ML19322B926

Forwards Annual Financial Repts,1978 for Tx Utils Co,Tx Electric Svc Co & Tx Power & Light Co.W/Accountants' Opinion Verifying Accuracy of Tx Utils Generating Co & Affiliates' Financial Statements

ML19322B926
Person / Time
Site:	Comanche Peak
Issue date:	12/04/1979
From:	Gary R TEXAS UTILITIES ELECTRIC CO. (TU ELECTRIC)
To:	Office of Nuclear Reactor Regulation
Shared Package
ML19322B927	List: ML19322B926 ML19322B928 ML19322B929 ML19322B930
References
10120, NUDOCS 7912180412
Download: ML19322B926 (9)

Text

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Log # TXX-3073 File # 10120 TENAS UTILITIES GENERATING CO.TII%NY 2003 BitYAN TY)% Eit DALIAS.TEXA8 76208 R. J. GARY "l:' ::::::'::::'

December 4, 1979 l Director Office of Nuclear Reactor Regulations c/o Distribution Services Branch ODC, ADM Nuclear Regulatory Commission Washington, D.C. 20555

SUBJECT:

COMANCHE PEAK STEAM ELECTRIC STATION DOCXET NOS. 50-445 AND 50-446 ANNUAL FINANCIAL REPORTS

Dear Sir:

Pursuant to 50.71 (b), Title 10, Code of Federal Regulations, Part 50, eight (8) copies of the 1978 Annual Reports of the applicants and owners in the above dockets are hereby submitted.

Respectfully submitted, R J. Gar' RJG:kp Enclosure (s)

THIS DOCUMENT CONTAINS POOR QUALITY PAGES 6

[ 7912180 Y/A -

b ACCOUNTANTS' OPINION

'exas Utilities Generating Company:

We have examined the balance sheet of Texas Utilities Generating Company as 6f December 31,1978 and 1977 and the related statements of operations and source of funds for construction for the years then ended. Our examinations were made in accordance with generally accepted auditing standards and, accordingly, included such tests of the accounting records and such other auditing procedures as we considered necessary in the circumstances.

In our opinion, the financial statements referred to above present fairly the financial position of the Company at December 31,1978 and 1977 and the results of its operations and the source of its funds for construction for the years then ended, in conformity with generally accepted accounting principles applied on a consistent basis.

DELOITTE HASKINS & SELLS Dallas, Texas

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March 23, 1979 i

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TEXAS UTILITIES GENERATING COMPANY BALANCE SHEET ASSETS December 31, 1978 1977 Thousands of Dollars FUEL PRODUCTION FACILITIES - at cost (Note 1)

In service . . . . . . . . . . . . . . . . . . . . . . . . $247,346 $163,879 Construction work in progress. . . . . . . . . . . . . . . 61,523 73,967 Held for future use. . . . . . . . . . . . . . . . . . . . 2,327 -

Total fuel production facilities . . . . . . . . . . . . . 311,196 237,846 Less reserve for depreciation. . . . . . . . . . . . . . . 41,674 25,648 Fuel production facilities, less reserve. . . . . . 269,522 212,198 CURRENT ASSETS Cash in banks. . . . . . . . . . . . . . . . . . . . . . . 4,366 8,719 Accounts receivable:

Affiliates. . . . . . . . . . . . . . . . . . . . . . . 13,541 7,052 Other . . . . . . . . . . . . . . . . . . . . . . . . . 1,153 546 Inventories - at average cost:

Material s and supplies. . . . . . . . . . . . . . . . . 9,803 4,974 Fuel s tock . . . . . . . . . . . . . . . . . . . . . . . 2,321 2,944 Other curren t as set s . . . . . . . . . . . . . . . . . . . 678 445 Total current assets. . . . . . . . . . . . . . . . 31,862 24,680 DEFERRED DEBITS (Note 1). . . . . . . . . . . . . . . . . . . 12,731 11,005 TOTAL . . . . . . . . . . . . . . . . . . . . . . . $314,115 $247,883 See accompanying Notes to Financial Statements.

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TEXAS UTILITIES GENERATING COMPANY BALANCE SHEET LIABILITIES December 31, 1978 1977 Thousands of Dollars CAPITALIZATION Common stock, without par value:

Authorized shares - 500,000 Outstanding shares - 100,000. . . . . . . . . . . . . . $ 1,000 $ 1,000 Long-term debt --- less amounts due currently:

9.20% senior notes (Note 3) . . . . . . . . . . . . . . 200,000 -

Advances from affiliates (Note 2) . . . . . . . . . . . 70,200 223,000 Other long-term debt. . . . . . . . . . . . . . . . . . 5,158 .3,783 ,

Total . . . . . . . . . . . . . . . . . . . . . . . 275,358 226,783 i Total capitalization. . . . . . . . . . . . . . . . 276,358 227,783 CURRENT LIABILITIES.

Accounts payable:

Affiliates. . . . . . . . . . . . . . . . . . . . . . . 2,607 829 Other . . . . . . . . . . . . . . . . . . . . . . . . . 13,342 10,061 Long-term debt due currently . . . . . . . . . . . . . . . 2,609 2,731 Taxes accrued. . . . . . . . . . . . . . . . . . . . . . . 1,492 1,117 Interest accrued . . . . . . . . . . . . . . . . . . . . . 5,553 263 Other current liabilities. . . . . . . . . . . . . . . . . 223 137 Total current liabilities . . . . . . . . . . . . . 25,826 15,138 ACCUMULATED DEFERRED FEDERAL INCOME TAXES (Note 1). . . . . . 1,810 397 UNAMORTIZED FEDERAL INVESTMENT TAX CREDITS (Note 1) . . . . . 10,121 4,565 COMMITMENTS AND CONTINGENCIES (Note 4)

TOTAL . . . . . . . . . . . . . . . . . . . . . . . $314,115 $247,883 l

See accompanying Notes to Financial Statements.

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TEXAS UTILITIES GENERATING COMPANY 1 1

STATEMENT OF OPERATIONS l

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l Year Ended December 31, 1978 1977 TE6iisands of Dollars OPERATING REVENUES - Affiliates (Note 1) $ 50,087 Power production . . . . . . . . . . . . . . . . . . . . . $ 68,087 Fuel producti on. . . . . . . . . . . . . . . . . . . . . . 103,442 62,182 Total operating revenues. . . . . . . . . . . . . . 171,529 112,269 OPERATING EXPENSES (Note 1)

Power production:

Operation . . . . . . . . . . . . . . . . . . . . . . . 34,967 22,939 Maintenance . . . . . . . . . . . . . . . . . . . . . . 33,120 27,148 68,087 50,087 Total . . . . . . . . . . . . . . . . . . . . . . .

Fuel production:

Operation . . . . . . . . . . . . . . . . . . . . . . . 44,574 27,432 Maintenance . . . . . . . . . . . . . . . . . . . . . . 18,133 12,912 Depreciation provisions . . . . . . . . . . . . . . . . 16,850 10,364 Federal incane taxes. . . . . . . . . . . . . . . . . . (8,501) (6,878)

Deferred federal income taxes - net . . . . . . . . . . 1,413 397 Federal investment tax credits - net. . . . . . . . . . 6,203 5,273 State, local and miscellaneous taxes. . . . . . . . . . 2,266 1,77."

Total . . . . . . . . . . . . . . . . . . . . . . . 80,938 51,2/i Total operating expenses. . . . . . . . . . . . . . 149,025 101,360 OPERATING INCOME. . . . . . . . . . . . . . . . . . . . . . . 22,504 10,909 INTEREST CHARGES Interest on senior notes . . . . . . . . . . . . . . . . . 5,111 -

Interest on advances from affiliates . . . . . . . . . . . 17,002 13,627 Other interest . . . . . . . . . . . . . . . . . . . . . . 733 340 Allowance for borrowed funds used

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during construction (Note 1). . . . . . . . . . . . . . (342) (3,058)

Total interest charges. . . . . . . . . . . . . . . 22,504 10,909 NET INCOME. . . . . . . . . . . . . . . . . . . . . . . . . . $ -

See accompanying Notes to Financial Statenents.

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TEXAS UTILITIES GENERATING COMPANY STATEMENT OF SOURCE OF FUNDS FOR CONSTRUCTION Year Ended December 31, 1978 1977 Thousands of Dollars FUNDS FROM OPERATIONS Depreciation provisions. . . . . . . . . . . . . . . . . . $ 16,850 $ 10,364 Deferred federal income taxes - net. . . . . . . . . . . . 1,413 397 Federal investment tax credits - net . . . . . . . . . . . 6,203 5,273 Allowance for borrowed funds used during construction . . . . . . . . . . . . . . . . . . (342) (3,058)

Total funds from operations . . . . . . . . . . . . 24,124 12,976 FUNDS FROM FINANCING 9.20% senior notes . . . . . . . . . . . . . . . . . . . . 200,000 -

Advances from (repayments to) affiliates . . . . . . . . . (152,800) 75,300 Other l ong-term debt . . . . . . . . . . . . . . . . . . . 1,253 5,094 Total funds from financing. . . . . . . . . . . . . 48,453 80,394 Total. . . . . . . . . . . . . . . . . . . . . . 72,577 93,370 DED UCT --- Othe r - ne t . . . . . . . . . . . . . . . . . . . . 2,803 1,996 Balance. . . . . . . . . . . . . . . . . . . . . 69,774 91,374 CASH IN BANKS --- net change . . . . . . . . . . . . . . . . . 4,353 (6,126)

CONSTRUCTION EXPENDITURES (excluding allowance for borrowed funds used during construction) . . . . . . . $ 74,127 $ 85,248 See accompanying Notes to Financial Statenents.

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TEXAS UTILITIES GENERATING COMPANY NOTES TO FINANCIAL STATEMENTS

1. SIGNIFICANT ACCOUNTING POLICIES The following significant accounting policies are followed by the Company, a wholly-owned subsidiary of Texas Utilities Company.

General - The Company acts as agent for Dallas Power & Light Company, icas Electric Service Company and Texas Power & Light Company (Electric Companies),

electric utility subsidiaries of Texas Utilities Company, in the operation of their jointly-owned, lignite-fueled generating stations and furnishes related services. The Company owns and operates fuel production facilities for the recovery of lignite for use as fuel at such stations. Under the terms of an operating agreement, the Electric Companies are required to pay the Company an amount at least equivalent in the aggregate to its annual charges to income for costs relating to services provided and fuel production facilities used. The Company also acts as agent for the Electric Companies in the design and construction of their jointly-owned, nuclear-fueled generating station, and operates a lignite-fueled generating station for the account of Aluminum Company of America; the accompanying financial statements do not include costs incurred or an equivalent amount of reimbursements for these latter two activities.

Fuel Production Facilities - The cost of property additions, including replacements of units of property and betterments, is charged to fuel production facilities. An allowance for borrowed funds used during construction has generally been charged to fuel production facilities at the rate of 7% of expenditures incurred; this practice has been discontinued commencing with new projects started on or after July 1,1976. Maintenance and repairs of property, and replacements of items determined to be less than units of property, are charged to operating expense. Depreciation reserve is charged with the cost of units of property retired, plus removal costs, less salvage.

Depreciation - For financial reporting and federal income tax purposes, the Company provides for depreciation principally by use of the sum-of-the-years-digits method. Depreciation provisions in percent of average depreciable property approximated 10% for 1978 and 1977.

Federal Income Taxes - The Company is included in the consolidated federal income tax return of Texas Utilities Company and subsidiary companies. Federal income taxes are allocated to all System companies based upon taxable income or loss. Deferred federal income taxes are provided for tax reductions resulting from the current deduction of certain construction costs which are capitalized per books. Investment tax credits, which are also allocated to the Company, are being deferred and amortized over the estimated service lives of the properties.

Deferred Debits - Initial costs incurred in connection with development of lignite mining areas prior to commencement of continuous plant operations are charged to deferred debits and amortized over future periods. In addition, differences between actual fuel production costs incurred and amounts billed to affiliates at standard rates are charged or credited to deferred debits and adjusted in subsequent billings.

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.. .. e TEXAS UTILITIES GENERATING COMPANY NOTES TO FINANCIAL STATEMENTS - (Continued)

Retirement Plan - The Company has a retirement plan covering substantially all employees. The cost of the plan is detennined by an independent actuary and is funded by the Company as accrued. The cost of the plan approximated

$1,596,000 (including $452,000 representing paynent in full of past service costs) for 1978 and $876,000 for 1977.

2. ADVANCES FROM AFFILIATES Advances from affiliates are obtained as needed for working capital, construction and other corporate purooses. At the respective dates indicated, affiliates had advanced the following amounts:

December 31, 1978 1977 Tihousands of DoTTirs Dallas Power & Light Company. . . . . . . . . . $ - $ 43,440 Texas Electric Service Company. . . . . . . . . - 78,785 Texas Power & l.ight Company . . . . . . . . . . 1,200 100,775 Texas Utilities Company . . . . . . . . . . . . 69,000 -

Total. . . . . . . . . . . . . . . . . . . $ 70,200 $223,000 The advances outstanding at December 31, 1978 are in the form of notes payable, due December 31, 1981, and generally bear interest at the rate of 9-1/2% per year.

3. 9.20% SENIOR NOTES In September 1978, the Company issued $200,000,000 of 9.207, Senior Notes due September 15, 1998, collateralized by the Company's assignnent of its rights _

under the operating agreement with Dallas Power & Light Company, Texas Electric Service Company, and Texas Power & Light Company described in Note 1.

The notes provide for mandatory annual prepayments of $13,300,000 beginning in September 1984. The notes may be redeened in whole or in part at the Company's option at a premium equal to the interest rate on the notes during the first year, and thereafter at a prenium declining in equal amounts to zero in the eighteenth year. In addition, the notes contain certain normal restrictive provisions regarding the issuancs af additional funded debt, creation of liens, paynent of dividends, and reacqusii. ion of common stock.

4. COMMITMENTS AND CONTINGENCIES Estimated construction expenditures for 1979 and 1980 are $97,000,000 and

$56,000,000, respectively. Connitments in connection with the construction program, principally for fuel production facilities, are generally revocable by

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TEXAS UTILITIES GENERATING COMPANY NOTES TO FINANCIAL STATEMENTS - (Concluded) the Company subject to reimbursement to manufacturers for expenditures incurred or other cancellation penalties.

Lignite mining operations are currently regulated at the state level by the Railroad Commission of Texas. Surface mining permits in connection with the Big Brown, Martin Lake and Monticello stations have been issued. Federal legislation regulating surface mining was enacted in August 1977 and interim and final regulations implementing the law have been issued. The Company filed suit in the United States District Court for the District of Columbia in January 1978, challenging the validity of these regulations and this suit has been appealed to the United States Court of Appeals for the District of Columbia Circuit. Enforcement of these regulations would increase the cost of producing lignite; however, the Company does not anticipate that the terms and conditions of permits issued thereunder will have a mat rial adverse effect upon the future use of lignite as fuel for the generation of electricity.

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