ML19309E151
| ML19309E151 | |
| Person / Time | |
|---|---|
| Site: | Crystal River  |
| Issue date: | 12/07/1979 |
| From: | ORLANDO, FL |
| To: | |
| Shared Package | |
| ML19309E142 | List: |
| References | |
| NUDOCS 8004180474 | |
| Download: ML19309E151 (15) | |
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dl m ORLANDO UTILITIES COMMISSION m C4stl@
500 SOUTH ORANGE AVENUE
- P. O. BOX 3193
- ORLANDO, FLORIDA 32802
- 305/423 9100 ER C. BRYAN MANAGEMENT'S REP 0RT I Operations for the year ended September 30, 1979 reflect an increase in gross revenues of 24.5% for electric operations and 7.8% for water
>r vis: gresie nr operations. The substantial increase in electric gross revenue is fiAR ES J. HAWKINS directly attributable to the pass through of the increased cost of fuel oil (42.2%). Other operating expenses for electric operations (excluding depreciation) decreased 2.6%. Water operating expenses increased 9.2%. This reflects the effort by the Commission to control
$,"c^o$ vic,"e", ,YSn M costs when compared to an inflation rate of approximately 12%.
Statistical data relating to electric and water operations for the fiscal years ended September 30, 1979 and 1978 is as follows:
RL T. LANGFORD Percent haror Amount Incr (Decr) 1979 1978 1979 1978 Active Services at 9/30:
I Electric Water 82,882 81,216 64,597 62,549 2.1 3.3 3.1 2.8
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m.s r. o st erasisant gg Electric (kilowatt-hour)
Residential 11,988 12,321 (2.7) 1.9 Small Commercial 20,855 20,972 (0.6) 0.7 v RTIS H. STANTON Water (1,000 gallons) 234 222 5.4 (3.1)
Esecutive Vice eresident
- G'a''^'*"g
Average Price to Customers:
Electric (kilowatt-hour)
Residential 3.83c 3.72c 3.0 (5.6)
Small Commercial 4.76c 4.68c 1.7 (7.1)
Water (1,000 gallons) 56.55c 57.04c (0.9) 3.1
+
We were able to lower our basic electric rates this year because of increased bulk sales of electricity to other utilities. This was made possible to a certain extent by our maintenance of a high degree of J. THOM AS GURNL.', SR. b d
- September 1,1979, to provide approximately $1.4 million less revenue.
Water rates were also adjusted to provide an additional $146,000 in Iene,,, couns.,f;,8 " 12g,,,
305/843-9500 YOU*?*O
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a As noted last year, the Commission has a participation agreement with the City of Lakeland, Florida, for the joint ownership (Lakeland - 60%,
Orlando Utilities Commission - 40%) of a 364 megawatt coal-fired generating plant. Construction of this plant (C. D. McIntosh Plant Unit #3) was commenced during this fiscal year. At September 30, 1979, we had expended approximately $16.7 million of an estimated cost to us of $75 million. It is anticipated that this unit will come on line in 1982.
To partially finance the construction of McIntosh Unit #3, we sold
$40 million of revenue bonds during the current year. This is part of an authorization of $225,330,000 of which $75,000,000 remains unissued.
These bonds received a rating of Aa and AA by the rating agencies which
- is consistent with our previous issue.
During the current year we began a cash management program utilizing a pooled investment account as explained in NOTE A to the Financial Statements which follow. Combining cash resources of several funds enables us to purchase larger and therefore more profitable investments.
We recognize the importance of electricity and water to our customers and the need to be less dependent on petroleum, as cited in the National I Energy Act. With this in mind, we are investigating other sources of power (coal, nuclear, and solid waste) in our continuing effort to provide reliable service as well as good quality water at reasonable costs to our customers.
C. H. STANTON Executive Vice President
- and General Manager Orlando Utilities Commission l
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I Ernst &Whinney certified Public Accountants 332 North Magnolia Ave.
P.O. Box 3426 Orlando, Florida 32802 305/841-2050 Orlando Utilities Commission Orlando, Florida We have examined the balance sheets of the Orlando Utilities Commission as of September 30, 1979 and 1978, and the related statements of income and accumulated retained earnings and 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 Orlando Utilities Commission at September 30, I 1979 and 1978, and the results of its operations and the changes in its financial position for the years then ended, in conformity with generally accepted accounting principles applied on a consistent basis.
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Orlando, Florida December 7, 1979 I
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I BALANCE SliEETS ORLANDO UTILITIES COMMISSION l
September 30 1979 1978 ASSETS UTILITY PLANT l In service: E Electric $201,202,982 $196,755,277 Water 47,911,304 43,899,677 g Common 11,838,795 11,668,344 E Allowances for depreciation and amortization (deduction) (90,266,585) (83,818,587) 170,686,496 168,504,711 Construction work in progress--Notes A and E 24,955,636 9,031,328 195,642,132 177,536,039 RESTRICTED ASSETS--Notes A and B Debt service funds 22,602,963 15,664,661 g Construction and related funds 44,826,980 18,402,724 g 67,429,943 34,067,385 CURRENT ASSETS Cash 161,270 356,084 Short-term investments 14,705,000 Pooled investments--Note A 10,900,283 [
Customer accounts receivable, less E allowance for doubtful accounts (1979--$217,318; 1978--$196,531) 11,367,933 8,311,813 E Accrued utility revenues 4,767,912 3,679,358 g Materials and supplies 7,050,995 5,810,235 Accrued interest receivable 154,524 218,136 Miscellaneous receivables, prepaid expenses and deferred charges 293,868 396,512 34,696,785 33,477,138 I
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$297.768.860 $245.080.562 I
w r-L September 30 1979 1978 r CAPITALIZATION AND LIABILITIES L
CAPITALIZATION Equity:
( Accumulated retained earnings:
Appropriated for debt service $ 17,962,375 $ 12,236,214 Invested in or appropriated for utility plant and working capital 103,994,673
{ 121,957,048 103,667,986 115,904,200 Contributed capital 5,884,072 4,515,014
[ 127,841,120 120,419,214 Long-term debt--Note C:
{ Bond principal Unamortized discount and expense 150,330,000 110,330,000 (deduction) (469,732) [ 149,860,268 277,701,388 110,330,000 230,749,214 CURRENT LIABILITIES--payable from restricted
[ assets Accrued interest payable on long-term debt 4,640,588 3,428,447
[ CURRENT LI~ ABILITIES--payable from current assets Accounts payable and accrued expenses
[ Customer meter deposits and interest 6,525,003 3,800,435 thereon 2,252,249 2,311,188 Collections for state and political '
h subdivisions 2,153,374 1,919,354 Due to the General Fund of the City .
of Orlando--Note D 2,099,070 484,578
{ 13,029,696 8,515,555 OTilER LIABILITIES Customer water and electric line
[ extension deposits 2,397,188 2,387,346 COMMITMENTS AND CONTINGENT LIABILITIES--Note E
$297.768.860 $245.080.562
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See notes to financial statements
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STATEMENTS OF INCOME AND ACCUMULATED RETAINED EARNINGS ORLANDO UTILITIES COMMISSION E
E Year Ended September 30 1979 1978 L
Operating revenues $118,948,769 $ 96,649,494 m
L Operating expenses:
Production 76,158,045 56,810,200 Transmission and distribution 5,000,302 5,155,871 Customer accounting 2,092,358 1,988,964 General and administrative 5,527,792 4,826,196 State utilities tax 1,065,693 1,023,166 m Consumer education 118,844 111,411 L- Payments to the General Fund of the City of Orlando--Note D 3,032,403 2,860,474 92,995,437 72,776,282 OPERATING INCOME 25,953,332 23,873,212 Depreciation--Note A 7,496,659 7,412,202
{ 18,456,673 16,461,010 Interest and other income 5,466,360 3,349,538 23,923,033 19,810,548 Other deductions--principally interest 7,601,185 5,342,253 INCOME BEFORE EXTRAORDINARY ITEM 16,321,848 14,468,295 Extraordinary item--gain on advance refunding of long-term debt--Note G 11,686,231 NET INCOME 16,321,848 26,154,526 l
Accumulated retained earnings at
, beginning of year 115,904,200 96,009,674 l 132,226,048 122,164,200 Less transfers to the General Fund of l the City of Orlando--Note D (10,269,000) (6,260,000) l ACCUMULATED RETAINED EARNINGS AT END OF YEAR $121.957.048 S115.904.200 See notes to financial statements 1
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STATEMENTS OF CHANGES IN FINANCIAL POSITION ORLANDO UTILITIES COMMISSION Year Ended September 30
{ SOURCE OF FUNDS 1979 1978 Income before extraordinary item $16,321,848 $ 14,468,295 Charges to operations not requiring current
[ outlay of working capital:
Depreciation and amortization 7,948,773 7,810.044 Amortization of bond discount and expense 2,747 46,867 h TOTAL FROM OPERATIONS BEFORE EXTRAORDINARY ITEM 24,273,368 22,325,206 Extraordinary item--gain on advance refunding
{ of long-term debt Amortization of bond discount and expense not 11,686,231 requiring current outlay of working capital 1,308,769
[ TOTAL FROM OPERATIONS 24,273,368 12,995,000 35,320,206 Proceeds from the sale of revenue bonds 40,000,000 110,330,000 Contributed :apital 1,369,058 772,737
[ Increase in t wcricted liabilities Increase in other liabilities 1,212,141 9,842 830,568 439,102 66,864,409 147,692,613
{ APPLICATION OF FUNDS Additions to utility plant--net 26.054,866 9,055,228 Transfers to the General Fund of the City of Orlando
[ Reduction of long-term debt Increase in restricted assets 10,269,000 6,260,000 126,885,000 33,362,558 522,617 Expenses attributable to sale of revenue bonds 472,479 ( 70,158,903 142,722,845 INCREASE (DECREASE) IN WORKING CAPITAL $(3,294,494) $ 4.969,768 CHANGES IN COMPONENTS OF WORKING CAPITAL Increase (decrease) in current assets:
Cash (194,814)
[ Investments (3,804,717)
$ 56,833 8,105,000 Customer accounts receivable 3,056,120 1,763,579 Materials and supplies 1,240,760 (1,102,028)
{ Other receivables and accounts 922,298 1,219,647 (1,896,378) 6,927,006 Increase (decrease) in current liabilities:
Accounts payabic and accrued expenses 2,724,568 1,222,660
{ Utility plant construction contracts (23,466) j Customer meter deposits and interest thereon (58,939) 373,240 Collections for state and political
[ subdivisions.
Due to the General Fund of the City of Orlando 234,020 221,609 1,6?4,492 163,195 4,510,141 1,957,238 INCREASE (DECREASE) IN WORKING CAPITAL S(3,294,g) f 4,969.768 See notes to financial statements
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L NOTES TO FINANCIAL STATEMENTS I
L ORLANDO UTILITIES COMMISSION I-L NOTE A--
SUMMARY
OF SIGNIFICANT ACCOUNTING POLICIES L
Utility Plant: Utility plant is stated at original cost of construction which includes payroll and related cost, general and administrative cost p and cost of equipment used in construction. It is the policy of the L Commission not to capitalize interest during~ construction.
Undivided Interest in Joint Projects: The Commission accounts for undivided
[ ownership interests in electric generation plants with other utilities based on the pro rata share of the projects' assets, liabilities, revenues and expenses.
[ Depreciation and Maintenance: The utility plant is being depreciated using the straight-line method, at rates calculated to amortize the cost over the estimated economic useful lives of the assets. Such amounts are charged h to depreciation or operating expense.
l The Commission charges maintenance with the cost of repairs and minor l
{ renewals of property, and the plant accounts with the cost of renewals and j replacement of property units. The cost of significant unusual repairs are deferred and amortized over periods not exceeding 24 months.
Pooled Investments: During the year ended September 30, 1979 the Commission i created a pooled investment account whereby all investments (restricted and '
unrestricted) excep( for those in the Invested Sinking Fund, have been
( placed in this account. The investments consist mainly of time certifi-cates of deposit, debt instruments of federal agencies, and securities held under repurchase agreements. These investments are carried at cost,
{ which approximates market. Pooled investments by classification at September 30, 1979 consisted of $60,600,957 in restricted assets and
$10,900,283 in current assets. (See Note B)
Materials and Supplies: Materials and supplies are stated at average cost.
Reclassifications: Certain items on the balance sheet as of September 30,
( 1978 have been reclassified to be comparative to current year classifications.
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NOTES TO FINANCIAL STATEMENTS--CONTINUED ORLANDO UTILITIES COMMISSION NOTE B--RESTRICTED ASSETS Restricted assets consist of the following funds:
September 30 Increase 1979 1978 (Decrease)
Sinking Fund $11,158,485 $ 6,417,412 $ 4,741,073 Sinking Fund Reserve 11,444,478 9,247,249 2,197,229 Renewal and Replacement Fund 7,226,621 6,288,426 938,195 Construction Trust Funds 37,600,359 12,114,298 25,486,061 TOTALS 16L 4_29.943 $34.067.331 $33,362.558 The above funds are classified in the balance sheet as:
Debt service funds $22,602,963 $15,664,661 $ 6,938,302 Construction and related funds 44,826,980 18,402,724 26,424,256 TOTALS 167,429,943 S34.067.385 1311(L2.,518 The funds consist of:
Cash and Certificates of Deposit $ 1,648 $ 4,375,505 United States Treasury securities--
at cost (approximate market value: 1979--$5,691,000; 1978--
$25,875,000) 5,690,407 25,754,567 Short-term investments 3,479,000 Pooled investments--Note A 60,600,957 Interest receivable 1,136,931 399,355 Orlando Utilities Commission Revenue Bonds--at cost 58,958 TOTALS $h7,429.943 $34.067.385 l
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NOTES TO FINANCIAL STATEMENTS--CONTINUED F ORLANDO Uf1LITIES COMMISSION L
NOTE C--LONG-TERM DEBT
{ By resolution dated April 18, 1978 and amended May 15, 1978, the Commission provided for the advance refunding of all of its water and electric revenue bonds outstanding at April 1,1978 in the aggregate principal amount of
$123,325,000 (Refunded Bonds) by the sale of $110,330,000 Water and Electric
[ Revenue Refunding and Improvement Bonds, Series 1978 and $94,650,000 Special Obligation Bonds, Series 1978. From the proceeds of the sale of the two issues, monies were invested in United States obligations in an irrevocable
[ Escrow Deposit Trust Fund. Such United States obligations will mature at such time and in such amounts so as to provide sufficient funds for the payment of maturing principal and interest on the Refunded Bonds. All
{ interest earned or accrued on the United States obligations has been pledged and will be used for the payment of the principal and interest on the Special Obligation Bonds, Series 1978. The Refunded Bonds are treated as extinguished debts in the accompanying financial statements even though the Refunded Bonds
[ do not have a provision for defeasance. The transaction has been accounted for in the same manner as a defcased transaction because the obligation of the Commission for the Refunded Bonds has been satisfied in substance al-( though not in form.
On July 27, 1979 the Commission issued $40 million Water and Electric
{ Revenue Refunding and Improvement Bonds, Series 1978A as part of the April 18, 1978 resolution, as amended.
The Series 1978 and 1978A are payable from and secured by a first lien
[ upon the pledge of the net revenues derived by the Commission from the operation of the water and electric system and from investment income earned on monies and obligations in certain sinking fund accounts.
[ Bonds outstanding as of September 30 are as follows:
{ 1979 1978 1978 series, 5.8%-6.375%, due serially 1994 to 2008 $110,330,000 $110,330,000
[. 1978A series, 5.6%-6.4%, due serially 1993 to 2008 40,000,000 { TOTALS S150.330.000 S110.330.000
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l NOTES TO FINANCIAL STATEMENTS--CONTINUED l ORLANDO UTILITIES COMMISSION l
l NOTE D--PAYMENTS AND TRANSFERS--GENERAL FUND OF THE CITY OF ORLANDO The Commission makes payments based on gross revenues from services within the City to the General Fund of the City of Orlando which are considered operating expenses. The Commission transfers additional monies to the I General Fund of the City of Orlando based on the Commission's income.
NOTE E--COMMITMENTS AND CONTINGENT LIABILITIES l
(1) By resolution, the Orlando Utilities Commission, on July 12, 1955, appropriated $180,000 annually for a period of 26 years commencing l April 1, 1955, for the retirement of the Sewer Revenue Bonds of the City of Orlando dated April 1, 1955, in the amount of $5,438,000. By an agreement between the City and the Orlando Utilities Commission, the l Commission may offset this contribution against the City of Orlando utilities tax. The agreement whereby the Commission pledges $180,000 of its revenues annually has become a part of the agreement between the City of Orlando and the bondholders and, therefore, it is a contingent liability ranking junior only to obligations of the Orlando Utilities Commission to the holders of its Water and Electric Revenue Bonds. This liability becomes payable only if the utilities tax is inadequate and thereafter l the City fails to reimburse the Commission from other utility tax revenues and also fails to levy a sewer tax as required.
(2) On December 22, 1969, the Orlando Utilities Commission pledged $480,000 of its annual revenues in connection with the issuance by the City of .
Orlando of $5,500,000 Improvement Revenue Bonds. This pledge is for a I period of 22 years from the date of issuance by the City of the Improve-ment Revenue Bonds or such longer period as shall be required to pay and retire all principal and interest on said bonds. This lien on the revenues derived from the Utilities shall be junior and subordinate ;
to the lien of the holders of any obligations of the Commission out- l standing or pari passu obligations hereinafter issued for purposes of !
the Commission, and to the annual payment for the retirement of the l Sewer Revenue Bonds described in the preceding paragraph, but shall I be prior and superior to any lien, pledge or encumbrance hereafter made of such revenues for any purposes other than said obligations of this Commission for water or electric purposes, and said annual Sewer Revenue Bond payment.
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L l NOTES TO FINANCIAL STATEMENTS--CONTINUED l I ORLANDO UTILITIES COMMISSION L
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NOTE E--COMMITMENTS AND CONTINGENT LIABILITIES--CONTINUED
[ (3) The approximate cost to complete construction contracts in progress entered into as of September 30, 1979 is $12,900,000. It is currently anticipated that additional. future expansion program costs, planned for the next three years will approximate $85 million. These amounts in-
{ clude a joint project with the City of Lakeland to construct a 364 MW steam-clectric generating plant to be located in Lakeland. The r Coumission will have a 40% ownership in the generating plant and be L entitled to 40% of its capacity.
(4) The Commission leases real estate for a fuel supply terminal under an
[ operating lease through the year 2023. Future minimum payments for this lease at September 30, 1979 are $11,880 annually.
(5) The Commission has filed a claim against the bonding company of a con-
{ tractor alleging damages for delays in the performance of'certain construction contracts. If the Commission is unable to show delay p damage, retainages of approximately $500,000 would be.due the contractor.
L The accompanying financial statements do not include a provision for liability, if any, that may result from settlement.thereof.
[ (6) The Commission was one of the defendants in an alleged class action lawsuit brought against the City of Orlando and Orange County, as well as the Commission. The lawsuit sought to enjoin the making of payments
{ by the Commission to Orange County of one percent (1%) of the Commission's gross electric revenues earned outside the City and to require repayment of the amounts paid amounting to about $12,000 per month since March (
p 1973. Secondly, it sought to enjoin the Commission from paying to the l L Ceneral Fund of the City any part of the Commission's net income, which is currently the practice. The complaint was amended February 7, 1978, to allege that rates charged for utilities services are unreasonable,
{ that payment for certain expenses are unreasonable and to seek an injunction for overcharges from 1970 to date plus attorneys' fees.
The court has decided in favor of the defendants. The plaintifs,
{ however, have filed an intent to appeal the decision.
(7) The Environmental Protection Agency has issued a permit for the
( Commission's Indian River electric generating plant which requires L the Commission to provide an off-stream water cooling system for such plant by some date in the mid-1980's in the event that an ecological study, in the opinion of the Agency, shows that the present cooling
{ system is doing substantial damage to the ecological system of the
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NOTES TO FINANCIAL STATEMENTS--CONTINUED ORLANDO UTILITIES COMMISSION E
L NOTE E--COMMITMENTS AND CONTINGENT LIABILITIES--CONTINUED adjacent portion of the Indian River. The cost to the Commission of u such study is estimated to be $1,300,000 of which approximately $800,000 has been incurred as of September 30, 1979. The final determination 7 of the Agency is appealable to the courts. If construction of off-L stream cooling facilities were begun now, it is estimated that they would cost approximately.$20,000,000.
{ (8) In August 1978, the Commission adopted a plan of paying employees having at least two years of employment for a' portion of their. unused sick leave accumulated at the date they terminate or retire. The p maximum estimated liability, calculated on the basis of unused sick j L leave for cligible employees at September 30, 1979 is approximately
$775,000. It is the policy of the Commission to record the costs {
of the plan only as benefits are paid. Benefit payments for the
[ year ended September 30, 1979 were $38,508.
{ NOTE F--PENSION PLAN The Orlando Utilities Commission has a pension plan covering substantially all employees. The total pension expense for the years 1979 and 1978 was
[ $1,622,763 and $1,390,132, respectively,.which includes amortization of past service costs over a period of approximately 30 years. The funding method used is the entry age normal with the initial unfunded accrued
{ liability frozen. Funding is by a Deposit Administration Contract. As of September 1, 1979, the anniversary date of the plan, the Pension Fund assets exceeded the actuarially computed value of vested benefits.
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NOTE C--EXTRAORDINARY ITEM As a result of the April 1978 advance refunding of the Commission's out--
standing revenue bonds as explained in Note C, a gain was recognized in accordance with generally accepted. accounting principles. The recorded
{ gain (non-current cash) was computed as follows: l Net carrying amount of refunded debt $123,325,000
[ Less unamortized discount and issue costs 1,308,769 L 122,016,231 Refunding bonds issued 110,330,000
[ GAIN (NON-CURRENT CASH) ON ADVANCE REFUNDING OF BONDS $ 11.686.231 l
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L NOTES TO FINANCIAL STATEMENTS--CONTINUED F
L ORLANDO UTILITIES COMMISSION NOTE Il--BUSINESS SEGMENTS '
[ The Commission operates in two business segments, the generation, trans-mission and distribution of electricity and the production, treatment, transmission and distribution of water. A summary of the segment informa-r- tion is summarized below:
L Electric Water Administration Total Year Ended
( September 30, 1979 Operating revenues $109,940,707 $ 9,008,062 $ $118,948,769 Operating income 21,950,648 4,002,684 25,953,332
[ Identifiable assets 243,607,004 42,579,933 11,581,923 297,768,860 Depreciation 6,485,817 1,010,842 7,496,659 j Capital expenditures 23,463,953 2,744,463 26,208,416 l Year Ended September 30, 1978
[ Operating revenues $ 88,289,612 $ 8,359,882 $ $ 96,649,494 Operating income 20,094,153 3,779,059 23,873,212 Identifiable assets 195,214,805 42,331,574 7,534,183 245,080,562 Depreciation 6,463,830 948,372 7,412,202 Capital expendi*ures 7,078,492 2,142,883 9,221,375
( Operating revenue of the electric segment includes approximately $13 million in interchange sales to another utility for each of the years ended September 30, 1979 and 1978.
NOTE I--INCOME TAXES In the opinion of the Commission and its counsel, the enterprise is exempt from federal and state income taxes.
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