ML20056C394
| ML20056C394 | |
| Person / Time | |
|---|---|
| Site: | Susquehanna  |
| Issue date: | 12/31/1992 |
| From: | Tilton J, Doreen Turner ALLEGHENY ELECTRIC COOPERATIVE, INC. |
| To: | |
| Shared Package | |
| ML17157C370 | List: |
| References | |
| NUDOCS 9306220330 | |
| Download: ML20056C394 (55) | |
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(;;; ~~- .y r f; q; ..s.. ~ ' ' { 7:y:. )$ lYYW5l 'l /," p p Nkof Cent ts 'T Y T >f N'*5 ate From 7g Pres; dent e. and Chairman '*3 I [ Transmission Projects ~ ~ 6 x gugg Power $,;,, ' * * * ' . 9 \\ f**N Managem, '~*12 8 Ray' lown Hyg CIectric. Project- ' ~.... ;3, 1 Powe,g Prity 9 The. J State og NeW York " ~ ~ ' 20 4 A 3Usqubhanna St ha ' Electric Station ' ~ ? * ' * < 24 : Allegheny gog,g~ 'N Of Directors ' ' ' ~ ' ' '
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~ [ ,m.h,:y.ll .] i, J- '4 j 4 . y, f -.7 lgggggj .s ji ~ 4 'S i ' ^ ~ i A flegheny Electric Cooperative, ) i ; /1inc., located in Harrisburg, Pa.,: supplies wholesale power to. Its - 14;- member distribution cooperatites in Pennsyltania and New ' Jersey.
- Those coopemtives, in turn, fur.
1 nish the electricity to light rural' homes and ; pouvr - rural develop-ment. i. . r k y. Y. 1.,. (. g g !c a'
b 'u 3 A Message From The Chairman And Pres ~ dent During 1992, Allegheny continued and expanded its ef. capacity entering our rate base and continuing litigation forts to assist its members m augmenting existing busi. over declining power allocations from the Power Authority nesses and attrauing new industries. Aggressive efforts by of the State of New York (PASNY). In addition, Allegheny Allegheny and its member cooperatives over the past few expected substantial increases in purchased power costs - years have resuhed in the creation ofseven economic devel_ f ni pnvate power compames, opment projects m 6ve different cooperative territories. In 1987, Allegheny had only two-thirds ofits SSES ca- - Eight others are in vanous stages ordevelopment. pacity - 140 out of 210 megawatts - rolled into its rate Fostering aonomic development is a natural extension base. The rest of the capacity was added in increments each of our comnutment to the communities and residents we year through 1991. serve 'I bese development activities not only help provide Also, during these years, the Raystown Hydroelectric job opportumtics, they also stabilize the economic base of Project was under construction and Allegheny faced both rural Pennsylvania and NewJersey and benefit all rural resi-construction cost overrun and operating risks once the proj-den t s. ect came on line. Also, litigation over low-cost PASNY Our primary task in maintaining and ir. proving the (li-power allocations continued and the possibility that we mate 6n business and industry in our region's rural areas is might lose additional capacity from that very af6ndable l 1 the delivery of reliable electric power at reasonable rates. source of power remained. i Energy - particularly electriary - is the lifeblood of Allegheny absorbed some significant private power modern economic activity. company wholesale rate increases during the period. For 1 We have devised and implemented a strategy aimed spc-example, Met-Ed's wholesale rate increased 42 percent dur-ci6cally at holdmg the line on rates and I am pleased to re-ing the period and West Perm's increased 33 percent. port Allegheny Electric Cooperative, Inc. is entering its Despite those and other rate-driving forces, Allegheny sixth straight year of rate stabihty. The rate stability period has held rates steady. During the six-year period from 1987 ofl987-1992 followed nine years when rates climbed at an through Allegheny 1 budgeted rate for 1993, the average average of 11.3 percent per year. This rate stability was net billed power cost for member cooperatives has in-hard.carned, coming amid signi6 cant pressures which creased only 1.1 percent per year as compared to the 11.3 could have driven rates much higher. percent per year increase for the period from c 978 through The challenge Allegheny faced in 1987 and in the follow-1987. ing years was how to control rates amid expense burdens. This is a dramatic improvement - all sn years' in-These burdens included construction risk from commit-creases combined re only one-half as much as that experi-ments to our load management and Raystown Hydroelec-enced injust one of the previous nine years, i i tric projects, Susquehanna Steam Electric Station (SSES) In 1993, Allegheny's net billed ratt vit be 61.24 mills
I 4 per kdowatt-hour, a 2 percent decrease fnun Un2 actual plants, such as SSES, will be assessed fees to help the U.S. rates. Alleghcny ulneved the decrease - the tburth in the government dean up nuclear enrichment facilities. Alleghe-last fh e years - by taking a number of financial, account-ny's 1993 assessment for that amounts to approximately ing, brigation and power supply initiat ves. 5410,tm. Without these new and projected levies, the net Aggressive marketing of SSES power saved our mem_ inlled average power cost - or what member cooperatives i ber mop (ranves $4 6 nullion. Allegheny also repriced ap_ would pay in 1993 - would have fallen 3.6 percent. pro ximately $123 million in high-interest i ederal Finan(ing We also uored several legislative victories in 1992. The ILmL loans, prmiding a net savmns of 51.42 nullion m IW3 U.S. Congr u approved a national energy bill that funda-and an additional $18 million over the term of the loans. mentally restructures the electric industry. Among the suc<cu in opposmg various pnvate power company rate nujor energy bill provisions important to rural electric co-increases for purchased power have also contubuted to Al-operatives is a transmission access provision that brings us legheny's rate.-mntrol effbrts. doser to the wheeling rights Allegheny has long advocated. Allegheny held the ime on utes even though its IW3 Under the bill. the Federal Energy llegulatory Commis-budgeted t u and government fee burden increased sub_ sion wdl have dear authority to order utilities that own tunsmission Inns to allow other utilities access to those stantially. As budgeted, the i ennsylvania General Assem-bly raised the state's l'uhhc Unlity Itcalty Tas, which in-Imes for ajust and reasonable fee. The measure was a prior-ity for (onunner-owned rural electric co-ops facing prob-crcased our tax load by $826,134. An increase m the state's Gross Itecipts Ta x is expet ted in PN3, w hich wdl force the lems m nmdng wimicsale power they generate or purchase co-op to pay at least 5170,000 more annually (br punhased """'nabk mas & pnwision will put Allegheny and tlu nanoni other m-ops on a more equal footing with large federal legislation, nudear power po w cr. Under new pnvate power companies. i pemipqwgg Another success mvolved payments wnsumers receive m**~e g from utdities (induding co-ops) thr buying energy-efficient c n 7 l ] equipment. 'I bese now will be made tax free. Previous in. p 'r 3 [(g/f Q ternal llevenue Service rulings had thund such conservation M. a v6 'V i r ichates to (ole,titute ta xab!e income. b We are proud ofour achievements and antidpate a bright (( tutme that indudes using our experose, influence and p/ standmg to do what the cooperatives have always done; hcip rural re.idents acquire and retain the benc6ts, services and opportunines ofTered by changing technologies and l times. We behes e our continued progress toward the organiza-i i tion s goal - providing rurai clectric moperative con-sumer-members with adequate and reliable supplies of rea-sonabirpriced electricity - is a vital cornponent in '"'"""E '""I "dd'"ts will keep pace in a c hangmg world. j Jesse C. Tdton lil, president (right) and Dave E. Tumer, chairman i
4 '5l 992 Allegheny Electric Cooperative, nc. Annual Report conolnic developulCnt. Everyonefoni President Bill Clinton to local tournship ( v supervisors and Chainbers o.fConnnerce say neu' jobs, plusgrou'ing Inisiness A and industry, are vital to ourSture. While everyone agrees on the iniportance ofan expanding _ job base,fn' organizations are positioned to assist in Inaking thosegoals a reality. But the nation's rural electric cooperatives are. The reasons are siinple. HICctric cooperatives are an integralpart o.fthe conununities they serl'c. They are, ill_lkct, olviled by the niculbers oftllose continnliities, not by abselltee stock-holdCrs Illtalvare oflocal nCCNs. $11 additioll, Clectric co-ops build and niailltaill olle of the nlore contplCX alltl inlportant conipollCllts oflocal infastrlictilres: llic electric lines U'hich provide Clectricity to foll'Cr rllral blisillCss, illdlistries alid rCsidCittial del'elopinellt. $11 $'Clllisyll'allia, rllral CICctric coopCrativCs oll'Il alid Inailltain about $2.5 pCrcellt oftlle Clectric litility lillCS ill file Conunontrealth, covering nearly one-third ofthe state's land area ill 4 i conllties, ill rllral I'Cillisyll'allia alltl NCiv)Crsey, tile eXpfrtise lisCd to overconle ille Ccolloillic, politi-cal and engineering hurdles ofsupplying reliable, reasonably-priced electricity to the states' ritral alCas also prol'idCs il strolly lbillidatioll to silpport rleral del'Clopintilt (forts. Allegheny Electric Cooperative, Inc., the Ivholesale supplier ofelectricity to the 14 electric cooperatil'es in Pennsyll'ania alld Neu' jersey, Ivorks hard to niaintaill a clinlate conducive to tieveloplnent n'ithin its nientbers'scrl' ice territories.
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l 8 . with annual increases ofonly 1.1 percent per year, a ratepr below that ofinflation. In con-trast, the region's private power companies have increased their retail rates by m average of 25.17 percent between 1988 and 1992. Those increases rangedfom a low of ?.4 percent to a high of54.2 percent. Allegheny'sJiat rate, however, has not been accompanied by a corresponding lack ofsystem improvements. The cooperative has provided transmissionpcilities to improve servicepr existing co-op members and ensure that the in.frastructure is suficient to meet new growth and development in areas served by its member cooperatives. Allegheny marked its most recent milestone October 15 with the completion ofthe Bedford North-South transmission project. Alhyheny built the 11.6-mile,115 kilovolt (k V) trans-mission line, its third transmission project, to enable Bedprd Rural Electric Cooperative, Inc. to serve a Texas Eastern gas compressor station. Only 19 months passed between the project's approval by the Alhgheny Board ofDirectors and its successfid completion. TVhile a project ofthis magnitude would typically take at least two years, Alhgheny successlidly expedited many aspects ofthe project due to the importance o(the new industrial load it serves. IVhen the second unit is added in the sunnner of1993 to bring thepcility up to a 12 Ally demand, this load will be larger by itselfthan that oftwo Alhyheny member cooperatives. The completed line joins two other dedicated trannnission pnyects built by Alhgheny. The first, the 5.5-mile, 69 k V Fahfleid-Alill Creek pmject in Lycoming County, entered service inJuly 1990. The second, the 7.5-mile,138 k V Domgal-Seven Springs pnyect, was com-pleted in November 1991.
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'10 Alhgheny developed the Dontyal-Seven Springs project to provide a inore economical and reliable source qfelectricity to the rapidlygrowing Seven Springs area which -,, portions ofSomerset, Fayette and TYestinoreland counties. The Allegheny Board ofDirectors has also paved the waypr two new transmission proj-ects, one that will serve increasing load requirements in the Sussex dural Electric Coopera-tive area and one that will improve reliability in one section of United Electric Cooperative's service territory. The Sussex prqject includes construction qfabout a mile of34.5 k V transmission line. Allegheny will acquire the necessary mile ofline starting at an existing transmissionfacility to provide cervice to a distribution substation after completion ofconstruction by Sussex Rural Electric Cooperative. The United Electric Cooperative project includes the construction ofa nine-mile,34.5 k V linefom private power companypcilities to United's new Cooksburg substation. The proj-ect will provide improvement in service and reliabilityfor co-op members who live in the arCa. These projects continue Allegheny's conunitment to its members and the connnunities they serve without sacrificing Allegheny's six-year trend ofrate stability. TYhile the transmission and delivery system is vital to the economic health ofrural areas, so is a reliable source qfpower. As rural areas grow, so doesthe needfor an adequate power supply not dependent on purchasesfom private power companies or any single source. i
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'13 1 Back in 1966, Allegheny anticipatedjitture needs and began building aframework ofdi-tierst:fied power sources. As a pnfrence customer, it I egan purchasing hydropowergenerated at thepublicly-owned Niagara Power Projectfrom the Power Authority ofthe State o_fNew York (PASNY). This extremely low-cost hydropower has saved Allegheny more than S219 million compared to the cost ofpower it would have needed to buy.from pritrate utilitics. gyyw;n7 wegw%mqu yN"7 wyngj. q vgw sw;; wamw~.~ v =. w. +m. ye y _ q p; ~ &.gp ppx%,, :s..w an:; >e. wmmamay 77 g .py
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'N h .) 1, .r" 5 ' % 'j. i - Q n . g:3 * '.;(f .,.~.ma x: ~:cr n One of rural Pennsylvania's most abundant resources is its for-ests and the timber they provide. Direct assistance to logging compa- .i. 4 nies cornbined n'ith support of / l* mJnufJClurcrs of finished uvad 9 .\\". products ensures economic and em;1loyment groulh. This Clarton County logymg firm, ficary Log-ging, received a $100,000 :cro-interest REA loan u~ith help from Central Electric Cooperative, Inc. The influx of needed funds helped expand the company's u'ork force and hept log loaders - like this one - moring. -m
'15 In 1977, Alicqheny continued developing reliable enclyy sources when it contractedpr 10 percent ownership in the Susquehanna Stealn Electric Station (SSES). SSES is a 2,100-niegawatt, two-unit nucicar powerplant located near Berwici:, Pa. Thepcility supplies 53 percent o.fAllegheny's energy needs. bliegilCny continued its coninlitInent to lolv-cost gColcration witll tilC Naystolvil 1-lydroelCc-tric Project, Williani F. Alatson Generating Station which began connnercial operation in 19XX. Nalnedpr thefirst president ofAllegheny, Alatson Station is the cooperative'sfrst wholly developed and operatedgenerating plant. It supplies 4.5 percent ofthe energy deliv-cred by Allegheny to its Incmber cooperatives. Stable rates and reliable power supplies are only part afthe cooperative's c[brts to attract i business and expand opportunitiespr those living in rural Pennsyhrania and NewJersey. In i recognition o.fthe unique role played by rural electric cooperatives, thefderalgovernment designated thenl as point agencies in rur<d development prograins contained in the 1990 Fann Bill. The Rural Investment Partnership Program,for example, provides capitalfor economic development in rural areas. Allegheny and its sister organization, the Pennsylvania Rural Electric Association (PREA), also support state legislation and initiatives designed topstergrowth in rural areas. Some ofthe initiatives endorsed by Allegheny and contained in the Pennsylvania state budget include a grant program which provides money to improve rural water supplies, pud-
-1 16 ingfor a distance learning program,pudingpr a medical lini: program to isnprove rural health care, and expansion ofthe rural and urban teacherforgiveness program. 1 1 I i
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'19 The teacherpl;qiveness program,pr example, encourages newly-graduated teachers to work in targeted districts - including rural areas - byjingiving all or a portion ofthe stu-dent loans o(those who agree to participate. The needpr many afthese programs was determined through the activities ofthe Center pr Rural Pennsylvania, a legislative policy and research agency ofthe state General Assem-bly. The Center, which PREA helped create through its lobbying eflorts and now partici-pates ill, deterillilles fleeds within rural cenilllinlities and cllarts ille e{lI' cts policies llave on rural state residents. t Allegheny is also sponsoring a study in apur-county area in central Pennsylvania to deter-mine specific business needs within the region. The results o.fthe study will enable its member co-ops to apply resources precisely to gain the maxinunn possible benefitpr the area's indus-tries and residents. The cooperative also supports use o_fstate development programs like PENNVEST, which provides loans andgrants to upgrade small conununity water and sewerpcilities. Pro-grams like this are designed to benefit all rural residents, notjust those who belong to rural i electric co-ops. Rural developments e[ forts also take place on thefederal level, too. REA 's distance learn-ing and medicallink grant program, authorized in the Rural Development Act of1990, is designed to provide rural schools, hospitals and medical centers with rapid access to more spe-i
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cialized training and inpnnation through the use ofteleconununications, coniputer nettuorks and other advanced technologies. To directly assist in rural economic developnient, Pennsylvania and NewJersey rural elec-tric cooperatives help secure zero-interest loans andgrantsforn REA tofnance projects in rural areas. These projects are designed to benefit the entire rural conununity, notjust those persons served by an electric cooperative. Thegoal isjob creation and stirnulation oflocal econoInics. The c(jorts arepaying o[f Seven pwjects infve di[ferent rural co-op territories are up and running. Eight others are in various stages ofdevelopntent. For example, injefferson County, Pa., a S100,000 cro-interest REA loan helpedj-nance a S2 niillion airport tenninal restoration. That project does double duty by providing construction and sta((ingjobs now as well as enhancing the localfacilities-in this case, an airport-which will help attractpture business and corporate development. In Clearfeld County, Pa. two separate S100,000 :cro-interest REA loans helpedfnid a portion ofthe start-up costspr the Sawmill Centerpr the Arts and a custom hardwoodpr-niture ntannhcturer, i The Sawmill Center strengthens a major rural industry-tourism-while providing an outletpr local artists and crafts people. And, by helping local wood products industries, both the logging and rural manupcturing base is supported.
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1 ~ .j 3 In Clarion County, Pa. a S100,000 acro-interest REA loan assisted a logging Imsiness in its expansion. Another S100,000 :cro-interest REA loan helped develop an incubator in Sornerset County, Pa. topster business development - in c[ lect " hatch" new economicg:owth.from prtile ideas. Once thosejledgling businesses are sound, they move on to make room in the a pcilitypr another new enterprise. A Somerset Countyfire truck and equipment manufacturing plant is also successfidly oper-ating with the help provided by a S100,000:cro-interest loan. Inpct, Blaine Stockton, REA assistant administrator ofeconomic development and technical services has praised the New Lexington Fire Equipment Company as one ofthe shining successes ofthe zero-interest rural development loan program. Thejirm, which opened in the sununer of1991, was pro-jected to have 20 employees on board afterJive years. Afterjust 18 months, the company has 41 employees and is still expanding. In Warren Comny, Pa. a $1.6 million waste recycling plant recently began operation. Allegheny and PREA are also helping to obtain a S100,000 =cro-interest REA loan to partiallypnd a 53 million municipal airport expansion project in Bradford County, Pa. In Clarion County, a S77,000 REA grant will help convert an unused bridge into a conunercial development. In Sussex County, NewJersey, plansfor a tourism expansion project are being discussed.
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25' 1 With the help ofAllegheny, PREA and their member cooperatives, these projects willpo-I tentially create an estimated 120 directjobs and stimulate existing businesses in their local econontles. Allegheny's rural desiclopment eforts continue a 50-year tradition ofconunitment to the needs ofrural citizens and businesses. That tradition began with thegoal ofenabling every-one to have the advantages and comfort electricpowerprovides. It continues today in efforts to provide equal opportunities injobs, education and health care to all residents regardless of u here they choose to live. I ) i t-
J, p 4 4 p$ h ~ Ieghen / e Board 9 w = u.; f' 9; = 4a' ( i Dave Turner 5% -(. Alston Teeter l Chairman d. Vice Chairman v' j j warren EC s.Jg Tri-County REC Director i "1fd I y E Y kv C \\"' k. f., g, \\ t)- N,[e- ,\\' k 1 ,j ..,3fp$, l.. t Qi 6:-n%q tl % y Of*L .4,4 Lowell Friedline 'n,sy John Looser ? $i( 1 C' Secretary Ql Treasurer g l-3 Qf W;qyg Adams EC omer et REC g; % t, 9-
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k 30 i Summary of Operations 1 J Adams Bedford Central Claverack New Enterprise Northwestern Somerset Southwest
SUMMARY
OF OPERATIONS Oper,omg res tnue 5 '9 002.76f. 5%.562,670 519.629.9 % 516.1411.766 11.23),643 517.6 ) 7.22M 512.373,773 51%A32.769 i OPERATING EXPENSES l'un hascJ pow er 519.f.12.19H 51611.6% 512.08 i.3i.7 59.742.7o4 114ol.2i N 511.447.471 59.126fCo 517.363.115 - Operanom A m.onirnaner My4.o20 51.507 302
- 54. ?82.f.04 5 Ua)5.498 58H7.o;4 5 3.; T 1.337 52p33.520 5 5.4 Mam '
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- 51. 51 t 294 5377.232 51,80 1.911 519rU21 51623m 5945.x01 15 % 854 1923.378 :
lnes $25.926 575.546 114 lM0 \\ $14.2f ? $M911 5330.624 5152.Ut 51M,824 : int test S l.784. M2 5414.776 S I M74,4% 5914.563 59 5923.924 5718,156 51,063,556 Cm of I trctn. %rruu 124.oWN! 5 7,Nxt. 732 S I N.5%. lH6 515#r* \\t.7 5 L 541.19) 517.079.158 512.f.25.531 522.951.473 : Operanng Mupm 1912.945 567, 9 tx slyRMm 5913.399 ($ i07351) 5 % % o70 (5251.758) 5479.296 hod-aij% rahlqt, mJf gtrH A ( apiQl t redits $l2R 6.ld $62.774 5 l 4I1,2612 5 l J ',7H % $4t P ol l 5221 340 5 j 44,M2(. 5131,73M Nei marpm 51 p41.583 5 'M712 51.224.m2 51 u k.lH2 t1 %733t; 5780,610 (5106,932) 5611,034 ! ASSETS loul Unhty plan: 553.270.353 514 w 1543 SMo29.910 5 %3 % ;46 51426.169 5 65M27.H3 121 301.100 $3U57,815 L ew a4 t umulutJ Jerrerunon 512.38P82 14.4x i s t ? 51.718pi l 5x.427 71o 52pM0.492 59,4-4.817 5U67 ll8 56,059.u76 Net unhiv plani 541.o:2.272 510.121 327 528.111.8'" 527.142.816 51.545.677 5 3. % 3.116 51Hy34. l M2 529.298,719 ' Other propeny A investn.cnn 5',674315 52.256.269 51339.457 54,122.541 5829.351 55673.166 54.241.23N $6,192.671 Current A aarucd.mri, s4.x 14. 210 5 2p37.1 ?f. 55.;12.H28 5234 2.467 Shm.??H 52310.550 ~51,336.831 52.1%2NI ' 1)cierreJ Jct m 596.9 % 171.761 5103.011 $?iS.131 50 5;i ",9 14 530.10) 571.458 ' Total men 553397 933 514,4 % 732 ER23% Iv5 534,125.957 114833 " 514.056,766 525.644.3;4 537.719.149 4 LIABluTIES Margms & upuncs $19.904 8k2 57.1772mi 515651.752 Silll?PM) 5 2.2Mi.o66 514.47 L939 514.85% 404 517.9563 24 L ong-tenu & bt 5 61.2%.N67 Sk2% 719 521.272,3o6 s t k.968 V 50 117,653.970 E l 3Ji52.9We 117.H29.146 Cunent & 4uturd lulubncs 12.425F16 57215'M 51 649.319 52 978.371 5198.244 51.874.512 59%.982 51 777,619 Othet s redm A reserves $ ! 2.168 $31 A,14; 5204.N I M 544 742 50 5 % 34; 11 %.9h2 5 % 760 - 'l oul i ubibr w<. ER 5C.913 514.4se. 712 5MlW,19; 154 125.957
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514.0 % 766 525,644.3M 5\\7.719.149 ' OTHER STATISTICS %lesollme 2.4'il 1.154 2349 2.432 US 2.361 1.852 2,431 < Comemen served 23h03
- 7. u 41 22M67 ti479 29s6 16,r.lo 11.24" 19.698 j Comumers per inile 92 68 75 64 x
7 A1 M1 K w h wld per mmumer
- 12. it t 10.764 H.141 9.958 11.650 10.445 12.794 12345I M w h s,.lcs 2n $i5.4 44.401 179J,53 154,142 34,7Hx 173.492 143,808 247.107 Ammai resenuc per rominner
$1.261 51p92 Swni 51.086 51N84 51.or 2 51.191 51.190 ' l%n im ntmrnt per mmumer $1.7M3 ..S1 51.281 51.754 5451 51.527 11.604 51 / 87 llevenue per nate oflme il 1 J.43 57.421 St. 6;6 56.413 5%623 17.469 56.681 19.fd9
k 31 Al egheny Member System Sullwan Sussex Tri-County United Valley Warren TOTAL 54,161,5m 512,514.IN3 514.124,954 514.061,325 517,6t4423 55,134.178 5198.369,082 52,679.357 56.871,464 58,111.419 58.387,448 511.837,427 53,199.u1; 5128.554.673 ' 5/M9.512 52,439,4N9 51,244,323 53.056.H36 51287,243 St JnipN 5 E34146 5273.796 5743,421 5494,56H 5912,H58 51.035.616 5321,665 slu.w s,715 540.03M 51.291.304 5134.471 197,792 5159.653 557,266 11,120.726 5225.783 5722.335 51.042.402 5!,250.02M 5754.162 51 ~12.270 110,920.R35 54.di m.488 512,8W4513 513.477.183 513.705.002 S l 7,u74, l t N, 54.790,343 5191,7H.mr, 5151.021 54M,;M 1647,771 53:% 323 SW4.317 5346.834 56.574.986 536. % 6 5122.637 Sils.a ol 5177,479 5167.221 560.738 11.723,264 SlH9.w? 5%n,217 5762.M62 5533 M02 5761.538 5404,572 18.298.250 5').420,447 524.259.490 EE.03R024 53;MU'H 1 5 A924,440 511,612.972 5192.164.025 13.iN7,594 5 5.N93. 301 58.497.34; 59,567.f> l l 510..W),%7 53.N 13,9 ] l $W,f dW,.071 56.322.H52 518, k.6.189 526.512.679 526,262.472 526.554.473 57,799.aw I 5292.467.934 51.236.775 52.704.128 as. m,377 54,843,255 14.639.M t sl,74574 5 %.131,361 Si9L5B 52.696,016 52,0%R2M $3.0%849 54.69H.M0 51.145. 4 k0 537,49L9'9 511.032 51s wi,718 (SAH78) 5237JaN 521,281 54 % 021 52,232,417 I $8.206.194 524.0733 61 512.272p ui 134.179,5M5 135.913.445 511,130.156 5187.326.k12 .i 51.uH l.Ho9 54A41.882 512.285.223 511,282,666 518.516.355 57,559.954 Slf>1.614,H;3 54.770,120 513.4;I,229 SIK il2.3;H 521.52),773 515,1 % 129 53.1 %.422 5203.01 ),H63 5352,076 12.134. 9 0 51.Mh351 51,164.740 51.W7,fil S 51xH.475 520.706 470 5189 545,370 518.072 540H.4t u. S V.4345 5251,2Hi 51,993,627 58,206,194 524.073.0;l 512.272J # m> $34,379.585 53; 913.445 511.110.1 % S TH7,326,Hl3 l R04 f.12 2.916 2.6 11 2,409 1,016 26.412 5.015 9,975 16,140 16,134 17,903 8,574 192J45 6.2 16 1 55 6.1 7.4 %4 7.3 7,6% 10,B6
- 6. mum 7,226 9,671
- 5. lt,2 9.h63 38A07 103.T03 111.129 116,577 173,143 44.25H 1,wi,2tn SM nO 51.257 5875 5872 5987 55W
$1.030 $1.261 51,k41 11.644 51.62N 51.483 5910 11.518 li,1M6 520.467 54.N44 15.344 57.334 55/ 65 17.505
4 32' AHegheny Electric Cooperat've, nc. ASSET 5: 1992 1991 1990 1989 1988 Gortal Plant (AM.947,M2 640,405.919 633,120,217 616,987,394 thk 034,277 Constrmtion Work m Progress 14,214,117 11,495,759 5,W3,441 9,240,232 6,938,574 TOTAL PLANT (4,1161,459 651.w1,679 619.023,65H 626,227,626 615,972.851 Accumulated provision for deprenatmn & amortrianon 167.HIM,423 154,581,169 137,5H1,537 MH,725,714 70.H28.%4 NET PLANT 49; 343.0 % 497.32tts10 501.442,121 537,501,912 545,10,wn NoirUtility property - ntt 4310.98H 5.010.441 4.970,62H - 5,0% 971 5,083,R43 Capital Credits - NI UCIC 141,530 125.292 2 %,167 322,fm M4,113 1pyrstment% Hi JWMatCd organvanom 3.H78,H51 1H79.055 3.879,261 3, H79,452 3.k t l.153 Other InVC%tinerits 5,197,077 4.628,698 4,012,303 Cash - gcucial funds .99.816 f,40.291 M7 -457,154 1,29,,372 Cash - a omtruc tum fund 48,695 1,kH9 12,101 1,183 251 Jd,4 Temporary mvestments 23,226,222 %,N 15,5 37 47.u19,705 35,tr/M.414 .N,577,723 hpcoal funds 1.874.311 1, H89,548 1 901.112 1,W3,823 2,071, % 2 Notes rnnvahir 3,% 7,637 3,6%,7;5 4,14H M2 Auoums rnetvable 10,35f t l 53 13,7(4,,227 11,549.6w f l7M.646 14,411,035 Materuls and SuppbrWiher 4,947.03.! 4.694,020 1,113,921 1.tB2,028 1,03),0H3 Prepayments 5,250,031 1,133,323 1.113,921 1,052,028 1,030JiH3 Other torrent & aarued awres 2.2%,H10 1,t 47,743 574,342 342,02H 333,278 Delerted debits 3,706,H35 2 (a bai4 49't2tn 1,350,929 848,811 TOTAL ASSETS 574,072.928 577,371,33) 5H2,532,219 wtpi7,6H9 6ts 2M.027 LIABILITIES Ikprerutmn M4,9'iH Ho4,907 M 4,907 WM,76h H04,477 Memberships 2.HIX) 2,800 2,Hto 2,Ht e 2,Ht #1 Parronage rapital 14,3W,7th 12.012,827 3.504,255 3H.941.H10 36,387,4M lbnated rapual 50,730 50,730 50,750 50,730 50,7D 14mg-term debt - it LA 7,395,044 7,413,005 5,715.056 4.0io,892 501,tol.153 f ong-term debt - other Soh,0HO, W4 50H,537,784 526,410.577 522,511,395 30,31H,791 Notes payabic 0 0 15,245,462 4.893,235 5,1mjuo Accounts payabic 6,183,734 16.H30,638 15,245,462 4,287,707 H,hol,704 Cost of servac adjustment 4.290,2M 2,541,259 6,416,815 4,N93.235 5,330,4.10 Accrued taxes 3,815,257 1,H15.246 545,874 551,844 346,221 Annwd nuerest 3,052.45H 3,509,277 3,502,011 3,34HJ,15 3,577,179 Other curreni & aurued habihnes 1,720,611 507.177 6H3,332 fd4,3n8 12,751 ikforred credas 17,926 267 18.130,59B 19.341,3H5 20,502,325 22 594.732 Operatmg Reserves 7,lt4,617 6,019,991 577,322,375 5H4,156,571 591Jm,212 TOTAL LIABILITIES 574.072,929 577,371,332 596,663,760 to4.658,89t, 614,203.944 MEMBERS REVENUES Adams 19,370,045 1H,201,477 16,920.011 16,459,643 15,45fL524 Itedford 5.533,837 5.180.139 4,94H.332 4,934Js4 4,717,574 Central 11,978,H57 11,410.378 11,170,252 11,123,585 10,795,933 Claverad 9.611,069 8,901,042 H,739,9fo 8,f,7H,763 8,348,586 New I.nrerpnse 2,429,876 2.301,401 2,214,818 2,1H3,5H2 2J u d>,6% Northwestein 11,186,990 10,444.591 10,323,lM 10.375,739 9,994,179 Somerset 9,793,753 9,106.H26 8.737,337 H,772,896 8,3$1,506 Southwest Central 17,142,056 16.1 %.475 14,825,514 14,548,709 14JW6,(as Sulhvan 2,619,316 2,390,777 2,M5,952 2,344,19H 2.193,827 Sussex 6,778,523 6,534,524 6,312,906 6,333,H50 63xi4.249 TmCounty 7,906,010 7,450,527 7,199,562 7,194,547 6,8H7.205 Umted 8,279.835 7,948,551 7,(44,416 7,814,89H 7.709,440 i Valley 11,694,928 11.122,999 10,650,759 10.555,639 9,955.957 Warren 3,159.357 3,180.782 3.084,646 3,114A4 3JJ51,498 1 TOTAL MEMBER REVENUES 127,434,459 120,380,490 115,137,651 114.434,194 109,532 tus 1 i
3' Fve-Year Financia Statement ELECTRIC ENERGY SALES: 1992 1991 1990 1989 1988 Me mbers 127,484.460 120,3Mo.490 115.10H,723 114.434,195 109,532 *
- j
%n-members 5,9B,149 24.W4 421 14,13N,M82 16,057,630 24,347,984 TOTAL RECEIPTS 13.1.419,un 145.34r 911 129,247.u r5 130,491,825 133.8m,792 -) Co r of pow er 34,447,974 43.054,251 32Am,914 3(358,MH7 40,119,659 j Whethng IO.168,7M6 8.h80,rM 9,249,H41 8.345,773 7,441.025 i RAYSTOWN: ~ oprianon A Manarnanie 2.2 )l. li n
- 2. G tu n 2,560,147 2,34t.,261 7 %,696 l
Interest 12H,693 0 0 0 116,970 l 'I r msmmion 23.91x 2n6,8us 1k3350 200,521 0 T axes 23,293 19,3Hi 16.884 0 OTHER PROJECTS: O x ranon A Mamtenance 2w,e9 .100,122 123.u.3 i 'I r ammmion 62.549 15.401 24,052 lieprn ianon 5M8,886 509.k 47
- 44. 190 T a m, 1H.912
.1,352 SSES: Generanon Operanon A Maintenance 19.UR.9 0 20,95H.143 l x,024.4oM 18,518,9n5 19,490,190 f uel 7.263,452 N.451974 9,512Jit 7 9,413,177 8,634,341 Unamort. Ih bt & I straonimary l as 9,rifiT,5 % lierrn i. anon 10,911,235 9,967,034 9,034.8i,5 9.37r 144 8.694pe 'l a xes 4.2)t2,906 4.243.49M 3.437,242 3,429 945 3,yiH,73) ^1 r ammmu m Mamernance 272,597 294,213 216pi7 317,2f4 207,431 Imere,r 39.ui8.659 42,319,156 43,018,285 42,724.ou. - 44,147,019 Internt charged to Construcuon - Credit -1,143,974 -1,u41.514 m).146 -1,233,918 -2,318,873 General A admim,iranvr 5,716,M58 5,559.u 0 5,315.UJ4 8.153,748 3,9Ho 637 3 TOTAL OPERATION EXPENSE IB 3v5,u,o 146,871,542 133,167.r,71 132,772.327 135J42.439 Depredauon I k6,HN4 159.f s,4 131,397 114,9kN 120,513 Taxes 164.n63 141.581 136,143 109,754 102,094 Other deducuons 410.374 -y,2,593 30,417,247 701,433 672,383 TOTAL EXPENSES 135341,2 n 146.5m.594 163.k52.4;8 132.315,632 135,212,6H3 Optraung marppo -l,921,624 -1,)62,683 434,U $ h53 1,82),807 .],331,89) Intcrest imome 2.M45,352 3.691,751 4,616,182 4,32M,040 2,924.k(A Other - prnfir/(lw.) nei 1.397.724 10,081 1,462.261 28.94ti 596,3 % Other capital u dtts 55,0f,N O 29,912 21,1h4 23,H25 NET MARGINS 2,376,520 2.519,149 -2%47e,4 #H 2,554,357 2,213.200
34 PROMPT ACTION RESULTS IN SIGNIFICANT SAVINGS n February 28,1992 Allegheny learned through a trade press report that the federal Rural Electrification Administration (RHA) neouldpr thefrst time permit generation and trans-mission cooperatives, such as Alicqheny, to reprice certain outstanding high-cost Federal Financ-ing Bank (FFB) loans. By agrecing to pay the goectrunent a prepayment premium equal to one year's interest on the loans being repriced, REA-financed electric systems could reduce the interest rate pr the remaining hp of the loans to the then-current FFB interest rate. At its March 5,1992 meeting, the Allegheny lloard of Directors authorized submission of a repricing application. Thanks to this speedy action, Allegheny was one of only 14 boirowers to receive itEA approval to reprice a portion ofits long-term FFil debt during 1992. Nearly $123 milhon of FFil loans carrying interest rates ranging from 8.28 to 13.8 percent were repriced by Allegheny on August 31, 1992 to new interest rates averaging 6.78 percent. The repricing is expected to provide a net savings in rates of $1.42 million during the first year and S19.07 milhon over the remaining term of the loans. liy timing the repricing to take advantage of falling interest rates, Allegheny maximized the savings available. Any delay in submitting the repricing request would have harmed Allegheny since REA limited the number of repricings permit-ted during 1992. The interest cost savings achieved by the repricing were incorporated into the "r8 Punhased Power Cost Projections and Member Cooperative Rate Study. Thus the expected net sasings were passed on to Allegheny's member cooperatives. l
a D W 9 b 'I ALLEGHENY ELECTRIC II COOPERATIVE, INC. i t 1992 Annual Report " Blueprints to the Future" Errata Sheet ? l l These pages replace pages 32 & 33 of the Allegheny Electric Cooperative,Inc. 1992 Annual Report which contained a printing error. Allegheny Electric Cooperative, Inc. 1992 1991 1990 1989 1988 ASSETS General Plant $648.947,342 $640,405.919 $633,120 217 $616.987,394 $609.034.277 Construction Work in Pro 0ress $14.214.117 $11,495.759 $5,903,441 $9.240,232 $6,938.574 TOTAL PLANT $663.161 A59 $651,901,679 $639,023 658 $626.227,626 $615,972.851 Accumulated provision for depreciation & amortaation $167.818 423 $154.581,169 $137.581.537 $88.725.714 $70,828,954 NET PLANT $495.343,036 $497.320,510 $501,442,121 $537.501.912 $545,143.897 Non-utility property - net $4.910.988 $5.010.441 $4.970.628 $5,055.971 $5,083.843 Capital credits - NRUCFC $141,530 $125.292 $296,167 $322.609 $344,133 investments in associated organtzations $3.878.851 $3.879,055 $3,879.261 $3.879.452 $3.811,153 Otner investments $5,197,077 $4.628,698 $4.012,303 $0 $0 Cash - general funds ($99,816) $640,291 ($887) ($457.634) $1,296.372 Cash constructron tund $48.695 $1,889 $12,103 $1,483 $251.664 Temporary investments $23,226.222 $36,895.537 $47,019,705 $35,078.414 $39.577,723 Special funds $1,874,0 1 $1,889,548 $1,901,112 $1,903.823 $2,071,952 Notes recevable $3.367,637 $3.695.755 $4.148.632 $0 $0 Accounts receivable $10.350.153 $13.766.227 $11,549,690 $13,734.646 $14,411.035 Materials and supplies - other $4.947,032 $4,694.020 $0 $0 $0 ' Prepayments $5.250,031 $1,133,323 $1,113,921 $1.052,028 $1,630,083 Other current & accrued assets
- $2.266.810
$1.047,743 $574.342 $342,028 $333.278 Unamort. debt disc. & EO losses $9,663.536 50 $0 $0 $0 Deferred debits $3,706.835 $2.643,004 $499.200 $1,350.929 $848,811 TOTAL ASSETS $574.O k 929 $577,371,333 $581,418.298 $599,765.661 $614.203,944 LIABILITIES Memberships $2,800 $2.800 $2,800 $2.800 $2,800 Ntrone9 capstal $14,390,760 $12.012,827 $9.921.071 $38.941.810 $36,387,453 rs,;,> apital $50,730 $50,730 $50.730 $50,730 $50.730 m. 2 debt - REA $7.395.044 $7.413.005 $5,623.571 $4.010.892 $501.601,153 Long-term debt - other $508.080,384 $508.537.784 "" 3 7,133 $522.511,395 $30.318.791 Notes payable $0 $0 $0 SO $5.180.000 Accounts payable $6.183.734 $16,830.638 Wi Z: ~76 $4.287,707 $8.801,704 Cost et serwce adjustment $4.290,266 $2,541,259 ) 6.4 N 5 $4.893.235 $5.330,430 Accrued taxes $3.815,257 $1,815.246 4 $551,844 $346.221 Accrued interest $3,052,458 $3.509.277 $3.50' 1 $3,348,615 $3,577.179 Other current & accrued tab:lities $1,720.611 $507.177 $683. 2 $664.308 $12,751 l Dcferred credits $17.926.267 $18.130.598 $15,187,4. 8 $20.502,325 $22,594.732 Operating reserves $7,164.617 $6.019.991 $4.153.917 $0 $0 TOTAL LIABILITIES $574,072,929 $577,371.333 $581.418.298 $599,765.661 $614.203.944 l i MEMBER REVENUES Adams $19,370,045 $18.201,477 $16.920.011 $ 16,459.644 $15,450.524 Bediord $5,533,837 $5,180.138 $4,948.332 $4,934,084 $4,717,574 Central $11.978,858 $11,410,378 $11,170,252 $11,123,586 $10.795.933 Claverack $9.611.069 $8,901.042 $8.739.960 $8.678.763 $8.348,586 New Enterpnse $2.429,877 $2. 301.401 $2.214,818 $2,183,582 $2,066.695 Northwestern $11.18G.991 $10AS4.591 $10,323184 $10.375,739 $9.994,179 Somerset $9.793,753 $9.106,826 $8.737,337 $8.772,896 $8,351.506 Southwest Cent af $17,142.057 $16.166.475 $14,825,514 $14,548,709 $14.005.63J Sullivan $2.619.317 $2,390.777 $2.345.952 $2.344.198 $2,193,827 Sussex $6,778.523 $6.534.524 $6.312,906 $6.333.850 $6.004.249 Tri County $7,906,011 $7,450.527 $ 7,199.562 $7.194,547 ~ $6,887,205 United $8.279,836 $7.948.551 $7.664,418 $7,814.898 $7,709,440 VaHey $11.694,928 $11,123.000 $10,f;50,759 $10.555.639 $9.955.957 i Warren $3,159,358 $3.180,783 $3.084,646 $3,114,000 $3.051,498 TOTAL MEMBER REVENUES $127,484.460 $120,380,490 $115,137.651 $114.434,195 $109.532.808
33-Five-year Financial Statement 1992 1991 1990 1989 1988 ELECTRIC ENERGY SALES: Members $127,484.460 $120,380,490 $115.137,651 $114.434.195 $109.532.808 Non-Member $5.935,149 $24,966.421 $14,109,954 $16.057,630 $24,347.984 TOTAL RECEIPTS $133,419,609 $145,346.911 $129.247,605 $130,491.825 $133.880,792 Cost of Power $34,447,974 $43.054.251 $32.085.914 $33,358.887 $40,119,659 Wheeling $10,168.786 $8.880.653 $9,249.841 $8,345,773 $7.441.025 RAYSTOWN: Generation Operation & Maintenance $2.231.109 $2,320.600 2,560,147 $2.346.261 $736.696 interest $0 $0 $0 $0 $116,970 Transmission $128,693 $206.809 $183,550 $200,521 $0 Taxes $23.918 $23.293 $19,385 $16.884 $0 OTHER PROJECTS: Operation & Maintenance $290.689 $300,322 $123,663 $0 50 Transmission $62.549 $15.401 $24.052 $0 $0 Depieciation $588.886 $509.847 $466,190 $0 $0 Taxes $18.912 $3.352 $0 $0 $0 SSES: Generation .i Operation & Maintenance $19.697 503 $20,958,143 $18,024,408 $18.518,905 $19,490.190 Fue! $7.263,452 $8,452,974 $9.512,667 $9,413,177 $8.634.341 Dep+sciation $10,931,235 $9,967,034 $9.034,865 $9.376,144 $8,694.096 t Taxes $4.282,906 $4,243.498 $3,437,242 $3,429.845 $3.608,751 Transmission Maintenance $272,597 $293.213 $216,007 $317.266 $207,431 Depreciation $804,908 $804,907 $804,907 $804,768 $804.477 interest $39.608 659 $42,319.156 $43.018.285 $42,724.066 $44,147,039 Interest charDed to Construction Credit ($1.143.974) ($1,041,514) ($909.146) ($1,233,918) ($2,'318.873) General & Administratwe $5,716.858 $5.559.603 $5.315,694 $5,153.748 $3,980,637 TOTAL OPERATION EXPENSE $135,395,660 $146,871.542 $133,167,671 $132,772.327 $135,662,439 Depreciation $186.884 $150.063 $131,397 $134,988 $120.533 Tas.es $169,063 $141,582 $136.143 $109,750 $102,094 r Other Deductions ($410,374) ($662.593) $30.417.247 ($701,433) ($672.383) TOTAL EXPENSES $135,341.233 $146.509.594 $163,852,458 $132.315.632 $135.212,683 Operating Marghs ($1,921,624) {$1.162,683) ($34.604,853) ($1.823,807) ($1.331,891) Interest lncome $2.845.352 $3,691,751 $4.636,182 $4,328,040 $2.924,868 Other - profit $oss) net $1.397,724 $10.081 $1.462.261 $28.940 $596.398 1 - Other capital credik $55.068 $0 $29,912 $21,184 $23,825 NET M ARGINS $2.376.520 $2,539,149 ($28.476,498) $2,554.357 $2.213,200 i i l h l
t ,/, b J bb ) ELECTRIC COOPERATIVE, INC. 212 Locust Street P.O. Box 1266 Harrisburg, Pa. 17108-1266 i l l
l 5' MARGINS The 1992 margins of $2,376,520 met Allegheny's Times Interest Earned Itatio (TIER) goal of 1.06. Additional margins of 54,290,266 in excess of this TIElt requirement earned during 1992 will flow back to member cooperatives in 1993 through Allegheny's Annual Operating Adjustment. FINANCING The largest expense item for Allegheny is interest on long-term debt. In 1992, it accounted for more than 28 percent of total expenses. To help control mterest costs, every efTort is made to obtain the lowest-cost financing vehicles available. These have included pollution control bonds, commercial paper, lines of credit, REA in-sured and guaranteed loans, and leveraged leasing. As of October 31, 1992, Allegheny's dollar weighted average interest rate on outstanding debt (excludmg leveraged lease debt) was 7.6H percent. POLLUTION CONTROL BONDS: Allegheny has been able to achieve very attractive interest rates by using variable rate tax-exempt pollution control revenue bonds to fmance a portion of the pollu-tion control facilities at the Susquehanna Steam Electric Station (SSES). In 1992, the average yield on the bonds, which bear interest at weekly and monthly variable rates, was 3 4 percent. These bonds-issued though the Lehigh County Industrial Development Authority-are backed by irrevocable let-ters of credit from Rabobank Nederland. COMMERCIAL PAPER: Allegheny maintains a conunercial paper program to supplement short-term project financing. Moody's investors Services has assigned its Prime-2 rating to this program. No commercial paper was issued or outstanding during 1992. LINE OF CREDIT: In fiscal year 1992, Allegheny had a S21.4 million hne of credit with the Na-tional Rural Utilities Cooperative Finance Corporation (CFC). When needed, this hne of credit is used to supplement project financing, The cooperative did not draw on these funds in 1992. REA INSURED AND GUARANTEED LOANS: A traditional blend of REA insured and itEA guar. anteed loans, which makes up the majority of Allegheny's debt portfolio, continues to be Allegheny's ) primary source of financing. REA guaranteed loans made by the Federal Financing Ilank (FFil) are j used to finance certain additions to SSES. Approximately 17 percent of the $476.5 million of the out- ] standing FFIl loans bear short term interest rates of two years. The remaining FFil loans have 35 year maturities and bear a weighted average interest rate of 7.67 percent. Allegheny utilizes REA in-sured loans to finance transmission and load management projects. llearing interest at 5 percent, these loans are an attractive low-cost source of financing. j LEVERAGED LEASE: The leveraged leasing of the Itaystown Ilydroelectric Project has ensured the cost of power produced by the project is lower than the cost of the purchased power it replaced. Under the lease agreement, Allegheny controls the placement of the 520.5 million debt portion of the lease. To take advantage of the continuing decline in interest rates, Allegheny has placed 60 per-cent of the lease debt in various maturities ranging from 30 days to 4 years. This resuhed in a blended interest rate of 7.09 percent in 1992. Compared to placing the total lease debt in a two-year maturity, an interest savings of $197,000 was realized for fiscal year 1992. CFC: In addition to providing Allegheny with a line of credit, CFC has provided financing for the Locust Court lluilding (Allegheny headquarters) plus loans of S4.4 million for load management and transmission facilities.
.. -~ 3C) TAXABILITY: Allegheny has a pnvate letter ruling from the Internal llevenue Seivice providing for the cooperative to remain taxable until an apphcation is made to become a tax-exempt organization again. Allegheny expects to have tax lo ses to carry forward to on' set regular tax liability for the fineseeable future. Allegheny continues to be subject to the Alternative Minimum Tax (AMT) provi-smns of the internal llevenue Code. Allegheny believes that the tax liabihties arising from the AMT will remain neghgible. REGULATION: Unhke for-pro 6t, miestor-owned utihties, Allegheny and its member cooperatives are consumer-owned and non-profit. They are self-regulated by their consumer-members acting through a democratically-elected board of ducctors and thus are not under the jurisdiction of the Pennsylvania Pubbe Utihty Conunission or the New Jersey lloard of Public Utilities. Ilowever, lWA docs review the cooperative's rate making and operating practices. Allegheny's board of directors are democratically elected. One duettor is selected from each of Allegheny's meinber cooperatives. The board governs all policies, including the estabhshment of rates. Iloard review of the rate-making process and approval of each rate change assures the enember cooperatives that the price they pay for electricny is fair and reasonable. ALL-REQUIREMENTS CONTRACT: Each of the 14 cooperatives served by Allegheny has entered { into a Wholesale Power and Power Cost Pooling Contract, commonly referred to as an All-Itequire-ments Contract. As a condition for approval of loans to Allegheny, Ill!A required Allegheny's mem-bcr co-ops to exceute these mntracts. All generation and transmission woperatives borrowing money from itEA are required to have substantially similar contracts signed by their member distribution systems. liy signing this contra (t, Allegheny's member distribution cooperatives agree to purchase all their power supply needs from Allegheny. ~Ihe) also agree to adjust their retad rates to meet all costs and TIElt requirements. In January 1977, each of Allegheny's member cooperatives crecured an amendment to the original 19M contrac t to mver Allegheny's purchase of 10 percent of SSES. The amendment extended the ) contract through !)ccember 31, 2025 to cover the hfe of the plant. TERRITORIAL INTEGRITY: The Unincorporated Area CertiGed Territory Law of 19W. originally signed into law in July 1975 and mdified in Pno, assigns exclusive territories fi>r all of Pennsylvania's rural dectric cooperatives and private power companies in areas outside the corporate limits of cities and boroughs. The law states that each electric supplier has the exclusive right and duty to provide servi e within its own territory. T his law helps avoid mstly duplication of ciectric lines and facihties, waste of materials and natural resources. plus improves electric system efTiciency by allowing electric utilities to make long-term contracts for power and plan necessary capital improvernents. It also allows cooperatives to retain large loads such as businesses, factories and retail centers that move into co-op terrimry. These addi-j tional loads help the cooperatives, which primarily serve sparsely. populated areas, to moderate rates by spreadmg their costs over greater sales. l I t
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u m 8 ? g,. Report Of b: Independent Accountants a+ ~p i Coo 3ers k &Ly] rand g g y jh @w) (l "" tU [{$ ,m Dr $ REPORT OF INDEPENDENT ACCOUNTANTS tt P 4' A m >ne ' d.,. };yI1 Mj ; To the 130arJ ofDirectors "1:.; v.., ' Alle,gheny filectric Cooperative, int. el. h}Q Q;; s.7, We have audited the accompanying balance sheets of Allegheny Electric Cooperative, Inc. (Allegheny) as of [~5 October 31,1992 and 1991 and the related statements oroperations, equities, and cash flows for the years then )ON y ended. These fmancial statements are the responsibility of Allegheny's management. Our responsibility is to g;! (. " s,.- M express an opinion on these fmancial statements based on our audits. [ [ We conducted our audits in accordance with generally accepted auditing standards. Those standards require - 'y that we plan and perform the audits to obtain reasonable assurance about whether the financial statements are @ yg k{f ~, y3 g free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts g*g 6s and disclosures in the financial statements. An audit also includes assessing the accounting principles used and [/ significant estimates made by management, as well as evaluating the overall financial statement presentation. MC f;p We bclieve that our audits provide a reasonable basis for our opinion. YD, in our opinion, the fmancial statements referred to above present fairly, in all material respects, the fmancial ' M position of Allegheny Electric Cooperative, Inc. as of October 31,1992 and 1991, and the resuhs ofits opera-h uons and its cash flows for the years then ended in conformity with generally accepted accounting principles. M NMf yQ x / yg g%7 5 North 1:ifth Street g h liarrisburg, Pennsylvania N% january is,1993 [ @h l - WIhj g H 4 ~; 4, y f S ~m df p% l 1 4.5S$.4,4fsus+z.njh
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i kh%%NI $NNN [3 . :,N e.l. ,,'v n BALANCE SHEETS " @w c-M, as of October 31,1992 and 1991 N A $c!xp
- .k 1'
(in thousands) @m;'. Q 1 712 1921 l:@ Assets ~ Li Electric utility plant: D1 1 7 Ml [Q In service 5644,42s $632,559 i Construction work in process 14,214 11,496 Nuclear fuel in process _ 4 511 7,847_ l 1 M 663,154 651,902 ^ ..?.[' yh less accumulated depreciation and amortization _1 @1818 154,581 495, 336 497.1321 h#$ D. OTHER ASSE'IS AND INVESTMENTS: itiTg!' Nonutihty property, at cost (net of accumulated depreciation $1 " gf T;[ of 51,847 in 1992 and 51,656 in 1991) 4,916 5.010 $[MS Eir investments in associated organizations 4,069 4,068 ,o Notes receivable from members, less current portion 3,368 3,695 ~ .s W Other investments 6,994 6,427 , [,, g Other noncurrent assets 522
- 554,
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19,869 19J54 9 P CURRENT ASSETS: '[ j <.y Cash and cash equivalents 23,391 37,117 ggb (3 Accounts receivable, including accounts receivable from members W g?. ^; of s9,729 in 1992 and 510,081 in 1991 9,920 13,374 %M f Inventories 4.947 4,694 7 $ y., Q" " Other current assets 3,339 _ 2 470 A 1 ae h e 41 597 57,655_ ) %a L 1 h7l Deferred charges ._13,3_70 __ 2 643 N@f@9 dd[j // Q W'*/ $570,172 $577,373 ?lM t-._ 4, i f. EquiTn;S: Q @O F ' F. Mernberships S 3 3 J 9 []kh 4 Donated capital 51 51 Patronage capital 37,952 37,952 l MN e Other margins and equities J3Jh1L___(2h937) D1 ,445 12,069-- 7s. J 14 .p g y; yN .-,y LONG-TERM DE!!T, LESS CURRENT PORTION 504,127 513,218 'N e w, on., %g CURRENT LI AltiLITIES: v i Q Current portion oflong-term debt 11,348 13,645 4 g-Accounts payable and accrued expenses 10,686 11,550 (M y . Accounts pavable to members 4,475 2,7_41_ 3.f.;r pd ~ ~. 2. _ 26,509 27 &6_ O(%Q M OTilER LIAltiLITIES AND DEI ERRED CREDITS: ,] Accrued nuclear decommissioning 7,165 6,020 h J:n ' Deferred income tax benents from safe harbor lease 10,711 11,454 d ,/ Other deferred credits 7, 215 6f76-Q R H ,- w + a.8 e 4m '5,091 24,150 g ~ Ii $570,172 5577,373 wp -q ^ y/ S e aaompanying notes tofnancial statements. f ; /,, - -a,{[ p g ; >~ksC3W.: jy h3 b w;wn&w4 + m L+g. W COWytf/hC L y m @ s, gggm a w ' gah s w w e %g n ;- - _ q y g g g b, _ u g; y_ . ~ ww e
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,,Q Qh^ ??f$h M A W M: TM STATEMENTS OF OPERATIONS h.- 6 n:w Wap., p.iy ,,'W. - for the years ended October 31,1992 and 1991
- J7M, (in thousands)
.a a e en.xM 1992 1991 M m.. w, +-s + c;; Operating revenue, including sales to members of g' N[$ %., m. i $127,495 in 1992 and 5120,380 in 1991 $133,438 5145,347 7. qp ~Jn gis W y> OPER ATING EXPENSES: [~'[l Purchased power 34,448 43,054 $$ I, Transmission - operation 10,531 9,319 M o-y" Transmission - maintenance 98 69 g g -4mp { Production - operation 15,674 15,556 W O Y. N, N, [ Production -maintenance 6,258 7,731 y[ f Fuel 7,263 8,453 ntN
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Depreciation, net 12,511 11.441 9 c, 2,a. fi 4.,
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Taxes 4,336 4,279 + $.. s (- Admmistrative and general 6,186 5,994 /W f^ Q J...s 97,305 105,896 $ y; - Operating margin before interest and other deductions 36,133 39,451
- 2... ;
.i ..r,. j f////[lT INTEREST AND OTIIER DEDUCTIONS (INCOME): M-Interest expense, net of allowance for fimds used @d.I during construction of $1,144 in 1992 and ..,s $1,042 in 1991 38,465 41,277 PN Other deductions (income), net (965) ' 14 m.. N 4 "m IP' 37,500 41,291 dN Operating deficit (1,367) (1,840) f%w <^ L. ' T NONOPER ATING MARGINS
- q Uh Net nonoperating rental loss (21)
(72). ~j kb Interest income 2,840 3,657
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'%,u s y ;> > y,g V:{s.f,g o ' W' &g;v ' +- ,i:Y, :f.5;j_ ww' .g,. w.g ya ly W ^ gc;:.f V STATEMENTS OF EQUITIES m kN for the years ended October 31,1992 and 1991 i v (in thousands) Mf sp W;. %' j;p s t,y.,( Unrealized 4,jg
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+N, Other Loss on + 4(o1 .:c w ~+. ]5 Margins Marketable Donated Patronage and Equity 4N cy Mernberships Capital Capital Equities Secunties Total c4 kI Italance at November 1,1990 $3 $51 $38,574 5(2H,476) 5(177) ' $ 9,973 . f$ is ur 9
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,f n,p :. ,,n3 Change in unrealized loss on L.MM marketable cquity k securities 177 177 5' '8 4Q; q ' wp Net margm 2,539 2,539 5 ( [y MM Retirement of capital credits (622) (622)
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u N/ y 4 // Italam e at October 31,1991 3 51 37,952 (25,937) 12,069 W ,-c ./_4 5~ Net margin 2,376 2,376 ,-4: m Italance at October 31,1992 $3 $51 S37,952 S(23,561) $14.445 '4c c 'J ?MQ, s L See aaompanying notes tofinancialstatements. j r m ast e.
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r, ;;;g " -~ r. ,cNy w 4 -A (,, 'A'. lMn STATEMENTS OF CASH FLOWS sr ,,y.- 4 y 3 s, for the years ended October 31,1992 and 1991 i ..e,, (in thousands) f.; %elJ W m A,. .'g-' CASill LOWS FROM OPER ATING ACTIVmES: x s .-.[9 Net margin S 2,376 5 2.539 Adjustments to rect ncile net margin to net cash provided by c, operatmg activities: s" + Depreciation and fuel amortization 19.053 19,218 8 ?-l Amortization of deferred charges and deferred credits (3,585) (859) 5 -: Gain on sale of other investments (200) (116) M e MJ g increase (decrease) in cash due to changes in operanng .a( uy assets and liabilities: Accounts receivable 3,454 (2,329) j PS-Invemories (253) (224) / " Other current and noncurrent assets (855) (438) M [ Deferred charges (33) (361) M !( Accounts payable and accrued expenses (8t4) (1,885) g gl. e. Accounts payable to members 1,734 (3,799). ((- ( Other liabilities and deferred credits 3,603 (687). 7[ Net cash provided by operating activities _2 4,4 30 ___ _ 11,059_ f ///f/ p / CAsit FLOWS FHOM INVESTING ACTIVITIES: 34 CA/ Additions to electric utihty plant and nonutility property (16,991) (15,359) ]q y/ / Purchase (redemption) ofinvestments in associated organaations (1) 182 3 g%. Pay ments received on notes receivable from members 362 322 s-y A Purchase of other investments (8.604) (12,514) g hh-' Net cash used in investing activities (17,025) (15,088) Q Proceeds from sale of other investments 8,209 12,281 Q .M r% %~ CASII FLOWS FROM FINANCING ACTIVITIES: ~ h.,,. Proceeds f rom long-tctm debt 4.531 3,933 N' Payments on long-term debt (15,919) (9,196) ~ N Payment of debt reporthase premium (9.743) Itetirement of capital crethts (622) N Nc cash used in financing activities (21,131) (5,885) } Decrease in cash and cash equivalents (13,726) (9,914) N Cash and cash equivalents at beginning of year 37,117 47,031 Cash and cash equivalents at end of year $23,391 $37,117 See aaompanying netcs rojinancial statemenn. I: I 4AW uJE: w w4t 5" 4.' 6 y4 y %.~. s, hodJer -en ca6%c 3 x('- % '~ N. - ? - 1 M '6 F Y f'E N h N M $ O kCQkY W lf'f"' .' " ' ? Q :. ;,,. r wwww xwy .n.
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..h 0 a. NOTES TO FINANCIAL STATEMENTS N?] 2 1 n ,gj 1[
- 1. Summary of Significant Accounting Policies:
,J [g Allegheny Electr;c Cooperative, Inc. (Allegheny)is a rural electric cooperative utility established under the [ i j laws of the Connnonwealth of Pennsylvania. Financmg assistance is provided by the U.S. Department of (C+ Agriculture, ilural Electrification Administration (ItEA) and, therefi>re, Allegheny is subject to certain rules w ~ and regulations promulgated for rural electric borrowers by ItEA. Allegheny is a generation and transmis-F fr sion cooperative, providing power supply to fi>urteen owner / members who are rural electric distribution g{' cooperative utihties providing electric power to consumers in certain areas of Pennsylvania and NewJersey. g^ ' ~ Allegheny maintains its accounting records in accordance with the Federal Energy Regulatory Commis-y q sion's chart of accounts as modified and adopted by ItEA. . $n M$ r (; Electric Utility Plant and Depreciation: MN [% Electric utility plant is stated at cost, which includes an allowance fi>r fimds used during construction. Depre-ciation for nuclear utibty plant and production assets is provided on the modified sinking ftmd method under 3 the amended phase-in plan adopted to conform to Financial Accounting Standards lloard Statement No. 92, ',d x-7 m ~ 7 "ltegulated Enterprises - Accounting for Phase-in Plans"(Statement No. 92). The straight-line method is 4 used for all other assets, except nuclear fuel The cost of units of property retired or replaced is removed ?g E from utility plant accounts and charged to accumulared depreciation. d
- )
Nuclear Fuel: D Nuclear fuelis charged to fuel expense based on the quantity of heat produced for electric generation. Under ~1 h the Nuclear Waste Policy Act of 1982, the U.S. Department of Energy (DOE)is responsible for the perma- .' t j) 7 nent storage and disposal of gent nuclear fuel removed from nuclear reactors. Allegheny currently pays to ' y. y_ r Pennsylvania Power & Light Company (PP&L), co-owner of Susquehanna Steam Electric Station (SSES), its V ~ pornon of DOE fees for mch (mure disposal services. . "d w, Cost of Decommissioning Nuclear Plant: M The estimated cost of decommissioning Allegheny's portion of SSES is approximately $36.4 million and is El being accrued over the estimate usefullife of the plant. Decommissioning costs are included in rates to the U l b, n-extent required to meet the limding schedule approved by the Nuclear Regulatory Conunission (NitC). QQ)' - q ' 4> 7 4 Differences between amounts accrued and amounts collected in current rates are deferred for future recovery in accordance with the ftmding schedule. As of October 31,1992 and 1991, deferred charges included 52.8 s ke( million and $1.8 million, respectively, of deferred nuclear decommissioning costs. Q As requued by the NltC, Allegheny established a Decommissioning Trust Fund (Trust Fund 11) which is d e M restricted for use to ultimately decommission SSES. In accordance with the NitC funding schedule,50.9 milbon and S0.8 milhon was funded to the Trust Fund 11 for the years ended October 31,1992 and 1991, D/O
- s respectively. Allegheny's lloard of Directors has restricted as of October 31,1992 and 1991, $3.4 million and
$3.8 million, respectively, of Trust Fund A for future payments to Trust Fund 11. Trust Fund A and 11 are Je n mcluded in other investments. Da Vm ' Accrued nuclear decommissioning as of October 31,1992 and 1991 was 57.2 million and 56.0 million. ? respectively. %.y Qf r'' Q -a. g s 1 aru:. W c e v e m ' 1"l A +. ,y ,f t [-4 j' \\j 1-y- ) ~
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- 1. Summary of Significant Accounting Policies, continued:
~ w p3 m gh Allowance for Funds Used During Construction: y p %. Allowance for funds used during construction represents the cost of directly related borrowed funds used for - M 4 ~ yg construction ofor additions to an electric utility plant. The allowance is capitalized as a component of the .' j cost ofelectric utihty plant w hile under construction. r 1:- @f,. Investments in Associated Organizations: s /y ~ # investments in associated organizations are carried at cost. y [^ Preliminary Surveys: J Costs of preliminary surveys for potential development projects are recorded as deferred charges. If con. %fg. strucuon of a project results from such surveys, the deferred charges are transferred to the cost of the facili-v nes if a prelinnnary survey is abandoned, the costs incurred are charged to operations. 9 '~ g Mx M:,h Cash Equivalents: -4 y-For purposes of the statements ofcash Dows, Allegheny considers all highly liquid investrnents with an orig-g gsy inal maturity of three months or less when purchased to be cash equivalents. Cash equivalents are carried at &~ J-cost, plus accrued interest, which approximates mat ket value. ? inventories
- k
{ [(. EtTectivejanuary 1,1991, Allegheny began to account for certain power plant spare parts using a deferred kh inventory method. Under this method, purchases of spare parts undcr inventory control are included in an g inventory account and then charged to the appropriate capital or expense accounts when the parts are used or 787 ,yky ~ consumed. M. ~ E ' The value of these spare parts was $4.5 milhon and was recorded as an increase in inventory on the bal-t u~ ance sheet. The associated income statement effect was recorded as a deferred credit and will be amortized as 7//g/ Sn.;r; a credit to expense over a three-year period consistent with the ratemaking treatment. 4 TW Me< ' in May 1992. Allegheny received permission from the Internal Revenue Service to use this method of 1;,( M/ accounting for mcome tax purposes. Therefore, Allegheny willinclude the value of these spare parts in taxa-(p ble income over a six-year period beginning with the tax ycar ended Octob<.r 31,1991, inventories are carried a* the lower of cost or market value, cost being determined on the average cost 1 & L method. .? .l " ; (W; Other Investments: Other investments include U.S. gm (rnment obligations, corporate obligations, and common stocks (mar-QC ketable equity securities). The U.S. government and corporate obligations are stated at amortired cost which ~ w..,^3 approximates market value, Marketable equity securities are carried at the lower of their aggregate cost or [3~ s market value. Changes in net unrealized losses on noncur rent marketable equiry securities are recorded di-
- g
.s rectly in a separate equities' account and are not included in the determination ofnet margin. Realized gams 7-
- E
'p - and losses are determined on a specific identification basis. (fg N y Patronage Capital and Other Margins and Equities: ~ Allegheny had established an unallocated equiry account Other Margins and Equities, as a resuk of a charge d-V against income in connection with the adoption of Statement No. 92. This charge against income was re. Q ( corded as a deficiency in an unallocated equity account since the amount is not allocable to Allegheny's ~~ 4- ~ members. All margins recognized by Allegheny are required by REA to be used to reduce this deficiency. y y w ~.. %%iJVwe%%f NM 4 %, 4 U ~ K 'y __.1!h. .l i 4 %c ~. ] AcJaw.1m pawnicu w%$ W W $ b k P W N $ $ 3 d N h a ~Q "% ( '% Q.%l$ U_ a Q} ; k ~w $ 1 &' % # w,k. &1 Wit ~ WUM ~
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- 1. Summary of Significant Accounting Policies, continued:
M ma ) ):V N Rates: y 9.] The lloard of Directors of Allegheny has full authority to estabbsh electric rates subject to approval by REA. gm. Revenues: gf llevenues from the sale of electricity are recorded based on billing:.o r embers and on contracts and sched- [# uled power usages, as appropriate, income Taxes: @g,' h Net operating losses for Gnancial and tax reportmg purposes differ as a result of timing ditTerences relating "p' ~. Mf pnmarily to depreciation. Investment tax credits, other than those sold through the safe harbor lease arrange- . yy ' M,2 ~ imome tax expense in the year in which the credit is utilized for tax purposes. J# ment, are accounted for under the dow-through method whereby credits are recognized as a reduction of e% #, b The Financial Accounting Standards lloard issued Statement of Financial Accounting Standards No.109, 17 3 e ."q " Accounting for Ircome Taxes"(Statement No.109), which requires a change, effec tive for the 6 scal year M n beginning November 1,1993, from the current method of accounting for income taxes pursuant to Ac-mM counting Principles lloard Opmion No. I1, to the liabllity method. Management expects that the adoption f W of Statement No.109 wiH not has e a materialimpact ( n Allegheny's net margin or financial position. M' f4 Margin Stabilization Plan and Annual Operating Adjustment Plan. jrg gy x g 1)uring 1992 Allegheny established an annual operating adjustment plan, which has been approved by itEA, g y to replace the margin stabilization plan w hich was terminated as of October 31,1991. Under the provisions W of both plans, Allegheny develops a budgeted margin each year based on a targeted Times Interest Earned 78 J ltatio (TIElt) of 1.0h If the actual margin realized is in excess of the TIER, Allegheny records the ditTerence + as a reduction of the current year's operating revenue and as a habihty to us members. u+ R~ The plans ditTer in that under the margin stabilization plan if the actual margin realized was less than the h g TIElt. Allegheny was permitted to record the ditTerence as an addition to the current year's operating reve-g p nue and as a receivable from its members. Under the annual operating adjustment program, Allegheny is not c,.C,. n -e> permitted to record the difference by w hich actual margins realized are less than the TIER as an addition to the current year's operating revenue and as a receivable from members. The liability to members, if any, % @] '1 recorded at the end of each year is incorporated into Allegheny's rate structure for the following year. Cl-through a cost-of-service billing adjustment made by Allegheny to its members. J i. y N' p;. I or the years ended October 31.1992 and 1991, operating revenues were reduced by 54.3 million and 52.5 'y%A4 million, respectively, due to actual margins exceeding the TIER. These amounts are included in accounts g;i;( Q payable to members as of October 31,1992 and 1991. k In accordance with RE A requirements the aforementioned margm stabilization plan ceased as of October M 31,1991, with credits to members for the October 31,1991 liability continuing through October 31,1992. [ d, e@, ~Q Reclassification: The 19916nancial statements have been reclassi6ed to conform with the current year presentation. 1 'w@ q a,g n <;e ,y - y )._ .z_n_. [" h ~ S a f 5 L q i'd, (s" V
- SDUbb$4kh.
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- 2. Electric Utility Plant in Service:
Electric utility plant in service consists of the following as of October 31,1992 and 1991: .,m >s g.E Depreciation / M Amortization, W Lives / Rates 1992 1991 (in thousands) ~ 2, M ~ E' Nuclear Utility Plant: 3 M-Production 39 years $516,345 5516,391 kh.mh Transmission 2.75 % 35,444 32,193 ~ . p/ 4 #; General plant 3% - 12.5% 859 859-i 5 Nuclear fuel Heat production 84,670 76,314
- p. M J
M 637,318 625,757 Non-Nuclear Utility Plant 3% - 33% 7,111 6,802 en g: 4n. s .p: %H Total $644,429 $632,559 m 5-R ' b,,. $.9 )
- 3. Susquehanna Steam Electric Station:
v. w- @),f Allegheny owns a 10% undivided interest in SSES. PP&L owns the remaining 90% Both participants pro- ?" i, . f, 4 g-- vide their own financing. Allegheny's portion of SSES' assets, which included electric utility plant in service, .;g 3f1]f. construction and nuclear fuel in progress, totalled 5645 million and $639 million as ofOctober 31,1992 and M 81-Qp 1991. respectively. Allegheny's share of anticipated costs for ongoing construction and nuclear fuel for SSES [g ;/j [ is estimated to be approximately $63 million over the next 6ve years. Allegheny receives a portion of the total SSES output equal to its percentage ownership. The balance sheets and statements ofoperations reflect %d, Allegheny's respective share of assets, liabilities and operations associated with SSES. g b 4, investments in Associated Organizations: h investments in associated organizations, at cost, consists of the following as ofOctober 31,1992 and 1991: dj! fS ,;Q Y' 1992 1991 h (in thousands) l Mo NAHONAI IlUR At UUurn.s CoOrin AUvr hNANCr US, ~ Corporation (Cl C) Subordinated Term Certificates, bearing interest from 0% Z gO to 5%, maturingJanuary 1, 2014 through 3 YN October 1, 2080 $3,860 - S3,860 ') m s fu ~ ' ' N AUoN Al llUR Ar U1n u n:s Coorru AUvr I'm ANCL. p" & Corporation Capital Term Certificates 142 -125 C f " + +; y; + n 2 '!$y-4 N AUoN A1, UANK 00H COOPI R AllVos: 'N Stock certificatts 48 63-g M 011tfR 19 20 - e w - + b(;> . %y.1 $4,069 ~ $4,068 - k, y4 Q s s 4 f"M Allegheny is required to maintain these investments pursuant to certain loan and guarantee agreements. s JV yi r 3 V .e ,, n,- _' ;g ,wy ,".s NP-"yff. $Un,yW n s +... gwm ., +J.54TW CMMc%.h. m [Cd +. s n. - Fj;c $hll.kf.h;i,A4 'ga, '6 sa L, c& ~ MN,,g'.}-ps N'i ye fS V W Em6TgS"M 9 M 4 ii @Wh.. Eh h h ' fju kl g f l ;Q;$ f
l &pg$$&%OW ? l: GN%" ; y ;. M4RnW' MawnbR:s y u ( r M... 4 l iS (;.
- 5. Notes Receivable From Members:
gF ' M Notes receivable from members arise from the lease ofload management equipment to the member coopera-Q$ ' p tives. Such notes bear interest at a variable rate (5.189% and 5.761% as of October 31,1992 and 1991, re- "y@ l l Q spectively) and mature at various dates through September 30,2000 . i. .;,a.,Q
- 6. Other Investments:
<j 4 y. Other investments consists of the following as of October 31.1992 and 1991: , P( W@ ) 1992 1991 l [j Cost Market Cost Market ( -yf (in thousands) (in thousands) 4 g.y.g 3 W DtcoMutsslONING TeusT FUNn A: ? gryg $ y3 w6 Money market funds S 103 $ 103 $ 64 5 64 p8 - Asty.. av, 4 U.S. Govermnent securities 1,161 1,187 1,824 1,874 9 A, Corporate bonds 1,088 1,104 913 935
- e. M R
Common stoc ks _1,055 1 153 990 1.095 3,407 3,547 3,791 3,968 .A m m. w r '.-, At%g .s NRC M ANDAU D DECoMMIS$1oMNc Tuust m,, g" k FUNu B: e"* a ,hq Money market funds 39 39 33 33 hCK" U.S. Government securities 1,403 1,427 779 793 ' Corporate bonds 315 313 . g'1 ~ . h [z o,g 1,757 1,779 812 826 W D ;,d..$[A i E Dint Siuvict Itistuvt FUND: r. - q/ U.S. Government securities _1 796 1,796 1,775 1,773 M ...n g;g %s., 1 s Accrued interest receivable 34 34 49 49 -TE ,< v }&n d $6,994 57,156 56,427 $6,618 -{ W f The gross unreahzed gains and losses in the value of common stocks were $172 and 574, respectively, as of gg:{ 5 October 31,1992 and $144 and $39, respectively, as of October 31,1991. ^y .g. k
- 7. Deferred Charges:
%~ Deferred charges consists of the following as of October 31,1992 and 1991: m. 9M. 7 ^ i 1992 1991 y 4 T@4 N (in thousands) M My Unamortized FFB debt repurchase premium 5 9,664 <:g.. t C[Y ' Nuclear decommissioning costs 2,838 . $1,796 s [ Low level radiation waste facility costs 502 349 Safe harbor lease closing costs 242 254 Preliminary surveys 124 244 9 q; q b , [ < <W ) $13.370 $2,643 , 4 ,nQ U.h hd6cT" h povn.fsig7 l-p ' -i-: $NWs N~ w$- 7'T== r 4 " d$y 3 w
- y L;
w amoppyW n ' q^ &~%up + W W $ l?b S N W k Q;y.,'y
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. ~,. uw.~.m c w ~, w n !k by_ q ?' f' W' ??' i ,., y O 1 s 4 b
- 8. Long-Term Debt:
- 6 Long-term debt consists principally of advances under mortgage notes payable for electric utility plant to l
'S LEA and to the United States of America acting through the Federal Iinancing llank (I I II) and guaranteed 7 g by REA. Subs'antially all the assets of Allegheny are pledged as collateral. Long-term debt consists of the r J' following a., of October 31,1992 and 1991: n i s, ~( 1992 1991 j "') (in thousands) g w o ~ g Advances under mortgage notes payable to I Fil at .,g interest rates varying from 4.879% to 10.734% ~Mi[ in 1992 and 6.418% to 13 820% in 1991, due m k, 3 , ~... @~$. varying amounts through 2021 5476,462 5487.276 A l " { T', Pollution Control llevenut Ilonds, payable senn- .k.$ annually, including interest through 2n14. M Variable rates ranged from 1.75% to 6.50% d 5Q, in 1992 and 3.75% to 6.0% in 1991 26.600 27,009 gj v _ Jg.[3 2
- % a.
'4 <r g].fH Mortgage loan p tyable to CFC, payable m various g4 quarterly installments, including interest 4. throughJanuary 2015. Variable rates ranged 1. from 5 00"4 to 6.625% in 1992 and 6.625% to N .cq i 9125% in 1991 1,939 1,973 Notes payable to CIC, payable in various quarterly -s a installments, including interest through October ((/ l '019. Variable rates ranged from 5.00% to t?'if. 6.625% in 1992 and 6.625% to 9.125% in 1991 3,075 3,101 ( ,9g 4 ( 5% mortgage notes payable to IRA due in 2 - + - p M varying amounts through 2019 7,399 7,513 ( g. o 7+ O 7 c ;' 515,475 526,863 Less current pornon 11,348 13,645 D .L g j $504,127 5513,21H M' - e &e :. j $h'.;. hDN Allegheny has the option on advances under long-term mortgage notes payable to f Fil to elect (subject to P f:N1 LEA approval) a short-term interest rate with an mterim maturity date of two years after the date of the As m ~ advance. At the date of the advance or on the maturity of an interim advance, Allegheny may also desy;nate j f that it desires a long-term mterest rate with a long-term maturity up to a maximum of 34 years from the end of the calendar year in which the note was issued. As of October 31,1992 and 1991, Allegheny had c1ccred g. k; short-actm interest rates and interim maturities on advances under these mortgage notes payables to FFil of e $82.6 million and $92.2 milhon, respectively. The remaining advances under mortgage notes payable to FI'll have previously been converted to long-term interest rates and maturities. As of October 31,1992, Alle-t N - s 't. 'A l$ ,jk J. e 'E. - - -E .t
- 94 e
r - L,3d' ~**'.J 4 ~ '. J {"[M - "'$ s kh.- g .T.' W .,t 9 d'.' MI*4W DG@thfM? j f hu. ,,g i c e .,b ~W M NA1this lie "E 66 6" @Q-lYA%%it b * #&'@* >$lya & ug > ~ YW%* R&* ; + p&g _ pf QQ y g y'sq;[; J.$' Y ! Y ' %;. g w c4 " ~ i s s e ' V&O ' A 1 w-Q._ }.. ^ y Qp % ' " -* 4
w3g$kht [ @wg pp&c+mwg Na M R $~ c7dMCCSbhb M'h W8 I ep N < w wm wefy fsp; 49 M M E
- 8. Long-Term Debt, continued:
y ~ +n 4 be [m gheny had $25.5 million of advances which are scheduled to mature and have interest rates reset within one f e h year. Allegheny intends to roll these advances over for additional two-year periods or to extend them to [" long-term maturities, in accordance with the mortgage agreement. ? h Effective August 31,1992, Allegheny executed a three-party agreement modifying promissory note with ( mpy FFil and itEA resulting in a one-time reduction of the interest rates on certain advances made to Allegheny by I Fil under the original mortgage notes. Total outstanding advances modified under the agreement M b p M g amounted to $122.0 million. Under terms of the agreement, Allegheny was required to pay a repurchase N m' premium, as calculated by llEA, of 59.7 million. This premium was recorded as a deferred charge and will y %pO be amortized over the remaining term of the advances modi 6cd by the agreement. q#' Long-term Pollution Control llevenue lionds (llonds) were issued by an industrial development author-j Lt ity on Allegheny's behalf. The llonds are subject to purchase on demand of the holder and remarketing on a Wq m' s [' "best efforts" basis until the Ilonds are converted to a fixed interest rate at Allegheny's option. If a fixed
- n '
f interest rate is established for the lionds, the lionds will cease to be subject to purchase by the remarketing ~ *ti -c (( agent or the trustre. The llonds are collateralized by irrevocable letters of credit from llabobank Nederland which are backed by a five-year credit facility in the event the bondholders tender the lionds prior to the conversion to a Oxed interest rate and the llonds cannot be remarketed. The stated amount of the letters of i =9 1 credit are equal to the amount of outstanding lionds plus an amount equal to sixty-6ve days' interest accrued on the lionds at 12% The indenture agreement contairs various ademption provisions with redemption jj g prices anging from Im"4 to 103% included in other investments, at both October 31,1992 and 1991, are oPF St.H million ofinvestments w hich relate to a debt service reserve fund required under the bond indenture. g gg ~ e m,y f trien M ATt;wrm.s or Au oNr,-upu m in ion im. NI XT IIVI VI.ARS ATdr As lot I oW% (IN TnoUSANDs): 1993 511,348 ~~f 1994 12,014 4 2, g 7 1995 12,527 /, .~W s. a-1996 13,045 ' 'w. 1997 13,703 /7g9 The above matunty schedule redects management's intent to convert advances under mortgage notes g? payable to FFil with interim maturity dates to long-term debt. %,d. Allegheny has a short-term line of credit available with CFC of $21.4 million. There were no amounts ~3 outstanding as of October 31,1992 or 1991. The interest rate is generally at prime plus 1% llestrictions are . l N(s imposed under the line Ofiredit arrangement including, among other things, maintenance of ratio reqmre- , c
- i K
ments under existing long-term debt arrangements and limitations of total short-term indebtedness. As of October 31.1992, Allegheny had unadvanced portions ofcertain existing itEA, FFil and CFC t .n6 long-term conunitments of S40.7 million. m e% F Allegheny is icquired by mortgage covenants to mamtam certam levels ofinterest coverage and annual t. ebt service coverage. Allegheny was in comphance with such requirements as of October 31,1992 and m. Certain of Allegheny's long-term debt is at variable interest rates and is therefore subject to various nur-ket and interest rate fluctuanons. r l-a e -. : : h : s.. ? k .h .,? .Qg y[c :& l '\\h el ,.,.r*9 ~ em M' T -ErN povd4tc,1 9 d.% v b.t4Ty de M ' MN N Jr-J f + @d MM MvMak'
- i
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- 8. Long-Term Debt, continued:
$q h During 1992 and 1991, Allegheny incurred interest costs of 539.6 million and $42.3 million, respectively, ^ agu n of whkh 51.1 milhon and $1.0 million, respectively, was capitalized as part of the construction of the electric .m@' ymw ge utility plant. Interest paid, net of anmunts capitalized, was $39.0 million and $41.3 million, respectively. .ym% 9
- 9. Deferred Credits:
@k " Deferred credits consists of the following as of October 31,1992 and 1991: Qg _ q' ' 1992 1991 g j;f (in thousands) g<t s aw g, y p G SSES inventory adjustment S2,980 $4,4W 2' ~ 1997 cash settlement (See Note 12) 2,333 p. p {y g Raystown lease gain 1,741 1,786 g' A @ M Deferred compensation arrangement . s %e.Z. M with PItE A 161 248 s h Other 173 e. ,(4 W A, " %- - $7,215 $6,676 Q L:L W mm .~ W
- 10. Income Taxes:
JM y> l:iq n As of October 31,1992, Allegheny had available nonmember net operating loss carryforwards of SIMO W vil a, ~,, million for tax reporting purposes expiring through 2006 and investment tax credit carryforwards of approx- %d y imately 522.1 million expiring through 20f G. Allegheny also had operating loss carryforwards attributable to AW member activities of S129.2 milhon for tax reporting purposes which may be carried forward indefinitely. ^ y M
- 11. Related PartyTransactions:
M [M Allegheny has an arrangement with an associated organization, Pennsylvania llural Electric Association @'%a (PitEA), under which PitEA provides Allegheny with certain management, general, and administrative ser-cp og ' --. vices on a cost rennbursement basis. Total costs for the services provided for the years ended October 31 a y 1992 and 1991 were approximately 54.0 million and S34 million, respectively. W-
- y QQ
- 17. Commitments and Contingencies:
-. G ( ( Insurance: cr g Allegheny and PP&L are members of certain insurance programs which provide coverage for property dam-M,^ age to members' nuclear generating plants. Allegheny's portion of the facilities at SSES is insured against 3 property damage losses up to 521.5 million under these programs. Allegheny is also a member of an im ur-ance program which provides coverage for the cost of replacement power during prolonged outages of nu-clear units caused by certain specified conditions. Under the property and replacement power insurance pro-y grams. Allegheny could be as+,essed retrospective premiums in the event the insurers' losses exceed their o w& reserves The maximum amount Allegheny could be assessed under these programs during the current pol- ]4 icy year is $0.9 million.- p Allegheny's public hability for claims resuhing from a nuclear incident is currently limited to $780.7 mil-F- hon under provisions of the Price-Anderson Amendments Act of 1988 (Act), which extended the Price- .j l Anderson Act to August 1,2002. Allegheny is protected against this potentialliability by a combination of y9 mmmercialinsurance and an industry retrospective assessment program. M s in the event of a nuclear incident at any of the facihties ou ned by others and covered by the Act, Alle- ] [ gheny could be assessed up to $12 6 mdlion per incident, but not more than $2.0 rmilion in a calendar ye r. ] i .a ) \\ , w ' w_ -4h. % 7 -- - e ..,.,s, ,,._i8 y q _q m'. v ' -,[..,- -g' ,y,,,i,-,- eom . _ = - .a g> m n i,. - - _: u^
- m u
%, O,g- ~e4 m% newmse + ~ w *nyta -rtsame neo swga._.._ _ v_g w.=~~% / g3 e 2earan g g4 t .. u.a ?_2_ w _ 1 1. .nwy x s,,-e a~ aw -v w,
j Ah QMYN M"m v.P % C ff7 W S W P numm.e m *=qw s m w d ' e S 6 i-AMOK. i 7, f . ~ ~ '51
- )r.
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- 12. Commitments and Contingencies, continued:
,Q. m, .~ A Safe Harbor Leases: s m Q Allegheny previously sold certain investment and energy tax credits and deprecunon deductmns pursuant to g-y( a safe harbor lease. The proceeds from the sale, mduJing interest earned thereon, have been denerred and are Q bemg recognized on the statements ofoperations m er the 30-> carterm lease. The net proceeds and related V,' ,Q interest were reqmred by itE A to be used to retire outstan 3ing i Fil debt. y?- Under the term of the ufe harbor lease. Allegheny is contingently liable in varying arnounts in the event t the lessor's tax benefits are disallowed and in the evcnt ofcertain other occurrences. The maximum amount gas hg for which Allegheny was contingently hable as of Wtober 31,1992 was approxinutely SIRO nullion. Pay-k I ment of this contmgent habihty has been guaranteed by CI C. h @) Litigation: jC .y. In the normal course of business, there are various claims and suits pendmg agamst Allegheny. In the opinion T' n = of Alleghen)'s management. the amount of such losses that might result from these claims and suits, if any, pg, h wo.dd not allici materially the 6 iancul statements. ~ Settlements: J In May 1992, Allegheny rc(cived a settlement of 53.5 milhon in cash. Allegheny recorded the S3.5 mdlion
- ~
~, r pg cash seulement as dcRrred revenue to be recognized as income over three years. The amount of revenue , w ;n [ recognued dm mg 1992 related to the settiement was 51.2 nnihon In addition, Allegheny wdl receive S4.5 nnlhon through noncash discounts on purtbases of capital equipment. k; g L inJuly 1991, a settlement was reached betw een Pennsylvania Electric Company (Penclec) and Allegheny yk fiir cuess energy whccled through and used by the Penelec system. Under the setticment agreemcnt Penelec 'W Q reimbursed Allegheny S2.5 nullion for the excess energy received. Allegheny recognited the full amount of '8 ' - % y" the seulement m 1991. p-
- 13. Sale / Leaseback Arrangement:
5.% Q,b Allegheny previously completed a sale and leaseback ofits hydroelectric generanon f cdity at the Itaystown llam (the Fachty). T he I atility was sold to a trustcc bank representing Ford Motor Credit Company (ford) fin S32 million m cash. Under terms of the arrangement. Allegheny is leasmg the I acihty from I ord's trustee W4 d -. tiir an imtial term of 30 y ears. Payments under the lease are due m semi-annual mstallments which com-M ,s - q menced Januar y 10.1989. At the end of the 30-year term, Allegheny wdl have the option to purchase the QW I acility for an amount equal to the I acihty's fair market value or fiir a certain amount fixed by the transatnon \\sp3) documents (Jeter mined by 1988 appraisal of the then tiireseeable residual value at the end of the lease tenn). N. N w hichever is less. M, o Allegheny also has the option to renew the lease for a f ve-y ear facd rate renewal and three fair market k renewal periods each of whi(h may not be for a term ofless than two years. Payments dunng the fned rate sC renewal pened are 30% of the average semi-annualinstallments dunng the initial lease term. Allegheny will b [Mcg retam co-licensee status fiir the Facihty throughout the term of the lease. The gain of 51.9 million related to $( the sale is bemg recognized over the lease tenn in the same proportion that the annual rental payments relate to total rental payments. ] The payments by Allegheny under thislease were determined in part on the assumption that Ford will be l ennded to certain income tax bene 6ts as a result of the sale and Icasebatk of the Facihty. In the esent that } Iord were to lose all or any portion of such tax bene 6ts, Allegheny would be reqmred to mdemnify 16rd for g the amount of the addnional fedcralincome tax payable by Iord as a resuh of any such loss. h 1 4 T s w' coeW., ,. / i. _a} b t '~ + - 'M Q< N & +: - i' v. ~ a=L 'e.-' y'i - 4 A W o3 m g W = W l Yf ~ >nh R., Jt. 4 % gp .l smi_m&Fg 2kw .~' m+ & K '-- - LL : && ~w e as ?. M2
.N t .y ... r 8 ;. *.P. - W.. d JhrSwM.& JWV & T IW'L ' 5 ' ND r - m-Q.y u
- 3. w
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- 13. Sale / Leaseback Arrangement, continued:
h The leaseback of the Facility is accounted for as an operating lease by Allegheny. As of October 31,1992 Ud future minimum lease payments under this lease, which can vary based on the interest paid on the debt used jf 3)% by Ford to fmance the transaction, are estnnated as follows (in thousands): 1993 $ 2,361 l j, NM 1994 2,361 l MP 1995 2,361 %" [e T 1996 2,237 p. 1997 2,078 n% M.S (kMk Thereafter 50 737 N 1 wn % gag Total minimum lease payments $62.133
- p d y_
The future minimum lease payments shown above are for the initiallease term and the 6ve-year renewal W2 [M period. These payments are based on an assumed interest rate of S.8% and may Onctuate based on differences between the future interest rate and the assumed interest rate M j Rental expense for this lease totalled St.H million for each of the years ended October 3', PM2 and 1991, @e respect vely. . tv wm y,e w
- 14. Concentrations of Credit Risk:
N< [w,T pr ( v.~ and NewJersey. 'I he member cooperatives' primary service areas are small cmmimnities located throughout ~7 Allegheny is comprised of member rural electric cooperatives, whose operations are located in Pennsylvania y m +. NA much of rural Pennsylvania and NewJersev. O q/ ' Allegheny's investments are invested in a variety of fmancialinstruments. The related values as presented %sp w (a in the financial statements are subject to various market fluctuations which indude changes in the equity f-h' markets, interest rate enviromnent and the genera 1 economic condnions. h g 15, Government Regulations: W r //// ( Q. d The Energy Policy Act of1992 established, among other thmgs, a ftmd to pay for the decontamination and .J Mt decommissioning of three nuclear enrichment facilities operated by DOE. A portion of the fund is to be Nh ^ collected from electric utilities that have purchased enrichment services 60m DOE and will be in the form of ',2 m gy annual special assessments for a period not to exceed more than 15 years. The special assessments will be y gf based on a formula that takes into account the amount ofenrichment services purchased by the utilities in W (7 1 past periods. {Q y As of October 31,1992, the financial statements do not reflect the additional liability and related deferred b' f *h charge. Allegheny recorded us share of the habihty in December 1992 in connection with PP&L's secogni- ' l K ).~.. tion of the liability in accounts of SSES. Allegheny's share of the liabilit y is $4A million which will be paid over a period of15 years. .d QM., 2nH +Q m, N Q,. [ 3 4 4<h al 1 p+hy g M~ h y J n ? ,1'[ y 42U#- %,4:-_ N 'i 4d - I-5 g b-r', 1Dhi 4 / t 1W. ,, ;.,. y _, j, :q y y r, 'M4; y,. : 9.g elo w % y'-+ ,,.~?*~ , h4 $ _1 Q W u q s n ~. v e sJJec n e a c w__nuuv a 2 ~m<< ~... w Wemo 2 .c W. ($ hbi ' t 'Ws WT%%*nq$0&sity&'+ j.x.If 5 l k kI."& fha ' & p/ %%?a;l MATEGMI: W E9hWM MN' tb#
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