ML20033A741

Annual Financial Rept,1980

ML20033A741
Person / Time
Site:	Comanche Peak
Issue date:	11/23/1981
From:	TEXAS MUNICIPAL POWER AGENCY
To:
Shared Package
ML20033A729	List: ML20033A731 ML20033A733 ML20033A734 ML20033A735 ML20033A738 ML20033A741 ML20033A742 TXX-3438, Forwards Amend 1 to Application for Ol,Per R Tedesco 811006 Request & Annual Financial Repts for 1980
References
NUDOCS 8111270201
Download: ML20033A741 (27)

Text

t STATISTICAL ll!GHLIGHTS har tie yars enJalSartordwr 30.1980 and 1979 1980 1979 Facilities Gibbons Creek plant completion 15T 107; L>manche Peak Station completion 75CT 657f Lignite resources (millions of tons) 79.2 69.9 Transmission lines - Agreements have been consummated with two other utility systems to integrate TMPA's facilities into the Texas high voltage power grid.

Financial Infbrmation Total revenue bonds outstanding

$850,000,000

$600,000,000 Average annual debt service S 70,725,000 S 46,121,000 Average borrowing cost for issues outstanding 7.5 3c; 6.86';;

Interest earned on investments S 36.070,000

$ 27,5a1,000 Bond rating - Moody's/ Standard & Poor's A/A +

A/A +

Electric System Net energy for load (kWh sales,000) 2,578,207 2,320,822 lcak demand (MW) 628 538 Customers 81,385 78,626 Savings realized through economic dispatch S

486,722 S

485,955 I

Ort ilt Centr:

The Thai Alanicipal Pouer Axou) is a uparate municipal aspiration. a p<,liti<al sulubrision <f the state and a IxJ> politic m tra+ l~u<< noua&re nts at411, "I'" I' i"'" "h " h " *

ad cintsate. It uas ataldished m 1975 by the cities if Bryan.

I&el is n~nd ajhr a anir a jkm Dentsn. Garland and Grcon d. ie to pantly plan. finance, coin-it,,,,,,,e.11.,a,,gt,, aw,7 g ay,,,

struct and upoute dectriad gouration and transmissionficilitia rive no uk. sna 50.01ro tons ri I'K"""I"<acdI'*':th "!In-to mat their a: erg) nads.

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Ibdeers: Certainly, but Grst I would like to give you A

some background on the options available. Some large utilities with continuous construction programs have a b, rom u- - anaUement

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g plants. We are too small to do this; it would be very A

expensive to hire an entire staff with all the necessary expertise and have no need for them when Gibbons Mien a new utility is created Creek No. I is Gnished. The other extreme is the " turn-key plant,' where the utility buys a packaged system, to Supp1y energy at a 1ower sc,, ao.o,3, yo,una ruies ana then removes itseif from Cost than its customers would the construction process. This way the utility pays what-ever it costs, including the price of mistakes, and there pay e1sewhere, peop1e start is no mc,noa or inso,iny,n,,,nci, o,;yio,,,oics c,c asking questions. They want to know about the organi-

followed, ation's structure, its accomphshments and its plans for the future, and they want the answers to come from top Our system is somewhere in between the two extremes management. The questions asked of TMPA President nd n t unlike programs used by other utilities without Richard Smith and General Manager Joel Rodgers in a permanent construction staff. We call it a " matrix" or the following interview have been raised by our inves-

" integrated" organization. Agency employees man ge tors, the financial community, electricity customers, and the overall program, keeping tabs on progress and ex-iur employees. The answers are straightforward and penditures via a new computer system. This way we can iecessarily brief. Readers are invited to contact Mr.

nticipate changes in costs and scheduling and alter our mith or Mr. Rodgers for more information.

c urse as necessary. We bire contractors with substantial resources and experience in specific areas, for example,

.ustion: What major changes have taken plate in the mine development, dam building or ioiler erection. If eency over the past year?

they do not perform as well as expected, we can replace (b4gers: The most visible change is in our staff. We are iow able to plan for and acquire the people we need as We decided to use this system because we believe we e move from a development stage organization to one care more about bringing the plant in on schedule and in full operation. Since 1979, we have added 28 people on budget than any contractor possibly could.

knd I am proud to say that the Agency is well-equipped r plant completion and start-up.

Question: What do you think was the Agency's most signi6 cant accomplishment in 1980 from the perspective am especially pleased that our construction manage-of the Board of Directors?

%ent team is in place. This is a crucial factor in meeting yur goals for scheduling and cost control.

Sinithe Unquestionably, the staffing effort that was be-gun two years ago is now beginrmg to bear fruit. We guestion: Your system of construction management for have achieved a degree of stability and maturity in our jhe Gibbons Creek project is some.vhat different from professional staff that was lacking before, and this is the hystems used by other utilities. Would you describe how Agency's most significant accomplishment. Equally im-fou use this system for scheduling and cost control?

portanc, but perhaps less apparent, is the fact that we

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i are still on schedule and within our budget. Every year, fate of nuclear plants are gradually being transferred I

not only in 1980, that a the key factor, the bottom line. from the hands of the owners to the hands of the regulators. A single plant or site is no longer an isolated Qaestion: How do you de6ne the role of the Cities with entity whose product depends only on the people w ho j

respect to ThtPA? What are their rights and what are build and operate it. Another accident like Three Stile their obligations?

Island would affect every plant in the country.

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Smith: From the time I began to serve on the Board, I Aty experience in the nuclear industry has helped me to,

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have felt that the ThtPA organization should mirror the evaluate the abilities of companies involved in building needs and aspirations, the limitations and the political Comanche Peak. I would put them up against any other realities of the Cities that formed it. This means it will nuclear team anywhere in the world! I think that my have some of the characteristics of a municipality. At the opinion will be confirmed by the regulatory structure in same time, the Agency operates in a Reid which is the process of obtaining operating licenses.

dominated by private companies. Thus, we need to be aware of, and sensitive to, conditions throughout the Question: The Agency has made several transmission power generation industry as we compete for talent.

agreements with other utilities in Texas. What were i

your reasons for doing this? Do you plan to seek other l

The Agency needs to have some independence in order such agreements?

to get the job done. However, it is basically a creature of i

the four Cities. They are obligated to provide both Rdecrf: We chose to do it for two reasons: it prevents t

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financial and " moral" support, elect Board members duplication of facilities - transmission towers and high !

l who are competent to set policy, and purchase the power voltage lines, and it saves money for the Agency and its p the Agency produces. In return,the Ci ies are entitled to customers. Because some of the lines we wil! be using t

receive power at a price that is lower than they could were already built, we avoided over $150 million in achieve on their own.

capital expenditures, plus the associated borrowing cost.

In addition, these agreements help us as an emerging l

Question: Do you see any advantages in having state or utility to build our credibility within the industry.

federal regulatory bodies set TMPNs electric rates?

i We certainly will h>ok for other possible agreements that l

Smith: No. In effect, ThlPA is already regulated by those help us to meet our primary goal-keeping the price who are closest to the retail customers. The Agency's of TMPNs electricity down.

l Board of Directors is appointed by the City Councils, which are elected by the customers of the municipal Q"eftion: There has been some question about public l

utilities. Since the Board sets the wholesale rates for power's ability to recruit and retain competent em-TMPA. you might say that regulation takes place during ployees. Have you had problems in this arca and if so, cm dm tions each April.

how have you dealt with them?

i Rd ers: Yes, but we have mide several mcves to resolve i

Qsotion: Do you feel that new licensing and regulatory K

I requirements for nuclear plants could delay commercial them. We offer innovative l ene6ts programs, a desirable'.

l operation at Comanche Peak?

k> cation and the challenge olhdpq to build a new utility. People are beginning to e ear about these pro-Rdgers: It is impossible to tell. Decisions affecting the gums around the state and within the industry, and i

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row they seek us out. We no longer have to "bert the wrong. For example, suppose that enost studies show lushes" for quali6ed candidates, that building a new lignite plant is our least expensive option for power supplies in 1990. Under the Reagan gs we have gained stability we %ve also reduced our administration, there could be some fundamenta!

Ecrition rate. In the Sve years imce we b gan, we have changes in the energy industry that would reduce the lad our share of morale problems stemming from a lack cost of nuclear power dramatically. Ir that case, it might af formal policy and direction. Now we are developinF be economically advantageous for us to buy more nu-policies, procedures and programs that help to de6ne clear instead of using lignite. That is only one scenario aur working environment and make people want to stay for the future - there are many others. We will cer-eith us. For example, we base increased the number of tainly do our best to plan wisely, but along with all our somen and minorities in professional positions and efforts, I hope that we are blessed with a healthy portion made some significant promotions from within Now we of gmd luck.

lind that the same things that help us to keep our good imployees enable us to attract new ones.

Question: What do you see as the biggest challenge for quotion During the past year there have been studies relating to a possible second unit at Gibbons Creek. D Rodpft Our biggest challenge is to take advantage of all you think that the Agency will decide to build one?

the oppornmities we have for saving money, thus keep-Why or why not?

ing the price of our product as low as po,sible. For ex mple, leveraged le sing of our draglines, recently smith: Right now I simply do not know if we will decide to build another unit at Gibbons Creek. The ppmved by the Board, will reduce our capital expendi-

'"'8" Board supported an independent study, which was just completed in December, to help determine what our We have our work cut out for us and it is a large and next source of power should be. It includes evaluatmns complex j. b. Obviously we want to get the power plant o

of a long h.st of possibilities for future supplies. The built m the shortest time and the most cost-effective suits of this report will be an important factor m next way possible. At the same time, we do not want to lose year's decisions. W,e expect to discuss them early m. 1981 sight ofinnovative ideas that can translate into consid-end we will be able to say more about the feasibih.ty of a erable savings. One of my personal goals as general

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r is m pm the Board with methods for Quation: What do you see as the biggest problem that keeping the cost of our product down. I intend to make che Agency has to solve within the next few years?

every effort to gather all the necessary facts, present them clearly and be ready to answer the tough questions Smith: Our biggest problem is in the area of power I know will come.

planning. The uncertainties of conservation, regulation, energy pricing and political attitudes, coupled with the Making these ideas work for us is one way to counteract need to think six or more years ahead about new gener-the effects in areas where we have no control. Working sting plants, make planning extremely dif6 cult. I do together, I am convinced we can fulfill the Agency's not believe that anyone can predict accurately what our promise - providing reliable electric power to the needs will be ten years from now. Chance plays a tre-Cities at a lower cost than they could achieve on mendous part in determining whether we are right or their own.

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i C al-The first piece of the TMPA

" puzzle" surfaced back in 1963. This was the need for installed reserves for the C/:..<!y iA-7ha< 3 Ira:7 + <! P. w r A c 13 a tai /n3 es I:see cities of Bryan, Garland and Greenville and the

.- ' te r tie.s h er. ric v I:, on varo a /< e 4 tre Brazos Electric Power Cooperative. " Installed reserves" v ;:, -tn i ice.

ared :/ ri: n pr a ig o - l:.l!. ;;n i m,p/zo refers to power generating capacity which is available r:.

Tia n 'i a ni, when some of the plants are shut down for maintenance

th i:n., r < r.a;:tal a :! ral:atact na n get i,.m tw t /<d i : la m er !3fP.D r.r-s

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and repair. The municipal systems of the three cities t

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and the Brazos cooperative agreed to interchange their reserves, coordinating scheduled shutdowns and the 1,it! ar!); p i>nre!7a.,cire i ed -

/ Air building of new units as the need for additional capaci-i J tr: :n _; r /m ue re

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ty arose. They alsc benefitted from coordinating the i

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use of their other facilities, helping to minimize the A.

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cost of power by choosing, whenever possible, the least m

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tricity among themselves. This sharing paid offin both crs. v;c 7d < m venn reduced investment and reduced cost of operation.

Perhaps more important, service became more reliable

- it was less likely that customers would lose power 4 a v: i c. 3 '. m.m.:s :

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when a plant had to be closed down.

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n There were other benefits, too. Together the Cities a

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n enjoyed more recognition and c edibility in the utility

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industry. The advantages and the savings inherent in this arrangement eventually attracted another Texas city.

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Denton joined in 1969, allowing the economies of Ti: n; *. < /: m r/ 4

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f scale to work even better for the participants.

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tia !:uo rn b 'er 73fPA im f, v: is / c r/ < 1 rna aa ur individual systems were relatively small, less than 150

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Tis al,* v. s. m ocr n i, w megawatts (MW), and fueled with natural gas (although rix m ij "' t/3 ; rmet.u:.! t/ c im.o./ i some cauld switch to oil temporarily in an emergency).

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Ik Gibis,m Cmh Steam Elstric Sta-tz<,n uar uter 509 u,mphte ta kn this ph tograph uas talen in [)an:lc 1980. Ik hgnarfadarrrin jm six mine andis trantirred b a,mme to tie ange 3dus. Shiun at tk hft. The hgnac ts burncJin de Ixdcr. suppera h tk a<dildet n at av right. 7k aluwt gases pan skuih tarzw p lation s0ntrJ. Lues and an fm ok 4M-jnt high u.a6. Ik darrnity gen 4

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the formation of the Texas Municipal Power Agency.

the plant could be built near the source of fuel, elim-First, the notorious winter of 1973-71 spawned unprece-inating expensive long-distante transportation. 51ost of dented price increases and government restrictions on the Texas coal is lignite, which has a lower energy the use of gas and oil as boiler fuels. Second, the content than coal found in other parts of the country, {

participants, acting together, commissioned R. W. Ileck but there is an abundant supply ofit. Engineering and Associates, an engineering Grm experienced in feasibility studies done for the Cities conGrmed that a power planning, to study their future electricity needs.

large lignite-fired plant, located at the mine mouth, The resulting report, submitted in Starch 1975, showed would be the best long-term choice for future power that, without additional power sources, there would be a supplies. T he best available site was Grimes County, shortage of capacity among the systems, starting in 1981 northwest of Houston. They began discussing a formal and growing to almost 500 MW by 1986. An added joint venture which would enable them to save money problem was the limited fuel storage for units that could by doing something together that none could do alone.

use oil as a standby.

The problem of obtaining the money, however, was still People in the Cities who were familiar with the advan.

unsolved. For the Cities to act together, they needed a tages of the past joint efforts were thinking about the vehicle with the legal authority to secure financing for possibilities under these new ground rules. As long as large projects. In 1975, the Texas Legislature passed a the load continued to grow, nearly twice as much power law, Article 1135a, Vernon's Texas Civil Statutes, that would be needed within ten years. The principle of allowed such joint action. The result was the birth of the economy of scale pointed to larger plants rather than Texas hiunicipal Power Agency on July 18,1975, ac-smaller ones. The planners recommended a " base-load"

. omplished by the passage of concurrent ordinances in unit, one that generates at full capacity all the time the Cities.

(except during maintenance or repair work).13ase-load The new law gave ThtPA the needed power to issue plants are built to supply a continuous flow of power, lmnds for financing its projects. Revenues received from unlike intermediate or peaking units, which are oper-ated only as supplements to base-load generation.

the sale of electricity to the C.ities would be used to back the bonds. Thus, the Cities electric systems are TMPA's custones and TAIPA is in effect a wholesale The Cities knew that with a larger plant, the cost of electricity would be less. And, if their neede dictated a utdity.

unit with 100 MW or more of capacity, they could Since TMPA is a government entity, it pays no property consider fueling it with coal, which looked like it wculd tax, no income tax, no sales or use taxes and its bonds provide better long-term cost stability thart natural gas.

are tax-exempt to the holders. This is one key to public The combined load forecasts justi6ed the size, but the power's potential for providing electricity at a lower cost price of several hundred millions of dollars was far than an investor-owned utility.

beyond the financing ability of any single City. Up to this point, the Cities had owned their own plants and Should the needs of the Cities change or should more bought and sold power among themselves. Now the cost-effective opportunities appear, the structure of the conclusion was that one large coal-fired plant shared Agency can be changed by the add;aon or deletion c,f among them would be the most cost-effective option.

participants in future projects.

As an added incentive, coal deposits in Texas meant that The agreements between the Cities and the Agency, l

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knowm tollet tively as the Power Sales Contrau, outime the rights and obhgations between the parties Auord-l L

mg to the agreements. the Cities have the right to

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receive a rehable supply ot' power f rom the Agenc y. At P

the same time. they are ob:igated to buy all ot' the

' emaxcxawrm=swm power needed m excess of w hat their own systems pro-dute..md to pay all the Agent v s (osts as required under 1,i 2.

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the Contrat t. All payments to the Agent v by the Cities f

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rather th.m f rom taxes l:i, no This is how the Ageng was t reated and defined. Niany interestine and exutme thmgs have happened sinu. In 19'S. the tederal government passed the Fuel l'se Au.

whn h will make it dittitult or impossible to burn natural gas to generate elettriary af ter 1990. The k

planned henite plant. named the (>ibbons ( reek Steam

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Electra Station, was lookmg better all the time Then, m 19~9. TN!PA management det idet. to take advantage of another sohd tuel, uramum, and purc hased a (t.'

pertent interest in a nut lear pilwer plant, (:omant he Peak. near (rlen Rose. Texas Transmission hnes to tarry power to the Cities are being built and. where t'easibic.

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shared with otFer utihties.

The scar 19x0 brought TNIPA closer to f ull operation.

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to be finished by the end of 1981. The draglines lO J L, will remose the " overburden" covering the lignite and v

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use it to refill areas already mm.ed. After refilling, the land will be regraded to approximately its original contour and revegetated according to an approved This was an exceptional year of reciamation P an.

i opportunity and accomplish-Thc physia pmy,ess aesaibea above is i,,yeiy due to rnent for the Texas Municipal the institution of a amstruaion management system that allows TMPA to maintain effective control over the Power Agency. In every one of job. eighty.,ive professionais we,e,cc,uitea from six its five divisions, significant strides were taken that ditTerent companies to form a management team at the will have a long-term impact on the Agency's operation.

plant site. Control over costs and schedules is facilitated Decisions were made by the Board of Directors and by a new computer system that allows the team to track management that tran; late into definite cost savings progress and e.cpenditures and spot potential problem both now and in the future.

areas before they become serious. All these efforts are directed toward the goal of pnxlucing power for the The most striking demonstration of progress is the Cities starting in late 1982.

Gibbons C. reek plant. A year ago it was only a skeleton, about 25 percent complete. Now it is over 50 percent The other reneration project in which the Agency is complete, with more than 1,000 people working to involved is the two-unit nuclear power station known as meet the scheduled operation date less than two years Comanche Peak, southwest of Fort Worth. Texas Util-away. The boiler and the turbine generator are being ities Company is building the plant and they recently installed, along with the scrubbers and electrostatic announced that Unit 1 is 87 percent complete and Unit precipitators. The latter devices are used to control air 2 is 51 percent complete. Goals for commercial opera-pollution, helping the Agency to meet its obligation to tion are 1982 and 198-1, respectively, and the Agency (

protect the environment.

will receive 6.2 percent of the total output of electricity.

One very visible sign of progress, which will become in the area of operations, two extremely important even more visible in 1981, is the dam and the 2,500-acre milesumes were mached in 1980 that bear witness to the cooling reservoir behind it. The dam will be closed in JanuAy 1981, allowing the reservoir to begin filling to Agencys status s a full-fledged member of the utility community. One was acceptance as a member or the provide water for testing programs starting later m the

. Texas Interconnected System, an intrastate arrangement year.

for mutual operation and planning of facilities to help Three miles away, development of the mine to supply maintain reliability of service. The other was the signing fuel for the plant has begun. In August,the Agency ofinterchange agreements between the Agency and the received a permit from the Texas Railroad Commission two largest utility systems in Texas. These latter agree-that cleared the way for erection of the minity equip-ments allow joint use of transmission facilities already ment. The wedge-shaped sections of the firs: dragline built, enabling TMPA to eliminate several planned base, resembling an enormous pie, arrived on site in late transmission projects. Thus the Agency saved at least November. Assembly is now underway, and is expected

$15 i million in future capital expenditures.

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accomplishment of the 19PO financing of $250 million, the total amount in bonds outstanding grew to $

million. The Agency has estimated its additional needs 3

m s ud

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~ y, As 1980 drew to a close, the Board approved a method

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R'd"'d today's replacement cost. It can, however, compete for Srrath. Bryan: W:stne Gr!non. Bryan:

l competent people, and make the most of what they are y,j,,j uf,, f3,,,,, cfy,f, y, 1 able to do.

stattku,. Garland: anJJarne, 7:

l Mmh. Grw die.

Almost 30 percent of the current staff was added in l 1980, 611ing out each division in preparation for opera-140ND 1NTI R13T (5 milbne g

sa y

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o 1 OSS13111t. leS mind are future generatingalternatives. In the last quar-

_ _h_c commissioned a study of the methods and costs of meeting predicted electricity requirements. The con-Within TMPA, as in any emerg dusion dthe mantigon1 plead mpon manunwnded a second unit at Gibbons Creek as the option most likely ing organization, there is a to result in the lowest cost to the Agency's customers.

wealth ofideas about the future.

• "" '""" i "" "' ""8"""" ' " * """Y "." h i '

f project is now in place, as are some of the facihties built During 1980 some of these ideas, for the 6rst unit whiduould be shared. However, there leveraged leasing, for example, moved closer to reality.

are many factors to consider in such an important deci-There are several others, in various stages of develop.

sion. Until they are fully discussed, " Unit 2" is merely a ment, that should be mentmned because they require possibility. The potential, however, is exciting.

investments of time and money, as well as understand-Beyond Gibimns Creek and Comanche Peak and besides mg and cooperation. These could pay off m lower elec-coal and nuclear fuels, there are other ways to generate tricity costs and better reliability than would be possible electricity. So far the utih.ty mdustry has met growing if they were never attempted.

nnds m4 by improving and re6ning the basic boiler The surest bet is full economic dispatch. Partial use of and steam turbine and by switching fuels in response to this method of maximizing total system efficiency has changes in economics and availability. The result has already saved the Cities close to a million dollars. For-been increasingly reliable service, supplied by an ef6-malizing the necessary agreements will save much more.

cient highly-centralized system. Will this framework The projected power costs to the Cities are based on the provide the best 6t for the future? If not, are there assumption of full economic dispatch. Perhaps this pos-others fnnn which utilities car. choose, enabling them to sibility will become next year's progress.

supply a market that threatens to erode as rates go upl in answering these questions, the industry, of which An example of a less obvious idea for saving money is TMPA is a part, may be forced to reevaluate its position the establishment by the Agency of a captive insurance in the electric generation business and decide that it is company. Already the risk management effort has help-ultimately in the energy business. Pla. ning will be ed to reduce overall premiums while increasing more dif6 cult than in the past, but the consequences of coverages and providing better loss and safety control being caught unprepared could be unfortunate for util-programs. A captive company could further reduce ti e ities and their customers alike.

cost ofinsurance and provide coverage in areas where insurance is unavailable or prohibitively expensive. This At this point, the future for the Texas Municipal Power possibility is presently under study.

Agency h>oks bright. Its Board of Directors, its manage-ment and its employees want it to remain that way.

Probably farther off but very much on management's TMPA is committed to staying in tune with the times.

ee

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FORECASTED PEAK LOADS AND RESOURCES (MW)

Ioad Resource Requirements Resources Balanc Year Peak Trans-Total Agency Ending Require-mission 1597 Require-Cities' Gibbons Comanche Total 9-30 ments losses Reserves ments Resources Creek Peak Resources 1980 617 (1) 93 710 932 0

0 932 222 1981 657 20 99 776 932 0

0 932 156 1982 703 21 105 829 932 0

71 1,003 171 1983 747 22 112 881 932 400 71 1,403 522 1981 792 24 119 935 932 400 142 1,47i 539 1985 835 25 125 985 932 400 1 12 1,474 489 1986 874 26 131 1,031 932 400 112 1,474 4 13 1987 915 27 137 1,079 932 400 142 1,474 395 1988 953 28 113 1,121 932 400 1 12 1,17 1 350 1989 993 30 149 1,172 932 400 142 1,17 1 302 1990 1,033 31 155

!,219 932 400 1 12 1,474 255 (1) Assumes Agency transmis., n facilities to be in service starting in 1981.

PROFILE OF THE CITIES 1980

• Brvan Denton Garland Greenville Population-1980 'est.)

44,265 53,500 112,850 25,000 Population-1970 33,719 38,874 81,437 22,013 Median Family In.ome (est.) S 18,569

$22,817 526,100

$ 15,425 Employment (est.)

96.69 96.69 96.191 95.39 Building Permits (est.)

670 351 1650 219 Maior Industries Energy-rdard aficrou ate antannas.

Ataalpnducts. aircraft Axrisultural d< micah.

and Businesscs prduction. budding computer s<{su are. Jitsd equipment, truch.

ruhkr g.nh. haler; materiah. plastic tru.bs, u dling ammunition. Jrilling items, aircrafi sontainers. Judprducts, equipment. businni equipment. utaring mmh)kation. u caring Jkrniture businessfsms f,rms. lingerie, flour.

appard. recreational appard. uomkn J.nrs muhi-ualipaper bags equipment. dwmical prducti, fniprodu.ts Other Resources and Ranling. agriculture.

Aluseums and historic Ranching. interstate Ide and rareation. I Amenities u ater and byJrvaarbon sita. Isla and highuay transportation. faihtia. interstate

[ud Japosits. unitrriity ra rcationalficihtin,

lain and rerreation.d highuay transportati.,n unin rsities facihtin Electric Customers Residential 15,002 13,891 35,616 8,017 Commercial, Industrial, etc.

2,209 2,768 2,730 1,122 Total 17,211 16,659 38,376 9,139 Generating Capacity 210 MW 168 M W 424 M W 100 M W I

Net Energy for load (kWh sales,000) 470,518 520,868 1,318,560 238,26i Cin)brmation supplied by the ci:ies

4 Financials 3

i

1 TEXAS MUNICIPAL POWER AGENCY.

(A Deielqment St.sge Enterprise)

BALANCE SHEETS; September 30,1980 and 1979

- ASSETS Nntes '

I980 1979 Elearic Plant:

-3 In service:

Transportation equipment 181,000

-S' 177,000; Furniture and fixtures 301,000-

.235,000:

Electric plant leased to others 403,000.

403,000 Intangible plant -

415,000

,145,000 Total.

1,330,000 1,260,000 Less accumulated depreciation 327,000 239,000 Total - net 1,003,000 1,021,000 Land held for future use 289,000 289,000 Construction in progress 2, 4 377,931,000 237,336,000 Total electric plant 379,223,000

'238,646,000 Other Assets:

Lignite rights 5, 8 20,850,000-12,133,000.

Unamortized borrowing costs -

17,001,000 12,907,000

' Deferred expenses to be recovered in future years 42,000 Total other assets 37,893,000-25,010,000

(

Restricted Assets:

6 Cash-233,000 212,'000' Time deposits 1,000,000:

1,000,000.

Securities purchased under an agreement to resell, at cost -

121,263,000

.168,508,000 l'

ed States Government and Government Agency obligations 336,508,000 187,459,000l ual deposits 673,000-1,290,000:

c Accrued interest 6,250,000 9,521,000 Accounts receivable.

14,000-Advance pay ments to contractors 1,'734,000 119,000.

Total restricted assa 467,675,000 368,109,000i i Curant Assets:

Cash 6<i3,000 212,000 Time deposits 242,000.'

Securities purchased under an agreement to resell, at cost 355,000 Accounts receivabic 5,000 6,000 Prepaid expenses 21,000 18,000 Due from restricted assets 196,000 Total current assets 1,220,000 478,000 Total

$886,011,000.5632,273,000 See notes to financial statements.

I 16 ~

h LIABILITIES AND RETAINED EARNINGS Notes 1980 1979 Retained Earnings (Deficit) Accumulated During the Denlopmcnt Stage 127.000 S (38,000)

Long-Term Dcht:

Revenue bonds:

7 Series 1976 50,000,000 50,000,000 Series 1978 250,000,000 250,000,000 Series 1979 300,000,000 300,000,000 Series 1980 250,000,000 Unamortized discount and premium - net (181,000)

(219,000)

Notes payable, excluding current instalments 8

2,367,000 2,390,000 Total long-term debt 851,883,000 602,171,000 Carr nt and Accrued Liabilities:

Payable from restricted assets:

6 Current instalments of notes payable 8

307,000 275,000 Securities sold under agreement to repurchase 14,742,000

> Accounts payable

?1,433,000 7,510,000 Retainage payable 4,230,000 3,302,000 Accrued interest 7,055,000 3,482,000 Due to current assets 196.000 Total payable from restricted assets 33,221,000 29,311,000

, Payable from current assets:

Accounts payable 24,000 99,000 Accrued compensation and pension benefire 9

182,000 316,000 Due to agency accounts 574,000 414,000 Total current and accrued liabilities 34,001,000 30,140,000 Commitments and Contingencies 4, 5, 10 Total

$886,011,000 5632,273,000 17

TEXAS 51UNICIPAL POWER AGENCY (A Danisment Stay Era:erpris.)

STATEN1ENTS OF OPERATIONS AND RETAINED EARNINGS (deb Aaumula:dJaricg tiv Jathpr m stagepr tiv pars enladSeptemlur 30.19ml ana i? ?9 and ammalatne jnm inception sply 1975) tu September 30. I980 Note 1980 1979 cnin2 Tin Operating Reunnes:

Charges to participating Cities 1

5 362,000 $

112,000 5 2,219,000 Other operating income 15,000 1-*,000 56,000 Total operating revenues 377,000 129,000 2.275,000 Operating Rctenue Deductions:

Operating and general expenses 231,000 369,000 2,016,000 Depreciation and amortization i2,000 21,000 79,000 Total operating revenue deductions 276,000 393,000 2,095,000 Net operating revenuo 101,000 36,000 180,000 01her Income (DeJactian> ):

Revenues of electric plant leased to others 68,000 51,000 137,000 Expenses of electric plant leased to others, including depreciation of S 19,000 and allocated interest of $27,000 (16,000)

(51,000)

(201,000)

Interest income 36,070,000 27,511,000 70,178,000 Interest expense on long-term debt (12,706,000)

(30,397,000)

(83,083,000; Amortization of debt discount, premium and borrowing costs, net (721,000)

(521,000)

( 1,506,00g Gain on sale of securities 90,000 90,000 Allowance for funds used in projects 7.267,000 3,380,000 11,323,000 Total other income (deductions) 22,000 (62,000.

Defirred Expenses to be Recouredin Future Wars 12,000 12,000 Net income 165,000 36,000 160,000 Raained Earnings (Deficit) Accumulated During the Deulupment Stage:

At beginning of period (38,000)

(11,000)

Distributiens to participating Cities (33,000)

( H,000 At end of period 127,000 $

(38,000) S 127,000 See notes to financial statements.

l 18

TEXAS MUNICIPAL POWER AGENCY t A Datforment Stage Enterprice)

STATEMENTS OF CHANGES IN FINANCI AL POSITION r the uan endedSeptemkr 30,19so and 1979

Jcanalatiurfrom inaption (July 197D to Septemkr 30. I980 1980 1979 a'M UI ATivt.

%uras rf ubrking Capital:

Net income 165,000 $

36,000 $

160,(MH)

Depreciation and amortization 19,000 43,000 112,000 Working capital provided by operations 181,000 79,000 272,(HM)

Proceeds of revenue bends 249,735,000 299,899,(M)0 860,064,000 Proceeds of notes payable (net of current instalments) 463.000 1,110,000

A 12,000 Total 5250,482,000 $ ;01,088,000 $861.718,000 Uses if WE% Capital

Additions to electric plant in service and land held for future use 72,000 S 78,000 $

1,477,000 Additions to construction in progress 110,566,000 177,716,000 377,226,000 Additions to lignite rights 8,717,000 4,170,000 20,739,000 Increase in net restricted assets 95,656,000 1 I l.076,000 131,451,000 Bornming costs 1,091,000 6,139,000 17 709,000 Pepayment of notes payable 186,000 343,000 1.015,000 Rcfunds to participating Cities rf excess operating charges 33,000 43,(HH)

Refunding of revenue bonds, Serics 1975 10,625,000 Increcse (decreaw) in working capital 791,0(H)

(467,000) 410.000 Total

_$ 2 50, 482,000 !301.088,000 $ 86 4,748,(NH)

Chaaps in Cw:ponents of Restriaed Aucts:

Increase (decrease) in restricted assets:

Cash, investments end special deposits 5101,208,000 $ 120,860,000 5459,677,000 Accrued interest (3,171,000) 7,937,000 6,250,000 Acccunts receivable and advance payments to contractors 1,629,000 110,000 1,748,000 Due from current assets (214,000)

~

Total 99.566,000 128,664,000 467,675,000 Increcse (decrease) in liabilities payable from restricted assets:

Current instalments of notes payable 32,000 59,000 307,000 Securities sold under agreement to repurchase (14.742,000)

I i,712,000 Accounts and retainage payable i1,851,000 (5013H10) 25,665,000 Accrued interest 3,573,000 391,000 7,055,000 Due to current assets 196,000 196,000 Other (103,000)

Total 3,910,000 11,588,000 il,221,000 l Increase in net restricted assets

! 95,656.000 $ 11 i,076,000 5144,151,000 fhangs in Compsnents of Mrling Capital:

]ncwnse (decrease) in current assets:

Cash and investments S

541,000 5 (111,000) $

998,000 Accounts receivable (1,000)

(4,000) 5,000 Due from agency accounts (17,000)

Due from restricted assets 196,1H 4) 196,000 Other 3,000 (11,000) 21,000 Total 742,000 (142,000)

I,220.000 L

increase (decrease) in current liabilities:

I Accounts payable (75,000)

(l1,000) 21,000 Accrued compensation and related benefits (134,000) 165,000 182,000 Due to agency aaounts 160,000 414,000 574,000 Due to restricted assets (213,000)

Total (49,000) 425,000 780,000 Ecrease (decrease) in working capital 791,000 5 (167,000) S i10,000 See notes to financial statements.

TEXAS MUNICIPAL POWER AGENCY The total Gnancing requirements for the above-men-f A Dm/f=nt Stage Enter / rsd tioned projects upon completion are estimated by TAIPA NOTES TO FINANCI AL STATEMENTS as of September 30,1980, as follows:

792.800.00

1. G ncral Gibbons Creek Steam Electric Station 5

interest in Comanche Peak Plant 207,400.000 The Texas Alunicipal Power Agency (TAIPA) was created Svstem Development and Reliabihty in July 1975 by concurrent ordm.ances or the Texas cities

~

Expenditures 80.600.000 of Bryan, Denton, Garland and Greenville (Cities) pur-g g ggg y g g suant to Chapter 166, Acts of the 63rd Legislature of Texas, Regular Session,1973 as amended by Chapter 1 S*"""d9 '[SI "'8Cd"I Aff**nting Policies X

113, Acts of the 6ith Legislature, Regular Session,1975 (Act). Under the provisions of the Act, TAIPA is a Electric Plant - Electric plant is stated at historical cost.

separate municipal corporation, a political subdivision of Such cost includes payroll related costs such as taxes and the State, and body politic and corporate.

employee benefits, general and administrative costs and an allowance for funds used in projects.

In September,1976, TAIPA entered into identical power sales contracts with each of the Cities for the purpose of The cost of construction performed by contractors is obtaining the economic advantages of jointly Gnancing, recorded on the basis of billings from the contractors.

constructing and operating large electric generating Certain facilities, primarily transmission facilities, have units and related facilities to supply the Cities' future been or will be completed prior to the completion of any energy needs. The Cities, under the power sales con-generating plant. These completed facilities will remain tracts with TAIPA, are required to pay, for the benefits in construction in progress until placed in service. At received or to be received by them from such activities, September 30,1980 and 1979, construction in progress an amount sufficient to pay TAIPA's operating and included S2,75-1,000 and 5771,000, respectively, of maintenance expenses and the Bond Fund, Reserve Fund such completed facilities.

and Contingency Fund requirements of the Revenue q

Bonds.

A//oisancefbr Funds Usidin Projects - TA1PA has cap-italized to electric plant and lignite rights the net cost

2. Nature rf Dadopment Stage Actirities of borrowed funds used for such purposes. The net cost TAIPA is undertaking, as projects approved by the Cities of borrowed funds includes amortization of bond dis-on August 27,1976 and June 13, 1978, respectively, counts, premiums and borrowing costs, security g;. ins construction of the Gibbons Creek Steam Electric Sta-and losses, and interest expense net ofinterest income.

tion, a lignite-fueled generating plant located in Grimes County. Texas and acquisition of a 6.27 ownership FederalIncome 7 axes - As a poli ical subdivision of the t

interest ir the construction of the Comanche Peak Plant, State of Texas, any income of TAIPA is exempt from a nuclear-fueled generating plant being constructed by a Federal income tax under Section 115 of the Internal subsidiary of Texas Utilities Company (see Note 1). In Revenue Code.

addition to these projects, TAIPA is planning er under-Lignite Rights - Lgnite rights mcludes the costs of all taking a number ot System Development and Re-preliminary and exploration studies, leaschold or fee liability Expenditures which primarily relate to cquisitions, delmy rentals and advance royalties.

transmission and communication facilities.

The cost ofligni*e rights will be amortized by the unit-of-production method when mining of the lignite is commenced.

Depreciation - D(preciation of electric plant in service is calculated by the straight-line method using the follow-ing rates:

Transportation 339 Furniture and tixtures 2001 Elettnc plant leaseti to others Yi 20 Intanpble plant 37

f Ratna Bondt - Issuance costs, discounts and premiums possibility that the antitrust review will not be com-d Revenue Bonds are being amortized by the straight-pleted prict tn the tirre Comanche Peak Unit One is

!!ine method over the period of the related maturities.

ready for operation. Legislation now pending in Con-g gress would allow an operating license to be granted

4. Aapi;ition </Interat in Coundy Puh prior to conclusion of the NRC's antitrust proceedings if On January 2,1979, TAIPA executed the Joint Owner-otherwise ready for issuance during the federal govern-chip Agreement (Agreement) to acquire a 6.2% un-ment's fiscal year 1980-1981, but there is no assurance fivided ownership interest in the Comanche Peak Steam that such legislation will be enacted into law or that the Electric Station, consisting of two 1,150 A1W nuclear-Comanche Peak antitrust proceeding will qualify for the fueled pressurized water reactor steam electric units time limits now proposed in the legislation. If an oper-together with associated nuclear fuel, switchyard, ating license has not been issued by the time Unit One substazion, railroad spur and reservoir and an interest is ready for fuel loading, costs will increase and the in a certain associated transmission line.

commercial operation date of 1982 will be delayed.

Under the terms of the Agreement, TAf PA is obligated g u ggf, y gj j

to pay 6.27 of all future (i) construction costs, (ii)

In conjunction with the constructior. of the Gibbons nuclear fuel costs, (iii) operating costs (after the station Creek Steam Electric Station, ThiPA has acquired rights is placed into commercial operation), (iv) a manzgement to near surface licnite deposits priinarily from surface fee of five percent of its pro rata share of operating costs esca e owners where in some cases the mineral estates are nnd (v) a management fee of five percent of its pro rata owned by others. In decisions rendered prior to 1980, chare of fuel cost (subject to certain cost escalation the Supreme Court ;f Texas held that, depending on limitations). Subject to certain operational exceptions, determination of fact questions which may require jury TAIPA is entitled to receive 6.29 of the net power trial, lignite deposits may be a part of either the surface output that the station is capable of producing at any estate or the mineral estate. At September 30,1979, g ven time.

ThiPA could not determine whether such rulings woul.1 result in additi n I c st t brain the rights to mine the he Atomic Erergy Act of 1954 requires the issuance by lthe Nuclear Replatory Commission (NRC) of operating near surface lignite dep sits n r the portion of amounts

' licenses for the Comanche Peak Plant The atsplication already paid which would not be recoverable if necessary for operating licenses for both units was docketed with mining rights could not be obtained.

the NRC on April 25, 1978. In connection with the On Alarch 19, 1980, the Supreme Court of Texas ren-operating license., ar antitrust proceeding and a safety dered its opiniori in the ca e of Wylie v. Reed, wherein end environmenta! ;.roceeding are now pending before the Court settled the question oflignite ownership by eparate NRC Atomic Safety and L' censing Boards.

holding that as a matter oflaw, a deposit which is within 200 feet of the surface is "near surface ~ and that The anzitnst proceeding involves numerous parties, many of whom are also parties to a dispute in Texas the rule for near surface lignite is that the substance will recarding interstate transmission. A preliminary settle-n t be granted or retained as a mineral ifit is shown ment has been reached among the parties but will that any reasonable method of production would destroy require further regulatory review before such settlement r deplete the surface. This decision should allow TAIPA t mine lignite fr m rights already acquired from surface kan become final. Whether the settlement will become

• st te wners without acquiring additional lignite rights dfective cannot be predicted at this time and there is a from mmeral estate owners.

In 1979, TAIPA filed an application with the Texas State Railroad Commission to obtain a permit for mining operations. The surface mining permit was received from the commission on August 18, 1980.

s 21

6. Rarricted Assets ranging from 6. lW to 16.007 and mature at various Restricted assets presented in the accompanying balance dates between October 1980 and April 1991. The se-sheets include those assets comprising the Bond, Re-curities are stated at amortized cost which is not mate-serve, Contingency and Construction Funds which are rially different than market. TAIPA intends to hold established and maintained pursuant to the Bond Reso-these securities to maturity.

lutions of ThiPA. All assets in the Bond Fund and substantially all assets in the Reserve Fund are available

7. Ramac Bomb only to meet the principal and interest payments on the TAIPA has four issues of Revenue Bonds outstanding, Revenue Bonds. Assets in the Construction Fund are described as follows:

primarily available for the payment of construction and 3y; acqui:ition costs of those projects described in Note 2.

39,6 m8 19'9 1980 The aggregate amount of assets in each of these Funds at September 30,1980 and 1979 is as follows:

"'"["

September 30 1980 1979

1. "E# "

annual 13ond Fund S 65,522,0(X) 5 63,506,000 serial Reserve Fund 72,880.000 47,975.000 matur-Contingency Fund 2,025,00s itses 1983-2011 1981-2011 1985-2012 1985-2012 Gmstruction Fund 327.248.000 25 i 628.000 Earliest Total

$467,675.000 $ ;68,109.000 redemption date 1986 1988 1989 1990 TAf PA bas purchased and sold investment securities The Bonds are payable solely from and are secured by an under repurchase agreements whereby TAIPA will resell rrevocable first lien on the net revenues of TAf PA and or rebuy, at its cost plus accrued earnings, specified the funds established by the Bond Resolutions.

amounts of the securities on or before specified dates.

The securities are primarily obligations of the United Annual debt service requirements at September 30, States Tre sury, the Fedcral Home Loan Afortgage Cor-1980 are summarized as follows:

poration, the Government National Afortgage Associa-tion and Federal Home Loan Banks. At September 30, Principal Intenest Total 1980 the<e agreements bear interest at rates ranging lih*vndd from 9.902 to 12.259 and mature at various dates Year Ended September 30:

1981

$ 63,910 5 63,930 between October 1980 and Afarch 1981.

3933 g,gg7 g,gg7 1983 690 62,087 62,77' Um.ted States Government and Government Agency ob-1984 U 15 e,052 6MM ligations include United States Treasury bills and notes 1985 11,270 61,829 73,099 and securities issued by tne Federal Home Loan Bank, 1986-2012 855.825 1.116.566 1.950.391 the Federal Land Banks, and the Federal National Afort-Total 5850.000 $ 1.128.551 52.278.551 gage Association. The securities bear interest at rates

~ ~ ~ - - - -

8. Notes Payable The Act permits TAIPA to issue non-negotiable pur-chase money notes payable in instalments (collateralized by the properties being acquired) in order to acquire land or fuel resources. TAIPA has issued such notes which are accounted for at stated or imputed interest rates and are due in annual or quarterly instalments over periods ranging from three to sixteen years. The costs of the property collateralizing the notes approximated g

$ 5,600,000 at September 30, 1980.

22

f r

J. Rairement Plan hie retirement plan is structured so that TAIPA con-

'ributes 10'J of gross wages to a fund for participants.

t hployees may contribute an additional amount up to n)W from their earnings on a voluntary basis. Interest is arned on each individual's account until retirement or

ermirution. The employee becomes a participant after pix months of service and becomes vested as to the amounts described above upon becoming a narticipant.

Retirement plan cost for 1980 and 1979 was $141,000 knd S105,000, respectively.

'O. Commitments and Cuntingencies

n connection with the projects and activities described n Note 2, TAIPA has entered into contracts for coods and services which aggregate approximately 5512,000,000 at September 30, 1980, of which pproximately $301,000,000 has been expended.

1

n order to obtain certain property and confirm certain

-ights necessary to complete the Gibbons Creek Steam Electric Station, TAf PA has made certain payments to 3 rimes County and three school districts during the

, ears 1978 through 1980 and has agreed to make addi-nal annual payments, subject to adjustment as spec.

.ed in the agreement, at the rate of $420,000 in 1981 nd $520,000 in 1982 and continuing each year there-t fter for as long as the Gibbons Creek Unit No. I is t

m operation. The estimated total pavments to be made 3y ThiPA under this agreement are.pproximately F 17,700,000 of which $1,420,000 hr beer. paid as of Leptember 30, 1980.

23

AUDITORS' REFORT In our opinion, the financial statements for the year ended September 30,1980 present fairly the Gnancial The Board of Directors position of Texas Municipal Power Agency at September Texas Municipal Power Agency:

30,1980 and the results of its operations and the I

changes in its financial position for the year then ended,'

We have examined tl e balance sheet of Texas Municipal and in our opinion, based upon our examination and the Power Agency (A Development Stage Enterprise) as of report of other auditors referred to above, the cumulative September 30,1980 and the related statements of opera-Gnancial statements from inception Guly 1975) to Sep-tions and r-tained earnings (deficit) accumulated during tember 30,1980 prescat fairly the cumulative results of the development stage and of changes in financial its operations and cumulative changes in its financial position for the year then ended and cumulative from position fir such period, all in conformity with gen-mception Guly 1975) to September 30,1980. Our ex-erally accepted accounting principles applied on a amination was made in accordance v ith generally consi3 tent %.

accepted auditing standards and, accordingly, included such tests (the accounting records and such other i

auditing procedures as we considered necessary in (ne h (x circumstances. The financial statements of Texas Muni-cipal Power Agency for the year ended September 30, Dallas, Texas 1979 and cumulative from inception Guly 1975) to September 30,1979 were examined by other auditors November 14, 1980 whose report, dated November 30, 1979, on those state-meats was qualified as subject to the effects of such adjustments, if any, as might have been required had the outcome of the litigation discussed in Note 5 to the financial statements been known; the resolution of this u: certainty in 1980 is discussed in Note 5. Our opinion j

expressed herein, insofar as it relates to amounts from inception Guly 1975) to September 30,1979 included in the staternents of operations and retained earnings (deficir) accumulated 'uring the development stage and of changes in financial position from inception Guly 1975) to September 20, 1980, is based solely upon the report of such other auditors.

21

.m BOARD OF DIRECTORS AtANAGEAfENT

. Richard Smith

-Joel T. Rodgers President of the Baird

. General Afanager Real Estate, Land Deselopment Alayor. Bryan, Texas

- Frank H. Bass, Jr.

Director, LegalSertices Vice-Pksident of the Boardand,

Larry C. Hearn Chairtr$n, Audit & Budget Ccamittee Director, Engineering & Operations Afaycr & Tempore.

Robert B. McKnight

- City Council, Garland, Texas _

Director, Construction Afanagement

- y

-W. S. (Bill) Nash

- Secretary-Treasurer <{the Bairdn,

_ Robert P. Murphy, J.

Consulting Engineering Director, Administratite Sertices Denion,' Texas -

Dan G. Simmons W. F. (Bill) Elkins Director, Finance Real Estate Intestor.

AIa3or, Greensille, Texas 0

^

Wayne Gibson Rancher, Cattle Broker General Counsel City Council, Bryan, Texa#

Naman, Howell, Smith, Lee & Muldrow Charles R. Matthews Brad Counsel Fin ncia!ConsultinK Dumis, Huguenin, Boothman and Morrow Garl.ntd. Texas c.e Financial Adiisors James T. Adcock First Southwest Companv Insurance Adjuster City Council, Greentille, Te::as,,

Roland Vela U..

Unitersity Prfessor City Council, Denton. Texas

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's Terminology and Abbreviations Used in This Report KW.... Kilowatt.

.1.000 watts..

..A measure of demand for power. Typical licht bulbs are rated at 66 and 100 watts.

MW... Megawatt..

..I million watts..

..A measure of demand for power.

KWH.... Kilowatt hour..

..l 000 watts used.

..A measure of energy.

for I hour Energy used by a 100

,a watt hght bulb durtng

• en hours.

KV.... Kilovolt.

..l.000 volts..

..A measure of electrical

('

potential Household N{

voltage is typically 115 volts.

T KVA....Kilovoltompere...1,000 volt-amperes...A measure of the capability of electrical.

equipment to operate under load without heat I)

C damage. This figure is -

the mathematical product of voltage times current (ampere).

M21L.

..one-tenth of a cent...A measure of cost of electricity.

MCT..

..l.000 cubic feet..

. Volumetric measure.

ment used for natural gas.

.p2]{P iT miunus