ML20050B916

Forwards Annual Financial Rept,1980 & Financial Statements & Auditors Rept

ML20050B916
Person / Time
Site:	La Crosse File:Dairyland Power Cooperative icon.png
Issue date:	04/01/1982
From:	Linder F DAIRYLAND POWER COOPERATIVE
To:	Office of Nuclear Reactor Regulation
Shared Package
ML20050B917	List: ML20050B916 ML20050B922
References
LAC-8190, NUDOCS 8204070554
Download: ML20050B916 (15)

Text

DlDA/RYLAND h

[k COOPERAT/VE Po BOX 817 2615 EAST AV SOUTH LA CROSSE. WISCONSIN 54601 (608) 788-4000 April 1,

1982 In reply, please refer to LAC-8190 DOCKET NO. 50-409 Director of Nuclear Reactor Regulation U.

S. Nuclear Regulatory Commission M

Washington, D. C.

20555 e

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SUBJECT:

DAIRYLAND POWER COOPERATIVE LA CROSSE BOILING WATER REACTOR (LACBWR)

RECy %'O n,,,

7 4NI-Jgg PROVISIONAL OPERATING LICENSE NO. DPR-45 g

7 FINANCIAL STATEMENTS AND AUDITORS' REPORT, g

6 AND DPC 1980 ANNUAL REPORT

Reference:

1) 10 CFR 50.71.(b)

D 6

~~

Gentlemen:

In accordance with the requirements of Reference 1, we are forward-ing three (3) copics of the annual financial report and certified financial statements for Dairyland Power Cooperative for the years 1979 and 1980.

Also included is the 1980 Annual Report.

If there are any questions concerning the reports or if additional copies are required, please contact us.

Very truly yours, DAIRYLAND POWER COOPERATIVE sfeJL AL c)

Frank Linder, General Manager FL:RES:af Enclosures cc:

J.

G.

Keppler, Dir., NRC-DRO III NRC Resident Inspector p odfW s

i B204070554 820401 PDR ADOCK 05000409 I

PDR

DAIRYLAND POWER COOPERATIVE I

l FINANCIAL STATEMENTS AS OF

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DECEMBER 31, 1980 AND 1979 TOGETHER WITH AUDITORS ' REPORT l

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o Anrrrun ANDERSEN & CO.

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AnTuun ANDEnSEN & CO.

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MINNEA POu s, M INN E50TA r

' II' e To the Members and the Board of Directors

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c Dairyland Power Cooperative

We have examineo the balance sheets of DAIRILAND POWER fa,

a COOPERATIVE (a Wisconsin cooperative) as of December 31, 1980 and i -

1979, and the related statenents of revenues and expenses and q

patronage capital and sources of funds used for construction for the

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years then ended.

Our examinations were made in accordance with generally accepted auditing standards and, accordingly, included such tests of the accounting records and such other auditing procedures as

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we considered necensary in the circumstances.

.i In our auditors' report dated March 14, 1980, our opinion on l

the 1979 financial statenents was qualified as being subject to the c

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effect on the financial statements of such adjustnents, if any, as

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night have been required had the outcome of the Wisconsin Department n

of Revenue's challenge of the Cooperative's method of determining its gross revenue license fee for prior years been known.

As explained in J

Note 10 to the financial statements, the Cooperative negotiated a

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c cettlement with the Wisconsin Departnent of Revenue of the license fee at an aggregate cost to the Cooperative of approximately $100,000 for

-,1 all years through 1978.

Accordingly, our present opinion on the 1979 financial statements, as presented herein, is different from that

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expressed in our previous report.

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In our opinion, the financial statenents referred to above prenent fairly the financial position of Dairy. land Power Cooperative an of Decenber 31, 1980 and 1979, and the results of its operations and nourcen of funda used for construction for the years then ended, in confornity with generally accepted accounting principles applied on a connintent bacia.

ARTHUR A!1DERSE!1 & CO.

flinneapolin, fiinne s o t a,

fiarch 4, 1981.

l

DAIRYLAND P BALANCE SHEETS-_DEC A

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1980 1979 ELECTRIC PLANT (Notes 1, 2, 3, 4 and 6):

Plant and equipment, at original cost

$420,597,124

$403,331,080 Accumulated depreciation (110,485,396)

(96,196,317) 310,111,728 307,134,763 Construction work in progress 16,254,257 15,584,818 Nuclear fuel, at enortized cost 15,442,478 14,685,235 Total electric plant 341,808,463 337,404,816 INVESTMENTS, at cost:

Capital term certificates of National Rural Utilities Cooperative Finance Corporation (Note 5) 9,743,884 10,334,726 Pollution Control Bond proceeds on deposit with trustee 571,289 1,237,324 Other investments 882,609 1,020,912 Total investments 11,197,782 12,592,962 CURRENT ASSETS:

Cash 165,903 124,765 Accounts receivable.

Energy sales 12,200,316 10,977,671 Other 950,994 1,375,910 Inventories, at average cost-Fossil fuels 44,577,098 44,358,885 Materials and supplies 4,911,673 4,046,801 Prepaid expenses 1,031,886 468,419 Total current assets 63,837,870 61,352,451 DEFERRED CHARGES:

Abandoned facilities, being amortized (Note 4) 7,266,491 9,553,391 Other 1,979,201 1,589,355 9,245,692 11,142,746

$426,089,807

$422,492,975

==

The accompanying notes are an integral part of

(ER COOPERATIVE kBER 31, 1980 AND 1979 CAPITALIZATION AND LIABILITIES 1980 1979 CAPITALIZATION:

Long-term obligations, less current maturities included below (Notes 3 and 6)_

Long-term debt

$ 303,225,297

$295,296,544 Subscriptions to capital tern certificates of National Rural Utilities Cooperative Finance Corporation, due in varying annual amounts to 1984 (Note 5) 1,849,864 3,318,350 Capitalized lease obligations, principally at implicit interest rates of 7%, due in varying amounts to 1995 7,435,563 7,659,084 Total long-term obligations 312,510,724 306,273,978 Member and patron equities _

Membership rees 9,484 9,202 Patronage capital (Notes 8 and 10) 56,892,902 58,289,658 Total member and patron equities 56,902,386 58,298,860 Total capitalization 369,413,110 364,572,838 l

CONTINGENT LIABILITIES AND COMMITMENTS l

(Notes 2, 3 and 10)

CURRENT LIABILITIES:

Current maturities or long_ term obligations 23,063,537 7,238,391 Notes payable (Note 7) 15,500,000 28,100,000 Advances from member cooperatives (Note 7) 313,362 Accounts payable _

aeneral 3,276,343 4,891,430 Construction 5,780,299 10,144,937 Accrued liabilities-Payroll and vacation pay 1,633,050 1,443,770 Taxes 2,037,536 1,704,920 Interest 1,316,678 827,399 Nuclear fuel reprocessing costs (Note 1) 2,883,767 2,622,994 Other 872,125 946,296 Total current liabilities

$ 56,676,697 57,920,137

$426,089,807

$422,492,975

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w NOTES TO FINANCIAL STATEMENTS (1)

Summary of Significant Accounting Policies-Organization:

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Dairyland Power Cooperative (Cooperative) is an electric generation and transmission cooperative association organized under the laws of Wisconsin and Minnesota.

The Cooperative provides wholesale electric service to nember distribution cooperatives engaged in the retail sale of

=2 electricity to member consuners located in Wisconsin, Minnesota, Iowa, Illinois and Michigan.

The accounting records of the Cooperative are maintained in accordance with the uniform system of accounts prescribed by the Federal Energy Regulatory Commission as adopted by the Rural Electrification Administration (REA), the Cooperative's principal regulatory agency.

Depreciation:

Depreciation is provided based on the straight-line nethod at rates which are designed to amortize the original cost 2--

of properties over their estimated useful lives.

The provision for depreciation averaged 3.2% and 3.3% of depreciable plant balances for 1980 and 1979, respectively, w

4 Amortization of Nuclear Fuel:

The cost of nuclear fuel is charged to fuel expense based on heat prode od for the generation of electricity.

The

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cost of dispo3al of spent fuel is being recorded over the

-- E lives of individual assemblies based upon management's estinate of such amounts.

Income Taxes:

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The Cooperative is exenpt from Federal and state incone taxes.

Accordingly, no provision for such taxes has been

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made in the accompanying financial statements.

Allowance for Funds Used During Construction:

--]

Allowance fo~

funds used during construction represents the cost of borrowed funds used for construction purposes and is capitalized as a component of electric plant.

The 2

amount of such allowance is determined by applying a rate i

to the balance of nuclear fuel in fabrication and certain electric plant additionn under construction.

The rates used varied fron 57 to 19.5% in 1980 and fron 6.4% to

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15.5% in 1979, depending on the source of funds.

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FINANCIAL t

STATEMENTS

's (Continued) 3 (1)

Summary of Significant Accounting Policies (continued):

- h if Property Additions:

a The cost of renewals and betterments of units of property

)-

(as distinguished from minor items of property) is i

charged to electric plant accounts.

The cost of units of

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property retired, sold, or otherwise disposed of, plus

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renoval costa, less salvage, is charged to accumulated provision for depreciation.

No profit or loss is recognized in connection with ordinary retirements of M'l"'

property units.

Maintenance and repair costs and 9

replacement and renewal of itens leas than units of property are charged to operating expenses.

e (2)

Nuclear Reactor-The Cooperative has operated a nuclear generating facility

.$-~ 2-under a provisional operating license which expired in 1975. The reactor is presently being operated under an informal extension of the provisional operating license.

The Cooperative has applied to the Nuclear Regulatory i

Commission (NRC) for a permanent operating license.

d Because of the Three Mile Island (TMI) accident, NRC is directing its resources towards TMI issues; therefore, its

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consideration of construction permits and operating L.' 9 4'

licenses, including the Cooperative's application for an

'e operating license, has heen delayed.

The Cooperative is unable to predict when a permanent operating license may be

+

granted.

3(. (. s ff,"l" 4 -

The Cooperative has announced its intention to deconmission the nuclear facility by 1990.

Recent events indicate that the nanner of decommissioning a nuclear generating plant 1.5.3 and the manner of disposition of spent nuclear fuel may not JE

/

be deternined for nany years.

Addi" onally, not all NRC i

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requirenents resulting from

'o riews of the TMI accident 33);.

have been defined.

While the provision for depreciation 3 q: '.

includes a factor to provide f or estimated decommissioning m

costs, the eventual cost o 's retiring a nuclear generating

1. [d unit is uncertain at the present time.

The Cooperative continues to review its decommissioning cost estimates and

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it expects that any increates in such costs will be

-j recovered through additionti rates.

vfj (3)

Construction and Commitments-

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.ls t The Cooperative's 1981 estinated. cc:istruction progran is

$17 n1111on.

Financing of construction is expected to be

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provided by borrowings fron'the Federal Financing Bank

(..f (FFB), proceeds f rom the i.ysuance of Pollution Control and i'l; Industrial Revenue Bonds, and short-tern lines of credit g ;.

• with the National Rural Utilities Cooperative Finance f

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Corporation (NRUCFC).

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NOTES TO FINANCIAL STATEMENTS (Continued)

(4)

Abandoned Facilities-The Cooperative was one of four joint owners in a project to build an 1,100 megawatt nuclear generating facility in western Wisconsin to have been known as the Tyrone Energy Park.

On March 6, 1979, the Wisconsin Public Service Comnission issued an order denying the application for a certificate of need for the project.

On July 24, 1979, the co-owners reached an agreenent to terminate and abandon the project.

At the time of abandonment, the Cooperative had incurred or was connitted for costs of approximately $11.5 nillion for its share of the project, including allowance for funds used du ring construction.

The Cooperative has received approval fron REA to reclassify its investment in the Tyrone Energy Park as a deferred charge and began amortization of these costs over a 60 nonth period connencing March 1, 1979 Such amortization is to be recovered through additional rates.

Anortization for 1980 and 1979 was approximately $2.3 million and

$1.9 million, respectively.

(5)

Investment in National Rural Utilities Cooperative Finance Corporation-The Cooperative has purchased or subscribed to purchase approximately $9.7 million of unsecured subordinated

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capital term certificates to be iscued by the National Rural Utilities Cooperative 'inance Corporation.

The certificates will bear interest at the rate of 3% per year and will nature in 2020, 2025, and 2030.

Of the above amount, $2.4 million will be purchased duaing the period 1981 to 1984 in annual installments approximating.7% of operating revenues, as defined.

^3

i NOTES TO FINANCIAL a

STATEMENTS (Continued)

=

(6)

Long-Tern Obligations-The Cooperative's long-term debt outstanding as of December 31, consists of the following:

1980 1979 REA Obligations (2%)

$109,257,045

$115,134,875 REA Obligations (5%)

20,075,150 10,180,671 FFB Obligations (7.6% - 14.6%)

165,191,000 146,359,000 NRUCFC Obligations-Prime plus 1/2%

8,025,000 8%

8,285,103 8,425,000 9.5%

9,278,326 City of Alma, Wisconsin Pollution Control Bonds (4.3% _ 6-1/8%)

13,390,000 13,600,000 325,476,624 301,724,546 Less Current Maturities 15,867,023 6,428,002 Total Long-Term Debt

$309,609,601

$295,296,544

==

Long-term obligations to the REA are payable in equal quarterly principal and interest installments to 2015.

Principal repayments on the long-tern obligation to the FFB begin in 1981 and extend through 2013.

Interest on the NRUCFC obligation of 9.5% is due quarterly and repayment of principal is due in quarterly installnents from 1981 through 1985.

Principal and interest payments on the 85 NRUCFC obligation are payable quarterly through 1999 2

The pollution control bonds are payable in increasing annual amounts in the years 1981 through 2008.

Substantially all of the Cooperative's assets are pledged as collateral for these obligations.

m

_4_

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NOTES To FINANCIAL STATEf1ENTS (Continued)

(6)

Long-Term obligations (continued)-

Maturities of the Cooperative's long-term debt, subscriptions for capital term certificates and capitalized lease obligations are as follows:

Year Amount 1981

$ 23,063,537 1982 28,770,190 1983 9,835,314 1984 9,740,874 1985 6,954,826 1986_2015 257,209,520 T;tal

$335,574,261

==

The amounts due in 1981 include $13,962,000 of two-year FFB obligations which the Cooperative intends to refinance under the long-term commitments with FFB.

In February, 1981, the Cooperative issued $16,100,000 in Pollution Control Revenue Bonds and $3,950,000 in Industrial Development Revenue Bonds.

These bonds, unconditionally guaranteed by the National Rural Utilities Cooperative Finence Corporation, are due and payable in February, 1984.

These obligations are not included in the above summary.

(7)

Lines of Credit-To provide interin financing, the Cooperative has arranged lines of credit agregating $34,600,000, p rincipally through NRUCFC.

Substantially all borrowings are at the prime interest rate.

Information relating to borrowings under lines of credit during the years is as follows:

1980 1979 (millions)

Average borrowing outstanding

$21.0

$18.3 flaximun amount outstanding

$32.4

$28.4 Weighted average interest rate at year-end 17.7%

15.5%

Weighted average interest rate for the year 14.7%

12.8%

There are no compensating balance requirements or fees relating to the lines of credit.

In December, 1980, the Cooperative initiated a policy which allows member cooperatives to prepay their power bills.

Under this policy, the Cooperative will pay interest on these prepayments equal to 1/2% less than the current NRUCFC short-term borrowing rate.

NOTES TO FINANCIAL STATEMENTS (Continued)

(8)

Retirement of Capital Credits-The Cooperative's Board of Directors has adopted the policy of retiring capital credits allocated to patron members on a "first-in, first-out" basis so that at all times the Cooperative will not retain as patronage capital any capital contributed or deposited nore than twenty years prior to the current year.

A ccordingl y, the 1960 capital credits were retired in 1980 and the 1959 capital credits were retired in 1979.

Implementation of this policy is subject to annual review and approval by the Board of Directors and the REA, and no cash retirements are to be nade which would impair the financial condition of the Cooperative or violate any terns of its agreements.

(9)

Pension Plan-Pension benefits for substantially all employees are provided through participation in the National Rural Electric Cooperative Association Retirement and Security Program.

Pension cost for this defined benefit pension program was approximately $1,103,000 in 1980 and $944,000 in 1979.

These contributions are determined in accordance with the provisions of the plan and are based on the gross salaries, as defined, of each participant.

Information from the plan's administrator is not available to permit the Cooperative to determine its share, if any, of unfunded vested benefits of the progran.

(10)

Contingencies-The Wisconsin Department of Revenue exanined the Cooperative's method of determining gross revenue license fee for certain prior years and in 1979 assessed deficiencies and interest of approximately $1.1 million for those years.

The Cooperative, on the advice of legal counsel, contested the firiings of the Department of Revenue.

In December, 1980, the Cooperative negotiated a settlement with the Wisconsin Departnent of Revenue of the license fee matter at an aggregate cost to the Cooperative of approxinately $100,000 for all years through 1978. The liability accrued at December 31, 1979, exceeded the settlement amount by approximately $670,000, which is reflected in the statement of revenue and expense for the year ended December 31, 1980, as nonoperating margin.

The Cooperative has been named in several lawsuits and claims, primarily related to the construction and operation of the John P. Madgett Station.

Although the outcome of these matters cannot be determined at the present time, management and legal counsel believe these actions can be successfully defended er resolved without a material adverse effect on the financial position of the Cooperative. _ __

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