ML19319D906

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Annual Financial Rept 1966
ML19319D906
Person / Time
Site: Rancho Seco
Issue date: 12/31/1966
From:
SACRAMENTO MUNICIPAL UTILITY DISTRICT
To:
References
NUDOCS 8003270572
Download: ML19319D906 (19)
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f ( FOREWORD l The District has just completed twenty years of operations--two decades of extraordinary growth and many accomplishments. In this year's highlights are noted some of the activities and planning j for the District's continued movement ahead. Among them are: l . Conclusion of contracts for surplus Northwest and Canadian Treaty power via the Northwest-j Southwest intertie and the extension of the power supply and interchange agreement with Pacific Gas and Electric Company. I . Purchase of a 2,100e.cre site for i. nuclear-powered steam generating plant in Southeast Sacra-mento County. . Underground distribution for substantially all new subdivirions. . A new record in peak load of 682,000 kw... an increase of more than 100,000 kw over last year. . New computer system in operation for accounting records and ready to take on increased work loads as they are programmed. The following pages present a completd'Enetailed report which,7e believe, gives a good picture ~ a of the District's operations during the year and its financial condition at the cl lof 1966. By order of the Board of Directors M President of the Board General Manager and Chief E-sacer SACRAMENTO MUNICIPAL UTILITY DISTRICT 6201 S Street, Sacramento PAYING AGENTS: DAVID S. KAPLAN, Secretary San Francisco-Bank of America N.T.&S.A. W. S. BOSSENMAIER, Accountant New York - First National City Bank DEPARTMENT MANAGERS: Chicago - Harria Trust and Savings Bank W. S. BOSSENMAIER, Accounting IIERBERT 11. IIUNT, Operating AUDITur.S: CII ARLES R. DAY, Engineering Arthur Anderse & Co., San Francisco JOIIN J. MATTIMOE, Hydro and General Construction OFFICERS: MARLEN N. DAVIS, Sales PAUL E. SIIA AD, General Manager and Chief II. R. LaFORTUNE, Purchases and Stores Engineer TIIOMAS H. SHEA, Comrnercial WM. J. NOLAN, Asst. General Manager and WM. N. WARNER, Personnel Treasurer EARL C. ROSSI, Land CARL L. RICIIEY, Assistant General JOIIN PAYNE,GeneralServices Manager. . E. A. COMBATALADE, Director of Public ~ E.KENDELLDAVIS, Attorney Relations r Q, n..

$m TWENTY YEARS OF MANAGEMENT l 1 } ( l ? l }w g_i d., f } i. 7 l .l_.:- &, l+ d _') p4 [4",.m' s. .... t.f: R;9.y.,,. x y'},' ]... ' "g j y.. ps . o. 8-w ,o.;< a 7 . y .. w. c. s : 1 .,'.'l... 1 . A]. ; i..#.?'. .-+. '.. ? s.s ~.. b 1- ~J -g _. q,w T

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- ),', i '." " $s civic-minded community ' leaders. Returned to office consistently, i. -l.'%. h ? Y.- 1 [<' they have helped plan and guide .,, t.p " ? *b. 6 -]. A'1 ' y = .' + ~{ the development of the District. e 1. . y ;) From left to right: Reginald A. 5 ~7 i P - M S tr e e t; Theodore J. Labhard; )': .j'~~ W... - ~ y-l l s.l/.,

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~,L 'l L President Royal Afiller; Vice Pres-ident Donald E. Wachhorst; Gerald v - C Johnson; Paul E. Shaad, Gen-

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.gr From left to right: Back row-Herbert Hunt, H. R. LaFortune, ? .\\ r a.g _.5-g fa John hiaitimoe, E. rom batalade. 2.- +. s g Wm. N. Warner, Carl L. Richey, Wm. Nolan and W. Bossenmaier. ? - :'., R L -I ~. T .- a l: -.:1 - Middle row - Afarlen N. Davis, {~l. Q l.z\\.. ^ a .i L.. 'f' 5 ^ f.; Thomas H. Shea, E. Kendell Davis .k .L nd Charles R. Day. Front row -

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l l O D D 1947-WITH SERVICE TO SAME ARL a n v ._~) As illustrated by photographs throughout this report, the Sacramento Municipal Utility Dis-thousande trict has experienced vast physical changes 250 during the past 20 years-an expansion among the greatest in the nation. How the District has kept pace, financially i ,oo and statistically, is summarized on the next-to- [ last page of this report. As for the details of the year 1966: NET REVENUE totaled $10,820,000, a de-crease of $643,000, or 5.6%, from 1965. This ,,o unusual downward turn in net revenue re-suited primarily from vagaries of the weather. / _~~ In contrast to an above-average snowpack in u1 1964-65, the year was marked by below-aver-age precipitation causing a 47.3% drop in [y hydroelectric generation. Additionally, a sum- ~ mer of recod-high temperatures in Northern California brocght new peaks in air-condition. So ing loads. These factors caused the purchas of power-net of interchange with Pacific Gas, and Electric Company-to run to record-high levels. The increase in cost was 91% over 1965. 57o rate reduction, granted early in 1966 to 1946 1950 1954 1958 1962 1966 Twenty years of customer growth Cince the Gold Rush days of 1849. Sacramento has been One great natural resource - the navigable Sacramento a transportat!on hub of the West. Situated IP the heart of River to San Francisco - has recently been further Im= ' Cctifornia, it Is the crossroads for much of the State's eco-proved with development of the Port of Sacramento. At nomic activity via highways, raltroads and alrtines. left, the area as It was In the 1940s. Below, as it is today. p$g %.sy&p $$a$$$+$$y$?$pw$$grv k@T 5 G & h"'"^^ 5bniC ~~" - ~.? "1M h7 r"vT*f ^>* W 5 5 w ?;? sy

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i UD HAS INCREASED 177 % IN PGPULATION-1966 commercial customers, also had a bearing on ments in the upper American River hydro-the drop in net revenue. electric project area. OPERATING REVENUES increased 5.9% Other amounts of these same taxes are paid ($1,873,000) to a new high of $33,595,000. and charged to construction costs. The Dis-In the main, this reflected increased air-con. trict also pays all California State taxes, local ditioning load and the sharp rise in electric sales and use taxes, and State gasoline taxes. energy requirements of an industrial customer These are charged as expense to the same which serves the aerospace industry in the categories of construction as are the materials and equipment to which the taxes apply. Sacramento area. The District has protested the legality of El OPERATING EXPENSES increased by Dorado County's assessing the new Loon Lake $3,439,000, or 19.3%, to $21,273,000 during Dam. Suit has been filed for recovery of 1966. Over 89% of this increase was in pur- $227,896 of taxes paid for 1964-65 and 1965-66 chased power costs. The balance was princi-on Loon Lake Dam improvements and water yr--pally in the-categories of depreciation and - rights acquired from Georgetown Divide Pub-operation'raused-by' growth and-increased'

  • vlic-Utihty: District.-A supplemental complaipt price levels.

will be filed seeking recovery of the 1966-67 taxes in the amount of $137,006. ~ TAXES for 1966, charged as such to operat-OTHER INCOME, principally interest, .g expenses, totaled $242,000, an increase amounted to $2,870,000, an increase of of 30.2% over the previous year. These taxes $874,000, or 43.8%, over 1965. This increase is were principally social security contributions due to substantially higher yields available and levies of El Dorado County on certain during 1966 on the District's investment in lands, land and water rights, and improve-securities of the Federal Government. One of the fastest. growing areas of the nation's fastest. throughout the District's 658. square-mile area. Subdivl. growing State, the District has added 138.000 customers alon development has been partloularly outstanding. At sturing Its 20-year history. New homes, shopping centers, left, one subdivision In its early stages some ten years strosts and freeways, and new businesses have spread ago. Below, as It is today. - E"'"" T , it,. y~ $, nl;;kk,3 ',;.'. { = 3 4,3,3. y A-pt PC. ,. 4..; ^ h N$ h Y f.bh k h N. r 1 y L ' -,.. j_ d. :. e-~

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1947-ELECTRIC POWER PEAK DEMA' l STATEMENT OF FUNDS FOR YEAR ENDED DECEMBER 31,1966 (IN THOUSANDS) Source of Funds: Use of Funds-1 Gross income (per Statement of Debt service (See Note): Net Revenue) $ 15,192 Revenue bonds $10,813 General obligation Interest earnings on funds held bonds 2,062 $ 12,875 by Trustee for bond redemp-tion 3,178 Depreciation 5,554 Additions to plant: l Generation $17;160 Total available for debt Other 6,602 23,762 service . _. _ m$ 23,924 Price adjustments received as a result of antitrust actions 7,907 Other, net 474 Taken from working funds 5,280 g Total funds received $ 37,111 Total funds used $ 37,111 Note: Debt service on revenue bonds is covered 2.21 times by funds available; total debt ser ice is covered 1.86 times. Capital of Californla, the city of Sacramento, has been buildings and major entrassos to the city from the west. l engaged in a widespread beautificaton and redevelopment Below, left, is a view of downtown Sacramento, focussing program. Major emphasis has been placed recently on the on the Capitol, as it was before redevelopment. Selow la downtown business area = the center of State and Federal the same area and new Capitol Mall today. pw pa m T*wn7y;*ymmj xyr rWWe Ww - l' ' g ' 5:{i?Qg.'em-l7 rOS $W~l f, 'k ' .j$7.~ .e'* f T.Q FM Q jy@$';Q f y} y m u ..t

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O D D d adA b JREASED BY 918 % -1966 op g k7 b_ o _.a milllOne $300 / 240 180 / / / / / 120 / n 60 s._. SMUD's growing investment in plant O 1946 1950 1954 1958 1962 1966 Ceautifloa'lon has been a constant aim of the District. A program has also contributed to beauty and better service. leader in underground distribution. S MUD placed more Additionally. residential substations have been hidden with than 90% of the past year's new subdivision distribution attractive, minimum. maintenance landscaping. Below le a systems underground. A carefully planned tree trimming substation before and after planting and landscagilng. -? f. v i'l ] " ') {f NI's. '.'p~ Fs'.,2,i'r2,L. ;~ E% n_.;, iy y 5 A:.4:p> c - ..v.,, i ?:

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P 1947-AVERAGE RESIDENTIAL USE UP 23 DEPRECI ATION, since 1957, has been based wwh 8- 0 on present value of property with full approval of the District's certified public accountants, Arthur Andersen & Co. NET INTEREST EXPENSE on long-term 4,300 debt amounted to $5,546,000, an increase of only $352,000, in 1966. This small increase results from interest earnings on temporr.ry investment of $79,323,000 of proceeds of Upper American River Project Refunding 3.600 Revenue Bonds held in irrevocable trust for re-funding of $77,200,000 of Upper American American River Project Revenue Bonds, Se-ries A, B and C, on February 15,1969, plus 2,400 redemption premium of $2,123,000. The in- ^ terest earnings on these temporary invest. ,f menta exceed the interest cost of the bonds from which the proceeds were derived by about three-quarters of one per cent per an-1,20o num. Average net interest rate on all bonds ( outstanding at the end of 1966 was 3.23fo. CAPITALIZATION as of December 31,1966, o amounted to $280,956,000. The customers' 1946 1950 1954 1958 1962 196 equity portion of this amount equaled $110,G48,000. Rise in SMUD's average annual residential sales Water is abundant in Northern California. At Sacramento's vide low. and high. elevation recreation. Poisom Dam = back door. Poisom Reservoir holds one million acre-feet, built by the United States Corps of Engineers-as it ap-Parther upstream SMUD's hydro project conserves more peared under construction In the early 1950s, below left, water. Both produce low. cost electricity and together pro. and as it appears today, below. ~-,. um. en g, k h W g. t% - g1 ' 3 9 L N = O b s w %,e' ? ** i 2

UNIT COSTS TO RESIDENTS DECREASED 42*/.-1966 FINANCING-The proceeds of the last rev-c,=aj enue bond issue delivered in August 1965 be-came fully expended in November 1966 so the District avoided the issuance of additional bonds during a period of record interest costs. 2,,o Depending on the future cost of interest rates, N,' the District may finance all 1967 plant ex-N penditures from internally generated funds and delay the issuance of additional revenue ,,, o bonds until 1968. 'x N POWER SUPPLY-With a constantly grow-ing population and an ever-increasing power 1.2o demand, the District this year completed ar-rangements to add materially to its three previously established sources of power. .so The first three are made up of a contract (un-til 1994) with the U. S. Bureau of Reclama-s tion permitting a total delivery of 360,000 kilowatts... a contract with Pacific Gas and Electric Company for purchases up to 300,000 194s isso ,9s4 1sse 1982. 1sse kilowatts... and, since 1961, the District's Upper American River Project. The steady reduction in cost per residential KWH Automation has helped the District keep pace with its F.spid low ratio of employees to customers has been maintained. growth... keeping records and billing efficient. accurate At left, below, are office workers ten years ago, and, at right. - and up to date. Paper work 'and clerical effort have been a section of the specially.1esigned computer center In-reduced. Through the District's 20 years' operations, a striled in 1966. .- w -n Edl a -- y ~ y T ( f 2-- r W".44*- e

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I 1947-CAPITALIZATION NOW $281 MILLION OF Wid l, I 'Ihe Upper American River Project, begun has executed an extension and revision of its 11 years ago, consists of a series of seven contract with the Pacific Gas and Electric powerhouses, lakes, and tunnels built in the Company to allow for integration of the inter-High Sierra some 60 miles from the District's tie energy. service area. Major portions of the second Canadian Treaty power and surplus North-stage of the project, financed by a $100 mil-west dump power will be available in the lion revenue bond issue authorized in 1963, spring of 1968 with the first savings to the are nearing completion. District totaling about $650,000. By the cariy 1970s, purchases of intertie power should save A temporary setback was encountered m. De-the District approximately $2 million annually cember by a fire destroymg large amounts of compared with other power sources. equipment stored for installation in the White Rock Powerhouse. The damage is covered by In all, the intertie contracts will provide insurance. It is estimated the powerhouse, the District with: with 200,000 kilowatts of capacity, will not e Two hundred thousand kilowatts of be on line until 1968-a delay of mne months transmission service between SMUD and to one year. the Oregon-California border for the pur-The District's fourth source of power is pro-ghase or sale of power from or to entities in the Northwest. Between 1971-76, dou-vided by four contracts relating to the extra-high voltage intertie between the Northwest ble this amount may be transmitted, and Southwest now under construction by the . The purchase of 172,000 kilowatts of Can. Federal Government, California Pawer Pool adian power at an approximate delivered and other agencies and companies. cost of 4.75 mills per kilowatt-hour. SMUD is contracting for purchase of Cana-

  • The purchase of up to 225 million kwh dian Treaty power and surplus Northwest annually of Northwest dump energy at dump power, transmission of this power, and a cost of 2% mills per kwh.

i OMUD has been giving increasing support and encour-tion until It is now able to offer such distribution free fr*, I agement to underground residential distribution. Through new all-electric subdivlsf 3ns. In sharp contrast to the per.t years of research and experimentation, the District overhead distribution of the past (shown at left) is one of has been able to reduce costs for underground construo-Sacramento's new subdivisions shown at right. ~?Df}??? 'd?? Q.Q, ' #YY?SI?O N ,Ms [ ($ [_ h h w.h h,..;$ #, a w n m Thkgfs ,;fcW y ~ ke m .4 w r VQyy%, ,p-( q 1

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1 1 l 1 1 4.10 MILLION IS C,USTOMERS' EQUITY -1966 ( ) I f 1 i l manon. i l saco / / 240 / / 9' Ie, 1eo i / 7 / / U. / j L, [ ]i. ID 120 s / / 6o / r,s Gains in capitalization ?- and customers' equity O 1946 1950 1954 1958 1962 1966 1 l l \\ \\ j Chown below Is 1966 construction u.tdor way on damage to equipment for White Rock, other con-the White Rock Powerhouse of SMUD's Upper struotton on the project continusd through the l American River Project. Lowest in elevation of

ear. Work was begun, for e xam ple, on the the seven powerhouses, White Rock will eventu.

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  • The opportunity to buy peaking capacity attorney that any judgments on these claims J

from the Northwest and Northwest firm will be within the scope of available insurance. power other than Canadian. A $5,198,975 suit filed against the District by Peter Kiewit Sons' Ccmpany, the contractor

  • An extension of SMUD's arrangement with PG&E (including integration of the who constructed the District's Union Valley l

systems) to permit the full utilization of Dam, was settled during 1966 for $400,000. Northwest power. ACCOUNTING SYSTEM - The District ] keeps its books in accordance with the Uni-f Looking into the future, with expected growth I rm System of Accounts for Electn, cal Corpor-in population and expet.ted increase in power at. ions presenbed by the Califorma Public needs, considerable progress is being made on Utilit,es Commissio i, a system comparable to i plans for a nuclear-generating plant. that of the Federal Power Commission and which investor-owned utilities are legally re-i; The site for the plant has been purchased and ^ the architect-engineers will be selectea in 1967. quired to follow. By early 1968, applications for Atomic Energy ENERGY MARKETING - Throughout the i: Commission h,eenses wdl be made and first year 1966, the District continued its aggressive orders will be placed for major components of energy-market.mg program with special empha-l the new plant. When completed, the plant will sis n eff rts to mcrease wmter loads to hel'- be of sufficient size to handle the system's improve the year round load factor. ( base power requirements, Active support was given the Medallion Home LITIGATION - Dun.ng 1966, the District "rogram. Demonstrations by the District's recovered approximately $7,907,000 in settle-des force helped show the advantages of ments of damage actions filed against electrical

s. raking by electricity, the use of electric heat-4 equipment manufacturers indicted by the Fed-ing, and outdoor lighting. Advisory assistance eral Government for price-firmg activit,es.

was given to architects, engineers and builders. i Similar actions are still pending against tw Promotional programs were coordinated on steel companies from whom the District pur-an industry-wide basis with dealers and chased penstock and against various manufac-contractors. turers of aluminum cable. The District worked closely with the Chamber Suits seeking $3,800,000 in damages from the of Commerce in attracting more inde.stry. It District as a result of the 1959 forest fires are also participated in numerous other commun- '{ still pend:ng. It is the opinion of the District's ity programs. l y. ( t y

STATEMENTS F N ET REVENU E-19 6 6 AND 1965 l t Year Ended December 31 1966 1965 OPERATING REVENUES: i Sales of afectric energy- $ 14,225,197 .l $ 15,322,577 Residentio.. Commercial ocd industrial 17,900,201 17,171,144 297,103 267,885 Street lighting............... 19,096 17,399 -46,905 l-39,811 Other electric utilities. Other efectric revenues. $ 31,721,436 $ 33,594,882 Total operating revenues l OPERATING EXPENSES: Operation- $ 9,106,862 $ 6,014,648 Purchased power 4,930,505 4,929,211 Other 1,439,606 1,322,257 Maintenance Provision for depreciation-4,452,174 4,495,585 Computed on historical cost Additional provision to reflect increase in price level (Note 3) 1,102,000 887,000 242,198 186,018 Taxes $ 21,273,345 $ 17,334,719 Total operating expenses $ 12,321,537 $ 13,886,717 Net operating revenue. OTHER INCOME (principally interest) 2,870,172 1,995,868 $ 15,191,709 $ 15,882,585 Gross income. INCOME DEDUCTIONS: $ 8,694,568 $ 7,590,203 Interest on long-term debt Amortization r,f bond redemption premium, 179,737 141,150 discount or d expense. Less-150,247 157,447 Amortization of bond premium Interest earnings on funds held by Trustee 3,178,130 2,380,311 for bond redemption 1,174,337 774,308 Interest charged to construction. $ 4,371,591 $ 4,419,287 Total income deductions. $ 10,820,118 $ 11,463,298 Net revenue for the year The accompanying notes are on integral part of these statements. t &~ A

SACRAMENT MUNICIPAL UTILITY DISTRIC1 i } ASSETS December 31 1966 1965 ELECTRIC UTILITY PLANT, at cost: Plant in service $207,413,394 $ 210,3,84,267 Less-Reserve for depreciation. 28,434,940 24,656,621 $178,978,454 $185,727,646 Construction work in progress. 50,745,685 31,563,542 $ 229,724,139 $ 217,291,188 ( NONUTILITY PROPERTY AND SEGREGATED FUNDS: Land and timber 786,613 819,035 Cash and U. S. Government securities, at cost-For construction purposes 44,673,843 49,773,487 in reserve funds for Revenue Bonds (Note 2). 5,967,060 5,111,206 $ 51,427,516 $ 55,703,728 CURRENT ASSETS: Cash 319,720 109,308 Segregated cash and short-term U. S. Government securities for payment of interest and long-term debt due within one year 7,687,976 7,724,192 Accrued interest receivable. 2,230,571 1,934,322 Accounts receivable, less reserves of $92,178 cnd $100,358, respectively. 2,504,958 2,122,031 Materials and supplies, at average cost 2,075,444 1,129,459 Prepayments and special deposits. 885,207 681,392 $ 15,703,876 $ 13,700,704 DEFERRED CHARGES. $ 2,655,637 $ 3,048,221 $ 299,511,168 $ 289,743,841 The accompo *ying notes are on integral part of these staternents. ( -,.- ~

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]{ jgg %i fi ', f,P ' ' g!. ypg , ;j ?! ,a f ~ .( ( The Sacramento Municipal Utility District began its operations (December 31, 1946) with headquarters offices in the building shown at left. The Dis-trict then served only 65,000 homes and businesses. IInving outgrown these original headquarters and two additional offices, the present building (above right) at 6201 S Street vas completed and occupied in May 1960 to serve the District's 163,000 customem. A four-story-plus-basement building-it was designed with space and plans for expansion. Now serving over 200,000 customers, the design provides for j staff and facilities to serve an anticipated population of over one million. At right-the District's service area-less than a two-hour drive from San Francisco or the Iligh Sierra-covers 656 square miles in the heart of Cali-fornia and in one of the two fastest-growing areas of the State. The District serves the capital city, the major portion of Sacramento County, and part of Placer County. j l m j Q e w \\ J

f .i OPERATING STATISTICS 1966 1965 1964 1963 1962 1961 1960 1959 1958 1957 1947 Customers at Year End. 201,356 196,112 190.507 183,596-176.170 169.626 163,173 153.920 142.572 135.601 70.952 KWH Sales (in thousands): ~ r Residential............ 1,021,223 922,256 863,183 785.005 714.074 664,278 580,583 491,976 431.857 381,537 100.228 Commercial, Industrial ani Other.... 1,684,914 1,493.768 1,322.020 1,125.516 1.033,446 943.636 846,287 773,280 700,699 637,952 239.873 Total 2,706,137 2,416,024 2,185,203 1.910,521 1,747,520 1,607.914 1,426.870 1.265,256 1,132.556 1.019,489 340.101 Revenue (in thousands): Residential............ $ 15,323 $ 14.225 3 14,006 3 12,989 $ 12.035 $ 10,191 $ 9,186 3 8.067 3 7,257 3 6.613 2.544 Commercial, Industrial and Other. 18,225 17.456 16,853 14,920 13,891 11.794 10,702 9.779 9,014 8.347 3.921 Total $ 33,543 3' 31,681 3 30.859 $ 27,909 3 25,926 3 21,985 3 19,888 $ 17,846 3 16.271 $ 14,960 3 6.465 Average KWH Sales per Residential Customer 5.821 5,417 5.232 4,959 4,711 ' 4.549 4,193 3,821 3,597 3.338 1.817 Average Revenue per Residential KWH Sold.. 1.50c 1.54c 1.62c 1.65c 1.69c 1.53c 1.58e 1.64c 1.68c 1.73c 2.54c Power Supply (KWH in thousands): Hydroelectric Generation....... 785,400 1.483,597 788,121 543.995 227,789 118.806 Purchases 2.135.910 1,124,540 1,577,951 1,547,587 1.669,892 1,641,732 1.574.054 1.393.956 1,245,746 1,126.179 387,000 i System Peak Demand-KW.. 682,391 576,590 545,590 465.792 416.994 398.473 337,474 283,394 247,190 228,784 76.857 Number of Employees at Year End. 831 811 780 763 769 789 796 757 710 701 490 FINANCIAL STATISTICS (THOUSANDS OF' DOLLARS) TOTAL OPERATING REVENUES $ 33,595 3 31,721 3 30,885 $ 27,937 3 25.959 3 22.047 3 19,912 3 17,865 $ 16.286 5 14.964 3 6.466 OPERATING EXPENSES Purchased power 3 9,107 3 6.015 3 6,879 3 6.946 3 7,692 3 7,485 $ 6.990 $ 5.705 3 5,063 3 4.591 3 2.214 Operation, maintenance and taxes.. 6.612 6.437 6.087 5,465 5,176 4.675 4,270 3.685 3.566 3,315 1.593 Depreciation.. 5,554 5,383 5,063 4.234 3.689 3.240 2.734 2.446 2.288 2.172 812 I Total operating expenses... $ 21,273 $ 17.835 3 18.029 $ 16.645 $ 16.557 $ 15,400 $ 13,994 5 11,836 $ 10.917 3 10.078 3 4.619 Net operating revenue $ 12,322 $ 13,886 3 12,856 3 11.292 3 9,402 3 6,647 3 5,918 3 6.029 3 5.369 3 4.886 1541 OTHER INCOME (principally interest). 2.870 1,996 1.337 1,244 1.444 1,511 1.511 1,197 498 403 9 Gross income $ 15,192 3 15.882 $ 14.193 $ 12.536 5 10,846 3 8,158 $ 7,429 $ 7,226 3 5.867 3 5.289 1.856 INTEREST AND OTHER INCOME DEDUCTIONS. 4.372 4.419 4.465 3.589 2.891 2.229 1.285 1.070 581 541 588 Net revenue for the year $ 10.820 $ 11.463 3 9.728 $ 8.947 $ 7.955 3 5.929 $ 6,144 $ 6.156 $ 5286 3 4 748 1 268 Times Bond Service Earned (a) 1.9 2.7 3.2 2.9 , 2.6 2.3 2.6 3.1 4.1 4.7 4.2 Bonjs Repaid 4.251 1,295 $ 1,256 $ 1.236 $ 1.323 $ 1,309 3 1.312 3 1,335 $ 1,113 $ 832 3 25 Electric Utility Plant. $ 229,724 $ 217.291 $ 198.767 3 184.422 $ 166,792 $ 143.486 $ 110.671 3 81,877 3 55.956 5 44.763 $ 15.469 Capitalization: Long. term Debt $ 170.308 $ 174.835 5 146.944 3 136.403 $ 127,830 $ 119,439 3 90.990 $ 60,823 $ 35,708 3 27.428 $ 16.213 Customers' Equity. $ 110,648 $ 98,726 $ 86.376 3 75.928 $ 66,404 3 58,193 $ 51.618 $ 44,498 3 37.646 3 31.702 1.268 (a) Gross iacome plus interest earnings on funds he d for bond redemption plus depreciation, divided by interest on bonds ofus bonds repaid. e

J BALANCE SH EETS - DECEM : ER 1966 AND 19 65 1 LIABILITIES December 31 1966 1965 CAPITAllZATION: [ Customers' equity employed in the business-Accumulated net revenue-i $ 92,531,150 $ 81,067,852 l Bolonce beginning of year Net revenue for the year. 10,820,118 11,463,298 $103,351,268 $ 92,531,150 l Accumulated price-level depreciation (Note 3) 7,297,000 6,195,000 Total customers' equity $110,648,268 $ 98,726,150 Long term debt (Note 1) 170,307,888 174,835,136 $280,956,156 $273,561,286 CURRENT LIABILITIES: Accounts payable. $ 7,593,136 $ 5,348,421 Accrued solaries, woges and vocation pay. 798,022 764,817 Long-term debt due within one year. 4,377,000 4,251,000 Accrued interest on long-term debt 3,544,207 3,674,347 Customers' deposits 825,510 790,062 $ 17,137,875 $ 14,828,647 DEFERRED CREDITS AND RESERVES: Reserve for extraordinary storm domoge. 300,000 300,000 Other 1,117,137 1,053,908 $ 1,417,137 $ 1,353,908 $299,511,168 $ 289,743,841

RESERVE FUNDS FOR REVENUE BONDS NOTES TO FINANCIAL STATEMENTS Reserve funds for revenue bonds at December 31 1966 and 1965, were as follows:

1. LONG TERM DEBT D"""'"

3 3 Long term debt outstanding at December 31,1966 3""8 156 and 1965, was as follows: J Ikemiser 31_ Upper Amerkan IUwer Project Donds 8 4,293,871 $ 3,3s3,211 19M 1965 White Itark Project Honds 1,0no.000 1,0uo,0tm General Otehantion Donds-ri,ctric System Honds $17,M9 515,227 Powr Donda of IN All parity revenue tumd, 155.520 212,70s $ 5,M7,o60 $ 5.111,2M Berise 1 o ,' M to 6 6, c 0 F.ledrie liards. P5,, IM7 to 1990 15.504,000 16,219,000 Duildin Honds of 196s-3,785.000 4,045,000

3. PROVISION FOR DEPRECIATION gr.,g1967 to 197a UgIr Amencan IUver Pmpct g, Q g,,3 The District provides for depreciation on the his-torical cost of the electric properties on a straight-57.,1967 to IMO 6,000,000 7,800,000 h,",Nc.iledfa, line basis at rates determined by engineering 8*

3 g (t g en F studies. Beginning in 1957 additional amounts r premium of $2.123.0 o 79,323.000 79,323,000 were provided representmg the difference between depreciation computed on property adjusted to "1"ofrNtN (79.323,0 0-(79,323,n ot Ugr A n it ver Pmject current price levels and depreciation based on the historical cost. In 1966 and 1965 such additional 3 ,.19fo to imi 79,500,000 79,s00,000 Q'd*3 4, 12,000,000 12,000,000 respectively. k 'ro3ect nond.- provisions amounted to $1,102,000 and $887,000, g,gfg5L1970to2004 3 ST, - 6f.,1970 to 2004 30,000,000 30,000,000 Electric System Hande-

4. CONSTRUCTION PROGRAM AND seria A-

,2gfg3%E 1967 to 1982 9,415,000 10,000,000 FINANCING { 2%f. 3%% 1967 to 1983 9,445,000 10,000,000 It is estimated that total construction expenditures l Total tends $172,208,000 $176,459.000 14es-Amount due within one year _4,377,000 4,251,0tn for 1967 will approximate $22,300,000, including $167,831,000 $172.208,000 $14,000,000 for the hydroelectric project in the Premium on Serien D Donde 1,351,899 1,202.147 $160,8hEt69 lita.410,147 upper American River watershed. TV finance er conshcdon on b MMectric pmMd Purchane Agreenwnt, 3%'.'.1967 to 2ian 1,424,9H9 1,424,989 in 1967 and future years, the District has au. $170.3M ma $174.835,136 'hority from its voters to iasue an additional amount of $58,000,000 in revenue bonds. ( In 1965, the District sold $79,500,000 Upper American River Project Refunding Revenue I Bonds to redeem, on February 15, 1969, the bal.

5. ANTITRUST LITIGATION ance of Upper American River Project Revenue l

I Honds then outstanding. Funds for redemption-Reference is made to the report for comments I including premium, have been deposited in Irre-relative to damage su.ts filed aga.mst certa.m elec-i vocable trust and are invested by the Trustee in U.S. Treasury Bonds or equivalent bearing annual trical equipment, steel, and aluminum manufac-interest of 47o. tu rers. ARTIIUR ANDERSEN & CO. 650 California Street San Francisco 94108 To the Boani of Directors of Sacramento Municipal Utility District: We have examined the balance sheet of SACRAMENTO MUNICIPAL UTILITY DISTRICT as of December 31,1966, and the related statement of net revenue for the year then ended. Our examination was 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. We had made a similar examination for the year ended December 31,1965. As set forth in Note 3 to the accompanying financial statements, the statements of net revenue reflect additional charges for depreciation of $1,102.000 and $887,000, respectively, for the years 1966 and 1965; these charges are equivalent to the amount by which depreciation computed on the cost of depreciable property, adjusted to reflect current price levels, exceeds depreciation computed on cost. Although generally accepted accounting principles presently provide that depreciation shall be based upon cost, we appmve of the practice adopted by the District since it results, in our opinion, in a fairer statement of net revenue. In other respects, the financial statements, in our opinion, were prepared in accordance with generally accepted accounting principles. In our opinion, the accompanying balance sheets and statements of net revenue present fairly the financial position of Sacramento Municipal Utility District as of December 31,1966 and 1965, and the results of its operations for the two years ended December 31,1966, prapared on a consistent basis during the period. ( ARTilUR ANDERSEN & CO. January 27,1967, I j L_ m.

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