ML20044C615

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Forwards Updates on Upgrades to Util Revenue Bond Ratings.On 930331,Std & Poors Upgraded Outstanding Electric Revenue Bonds from Bbb+ to A-.Rating Upgrades Reflect Substantial Development in Util Independent Power Projects
ML20044C615
Person / Time
Site: Rancho Seco
Issue date: 04/06/1993
From: Shetler J
SACRAMENTO MUNICIPAL UTILITY DISTRICT
To: Weiss S
NRC OFFICE OF INFORMATION RESOURCES MANAGEMENT (IRM)
References
DAGM-NUC-93-080, DAGM-NUC-93-80, NUDOCS 9304090280
Download: ML20044C615 (10)
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Text

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?@.SMUD SACRAMENTO MUNICIPAL UTILITY DISTRICT D P. O. Box 15830, Sacramento CA 95852-1830,(916) 452-3211 AN ELECTRIC SYSTEM SERVING THE HEART OF CALIFORNIA DAGM/NUC 93-080 April 6,1993 U.S. Nuclear Regulatory Commission Attn: Document Control Desk Washington, DC 20555 Docket No. 50 312 Rancho Seco Nuclear Generating Station License No. DPR-54 UPDATE ON TIIE DISTRICT'S BOND RATING Attention: Seymour Weiss In District let ter AGM/N UC 91-132, dated August 22,1991, we informed you of recent reviews and upgrades to our bond ratings. This letter provides further information regarding more recent upgrades to our revenue bond ratings.

On M ay 6,1992. Fiteh Investors Service, Inc. rated $372.4 million ofelectric revenue refunding bonds, and 5125 million ofelectric revenue bonds as.A-(Series A and B). Fitch also upgraded the rating ofoutstanding parity bonds from BBB+ to A-Fitch noted that the District's credit trend is stable, and that the higher ratings reflect our strong economic base, very competitive electric rates, and improved interconnection arrangements with Pacific Gas and Electric Company.

On March 31,1993, Standard and Poor's (S&P) upgraded the District's outstanding electric revenue bonds from BBB+ to A, and our subordinated electric revenue bonds from BBB-to BBB+. In addition, S&P assigned an A-rating to an additional $75 million ofelectric revenue bonds, and S419 million of electric revenue refunding bonds (Series D and E). These rating upgrades reflect substantial development in our independent power projects, and the significant progress made towards improved financial results and stable operations.

9304090280 930406 PDR ADDCK 05000312 l

I PDR I

DISTRICT HEADQUARTERS O 6201 S Street, Sacramento CA 95817-1899

'. W eiss DAGM/NUC 93-080 S

Attached are copies of S&P's and Fitch's comments regarding the bond rating increase, and a description of our senior bond rating history.

Members of your stafTwith questions requiring additional information or clarification may contact Bob Jones at (916)452-3211, extension 4676.

Sincerely,I

\\s,Lu fv

\\

James R. Sheller Deputy Assistant General Manager Nuclear Attachments cc:

J.B. Martin, NRC, Walnut Creek I

F o

Public Finance'

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Revenue

.l New issue Sacramerro Municiaa J~i iy Jis~ric, Ca ifornia l

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New Rating Outlook I

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Sacramento Municipal Utility District's

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(SMUD) $372.4 million electric revenue re-

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funding bonds,1992 series A, and $125 million electric revenue bonds,1992 series Outstanding Rating B, are rated 'A '. The rating on $ 1.28 billion 1?l' of outstanding parity electric revenue bonds is upgraded to 'A ' from 'BBB+' The credit

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g trend is stable.

The higher rating reflects the district's

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strong economic base, very competitive elec-

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tric rates, and improved interconnection ar-

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n, rangements with Pacific Gas & Electric Co.

(PG&E). Also viewed favorably are contin-

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ved improvement in financial performance and projections of only modest future rate lssuer Contact increases. The improved relationship be-tween SMUD management and its board, along with the recent completion of a com-prehensive resource plan, are additional fac-

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tors supporting the rating upgrade. The new plan incorporates demand-side j

resource

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management programs and several smaller-sized cogeneration projects. Concern re-garding the SMUD board's over-involvement in management decisions should be less of an issue with the closure of Rancho Seco and the stabilization of financialoperations.

Credit risks center primarily on the need for final approvals, funding, and construction of new generating resources. In addition, while helped by lower natural gas prices and iner FITCH

.sx p e & & u s asw Ouana 1

Rote Covenant: D:stoct net revenues wi!! equal of least i 20x cnnual debt service on the bonds and all parity

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bonds ov':.tond ng.

l Additional Bonds Test: Additional ponty bonds may be l

asued if an independent engineer certies that net revenues, sacragnento -

after comp'etion of improvements proposed to be hnonced w,th oditona! bands, will cover debt service on outstanding Francaco,.

parq bonds and the oditonal bonds to be issued. In

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l aditon for 12 consecube months during the 24 months California m~escieiv p ecechng issuance. of odshonal revenue i

bands. ret revenues must equal at least L25x mc>.imum l

annud ceb' service s%DS) on dl ponty bonds outtand:ng l

a^d 'he addicnd revenue bonds. Net revenues may be

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ac.stea t mcor;> orate a pornon of the go:ns ossoccted wdh c

ncrea2fd ra!es Reserve fund: A reserve !vnd wJ be mo:ntained in on 0 nount eaual to at least the cunent annua! interest require-2 eceren en upp pxhmes Cc!i mas eendea.

mes c=n al outstand:na bonds o,d parity bonds li the a

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i inco and ne eTreas cme recession c e oNet poh of d stnct's debt semce ;c seraae rono fails below 1 ADx in

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l, M.,n any f:sco! '/ ear, funds f:om tee f:rst ceJoble net resenues n

' be set aside in spec 6ed reserve funds in on amount Strengths eqw! to a leapt 15% of the totat cunent monthly interest

.eauiremen s of all parity conds until tne debt service

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_ pebyage.cge et. r rc es for tne tea on

%g.c ou raso :eaches l ADx' or until the oggreacte

- imraementaten c. the new generahng res. r:e pan, cmount in the reserve funds equa,is Iv%DS on a, pan.ty

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t su fallc,Jna acceptance by the SMUD board bands, whichever occurs m

- Connnued imptovement in finanoa; position, inciuding a f ae+ charge ra+c of 1.52 times W in 19c1 Flow of Funds

mpt0ced reia onsk
p beween the boa d and manage-Dztnct recenues wdi b= distnbuted in the io!bwing order of n

ment prioney to pay for:

- Operotng and mo;ntenance IC&A) expenses and Risks er*'9/ payments n t included in ou/,;

i A

- Depastts to the dectric revenue bond interest fund,

- N,eed ty ' noi approva.s. funding. and consha, n v'

..eu cenerc' na resoeces.

- De'ocsits to the electnc revenue bong redemption ;uny, s,

- cesano, si Coacm.a's d'avaht may ad<erse9 o"d rocct Ae ifnct. cEcugh Enc'icS stab % has been

- DEPO W D N *, # '* "

  • ra ~a.ned n recem yea s

- H:darj Of Oc!Ne co '*mJr. ', invol.ement in SMUD kny remaming Un s W be ovadab e of aU lcw!ul district e!b purposes.

The District Purpose J the SWD's se sice crea cove <s opproximately 000 squc'e Bond pro:eeds sd be used ta refund a portan c d ends omandna dech: resenae bonds and re:mburse m'les in centra' Cohfomia, w:th a popula'on of more than SMUD for cecom $ree ous capda! mo asement.

are m&on Sacramento, the state cop.td and seventh most popubus area in CoMom a. is included ;n the service crea.

A:c"dG tC#ha't' Econome"ic fo'ecovin9 Associo'e5 Security Features

'*0 5 P' i*c'ed tu ee nato,Uochfamegrowyg Pledged Revenues:h 1992 senes A cod 1972 senes E c ea, based on popubtion, over the next tew seats. Tne e.

rma, w t e secmea n, r a re.w ues or me e ectnc system a vf ace nurnber of CUsiome s se 49d m l99l was

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5 oJ?ston1'r,o e'e-chc re.enue

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~m. y D,J 5 M 'epreSen'.ng C 3 l$ overOge annud inrease en. y s3 y [. m. - s J,y

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1 occocnt for 43% of energy sales, whde commercial and SMUD is entded to c 50% ownersh:p share in two geother-indu tnc! cudomers actcat fm 57%

mal units having a combined rated capacity of 132 mw.

The disnict has provided cH eiectnc requements in its The other CCPA No. I partcipants include Modesto !rriga-

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sevce crec since 1947 de, SMUD accu; red a porton hon Dist6ct with a 40% shore and the Citf of Santa Clorc, cf PG5E's electnc system The datnct is gavemed by a 101 Due to technical problems, he. Iow steam suppl and y

fue-member eiered boc d of drectors ser.ina stoacered coor quchty of steam actucHy suppled, the two units have tou ',ect terms. me accra s responsve tar pol1cy oecr not run at tud copocey s.ince inmo, cperaton. !he present i.

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p ncLd.ng icw cis~nts and c!sc cepo:nts the ccmbined net capacit-y for the two un ts 3.48 mw.

s cns cene ai mancae who is resconsee for d:stnct manage-Prior to March 31,1092. CCPA No. I obtained steam for the project under o contract with subsecnes of Geother-en' cnd cperat crn Frenous conce ns :ecicedm the reic:ionsh:p beween mal Resources International inc, which had been in banb management ona Se board to.e been m,t gated in recent ruptcv sinceJune 1989 On March 31. the stead, eld assets vece parth da to se acpe'rwent and subsecuer.t occom-were scld to CCPA No.1. which subsequerb executed on m

ca_ reement woh cn outs de porn. to co. erate the steamfieId.

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  • vs cr vano rreemar w new cenera; recnoce'.

Dac F < vsi Me vec's ct SWD ^ ' heeman succesduN CCPA No. I bebeves that pudent steamfield management ca ch 5 c.nded L T tcT ncrecu and Woroved wdl improse the undi procuct.4 P:cns b dd cad, tono!

m weils and unceric!e c'her seemf4 eta imprasements are

> / ~ E : mace m *e cc r ~v q.ne coorc s mcre coneLve re ce: t, r:e de:Ura c, unger conddercion for I w, sces to increase steam g

r e c" ace y !av c1; r as t+e i

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3 enocie tne mcreased product.cn le.eds snouLa tancnc ;ec;

roducPcn CCPA No.1 porncipants b recoger sea irnestment in the Power Resources croiect For p!anning purposes SVUD csa,mes betn unas Nem car;enh a
n
erm ced cceer purcho:e arrence d be csperctonal by 1994.

[ Y U 3's avcd bie ccOc:,tjInr I 992.s eshma'ec of F en 2 348 megccans brai cc pc ed en a icrecared rece Power Purchase Agreements oe~ cnd ei 2.275 mw The d nscn cwn generascn yvem A large pc4 tion of SMUD's resource requnemen 3 are sats-corm: of e ght nydrc+iecmc p!crts wee geceermc! umts, f,ed through vanous power purchate agreemen+s auth Wer

,,_.m c ccmbron tebine. and a sdcr picwchoic fac.hty !ct ern Arec Pcwer Administraton NVe9em). PG&E and a 790 rw co-b.ned net gre c$na capace, The c.smct Southem Cahfornia Edison Co (SCEL cmonc ethers.

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'eme.r ng teci e ~:er.t; 360 mw of Centic! Vo!!ey Pro;tect lCVP) power thrQuch TN c42 -'w hydroetecmc Upcer t.mencon E er Protect 2004 A centract amendment pro Aded the distnct whh the Ut P : th., er 5 :c geu c uned generanng rescu ce right to purchase approWmately 100 mw of pec'Ung power Urder c.e age vorer cc c t.ons m prc:ect facd tes a e and a sc gave SVUD the naht b puzhese opp 04 mate'y t

ccDade d Gene ctr,g apDr? nc:cij l.30 blon dowat' 3l% of C\\P power beween 20CM-2015. Westem crd a w cf rway w ear C r era, m a s e n.ce ct.

PG&E are encoced n bacnon recc din vanous issues.

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path Sece nudem un n n was bed, ' ne i 9EO ygc 9,gd ;,g 'crq t.e

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  • tea Tdic: j d ciec < tr-Gej e+5 Incun @ y c!ed energy to th d;*nct thrcugh Oc.: 3l I 999. and go e

" <~ cl I source Ai9c hc,sP's hd 95 carCJ edk 'he SMUD the cpton b reduce tre pu'demd cmrera at coy The d.cn t has gr.e, PGSE the hcerm aagcnera dedne nme v nh Le sects' noty i

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c Te seam wpp e ir _ t :-

pucharc,., tn 500

  • e c.c4ch!e Pecm < < rch and cac e:!/ tsespMied C yded not bcc6 an anc w d redyr

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dech - t 2 i w N 20 n.. % d.no a parponn3 wh m., in i 994 and to ce'c Februcs 1097 M tV. pau che pan es ir, as-r ' ' 9 _ dr + uc e g rote SMUD bas been able ta sd:s gregy asmcW v m

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sa:e c7eemm from rec.r sepphe:s ct a k < '

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- Cert d Co Xe ' mer cc9 and a eranue sn m & Ume

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-swere mmvat u% Dec C&c l

t SCE contracted te supply the district with 300 mw of.

mmo! prcject's twoyear performance. E ock Nvo coils for up p

capcotf and associered energf through Dec. 31.1999, to 200 mw cf Pacii;c Northwest rescurces to be on line by wah transm ssion proviaed according to the PG&E ncnsmis-1997. SMUD will purchase power on a tale and pay basis non rate schedule. The dienct has exercised its cpuen to from c 130-mw gas-fired una to be constructed sovihecst of l

teduce a3 SCE purchases to 200 mw upcn fwe years noce Entsh Cdumbia. Canodo. Also, a power exchange agree-cnd wd do so in March 1996 mth 100 ma emaining in ment wiu prodde the diarict with odditiono! copocity frcm place urd contract expnchon.

this project during $ MUD's pock summer period This In add t.on to the abcme og:eements. EMUD bcs a resource is contingent upon f.nahzing transmission cacnge cenncct wnh Pacific Power & Light Co wh:ch provides 100 ments. Block three includes 350 mw-400 ma of renewable mw ci bm pcwer 6 cugh 2015. A!sc the d.smcts por:.cr or advanced technology resources to be en hne by the year i

poben in vancus power pool agreements proedes access 2000. The specihc pro!ects for blocks one and two were j

to econembc! power resources.

ccptoved by the board and authonzation was gNen for i

SMUD management b proceed w;th development. Whde Future Power Resources no spec:f c pro!ects were opproved for block three, the 5 nce 1987 SMUDi pe:L aemana decsed at c 3g board enabkhed a threeyear prog cm to identJ reneu f

o<erage annuci ra'e whde energj scles rose 3 2% cm able and ad<cnced techoclogy resources for deve!cpment ber *s decode-adj. Ercqec!hrq th'O. m IW6 fcreCast c 2b3$ c,e oce annuc! pcv ; raie nhep sa:es and a nse m ic'ecada SMUD J be responsbie ict fuel prccurernent for the

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coceretc$on protecs and w4 bem:r necotonna with cas t s Joy i

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3 Ji be cue to cor6 futu e e^etc< cnd cemand c o<.e, swpes es i as year. tunent p ans nctuae e ecunno r

i tnrough agg esu.e demand w mana:ement c. roc cms.

Eno't ena Icngierm gas contracts on-purchasing cbcet i

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,Na, c"g, e requbements on the spct mer et j

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e-WJh the:e pngrams SMUD monacemnt befeses enerav a.

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me cogeneranon projects are suc.ett to environmento

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.. s Nough iWo wrAe pionned peak dema,d crua" - m Ceas order the Colfcmia Enncntrento! Quckt Act and f

dechne t 2 040 rr u 31;% km 2,0E0 rs - i 002.

  • o0'0"9 C4 9W./ Perm:ts onc ctrer cpprova s by m.n e.

COM0'"c Enmgy Ccmmission. In add >tien to receMng Ima!

The cemcfs demar.dsde rmnagemet macram i n-

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ciudes load managerrent d6gned to heip con"ci peak appravc3 on perm:ts oriTe projects ;.unchng on construc-summer bcds: censer <c$on eMer s to :mpro<e eEcency g hon d need', e be ochreved l

ecstng homes and bWd.ngt v cor.macn ena c oro.aram. cer.ed at encou ca na. :ow tct on of new hemes Transm,ission r

e c,d bundinas that c.e mcre enercy e%ent ec, reased Cunently, the dismcf has a transmss;cn centract w;th certain j

b.i, 90% and fecerci bWd:rc s'cndards Ihe ccicned Cohfo?nc Gecorowned utlhes 50! endes it b 2CC mw e!! orts Cr titse "*DC'cns c'e c. r' ec'6C C 't.' duce,-.I. njs c CapOC t'/ o'ver es!ra Nc -Voitace transrntsLOn ines im ina Y

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D90k dernOrc b /.12 m A m l W 2c'dcer$00r% hi ne ?cch < Noriaesi and CcMynic 'the interte). The a

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te decrac ' -" an W " '

p',' c C : c" "Ci 07 Of the :MWces 'eCeived Und9r 'he cDntrOct S subject Mcna SuyD W + 4 ma a e a m we,. 'm. ; c/ - -

t te recerc! Enerce reguletc.<y Common f, __tl cp l

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nume ous othe' part por c SUUD4, c

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't-T 7's'GG, E*oject (OIP) a 50b ! c 6 i UcWnS On hne

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a n CoocD+ Cf l,600 me The COTP ve% n beng com inc' CLP:?/c' icOT u c*ec N '

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F to rescu ce n th'ee ac w Ucm

'uced between Oregcm and cennc! CcMcmo. As of Mar h 19Q2, se pqect was apprcmcsi 66% ccmpbe Ebck e _ c c, - ;

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c-f coacreason - a m onc c W "d acm -

'a and schedWed for cc r.myca! cperchen m ectly 1993 c' Co-be ~!CVr pwc:a < henahc -'- v;rr Pc~?

cn es* moted ccd. e=c5Jdag mierest. d 1420 r40n lf f

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m eyDeded t be rarp,etec Oy i f a i V -t.r e & voi U.

Uh te5 nc,! tO poltcTQ?e aJect / m tb (d.H P' CV be'ng rio t% com*ruchon ? reabY c'a - MT cn r"br C at r ed the ngJ C parhDpate LeCai *r Es by M4 (.Od7n a y

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"a kohC A nes CGWsici IANC s ce mip crd ccd von.ed muid e!. vc mc ' 'A

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p'Olect.nAObj v.d cv deMc p9l as a b 1.

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TANC's shcre of the prcJ;ed ced wW be entded to cppree suppff resources, demand-side management programs.

l imate, y m,,., m mw of capac6 en en uncencd.'onal la. eor-and. improvements to existing transmission fac....mties, distnbu-1 r,

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pay basis. The dienct expeas to use this transmisson tion system, and general plant. Over the next 10 yects, capoch to import fam capovy resources from the Pacdic revenue bond issuance is forecast to be $930 mien, with Northwest and Canada. The ecnnede Power Adrr.in;stra-

$550 m3cn for system improvemer.ts and $ 3 B0 mean in t;cn ena me f.ocy, c Nochwest utihes are respons:c, le for new generaton focmties.

s cenc n epgrades to Ae NcrAwest transmission synem SMUD's f:nancing plans for the new cogeneration projects requed to accommodate +e add.t onai transtneon co-are intended to ma;r tain the benefas of lowcost, tarexempt pocay pre.ided b, e C OT?

hnancing and ovcod project risk as much as possible. To TANC's sho e c.f the est:ma ed COTP constructon costs is ochieve these objectives, the doict plans to e9 blish a enpoenately $,356 7 m6cn er:!vsne of intete9 and jointpowers agency with Modese bigaton District, to sere i

chance for ones mec c/nc constscticn ena, any as a hnancina mechen.sm for these pro'Iects. Since the finar,g test Shrub o p c;ect partc:oont faJ to make me jomFpowers agency would be o separate legal ent,ty hom reau.sd payment m as,5c e, en Ae soe i ed penod.

SMUD, hncncing for the projects would be ofLbclance sheet i

as ent. rent to C07 t ander :coobN ray be concebd.

and payab'e es a d6toct operonng expense. There v.iu be m S s case, TAN 1 acJd ce recaed to csyme the separate tcieandpay cont' acts be%een SMUD and the

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dew: r cc1.c pan, shares ci me COTP unless the icontpowers agency for each project. SMUD c!so pions ta i

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.i r.cnch ha ocm> arts reacn enre co eeme" a

secure o cread enncncernent ter th:s cebt.,he estimatec cost s

peac pant ce!am er 4s pacermuont cn to MNC. me of these proie ts is approximately $550 meon. The Cana-l condeicAng paspann c e wb;ect c c prc. rata peo-up den project ud be hnanced by the develcoer and the l

in nez ernement cod pccr ers Wed to c 25% cease ccpacity wil be c purchased power expense for SMUD.

i m <re entfernent sha e

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i Smce 4 ee is no drea connectcn bneer, me COTP Rates and Regulation te.rxi pc. ras and th > de :t t seroce creo the d'stric' is SMUD's rates are set by the board and are not sub;ec to l

s.cn ng w/h Westem to negctate en opeement whereb b,,epem m9. transma power n m the w r to 9,ov.n./

anY outside revreu cr reguichon, The rc+es are cormosed t

v of a power supp!y cost rete through which power supply us suce crec SMUD aba has the cot;on cf cucin:n9 costs are recove ed, and a base to e. which recovers the I

e

!;tC'ec'C9ci trcn5 ?is tcn serv Ce t Cm rl w, e. as ou'bned in dgtrict s re noinina ccsts. Disfact D. obc'Y is to !?/!ew the the in+e ar.nection ayeement be.taeen he two ocrtes power sccd~y cost rete semiannuck t in Dccember 1901 y

and, 0:30 rose c rangec ;or r,e.t to pronce the board odopted a new rate struc'ere that brouaht rates p a7.

%t i m C mA 300 rrw of f.rr, bra; rect: enc! transmission for oil customer clcsses more in kne wah SMUD5 cos of caca:q cn.t: nee-The d sina's share c! this serece is 3erjce The resuh was an overc4 rate decrease of 0.9%

ondec ed to be 40 '

weh most of the decrease coing to buoness customers Cer Cin O Cndy ddpJ'es De*neen SIN.'C and EG,$E paying more then i 10% of t$r c'ost cf service 1

te:e resaea uncer tre trarrracr. ote sd ecce and the Achouch SMUD's rates e< teed ine not.onal overcae thea l

g pG9.E a d 'her WeV Coca d bes t

r g figrp@CC rC e ygjg t_0, ppg,g{g m g r

, " r19 f Cn Cg p p er p idC *C f E ms

'I be Ye _ rd t'c* sm thn se ace f ', c! bn.

l @2, the a /erage res.ce'AOI ra% for c 901 t ~ ca : tW 9 U C m tc r ches carc;te a-d ggy

,,.,r, S 00 cets : _ M serss on eu* ted e ergj hcrn ECE cna - *.er -

7 ' c f W -.w. to 19 3$ cgz g. ;gh (g, g pg.33 gggmg The d3 yg hm

+

cyc?Gifcorm-m.i3 a

-, rar W.g e.rea not mcreawd rce. smce 1 % ; coa d:es not a hc paw c ry <> 3 1 ne -

7;=

ra e,r.cma e m,19c,sa v, ay7 ; tu re'e mmam en m.

,..,, _,,.. g:

,~r

-r

,.m..

.....e-o m& '*n e e c p; e +, t rean and bu d + wce-eg.ed e appemce 3%E annuou, Cumra i;r d,nc a eer <. Mc eamme cr:d cH gn., PGsE c seu

[g, e,g 3937,ma,. m d Fcncho Sem cisad.v b bw + e'$

+

c nars q = f e e se 0

t c :ce nasea 'c u x roies G:;r fuocrd. stauD e pect a rou e rmc.n a

me sce,t+sogenemc n m ea pe;.

%~,.

3 %a cpprceat4 25% beau PGSE1 rou

.., ~

a armas oe oe m, _ uct e rx epnrauct Decomm.issioning Cap.tal improvements AnJm prcoc.ed dwomnmorzg p,m r,se ancu.

i e

r and Future Financing Seco reear pbnt was Wd v en w %dect kgam SMJD s capac irnproe+ - 5 :902-!996 ce ya Ccar necn VC) in May 1991 f JC cppro<ci of i i

s ope:H by tr o l 092 The fes* dage Ad cr $92 5 r-hon Th _
  • xe hs r.;t,r. W : =

plan decommson.ng s a ucrage phaz tr s irvie: w ing

]

/

b rante tb r ew cmer< -/on mokt Hoe m-the pbnt for copcmew IC 3ece. Abr tM pf

-N cLdea omog

  • capta ea. m m c e me t we <

t e.r q. ; c., r ;;, gr

,dv-J wu, G.

L.

e-a r

s.

u.. ~

r s

sme.ww un on com B

h Financial Summary

.l c

i3000. Years Ended Dec. 31) t Actual Projected

?

1988 1989 1990 1991 1992 1994 Operat:ng Revenues 521 480-585,741 649.987 644.393 661.105 717,876 Other income, Net 34.901 E 2.963 55.447 42,501 50,199 22,0B4 Total Revenues 668.704 705,434 686,894 711,304 739.960 616.47i Tsal O&'A Emenset 411.853 422.824 452.465 424.776 432.252 457,748 Net Revenues 204.618 245.860 252.969 262.118 279.052 252,212 Total Debt Se oce

  • 120 873 127.131 137,390 144.022 157.115 173,726 Debt Se,:e Coverage d 69 1.03 1.84 1 22 1.78 1 62 Faed Cha'y Roto W
  • i 13 1 26

!.47 1.52

.56 1.50 7 M"'

Od en.P.*

'[

,C'Cbv 7.)^76'

"{

.C s

Cd rj Ct'EI / W 'C 6.' ZI n'P C'M ( ', C h/NCS I- )

lOk D.hb.JC6 $ 3' D # TI'(.C Y

'@ sk$d h

~

j I

piae,a be de:oman. nard by moong ch fuel and c:het 3 ect. priman!y due to the transfer of $18 4 mAon c,f

)

rad: cache mctenais a on de ! ::scm re.+nues into a rate stcolzation fund increased cusicmer The dna onecates tha-u tcta! ccst for bc h sc!es conmbuted an and:tiona! $ 13.2 mkn e cperanng 1

3 decome =r.g no es di cwomate $2M mScn n revenues. Reduced purchased power costs largely were i

3. W.4 Oc G L

. c

,mi r%On 9 iYY.

reLpOnsiCie fCf C +p/ /

rr mCn, Of 6,t, decens in Om,,A.

4,

i pius CppICL m Ct9b.N O

-! h9,'h-h05 Opproved + Dq%,' s r

. 9 e,penLe5. CeSpite the CCntinued drought in (CMOmic, The

,e C050'$ tOf Ede 7e5DIO*Cn l

i finOncicI 05:dOnce pIc't odd OrOded C Oc55e5LiCf rDrI /

dishCf hCS CNet the DEQCINe bnOSCiOI impOct ThrOUgh 1

Ocense br Rancho Soco Bom ccnons di take effect economy energ~! purchases from the Foaf:c Northwest and H--

cencina the NCs tw en of a cnolenge by 'ne Environ-lcwer natuto! gas prices. Substant!al cco savings recent!7 menTO' Con 5ttvCf.cn OOOn:ZOnCJ E deco *Tm M Or ;r a ha've bee 9 inCUTred by the ddtriCt, k, O fe5Uit. SMUDi cbaty t:uu fund currerQ eteis $97 ruch ; enac! contnbfor.s o reduce expenses further is Meiy !c le mc:e d fhcuit in n.e t

to the trust d ea.;al $6 rnicr. cer year ure me d:s'nc?

fdure.

i rece:<es N.m acprovat 'or m, e aec hsece ^g pan 1ne t he d:stnes ;,ewcaperge :ctio sr.:we; tener.mprove-a ann c CGTJr butiOn th95 W.I SCf 90te D b l 2 '" eon pe Fr ent, reaching }.52x in 99l The f.>ed-ChOr.*;e ichD ts u

s.

t

,/ eof brOU3h 2If36 M7F I E OcCr:.<d Of Ye don t* 9 COnLidered be mCLf COnSeNCE<e brm of debt Lerace i

=

1 0

m 1

L

) ( h e'e

$bveIC-b'bce ek dCOS C C [lij

'.k'Cin mCE IC v IC'7N c ?1

  • O!n n COi ve 95 Ono F*

h.

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er

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Finances

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ID P26 TIX:.

HEADI,INE: 8&P Raises sacramento Muni Util Revs To A=; Assigns Var Rtgs NY - S&P CreditWira 3/31/93== S&P raises its ratings on Storamento Municipal Utility Distriot, Calif 's (SNUD) $568 million electrio revenue bondsseries7-8[on-W,bordinatedelectricrevenuebondeseries1988toand 1993A to V

SMUD's $337 mil 1 su j

triple ='Be= plus from triple

'B'.

j In addithon, sep assigns its single 'Ar-minus rating to the SNUD's $75 l

million electrio revenue bonds series 1993E and approximately 4351 million olectric revenue refunding bonds series 1993D.

The rating upgrades reflect the reduced risk associated with the resource noquisition plan due to substantial development of the local area independent power projects -- phase 1. While unoortainty remains regarding demand

  • side canagement (DsN and late 1990s capacity additions, E No M Northwest i

transmission noo)ses with the operation of the COTP (California =0 regen i

provides sNUD suf Transmission prodeot plan variances. Rowev)er, new resources,ficient flexibility to manage resource i

including Dsu will provida over 50% of SNUD's load in 3003. Until phase one, pro $ sots over 500aw -- and the Board has implemented rate operational -- eneoapassing inormasin esses to fund the further. g purchased power expenses, the district rating is unlikely to abange SMUD is utilising a diverse resource strategy to replaos investor-owned i

utility power purchases and provide for load growth. Integral to the plan is an afficient DsN program anticipated to allow SNUD to 11 alt capacity 4

requirements to current levels. Demand-side programs sooounted for 2973r of i

5 capacity in 1991, approximately 39% of the 768aw projected DSN for 2003. The remainder of the power supply resouroas will come from gas-fired inde dent power projects and advanced technology alternatives.

OXimately 50 of gas capacity in four projoots is well under way and e uled for operation prior to the capacity needs oocurring in 1997 as a result of the termination 2

of 588mw of purchased capacity. Should some pro cavings not materialise, SMUD has sufficient fle$eot capacity be delayed or DSM xibility to replace the sopmoity through the transmission network. sNUD's peak ooours during the i

cummer cooling season with 1991's peak approximately 700mv higher than the Novenbar to January average peak. The transmission tooses allows the district has excess summer capacity. Additionally, SMUD has 400mv of transmis i

onpacity between the district and southern California Baisen Co., which of the southern California recession and southwest capacity surplus The resource plan will be expansive. but primarily financed on an 3

off-balance-sheet basis. SNUD is projecting S.e4 annual rate increases in order to maintain the strong financial position the utility has established over the last three yea.rs whila paying for the :pro $ sot capacity. The rate increases are reasonable taking into effect bota the slower load growth of the i

sacramento county area and expensive tariff natural gas prices for the projects. While a Noclellan Art closing would lower load requirements further, i

alower growth will reduce the pressure on the resouros plan. The Sacramento 4

ocenomy has softened, nut still has significant strength. Unemployment for th3 county is up to 7.7%, but is a function of slower employment growth, not I

employment declines.

SMUD's rates are very competitive, banofiting from the distriot's hydroelectrio capacity on the Upper Amarioan River and low-cost WAPA (Western L--.

Arca Power Administration) capacity. Residential rates at 8.18 omnts per kWh aro 42.6% balow PGEE and, while rising,. are expected to remain signiflcantly below PG&E. EMUD additionally has established a $49.7 million rate ctabilization fund which likely will rise to $75 nillion by the end of fiscal 1993 and will smooth the rate impact of higher:purchased power costs.

The ratings outlook is stable. SMUD's operat;.onal and financial flexibility support a single ='A' category rating. Bovever, until ths phase one resouros cep ioition plan is completed and in the rata base, a higher rating is unlikely, S&P said. --CreditWira Contact Mark Ryan (212) 208=1848, William Chew (212) 208-1850, William Cox (212) 205-1866.

t

)

i l

]

SACRAMENTO MUNICIPAL UTILITY DISTRICT SR. BOND RATING HISTORY Standard & Poor's l

1 1984 - AA i

4/22/86 - 8/27/86 - AA-8/27/86 - 6/4/87 - A 6/4/87 - 5/6/92 - BBB t

5/6/92 - 3/29/93 - BBB+

l 3/29/93 - Present - A-i Moody's 3

1984 - AA i

4/30/86 - 11/25/86 - A1 l

11/25/86 - 2/2/87 - A 2/2/87 - 9/28/87 - Baa1

~

9/28/87 8/1/91 - Baa 8/1/91 - Present - A EMt1 12/28/89 - 5/6/92 - BBB 5/6/92 - Present - A-l 3

e

.,.

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