ML20072G639

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Annual Financial Rept 1982
ML20072G639
Person / Time
Site: Comanche Peak  Luminant icon.png
Issue date: 06/15/1983
From: Mccaskill R, Parker W
BOSTON EDISON CO.
To:
Shared Package
ML20072G635 List:
References
NUDOCS 8306280580
Download: ML20072G639 (40)
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.g B_ razos Electric Power Cooperative, Inc. is a gene transmission electric utihty organized in 1941 to provide electric distribution cooperatives with reliable electric power

. at the lowest possible cost. Brazos sells wholesale power to its 19 member cooperatives which serve consumers in 57 counties in -

Central Texas. Through power interchange ag,reements, the Cooperative also sells power to seven municipal electric systems and Texas A&M University.

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Summary ofConsolidated Financialand Operating Statistics b:T

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. '*l-A Y 1982 1981 1980 Total Operating Revenues (000's)

$173,107

$108,792

$ 93,695 Total Operating Expenses (000's)

$172,757

$108,919

$ 91,881 Operating Margins (Loss)(000's) 350 (127)

$ 1,814 Total Assets (000's)

$305,640

$261,999

$226,724 Total Equity (000's)

$ 20,753

$ 20.018

$ 20.034 Times Interest Earned Ratio (TIER) 1.03 1.01 1.15 Debt Service Coverage (DSC) 1.09 1.03 1.10 Energy Sales (Megawatt hours)

Member Cooperatives 2,389,141 2,226,904 2,214,371 MunicipalInterchange Customers 226,982 218,956 224,843 Economy Sales

_1,0_49 09_0_

83 595 2324_8_

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2,529,455 2,462,962 Total 3 665,213- _ _

-1 Peak Demand (Megawatts) 531 520 508 Revenues & Expenses EnergySales (in$ thousands)

(in megawatt hours)

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f Member Cowancs

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2 W 141 Bewmas I?).lo7

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Member Cooperstws

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21 3 404

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Marixips intercW Cassiome's 218 M V lewnues 1 3.'92 ga g,,3, mv Sus 84 tot 1/

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Member Coopermives

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uonom,a zi,4. i,7 MemberCooperaroes

/./ 1 84' 829 Bewners 72.128 7h V mxmallmerchanee Caemers IM822 [/

,7 Expenses 7tt?24 l kanomy $4cs H 14 [f]

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== v NetUtilityPlant (in$ millions)

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William G. Parker

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Q[ ggQ)fg fg Richard E.McCaskill ./ - 1 (- t..l;. .f ,....Y jr! Executive VicePresident = ~ ~. :- ;.; W.. _; i.. '. _ :. f. +,7 andGeneralMan.yer ..l .f..., :._ _._ [ f ~, hepastyearhasbeen Wehaveactivelysearchedforways hand, we were successful in obtaining characterizedbysome to reduce costs.InJanuary 1982,we Utility Commission authorization to defer uncommon short-term instituted an economicdispatch dep eciation and thereby reduce revenue challenges.Stemmingfrom themwere operationwith ourco-membersof the requirements for the first two years of someencouragmggamsandafew Texas Municipal Power Pool. Using the San Miguel's operation. This deferral disappointments. most efficient Pool units with lower fuel reduces our customers' bills by about $17 Ourjointly-ownedSanMiguelPlant costs, we were able to save our customers million for that two-year period. The completeditstestphaseandbegan $4.5 million in the first nine months of deferred depreciationispresently commercialoperationonJanua$ 1982. the year. The municipal members of the included in the revenue requirements 7 By contract.Brazosreceived 67V ofits Poolachieved comparable savings. over the subsequent five years beginning output this first year. To accommodate Regrettably, take-or-pay terms oIthe in 1984. the economics of the plant-high capital Pool members' fuel contracts prevented Weinstituted a" Prepayment Plan" costs and low fuel costs-we had our first significant benefits from the operation in whereb memberscouldpaytheirpower major rate change since 1976. Generally thelast quarter.We ex >ect economic billsear.The plan enabled Brazosto speaking the plant has functioned well. dispatchingtobebeneicialtoour reducei line-of-creditborrowingsandit It operated at a 70.2% capacity factor customers and the Pool members again in savedbothBrazosandourmembers (percentage of total possible energy 1983. several thousands of dollars in financing output) for the duration of 1982. At the weweredisappointedthat the costs. While the savings were not large, same time,ithashadsome unexpected savingsof theeconomic dispatch we feel the plan was significant because it o aerational costs. They drove the cost of operationwerenullifiedby is another joint effort with our members electricity higher, for the last three unanticipated, year-end. San Miguel to cut costs for the ultimate consumer. monthsof theyear,than wehad operational costs. We have formed a joint anticipated. accountingcommitteeand ajoint operationscommitteeamongBrazos. SouthTexasElectricCooperative and San MiguelElectric Cooperative to achieve closer financial and operational coordination. Despite intensive effort in the first quarter. we failed to achieve the sale of San Migueltaxbenefits throu a " safe-harbor leaseagreement.Ont eother 3

m Longterminterest ratesdecreased Lastyearwe toldyouthatthe12 howmuchthey cut from raterequests. during the near. We began systematically membercooperativesofMid-Tex Our business requires the longest of plans reviewingiebt to determme the Generation & Transmission Cooperative seekinganaggregate ofbenefits-a optimum point at which the Cooperative had requested a joint study with Brazcs reliable suppTy of electricity which is least should convert short-term borrowings to to evaluate the mutualbenefitsof expensive over the long term. To build long-term.Propertimingof the membership in Brazos. The preliminary new facilities which have the smallest conversion has the potential to save our study results show the probability of immediate cost impact could poorly serve customers millions of dollars in financing signilicant long-term savings for the Mid-our customers and their consumers, in costsoverthelife of the debt. Tex cooperatives and smaller savings for thelongrun.Forexample,the weshallcontinuetosearchforother the membersof Brazos.Nine Mid-Tex cumulative fuel cost over the life of a meansofreducingcosts. cooperatives have expressed interest in powerplant canexceed theplant's During 1982. Brazos initiated studies joining Brazos should the detailed study capital cost threefold. Because lignite is forgenerationexpansion.Our results confirm initial indications. We much less expensive than gas, it pays in membershipintlieTexasMunicipal shall evaluate the final results very thelongrunto buildthe more costly PowerPoofhasenabledustodelaythe carefully to insure that they are beneficial lignite-fired plant. We encourage you to additionof another mwerplantfrom to ourcustomers. consider thelonger perspective and to 1987 until the early 1990's. We are now Playingonemotionandignoring expressyouropimonstliereon. conducting conce ptual studies comparing facts. the recent gubematoridcampaign anewlignite-firec generatingplantin inTexasworsenedawave of eastTexas toasecondunitat the San consumerism based on electric utility Miguel Plant site. A pro ect to build the rates. It is too early to anticipate what moreeconomicalunitshouldbegin changes will be made, but change is fairly within theyear. assured. We shall work to avoid changes which are aimed at immediate benefits without regardtolongterm considerations. The electric utility industry runscounterto the current philosophy ofimmediate expectations and instant satisfaction wherem business isjudgedbyth previousquarter: govemment,b thelatestmonthly statistics;and ilitycommissions,by 4

l l 1982 Review l yw q y-ng<~~cr~p w gmgem, p,mm m m mm mwm m mpmy.A m,,

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v. w - hela m audd m ad.wia muwLan d huh;4 @ m M & m essc h issa FINANCE & ADMINISTRATION wy - ;w_ F*%%r. "9 W:3 t 4,_ 4 %n g a.. 79 l ,,.,-e (- 't< 4 , W:Fi s 3 m l }

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I \\ \\ y yg gh N ). ^ il- \\ s, f 1.>. : i. A ..g j . r 'n3' .W pa ji ig ' * = # gn h v, C W Orpemet AfdDRet ur sa!es 10 eur customers. D member cooperatives and (k mumapal mterthance custemers. Increased 'a te 2 010124 c mecawatt hours This cam is sicmftcant m a vea! cf mild weather'and recessten Betause of ecen0mv enercy sales and our etanomit d:spatch operafiens. cut tetal sales inueased 4;4 e 4.005.21; t mecawatt hours For the year. total revenues mcreased to $1's milhen There was a maler shttt m the strutture et eur expenses In !051 tuel adeunted fer ;;3c of a revenue della, and purchased power. 41 This vean we purchased ever 000 et our customers pcwer requirements frem the San Micuel i Plant Consequently. purchased power has beteme our ma:er expense It amounted te everis; millten er ;0" cf a i revenue dellar i Anether record set m 105' demonstrates the crowth and strencth of i the Cooperative 't teck from 1041ic 1J'4 ter assets te reach $100 milhon Ther ~ 4 grew te $200 milhen by 1050 This vea j". assets tetali;00 mtlhen These f,: cures u aise draman<am demonstrate tne w p'- ~" i E b.- mass:ve tesa te which utthnes and then tensumers nas e t'een suD;ected m recent 2 = Years ,nas also mcreased at a & G 2:; .- ~ inte:est cest rapid rate The ma:ents of ourlong-term r" detit :s previded by the Federal Emananc o

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MMW Bank throuch Rmal Electnaf: tat:en Admm:stratten cuarantees The average imerest rate et our Fece:al Emanane Bank debt exteeded 1;E: at year-enti Our average mterest rate en leng-term debt mecased trem e ;: m 1050 te ar m 1J32 Because et the hlch rates we had seletted a tw0-sear ma'tu ts te: eart:e: netes we a:e pleased by the :ecent

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4. ' 4 ejefg@mfs, long-term interest rates \\\\,e dese;.v z

u K c %7W monitor Federal Emancme Bank rates to % q* K ' jfh analyze the economKs of early debt Q ^^ &;ag& M; <enversion from short-term debt to i;t #: s g gz long-term n, ,_f m gg.; ew%j?y W ilM q E; D To sustam our capital crowth. we O7 waM(+ r{W"Qg apphed for and received alBe milhon nSage loan from the Federal Emancme Bank yyMag' 7/jhi This loan provd s funds for tra'nsmission .~ , sp? @ Tf0 / projects through N51 plus additional 3F 1 ' y (@W M ,M s 1 fmancme for our ; 51c mterest m the

  1. 9 7 pgaE Comanche Peak Nudear Plant h

Because of future ceneration u ew $ gj@ $. '\\ presently beine plan, n,td we have J?' MEMW 7 mvestigated several tmanang plans a v. < n f.w - ; MUf; a N mdudmg leasmg arrangements. revenue , +P ,@M ~ + i bonds. and the issuance of commeraal 2. ' p." h t i paper m4m mg s We becan planmne ter an addition yA / 4' - d to the headquarters btiildmg to = ~ 4 accommodate our Project Construction g and Enemeenne Division whKh is 9 Y:[ presen0v located m leased quarters

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OPERATIONS W i -e, ., Q-- - (. p r,f d [ y r; / ,y M M ll;y.sa 3:r - p W,;b f g% f. j D B Swenke Mrage: e-7 3y m, ,:p DaJR' j-CN$( d 6N ne notewortr. 3 Jir g y accomphshment dunne the vear MW was the estabbshment and W emp!ovment of ecenemh dispattn.ne v withm'the Texas Mumural Power Pc'el. 39-whKh censists of the electnc systems of Brazes and the attes ei Bryan Denten Garland and Greentt!!e Etenema dispatchmg ts a program ei !cadmg -ceneratinc umts m,relatien te their tue! e, C0sts per xitewatt neur et cutput te mmimize the cost cf eleanan This operation a<hieved savines 5v m,atmizmc the use ef the San Mm,ue. + r \\ 't ei f 6 h, i A C

and by utilizing the most efficient gas-To maintain the reliability ofour substationcapacityby 100.000 KVA. firedgeneration units to meet the equipmentandsystems,we undertook Twenty-five miles of 138 KV transmission remainderof the Pool'senergy some majorpreventive maintenance. line were added to the system primarily requirements. The operation saved our Wecompletedmbrepowerplant to serve new distribution substations for customers $4.5 million and the municipal maintenance than in any previous year, ourmembers.The majorsubstation membersof the Poolachieved including the overhaul offive turbmes. construction projects completed were: comparable savings. Take-or-pay terms of Plant efficiency improved 3.4% over 1981

  • the 6.250 KVA Salem Substation, the mumcipalmembers'gascontracts and our system average net heat rate was whichwillaccommodate thesteady prevented significant use of economic 10.491 Btu perkilowatthour.

owthin theeastemportion of dispatching in the last three months of weinitiated acontinuingprogram of fookeCounty ElectricCooperative the year. W e expect continued benefits transmission pole ground-lme mspection Association'sservicearea. from thisoperationin 1983. and treatment forthe system s 35.000

  • the 20.000 KVA FallCreek During1982.Brazoswasfacedwith a 7 oles. This program should extend the Substationservingaheavily severe take-or-pay situation. "Take-or-

.ife of existmg poles and reduce outages. populatedportionofJohnson 7ay isthecontractualobl ationto ay In addition to the routme County Electric Cooperative

orgasaccordingtoaspec iedmont ly transmission system construction and Association'sservice area.

rate of usage. Production of electricity maintenance, our crews constructed one

  • the 20.000 KVA Dobbin Substation from the San hiiguel Plant eliminated the new distribution substation and 18 three-which willhelp hiid-South Electric need for significant operation of our gas-phase distribution bays. We provided Coo erative Associationservea firedplants.Furthermore,thelow support services for construction and rapi lyincreasingloadwhichis statewide demand fornaturalgas testingof fourdistribution and two
  • the 40.brom the Houston area.

movin f prevented Brazos from having any natural transmission substations,and we KVA Roanokeand the gassalesofsubstance. Aspart of the accomplished system improvements at 37 60.000 KVA RenobulkJower economicdispatch operation,we substations. Moreover, we mstalled, and substations,whichwiliimprove the marketed more than 8 million MCF of gas putinservice, microwave voltage and reliability of service to in the form of electricit to other utilities. communicationsbetween ourSystem coo erativesinthenorthemand Bydoingso,thenatura astake-or-pay operationsCenterandtheSan Miguel north centralportion of the system. problem waseliminate Pfant.Replacmgleasedlines,this OnJanuary 11.1982,inthe midst of a microwavelink transmitscritical Because of an administrative delay in severe winter storm, the electric systems generation and transmissionline approval of our loan guarantee by REA. inTexasexperienced ashortage of operationdata. we did not complete all planned system availablegenerationcapacity. Appealsfor Ourprimaryobjectives for1983 are improvements. However, a sigmficant voluntary reductionin theusage of to keep fuel costs as low as possible and amount ofimprovement workwas electricity were made toindustrial toincrease the reliability ofthe accomplished, under our supervision, by customers.Through newsmedia Cooperative'sgeneratingunitsand both OperationsDivisioncrewsand announcements, other customers were transmission facilities. contractors Webeganmajorconstruction asked to conserve. Some of Brazos' load on the 20-mile, steeltower. 345 KV Elm was shed for a period of up to 45 minutes PROJECTCONSTRUCTION Mott-to-Whitney transmission project AND ENGINEERING which will provide a port-of-entry into to maintain electric system security. By the Brazos system forSan Miguelbulk takingthese steps,we helped averta . ~ < widespread. interconnected electric Power. This project is schedu' led to be o completed in March 1983. It is our second stememergency.To reduce the 345 KVline construction project. a ances of a similar occurrence in future years, we have further winterized our fj. Majorexpansionofthemicrowave plantswithadditionalfreeze rotection , C =.:. system, whica cames voice and control communications, continued during the andothermeans. Additional,wehave /- workedwiththeNorthTex Security 1C- *t J year. Installation of the communications Center to improve our response to such 8.w.oyess,ifankger ~ tinkbetweenWaco and the San Miguel Plant, and installation of microwave links occurrences.TheSecurity Center between the Hood. Reno,and St.Jo

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functions as a point of coordination for theinterconnected electric system eetingour1982 goals.we substations were completed. operations of utilities in the northem part completed design. procurement. We havebeen studying.in detail. ofTexas. and construction supervision advanced techmcal standards to develop activities for projects which increased the most economicalandefficient distribution substation capacity by)70.000 KVA and transmission (bulkpower 7

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  • .$,;9 challence is te sustam this momentum
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Mf 9. ~ g@v.+ip. &. f male. <udies wnwh wm lead te a new M t= m. ,t y future generanen pla,n for the W. ;.;,. w. : a i*, -.- Coo ^erante Severai thatv-vear fue,t n 4 s 4 i. .y .f. c w c- + 4 y reserves were :uentificano analyzeu;

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o' .. ;mf y f f..e,h.] x w$ $- yg, w ; y- - n., ene altemanve. a acmtequed power .l :." whKh will develop tne esumated cost of . f plant m east Texas 'At the same ame. we i.' :.. > i..5;4 - - ' -& (. 4 , y ;. : j.. underteck a similar studv ef a secend ( ;* 1/;- _-,? s 7 c.,. cf 1 resuits c: these two stud:es wth,,ne e ,ff.f.g-4.f.,.;f~ umt at th,e San Mu.ue! Pbnt sue The ,;.w;.,,,- ..., e'. - 4 co,mnated enablm,c us te uetermme, r, -e wnKn um,t sneuld ce,bu:h te be en une e s,.m,. + + y,. f. maw, y, ,wm m tne eant 1a00 s k %. _ ' We a!se conducted a study N 5W %@y@h thispowerplant wea determmeif cad manacemem f g?. 6 w techmques wu!d delavienstruccen cf g %c y- % evaluatmc tne results whwh seem te 7.* %.T ~ !. h.; 9 .V... mdxate t"nat mstalianen ef:ca, d, net . p,,.". ~ p. e. -f. % g. managemem eqqnpment weujo p w..- j ;. x benent our members and m:gm even ce - c g.- e_;m.; . ;. y .7 .t detnmema! v 3,. .- g .e ' ; 1. !;. ;.. ' t . f. '.6.;. .... 6._. Je ? To a d the develepment of the r s .c. 4 .g, =, 8 7 +,.,.. g. ,1., i r. eferat:en Cemerate P:annmc"retermed .,.i '4

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3:. n.,p m. ; yygg 3yy 3. 3 c i.:~S.ciku:,.A % w Me w ema m. m ~1 - J. ...'13-Continually searchingformore which was initiated at the end of 1931. outspokenonissuesaffectingour economic transmissionofenergy has been well received. We have actively industry anditsconsumers.We are throughout the system,weperformed participated in joint, member-services actively searching for additional ways to computer assisted studies of summer-and activities with our members, including support the member services and public winter-peak transmission power flows hosting a trip to the San Miguel Plant. relations activitiesof our member and transmission losses for different Additionally,we haveincreased the cooperatives and municipal customers. interchanges, within the Texas Municipal communicationssupport to our With regard to ourproposed new Power Poolsystem.These and other customers by developing and printing generation facility, we have a public Studies give us the basis for our plan for situational bill stuffers, short articles and relations plan ready to support this major future transmission system construction explanatory papers. To better understand undertakmg. andimprovement,and arrangements the relations 1ipbetween ourmember withinterconnectedutilities. cooperatives and their consumers, we (Qgh%" Toprop rly serveits customers,the have participated in talks with consumer Electric cooperatim electric utifi mdustry must construct grou >s and individuals. Obtaining a first-facilities whi h cost millions of dollars. hanc impression of consumerattitudes 2 EEs.:. _- a We must make decisions regarding such has been beneficial. We plan to exaand 9L-. ~ t,F facilities years in advance of their need this activity in 1983. 0ur program for the WiEE" $,l! and in the context of high interest rates 1932-83 advertisingyearliasbeen EE::.EEE 1 and variable load gmwth. I.ong-range aggressive. Using moming drive-time EEGrEEE, '/ alanning has to be flexible and must be radio and local newspaper covera'e, we

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based on the best information available at havefocusedonwhatitmeansto ea t-the time of decision. Proper planning memberof a cooperative and on the minimizes the overall financial burden by comparative cost of electricity. The g

==a a evaluatingasagroup: thought of conservation exists o present value cost of ahematives throughout these advertisements. g,,,7,, n,,,p,p,,,jr,r,,,,,,,,, o system reliability Weanticipateincreased activism trom nsmusenes.

  • time ofinstallationbasedonload regarding electric utility regulation during projection 1933. I, ate in the ear, we took steps to BRAZOSFUEL COMPANY,INC.

o powerlosses keepmoreclosel infonnedofstate

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regulatoryandle slativeactivities. .- g - Prelimina evaluationofourenhanced A We feelwehaveasoundlybased plan for ca ital expenditures which will liaisonhas een heartening.Wehave . y rowth. At the established good informational contacts .;y accommo atememberfletoimprove at the Public Utility Commission, enabling

1. ~ y, same time,we willbe a reliability, quahty of service and the us to keep abreast of proposed regulations.

economics of transmission within the In the past two years, severe wmter . > g, weatherhasaffected statewide Brazos Sgem. generation supplies.Tobebetter

c. L sartin, Manager PUBUCRELATIONS prepared to handle such emergencies in F'i' ff

'h7. the future, we formahzed our plans for "~ ~- he Cooperative'ssubsidiar emergency action and communications Brazos fuelCompany,Inc.y, "e ~Oj.b withourcustomers,the media and the ,has 7. & public. approximately 80contractswith " M#' Duringthe summer,in response to a Fort Worthbasin area producers. These -@f - ' h' Department of Energy regulation,we contracts cover more tnan 550 wells. The developed a five-year conservation plan. daily gas volume which these wells can i It is designed to reduce system-wide, deliver has been decreasing steadily W 7* annualelectricity consumptionby duringthe past twoyears.llowever, F. M. Bushnell. lr.. Manacer approximately 172 million kilowatt hours using power from the lignite-fired San by 1988. Our plan, approved at year-end, MiguelPlanthas reduced our P"$ isbasedprimarily on conservation requirements fornaturalgas. 6 advertising in support of our customers-Brazos Fuelhasbeeninvolvedin S trengtheningour communicationswith member conservation programs. both short-and long-range fuel studies. cooperativesand municipal Ourobjectivesduring1983 are to customers was a major objective of 1932. im] rove and expand our media contacts, Our monthly newsletter, "Brazos Briefs " toiuild on our newbase of state govemmentliaison,and tobe more 9

. m :ymmpywrympy < m m+ 3 xmm 't } & M L & a g y g a g g g @ ld ,wagy&;f%,. g; y w:;,a '#,i y i ng M:1 We evaluated three east Texas henite reserves and analyzed fuel reserie data for a second unit at the San Mieue! Plant site One of these reserves wilfbe used for our next eeneratme unit. scheduled to be on hne in'the earlvia00 s we a:e a f currently necotiating with a coal y company to 2etermine a compettine d l pnce which can be used as part of the 3 q evaluation of two plant sites p ,4g Brazos Fuelredetermmed the pnce of cas with its producers at P 0248 pet MCF e _ 1 s;t' for the NS2-83 contract year For the f Y [:e d { #" r 'J calendar year. the weichted at erce pnce 7 2; L 9 i ~ i> was O 30 per MCF In'a pened xnen gn gw regulation is pushine up the cost of M 7 4 ",*[ J 4" i s na'tural cas on a mon'tnly basis, we feel thar %d? we heltf the hne successfully with this (k a pnce A group of producersfrom the \\ }- - -}* Z #' Graham. Texas area has not agreed te the pnce and has mitiated leeal action to obtain a pnce havmg mo'nthly escalation We feel secure in ourposinon et ,_,~C. redetermmme a fixeo pnce for each contract ves'and will defend that position as required Brazos Fue! has met with several cas supphers m the past year as it beeins t'e ) gj look for new lone-rance cas supph An v Important conskferatienis bu1Idme a cas I; - pipehne from a malc r suppher to p'reiide

J more flexibihty m eas purchases and sales Our cont'ract'with a cas pfi elme

-e-.- rompany which supphes 2h c the } sc A W Cooperative s natu- ~ Jas. expires m June Aum. 983 Average FuelCost;$per MCP ,n<wescam;waw wu Sijf 32 1 Q Sl i M4 Q ~ - - 1 99 ] 10

Treasurer'sReport g I s he Consolidated Statement 1982 marksa milestonein the of Revenue and Patronage Cooperative's history; total assets Capitaland OtherEc uities of exceeded $300 million forthe first theCooperativeanditswholly l time.Totalrevenues were $173 l owned subsidiary,flects that the Brazos Fue million. The distribution of revenues I company,Inc., re indicatesthat purchasedpowerhas l operations produced net mar?. ins of replaced fuelas the majorcostitem. $734,995 for calendaryear 1982. Weare presentingbelow the k Marginsimproved significantly distributionofboth the 1981 and p compared to the net'lossof $16,709 1982 revenue dollarsto show the l 1982 resultedin a TimesInterest to significant power purchases from reported for1981.The margins for change.The changeisprimarily due l Eamed Ratio (TIER)of1.03 and a the San Miguel Electric Cooperative. Debt Service Coverage (DSC)of1.09. Its 400 MW lignite-fired plant started v ^v. The TIER and DSC ratios are key commercialoperationin January am muinsms a financial indicators used by the Rural 1982. Brazospurchased 67%%ofits Electrification Administrationin output this first year. Energy from assessingtheability of the the San MiguelPlant amounted to g Cooperative to meetits mortgage 60% of the Cooperative's sales to y rec uirements. While the Cooperative membersand other firm customers. } fel short ofits targeted 1.1 TIER and The Cooperativereceived Rural l Robert H. Bunting DSC levels for1982,it exceeded the Electrification Administration and secrewy.rreasurer 1.0 levels required by mortgage. FederalFinancingBankloan fund l Operating margins, from the advances of $37,210,000 during 1982. l Cooperative's operations for 1932 These advances were used to finance were $405.594. As requiredby the the construction of transmission ( Cooperative's By-Laws, these margins facilitiesand to finance the cost of havebeenallocated to consumerson our 3.8%interestin the Comanche a patronagebasis. Peak Nuclear Plant.Long-term debt at year-end was just over$250 million. The Cooperative's totalmargins and equitiesof$20.8 million l represent 6.8 percent of the $305 m'lhon totalassets. i / / / / Distnbution of1981 Distnbutionofl982 RevenueDollar RevenueDollar I FuelCost 52 oc [ FuelCost

3) ec Wages & otherCosts 1 oc Wages &otherCosts 1.1C Generated Power 54.2C Generated Power 34.7C Taxes 1.0c NO s'

Taxes .6C Admin. & Gen'l. 2 6C %- Admin. & Gen'l. 1.7C Transmission 3.9C % Transmission 4.7C Depr.& Amort. 3.8C x - Depr.& Amort. 3.0C Interest 3.8C ,'C Interest 9.3C Optg. hfargins 0C W Optg. hfargins .2C Purchased Power 30.7C Purchased Power 49.8C 100.0c 100.0c n 11

~ TheBrazosSystem B razos Electric Power Cooperative. Inc. isageneration and transmission cooperative which provides electric power toits19 memberdistribution cooperatives whose service areas cover 49,900 square miles of Texas. Brazos and its members comprise the BrazosSystem.Through 3 interchange agreements, Brazos provides electric power to the municipal systems of the cities of Bartlett, Granbury, Heame, I er,Seymour,Weatherford and Sang,tesboro and toTexas A & M University. l whi Brazosisa memberof the TexasMunicipalPowerPool I with the citiesof Bryan. Denton, Garland and Greenville.The combined generation capacityof the TexasMunicipalPower Pool is 1,760 megawatts. 12

T l { i l t i Headquarters e M Nuclear

  • BrazosElectric PowerCooperative Electn. Power e MemberCooperatives c

Generation Plants ditm NaturalGas system statistics I ' " ' ' "'"*F P"'""8 i { jointly owned. undet Construction) " C[E#I' p te 50MW UO MW* Lipite manaic W. Maierri,nt N cas w6uW ni uW (jointlyowned) North Texasflant N Cas 66 MW 75 5 MW W R. gBoblPo ge Plant N Gas D MW 14 MW Hydrot ycontracti %MW T4 MW h 775 MW 814 5MW g,,, { Transmissen tanes: 345 KV 77 tmles j 444mdes 118KV IJ37mdes 64 KV 2d"1"YI5 t I Membes Cooperanves...... . 14 MunK1pallmerchange Customers. I CoumiesServed 57 femisologyand AMsweisdoms Csed Ar Thh Espost KW...~. Kdowatt...1.000 watts A measureofdemandforpower TypKal i hght bulbsare rated at 60 and 200 watts MW Megawatt.... I mdhon watts A measure ofdemand forpower. t KWH_ Kdowat hour 1.000wansusedfor1 hour i A measureofenergy Energy used by a 100-watt hght bulbdunng tenhours MWH. ...Megswatthour...).0001ulowatthours l A measureof energy KV. . Kdovolt.. l.000 volts A measure of electncal potential Household l vohageis typically !!1 vohi KVA. . Kdovoh-arrpere.. 1.000 voh-amperes A measure of capabdity of electrxal eqmpment to operate under load wnhout heatdamage Thisfiguressche mathematralprWuct of vohagetimes TransmissionSystem cunem amperet lagmte...... Alow quahty coal. g"h of,',(,o ;t., - 345KVTransmissionLines Md' - 138KVTransmissionLines uCr. 2000cubiant t - 69KVTransmissionLines Vd='"( *'$"**" "'ed 'o' ""'1 '5 8 1 13

he financial strength and resilience of the Brazos System stem T from its member cooperatives. listed below. They serve member-consumers in rural, suburban, and urban areas totaling nearly 20% of Texas. This vast service area provides diversity for income sources of residential, agricultural and industrialloads. It also provides strong growth in energy sales. In this year of severe recession, airm energy sares increased seven percent, a growth figure stronger than 1981 produced. MemberCooperatives Headquarters Bartlett Electric Cooperative, Inc. Bartlett B-K Electric Cooperative,Inc. Seymour Belfalls Electric Cooperative, Inc. Rosebud Comanche County Electric Cooperative Assn. Comanche Cooke County Electric Cooperative Assn. Muenster Denton County Electric Cooperati' e, Inc. Denton Erath County Electric Cooperative Assn. Stephenville Fort Belknap Electric Cooperative, Inc. Olney Hamilton County Electric Cooperative, Assn. Hamilton Hill County Electric Cooperative, Inc. Itasca J-A-C Electric Cooperative,Inc. Bluegrove JohnsonCountyElectricCocperative Assn. Clebume Limestone County Electric Cooperative, Inc. Mart McLennan County Electric Cooperative, Inc. McGregor Mid-South Electric Cooperative Assn. Navasota Navarro County Electric Cooperative, Inc. Corsicana Robertson Electric Cooperative, Inc. Franklin Tri-County Electric Cooperaive, Inc. Azle Wise Electric Cooperative Inc. Decatur 14

RS( 8' T . w 1982 1981 1980 1979 1978 (Mills per KWH) TotalOperating Revenue (1) 46.8 40.1 34.6 30.9 28.3 Operating Costs Production expenses (2) 39.5 34.1 29.1 24.8 22.4 Transmission expenses 2.2 1.6 .8 .8 .7 Adm.and general expenses .8 1.0 .9 .9 .7 Dep'n., taxes, insurance, interest 4.1 3.4 3.2 3.7' 3.5 Tot:1 Operating Costs 46.6 40.1 34.0 30.2 27.3 Net Operating Margin (Loss) .2 (-) .6 .7 1.0 (1) Average sales price by class Firm power sales Member Cooperatives '49.9 40.1 34.5 30.7 28.1 Cities 50.9 42.4 36.0 32.9 30.0 34.8 31.9 Utilityinterchange Surplus power sales Cities 38.4 33.9 34.5 29.5 26.3 (2)Further analyzed by source G:nerated power Cost of fuel 39.1 34.1 27.6 23.3 20.7 Wages and other costs 1.2 1.0 .6 .9 .6 Purchased power For system 36.3 24.9 22.9 19.7 14.3 Atisolated meter points 41.6 35.6 29.1 26.0 22.8

  • Excludes operations of Brazos FuelCompany, Inc.

i l 15

p.,

p.,

m __s m. _s w.aa nu -. x.a x a w. e ~- m 1982 1981 1980 1979 1978 Electricity Generated and Purchased -in Megawatt Hours Generated at W.R. " Bob" Poage Plant Generated at North Texas Plant 22,890 71,897 99,986 4,262 15,127 Generated at Randle W. Miller Plant 1,499,573 1,494,217 1,782,357 1,513,456 1,800,256 ' Purchased for system ~

c. From San' Miguel Electric Cooperative 1,654,877.

366,664 . b. From other utilities 170,161 295,685 286,930 334,217-67,181' Purchased atisolated meter points 458,434 412,529 413,856 363,032 367,733 - 3,805,935' 2,640,992 2,583,129 2,214,967 2,250,297 ' Electric Salee-In MegawattHours - A.FirmMemberCooperatives 2,389,141 2,226,904 2,214,371 1,897,829 1,887,021 Cities-regularinterchange 226,962 218,956 224,843 195,822 199,866 2,616,123 2,445,860 - 2,439,214 L '2,093,651 2,086,887 B. Economy Sales 1,049,090 83,595 23,748 33,150 - -50,186 - 3,665,213-2 S29,455 - 2,462,962 2_ 126,801 -2,137,073 m Electric Sales to Member Cooperatives-in Megawatt Hours- . Bartlett Electric Cooperative, Inc. 47,P.21 43,646 44,297 41,767 41,714 Belfalls Electric Cooperative, Inc. 42,317-46,837-42,859 .32,874 30,834 B-K Electric Cooperative,Inc. 61,530 ; 62,194, 66,430 57,746 ~ 58,733 Comanche County Electnc Cooperative Assn. 136,675 f 123,059 113,760 .90,078. 87,325 Cooke County Electric Cooperative Assn.

234,604 220,337; 221,999 209,647 '

215,577. Denton County Electnc Cooperative, Inc. 218,286

195,937 -

195,123 164,319 2162,547 Er th County Electric Cooperative Assn. 146,638: I137,763 : .140,736 - 118,911- .122,570 4 Fort Belknap Electric Cooperative, Inc. 94:T26 84,994 75,466 67,637 67,072 H milton County Electric Cooperative Assn. 75,602 69,983 72,741 66,510 69,236 4 Hill County Electric Cooperative, Inc. 111,916 103,032 108,514 93,516 93,289 J-A-C Electric Cooperative,Inc. 82,017. 73,085 -66,765 60,554 60,636 Johnson County Electric Cooperative Assn. 286,371 259,155 262,235 228,898 222,269 ~ Limestone County Electric Cooperative, Inc. 61,201 58,552 61,404 56,985 56,743 McLennan County Electric Cooperative, Inc. 77,009 75,815 74,774 63,282 63,014 Mid-South Electric Cooperative Assn. 156,657 141,804 117,957 93,040 iS,573 Navarro County Electric Cooperative, Inc. 86,241 95,233 106,045 68,468 69,402 Robertson Electric Cooperative, Inc. 48,626 41,757 41,568 35,283 35,048 Tri-County Electric Cooperative, Inc. 301,061 283,580 290,372 252,767 248,345 Wise Electric Cooperative,Inc. 120,443 110,141 111,326 95,547 93,094 1 2,389,141 2,226,904 2,214,371 1,897,829 1,887,021 16

4 1982 1981 1980 1979 1978 Maximum Kilowatt Demand At Member Delivery Points 568,681 556,837 551,656 433,233 468,976 AnnualLoad Factor Percent Member Cooperatives 48 46 46 50 46 Electric Energy Sales M:mber Cooperatives . $119,214,939 $ 89,373,467 $ 76,382,941 $ 58,230,463 $ 53,083,875 Wholesale and other 51,976,783 11,830,747 - 8,848,000 7,332,682 7,207,920 $171,191,722 $101,204,214 $ 85,230,941 $ 65,563,145 $ 60,291,795 Other Electric Revenue 184,241 245,027 102,932 100,574 103.841 Total Operating Revenues $171,375,963 $101,449,241 '$ 85,333,873 $ 65,663,719 $ 60,395,636 Operating Expenses Production Expense-Generated Power S 59,530,029 $ 54,979,207 $ 53,184,446 $36,697,814 $ 38,488,525 Production Expense-Purchased Power 85,265,221 31,174,730 18,633,493 16,031,402 9,338,290 Transmission Expense 8,121,976 4,092,502 1,962,736 1,719,860 1,460,791 insurance and Welfare Expense 1,200,410 954,435 841,434 730,333 685,754 Other Administrative & GEneralExpenses 1,783,918 1,635,066 1,337,628 1,140,286 916,087 Depreciation and Amortization 5,126,312 3,826,420 3,519,135 3,588,702 3,269,250 Taxes 1,082,647 1,014,270 913,757 819,521 784,403 Interest'on Long Term Debt 22,403,479 15,530,709 11,343,930 3,928,246 4,447,953 Otherinterest 1,047,359 583,981 576,205 549,609 1,589,352 Less Interest Charged to Construction (14,735,721) (12,438,836) (8,462,767) (940,829) (2,717,047) Other Operating Deductions 144,739 179,555 3,779 5,293 T4talCost of Electric Service $170,970,3_69 $101,532,039 $ 83,853,776 $ 64,264,944 $ 58,268,651 l Gain (Loss)in Operating Margins 405,594 (82,798) $ 1,480,097 $ 1,398,775 $ 2,126,985 Non-Operating Margins 337,760 92,624 247,537 346,152 783,929 Gain (Loss)in Total Margins S 743,354 $ 9,826 $ 1,727,634 $ 1,744,927 $ 2,910,914 l exciuses operations or erazos ruei Company, inc. I 1 I i 17 l

e Years Ended December 31,1982 and 1981 1982 1981 ASSETS (Note 2) Utility plant (Notes 1,3 and 13): Electric plantin service,at cost $164,518,537 $152,532,209 Completed construction not classified. 5,698,207 6,403,476 Construction workin progress 133,386,486 102,072,894 Nuclear fuelin process of refinement and enrichment 4,751,582 4,CS3,079 308,354,812 265,071,658 Less accumulated provision for depreciation and amortization 42,343,477 38,163,910 Utility plant, net 266,011,335 226,907.748 Other property and investments: Investments in associated organizations: Capital term certificates (Note 13). 4,847,198 4,247,355 Patronage capital (Note 1) 1,107,712 1,236,309 Other 11,453 11,635 Notes receivable 4,409 294,798 Restricted assets and other investments: Certificates of deposit 28,106 229,557 Other ~ 22,500 27,500 6,021,378 6,047,154 Current assets: Cash-general 831,788 372,221 Cash-loan funds 176,946 41,331 Specialdeposits 121,600 38,846 Temporary cash investments 600,000 1,089,054 Accounts receivable 18,996,620 15,657,022 Fuelinventory, at average cost 1,232,774 1,016,268 Material and supplies, at average cost 7,023,056 5,691,138 Prepayments 211,654 252,740 Totalcurrent assets 29,194,438 24.158,620 Deferred debits: Unrecovered purchased fuel costs, less a:lowance for unrecoverable gas of $538,530 and $604,600(Notes 1 and 13) 775,898 1,049,708 Fixed transmission costs, less amortization of $424,898 and $-0-(Note 8) 1,652,960 1,959,235 l Other 1,984,400 1,876,204 l 4,413,258 4,885,147 $305,640,409 $261,998,669 18

1982 1981 i LIABILITIES 1 Equity and margins: Memberships S 95 95 Patronage capital and other equities (Note 4) 20,752,438 20,017,443 20,752,533 20,017,538 Long-term debt: REA mortgage notes (Notes 4 and 5) 77,427,713 80,593,408 NRUCFC mortgage notes (Notes 4 and 6) 10,293,139 10,997,789 FFB mortgage notes (Notes 4 and 7) 162,939,000 125,794.000 250,659,852._ 217.385,197 Currentliabilities: Current maturities of long-term debt 3,655,000 3,461,000 ) Accounts payable 23,936,313 13,064,773 Notes payable-NRUCFC(Note 9) 5,300,000 6,800,000 Notes payable-banks 22,500 27,500 Other accrued liabilities 1,045,951 929,868 Totalcurrentliabilities 33,959,764 24,283,141 Deferred credits (Note 1) 268,260 312,793 $305,640,409 $261,998,669 The cccompanying notes are an integralpart of these financialstatements. I' i 19

m Years Ended December 31,1982 and 1981 1982 1981 @'perating revenues: Sales of electric energy (Notes 1 and 11) $171,191,722 $101,204,214 Sales of natural gas 1,776,021 7,430,322 Other 139,139 157,765 173,106,882 108,792,301 Operating costs and expenses: Cost of naturalgas sold 1,721,270 7,265,211 Operating expense: Operation erpense: Production-fuel (Note 1) 57,471,918 53,251,121 Production-other .1,011,801 905,293 Purchased power - 85,265,221 31,174,730 Transmission 6,140,244 2,583,482 Distribution 301,953 270,589 Administrative and general 3,096,239 2,721,641 Maintenance expense: Production 872,584 731,446 Transmission 884,504 646,245 Distribution 795,275 592,186 Generalplant 112,756 105,168 Depreciation and amortization (Note 1) 5,129,679 3,831,414 . Taxes 1,095,051 1,020,427 Interest on long-term debt -22,403,479 15,530,709 Otherinterest 1,046,240 549,013 Interest charged to construction (Note 1) (14,735,721) (12,438,836) Other deductions 144,739 179,555 Totaloperating costs and expenses 172,757,232 108,919,394 Operating margins (loss) 349,650 (127,093) Patronage capitalallocations 73,384 82,302 Nonoperating margins: Interestincome 234,172 238,715 Interest expenses (228,858) Other 52,028 495 1 Margins (loss) before Federal income tax 709,234 (34,439) Federal income tax (benefit) (Note 12) (25,761) (17,730) Net margins (loss) 734,995 (16,709) Patronage capital and other equities, beginning of year 20,017,443 20,034,152 Patronage capital and other equides, and of year S 20,752,438 $ 20,017,443 The accompanying notes are an integralpart of these financialstatements. 20

Years Ended December 31,1982 and 1981 1982 1981 Working capitalprovided from: Net margins (loss) 734,995 (16,709) Depreciation and amortization 5,129,679 3,831,414 Patronage capitalallocations (73,384) (82,302) Gains on salesof assets (49,851) Working capital provided from operations 5,741,439 3,732,403 Advances from CFC 77,100 Advances from REA 65,000 1,176,000 Advances from FFB. 37,145,000 34,059,000 ~ Decrease in other property and investments 99,161 323,578. . Salvage value of retirements 970,092 1,330,010 n Contributions for line removal and relocation 159,016 180,176 j- . Decrease in unrecovered purchased fuel costs 273,810 876,913 l Proceeds from sale of assets 56,150 l Totalworking capitalprovided 44,509,668 41,755,180 Working capita!used for: l Additions to utility plant. 44,607,928 36,553,310-P;yments on long-term debtto REA 3,230,695 3,080,238 Payments onlong-term debt to CFC 704,651 1,339,862 Plant removalcosts 335,847 -383,407 Decrease in deferred credits 44,533 303,252. increasein other deferred debits. 226,819 1,810,289 Totalworking capital used 49,150,473 43,470,358 - l l Decreasein working capital $ (4,640,805) - $ (1,715,178) Changesin working capital: Increase (decrease) in current assets: Cash 595,182 (382,463) l Temporary cash investments (489,054) 238,000 l Special deposits 82,754 (29,325) Accounts receivable 3,339,598 3,807,669 Material and supplies 1,548,424 (655,141) Prepayments (41,086) 8,772 5,035,818 2.987,512 l Increase (decrease) in current liabilities: Current maturities of long-term debt 194,000 20,000 l Accounts payable 10,871,540 1,704,717 Notes payable (1,505,000) 2,995,000 Other accruedliabilities 116,083 (17,0P7) 9,676,623 4,702,690 Decreasein working capital $ (4,640,805) $ (1,715,178) The accompanying notes are an integralpart of these financial statamt nts. 21

n. h ggyme gp g7717 mygg 7mg7 w=-~ .m m Mu W unaniWMuwakkaG;w+wak.;aww2;..unw. - J M a & 4;;-' "~ Decembei31,;1982 and 1981 Depreciation. Provision has been made for depreciation on a t-line basis at annual composite rates as PrinciplesofConsolidation o s. The consolidated financial statements include the -- od lan accounts of the Cooperative and its wholly-owned yran on l a,

subsidiary,BrazosFuelCompany. Allintercompany--

Distributionpbant tf - 2.88% - items have been eliminated in consolidation.. Generalplanti . SystemofAccounts ~ Structuresandimprovements : 2.50% l The accountm' g records of the Cooperative . Transportation ~ 15.50% conform to the Uniform System of Accounts. Communications . 6.50%. - prescribedbytheFederal3nergyRegulatory !

Othergeneralplant 6.00 %

Commission for Class A and B electnc utilities PatronageCapitalCertiBcates modified for electric borrowers of the Rural: - Patrona capital from associated organizations is : Electrification Admuustration (REA). . recorded at be stated amount of the certif ElectricRevenuesandFuelCosts UnrecoverbdPurchasedFuelCosts' Electric revenues aie recorded monthly as of the

Natural gas purchased under the take-or-y date meters are read and accounts are billed..

. terms of contracts with various individual prNu ers. Fuel costs are charged to production expense as - is recorded at contract cost, which includes - fuelisconsumed.- production taxes and royalties. The amount of gas -' PlantAdditionsandRetimments ) aid for in advance is classified as a deferred de5it. - L The cost of additions to electric plant in service - Jnpaid production taxes and royalties, related to the represents the origmal cost of the contracted services. above contracts, are included in deferred credits until direct labor and material, interest on construction; such time that the gas purchased and not taken will loans, and indirect charges for engineering,- actually be recovered by the Cooperative.p supervision and similar overhead items. Maintenance - J An allowance for unrecoverable gasis provided and repairs of property and re placements and for by charges to income. The allowance is based. - renewals'ofitems determined to be less than units of - upon a determination by the Cooperative's. ' pro pertu are charged to operations. For )roperty l. - consultin engineers as to the volume ofgas losses in rep;acet or renewed, the original cost p us remova eachwe cost less salvage is charged to accumulated provision i for depreciation. The cost of related replacements and renewals is added to electric plant. Contributions in aid of construction are credited to the applicable _ plantaccounts.: InterestChargedto Construction The Cooperative has capitalized as a part of ~ ~ electric plant the cost of borrowed funds used for l such purposes, net ofinterest eamed on " idle" advances of the borrowings. This procedure is in l accordance with that prescribed by REA. 9 l l N l l-22

u 9 -e .- ~ mg -m y 4 1 46 b' [d. - f I,,.i 4 ' w ? f, c. 4 x1.

  • 7#

.1 Unde provisionsofthelong-termdebt All assets are pledged as security for the long. agreements, until the total of equities and margins term debt to REA, National Rural Utilities equals or exceeds 40% of the total assets of the Cooperative Finance Corporation (CFC) and Federal Cooperative, the retum to patrons of ca ital i FinancingBank(FFB). contributed by them is limited generall to 25% of the patronage capital or margms received b the Coo $rativemthenext receding ear. Listed below are the major classes of utility plant eby-lawsof the ooperativ donotprovide 1 asof December 31,1982 and 1981: for the assignment of non-operating margins or December 31,. . eamings of subsidiaries. The by-laws were amended. 1982 1981 effective January 1,1976, to permit the offsetting of .l . Intangible plant 2,170 : $ 2,170 current year operating margms against operating i: Production plant 59,914,595 59,884,283 deficitsofprior years. Transmissionplant. - 74,356,782 - 66,798.974 Distribution plant. 26,132,645 21,973,064:

inclubroximately$1,320Mi alandi

'l Mort notes to REA are 2%and 5%,35 ear .Generalplant - 4,112,345 : 3,873,718 notespay b ewithprinc Completedconstruction; ofap due ~ quarterly.The debt ' 7 not classified. 5,698,207, 6,403,476 es an estimated $3,200,000 ofprincipal and - Electricplantinservice 170,216,744 - 158,935,685 deferred interest payable within the next twelve Constructionworkin months. The notes are scheduled to be full various dates from June 4.- 1983 to April 30 profess 1133,386,486 102.072.894 2015.- Nuclearfuelin processof - Unadvanced loan funds of $1,845,000 are available to refinementand the Cooperative on loan commitments from REA. 24.063,079-enrichment '4,751,582- . $308,354,812 - $265,071,658 -Long-term debt to CFC consists of 7% to 14% Included in construction work in progress at . mort pge notes payable with principal and interest December 31,1982, are costs of $112.712,150 for the - instal ments of $328,000 due quarterly with $455,000 - ourchase of 3.8% ownership in the Comanche Peak ~

principal payable within the next twelve months.

Nuclear Plant. The Cooperative's cost ofit's 3.8%. The notes are scheduled to be fully repaid at various - share in the Comanche)eak Nuclear Plant is. - dates from May 31,1989 to November 30,2016. estimated tobe$192,636,000. Detailofpatronage capital: December 31, 1982 1981 Assignable 478,866 $- -384 Assigned - -17,098,877 17,098,877 _17,577,743 -17.099,261-l = Detailofotherequities:. 9(4%) ? Operatingmargins(loss) ? Capitalgainsandlosses - . 9,383 ,383 Non-operatingmargins-2.922.665 2.658,289 L Retained earnmgs or l1 subsidiary 242,647 251,006 3 3,174,695 - 2.918,182 Totalpatronage capital and otherequities $ 20,752,438 $ 20,017.443 - L I a w =. -...=x...

. ~ yy e, ^ w ~ + - ~ _ ~m.,, _ j & dyc;ggi Long-term debt 'to FFB consists of 9.824% to 16.668%,2 The Cooperative has a contributory retirement ; to 32 year notes payable with interest payments due 1 plan covering substantially all ofits employees. Total quarterly. The notes are scheduled to be fully repaid. retirement costs charged to operationsTor 1982 and n at various dates from February 4,1983 to December 1981, were $332,724 and $222,861, respectively, and - 31,2014. The Cooperative has an option to extend the include charges for current and prior service costs. due dates, of the 2 year notes, for a period not less. TheCooperative'spolic i fd i . than two years nor greater than seven years after the 1annuallyasitisaccrued.y sto un ret rementc c . date of the advance: or to extend the maturity date to. The actuanally computed value ofvested benefits ~ hirty-four years after the end of the calendar year in. t at December 31,1981 (date oflatest informadon which the advance was made. At December 31,1982, : book valu) e of the pension fund asse R 7 L the Cooperative had 993,062,647 of advances with short-term maturity c ates which they intend to refinance under the above options. These advances The Cooperative has contracts with 17 ofits 19 - have been classified as long-term debt for fimacial ~ statement mrposes.Unadvancedloanfundsof. , member distribution cooperatives, through June 30,- $140,122,0f0 are available to the Cooperative on loan = 2020, for the sale of wholesale electric energy. commitmentsfrom FFB". Contracts with the other 2 member cooperatives are-- through the period June 30, 2010.- Sales of electric - ener g to the 19 members were $119,214,939 and - 4

The Cooperative has constructed a 77 mile, 345KV..
$89,F73,467 for 1982 and 1981, respectively.--

transnussionline fromtheSanM elElectric' Cooperative,Inc.generatingplaninterconnection with anotlier utili. Pow) to a point of L . Federalincome taxes are paid on taxable income lant eris ; transmitted from the plant to the point of ; - of the subsidiary only. No provision has been made for Federal income taxes for the Cooperative in . interconnection and is wheeled b other utilities into t ? reliance on a determmation letter, dated March;1 the Brazos transmission system. !ertain fixed costs ' associated with the line, and charges from other ;._. .1969, issued by Intemal Revenue Service, which. i utilities for wheeling services, were deferred pending ' states that in the opuuon of the Service the '. Cooperative meets the requirements of Section commercial operation of the Plant which occurred in~ ~ . early 1982. The deferred costs are being amortized to = L 501(c)(12) of the Intemal Revenue Code and is entitle expense on a straight-linebasis over a period of 5 - to exemption from Federalincome tax.? The tax benefit of $25,761 represents a refund of years. $'33,583 due from Internal Revenue Service resulting from a net o peratin loss of the subsidiary in 1982,iess 1 The Cooperative has established a line of credit, - = $7,822 for ad ditionak taxes resulting from a for short-term financing, with CFC for $22,000,000. At. L Revenue Service examination of tlie subsidiary for, December 31,1982, the amount owed CFC under such theyears1977 through 1979.- ~ agreement is $5,300,000 due March 18,1983 at an annualinterest rate of11-3/4%. um 3 l l j 4 i 24

P ~ ) m n r y operatingAgreements UnrecoveredPurchasedfuelCosts Under the terms of operating agreements, the The Cooperative has contracted to purchase gas - Cooperative has guaranteed the cities of Whitesboro from various individual producers, in a(dition to _ and Banger a mimmum annualincome from the o ration of their electnc systems. Management is of tpe opunon that the Cooperative will mcur no other suppliers. The remainmg term of the majority of these contracts is approximately 11 years. Under the terms of the contract agreements, the liability as a result of sucli guarantees. ' Coo grative has agreed to purchase and receive, or ReportoftndependentAccountants pay :or if available and not taken, an average daily quantity of gas as set forth in the contracts. The MainHurdman contracts provide for the recovery of gas paid for, but not taken, over the remaining life of the contracts. It Wa?- is the opinion of management, that with proper - M"J7 monitoring of reservoir performance and field.. surveillance of operating conditions, failure to recover The BoardofDirectors gas paid for but not taken above the allowance for-Brazos Electric Power Cooperative, Inc. - unrecoverable gas, will be minimal: and that such . sheet of Brazos Electric Power Cooperative Inc. and . We have examined the consolidated balance failures, should'they occur, are a 7 roper increment of the cost of actualps deliverec and therefore subsidiary as of December 31,1982 and 1981, and the recoverable, under t se Cooperative's rate structure, related consolidated statements of revenue and fromitscustomers-Ntronage capital and other equities and changes in Construction Commitments inancialposition for the years then ended. Our The Cooperative's expenditures for its 1983 examinations were made in accordance with accordmgly, m, pted auditmg standards a generallyacce construction to mare estimated tobe . approximate $k600,000 of which $65,750,000 will recordsandsuchother considered necessary m, auditing procedu be financed b REA, CFC and FFB loan funds and the circumstances. $850,000bygeneralfunds. Approximately$28,151,000 of the estimated 1983 construction program In our opunon, such financial statements present. expenditures is for additions to the Comanche Peak fairly the financial position of Brazos Electric Power NuclearPlant' Cooperative, Inc. and subsidiary at December 31,1982 and 1981, and the results of their operations and the SubscriptionAgreement changes in their financialposition for the years then The Cooperative is committed under the terms of ended, in conformity with generally accepted a subscription agreement to purchase additional CFC accounting principles applied on a consistent basis. capitalterm certificates tota inga roximately October 1,in each of the years 83 and 1984.y on & MA $1,199.686.Subscriptionsare p eannuall 1 March 11,1983 l 1 25

BoardofDirectors

q. ;,; -

~ '::. - -T / yi 7 7 , __,_,, q'} b ' " u _;_ .)_ I.' William G. Parker F.C.Luedtke RobertH. Bunting President Vice President Secretary Treasurer Comanche County McLennan County Electric FA-C Electnc Cooperative. Electnc Cooperative Cooperative.Incdrporated Incorporated Association William Sanders Woodrow Hensarling Horace R.LeNoir Erath County %d-Seuth Limestene County e E!ectnc Ceeperante Eleanc Ceeperanve. E!ectnc Ceeperant' Asseaanen Associanen Incerperated _m-Y g w l Y 'if q! lIf 's ~ h E I j J.W.Richards.Jr. Lawrence Karl Grover F.Furt J.F. Herring.Jr. Rebensen Bartlett Fen Belknap Tn-County 4 Elednc Ceeperanve. Eleanc Ceeperante. Electnc Ceeperanve. Electnc Ceeperante. !ncerperated Incorperated Incerperated !ncerperated \\ m m,. . m.c =- 26

~ .l.. ..,l l} l f. l I \\ G.W. Cates M.E.Holley LutherL Parks HillCounty DentonCounty Belfalls Electnc Cooperative. Electric Cooperative. Electnc Cooperative. Incorporated Incorporated Incorporated W g-Y, JoeForman JackElam BillyPoland Wise Hamilton County JohnsonCounty Electnc Cooperative. Electric Cooperative Electric Cooperative Incorporated Association Association .g ' MelvinJordan RcbertT. Lewis,Jr. DonGregg Navarro County CookeCounty &K Electnc Cooperanve. ElectricCooperative Electric Cooperative. Incorporated Association Incorporated 7 - . - :...,... l L l l l 27

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?.*,*, ,e a- .,r... gj Richard E. McCaskill Executive Vice President and General Manager Francis M. Bushnell, Jr. Executive _ Assistant and Manager-Public Relations - Clarence W. Carpenter Manager-Finance and Administration Billy W. Dyess Manager-Project Construction and Engineering Dan B. Swenke, Jr. Manager-Operations W. B. Townsend, Jr. Manager-Corporate Planning i l l 1 28

a I_ l TEX-LA ELECTRIC COOPERATIVE OF TEXAS, INC. FINANCIAL STATEMENTS ~ December 31, 1982 and 1981 and I, ACCOUNTANTS' REPORT I I. I I l l AXLEY& RODE CERTWIED PWBLIC ACCOUNTANTS + -. - - m

C0NTENTS ~ Accountants' Report -------------------------------------------------------------- 1 Financial Statements: Balance Sheets ---------------------------------------------------------------- 2 Statements of Revenue and Patronage Capital ----------------------------------- 3 Statements of Changes in Financial Position ----------------------------------- 4 Notes to Financial Statements ---------------------------------------------------- 5 l. l. l I l AXLEY& RODE CERTIFIED PUBLIC ACCOUNTANTS ( . ~. ~...,,. -

.._.... ~.. AXLEY & RODE CERTIFIED PUBLIC ACCOUNTANTS LUFMIN NACOGDOCNES - CROCKETT LivlMGSTON TEMAS l February 3, 1983 ^ The Board of Directors Tex-La Electric Cooperative of Texas, Inc. l We have examined the balance sheets of Tex-La Electric Cooperative of I, Texas, Inc. as of December 31, 1982 and 1981, and the related statements of ( revenue and patronage capital and changes in financial position for the year ended December 31, 1982 and for the period May 7,1979 (inception of operations) l-accepted auditing standards and, accordingly, included such tests of the to December 31, 1981. Our examinations were made in accordance with generally accounting records and such other auditing procedures as we considered necessary l in the circumstances. As discussed in Note 10 to the financial statements, the Cooperative has g not recorded patronage capital allocations in the amount of $2,837,157 from the i National Rural Utilities Cooperative Finance Corporation (CFC) at December 31, ~ 1982. The patronage capital allocations represent the Cooperative's share of the net margin of CFC and the proportionate increase in the Cooperative's l-recorded under the equity method of accounting in order to conform with investment account. In our opinion, the patronage capital allocations should be generally accepted accounting principles. l g. In our opinion, except for the effect of the matter described in the pre-ceding paragraph, the financi.21 statements referred to above present fairly the I financial position of Tex-La Electric Cooperative of Texas, Inc. at December 31, 1982 and 1981 and the results of its operations and changes in its financial position for the year ended December 31, 1982 and for the period May 7, 1979 (inception of operations) to December 31, 1981, in conformity with generally l accepted accounting principles applied on a consistent basis. CERTIFIpPUBLIf' ACCOUNTANTS I 1 I l i

TEX-LA ELECTRIC COOPERATIVE OF TEXAS, INC. BALANCE SHEETS December 31, 1982 and 1981 1982 1981 ASSETS Electric Plant, At Cost: l Furniture and fixtures 5 798 $ 3 111 Less accumulated depreciation 848 471 4 950 2 640 Construction work in progress (Notes 2, 5 and 9) 79 539 233 120 996 489 NET ELECTRIC PLANT 79 544 183 120 999 129 Current Assets: Cash, including certificates of deposit of $150,000 in 1982 and $175,000 in 1981 - General 214 343 249 956 Cash, including certificates of deposit of $1,138,541 - Construction 1 150 096 Accounts receivable (includes receivables from member cooperatives of $1,659,243 in 1982 and $9,419 in 1981) 1 675 703 41 535 I Prepaid expenses 4 757 3 363 Accrued interest 5 576 978 TOTAL CURRENT ASSETS 3 050 475 295 832 l $82 594 658 $121 294 961 EQUITIES, MARGINS AND LIABILITIES I Equities and Margins: Memberships 700 $ 700 Patronage capital (Note 3) 207 219 131 720 g Other equities (Note 4) 38 280 28 441 l TOTAL EQUITIES AND MARGINS 246 199 160 861 Long-term debt (Note 5) 80 682 000 121 072 540 1 Current Liabilities: Accounts payable 1 636 934 59 862 l Accrued expenses 322 1 698 Accrued interest 29 203 TOTAL CURRENT LIABILITIES 1 666 459 61 560 $82 594 658 $121 294 911 I I I The accompanying notes are an integral part of these financial statements. AXLEY& RODE CERTIFIED PUBLIC ACCOUNTANTS

TEX-LA ELECTRIC COOPERATIVE OF TEXAS, INC. STATEMENTS OF REVENUE AND PATRONAGE CAPITAL Fcr The Year Endzd Dectober 31, 1982 cnd The Paried May 7, 1979 (Inceptien of Opercticas) to December 31, 1981 Period From May 7, 1979 l To 1982 December 31, 1981 Operating Revenues (Note 6): Power sales $10 817 219 Professional fee assessments 195 343 564 027 11 012 562 564 027 Operating Expenses: Cost of purchased power 10 476 778 Administrative and general (Notes 7 and 8) 459 908 431 836 I Depreciation 377 471 Interest (Note 9) 10 937 063 432 307 l Net operating margins 75 499 131 720 Nonoperating Margins: l Interest income 9 839 28 441 Net margins 85 338 160 161 Patronage capital - Beginning 131 720 217 058 160 161 Transfer to appropriated margins (Note 4) (9 839) (28 441) I Patronage capital - Ending 207 219 131 720 l I I I I I The accompanying notes are an integral part of these financial statements. I l AXLEYat RODE CERTIFIED PWSLIC ACCOUNTANTb w. r. ,a ,,g,. ,n., s e,- e: ..,.-.rm ---~? . * - = ~ ~ - ~ -~ ~

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l.o TEX-LA ELECTRIC COOPERATIVE OF TEXAS, INC. l STATEMENTS OF CHANGES IN FINANCIAL POSITION I For The Year Ended December 31, 1982 and The Period May 1, 1979 (Inception of Operations) to December 31, 1981 l Period From May 7, 1979 l To 1982 December 31, 1981 Funds Were Provided By: I Net margins 85 338 160 161 Add Items Not Requiring Funds: Depreciation 377 471 TOTAL FUNDS FROM OPERATIONS 85 715 160 632 l Membership fees 700 Advances from CFC 12 967 856 121 572 540 l Advances from REA 80 682 000 Sale of interest in Commanche Peak Steam Electric Station 66 133 123 $159 868 694 $121 733 872 Funds Were Used For: Additions to construction work in progress $ 24 675 867 $120 996 489 l Additions to furniture and fixtures 2 687 3 111 Payments on debt to CFC 134 040 396 500 000 Increase in working capital 1 149 744 234 272 $159 868 694 $121 733 872 Increase (Decrease) In Working Capital By Components: l Cash - General (35 613) 249 956 Cash - Construction 1 150 096 Accounts receivable 1 634 168 41 535 l Prepaid expenses 1 394 3 363 Accrued interest 4 598 978 Accounts payable (1 577 072) (59 862) Accrued expenses 1 376 (1 698) Accrued interest (29 203) 1 149 744 234 272 i I The accompanying notes are an integral part of these financial statements. AXLEY& RODE CERTIFIED PWSUC ACCOUNTANTS ..n-n-

a. I TEX-LA ELECTRIC COOPERATIVE OF TEXAS, INC. I NOTES TO FINANCIAL STATEMENTS NOTE 1 - ORGANIZATION AND

SUMMARY

OF SIGNIFICANT ACCOUNTING POLICIES I A. Organization and Operation: 1 Tex-La Electric Cooperative of Texas, Inc. (the Cooperative) was formed in May, 1979, pursuant to the Texas Electric Cooperative Corporation Act, by the rural electric cooperatives of Cherokee County Electric Cooperative Association, I Deep East Texas Electric Cooperative, Inc., Jasper-Newton Electric Cooperative, Inc., Houston County Electric Cooperative, Inc., Rusk County Electric Coopera-

tive, Inc., Sam Houston Electric Cooperative, Inc. and Wood County Electric Cooperative, Inc. (Members).

l The Cooperative was formed to obtain the financing required by the members to acquire ownership interest in large electric generating facilities and for g coordinating the power supply requirements of such members. B. Chart of Accounts: h The accounting records of the Cooperative are maintained substantially in accordance with the Uniform System of Accounts as prescribed by the Federal Energy Regulatory Commission (FERC). C. Electric Plant: g Furniture and fixtures are stated at the historical cost and are being I depreciated using the straight-line method over an estimated ten year life. Construction work in progress represents the Cooperative's share of the l project costs not yet in production. D. Allowance for Borrowed Funds Used During Construction: The Cooperative has capitalized to electric plant the cost of borrowed funds used for the construction of the Commanche Peak Steam Electric Station. E. Income Taxes: The Cooperative is exempt from Federal income tax under the provisions of l Section 501(c)(12) of the Internal Revenue Code. NOTE 2 - JOINTLY-0WNED FACILITIES i l On December 9, 1980, the Cooperative executed a Joint Ownership Agreement to acquire a 4 1/3% undivided ownership interest in the Commanche Peak Steam Electric l Station, a two unit 1150 megawatts each nuclear fueled electric generating station, l located near Glen Rose, Texas in Hood and Somervell Counties, Texas, being con-structed by Texas Utilities Generating Company. On February 12,

1982, the i

Cooperative sold 2 1/6% interest to Texas Power and Light Company. The proceeds from the sale amounted to $66,133,123 which represented the Cooperative's cost of con =*ruction and capitalized interest. l l Axt.EY & RODE CERTIFIED PWSUC ACCOUNTANTS

g. TEX-LA ELECTRIC COOPERATIVE OF TEXAS, INC. g NOTES TO FINANCIAL STATEMENTS - CONTINUED NOTE 2 - JOINTLY-0WNED FACILITIES - CONTINUED The project is estimated to cost $3.196 billion providing completion schedules of June, 1983 and December, 1984 for Units one and two, respectively. I NOTE 3 - PATRONAGE CAPITAL The details of patronage capital at December 31, 1982 and 1981 are as follows: 1982 1981 l Assignable (Note 4) $207 219 $131 720 Assigned 207 219 131 720 Less: Retired l $202_212 $131 720 NOTE 4 - OTHER EQUITIES The details of other equities at December 31, 1982 and 1981 are as follows: l Appropriated margins $38 200 $28 441 1982 1981 The by-laws of the Cooperative provide that nonoperating margins be used g initially to offset any losses incurred during the current or any prior fiscal year. Upon recovery of any losses, a fund in the amount of $400,000 shall be accumulated from these remaining nonoperating margins and funded each year, if necessary, to maintain the $400,000 balance. NOTE 5 - LONG-TERM DEBT l Long-term debt at December 31, consisted of the following: 1982 1981 1 Mortgage note payable to the National Rural Utilities Cooperative Finance Corporation (CFC), interest at prime plus 1 1/2*/,, I interest payable in quarterly installments, maturing in July, 1982 $121 072 540 Nortage note payable to the United States of America with the Rural Electrification Administration (REA) as administrator 80 682 000 $80 682 000 $121 072 540 In July, 1981, the Coopera tive entered into a loan agreement not to exceed $180,000,000 to finance the construction and operation of generating facilities, electric transmission, distribution and service lines by the Cooperative payable to the Federal Financing Bank pursuant to an agreement between the Federal Financing Bank and the REA. The maturity date of each amount advanced under the loan AXLEY& RODE CERTIFIED PWOLIC ACCOWNTANTs

.._...._m .. ~..... _. TEX-LA ELECTRIC COOPERATIVE OF TEXAS, INC. NOTES TO FINANCIAL STATEMENTS - CONTINUED NOTE 5 - LONG-TERM DEBT - CONTINUED agreement shall not be less than two years nor more than seven years af ter the date - of the advance.and shall be designated in writing at the time of request by the g borrower subj ect to REA approval. The interest rate applicable to each advance shall be the respective rate established by the Federal Financing Bank at the time of the advance. h On May 26, 1982, the Cooperative received the first advance on the loan agree-ment in the amount of $69,768,000 at 13.575 per cent per annum due May 26, 1984. The proceeds were used to release the note agreement with the CFC. At December 31, l 1982, the Cooperative had received advances of $80,682,000 from the REA of which each advance is to mature two years from the date of each advance. g NOTE 6 - POWER CONTRACTS l Tex-La Electric Cooperative, Inc. has entered into agreements with Texas Power and Light and the United States of America acting through the Southwestern Power h Administration (SPA) for the delivery of power and energy. Tex-La Electric Cooperative, Inc. has assigned its rights, titles and interest in the delivery of power and energy to the Cooperative. During 1982, Tex-La Electric Cooperative, Inc. made power sales of $13,674,607 to the Cooperative's members. The power sales by the Cooperative to the members for the period August 1, 1982 through December 31, 1982 was $10,817,219. t g During 1981 and through July 31, 1982, the Cooperative collected a professional fee assessment of $0.0005 per kilowatt hour for providing the assigned power from h Tex-La Electric Cooperative, Inc. to its members. The Cooperative realized $195,343 rad $564,027 of professional fee assessments for the year ended December 31, 1982 and from May 7, 1979 (inception of operations) to December 31, 1981, respectively. The Cooperative is obligated to supply power to its members under the power sales contracts which exist with the Cooperative's seven members for the sale of all g electric power which the members will require for the operations of their respective I systens. The contracts extend to December 30, 2026 and thereafter, as permitted by law until the expiration of six months af ter notice of cancellation by either the Cooperative or the members. NOTE 7 - PENSION PLAN Pension benefits are provided for substantially all employees. The Coopera-tive's policy is to fund all pension costs accrued through participation in the National Rural Electric Cooperative Associatica Retirement and Security Program. Pension costs were $8,100 for 1982 and $5,900 for 1981. The Plan is approved by the Internal Revenue Service. . AXLEYa RODE CERTIFIED PUSLIC ACCOUNTANTS

TEX-LA ELECTRIC COOPERATIVE OF TEXAS, INC. I NOTES TO FINANCIAL STATEMENTS - CONTINUED NOTE 8 - RELATED PARTY I The Cooperative and Sam Rayburn G & T, Inc., (SRG&T) a rural generation and transmission cooperative, have entered into a contractual agreement whereby the Cooperative agrees to provide management services to SRG&T. SRG&T reimburses the Cooperative for SRG&T's proportionate share of the management related expenses. The Cooperative was reimbursed $63,778 in 1982 and $66,119 in the period May 7, 1979 to December 31, 1981. Certain members of the Cooperative are members of SRGST. NOTE 9 - CAPITALIZED INTEREST l* Interest costs incurred for the year ended December 31, 1982 and for the period from inception of the Cooperative to December 31, 1981 were $14,317,151 and $19,257,267, respectively. Proceeds resulting from the sale of 2 1/6% of the l Cooperative's undivided ownership interest (Note 2) attributable to' capitalized e interest amounted to $13,749,111. Interest capitalized as part of newly constructed facilities at December 31, 1982 was $19,825,307. NOTE 10 - INVESTMENT IN ASSOCIATED ORGANIZATION As of December 31, 1982, the Cooperative has received patronage capital alloca-l tions in the amount of $2,837,157 from the National Rural Utilities Cooperative Finance Corporation (CFC). The patronage capital allocations represent the Cooperative's share of the net margin of CFC for the two years ended May 31, 1982 and the proportionate increase in the Cooperative's investment accounts. l As indicated in CFC's annual report for fiscal year 1982, patronage capital, with respect to the years ended May 31, 1976 and 1977, was retired by CFC in June, l 1982; patronage capital allocated with respect to prior fiscal years was retired t previously. Future retirements of patronage capital allocated to patrons are to be made on a seven-year, or shorter, cycle with due regard to CFC's financial con-dition. i As of December 31, 1982, the Cooperative has elected not to record the patronage capital allocations. I NOTE 11 - PENDING LITIGATION l The Cooperative has been named in the case United States _vs Tex-La Electric i Cooperative, Inc. In March, 1979, the Department of Energy issued a rate order which purported to increase wholesale rates to SPA customers on an interim basis pending final confirmation by the FERC. The SPA is a Federal power marketing agency which sells wholesale electric power to the Cooperative. The Cooperative declined to pay based upon grounds that the Department of Energy lacked interim ratemaking authority. I Judgment has been entered for the government and the Cooperative will be required to pay the rate increase plus interest. Management believes that sufficient funds have been remitted prior to July 1, 1982 to Tex-La Electric Cooperative, Inc. by the members to satisfy the judgment. These funds have been placed in interest bearing accounts. I AXLEYaRODE CERTIFIED PWALIC ACCOUNTAhla}}

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