ML19319E120
| ML19319E120 | |
| Person / Time | |
|---|---|
| Site: | Rancho Seco |
| Issue date: | 08/16/1968 |
| From: | Nolan W SACRAMENTO MUNICIPAL UTILITY DISTRICT |
| To: | |
| References | |
| 2934, NUDOCS 8003310627 | |
| Download: ML19319E120 (8) | |
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BEFORE THE UNITED STATES ATOMIC ENERGY COMMISSION In the Matter of SACRAMENTO MUNICIPAL UTILITY DISTRICT RANCHO SECO NUCLEAR GENERATING STATION, UNIT NO.1 Docket No. 50-312 a::-.*. s.... ~.. g.-., C'G
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At s4 FINANCIAL QUALIFICATIONS s
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SACRAMENTO MUNICIFAL UTILITY DISTRICT August 16, 1968 2934
3 1
- 1.
OUALIFICATIONS OF WITNESS 2
My name is William J. Nolan.
I have been employed by 3
the Sacramento Municipal Utility District (which I will sub-4 sequently refer to as SMUD) in an executive capacity since 5
June 16, 1946.
I currently hold two officer positions: that 6
of Treasurer, which I have held since July 5, 1962, and that 7
of Assistant General Manager, which I have held since 8
November 7, 1963.
9 Prior to my association with SMUD, I was employed for a 10 period of five years by the Railroad Commission of the State 11 of California (now the Public Utilities Commission) as 12 Accounting Officer and Assistant Secretary..
13 2.
THE DISTRICT 14 SMUD was formed by vote of its electors under provisions 15 of the California Municipal Utility District Act, 16 SMUD is governed by an elected board of five directors.
17 The board has power co issue municipal bonds to finance addi-18 tions and betterments to SMUD's electric system.
The board 19 also has power to levy-a tax on property within the District's
.20 boundaries.
21 SMUD was formed in 1923, has been operating a large-scale 22 electric distribution system since 1947, and has been generat-23 ing power at hydroelectric plants since 1961.
SMUD's service 24 area consists of most of Sacramento County, including the City 25 of Sacramento, the capital of the State of California, and 1
~
1 also includes a small portion of Placer County directly to 2
the north.
The service area contains over 650 square miles 3
and has a population of over 650,000.
4 3.
OPERATING AND FINANCIAL STATISTICS 5
a.
In 1967 operating revenues amounted to $35.9 million 6
derived from the sale of 2.9 billion kilowatt hours.
During 7
the past five years, operating revenues have increased 38.2%
8 despite a rate reduction in 1965 which then had the effect of 9
saving the customers of the District $1.4 million annually.
10 During the same period, the sale of kilowatt-hours has 11 increased 65.9%.
In 1967 the system peak demand of SMUD was 12 in excess of 740,000 kilowatts, an increase of 77.6% over the 13 comparable figure for 1962.
On July 19, 1968, system peak 14 demand reached approximately 800,000 kilowatts.
15 b.
Chi December 31, 1967, SMUD served 205,60.0 customers, 16 as compared with 176,200 customers at the end of 1962, an 17 increase of-16.7%.
18 c.
At the end of 1967, SMUD's capitalization amounted to 19
$291.3 million, consisting of $165.6 million of long-term debt 20 and $125.7 million of customers' equity.
21 d.
On December 31, 1967, electric utility plant stated 22 at original cost less depreciation amounted to $246 million.
23 In comparison, depreciated electric utility plant on Decem-24
.ber 31, 1962, was' carried on the District's balance sheet at 25
$167 million.
At the end of 1967, the ratio of net plant 2
.s 1
cost to outstanding long-term debt was 148.5%.
2 e.
In 1958 the District commenced construction of a 3
large hydroelectric generating project on the South Fork 4
of the American River and its tributaries in the Sierra 5
Nevada Mountains, some 60 miles to the east of the city of 6
Sacramento.
Currently, the District has completed five 7
powerhouses with generators having nameplate rating of 8
522,500 kilowatts with a capability of producing 1.8 bil-9 lion kilowatt-houts during a normal water year.
To date, 10 SMUD has expended almost $175 million on this project and 11 on transmission lines to bring project power to load center.
12 According to present schedules, the project will be com-13 pleted in 1970 and at that time will have an installed capa-14 city of 597,000 kilowatts which will provide 1.9 billion 15 kilowatt-hours during a year of normal precipitation.
The 16 overall cost of the project will be about $195 million, 17 including interest during construction.
18 4
CONSTRUCTION EXPENDITURES 19 SMUD's-construction expenditures for 1967 amounted to 20
$21,627,000 of which $1,066,000 was directly related to the 21 Rancho _Seco Proj ect.
SMUD's estimates for construction 22 expenditures, including expenditures for nuclear fuel, over 23 the next several years are stated in Table 2 of Exhibit A 24 of its license application as follows:
3
-m 1
Total Estimated Estimated Construction
- 2 Construction Attributable to Rancho Seco 3
1968
$ 20,125,000 2,537,000 4
1969 42,458,000 22,091,000 5
1970 43,056,000 22,724,000 6
1971 67,688,000 54,460,000 7
1972 87,066,000 74,320,000 8
1973 51,759,400 37,846,000 9
$312,152,000
$213,980,000 10 Includes $64,617,000 for construction of 11 a second unit at the Rancho Seco site.
12 SMUD has made appropriate allowance in its financial plan-13 ning for possible increases in construction costs attributable 14 to Rancho Seco.
15 5.
FINANCING 16 a.
During the first decade of SMUD's operation of its
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electric system, from 1947 through early 1958, construction 18 was financed through the issuance of general obligation bonds 19 and from internal sources.
Through legislation enacted in 20 1955 and later broadened, SMUD obtained authority to issue 21 revenue bonds, and in late 1958 revenue bonds replaced general 22 obligation bonds as the District's method of financing.
23 At the end of 1967 SMUD had outstanding $24,511,000 of 24 general obligation bonds and $143,320,000 of revenue bonds, 25 exclusive of bonds to be refunded in 1969 for which funds are 26 held in trust.
4
t h O
1 Since 1947, when SMUD commenced operation of its electric 2
system, all general obligation bonds have been serviced 3
entirely from revenues.
4 SMUD's 1967 operations generated funds sufficient to cover 5
debt service on revenue bonds 2.54 times and to cover total 6
debt service 2.13 times.
As of December 31, 1967, the average 7
net annual interest cost on all outstanding SMUD bonds was 8
3.22%.
9 b.
All revenue bonds issued by SMUD have been rated AA by 10 Moody's Investor's Service, Inc., and by Standard & Poor.
11 c.
It is currently planned that approximately 70% of 12 SMUD's total estimated construction for the period 1968 13 through 1973, inclusive, will be financed from the sale of 14 revenue bonds and the remainder from internal sources.
The 15 staff forecasts upon which this planning is based assume that 16 the revenue bonds to be issued during this period will bear 17 an average annual interest cost of 4.75% and that principal 18 will be repaid in equal annual installments over a 30-year 19 perioc.
These forecasts show a minimum debt service ratio 20 on revenue bonds of 1.76 during the period of the forecast.
21 SMUD's financial consultants, Blyth & Co., Inc., and Stone 22
& Youngberg, of 9an Francisco, California, have advised that 23 a debt service ratio of 1.76 on seasoned revenue bonds such 24 as those issued by SMUD is more than adequate to preserve 25 the AA rating those bonds now hold.
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d.
In accordance with covenants in presently outstand-2 ing revenue bond issues SMUD will maintain reserve funds
-3 rising from $4,800,000 in 1968 to $14,600,000 in 1973 for use 4
only in the event funds generated by operations should be 5
insufficient to pay matured interest and principal.
In addi-6 tion SHUD's planning contemplates that during the 1968 through 7
1973 period it will maintain unrestricted (surplus) runds of 8
not less than $12,700,000 to permit the scheduling of bond 9
issues under favorable market conditions, to allow for the 10 possibility of error inherent in any financial forecast, and 11 to provide for extraordinary losses and other unpredictable 12 financial requirements.
13 The maintenance of these funds will add to the security 14 and the marketability of the bonds SMUD will issue during the 15 period 1968 through 1973.
16 6.
CONCLUSION 17 Sacramento Municipal Utility District is financially 18 qualified to construct the Rancho Seco plant.
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