ML19321B343

Annual Financial Rept 1979.Certified Financial Statements for 1978 & 1979 Encl

ML19321B343
Person / Time
Site:	La Crosse File:Dairyland Power Cooperative icon.png
Issue date:	05/15/1980
From:	DAIRYLAND POWER COOPERATIVE
To:
Shared Package
ML19321B341	List: ML19321B340 ML19321B343
References
NUDOCS 8007310443
Download: ML19321B343 (47)

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.J More than I.500.000 tons of coal - purchased at a cost of nearly

$39.000.000 - were barged to the Genoa #3. Alma and E.J. Stoneman power pf ants during the 1979 navigational season on the upper Mississ'ppi River.

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Total operating revenues exceeded $100 million for the first time, while total margins were over $3.4 million.

Net cost of electricity delivered to member cooperatives in-creased 12.26 percent to 2.41 cents per kilowatt-hour.

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Power sales to member cooperatives increased 5.4 percent over the previous year. Total power sales increased 11.2 percent.

I The completion of the John P. Madgett station at Alma gives Dairyland Power a net capacity in service of 1,043.350 g

kilowatts.

r The Siting Study for Project '87 was completed. The prefer-red site is adjacent to the John P. Madgett Unit One and the alternate is in Barron County.

I The Three Mile Island (TMI) incident greatly affected deci-sions to cancel the Tyrone Energy Park and planned phase-out of the La Crosse Boiling Wa'er Reactor (LACBWR) by 1990.

p At mid-year an extensive restructuring of the wholesale power rate was adopted by the board based upon a cost of service study. It will encourage consertation and load man-agement.

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The board of directors has approved a load management '

program which will reduce future new capacity requirements and the cost of electricity.

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President's Message 2

Board of Directors...

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General Manager's Report.

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$M 1979 Operations..

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Comparative Sales 17

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Rnancial Statements..

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Notes to Rnancial Statements 24

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Consolidated Cost Information 28 Statistical Comparative Summary 27 v; n g.w m.qM Service Area Map (inside back cover)

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Pnnted by Dairyland Power Cooperative 1

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When rural electrification began in the 1930s tha word

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" rural" was synonymous with " farm." That's not the case any longer.. you might want to substitute the word y

" resident" for farm.

IV18$$Q6 Approximately 40 percent of Dairyland Power's consumer i

members are commercial farmers. 57 percent are rural resi-dential and seasonal and three percent are commercial or

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Despite the decline in the number of farms, most memb cooperatives have experienced significant growth in mem-

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bership as a result of a shift in population from urban areas to

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rural areas.

An analysis of recent trends reveals that member coopera-l l

tives have been growing faster in terms of new members than growth in total population of the counties in which they are located. His has resulted in the construction of a larger number of single family homes, often electrically heated anc with most of the labor saving conveniences. The non fam residential consumer is presently the second largest anc fastest growing in the Dairyland Power system.

Unfortunately, there is a small and loud group amont these residents who are not considering the agricultural valu of the rural area. Many of these people were not yet bon when the rural electrification program began 45 years age it's their belief that you flip the switch and the lights will alwa come on... and always have.

Cooperative mral electnfication was bom as a social prc gram by people recognizing electric service as a privil Some of the new residents believe electric service is a righ but yet are the very ones who support the numerous roac blocks being thrown in the path of reliable electric service The-eems to be a distrust of almost everything ar.

cveryon:. associated with the electric utility industry. B a new power plant or erecting a new transmission line h tumed irito endless rounds of govemment permit procedur and public heanngs.. often spurred on by individua~

including many who are not even consumer-members.

t here is also a longing among a few people to retum to t land and simpler life style. For just a few, that's fine - but f large populations it simply cannot be done.

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DAIRYLAND POWER COOPERATIVE 1

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Few industries are subject to the impediments which con-D 4%

jl front electric power producers. Conditions have reached the j'

. ?pW6 point v.here Dairyland Power's ability to generate and trans-J *> 's mit e!cctric energyis seriously hampered.

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People still want electricity, but they don't want generating 3

.j plants in their neighborhoods, nor power lines crossing their i

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land. These people should stop and think a minute. l.ook i* V '

back 10 years and see what has happened to electdcal J

~J cre are times the general good of the public must take A

precedence over individual rights. If people want electricity,

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generating plants and somebody's land is going to be used.

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they are going to have to put up with some power lines and 4

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We are living in one of the most difficult periods in the

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history of the mral electric program. The sad thingis,it seems 3

f to be getting worse instead of better. Many of our consumers i

Edward J. Hotdorf _

have experienced the benefits of electricity from the begin-ning. They can remember when c!cctricity in the rural areas was unheard of and they don't want is lose those benefits.

1 hose of us w!th that type of thinking must start to fight back.. If we want to continue at the same standard of living.

or improve it. Dairyland Power needs that type of active support.

we've remained apathetic too long.

How many of us are willing to reduce our present standard p/

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of living or our present overall economy? Any change can be Maf' (p/f./, J a problem in one way or another, but unrealistic, drastic

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changes in our lifestyle cannot, and must not, be done.

Dairyland Power has had an expansion program over the Edward J. Holdorf, years to keep pace with the rising demand for electric energy.

President it has become extremely difficult to meet these schedules and i

we are running out of time.

A good example of this is the 161 kV transmission line 3

f proposed from Dairyland Power's Genoa, Wis., site to Inter-state Power's Lansing, Iowa, site. The line was originally 1 scheduled to be completed in the summer of 1977.. hope-fully, the line will be started this year. It's a vital line for j continuedreliabilityof electricservicethroughoutalargeareaof southwestem Wisconsin, n 3 eastem Minnesota.

The public sector creating these delays are not only costing us money but valuable time. A most initating thing is when '

i the brownouts and blackouts come, and they will, these ll people will blame the electric utilities for not having sufficient power.

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Board of []Y l g) 6 f{Q Q[$

Morris W. Birkbeck C. Gerald B: shop Jo Carroll REC Croaford REC

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. a \\\\...s Emery W. Koval Bayfield REC The officers of the Daniv-r-

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l Board of Directors are (left t

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to right) Morrie W. Birk.

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bes k. First Vice-Preeldent;

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L Ben W. Busta. Treasurer:

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Second Vice President.

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1. C, General Counsel

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DAIPNLAND POWER COOPERATIVE 1

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u Ben W. Busta Leo F. Bymes Donald L Corty B Edward Ehom Gustaf B. Gustafson Hawkeye Tri-County REC Allamokee-Clayton REC Polk-Bumett REC Richiand REC Winnebago REC s-.

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Edward J. Holdorf Roy G Jaslouski Raymond E. Jerdee Willis P. Jerome Elmer F. Kaiser Pierce-Pepin REC Taylor County REC Freebom4fower REC Barron REC Grant REC 7-

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..A Donald D. Pehl Dton R. Redalen John Roberts Q2entin C. Rucker Irvin O. Schnick hfayette REC Tri-County REC Eau Claire P.EC P:ople's REC Jackson REC

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W Ervin H. Schultz Rudy L Wagner Wi!!iam E. Watland Wayne L Willink Ralph E. Woik Pnce REC Oakdale REC Dunn County REC St Croix REC Clark REC 5

he 1970's are history. The end of the decade marked th.

G6HGTdI 100th anniversary of Thomas Edison's development of thi first practical incandescent light bulb. It was also Dairylanc k3QRgG[,$

Power's 38th year of existence.

The year 1979 was one of disappointment, uncertainties PlePort and ep-ortunities. The numerous and varied events will b.

looked up. : as a year of decisions.

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Our major generation construction project, the 350,00(

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,'c l-kilowatt John P. Madgett station, was completed ! ate in 1979

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The plant went on-line on November 1 and was officiall3

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credited in commercial operation by the Mid-Continent Aret

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Power Pool (MAPP) as of November 25,1979. The compte A>

c e-tion of the Madgett station gives Dairyland Power a ne

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capacity in service of 1,043,000 kilowatts. We now have z surplus of generating capacitu-and that's a o,,d feeling It's the first ti ne Dairyland Power has had surplus capaciti since 1973. However, our load forecast shows that we v31 again be deficient in 1982.

Initial start-up activities of the Madgett station were excel-lent-even better than anticipated. However, on January 12,1980, there was a boiler accident which kept the plant ou-of service until May. We are very happy that the plant is now in operation for the summer, which will allow us to fulfil czpacity exchange agreements with other utilities.

Our greatest disappointment during the year was the can-cellation of the Tyrone Energy Park. The write-off of $10 million (plus interest) will result in a small power cost increase to consumers. The cancellation of Tyrone will also result in higher power costs in the future, since we will have to develop higher cost alternate generation.

The cancellation came as a result of the Wisconsin Public Service Commission's (WPSC) denial in ear'y 1979 of a permit for the construction of the plant, which was to be a 1,100,000 kilowatt nuclear unit. Dairyland Power's share i

would have been 13 percent or 143,000 kilowatts. We ap-pealed the decision, but later dropped the appeal.

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Our appeal of the WPSC decision came at the time of the incident at the Three Mile Island (TMI) nuclear plantin Penn-sylvania, which without a strong federal policy for develop-I ment of new nuclear plants has made the future of nuclear l generatian mu:h more uncertain.

6

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4 of its small size, the cost of generating electricity at LACBWR I=

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electricity at IACBWR is lower than our coal plants. In a few s.

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source of electric energy. If c.? country is ever to free itself Y

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an integral part of the total energy mix.

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o y-e decision to phase out LACBWR by 1990 was predi-Frank Lander cated upon the planned addition Of a major fossil fired Unit to the system in 1987, known as Project '87.

Several municipal electric utilities that we sewe plan to own a share of Project '87. We would like to welcome the munici-p.

pal utilities who will be sharing Project '87 with us. His new arrangement between Dairyland Power and the municipal utilities will assure both of us a futitre power supply at lower costs than each could secure separately.

I represent the rural electric cooperatives on a national The coming year will be crucialin the State of Wisconsin utility industry committee to oversee and coordinate efforts of regulatory process to obtain permits for the new unit. He the ir.dustry to address the impacts resulting from the TM1 WPSC has completed advance plan hearings which began in incident. The knowledge gained from the TM1 incident has November 1979. We have become very concemed about already been used by the industry to make existing and future the unrealistic attitude of the WPSC in determining the need nuclear plants even more safe and dependable.

fer new generating capacity. The effect that inflation and consemation will have on the use of electric energy is uncer-Our committea has formed a permanent Institute of Nuc-tam, which makes it very difficult to forecast future load lear Power Operations (INPO) whose function is to establish gr wth.1-lowever, the cost of some overexpansion, if that industrywide benchmarks for excellence in the safe operation should occur, is much better than the real social and of nuclear power reactors. I repant the cooperative seg-economic costs of an energy deficiency. A decision by the I

l ment of the utility industry on the INPO board of directors.

WPSC on our futu-e plans is expected later on this year.

%!s past year has been a frustrating one for the 46,000 kilowatt La Crosse Boiling Water Reactor (IACBWR). Our

- staff spent alot of timejustifying the need for and safety of the plant because of the attempts of local intervenor groups to prevent the installation of additional spent fuel storage racks i

gnd to shut down the plant. Valuable time was lost that l

should have been spent on other work. Dairyland Power's t pplication to expand the spent nuclear fuel storage facilities w;s approved by the Nuclear Regulatory Comrnission (NRC). We expect iew requirements for IACBWR during th2 coming year as a result of the TMIincident.

In March of this year we announced plans to phase out the oper tion of LACBWR by 1990. IACBWR is the smallest oper: ting nuclear power plant in the United States. Because 7

We are seeking federal funds to study the possible installa-used for dual space heating systems, heat storage systems t'on of a hydroelectric plant at the U.S. Corps of Engineers water heaters, crop driers, irrigation, night lighting, and othe Lock and Dam No. 8 near Genoa, Wis. He 10,000 kilo-loads.

watt hydro project would cost an estimated $21.5 million Conservation in the use of energy, including electricity and would supply 52 million kilowatt-hours (kWh) of electric ~

should be given the highest national priority in energy plan ity to the Dairyland Power system in an average year.

ning to reduce our country's dependence on oil. We use ver We have also announced plans to build a 70,000 square little oil for the generation of electricity; however, when w foot service building which will be located a few blocks from need to purchase electricity from other utilities, it is ofte our present headquarters building in La Crosse. He new purchased from oil-fired units. We have experienced a reduc building will relieve crowded conditions at our present head-tion in the rate of our load growth which we believe is due t quarters and will include a central warehouse, garage, vari-efforts of our consumers to use electricity wisely and reduc ous shops, laboratories and offices.

their usage wherever possible.

Over the past decade, inflation has become a significant Financially,1979 was the first time Dairyland Power he factor in the economy and in our business. It was necessary to topped $100 million in revenues. Our margins were $3.

increase rates for 1980 by 16.9 percent due mainly to the million. De increase in both revenues and margins was du higher investment and interest cost for the John P. Madgett to the 1979 three mill per kilowatt-hour rate increase and als station compared to our other facilities. Inflation and high to improved operation of our plants.

Interest rates have, and will continue to have, a large impact New transmission line construction continues to receiv on increasing power costs. We must increase our efforts t increased attention from the public and regulatory agencie:

become more efficient in the planning, construction and We did receive a crucial approval on an application to th operation of our system.

U.S. Army Corps of Engineers for permission to cross th The restructuring of our wholesale rates for sales to Chippewa River near Durand, Wis., for the constmctio inember distribution cooperatives was completed, and the of the 161 kilovolt (kV) Alma-Crystal Cave line.

new rates became effective on June 1,1979. De new rates We do hope to begin construction this year on the 161 k' are more cost justified than the previous rates. The distribu-line proposed from our Genoa site to Interstate Power tion cooperatives are modifying their retail rates to reflect the Lansing, Iowa, site. The line was originally scheduled to t change in wholesale rates, thereby giving consumers new completed in the summer of 1977. It is a vitalline for tF incentive to utilize conservation and load management prac-continued reliability of electric service throughout a larc tices to reduce their load at the time of the total system peak, area.

which will reduce the need for future new facilities and lower As we close the decade of the 1970's and review tt their cost of electricity.

c mplex events that were never envisioned when the decac The rates for sale of power to municipal utilities for resale began, we begin the 1980 s with renewed confidence in o:

were also restructured to make them more cost related. In the capabilities as a rural electric cooperative.

future all contracts with municipal utilities will be directly with Dairyland. In the past, municipal utilities with diesel generat-It was through the efforts of our dedicated employees ar ing facilities have been served by the distribution coopera-management that we successfully met the challenges of tl tives on a resale basis.

1970'c - environmental roadblocks, burdensome regul tion and high inflation. It is with renewed determination at In March of this year the Dairyland Board authorized a new dedication that we enter the new decade.

load management program. Dairyland Power and its member cooperatives will work together to install a modem

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centrally operated control system which will be capable of

[1M switching various consumer appliances off during peak load periocis.

Frank Linder, With such a system we will be able to reduce our system General Manac load during peak load periods without inconveniencing the user. The amount of new high-cost generating capacity can May 15,1980 be reduced, resulting in less investment, more efficient use of existing generating facilities, and lower, power costs.

he control system can be used for switching off electncity 8

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Dalryland Pomer Construcuan crews work on the four-mile N.149 line (69 tic ecology in areas mhere mater is returned kV AlbionTap off a Northern States Power Co. IIne)in Wisconsin near Black to the river from Dairgland Power stum River Fatis. This line was energized Ju.se28.1979, generating stations. This walleye was measured, seighed and releaseJ

Power Supply qpg g

Y Dairyland Power Cooperative's total system energy requir

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ments climbed 11.1 percent from the 1978 total. The syster r

wide supply of electric energy reached a record lev l

4,456,073,000 net kilowatt-hours.

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Dairyland Power generating plants produced 78.3 percent.

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j-the total energy while purchased power from members of tl J

Mid-Continent Area Power Pool (MAPP) accounted for tt

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remaining 21.7 percent needed to satisfy the electrical needs <

nearly 161,000 consumer-members.

the year The eiectr4c enersv eroaectien trom foer coei-rirea eneretir s

piants supplied 72.1 percent of Dairyland Power's system n jg pgy{gg quirements. Genoa #3 generated 46.2 percent of the n kilowatt-hour total; Alma #1-5,19 percent; the E.J. Stoneme station,3.8 percent and the John P. Madget station,3.1 percen The John P. Madgett station at Alma went on-line in a te status capacity approximately November 1,1979, and wt officially credited by MAPP as being operational and comme cial as of November 25,1979.

The La Crosse Boiling Water Reactor (LACBWR) accounte for 4.5 percent of the system requirements and the Flambee hydroelectric plant and Twin Lakes diesel plant supplied tF.

remaining 1.7 percent.

Dainjiand Power's original generating facility, Genoa #'

formerly a coal-buming installation now fueled by oil, remaine on standby status throughout.the year.

Sales Power sales totaling 4,274,396,249 kilowatt-hours represe:

an 11.2 percent gain over 1978 electric sales and a 1.1 perces increase over the record kilowatt-hour total established in 197:

This is the highest in Dairyland Power's 38 years of operatior Electric sales total of 2,741,331,383 kilowatt-hours to Class members - the 29 distribution cooperatives served by Dair3 land Power - were up 5.4 percent.

Energy sales to Class C and D members - Cooperativ Power Association in Minnesota, other neighboring electr utilities of MAPP and area municipal systems -increased t 1,533,064,866 kilowatt-hours a 19.9 percentincrease over th previous year.

Revenues Total operating revenues registered a new high c

$100,672,821, an increase of 22.4 percent.

This included $100,547,645 in sales of electric energy. It come from energy sales to Class A member systems edged up t

$69,598,101, a 24 percent gain, while revenues from Class (

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FUEL COST Cents Per Million BTU b dto$30,949 and D members and othe 600 f

550 messa-i Oil j

Coal j

Rent from electric propt 500 asumu Nuclear 9

revenues.

I The cost of producing electric pow 450 8

Expenses I

enses ri spiral throughout 1979. To f

400 h

deductions r 350 g

,ng expenditures, interest an g

i 300 1978 expenses.

At Dairyland Power, the cost of fu 1

i le largest annual expense item. The 250 34,502, accounted for nearly 43 200 j

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Purchased power accounted fo 150 Anot er signifi h

operating expense

$18,360,383.

d enerz outlay covers payments f 100 b

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974 1975 1976 1977 1978 1979 Another sizeable expense amounting to $1,90f Commissior result of the Wisconsin Public S 1

i t in th rejection of the Tyrone Energy Par billion nuclear facility a

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LOAD GROWTHAr nuat Energy Requirernents - (Net at Generating j

Plants) f prior to the WPSC action.

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non me.arr uours mated at approximately $11.5 mil thperi totalliability will be expensed over a 6 mem-w-Actual ses umForecast

/ f' March,1979.

In other 1979 disbursements, t

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er maintenance costs. '!he reason be 5000

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h G l outages in 1979 as compared to 1 down for major overhaul.

4000 L

I COST OF ELECTRICITY

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Cents Per kWh 2.8 2.6 E Gross F

2A Margins E Net 5

Total margins climbed to $3,430.699 from $591,139 in

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,. p 1978. Total margins include a non-operating r.,argin of 2.0 j

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$156,647, derived principally of interest income.

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The Dairyland Power Board of Directors, anticipating the 7

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]e' 34 effect of adding the John P. Madgett station as an operating unit 1,

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during 1979, approved a three millincrease in wholesale power 1.2 j

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schedules effective January 1,1979. At mid-year, an extensive l

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L;l by the board based upon a cost of service study to reflect the

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current fixed and variable cost pattems.

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kilowatt-hour. The increase was phased in with an 8.9 percent

.2 increase as of January 1,1980, and a 13.6 percent increase on

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June 1,1980. The two-step increase is designed to meet a board 1974 1975 1976 1977 1978 1979 approved budget of $4.5 million in margins for the year of 1980.

This large increase is due to the higher fixed and operating expenses of the John P. Madgau 9ation for the full year.

TOTAL REVENUE AND EXPENSES Millions of Dollars r

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I m _

100 r---

E Revenue g?

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_ _..I E Expenses Cost of Coal 90 g

Per Ton Delivered 1970.

.$ 7.39 80 "M

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1971.

9.51 m

70 J

t 1972.

10.17 1973...

11.00 r._

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m rt 1974..

13.93 1975.

19.13 60 ri 1

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1976.

19.26 r5 I'

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21.91 50 1979.

24.46 j

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DA!RYLAND POWER COOPERATIVE AN OVERALL COMPARISON Total Operating Net a e t*"o7 ta";&? "*'" M '""

o huens Billions Gross Net

% Change. Not 1969

$21.99

$19.08

$2.24 3.07 1.00 0.80

+ 5.98 1974 47.10 43.02 2.54 4.16 1.32 1.11

+ 3.25 1975 56.41 55.52 0.28 3.83 1.54 1.50

+ 34.83 1976 69.41 64.62 4.47 4.28 1.91 1.71

+ 13.93 1977 76.63 73.29 1.91 4.61 1.99 1.86

+ 8.92 1978 81.95 81.36

-0.25 4.20 2.17 2.15

+ 15.48 1979 100.82 97.39 3.27 4.67 2.54 2.41

+12.26 Nst Cost of Power Dairyland Power has adopted a maturity management pro-Re continuing pressures of inflation caused the average cost gram for its permanent FFB financing. ne objective of reducing of delivered power for the year to rise to $.024137 (2.41$) per totalinterest expense through the temporary use of short-term kilowatt-hour which is an increase of 12.26 percent.

maturities was adopted by management in 1979. He total amount of short-term FFB maturities to be converted into long-Interest on Long Term Debt term obligations in 1981 is $13,%2,000.

Dairyland Power maintained its schedule of repayments, with Field Construction interest, on a!! long and short term obligations during 1979.

Nine new distribution substations, a 34 mile 161 kilovolt (kV)

Specifically, total 1979 interest payments included transmission line and 30 miles of 69 kV power lines share the

$2,643,119 to the Rural Electrification Administration (REA),

bulk of major field construction projects completed last year

$ 11,118,174 to the Federal Finance Bank (FFB), and $827,484 throughout the Dairyland Power system.

to the National Rural Utilities Cooperative Finance Corporation (CFC).

Two of the newly-energized substations-Glen Haven and 1.ancaster #2 - are located in the service area of Grant REC.

Additionally, another $789,450 in interest was paid to CFC Two others - Madison and Burr Oak - service Hawkeye covering City of Alma Pollution Control Bonds and $81,014 on Tri-County REC.

unit trains for coal transportation at the John P. Madgett station.

Historically, through 1979, Dairyland Power has paid REA,

$43,995,482 in interest payments, $73,464,598 on principal long. term debt ior a total of $117,460,081 throughout its corpo-rate life.

13

7,

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THE EXPENSE DOLLAR --- Where it went Year Depreciation Fuel Ad n a at n Pat ae Purchased I

1969 13.6%

32.7 %

3.4%

13 3 %

426 86%

10 6%

13.6%

1974 9.8 41.1 2.3 8.7 6.9 10.6 7.6 13.0 j

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1975 8.8 42.0 2.8 1.5 9.0 16.1 7.3 12.5 1976 7.6 45.2 2.0 6.9 5.8 15.9 5.6 11.0 1977 8.4 45.1 1.8 4.3 4.9 19.5 4.9 11.1 1978 8.1 40.4 2.2

.7 7.0 24.7 5.8 11.1 f

1979 7.6 42.7 4.6 3.4 4.6 18.4 9.9 8.8 i

Other new distribution substations are identified as Lyndon Erection of a second outlet 161 kV transmission line from tt Station (Oakdale REC), Albion (Jackson REC), Oak Grove John P. Madgett station to Crystal Cave, near Spring Valle:

(Pierce-Pepin REC), Wilson (Tri-County REC) and Douglas Wis., and construction work on a number of other tap lines ar (Cedar Valley REC).

distribution substations were in progress at the year's end.

The 161 kV transmission line, which was energized De-Personnel Growth cember 4, links the new John P. Madgett station with a high-Dairyland Power Cooperative had a net gain of 32 employe.

capacity transmission substation, Tremval, owned by Northem in 1979 bringing the total employment at year,s end to 660 States Power Co. near Blair, Wis.

lhe greatest share of the i.ew permanent employees we Completion of the line was delayed more than a year due to assigned to Alma as part of the staffing requirement at the Jol difficulties in obtaining right-of-way and new statutes relating to P. Madgett station which went into commercial operation,n la i

agricultural land use. Right-of-way and engineering work began November.

early in 1975 and constmction of theline commenced two years later, February 1,1977.

A statistical look at personnel transactions in 1979 shows i new hires (including 12 temporary employees) and 60 termin The newly energized 69 kV lines - 10 in all-range in tions, including five retirernents and one death, lengths of a quarter-mile to 6.8 miles. These short power-or tap - lines were built to connect new substations with nearby A one-year labor agreement with Local 953, IBEW, effecti transmission lines.

February 1,1979, through January 31,1980, was negotiat.

between the parties. However, after a long series of negotiatio the wage amount granted was determined by a three memt board of arbitration.

14

s

.._ _...~.

DA!RYLAND POWER COOPERATIVE 7-POWER SALES Millions of kWh 5000 C Member Cooperatives 4500 E Others m

Environmental Requirements E CPA_

4000 n

Heavy emphasis was placed, during 1979, on various Fm environmental requirements for compliance on the John P.

3500 1

Madgett station pre-startup permits. Final operating criteria j

were set to assure protection of air and water quality and y

3000 1

complete compliance with all permit requirements.

3 0

i Other important environmental projects included monitor-2500 j

ng of existing facilities, observation of legislative and regula-j tory activities which would change present environmental 2000 regulations, and participation in planning for future projects to assure compliance with environmental rules.

d lJ' 1500 Transmission lines are receiving increased attention from the public and regulatory agencies, and environmental ac-1000 q

. [

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.j tivities involving routing and permits for transmission facilities have expanded accordingly.

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E This activity involves close coordination with other Dairy-500

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land Power transmission specialists to assure that construc-1974 19 5 1976 1977 1178 1979 '

L._ _

During 1979, Dairyland Power received a crucit.1 approval on an application to the U.S. Army Corps of E igineers for

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permission to cross the Chippewa River near Durand, Wis.,

POWER GENERATED AND for the constmction of the 161 kV Alma-Crystal Cave line.

PURCHASED uittions of Awh (Net)

This favorable regulatory action permit +?d Dairyland 5500

~ ~ ~

Power to resume acquisition of right-of-way casements and to continue construction on the transmission line.

E Coal & Nuclear 5000

~

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During the year, final planning was concluded for the C Purchased E Hydro & Diesel permit application for development of a remote site for dis-4500 posal of waste coal ash material from the John P. Madgett station site.

4000 m

[

. 3 Other environmental activities includet work to maintain l

j the licensed status of the ash disposal facilities at Genoa, 3500 L

1 Cassville and Alma, Wis.

3000 I

v r

l L

2500 A:

2000

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+

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1500

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m = ~ *~ m

~J 1974 1975 1976 1977 1978 1979 L.,.

15

)

t Planning For The Future r

One of Dairyland Power's most important conce. is for the future is developing new generating capacity to mee' the grow-ingload requirem - 'ts of member rural electric cooperatives and m

the municipal utilities served by Dairyland Power at lowest benem On possible costs.

i Some of the municipals served by Dairyland Power will share im GENHATION Gross Ne in the ownership of Dairyland Power's next generating project

... Project '87. The name is given because 1987 is the target Steam. Alma.

910.004.000 847.553.500 date for the project, and is the earliest Dairyland Power could JPM 157 000 139 000 on 600) have the unit in operation. The next year is a crucial one in the Genoa #3.

2.165.086.000 2.061.0ca.000 State of Wisconsin regulatory process to obtain permits for the S

18g;000 16g8yg new unit to meet this desired schedule.

Hya,o _ piambeau,

70,017,000 69.707.900 Dairyla.,d Power has also announced intent to phase out the (8**'

3,$$ 3.k4 7,

46,000 kilowatt la Crosse Boiling Water Reactor (LACBWR) at Purchased Power.

% 5.581.000 965.581.000 Genoa, Wis., by 1990. Continued regulatory activities with their Total Requanents.

4.672.819.b00 4.450.073.000 cost implications make it increasingly difficult for the small nu -

clear plant to show favorable economic retum, given the antici' DISTRIBUTION (kWh) pated additional capital requirements.

t' Ciass A Members......

2.741331383 The additional generating capacity that is planned to be on Cias C & D Members.

1.jn0mse6 line in the Dairylar:d Power system by 1987 will make it less Total Sales.

4.274.390.249 attractive to operate a small highly technical plant, such as

'",$*n,S,

e,. ;

xgg ses 7

LACBWR, with its high overhead costs.

Totat Ds%.

4.456,073.000 Total Ptant GENERATING STATIONS Net Capacity Number inkW Type Station of Units (Winter)

Steam. Alma.

5 206.950 JPM......

1 350.000 Genoa #1.

4 12.600 Genoa #3.

1 350.300 Stoneman.

2 52.800 Hydro.

Rambeau..

3 16.000 Desel.

Twtn Lakes.

4 8.700 Nuclear. LACBWR.

1 46.000 Total Capacity in Service.

1.043,350 TRANSMISSION UNES M ls o Miles as Voltage.kV Cor % ed operating 161.....

507.09 507.09 115/161.

2.20 2.20 69...

4.!86.21 2,157.61 34 5.

Mfd 419 43 Total Maes.

3 ; #9 U 3.086.33 SUBSTATIONS Total 4 act ty.

Type Number kVA Plant.

5 1,108.500 Transmisson 19 8(B 000 DstnbutN 235 642315 Total.

W 2.553.815 l

w.-

_ _ _. ~..

DAIRYLAND POWER COOPERATIVE Comparative Sales to Member Cooperatives roa 1ss vesas esoto occomsea si. teze xxo ters Member Number of Members kWh Billed Revenue Cooperatives 1979 1978 1979 1978 1979 1978 WISCONSIN Barron*

10.591 10,453 171,072,409 156,730,422

$ 4.233,879

$ 3,378,058 Bayfield 5,260 5,117 44,984,988 43,395,994 1,160,996 956,555 Buffalo.

3,'t54 3,207 62,084,371 59,521,458 1,604,873 1,301,791 Chippewa Valley,

4,706 4,614 67,448,987 63,717,937 1,744,950 1,397,025 Clark.

6,53b 6,384 109,336,901 104,522,747 2,862,197 2,305,829 Crawford 2.631 2,552 37,464,961 36,379.286 986,979 8L",817 Dunn.

5,470 5,404 91,617,990 87,110,091 2,383,441 1,916,062 Eau Claire 6,676 6,379 97,131,745 92,361,311 2,487,407 2,001,968 Grant

• 4.874 4,807 119,127,018 113,254,873 3,102,151 2,514,679 Jackson

• 4,260 4,387 55,063,765 51,439,020 1,426,711 1,132,329 Jump River 5,076 4,904 50,893,813 48,492,332 1,317,652 1,062,416 Lafayette

• 2,192 2,169 51,844,680 49,977,367 1,344,736 1,102,590 Oakdale*

8,036 7,821 122,060,736 115,769,273 3,070,585 2,521,757 Pierce-Pepin*

4,446 4,376 106,174.124 113,717,281 2,657,785 2,455,994 Polk-Burnett 11,573 11,139 106,362,408 100,577,729 2,692,903 2,170,138 Price,

5,523 5,327 39,998,334 38,073,557 1,027,677 832,755 Richland.

2,812 2,770 39,918,443 39,362,787 1,029,968 857,144 St. Croix.

4,084 3,938 80,918,896 75,921,555 2,090,463 1,661,226 Taylor.

2,623 2,533 41,056,761 39,187,539 1,062,670 857,531 Trempealeau*

5.930 5,850 122,293,766 111,545,821 3,125,533 2,427,623 Vernon*

7,177 7,083 128,082,975 123,881,129 3,289,719 2,705,642 Total Wisconsin,

113,724 111,214 1,744,938,072 1,614,939,509

$44,703,275

$36,364,929 MINNESOTA Freeborn-Mower

• 5,420 5,417 130,671,044 119,077,498 3,259,067 2,548,097 i

People's.

10,100 9,914 169,007,920 164,356,755 4,085,139 3,401.813 Tri-County

• 10,264 10,141 227,945,793 216,675,901 5,702,936 4,629,974 i

Total Minnesota 25,784 25,472 527,624,757 500,110,154

$13,047,142

$10,579,884 IOWA Allamakee-Clayton.

7,333 7,201 115,712,736 99,653,833 2,998,020 2,391,447 Cedar Valley

• 2,964 2,946 85,039,398 74,526,975 2,103,509 1,606,638 1

Hawkeye 5.588 5,541 116,182,223 107,457,068 2.968,108 2,315,302 Winnebago*

2,136 2,155 98,937,487 92,343,004 2,408,941 2,033,773 Totallowa.

18,021 17,843 415,871.844 383,980,880

$10,478,578

$ 8,350,16b r

ILLINOIS Jo-Carroll..

3,441 3,386 52,896,710 50,810,284

$ 1,369,106

$ 1,105,208 Totals including Municipals,

160,970 157,915 ' 2,741,331,383 2,599,840,827

$69,598,101

$56,400,181 Totals Excluding Municipals 160,944 157,889 2,495,511,489 2,364,561,687

$63,588,906

$51,213,550 4

• Indudes Sales to Municipals Served Through Member '3ystems.

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quired Dalrgland Power's Ergineering Department to use precise planning of new transmission lines.

DAIRYLAND POWER COOPERATIVE s.

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n Financial NO Statements a

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crit new towers in the joint project. This tower is 205 8

f at high and la located at Weston. Wis.. west o M;nomonie. Phase Two of the program, in the south-ern itif of the Dalryland Power system.is expected to be completed in 1980.

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(herall coordination of the Dalrgland Power System is accompilshed at the Operations Control Center located in the general office building at La Crosse. It is here that dectolons are made which correlate the operation of i

generating sources, the transfer of bulk power to and from neighboring systems and transmission network switching in order to achieve optimum 1

i economy, stability and security.

BALANCE SHEETS - DECEMBER 31,1979 AND 1978 Assets 1979 1978 ELECTRIC PLANT (Notes 1,2,3,4 and 6):

$403,331.080

$209,470,904 g

Plant and eqmpment, at original cost.

(96,196,317)

(88,009,424)

Accumulated depreciation,

$307,134,763

$121,461,480 Construction work in progre:s -

7,486,879 I'809.806 144,215,218 Johr P. Madgett Station 13,775,012 17,138,030 O+' e 14,685,235 10,290,670 N. clear fuel, at amortized cost

$337,4M,816

$300,592,277 Total electric plant t

INVESTMENTS, at cost Capital term certificates of National Rural Utilities Cocperative Finance Corporation (Note 5).

$ 10,334,726

$ 8,792,372 Pollution Control Bond proceeds on deposit with trustee.

i 1,237,324 2,941,655 l

1,020,912 1,854,090 Other investments.

t

$ 12,592,962

$ 13,588.117 Total investments CURRENT ASSETS:

[

124,765 389,761 Cash,

Accounts receivable -

l Energy sales.

[

10,977,671 12,087,698 1,375,910 1,446,874 Other Inventories, at average cost -

44,358,885 40,2M,051 Fossil fuels.

4,046,801 2,534,703 Materials and supplies t

468,419 1,209,246 Prepaid expenses i

$ 61,352.451

$ 57,%2,333 Total cunent assets.

i DEFERRED CHARGES:

l Abandoned facilities, being amortized (Note 4)

{

$ 9,553,391 Other j

1,589,355 646,364 I

$ 11,142,746 646,364 f

$422,492,975

$372,789.091 i

6 I-g The accompanying notes to Anancial statements are an integral part of these balance sheets 20

~.. _. -..

-. ~. -

DAIRYLAND POWER COOPERATNE Capitalization and Liabilities 1979 1978 CAPITALIZATION:

Long-term obligadons, less current maturities included below (Notes 3 and 6) -

$295,296.544

$250,701,197 Long-term debt.

Subsct.;* ions to capital term certificates of National Rural Utilities Cooperative Rnance Corporation, 3,318,350 2,663.378 due in varying annual amounts to 1984 (Note 5)

Capitalized lease obligations principally at implicit interest rates of 7%,

due in varying amounts to 1995 7,659,084 7,974,798 Total long-term obligations

$306,273,978

$261,342,373 Member and patron equities -

Membership fees.

9,202 8,839 Patronage capital (Notes 8 and 10).

58,289,658 56,704,530 I

$ 58,298,860

$ 56,713,369 Total member and patron equities.

$364,572,838

$318,055,742 Total capitalization CONTINGENT LIABILITIES AND COMMITMENTS (Notes 2,3 and 10)

CURRENT LIABILITIES:

Current matudties of long-term obligations.

l

$ 7,238,391

$ 6,720,584 28,100,000 22,000,000 Notes payable (Note 7)

I Accounts payable -

4.891,430 6,497,105 General 10,144,937 11,149,477 Construction Accrued liabilities -

1,443,770 1,260,880 Payroll and vacation pay.

1,704,920 1,118,904 Taxes 827,399 1,435,473 Interest.

2,622,994 2,285,974 Nuclear fuel reprocessing costs (Note 1) 946,296 2,264,952 Other

$ 57,920,137

$ 54,733,349 Total current liabilities.

$422,492.975

$372,789,091 n.-.--

~ % - _ - - -

The accompanynng notes to Anandal statements are an integal part of d,ese balance sheets

Statements of Revenues and Expenses and Patronage Capital FOR THE YEARS ENDED DECEMBER 31,1979 AND 1978 1979 1978 OPERATING REVENUES:

Sales of electric energy

$100,547,645

$ 82,213,48 Other i

125,176 19,75.

Total operating revenu s,

$100,672.821

$ 82,233.24(

OPERATING EXPENSES:

Power generation -

Fuel.

$ 43,034,502

$ 33,010,16; Operation Maintenance 5,865,730 5,412,065 Purchased and interchanged power.

3,776,033 5,769,02; Transmission -

18,360,383 20.252.80(

Operation,

Maintenance 543,595 538.30C l

1,261,986 1,217,985 Administrative and general-Operation.

}

t 4,702,838 3,602,641 Maintenance 123,007 93,768 Depreciation and amortizabon (Note 1),

7,691,450 6,642,379 Taxes 3,937,478 2,801,947 Total operating expenses.

$ 89,297,002

$ 79,371,086 Operating margin, before interest and other deductions.

$ 11,375,819

$ 2,862,154 INTEREST AND OTHER DEDUCTIONS:

Interest on-

[

Long-term obligations

$ 15,352,985

$ 9,952,491 Short-term obligations j

2.388,349 972.801 Allowance for borrowed funds used during construction (Note 1).

(11,681,830)

(7,825,728 Amortization of abarJoned facilities (Note 4).

t 1,905,750 Other

{

136,513 18,352 f$

Total interest and other deductions 8,101.767

$ 3,117,919 Operating margin (deficit) l

$ 3,274,052 (255,765)

NONOPERATING MARGIN.

Allowance for funds, other than borrowed funds, used during construction (Note 1)

Other 1,121,072 156.647 (274,168)

Net margin.

$ 3.430,699 591,139 PATRONAGE CAPITAL BEGINNING OF YEAR.

56,704,530 57,550,907 RETIREMENT OF CAPITAL CREDITS (Note 8)

(1,845,571)

(1,437,516) 1 PATRONAGE CAPITAL END OF YEAR, including margins assignable of $3,430,699 in 1979 and $591,139 in 1978.

j t

$ 58,289.658

$ 56,704,530 22 b

1he accompanWq ncdes to 6nanaal statements are an integral part of these statements

DAIRYLAND POWER COOPERATIVE Statements of Sources of Funds Used for Construction 1979 1978 FUNDS GENERATED lhTERNALLY:

Net margins,,

$ 3,430,699 591,139 Noncash items -

Depreciation and amortization:

Charged to operations.

7,691,450 6.642.379 Charged to clearing and other accounts 1,186,620 1,029.592 Amortization of abandoned facilities and other deferred charges (Note 4) 1,997,156 Nuclear fuel amortization.

1,144,817 689.513 Allowance for funds other than borrowed funds used during construction.

(1,121,072)

Funds generated by operations.

$ 15,450.742

$ 7.831,551 Retirement of capital credits (1,845,571)

(1,437,516)

Funds generated intemally

$ 13,605,171 5 6,394,035 FUNDS OBTAINED FROM OUTSIDE SOURCES:

Long-term borrowing from FFB and REA (Note 6).

$ 50,793,034

$ 55.464.174 Pollution Control Bond financing, less amounts on deposit with trustee 1,494,331 10.658,345 Sale of non-utility property.

875,600 Short-term borrowing,

6,100,000 12,900,000 Repayrnent of long-term obligations to REA,

(5,472,880)

(5,456,279)

Reduction of other long-term debt.

(315,714)

(291,909)

Net funds obtained from outside sources S 53,474,371 5 73.274.331 OTHER SOURCES (USES) OF FUNDS:

Purchase of capital term certificates, net of change in subscription.

(887,382)

$ (1,%5.339)

Decrece in other investments (42,422) 112,346 Abandoned facilities and other deterred charges, net (12,493,175)

(276.587)

Changes in other working capital items -

Cash.

264,996 (37,172)

Accounts receivable

(

1,180,991 (3.355.274)

Inventories.

(5,576.932)

(15,760,684)

Prepaid expense.

740,827 280,811 Accounts payable t

(2,610,215) 3,159,104 Accrued liabilities (820,804) 2,118,992 Total other sources (uses) of funds

$ (20.244,116')

$ (14.823.803)

FUNDS USED FOR CONSTRUCTION

$ 46,835,426 5 64.844.563 f

Add. Allowance for funds other than borrowed funds used during construction.

[

1,121,072 ELECTRIC PIANT ADDITIONS, net,

$ 46,835,426

$ 65,%5,635 The accompanying notes to Ananaal statements are an integral part of these staternents

Notes to Financial Statemenis tfradd'"""';nd bette,ments of units of p,eper,s e

s as gu m m n T hems pro p @ b

1.

SUMMARY

OF SIGNIFICANT charged to utility plant accounts. The cost of units o ACCOUNTING POLICIES -

property retired, sold, or otherwise disposed of, plu:

Organization:

removal costs, less salvage, is charged to accumulatec Dairyland Power Cooperative (the Cooperative) is an provision for depreciation. No profit or loss is recognizec electric generation and transmission cooperative associ-in connection with ordinary retirements of propert3 ation organized under the laws of Wisconsin. The units. Maintenance and repair costs and replacemen-Cooperative provides wholesale electric service to and renewal of items less than units of property an member distribution cooperatives engaged in the retail charged to operating expenses.

sale of electricity to memt zt consumers located in Wis-

2. NUCLEAR REACTOR -

consin and parts of Minnesota, Iowa, Illinois and The Cooperative has operated a nuclear generating facilitt Michigan.

under a provisional operating license which expired is The accounting records of the Cooperative are main-1975. The reactor is presently being operated under ar tained in accordance with the uniform system of ac-informal extension of the provisional operating license counts prescribed by the Federal Energy Regulatory The Cooperative has applied to the Nuclear Regulator.

Commission as adopted by the Rural Electrification Commission (NRC) for a permanent operating license Administration (REA), the Cooperative's principal reg-Because of the Three Mile Island (TMI) accident, NRC i ulatory agency.

directing its resources towards TMI issues, therefore, it consideration of constmction permits and operatin Depreciation:

licenses, including the Cmperative s application for a:

Depreciation is provided based on the straight-line perating license, has been delayed. He Cooperative i method at rates which are designed to amortize the unable to predict when a permanent operating licens original cost of properm over their estimated useful m y be granted.

lives. The provision for c6epreciation averaged 3.3% of depreciable plant balances for 1979 and 1978.

Recent events indicate that the manner of decommission ing a nuclear gener ting plant and the manner of dispos!

Amortization of Nuclear Fuel:

ti n f spent nuclear fuel may not be determined fc Ee cost of nuclear fuelis charged to fuel expense based m g years. Monah, not an E r@remes rc on heat produced for the generation of electricity. He sulting from reviews of the TM1 accident have been de salvage value of fuel assemblies and cost of disposal of fined. While the provision for depreciation includes spent fuel are being recorded over the lives of ir dividual factor to provide for estimated decommissioning costs assemblies based upon management's estimate of such the evenutal cost of retiring a nuclear generating unit i am unts uncertain at the present time. The Cooperative continuc Income Taxes:

to review its decommissioning cost estimates and it e>

The Cooperative is exempt from Federal and state in-pects that any increases in such costs will be provided fc come taxes. Accordingly, no provision for such taxes in future rates.

has been made in the accompanying financial state-

3. CONSTRUCTION AND COMMITMENTS -

ments*

Re Cooperative's 1980 estimated construction prograr Allowance for Funds Used During Construction:

is $29 million. Financing of construction is expected to t Allowance for funds used during construction represents provided by borrowings from the Federal Financial Bar the cost of borrowed funds and a retum on other capital (FFB) and short-term lines of credit with the Nation used for construction purposes and is capitalized as a Rural Utilities Cooperative Finance Corporatic component of electric plant. The amount of such allow-(NRUCFC).

ance is determined by applying a rate to the balance of nuclear fuel and certain electric plant additions under construction. The rates used varied from 6.4% to 15.5%

in 1979 and 5% to 7.5% in 1978, depending on the source of funds.

24

tal contributed or deposited more than twenty years prior F

to the current year. Accordingly, the 1958 capital credits

' Auditors' Renort were retired in 1978 and the 1959 capital credits were r

retired in 1979. Implementation of this policy is subject to To the Members and the Board of Directors Dairyland Power Cooperative:

annual review and approval by the Board of Directors and the REA, and no cash retirements to be made We have examined the balance sheets of DAIRY-which would impair the financial condition of the LAND POWER COOPERATIVE (a Wisconsin Cooperative or violate any terms of its agreements.

cooperative) as of December 31,1979 and 1978, and the related statements of revenues and expenses and

9. PENSION PLAN -

patronage capital and sources of funds used for con-P,msion benefits for substantially all employees are pro.

stmction for the years then ended. Our examinations vided through participation in the National Rural Electric were m de in accordance with generally accepted Cooperative Association Retirement and Security Pro-auditing standards and, accordingly, included such gram. Pension cost was approximately $944,000 in 1979 tesu of k accoudng recods and sua ohr auh and $825,000 tr/1978. The Cooperative's policy is to ing procedures as we considered necessary in the fund pension costs accrued.

circumstances.

10. CONTINGENCIES -

In our auditors' report dated March 23,1979, our The Wisconsin Department of Revenue has examined the

{ op nion on the 1978 financial statements was qual-i Cooperative's method of determining gross revenue fied as being subject to the effect on the financial license fees for the years 1973 through 1976, and has statements of such adjustments,if any, as might have assessed deficiencies and interest of approximately $1.1 been required had the outcome of the denial of a million for these years. The Cooperative estimates that certificate of need for constmction of the Tyrone additionallicense fees of approximately $600,000 could Energy Park and the subsequent decision by the be assessed for 1977 if the Department of Revenue's Cooperative and the other participants to discontinue method of computing the license fee is applied to that the project been known. As explained in Note 4 to the year. These amounts have not been reflected in the financial statements, the project was discontinued in accompanying financial statements. l_icense fees for l 1979. 'The Cooperative's principal regulatory agency 1978 and 1979 have been accrued on a new basis of has approved classifying the accumulated costs of assessment approved by the Wisconsin Department of approximately $11.5 million as deferred charges Revenue. The Cooperative, on the advice of legal coun.

which will be recoverable in the future through in-sel, is vigorously contesting the findings of the Depart.

creased rates. Accordingly, our present opinion on the 1978 financial statements, as presented herein, is dif-ment of Revenue and believes that any liability will be ferent from that expressed in our previous report.

substantially reduced or eliminated; however, the out-g come of this matter cannot presently be predicted.

As discussed in Note 10 to the financial statements, the Wisconsin Department of Revenue is challenging j

in January,1980, an accident at the Cooperative's John P.

p the Cooperative s method of determining its gross Madgett Station caused significant damage to the boiler.

revenue license fee for the years 1973 through 1977.

L.

Temporary repairs are being made and it is expected that The Cooperative is contesting the Department of the plant will be retumed to cperations by May 1,1980.

Revenue's assessment for additional license fees, a;

Further permanent repairs are to be made at a later date.

however, the additional amount to be paid, if any, is in the opinion of management and legal counsel, the cost not determinable at this time.

of these repairs will be substantially covered by builders' in ur opinion, subject to tne effect of the outcome risk insurance on the station or by warranties of the f the gross revenue license fee ma;ter described in manufacturer and contractors.

the preceding paragraph, the finanaal statements re-The Cooperative has been named in severallawsuits and ferred to above present fairly the financial position of I

claims, primarily related to the construction and opera-Dairyland Power Cooperative as of December 31, tion of the John P. Madgett station. Although the out-1979 and 1978, and the results of its operations and come of these matters cannot be determined at the pres-sources of funds used for construction for the years ent time, management and legal counsel believe these then ended, in conformity with generally accepted actions can be successfully defended or resolved without accounting principles applied on a consistent basis.

a material adverse effect on the financial statements of the ARTHUR ANDERSEN & CO.

r Cooperative.

Minneapolis, Minnesota March 14,1980, 26

i L.

4 DAIRYLAND POWER COOPERATIVE

4. ABANDONED FACILITIES.

Long-term obligations to the REA are payable in equal Re Cooperative was one of four joint owners in a project quarterly principal and interest installments to 2013.

to build an 1,100 megawatt nuclear generating facility in Pnncipal repayments on the long-term obligation to the westem Wisconsin to have been known as the Tyrone FFB begin in 1981 and extend through 2012.

Energy Park. At December 31,1978, the Cooperative had invested approximately $7.5 million in the project.

Interest on the NRUCFC obligation at prime plus %% is due quarterly and repayment of principalis due in quar-On March 6,1979, the Wisconsin Public Service Commis-terly installments from 1982 through 1984. Pn,napal re-sion issued an order denying the application for a certifi-payments and interest on the 8% NRUCFC obligation cate of need for the project. On July 24,1979, the are payable quarterly through 1999.

co-owners reached an agreement to terminate and abandon the project. At the time of abandonment, the The pollution control bonds are payable in increasing an-Cooperative had incurred or was committed for costs of nual amounts in the years 1980 through 2008.

approximately $11.5 million for its share of the project, Substantially all of the Cooperative's assets are pledged as including allowance for funds used during construction.

collateral for these obligatons.

The Cooperative has received approval from REA to re-Maturities of the Cooperative's long-term debt, subscrip-l classify its investment in the Tyrone Energy Park as a tions for capital term certificates and capitalized lease deferred charge and to begin amortization of these costs obligations, dtiring each of the next five years are as over a 60 month period commencing March 1,1979.

foHows-Such amortization is to be recovered through additional Year Amount rates. Amortization for 1979 was approximately $1.9 1980

$ 7.238,391 j

million.

1981 21,787,952

5. INVESTMENT IN NATIONAL RURAL UTILITIES 1982 12,306.205 COOPERATIVE FINANCE CORPORATION.

1983 8,466,348 1984 9.938,829 Re Cooperative has purchased or subscribed to purchase 1985-2013 253,774,644 approximately $10.3 million of unsecured subordinated capital teon certificates to be issued by the National Rural he amounts due in 1981 include $13,962,000 of two Utilities Cooperative Finance Corporation. The certifi-year FFB obligations which' the Cooperative intends to cates will bear interest at the rate of 3% per year and will refinance under the long-term commitment with FFB.

mature in 2020,2025, and 2030. Of the above amount, f

o pfo de 7*

E

$3.8 million will be purchased during the period 1980 io l

tn financing, the Cooperative has ar-1984 in annual installmente approximating.7% of ranged lines of credit aggregating $32,850,000, princi-operating revenues, as defined.

pally through NRUCFC. Substantially all borrowings are

6. LONG TERM OBLIGATIONS -

at an interest rate of prime plus %%. Information relating Ec Cooperative's long-term debt outstanding as of De-to borrowings under lines of credit during the years is as cember 31, consists of the following:

follows:

1979 1978 1979 1978 REA Obligations (2%)

$106,048,051 $120,919,931 (millions)

^"*9' "9 *

"9 REA Obhgations (5%)

19.267,495 3,872,670

"'"***"I**""9 FFB Obbgations (7.6% - 11.3%)

146,359,000 113,000,000 Weighted average Pn plus 8,025.000 5,325,000 l

Weighted average interest rate for the year 12.8 %

9.9%

l 8%

8,425,000 OhuNn"'canD5n"ds here are no compensating balance requirements or fees I p

(4.3% - 64%)

13,600.000 13,600,000 relating to the lines of credit.

$301,724.546 $256,717,601

8. RETIREMENT OF CAPITAL CREDITS -

e C operative's Board of Directors has adopted the rrent matunties 6,428,002 6.013,4(M policy of retiring capital credits allocated to patron mem-Total Long-Term Debt

$295,296,M4 $250,704.197 bers on a "first-in, first-out" basis so that at all times the Cooperative will not retain as patronage capital any capi-i e

DA!RYLAND POWER COOPERATIVE Statistical Comparative Summary 1979 1978 1969 Unaudted REVENUE Class A Member Power Sales.

$ 69,598,101

$ 56,403,181

$ 14,343,101 Class C & D Members and Other Power Sales 31.074,720 25,813,3M 6,801,867 156,648 (254,414) 669,807 Nonoperating Revenue.

Total Revenue.

$100,829,469

$ 81,959,071

$ 21,814,775 NET GENERATING CAPABILITY - kW 96't,350 694,100 655,000 KILOWATf. HOUR OUTPUT NET (000 Omitted) 2,403,498 Steam Generation.

3,217,167 2,718,200 68,000 Nuclear Generation.

200,932 174,223 67,481 69,708 77,220 Hydro Generation.

8 Diesel Generation 2,685 3,951 10,233 Purchased Power.

965,581 1,037,028 382,984 Total 4,456,073 4,010,622 2,932,196 l

KILOWATT-HOUR SALES (000 Omitted)

To Class A Members.

2,741,331 2,599,841 1,433,484 To Class C & C Members 1,533,065 1,242,906 1,356,996 2.790,480 Total 4,274,396 3.842,747

[

AVERAGE kWh COST TO MEMBER SYSTEMS Gross (Before Margins).

.025388

.021694

.010006 Net (After Margins)

.024137

.021466 i $

.007972 MEMBER CONSUMERS AT END OF YEAR.

160,944 157,889 i

115,172 649 621 496 EMPLOYEES (Average During Year).

{

UTILIT( PLANT AT COST Electric Plant in Service

$418,016,315

$219,761,574 l

$141,574,422 Construction in Progress.

15,584,818 168,840,127

{

9,640,072 Total Electric Plant

$433,601,133

$388,601,701

$151,214,494 (96,196,317)

(88,009,424) {

(36,394.979)

Accrued Depreciation.

Depreciated Cost of Plaat

$337,4M,816

$300,592,277

$114,819,515 I

INVESTMENT AT COST Per Consumer.

[

2,096 1,904 j

1,313 Per Member System.

i

$ 11,634,649

$ 10,365,251 i

$ 5,600,537 TOTAL ASSETS.

$422,492,975

$372,789,091

$142,727,883 TRANSMISSION LINE i

Kles of 34.5 kV j

390 33 420.19 762.98 Miles of 69 kV.

2,18u.21 2,127.20 j

1,714.22 509.29 475.68 334.36 Mles of 161 kV.

j 3,086.33 3,023.07 2,811.56 Total Mies 235 224 160 DISTRIBUTION SUBSTATIONS MEMBER SYSTEM SUBSTATIONS DEMAND MAX. kW.

554,054 527,779 291,155 MEMBER SYSTEM ANNUAL LOAD FACTOR- %

56.5 56.2 56.2 kWh MO. CONSUMER USE - WITH MUNICIPAL..

1,434 1,401 1,048 1,301 1,274 j

942 kWh MO. CONSUMER USE - EXCL MUNICIPAL r

i 1,618,448 1,403,655 i

1,141,242 COAL BURNED (Tons).

[$

6.49

[$

24.46 24.56 COAL COST PER TON DELIVERED.

o DAIRYl.AND POWER COOPERATIVE-MEMBER DISTRIiUTION COOPERATIVES ConsoHdated Balance Sheets ASSETS AND OTHER @

Accum.

Invest. In Current T

se t ti i for c,

t tv Or - a's.

Pr A et &

Clase "A'* Members Plant

& Amort.

Plant Capital Invest.

Def. Debits D.

Wisconsin Barron..

$ 11,428,341 3,671,211 7.757,130 3,319,835 497,238 1,849,265 13.4; Bayfield,

8,656,718 2,603,524 6,053,194 273,213 349,458 850,514 7,5; Buffalo......

3,947,708 1,342,809 2,604,899 1,516,849 173.449 747,940 5,0J Chippewa Valley 4,113.491 1,501,482 2,609,009 1,500,552 287,962 635,070 5,0:

Clark....

6,822,673 2,388,507 4,434,166

'?,752,398 517,758 1,321.691 9,0; Crawford.

2,056,984 764,212 1 292,772 926,791 153,023 374,450 2,74 Dunn...

5.037,174 1,988,378 3,048,7 %

2.127,548 533,662 612,788 6.3; Eau Claire.

6,798,742 2,009,998 4,788,744 1,886,016 380,181 953.777 8.0(

Grant.

6,090,937 2,109,325 3,981,612 2,625,449 276,663 667,029 7,5E Jackson.

5,168,386 1,467,702 3,700,684 1,192,678 299,219 609,763 5,8(

Jurnp River,

5,930,945 1,873,399 4,057,546 1,156,130 3d4,400 1,021,577 6,5 Lafayette.

4,097,157 776,439 3.320,718 1,428,152 201,442 401,166 5,3!

Oakdale.

9,617,806 3,145,093 6,472,713 2,621,094 1,172,868 1,101,949 11,3t Pierce-Pepin 5,423,235 1,896,411 3.526,824 2,415,835 417,005 1.270,023 7,6; Polk-Burnett 11,539,631 3,325,176 8,214,455 2,203,610 644,512 1,393.992 12,4f Pnce,,..

6,697.166 2,319,946 4,377,220 199,809 232,669 593,991 5,4(

Richland 3,504,111 1,113,085 2,391,026 1,026.377 195.390 370,403 3,%

St. Croix 5,383,913 1,498,534 3.885.379 1,828,118 360,637 750,689 6,8; Taylor...

3,283,143 944,191 2,338,952 987,087 288,747 751.395 4,3t Trempealeau.

7,563,813 2,074,417 5,489,3 %

2,462,153 331,229 1,377,694 9,6t Vemon,

8,914,742 3,030,436 5,884,306 3,140,612 416,202 1,760,637 11,2C

$132,076,816 41,847,275 90.229,541 37,590,336 8,073,714 19,418.833 155,31 Illinois Jo-Carroll

$ 4,593,097 1,406,302 3,186,',95 1,078,955 222,427 599,774 5,$

Minnesota 2

Freeborn-Mower,

$ 10,234,087 2,764,711 7,469.376 3,101.061 603,761 1,073.180 12,2 People's.

14,903,845 4.347,984 10.555.861 3,485,899 650,363 1,912,813 16,f Tri-County.

13.226,079 4,065,936 9,160,143 5,207,920 753,% 9 1,638,375 1 6,74

$ 38,364,011 11,178,631 27,185,380 11,794,880 2,008,093 4,624,3U 45,6 lowa y

Allamakee-Clayton,

$ 9,876,105 3,671,284 6,201,821 2,773,834 551,206 1,441,871 10,9; Cedar Va!!ey...

4,557,950 1,647,991 2,909,959 1,697,301 232,723 1,128,973 53y Hawkeye Tri-County.

6,447,838 2.492,038 3,955.800 2,636,973 108,981 2,044,780 8.7j Winnebago.

2,534,090 1,267,900 1,266,190 1,632,036 391,885 556,488 3,$

$ 23,415,983 9,079,213 14,336,770 8,740,147 1,284,795 5,172,112 29,5 Total Distribution

$198,449,907 63,511,421 134,938,486 59,204,318 11,589,029 29,815,087 235,d Dairyland Power.

$446,187,554' 108,782,738 337,404,816 12,592, % 1 72,495,197 422,4 Total Dist & Dairyland.

$644,637,461 172,294,159 472,343,302 59,204,318 24,181,990 102,310,284 658,%

DPC Patronage Capital,

(58,289,657)

(5 8,24 Consolidated *

$644,637,461 172,294,159 472,343,302 914,661 24,181,990 102,310,284 599,7d

'Unaudted (1) includes $12.586.422 LACBWR Onginal Cost Adgstment. $ 14.6R5.235 of net Nuclear Fuel, $15.584.818 of Construction Work In Prcxpess, and includes $9,124.465 capitant 2S use for tiarn

._-4 DAIRYlAND POWER COOPERATIVE d

LIABILITIES AND OTHER CREDITS P.t. Cap. &

Noe Other Total 1.ong Cwrent Cr te IJab es

~":0-~

• 7.".'

""Se '

"cre' Lc

^%=0 4."Te

',er 47,800 5,656,399 205,565 86,462 5,996,226 6,577,729 713.382 136,131 13,423,468 24,604 800,253 17,508 6,407 848,772 5,520,663 940,535 216,439 7,526,409 9,166 2,758,616 9,338 2,777,120 1,998,057 262,851 5,109 5,043,137

' 10,960 2.818,080 44,998 2,874,038 1,734,121 294,037 130,397 5,032,593

• 42,611 6,723,721 68,514 6,834,846 1,419,952 7M,004 67,211 9,026,013

' 11.820 1,619,865 33,903 18,407 1,683,995 917,463 145,528 50 2,747,036 31,678 5,300,083 44,254 52,573 5,428,588 313,843 334,327 246,036 6.322,794

' 68,600 3,539,579 62,686 38,636 3,709,501 3,870,868 359,8 %

68,483 8,008,748

'26,515 4,836,538 14,346 4,877,399 2,243,940 414,454 14,960 7,550,753 20,119 3,450,7 %

2,850 3.473,675 1,980,286 271,888 76,495 5,802,344 23,535 1,851,844 46,811 1,922,190 4,034,417 526,204

%,842 6,579,653 15,138 3,192,505 18,476 3,226.119 1,871,851 212,354 44,154 5,354,478 58,305 4,628,905 61,207 38,6 %

4,787,023 5.819,312 662,516 99,773 11,368,624

' 15,770 4,102,767 162,817 9,764 4,291,118 2,682,359 490,012 166,198 7,629,687

- 63,245 4,574,845 71,131 37,637 4,746,858 6.696,355 906,631 106,725 12,456,569

'27,553 951,799 14,448 7,579 1,001,379 3,984,813 265,738 151,759 5,403,689 l

18,837 2,254,912 84 2,273,833 1,374,572 276,121 58,670 3,983,196 19,083 3,621,360 28,269 24,846 3,693,560 2,721,337 3o6,134 13,792 6,824,823 8,382 2,173,569 33,316 34,435 2,249,702 1,937,647 160,213 18,619 4,366,181 10,752 5,144,968 141,140 68,700 5,365,560 3,685,666 598,341 10,905 9,660,472 38,709 5,925.8 %

53,831 3,441 6,021,877 4,553,529 612,643 13,708 11,201,757 593,184 75,927,210 995.362 567,623 78,083,379 65,938,780 9,547,809 1,742,456 155.312,424

'28,165 2,749,917 30,670 70,639 2,879,391 1,532,847 660,252 15,461 5,087,951 9,680 5,514,298 106,446 78,916 5,709,340 6,254,923 167,082 116,033 12,247,378 44,488 7.010,958 70,716 312,980 7,439,142 8,313,300 811,824 40,670 16,6M,936 17,458 12,652,726 529,751 8,036 13,207,971 2,747,228 801,224 3,984 16,760,407 71,626 25,177,982 706,913 399,932 26,356,453 17,315,451 1,780,130 160,687 45,612,721 38,245 7,417,617 177,432 7,633,294 2,699,626 594,285 44,527 10,971,732 14,395 3,217,551 15,568 473,021 3,720,535 1,981,356 224,578 42,490 5,968,959 27,075 7,585,454 157,790 300,184 8,070,503 11,182 521,809 143,040 8,746,534

, 11,385 3,291,774 229,758 3,532,917 289,329 23,642 711 3,846,599

.91,100 21.512,3 %

350,790 1,002,963 22,957,249 4,981,493 1,364,314 230,768 29,533,824 784,075 125,367,505 2,083,735 2,M 1,157 130,276,472 89,768,571 13,352,505 2,149,372 235,546,920 9,202 58,289,657 58,298,859 313,512.371 49,878,112 803,632 422,492,974 193.277.183,657,162 2,083,735 2,041,157 188,575,331 403,280,942 63,230,617 2,953,004 658,039,894 (58,289,657)

(58,289,657)

(58,289,657) 193,277 ~ 125,367,505 2,083,735 2,041,157 130,285.674 403,280,942 63,230,617 2,953,004 599,750,237 2

DAIRY 1AND POWER COOPERATIVE-MEMBER DISTRIBUTION COOPERATIVES Consolidated Statement of Revenues and Expenses..

1979 m

e=

e.s

=

_..n_.

Ctene "A" Members Capital Total Pomes opera..one Maintenance f.mpense E

Wisconsin Barron..

$ 6,105,846 5.643,061 4,286,546 97,672 260,433 180,649 Bayfield.

2,126,728 1,984,502 1.160,996 65,009 152,669 121,770 Chippewa Valley 2,533,936 2,269,213 1,607.277 101,835 11 ',393 46,030 Buffalo......

2,433,077 2.275,725 1,744,950 64,512 86,635 47,761 Clark....

3,936,644 3,712.514 2,863,789 108,316 129,730 79,472 Crawford.

1,437,312 1,365,723 986,979 45,548 88,060 55,805 Dunn...

3.411,262 3,020,3 %

2,383,441 53,229 112,719 38,848 Eau Claire.

3.495,494 3.203.005 2,487,407 46,447 118,901 100,235 Grant.

4,162,241 3,965, % 1 3,111,560 123,855 154,705 99,395 Jackson.

2,280,770 2,094,701 1,422.681 61,272 128,703 91,418 Jump River.

2,435,346 2,186,890 1,307,547 117,063 151,818 86.934 Lafayette.

2,037,994 1,903.878 1,351,963 70,364 114,679 30,M8 Oakdale.

4,880,229 4,598,580 3,073,436 200,254 184,436 180,404 Pierce.Pepin 3,772,342 3,522,255 2,725,510 57,807 165,090 44,377 Polk-Bumett.

4,335,994 3,945,165 2,692,902 86,624 258,888 134,031 Price....

1,890,644 1,759,491 1,028,656 38,436 204,922 69.301 Richland 1,573,952 1,450,213 1,031,275 55,538 55,402 40,246 St. Croix 3,002,216 2,789,668 2,090,463 73,637 142,956 63,071 Taylor...

1,626,648 1,445,783 1,062,670 34,003 62,866 24,992 Trempealeau.

4,659,375 4,203,031 3.152,018 182.113 142.928 168.286 Vemon,

4,984,393 4,456,634 3,292,849 136,296 222,886 155,105 F

$ 67,122,443 61,706,389 44,864,915 1,819,830 3,056.819 1,859,078 1

Illinois Jo. Carroll

$ 2,144.835 1,811,598 1,375,405 24,867 80,457 59,909 i

Minnesota Freebom-Mower.

$ 5,098,843 4,436.354 3,237,039 222.048 231.160 113,932 People's.

6,329.525 5.785.961 4,100,792 190,736 382.697 200,507 p

Tri-County.

8,111,605 7,270.379 5,721,890 291,893 294,961 153,829

$ U.539,973 17,492,6M 13,059,721 704,677 908,818 468,268 p

g i

).

J Iowa i

Allamakee.Clayton.

$ 4,686,235 4,313,511 2,998,020 297,767 190,593 167,075

^1 Cedar Valley.

2,943,221 2,622,827 2,023,470 33,181 118,041 51,551 j

2 Hawkeye.

4,048,685 3, % 7,065 2,968,108 216,526 212,M4 54,983 l

Winnebago.

2,927,041 2,918,606 2,508,474 92,826 60,965 29.957

" 'k W

$ 14,605,182 13,822,009 10,498,072 640,300 582,243 303.566

?&

Total Distribution.

$103,412,433 94,832,690 69,798,113 3,189,674 4,628,337 2,690,821 1 l f

-6 y

Dairyland Power.

$100,672,821 89,297,003 18,509.826 49,443.828 5,161,026 t !

Total Dist. & Dairyland.

$204.085,254 184,129,693 88,307,939 52,633,502 9,789,363 2,690.821 l' '

l DPC Sales & Capital u

Credits to Dist. Coops,,

$ (69,598,101) (69,598,101) (69,598,101) 1

^1 Consolidated *

$134,487,153 114.531,592 18,709,838 52,633,502 9,789.363 2,690,821 l'

iv 4 N

• (.)naudred Ad m b;wnn W Ndt NtnM n Ya N Audt Adgwns 30

(&&

s4Q NN

DA!RYLAND POWER CCX) PERATIVE rd".'

oD PIs ii.:

r,.

329,395 280,789 207,577 462,785 101,367 267,625 2,040 217,317 514,804 214.091 194,078 75,628 142,226 25,938 127,406 4,578 59,592 95,772 182,575 95,700 88,550 264,723 45,300 76,250 9

82,375 316,139 175,250 74,410 82,207 157,352 19.266 71,864 1,342 89,565 192,977 218.595 165,642 146,970 224,130 65,900 40,208 1,074 146,911 395,659 C3,942 39,278 51,792 71,589 21,999 29,988 4,244 50,660 110,016 199,243 126,093 106,823 390,866 46,091 6,075 438 122.338 552,782 150,137 149,452 109,591 292,489 69.148 154,860 733 127,674 333,718 191,764 145,980 137,529 1 %,280 45,968 98,977 991 159,228 301,508 188,185 116,737 85,705 186, % 9 36.537 67,236 312 73.230 228,288 290,345 131,694 93,177 248,456 31,% 9 126,483 39,666 67,632 181,908 157,011 100,144 78,337 134,116 18,476 97,457 14,839 69,022 109,318 442,322 242,280 181,679 371,649 70,233 144,016 66,907 157,607 388,566 260,336 133,110 126,106 250,087 36,520 101,528 319 136,419 318,179 341,953 270,763 158,804 390,829 80,1 %

215,864 552 138,222 392,831 184,455 164,612 62,343 131,153 16,262 107,135 52,749 93,029 141,541 71,7 %

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(3,572,339) 333,724 12,362,683 6,815,140 19,955,561 1,595,838 7,900,481 3,576,615 10,074,303 31

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s D:IrylEnd Pcw:r Cooperative WISCONSIN Barron Dectnc Cooperative Barron BaySeld Dectnc Cc,operanve, Inc.

Iron River Buffalo Dectne Cooperative Alma Chippewa Valley Dectric Cooperative Comell E

Clark Dectnc Cooperanve Greenwood Crawford Dectne Cooperanve Gap bfdis i

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ARTHUR ANDERSEN & CO.

MINNEA14)LIS, MINNESOTA i

To the Members and the Board of Directors Dairyland Power Cooperative:

We have examined the balance sheets of DAIRYLAND. POWER COOPERATIVE (a Wisconsin cooperative) as of December 31, 1979 and

]

1978, and the related statements of revenues and expenses and I

patronage capital and sources of funds used for construction for the years.then ended.

Our examinations were made in accordance with 4

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.

l In< our auditors' report dated March 23, 1979, our opinion on P

the 1978 financial statements was quel.ified as being subject to the effect on the financial statements of such adjustments, if any, as 1

might have been required had the outcome of the denial of a j

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certificate of need for. construction of the Tyrone Energy Park and the i

subsequent decision by the Cooperative and the other participants to l

discontinue the project been known.

Ac explained in Note 4 to the financial statements, the project was discontinued in 1979. Tiie Cooperative's principal regulatory agency has approved classifying the i

accumulated costs of approximately $11.5 million as deferred charges wnich will be recoverable in the future through increased rates.

Accordingly,-our present opinion on the 1978 financial statements, as presented herein, is different from that expressed in our previous report.

l l

As discussed in Note 10 to the financial statements, the Wisconsin Department of Revenue is challenging the Cooperative's method of determining its gross revenue license fee for the years 1973 through 1977.

The Cooperative is contesting the Department of Revenue's assessment for additional license fees, however, the additionr.1 amount to be paid, if any, is not determinable at this time.

In our opinion, subject to the effect of the outcome of the gross revenue license fee matter described in the preceding paragraph, the financial statements referred to above present fairly the financial position of Dairyland Power Cooperative as of December 31, 1979 and 1978, and the results of its operations and sources of funds used for construction for the years then ended, in conformity with generally accepted accounting principles applied on a consistent basis.

ARTHUR ANDERSEN & CO.

Minneapolis, Minnesota, March 14, 1980.

DAIRYLAND POWE

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BALANCE SHEETS-_DECEf1E s

A S

S E

T S

1979 1978 ELECTRIC PLANT (Notes 1, 2,

3, 4 and 6):

Plant and equipment, at original cost

$ 403,3 31,0 80

$209,470,904 Accumulated depreciation (96,196,317)

(88,009,424)

$ 3 0 7,13 4,7 63

$121,461,480 Construction work in progress _

Tyrone Energy Park 7,486,879 John P. !!adgett Station 1,809,806 144,215,218 Other 13,775,012 17,138,030 Nuclear fuel, at amortized cost 14,685,235 10,290,670 Total electric plant

$ 3 3 7,4 0 4,816

$ 30 0,59 2,277 INVESTf1ENTS, at cost:

Capital term certificates of National Rural Utilities Cooperative Finance Corporation (No te 5)

$ 10,3 34,7 26 8,792,372 Pollution Control Bond proceeds on deposit with trustee 1,237,324 2,941,655 Other investments 1,020,912 1,854,090 To tal investments

$ 12,5 92,962

$ 13,588,117 CURRENT ASSETS:

Cash 124,765 389,761 Accounts receivable-Energy sales 10,977,671 12,087,698 Other 1,375,910 1,446,874 Inventories, at average cost-Fossil fuels 44,358,885 40,294,051 flaterials and supplies 4,046,801 2,534,703 Prepaid expenses 468,419 1,209,246 Total current assets

$ 61,35 2,451

$ 57,962,333 DEFERRED CHARGES:

Abandoned facilities, being amortized (Note 4) 9,553,391 other 1,589,355 646,364

$ 11,142,7 46 646,364

$422,492,975

$372,789,091

==

==

The accompanying notes to financial statements a:

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l COOPERATIVE l(R 31,1979 AND 1978 h

CAPITALIZATION AND LIABILITIES 1979 1978

CAPITALIZATION:

Long-term obligations, less current maturities included below (Notes 3 and 6)_

Long_ term debt

$29 5,29 6,544

$250,704,197 Subscriptions to capital term certificates of National Ru al Utilities Cooperative Finan e Corporation, due in varying annual amounts to 1984 (Note 5) 3,318,350 2,663,378 Capitalized lease obligations principally at implicit interest rates of 7%, due in varying amounts to 1995 7,659,084 7,974,798 To tal long-term obligations

$306,2 73,9 78

$261,3 42,3 73 flember and patron equities-Membership fees 9,202 8,839 Patronage capital (No tes 8 and 10) 58,289,658 56,704,530 Total member and patron equities

$ 58,298,860

$ 56,713,369 Total capitalization

$36 4,57 2,838

$318,05 5,742 l

CONTINGENT LIABILITIES AND C0f1MITf1ENTS (Notes 2, 3 and 10)

CURRENT LIABILITIES:

Current maturities of long_ term obligations 7,238,391 6,720,584 Notes payable (Note 7) 28,100,000 22,000,000 Accounts payable-General 4,891,430 6,497,105 Construction 10,144,937 11,149,477 Accrued liabilities-Payroll and vacation pay 1,443,770 1,260,880 Taxes 1,704,920 1,118,904 Interest 827,399 1,435,473 Nuclear fuel reprocessing costs (Note 1) 2,622,994 2,285,974 Other 946,296 2,264,952 Total current liabilities

$ 57,920,137

$ 54,733,3 49

$ 422,4 92,9 75

$ 372,7 89,0 91

==

==

i-

$ an integral part of these balance sheets j

DAIRYLAND POWER COOPERATIVE STATEMENTS OF REVENUES AND EXPENSES AND PATRONAGE CAPITAL FOR THE YEARS ENDED DECEMBER 31, 1979 AND 1978 1979 1978 REVENUES AND EXPENSES OPERATING REVENUES:

Sales of electric energy

$100,547,645

$82,213,485 Other 125,176 19,755 Total operating revenues

$100,672,821

$82,233,240 OPERATING EXPENSES:

Power generation-Fuel

$ 43,034,502

$33,040,161 operation 5,865,730 5,412,069 Maintenance 3,776,033 5,769,027 Purchased and interchanged power 18,360,383 20,252,806 Transmission-Operation 543,595 538,300 Maintenance 1,261,986 1,217,988 Administrative and general-Operation 4,702,838 3,602,641 Maintenance 123,007 93,768 Depreciation and amortization (Note 1) 7,691,450 6,642,379 Taxes 3,937,478 2,801,947 Total operating expenses

$ 89,297,002

$79,371,086 Operating margin, before interest and other deductions

$ 11,375,819

$ 2,862,154 INTEREST AND OTHER DEDUCTIONS:

Interest on-Long-term obligations

$ 15,352,985

$ 9,952,491 Short-term obligations 2,388,349 972,804 Allowance for borrowed funds used during construction (Note 1)

(11,681,830)

(7,825,728)

Amortization of abandoned facilities (Note 4) 1,905,750 Other 136,513 18,352 Total interest and other deductions 8,101,767

$ 3,117,919 Operating margin (deficit) 3,274,052 (255,765)

NOMOPERATING MARGIN:

Allowance for funds, other than borrowed 1,121,072 funds, used during construction (Note 1)

Other 156,647 (274,168)

Net margin 3,430,699 591,139 PATRONAGE CAPITAL PATRONAGE CAPITAL BEGINNING OF YEAR 56,704,530 57,550,907 RETIREMENT OF CAPITAL CREDITS (Note 8)

(1,845,571)

(1,437,516)

PATRONAGE CAPITAL END OF YEAR, including margins assignable of $3,430,699 in 1979 and $591,139 in 1978

$ 58,289,658

$56,704,530

==

=

The accompanying notes to financial statements are an integral part of these statements

l' DAIRYLAND POWER COOPERATIVE STATEMENTS OF SOURCES OF FUNDS USED FOR CONSTRUCTION FOR THE YEARS ENDED DECEMBER 31, 1979 AND 1978 1979 1978 FUNDS GENERATED INTERNALLY:

i Net margins 3,430,699 591,139 Noncash items-Depreciation and amortization:

t Charged to operations 7,691,450 6,642,379 j

Charged to clearing and other accounts 1,186,620 1,029,592 Amortization of abandoned facilities and other deferred charges (Note 4) 1,997,156 Nuclear fuel amortization 1,144,817 689,513 Allowance for funds other than borrowed i

funds used during construction (1,121,072) t Funds generated by operations

$ 15,4 50,7 42 7,831,551 I

Retirement of capital credits (1,845,571)

(1,437,516) 1 Funds generated internally

$ 13,605,171 6,394,035 FUNDS OBTAINED FROM OUTSIDE SOURCES:

Long-term borrowing from FFB and REA (Note 6)

$ 50.793,034

$ 55,4 64,174 Pollution Control Bond financing, less i

amounts on deposit with trustee 1,494,333 10,658,345 i

i Sale of non utility property 875,60)

Short_ term borrowing 6,100,060 12,900,000 Repayment of long-term obligations to REA (5,472,850)

(5,456,279)

Reduction of other long-term debt (315,714)

(291,909)

Net funds obtained from outside sources

$ 53,4 74,3 71

$ 73,274,331 OTHER SOURCES (USES) 0F FUNDS:

Purchase of capital term certificates, I

net of change in subscription (887,382) $ (1,065,339) l Decrease in other investments (42,422) 112,346 Abandoned facilities and other deferred charges, net (12,493,175)

(276,587) l Changes in other working capital items-L Cash 264,996 (37,172) i Accounts receivable 1,180,991 (3,355,274)

Inventories (5,576,932)

(15,760,684)

Prepaid expense 740,827 280,811

)

-Accounts payable (2,610,215) 3,155.104 Accrued liabilities (820,804) 2,118,992 l.i.

Total'other sources l

(uses) of funds

$ (2 0,2 44,116) $(14,823,803) l FUNDS USED FOR CONSTRUCTION

$ 46,835,426

$ 64,844,563 Add-Allowance for funds other than borrowed funds used during construction 1,121,072 ELECTRIC PLANT ADDITIONS, net

$ 46,835,426

$ 65,965,635

==

==

The accompanying notes to financial statements are an integral part of these statements

NOTES TO FINANCIAL STATEMENTS (1)

Summary of Significant Accounting Policies-Organization:

Dairyland Power Cooperative (the Cooperative) is an electric generation and transmission cooperative association organized under the laws of Wisconsin.

The Cooperative provides wholesale electric service to member distribution cooperatives engaged in the retail sale of electricity to member consumers located in Wisconsin and parts of Minnesota, Iowa, Illinois a'nd Michigan.

The accounting records of the Cooperative are maintained in accordance with the uniform system of accounts prescribed by the Federal Energy Regulatory Commission as adopted by the Rural Electrification Administration (REA), the Cooperative's principal regulatory agency.

Depreciation:

Depreciation is provided based on the straight-line method at rates which are designed to amortize the original cost of properties over their estimated useful lives.

The provision for depreciation averaged 3 3% of depreciable plant balances for 1979 and 1978.

Amortization of Nuclear Fuel:

The cost of nuclear fuel is charged to fuel expense based on heat produced for the generation of electricity.

The salvage value of fuel assemblies and cost of disposal of spent fuel are being recorded over the lives of individual assemblies based upon management's estimate of such amounts.

Income Taxes:

The Cooperative is exempt from Federal and state income taxes.

Accordingly, no provision for such taxes has been made in the accompanying financial statements.

Allowance for Funds Used During Construction:

Allowance for funds used during construction represents the cost of borrowed funds and a return on other capital used for construction purposes and is capitalized as a component of electric plant.

The amount of such allowance is determined by applying a rate to the balance of nuclear fuel and certain electric plant additions under construction.

The rates used varied from 6.4% to 15 5% in 1979 and from 5% to 7.5% in 1978, depending on the source of funds.

NOTES TO FINANCIAL STATEMENTS (Continued)

(1)

Summary of Significant Accounting Policies (continued):

Property Additions:

The cost of renewals and betterments of units of property (as distinguished from minor items of property) is charged to utility plant accounts.

The cost of units of property retired, sold, or otherwise disposed of, plus removal costs, less salvage, is charged to accumulated provision for depreciation.

No profit or loss is recognized in connection with ordinary retirements of property units.

Maintenance and repair costs and replacement and renewal of items less than units of property are charged to operating expenses.

(2)

Nuclear Reactor-The Cooperative has operated a nuclear generating facility under a provisional operating license which expired in 1975. The reactor is presently being operated under an informal extension of the provisional operating licence.

The Cooperative has applied to the Nuclear Regulatory Commission (NRC) for a permanent operating license.

Because of the three Mile Island (TMI) accident, NRC is directing its resources towards TMI issues; therefore, its consideration of construction permits and operating licenses, including the Cooperative's application for an operating license, has been delayed.

The Cooperative is unable to predict when a permanent operating license may be granted.

Recent events indicate that the manner of decommissioning a nuclear generating plant and the manner of disposition of spent nuclear fuel may not be determined for many years.

Additionally, not all NRC requirements resulting from reviews of the TMI accident have been defined.

While the provision for depreciation includes a factor to provide for estimated decommissioning costs, the eventual cost of retiring a nuclear generating unit is uncertain at the present time.

The Cooperative continues to review its decommissioning cost estimaten and it expects that any increases in such costs will be provided for in future rates.

(3)

Cons tructic.n and Commitments-The Cooperative's 1980 estimated construction program is $29 million.

Financing of construction is expected to be provided by borrowings from the Federal Financial Bank (FFB) and short-term lines of credit with the National Rural Utilities Coopsvr.tive Finance Corporation (NRUCFC).

l l

NOTES TO FINANCIAL STATEMENTS (Continued)

(4)

Abandoned Facilities-The Cooperative was one of four joint owners in a project to build an 1,100 megawatt nuclear generating facility in western Wisconsin to have been known as the Tyrone Energy Park.

At December 31, 1978, the Cooperative had invested approximately

$7.5 million in the project.

On_ March 6,1979, the Wisconsin Public Service Commission issued an order denying the application for a certificate of need for the project.

On July 24, 1979, the co-owners reached an agreement to terminate and abandon the project.

At the time of abandonment, the Cooperative had incurred or was committed

]

for costs of approximately $11.5 million for its share of the project, including allowance for funds used during 4

construction.

3 The Cooperative has received approval from REA to reclassify its investment in the Tyrone Energy Park as a deferred charge J

and to begin amortization of these costs over a 60 month period commencing March 1, 1979.

Such amortization is to be recovered through additional rates.

Amortization for 1979 was approximately $1.9 million.

(5)

Investment in National Rural Utilities Cooperative Finance Corporation-The Cooperative has purchased or subscribed to purchase approximately $10.3 million of unsecured subordinated capital term certificates to be issued by the National Rural Utilities Cooperative Finance Corporation.

The certificates will bear interest at the rate of 3% per year and will mature in 2020, 2025, and 2030.

Of the above amount, $3.8 million will be purchased during the period 1980 to 1984 in annual installments approximating.7% of operating revenues, as defined.

i

! l

NOTES TO FINANCIAL STATEMENTS (Continued)

(6)

Long-Te rm Obligations-The Cooperative's long-term debt outstanding as of December 31, consists of the following:

1979 1978 REA Obligations (2%)

$106,048,051

$120,919,931 REA Obligations (5%)

19,267,495 3,872,670 ISB Obligations (7.6% - 11 3%)

146,359,000 113,000,000 NRUCFC Obligations-Prime plus 1/2%

8,025,000 5,325,000 8%

8,425,000 City of Alma, Wisconsin Pollution Control Bonds (4.3% 1/8%)

13,600,000 13,600,000

$301,724,546

$256,717,601 Less Current Maturities 6,428,002 6,013,404 339gg][g, [3}g;[g}g[9J 2 5 To tal Long-Term Debt Long-term obligations to the REA are payable in equal quarterly principal and interest installments to 2013 Principal repayments on the long-term obligation to the FFB begin in 1981 and extend through 2012. Interest on the NRUCFC obligation of prime plus 1/2% is due quarterly and repay.nent of principal is due in quarterly installments from 1982 through 1984. Principal repaymenso and interest on the 8% NRUCFC obligation are payable quarterly through 1999 The pollution control bonds are payable in increasing annual amounts in the years 1980 through 2008. Substantially all of the Cooperative's assets are pledged as collateral for these obligations. Maturities of the Cooperative's long-term debt, subscriptions for capital term certificates and capitalized lease obligations during each of next five years are as follows: Year Amount 1980 7,238,391 1981 21,787,952 1982 12,306,205 1983 8,466,348 1984 9,938,829 1985-2013 253,774,644 The amounts due in 1981 include $13,962,000 of two year FFB obligations which the Cooperative intends to refinance under the long-term commitment with FFB. NOTES TO FINANCIAL STATEMENTS (Continued) (7) Lines of Credit-To provide interim financing, the Cooperative has arranged lines of credit agregating $32,850,000, principally through NRUCFC. Substantially all borrowings are at an interest rate cf prime plus 1/2%. Information relating to borrowings under lines of credit during the years is as follows: 1979 1978 (millions) Average borrowing outstanding $18.3 $97 Maximum amount cutstanding $28.4 $25.4 Weighted average interest rate at year-end 15 5% 11 7% Weighted average interest rate for the year 12.8% 99% There are no compensating balance requirements or fees relating to the lines of credit. (8) Hetirement of Capital Credits-The Cooperative's Board of Directors has adopted the policy of retiring capital credits allocated to patron members on a "first-in, first-out" basis so that at all times the Coopeeative will not retain as patronage capital any capital contributed or deposited more than twenty years prior to the current year. Accordingly, the 1958 capital credits were retired in 1978 and the 1959 capital credits were retired in 1979 Implementation of this policy is subject to annual review and approval by the Board of Directors and the REA, and no cash retirements are to be made which would impair the financia? condition of the Cooperative or violate any terms of its agreements. (9) Pension Plan-Pension benefits for substantially all employees are provided through participation in the National Rural Electric Cooperative Association Retirement and Security Program. Pension cost was approximately $944,000 in 1979 and $825,000 in 1978. The Cooperative's pclicy is to fund pension costs accrued. NOTES TO FINANCIAL STATEMENTS (Continued) (10) Contingencies-The Wisconsin Department of Revenue has examined the Cooperative's method of determining gross revenue license fee for the years 1973 through 1976, and has assessed deficiencies and interest of approximately $1.1 million for these years. The Cooperative estimates that additional license fees of approximately $600,000 could be assessed for 1977 if the Department of Revenue's method of computing the license fee is applied to that year. These amounts have not been reflected in the accompanying financial statements. License fees for 1978 and 1979 have been accrued on a new basis of assessment approved by the Wisconsin Department of Revenue. The Cooperative, on the advice of legal counsel, is vigorously contesting the findings of the Department of Revenue and believes that any liability will be substantially reduced or eliminated; however, the outcome of this matter cannot presently be predicted. In January, 1980, an accident at the Cooperative's John P. Madgett Station caused significant damage to the boiler. Temporary repairs are being made and it is expected that the plant will be returned to operations by May 1, 1980. Further permanent repairs are to be made at a later date. In the opinion of management and legal counsel, the cost of these repairs will be substantially covered by builders' risk insurance on the station or by warranties of the manufacturer and contractors. The Cooperative has been named in several lawsuits and claims, primarily related to the conscruction and operation of the John P. Madgett s tation. Although the outcome of these matters cannot be determined at the present time, management and legal counsel believe these actions can be successfully defended or resolved without a material adverse effect on the financial statements of the Cooperative. !}}