ML19345H534

Annual Financial Rept 1980

ML19345H534
Person / Time
Site:	Hatch
Issue date:	05/18/1981
From:	MUNICIPAL ELECTRIC CO. OF GEORGIA
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ML19345H531	List: ML19345H530 ML19345H534
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NUDOCS 8105210213
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Municipal Electric Authority of Georgia 1980 Annual Report Cost of Living index Up 2.7c

-..s Up 13.3'e Up.68o f

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1980 Highlights Definitions

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o 4.77 billion kilowatt-hours required 8+(su$e many of the terms used to desenbe Power supply sources-%1EAG participants by panicipating systems.

our operatiom are peculiar to the electric are supplaed electricity from three different utility industry, we are including definitions sources:

o Gross resenues of $!43.484.674.

M "plansHom M the tenns namt commonly uwd in this report. %e hope Projectpower is the retair.ed ouput of th e e asue of $125 m!Dion in Series E thew defimtions will help you to undentand generating plant owned by %IEAG.

beiier our achietement, and gaan.

Supp/cmensetrower h the capacity and Edwer Resenue aonds.

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enogy wugs w m % ca m e a

• m Ini"t Pown ' MsuMent to mut n

o issue of $150 milhon m-1980 Series the year when the most electrical capacits is being uwd. This nor naily occurs di. ring' Pi P' " ""d'*

General Power Resenue Bonds.

duiy o, August in the %IEAG service area.

SEP e power is the power produced by but as additionat electric heating is imtalled.

Federal hydroelectric sources and o Peak demand of !.006.291 kilowatts monthly winter peaks are approaching our marketed by the Southeastern Power set July 16.

monthly utmmer peaks.

Administration to inditidual KillowestikwJ. Adowett-hourIi=hp- %

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F o Exchange of 15.19 shares of Plant kilowatt, one thousand warts.i the basic Torelde#reredpower-The sum of all Scherer Uruts 3 & 4 for additional umt of measurement for electricity, project. supplemental and SEP % power 15.19 shares in Units I & 2.

'epresenting a capacity to perform work. %

deliiered to %IEAG participants, kilowatt. hour is the use of this capacity for M

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o lpgrading of bond ratmgs from A+ to one hour.

and supplernental power deli *ered by AA-bV Standard and Poor *s.and

%fetewettimw>-One mdlion matts of

%IEAG. No 5EP 4 power or participant-from k to Al by Moody's.

C8Pacity.

ow ned power is included in this figure.

Integrated Transminion System tlTSt-Pumped storate- % technique whereby e Start of construction of M EAG's new The irammission system linking the entire waier is used to generate energy as it flows office fJalityin Northwest Fulton state with the esception of areas wried by from an upper reser*oir through a turtr:ne-TVA and hasannah Electric and Power ( o.

generator into a 'ower resenoer. Then.

County.

IT5isawnedjoinfly by \\1EAG.Georgis durin off peak periods, the turbo.

Power Co Dalton and Oglethorpe Power generators are re*ened pumping the water Corp. %IE AGi meestment en IT5 is 5g4

• back to the upper rewrvoer ahere it can be million.

uwd again and again in the generation Electronic lood management-Sy stems P'*""'

imtal!cd by inditidual participants uhich Baling weier reactor-The process u ed to lirait the operation of air conditioning tran fer heat from nuclear tinion to steam comprenors, w ster heaters, pumps an(

• hich is piped directly to a turbo-generator.

other high demand machinery during peak Plans flatch has two boiling wster reactors.

The Municipal Electric Authonty of t,',s)"t,j b

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Georgia, created by the 1975 Georgia cuts off certsin items for,arying penods eo General Assembly to assure adequate,

'*"" Peak demands for electricity.

is not uwd to turn the turbine wheel of the dependable and economial supplies of Crocrating rep city retings-In most turbo-generator. Plant % ogtle is scheduled 41EAC documents, the generating to hate Iwo preuurised *ater teacton.

electriary in areas w here ten percent of.

capacities of anies under construction are the state's population lis es. is the bulk nominal ratings. or ratings which Sc@ecA % hen the %uthority purchows

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power supplier to 47 participants uhich

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• operate their ow n "IcCtDC distnbution are auigned ratings which are the net peak receite the output of this ownenhip in systems.

load outputs of the units, and these ratings gradually increasing increments over a change each year.

Puial M yenn. Ior nample, of %IEAG4 1

34.2 percent share of units 1 & 2 at Plant Low Acadhydro- % term normally applied 5cherer, only one tenth of this 30.2 percent to any bydroelectric generating facdity will be received during the wcond year of where the head idepth of water behmd a operation. increasing by 10 percent each dam or generator)is leu than 64 feet.

year until all 30.2 percent is obtained during Coteneretion- % rocess *here electricity the elesenth year. The remainder of this P

is generated and the same energy source is

'""E7 8nd capacity is sold to Georgia Power (.o. each year, and n referred to as used for an additional purpme. li r esample.

o wilback.

a manufacturing piant u tuch makes steam in a twiler use. this steam to generate electricity with a turbine, then uws the steam eshausted from the turbine as a heat sou ce in the manufacturing procen is utilising cogenerttion.

l P00R ORIGIND l

1

I To Our Readers i

De year recently ended was, in many respects, the most esentful twelve months of our l

existence.

j In order to con:im our generation construction program, we sold bond issues of $125 I

million and $150 nullion. which brought us to the 51 billion mark in financing in less than four years. We also made plans to sell a S75 million issue early in 1981. With these sales, L

more than half of our current financmg schedule has been completed,and the rest of our i

borrowing timetable calls for smaller issues at approximately one-year intervals I

through 1987 After examining the options available to us for many months, we concluded that an j

exchange of our 15.1 percent ownership in units 3 & 4 of Plant Scherer for the same additional ownership of units I & 2 would be highly beneficial to our participants and their electrical needs, so this action was successfully concluded in August oflast year.

I A record-setting heat wave w hich enveloped much of the country in its grip in June and July brought temperatures of.105 to 110 degrees to Georgia for extended periods last sum ner. His resulted in record electrical consumption and almost daily new peak demand; for energy.

Some of the year's most welcome news came in August and December, when Standard & Poor's and Moodys upped the Authority's bond ratings by one step to AA-l and Al, respectisely. Most of the credit for this c.spression of confidence in the Authority's I

achiesements and goals belongs to on participants, who made an outstanding impression on analysts from the rating agencies dunng sisits to the cities we serse.

in the financial environment of today's world, all of the old rules and trends seem to i

hase flown out the window with the arrival of the Eighties. The bond market, especially, seems ta hase entered a new era, with record-high interest rates and decreasing demand l

for long-term obligations. For each of the year's two bond sa!es, we saw net interest costs climb.87 percent and 1.2 percent from the preceding issue, with the January 1981 sale i

commanding 9.94 percent. De 30-year revenue bond index, an indication of the initial otTering yield for a 30-year revenue issue, set an all time record level of 11.41 percent on December 18,1980. The prime rate started the year at slightly more than 15 percent, and peaked for the year at 21 percent in December. Although revenue bond interest rates were not quite that volatile, they nesertheless rose more than 3 percentage points from January to December with only one small decline in midyear.

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As we noted in ilst year's report, inflation is a powerful influence on bond prices and interest rates. The new Administration in Washington is proposiop a number of anti-inflationary moves, w hich in turn would tend to add stabihty to our econoiny in general and specifically to the bond market. However, the political obstacles to the rapid and effectise implementation of a comprehensise anti-inflation program are great and may proside penods of skepticism and disappointment.

But there is no skepticism among our participants about the effects of electronic load management on their finances. With each passing year, more of our cities make the commitment to install these systems in order to hold down summertime peak demands and to save on demand charges which continue until a new pet.k is set. Our participants, by their aggressiw leadership in this matter, have been pathfinders in a new roic for technology..

Although we have made a number of ef' orts to keep our participants abreast of the activities and plans of the Authority throughout.;ar four-year existence, mo t of these meetings have focused on one or two current issues or decisions. late in 1980, we held a '

series of meetings in several locations across the state comenient to most participants in '

order to discuss several items of a long term nature. These gatherings, which were well attended by both elected and appointed officials, addresmi such topics as projected bulk power costs between I. - nd 1985: generating plant concruction schedules and costs; and v. rious budget considerations. It is our intention to sc^wf ule meetings of this' nature on a yearly basis in the future because of the enthusiastic reception gisen to the first in this series.

We also continued our meetings with institutionalimestors and analysts throughout.

the year, building on the reservoir of good will and trust established in presious conferences to tell the NIEAG story.The results of these meetings were never more esident than during the year's two sales, when demand for NIEAG securities was strorg while other issuers were experiencing weak to moderate market appeal.

Our staff, numbering less than 50 for most of the year, made a tremendous contribution to the year's successes. Their dedication, professionalism and tenacity was much in evidence during 1980, enabling us to accommodate an ever-increasing workload with only a smallincrease in the size of the staff.

Finally, we are grateful for the continuing support given us by all of our participants -

in the day-to-day accomplishment of our goals. Without exception, they are interested, enthusiastic and knowledgeable about what our team has accomplished thus far and w hat we hope to do in the years ahead in order to supply electricity to them w hen and w here they need it and at the lowest possible cost.

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G. N. N1anley Doneld L Stokley Chairman General Nianager s[

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i Review of Operations Generation and Trarnmission Total Energy Delisered to MEAG Participants-1980 IN THoOSAND4 of Mw H De record-breaking heat wase which literally baked much of the country last summer pushed electrical consumption in Georgia to new peaks almost daily dunng mid-July. The 600 scanng heat. combined with a lack of rainfall to bring esen temporary relief. peaked at 109 degrees that month a new record for the state.

It was only natural that such high temperatures w ould cause more energy use than eser before.as Georgians turned on air conditioners in record numbers to escape the heat.

The state's terntorial peak load mark was shattered on July 8. 9.10 and 11.and these 450 records were topped stiu further on July 16, when the peak demand measured at the generators rose to 11.154.000 kilowatts (kw). an increase of 9.2 percent oser the 1979 peak penou. Between the hours of four and the o' clock on the afternoon of July 16, when the highest demand of the year was experienced. NIEAG participants wer using 9.6 percent of l

the terntory's electrical output. Total deliscred energy to participants last year rose 9.37 percent to 4.77 billion kilowatt hours (kwhk a sharp climb from the four-tenths of one 300 I'

percent rise in delisered energy the presious year.

Load management messages or calls to all participants are made by members of the NIEAG staff each day during which the possibility crists that a new peak will be established. In 1980. these calls went out on 17 days, a 30 percent increase from 1979.

Although precise data is not asailable on the extent to which peak load was reduced, the g

reduction was certainly significant because of the number of participants who either manuaUy or electronically interrupted operation of pumps. motors, water heaters and air conditioners for sarying intersals during peak periods.

During the y ear, an additional 3esen participants installed electronic load management systems, adding seseral thousand switches which turn off high current l

consumption items on a scheduled basis during potential peak load periods.

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Resersing the trend of the past three years, bulk power costs to our participants

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rose dunng 1950 to 26.86 mills per kw h. His 9.9 percent rise was experienced because of g *jf4*gg gg increasing operations and maintenance expenses; nsing administratise and general expenses associated with the generating plants: higher fuel costs and increased costs of supplemental power purchases. Bis chart shows cost comparisons in mills per kwh for the presious four 3 ear period:

iest Bulk Power Project Power Supplemental Power 1977 24.73 19.93

26. I I l978 24.61 20.56 26.86 1979 24.44 I8.58 31.47 1980 26.86 21.57 35.89 We arejustifiably proud of our record in holding down bulk power costs to our l

participants during our four years of operation. Looking to the future, howeser, we are projecting increases in energy costs oser the next fhe years. With double-digit intiation.

interest rates on municipal bonds oser 10 percent, and escalating material costs nd wage rates, such increases are to be expected. On the brighter side. howeser. these increases l

shoaid approximate the rise in the cost of tising oser this period. so in terms of constant

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dollars the cost of electricity should remain lesel.

Although bulk power costs did increase during 19x0, the increase w ould have been l

greater had our project power's share not risen significantly, from 54.4 percent of total bulk energy to 63 percent. Additional project power meant less supplemental power purchases were required at a cost of nearly 36 mills per kwh.

No new generating sources were added by N1EAG during 1980, but capacity retention of the four operational units did increase, as show n in this table:

Project Rentention of Each Unit 1979 1980 Ow ner-Capacity Percent Capacity Percent Unit ship Retained Retained Retained Retained Hatch I l 7.79 83.5 mw I l.06 84.8 mw 11.06 Hatch 2 17 7 67.7 3.85 6a.6 8.85 Wansley 1 15.1 82.0 9.43 81.6 9.43 Wansley 2 15.1 65.7 7.55 82.2 9.43 3

Total Energy Delisered to MEAG Thera are many ways to measure the performance of any generating unit. but Participants two of the most commonly accepted methods are availability and capaeity factors. To IN rHot % OD% oF \\1WH compute asailability of a urut, the total number of hours the unit was asailable to generate is dhided by the total number of hours :n the > ear. Capacity factor is stated as (N actual kw h 5l g

j produced as a percentage of the maximm which could hase been produced during the

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i year. Here are the 1980 capacity factors and asailabil ty of the four operating units in w hich j

we hase an ownership share-l' nit Asailability Capacit) Factor 4

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i Wansley I 92.5F 85# r c

Wansley 2

76. lF 68.8F 1

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Hatch I 82.5F 70.(G 1

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Hatch 2 59.6 4

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l' As is esident from this data, all of the units performed well, helping to hold down l

l energy costs to a great degree, but the star performer would hase to be Wansley I on any 1

judgmg scale. T1us 865 mw urut ran at sirtually maximum output from May 9 until i

Nosember 22 with only slightly less than four days out of service for maintenance. Hatch I'

I s's also an outstanding performer during a year w hen demand rose almost 10 l

percent. Wansley 2 also ran abose industry standards, while Hatch 2 fell slightly under the l

l 60 percent availability mark only t ecause of an eight week outage in March and April for turbine vahe testing, and another shutdown for refueling and modifications which began I:i on Nosember I and continued through the end of the year.

A combustion turbine unit with a generating capacity of 42.600 kw was put into l

I commercial operation at Plant Wansley in mid-Nmember. This $13.9 million installation, of ahich M EAG will purchase a 15.! percent share for 52.1 million, prosides a capability 0

for the plant to produce its own energy for motors, pumps and blowers in order to restart the units following a system blackout if the plant was shut fown and isolated from other

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energy sources.

One of M EAG's major advantages to participants is our ability to utilize the state's total transmission network, called the Integrated Transmission Sprem (ITS). This f:ctor enables us to make use of Feneration from any source, to 'ap the system at any location and to consider construction of additional capacity sinually anphere in the state. As a pan owner of this system, we maintain an imestment in the ITS proportional to our maximum peak demand, but this imes ment varies from slightly under to slightly oser panty as the system expands. During 1%0, we were at or abose ownersh.p parity, resulting in credits of 5115, !$9.45. Our imestment in the ITS in 1980 rose to a total of 584.6 million, with approximately 20 percent of the 3 ear's 53.9 million expenditures spent for transmission line construction and 30 percent for substation facilities.

flecause M EAG's total baseload retained capacity is projected to exceed our basekiad requirements in 1981. etTorts to sell 50 megawatts of capacity to other power producers began late in the year. Members of the Engineering & Operations staff sisited two Georgia utilities and eight Florida firms to determine whether these organizations had any interest in such a purchase. Irutial response was favorable, and negotiations are continuing with two lirms. If agreements are forthcoming from these negotiations, they could result in additional revenues to M EAG of approximately $10 million oser a two-year period.

Low head hydro continued to receise our attention last year and a study done for us by Stone and Webster was completed in the fourth quarter. The conclusions reached in this study, based on current technology, eliminated the Sasannah Riser site near Augusta from current consideration. and showed that the other two sites did have potential for cost-effective generation, depending on the sarious assumptions used. The e two remairung sites, the Carters Lake reregulation dam in northwest Georgia. and the Andrews dam on the Chattahoochee in southwest Georgia, are undergoing further study and discussion to determine if they could effectisely contnbute to keeping electricity costs at a relatisely low lesel.

Primarily as a result of the Three Mile Island accident, utilities nationwide organized to find the causes af nuclear plant accidents, to eliminate these causes and to insure than an accident would not bnng financial ruin to a utility. The Institute of Nuclear Power Operations, or INPO. became fully operational in 1980 from headquarters m Atlanta and it dedicated to msunng the high quality of operation in nuc! ear power plants.

M EAG became an IN PO member in March. whenjoint owners of nuclear generating facilities were imited tojoin this industry-wide effort toward quality assurance.

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De Authonty also took steps to protect its ability to continue to prmide energy to participants in the unlikely esent of a lengthy nuclear plant outage. Under the terms of an agreement with NEll(Nuclear Electric insurance, Limited). MEAG would be reimbursed up to 5500$0 per week to buy replacement power if an accident imoking contamination took f5 ant Hatch out of senice for mcre than six months. NEIL is a mutualinsurarse organization and is backed by utilities owning nucleai generating facihties.

Because good planning is dependent on reliable data, the Authority staff undertook its first residential appliance suncy during 1980. His suney of 775 residential customers, completed m May in conjunction with similar suncys by Georgia Power Co.

and Oglethorpe Power Corp, resealed that 100 percent of the respondents owned refrigerators and television sets, more than half had freezers, two-thirds cooked on electne stmes and 83 percent had washing machines. Only 15 percent heated their homes electncally, but 69 percent of all homes had electnc air conditioning, divided almost esenly between central and window units.

During 1979, Georgia Power proposed to M EAG an exchange of ownership interests in Plant Scherer, the four-urut, coat-tired generating plant being built near Forsyth,in which the Authonty owned a 15.1 percent interest. The proposalimohed a swap of our interests in units 3 & 4 for additional 15.1 percent interests in units I & 2. After sescral months of esaluating this proposal, the staff recommended and the Authetity members apprmed this transfer of interests. The proposal was then taken to our participants, because their unanimous agreement was necessary before proceeding. In May 1980, apprmal of all 47 participants was receised, and Project Dree, as it is referred to, was of ticially established. The 1980 Series General Power Resenue Bond issue of 5150 million to finance the project was sold in August, and the transaction was closed on September 18 w hen our check for 566,742,992 was handed to Georgia Power Co. officials.

The advantages of this new project resulted in not only immediate sasings to the Authority's participants, but continued economies mer the long range. Because unit 1 i; scheduled to go into opera tion in Nmember 1981 and unit 2 two years later, construction costs will be lower and are more easily defined than for units destined to go on line in the mid to late Eighties. An added adsantage of this project is that the sellback agreement negotiat-d with Georgia Power for the Scherer units lits our forecast load growth cune much better than the one existing before this agreement. Our investment in the plant is expected to be approximately $440 million of a totalcost projected at $2.2 billion. A Total MEAG Participant similar change of plans for Plant Scherer was made by Ogiethorpe Power Corp., which Demand -1980 purchased 00 percent of units I & 2 At year-end 1980, unit I was 83 percent complete, n yw while unit 2 was one-third of the way to completion.

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De other generating plant under construction in which we hase an ownership share. Plant Vogtle,is approximately eight months behind schedule, but the two pressunted water reactors are still expected to be in commercial opera' ion in 1985 and 1987. 't year-end, unit I and the common facilities at the Burke County site were 19 percent complete, w hile unit 2 was 5 percent fmished. Total M EAG expenditures on the l

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project by December 31 were $146 million of a cost estimated at $488 million for MEAG's 17.7 percent share.

From the beginning of the Authority's role as a power supplier, Crisp County Power Commission was the only participant which purchased suppleraental power from a source other than MEAG. De Crisp purchases of supplemental capacity and energy were made directly from Georgia Power Co. simply because it was their least expensive option 600 under an existing contract. Dis cG. tract expired in 1980 howeser, and their most economical option shifted to the purchase of supplemental energy from M EAG beginning I

in July. This change is expected to result in an increase of 2.6 percent in MEAG's total l

supplemental energy sales.

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Legal and Regulatory i

in 1978, Appling County, Ga (the county in which Plant Hatch is located) filed a suit in U S. District Court questioning the Authority's exemption from ad valorem raxes. The t. J Distnet Court dismissed the suit in January 1979. but it was appealed by Appling County to n; ;

l the U S. Court cf Appeals for the Fifth District. On July 23,1980. the Court of Appeals

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j aflirmed the decision of the District Court. Appling County then had until August 6,1980 fj,jy9./

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to file a motion for reheanng, but this deadline passed without a filing by the county. A later M/WAP/Je e t/4'A 3

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MEAG Participant Peak Demand petition to the U. S. Supreme Court was denied by the court, effectisely ending this matter

(% MW ML 4%l RED AT DEt niR Y Pol % M in the Authority's favor.

1200, Two Georgia Power Co. requests for increases in the rates charged for supplemental power affected the Authority during 1980. The PR-4 (partial requirements, i

founh rate schedule) request went into effect on July 1,1979, w hile all panies to the case l

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continued negotiations. The Federal Energy Regulatory Commission (FERC)approsed a l

settlement in this matter on May 15,1980, resulting in increased resenues for Georgia Power l

l Co. of 58.2 million instead of the $20.7 million requested in the original filing. Because 900l l

i MEAG had been paying the requested rate for nearly eleven mor.ths, we received a refund I

of $3.46 million.

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Another partial requirements rate increase (PR-5) was requested by Georgia i

Power Co. on Apnl 4,1980, and was effectise Nosember i This requen amounted to 538.4 I

million additional resenue for the test year, or an increase o.'approximately 18.5 percent. At l

the Authority's December 1980 meeting, members approved a proposed settlemeM in th.is g

case w hich would permit supplemental ratene r24 about sesen percent with a moratorium on further increases until January 1,1982. Also agreed t3 in this proposed settlemtut, i

approsed by FERC on April 21,1981, were a number of terms and conditions favorable j

to the Authority which had been under discussion during seseral previous rate cases.

1 100 l t

j Participant Report

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Industry's continuing mose to the Sunbelt states was sery much in esidence in Georgia i

dunng 1980, and particularly sisible in our panicipant cities. Georgia's favorable climate, 0

low taxes snd a state-spon<ored Quick Start training program to prmide skilled workers at no cost to prospective employ ers all contributed to make Georgia one of the leaders in

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attracting new industry.

8 But another factor made M EAG participants particularly desirable locations for new or expanded facilities-their ability to proside a virtually unlimit-d supply of electricity at reasonable prices. All of these factors induced such industrial giants as TRW, Inc. to spend $20 million in Douglas and Thomasulle to expand an existing plant and build a rew factory for producing aircraft engine components, creating more than 600 new employment opporturuties.

And in LaGrange, Dow Jones & Co. announced plans for a regional printing plant for the Wall Street Journal and other Dow Jones publications. A cylinder head gasket plant, valued at $10 million, will proside an additional 200 jobs for LaGrange residents when the Goetze AG location goes into full operation, and another 200 employees will be needed to staff the Mallory battery facility there.

The Sunbelt Expo is not an industry, but the benefits to Moultrie, where it is held, keep increasing each year. This week-long exhibit of the latest in agricultural equipmer,t and farming techniques attracted more than 210,000 vi-itors in 1980, many of w hom were foreigners.

Delightet with the pruiuct quality from their Thomaston plant, Yamaha Music Manufacturing Corp. invested an additional S6.5 million to expand their electronic organ plant to 170,000 square feet and increased employment to 150 persons. In Fitzgerald, a S4.4 million imestment by Fitzgerald Railcar Senices, Inc.,in a railcar repair facility brought 125 jobs to tha community, w hile a new multi-mi!) ion dollar lumber and wood chip mill for Gilman Paper Co. prosided employment for 100. Increasing demand for baby clothes produced by Irwin Manufacturing Co. was the incentive for that firm to establish a plant in an existing Fitzgerald facility and hire 75 worxers.

Elsewl ere in participant cities around the state, Hercules Corp. began a S33 million expansion of their carpet tiber plant in Cosington, and Mobil Chemical added 52 million worth of office and manufacturing facilities to their plastic bag unit. Preparing for additional expansion of industry in their town, Cosington and Newton County purchased 235 acres with rail frontage for an additionalindustrial park. Cosington also decied to take advantage of the boom in cable TV by installing a municipally-operated system to sene nearly 5,000 homes. Like their neighboring city of Monroe, Cosington's network will also serve as the medium for electronic load management and includes prosisions for automatic meter reading.

The north Georgia city of Calhoun counted nearly 1000 new jobs and a capital 6

expenditure of S'O million resulting from their 1980 drise for industrial expansion. The Fafnir Bearing Disision of Textron, Inc., built a 350,000 square foot facility on 65 acres to prcduce and assemble beanngs, with jobs for more than 600. Also in Calhoun, Gardner Machines Dinsion of Litton Industries constructed a plant producing gnnding wheels for the automotise industry; w hen this 'mit goes into full operation, it will employ nearly 100.

And Consolidated Foods' Kahn's Co. unit bought an existing meat processing plant, spent 53% million to modernize it and hired more than 250 emplo>ees to staffit.

The story is much the same in nearly all of M EAG's participant cities. They are approaching industrial deselopment with the same drise and enthusiasm they comey to sisiting analysts, bond rating agency representatives and M EAG's institutionalinvestors.

And just as they haSe left these visitors impressed with their progessive attitudes and urtderstanding of what MEAG is trying to acco nplish for them, they have been unusually successful in selling their communities to new industnal prospects.

Administratise At the Authontf5 Annual Meeting held on July 16,it was announced that participants had reelected the three members whow terms npired in 1980 Mayors John Dent and Ed Pope, and Wallis Hardeman. During the Authonty meeting following the Annual Meeting, Chairman G. N. Manley was also reelected to head the Authority for an additonal one-year term.

As documented in last year's Annual Report,15 acres ofland just outside Atlanta's Perimeter Highwa> in northwest Fulton County were purchased in March 19'9 for M EAG's new office building. Site preparation began in March 1980,and M EAG's employees mosed into the new facility on February 7,1981, our fourth anniversary as a pow?r supplier. Equipped with a nun,ber of passise energy-saving features, the 30,000 square foot, twe-lesel building is atop one of the highest points in Fulton County. The ex'erior is of limestone,and the building is sited so t! at the winter sun's rap help provide majmum heating while the summer sun's higher angle is minimized by recessed tinted and dc,uble-glated windows. MEAG's omputer system is used as the heat source for the building) hot water supply, and when temperature and humidity conditions permit, sents t'tility Plant insestment open to allow outside air circulation through the building without additional heating or (includes Generating Plant, cooling. This modern facility not only will be more economical than our former downtown Transmission and Nuclear Fuel)

Atlanta location, but w all also add to the efficiency of our operations.

tuutiloss oF tot L us Because of increased needs for salary and benetit administration, both at the 800 professional and clencalleveb a p rsonnel ser ices section was established early in 1980.

Responsibdities of this section inAiejob classification,intersiewing qualified candidates, salary and benefit administration, equal opportunity and afiirmatise action compliance.

The size of the M EAG staff at the start of the year was 40, growing to 49 by December 31.

The data processing section expanded by four programmer-analysts because of our g

continumg shift from outside computer sources to an in-house capability, a move w hich should result in considerable dollar sasings as well is increasing our flexibility in l

information retrieval and utilization. Other positions added during the year included an

nternal auditor, a planning technician, a aunsmission engmeer and two accountants.

l

[

Personnel turnoser continues to be low, reflecting in part the challenge connected j

with the start-up and growth of one of the nation's leading joint action a;;encies as well as l

the resultingjob satisfaction from our team of dedicated professionals. All of our major accompShments can be attnbuted to hard working, thoroughly knowledgeable staff members utilinng their experience,imagmation and teamwork.

The Light Up Your t ife educational program for all Georgia sixth-graders reported in these pages last year grew by leaps and bounds. This effort to help young

00j Georgians learn more about electricity generation, transmission and use, plus a sampling of utility economics. had been completed by more that 30.000 students when the 1979-80 l

whool year ended. Beginning with the new school year in September 19:50, additional j

workshops were held for educatots throughout the state who had heard about the program j

from some af their fellow teachers and were eager to learn more. News of the program's of J

j/

success spread to other areas following publicauon of an article in an educationaljournal

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j

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/ p// p' / p / %p and requests were receised from sirtually esery state for copies of the workbook and

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N teacher's guide used in this program.

MEAG Total Hetenues Financial n wt uoss ot oot tras During a year of increasing inflation, nsing costs and spiralling interest rates, two changes iso l

f l

highlighted NIEAG's financial picture. First, we reached the billion dollar mark in l

l I

financmg, halfway toward our projected borrowings of over 52 billion. Secondly, our bond l

l i

ratings were upgraded by both Standard and Poor's and Nfoody's to AA.and Al, respectisely, l

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{

Two bond sales during the year brought us to the billion dollar milestone, a i

significant achievement for an agency less than four years old. The Series E sale of $125 l

I million on January 18 was made for a net interest cost of 7.87 percent, Reflecting the I

sotatility of the years bond r.arket, the August sale by the Authority of $150 nullion in 1980 Series bonds was priced at a net interest cost of 9.13 percent. Despite the fact that this sale occurred during a very difficult period in the bond market, NIEAG obligations sold readily, j

both in the institutional market and to Georgia investors, w hile the securities of otherjoint j

action agencies carried even higher intercst rates in the same selling period.

l Another achievement of which we are proud was the upgrading of all our revenue

{

bond ratings by the respected rating firms of Nfoody's and Standard and Poofs. Our A+

rating from Standard and Poofs was elevated to AA in August, followed by Ntoody's rise 50l f

to Al from A in December. These upgradings were especially noteworthy considering that NtEAG was one of the fewjoint action agencies in the country to experience a boost in l

ratings during 1980.

The following sentence, excerpted from Standard and Poofs report on the N1EAG i

upgrading, capeulizes their reasons for the higher rating and, we hupe, reflects the general feeling of the investmetti community regarding our securities:

)

i "Due to the strong track record of N1EAG, which reflects financial operations, o

strong management, and a lesel rate structure, coupled with a stable economic base,.. we I

hase upgraded the rating from *A+'to'AA '..

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f f

As might be expected, resenues for the year set new record highsjust as kwn consumption did, climbing 21 percent to 5143,484,674. Total resenues are composed of participant resenues, w hich were up 18.46 percent to $108,332,9$1, and sales to Georgia Power Co. under the sellback agreements, amounting to $35,151,723, an increase of 29.61 percent.

.\\lEAG Financing Schedule Anticipating a lengthy strike by members of the United Ntine Workers of America is sm tims or tmt i ans beginning in March 1981, we began stockpiling coal to meet this possible contingency last summer. By the time the strike began, more than four month's supply was on hand at Plant i,ooo! l l,

Wansley, our only operational coal-fired plant. Although approximately half of the coal 1

used at Wansley comes from non-union sources, the wisdom of stockpiling was prosen j

i hf i

during a similar coal miners'sinke in 1978, w hen many utilities saw their resenes dwindle i

to almost nothing during that lil-day walkout.

l l

I When the PR-4 rate case settlement was finally approsed by the Federal Energy j

j l

Regulatory Commission in May 1980, the Authority received $3 M6,404 in refunds as a j

result of osercollection by Georgia Power Co. In their desire for rate stability, Authority 400' i

i i

I members decided to retain sirtually all of this refund so that the 54.75 per kw charge for e

i j

l Project Two and supplemental demand could be retained for the fourth consecutne year.

I 1

I in 1980, the Authonty's resenues exceeded its expenses and cash resene l

i l

l requirements by $3,120,740, which was refunded to participants in Nf arch 1981.

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l l

A $100 million revolving credit and term loan agreement presiously used by the l

i j

Authority expired on March 31,1980, and was replaced by a new three-y. r $135 million i

l 1

agreement This new agreement is more advantageous to our financial operations because

}

i 2Y l

l of the incrtased amount at a lower interest rate. Further, funds used under the new l

i agreement air applicabie to all three projects of the Authority, w hile the agreement it j

replaced could only be used for borrowing for Project I, i

l i

The software package adopted in 1979 by M EAG to improse our rate of return on

]

j imestments became fully operational in 1980. This computerized system enables us to sciect the secunties which best meet our in estment requirements and also allows us to time our i

i l

purchases, sales or trades of securities for maximum advantage. An additional byproduct of I

this system is that it prosides us with accounting data in a form which allows us to e) j j j j;

/

immediat :ly update our general ledger and furnishes us with statistical data w hich we use to

/4' /

/

/[/[f

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/

esaluate and control our performance in the imestment area. Because our imestment portfolio during the year approached the $350 trullion range, it is important that imestment EZEZ Total all projects decisions are based on the most up to date, reliable information asailable, and this system um enonct iHREE

$2.185 bilhon meets these requirements in a ve.y timely fashion.

8

Auditors' Opinion Financial Section Contents Municipal Electne Authority Balance Slwets 10.11 statements o(Net Resenues We have eumined the balance sheets of Municipal Electric Authority of Georgia as of ami Accumulated Net Reunves 12 December 31,1980 and 1979 and the related statements of net revenues and accumulated net revenues and of changes in financial posit'on for the yearnhan ended. Our statements o(Chanses cuminations wcre made in accordance with generally accepted auditing standards and, in Financial Pontion 13 accordingly, included such tests of the accounting records and such other auditing p

g procedures as we considered necesary in the circumstances.

Supplementalsciwdule of in out opinion, such financial statements present fairly the financial position of the m,,,in 4.,,oggi,

Authority at December 31,1980 and 1979 and the results of its operations and changes in Bond Resolution Funds and its fina ncial position for the years then ended, in conformity with generally accepted Other Funds I4, 15 accounting principics applied on a consistent basis hWe aCh Our cuminations of the financial statements of the Authority also comprehended the sappienwntalSctwdule of accompanying separate balance sheets of the Authority's Power Resenue Bond mnges W Amts of tsw Resolution Project (Project One)ano General Power Resenue Bond Resolution Project.s Bond Resolution Funds 16,17 (Projects Two and nree) as of December 31,1980 and the related statements d net retenues and accumulated net resenues and of changes in financial position'or the Star

" *[**"'I*'

,,,,7,,,,,,, 3, then ended, and our opinion stated abose is to be considered as applying thereto.

Our cuminations also comprehended the supplemental schedules of changes in assets of the bond resolution funds and other funds of the Authority's Power Resenue Bond Resolution Project (Project One)and General Power Revenue Bond Resolution Projec;)

(Projects Two and Eree) for the year ended December 31,1980. In our opinion, such supplemental schedules, w hen considered in relation to the basic financial statements, present fairly in all matenal respects the information shown therein.

Deloitte Haskins & Sells Atlanta, Georgia February 27.1981 l

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i i

9

Balance Sheets MUNICIPAL ELECTRIC AUTilORITY OF GEORGIA 1980 Authority Total General Power Power Resenue Bond Revenue Bond Resolution Resolution Projects Project (Projects Two ASSETS (Project One) and Three) 1980 1979 l'tility Plant,at cost (Note I(c));

Electric plant:

Electric plant in senice 5353,360,733 5 30,888,192 5 384,248,925 5376,014.588 Construction work in progress 243,863,799 129,495,210 373,359,1,09 177,242,935 Total 597,224,532 160.383,402 757,607,934 553,257,523 Less accumulated depreciation 56,029,239 3.134,849 59,214,088 43,550,528 Electric plant-net 541,195.293 157,198.553 698.393,846 509,706,995 Nuclear fuel M.168,492 34,I68,492 23,264 % 6

' ss accumulated amortization 15,653,672 15,653,672 6,386,152 u

Nuclear fuel-net i8,514,820 18,5I4,820 16,878,414 Total utility plant - net 559,710,113 157,198,553 716,908,666 526,585,409 Special Funds (Notes 1 (0,2 and 4):

Funds restricted unc:er resenue bond resolutions:

Cortstruction fund 65,842,820 41,323,859 107,160,679 107.146,481 Debt senice fund, excluding deposits for payment of accrued interest 68.360,69I 41,244,991 109,605,682 70,107,750 Resene and contingency fund 7,070.725 485,292 7,556,017 6,430,I86 General reserve fund 1,030,333 1,030,333 501,285 Total funds restricted under revenue bond resolutions I42,304,569 83,054,142 225,3f ?,71I l 84,185,702 Bond anticipation note fund, excluding deposits for pa> ment of accrued interest 50,266.573 50,266,573 195,982 Total special funds 192.571,I42 83,054,142 275,625,284 134,381,684 Current Aswts:

Operating fund (Notes I (0,2 and 4) 21,417,274 3,354,807 24,772,081 22.074,573 Deposits in special funds for pa> ment of accrued interest (Notes 7 3 and 4) 23,431,296 d.728,971 32,160,267 22,525,131 Supplerr. ental power account ( Notes I (0 and 4) 14.353,439 14,353,439 9,560,903 Receinbles from Participants (Note 2) 1.i30,549 1,545,946 2.676,495 352,188 Other receinbles 3.140 1,944,275 1,947,415 334,120 Fuel stocks, at average cost 4,320,165 2,509,284 7,429.449 4,607,409 Prepa>ments 696.288 128.244 824,532 258,376 Total current assets 65,952.151 18,211,527 84.163,678 59,712,700 Deferred Debits:

Costs to be recovered from future billings to Participants (Note I (c))

30,600,434 I,398,300 31,998,734 20,608,442 Unamortized debt expense 8,721.056 t 517,519 13.238.575 9,159,880 Total deferred debits 39,321,490 5,915,819 45,237,309 29,768,322 Total Aswts 5857.554,896 5264,380,641 51,121,934,937 5800,448,II5 10

December 31.1980 and 1979 1990 Authority Total General Power Power Revenue Bond Revenue Bond Resolution Resolution Projects Project (Projects Two LIABILITIES (Project One) and Three) 1980 1979 Long-term Debt:

Power revenue bonds (Note 2):

Series A

$293,345,000 5 293,345,000

$295.635,000 Series B 148,120,000 148,120,000 149,075,000 Series C 74,740,M0 74,740,000 74,875,000 Series D 100,000. X) 100,000,000 100,000,000 Series E 125,000,000 125,000,000 1978 Series S 99.570,000 99.570,000 100,000,000 1980 Series 150,000,000 150,000,000 L'namortized discount t 1,552,178)

(3,170,131)

(4,722,309)

(1,140,030)

Total power resenue bonds 7'1,652,822 246,399,869 986,052,691 718,444,970 Bond anticipation notes payable (Note 3) 50,000,000 50,000,000 40.000,000 Totallong-term debt 789.652,822 246,399,869 1,036,052,691 758,444,9/0 Accumulated Net Resenues(Note I (d))

26,638,798 1,516,491 28,155,289 10.878,583 Liabilities Pa)able from Construction Fund 10,0$0,217 7.710,219 17.760,436 5,089,738 Current Liabilities, excluding current matunties of power revenue bonds, payable from debt senice fund (Note 2):

Accounts payable 7,781,763 24,491 7,806,254 2,907,552 Accrued interest on long-term debt 23,431,296 8.728,971 32,160,267 22,525,131 Payables to Participants 602.041 Total current liabilities, exd2 ding current maturities of power resenue bonds 31.213.059 8.753,462 39,966,521 26,034,724 Commitments and Contingencies (Notes 7 and 8)

Total Liabilities

$857,554,896 5:64,380,041 51,121,934,937 5800,448,II5 SEE NOTES TO FIN OCl AL STATE \\ TENTS ON P%GES IMO.

Il

Statements of Net Revenues and Accumulated Net Revenues l

41t!NICIPAL ELECTRIC AliTHORITY OF GFO' 'g For the years ended December 31.1980 and 1979 1980 Authonty Total General Power Power Re,enue Bond Resenue Bond Resolution Resolution Projects Projet (Projects Two (Project One) and Three) 1980 1979 Resenues:

Project power S 74.773,588

$ 15,211,939 5 89,985,527 5 65,033,148 Supplemental bulk power 53,499.147 53,499.141 53,535,324 Total revenues 128,272,735 15,21 f.939 143,484,674 118,568,472 Expenses:

Project power operating expe.'ses exclusive of depreciation and amortization of utility plant 44,686,274 13,015,731 57,702,005 45,25i,830 Supplemental bulk power purchases 48.298.600 48.298,600 53,535.324 Total 92,984,874 13.015,731 106.000,605 98,787.154 Depreciation and amortization:

Depreciation of electric plant 14,941,760 1.144,318 16.086.078 I1,839,264 Amortization of nuclear fuel 7.702.289 7,702.289 4,443,097 Total 22.644,049 1.144,318 23,788,367 16.282,361 lo.erest charges (and credits):

Interest on long-term debt 49,462,588 11,288,02I 60,750,609 46,787,981 Amortization of debt discount and expense 1,567,057 587,140 2.154,197 1,653,604 Interest on insestments 129.473.664)

(7,211,024)

(36,684,688)

(25.952.989)

Interest capitalized as portion of cost of utility plant (I4,121.247)

(4,289.482)

(18,410,729)

(15,583.307)

Total 7.434,734 374,655 7,809,389 6,905.289 Costs to oe c: covered from future bir.ing to Participants (Note I(c))

(10,817,324)

(572,969)

(11.390,293)

(7,398,559)

Total expenses i12,246.333 13,961,735 126,208,068 114.576,245 Net Resenues(Note I(d))

16,026,402 1,250,204 17,276,606 3,99?,22*

Accumulated Net Resenues-Beginning of year 10.6l 2.396 266,287 10,878.683 6,886.456 Accumulated Net Revenues-End of year 5 26,638,798

$ 1.516.491 5 28,155,289

$ 10.878.683

$EE NOTES TO FIN ANCI AL STATE \\ TENTS ON PAGES IMO.

12

Statements of Changes in Financial Position Nil'NICIPAL Et ECTRfC AUTHORITY OF GEORGIA For the scars ended December M.1980 and 1979 1980 Authority To'al General Power Power Resenue Bond Resenue Bond Resolution Resolution Projects Project (Projects Two (Project One) and Bree) 1980 1979 Sources of Working Capital:

Operations:

Ne: restnues 5 16.026,402 S I,250,204 5 17,276,606 5 3,992,227 Depreciation and amortization of unlity plant 22,644,049 1,144,318 23,788,367 16.282.36i Amortization of debt discount and expense 1,567,057

$87,140 2,154,197 1,653,604 Depreciation, amortization and interest deferred (10,817,324)

(572,969)

(11,390,293)

(7,398,559)

Total 29,420,184 2,408,693 31,828,877 14,529,633 Proceeds from power restnue bonds 121,634,003 I43,550,827 26),184,830 97,045,446 Proceeds from bond anticipation notes 50,000,000 50,000,000 Proceeds from facility sales 1.287,340 2,037,066 3,324,406 Transfer of electric plant facilities to Project Bree 8,990,928 5 ccialfunds 8,991,732 Li. abilities payable from construction fund 6,305,833 6,364,865 12,670,698 4,598.410 Total 217,638,288 154,361.451 363.008,811 125,165,221 lies of Working Capital:

l'tility plant additions:

Electric plant, net of accumulated depreciation at date of purchase of $2,937,363 in 1979 108.166,319 99,931,016 208,097.335 105,380,798 Nuclear fuel, net of test period amortization of

$498.967 in 1979 9,338,695 9.338,695 3,930,259 Transfer of electric plant facilities from Project One 8,990,928 Retirements of power revenue bonds 3,380,000 430,000 3,810,000 3,265,000 Payment of bond anticipation notes 40,000,000 40,000,000 Special funds 49,401,i14 41,842,486 91,243,600 11.345,965 Total 210,286,128 151,194,430 352,489,630 123.922,022 Increase in Working Capital (excluding current maturities of power revenue bonds)

S 7.352,160 5 3,167,021 5 10,519,181 5 1,243,199 Components of increase in Working Capital (excluding current maturaies of power resenue bonds);

Operating fund S 4,270,546 S ( I,573,038) S 2,697,508 5 3,120,309 Deposits in special funds for payment of accrued interest 4,168,721 5,466,415 9,635,136 3,219,188 Supplemental power account 4,792,536 4,792.536 (318,204)

Receivables from Participants 778,361 1,545,946 2.324,307 (3,283,099)

Other receisables 2.289 1,611,006 1,613.295 (158,238)

Fuel stocks 168.901 953,139 2.822,040 948,443 Prepayments

$23.154 43,002 566.156 188,701 Accounts payable (4,883,627)

(15,075)

(4,898,702) 1,234,531 Accrued interest on iong-term debt (4,168,721)

(5,466,415)

(9.635,136)

(3,219,188)

Pavables to Participants 602,041 602,041 (489,244)

Increase in Working Capital fexcluding current maturities of power resenue bonda S 7.352.160

$ 3,167,021 S 10,519,181 S 1,243,199 SEE NOTES TO FIN OCI AL STATE \\ TENTS ON P \\GES 16-20.

13

Power Revenue Bond Resolution Project (Project One)

~

Supplemental Schedule of Cho.nges in Assets of the Bond Resolution Funds at MUNICIP%L ELECTRIC AUTHORITY OF GEORGI A Cash and investments.

December 31, Debt 1979(2)

Proceeds (l)

Bond Resolution Funds:

Resenue Fund Operating Fund:

GeneralOperating Acount S 6,105,124 Payroll Account 28,173 Nuclear Fuel Account 9.037,946 Revolving Construction Account 247,323 Fossil Fuel Account 1,628,565 Working Fund 250 Total Operating Fund 17.047.381 Resene and Contingency Fund:

Renewaland Replacement Account 2,476,517 Decommissioning Account 1.364,560 Resene Account 2,085,450 5

55,000 Total Reserve and Contingency Fund 5.926,527 55,000 General Resene Fund 500.000 Construction Fund 78.201.776 89,804.276 Debt Service Fund:

Debt Senice Account 25,020.969 22,144,830 Debt Service Resene Account 46.811.091 10.963.324 Total Debt Service Fund 71,832,060 33.108,154 Total Bond Resolution Funds 173,507.744 122,967,430 Other Funds:

Supplemental Power Account 9,427,699 Bond Anticipation Note Fund 798,107 50,000.000 TOTAL

$ 183.733.550

$172.967,430 (l} Receipts from bond proceeds include interest receised at issuance (5777.830)and are net of ur:Jerwriters' fees (52,156.250)and bond discount t $654.150).

(2) Insestments exclude interest receinbie of 55.406.M4 at Deceinber 31,1979 and 59.451.387 at December 31,1980.

14

Other Funds For the year ended December 31,1980 Cash and Investments, Power Investment Disburse-December 31.

Billings Interest Transfers ments 1980 (2)

$ 75.172.715 5 321.878 Sf 60.193.888)

S 15.300,705 5!7,362 9.545,276 10.813,975 5 5,353,787 2,795 747,215 750.010 28,173 1,i19,340 9,806,427 5.560,274 14,403,439 24,313 47,333 90 623 228,346 61,689 20,480,1 l l 21,032,304 1,138,061 2,827 2.827 250 1,725.499 40.629.189 38.250.013 21.152,056 160.841 265.062 826.861 2,075,559 213.654 1,132,741 2,710,955 I89,659 (l89.659) 2,140,450, 564,I54 1.208.I44 826.861 6,926,964 103.842 396.158 1.000,000 12,859.532 (41.042,365) 77,731.670 62,G91.549 l.088,648 27,202,051 45,450,273 30,006,225 5.146.371 (5,141.970) 57.778.816 6.235.019 22.060.08!

45.450.273 87.785,041 15,172,715 21,809.924 (36.942.681) 177,559.522 178,955,610 56,728,175 1,205,500 (I,429.678) 51,944,I42 I3,987.554 2.244.030 38.372,359 42.036.396 49.378.100 5131,900.890

$25,259.454 5

5271.540.060 5242,321.264 l

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15 L

General Power Revenue Bond Resolution Projects (Projects Two and Three)

Supplemental Schedule of Changes in Assets of the Bond Resolution Funds MUNICIPAL ELECTRIC At'1 HORITY OF GEORGI A Cash and Investments, Debt December 31,1979 (2)

Proceeds (I)

Resenue Fund Operating Fund:

General Operating Account S 3,714,191 Resolving Construction Account 250,000 Fossil Fuel Account 892,430 Total Operating Fund 4,856.621 Resene and Contingency Fund:

Renewaland Replacement Account 257,088 Resene Account 175,550 Total Resene and Contingency Fund 432,638 General Resene Fund Construction Fund 24,469,746 5111.021,416 Debt Senice Fund:

Debt Senice Account 10,497,222 18,6!9,346 Debt Senice Resene Account 7,972,470 15,178,650 Total Debt Service Fund 18,469,692 33,797,996 TOTAL S48,228,697 S144.819,412

11) Receipts from bond proceeds include interest received at issuance 15693.662) and are net of underwnters' fees 62.s50,250) and bond discount (53,024.000).

(2)Insestments esclude mterest receisable of 51 i73.360 at December 31.1979, ar.d 52.823.797 at December 31,1980.

Notes To Financial Statements ML'NICIPAL ELECTRIC AUTHORITY OF GEORGI A I, General Matters and Accounting Policies Authority's entire interest in that plant.

(a) Ceneral Matters Project One, established and financed under the Power Resenue Bond Resolution adopted August 30,1976 as The Municipal Electric Authority of Georgia (the" Authority")

subsequently amended, consists of undivided ownership is a public corporation and an instrumentality of the State of interests in eight generating units, separately-owned Georgia. created by an Act of the 1975 Session of the General transmission facilities, and working capital required for the Assembly of the State of Georgia (the "Act") to supply Authority's bulk power supply operation.

electricity to local government electric distnbution systems.

Projects Two and Three, established and financed under the The Act prosides that the Authority will establish rares and General Power Revenue Bond Resolution adopted March 22, charges so as to produce resenues sufficient to coser its costs, 1978 and readopted April 19,1978. as subsequently amended, including debt senice, but it may not operate any ofits consist of additional undisided ownership interests in four projects for profit, unless any such profit inures to the benefit generating units. The Project Three ow nership interests were of the public. Forty-six cities and one county (the acquired from GPC in September 1980, as more fully desenbed

" Participants")of the State of Georgia have contracted for in Note 5.

power with the Authority, through tr,e i.uthority's projects.

The Project One, Project Twoand Project Three Power designated Project One, Project Two and Project Three.

Sales Contracts between the Authority and each of the forty-The Authonty and Georgia Power Company ("GPC")are seven Participants require the Authonty to provide,and the party to agreements goserning the ownership and operation of Panicipants to purchase from the Authority, all of the electric generating and transmission fac;1ities. GPC manages Participants' bulk power supply, as defined in the contracts.

the construction and op ration of the Authority's generating Each Participant is obligated to pay its share of the Authority's facihties and operation of the Authority's transmission operation and debt senice costs of each project.

facilities. These agreements require the Authority to sell to Supplemental bulk power supply is that portion of the GPC dec!ining portions of the output and senices of each Participant's bulk power supply :n excess of its entitlement to generating unit dunng the first eight to ten years of commercial Project One powerand the output and related senices of the operation. Fadure of the Authority to meet any obligation to other projeus Payments received by the Authority from the GPC under these agreements in respect of a specific plant Participants for supplemental bulk power supply are not wouki allow G PC to invoke its remedies in respect of the pledged under either resolution.

16

O For the year ended December 31.1980 Power investment Disburse-Cash and Investments, Billings Interest Transfers ments December 31,1980 (2) 513,896,100 5 48.335

$(l 1,749.866)

$ 2,194,569 448,842 987,635 2,670.658 5 2,480,010 28,633 (l2,046) 16,627 249,960 29,349 9.328,442 9,667,494 582,727 506,824 10.304.031 12.354,779 3,312,697 17,573 293,496 275,978 292,179 7,460 (7.460) 175,550 25.033 286.036 275.978 467,729 3.242.699 (192,24I) 98,380.843 40,160,777 901,953 2.I48,547 6.945,268 25,221,800 796,507 (796.507) 23,151,120 1.698.460 1,352.040 6.945.268 48,372.920 S13.896.100 55.521.351 5

$120.151.437 592,3!4,123 For the years ended December 31.1980 and 1979 The resolutions require that payments by Participants for principally depreciation and amortizathn of utility plant in project power be deposited in special funds and be used only excess of amounts billed to Participants and include certain for operation costs. debt senice, and cther stipulated purpecs.

interest charges and credits not currently reflected in the billings The.esolutions also establish specific funds to hold assets for to Participants, payrnent of project acquisition costs.

(d) Net Revenues Other funds are used to hold assets not subject to the restrictions of the resolutions but designated for specific A portion of billings prosides for deposits in the Resene and purposes.

Contingency Fund, Operating Fund, and the Supplemental Power Account and for payment of debt the proceeds of which

. I # "" "#

were used in the acquisition of initial worhng capital. There are The accounts of the Authority are maintained substantially in no expenses that relate to this portion of the billings; as a result, accordance with the Uniform Systern of Accounts of the such portion represents the Net Resenues for the period.

Federa! Energy Regula:ory Commission, as prosiderl by the Accumulated net revenues are invested in various funds of the Power Sales Contracts with the Participants, and are in Authority or la utility plant and are subject to disposition in conformity with genenlly accepted accounting principles. A accordance with the provisions of the resolutions.

separ.ite set of accounts is maintained for each of the I') C"D N#"'

Authority's projects.

(c) Costs to be Recoveredfrom future &//ings to Participants The cost of utility plant ir.cludes direct and oserhead costs and the cast of funds borrowed by the Authority and used for The Power Sales Contracts with the Participar,ts proside for cor.struction purposes.

billings to the Participants for output and senices of the Depreciation of electric plant is computed by the straight-project to proside for payment of current operating expens s.

line method oser the expected senice life of the plant, using payment of debt principal and interest (debt senice)and composite annual rates as follows:

deposits in certain funds, all in compliance with the bond 198a 1979 resolutions. Net costs in excess of the amounts currently billable Coal-fired Generatine Plant 3.69%

2.7e~c to the Participants are to be recovered from future project

("3ns n jen" Ntg Plant C!' r on PI resenues and are classified as a deferred debit. These costs are Distnbution Plant 3.66 %

3.10c*o 17

Notes To Financial Statements MUNICIPAL ELECTRIC AUTHORITY OF GEORGIA The estima:ed cost of decommissioning the nuclear Security investments of the special funds, the operating fund generating plant promptly after removal of each unit from and the supplemental power account are stated at cost plus service has been considered in the establishment of the accrued interest.

composite annual depreciation rate, Amortization of nuclear ftielis based on the quantity of 2, Power Resenue Bonds heat produced for the production of electric energy, GPC*

The resolutions authorize the issuance of Power Revenue acting for the Authority, has a nuclear fuel supply contract Bonds in the aggregate principal amount of $ 1.600,000,000 for whereby the ownership of certain spent nuclear fuel the purpose of financing Project One and the issuance of assembhes will revert to the supplier; no provision has been General Power Revenue Bonds in the aggregate principal made for nuclear fuel storage costs which might be incurred amounts of S260,000,000 for the purpose of financing Project if reprocessing services are not available when required for Two and S300,000,000 for the purpose of financing Project these nuclear fuel assembhes. For nuclear fuel assembh,es Three, Such aggregate principal amounts of bonds have been not subject to the above contract, provision is being made validated by courtjudgments, The :esolutions permit the for estimated storage and disposition costs, issuance of additional bonds for certain purposes, including When property subject to depreciation is retired or completion of the projects.

otherwise disposed of m the normal course of business,its Bonds issued under the resolutions are secured by pledges cost, together mth its cost of removal less salvage, n charged of project power revenues attributable to the respective to accumulated depreciation.

projects after paymet.t of their operating expenses, as well as The cost of maintenance, repairs and replacements of pledges of the assets in the funds established by the bond minor items of property is charged to mamtenance expense resolutions. Each Participant's payment obligations under the accounts. The cost of replacements of property (exclusive of Power Sales Contracts are general obligations to the payment minor items of property)is charged to utility plant accounts.

of which the Participant's full faith and credit are pledged, (f) Special funds Operating fund, and Supp/cmental Maturities of bonds outstanding at December 31,1980 were Power Account as follows-General Power Power Revenue Bond Revenue Bond Resolution Projects Year Resolution Project (Projects Two Authority Maturing Interest Rates

( Project One) and Three)

Total 1981 4.009 to 5.509 5 3,945,000 5

450,000 5 4.395,000 1982 4.200 to 6.We 6.080,000 470,000 6,550,000 1983 o.359 to 6.409 6,330,000 500,000 6,830,000 1984 4.509 to 6.404 6,610,000 2,235,000 8,845,000 1985 4.659 to 6.409 6,925,000 2,305,000 9,230,000 1986 4.809 to 6.409 7,690,000 2,505,000 i0,195,000 l987-199I 4,909 to 7.259 59,140,000 18,675,000 77,8'5,000 1992-1996 5,309 to 8.209 78,765,000 20,100,000 98,865,000 1997-200I 5.70G to 7.509 81,560,000 8I,560,000 2002-2006 6.009 o9.259 69,095,000 87,750,000 156.845,000 2007-20i!

6.20 %

I49,230.000 149,230,000 20I2-2016 6.!25Q to 8.00%

178,615,000 114,580,000 293,195,000 2017-2018 7.875 9 87,220,000 87,220,000 Total 5741,205,000 5249,570,000

$990,775 ora)

On January 15,1981, the Authority sold 575,000,000 rate plus 2Fe, to a maximum of 10%c~o, Under the principalamour t of Power Revenue Bonds, Series F, with agreements, borrowings for individual p-ojects reduce the interest rates ranging from 7,10c~ to 109 and with annual amount available for other projects. Compensating c

matunties and sinking fund requirements to 2014.

balances of $500,000 are to be mainuined but are not legally restricted as to withdrawal,

3. Revoising Credit and Term Loan Agrecments in April 1980, Project One borrowed $50,000,000 in Term Revolving credit and term loan agreements between the Adunces maturing March 31,1983, Authority and a group of banks allow the projects to At D ccmber 31,!979 the Authority's Project One had borrow up to SES,000,000 in Revolving Credit Advances borrowed $40,000,000 in Term Advances under a previous and 550,000,000 in Term Advances until March 31,1983.

agreement. These Term Advances were repaid in 1980 with These advances are to bear intereat at 45Fc of the prime procteds from the issuance of Power Resemie Bonds, Series E.

18

For the years ended December 3f.1980 and 1979

4. Special Fands, Operating Fund, and Supplemental Gosernment agencies and in securities collateralized by securities of tiu. U.S. Government and Gosernment agencies. At Power Account Decemb:r 31, M and th AusoritM cash ahsty he Authority is authorized under the resolutions to invest imestments as follows:

its funds in securities oi' the U.S. Government and Total Cash Secunties*

1980:

Power Resenue Bond Resolution Project:

Special f unds (including 523,43 I.296 classified 5216.002.438 5 725.329 5215.277,I09 as current assets) 21,417.274 417.072 21.000,202 Operating fund 14.353.439 116.019

1. 237.420 Supplemen:a! power account 5251.773.151 51.258 420 5250.514.731 Total General Power Revenue Bond Resolution Projects:

5 91.783,113 5 226,153 5 91.556.960 Special funds (including 58,728,971 classified as current assets) 3.354.807 133.041 3.221.766 Operating fund 5 95.137.920

$ 359.194 5 94.778.726 Total Authority Total (including 571.285.787 classi6ed as 5346.911.071 51.617.614 5345.293.457 current assets) 1979:

Authonty Total (includine $54,160.607 classified as 5238.542.291 54.460.752 5234.081.539 current assets)

• Primarily short-term secunties, at cost which approximates market, and accrued interest.

Projects One and Two and to supplemental bulk power for the

5. Facility Sales and Purchases peried fr m June 26,1978 to June 30,1979 relating to a The Authority and GPC entered into the Plant Robert W.

E'*"

Scherer Purchase, Sale, and Option Agreement on May 15, 1980. On September 18,1980, the transactions contemplated by

7. Acquisition and Construction Program the agreement occurred,as follows:

GPC purchased the Authority's entine 15.lc~c undisided The Authority has substantial commitments in connection ownership interest in each of Scherer Units 3 and 4 for with the acquisition and construction of the projects. The present estimate of the totalcost of acquisition and construction 53,324 106. The Authority's 15.106 irnerests were held 10.0cc by Project One and 5.le'e by Project Two.

is $1,856,000,000 for Project One and 5355,000,000 for Projects The Authority purchased an additional 15.le'e undisided Two and Eree. For power restnue bonds in an aggregate ownership interest from GPC in each of Scherer Units No. I principal amount in excess of SI,600.000,000 for Project One and 2 for $69,756,047. These additional ownership interests and $560,000,000 for Projects Two and Dree the Authority are held by the Authority's Project Three.

would be required to obtain a validation judgment for the The prices are,in part, based on estimates and may be additional amount.

l subsequently adjusted by the parties.

Delays in construction or changes in emironmental and Also, the Authonty transferred certain interests in Plant regulatory standards could increase the cost of the facilities Scherer common facilities from Project One and ProjectTwo t and require billings to Participants for debt senice associated Project Three. The net cost was $8.990,928 for the Project One with partially completed facilities.

facilities and $4,184,279 for the Project Two facilities.

An operating license must be obtained from the Nuclear Regulatory Commission prior to operation of a nuclear unit.

6. Refunds from Georgia Power Company 8 C "'I"E*"*I*S The Authority was charged under partial requirements rates Nuclear fuel reprocessing senices are currently not by GPC, which were subject to refund, for the period from commercially available. The unavailability of reprocessing July 1.1979 to Apn] 23,1980. In May 1980 the Authority senices when needed would necessitate arrangements for received a refund including interest in the amount of 53.385,374 perta'ning to Project One and to supplemental bulk storage of spent fuel at substantial cost.

The Price-Anderson Act limits the pubik. 'hbility of a power and of 581,030 pertaining to Project Two.

licemee of a nuclear power plant to $560,tE LOO for a single During 1979 the Authority received a refund including interest from GPC in the amount of $6.074.603 pertaining to nuclear incident, which amount is to be covered by prisate 19

Notes To Financial Statements MUNICIPAL ELECTRIC AUTHORITY OF GEORGIA For the years ended December 31.1980 and 1979 insurance and agreements ofindemnity with the Nuclear weeks after the outage) for or e year, and $150.000 pec week on Regulatory Commission. Such private insurance (in the Plant Hatch Unit No. I and $100,000 per week on Plant Hatch amount of $160.000.000, the maximum amount presently Unit No. 2 for the second year. N! embers are subject to amilable) and agreements of indemnity are carried by GPC retrospective premium assessments of up to five times their for the benefit of all co-owners of the plants. Effective August respective annual premiums if losses exceed the accumulated 1977,as part of a program to phase out the gosernment funds available to the insurer. The Authority's annual indemnity portion of the public protection program previded premium for both Units is $410.000.

by the Price-Anderson Act, each licensee of a nuclear power GPC, on behalf of all the co-owners of Plants Hatch and plant became obligated,in the event of a nuclear incident, to Vogtle,is a member of Nuclear Ntutual Limited,a mutual pay a deferred premium of up to $5,000.000 per incident for insurer established.o proside property damage insurance to each 16ensed reactor operated by it but not more than members' nuclear generating plants. In the esent of

$ 10.000,000 in a calendar year. The government indemnity catastrophic losses to the insurer, the members are subject to was, after such date, reduced by the aggregate amount of all assessments in proportion to their participation in the mutual deferred premiums payable. The Authority is liable for its insurer. The portion of the maximum present assssment for 17.7C* share of any such deferred premium.

GPC which would be pa>uble by the Authority is c

The Authority is a member of Nuclear Electric insurance approximately $4,860,000.

Umited, a mutual insurer w hich provides insurance to coser 9.

c Heatm.n Amants members

• costs of replacement power resulting from a prolonged accidental outage of nuclear units. The Authority is Certain amounts included in the Authority's financial statements insured up to $300.000 per week on Plant Hatch Unit No. I for the year ended December 31,1979 have been reclassified for and $200.000 per week on Plant Hatch Unit No. 2(starting 26 comparability.

GeneralInformation MEAG Corporate Office Bond Coumel M ANAG EMENT 147n Riseredge Parkway Otiser Maner & Gray Atlanta. Georgia 30323 Savannah, Georgia Donald L. Stokley

(>04) 952-5445 General Manager Trustee General Coumel The Citizens and Southern Paul R. Heim L Chfford Adams,Jr.

National Bank Directorof Engmeenng Elberton and Atlanta. Georgia Atlanta, Georgia and Operations (Partner-Heard. Leserett and Adams)

Co-Trustee Paul F. Jackson Financial Adsisor Trust Company Bank Directorof FinancialSersices In Jolicy & Co.. Inc.

Atlanta, Georgia Atlanta. Georgia Mack D. Secord Director of Public Information Consulting Engineer R. W. Beck and Associates Orlando. Florida 20

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