ML19309F890
| ML19309F890 | |
| Person / Time | |
|---|---|
| Site: | Seabrook  |
| Issue date: | 04/30/1980 |
| From: | MASSACHUSETTS MUNICIPAL WHOLESALE ELECTRIC CO. |
| To: | |
| Shared Package | |
| ML19309F878 | List: |
| References | |
| NUDOCS 8005010560 | |
| Download: ML19309F890 (44) | |
Text
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ANNUAL REPORT 1
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A'L- s s . ~ g- ,. d ~ y Planning for future electric supply: economic baselord power is essential. In 1979, member managers and commissioners inspected jointly-owned nuclear powcr plants under construction in New En; land. On the cover: a temporary geodesic dome covering the Seabrook nuclear containment building offered winter protection for construction activity in 1979. 1
1979: Challenge and accomplishment
Dear members,
A decade ago MMWEC was established as Regulatory approval of energy forecast a bulk power supply agency intended to MMWECs 1978 Annual Supplement to serve Massachusetts municipal electric the long-Range Forecast was approved in systems. During its ten-year history, January 1979. The decision was conditioned MMWEC has changed from a struggling upon an expanded staff effort to produce a infant agency to a rapidly advancing power significantly improved data gathering system supply agency, and from a non-profit hybrid and methodology for forecasting the load electric company to a public corporation; growtli of MMWECs;31 varied member MMWECs goals are simple and _ direct: ' To . systems. Du' ring 1979,IWMWECs staff provide an adequate power supply for endeavored to develop' accurate forecasts of Massachusetts municipal electric systems at future electric demand for each town. A the lowest possible cost, consistent with decision on the 1979 supplement is sound public policy. anticipated in 1980. MMWEC has realized success in meeting Alternate energy resource development its goals. It is now well on its way toward As energy costs increased, hydroelectric 3 furnishing its members with adequate bulk power and resource recovery (refuse-power supplies and, by the end of 1979, buming) plants became increasingly attractive MMWEC member systems realized savings and possibly cost effective. In September, the totaling $11,800,000. Board of Directors approved a $5 million The Stony Brook Project " renewable resources" fund, a portion of Construction of the Stony Brook Project which is intended to develop potential hydro was suspended for the first five months of sites in the region. MMWEC has received 1979. On June 1, the Department of Energy proposals from interested developers of determined that the Intermediate unit was resource recovery plants in 1979, and exempt from certain fuel use restrictions, and ownership interest in wood-buming plants is construction resumed immediately. At year also being studied. end, the project was on schedule and increased membership within budget. On October 19,1979, the Merrimac The $150,000,0001979 Series A Bonds, Municipal Light Department formally joined MMWECs first long-term financing for the MMWEC as the 31st member community Stony Brook Intermediate unit, issued in and will continue to receive staff support in August, received a favorable net interest rate 1980 to evaluate power supply requirements of 7.0069%. In late 1979, MMWEC issued and power supply alternatives. MMWECs
$35 million in short-term notes to finance membership now accounts for approximately constmction of the Stony Brook Peaking unit. 75% of the peak load of all the municipal Baseload power supply progress electric systems in Massachusetts.
Twenty MMWEC member systems and With the cooperation of the membership, ten non-member systems executed Power MMWEC looks forward to meeting future Sales Agreements with MMWEC in challenges with continued success. Through September,1979, for participation in power the development of an economic and supply from the Seabrook nuclear power dependable power supply program, the project. The recent participant commitment annual savings in power costs will continue of 138 megawatts represents an added 6% of to increase as the advantages of MMWECs the project, bringing MMWECs total program are realized. commitment to 11.59% of the project. g MMWEC is currently involved in final M. negotiations with the New Brunswick Power Francis H. King, Presidenf Commission for 100 MW of contract power from its Point lepreau nuclear power plant. The term of the contract will be six to nine T f
, years beginning in 1981. James E. Baker, Chairman 1-4 i
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1o- u.. n m:i; 4 .ti - c , 4. ,c- r. ,. Trernendous rnanpower and snaterials are needed to build projects the scale of the 1,150 M1V Millstone 3 nuclear power plant. The project will provide rnernber l participants with 35 MtV of baseload power. l l 1 4; '*\ l l 2 I
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l The power of cooperation Economic electricity is essential to throughout the booming '60's. Nuclear municipal development. Since its inception, power, once viewed as the solution to hih1WEC's primary goal has been to develop economical, clean and safe power supply, l an economic power supply mix for each has lost its original public favor. A lack of individual member system. In order to coordinated government decisions has t realize that goal, several objectives were resulted in nuclear waste disposal and I originally set: to participate fully in the New nuclear plant siting problems, while federal England Power Pool (NEPOOL); to minimize and state red tape continue to increase the power costs through long-term contracts and cost and delay the construction of nuclear I joint ownership interests in regionally power plants. The cost of building nuclear planned generating units; and to arrange the power plants has increased seven-fold while orderly replacement of expensive wholesale planning and construction time has doubled power purchases with electric power in the past twelve years. Financing nuclear
, resources financed by hih1WEC. These power plants has become more difficult, and objectives have successfully been met delays in on-line dates add to the difficuhy through the cooperation and dedication of of planning optimum power supply mixes the membership and hih!WEC staff. for h1h1WEC members. > Individually, hiassachusetts municipals are The federal government has urged the limited in what they can accomplish. electric utility industry to shift to coal as a Collectively, they have proven the effective- prime fuel source. In the industrial northeast, ness of joint action and cooperation. the conversion to coal will require consider-The 1979 dimate able expense for pollution equipment and Uncertain energy resources, rising energy transportation of fuel. Efficient oil-fired power costs, public reaction to higher electric bills plants will contribute to electric energy and new emphasis on conservation and load supplies in the northeast for many years.
management have significantly changed the The purpose of Stony Brook focus of the electric power industry. l.ocated in Ludlow, h1assachusetts on a Dramatic shifts in national energy policy 470 acre former military weapons storage in the past two decades highlight the site, the Stony Brook power plant is the challenges to power supply planning cornerstone of the h1N1WEC power h1N1WEC now faces. The use of " cheap and supply program. inexhaustible" oil and natural gas was urged The oil-fired intermediate and peaking
, units are now under construction. The inter-
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~ ' ~ mediate unit will produce 30-40% more power by capturing gas turbine exhaust heat A and converting the heat into steam, which is M used to generate electricity without the use 4 .7 of additional fuel. While oil is one of the most efficient fuels to use in a combined-8m cycle unit, the power plant has been g7g ,
designed to utilize natural gas or synthetic fuels when available. ' Stony Brook is intended to fulfill a specific role in meeting municipal power needs. Of the total 511.000 kilowatts of power Stony
. Brook will produce, 341,000 kilowatts is
- 7. termed " intermediate" power - power normally used on weekdays when demand A is fairly high. 170,000 kilowatts of " peaking" f*
. ( s power.is, intended to be used at times of high demand. Stony Brook will replace
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At the Stony Brook Project, foundation construction began in early June,1979. Steel circulating water pipes were encased in rebar during the surnoner. Approxirnately 38% of the project's 18,000 cubic yards of concrete were poured by year end. J !. , I n '; n s-- 4 si.aiQ t est ps% *% s , Y
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- Stony Brook: dramatic progress On December 21,1978, the N1N1WEC e Board of Directors suspended con ,truction at . , c4k Stony Brook pending the appeal of the initial i b. " .., negative decision of the Department of 4- Energy. On June 1,1979, the DOE .jdihy l
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announced its decision to classify Stony Brook as an " existing" power plant. The l ~ favorable decision was the welcome culmina-tion of seven long months of intensive staff l ' efforts to demonstrate to the federal govern-ment the crucial role Stany Brook plays in N1N1WEC power supply development. After the five month construction delay, construction activity resumed at a dramatic pace. The current status of the Stony Brook 4 Project is a source of pride to N1N1WEC and a credit to the coristruction workforce. The overall construction progress of the Intermediate and Peaking project was esti-mated at 14% at year end. Despite the construction delay, Stony Brook wdl meet its projected commercial on-line dates. Out of 89 contracts necessary to complete the project, thirteen remain to be awarded
- , in 1980.
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Major licensing activities complete r By mid-year, all of the major licenses for the construction of Stony Brook were New England Power Pool's transmission facilities in I udlow, Massachusetts. R '.'<. Beck and Associates is estimated to be 65%
) received. The Massachusetts Department of complete on engineering for the Environmental Quality Engineering construc- transmission line.
tion permit was received on January 31,1979. Construction activity vigorous On April 18, the U.S. Ensironmental There were approximately 120 construc-Protection Agency determined that the units tion workers on site in 1979. Progress was met the Federal Clean Air Act requirements rapid and highly visible. and issued a Prevention of Significant Following the site preparation work of Deterioration permit which acknowledged 1978, construction focused on the foundation that the air quality in the vicinity of the of the powerblock area, the water storage power plant will meet federal standards. On tanks, fuel oil tanks and fuel oil day tank. July 25, the Massachusetts Department of The fou-Laon for the powerblock area was Public Utilities granted authority to MMWEC virtually complete and 38% of the project's to construct and use the 345 kV transmission 18,000 cubic yards of concrete had been line planned to interconnect the project with poured by the end of the year. the New England transmission network. The structural steel that provides the Further licenses and permits will be appl skeletdngir..tf4 power plant was 35% for as construction acthity progresses.; ',ied' eldon D Project engineering in final ~ stages , , [, , (ii c6mp[Octiifn stebfe i'n{cember 31,1979. the area of the major Complete Bechtel Power Corporation is the architec't- generating equipment was finished in early engineer for the Stony Brook units. At year December. The Intermediate unit gas end, Bechtel estimated power plant engi- turbines generators and related accessories neering to be 87% complete. All major were placed on their respective foundations. purchase orders had been placed and The steam turbine pedestal, peaking unit gas mechanical and civil drawings were 95% turbine foundations and major tank
, complete oy December 31,1979. foundations were also complete in 1979.
RW. Beck and Associates is architect- A railroad line planned to bring major engineer for the switchyard and transmission generating equipment on site and serve as j line at Stony Brook. The 115/345 kV backup for fuel delivery was completed in - switchyard will be located immediately east late November. Repeated equipment deliver-of the plant on approximately eight acres. ies were made by rail, including three gas RW. Beck and Associates is estimated to turbines, associated generators and the three be 65% complete on engineering for heat recovery steam generators. J the switchyard. l the planned transmission line route will
- connect the Stony Brook switchyard to the 1
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l 1 1 l t l l 1 Fuel supply under negotiation ! Iong-term sources of No. 2 fuel oil were i investigated extensively in 1979. Invitations
; to bid were mailed to potential oil suppliers in September. Responses from several firms have been positive and contract negotiations
, are proceeding. MMWEC's primary objective is to have more than one oil supplier with a ! secure source of crude oil and refinery
- capability. A principal concern is that any i source of fuel be independent from existing supply in New England.
l Supplying MMWEC's oil requirements will a depend upon market conditions and govern-ment regulations; because of the uncertainty j of on orpply, MMWEC is strengthening its i commitmen.: to study alternate fuel sources, i D i
, including surplus natural gas and synthetic 1
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- fuels. A preliminary study of alternate fuels was completed in 1979.
- MMWEC is negotiating for the transport
! of fuel oil through two common carrier
; pipelines. The location of the Stony Brook I
Project allows inexpensive delivery since
. . . both pipelines are in the plant vicinity. One pipeline originates in the port of New Haven, Co n ut and another pipeline extends from the port of East Providence, Rhode Island. Dedicated storage capacity and terminalling services are anticipated in New Haven, with alternate capacity in East Providence. The offsite storage capacity will
{g be in addition to tFe 400,000 barrels of storage at Stony Brook.
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! Overleaf: In early December, the three mammoth heat recovery steam generators [hlii{h will utilize
' exhaust heat, producing 30-40% more power, were carefully assembled
; unthin the structural steel skeleton.
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l3 - - v. y-Financing the Stony Brook Project cost of the 1979 Series A bond issue was Bet htel Power Corporation estimates the 7.0069% Viewed as favorable when first protect to cost $155 7 million. The Intermedi- issued, the Series A interest rate appeared ate urut is espected to cost $109,008,000 and much more favorable when the market later the Peaking unit is espected to cost deteriorated substantially. A portion of the
$46,e>42,000 RW. Beck and Associates proceeds was used to pay $64 million of estimates the transmission line and switch- notes issued for the Intermediate project.
vard to cost $8 5 million. The total estimated On December 4, MMWEC issued $35 hnancing required for the project is $251.3 million in short-term notes to finance milhon including interest dunng construction of the Peaking project. The new constructmn, allowances for contingencies, loan was issued at 60% of the prime rate reserse fund requirements, financing costs and matures January 2,1981. Five million and adnunistrative expenses. Contracts or dollars in notes were repaid from the purchase orders for equipment. construction proceeds. long-term financing of the Peaking and site work through 1979 totaled project is anticipated during 1980.
$130.540.000 or 80% of the total cost of the units in August 1979, MMWEC closed a bond issue of $150 millioo to finance a substantial portion of the construction of the Stony Brook Intermediate unit. The net interest 9
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l)espite a five rnonth construction , delay, Stony Brook was on schedule and within budget. The oil-fired 5 -- ----- -- cornbined-cycle power plant will provide rnern! sus and the region with a ,, L _ - . _ . - _ . secure source of electric energy to rneet Iheir needs efficientIy and econornically w 4 .r # during a tirne when unany units have l faced substantial delays.
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Electric power supply embargo, the average annual demand growth MMWEC offers its members centralized rate has been 3.7%. Events fo!!owing the and coordinated planning, arid provides oil embargo have radically affected forecasting methods, however. professional services at low cost with atten. tion to diverse local requirements. In 1979, The forecast proposed in 1979 is based on MMWEC plant.ing engineers helped a significantly improved data gathering members to improve agreements with their system and methodology. With the projected existing suppliers and make short-term effects of greater energy conservation measures on electric demand, the forecast purchases where appropriate. averages 2.2% growth after 1985. Approval Savings to members f MMWEC's forecast is anticipated in 1980. Through careful monitoring of each member system's seasonal power require. Baseload power acquisitions ments, and analysis of capacity offerings MMWEC power planning engineers study throughoui NEPOOI. MMWEC was able to the long-term requirements of the members recommend several short-term unit power and the resources in the region available to contracts which produced substantial power meet those requirements. Joint action is cost savings to the members. the most effective and mutually beneficial During 1979, MMWEC initiated short-term way to plan for, acquire and finance contracts for capacity from Vermont Yankee, generating capacity. Canal 2. Middletown 4 and Montville 6, as On September 27,1979, twenty MMWEC well as surplus capacity within the MMWEC members signed Power Sales Agreements systems. These contracts, combined with for additional output from Public Service of esisting long-term contracts and service New Hampshire's Seabrook nuclear power contracts with each system's major supplier, project. This purchase, known as Project 6, produced approximately $1,500,000 in power includes 28 MW for ten non-member partici-cost savings in 1979. Pants and 110 MW for member participants. With the addition of Project 6, MMWEC's The Vermont Yankee purchase of 28 megawatts for the summer periods of 1979, ownership share in Seabrook will be 11.6% 1980 and 1981 resulted in nearly $100,000 in or 267 MW. The additional Seabrook interest included an agreement between MMWEC energy savings in 1979. Capacity exchanges between members and PSNH which will permit members, at effectively balanced the surpluses and their option, to sell capacity which is surplus deficiencies in power requirements within t their needs to PSNH during a sr fied MMWEC. An average of 23 megawatts of peri d of time. This agreement will increase capacity was exchanged in 1979, resulting in member flexibility in planning future power approximately $340,000 in savings. supply by a!!owing members to tailor their mix f res urces to their best advantage, Total savings to MMWEC members since entering into the Power Supply Program are Tne Massachusetts Department of Public Utilities hearings will begin in mid-March approximately $11,800,000. 1980 on MMWEC's petition to finance Forecasting future electric demand Project 6. When this approval is obtam, ed, , Accurate forecasting of members' energy h1MWEC will finance and acquire ownership requirements is fundamental to MMWEC's Project. power supply development. The task of Inter 8m Power supply projecting the future electric demand of MMWEC has been searching for interim diverse member systems located across the Power supplies to offset the delayed i state is complex. In 1979, special emphasis schedules of New England baseload units. was placed on forecasting the effects of The New Brunswick Electric Power I potential conservation and load manage-Commission has entered into final negotia-ment programs. ti ns that are expected to lead to a contract Historically, MMWEC members' growth has been somewhat higher than other m early 1980 for the purchase of 100 MW of I
- regional utilities. Since 1974 and the Arab oil Power to be supplied between 1981 and i
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d i 4 The power supply program
% of Total Proposed - Operaion Date/
Ownership Interest Unit Capacity Status Fouil-fueled resources 4 W.F.Wyman Unit 4 3.67 22.0 MW on-line (oil) Stony Brmk Peaking Units 100.00 170.0 MW 1982 (oil) Stony Brook Intermediate Units 90.76 309.1 MW 1981 i (oil) Sears Island Uriit 1 13,90 78.9 MW 1987 (coa!) TOTAL 580.0 MW Nuclear resources Seabrook Units 1 & 2 11.59' 266.6 MW* 1983/85 Mdistone Unit 3 4.80 55.0 MW 1986
- Pdgrim Unit 2 13.24 152.3 MW 1985 Montague Units 1 & 2 1.45 33.3 MW indefinite TOTAL 507.2 MW Total resources 1087.2 MW
*t,nludes 28 Af W contrated for by ten non-member participants.
138 Af W or 6 0091%f Seabnna is pending regulatory approval and financing 1989 from $~ Point lepreau Unit I nuclear In 1979, MMWEC perf3rmed a siting , power plant. study to identify potential sites for hydro Additional analyses are also underway at development. Thirty-one sites were identi-i the New England Power Pool (NEPOOL) for fled and proposals for feasibility study work obtaining additional Canadian power, were solicited. Five categories were including surplus hydro from Quebec. described in the invitation to bid announced MMWEC would have the opportunity to in November. The categories range from participate in any NEPOOL purchase, small hydro projects of one-half to five MW Activities also proceeded on MMWEC's each to a major joint ownership development application for an allocation of the Power of 30 MW. Authority of the State of New York's Niagara MMWEC has also been negotiating for up hydro power project. This baseload hydro to 15 MW of the Lowell hydro project power would be purchased under a long- planned for development on the term contract. Merrimac River. Trash, wood and wind were studied as Alternative energy sources . fuel sources in 1979. Several refuse burning As fuel costs escalated in 1979, the ' power plant proposals were analyzed and economic viability of alternate fuel sources consultants with expertise in state-of-the-art increased. Significant progress was made in technology were retained to provide the analyses of hydro, resource recovery and technical guidance. Action is expected in wood-fired power resources. 1980 on one or more of the trash proposals In July of 1979, the Board of Directors currently under analysis, announced its commitment to spend up to The possibility of joint ownership or a
$50 million for the development of hydro- long-term purchase from a 50 MW wood-electric power. Subsequently, MMWEC burning power plant proposed in Burlington, authorized funding for a $5 million renew- Vermont is under investigation.
able energy resources development program MMWEC also began planning wind data as part of Project 6. collection studies for members in 1979
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l 18
The financing program and Support Services. The Construction In order to finance construction or o vner- Department, Communicasans Department ship interests in joint electric generating and Staff Legal Counsel were also organized projects, MMWEC issues electric revenue to improve functional accomplishments. bonds. The authority to issue revenue By the end of 1980,114 employees, bonds is granted by Chapter 775 of the including nine positions for plant operators, Massachusetts Acts of 1975. A total of $595.5 are expected to be on the staff. The Board of million in outstanding revenue bonds and Directors authorized MMWEC to build a notes have been issued to provide capital for new, energy efficient and economical office the purchase of generating resources. The building to accommodate the expanded staff. estimated financed cost of 1,060 MW of The building is scheduled for completion in generating capacity in the power supply late 1980. system is in excess of $1.5 billion- The 1980 goals After take-or-pay power sales agreements The following represent key goals which have been signed by interested participants, we expect to achieve during the coming year: the Massachusetts Department of Public 1. Receive regulatory approvals and finance Utilities must approve financings. To date. Project 6, the Stony Brook Peaking
$1,085 billion in revenue bonds have been project and other possible power approved by the DPU. projects.
Because of the successful electric depart-
- 2. Acquire power resources as needed to ment operations and excellent credit of the meet member needs in the most economic members MMWEC has one of the best joint manner possible.
action municipal system bond ratings in th! 3. Make definitive progress in hydro, resource nation: "A+" by Standard & Poors and "A recovery, and other alternatives, by Moody's.
. where economic.
It is anticipated that the 1980 fm.ancmg
- 4. Assist members in establishing an active program will include funds to complete the conservation program.
financing of the Stony Brook Project and . 5. Contract for secure fuel sources for the the mitial financing for Proj,ect 6. In addition, Stony Brook Pred ct. funds may be obtamed for other possib!? 6. Acquire the necessary permits for project nuclear ownership interests and alternative ,cgiyg,;,,, energy resource development programs such
- 7. Begin a siting study for a coal plant and as hydro, resource recovery and wood-prepare an overall siting program.
burning power plants.
- 8. Complete the new administrative building.
Administrative accomplishments I would like to express my appreciation to in order to achieve the substantial the members, the Board of Directors and the accomplishments of 1979, considerable staff employees for their support during this past expertise was required. Since December 31, year. I look forward to continued challenges 1978, the MMWEC staff more than doubled and accomplishments in 1980. The goals set from thirty-five employees to eighty by the for the coming year will require censiderable end of 1979. The staff additions are primarily effort; I am confident that the challenges professional, including engineering, will be met. accounting and management personnel The increased staff and expanded respon- d sibilities of MMWEC called for a rearrange- Phillip Otness, General Manager ment of functions to improve efficiency and management effectiveness. In June, three key division manager positions were created: Finance and Treasury, Power Management, I = .
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The MMWEC membership The Massachusetts Municipal Wholesale electric utilities in the nation. Electric Company is a political subdivision of Any Massachusetts municipal electric depart-the Commonwealth of Massachusetts ment may become a member of MMWEC inaugurated May 27,1976 as a public following authorization by a town meeting or corporation. city governing body. The MMWEC member municipals were At the close of 1979, the thirty-one member established between 1889 and 1915. They are cities and towns provided electric power to among the oldest, most experienced public well over half a million people. ( 1) Ashburnham Municipal Light Plant (17) Merrimac Municipal Light Department Robert Gould. Manager Theodore Van Nahl, Manager ( 2) Boylston Municipal Light Department (18) Middleborough Gas & Electric Department Edward Kimball Manager Clifford Engstrom, Manager ( 3) Braintree Electric Light Department (19) Middleton Municipal Light Department Donald Newton, Manager Mark Kelly, Manager ( 4) Chicopee Municipal Lighting Plant (20) North Attleborough Electric Department flerve Plasse, Manager liarold Payne, Manager ( 5) Danvers Electric Department (21) Paxton Municipal Light Departuwnt John Finocchio, Superintendent liarold Smith, Manager ( 6) Georgetown Municipal Light Department (22) Peabody Municipal Light Plant James llazen, Manager Edward McCarthy, Manager ( 7) Groton Electric Light Department (23) Princeton Electric Light Department ' Roger Beeltb, Manager Richard Wheeler, Manager ( 8) liingham Municipal Light Plant (24) Reading Municipal fight Department Clyde Curtis Manager Norbert Rhinerson, Manager ( 9) Holden Municipal Light Department (25) Shrewsbury Electric Light Department Neil Murray, Manager James Baker, Manager (10) Ifolyoke Gas & Electric Department (26) South Hadley Electric Light Department George leary, Manager Wardman Brooksbank, Manager (11) lludson Light & Power Department (27) Sterling Municipal Electric Light Department 11orst fluchmer, Manager Frederick Gurney, Manager (12) 11ull Municipal Lighting Plant (28) Templeton Municipal Lighting Plant Everett Lutzy, Manager Gerald Skelton, Manager (13) Ipswich Municipal Light Department (29) Wakefield Municipal Light Department Robert O'Meara, Manager William Wallace, Manager (14) Littleton Electric Light & Water Department (30) West Boylston Municipal Lighting Plant Curtis Lanciani, Manager Charles Coughlin, Manager - (15) Mansfield Municipal Light Department (31) Westfield Gas & Electric Light Department James !!all Director Don Duperrault, Manager (16) Marblehead Municipal Light Department Richard Bailey, Manager m p ..- wy L . 21 , *Qil;yf&s?. e1 .;tf~gfW - fxf,
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l Board of Directors l - Richard Bailey Manager, Marblehead l .. i ..s 4 James E. Baker ' l .: Manager, Shrewsbury l James F. Itall Director. Mansfield llorst lluehmer Manager, I!vdson E * Francis 11. King *
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l l l , The Treasurer's statement l MMWEC continued the financing of the projects in its Power Supply Program during 1979 through issuance of bonds and notes. On January 1,1979 MMWEC had notes outstanding, primarily issued to finance the Stony Brook Projects, amounting to approxi- 3 mately $70 million. On August 16,1979, - MMWEC sold $150.000,0001979 Series A Bonds for the Stony Brook Intermediate l Project. Primarily ' ugh the application of a portion of the b : proceeds, notes outstanding were rutuced to $5,000,000 issued for the Stony Brook Peaking Project. Notes outstanding at December 31,1979 amounted to $35,000,000, all of which were issued for the Peaking Project. warv The 1979 Series A Bonds were MMWEC's fifth bond issue. Total revenne bonds issued . and outstanding at December 31,1979 amounted to $560,870,000. MMWEC's bonds are rated "A" by Moody's and "A+" by Standard & Poors. ' As a result of MMWEC's conservative m financing practices with respect to permanent financing for projects under construction, in
&W most cases estimated construction cash flow -
requirements and the interest requirements ' on long-term debt issued for such projects t . have been funded through 1981 or longer. ~ This policy provides flexibility with respect to future financings which is advantageous, ..
/
particularly in light of money market ""* l conditions in the latter part of 1979 and continuing into 1980. Band' l**=ed The Board of Directors continued the ,,,,, 7,"', s,.. o.,, u,,,,,,,,,, appointment of Arthur Andersen & Co. as == c t a. l l independ mt certified public accountants for l@ ,',""' ^ ',Q;"'" y;.7; , 72,# the corporation. The Auditors opinion and ion s, s etw u.7.n 6 u7 7 MMWEC's financial statements for the years ,Ja* ended December 31,1979 and 1978 are l'7' 5"-*
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included as a separate section of this Annual 1 Report. Project Financing Status Bonde f etisieted lateveet
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4 Aq [ lemmed cometruction Requirennente l / Priect f000# caeli Flow ontstandens George Leary, Treasurer m,,,,,, , , , , ,
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Nairar M = 2 10 060 (11 1-1 n2 Nwirst Pmiect 3 52.690 71 al I l 82 Nalear Pmiert 4 11 A 500 7-1 53 7-1-83 Nwlear Propet 5 30.500 71.s3 71 a3 Wyman Pmicci 9.420 (2) (2) Searo l land 9.500 4-1 44 7-1-82 l soony Bemek int. 130 000 to151 1182 S%0,R79 (H Pron to en early dev_" , : stage and peeeently inactive. (2) In ceansnerdal operselon. 24 t - s. ~ =
._ a MMWEC 1979 f
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FINANCIAL STATEMENTS
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' Table of Contents Consultants and Financial Advisors 2 Auditor's Report 3 Balance Sheets 4 Statements of Operations 5 Statements of Changes in Financial Position 6 Statements of Changes in Special Funds 7 Statements of Long-Term Debt and Notes Payable 9 Notes To Financial Statements -10 s
D**D *]D'TTIM w o A. o Ju.1_$lL
(. I Consultants and Financial Advisors Bond Fund Trustee Continental filinois National Bank and Trust Company of Chicago, Illinois Paying Agents Continental filinois National Bank and Trust Company of Chicago, Illinois 1976 Series A' Bonds k 1977 Series A Bonds 1977 Series B Bonds 1978 Series A Bonds 1979 Series A Bonds Citibank, N.A., New York 1976 Series A Bonds 1977 Series A Bonds 1977 Series B Bonds 1978 Series A Bonds 1979 Series A Bonds New England Merchants National Bank, Boston, Massachusetts 1976 Series A Bonds 1977 Series A Bonds 1977 Series B Bonds Shawmut Bank of Boston, N.A., Boston, Massachusetts i 1978 Series A Bonds 1979 Series A Bonds Construction Fund Trustees Continental filinois National Bank and Trust Company of Chicago, Illinois Nuclear Mix No.1 Nuclear Mix No. 2 Nuclear Project No. 4 Shawmat Bank of Boston, N.A., Boston, Massachusetts Nuclear Project No. 3 Third Na tionalBank ofilampden County, . Springfield, Massachusetts s~ Wyman Pro ect Nuclear Pro ect No. 5 Sears Island Project Stony Brook Intermediate Project Financial Advisor - La:ard Treres & Co., New York Bond Counsel
- Wood and Dawson, New York 2:
D**}D *]D ~TYh o a Ju o Ju. A 1m
Auditor's report To the Board of Directors of MASSACHUSETTS MUNICIPAL - WHOLESALE ELECTRIC COMPANY: We have examined the balance sheets and statements of long-term debt and notes payable of MASSACIIUSEITS MUNICIPAL ~ WHOLESALE ElICTRIC COMPANY (a Massachusetts public corporation) as of < December 31,1979 and 1978, and the related statements of operations, changes in financial position and changes in special funds 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 com dered necessary in the circumstances. In aur opinion, the financial statements referred to above present fairly the financial position of Massachusetts Municipal Wholesale Electric Company as of December 31,1979 and 1978, and its results of operations and changes in its financial position for the years then ended, in conformity with generally accepted accounting principles apphed on a consistent basis. Y . ARTHUR ANDERSEN & CO. Boston, Massachuwets Marsh 3,1980 D 9
*lD *]D N e o j\\ w A\l .\ m 3
s 1
-Balance Sheets December 31,1979 and 1978 -
(lMlars its Thousands) '1979 1978 Projects Under Wyman ASSETS Service Construction ProWe Total Total Electric Plant in service 5 -
$ - $ 7,045 $ 7,045 $ 6,462 less Accumulated Depreciation (%tr3) - -
(227) (227) (16)
- - 6,818 6,818 6,446 e
Under Construction (%fes 2 and 7) 130,634 ' 130,634 70,869 Jointly-Owned - - 62,941 62,941 26,667 MMWEC Projects - -
- 193,575 - 193,575 97,536 193,575 6,818 200,393 103,982 Total Electric Plant -
Oths Property and Equipment 1,258 - 1,727 1,589 _469 a Accu.;wlated Depreciation (%te 3) (156) (60) _ - (216) (131) 313 1,198 - 1,511 1,458 313 194.773 6,818 201,904 105,440 Total Property, Plant and Equipment Special Funds (see uperate statement) - 374,502 2,033 376,535 351,666 Current Assets Cash 351 - - 351 122 Accounts Receivable 440 228 203 871 101 Unbdled Receivables (%te 2) 208 - - 208 15 Inventories principally fuel oil - - 368 368 186 Advances to or (from) Projects 248 (244) (4' - - Prepaid Espenses 31 183 214 16 1.278 167 567 2,012 440 Deferred Charges Unamortised Debt Discount and Espenses (wee 4) - 16,698 196 16,894 9,739 Costs Recoverable in the Future Under Terms of the Power Sales Agreements (%tes 2 and 6) . - 2,703 490 - 3,193 64 Other - 1,636 - 1,636 177
- 21,037 686 21,723 9,980
$ 1,591 $590,479 $ 10,104 $602,174 $467,526 LIABILITIES Long-Term Debt (See wperate statement) $ - $351,450 $ 9,420 $%0,870 - $410.870 Advances from Members (Note D 131 - - -131 128 Current Liabilities Working Capital Advances .
750 (723) (27) - - Notes Payable (S<c scperate statement) - 35,000 - 35,000 54,250 Accounts Payable 543 3,859 638 5,040 639 Accrued Espenses 167 240 20 427 1,571 Contractors
- Retention - 653 - 653. 65
" 1,460 39,029 631 41,120 ' 56.525 Deferred Revenues - - - _ _p 53 3 Commitments and Contingencies (Note 7) . ~
$ 1.591 $590,470 $ 10,l'04 ~ $602,174 $467,526 ^
The accompanying notes are an integral part of these financial statements. 4
'D DW D Wy n-1 M& Mu M) b
-.s Statements of Operations For ti.e years ended December 31,1979 and 1978 (Dollars in busands) 1979 1978 Projects Under Wyman Service Construction Project Total Total Rt. venues:
Electnc Sales for Resale (MWe 2) $387 $. . $1,007 $ 3,3,4 $ 88 Service Revenues $94 - - 594- 455 Interest income - - 27,362 221 27,563 22,996 a Total Revenues and Interest income $981 $27,362 - $1.228 $29,571 $23.539 Operating and Service Expenses: Fuel Used in Elettne Generation $ - $ - S 385 5 385 $ 72 Punhased Power (Mee 2) 387 - - 387 - Other Operations and Maintenance - Payroll and Related 2% - 30 326. 197 Other 271 - 384 655 253 Depreciatmn (Mec 3) - 25 - - 211 236 37 Tases Other Than income 2 -- 78 80 6 981 - 1,088 2.069 565 Interest Expense: Interest Charges . 32,891 575 33,466 25.948 Interest Charged to Projects Dunng Construction (Mee 2) - (5,529) - (5,529) (2.910)
- 27,362 575 27,937 23,038 Loss on Cancelled Units (Mac 6) - 2,703 - 2,703 -
Total Expenses 981 30.065 1.663 32,709 23.603 Less - Costs Recoverable in the Future Under Terms of the Power Sales Agreements - (2.703' (435) (3,138) (64)
,Mers 2 and 6)
$981 $27,362 $1.228 $29,571 $23,539
,1 l
I i The accompanying notes are an integral part of these financial statements. 5 4 4
Statements of Changes in Financial Position For the years ended December 31,1979 and 1978 (DnWars in Thousands) 1979 1978 Projects Under Wyman - Service Construction Project Total Total SOURCES OF FUNDS: Operations and Services - Revenues and Income $ 981 $ - $ 1,228 $ 2,209 $ 549 Expenws (981) - (1,663) (2,644) (613) Charges Not involving Funds: Depreciaten and Amortizatwn (Mees 3 and 4) 25 - 216 241 37 increaw in Deferred Revenue - - 50 50 3 Interest Expenw Previously Funded - - 285 285 47 From Operations and Service 25 - 116 141 23 Financing and investments - 150,000 - 150,000 75,000 Bond Proceeds - 27,362 - 21,362 22,990 Interest income - Interest Expense - (32,891) - (32,891) (25,900) Charges Not involving Funds: Deprecialmn and Amortization - 444 - 444 382 Interest charged to ProWt. Dunng Construction - 5,529 - 5,529 2.910 2,703 - 2,703 - Ims on Cancelled Units (Mee 6) - From Fmancing and Investments - 153,147 - 153,147 75,382 Total Sources of Funds $ 25 $153,147 $ 116 $153,288 $ 75,405 USE OF FUNDS: Additions to Electric Plant $ - $ 98,743 $ 570 $ 99,313 $ 54,654 Additions to Other Prnperty and Equipment 4 134 - 138- 73 Additions to Debt Dmcount and Expenws (Mtc 4) - 7,544 - 7,544 2,281 increaw in Costs Recoverable in the Future Under Terms of the Power Sales Agreements (Mees 2 anJ 6) - 2,703 435 3,138 64 Increaw in Other Deferred Charges - 1,459 - 1,459 148 Other (3) - (147) (150) (20)
$ 1 5110.583 $ 858 $111,442 $ 57,200 CilANGE IN WORKING CAPITAL, INCLUDING NOTES PAYABLE AND
$ 42,564 $ (742) $ 41,846 $18,205 SPECIAL FUNDS $ 24 CIIANGE IN WORKING CAPITAL CONSISTS OF:
Increaw (Decreaw) in Special Funds S - $ 25,393 $ (524) $ 24,869 $62,215 Increaw (Decreaw) in Current Aswts - Cash 229 - - 229 67 Accounts Receivable 363 228 179 770 75 h Unbilled Receivables 193 - .- 193 (35) 186-Inventories - - 182 182 Prepaid Empenws 22 183 (7) 198 (28) - Advances to Projects 221, (221) - - ' 1,028 25,583 26,441 62.480 (170) (Increaw) Decrea'w in Notes Payable _- 19,250 - 19,250 (44,300) (Increaw) Decreaw in Current llabilities - Working Capital Advances (350) 340 10 - - Accounts Payable (517) - (3,322) (562) - (4,401) 966 Accrued Expenws (137) 1,301 - (20) 1,144 (876) Contractors
- Retention -
(588) -. (588) (65) (1,004) 16.981 (572) 15,409 (44.275)
$ 20 $ 4 564 - * (742) $ 41,846 $18,205 ne accompanying notes are an integral part of titese financial statements. 6
I- 1 Statements of Changes in Special Funds For the two years ended December 31,1979 (DcIlars irr 77mrsands) Conoruction and Construction Interest Funds Nuclear Nucicar - Nudear Nudear Nuclear Sears . Stony Brook . Min Mis Project Project Project Island Intermediate Wyman Nat No.2 - No.3 No.4 No.5 Project Project Project Balances, January 1,1978 $133,859 - $6,597 Add:
$42.239 $ 77.459 $ - $ - $ .- $3,459
)
Bond proceeds ' - - - 32,008 27.893 8,686 - - Note proceeds - -- - - 10,000 2,000 - - Interest income 8,348 444 2,344 6,410 - 966 231 - 183 , Electric sales for resale - - - - - - - - Inter-fund transfers - - - - - (774) 142,207 7,041 44.583 115,877 38,859 10,917 2.868 Deduct: Construction espenditures 14.098 354 13.459 57 8 1.169 - 1,126 - Debt issue costs - - 1 -768 225 79 - - Other property acquisitions - - - - - - - - Operatmg purchase and expenses -- - - - - - - - Note retirements - - - - 10,000 2,000 - - Interest payments - notes - - - - 232 57 - - Interest payments - 1=onds 11.818 692 3,276 6,230 681 213 - 570 Working capital advances 2 29 10 23 36 46 - (77) , 25,918 1,075 16,746 7.078 11,182 3.564 - 1,619 Balances, December 31,1978, consisting of: Construchon fund S 80,834 $3,890 $18,009 $ 75.621 $18,488 $ 5.121 $ -
$ 964 -
Constructmn in rest 35,455 2,076 9,828 33,178 9,189 2,232 - 285
$116,289 $5,%6 $27,837 $108,799 $27,677 $ 7,353 $ - $1,249 Add:
Bond proceeds Note proceeds
- - - - 139,875 -- q Interest income 8,783 511 2,143 6.697 1,769 607 2,673 81 Electric sales for resale - - - - - - - -
Inter-fund transfers 1,061 43 275 377 95 '30 15,500 15 Other receipts - - - - - - 408 ' - 126,133 6,526 30,255 115.873 _29.541 7,990 ' 158,452 1.345 Deduct: Construction espenditures 7,914 245 3,288 37,709 9,540 139 6,774 610 Debt issue costs 1 - - 3 3 1 7.284 - - Operating purchases and expenses - - - - - - - Note retirements
~
I,250 - - - - - 64,000 - Interest payments - notes - - - - - - 429 - Interest payments - bonds 11.818 692 3,276 7,373 2,042 . 638 4m su - Working capital advances 46 34 12 25 (19) (15) 257 (10) Other 7 - - 1,300 3 - - - 21.036 971 6,576 Jg 11.895 76; 82,581 885 Balances, December 31,1979, consisting of: Constructmn fund $ 81.460 $4.171 $17.127 . $ 43.658 - $10,499 $ 5.633 $ 55,714 $ 460 Comtruction intere9 23.637 1,384 6,552 25,805. 7.147 1,594 _ - 19,857 -
- $105.097. $5.555 $23,679 $ 69,463 . $17.646 $ 7,227 $ 75,571 - $ 460 The accompanying notes are an integral part of these financial statements..
7 ) a 0 0 AM duJUXhb
_ Bond Total ' Reserve and Stony Brook - Nuclear Total Total
. Reserve Trusteed Contingency Peaking Intermediate MisNo.1 Revenue Non-Trusteed Special jBond f, und : Fund Funds Fund Project Project (Seabrook) Fund Funds Funds
$ -- $21,777 $285,390 $ 102 . $ 350 $ 3,609 $ - $ - $ 4,061 $289,451
.5,023 73,610 - - - -- - .- 73,610
- - 12,000 - 4,800 48.200 1,250 - 54,250 66,250
- 1,747 20,673 7 239 2,063 12 2 2,323 22,996
- - - - - - 91 91 91 (774) - - - - 774 774 ' --
452,398
- 28,547 -390,899 -109 5,389 53.872 1,262 867 61,499
- - 30,271 - 1,129 20,173 660 - 21,962 52,233
- - 1,073 - 3 .33 6 - 42 1,115 (279) 276 - -
(3) (3) 295 295 295
- - 12,000 - 1,230 8,720 - - - 9,950 21,950 -
289 - 133 1,240 - - 1,373 1,662 23,480 - - - - - - 23,480
. - 69 - 1 (70) - - 49) -
. - 67,182 - 2,217 30,372 ~ 666 295 33,550 100,732
$ - $28,547 $ 323,717 $ 109 $ 3,172 $ 23,500 $ 5% $ 572 $ 27,949 $351,H6
- 9,929 149,800 1,000 - - - - 1,000 150,800
- - - 40,000 64,000 - -
104.000 104,000 6 2,547 25,817 45 493 1,124 28 76 1,766 27,583
- - - - - - - 1,007. 1,007 1,007 279 (1,612) 16,069 28 - (15,500) (307) (290) (16,069) .
- 408 - - 4,540 - 471 5,011 5,419 283 , 39,411 515,811 1,182 43,665 77,664 317 1,836 124,664 640,475 -
I .- - 66,219 - 2,939 25,772 246 - 28,957 95,176 t - - 7,292 - 17 182 1 - 200- .7,492
- - - - - - - 1,035 1,035 1,035 65,250 - 9,800 48,200 - - 58,000 123,250
- - - 429 - 487 3,469 70 - 4,026 ' 4,455 ! - 283 - 30,546 - - - - - - - 30,546 - i
- - 330 - - -- - 20 . 20 350 l - - 1,616 - - - - - - . 1,636
!' 283 - 171,702 _ 13,243 77,623 317 1,055 92,238 263,940 _$3_9,4_11 $344,109 $1,182 $30422 $ 41 $ - $ 781 5 32,426 ' $376,535 g$ _., _ l l 8 1 b
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Statements of Long-term Debt and Notes Payable. December 31,1979 and 1978 ' (Ddlars in Thousands) 1979 1978 Redeem-. Projects able Under . Wyman Beginning Construction Project Total Total Power Supply System Revenue Bonds (Nde 5) 1976 Series A Serial Bonds 5.60% - 6.75% $840 due in 1985 increasing to $1,635 in 1996 $ 14,240 $ .- $ 14,240 $ 14,240 Term Bonds 7.25% due 2014, sinking fund requirement of $1,745 in 1997 1986 increasing to $5,735 in 2014 at 103% 60,760 - 60,760 60,760 75,000 - 75,000 75,000 1977 Series A SenalBonds,4.20% - 6.10% $130 due in 1981 increasing to $4.500 in 1998 38,540 3,680 42,220 42,220 Term Bonds,6.375% due 2015, sinking fund requirement of $4,760 in 1999 1987 increasing to $11,925 in 2015 at 103% 129,410 5,740 135,150 135,150 167,950 9,420 177,370 177,370 1977 Series B Serial Bonds, 510% - 5 80%, $1,090 due in 1988 increasing to $1.870 in 1998 15,855 - 15,855 15,855 Term Bonds 6125% due 2017, sinking fund requirement of $1,980 in 1999 1987 increasing to $5,770 in 2017 at 103% 67,645 - 67,645 67,645 83,500 - 81,500 83,500 1978 Series A Serial Bonds 5 80% - 6 60% $765 due in 1988 increasing to $1,795 in 2000 16,400 - 16,400 16,400 1 Term Bonds,6125% due 2018, sinking fund requirement of $1,915 in 2001 increasing 1988 1 to $5,475 in 2017 and $700 in 2018 at 103% 58,600 - 58,600 58,600 75,000 - 75,000 - 75,000 1979 Series A SenalBonds,6 00% - 6.70% $2,660 due in 1984 increasing to $4.855 in 1994 40.035 - 40,035 - Term Bonds,5 00% - 7 20% $10,620 due in 1996 increasing to $67,360 in 2008, sinking fund requirement of $5.180 in 1989 1995 increasing to $11,740 in 2008 at 103% 109,965 - 109,965 - 150.000 - 150,000 - 551,450 9,420 560,870 410.870 Notes Payable (Nde 5) Nutlear Mix No.1 - Seabrook - - - 1,250 Stony Brook Peaking Project . 35,000 - 35,000 4,800 Stony Brook Intermediate Proiect - - -' 48,200 35,000 - 35,000 54,250
$586,450 $9,420 5595,870 $465,120 The accompanying notes are an integral part of these financial statements.
9
I l l l I 1 Notes to Financial Statements i December 31,1979 and 1978 l (1) Massachusetts Municipal Wholesale advances had been drawn from individual Electric Company (MMWFC) project funds based on the ratio of estimated MMWEC is a political subdivision of the administrative expenditures for each project Commonwealth of Massachusetts, authorized for the period to the total of estimated project to issue revenue bonds secured by power administrative expenditures for the period. sales agreements with its members and other At December 31,1979 and 1978 the amounts electric systems to finance the construction of the advances were $750,000 and $400,000, and ownership of electric power facilities- respectively. Any Massachusetts city or town which has ..
'"" ..'## "' ^ ##"""." "
a municipal electric department and which is authorized by majority vote of such city or I"##"5' Ch"'f'd # Pmiects Durine Construction town may become a member by applying for admission to MMWEC and agreeing to MMWEC capitalizes interest as an element comply with such reasonable terms and of the cost of constructed electric plant. A conditions of membership as the By-laws of corresponding amount is reflected as a MMWEC may fix from time to time. As of reduction of interest expense. The amount of December 31,1979, thirty-one Massachusetts interest capitalized is based on the cost of municipalities had received votes of their debt, including amortization of debt discount respective city councils or town meetings and expenses related to each project, net of authorizing membership by their respective investment income derived from project municipal electric systems. - funds not yet expended for construction. Pouvr Supply System Special Funds MMWEC is obtaining power supply Proceeds from the sales of Revenue Bonds capacity by acquiring interests in various are deposited with Trustees to be invested
? generating units from certain investor-owned until they are required for construction or utilities and by constructing its own electric debt service payments. Note proceeds are power facilities. See Note 7 for information Pl aced with Depositories and are similarly ) with respect to MMWEC's construction invested by MMWEC. Investment securities consist of U.S. Government securities, program and commitments. In addition, MMWEC negotiates power purchases on Federal agency obligations, and bank behalf of its membtrs. certificates of deposit in accordance with the Advances from Members provisions of the Bond Resolution. The -
investments are carried at cost, adjusted for MMWEC is authorized to assess each amortization of premium or discount. member to provide working capital Advances may be returned to the members upon approval by MMWEC's Board of Directors or the dissolution of MMWEC. Advances from Proircts The Board of Directors has authorized working capital advances of up to $750,000 from Project Construction Funds. Such 10 D**]D ]DNlYM a Ju . o Juu 2U S UL w
Notes to Financial Statements December 31,1979 and 1978 (2) Siansfcant Accounting Policies. cont'd Pl ant in service amounted to $211,000 using Revenue and Costs Recoverable in Future a co posite rate of %. Depreciation of other property and equipment aggregated Under Terms of the Power Sales Agreements
$85,000, of which $60,000 was allocated to Dectric Sales for Resale projects under construction and represents a Under the terms of the Power Sales composite rate of 16%. Depreciation of Agreements with Project participants, electric plant in service in 1978 was $16,000 revenues include billings to participants for and other property was $78,000, of which debt principal and interest payments in the $57,000 was allocated to projects period in which they are due. Ilowever, for under construction.
financial reporting purposes, MMWEC (4) Unamortized Debt Discount and Expenses recognizes currently the depreciation and Debt discount and expenses are amortized amortization expense of assets financed by to interest expense over the life of the related bond principal The excess of current outstanding debt. Additions to and amortiza-expenses over amounts billed currently tion of discount and expenses are under terms of the Power Sales Agreements summarized below: is deferred to the future periods in which ,
,ng,, g,, .3 ,,y these amounts will be recovered through Balance Arnorti- Balance revenues. Jan.1 Additions raten Dec. 31 Electric Sales for Resale and Purchased I'78 Power reflected in the column headed 1976 A e nas 52.126 s - s (58) s 2.068 1977 A Bonds 3,s12 1 (102) 3,711 Service, represent power purchases made by 1977 B Bonds 1.s23 44 (47) n.s2n MMWEC for remle to contracting participants. 1978 A Bonds -
2.135 (15) 2,120 In addition to these arrangements, MMWEC 1977 A Notes 22 - (22) - 1978 A Notes - 95 (80) 15 serves as an agent for certain participants,
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whereby MMWEC is billed for the costs of power purchased or received by the
"" * * ' * " ' I' * " ' ' ' ' ' '
participants under other contracts and agreements. Such costs are expenses of the [, , , , , 1977 A Bonds 3.711 - (102) 3.609 partripants and, accordingly, are not reflected 1977 B Bonds 1.820 - (47) 1.773 in the accompanying statements 1978 A Bonds 2.120 3 (54) 2.069 of operations. I'7' ^ Baad' ' - 7.4'6 (85) 7.411 Service Revenues
* ^ N#" '
('5) ~ 1978 5 Notes 5 1 (6) - Under terms of the Service Agreement, 1979 A Notes - 20 (20) - MMWEC bills its members for costs incurred 1979 B Notes - 24 (2) 22 in providing services on their behalf. Service s',739 57,s44 s(3s+) sie.e94 revenues are recorded in the accounts as the corresponding expenses are incurred. Amounts which are not yet billed are included in Unbilled Receivables in the acrompanying balance sheets. (3) Depreciation Property, plant a~1 equipment in service is depreciated using the straight-line method over l'ie estimated useful lives of the respective assets. Depreciation of electric 11
.a. .
Notes to Financial Statements December 31,1979 and 1978 (5) Debt (6) NEP Units 1 and 2 Cancellation Parmer Supply System Recenue Bonds MMWEC's Nuclear Mix No. 2 was origin-In order to finance construction or ally comprised of the New England Power ownership interests in joint electric Company nuclear units NEP 1 and 2 and generating projects, MMWEC issues, Northeast Utilities Montague units pursuant to its Bond Resolution and Chapter 1 and 2 (See Note 7). 775 of the General Laws, Power Supply The New England Power Company efforts to locate the NEP units in Charlestown, System Revenue Bonds. The Bonds are secured by a pledge of the revenues derived Rhode Island were unsuccessful and the units were cancelled on December 17,1979. by MMWEC, under terms of power sales agreements, from the ownership and At December 31,1979 MMWEC recorded its operati)n of its power supply system.- inytstment of $2,703,000, including interest Pursuant to the power sales agreements with charged'during construction, as a charge to the participants, each participant is obligated expense and deferral of that loss was to pay i:s share of the actual costs relating to recorded as " Costs Recoverable in the the gen erating units under construction or future under terms of the Power Sales for pla ned construction. The participants' Agreements". In accordance with the terms obligati>ns are not contingent upon the of these power sales agreements, the loss completion or operational status of the units. Pl us all costs associated with the Montague Notes PayaNe facility will be recoverable from the Under terms of the resolution covering this participants in Nuclear Mix No. 2 over the borrowing, the notes are issued in anticipa- Period in which the related debt principal and interest are due. tion of MMWEC's intended issuance of revenue bonds in 1980 to provide long-term (7) Construction and Financing financing of the project. The notes, which Construction Pnwram 4 mature on January 2,1981, bear interest at a MMWEC's plans for construction and rate equal to sixty percent of the bank's acquisition of ownership innrests in prime rate, payable semi-annually. The notes additional generating capaci.y are under are subject to redemption and prepayment continuing review and revision. Currently, prior to maturity and, in the event that the forecasted expenditures for the generating notes are not repaid at the maturity date, the facilities as shown below, amoun? to approxi. rate of interest increases to eighty percent of mately $1.1 billion, including estimates for the bank's prime rate. contingencies, interest, and MMWEC costs Line of Credit charged to projects during construction, MMWEC has a $2,000,000 revolving line including approximately $107 million of credit which is used to temporawy finance for 1980. certain power purchases fer itself and certain of its members. Borrowings under this line are at an interest rate approximating 50% of the prime rate and are secured by the receivab!cs corresponding to the amounts taken-down. i 12' 1E o
8 6 Notes to Financial Statements December 31,1979 ~and 1978 (7) Construction and Financinocont'd Constructiort Pnwam (Ddlers in Thousands) Proposed . Total MMWEC . Estimated
' Urut (Isad Participant) - Estimated Capabdity Espended To December 31, MMWEC Completion Date* (MW) 1978- 1979 Expenditures
' Nuclear Mis No.1 Pilgrim Unit Na 2 (Boston Fdison)-1988 152.3 $37,795 . $ 45,032 $392,370 Mdistone Unit Na 3 (Northeast Utihties)-1986 18.4 8,927 11,025 47,642 Seabrook Units Nos. I and 2 (Pubhc Service Ca N1f).1984-1986 37 833 1,795' 9,438 174.4 $47,555 $ 57,852 $449,450 Nuclear Mix No. 2 NEPCO Umts Nos.1 a'nd 2 (New England Power ) See Nde 6 -
$ 2.368 $ -
Montague Units Not I and 2 (Northeast Utihtics) ~ Uncerfam** - 33.3 645 688 Indeterminable 33 3 $ 3,013 $ 688 Nuclear Project No. 3 Mdistone Unit Na 3 (Northeast Utahties).1986 36 8 $20,199 $ 24.409 $ 81,505 Nuclear Project No. 4 Seabrook Umts Nat and 2 (Public Service Ca N11).1984 - 1986 99 6 $ (913) $ 36,888 $168,931 Nuclear Project No. 5 , Seabnwk Umts Nos. I and 2 (Public Service Ca NII)-1984-1986 25.3 $ (164) $ 9,494 $ 46,355 ., Total Nuclear Units 369.4 $69,690 $129,331 Sears Island Project o Sears 14and Coal Unit Na I (Central Mame Power)-1988 78 9 $ 1.179 $ 1,303 ' $127,136 i Stony Brook Peaking Project Phaw 1 Peaking Units (MMWEC) - 1982 170 0 $ 1,836 $ 5,123 $ 63.964 Stony Brook Intermediate Project l'hase 1 Intermediate Umts (MMWiC) - 1981 309.1 $24.831 $ 57,818 $150,463 Total Fouil-Fueled Units 558.0 $27,846 5 64,244 Total $97.536 $193y
*Completum dates are estimates for MMWEC's planning purposes and may vary from tiume mdicated by the lead participant.
"Commernal operation dates are uncertain and the lead participant has not made a current cost estimate.
The estimate of total expenditures was each unit (the " lead participant") and on made by MMWEC and its Consulting other available data. Engineer based on information available The complex process of obtaining the during the second half of 1979. Estimates for numerous regulatory approvals and permits jointly-owned facilities are made by to construct the Seabrook units has been MMWEC's Consulting Engineer based on ' lengthy and has resulted in considerable - those of the electric utility company having - increase in their cost. Public Service primary responsibility for the construction of Company of New Hampshire ("PSNil") is-13 a k
Notes to Financial Statements December 31,1979 and 1978 (7) Construction and Financing, cont'd ' The electric utility industry has experienced Gmstruction Prmam and may continue to experience a number of presently experiencing difficulties in obtaining problems including financing large construct external financing for its construction tion programs during an inflationary period, program, a major portion of which is its 50% obtaining sufficient capital, compliance with ownership in Seabrook, and maintaining environmental regulations, delays in adequate cash flow to fund that program corstructing new facilities, delays in licensing, and current operations. PSNil has proposed particularly nuclear facilities since the Three to reduce its ownership in Seabrook by Mile Island incident, high fossil fuel costs approximately 15% and other utilities, and obtaining adequate rate relief.. including MMWEC to the extent of approxi. Financing Program mately 6% have committed to a like amount To finance its ownership share of the costs subject to certain conditions, primarily of these projects, MMWEC intends to issue regulatory approvals which could involve an additional series of revenue bonds, the extended period of time to obtain. PSNil has timing and size of which will be based upon indicated that adequate permanent rates > construction cash flow requirements and timely regulatory approvals allowing a bond market conditions prevailing at reduction in its Seabrook ownership by not the time, significantly less than 15% the continued (8) Retirement Plan availability to it of external financing and the Retirement benefits are provided to ability of other Seabrook owners to obtain MMWEC's eligible employees through its necessary and timely financing are all participation in the Retirement and Security essential to avoid suspension of construction Program sponsored by the National Rural or other measures which might adversely Electric Cooperative Association. Pension o affect the completion and cost of Seabrook costs were $48,082 for 1979 and In December 1979, the New flampshire $33,942 for 1978. 1 Public Utilities Commission ("NilPUC") granted PSNil emergency rate relief, under bond, which represents a portion of a permanent retail rate increase presently pending before the NiiPUC. MMWEC cannot predict what effect the foregoing financing and regulatory problems may have on the
, completion or cost of the Seabrook units.
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AIAfWEC's annual report is available without charge upon written request to the administrative offices: PO Box 426, Ludlow, l Afassachusetts 01056 l A ttention: Afary Alice Cullers, Records Afanager The AIAfWEC annual report was produced by the Communications Department and prsnted commercially. l editorial: Kathryn Afilillo 1 design: Kathryn Afihilo l Stephe,r Bellerydu l photography: Afichael Gallant sterv,, s ,,o,,ca, l l Wesley Blnt l typography: R lxrraine Tickett graphics: Natalte Babine Banatk printer: Thomas Taid Company
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Mossochusetts Municipal Wholesale Electric Company ' I Stony Brook Energy Center, Ludlow, MA 01056 l _ _ _ _}}