ML19323F804

Annual Financial Rept 1979

ML19323F804
Person / Time
Site:	Hatch, Vogtle
Issue date:	05/23/1980
From:	MUNICIPAL ELECTRICAL AUTHORITY OF GEORGIA
To:
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ML19323F799	List: ML19323F798 ML19323F804
References
NUDOCS 8005290488
Download: ML19323F804 (21)

Text

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O 1979 AnnualReport Municipal Electric Authority of Georgia 80 0529 0 Y@

1979 Highlights

• 4.4 bilhon kilowatt. hours required by parncipating systems.

• Grms revenues of $118.568.472.

• Issue of $100 milhon in Senes D Power Revenue Ik>nds.

• Peak denand of 970.035 kilowatts set August 8.

• Purchase of Integrated Transmission System comp >nents valued at $10.4 million.

• Receipt of American Pubhc Power Associanon's Scattergood Award for leadership in the public power industry.

MEAG The Murucipal Electric Authonty of Georgia, created by the 1975 Georgia General Assembly to assure adequate, dependable and economica' supplies of electncity in areas where ten percent of the state's populanon lives, is the bulk power suppher to 47 participants which operate their own electric distribution systems.

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To Our Read:rs The year 1979 for MEAG proved to be Any list of the year's highlights would a connnuing test of our abdity to keep have to include the honor given us in June electric rates level in our third year of by the American Public Power Association operanon. We are pleased to report that dunng the annual conference of this group we passed this test in excellent condition in Seattle. Cinng MEAG for " enhancing despite rising costs from almost every facet the prestige of and making substannal ofoperanons. conmbutions to APPA and the public Further, our prehminary esumates for power industry l* APPA presented to the 1980 appear to confirm our major goal of Authority the E. F. Scattergood Achieve-keeping the same rate structure for this ment Award, given annually to an out-period. Tlus means that for the past three standing APPA member unlity.

years, we have been able to provide bulk The last of the Authority's currently elecmcity to our pamctpants at an average planned generating units goes into operation kdowart-hour cost o(24 mills, which is in the year 1989. Lsst year, we began to substantially below alternative sources. look at additional sources of generation in The year just ended saw Georgia's order to keep pace with the demands of second nuclear electric generanng unit go our pamcipants. Among the bprions being into commercial operation in the third considered are low-head hydro, co genera-quarter. The acnvation o(1.' nit 2 at Plant tion using manufacturing process steam.

Hatch doubled our nuclear capacity, and pumped storage and convennonai steam-because of the very low fuel cost of this electnc generating plants. Our preliminary generation, played a major role in helping studies indicated at least three low-head keep our rates level. hydro sites had the potential for generanng Another important factor in helping our peaking energy on a cost-e(6cient basis, so cities hold down their rates was the adop- we will examine these sites in additional tion by several addinonal participants of detail this year.

electronic load management systems. We The inflationary factors about which we continue to recommend that parncipants commented on these pages last year con-examine closely this method o(cost. tinue to drive up the cost o(doing business cuttng to determine the bene 6ts to their by increasing interest rates, pushing up-particular Iced structures. Most have found ward the cost of fuel and raising the salaries that the savings expenenced in the first 18 we must pay to continue to attract com.

to 24 months of operation pay all equip- petent sta((members. All of these factors ment and installation costs, so savmgs are combining to hasten the day when we beyond that period are virtually free. will be forced to increase the price we Interest rates on the bonds we sell to charge for supplying our 46 cities and one continue the Authonty's purchase of county with electricity. However, w,th the generation and tra .smission propemes continuing cooperanon and assistance of continued to climb during 199 as the our participants, we intend to delay this result of additional compention between action as long as possible by continuing borrowers for capital. Because of the aght control over expenditures, getung the demand for fur ds in the municipal bond maximum from a small but highly profes-market, we stepped up our program of sional sta((and exploring every opportunity visits to institutional investors in all parts to keep energy costs as low as possible.

of the country. At each stop, we discussed MEAG's on-going program of purchases, the savings experienced by our participants and the financial secunty of any investment G. N. Manley Chairman

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in MEAG. In virtually every instance.

MEAG's reputation (or achievement was well known, which made our discussions g7// e vith these very demanding audiences Donald L Stokley much easier. General Manager ,

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Y MEAG'S Revisw of Operations PARTICIPANTS ceoemson aorrreosmission For the mird ccnsecutive year, our rates for bulk power supplied to participants Their Story dropped slightly, despite the effects of inflation on fuel costs, purchased power and interest rates. The following table shows how bulk power costs (in mills The narrative portion of this third MEAG Annual Report tells the story of k% watt. Bulk Project Supplemental hours and consumption; of generating Year Power Power Power plants and transminion lines; and of 1977 24.73 19.93 26.11 1978 24.61 20.56 26.86 dollars collected and spent.

1979 24.44 18.58 31.47 But the real measure of how succemful we are is how well we serve our 47 Although many economists had forecast gloomy prospects for 1979, the year participants in meeting their electric proved to be one of relatively level electrical consumption and demand, with energy needs. So we asked the people who slight increases in both areas. Total bulk power and federal hydroelectric energy represent our participants: mayon, city de!ivered to our 47 participants was 4.36 billion hilowatt-hours (kwh), up four-managen and utility comminionen, to tenths of one percent over 1978, while demand rose seven-tenths of one per-express their feelings about MEAG. On the cent, tc,910,907 kilowatts (kw ). These slight increases, rather than the four to following pages, you will find a crou- seven percent annual growth experienced during earlier periods, were caused section of their responses, along with some by the overall state of the economy, variables in the weather, conservation, load information about themselves and their management and reduced industrial growth.

cities. From communities large and small, Of the total energy provided to participants by MEAG,55 percent was project urban or rural, highly industrialized or powet while supplemental purchases from Georgia Power Co. accounted for agriculture-oriented, the response was the the remaining 45 percent. When compared to the 1978 ratio of 36 and 64 per-same: MEAG is saving us and our cent, respectively, the increase in lower priced project power accounts for the customen money while serving us well. overall cost reduction. In addition to bulk power supplied by MEAG, partici-We are grateful for their enthusiastic pants received 620,704,400 kwh from the Southeastern Power Administration, support of MEAG and pledge our which markets the federal hydroelectric energy.

continuing efforts to maintain our The Georgia territorial peak load of 10,213,000 kw occurred between the reputation as one of America's most hours of 5 and 6 p.m. on August 8,1979. During this hour, MEAG's contribu-successful joint action power suppliers. tion to the peak was 970,035 kw (measured at the generator bus and includ-ing power furnished by the federal hydroelectric projects) or 9.5 percent of the terntorial peak. One of the major reasons for this small expansion in de-mand over the previous year was the growth of electronic load management systems among paracipants. At the ame of the 1979 peak,13 participants had these load management systems in operation, while it is estimated that by the time of the 1980 peak day,16 cities will be peak-shaving by controlling the opera-tion of air conditioning compressors and electric water heaters. This growth in systems to hold down the peak load has both short-range and long-term impli-cations, in that it currently saves participants money by cutting demand charges while over the long run, it delays the need to build expensive new generanon capability just to meet peak-hour demands.

Our owned generating capacity increased by 135,405 kw on August 8,1979, when Unit 2 of the Eden 1. Hatch Nuclear Generating Plant was declared in commercial operation. This unit achieved initial criticality on July 4,1978, and was expected to be operational in December of that year. However, problems discovered in the startup testing phase imposed a delay of several months. One difficulty in particular was that certain pipe supports, or hangers, pulled loose from their mounts when subjected to extreme pressure shocks. To correct this problem, more than 800 hangers in each of the two Hatch umts were replaced.

Because of this discovery, reactors nationwide had to be checked and many underwent the same replacement procedure.

Retained capacity also increased significantly during the past year, from 198,188 kw on December 31,1978, to 298,894 kw by the last day of1979. These increases are attnbutable to the placing in commercial service of Unit 2 at Plant Hatch and the increased retention of capacity of Unit 1 of Plant Wansley and Umt 1 of Plant Hatch. These periodic increases in retained capacity are in keep-ing with our sellback agreement with Georgia Power Co.

One of the year's bright spots was the high availabdity of the generating uruts at plants Hatch and Wansley. Hatch 2 was operated at 80 percent for the four full I months in which it was in commercial operation. In similar fashion, both Wans-ley units continu-d to be outstanding performers, wirb units I and 2 generating ,

at 71 and 77 percent of capacity for the year. These records were among the  !

major reasons why we were able to keep the kwh cost of delivered energy to  !

pamcipants at basically a level rate of 24 mills. l A $10.4 million purchase of transmission and distribution facilities on August 2 23 served to bring MEAG into parity in the statewide Integrated Transmission

v stem a ITS i This acquisinon or 165 miles at ransmtssion hnes, two transmis-

, ion substanons and nine distribunon substanons also reduced panty pas ments

%r MEAG from an average or 5167.000 per month ro approximatelv 54 AY monthh Current projecnons indicate 19N' nnual receipts or 510CdY rather -

%n pavments for the se of the ITM f ust is was done in '8 Georgia Power Co. lowered its forecast of the terri-

. nai erowth are because or economa conJinons, conservanon and the re- '

m. ,ui ,,t ,arural gas constraints trom residennal and mdustnal hookups. From i preda non , .t an annual eroch or 4 54 percent through 1944. peak demand er. wth wa , iowered to 3 95 percent per sear Tne MEAG start predicted that *

,ur wak Jemand would nerease 4.32 percent each vear through 1904 -

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I The to- ered terntonal torecast <auseJ Georgia Power Co. to furthu delav /,, l mits 4 mJ 4 or P! ant Stherer to Februarv 14M7 and Februarv 1989. the latest ,

p ssibic ompienon dates under the terms or MEAG's contract with the com- .'

panv i ont urrent with the announcement of the delav in mid-September. Geor- ,

i eu Pou er : b proposed rhat the co-owners of Scherer units 3 and 4 consider fg I emne up -heir mterests m thow units and Joubling their present ownership '/

snares n umts 1 ar J 2 It accepted. this pronwai would enable Georgia Power

- > , turtner Jeiav. cancei or seil one or both rematrung units to unhnes outside F6 t c reu WS l

\tter months or negonanon and dis <ussion. the Authontv recommended _, s

-g-g ,',j--m 1 i

mis rop isa!. know n .ts Project 3. to its ;sarnapants because or the many bene- g _- y J , -- '

nrs a ha h .t >tters. First the construtnon cost esumates for units 1 and 2 are i g I mus h nrmer. smce their complenon dates at 1982 and 1984 are near-term. and -

onst: < non :s mu< h turther alone. At vear-end. Unit I was past the 50 percent e i omnenon staee and snli expected to begm operanon late m 1981. Another a r :a s ir uivantage to Proiett i is that a new buvback schedule stamng with no , rr etenn. ,n bv ME AG the first vear and increasing by ten percent each succeedme s cir wuid nt MEAG s requirements much better Finallv adornon or this

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I pr. net t u ouid save parnapants approximatelv 5100 milhon m nnancmg because . U=

l he earher units are :ess expensae than the later ones, plus addinonal operanne / 'iyii saunes wouid accrue to the pamcipants our the hie of the faahtv. (- um j

Ar this a nnng. more than 45 percent or our 47 parncirants have acreed to '

his new proiett and . is expet teJ that the remainmg emes will sign their agree. T gh bU men ts m Mav 1; The "roiett 3 agreement snll provides MEAG with an opnon 4

xquire up to 1; I percent capaarv m Units 3 and 4 it it proves advantageous A cin:en of Doerun for more than 40 to . ,ur eeneranon program It exerased. this opnon would be a separate project. vears, Mayor B. C. Cmuell enumerates t 'n Mart h 23 1079 m acaJent at the Three Mile Island nuclear electnc some of the high points af living in the eencranne tachtv of Metropohtan Edison Co, phts the extensive media cover- small Johuitt County town in somh ice .t his acudent. ratseo doubts m the mmds or nulhons of Amencans cen. Georgia: friendiv people, good security, fertile soil and low electrical races. Said Mavor Crowell, owner of a gas station and Total MEAG Participant Dernand-1979 auto parts store, "ME AG is one of the best things that ever happened to Doerun."

The town's 460 electricity customers g g include a sprtswear manufacturer that employs 200 workers and peanut and fertilizer plants that are also si:able operations and big electricity consumers

0 - 750 for the small town of 1,13 3. lead management poses no problem

the city cuts back on functions such as water pumping and,if things really get serious, will ask the sawmill or the outskirts of w gg town to decrease its electrical usage.

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'AN FEB M AR APR M AY TN JUL Al G 5EP (X'T NOV DEC 3

/ l cerning the safety of nuclear power. On April 3,1979, the co-owners of all

/ nuclear plants in the Southern electric system formed a high-level Nuclear Safety J Review Task Force to invest gate safety-related design, operation and training h aspects of plants Hatch and Vo<;tle in Georgia and Farley in Alabama, htEAG selected as its representanves on this task force Dr. Lynn Weaver, head of Geor-gia Tech's School of Nuclear Engneering, and Edward Wiot, of NUS Corp.

Both reports of the group concluded that the nuclear plants in Georgia and Alabama are bemg operated safely, and that the ccwowners are committed to all future enhancements of safety.

, in order to assist us in our generanon planning for the next decade, we en-gaged the Stone & Webster Engmeeting Corp. to develop a long-range geneta-non plan. Their analysis showed the connnumg benefits of Projects 1 and 2, and

\ concluded that Project 3 would indeed be beneficial to MEAG, the same con-y clusion reached in a study by R. W. Beck & Associates. The report also stated that further ownership of nuclear, coal-fired and pumped-storage capacity

) offered the least expensive means of meeting MEAG's future requirements.

. Because it has been esumated that the wood waste products of Georgia could F ** supply f:ve percent of the tctal energy requirements of the state, MEAG has explored several avenues leading to the unli: anon of these products. We have

" *. discussed possible gneranng sources mth two lumber companies in the state

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M and we continue to work with the wood utili:ation group at Georgia Tech. .

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, Several Army installations in Georgia have large, heanly-forested reservations, i

so discussions concerning the use of waste wood from these areas are continumg.

.- In most parts of Georgia, the wood wastes ethin a 50 mile radius would support i f a generanon unit of about 17 mw, while also providmg steam for certam indus-W _ O, g- trial processes.

Hydropower could also have an important role in any future MEAG generat-ing projects. Dunng 1979, we idenafied three existing Corps of Engineer dams l

7 -i which were not equipped with turbines when built but which have a potennal for electric generanon. These three sites: Carter's Lake Reregulation Dam on the

• Coosawattee River; the New Savannah Lock and Dam near Augusta: and the Andrews Lock and Dam on the Chattahoochee River in southwest Georgia, are currently undergoing feasibility studies by Stone & Webster. These studies are expected to be complete during the last quarter of 1980, and should assist us in determining which of the three have a costebenefit potential to become ,

College Park City Manager Don Stone cites MEAG hydro projects. '

"MEAG's helping us keep our rates low" as the primary advantage in the city he has managed for more than two years. All Legal and Regulatety we have to do is to compare our rate, Two parnal requirements (PR) rate cases affected the amounts MEAG paid for i with those of other power suppliers," said purchases of supplemental energy during the year 1979. The PR-3 rate, which l Stone, whow utilities operation serves was filed with the Federal Energy Regulatory Commission (FERC) on Decem- i nearly 10,000 electric customers. "We ber 30,1977, was finally settled by all of the parnes involved in January 1979 l have one of the lowest rates in the state." and forwarded to FERC for approval. This approval came on June 13 of last With a population of approximately year, and on August 24, following filing of a revised rate schedule by Georgia 26,000 College Park is one of MEAG., Power Co., MEAG refund checks totalling $4.4 million were mailed to pame-largest participants. In early 1979, the city ipants.

completed a half million dollar electrical The PR-4 rate request, which was filed by Georgia Power Co. on December 1, rehabilitation project that, during a period 1978, went into effect July 1,1979, representing a four percent increase over of several years, included the imtallation PR-3 rates. A negonated settlement was reached in the PR-4 matter and filed of new transformers, wires and poles.ne with FERC early in 1980. Part of this settlement included a moratorium on any '

system was converted from 7 kilovolts to further increases unni N, vember 1,1980.

12 kv. With electricalloads growing, Effecuve October 1,1979, FERC ruled that utilines collecting increased rates esplained Stone, the completed work will under bond must pay the existing prime rate, compounded quarterly, on any i enable the city to provide better service to amounts required to be refunded, rather than the nine percent simple interest l customers. previously charged. Ir :s hoped that this action gives an added impetus for unli- ,

ties filing higher rates to settle exgditiously to avoid payment of the higher I interest rates. ,

It is encouragmg to note that FERC Chairman Charles Curtis has proposed a i one-year nmetable for complenng action on wholesale rate cases. Curtis has also l predicted : hat the problem of pancaking-the filing of one rate increase before a previous one is settled-would disappear if Congress amended the Federal Power Act to prevent any rate increase from taking effect unnl FERC found it just and reasonable.

The state legislation which would remove MEAG's exemption from ad valorem tax remained in Senate committee at the close of the 1979 session of the Georgia General Assembly. The matter came up again during the 1980 ses-4 sion, and a bill was passed which continued the ad valorem exemption on Project I

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m . pr, pr*s urn! ai! ssueJ ni snds have matured < >r 'ne sear .?k' Proiet t 4 ,7 }

.rt naws 't , arned 'ut a < CJ ne taxarie A!! hough this nim mame iau .>n $; 7 - -

t iri n ? W :ne ner mr.ht mM ne mmimai antu the s ear N '!? when m ("*I g, ,,g-

'e.. e taxes u ,rk rease os a smmi imount s et > ne jeterm:neJ rn s i

~ . hstrwt . .iort s dis n u s%ai st Apphne t ounn ( 'ommiv, ion s suit -

f a t e r.e M E .4 2 and t u -re:a P, wcr ( a Aith ansrtrao to Jernve "nat d emy .. 7 n n- .rcens i >t *be r r:em s :ue pn >t ess net ause of 1 det!me :n pr 1pern ta x

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k' N In Lafayette City Manager Gmdy

.McCalmon has found MEAG to be a primary selling point in attracting industry to the arv of 7.000. Working with the Georgia Department of Industrv and IM 13 Trade. McCalmon is encouraging industries to hick seriousiv at LaFavette.

, "I'se discussed MEAG and the role ihe f organization plavs in the community." said the city administrator. " Industries want to 0 L be amured their prewnt electrical loads will be mer, as well as thme thev'll require s t u as sr9 Ni e 1 N. lL Al i sEP C WV DEC for future expansion."

In early 1%0 McCalmon was working Batwn-( Wi f.enstrucnon ( 'o.. Of West Point. Ga.. will be the builder at the wvh two industrial prmpects considering cutachn inmal site preparanon began earh in NV. and it ts homi that the 12Favette as a prime hication. Before the statt .sd ne IHe to mcurv 'he Rtveredee Park bu:IJine bs the enJ or NT vear is over. one of the industnes.

Nth..uen he workioaJ erew at a signincant rate junne loM start growth predicted McCalmon. will announce ptans us reiamen minima! We hegan the vear with 31 empiovees, bs vearend. our to hicate in the northwest Georgia arv.

start n >raucJ C We ire tor unate to nave as emp i ovees a eroup of hieniv pro essionai. jechated peopie, most or u hom have extensive experient e m un!tn

,annine ic<ounnne or ene:neenne Thev are enthusiasnc about the < haHence erresented bs the tormanen or a relanveiv new ma:or iomt acnon acena. anJ nts u tal:n s reflected in "ht spirit or teamwork w hich prevails in ail .>r our

" orts to sen e our parncipants Beca use >t m nereasme jemand tor eiec rona data processine wruces a

ara processine setnon was estabbshed. repornne to the Director at Emancui sen ices Th .mt began Jo:ne many or rhe rasks tormerir accomrbshed :,.

.uae mntractors. reswtme :n a monsiderarie saune to the Authonrc MEAT; :n :ooperanon witn nree . ,tner marr pow er suppliers m the state.

emnarked on an educanonai - rogram Jesyned to reach urtuailv evert one at

( korgu 's sixtn sraders t 'ailee acht L'r Your Lte. -his tw o-week ;'rocram hhes students !ne hd5Ns sit vieC! Tlc eeneT3tlen. 73rlsmL%5lon. distTlbunon and 3

use. emphasane the socia; aspects as wel: as Ac te<nruca! ones Approved bs the State Board of Education the procrarn w as recen ed enthusiasacalk bv educators dunne a tna: penod and was ienethened necause of their reauests in another educationa; eftart ate AG was a cos;mnsor with the Georcia Murucipa! Associanon for a senes of eneres aude seminars e sund the state At these workshops. emplovees of parturant unhn systems were tramed to

<onduct eneres audits or both municipa! buiidmes anJ residences ebb Panicipant Repon f' , We are grateful for the spinted support prov:Jed us bs parncipants Junng the sear just ended This backmc was evidenced bs their enthusiasnc acceptance of an mutanon to mee with mvestment analvsts usitine the Authoritt and I discuss the advantaces to their mdindual systems and customers of hiEAG's achievements Thes were quick to po nt out that smce MEAG's tormanon. par- -

ncipants could make all-out erforts to attract mJustnes of any st::e. con 6 dent l m the knowleJee that eiectnc eneres Jemands can anJ will be met from MEAG's capabilines Pamcipants also responded wholeheartediv when we asked them to speak on our behalf at legis! ante heannes at both the state and nanonal level Their col-lective input had a major irnpact on some proposed legislanon beine considered bs the Georgia Genera! Assembiv and was also important in discussions before lawmakers and the vanous reculator agencies of the federal government m

M ashington. D E We were pleased at the number of hical of6cials. both elected and appomted.

f  ; who attended our regular monthh Authontv meenngs in Atlanta and at three other kicanons around the state Junne 1974 Thes also showed grear interest 1

m special meennes on specine topics such as Project 3 and ad valorem tax legis-

, lanon. hstenme to our presentanons on these subjects and making known their news to elected of6cials in ierters. phone calls and mfor nal meenngs Such support is indicative of the acnve role parncipants exeren.e m the planntne and crowth of MEAG This same ntal n and consumme interest was also mirrored m the maustnal 1 crowth expenenced bs parncipant municipahnes Junng 1974 and earh 14SC Tvpical of the expansion plans of major firnv.. the Mdier Brewing Co announced Acose in local and regmnal pohtics since plans early in the vear to butid a ik 7 milhon alummum can manufactunng l .he w as a teenager. Ldlian Webb has served piant m Moultne Annua! wages and purchases for this facihtv are esnmated at l Norcnws as its mavor for the past sis vears, following a four-vear stint as a member of Projected Peak Demand and Power Supply the cits council. The Norcrm. native, '+F& " m mother of four,is also chairman of Electric g-Cities as well as a member of the esecunse 6~

board of the Atlanta Reponal Comn.imon.

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"We became a NIE AG participant." po;: 6 >+

3 Niasor Webb said. "because it offered us .-/ ' I)M'p

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. r three important advantages. Fint, it see N s o . isee promised u the chance to have a soice in . [; . %, , ,

-g the decmon-making process of our power su pplier." , . 6 .jc .

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" Nest. it allowed us to be more .-'1 .O # y ' t compenris e with other cities in trymg to iggg ,. q[;- P [pd 'I '

, l .$-  ; iggg encourage new industrs for Norcross. , pp ; y y ' , c .

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because we could assure prospats of being E f -

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able to sen e any u:e electncal load." she continued.

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"Finalls. NIE AG gave us the chance to

stabilize our rates for a fc w years, rather #NI.~ s '. * '

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than imptwe mcreases on our customers , , , ,

1 almost eu n vear. And the earnings from ,- 16 j~j,

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our electric svstem have enabled us to

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make some city improvements that we just g3& r . . . . ,,

l 7 , ,  ?. .g didn't has e rhe tas dellars to do otherwise. {gy i g.. ..q& --+e Q p p. y g , G . .c.

As sou can tell. I m a great supporter of eN - -

- ~' r NIEAG. and rm delighted that the < ' < "

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• organi:ation has been so succewful in its _ m .y % y short history."

y pp, w 6 RE TGFI' Pfh 4 7 s APA m M -sEPA

57.2 million. He new plant, expected te employ about 200, will pros,de a por-non of the container needs of h1 iller's new $247 million brewery in Albany,40 miles northwest of Moultne.

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In Cartersville, Stratton Industries, a major manufacturer of carper fiber, expanded their capacity by leasing a 100,000 square foot building and adding g

nearly 200 employees. And LaGrange received a boost in its economy when a three new plants were announced for the city's industrial park. There, Butler Manufactunng Co. employed 120 people to build incubators, the Whiang l Corp. facihty assembhng tracked vehicles prosided jobs for about 135, and .

about 350 employees were hired for the new Hanes Hosiery mill.

A $5 million investment by Moorman Manufacturing m Cordele during the year is expected to provide jobs for 50 when their new cattle and hog feed plant opens soon. Elsewhere m Crisp County, Retco's facihty at Warwick employs 150 in the manufacture of chemical warfare suits for the Army. Another 300 jobs were created in the Cordele area in 1979 when two major shopping centers were opened. #

Yamaha Internanonal Corp. began construction of a 100.000 square foot facility in nomaston last year to produce electronic organs and other musical .

mstruments. First year employment is expected to be about 100, but with a /

potennal work force of several hundred technicians.

And m Norcross, Rockwell Internanonal announced plans for an electromcs e manufacturing and assembly plant which could provide work for up to 2,000 A.

people within the next two or three years. Although not all of these industries are being served by MEAG participant systems, the new jobs and increased eco-g7 nonuc acuvity produced by these developments add further stability and strength _D to local governments. , h. _ .

'q M

. Financial '

For the twelve months ended December 31,1979, MEAG recorded gross re- -

venues of $118,568,472. Bulk power sales to parncipants totaling 3,741,482,798 -

kwh prosided revenues of $91,447,739, while capacity and energy sales to Geor-gia Power Co. accounted for the remaining $27,120,733. Although bulk power energy use by our 47 participants increased slightly over 1978, revenues from participants actually decreased one-tenth of a percent because the average bulk

• p ,

power cost declined. Bulk power includes all delivered power except partici- Alex Houell, Sr. was city manager of l pants' SEPA allmanons. BL.kely, another MEAG participant city,

]

The cost of bulk power supplied in 1979 to our participants averaged 24.44 before he became Fairburn's city manager nulls per kwh. Included in this figure is 1,700,972,563 kwh of supplemental s n years ago. For the south Fulton County tvwer purchased from Georgia Power Company at an average delivered cost town of 3,800, he foresees steady but not

{

of 31.47 mills, while project power was supplied for 18.58 nulls per kwh. These booming progress. Feeling confident that costs include the PR-3 settlement refund of $6,074.603 but do notinclude the Fairburn could supply electrical power to PR.4 se tlement, which has not yet been approved by FERC. any size industry because of MEAG, he In the first quarter of each year, the previous year's actual costs are compared would like to see more industry come to mth revenues collected from our parncipants during that penod. Because bill- town in the long-range future.

ings for project power are on a budgeted basis, any under- or over-btiling is ad- "We feel that our electrical operation 1 justed at that time. He 1979 year <nd settlement resulted in a MEAG refund to is a smooth-running one," Howell parncipants of $6,176,750. Major reasons for this refund included greater in- commented. "Our residential. commercial i

terest earnings on investments than anticipated; higher capacity factors on gener- and industrial electricity customers are anng plants and adjustments for generation and transnussion costs relanng to pleamt with the service and the reasonable 1977 and 1973. rates we are able to offer through our The Authonty's capital expenditures for purchase and construcnon of gener- association with MEAG."

anne plants and transminion lines increased shghtly in 1979, from $100.8 mil- A future project that will upgrade ,

lion in 1978 to $109.3 million. However, these outlays are expected to increase Fairburn's service to its 1,500 electrical j significantly in 1980, when major investments in plants Vogtle and Scherer will J customers is a new substation that should '

be required and Project 3, when approved, will also account for a major captal be completed in mid-summer 1980. I expenditure. The following table is a capule summary of direct captai appropri- '

anons (including capitah:ed interest) for 1978,1979 and 1980:

Capital Expenditures (in millions of dollars) i Year Project 1 Project 2 Project 3 Total 1978 50.7 41.1 -

$ 100.8 l 1979 97.o 11.7 -

$ 104.3 ,

1980 (estimated) 139 0 15.3 104.8 $259.1 i On January 17,1979. the Authonty sold $100 nullion in Senes D Power Revenue Bonds for a net interest cost of 7.009 percent. With this sale, the weighted aver-1 age net interest cost of all $725 nullion MEAG bonds was 6.316 percent. An- 7 I -. - ,- . - - - - - . - ,--

i -

l I

i y other sale, the Series E issue in January,1980, reflected the precipitous rise in

y overall interest rates for bonds in just one y-ar, when it was priced at a net in-

'- terest cost of 7.875 percent. This $125 million sale of secunties raised our net M 3p .awr I interest cost fer $850 mdlion outstanding to 6.546 percent.

l A Because of the current uncertain state of the bond market and the record high U' a interest rates required to sell long-term oblicanons, the Authority in early 1980 l n, te Fortg**g i

began to examine all aspects of alternauve methods of financing. Some of the options being considered include additional bank lines of credit and the sale of tax-exempt commercial paper or noter with terms of less than ten years.

rn The Authority's two current projects had been expected to require approxi-mately $1.207 billion in financing through 1987 in addition to the $850 nullion already raised. If Project 3 is approved as expected, this adds an additional fmancing requirement of approximately $215 million, but saves $313 million in

) Project I and 2 costs for a net savings of $98 million. This chart shows the l approximate amounts required each year (in nullions of dollars) to carry out the total financial program of the Authority:

l d

MEAG Financing Schedule

,.?. IN utu. toss or cottans

$aA-?& n Q

800 800 i' i j Y. t s p St,T

, .s hy.8>p.,, ;} P r,huf kMy [

< i j '> > "i n d(( 3 #

l

.,jsh i

1. i h4 y$1 4 i t L Wt >

! Iph5k 4 f5l

! j. QWtk. l? Q

.h-).d #

I $$$ ? h V,*& #

\ &zyIWhh s,wcets yMl. hh m

Claude Lauson, a Fort Valley native who owns and operates Quality Cleaners, was

, appointed chairman of the city's utilities commiwion in early 1980 and feels that

'Thow who understand utilities think o MEAG is one of the best things the city has ever done." A member of the comminion since April 1974, Lawson emphasized, 1977 79 1980 19ei 1982 1983 196 4 1985 1986 1987

" People w ho are in a position to assess ., g pg g es,

~

MEAG's impact on the city are glad we pgggyo have the benefits that MEAG affords." p, a

< In May 1979, the city of 10,000 instituted a $136,000 load management Total all projects $1,959

• Already issued system that has been an economic plus for

[

the town and a source of pride for Lawson i

In late 1979, the MEAG financial staff began the implementation and testing of i and the commission. The system has worked so well,in fact, that Lawson would a new compute &ed money ',nanagement system called Moneymax. With this like to share Fort Valley's success story new system, expected to be tully operational by mid-1980. MEAG can maxi-mue its e rnings n investments, monitor daily cash flow requirements and with towns of comparable si:e throughout the country. impr ve its accounnng for investments.

As data automanon requirements continued to grow, the Authority approved

in September 1979 initiation of a preliminary study concerning the purchase ofin-house computer equipment. Proposals were subsequently received from several vendors and these proposals are being evaluated by the staff. A recom.

mendation to the Authority is expected by June 1980.

Keeping the financial community informed, always a matter o(high priority, received :ncreased emphasis in 1979, with a significant number of visits to insti-tutional investors, analysts and ranng agencies. We plan to continue our efforts in this area because of our belief that our relanvely low average interest cost is at least partly due to our policy of discussing MEAG's programs and achieve-ments frequently with a variety of audiences in the financial community.

8 l

Auditors' Opinion Financial Section Murucipal E!cctnc Authority Contents of Georgia:

Balance Sheets 10,1I We have examined the balance sheets of Municipal Electric Authority ofGeorgia Statements of Net Revenues as of December 31,1979 and 1978 and the related statements of net revenues and Accumulated Net Revenues 12 and accumulated net revenues and of changes in financial position for the years Statements of Changes then ended. Our examinanons were made in accordance with generally accepted in Financial Position 13 auditing standards and, accordingly, included such tests of the accounting records and such other auditing procedures as we considered necessary in the P"I0"'

circumstances. SUPPl emental Schedule of Changes m Assets of the In our opinion, such financial statements present fairly the financial position Bond Resolution Funds and of the Authonty at December 31,1979 and 1978 and the results ofits opera' Other Funds 14,15 nons and changes in its financial position for the years then ended, in conformity with generally accepted accounting principles applied on a consistent basis. Pmject Two Our examinations of the financial statements of the Authority also compre, SUPPl emental Schedule of hended the accompanying separate balance sheets of the Authority's Project han A

,g lu o Fun 16 One and Project Two as of December 31,1979 and the related statements of net revenues and accumulated net revenues and of changes in financial position Notes for the year then ended, and our opinion stated above is to be considered as To Financial Statements 17,18,19 applying thereto.

Our examinations also comprehended the supplemental schedules of changes in assets of the bond resolution funds and other funds ofthe Authority's Project One and Project Two for the year ended December 31,1979. In our opinion, such supplemental schedules, when considered in relation to the basic financial statements, present fairly in all material respects the informanon shown therein.

Deloitte Haskins & Sells Atlanta, Georgia February 29, 1980 l

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9

Balanca Sheets MtJNICIPAL ELECTRIC AtJTHORITY OF GEORGIA 1979 Authonty Total ASSETS Project One Project Two 1979 1978 Utility Plant, at cost (Note 1(d)):

Electric plant:

Electric plant in service $345,494,246 $ 30,520,342 $376,014,588 $253,364,279 Construcnon work in progress 154.284,680 22,958,255 177,242,935 192,282,316 Total 499,778,926 53,478,597 553,257,523 445,646,595 Less accumulated depreciation 41,529,925 2,020,603 43,550,528 29,481,133 Electric plant-net 458,249,001 51,457,994 509,706,995 416,165,462 Nuclear fuel 23,264,566 23,264,566 24,918,680 less accumulated amorti:ation 6,386,152 6,386,152 7,527,428 Nuclear fuel-net 16,878,414 16,878,414 17,391,252 Total utility plant-net 475,127,415 51,457,994 526,585,409 433,556,714 Specist Funds-Primardy short-term secunty investments, at cost, which approximates market, and accrued interest (Note 2):

Construcnon fund 82,057,6C6 25,088,875 107,146,481 70,245,285 Debt service fund, excluding deposits for payment of accrued interest on power revenue bonds: 1979-

$21,915,131, and 1978-$19,091,776 54,419,580 15,688,170 70,107,750 67,021,842 Reserve and connngency fund 5,995,575 434,611 6,430,186 4,697,157 General reserve fund 501,285 501,285 Total special funds restricted under revenue bond resolutions 142,974,046 41,211,656 184.185,702 141,964,284 Bond anncipation note fund 195,982 195,982 40,063,167 Total special funds 143,170,028 41,211,656 184,381,684 182,027,451 Current Assets:

Operating Fund-Primanly short-term secunty investments, at cost, which approximates market, and accrued interest (Note 2) 17,146,728 4,927,845 22,074,573 18,954,264 Deposits in debt service fund for payment of accrued interest on power revenue bonds (Note 2) 18,652,575 3,262,556 21,915,131 19,091,776 Deposit in bond anticipation note fund for payment of accrued interest (Note 3) 610,000 610,000 214,167 Supplemental power account-Primanly short-term security investments, at cost, which approximates market, and accrued interest (Note 1(a) ) 9,560,903 9,560,903 9,879,107 Net utility revenue accounts receivable from Participants bdled and accrued (Note 2) 352,188 352,188 3,635,287 Other receivables 851 333,269 334,120 492,358 l Fuel stocks, at average cost 3,051,264 1.556,145 4,607,409 3,658,966 Prepayments 173,134 85,242 258,376 69,675 l

Total current assets 49,547,643 10,165,057 59,712,700 55,995,600 l

Deferred Debits:

Depreciation, amorti:ation, and other expenses to be I recovered from future revenues from Participants (Note 1(c)) 19,783.111 825,331 20,608,442 13,209,884 Unamortced debt expense 7,526.701 1,633,179 9,159,880 8,465,047 Total deferred debits 27.309,812 2.458,510 29,768,322 21,674,931 Total A., sets $695,154,898 $105,293,217 $800,448,115 $693,254,696 10

December 31,1979 and 1978 1979 Authority Total LIABILITIES Project One Project Two 1979 1978 Crpitalization:

Power revenue bonds (Note 2):

Senes A $295.635,000 $295,635,000 $297,850,000 Senes B 149,075,000 149,075,000 150,000,000 Senes C 74,875,000 74,875,000 75,000,000 Senes D 100,000,000 100,000,000 1978 Series $100,000,000 100,000,000 100,000,000 Unamorn:ed discosmt on long-term debt (947,593) (192,437) (1,140,030) (533,911)

Total power revenue bonds 618,637,407 99,807,563 718,444,970 622,316,089 Ibnd anncipanon notes payable (Note 3) 40,000,000 40,000,000 40,000,000 Accumulated net revenues (Note 1(c) ) 10,612,396 266,287 10,878,683 6,886.456 Total capitali:ation 669,249,803 100,073.850 769,323,653 669,202,545 Liabilities Payable From Construction Fund 3,744,384 1,345,354 5,089,738 491,328 Current Liabilities, excluding current maturities of power revenue bonds payaHe from debt service fund:

1979-$3.810,000, and 1978-$3,265,000:

Accounts payable 2.898,136 9,416 2,907,552 4,142,083 Accrued interest on power revenue bonds 18,652,575 3,262,556 21,915,13 t 19,091,776 Accrued interest on bond anticipation notes 610,000 610,000 214,167 Net unlity revenue bilhng adjustment 602,041 602,041 112,797 Total current liabilities, excluding current maturities of power revenue bonds 22,160,711 3,874,013 26,034,724 23,560,823 l

l l

l Commitments and Contingencies (Notes 4 and 5) l I

I Total Liabilities $695,154,898 $105,293.217 $800,448,115 $693,254,6%

SEE NOTES TO FINANCIAL STATEMENTS ON PAGES 17-19 11

Statcm:nts of Nat Revenues and Accumulated Net Revanues MUNICIPAL ELECTRIC AUTHORITY OF GEORGIA For the years ended December 31,1979 and 1978 1979 Authority Total Project One Project Two 1979 1978 Revenues:

Project power $ 53,832,301 $ 11,200,847 $ 65,033,148 $ 47,53U79 Supplemental bulk power (net of suppiier refunds of $4,722,400 in 1979 and $3.180,301 in 1978) 53,535,324 53,535,324 64,255,118 Total revenues 107,367,625 11,200,847 118,568,472 111,788,297 Expenses:

Project power operanng expenses exclusive of depreciation and amorti: anon of utility plant 34,820,790 10,431,040 45,251,830 31,208.308 Supplemental bulk pcwer purchases 53,535,324 53,535,324 64,255,118 Total project power operating expenses, exclusive of depreciation and amorti:ation, and supplemental bulk power pu chases 88,356,114 10,431,040 98,787,154 95.463,426 Interest charges (and credits)(Note 4):

Interest on long-term debt payable from project power revenues 18,756,024 2,621,000 21.377,024 16,502,259 Interest on investments (9,138,346) (2,488,287) (11,626,633) (6,632,507)

Interest charges-net 9,617,678 132,713 0,750,391 9,869,752 Depreciation and amorti: anon charges (and credits):

Depreciation of electnc plant 10,921,009 918,255 11,839,264 9,379,643 Amorti: anon of nuclear fuel 4,443,097 4,443,097 2,325,171 Amorti: anon of debt discount and expense 1,378,939 274,665 1,653,604 1,449,617 Depreciation and amorn:ation to be recovered from future revenues from Participants (11,075,152) (822,113) (11,897,265) (10,174,170)

Deprecianon and amorti:ation charges-net 5,667,893 370,807 6,038,700 2,980,261 Total expenses 103,641,685 10,934,560 114,576,245 108,313,439 Net Revenues (Note 1(c)) 3,725,940 266,287 3,992,227 3,474,858 Accumulated Net Revenues-Beginning of year 6,886,456 - 6,886,456 3,411,598 Accumulated Net Revenues-End of year $ 10,612,396 $ 266,287 $ 10,878,683 $ 6,886,456 SEE NOTES TO FINANCIAL STATEMENTS ON PAGES 1719 12

Statements of Changes in Financial Position MUNICIPAL ELECTRIC AUTHORITY OF GEORGIA For the years ended December 31,1979 and 1978 1979 Authority Total Project One Project Two 1979 1978 Sources of Working Capitah Operanons:

Net revenues $ 3,725,940 $ 266,287 $ 3,992,227 $ 3,474,858 Depreciation and amorn:ation charges-net 5,667,893 370,807 6,038,700 2,980,261 Total 9,393,833 637,094 10,030,927 6,455,119 Proceeds from power revenue bonds, less debt dncount and expense 97,045,446 97,045,446 171,183,113 Special funds 8,991,732 8,991,732 Proceeds from bond anticipation notes payable 40,000,000 Interest on investments of construction fund deferred 4,498,706 4,498,706 2,431,% 1 Liabilines payable from construcnon fund 3,744,384 854,026 4,598,410 491,328 Total 114,682,369 10,482,852 125,165,221 220,561,521 Uws of Working Capitah Unlity plant additions:

Electne plant, net of accumulated deprecianon at e of purchase, $2,937,363 in 1979 and

$2,055,147 in 1978 93,671,418 11,709,380 105,380,798  %,123,652 Nuclear fuel, net of test penod amorn: anon,

$498,%7 in 1979 and $523,042 in 1978 3,930,259 3,930,259 4,707.315 Bond pnncipal renrements 3,265,000 3,265,000 2,150,000 Special funds 11,345, % 5 11,345,% 5 106,879,725 Liabilines payable from construenon fund 2.376,173 Total 112,212,642 11,709,380 123,922,022 212,236,865 Increase (Decrease)in Working Capital (excluding current maturities of power revenue bonds) $ 2,469,727 $ (l.226,528) $ 1,243,199 $ 8,324,656 Components of Increase (Decrease) in Working Cepital(excluding current maturities of power revenue bonds):

Operanng fund $ 4,218,480 $ (1,098,171) $ 3.120,309 $ 7,846,119 Deposit in debt service fund for payment of accrued interest on power revenue bonds 3,367,084 (543,729) 2,823,355 5,229,608 Deposit in bond anncipanon note fund for payment of accrued interest 395,833 Supplemental power account (318,204) 395,833 (318,204) 214,167 561,093

)

Net unlity revenue accounts receivable from Participants billed and accrued (3,283,099) (3,283,099) (3,489,909)

Other receivables (1,823) (156,415) (158,238) 424,097 Fuel stocks 626,627 321,816 948,443 1,276,628 Prepayments 105,431 83,270 188,701 43,334 Accounts payable 1,122.315 112,216 1,234,531 1,776,091 Accrued interest ori power revenue bonds (3,367,084) 543,729 (2,823,355) (5,229,608)

Accrued interest or bond anucipanon notes (395,833) (395,833) (214,167)

Net unlity revenue billing adjustment (489,244) (489,244) (l12,797)

Increase (Decrease) in Working Capital (excluding current maturines of power revenue bonds) $ 2,469,727 $ (l.226,528) $ 1,243,199 $ 8,324,656 EEE NOTES TO FINANCIAL STATEMENTS ON PAGES 17-19 l

13 l

Project One Suppl mental Schedule of Changes in Assets of the Bond Resolution Funds and Other Funds MUNICIPAL ELECTRIC AUTHORITY OF GEORGIA Cash and Investments, December 31. Debt 1978(2)(3) Proceeds Q Bond Resolution Funds:

Revenue Fund Operanng Fund:

GeneralOperatmg Account $ 6,166,094 Payroll Account 28,174 Nuclear Fuel Account 4,355,021 $ 4,536,000 RevolvmgConstrucnon Account 250,000 Fossil Fuel Account 2,117,606 Workmg Fund 250 Total Operating Fund 12,917,145 4.536,000 Reserve and Conungency Fund:

Renewaland Replacement Account 2,202,718 Decommissioning Account 777,960 Reserve Account 1,376,150 84,000 Total Reserve and Conungency Fund 4,356,828 84,000 General Reserve Fund Construenon Fund 36,927,621 71,893,207 Debt Semce Fund:

Debt Service Account 23,691,383 13,269,152 Debt Semce Reserve Account 38,661,448 8,149,643 Total Debt Service Fund 62,352,831 21,418,795 Total Bond Resolution Funds 116,554,425 97,932,002 Other Funds:

SupplementalPower Account 9,759.222 Bond Anncipanon Note Fund 40,005,403 TOTAL $166,319,050 $97,932,002 (1 ) Receipts from bond proceeds mclude interest received at issuance ( $ 304.152); nd are net of underwnters' fees ($1.725,000) and bond discount (P 4,150).

(2) Investments exclude mrerest receivable of $L681,127 at December 31,1978 anc $5,406.684 at December 31,1979.

(3) Cash and investments ar December 31,1978 exclude receivables from Geore Power Company of $2,130,999 14

For the sear ended December 31,1979 Cash and Investments, Power Investment Disburse. December 31, Billings Interest Transfers ments 1979(2)

$ 56,829,657 $ 251,131 $ (45,575,519) $ 11,505,269 636,161 8,355,367 9,052,498 $ 6,105,124 992 334,316 335,309 28,173 729,523 3,900,934 4,483,532 9,037,946 21,872 38,693 63,242 247,323 89,163 13.039,929 13,618,133 1,628,565 2.175 2,175 250 1,477,711 25,671,414 27.554,889 17,047,381 171,022 1,168,178 1,065,401 2,476,517 70,616 515,984 1,364,560 187.729 437,571 2,085,450 429,367 2,121,733 1,065,401 5,926,527 38,942 461,058 500,000 5,080,787 (4,464,295) 31,235,544 78,201,776 2.9J2,316 22,%I,284 37,203,166 25,020,% 9 3,315,527 (3,315,527) 46,811,091 5,617,843 19,645,757 37,203,166 71,832,060 56.829,657 12,395,781 (2,139,852) 108,564,269 173,507,744 58,401,794 910,548 (413,543) 59,230,322 9,427,699 2,706.045 2,553,395 44,466,736 798,107 5115,231,451 $16,512.374 $ - $212,261,327 $183,733,550 I

l 1

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l 15

Project Two Supplemental Schedule of Changes in Assets of the Bond Resolution Funds MUNICIPAL ELECTRIC AUTHORITY OF GEORGIA For the year ended Cecember 31,1979 Cash and Cash and Investments, Investments, December 31. Power Investment Disburse- December 31, 1978 (1) Billings Interest Transfers ments 1979 (1)

Revenue Fund $12,505,828 $ 54,641 $(10,380.278) $ 2,180,191 Operanng Fund:

GeneralOperating Account $ 5,067,%2 352,586 444,247 2,150,604 $ 3,714,191 Payroll Account 224,820 224,820 Revolving Construction Account 250,000 24,849 (24,849) 250,000 Fossil Fuel Account 585,232 45,483 8,164,723 7,903,008 892,430 Total Operanng Fund 5,903,194 422,918 8,808,941 10,278,432 4,856,621 Reserve and Cennngency Fund:

Renewal and Replacement Account 146,400 13,017 135,479 37,808 257,088 Reserve Account 175,550 16,739 (16,739) 175,550 Total Reserve and Connngency Fund 321,950 29,756 118,740 37,808 432,638 General Reserve Fund - -

Construction Fund 30,627,183 2,626,781 110,111 8,894.329 24,469,746 Debt Service Fund:

Debt Service Account 14,515,109 1,003,640 2,047,360 7,068,887 10,497,222 Drbt Service Reserve Account 7,972,470 704.874 (704,874) 7,972,470 Total Debt Service Fund 22,487,579 1,708,514 1,342,486 7,068,887 18,469,692 TOTAL $59,339,906 $12,505,828 $4,842,610 $ -

$28,459,647 $48,228,697

(! lImestments exclude mterest recewable of $578.976 at December 31,1978 and $1.173.360 at December 31.1979.

16

Notes To Financial Statements Ml/NIC! PAL ELECTRIC AUTHORITY OF GEORGIA For the years ended December 31,1979 and 1978

1. GENERAL MATTERS AND ACCOUNTING POLICIES ect power be deposited in special funds and be used only for (a) General Matters operation costs, debt service, and other stipulated purposes. The The Muniapal Electnc Authonty of Georgia (the "Authonty") resolutions also establish construction funds to hold assets for is a public corporation and an instrumentality of the State of payment of project acquisition costs.

Georgia, created by an Act of the 1975 Session of the General Other fuads are used to hold assets not subject to the restric-Assembly of the State of Georgia (the "Act") to supply electricity tions of the resolunons but designated for specific purposes.

to h> cal government electric distnbution systems. The Act pro-vides that the Authonty will estabhsh rates and charges so as to produce revenues sufficient to cover its costs, including debt serv-(b) Basis of Accounting ice, but it may not operate its projects for profit, except insofar The accounts of the Authority are maintained substantially m acc rdance with the Uniform System of Accounts of the Federal as any such profit will inure to the benefit of the public. Forty-six Energy Regulatory Comnussion, as requid h the Power Mes cines and one county (the "Pamapants") of the State of Georgia have contracted for power with the Authonry. Contracts with the Participants, and are in conformity with gen-He Authonty and Georgia Power Company ("GPC") are era W accept acc untmg pMn A separate set of accounts is maintained for each of the Authority's projects.

party to agreements goverrung the ownership and operation of electnc generaung and transmission faalines. GPC manages the construction and operation of the Authority's generanng faalities (c) Revenues and Net Revenues and operation of the Authority's transmission faalities, desig- The Power Sales Contracts eith the Participants provide for bill-nated Project One and Project Two. These agreements require the ings to the Participants for or put and services of both projects to Authonty to sell to GPC declining portions of the output and provide for payment of current operaung expenses, payment of services on' each generating unit of Project One and Project Two debt principal and interest (debt service), and deposits in certain dunng the first eight years of commercial operation. Failure cf the funds, all in compliance with the bond resolutions. These billings Authority to meet any obliganon to GPC under these agreements and the related expenses are accounted for as follows:

in respect of a specific plant would allow GPC to invoke its reme- Pomon of billings that provides for current operanng ex.

dies in respect of the Authonty's entire interest in that plant. penses and interest expense-Operating revenues are accrued Project One consists of 17.7% undivided ownership interests and include an amount equal to these expenses; a bilSng adjust.

in each of four nuclear-fueled generating units,10% undivided ment is made in the following year for the difference between ownership interests in each of six coal-fired generanng units, sep- the amount accrued and billable and the amounts ofinterim arately-owned transmission facilines, and working capital required bills rendered. There is no resulting effect on Net Revenues.

for the Authonty's bulk power supply operation. Acquisition of Portion of billings that provides for payment of debt the pro-these faalities is financed by the issuance of revenue bonds pur- ceeds of which were used in the acquisition of utility plant, suant to the Power Revenue Bond Resolution adopted August 30, etc.-The excess of depreciation of electric plant (straight-line 1976 as subsequently amended. method), amorti:ation of nuclear fuel (unit-of-production Project Two consists of 5.1% addinonal undivided ownership method), amorti:ation of debt discount and expense (bonds interests in each of six coal. fired generating units which have been outstanding method), and certain operating expenses over such acquired with proceeds from revenue bonds issued pursuant to portion of the billing is accounted for as an amount to be re. )

the General Power Revenue Bond Resolution adopted March 22, covered from future billable project revenues and is classified 1978 and readopted Apnl 19, 1978. as a deferred debit. There is no resulting effect on Net Revenues. I Project One began operations on January 27,1977 and Project Portion of billings that provides for deposits in the Reserve Two began operations on June 21,1978. and Contingency Fund and Operating Fund and for payment j Supplemental bulk power supply is that pomon of the Pamci- of debt the proceeds of which were used in the acquisiton of I pants' bulk power supply in excess of their entitlement to Project initial working capital--There are no expenses that relate to this One power and the output and related services of Project Two. pomon of the billings; as a result, such pomon represents the Pavments received by the Authonty from the Participants for Net Revenues for the period.

supplemental bulk power supply are not pledged under either Earrungs on investments of the Construction Funds and the resolution. Bond Anticipation Note Fund reduce the cost ofutility plant addi-The Project One and Project Two Power Sales Contracts be- nons to the extent that the earnings are allocable to construcnon tween the Authonty and each of the forty-seven Partiapants work in progress; otherwise, the earnings reduce the deferred l

require the Authonty to provide, and the Partiapants to purchase debits to be recovered from Pamcipants. Earnings on investments from the Authonty, all of the Participants' bulk power supply, as of other funds reduce the billings to Pamcipants for current oper-defined in the contracts. Each Pamcipant is obligated to pay its anng expenses.

share of the Authority's operanon and debt service costs of each Accumulated net revenues are invested in various funds of the i project. Authonty and are subject to disposition in accordance with the l The resolunons require that payments by Participants for proj- provisions of the resolutions. l 17

Notes To Financial Statsmants MUNICIPAL ELECTRIC AUTHORITY OF GEORGIA (d) Utility Plant Series B:

He cost of unlity plant indudes direct and overhead costs and the 3%% to 6% matunng annually to 1998 $ 49,685,000 net cost of funds borrowed by the Authonty and used for con- 6a u equ$re nt begmIngInY 20.460,000 stmenon purposes. 6W3 matunng in 2012 with annual smking ne Authority computes depreciation of electric plant by the fund requirements begmning in 2003 78.930.000 straight-line method over the expected service life of the plant. Total $149,075,000 using composite annual rates of 3.70% for nuclear-fueled generat-ing plant, 2.76% for coal-fired generatmg plant, and 3.10% for Serf e. C:

4 transnussion and distnbution plant. The cost of decommission' 6% maturing in 2004 with annual sinking ing the nuclear-fueled generating plant promptly after each unit fun.1 requirements begianmg in 1999 17,305,000 has been taken out of service has been considered m the establish- 6h% matunng in 2012 with annual sinking ment of the composite annal depreciation rate. fund requirements begmning in 2005 34,970.000 Amorti: anon of nuclear fuel is based on the quantity of heat Total $ 74.875.000 produced for the production of electnc energy. GPC, actmg for Series D:

the Authonty, has a nuclear fuel supply contract whereby the 5M% to 6.70% maturing annually to 1998 $ 20.395.000 ownership of certain spent nuclear fuel assemblies will revert to 6%% maturing in 2003 with annual sinking the supplier; no provision has been made for nuclear fuel storage fund requirements beginning in 1999 14.890,000 costs which might be incurred if reprocessing services are not 7% matunng in 2015 with annual sinking available when required for these nuclear fuel assemblies. For fund requirements begmnmg in 2004 64.715.000 nuclear fuel assemblies not subject to the above contract, provi, Total $100.000.000 sion is being made for estimated storage and disposition costs.

On January 18,1980 the Authority sold $125,000,000 princi-When property subject to deprecianon is retired or otherwise pai amount of Power Revenue Bonds, Series E, with interest rates dispos . of in the normal course of business, its cost, together ranging from 6.40% to 7M% and with annual maturities and with its cost of removal less salvage, is charged to accumulated sinking fund requirements to 2018.

deprecianon.

Project Two General Power Revenue Bonds outstanding at ne cost of maintenance, repairs, and replacements of minor December 31,1979 were as follows:

items of property is charged to main;enance expense accounts.

He cost of replacements of property (excle ive of minor items of 1978 Series:

property) is charged to utility plant accounts. 4.60% to 64% maturing annually to 1995 $ 20,870,000 6%% maturing in 2002 with annual smking

2. POWER REVENUE BONDS fund requirements beginning in 1996 22,620,000 D $ " " """a s nking He resolunons authori:e the issuance of Power Revenue Bonds fu d ire n in gn2 in the aggregate prinapal amount of $1,600,000,000 and the issu- 6.80% maturing in 2012 with annual sinking ance of General Power Revenue Bonds in the aggregate principal fund requirements beginning in 2007 38.200.000 amount of $260.000,000, for the fmancing of the projects. Such Total $100.000,000 aggregate pnnapal amounts of bonds have been validated by court ~

judgments. The resolutions permit the issuance of additional Scheduled principal maturities for the next six years of power bonds for certain purposes, including completion of the projects. revenue bonds outstanding at December 31,1979 were as follows:

Power revenue bonds issued under the resolunons are secured by pledges of project power revenues attributable to the respective a uri y Da Proje One Pm c 53 3 , 0 projects atter payment of their operating expenses, as well as 3,945.000 January 1,1981 450.000 pledges of the assets in the funds established by the bond resolu' January 1,1982 6,010.000 470,000 nons. Each Participant's payment obligations under the Power January 1,1983 6,260.000 500,000 Sales Contracts are general obligations to the payment of which January 1,1984 6,535.000 520,000 the Parncipant's full faith and credit are pledged. January 1,1985 6.845.000 550.000 Project One Power Revenue Bonds outstanding at December  ;

31,1979 were as follows: 3. REVOLVING CREDIT AND TERM LOAN AGREEMENT l A revolving credit and term loan agreement (the " Agreement") j

3. 0 Y to 5%% matunng annually to 1995 $ 92,t40.000 between the Authonty and a group of banks allows the Authority 1 6% matunng in 2000 with annual sinking to borrow up to $40,000,000 in Term Advances and up to i fund requirements begmnmg in 1996 54,265.000 $60,000,000 in Revolvmg Credit Advances, unni March 31,1980.

6.203, matunng in 2009 with annual sinking

)

Borrowings under the Agreement bear interest at the lesser of an i (und requirements begmning in 2001 149.230.000 '

annual rate of sixty-seven percent of the rate ofinterest available Total

$295.635.000 for ninety day loans to substantial and responsible commercial 18 l

l

For the years ended December 31,1970 and 1978 borrow ers of the pamcipanng banks (the pnme rate) or 9% Com- 5. CONTINGENClES pensating balances of $4,045,000 are to be maintained bat are not Nuclear fuel reprocessing services are currently not commercially legally restricted as to withdrawal. available. The unavailability of reprocessing services when needed On December 6,1978 the Authority borrowed $40,000,000 would necessitate arrangements for storage of spent fuel at sub-in Term Advances matunng March 31, 1980. Such notes bore stannal cost.

interett at the annual rates of 9% at December 31,1979 and 7.7% The Price-Anderson Act limits the public liability of a licensee at December 31,1978. The Authonty intends to repay such Term of a nuclear power plant to $560,000,000 for a single nuclear Advances with bond proceeds obtained from the issuance inJan- incident, which amount is to be covered by private insurance and uary 1980 of Series E. Power Revenue Bonds. Such bond proceeds agreements of indemnity with the Nuclear Regulatory Commis-are pledged for the repayment of the Term Advances. sion. Such private insurance and agreements of indemnity are carned by GPC for the benefit ofall co-owners of the plants. Effec.

4. CONSTRUCTION PROGRAM tive August I,1977, as part of a program to phase out the govern-The Authonty has substannal commitrr,4nts in connection with ment indemnity pornon of the public protecnon program provided the acquistnon and construcnon of thefprojects. by the Price. Anderson Act, each licensee of a nuclear power plant it is estimated that the total cost of aQutsition and construction became obligated, in the event of a nuclear incident, to pay a de-w,11 be $1.854,M,000 for Project One and $197,000,000 for ferred premium of up to $5,000,M per incident for each licensed Project Two and that bonds in these principal amounts, including reactor operated by it but not more than $10,000,000 in a calendar bonds previously issued, will be required to be issued to pay the year. The government indemnity was, after such date, reduced cost of acquisition and construction The Supreme Court of the by the aggregate amount of all deferred premiums payable. The Au-State of Georgia has validated bonds in the aggregate principal thonty is liable fer its 17.7% share of any such deferred premium.

amount of $1,600,000,000 for the purpose of financing Project GPC, on b.-half of all the co-owners of the plants,is a member One and $260.000,000 for the purpose of nnancmg Project Two. of Nuclear Mu:ual Limited, a mutual insurer established to pro-The Authonty has tentanvely accepted an offer by GPC under vide property damage insurance to members' nuclear generating which GPC would purchase the Authonty's 15.1% interest in two plants. In the event of catastrophic losses to the insurer, the mem-coal-fired generanng units, Scherer Units 3 and 4, and the Author, bers are subject to assessments in propornen to their participation ky would purchase an addinonal 15.1% interest in two coal-fired in the mutual insurer. The pornon of the maximum present assess-generanng units, Scherer Units 1 and 2 (which would be financed ment for GPC which would be payable by the Authonty is approx-by the Authonty as a separate project). Final acceptance of this imately $4.860,000.

offer is conditioned, among other things, upon the Participants. GPC has filed new supplemental bulk power rates with the execution of power sales contracts with the Authonty for the out. Federal Energy Regulatory Commission. The Authority has been put and services of these addmonal interests. If the offer is ulti. charged under these rates, which are subject to refund, sinceJuly 1, mately accepted by the Authority the present esumated cost ci 1979. Any resand will be disenbuted by the Authority to Partici-acquisinon and construccon of Project One and Project Two wot!d pants in prorprtion to their respecnve purchases of supplemental be reduced. power.

Delays in castruction or changes in environmental and regula-tory standards could increase the cost of such facilines.

An operanng license must be obtained from the Nuclear Regula-tory Commission prior to operanon of a nuclear unit.

The cost of unlity plar$t additions during 1979 and 1978 in-cludes the net cost of funds borrowed by the Authority and used for construction purposes, as follows:

Project One Pro!ect Two 1979:

Interest on long-term debt $21,506,800 $3.904,157 Interest on mvestments 6.822,636 3.005.014 Net cost of funds $14.684.164 $ 899.143 1978:

Interest onlong-term debt $15.298,133 $2,062,818 Interest on investments 2,052.288 851.665 Net cost of funds $13.245.845 $1,211.153 19

i GeneralInformation ALTHORITY MEAG MEMBERS MANAGEMENT Gayle Manley Donald L Stokley Chairman General Manager j Albany, Georgia (Commissioner of Admmistranve Paul R. Heim Services, State of Georpa) Director of Engmeenna and Operanons W. Roland Clayton Vice Chairman Paul F. Jackson Thomasville, Georgia Director of Financial Services (Retired Surenntendent Themeville Water and Light Departmenti Mack D. Secord Director of Public information H. B. Lovvorn**

Secretary-Treasurer OFFICES LaGrange, Georma (Manager, City of LaGrange) 800 Peachtree Center-South Tower 225 Peachtree Street Charles A. Newcomer,Jr.. Atlanta, Georgia 30303 Assistant Secretary-Treasurer (404)659-1555 Fitgerald, Georgia (Renred Banker) General Counsel L.Chiford Adams,Jr.

John W. Dent Elberton, Georgia Cartersville, Georgia (Partner-Heard, Leverett and Adams)

(Mayor, City of Cartersville)

Wallis Hardeman,Jr.

Financial Advisors Lex J lley & Co.,Inc.

Fort Valley, Georgia Atlanta, Geon-a (Renred Businessman)

Consulting Engineers Frank L. Olson R. W. Beck and Assc<tates Cordele, Georgia (Manager, Cnsp County Power OrlandoEonda Commission)

Bond Counsel Oliver Maner & Gray E.B. Pope Savanrah Georgia Washington. Georgia (Mayor, City of Washington)

Te The Circens and Southern Alpheus Stakely National Bank

" College Park. Georgia Atlanta, Georca (Retired Busmessman)

Co-Trustee Trust Company Bank Atlanta, Georgia

• • Chairman. Audit Commarree

• Memlu, Audic Commirrce 20

Authority Participants LFaverre Calhou n Cartens ille

/ s tb

/ Norcrms y / EastPoine

/ e e Park j/ L w rence ulle

- - Fairburn

( e Monroe Hogansulle Elberton Cos ington LGrange Griffin West Point Mansfield Jacbon i nr cell Washington F<

Fort Vallev Ellaulle Sandens ille Cnsp County Blakelv A!bany

% Ivania S51s ester Bnnson Fit: gerald Camilla Doerun Whigham Moultrie Cairo Dou g'as Thomanulle Adel Quitman l

l 1

\

Municipal Electric Authority of Georgia 800 Peachtree Center--South Tower 225 Peachtree Street Atlanta, Georgia 30303

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