc 1 to gen-I 7

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erate power Junng those outages investment in Insulation SMUD rejected that claim as being Eliminating energy waste is the pomary without merit. The filing of the West-goal of SMUD-sponsored conservation Inghouse claim was followed by a programs. A highly successful residen-tial attic insulation drive is an excel-suit against the District for $6 7 mil-lent example of what the Distoct is hon for repair work performed on Rancho Seco's steam turbine. SMUD accomp! shing believes Westinghouse was respon-sible for the damage to the turbine this second proposal, the rates for and, as a result, has refused to pay Central Valley Project power pur-the contested amount. For further chased by the District would be information regarding these matters, increased by the 100 percent figure.

refer to Note 5 of this report's Notes in January of 1978, the Department to Financial Statements on page 15 of Energy announced that an interim rate increase of about 95 percent Purchased Power would be placed into effect on May 1 The United States has a lawsuit on 1978, pending completion of the administrative proceeding. It now file against the District in the United

. States Distnct Court for the Eastern appears that the proceed ng will not be completed untillate 1978 or District of Cahfornia in which it seeks a judicial interpretation of several of early 1979.

Tre per r~a+et ng r nct;ons or :rt a

the provisions of the contract under Demnwt of tm inmmin uomnM to which the Distnct purchases 9ower rne Depanment or Energy on Octotc'.1977 from the Central Valley Project. In September of 1977, the Department Rates and Financing of the interior

• announced that rates f or Central Valley Project power would Continuation of the drought in be increased effMvc on or about Ca'ifornia reduced hydroelectnc out-June 1.1978, and initiated an admin-put and increased dependence on istrative proceeding to determine thermal generation facilities The high the amoual of the increase and the cost of fossil fuels resulted in rate structure of the new rates. In its increases in many areas, but the announcement, the Department needs of SMUD consumers were met stated that its revenue needs re-withou' reliance on fossil-fired gen-quired a rate increase averaging erate <, and no rate increase was approximately 180 percent and sug-necessary in 1977.

gested two alternate rate structures.

In the budget released for 1978.

One of those structures would be a SMUD planners call for a rate increase uniform increase of approximately averaging 15 percent, effective May 2.

180 percent to all customers. includ-This increase, the first in two years, d

ing the District. The other rate struc-v ould offset the effects of inflation Homes purchasing insulation under ture would involve an increase of and higher cost of Central Valley the SMUD attic retrofit program approximateiy 100 percent for most Project power mentioned above. A of the power marketed by the Central

$30 8-million bond issue to finance

' ' ~

Valley Project and an increase of the purchase of uranium concentrates approximately 300 percent for certain for use in the fabrication of nuclear

• [,'S *qj~is v r 6 6 mitiion square feet of power imported by the Cer tral Valley f uel for Rancho Seco wqs also in-Project from the Northwest. Under ciuded in the 1978 budget.

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BALANCE SHEETS December 31.1977 and 1976 - e r. .o t i sp. L 1977 1976 4 ELECTRIC UTILITY PLA' T: * '. Plant in service, at original cost $791,480,908 $767,509,10: N ~ Less-Reserve for depreciation 125,342,161 106.005,34: $666,138,747 $661,503,76; Construction work in progress 30,587,929 27,301,33' Nuclear fuel, at amortized cost 42,458,321 40,372,92 $739,184,997 $729,178,02< 4 SEGREGATED FUNDS, consisting of cash 4 and securities, at cost. -.~ ... =~ ^ ~ ~ hich approxirhates market: For construction purposes (Note 4) - $ 37,178,421 $ 38,'149,04 ~ w In reserve funds for Revenue Bonds (Note 3) 23,582,678 23,848,45' S 60,761,099 $ 61,997.49' + - CURRENT ASSETS: Cash 231,959 361,b x-Segregated cash and securities for payment of debt service ' 13,558,233 17,944,38 ,1 ' Accrued interest receivable 1,581,610 1,297,48 1 Ei dccounts receivable, less reserves of z.. _ 6,410,8p e. . [a ts. G [, e,$199,037 and $180,430, .g ' i f 5,839,33, respectively. 6,842,243 e

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i UE ' Re'ceivable from sale of surplus powerj

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' 6,798,493 1 n,; y.,a

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3,-,, x-ic i 985 96i ..; : W ' J;. S Materials andiupplieslat average cost 9,766,828:.,, ~ -t. ..,.w.

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nL~, v. Wn m-~ ^ M'.F.gAC -Q ;p Prepa 3_:a,.yments and special deposits ' f 1,185,330 : V,2 1,305,70s y r - 9 .m. .aum.. a s v u- ,m l..% f... 4 ,,,- p, y-m. 7 ,3 p y,~ y M QQ_ g 1 ' KcP yy GJ, 4 ' ^, t 4, y ;. [w][.M. U / h.csa . +: s

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$ 39,964,696 : _ $ 41,148,91j k w m p3 n m :~ . e m.. m es @g v-ec. %#. 7 <, o s s. .q g z.+ 3 -, ..s DEFE,RRE.D CHA,RGES i SE 6'M is;. ' %, &; w.,E 3 W' 'e

$ ' 6,477,988 ;,

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STATEMENTS OF NET REVENUE Yr.:s snoed Decsmber 31.1977 and 1976 Sacramento Municipai Ut.hty District o i o f f 1977 1976 ti t [ OPERATING REVENUES:.

• Residential

$ 44,497,194 $ 40,553,323 I ~ Commercial and industrict 42,011,519 - 40,331.808 e t Sale of surplus power (Note 5) 33,570,126 20,988,153 i Other 1,145,407 1,073,077 l I' ~ Total operating revenues $121,224,246 $102,946,361 j i f OPERATING EXPENSES: Operation-t Purchased power _ _ 7,779,698 - - $ - 7,642,709.- Nuclear fuel used for generation 16,257,672 6,580,766 ? Production 8,359,550' 5,437,590 Other 15,131,059 + 14,909,862 r-1" Maintenance. 15,274,430 9,439,419, ( i - } Provision for depreciation (Note 1) 20,795,106 20,552,1121 ~ i a i t Total operating expenses. n. y +.. - -. $ 83,607,515, '$ 64,562,458 f' 1 c - x c-w= .,.c ,.>g (+,, .m y p c Nel operating revenue. 'S 37,616,731. $ 38,383,903. .;~^,. ~ + y ,7.. + y, .4, >Q/ 3 [.f 71 r M, I' c RJf ,7-

;- g,

g, 4 q-OTHER INCOMEim j g ji.. Allowance for funds used during constiuction ,C-f ,L 'J O: l equity only in 1977 (Note 1) -. }~, 539,843 4 Z.1,498;128,; r a .. c ..,.a. c. H-

+

a. 4 Interest income'and other; _ y. . _4,730,164 ? >$ ;. 3,755,822.: .t.;j,c. ., m

g. ~ 3 -

~ ['l= s l k' 1"~ ' 7,

k

', ff g%[QM ' '~.; i* ~ .t p,(c< ... s. Gross income =. u,, - $ 42,886,738 i _ $ 43,63,7,853 V w a , g...p L .e ~ ~ 25,081,778 :: 24,946,2142 .;,,, INTEREST EXPENSE: t . 7, interest on long-term debt. 4 - = - c % *;A. c < a,1., ;p..,.y( + t c;'. 1.---- Jg, a,-. ~y,,ser nge t '.' p~ .n:,; =, y:,? ~ Allowance for borrowed funds'used during. p 2-6 g n j;g,, j > J,gw = ~,: e construction-credit (Note 1) (513,621) -' '.i

e. w,.

-g.n y ,s. s.; u l y< .l

9..,

Net revenue for the year., $ 18,318,581 c . $ 18,691,639 l 79 ilI w. + ~ 4 p, yy, s The accompanying notes are an integral part o' these staternents.; p , y / s a s 3

• [

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S cremento Municipd UtAty Distnct 'l 4 a., -w.- w . W 6 t il a4" d 1977 1976 , CAPITALIZATION: Custorners' equity ernployed in the business-s .s Balance beginning of year $310,891,798 $292,200,159 l 1 Net revenue for the year 18,318,581 18,691,639 t Total customers' equity $329,210,379 $310,891,798 Long-term debt (Note 2) 469,224,885 484,826,722 i 56 u.rst ' ~ ^ ~ ^ cx-r. 7, v. -.-" -- v.. : -:a 2 - - - -~ ~ m ~ - y -w-I $798,435,264 $795,718,520 3 m C RFIENT LIABILITIES: Accounts payable $ 19,367,344 $ 11,391,025 .y. l Accrued salaries, wages and vacation pay 3,207,396 2,892,682 t- ~- j .Long-term debt due within one year 15,608,905 16,949,309 i $. L A,ccru'ed interest on long-term debt. L. W y; # ,n-n. 6,060,974 , 6,266,665 r,- 1 n ;; :. [f". '. ' ' 7 q .l Customers' deposits

• 2,012,548 1,859,532 D.c 4 -

g .4 W 1... ~,.. ,? - ~.. s 2 x, i 3gTs, n . a v: /x; Other ,2 1,696,349 2,074,739 e e,.. e. + c ,t ,t - l %QG:'. 'M, y, .t J ,1,. 'i o + t 4.- -, e ., m s y.- p 4 rq g, 4 i.4 ~ $ 47,953,516 5 41,433,952 ., e, e. . ~ s,o e.,-, s .e w c (, . t-n-s m a - ,.me - s.< $846,388,780 $837,152,472 } ?,o u ,3.,g. l i .4 c i .c . INC W i, ,.,;y., N

• + - -

4 > ,.s mvN7 p 2 5,; ;The accompanying notes are an integral part of these balance sheets. '. r : y.7.. eg r ,qgy n; % .-k f,-' ^ J i - ~ sf, _ 4I

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4~, 3.. ,e r. + g 'u c 4' u t.e: [, e f; _. e' 1 f,1.N N, g. c k :c.T Qi, 6^ ,,5 y 3. -' +.. + a h 2' * } f-' w. 4 t _ 'N' ' k ? __ 1 ; f A,~..h h;,'c C, u .,..u.'i.,y j$ p.- 3.h * ~ 4 ts d.: # h, A, ' N :,M. i ~ 4 3 ~, J 4 7 d$^ .') V.F a r.* ? ch'S,i k v,P -- - p f, ",, 3-PN ... i., 4 yg - - ;^

NOTES TO FINANCIAL STATEMENTS Decemt>er 31,1977 cnd 1976. .; y. ^ ORGANIZATION'AND EXEMPTION FROM INCOME TAXES Long-term debt utstanding at December 31,1977 and 1976. The Sacramento Municipal Utility District was formed and was as follows: operates under the Municipal Utility Distnct Act. The Act confers 1977 1976 upon the District the rights and powers to fix rates and charges for commodities or services furnished, to incur indeotedness and General Obligation issue bonds or other obligations and, under certain circum." Bonds and Notes-stances,14 nevy and collect ad valorem property taxes. The Dis. Power Bonds of 1938 tr ct is exempt from payment of federal and state income f axes. including premium,5%, METHOD OF ACCOUNTING - 1978 to 1979 $ 1,268,705 $ 1,886,474 The Distnct's books and accounts are based upon the Unifom, Electric Bonds,2%,1978 to 1990 7,584,000 8.304,000 System of Accounts for Pubhc Utihtees and Licensees prescribed by the Federal Energy Regulatory Commission, the same ac. Building Bonds,2-3/4% counting system which investor-owned electnc utshties operating 4-3/4%,1978 to 1992 7,090,000 7,735,000 8,350,000 in Cahfornia are required to follow. SMUD Notes, Series A DEPRECIATION AND AMORTlZATION METHODS SMUD Bonds Series C. The District provides for depreciation on the historical cost of 3-3/4%-4-3/4%,1978 to 1981 25,000,000 ' 25,000,000 electric properties on a straight-hne basis at rates determined by Revenue Bonds-engineenng swdies. The average annual depreciation rates for Upper Amencan River Project Distoct plant in 1977 and 1976 were: ~ -. Refunding Bondt 1-3-3/10%,1978 to 1991 56,800,000 60,000,000 1977 1976 White Rock Project Bonds-Intangible plant 3.06 % 3.06 % Series A anc B,3-1/4%- Generahon-3-1/2%,1978 to 2004 36,300,000 37,115,000 Hydro 1,52 1.52 Series C and D 6-1/4%- Nuclear 3.29 3 41 7%,1978 to 2010 56,200,000 56,600,000 Transmission 2.87 2.61 Electric System Bonds, e Distribution 2.98 3.01 3 %-3-3/20 %,1978 General ' 5,76 5.71 to 1983 6,290,000 7,435,000 Composite 2.87 2.91 Electric Revenue Bonds, Series A-F,4-3/4%-7%, The Distnct amortizes the cost of nuclear fuel on a unit-of-1978 to 2013 288,100,000 288,900,000 production method, based on the cost of nuclear fuel plus esti-Total bonds and notes $484,632,705 $501,325,474 tr,ated reprocessing costs less salvage. ~ Purchase Agreements,3-3/4%- ALLOWANCE FOR FUNDS USED DURING CONSTRUCTION U-3/4%,1978 to 2000 1,476,639 1,784,319 Effective January 1,1977, the Federal Energy Regulatory Com-mission (FERC) prescribed a for,m'ula to be used,to compute $486,109,344 $503,109.793 j separately the maximum amount of the allowance applicable Less-Bond discount, White to borrowed funds and to equity funds.,_in the Statement of Rock Project, Series C, 1,275,554 1,333,762 i R 'A l 4 Net Revenue, the allowance applicable to borrowed funds is Less-Amount due within. reported as a reduction of interest Expense and the allowance one year - 15,608,905 16,949,309 i applicable to equity funds is reported as Other income. Prior t $469,224,885 $484,826,722 1977, the FERC did not prescribe a formula for computing sepa-J rate rates for the two components, and the entire allowance was - g fyf j . W, ,mm ca, n. w) er; a q included in Other income.y The total allowance for funds used d'uring' construction in 1977 Reserve funds for revenue bonds at December 31,1977 and j y, 'and ?976 amounted to approximately 6.5% and 6.0%, respec. 1976, were as followx

• /

+ i tively, of eligible plant under construction.. 1977 1976 l - RETIREMENT PENSION PLAN i Electric System Bonds $ 1,043,800 $ 1,048.446 ~ The District's employees are covered by' a contributory retire. ment plan administered by the State of Cahfomia. Contributions _ Electric Revenue Bonds 15,312,160 15.214,358 2 ; by the District for 1977'and 1976 amounted to $3.259.000 and White ( r,k Project Bonds 929,986 A 929,986 j j ' $2,494.000, respectively. Reflecting recently improved benefits All Par j Bonds - 6,296,732 .6,655,661 ; j cf the plan and actuana' studies, the District's rate of covered $23,582,678 $23,848,451 payroll contnbuted to the plan increased from 6.32% to 11.38% c ffective March 1,1976, to 12.38% effective July 1.1976, to 12.46% i cffective January 1,1977 and to 13.46%, effective July 1,1977. An

• O O "7
• ?

?N.O additional increase of 1.85% has been announced by the Public Estimated construction expenditures and expenditures for nu- ! Employees Retirement System to be effective on July 1,1978. clear fuelin 1978 are $45,000,000 and $50,000,000, respectively., I ' '; ? y 14 Jg . ;n ,.h h?i-- ?[ W..n.N%.M%.L 2 3V s# w .~ .-J,, .#,VO ,y g i. J r 1 'i 's M.d.J, w.. m aZu,~~ N >4j 3 y i ~

STATEMENTS OF CHANGES IN FINANCIAL POSITION , Years ended December 31.1977 and 1976 Sacramento Municipal Utity D,str et rs .o e 1977 1976 s ( .li k g s .\\. FUNDS PROVIDED FROM: ~ Net revenue for the year $18,318,581 $18,691,639 Operations-w( ~ 9 ~ Add-Depreciation 20,795,106 20,552,112 + Interest on long-term debt 25,081,778 24,946,214 p 3 Total available for revenue bond debt service $64,195,465 564,189,965 )'.e Add-Nuclear fuel used for generation 16,267,672 6,58,0,766 W i t Total available for total de'bt service $80,463,137 $70,770,731, .e e.; m% m .......__,. _.- _.. - m. - q "7'*tw'=-*nn7-rt ' Sale Df SMUD Bonds 3eries C-- m-m,... - -. 25,000,000 A ~u- ~ i ' . ~.'7< Reductions in (additions to) working capital 7,703,783 (8,177,876) - m. Reductions in (additions to) segregated M# construction funds ~ 970,620 (8,846,216) ..w L' 1 3> ~ ^ ^ Reductions in reserve funds 265,773 251,368. P. 3 t i - Other >, ' 848,832. ,(12,373) 4 s s w,w p. cU '..,.. r. ...r .... ~ - +.,c_,;p N, . + - Total fundo provided $90,252,145 $78,985,634j e.w ., m.,; W 1. w, : - . >.,.m. n.a,~ -. t .. e.m ms..-.. o- .s r,..,. FUNDS 'USED FOR:W: 41 Debt service-1 a 1 E~ @:c,'?;W-pf Q.? W " W..., ? L- ^ 1 ' si.9, 75 ;,1 y'Reve.nue b,onds;. -r, $29,561,694. $29,194,094 4:e.'- 4 ' p, p[ l J v,c {* p, A 2.' *W7{*J, M *,,'t{.d

• 4 "y~ m/-.,~.

c s q .J

4.,

n General obligation bonds arid notes. ~ 11,978,805 , S.. - *" y .fg, BM, 1 r 3 11,159,07.3 e M J'.x:.d. !My m1: @9, ?Q f.n P ~~' s~

s l

n n. m ; gg. e. p' .t.4 :,. o } go ,. #A'. O s.. W- ~ h, Q,.y 1 3gg' 3 f :;'Totaldebt servico.. . $40,353,'167., t-v T: Qf%,rf n c $41,540,499 ~ '? A e (M JN N h R % 4 O 'i %fp f Additions to plant 1

a h b y}h'

~

a n.

48,711,646 38,632,467 p/,5 9: 7,.> - w..y e,, g. c., 5 ae 4 $90,252,145, $78,985,634 i E ad; a e .:. g. W R ; s.m. - s. 6..:LTotal funds used _ w & a.m:v e

• 9

.i f.pdf}'j W:siQ f.* Vi% G 3,.. A a g NUMBER OF TlMESM V,, ' t., ^ DEBT SERVICE IS. COVERED e ' a. ', ~.. x. Ch.BY FUNDS AVAILABLEi --.,' ' ' Revenue bonds - 2.17 2.20 1

4. j ;, w

.f,.

y. b r T.%;'

3.. oq< 2 , Total debt - 1.94 - 1.75 pn + x.. 4 w< n.... w., .{ x. ss g j ([, ' /ri '.% i %9 ,-. p. ,: e n, ' The accompanying notes are an integral part of these statements. @i., h ~ -W. y' 4 kg %g C Q,3 i.4%.4;2 :: ) q7 , c.,. x wg-- y-up n e,,+. s ,- 9<. g y.. vmy c.q _ a.

:. z g,.,-_

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1. N bN'd:D.I

....k + ' In April 1975, the Rancho Seco nuclear plant began commer. provision in the contract under which the District purchased the chl operation, and the District's surplus power billings to Pacific Rancho Seco turbine generator from the Westinghouse Electric Gas and Electric Company (PGandE) since that time have been Corporation obligates Westit@ouse to pay any judgment which r:ndered in accordance with the terms of the 1970 Power Sale, PGandE may obtain ~ Exchange, and Integration contract with PGandE. The contract provides that PGandE shall purchase the District's unused gen-ortting crpacity, the energy generated by that capacity, and also the surplus energy generated by capacity used by the District. Und:r, the contract, payments.for capacity continue during periods of plant shutdown, although payments for energy do not. On June 30,,1975, the operation of the plant was halted be- + c'use of a failure of the rotor discs in the_ low pressure turbines. The turbine rotors were replaced, and the plant went back into operation in late February 1976, it was again taken out of service 'in c".rly April 1976 for replacement of the generator stator wind. ings rnd was returned to service on October 10,1976. As a result i o,f theseproblemsg ~ ~ h

r. Q)ln'1975 lhe Distficrrecorded $5,850,000,- consisting of the-r '. _

o c.; '59,350,000 turbitvTotorre~ placement cost less $3.500,000 of" ~~'m""~- a ( anticipated insurance recovery, as abnormal generation plant 4 mdntenance. The 59,350,000 turbine rotor rt; placement cost in-C 'cluded rpproximately $7,000,000 of billings from Westinghouse AUDITORS' REPORT Electric Corporation which the District had not paid. Ori. October 4,1977, Westinghouse filed suit against the District seeking recovery of this amount. If the District's ' contention that Westing' ' To th'e Board of Directors of ' hous] should be denied recovery because the turb,ine failure was Sacramento Municipal Utility District attributable to its own acts and omissions is upheld by the courts, m the smount represented by tho' Westinghouse, billings, adjusted /We hav'e examined the balance sheets of Sacramento M'unici $Y by any modification in the ant cipated insurance recovery, will be. pal Utihty District as of December 31,1977 and 1976, and theM credited to Maintenance.;" y, s : ;y- . related statements of net revenue and changes in financial posi-$ [, (2) Th'e District and PGandE are in disagreement with the treat. _ lion for each of the years then ended. Our examination was made C ment, under the terms of _the 1970 Agreement, of the matter in' accordance with generally accepted auditing standards, and i referred to in (1) above and certain other matters affecting the * ' :accordingly included such tests of the accounting secords andC ~

billing of surplus pow e,r to PGandE. The District believes that the

" such other audair)g procedures as we considered nece in E imal resolution of foese dispute _s wil.1 not have,any ' material 7, the circumstances.: Wt ~

D ~

.adpsQgonje accompanyingpag,al sta}ementsk < 1 * $ As discussed in Note' 5 to the accompanying financial state.- _' (3) InTJune 19J6, PGandE f.iled _a claim against the District;,_, ments, Pacific Gas and Electric, Company filed a claim against alleging that the inatters referred to above indicate-that the p..the District in June 1976, alleging that outages'in 1975 and 1976 R Rancho'Seco^ plant'did not become commercially'oper'able jn' T Lindicate that the Rancho Seco p! ant did not become commer a ~ ' April 1975 and that the rights and obligations'of the parties ' on-[cially, operable in April 1975 and that the rights and obligations of] c 1inued,lo be controlled by an earlier contract. The claim seeksi, J the parties continued to be controlled by an earlier contract., recovery of approximately $50,000,000 alleged to be the differ-b Che claim seeks, recovery of approximately $70,000,000. The ence between payments due"under the two contracts, and also ' " ) District believes its position on the claim will be upheld, but the ' 'seeksjecdvery of $20,000,000, plus additional costs, expected to ? ~.outcome cannot be determined at this' time.WfC A i occur after the fihng of the claim to replace capacity and energy ; ~ In our opinion / subject to.the effect of any adjustments that 'which ttishould haveiece'rved from Rancho Seco. The District ( may result from the claim mentioned in the preceding paragraph,, l and PGandE have executed an aDreement whereby PGandE;; the accompanying financial statements present fairty the finanF,J has ' greed that anyiward'or judgment it receives based on its y E cial position of Sacramento Municipal Utility District as of Decem- - a claim will be subordinated to the rights of holders of. documents - i ber 31,1977 and 1976, and the results of its operations and the w , evidencing indebtedriess of the District issued prict to the date :,, changes in its financial position for e_ach of the years then ended :

• of such award or judgment, and has further agreed that amounts.

in conformity with generally accepted accounting principles con ' , collected 'or offset by reason of such award or judgment during : sistently applied during the periods.R ~ '~* any" month may not exceed 6 percent of the District's operating 3, I f ^ . revenues from retail sales during the preceding month. While the outcon'Lof any litigation that may be based on,the PGandE'j clairn cannot be~ predicted with certainty, the District believes that San Fdncisco, Califomia :- Arthur Andersen & Co. it has meritorious defenses and,'in addition, that an indenmtly . January 27,1978 - w m.

• %;fi ;'yf@

h4 y 3 1,'s, ~ j Q *$U@f % f ' N.J 15Y '3;- e w w@hN $$. ~,,Y (N hb d[ g Qd[h@ g i [ j kd6 x-n+ u

TEN YEAR

SUMMARY

OPERATING STATISTICS 1977 1976 1975 1974 1973 Customers at Year End 296,541 282,621 273,259 264.159 254,646 KWH Sales (in thousands): Sales to Customers-Residential 2,222,998 2,102,704 2,034,017 1,903,777 1,873,373 Commercial, Industrial, and Other 2,544,239 2,504,313 2.376,723 2,227.059 2,334,503 Total 4,767,237 4,607,017 4,410,740 4,130,836 4,207,876 Sale of Surplus Power 2,923,955 159,196 1,835,952 Total 7,691,192 4,766,213 6.246,692 4,130,836 4,207,876 R venue (in thousands of dollars): Sales to Customers-Residential 44,497 40,553 35,188 5 32,497 29,686 Comme;cial, industrial, and Other ... _43,157 41,405 35,497 32,430 30,957 Total $' 87,654 81,958 70,685 $ 64,927 $ 60,643 Sale of Surplus Power 33,570 20,988 28.551 Total $ 121,224 $ 102,946 $ 99,236 64,927 $ 60,643 Average KWH Sales per Residential Customer 8,597 8,491 8,500 8,244 8,416 Average Revenue per Residential KWH Sold 2.00$ 1.93c 1.73c 1.71c 1.58c Power Supply (KWH in thousands): Hydroelectric Generation 209,717 1,038,936 2,023,803 2,584,467 1,853,006 Nuclear Generation 5,870,832 2.181,261 2,472,624 207,223 Purchases 1,904,428 1,855,626 2,016,288 1,603,556 2,586,927 System Peak Demand KW 1,353,589 1,329,983 1,272,389 1,201,188 1,173,588 Equivalent Full-time Employees at Year-End 1,559 1,442 1,447 1,375 1,302 FINANCIAL STATISTICS (in thousands of dollars) TOTAL OPERATING REVENUES $ 121,224 $ 102,946 $ 99,236 $ 64,927 60,643 OPERATING EXPENSES Purchased Power 7,780 7,643 8,050 8,059 9,914 Operation, Maintenance, and Taxes 55,032 36,367 38,838 16,811 14,504 Depreciation 20,795 20,552 18,227 8,010 7,698 4 Total operating expenses 83,607 64,562 $ 65,115 32,880 32,116 Not operating revenue 37,617 38,384 34,121 32,047 28,527 OTHER INCOME 5,270 5,254 8,986 29,976 23,377 Gross income 42,887 43,638 5 43,107 $ 62,023 $ 51,904 INTEREST AND OTHER INCOME DEDUCTIONS 24,568 24,946 25,226 25,762 22,524 Net revenue for the year 18,319 18,692 17,881 36,261 $ 29,380 i Times Debt Service Earned 1.9 1.8 1,7 1.9 2.1 Bonds Repaid 16,657 15,648 15.145 11,053 6,607 Electric Utikty Plant S 739,185 $ 729,178 $ 722,081 $ 705,812 $ 649,036 Capitalization: Long-term Debt $ 469,225 $ 484,827 $ 478,159 $ 494,165 $ 509,671 Customers' Equity $ 329,210 $ 310,892 $ 292,200 $ 274,319 $ 238,059

e \\ O l g y ). -,. ~f. ., ;.} e - - - u. .. 3} '-- G ~. w?-V 'u. Q.. ',_, n% v.,;. ',>&h. %.'#,*<..' w -j..- y. .s ^ n~ .. t., 'wa .-..i ...s s,,* r ,g. ,4 . c. v -E. R t 197/ 19 M 1970 1969 ..As. 1968 f4'. ,4 W yp,, '* f, '. t " J lT~- .J ' 245 449 234 128 224 679 216.408 210.976 + a t.; , ;{ 9 l .;z ..k ' ' c...j,." ? ';. 2 q . ^ g . ; Q.,y4Q.y. :. W 17 m 79B 1.611.792 1.437 918 1,354.488 1.202.511 3 -.. s%A. 3.4 ?. ?.p%* 5 5,,c g { 2 204.425 2 038 245 1.953.273 1.952.288 1.903.108 ' gg ' % ?,y j ~ 7. / ~'., , - 7 '] '. [-.'} % , 3 937 223 3 650.037 3 391.191 3 306,776 3.105.619 M. /, +. i .o y. . c q, . _. J. c. . _; A. n '.' % *.,'*'1 s y ,7-3.937 223 3 650.037 3.391.191 3 306.776 3.105 619 s.u 1 ,n s ,..j 6p f j , i f v.*

j. '

'_- - _ :% i 5 ' 1i a e. 3--,= .j I 26 624 23 302 19.711 18.692 17.178 -- " 1 - - ,~ .. ~. 28 048 24.373 21.566

21.133] ;

2,0d2ji I ghE agh~a ) '.. ,.[ l ' ~ j $.54 672 47.675 41.277 39 825 5 37599 ?',." d, ' { ~. (., g. . ~, l $ 54.672 47.675 41.277 39.825 37.599 ,3 e 4 l 8.116 7.9?8 7.365 7.179 6.534 ?- . ]'c - s ' [";. V 154c 145c 137c 1 38c 143c 1 1 591.129 1.664.528 1 B93.027 2.546.344 1 121.252 l - = ?! ' - i ~ 2.636 552 2.240,277 1.737.889 981.575 2.204 914 1 099.188 1,0?O.389 908.388 855.589 793.188 .~. 4 1.242 1.166 1.036 963 831 .-- e s T +

.i 1

y 54.672 5 47675 5 41,277 39.825 37.599 >+. - ~ s +, 10.600 8.661 8.396 6.158 9.530 f~ = 4. 13.153 11.435 10.604 9.078 7.856 7.337 6.483 6.000 5.749 5.421 1; + s 31.090 26.579 25.000 20.985 22.807 + s .f t * + c 23 582 21.096 16.277 18,840 14.79? t-15.017 10.098 7.048 3.550 3.089 S IN s. I $ 38.599 31.194 5 9.325 22.390 17.881 + 8.658 13.105 8.088 5.299 5,244 ..(.m i + 29.941 18.089 15.237 17.091 12.637 b, ' ~ -lg j - 9 '.A..g*,.,., _. - fsM.,. ...s '. e c ~ 20 20 19 27 20 ~ 6 237 5.898 S.759 81.876 4.549 M. e... . v.

• "b

$ 5. a96 $ 466.091 $ 348.155 $ 296.190 $ 259.323 ,y.,..,' -.. wnan?

7 /.

- kg. [ $ 420.093 $ 340.565 $ 206,908 $ 154.921 $ 160 805 I. $ 208.679 $ 188.738 $ 170.649 $ 155.411 $ 138.321 5 ( "S" .l .A . 4 f' .}}