ML19323C823

Annual Financial Rept 1979

ML19323C823
Person / Time
Site:	Trojan File:Portland General Electric icon.png
Issue date:	05/16/1980
From:	EUGENE WATER & ELECTRIC BOARD
To:
Shared Package
ML19323C817	List: ML19323C816 ML19323C821 ML19323C823 ML19323C824
References
NUDOCS 8005190257
Download: ML19323C823 (33)

Text

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Mayor, Common Council and Citizens of Eugene gg-gi8',5 7

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The highest priority for Eugene Water & Electric Board in the 1980's is to prevent an electricity shortage. As is reviewed in this Annual Report, EWEB is actively developing conservation incen-tives and renewable generating resources to meet the increasing needs of the utility's consumers.

There are similarities between the electricity supply problems foreseen for the 1980's and the water.iupply problems EWEB confronted in the 1970's. Early in the decade, the growing population had pushed demand to the limits of the utility's water filtration and transmission capability. To guarantee a plentiful and safe water supply for years into the future, the EWEB Commissioners ap-proved a multimillion-dollar water system improvement program. That program is essentially com-pleted. Without the system improvements, the utility would not have been able to pump the better than 60 million gallons of water demanded on a single July day in 1979. The water utility now has the supply and the facilities to meet a growing demand for many years.

The water supply success story sets an example for solving the electricity supply problem. The answer is to eliminate waste and construct new facilities. However, unlike the local issue of water supply, the electricity shortage is a regionwide problem.

The Bonneville Power Administration has declared it will not guarantee meeting EWEB's load growth beyond July 1983. In addition, BPA's proposed allocation procedure requires utilities to achieve 15-percent conservation in order to receive a full allocation. This means EWEB's conserva-tion programs must be strengthened. And it means that EWEB must expedite development of new generating resources.

One resource which EWEB will not be utilizing is its 30-percent ownership share of the Trojan Nuclear Plant. On January 7,1980, the EWEB Commissioners voted unanimously to leave the utility's share of Trojan power net-billed with the Bonneville Power Administration. Withdrawing this power into EWEB's system would not have increased the region's energy supply and, therefore, would not have reduced the threat of power shortages. The Board of Commissioners agreed that EWEB's financial investment in Trojan was too great a single-source risk for a utility the size of EWEB to assume. The incident at Three Mile Island, and the failure of the federal government to provide facilities for storage or reprocessing of spent fuel, were among the reasons for concern about future operation of Trojan. EWEB's net-billing contract with BPA is now permanent, and all of EWEB's Trojan costs will be paid by BPA whether the plant is operating or not. It is my hope that the spent fuel issue will be resolved and the Trojan Plant will continue to produce power through-out its planned lifetime, helping to meet the electricity needs of people throughout the Northwest.

Formation of a new Power Resources Division in early 1980, directed by Herbert Hunt, places strong emphasis on development of renewable resources. This division will concentrate the project management of new generating facilities, separating those activities from other utility operations.

One reason to believe that EWEB will succeed in meeting the challenges ahead is due to the utility's skilled management and employees. EWEB has traditionally employed quality personnel, has provided specialized education and training, and has rewarded employees with competitive wages and benefits. The employees' dedication and ability are the reasons EWEB is held in such high esteem by the community.

The utility's most trying times may lie ahead, but there is no utility organization more capable of success.

1-John A. Tiffany President

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eleded in 1976; vicy president of the Board from T?',

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of Oregon, with business interests in Eugene.

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The Water Utility i

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~i An increase in water sales in 1979 reversed

,N@MplLT 6 8UiI.DI N Gi four consecutive years of declining water con-Y~

sumption by EWEB customers. The 8.4 billion 1

gallons sold during the year was an 11.5-per-S cent increase above 1978 and broke the all-time sales record set in 1974.

Water sales had been decreasing due to conservation and extremely wet summers.

Rainfall during the summer of 1979 was again about triple the normal rainfall, but longer dry periods between the showers made increased irrigation necessary. On July 17, EWEB pumped 60.4 million gallons of water, breaking the previous record peak of 57.1 million gallons reached in August 1978. The almost 1.4 billion gallons of water pumped in July bettered a six-year-old record for water pumped in a month.

Still, the wet summers have disguised the potential impact of customer growth on EWEB's system. EWEB added nearly 1,400 customers in

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1979, raising the total to 31,185. In addition, hm four water districts served by EWEB in 1979 had more than 9,000 customers. Since the last

" normal" summer (1974), the number of customers has increased 24 percent, but use has increased less than one percent.

j The record water use in 1979, along with an average seven percent rate increase in February, pushed water revenues to $5 million, 15 percent greater than 1978. Residential customers accounted for 47 percent of the revenue, commercial customers were responsi-ble for 44 percent and water districts con-tributed nine percent. Although rates were higher, the increased water use resulted in the average residential revenue per 1.000 gallons increasing only two percent to 81 cents. This 6

means that one penny purchased better than 12 gallons of purified water delivered to the tap.

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j 1974 1979 Decade in Review i ~

.WaterSales i

During the 1970's, the number of water I (BillionGallons)5 j

i customers served by EWEB grew by nearly 1-1 9,500 (44 %), about the same as during the

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t 1960's. However, annual sales increased only 5

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j 1.6 billion gallons the past 10 years (23%), com-8-

pared with an increase in annual consumption

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j of 2.6 billion gallons the previous decade. Aver-6-

age annual residential water use dropped from bl k ^M L

i 137,000 gallons in 1969 to 110,000 gallons in I

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1979, while average commer.ial use rose from a

j 827,000 gallons to 870,000 gallons.

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I revenue, which jumped 223 percent from 1969

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to 1979. Thie --as brought about by increased l

sales and by a better than doubling of the S [o"'N,$il l

water rates. The higher charges were needed E Water Districts & Other to offset inflationary costs hitting the labor-and j^

capital-intensive utility, and to provide partial l'

funding of the $12.7 million water system im-provement program begun in 1976.

Peak One-Day Demand The water system improvements have been

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funded by $10 million in debt financing and l

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through utility revenues. EWEB p'ans perma-l

'j nent financing through sale of up to $15 million 48, H

in bonds in 1981, which would include funds for l

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construction of a proposed second phase of 36' improvements.

When a final section of transmission pipe-i

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line is installed in southeast Eugene, the first 24 1

phase of the water system improvement pro-i i

gram will be complete. Already, the program 12 has increased capacity of the EWEB filtration

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plant by 75 percent, reservoir storage by 35 I

i percent, and transmission pipelines by 75 per-i cent. The filtration plant can provide up to 105

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I of 60 million gallons per day. As a result of this j

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$ 15 million at the beginning of the decade.

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New Connections / Acquisition of Oakway Water District EWEB installed 1,300 water services in l

1979,400 fewer than the previous year, and in-stalled 24 miles of new pipelines. 'the water utility has nearly 500 miles of distribution and transmission pipelines.

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In September 1979, the customers of the Oakway Water District voted to dissolve the district, turning over the system to the Eugene

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Water & Electric Board effective January 1, f

1980. Expansion of the city limits had reduced b

the size of the district, which served an area N'

north of Eugene, affecting the economics of its operation. EWEB already had been providing the district's water supply and was handling ser-Eugene one of the highest-quality water sup-vice installation, maintenance and billing for plies in the nation.

the district's 750 customers.

From the moment the water leaves the a en ge Mradon Mant und hs use h The WaterSystem the customer, the water,s kept m a completely i

Eugene is blessed with a plentiful water enclosed system to protect purity. At EWEB's source, the McKenzie River. The water is soft, federally certified laboratory, water quality is cool and relatively free of impurities. This out-continuously monitored to assure EWEB cus-standing source and EWEB's excellent filtration tomers that their water exceeds all standards of l

and distribution system combine to provide the FederalSafe Drinking Water Act.

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Revenue

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Residential '.........

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The Electric Utility I

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increase in February, increased retail electric J

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and the water utility. The residential average g

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to 1.61 cents, well below the national average e, jT~

of 4.29 cents.

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generation plant with Weyerhaeuser and at

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creased 55 percent in 1979 to more than 247

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million kWh. The $4.3 million in revenues from 7g k

those sales pushed the total electric revenues to 4

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$33.3 million,12 percent above 1978.

• • I**I" Electric sales in 1979 were a paradox.

Residential sales, which had been increas-During the 1970's, EWEB added 18,000 ing slowly, jumped 5.6 percent, the largest customers (44%) and increased annual sales by growth rate since 1971. Meanwhile, commer-807 million kilowatt-hours (60%). However, one cial/ industrial sales, which had been growing at statistic declined during the decade: average an-a faster rate than residential use, declined two nual residential electricity use. In 1969, the percent. This was caused by a decline in de-average residential consumption was 19,636 mand for forest products and by a strike at kWh, triple the national average. In 1979, that EWEB's largest industrial customer, Weyer-figure fell to 18,540 kWh while the national haeuser Company. The result was an increase average rose toalmost half that total.

in total retail electric sales of only 1.5 percent, EWEB's residential electricity use is higher to 2.14 billion kilowatt-hours, the smallest than the national average because EWEB cus-growth rate since 1933.

tomers use less natural gas or oil for home The increase in retail sales in 1979 clearly heating. Ninety-three percent of the residential does not reflect the higher energy demands units added to EWEB's system during the 1970's

. placed upon EWEB's electric system during the are electrically heated. It is estimated that 70 year. Starting with New Year's Day, when the percent of all homes served by EWEB have 24-hour system load exceeded 10 million kWh electric heat.

for the first time, the frigid 1979 winter tested Although electric rates increased during the EWEB's system daily. Electricity use in January decade, reduced use held the average monthly averaged nearly one million kWh a day more residential cost to $24.87 in 1979, compared than any previous month. When the peak elec-with $14.12 ten years earlier.

tricity demand reached 533,000 kilowatts on Providing facilities to meet the growth in i

February 2, it was the fifth time in 32 days that the number of customers and sales during the l

a new peak record had been set, eclipsing the decade increased the EWEB plant in service to l-1978 mark by 10 percent. The reliability of over $132 million (excluding the Trojan Project EWEB's electric system was proven by the very investment), 69 percent greater than 1969. In-few outages which occurred during the un-cluded in that total are the 575 miles of dis-precedented demands for power.

tribution and transminion lines installed in the Another indicator of growth was the in-1970's, so that the utility has nearly 1,500 miles crease in the number of customers. The addi-of power lines in service.

tion of 2,038 customers was the second highest ever, bringing the total number of customers to nearly 60,000.

The slight rise in retail consumption in 1979, coupled with a 4.5 percent average rate a

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1974 1979 l

Generation 8

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' ElectricSales l

EWEB's hydro and steam generating plants (mbn Kilowatt-hours) j had a net generation of 583.5 million kilowatt-g I

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hours in 1979, almost 15 percent more than l

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1978. The largest portion, nearly 375 million i

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kWh, was generated by EWEB's three hydro-2.0 electric projects on the McKenzie River. The l

EWEB-Weyerhaueser Utility / Industrial Energy 1.5 q

Center, a cogeneration facility, produced almost j

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175 million kWh, and the EWEB steam plant B_

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generated 34 million kWh.

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Steam as Q

EWEB operates a central steam heating I

system serving 145 customers in downtown s +

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I other plant. In 1979, 571 trillion pounds of steam were delivered, bringing a revenue of

$1,020,851, up 6.3 percent. During the year, I

the steam plant burned nearly 19 million cubic i

i feet of wood waste to provide the steam for d

central heating and generating power.

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--i Conservation l

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The programs offered by EWEB's Energy 400 Conservation Center helped the decline in aver-age residential electricity use. In 1979, the 3

300 -

y center provided 1,017 free home energy use i'

l analyses, bringing the total to more than 2,700 I

since the center was formed in June 1977. Also, 200 - -

26 new homes were certified as meeting EWEB's strict Energy Efficient Building Award loor standards, so that there are now 116 of these l

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super-insulated homes. The average electricity t-

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homes was only 286 kilowatt-hours per month, costing only $4.57 montnly. EWEB was the first utility in the Northwest to promote construction Customers of energy efficient homes. The success of this (thousands) program has encouraged stricter weatherization 60 standards for all homes built in Oregon.

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The Energy Conservation Center also has 4g

__j consulted with commercial and industrial l

customers on load management, has presented numerous conservation talks to public groups, 36 -

and has participated in several energy fairs, l

home shows and other events.

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2 In Lieu-of Tax Payments Nearly $4 million was paid by EWEB in lieu j*

of taxes during 1979, makir.g EWEB second only to Weyerhaeuser Company as the largest contributor to local governments in Lane Coun-ty. The largest share, $2.5 million, was paid to the City of Eugene, almost four times what the city received ten years before. Nearly $700,000 of the total paid to the city was from EWEB's 30-percent ownership of the Trojan Nuclear Plant. Since the utility began making in-lieu-of-tax payments in 1943, it has contributed nearly

$29.6 million to support local governments.

Contributions In Lieu of Taxes (including Trojan Project)

Cumulati e Paid to:

1979 1978 Total City of Eugene.

.2 493 423 2 555 550 22 057 500 School Districts & LCC.

1 417 223 1 354 434 7 260 938 City of Springfield.

. 54 890 50 010 242 953 Total Contributions.

. $3 965 536

$3 959 994

$29 561391

.y:,:

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~1979 f4

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.?

[ Number of

Consumption

Total

~ Revenue /.

R. l S Classof Service" b JCustomers!

' '(kWh) '!

' Revenue -

- (kWh) '

~

)Residentialb......} 4 {53188 [987 719 617?

~15 873 717

.0161j ' fig $

. Commercial & Industrial! A T6 669 1130158 887 (

'12 847 903 -

..0113 MMW bhhh

[ 8[i 217'541 212 -

[ Street _Lightink.. ;;.9 ',i 9 19_439 529

[88 732:

.0094 cl 172'246?

.0098

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=:. Water Utility...'.. -.. J'E Gb:n 1

1

' i. S9 866??2 144 859 2450 (28 982 628"

.0135

RetallElectricSales ;..

~ - -i 7 247 459'000t i4 3'492851

.0176 ' {$g be

.{ Sale's to Other Utilities [.. '

/TotalElectricSales....e

$59866,52 392 318245. 3$33 331913 i

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Resource Development

~

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. Resource Development -

De most critical issue facing Eugene Water &

In order to encourage more home weather-Electric Board is how to meet the future electricity ization. EWEB is pursuing authorization for a no-needs of its customers. His was not a problem in interest weatherization loan program. As currently the past, as the Pacific Northwest had plentiful envisioned, owners or renters of from single family hydroelectric resources and EWEBt contract with to four. plex residences would be eligible for the the Bonneville Power Administration required BPA loans, which could be repaid over a period of to meet any EWEB load growth. However, the de-years or, in the case of building owners, when mand for power in the Northwest is close to ex-there is a transfer of title. If EWEB receive:; a ceeding the available supply, and BPA has told waiver from the $300 loan limit included in the EWEB and its other preference customers that the National Energy Conservation Policy Act (NECPA),

federal agency will no longer guarantee to meet the utility will seek a test case to determine if it load growth after July 1983.

has authority under the City Charter and the State Anticipating this situation, the EWEB Board of Constitution to offer such a program. li the ruling Commissioners pushed throughout the 1970's for is favorable, DVEB will request citizen authoriza-meaningful conservation and for development of tion of bond financing for the program.

renewable generating resources. Following is a DVEB will be implementing a Residential Con-review of projects EWEB is working to develop:

servation Service Program in 1980 as required by NECPA. Essentially, this is an extension of the Conservation home energy use analysis offered by EWEB since Solar 1977. Under the expanded program, EWEB will l

EWEB is providing financial aseistance to the calculate potential energy savings from weatheriza-l University of Oregon Solar Centrr for automated tion and from passive solar systems; will assist the solar data gathering. This information will be in-residential customer in selecting suppliers, installers valuable to citizer:< and architects wishing to and lenders; and will inspect completed installa-design appropriate active or passive solar systems tions. Details of the "ogram will be determined by for homes and buildings in the Eugene area. We results of public hearings held in April 1980, with utility is also specially monitoring energy use at implementation scheduled for late in the year.

several solarassisted homes to help identify cost-effective systems.

New Generation Cogeneration

\\"

,9 De EWEB-Weyerhaeuser Utility / Industrial Energy Center has been in operation since 1976.

High-pressure stenu produced by Weyerhaeuser's boilers is diverted through an EWEB turbine.

l generator enroute to its use at lower pressure in kas Weyerhaueser's industrial operations. Capacity of pme the generating unit is 51,200 kilowatts. However, Weyerhaeuser currently supplies enough steam to produce about 33,000 kilowatts of power. Elec-tricity generated at the facility is contracted to three California cities until EWEB determines it needs the power for its own customers.

he possiblity of a cogeneration plant utilizing waste heat from a charcoal briquet manufacturing plant in Springfield is being studied. Waste heat Weatherization from the Kingsford Company plant may have the Conservation is the lowest <ost and most im-potential of fueling a 1015,000-kilowatt generating mediately available energy resource. It is estimated unit. E%T.B and Kingsford are sharing the cost of a that weatherizing a poorly insulated,1,100sluare-

$100,000 feasibility study to be completed in 1980.

foot, electrically heated home would, over a 20-year penod, recover some 300,000 kilowatt-hours of wasted electricity at a cost of only 0.2 to 0.4 cents per kilowatt-hour.

-- w l

g D%'

q.

Geothermal Wind Oregon is bclieved to possess excellent geo-Oregon's publicly owned electric utilities have thermal resources. However, very little h actually been funding wind power research at Oregon State known about what geothermal potential exists, and University for several years. They are now pro-

~i how much it might cost to develop. Toward this ceeding with the next step: construction of a full-end, EWEB acquired in 1979 a $300,000 US.

scale wind turbine. EWEB is the lead utility and Department of Energy grant to drill geothermal Central Lincoln PUD is the host utility for the test wells in the central Cascades. EWEB con-

$250,000 project being funded by 19 Oregon tributed $50,000 to the project as did two private publicly owned utilities and the American Public energy resource firms. In addition, the Oregon Power Association. Alcoa laboratories is to supply Department of Geology and Mineral Industries con-by mid-1980 a 500-kilowatt vertical axis wind tributed services in kind toward the project. Six turbine for a site on the Oregon coast. The wind temperaturegradient wells were drilled to varying turbine looks like a giant three-bladed egg beater depths up to 1,800 feet at different locations. The standing almost 14 stories tall. Objectives of the well casings were filled with water which will be demonstration project are to determine actual costs monitored to measure how much the temperature and reliability of wind turbine generation, impacts increases with depth. Analysis of this information of integrating a randomly operating power source will help determine whether or not there is an into a utility system, and emironmental effects in-attainable geothermal resource which could be cluding public attitude toward visual impact.

utilized to generate electricity; and, if so, at which location and at what depth might an adequate Wood Waste resource be found. Even if results are favorable, EWEB has been using wood waste as a power geothermal production in the Cascades may be plant fuel since 1941. The utility's steam plant uses slow to develop.

waste wood chips from lumber mills to provide EWEB is also a participant in a geothermal central steam heating and to generate electricity.

development program in northern Nevada. EWEB However, competing uses for wood waste and the and three other utilities are planning to install one cyclical nature of the lumber market create occa-or more 10,000-kilowatt generating units utilizing sionalsupply problems.

_ M fidM,,

the liquid 41ominated resource at sites developed by wQ 7 Meanwhile, thousands of tons of forest waste m

the resource owners. Consideration % h being are being left behind at logging operations in the given to installation of a prototype geothermal nearby Cascades. This potentially valuable resource generating unit of 50,000 kilowatts capacity. The is currently being bulldozed into piles and burned, participating utilities are hopeful that generation creating considerable pollution.

from these northern Nevada geothermal fields will EWEB is the lead agent for a $180,000 study be realized during the early 1980's.

supported by the Electric Power Research Institute, Pacific Power & Ught Co., and the Oregon Gover-Small Hydroelectric nor's Wood Residue Utilization Committee to deter-EWEB will be filing applications with the mine the availability of retrievable forest waste in Federal Energy Regulatory Commission for five the central Cascades. The study also will identify hydroelectric projects in 1980. The projects, which the feasibility and preliminary design of a 24.000-could have a combined capacity of over 70,000 kilowatt wood-fired power plant located near the kilowatts, are all located on the western slope of forest resources. The study is scheduled for com-the Oregon Cascades. Three are at existing federal pletion in 1980.

fkxxl control projects, while the others are donwstream from federal projects. Because of their Each of these resources has potential How locations, these projects could be installed and much potential is actually realized, and when, operate with minimal environmental effects.

depends on the extent of governmental obstacles, technological development and public acceptance.

Meanwhile, the number of EWEB customers con-tinues to grow.

j_

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, >... ~...

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,YF to 44p. Although tta number of electric and.

y-

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~__n-4, g3 EWEB has increased. -

3 '..

u

. t p'.

water customers served by?!970's,

.e 4( percent disting the the utlHty - i workforce has increased by just 14 percent.

4_

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' EWEB employees average 11 and a half years t

+

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of service, attesting to the low'turnoveir rate.

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' - Fifteen employees retired.in 1979 with a com-y ;% '

e s:

i I

binedserviceof 313 years..

g.;

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..., e Employee payroH and benefits costs have J.

-. f,.

7 9.,./.

i 190 percent froin 1969 to 1979. -

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labor cosk have O at. about V

.. 3 7

.c O percent of total utuity expenilitares through. ' ' ~"

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out the decade. -

l.,.,;.- ' H EWEB is ang opportunity employer - D " 7

. -- ; 3,,,%. }

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,and is subject to the. provisions of the Office of p-A

-.'w, Feders contract compnance. Ewsn oncies y.

c s

and federany approved Afarmative Action Pro ' '

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' gs_imzad dram guaranteegendiscrimination. and egnal Opportunity for employment and advancetnent w

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'Theemployees' dedication '

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Total long-term debt maturities during the years 1981 through 1984 (exclusive of the Water Utility System Revenue Bond Anticipation Notes, which the Board intends to retire by the issuance of Water Utility System Revenue Bonds in 1981) are as follows:

Electric Utility General Trojan Water System Project Utility 1 365 000 2 335 000 239 183 1981..

1 370 000 2 435 000 238 301 1982.

1983.

1 472 000 2 530 000 232 419 I 415 000 2 645 000 242 478 1984.

The Board has observed, performed and fulfilled its covenants and obligations as required by resolutions authorizing the issuance of revenue bonds, including the maintenance of net revenues available for debt serv-ice. In determining debt service coverage of the Electric System, all General System net revenues and Trojan Project Net Billings are available for General System debt service. However, the Board has covenanted to fix rates and charges so that General System net revenues are sufficient to pay debt service on all General System Bonds in order that Trojan Project Net Billings will be available for servicing the Trojan Project Bonds.

Pension Plans:

Substantially all employees are covered under the State of Oregon Public Employes Retirement System (PERS) plan and a supplemerdal retirement plan. Pension expense for 1979 was $797,580 for the Electric Utili-ty and $187,580 for the Water Utility (expense for 1978 was $655,655 and $153,796, respectively), includi.:g amortization of the unfunded liability for the present va ae of all past normal costs over a 30-year period. The Board's policy is to fund pension cost accrued. For the PERS and supplemental plans, based on the latest available actuarial reports as of December 31,1977 and 1978, respectively, the actuarially computed value of vested benefits exceeded the market value of fund assets by $3,415,000.

Litigattom On November 14, 1977 the City of Portland, Oregon (Portland) filed two lawsuits in the United States District Court for the District of Oregon against the Administrator of BPA and the Secretary of the Depart-ment of Interior. The Board has intervened in both actions. In the first action, Portland alleges BPA has acted illepily in its sales of power to preference customers, private utilities and the direct service customers, and asks that the present method of marketing federally-owned power be declaied to be unlawful. In December 1978 the first action was orally dismissed because the claims it presented were not ripe for adjudication.

However, an order dismissing the case was not entered. Instead, the court is seeking additional input from the involved parties before taking further action. In December 1979 Portland filed a motion for leave to file an amended complaint in the first action. The Board thereafter filed a motion in opposition to this motion. No further action has been taken by the court on this motion or any other aspect of this case.

In the second action, Portland claims that certain net billing agreements and power sales contracts entered into by BPA subsequent to January 1,1970 are illegal and void by the alleged failure of BPA to com-ply with the terms of the National Environmental Policy Act of 1969 (NEPA). The Board is a party to net bill-ing agreements in connection with the Trojan Nuclear Project and to a power sales contract, both of which would be affected by this action. The Board claims that there has been compliance with the NEPA and that in any event Portland is not entitled to relief by reason of laches since it knowingly delayed requesting such relief for a period of years.

In the opinion of the Board's special counsel based upon existing statutes, case law and facts presently discovered, there are meritorious defenses to both actions which should prevail. The opinion of special counsel pertinent to the ultimate outcome of both actions is in no way affected by the filing of the motion to file an amended complaint.

Portland General Electric Company, the Trojan Project operator, filed suit during 1979 seeking to recover from Bechtel Power Corporation, the Project designer, all costs associated with the modification of the control room as well as their excess power costs resulting from a nine-month Project shut down. On February 1,1980 the Board filed a motion for leave to intervene as a party plaintiff only in that portion of the suit relating to the costs associated with modification of the control room. Bechtel has filed their answer to the suit alleging numerous affirmative defenses and counterclaims of approximately $108 million. Special counsel has advised the Board that based upon the facts presently generated in the litigation,it appears that meritorious defenses exist as to most of the counterclaims. There will be no adverse financial impact on the Board due to the con-trol room modification since all costs will be recovered either from the Project designer or through net billing.

Reclassifications:

l For comparability, certain 1978 amounts have been reclassified to conform with account classifications used in 1979. There was no effect on previously reported net revenue.

E

'1 l'

The Net Billing Agreements provide the Board an option to withdraw in full or in part, for use in its own system, its'30% share of the Project capability and thus terminate its assignment to BPA and other parti-cipants. On January 7,1980 the Board unanimously agreed not to exercise its withdrawal option, although the

' option does not expire until July 1,1980 (under agreements granting extensions from the original July 1,1977 notification date). The Board had previously notified BPA that, in the event the extension agreements are invalidated, it will withdraw substantially all of such capability in specified annual increments from 1984 through 1997.~ Upon withdrawal or termination of the Net Billing Agreements, the Board would be obligated pursuant to the bond resolution to pay its share of the Project costs, including debt service, on the same basis and terms as provided in the Net Billing Agreements.

Provision for depreciation is computed using the 6% sinking-fund method based upon an estimated serv-icelifeof 33 years.

Nuclear fuel amortization is provided based on the quantity of heat produced for the generation u energy

- without provision for salvage value.

Estimated costs associated with decommissioning the Plant at the end of its useful life and permanent storage of spent fuel are currently being evaluated by the Board and BPA. These costs are Project costs and will be included in annual operating budgets for net billings when determined.

The Nuclear Regulatory Commission has accepted BPA's guarantee that the Board's share of Price-Ander-son Act liabilities,if any are incurred, are net billable.

LONG TERM DEBT:

1979 GeneralSystem Revenue Bonds Series A,8-1-60 issue,3-4%,due 1981-2004.

18 698 000 Series B,8-1-62 issue. 3%, due 198182.

375 000 Series C,8-1-66 issu<.,4.30-4.35%, due 1981-99.

3 640 000 Series D,8-1-68isst.,4-4.90% due 1981-99.

5 085 000 Series E, I l-1-75 issue,5.204.50%, due 1981-90.

6 715 000 34 513 000 Less unamortized discount..

266 186 34 246 814 Trojan Nuclear Project Revenue Bonds, Series of 1977 Serial Bonds,3-5.75%, due 1981-90.

63 960 000 Term Bonds,5.90%, due 2009.

83 700 000 147 660 000 Less unamortized discount -,

2 480 850 145 179 150 ELECTRIC UTILITY LONG. TERM DEBT.

$179 425 964 Water Utility System Revenue Bonds 3-15-62 issue,3-3.20%, due 1981-86.

600 000 8-1-66 issue,4.30-4.35%, due 1981-99.

2 030 000 8-1-68 issue,4.75-4.90%. due 1981-99.

I 660 000 Debt assumed through annexation,3.50-4.80%, due 1981-90.

233 353 Water Utility System Revenue Bond Anticipation Notes 1976 issue,5.25%, due 7-1-81.

9 000 000 1979 issue,5.875%, due 7-181..

1 000 000 14 523 353 1

less unamortized discount.

38 316 WATER UTilllY LONGTERM DEBT.

$ 14 485 037

r-Notes to Financial Statements December 31,1979 Summary of Significant Accounting Policies:

GENERAL.-The Eugene Water & Eletric Board, an administrative unit of the City of Eugene, Oregon, is responsible for the ownership and operation of the electric and water utilities. It has the authority to fix rates and charges for commodities or services furnished. The Board's policies conform to generally accepted ac-counting principles for public utilities and the accounting requirements of the Federal Energy Regulatory Commission. Significant policies are described below.

UTILITY PLANT AND DEPRECIATION-Utility plant is stated substantially at original cost. Cost includes labor, materials, payments to contractors, transportation and construction equipment use and indirect costs,

. such as employee benefits, general and administrative expenses, allowance for funds used during construc-tion,less customer contributions.

The cost of additions, renewals and betterments are capitalized. Repairs and minor replacements are charged to operating expenses.

-With minor exceptions, the cost of property retired and removal cost, less salvage, is charged to accumulated depreciation when property is removed from service.

Depreciation is computed using straight-line composite rates which are equivalent to approximately 3.1%

of the Electric Utility General System and 3.2% of the Water Utility original costs of depreciable utility plant.

INVESTMENTS-U.S. Government securities included in various funds and in current assets are carried at amortized cost plus accrued interest which approximates market.

MATERIALS AND SUPPLIES-Materials and supplies are carried at average cost.

OPERATING REVENUES-Revenues are recognized when monthly cycle billings are made. No accrual is made for energy used between the cycle billing date and the end of the accounting period.

Trojan Project:

The Board, as a tenant-in-common with Port:and General Electric Company and Pacific Power & Light Company, owns a 30% share of the 1,130 megawatt Trojan Nuclear Power Plant.

Under Net Billing Agreements the Board has assigned to Bonneville Power Administration (BPA) and other public agency participants its 30% share of the output from the Plant. Over the life of the Project, the Board will receive payments and credits (nct billings) equal to its share of all the Project costs and debt serv-ice whether or not the Project is operable or operating and notwithstanding the suspension, interruption, interference, reduction or curtailment of Project output. However, as provided for in the Agreements, such net billing receipts may vary substantially from expenses and costs on an annual basis. Because of the even-tual netting effect, net billings are recognized in each accounting period only to the extent of current expenses. The accumulated excess of net billings over expenses is stated in the balance sheet as ' Deferred Trojan Net Billings" Following is an analysis of Trojan Project net revenue:

1979 1978 Total net billings.

22 553 286 30 264 715 Less deferred net billings..

534 475 11 043 075 Recognized net billings.

22 018 811 19 221 640 Interest earned-Net.

1 722 350 1 196 023 TOTAL REVENUE 23 741 161 20 417 663

' Trojan operation & maintenance expense.

7 640 844 6 839 963 Nuclear fuel amortization.

3 585 380 907 841 Interest expense & discount amortization.

8 925 543 8 994 776 Depreciation.

i 692 778 1 572 444 Contributionsinlieu of taxes.

I 783 904 1 947 078 Administrative & general.

I12 712 155 561 TOTAL EXPENSE 23 741 161 20 417 663 TROJAN PROJECT NET REVENUE

$ None

$ None L

j

1 Water Utility Statement of Changes in Financial Position For the Years Ended December 31,1979 and 1978 1979 1978 Net revenue for the year...........

1 024 478 1 227 642 Charges not requiring current funds 1 087 127 909 596 Depreciation & amortization..........

2 111 605 2 137 238 Provided from operations...........

, Construction funds used 1 892 515 1 089 000 Increase in iong-term debt..

Increase in current liabilities............

13 368 64 592 3 213 973 4 094 345 TOTAL FUNDS PROVIDED......

i l

1 Additions to utility plant-Net.

2 480 321 5 421 836 Increase in segregated cash & bond funds..

28 316 7 750 Long-term debt paid or currently maturing.

238 124 234 465

)

Increase in receivables, materials & prepayments.

236 851 180 434 Increase in other assets-Net.

71 369 10 581 TOTAL FUNDS USED.

3 054 981 5 855 066 INCREASE (DECREASE)IN CASH AND SECURITIES.

$ 158 992

$(1760 721)

The accompanying notes are an integral part of this statement.

W ter Utility Statement of Net R;vinue For the Years Ended December 31,1979 and 1978

_ !.979 1978 2 358 265 -

1 965 620 Residential......

Commercial & industrial......

2 650 225 2 359 355 Other.

37 047 55 771 5 045 537 4 380 746

- OPERATING REVENUES..

593 209 507 929 Source of supply, pumping & purification.

719 908 490 626 Transmission & distribution..

Administrative & general.........

659 000 541 975 446 319 399 132 Other operating expenses.

1 055 232 877 560 Depreciation & amortization.

3 473 668 2 817 222 OPERATING EXPENSES..

1 571 869 1 563 524 NET OPERATING REVENUE..

Interest earnings on investments.

72'483 172 153 43 400 79 900 Allowance for funds used during construction.

OTilER REVENUE.....

I15 883 252 053 Interest expense & discount amortization.

719 874 692 035 Allowance for borrowed funds used during construction.

(56 600)

(104 100)

REVENUE DEDUCTIONS...

663 274 587 935

$1024 478

$1227 642 UTILITY NET REVENUE..

The accompanying notes are an integral part of this statement.

n

Liabilities-1979 1978 Balanct. beginning of year...

10 667 129 9 439 487

- Net revenue for the year.

1 024 478 1 227 642 RETAINED EARNINGS..........................

11 691 607 10 667 129 i

L l

l LONG. TERM DEBT......

14 485 037 13 630 188 t

Accounts payable...

530 856 601 773 Accrued payroll & vacation pay.

235 341 208 028 Accrued interest on long-term debt....

363 910 310 597 Long-term debt due within one year..

238 124 234 465 CURRENT LIABILITIES....

1 368 231 1 354 863

$27 544 875

$25 652180 b

m.

. Water Utility Balance Sheet -

December 31,1979 and 1978 Assets 1979 1978 Plant in service.

36 776 135 33 632 569 Less-Accumulated depreciation & amortization.

12 656 036 11 423 865 24 120 099 22 208 704 i

187 560 187 560 Property held for future use...

835 854 1 354 055 Construction work in progress..

25 143 513 23 750 319 1RILITY PLANT................

282 275 287 230 SEGREGATED BOND FUNDS.........

390 783 231 791 Cash & temporary investments.

488 800 455 529 Segregated cash & securities for payment of debt service..

Accounts receivable,less reserves 1979-$16,914; 1978-$12,739..

339 586 290 491 376 725 508 555 Materials & supplies......................

35 057 15 471 Prepayments & special deposits.....

1 930 951 1 501 837 CURRENT ASSETS.

Un ;mortized bond expense......

15 593 16 800 l

Deterred charges & other.

172 543 95 994 OTHER ASSETS.......................

188 136 112 794

$27 544 875

$25 652180 The accompanying notes are an integral part of this statement.

d 1

I e

i

Electric Utility Statement of Changes in Financial Position For the Years Ended December 31,1979 and 1978 1979 1978 Net Revenue for the year.....

8 054 815 8 107 284 Charges not requiring current funds 3 755 397 3 528 129 Depreciation & amortization.

Provided f rom operatior.s...

11 810 212 11 635 413 increasein current liabilities.

723 732 297 682 12 533 944 11 933 095 TOTAL GENERAL SYSTEM....

Provided from operations-Depreciation & fuel amortization 5 278 158 2 480 285 874 810 805 030 Construction funds used.

534 475 11 043 075 Deferred Trojan net billings.

1 460 309 372 971 Changes in other items-Net.

TOTAL TROJAN PROJECT, 8 147 752 14 701 361 TOTAL UTILITY FUNDS PROVIDED...

20 681 696 26 634 456 Additions to utility plant-Net.

9 408 601 8 712 972 Long-term debt paid or currently maturing.

1 630 000 1 320 000 Increase in receivables, materials & prepayments.

120 423 1 465 570 Increase in construction fuads.

176 576 101 958 Other funds used-Net 280 918 169 017 TOTAL GENERAL SYSTEM.

11 616 518 11 769 517 Additions to utility plant-Net.

5 525 268 9 445 683 increase in General fund...

327 713 1 241 373 increase in other segregated funds...

39 771 1 829 305 Long-term debt paid or curreatly maturing.

2 255 000 2 185 000 TOTAL TROJAN PROJECT.......

8 147 752 14 701 361 TOTAL UTILITY FUNDS USED.

19 764 270 26 470 878 INCREASE IN GENERAL SYSTEM CASil AND SECURITIES

$ 917 426 163 578 The accompanying notes are an integral part of this statement.

D

Electric Utility Statement of Net Revenue For the Years Ended December 31,1979 and 1978 1979 1978 15 873 747 14 377 310 Residential..

12 847 903 11 961 655 Commercial & Industrial....

5 174 398 3 978 357 Sales to other utilities Steam heating.

1 020 851 960 198 GENERAL SYSTEM OPERATING REVENUES 34 916 899

_31 277 520 7 115 663 6 558 469 Purchased power.

Steam & hydraulic production..

5 188 854 3 488 098 Transmission & distribution.

3 580 955 2 989 297 i

3 369 040 2 582 446 Administrative & general I 848 970 1 604 573 Other operating expenses....

3 580 949 3 376 140 Depreciation & amortization.

2 181 632 2 012 916 Contributions in lieu of taxes..

26 866 063 22 611 939 GENERAL SYSTEM OPERATING EXPENSES.

GENERAL SYSTEM NET OPERATING REVENUE..

8 050 836 8 665 581 interest earnings on investments.

I 241 324 782 179 Allowance for funds used during construction.

196 800 130 200 Other nonoperating rever.ucs.

157 301 207 117 GENERAL SYSTEM OTIIER REVENUE 1 595 425 1 119 496 Interest expense & discount amortization.

I 694 646 1 755 593 Allowance for borrowed funds used during construction.

(103 200)

(77 800)

GENERAL SYSTEM REVENUE DEDUCTIONS.

1 591 446 1 677 793 TROJAN PROJECT NET REVENUE...

$ 8 054 815

$ 8107 284 UTLITY NET REVENUE.

The accompanying nctes are an integral part of this statement.

N

Liabilities 1979 1978 General Trojan Total Total System Project Utility Utility Balance beginning of year.

62 595 724 62 595 724 54 488 440 Net revenue for the year.

8 054 815 8 054 815 8 107 284 RETAINED EARNINGS...

70 650 539 70 650 539 62 595 724 LONG-TERM DEBT.........

34 246 814 145 179 150 179 425 964 183 150 536 x

Accounts payable..

3 638 109 2 116 011 5 754 120 3 522 436 Accrued payroll & vacation pay 724 113 724 113 707 550 Accrued interest on long-term debt.

698 706 2 883 542 3 582 248 3 569 753 Long-term debt due within one year.

I 265 000 2 255 000 3 520 000 3 415 000 CURRENT LIABILITIES..

6 325 928 7 254 553 13 580 481 11 214 739 OTIIER LIABILITIES AND DEFERRED CREDITS......

160 753 160 753 165 152 DEFERRED TROJAN NET BILLINGS...

41 518 507 41 518 507 40 984 032

$111384 034 $193 952 210 $_305 336 244

$298110183 l

Electric Utility Balance Sheet December 31,1979 and 1978 Assets 1979 1978 General Trojan Total Total System Project Utility Utility Plant in service.........

132 569 703 140 943 745 273 513 448 260 701 260

!' ess-Accumulated depreciation & amortization..

44 463 884 5 513 514 49 977 398 44 805 239 88 105 819 135 430 231 223 536 050 215 896 021 Property held for future use.

627 390 627 390 627 390 Construction work in progress..

3 595 944 3 595 944 4 346 972 Nuc' ear fuel,less accumu ated amortization 1979-$9,610,163; 1978-$6,024,783.....

23 489 268 23 489 268 24 477 955 UTillTY PIAlVr...........

92 329 153 158 919 499 251 248 652

':45 348 338 Bond funds......

2 745 426 10 565 248 13 310 674 13 217 420 Reserve & contingency Iund...

2 000 000 2 000 000 2 000 000 Renewal & replacement iund...

500 000 500 000 500 000 Construction fund...........

I 622 644 1 622 644 2 320 878

}

SEGREGATED FUNDS...

4 868 070 12 565 248 17 433 318 18 038 298 Cash & temporary investments.

6 935 407 3 566 053 10 501 460 9 256 321 Segregated cash & securities for payment of debt service.

1 000 472 3 547 152 4 547 624 4 488 000 Receivables,less reserves 1979-$95,140; 1978-$84,788.

3 918 906 3 918 906 3 536 005 Materials & supplies 1 380 985 1 501 831 2 882 816 2 704 641 Prepayments & special deposits.

222 655 274 601 497 256 694 748 CURRENT ASSE'I3......

13 458 425 8 889 637 22 348 062 20 679 715 Advance refunding costs.

12 364 604 12 364 604 12 781 388 Unamortized bond expense....

163 294 428 283 591 577 636 187 Deferred charges & other.

565 092 784 939 1 350 031 626 257 OTHER ASSETS.....

728 386 13 577 826 14 306 212 14 043 832

$111384 034 $193 952 210 $305 336 244

$298110183 The accompanying notes are an integral part of this statement.

I '_

t m

)

~

Eugene Water & Electric Board-500 East 4th. Ave./P.O. Box 10118/ Eugene, Oregon,97440

'(503)484-2411:

- S~

FinancialStatenients 1979 and 1978 To the Board of Commissioners of Eugene Water & Electric Board:

We have examined the financial statements of the Eugene Water & Electric Board for the years ended December 31,1979 and 1978, which are incbdea herein. Our examinations were made in accordance with generally accepted auditing standt.rds 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 aforementioned financial statements present fairly:

(1) the' financial position of the Electric Uti!:ty and Water Utility of the Eugene Water & Electric Board at December 31,1979 and 1978, and the results of tlieir operations and changes in their financial position for the years then ended; and (2) the assets and liabilities of the Electric Utility General System and the Trojan Project of the

- Eugene Water & Electric Board at December 31,1979, and the results of their operations and

~

changes in their financial position for the years ended December 31,1979 and 1978, all in conformity with generally accepted accounting principles app ied on a consistent basis.

[,-a~ l l

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