ML19323H981
| ML19323H981 | |
| Person / Time | |
|---|---|
| Site: | Fermi  |
| Issue date: | 02/22/1980 |
| From: | NORTHERN MICHIGAN ELECTRIC COOPERATIVE, INC. |
| To: | |
| Shared Package | |
| ML19323H980 | List: |
| References | |
| NUDOCS 8006170405 | |
| Download: ML19323H981 (30) | |
Text
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l Northern Michigan L
Electric Cooperative, Inc.
Boyne City, Michigan i
1979 pi
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Page TABLE OF CONTENTS 1
2 Board of Directors.
4 Chairman's Message.
5 General Manager's Report 8
i Electric Sales to Members 8
Number of Consumers Served 9
Electric Revenues, Cost of Electric Service, Wages.
9 Fuel Costs, Purchased Power, Taxes, Plant Additions 10 Fuels for Generation 12-13 Fermi 11 Nuclear Facility.
14 Treasurer's Report 15 Comparative Electrical Operations Summary 1970 - 1979
. 20 Balance Sheet - Assets
. 21 Balance Sheet - Liabilities
. 22 Statement of Operations.
. 23 Statement of Patronage Capital
. 24 Statement of Changes in Financial Position
. 26 Notes to Consolidated Financial Statements
. Back Cover Staff and Att;rney.
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B ARRIE LIGHTFOOT HAROLD BELDO WAYNE NORDBECK DIRECTOR TREASUPER VICC CH AIRM AN PRESQUE ISLE ELECTRIC COOPERATIVE INCORPORATED lPr*T P/+ m ~.z T T 7 3 3
MELVIN M AXWELL F. EDG AR RENDER MELVIN B ASEL DIRECTOR DIRECTOR SECRETARY TOP O' MICHIGAN RURAL ELECTRIC COMPANY 22 II.
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l HARRY PAULY. M AN AGER Number of customers served 23,137
_g Miles of line 3,534 T7 f.]g
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Number of customers served 33,361 3f(M* Jvwhd?
Miles of line 4,585
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The increased use of electricity by rural con-o sumers in the Northern Michigan service area requires that the cooperative continue to plan
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r for new power plant and transmission facilities.
s The growth rate in 1979 was 5% in KWH sales g [_
and 1.5% in non-coincidental KW demand sales.
Northern's annual peak load showed a decline of 5% from 99,870 KW to 94,860 KW. This was one of the results of the mild weather that occured in December,1979.
Membership understanding o.f their cooperative The job of translating information from the is vital if we are to minimize the problems of Power Requirement Studies and many other unrest that are plaguing the industry. We, as dir-sources, into hard decisions about power plant ectors, must see that our cooperatives carry out construction or joint ventures with other util-effective communication with our members. At ities, is a major management responsibility that one time cooperatives were small, but with in-begins years before the electric power will be creased usage and changing econonics of elec-used. it involves coordinated ef forts by the tricity, we have grown. There is no evil in being Cooperative, the member systems, the consult-big, no evil in being economical. We hear much ing firms contracted to perform specialized about small independent technology, solar pow-studies and other utilities.
er, windpower and others. We welcome alter-During the past year, we have seen many changes native energy sources. However, we cannot be in the utility field. Among the major events, we expected to plan for and provide standby elec-have witnessed the most publicized accident in tric energy to a home when the wind does not the history of nuclear generation. The result of blow or the sun does not shine without some this along with other required criteria has great-sort of financial agreement.
ly increased the investment required to com-Northerre continues to be involved in many pfete the Fermi il nuclear project, as you will vital issues this year and I won't repeat them see in the more detailed part of the report. At here, as they will be covered in other parts of the same time we are witnessing increasing ac-this report. The accomplishments of the past tivity of the anti-nuclear groups throughout our year were achieved only through the dedication area as well as the country. If there ever was a of directors, managers and staff. We are grate-time for cooperation among cooperatives and ful for their services.
member consumers, that time is now. The months and years ahead for Northern and its Truman Cummings, Jr.
three member systems will call for patience and Chairman
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understanding on the part of everyone.
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'('b*,f Qj The year 1979 saw the successful settlement of the Midland Anti-trust suit which had pitted most of Michigans Cooperatives and Municipal r.Q.
J'gg4 Electric Systems against Consumers Power Com-N pany. That which Cooperatives /Municipals W'
sought was the right to participate in large-scale N >>
nuclear units together with attendant coordi-JA @
kc nation requirements. The settlement, in addition Nb.
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Northern its costs in association with the case.
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The settlement contained other agreements
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which are of tremendous long-range importance to Northern. Perhaps chief amongst these stip-and were considering purchasing an additional 10 ufations, is Northern's right to invest in and own MW. Because of the increased cost in Campbell certain portions of Consumers transmission sys-3, the additional purchase is being reexamined by tem. The positive exercise of this stipulation the various Boards.
will result in uncalculatable savings to Northern Northern, af ter establishing feasibility, applied over the years when compared to paying wheel-to the Rural Electrification Administration for ing charges to Consumers.
a deficiency loan in the amount of $101,337,756 Based upon Power Requirement Studies con.
for completion of its 11.22% share of the Fermi Il taining data through 1977, Southern Engineering project. REA approval is expected momentarily.
Company performed feasibility studies and rec-In Michigan, a Cooperative must also obtain the ommended NMEC purchase 44 megawatts in Michigan Public Service Commission's approval Consumers Power Company's Nuclear Units pr:or to obtaining long-term financing. Northern Midland 1 and 2, and 20 megawatts in their east.
made application to the MPSC on January 2,1980 ern, low sulphur, coal-fired Campbell 3. Southern for this approval. The Michigan Attorney Gen-also recommended Northern purchase 30 mega-eral's Office and an anti-nuclear organization call-watts in Detroit Edison's western low sulphur ing itself PIRGIM (Public Interest Research Group coal-fired units Belle River 1 and 2. True to form, in Michigan) have intervened and are attempting it seems that these recommendations had no to thwart the lawful actions of the NMEC Board sooner been made than Consumers Power an-by blocking the financing request. We must ex-nounced that Midland costs, including costs as-pect this Attorney General will continue to im-sociated with Dow Chemical were estimated to pose his attitudes on the qualified and member increase to $3.1 billion. Partly as a result of the elected directors in the exercise of their respon-increased cost estimates, but mostly because of sibility for cooperative affairs. Apparently, this uncertainties associated with possible DowChem-will be done regardless o' the pernicious affect ical remedies caused Southern to withdraw its of these interventions on our rate paying mem-Midland recommendations. At approximately bers, who of course must pay for this outrageous the same time, we learned that a cracked Campbell interference in Northern's internal affairs. None-3 superheater would likely escalate this plants theless, Management has no reason to believe the cost from $600 to $620 million. The NMEC MPSC, in the exercise of its responsibilities will Board and the Distribution Cooperative Boards not approve Northern's lawful request for fund-had approved purJMng 20 MW in Campbell 3 ing. Fermi is currently estimated by Detroit Ed-(
41
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ison to become commercial by September,1982.
to Hersey, because PAC would intend to pur.
Northern, for purposes of feasibility and financ-chase waste heat as process steam. This improve-ing only, has estimated the commercial operating ment might account for as much as a 30% i.>
date as July,1983.
crease in efficiency. PAC has a so stated they Northern, in partnership with Wolverine Elec-would purchase, probably from Cherrylar.d, tric Cooperative, has been awarded a grant from under a negotiated co-generation rate,10 MW the Departraent of Energy (DOE) and the Elec-cf capacity and associated energy around the tric Power Research inrGtute (EPRI) of approx.
clock. When these major components are added imately $11 million. These monies, coupled yp, the possibility of a feasible project develop-with estimated cooperative participation of $5 ing re greatly enhanced. Management is attempt-million are for the construction of a 10 mega.
ing to have initial studies ready for the Direct-watt Lead Acid Battery Plant to be locat.d at ors perusal by year end.
Hersey, Michigan. This will be the world's Northern's most recent rate increase became ef-largest battery and will operate as a peaking plant.
fective in late December,1979. We now be-The project becomes feasible because of cooper-lieve the methodology approved by the MPSC ative participation in Fermi 11, wherein low-cost, will help us meet our cash requirements in a off peak energy is available for charging the bat-superior manner than before because of this tery. Discharge occurs during peak hours. When pe;k rate's recognition of the effect of fuel and pur-versus off-peak plus capital costs were initiallv com-chased power lag. However, with inflation pared, apparent feasibility were established. Definitive ambling along in double digit figures, we also feasibility studies and contracts suitable to assume we will have to request an additional Cooperatives, REA and DOE are being prepared.
rate increase in 1980.
At this writing, Management believes negotia-Most of the recommendations contained in the tions on this project will be successful.
excellent Management Audit performed by Ernst The Packaging Corporal in of America and and Whinney have been adopted by Northern.
Northern have agreed to tudy the feasibility of A few are not practical to implement until the a waste-wood fired electr : generating plant form of the combined WEC/NMEC is known.
which would be located on Packaging Corpor-That these two organizations will combine seems ation's property at Filer City. Undoubtedly, many obvious given the strong reasons contained in the directors are somewhat confused by this announce-Ernst & Whinney Merger Report and the follow-ment, particulary keeping in mind what last up support by REA. A Committee has been year's annual meeting guest speaker from U.S.
selected formed from representatives of the Plywood had to say about the high expense of Distribution Cooperatives. This Committee's using wood as a boiler fuel to generate electri-function is to select the business entity which city. Northern would wish it clearly understood will benefit its members to the highest degree that the underlying concepts of the plant we are and recommend procedures for implementation considering, and that wood-fired plant which to the Distribution Cooperatives. Management may be built at Hersey are quite different. In has been advised that ultimate approval of any our opinion, these ditferences may make the pro-combination must come from the Distribution ject feasible. Specifically, PAC is currently dump-membership at Regular or Special meetings of ing as waste, a wood residue which, according to the members.
them, would supply 40% of the fuel for a 25 MW plant. This would be available as fuel plus PAC Two very beneficial programs should be enacted i
has agreed to supply wood as fuel for the life-in the reasonably foreseeable future. These being time of a feas,ble project. Th,s is opposed to re" vastly improved Power Requirement Studies and i
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lying on the State of Mich,gan with its suspect an ef fective Loao Management program. Each
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i rate of the plant would be improved compared veys and will surely result in Northern's imple-mentation of these programs years ahead of
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schedule. We close this report discussing Power Requirement Studies and Load Management Pro-grams because Northern's Management is of the opinion that obtaining future loans may be very dependent on how we proceed with these two extremely important subjects. Therefore, we believe improvement and implementation in these realms is mandatory.
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Clyde L. Johnson i
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wages were charged as operating and maintenance E/ectric #eFanues costs, $123.852 capitai; zed and $16,251 were Revenues from the sale of electric energy in 1979 totaled $19,177,545, up 13.5% over 1978. Part of the increase can be attr. outed to increases in
[ygf ggggg fuel and purchased power costs, however,-mem-ber cooperative kilowatt hour sales increasd 5%
Coal purchased in 1979 for the Advance Steam over 1978. During 1979 member cooperatives Plant totaled 105,719 tons wi'h a total ccst of purchased $18,817,402 in electric energy which
$4,441,506. The average unit cost increased represented an 16% dollar increase in their pur-from $1.56 to $1.69 per million BTU or 8% dur-chases over the previous year, ing the year. The price per gallon paid for fuel oil was 42.001 at the beginning of the year and During the past ten years, the number of kilowatt had increased to 86.00/ per gallon by years end.
hours sold to member cooperatives has more than doubled. In 1970 our sales to members amount-ed to 243 million kilowatt hours while in 1979 Purc/iesed Power they reached 496 million kilowatt hours, an in-crease of 104%.
The cost of purchased power increased $2,819,400 The trend or rising fuel and purchased power in 1979 with the price of such power averaging costs continued in 1979. Application of the f uel 31.1 mills per kilowatt hour..This is an increase and purchased power adjustment charge caused of 2.1 mills per kilowatt over 1978 costs. Most the average price per kilowatt hour to members of this increase was due to higher fuel adjustment to reach 38.0 mills, an increase of 10% over the charges ard base rate increases by the investor 1978 cost.
owned utilities.
The primary sources of our purchased power was from the City of Lansing and Detroit Edison Company. Jointly, they supplied 59% of the Cast of Electric Service cooperative s totai energy requirements.
The average cost of electric service was 34.3 mills per KWH in 1978. In 1979, this cost IIO8 was 38.2 mills per KWH, representing a 11.4%
increase for 1979.
Tax expense in 1979 totaled $564,036, an in-The total cost of electric service in 1979 was f 13% over 1978. $491,132 was for cre se
$19,357,865, an increase over 1978 of 13.8%
pr perty taxes and $72,904 for employment taxes.
in cost, compared to an increase of only 2.1%
These taxes totaled 3% of the total cost of elec-in the total number of kilowatt hours sold.
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74% of 1979 electric costs was for fuel and pur-chased power,13% for wages, materials, sup-plies and 13% for depreciation, taxes, interest ent Additions and maintenance.
Total utility plant additions in 1979, including the Fermi ll project amounted to $34,248,919, ggEgg a 30% increase in total utility plant.
Gross wages earned in 1979 were $1,242,829; During the year, two new substations were com-an increase of $53.450 over 1978 gross wages pleted and thirteen miles of 69,000 voit line amounting to $1,189,379. $1,102,726 of 1979 was compteted.
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Fuels for Generation g vernmend r nucle r p wer has created dif-ficulties for the industry. The government,s Coa /
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'*d"'* ' ' St "9 'P*"t fuel rods and other nuclear wastes has increased Michigan relies heavily on coal as a fuel for public disapproval of nuclear power.
generation. It is estimated that there are enough coal reserves in the United States to last 300 Oi/ and Natura/ Gas years at the current rate of consumption.
A heavy dependence on coal, however, can Oil burning plants are usually used to produce affect air and water quality, increase the num-electricity to satisfy peak demand requirements.
ber of land use problems and produce an impact Pollution controls are easily met with petrol-on rail and water delivery systems.
eum because the fuel burns quickly and cleanly.
Sulfur dioxide, ash and other undesirable emis-Since oil and gas are quick to fire, utilities can sions are produced from coal combustion and sta[t up or shut down their plants rapidly and must be controlled by expensive po!!ution con-ef ficiently - a nec7ssity when producing limited amounts of electncity for small periods of time.
trol equipment. Regulation of these emissions in case of major power failure, peaking units is costly and though desirable in many respects, can also come on line quickly to replace lost power.
has severely limited coal as a primary source of fuel.
Because oil and gas reserves are limited and the cost is continuously increasing, the industry is Nuc/ ear searching for ways to improve the heat rate efficiency of these fuels.
Nuclear power has the potential of being the world's principal source of electricity. Because The long-range outlook for petroleum supplies indicate the v,tal need for the construction of i
of imported oil price increases, many nations coal and nuclear facihties. Over the next decade, have turned to nuclear power. France is one of 0il and gas supplies are expected to decrease con-
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the leaders in nuclear power with the Phoenix siderably, and without significant new oil dis-1 250 megawatt breeder reactor now in service.
coveries, it is likely a worldwide * ;troleum short-The United States has approximately seventy ge will occur,n the 1980's.
i commercial nuclear plants now in operation.
The safety record of nuclear plants the world
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over has been outstanding. The recent Three Mile Island incident has shown that even this outstanding safety record must be improved to obtain an even greater degree of public accept-ance and to demonstrate that nuclear power presents no safety threat greater than other forms of energy production.
Nuclear plants have low operational and fuel costs which result in relatively inexpensive power, which save our consumers money. As with coal, nuclear power can assist the United States in our attempts to become independent of foreign oil. As fossil fuel reserves become scarce, reprocessing of spent fuel rods and the development of the breeder reactor will con-tinue to support future program developments.
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furnace or by splitting certain atoms of uran-Ferint ll Nasclear Facility lum in a nuclear reactor.
The cooling syste'; is a main link in the chain Nuclear plants are not as different from other that converts fission energy to electrical energy.
power-plants as many misconceptions imply.
Here is the chief difference between boiling Understanding what they are and how they water reactors and pressurized water rea work,is important to forming judgements and in the BY,'R's made by General Electr attitudes aoout nuclear power, water boils to steam directly in the re.
vessel. " Fermi 11 is a BWR." In PWR's made by Electricity is produced at all power plants by Babcock & Wilcox Company, Construction Err spinning a shaf t of a huge generator in which gineering Inc. and Westinghouse Electric Cor-coils of wire and magnetic fields interact to create electricity. In most plants, thermal or poration, the reactor water is pressurized so as steam-electric, this spinning is done by high not to boil. Instead, it is pumped through a her+
pressure steam "bicwing" the propeller-like exchanger, where a separate supply of water is heated to produce steam. At both types of blades of a turbine connected to the generater shaf t. Heat to boil water into steam at these plants, this steam is then used to make electri-plants is produced in either of two ways: by city in exactly the same way as at a plant burn-burning coal, oil or gas, - the fossil fuels - in a ing fossil fuel, by spinning the turbine which drives an electric generator.
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[eCf3 Ah0&f fermj Ownership: Detroit Edison (8099, Co-op's (20%)
Plant operated by: Detroit Edison Architect Engineer: Detroit Edison in February,1977, a 20 percent ownership in-Anticipated plant life: 40 years terest in Fermi 11 was sold by Detroit Edison Nuclear reactor manufacturer: General Electric to Northern Michigan Electric Cooperative Co., San Jose, California (11.22%) and Wolverine Electric Cooperative Turbine generator manufacturer: English Elec*ric, (8.78%). The three companies will share the Ltd., Stafford, U.K.
plants output consistent with their respective Construction manager: Daniel Construction Ca.,
interests.
Greenville, South Carolina farmi // Key Detes wark Porce. Construction, average 825 Plans for project announced: July 26,1968.
Construction, peak 2,100 Application for AEC (now NRC) construction permit Operational Total 125 submitted: April 29,1969 Type of fuel: Uranium Oxide enriched U-235 Construction permit issued: September 26,1972 Total fuel weight: 164 tons l
Site preparation work started: Late 1969 Materials: Volume of concrete 300,000 cubic
. Construction started: October,1970 yards.
Reactor vessel delivered: July,1974 Steel: 20,000 tons l
Generatcr delivered: July,1976' Electric wire: 760 miles Cooperative projected completion date: July,1983 Conduit: 40 miles General Information:
Method of cooling condenser water: Closed l
cycle with two natural draft cooling towers.
Electric generation capacity:1,100,000 Kilowatts y'
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This Annual Report includes the Balance Sheet and Statement of Revenue and Expense of the cooperative. These statements audited by Donald R. Breadon of Traverse City, Mich-
.igan reflect that for the calendar year 1979, operations produced a (loss) in margins of
($180,321) and non-operating margins totaled
$130,237. $104,805 of non-operating margins represents patronage capital issued by the National Rural Utilities Cooperative Finance Corporation ("CFC").
Northern,is a participating member of the Na-tional Rural Utilities Cooperative Finance Cor-poration ("CFC") purchased $111,359 in CFC capital term certificates in 1979. The current investment totals $771,362. The cooperative's projected total investment in capital term cer-tificates through 1984 is $1,402,362.
During 1979, the cooperative received R.E.A.
insured loan fund advances of $1,793,000 to
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finance construction of approved loan pro-jects. In addition, $36,460,000 of R.E.A.
guaranteed loans were advanced to finance the Fermi 11 project.
j Substantial progress was achieved on the Fermi 11 nuclear generating station during the year.
During 1979, Southern Enginnering Company has reported to the cooperative on construc-tion progress and cost monitoring of the Fermi 11 project. Their report addresses topics such as cost reporting systems, contracts relevant to Fermi ll, uranium acquisition for the plant and construction progress on this project.
Harold E. Beldo.
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COMPARATIVE
SUMMARY
OF ELECTRICAL OPERATIONS 1970-1979 (MILLS PER KWH) 1979 1978 1977 1976 1975 1974 1973 1972 1971 197 Total Operating Revenue (1) 37.8 34.0 30.4 31.4 29.0 25.3 18.3 16.8 15.8 14.E Operating Costs:
Production Expense (2) 31.2 27.9 25.2 25.2 23.4 19.6 13.3 11.2 9.8 8.5 Transmission Expense
.8
.9
.6
.7
.6
.7
.8
.6
.7
.8 Other Adm. & General Expense 1.3 1.2 1.4 1.2 1.0
.9
.7
.7
.7
.6 Depreciation & Amort.
1.8 1.7 1.5 1.5 1.5 1.6 1.6 1.7 1.8 1.7 Taxes 1.1 1.0
.9
.9
.9
.9
.9
.9 1.0 1.0 Interest 2.0 1.6 1.4 1.2 1.3 1.1
.9 1.0 1.1 1.1 TOTAL OPERATING COSTS 38.2 34.3 31.0 30.7 28.7 24.8 18.2 16.1 15.1 13.7 Net Operating Margin (Loss)
(.3)
(.6)
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(1) Member Cooperative Sales 38.0 34.5 30.8 31.4 28.9 25.3 18.3 16.7 16.0 14.9 Wholesale and Other 33.4 25.5 24.3 26.7 30.3 27.2 16.8 3.9 8.8 6.9 (2) Generated Power. Cost of Fuel Steam Generation 22.3 20.4 18.2 17.8 16.6 10.0 7.0 6.8 6.3 5.8 Internal Combustion 48.7 34.3 42.1 34.9, 34.8 33.4 23.4 17.1 14.4 9.9 Purchased Power Cost 31.1 29.0 24.8 24.8 23.1 27.1 18.0 14.0 16.0 16.2
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M:1.;. - e COMPARATIVE
SUMMARY
OF ELECTRICAL OPERATIONS 1970-1979
.l ELECTRICITY GENERATED AND PURCHASED-IN THOUSANDS OF KILOWATT HOURS 1979 1978 1977 Generated 181,539 243,347 253,491 Purchased for System 339,295 267.320 247.675 520,834 510 667 501,166 ELECTRIC SALES -
IN THOUSANDS OF KILOWATT HOURS Member Sales 495,018 471,489 444,737 Wholesale and Other 12,317 25.274 33,229 507.335 496 163 477.966 ELECTRICAL SALES TO MEMBER COOPERATIVES-IN THOUSANDS OF KILOWATT HOURS Cherryland Rural Electric Cooperative, Ass'n.
125.049 117,005 106,753 Presque Isle Electric Cooperative, Inc.
134,958 133,443 129,067 Top O' Michigan Rural Electric Company 235,011 221.041 208.917 495,018 471.489 4 l44 MAXIMUM KILOWATT DEMAND AT MEMBER DELIVERY POINTS 101,309 99,861 100,153 ANNUAL LOAD FACTOR PERCENT MEMBER COOPERATIVES 56 54 51 LINE LOSSES PERCENT 2.6 2.7 4.6 f
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COMPARATIVE
SUMMARY
OF ELECTRICAL OPERATIONS 1970-1979 1976 1975 1974 1973 1872 1971 1970 281,412 310.305 288,730 290,850 294,580 267,608 248,423 192.531 129.575 124,186 92.887.
50,885 28.595.
19.292 473.943 439,940 412,916 383,737 345,465 296,203 267,715 l
l 438,169 404,510 383,762 354,407 324,285 272,980 243,245 9,297 12.714 3.435 12.088 6.557, 5.209 10.147 447,466 417,224_
387,197 366,495 330,842 278,189 253,392 1
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103,185 93,658 88,087 84,462 75,707 63,894 55,301 129,266 123,120 120,(115 116,265 111,830 98,534 89,710 205.718 187.732 174.760 153.680 136.748 110.552 98.234 438,169 404,510 383,762 354,407 324,285 272,980 243,245 91,472 86,898 82,828 75,749 70,752 63,598 55,992 l
55 53 53 53 52 49 50 5.6 5.2 6.2 4.5 4.2 6.1 5.4 Fw Y%
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s COMPARATIVE
SUMMARY
OF ELECTRICAL OPERATIONS 1970 1979 i
1979 1978 1977 1976 1
ELECTRIC ENERGY SALES Member Cooperatives 18,817,402 16,246,253 13,712,248 13,776,658 Wholesala and Other 360,142 645,356 808.975
_ 247,795 TOTAL OPERATING REVENUES 19,177,544 16,891,609 14,521,223 14,024,453 OPER ATING EXPENSES Operation Expense Generated Power 4,691,040 5,628,937 5,389,864 5,910,629 Operation Expense - Purchased Power 10,55C,900 7,737,500 6,144,278 4,768,538 Operation Expense - Transmission 317,381 244,001 212,151 185,646 Other Admin, & General Expenses 640,810 545,867 664,000 497,785 j
Maint. Expense - Generated Power 560,963 485.542 485,663 596,799
!l Maint. Expense Transmission 89,592 174,068 82,687 137,075 Maint. Expense - General Plant 27,395 41,975 33,418 23,649 Depreciation & Amortization 899,238 850,928 715,040 672,121 Taxes 564,036 499,937 428,784 380,570 Interest on Long Term Debt 9,235,453 6,822,288 4,279,591 487,944 Less Interest charged to const.
(8,450,340)
(6,112,280)
(3,661,306)
Other Interest 225,398 97.991_
33,557 48,440 TOTAL COST OF ELECTRICAL SERVICE 19,357.866
_17,016,754 14,807,727 13,709,196 GAIN (LOSS) IN OPERATING MARGINS (180,322)
(125,145)
(286,504) 315,257 NON OPERATING MARGINS 130,237 601.148 165.232 22.147 GAIN (LOSS) IN TOTAL MARGINS (50,085) 476,003 (121,272) 337,404 1
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'I 1975 1974 1973 1972 1971 1970 11,697,592 9,691,622 6,491,195 5,431,332 4,358,507 3,622,616 384.840 93,271 202.793 123.799 46.036 69,804 12,082,432 9,784,893 6,693,988 5,555,131 4,404,543 3,692,420 6,344,738 3,963,109 2,939,425 2,757,483 2,144,558 1,732,364 2,991,890 3/369,138 1,674,092 713,540 456,085 311,924 135,636 118,067 81,058 73,175 80,022 68,253 402,046 323,148 237,114 224,424 190,261 157,662 414,9b2 259,175 254,754 230,243 125,215 123,467 106,131 164,438 220,568 106,017 102,589 82,958 23,674 16,006 12,922 20,164 12,969 7,870 626,986 607,732 592,960 568,506 511,410 448,049 398,910 359,930 321,252 312,628 288,719 255,659 368,757 339,933 332,001 331,364 313,830 280,312 (1,947)
(11,197)
(12,380) 162,616 75.776 15.294 817 965 1,467 11,976,336 9,596,452 6 681,440
_5,336,414
_4,215.426
_3,457,605 106,096 188,441 12.548 218,717 189,117 234,815 11.584 17.263 6.156 5.410 1.192 2.663 117,680
_ 205.704 18,704 224,127 190,309 237,478 i l l
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i MICHIGAN 47 CHEBOYGAN NO,9THERN MICHIGAN ELECTRIC COOPERATIVE, INC.
BOYNE CITY, MICHIGAN BALANCE SHEET ASSETS December 31, 1979 1978 UTILITY PLANT:
Electric plant in service
$30,815,865
$26,016,720 Construction work in progress 119,040,300 89,526,903 Electric plant acquisition adjustment 89,988 89,988 149,946,153 115,633,611 Less accumulated depreciation and amortization 10,357,830 9,717,539 NET UTILITY PLANT 139,588,323 105.916,072 INVESTMENTS:
Investments in associated organizations 1,630,400 1,414,236 Nonutility property, net of accumulated depreciation 6,857 6.836 TOTAL INVESTMENTS 1,637,257 1,421,072 CURR' NT ASSETS:
Cash 116,811 68,637 Cash, restricted for construction 156,222 175,811 Accounts receivable 1,986,022 1,616,746 Materials and supplies 5,152,431 4,182,253 185.649 243,158 Prepayments TOTAL CURRENT ASSETS 7,597,135 6,286,605 DEFERRED CHARGES 97,145 222,701
$148,919,860
$113,846,450 See accompanying summary of accounting policies and I
notes to financial statements.
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6MNWWfb>W4fe4 4e LIABILITIES December 31, 1979 1978 EOUlTIES AND MARGINS:
600 600 Memberships 2,006,602 2,006,602 Patronage capital 241.612 291.697 Other equities (deficit) 2.248.814 2.298.899 TOTAL EQUITIES AND MARGINS l
LONG TERM DEBT:
Mortgage notes to Rural Electrification Administration and Federal Financing Bank 141,404,231 105,767,980 26.487
_ 26,487 Breeder Reactor Corporation 141.430.718 105.794.467 TOTAL LONG-TERM DEBT CURRENT LIABILITIES:
Notes payable to National Aural Utilities Cooperative 2,700,000 2,200,000 Finance Corporation i
1,813,682 989,739 Accountspayable Accruals 490,422 436,988 Taxes 69,610 1,999,941 Interest 166.614 126,416 Other 5.240.328 5.753.084 TOTAL CURRENT Li A31LITIES
$148.919.860
.$113,846.450 l
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h MICHIGAN 47 CHEBOYGAN NORTHERN MICHIGAN ELECTRIC COOPERATIVE, INC.
BOYNE CITY, MICHIGAN
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STATEMENTS OF OPERATIONS Year endes! December 31, 1979 1978
$19,177,544
$16.891.609 OPERATING REVENUES AND PATRONAGE CAPITAL OPERATING EXPENSES:
Steam power generation:
Operation 4,319,457 5,209,680
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Maintenance 395,712 320,377 Hydraulic power generation:
Operation 62,408 57,445 Maintenance 32,485 62,618 I
Other power generation:
Operation 309,176 361,812 Maintenance 132,766 102,547 Purchased power 10,556,900 7,737,500 Transmission:
Operation 230,069 186,132 Maintenance 50,991 124,770 Distribution:
f Operation 75,514 57,870 Maintenance 38,601 49,297 Consumer accounts 11,799 9,289 l
Administrative and general 640,810 536,578 General plant maintenance 27,395 41,975 Depreciation and amortization 899,238 850,928 Taxes 564,037 499,937 Interest:
Long-term 781,333 709,361 l
Intermediate loan 8,454,120 6,112,927 Interes? charged to construction (8,450,343)
(6,112,280)
Other interest 225,398 97.991 19.357.866 17.016,754 I.
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Operating margins (deficit)
(180,322)
(125 145) s
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NONOPERATING MARGINS:
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?y Interest and dividend income 132,235 602,585 1.998 1.437 Td
.l?f l$4, Nonoperating margins 130.237 601.148 ol
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NET MARGINS (DEFICIT)
($
50.085)
$ 476,003 n
' See accompanying summary of accounting policies and notes to financial statements -
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MICHIGAN 47 CHEBOYGAN NORTHERN MICHIGAN ELECTRIC COOPERATIVE, INC.
BOYNE CITY, MICHIGAN STATEMENT OF PATRONAGE CAPIT&
Year ended December 31, 1979 1978 BALANCE at beginning of year
$2,006,602
$2,006,602 Add operating margins for the year BALANCE,at end of year
$2.006.602
$2,006,602 STATEMENT OF OTHER EQUITIES (DEFICIT)
Year ended December 3,1, 1979 1978 BALANCE (DEFICIT), at beginning of year
$291,697
($184,306)
ADD (DEDUCT):
Nonoperating margins for the year 130,237 601,148 Operating deficit for the year (180.322)
(125.145)
BALANCE, at end of year
$241.612
$291,697 l
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2 MICHIGAN 47 CHEBOYGAN NORTHERN MICHIGAN ELECTRIC COOPERATIVE, INC.
BOYNE CITY, MICHIGAN STATEMENT OF CHANGES IN FINANCIAL POSITION Year ended December 31, 1979 1978 1
FUNDS WERE PROVIDED BY:
l Net marg'ns (deficit) before provision for depreciation and armrtization of (1979-l
$935,879; 1978 $884,434) 885,794 1,360,437 Advances from REA and FFB 36,460,000 26,517,000 Material returned to stock from retirements 79,420 52,098 125.556 Decrease in deferred charges 37.550.770 27.929.535 I
FUNDS WERE USED FOR:
Extension and replacement of plant, net 34,626,795 25,638,103 Repayment of long-term debt to REA -
799,403 744,672 principal when due j
Decrease in deferred interest 24,346 24,346 216,185 684,823 j
increase in investments 863 fj Decrease in deferred credits 60,755 23,306
,j Plant removal costs 4.327 increase in deferred charges 35.727.464 27.120.440 N^:&
$ 1.823.286
$ 809.095 Ed INCREASE IN WORKING CAPITAL 9.14
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MICHIGAN 47 CHEBOYGAN NORTHERN MICHIGAN ELECTRIC COOPERATIVE, INC.
BOYNE CITY, MICHIGAN STATEMENT OF CHANGES IN FINANCIAL POSITION (Continued)
Year ended December 31, 1979 1978 CHANGES IN WORKING CAPITAL ITEMS:
Increase (decrease) in current assets:
Cash
$ 48,174
$ (108,261)
Cash, restricted (19,589)
( 90,015)
Accounts receivable 369,276 105,510 Materials and supplies 970,178 284,783 Prepayments (57.509) 122.260 1,310.530 314.277 l
Decrease (increase) in current liabilities:
Notes payable Accounts payable (500,000) 1,191,648 f
Accruals (823,943) 92,893 1
1.836.699 (789,723) 512.756 494.818 INCREASE (DECREASE) IN WORKING CAPITAL
$1823,286
$ 809.095 See accompanying summa 7 of accounting policies and notes to financial statements.
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SA aw NOTES TO CONSOLIDATED FINANCIAL. STATEMENTS DECEMBER 31,1979 and 1978
- 1. Summary of significant policies.
Accounts receivable All accounts receivable are considered by management System of accounts The accounting records of the Cooperative conform to to be co!!ectible accordingly, no provision for uncol-the Uniform System of Accounts prescribed by the lectible accounts has been provided.
Federal Energy Regulatory Commission modified for electric borrowers of the Rural Electrification Materials and supplies Operating materials and supplies are valued at average Administration.
cost.
Electric revenues and fuel costs Electric revenues are recorded monthly as of the date
- 2. Utility plant Listed below are the major classes of utility plants meters are read and accounts are billed.
as of December 31,1979 and 1978.
Fuel costs are charged to production expense 1979 1978 as fuel as consumed.
intangible plant 43,445 41,000 Steam production plant 10,313,020 10,313,020 Plant additions and retirements Hydraulic prod. plant 916,643 916,643 The cost of additions to electric plant in service rep-Other power prod, plant 2,570,957 2,570,957 resents the original cost of the contracted services, Transmission plant 12,782,771 8,300,661 l
direct labor and material, interest on construction loans Distribution plant 3,425,360 3,169,880 where applicable and indirect charges for engineering, General plant 763.669 704.559 supervision and sirnilar overhead items. Maintenance Electric plantin and repairs of property, replacemen,ts and renewals of 5,865 26,016,720
- C' items determined to be less than ur'its of property are Construct. n work io charged to maintenance expense. For property replaced I" P' 955 or renewed, the original cost plus removal cost,less Electric plant acqu-salvage is charged to accumulated provision for depre-tsiti n adjustment 89.988.
89.988 ciation. The cost of related replacements and renew-j als is added to electric plant. Contributions in aid of construction are credited to the applicable plant Depreciation for the twelve months ended Decem-ber 31,1979 and 1978 was $899,238 and $884,434 accounts.
respectively, of which $862,908 and $850,928 was Depreciation charged to depreciation expense and $36,330 and Provision has been made for depreciation on a :traight
$33,506 allocated to other accounts.
line basis at annual rates as follows:
{
4.00%
- 3. Long term debt t
Franchises and consents Mortgage notes payable to REA are represented by 3.10%
Steam prod. plant-comp. rate note instruments payable to the United States of E
2.00%
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Hydraulic production plant America bearing interest at the rate of 2 5%. All assets 3.00 -7.00%
(
)
Other productiormlant are pledged as collateral for this debt. The notes are for 2.75%
Trans. plants:omposite rate 35 year periods each, and principal and interest install-3.50 %
Distribution plant-composite rate ments are due quarterly in amounts of approximately
' d 10.00-33,00%
Power operated equipment j
2.00- 10.00%
$475,000 each.
p.F f Other general plant 4
it is estimated that installments of $1.700,000 payable
+.i Investments in associated organizations within the next twelve months will include $876,000 in b"
]
The investments in associated organizations referred to principal. The notes are scheduled to be fully repaid at Q%3 in the financial statement were as foffows:
various times from October,1984 to March,2012. Un-ymj f$p[6d 1979 198 advanced loan fund. of $10,882,974 are available to the M
1 National Rural Utilities Finance Corporation Cooperative on loan commitments from Rural Electri-Capital Term Certificates fication Administration.
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$771,362
$660,003 Patronage Capital Certificates 854,207 749,402 Other 4.831 4.831 Total
$1.630.400 _
$1.4_14.236.v.-
On February 8,1977, Northern Michigan Electric Co-
- 6. Patronage capitt'.id other equities operative, Inc, concluded negotiations for the purchase Patrcoage capital consisted of:
of 11.22 percent of the Enrico Fermi 11 Nuclear Energy December 31, Generating Facility, owned by Detroit Edison Comp.
1979 1978 any, located in Monroe County, Michigan. Long-term Assignable financing arrangements were made in 1978 with the Assignd 2.006.602 2.006.602 Federal Financing Bank through the United States Department of Agriculture for $127,873,000. Of the TOTAL 2,006,602 2,006.602 proceeds from the loan, $122,905,000 are for the En-rico Fermi ll and the balance being used for other plant additions. Amounts unadvanced at December 31,1979 Other Equities (Deficit) were $13,184,000. The amounts are ' advanced from time to time as required and at varying interest rates.
Amounts have been advanced from August 10,1978 December 31 through December 31,1979, maturing on August 10, 1F80 through December 31,1982, at interest rates of 1979 1978 8.260 percent to 10.721 percent.
Nonoperating margins, net
$247,510
$297,595 During 1972, the Board of Directors authorized the ex*
Capital gains (losses),
penditure of $52,973 for participation in the Liquid incurredpriorto1979' (5,898)
(5.898)
Metal Reactor Demonstration Program, to be paid in ten equel annual installments. There were five install-TOTAL 1241,612
$291,697 ments remaining at December 31,1979.
- 4. Line of credit agreement The Cooperative has established a line of credit for short term financing, with NRUCFC for $12,000,000.
At Des r.ber 31,1979 the amount owed NRUCFC under such agreement is $2,700,000.
- 5. Pension plan Pension benefits for substantially all employees are provided throuyi participation in the Retirement and Security Program of the National Rural Electric Cooperative Association. Pension costs were approx-imately $77,672 in 1978 and $79,500 in 1979.
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rT" Breadon & Holly, P.C.
rr comntD,u,0c AccOoN1,1S February 22, 1980 Board of Directors Northern 111chigan Electric Cooperative, Inc.
Boyne City, Michigan We have' examined the balance sheets of Northern Michigan Electric Cooperative, Inc. as of December 31, 1979 and 1978, and the related statements of operations, other equities, and changes in financial position for the years then ended.
Our examination was made in accordance with generally accepted auditing standards and, accordingly, included such tests of the accounting records and such other auditing procedures as we considered necessary in the circumstances.
In our opinion, the financial statements mentioned above present fairly the financial position of Northern Michigan Electric Cooperative, Inc. at December 31, 1979 and 1978, and the results of operations and changes in its financial position for the years then ended, in conformity with generally accepted accounting principles applied on a consistent basis.
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i}{C DONALD R. BREADON. C.PA DENNIS L HOLLY, C.PA 153M EAST FRONT e TMVEltSE Cm/, MOilGAN 49684 a TELEPHONE: (616) 946-8930 _
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y-RICHARD 5. CHAPPELL TR ANSMISSION M AN AGER JOHN R. CLARK PRODUCTION M AN AGER 5
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