ML20049A175

Forwards Annual Financial Rept 1978

ML20049A175
Person / Time
Site:	Rancho Seco
Issue date:	03/26/1979
From:	Oubre R SACRAMENTO MUNICIPAL UTILITY DISTRICT
To:	Office of Nuclear Reactor Regulation
Shared Package
ML20049A176	List: ML20049A175
References
RJR-79-144, NUDOCS 7903290156
Download: ML20049A175 (1)

Text

g~ SACRAMENTO MUNICIPAL UTILITY DISTRICT O 6201 S St suun 95813; (916) 452-3211 RJR 79-144 March 26, 1979 Director Office of Nuclear Reactor Regulation U.

S. Nuclear Regulatory Commission Washington, D.

C.

20555 Sir:

In compliance with Nuclear Regulatory Guide No. 10.1 " Compilation of Reporting Requirenents for Persons Subject to NRC Regulations" Appendix A, No. 48, Code of Federal Regulations Title 10 Article 50.71(b) and Rancho Seco Administ rat ive Procedure AP. 21, En closure 5.2 (1), please find enclosed eight (8) copies of the Sacramento Municipal Utility District Annual (Financial) Report for 1978.

Very trul yours,

/

[G/

n R. P. Oubre' Acting Manager, Nuclear Operations RPO:RWC: Jim Enclosures es:

R.

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1 Board Elections Fredenck E. Andemon. Jr. a member of the SMUD Board of Directos since 1971, announced that he would not mn for reelection in 1978. Paul W Carr, a Sacramento crea businessman, was ekcted to a four-year term to succeed Highlights of 1978 Mr Anderson.

13.194 new sewice connections were Courtland rancher. Donald C. McClain.

made during 1978. bringing the total l

was reelected to the SMUD Board for a number of customers served to over 300.000 l

tour-year terrn. Mr McClain has sewed as for the fist time.

l a Director since 1974 Peak demand rose to 1.578 megawatts dunng a prolonged heat wave, and total

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energy sales increased to 5.150.866.000

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kilowatt hours

• during 1978.

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Net revenue rose to S29.584.000 tor 1978, and construction expenditures

<, yg totaled S68.172.000, up 39.9 percent over the previous year.

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SMUD's capitalization at year-end stood IOt"iEOf" UE3f#w,35 at $851.999.000.

Txcludes sales et surplus power g{

AnY%~.1s,

'd2 2,v %,

,a n-na w w a sam.

y ;i. 7x r An+ s a 3r rygig e, ne w v OnThe Cover Sails on Rancho Seco Lake symbolize the rich recreational potential which 3@

Northem Caltfomians enjoy and illustrate

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how Sacramento's need for energy is met while keeping other basic commuruty needs in mind.

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Cover photo by: Robert Miller Sacramento 1

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Operations Record growth and extensive new constmction were expenenced in SMUD's sewice area during 1978.13.194 new customers were added. and for the !trst time in its history. SMUD sewed over 300.000. Large increases were recorded started on November 15.1978 and com-in both the residential and commercial pleted on December 21.1978 This period of customer groups.

36 days 8 hours9.259259e-5 days <br />0.00222 hours <br />1.322751e-5 weeks <br />3.044e-6 months <br /> established a new record The geographic boundanes of SMUD's for a plant of this size.We are proud of potential sewice area were expanded this accomplishment.

substantially dunng the year as a result of SMUD's hydroelectnc project in the annexation of a sparsely populated Sierra retumed to full sewice during 1978 area adjacent to the Distnct's existing following the drought of the previous year.

boundanes. Residents in a 100-square mile During 1977. only 0 2 billion kilowatt-hours section of southeastern Sacramento County were generated by SMUD hydroelectric voted to join SMUD This set in motion plant plants This contrasts with a 1.7 billion kilo-evaluation studies and negotiations for watt-hour total for 1978. Return of more the eventual purchase of the distnbution normal weather conditions made it iacilities in the area possible for hydroelectricity to once again SMUD also began to provide electric play a major role in supplying area energy service to the Delta community of Walnut requirements.The Distnct purchased Grove which had previously been sewed capacity and energy from the Cahfornia by the Alex Brown Electnc Company Central Valley Project. owned and This included service to an area of approxi-operated by the Federal Govemment mately one square mile. annexed to the Energy purchases in 1978 totaled 1.9' billion Distnct in 1977 kilowatt-hours ! rom this source.

Customer growth and an extended penod of very hot weather contnbuted to Conservation a record peak demand of 1.578 megawatts Conservation programs developed by onWednesday. August 9 On that same SMUD are another means the utility day SMUD set a new. 24-hour energy use employs to manage energy use through record of 26.465.800 kilowatt-hours This reductions in waste.

record was 20 8 percent above the top SMUD works with alltypes of energy kilowatt-hour consumption day during the consumers. even those whose greatest previous year impact on the electnc service is yet to come.

Meeting these record system totals with For example, a mobile energy road show a reliable supply of electncity was made travels to area schools taking the message possible by SMUD generation resources.

of conservation to tomorrow's customers.

SMUD's largest single source of power Dunng the year. new home buyers is the 913-megawatt Rancho Seco nuclear received copies of an award winning power plant. Although a transformer SMUD booklet on proper landscaping and failure cut this plant's capacity back to 70 its importance in conserving energy SMUD percent dunag the first seven months of sponsored neighborhood home energy 1978. it still generated 5 0 billion kilowatt-conservation workshops and continued to hours dunng the year Rancho Seco was offerhome economic sewices andits returned to full power operation in time attic insulation program. consisting of to help meet the record peak summer inspections. installation and low-cost penod Rancho Seco's second ref ueling was financing.

3

7' SMUD analysts work with a variety of ftrmsof allsizes Energymanagement seminars were conducted ior businesses.

as were on-site energy analyses of many commercial and industrial customers.

Over 275.000 people attended Sacro-mento's third annual Energy Expo. SMUD mission lines linking the new Carmichael was a pnmary sponsor of this conservation substation with existing stations serving the trade show Interest in solar energy was nodhern portions of Sacramento County heightened by the first " Solar Fair" for continued during the yearThese 230.000-Sacramento area residents at the SMUD volt lines will combine both overhead headquarters building and bythe Distnct's and underground constmction to minimize sponsorship of a solar home "open house" their impact on the area's residential Such programs make it possible for con-neighborhoods Completionof thesefacili-sumers to see the latest in methods and ties is scheduled for 1980. Costs associated products which can assist them in their with the centralcity and north area conservatton e!!oris.

transmission projects under const ruction A residenttalsolordomestic water during 1978 totaled $1.3 million.

heating program was begun during the Sacramento's northeastern communities year. and a load management expenment will be served by a new bulk power was expanded The expenment involves substation and operating headquarters control of air conditioning on approxi-scheduled ior completion in the early motely 900 test homes during peakuse 1980s.While fulfilling the need for summer months, additicaal electrical capacity for the area.

A residentialincentive program the complex will also serve as a base of aimed at both new constmetion and the operations f or various support iorces remodehng market was prepared during serving the northeastern county Approval theiourth quarterof the yeat and is of an environmental 1mpact repo t on this scheduled to begin in January.1979.The multimillion-dollar project marked the program encourages heat pumps and first step in its development as a SMUD other energy savmg construction iectures.

resource fortheiuture.

The initial phase of a multistage trans-Construction mission expansion project designed to Expansion of the distnbution system increase system capacity at various points serving SMUD consumers required an was approved by the SMUD Board of expenditure of S22.559.000 dunng the year.

Directors during 1978. Work related to this SMUD has a long-standing policy of con-1irst stage willinclude constmction of new structing all new residential distribution transmission lines in several areas through-circuits underground This!act accom-out Sacramento Count y and the adjoining -

ponied by increased building activity, region. In some cases. existing f acilities required SMUD tolay an estimated 647 will be expanded. while in others, new lines milesof undergroundccble.

must be constructed.This!irst phase of the Constmctton of a 6.25 mile transmission transmission expansion project has an line connecting central city bulk power estimated cost of S6.75 million. Facihties substations proceeded on schedule during included are scheduled to go into service 1978 The 115.000-volt line will, when beginning in 1980.

completed in 1979 increase system relia-Constmction of advanced secunty and bihty for a malor share of the consumers fire protection systems for the Rancho Seco 4

servedbySMUD Constmetionof twotrans-nuclear power facihty, necessitated major w.

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utilities to study the feasibihty of devel-oping geothermal resources in northern Nevada. Plans have been announced for a three phase project with the goal of developing the hot water geothennal potential alrecoy known to exist in the outlays of time and money during 1978.

area. SMUD allocated S125.000 as its share Both the secunty and fire systems are being of the !irst phase. Phase one willinclude retrofitted to SMUD's existing plant to a nine-month study to locate a desirable meet new. more stnngent requirements site and to investigate environmental.

placed on all commercial nuclear power regulatory and cost questions.

pla nts by the Federal Nuclear Regulatorg Solar energy will be converted directly Commission (NRC).

to electricity which will be fed into the Secunty upgrading ior the Rancho Seco existing electrical grid at Rancho Seco site has un estimated cost of $5.5 million.

if a proposalsubmitted bySMUD and Constmction related directly to this project a project contractor is accepted by the began during 1978. and is scheduled for Federal Depadment of Energy (DOE).The completion in 1979 S3 million project has been selected as Installation of improved iire protection oneof thefinalistsforDOEfunding Should systems was begun during the year This the proposed 0.1-megawatt photovoltaic retrofitting is scheduled for completion plant be approved by DOE.constmction early in 1979 at a cost of approximately could begin as early as June 1979.The ulti-

$125 million mate goal of the project is to gainflisthand knowledge of how this space age tech-Resource Planning nology might be brought back to eadh as Planning to meet future needs took on future energy resource.

special meaning ior SMUD during 1978.

At year's end. the SMUD Board of While working with existing customers to Directom approved an emission offset aid in the etficient use of electric energy program to clean up air pollution as a SMUD also continued the search for new prerequisite to the potential constmction generation resources to meet tomorrow's of a combined cycle power plant in the energv requirements SacramentoValleyThe proposed 160-Expansion cf SMUD's existing hydro-megawatt combined cycle plant would be electnc project in the Sierra Nevadas was oil-fired Planscallforitsconstruction under review dunng 1978.Three separate adjacent to the existing Rancho Seco expansion projects have been proposed facihty which could net more than 40 millica additional kilowatt hours annually Litigation When the existing hydroelectnc project Dunng 1978. a settlement was reached was constructed in the 1950s and 1960s.

on the $6.7 million claim filed by none et the expansion now being Westinghouse Corporation with SMUD considered was economically viable. but regarding repair work on the Rancho increasing fuel costs and growing demand Seco steam turbine The turbine's two low for energy require that these options be pressure rotors f ailed and were replaced reviewed Feasibihtystudies begunin in 1975 The negotiated settlement called 1978 must be completed betore a decision for payment of S3 3 million of the contested on the expansion of existing hydroelectric amount to Westinghouse. SMUD received resources can be made.

payment of S2.1 million from insurance SMUD hasloined with other westem carries and other parties resulting in a net 7

became etfective on May 2 The rate increase was the!trst in two yeont Ecllowing negotiations with the Organization of SMUD Employees (OSE).

monthly-rated personnel received a 6.25 percent wage increase inJune. SMUD payment by SMUDof S12 million.

employees represented by the Interna-The Distnct and the Pacific Gas and tional Brotherhood of Electncal Workers Electnc Company are continuing to work (IBEW) received a 70 percent wage towards arbitration of a S70 million claim increase in December following separate

!iled by PGandE in 1976 as a result of negotiations with that bargaining unit.

plant outages at Rancho Seco_

SMUD's average number of equivalent full-time employees rose to 1.611 during Purchased Power 1978. and the annual payroll exceeded The Western Area Ibwer Administration

$313 million (WAPA). an agency of the Depadment of in October the Distnct completed a Energy which administers the power

$40 million. long-term revenue bond sale marketing functions of the CentralValley (Electnc Revenue Bonds. Series G).This Project. put into effect an intenm rate issue is rated AA by Moody's and Standard increase for Central Valley Project power

& Poor's. as are all previous District of approximately 95 percent effective bonds The Distnct has maintained debt May 25.1978. pending completion of an equity ratios debt senrice coverage ratios administrative proceeding to determine and a healthy 1inancial climate in order an ultimate rato. WAPA is proposing two to retain this high quahty rating The Series alternative rate structures. one of which G Bonds were sold at a totaleffective would result in rates to SMUD approx 1-interest rate of 6 015 percent.

mately 15 percent higher than the intenm The Distnct capitalization at year-end rates The second would redece the intenm was S852 million. of which 42.1 percent rate by about 9 percent.

was equity Net revenue for the year was In addition to the administrative

$29 6 million. providing a revenue bond proceedings the United States has c lawsuit debt service coverage ratio of 2.45 times.

on ille against the Distnct seeking a judicial At year end. SMUD's Board adopted a ruling on the CVP contract provisions 1979 budget totahng S209 million of which which SMUD contends hrruts rate increases

$641 million was earmarked for capital to less than those proposed byWAPA.The expenditures and $30.2 milhon f or nuclear United States and the District have agreed fuel purchases The budget calls for no rate that until final judgment is rendered in that increase dunng the year but does show lawsuit the Distnct may pay into escrow need for an additional S50 million outside all bilhngs for Central Valley Project 1inancing around mid year

/

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power in excess of those based on the pre-May 25.1978. rates A

Financial

\\:m C'..a r.3ae Totaloperatmg revenuesIor the year Ge m d t.or.aje-were S135.223.000. an increase cf Il 5 percent over 1977 increased revenues j

were denved f rom an 8 0 percent growth

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c in sales and a 14 4 percent rate increase g,3 c gg 8

adopted by the Board of Directors which nesdri

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BALANCE SHEETS

[ =omter 31. l?/8 und 1977 Assets 1978 1977 Electric utilityplant:

Plant in service.at onginalcost

$817,258,348

$791.480.908 Less-Reserve for depreciation 141,535,467 125.342.161

$675.722,881 S666.138.747 Constmctionworkin progress 30,704,640 30.587.929 Nuclear iuel. at cost less amortization 65,071,127 42.458.321

$771,498,648 S739.184.997 Segregated funds, consisting of cash and securities,at cost which approximates rnarket:

For constmction purposes (Note 4)

$ 64,169,265 S 37,178.421 In reserve funds for Revenue Bonds (Note 3) 25.064,883 23.582.678

$ 89,234,148 S 60.761.099 Current assets:

Cash 377,412 S

231.959 Segregated cash and securities for payment of debt service 13,702,665 13.558.233 Accrued interest receivable 1,884,899 1,581.610 Accounts receivable. less reserves of

$242.873 and S 199.037. respectively 9,499,541 6.842.243 Receivable irom sale et surplus power 3,316,362 6.798.493 Materials and supplies. at average cost 11,361,013 9.766.828 Prepayments and special deposits 697,852 1.185.330

$ 40,839,744 S 39.964.696 Deferred charges

$ 5,709,646 S 6.477.988

$907,282,186 S846.388.780 10 l

i Sacramento Munic: pal Util:ty Distnct Liabilities and Customers' Equity 1978 1977 Capitalization:

Customers' equity employed in the business-Balance beginning of year

$329,210,379 S310.891,798 Net revenue forthe year 29,584,059 18.318.581 Totalcustomers'equiti

$358,794,438 S329.210.379 Long-term debt (Note 2) 493,204,534 469.224.885

$851,998,972 S798.435.264 CurrInt liabilities:

Accounts payable

$ 19,848,065 S 19.367.344 Accmed salaries, wages and vacation pay 3,668,639 3.207,396 Long-term debt due within one year 16,055,829 15.608.905 Accrued interest onlong-term debt 6,351,888 6.060,974 Customers' deposits 2,288,346 2.012.548 Purchased power rate increase (Note 6) 4,037,451 Other 3,032,996 1.696.349

$ 55,283,214 S 47.953.516

$907,282,186 S846.388.780 The accompanying notes are on integral part of these balance sheets 11

'f Tt STATEMENTS OF NET REVENUE N(

Meramebi e

Melcipciutaity Distnct Yec s ended December 3L !?78 and 1977 f

,W) "

'z "l l j

t t

1976/),

f 977 1

f[#

.,y i

y

$ 53,955,315 S 4/4 M 194 Operating revenues:'

/esidental,f h Commercia'.edihdustnal i

e

1. 48,446,174..e -r 42.011.519 u

e

,s a.

wa

,' j.$e,e of stIplus pawer '{4cte 5)

.31,557,W6 33.570.1 3 -

\\

3

.i /

O f' 1.145A079' Other 1,263,368 r

f-

.j

/

~

.,' (,s;,

Total >perating revenues

$i35,24'33?s /

S121.224 24^;

.I

'r J

/

,.(

a Operatingr expenses:j Operation-s

\\

/

I l

$ 11,739,G f,.rS 7.779.698, Purchased power (Note 6) 3

> f2

- lf s'

/ '

Nucleariutl used for generation,i C '. / '13,507,470 ' ~

'4 5671'77 i

e, sJ.

e,

~

i Production

/

8,627,32,4 8.'359550 s

f (,_15.131.059

/

/

Other 17,126.324 'y s

w.

o y f,,

Abnormal generation plant r

-)

.F-maintenance (Note 5)

(2,1?.,9,463) 15.274430

/ Othermaintena.nce,

17,350,450 Provision !or de'prtN1ation (Note 1) 21,768,744 20.795.1C6 e'

'l l i

,, s Totalopdating expensA

$ 87,980,753 S 53.607.515

~

1 e,

a w

',/

a g,

r ',i Net.c @ ngnevy ue a

$ 47,242,080 S 37.616.73l j

ee

/

s

+

Otherincome:i -

Allowana for ([h fy fimds used dunng

,)

constnicti,n'(Note J /

900,7871 fy 539.843

• y'

,j y

. Jnterest picome and other 5,360,035 4 730.164 ~

,s 6

j.*

6e f

g-p#

$ 53,503,752 S"42.886.738 Grrsj,ancome

,, '(/

Interest expense:

Interest'on long-term debt - "

25,032,873 25.081,778 12 Allowance 1or borrowed funds used e'

during rgretruction-credit (Note 1)

(1,113,180)

(613.621) m, 1 a

1+t

~t/

r t

- Wi, venue 16r the year

$ 29,584,059

$ $.318.581

~

..t.

.-l fa'

~t

/ /e je accorj j @r:0 notes me arx';stral pan er these statemer.ts.

f,

I 4'

STATEMENTS OF CHANGES IN FINANCIAL POSITION fort e.t e r m s utaty D o nct

• Wr ; r-r.duiI,. ce.~.t.or 31,17/8 and D77 f

h 1978 17T7 Funds provided from:

Operatiors-Net revenue for the year

$ 29,584,059 S 18.318.581 l

Add-Depreciation 21,768,744 20.795.106 l

Interest on long-term debt 25,032,873 25.081.778 Totalavailable for revenue bond debt sewice

$ 76,385,676 S 64.195.465 Add-Nuclear fuel used for gerieration 13,507,470 16.267.672 Total available ior total debt service

$ 89,893,146 S 80.463.137 Sale et Electnc Revenue Bonds Series G 40,000,000 l

Reductions in working capital 6,454,650 7.703.783 Reductions in segregated construction funds 970.620 Reductions in reserve funds 265.773 Other 698,330 848.832 Total funds provided

$137,046,126 S 90.252.145 Funds used for:

Debt serace-Revenue bonds

$ 31,136,192 S 29.561.694 General cbligation bonds 9.264,523 11.978.805 Total debt service

$ 40,400,715 S 41.540.499 Additions to plant 68,172,362 48.711.646 Additions to segregated construction fund 26,990,844 Addittors to reserve funds 1,482,205 Total funds used

$137,046,126 S 90.252.145 Number of times debt 13 service is covered byfunds available:

Revenue bonds 2.45 2 17 Total debt 2.23 1 94 n.o c r.p :.nr m m.

e em; mm. m,, r.n

Notes 13FinancialStat ments Locernber 31.1979 and 1977 1.Summaryof Significant Accounting Policies mately 5.5% and 6.5% respectively. of eligible plant underconstmction.

ORGANIZATION AND EXEMPIION FROM INCOME TAXES RETIREMENT PENSION PLAN The Sacramento Municipal Utility District was The District's employees are covered by a con-formed and operates under the Municipal Utility tributory retirement plan administered by the State Distnct Act.The Act confers upon the District the rights of Califomia. Contributions by the District for 1978 and powers to fix rates and charges for commodities and 1977 cmounted to S4.084.000 and S3.259.000.

or services f urnished, to incur indebtedness and issue respectively Retlecting recently improved benetits bonds or other obligations and. under certain cir-of the plan and actuarial studies. the District's rate of cumstances. to levy and collect ad valorem property covered payroll contnbuted to the plan increased taxes.The Distnct is exempt from payment of federal from 12.38% to 12.46% effective January 1.1977; to and state income taxes.

13.46% effective July 1.1977; and to 15.31% e!!ective METHOD OF ACCOUNTING July 1.1978.

The Distnct's books and accounts are based upon 2.Longillerm Debt the Unitorm System cf Accounts for Public Utilities and Long-term debt outstanding at December 3L 1978 Licensees presenbed by the Federal Energy Regula-and 1977.was asiollows:

tory Commission. the same accounting system which 197a 1977 investor-owned electnc utilities operating in Calif or-Generalobligaton Bonds-nia are required to follow.

Ibwer Bonds of 1938.

Includmg premium. 511979 640.359

$ 1.268.705 DEPRECIATION AND AMORTIZATION METHODS nectnc Bonds. 2% 1979 to 1990 6.s64.000 7.584 000 The District provides for depreciation on the his-Buildmg Bonds. 414-3/41 1979to1992 6.420.000 7.000.000 toncal cost of electric properties on a straight-line SMUD Bonds senes C.

basts at rates determined by engineering studies.

3 3/4t41/10s 1979 to icei 19.200.000 25.000.000 The average annual depreciation rates for District Revenue Bonds-Upper Amencon River Project plant in 1978 and 1977were:

Ref undmg Bonds. 3-l/10%

197a 1977 3-3/1011979 t01991 53.500.000 56.800,000 White Rock Project Bonds-Intangib:n plant 3.06%

3 06%

Senes Aand B. 3 t/4V 31/2% 1979 to 2004 35.475.000 36.300 000 1.53 1 52 Senes C and D. 61/4L Nucknr 3.35 3 29 7% 1979to2010 55.800.000 56.200 000 Transmusmn 2.62 2 87 Electnc System Bonds.

h. "

3 j

3W3 3'2011979 to 1983 5.145,000 6 290 000 Electnc Revenue Bonds Drr posite 2.91 28, Senes A-G 4 3/4W7%

imt 2ma 326.000m 29 100 g The Distnct amortizes the cost of nuclear fuel on a Nments 3 afar unit-of-production method, based on the cost of Pure s nuclear fuel plus estimated disposal and/or repro-6-3 '4% 1979 to 2000 1.433.s17 1476639 Cessing Costs.

$510.47s,176 S486.109.344 ALLOWANCE FOR FUNDS USED DURING "pSdd[$$[

1.217,813 1.275.554 e

CONSTRUCTION v.ss-Amount due within cro year 16.055.s29 15oos905 Etfective January 1.1977. the Federal Energy Regu.

$493 204.534 s469 224 885 lotory Commission (FERC) prescnbed a formula to be used to compute separately the maximum

3. Reserve Funds for Revenue Bonds amount of the allowance applicable to borrowed Reserve funds for revenue bonds at December 31, funds and to equity funds. In the Statement of Net 1978 and 1977.were as follows:

Revenue the allowance applicable to borrowed 3,73

977 funds is reported as a reduction of Interest Excense Electnc system Bonds

$ 1.056.672 s 1 043.800 and the allowance applicable to equity funds is cectnc navenue rends 16.s65.376 15.312 160 g

reported as Other Income.

White Rock Provt fonds 929.986 027CS6 Amnty sonas 6.212.849 6.2w732 The total allowance for funds used dunng con.

$25 m as3 S2m2 678 stmction in 1978 and 1977 amounted to approx 1

r

4. Ccnstruction Program and Nuclear -

(3) In June.1976. PGandE filed a claim against the FuelPurchases District alleging that the matters referred to above Estimated construction and nuclear fuel expen-indicate that the Rancho Seco plant did not become ditures in 1979 are S64.000.000 and S39.000.000, commercially operable in April 1975 and that the respectively rights and obligations of the padies continued to be controlled by an earlier contract.The claim seeks

5. Rancho Seco Nuclear Plant recovery of approximately $50.000.000 alleged to in April 1975. the Rancho Seco nuclear plant be the difference between payments due under the began commercial operation, and the District's sur-twocontracts.andalsoseeks recoveryof S20.000.000, plus power billings to Ebcific Gas and Electric Com-plus additional costs expected to occur after the filing pony (PGandE) since that time have been rendered of the claim to replace capacity and energy which in accordance with the terms of the 1970 Power Sale, it should have received from Rancho Seco.The Dis-Exchange, and Integration contract with PGandE.

trict and PGandE have executed an agreement The contract provides that PGandE shall purchase whereby PGandE has ogreed that any award or the District's unused generating capacity the energy judgment it receives based on its claim will be sub-generated by that capacity and also the surplus ordinated to the rights of holders of documents energy generated by capacity used by the Distnct.

evidencing indebtedness of the District issued prior Under the contract, payments for capacity continue to the date of such award orjudgment, and has during periods of plant shutdown. although pay-fudher agreed that amounts, including interest. col-ments for energy do not.

lected or offset by reason of such award orjudgment On June 30.1975, the operation of the plant was during any month may not exceed 6 percent of the halted because of a failure of the rotor discs in the District's operating revenues from retail sales during low pressure turbines.The turbine rotors were re-the preceding month. While the outcome of any liti-placed. and the plant went back into operation in gotion that may be based on the PGandE claim late Febniary.1976. It was again taken out of service cannot be predicted with certainty. the District in early Apnl.1976 for replacement of the generator believes that it has meritorious defenses and. in sintor windings and was returned to service on Octo-addition. that an indemnity provision in the contract ber 10.1976 As a result of these problems:

under which the District purchased the Rancho Seco (1) In 1975. the Distnct recorded SS.850.000, con-turbine generator from the Westinghouse Electric sisting of the S9.350.000 turbine rotor replacement Corporation obligates Westinghouse to pay any cost less S3.500.000 of anticipated insurance recov-judgment which PGandE may obtainc ery as " Abnormal Generation Plant Maintenance"

6. Purchased Power RateIncrease The S9.350.000 turbine rotor replacement cost in-On May 25.1978, an interim rate increase for cluded billings from Westinghouse Electric Corpora-power purchased from the Central Valley Project tion which the District had not paid. On October 4.

(CVP) was placed into effect by the U.S. Depadment 1977, Westinghouse filed suit against the District. On of Energy The estimated annual billing increase to November 14.1978. all parties to the litigation the District under the new intenm rate is approxi-reached a settlement agreement under which the mately S7 million. It is anticipated that the portion District paid S3.337.500 to Westinghouse and re-of each monthly bill representing the increase will ceived payments and credits totaling $2.169.000 be paid into escrow pending conclusion of a lawsuit from other padies. This settlement resulted in a net filed against the District by the United States to obtain credit to " Abnormal Generation Plant Mair anance" a judicial ruling on the District's contention that the of approximately S2.139.000 in 1978-cnteria being used in the rate proceeding are not in (2) The District and PGandE are in disagreement accord with a rate modification formula in the con-with the treatment.underthe terms of the 1970 Agree-tract under which the District purchases CVP power.

ment. of the matter referred to in (1) above and cer-The District cannot at this time estimate how much.

tain other matters of fecting the billing of surplus if any of be amounts paid into escrow will be re-power to PGandE The Distnct believes that the final tumec' > it if it is successful in the lawsuit. Currently resolution of these disputes will not have any mater-these umounts are being included in purchased 15 tal adverse effect on the accompanying financial power expense and recorded os a Purchased Power statements.

Rate Increase. current liability

Audit:rs' R: port TEN YEAR

SUMMARY

To the Board of Directors of Operating statistics 197a 1977 Sacramento Municipal Utility Distnct Customers at Year-End 309,735 296 541 We have exammed the balance sheets of Sacra-mento Municipal Utthty Distnct as ct December 31.

KWH Sales (in thousands):

1978 and 1977. and the related statements of net Sales to Customers-revenue and changes in financial position for the Residentiai 2.458.990 2.222.998 years then ended Our examination was made in Commercia:. Industrial, and Other 2,691,876 2.544.239 accordance with generally accepted auditing standards. and acccrdingly included such tests of the Total 5,150,866 4.767.237 accounhng records and such other auditing pro-c leof SurplusPower 3,081,911 2.923.955

~a cedures as we considered necessary in the circumstances Total 8,232,777 7.691.192 As discussed in Note S to the accompanying finan-cial statements. Ibci!!c Gas and Electnc Company Revenue (inthousands of dollars):

h:ed a claim against the Distnct in June.1976. alleging Sales to Customers-that outages in 1975 and 1976 indicate that the Rancho Residential

$ 53,955 S 44.497 Seco plant did not become commerciallycperablein Commercial. Industrialand ~)ther 49,710 43.157 Apn!.1975 and that the nghts and obhgations of the part es contmued to be controlled by on earher con' Total

$ 103,665 S 87.654 tract The claim seeks recovery of approximately C70.000.000 The Distnct belteves its position on the Sale of Surplus Power M,558 33.570 claim will be upheld. but the outcome cannot be Total

$ 135,223 S 121.224 determined at this time Also as discussed in Note o. dunng 1978 the U S.

Average KWH Sales per Residential Depadment ct Energy placed mto ettect an intenm Customer 9,091 8.597 rate increase The Distnct has recorded the related Average Revenue per Residential hlhngs as purchased power expense and anticipates KWH Sold 2.19C 2.00<:

placing the funds for payments in escrow because the Distnct contends that the intenm rate increase is not in PowerSupply(KWHin thousands):

accordance with its purchased power contract The Hydroelectric Generation 1,705,497 209.717 United States has !!!ed a lawsuit against the Distnct t Nuclear Generation 4,965,812 5.870.832 obtain a ludicial ruling on this matter The Distnct beheves that its pmition will be upheld but cannot at Purchases 1,866,937 1.904.428 this time determine the outcome or itnancial effect System Peak Demand-KW 1,577,785 1,353.589 Sr our cpinion. subiect to the effect of any adjust-Equivalent Full-time Employees ments that may result f rom the matters discussed at Year-End 1,678 1.559 above the tmoncial statements referred to above present fairly the hnancial position of Sacramento Financia1 Statistics (in thousands of dollars)

Municipal Utihty Distnct as of December 31.1978 and Tota 10perating Revenues

$ 135,223 S 121.224 1977 and the results of its operations and the changes in its financial position for the years then ended in Operating Expenses conformity with generally accepted accounting Purchased Fbwer 11,740 S

7.780 pnnciples consistently applied dunng the penods Operation. Maintenance. and Taxes 54,472 55.032 Adhur Andersen & Co Depreciation 21,769 20.795 San Francisco Cah!crnia Totaloperating expenses

$ 87,981 S 83.607; January 26.1979 Net operating revenue

$ 47,242 S 37.617 OtherIncome 6,262 5.270 Grossincome

$ 53,504 S 42.887 Interest and Other Income Deductions 23,920 24.568 Net revenue for the year

$ 29,584 S

18.319 16 Times Debt Service Earned 2.2 1.9 Bonds Repaid 15,566 S

16.657 Electric Utility Plant

$ 771,499 S 739.185 Capitalization:

Long-term Debt

$ 493,205 S 469.225 Customers' Equity

$ 358,794 S 329.210

1976 1975 1974 1973 1972 1971 1070 1969 282.621 273.259 264.159 254.646 245.449 234.128 224.679 216.408 2.102.704 2.034.017 1.903.777 1.873.373 1.732.798 1.611.792 1.437.918 1.354.488 2.504.313 2.376.723 2.227.050 2.334.503 2.204.425 2.038.245 1.953.273 1.952.288 4.607.017 4.410.740 4.130.836 4.207.876 3.937.223 3.650.037 3.391.191 3.306.776 I

159.196 1.835.952 l

4.766.213 6.246.692 4.130.836 4.207.876 3.937.223 3.650.037 3.391.191 3.306.776 3 40.553 S 35.188 S 32.497 S 29.686 S 26 624 S 23.302 S

19.711 S

18.692 1

41.405 35.497 32.430 30.957 28.048 24.373 21.566 21.133

$ 81.958 S 70.685 S 64.927

$ 60.643 S 54.672 S 47.675 S 41.277 S 39.825 20.988 28.551

$ 102.946 S 99.236 S 64.927 S 60.643 S 54.672 S 47.675 S 41.277 S 39.825 i

i

(

8.491 8.500 8.244 8.416 8.I16 7,928 7.365 7.179 1.93c 1.73c 1.71c 1.58c 1.54c 1.45c 1.37c 1.38c 1.038.936 2.023.803 2.584.467 1.853.006 1.591.129 1.664.528 1.893.027 2.546.344

(

2.181.261 2 472.624 207.223 l

1.855.626 2.016.288 1.603.556 2.586.927 2.636.552 2.240.277 1.737.889 981.575 1.329.983 1.272.389 1.201.188 1.173.588 1.099.188 1.020.389 908.388 855.589 1.442 1.447 1.375 1.302 1.242 1.166 1.036 963

$ 102.946 S 99.236 S 64.927 S 60.643 S 54.672 S 47.675 S 41.277 S 39.825 S

7.643 S

8.050 S

8.059 S

9.914 3

10.600 S

8.661 S

8.396 S

6.158 36.36'l 38.838 16.811 14.504 13.153 11.435 10.604 9.078 20.552 18.227 8.010 7.698 7.337 6.483 6.000 5.749 S 64.562 S 65.115 S 32.880 S

32.116 S 31.090 S 26.579 S 25.000 S 20.985

$ 38.384 S 34 121 S 32.047 S 28.527 S 23.582 S 21.096 S

16.277 S

18.840 5.254 8.986 29.976 23.377 15.017 10.098 7.048 3.550

$ 43.638 S 43.107 S 62.023 S 51.904 S 38.599 S 31.194 S 23.325 S 22.390 24.946 25.226 25.762 22.524 18.658 13.105 8.088 5.299 18.692 S

17.881 S 36 261 S 29.380 S

19.941 S

18.089 S

15.237 S

17.091 1.8 1.7 19 2.I 2.0 20 1.9 2.7 S

15.648 S

15.145 S

11.053 S

6.607 S

6.237 S

5.898 S

5.759 S 81.876 S 729.178 S 722.081 S 705.812 S 649.036 S 571.896 S 466.091 S 348.155 S 296.190

$ 484.827 S 478.159 S 494.I65 S 509.671 S 420.093 S 340.565 S 206.908 S 154.921

$ 310.892 S 292.200 S 274 319 S 238.059 S 208.679 S 188.738 S 170.648 S 155.411

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