ML20072V200

City Public Svc 1993-94 Annual Rept

ML20072V200
Person / Time
Site:	South Texas
Issue date:	01/31/1994
From:	Bryant F, Rosenberg A SAN ANTONIO CITY PUBLIC SERVICE BOARD
To:
Shared Package
ML20072V165	List: ML20072V186 ML20072V191 ML20072V192 ML20072V200 ST-HL-AE-4869, Forwards 1993 Annual Financial Repts for Licensees
References
NUDOCS 9409190255
Download: ML20072V200 (34)

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. j 1993-94 Annual Report 1

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l Significant Facts for the Year i

i O Gross revenues increased $83,129,000 to . . 5930,505,000 0 City payments increased $11,367,000 to.. . 5124.882,000 0 Debt requirements on the New Series Bonds decreased S12.086,000 to . . 5217.048,000 0 Cost to residential customer per KWil increased 5.7% to . . 7.00c O Cost to residential customer per MCF of gas increased 6.9% to.. .55A4 O Maximum electric system load increased 91.000KW to . . .. . 2.908.000 0 9,040 electric customers were added to total . , , , . 494,385 O KWil sales increased 3.6% to.. .12,725,377,388 0 1,744 gas customers were added to total.. . 292,241 O MCF sales increased 3.7% to . . . .26,307,734 Summary of Application of Revenues

! Gross revenue for 199k44 - - $930,505,000 l

i l Application of revenue:

_ $260,215,000 '

{ Fuel, purchased power, and resale gas _

Other operating and general expenses _ . I66.054.000 l Maintenance of the systems . . 88,528.000 '

For debt requirements and other interest .. .. $246,172.0W Interest charged to construction . 1.977.000 l Net debt requirements and other interest.. .. . 244,195,000 i Payments to the City of San Antonio . . 124.882.000 Halance from operatiuns available for construction . . 46.63 f .000 Total .. $930,505.000 3 Gross amount spent for replacement, improvements and em...a ; of gas and electrie FybtCm3 : - $124,162.000 Funds obtained from:

Operations . . 546.631.000 Commercial Paper.. .53.811.000 Improsements and Contingencies Fund . . 16.641,000 Contributions and advances in aid of construction.. 7.079.000 Total . . . . .. $124,162.000 Average Monthly New M mm === == -- -- == -- ==s == mm 19E55 Philadelphia -= ssE2mm -- Macas umCM ==s emmis amme suas 179.53

Residential Gas & Electric san rrancisco == == m= mom em - suc==> --8161.99 Bills for the 20 Largest san ;ose - um -- - - e- ar.= ,isu2 g gggg Boston uramm -- am smus - sesCW "N" w 154.08 San Diego -- == == samams monum -- ammi C.14 84 5 MCF/1,000 KWH ptioenix - sucum - - murm - surm <,143.

4 12 months ending January 1994 Crucago -- satamm == ==s encms == m1.4 ,

Los Angeles -- sur.imus - -:mma -- ess::mu m 124 66 Baltimore -

suumme smtes seuime satamu -- m 124.14 Dettoit aser.mm -=s ==e masse -'=a sucum t 123.1 Houston suce macum -- s-- suscam smGm i 122.57 Washington D.C. -'- sEEEm sucEBs == sECWs == 121.07  !

Jacirsonville mDeus == * --a sucius sata 112.65 Dallas -- -- smEEBs emEENs == esE2112.64 Columbus secas unase smuums -- -- Mus; 109.98 Milwaukee == == s-- lesGun imum 95.45 San Antonio miases mizu seraum == sucz 94.99 ,

Indianapohs mucams -- smaans w- senz 94.65 Memphis acans setas == recame as 86.26 i

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Prcfile of City Public Service

.urchased by the City of San-.

An'onio t in Octoberl1942,

ICity Public Service lis~ one ofi

.thE jargest municipal titilities i

t in 1 thel ~ country l - se'rving, 494,385, elec't ric c'ustomers ,

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throughout;its.1.566l square mile'serviceLarea.

1The gas' system supplies approximately 292,241

- customers in the San' Antonio urban arcat e CPS generates power for its customers at' two' y.

coal-fired and five natural gas'-fired plants with -

~ < Oa combined capacity of 3,736 megawatts in the

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San Antonio' area. The utility also owns 28 per-

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hent of the South Texas Project nuclear plant on ' o thb[ Texas coasi, which addhanoth$r':700 megawatts of capa'cityiThe' gas systeikis com-

' prised of 3,902 miles of gas lines through Nhich nhtural gas is delivsred to CPS customers.:

'.The CPS goal is to produce reliable, low-cost; energy to serve the San Antonio area, which h'as

..a population of ~1.4 million' and is'. the third :

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largest metropolitan area in the state. Tourism,L manufacturing, construction,-insurancef retail- ,

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ing and medical care have been the traditional:

economic mainstays, along with one 'of the ~ .

IrNst concentrations of military installations in i

l' (U.S. In recent years, San Antonio has broad-L.id its' economic base to include' numerous ~. m I .,

, high-tech firms in the fields of electronics, data :

processing, biotechnology and telemarketing.

l l City Public Service.had 3,576 employees asi l  ? of January 31,1994.

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Letter from the Chairman of the Board and General Manager ,

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{ ] he 1993-94 fiscal ing customers without benefit of the San Antonio area will contmue the nuclear plant, CPS also contin- to benefit from reliable utility ser-

> car was one of ac-complishment and ued to gather the information vice and very competitive rates challenges for City needed to pursue remedies avail- which help provide incentives for Public Service- able for past management of the business growth and relocation to accomplishments because of two nuclear plant by llouston Lighting San Antonio.

significant bond refinancings & Power and to insure that the While the success of CPS can which will save ratepayers S160.2 causes of these problems do not be attributed in part to business million between now and fiscalyear recur. CPS is hopeful that these ef- strategies over the years, the real 2014 and challenges to provide re- forts will be successful and that, secret is the CPS employees. With liable. Iow-cost energy to its cus- with the recent reorganization of a fine organization in place, CPS tomers. The refinancings restruc- 1IL&P's nuclear staff in charge of kioks forward to the opportunities ture the utility's debt to take a ma- operating STP. operation of the which lie ahead to serve the San jor portion of the savings in the project will be more reliable in the Antonio area. The utility is poised next three years, periods which pre- ensuing years. to continue providing utility service viously had peak debt require- Despite a difficult year in deal- to the nation's tenth largest city as ments. When coupled with savings ing with the South Texas Project, San Antonio maintains its positive from refunding issues since 1985, CPS recorded many successes in economic pace.

CPS has been able to achieve debt . serving customers and maintaining senice savings of S408.8 million its financial stability during the for its customers. 1993-94 fiscal year. Electric sales .

CPS proved the soundness ofits and revenue reached all-time highs planning and its operating capabili- while records also were set for 24- Dr. Frank Bryant ties, even in the face of major chal- hour electric usage and hourly peak CllAIRMAN lenges such as the one which oc- demand.

curred this year with the South Electric rates continued to be Texas Project. The decision made low, despite the need to use more by CPS in the mid.1980s to further expensive natural gas to generate diversify the fuels used to generate a greater.than-expected portion of Arthur von Rosenberg electricity through addition to its customers' electrical requirements. GENERAL MANAGER coal-fired capacity put CPS in a Compared with residents of other good position to deal with the shut- major cities in the state. CPS cus-down of the South Texas Project tomers consistently paid less for nuclear plant in early February their gas and electricity than did 1993. Without nuclear generation customers of other utilities. CPS for the year. CPS relied mainly on customers' bills also were the low-its coal-fired plants to serve its cus- est among the 10 largest cities in tomers' electrical needs. And was the country, able to do this without any major CPS will continue to previde operational difficulties, quality senice at low rates .n the in addition to dealing with the future. Modern facilities r.nd a con-operational ramifications of serv- scientious work force assure that 2

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i San Antonio's real estate market j rebounded with an increase of more than 5,000 i housing units j

built during the year.

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With the most modem environmental equipment, the utility's coal-fired plants produced 73 percent of CPS generation for the year.

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City Public Service recorded a year of accomplishment in l

operations and financial stability dunng 1993-94. The utility l

continued to prov>de its customers with excellent service at rates which remin among the lowest in the state and nation

( when compared wrth other large cities. CPS also, through two l

refinancing transactions during the year, reduced its debt requirements by $161.2 million through 2014. This financial l

restructuring, combined with earlier refinancing will save more than $31 million annually during the next three years. As the  ;

utility looks ahead, its management and work force remain  !

dedicated to finding new and more efficient ways to serve customers so CPS retains its leadership position in the industry.

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Operations Benefit from Fuel Diversification

{ ] he City Public Scr- Trustees authorized participation in Confirmatory Action Letter and vice strategy of di- a joint nuclear project and con- supplements listing 16 operating versifying the fuels struction of two CPS-owned coal- and regulatory issues which were it uses to generate fired generating units. The twin to be addressed before the plant electricity paid big coal-fired I.T. Deely units began could return to service.The Project dividends during the 1993-94 fis- senice in 1977 and 1978, and the Manager,11ouston Light;ng &

cal year. With both units of the coal-Dred capacity was increased Power has been working during South Tesas Project nuclear plant through addition of the f.K. Spruce the year to address the issues and out of service except a few days at Plant in 1992. The two nuclear expects Unit I to return to service the beginning of the year, CPS re- units went into service in 1988 and in the first quarter of 19% Unit 2 lied on coal and natural gas to gen- 1989. The f uel diversification pro- is projected to restart 60 to 90 days crate the electricity its customers vided by these plants makes it pos- later.

required. Because of the availabil- sible for CPS to take advantage of Work at the STP has included ity of generation from these fuels, changes in fuel prices to serve its reducing the backlog of mainte-CPS was able to meet its custom- customers at the most reasonable nance items and engineering sup-I crs' needs. costs. port work, reducing the workload CPS has followed a philosophy lloth units of the South Texas of operators to increase their effec-of diversif3 ing the fuels used to Project nuclear plant were shut tiseness and hiring a new senior generate electricity since the 1970s down in early February 1993 be- management team at the project to when the utility and the country cause of problems with the auxil- improve work direction. These ac-faced severe shortages of natural iary feedwater pumps. Subsequent tions are expected io Provide long-gas and the price of gas increased visits from Nuclear Regulatory term benefits for the plant through rapidly. In 1973 the CPS Board of Commission teams resulted in a future efficiencies at the same time s

the action meets NRC require. Despite using more natural gas converted, and moneys which are ments to restart the plant. for generation, CPS customer bills not used in any year can be carried With the STP out of service, the remained among the lowest in the over to the next fiscal year.

new J.K. Spruce coal-fired plant state and nation. The average CPS In addition to creating an over-became even more important to the residential customer paid $44.99 head conversion fund, CPS staff is utility. In its first full y ear of opera- for 1.000 kilowatt hours of elec- res iewing elect ric facility construe-tion, the Spruce Plant operated at tricity and 5.000 cubic feet of gas tion standards to afford greater 92 percent of capacity, poducing in fiscal 1993-94. consideration for aesthetics. Op-4,303,296 megawatt hours of elec. As the city grows, attention has tions being explored include estab-tricity. The utility's three coal-fired turned to environmental and aes- lishing utility conidors and using units together produced 73 percent _ thetic awareness as evidenced by concrete and steel poles, armless of CPS generation for the year, with the passage of City of San Antonio conductor supports and added the remaining 27 percent coming ordinances on utility corridors, bill- landscaping around substations.

from natural gas. boards and landscaping. Presently, CPS met the challenge of in- 25 percent of the CPS electric 83s-creased coal usage at a time when tem is underground and under.

shipping was hampered by flood- ground service continues to be the ing in the Midwest. Because sup- trend in subdivision planning.

plies were reduced through slow flowever, in an effort to aestheti-shipments, six additional trains cally enhance the environment and were leased to supplement the nine respond to public concern, the CPS CPS-owned trains which normally 130ard of Trustees created the CPS operate. lly the end of the year. CPS Overhead Conversion Fund to had a little more than a one-month change some existing overhead fa-coal supply and cominued to work cilities to undaground. Although toward increasing the stockpile. conversions are sery costly, this The three generating units together fund did not require a rate inercase.

use approximately one and-one- Under the Conversion Fund half train loads per day. program, beginning with the :-193-The shutdown of the STP also 94 fiscal year, the CPS Board allo-resulted in increased dependence cated one percent of the retail elec-on natural gas, a more expensive tric revenues, approximately $6.9 fuel for generating electricity. The million based on 1992-93 electric result was that electric bills for CPS revenues, to modify existing over-i customers were 8 percent to 10 head facilities and for construction i

percent higher than if the preferred of new overhead transmission fa-l nuclear and coal-fueled generation cilities. The City of San Antonio mix had been available. liigher receives 75 percent of the alloca-operating and mamtenance costs tion with the remainder for subur-l associated with the nuclear unit han cities and unincorporated ar-repair work did not affect custom- eas. The municipalities are respon-ers' bills. sible for selecting projects to be 6

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.p As part of a program to enhance the envimnment, CPS began a pilot project to install mom aesthetically pleasing armless poles.

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! CPS Achieves Positive Financial Results a

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{ ] hrough continua- bills, an estimated $7.4 million in Investor Service Inc. and Akiody tion of its long- savings annually for customers who investor Service continued their 4

l standing financial use at least 5.000 kilowatts a AA+ and Aal ratings while Stan-

! strategies, CPS month. These include military dard and Poor's Corporation main-l completed a suc- bases; large hospitals; federal, tained an AA rating. The new cessful year. The utility achieved state and local governmental facili- bonds, with an average interest rate

record high electric sales and gross ties

sisitor attractions such as Fi- of 5 percent, will save CPS $ I 29.5

{ revenues and attained savings esta Texas and Sea World; and million during the next 20 years.

l through debt reduction and cost manufacturers such as Golden Alu- The bond sale included $666.7 l containment efforts.The successes minum. million to advance refund higher-j were accomplished in an environ. The utility also implemented interest CPS bonds issued between

. ment made difficult by the increase residential, commercial and indus- 1985 and 1992 at interest rates of I in South Texas Project operating trial interruptible rates to help post- 6 percent to 9.3 percent. The sale and maintenance costs which re- pone the need for new power also converted S65 million in short-j suited from the year-long efforts to plants. Commercial customers, term commercial paper to long-get the project back in service. who agree to interrupt at least 500 term debt to take advantage oflow The nuclear plant shutdown at kilowatts of electricity. or indust rial interest rates.

the beginning of the fiscal year re- customers who agree to interrupt in August 1993. CPS redeemed sulted in STP expenses totaling 1.000 kilowatts of electricity or more than $232 million in out-

$109.9 million for maintenance more, have the option of being standing bonds through the sale of and operation. $34.6 million more served on an interruptible basis to lower-interest Tax Exempt Com-than projected. The shutdown also lower their costs. Modifications mercial Paper. The redemption is caused an increase in the use of made to the Large Power Time of expected to achieve interest savings higher-cost natural gas to generate Use Rate are expected to save busi- of about $30 million during the electricity with the added fuel costs nesses $980.000. CPS also intro- next nine years. The combined ef-passed on to customers. These duced an experimental Residential feet of these two actions will bring i costs. combined with an increase Time of Use Rate which offers sav- the interest rate on all CPS long-in sales, resulted in record high ings for residential customers who term debt to 5.76 percent.

electric revenue of $782 million, up can shift usage of electricity to off- .

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S73 million from the previous 3 car. peak hours. The decline in CPS rev-The higher cost of gas for resale enues resulting from the lower -

and a 3.7 percent increase in us- rates should be offset by savings in age spurred more gas revenue for interest costs. an aggressive cost.

the 1993-94 fiscal year, totaling cutting program and anticipated .-

1 S125.5 million. Gas revenues were business expansions and new busi-11.4 percent or $12.9 million nesses resulting from the favorable greater than last year. ' - '

rates. .

in addition to its already low Conservative financial manage.

rates. the utility is assisting busi- ment strategies continued to help .

ness tbrough a new rate forits lary- CPS obtain excellent bond ratmgs ', .

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est electric customers. The rate re- when issuing $777.7 million in re- ,.

. I suits in a 10 percent reduction in funding bonds in January. Fitch a - -

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Located on the beautiful River Walk, the Downtown Customer Service Center is one of four locations where the utility provides individual service to its half-rnillion customers.

i San Antonio: The Utility Serves a Growing Area l

l San Antonio during the year, Since nesses also includes small business.

{ .] he economic out-look in Texas im- the EDF began operating in 1975. To provide increased opportunity l

i proved in 1993 the organization has assisted 88 for small and minority businesses, with particular companies in relocating to San ' CPS held six business opportunity strength in certain Antonio, bringing 28,000 jobs and seminars informing 400 companies regions of the state. One of the par- more than $21 million annually in on how to conduct business with ticularly bright spots, the San An- revenue for CPS. the utility. The participation of l

tonio economy showed renewed Passage of the North American more local businesses in the CPS vigor during the year with result- Free Trade Agreement at the na- purchasingprocess helps stimulate ing growth in the use of natural gas tional level is expected to have a ' the San Antonio economy and cre-and electricity. The city's reat estate positive effect on San Antonio's ates competition to keep the market rebounded with an increase economy. Businesses wishing to utility's costs low, of more than 5,000 housing units expand into Mexico are expected As San Antonio's economy has built during the year. This one per- to set up San Antonio operations prospered, CPS likewise has expe-cent growth in the housing inven- to take advantage of the city's prox- rienced growth. The hourly peak tory is surpassed, however, by the imity and cultural ties to that coun- . demand for electricity increased job growth rate of 2.9 percent try. City leaders are working to po- 3.2 percent from the previous year achieved as a resuh of business sition San Antonio as a major fo. with a new all-time record of 2.908 expansion and business reloca- cal point for conducting business megawatts set on July 30,1993.

tions. Office building occupancy in Mexico. The 1992 record was 2,817 mega-citywide rose to 84 percent, up al- Emphasis on tourism continues watts.The previous 24 hour2.777778e-4 days <br />0.00667 hours <br />3.968254e-5 weeks <br />9.132e-6 months <br /> record most 5 percent from 1992. Apart, as Fiesta Texas. Sea World, the likewise was broken with the new ment occupancy at the end of the Alamo and River Walk have been level reaching 54,298 megawatt year was 94.7 percent, joined by the flyatt Itill Country hours, a 3.9 percent increase over During the year. San Antonio Resort, a new conference / retort the previous year's record.

welcomed Southwestern Bell, the destination which attracts profes. The number of customers also 29th largest corporation in the sional consentions. The - Ala- has grown. CPS added 9.040 new country, which now has its corpo- modome, which opened in 1993. electric customers during fiscal rate headquarters in downtown 3erved as the host site for the U.S. 1993-94, a 1.9 percent increase.

San Antonio. Integrated Cargo Olympic Festisal, Alamo Bowl and New natural gas customers num-Management Systems likewise 1o- other sporting events and will pro- bered 1,744.

cated its corporate headquarters in vide additional space for large con- CPS serves a growing area the Alamo City. World Savings and ventions, where an average population Loan is constructing a 900-em- San Antonio is a good location Frowth of 1.4 percent annually is playee national center for customer for expanding business as shown forecast for the next 25 3 ea rs.

service, while Caremark Interna- by the growth of West Telemar- While residential electrie usage is tional has established a claims op- Leting, the largest processor of in- expected to grow more slowly in cration. The Economic Develop- bound calls in the U.S. The com- the future than it has in the past, ment Foundation of San Antonio pany plans to expand its facilities usage is expected to be about 20 counts more than 1,000 additional and increase its work force of 2,700 percent greater in 2015 thani 't is jobs in the CPS service area due to to 3,500 during 1994 today.

the relocation of new businesses to CPS attention to local busi- CPS studie.4 show the utility has 10'

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adequate capacity to serve custom. begin construction of a 500 mega- Spruce Plant at Calaveras Lake to ers with current generating facili- watt coal-fired unit later this de- take advantage of existing coal-han-ties into the next century. To meet cade with the unit to go on line in . dling facilities and water from the the anticipated customer growth 2001. The plant probably will be lake.

beyond that time, CPS expects to - constructed adjacent _to the J.K.

CPS Develops its Employees and Facilities l

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i PS continues to ' get on-the-job training while allow- or on the telephone.The voice mail develop its em- ing CPS to evaluate those who sptem has been particularly help C ployeestoassure- 'might be future employees. This ful in slowing the growth in staff the utility has an emphasis on helping students in levels.

excellent work - theiracademic years should assure A new remittance processing j force, both for the present and the that CPS can continue recruiting system composed of three ma. l future. The utility also takes advan- high quality personnel. chines was installed to speed up the i tage ofimprosed technology to in. The utility maintains a strong processing of customer payments. j crease efficiency, relationship with its retired person. The new machines are approxi-Special programs provide' train- nel through the CPS Itetirees As- mately two-and one-half times ing for employees. During the year, sociation. During the year, mem- faster than the models they re- l 2.171' employees attended 49 bership grew to 475 members who placed. j courses offered through the CPS sene as another strong link with CPS expects to save about training division. CPS employees the community. $428.000 per year as a result of also took advantage of the opportu- CPS took advantage of new installing two load demand com- i I

nity to atts , institutions of higher technology to improve operations puters at the coa'-fired J.T. Deely education. A total of 183 employ- and reduce costs tbrough efficiency. Plant. The computers coordinate ces attended college courses in the The utility upgraded its personal boiler and turbine operations to evening and on weekends at CPS computers, replacing older PCs improve the plant's efficiency.

expense to pursue studies related to with Intel 486s and Windows. The conversion of the gas dis- l

! their jobs. Some college courses based software. Emplo3ees were tribution system maps to computer were taught at CPS facilities as an trained in use of the new programs form so they can be readily updated added convenience for employees to and are expected to increase pro- was completed and is in use by improve their education. ductivity because of the enhance- employees at several locations

! CPS continued to recruit high ments, throughout the city. Computeriza-school students for the summer Productisity also is benefiting tion of the electrical system facili-l work program and college students from a new voice mail system ties was 95.5 percent complete by for the co-op program. Iloth pro. which allows employees to retrieve year-end and likewise is expected vide opportunities for students to messages left while they are away to contribute to overall efficiency.

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Employees Participate in Community Work evaluates requests for assistance sented 488 safety programs to al-ployees showed and then recruits employees to most 80,000 persons. Information C PS and its em-their community work on projects which are se- about the efficient use of gas and spirit through a lected. electricity was presented to more variety of pro- CPS employees again this year than 100.000 customers.

grams during the 3 ear. Activities in- showed their community spirit The conservation message also cluded not only participation in the through participation in the United was presented to the community employee voiunteer program but Way campaign. Contributions of thro' ugh a new 13-week series of also contributions to the United nearly $459.000 exceeded last television programs sponsored Way campaign and presentations to year's by 4.5 percent and per capita jointly by CPS and two major busi-

community groups about safety ghing increased by 5 percent. More nesses. The 30-minute programs and conservation topics. than 1,600 employees are now w hich aired locally on the CisS af-Employees spent more than signed up as Continuous Givers, filiate emphasized energy efficiency 11.000 hours0 days <br />0 hours <br />0 weeks <br />0 months <br /> of their free time who automatically donate their fair through low-cost home improve-during 1993 assisting non-profit Share each 3ear. ments. A second series is being organizations and agencies through CPS employees took the utility's planned in the next fiscal year to the Volunteers in Public Service. messages about safety and conser- continue the emphasis on energy The program matches employee valion to the community through - conservation, talents with needs for volunteer presentations to school groups, work in the community. A 12-mem- businesses and organizations. Dur-ber employee steering committee ing the year, CPS personnel pre.

Summary Despite not having the benefit continued its strong financial per. city. The utility will continue to of generation from low-cost formance. achieve its goal of providing safe, nuclear fuel and experiencing in- Continued growth in San Anto. reliable, low-cost natural gas and creased costs to return the South nio outpaces many other areas in elect ric service for the benefit of its Texas Project to service. CPS the country and provides a positive customers.

passed the test with flying colors. environment for the utility's opera-The utility retained its favorable tion. With a fine organization in bond ratings and maintained low place and a tradition of excellence rates compared with other utilities spanning more than 50 ears, 3 CPS around the nation and state. CPS looks ahead to futurc opportunities performed well operationally and to serve the energy needs of a great i

12

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t i Board of Trustees

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_..- $ N:  ; .. .

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$ .4

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Dr. Frank Bryant Al Aleman Gloria Hernandez Chairman Vice Chairman Trustee i Physician Aleman Food Service Suchy's Flowers and Gifts i

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.d ', f v. , r i g l ,- .. L

.c X ;f n .YYN up.  %.

Pat Legan Nelson W. Wolff l Trustee Ex-officio Trustee l Legan Properties Mayor of San Antonio i

1 i

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l. . ._ . . . . . . _ . . . . -. . . . - . - - _ - . _ . -

l CPS Management Staff l

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4 A . ,. e 19 g i

Arthur von Rosenberg Jamie E. Axtell Kenneth J. Fiedler General ManaDer Assistant General Manager for Assistant General Manager for Planning and Development Operations i

t I

( -

CPS Department Managers

! Ralph E. Alonzo Customer Services

, Les Barrow

~

Construct,on l ,

s i

> Steven Braimer

.. Administrative Services

1. - ' . *. M w / Martin Clausewitz

'W . '"

Generation and

. Environmental Planning l Anthony C. Edwards Employee Relations i .

Lou Fleckenstein l Materials and Transportation Nick Flores Howard Freeman Joe D. TreviAo Operations Assistant General Manager for Assistant General Manager for Paul R. Garza i Finance Transmission and Field Administration Distribution Engineering Wallace H. Geissler wer an ng n enn0 and Construction William C. Gunst

Production l Leonard Hill Transmission and j Distribution Engineering z' Cy Hutchinson Data Processing Services John J. Leal Personnel Donald R. Schnitz Gas Engineering and Fuels Stewart Schooler Legal Services Barbara K. Stover Public Relations u Donald S. Thomas Financial Services

l 4

l l 1

l Management's Financial Summary For Fiscal Year 1993-94 )

i i I

( l i

4 l

l ecord gross rev- revenue was up $86.3 million as a from gas sales. Non-operating rev-enue was re- result of higher fuel cost recover- enue included interest on in-l corded in fiscal ies of $54.7 million for the produc- vestments and miscellaneous in-l year 1993-94 tion of electricity and $ 12.2 million come. The average resenue of 6.1 l

j primarily due to for resale gas recoveries. The re- cents per KW11 and $4.74 per MCF l the recovery of increased fuel costs. maining increase of $I9.4 million represents a slight increase over last i More expensise natural gas and was a result of increased sales. 3 ear and is a result of higher fuel coal were used to produce electrie- Non-operating revenue declined by and resale gas costs.

ity while both units of the South $3.2 million because of lower in-Texas Project nuclear plant were terest earnings. Expenses shut down in early February 1993 CPS earned about 86 percent of Operating and maintenance ex-because of problems with the aux- its operating revenue from electric penses for the fiscal year totaled

iliary feed water pumps. Subse- sales and approximately 14 percent $514.8 million. up $104.2 million j quently, the Nuclear Regulatorv Electric Sales in Billion kWH

. . Fiscal Years Ending January 31 Comm.ission cited various operat.

• / ~

! ing and regulatoryissues which had ,- -

- 2.7 l to be resolved by the Project Man- O l-l ager. Ilouston Lighting & Power.

prior to the restart of the plant. The 1 l

NRC authorized the restart of STP j j Unit I in February 1994.with Unit 2 expected to go on line 60 to 90  ;

days after Unit I begins operating.

Sales i Electric sales set a record for the

! 1990 1991 1992 1993 1994 j fiser.1 year. reaching 12.7 bill. ion

, Electric sales set an all-time recorti at 12.7 billion kilowatt hours.

j kilowatt hours. The 3.6 percent increase in sales over last year re. Gas Sales in Million MCF Fiscal Years Ending January 31

! flects a modest increase in the num- y,7 f ber of customers. which has been 4, 4,8 5.4' -

! the trend in recent years.

f Gas sales totaled 26.3 million l MCF, a 3.7 percent increase over I last year. Gas sales have been af-2 i fected the last four years by mild 4

winter weather.

i

! Revenue f Gross revenue increased $83.1 million from the presious year. 1990 1991 1992 1993 1994

{

l reaching $930.5 million. Operating Gas sales have been affected the last four years by mild winter 5 weather.

1 is 4

3 i,

Gross Revenues Operating & Maintenance Expenses in Millions of Dollars fiscal Years Fnding January 31 In Millions of Dollars Fiscal Years Ending January 31

/ <

$295 B Non-Operating Revenue f 3994 -; ..

0 cainevenue . . . . - -

N B ElectricRevenue 1993 113~ 26 $80 ...g,.. ..,. ,ygg

p. - Q'N. - $230 hg 1992 -

$g l 4 'J > M MAM #

.j $l72 1992 k}...,.-...'.

',' .g7'. ..

1991 l }? Q.jM (.. h  ;

m...

mm s~ ~~

- & % G y g%g Po&;.. . . ,. . .m y:.. mmm,p ,

@ CPS Other operating & Maintenance er ; c3 J . . ; . - -. . . .- . . . . :-

0 sTP other opernung & Maintenance 1990 h, .. ..t..>. 9

. t .: . .. . . . .\k., >.

119 $3 p_ _

Gross revenue increased 9.9 percent over the previous year. Fuel, power and resale gas accounted for more than half of the operating and maintenance expenses.

from the presious year. Iligher 51 percent of the capital expendi- Financing Results fuel power and resale gas eu tures. Commercial paper financed During the year CPS sold $21 i penses of $260.2 million increased almost 43 percent of construction million in Tax lhempt Commercial more than 558.5 million over last costs, w hile almost 6 percent came Paper (TliCP) which was used to-year and accounted for more than from customer contiibutions. gether with other funds to call $232 30.5 percent of the costs to oper. With no major generation million of long-term bonds which ate and maintain the electric and projee planned CPS expects to had a higher rate of interest. The gas >> stems. fund its low er capital needs during refunding issue will produce an Non fuel operating and mainte- the next few years primarily from estimated net sasings of $30 mil-nance expenses were up $46 mil. resenue and commercial paper. lion in interest through the year lion, with STP operating. mainte. l.ong-term bonds will continue to 2003.

nance, and regulatorprequired be used periodically to consert out- In addition at year-end, S777.7 w o L accounting for $39 million of standing commercial paper olong- million of refunding bonds had the higher costs. Non-fuel costs term debt in periods when interest been sold at an average interest cost ewiuding STP increased by S7 mil- rates are adsantageous. of 5.01 percent but had not 3et lion or 5 percent user last year. Electric Generation by Fuel Type Coal-fueled electrie generation in Million KWH Fiscal Years Ending January 31 acwunted for 72 percent of CPS [H aan/ou O Coal M Nuclear generation for the 3 car. contribut- C e m_.c.

ing significantly to stable electric "** * - 58N prices w hile STP w as out 01 opera-tion, while 28 percent of genera-g tion was from gas and eil. 1992 I

34  %. 24 92 .

Construction mui l

The CPS strategs to pay for a -- -m 1 e

major part of its cor truction pro-kSEPN gram relied on resenue from em' For the first time since 1987, the utility relied entirely on coal and rent and prior years for more than natural Das for electric generation.

1G

been issued, to refund certain at year-end and had a very favor- tal assets declined slightly during higher interest long-term debt and able 6.35 percent weighted average - the year primarily as a result ofless to fix the interest rate on $65 mil. interest rate. After giving effect to construction and the increasein of lion of TECP. The interest savings the $777.7 transaction which re- depreciation for the new I. K.

on the refunding of the long-tenn - mained to be finalized at year-end. Spruce Plant. Last year. the Spruce debt willamount to $129.5 million the weighted ' average interest cost Plant was depreciated for only between 1994 and 2014. The two - on CPS outstandinglong-term debt . three months.' Assets could con-transactions in 1993-94 continue will drop to 5.76 percent. tinue to decline, as little construc-the program which was begun in .

tion is projected in the near future.  ;

1985. bringing the total interest Subsequent Events The utility's operation has been i 1

savings to $409 million from 1986 ' The South Texas Project Unit 1 judged by bond rating agencies to i through the year 2015. Annual in- began operating February 25, be in the top categories among terest savings of approximately $31 1994, but was force to shut down municipal utilities throughout the million will be achieved during March 1, because of a loss of feed . country. CPS expects that its strong -

each of the next three fiscal years. water to one of four steam genera- financial health ivill continue as it CPS continues to maintain the- tors. Following repairs, the unit . provides outstanding service at .

highly favorable Aai bond rating ' was restarted on March 22. and rates that are among the lowest in by Moody's investor Services and reached the 100 percent power . the state and nation.

AAy rating by Fitch investor Ser- level on April 8. 1994 Electric Capacity by vice.This ratingkeeps CPS among On February 23,1994, ihe _ Fuel Type - Capacity in Milhon MW -

a small gmupof public utilities that $777.7 million of New Series 1994 hate bond ratings above AA.. Revenue Refunding Ilonds dis-The $298 million outstanding cussed under FIN ANCING RE- ,;n balance of commercial paper at SULTS were delivered. , [ Gh year-end had a weighted average r ,

interest rate of 2.39 percent. Rev- Summary %g ~

enue bonds outstanding, net of cur- CPS assets total $4.6 billion and '2

rent maturities, totaled $2.3 billion the utility is financially strong. To- .

Funding of Capital Projects Capital Expenditures in Millions of Dollars Fiscal Years Ending Janaury 31 in Millions of Dollars Fiscal Years Ending January 31 All Others o STP J.K. Spruce 1994 E Operauons igg 4 $125 0 cu.iomer contribution.

$ $1 1993 E commercialPaper 1993 1992 -

1992 1991 .1991 1990 1990

) >

More than half of the funding for capital projects came from Capital projects declined 27 percent, primarily because the revenue from current and prior years. Spruce Plant was completed.

i l

17

i l Bal:nce Sheets l

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! i Years Ended January 31, ,

1994 1993 j ASSETS (in th<ntsands) i UTILITY PLANT, at cost (Notes 1. 3, and 9):

i Plant in service-l Electric... .. . .. . . . . . .. . $ 4,271,014 $ 4,197,904 j Gas.. . . .. .. . . 267,472 252,947 General.. . . .. .. . . , 116,170 109.806 Total plant in service. . . . . . 4,654,656 4,560,657 Less-accumulated depreciation . . . . . .. . .. 1,042,183 917,783

, Plant in service, net . . . . .. .. . . . . 3,612,473 3/>42.874 l Construction work in progress.. . . . . . . 125,619- l 10,693 l . Nuclear fuel,less accumulated amortization of $74.345 in 1994 and $74,131 in 1993. . 96,931 88.497 ;

l lleld for future use.. . . . . . . . . .. 34,393 34.129 a

Utility plant. net . . . . . .. . . . 3,869,416 3.876.193  ;

RESTRICTED CASil AND INVESTMENTS (Notes /. 2,3. and 4):

Bond reserve-Old series .. . . . . . .. . . 17,052 17,397 New series.. .. . . .. .. . . . .. . 198,676 212,265

' Commercial paper redemption fund.. . . . . . . .. . 143 0 ,

l Improvements and contingencies fund. . .. . . 93,918 111,770 Cash restricted for payment of construction retainage payable.. . . . . 0 21.628 i Other.. . .. . . . . . . 36,952 26.375 -

Total restricted cash and investments... . . . . . .. 346,741 389.435 l

i CURRENT ASSETS:

Cash and temporary investments (Notes / and 2)_. . . . . . .. 63,123 48.806 Cash restricted for payment of construction retainage payable., . . 21,739 0 Customer accounts receivable, less allowance for doubtful accounts of $2,853 in 1994 and $2,593 in 1993.. .. . . 56,698 62,908 Litigation settlements benefits receivable (Note 101.- . .. . . 0 9,601 Other receivables.. . . .. . . . . 2,183 2.768 Inventories and supplies, at average cost-Materials and supplies. . . . 55,243 54.004 Fuel stock. . . . . . ... . 21,167 29.495 Prepayments and other.. . . . . .. .. . . . . 6.368 5.965 Total current assets.. . .. . . .. . . 226,521 213.547 i

t i DEFERRED DEBITS AND OTliER (Notes I and 6).. . 201,386 ~ 206.508 l

TOTAL. .. .. . . .. . . . $ 4,644,064 $ 4.685.683 f Y(($f0N 'hNf N$Yt Y(( hhN $N (fY fY?$ $ $ ${$ NYS (h0 $ Y$($N(N$$.

18

~ __ _.. . _ ._.. . . . _ . _ _ _ _ . . . _ _ , .

t

. Years Ended January 31,1

'1994 -1993 Equity and Liabilities rin thousanas;

' LONG. TERM DEBT:

Revenue bonds (Notes 3 and 4)- __ _

Old series . . . . . . , .. . . . .. .. .. . . .. .... . $ 26,250 $ 38.250

. New series.. . . . . . . . . . . . ... . . 2,696,220 2,978.500 : -'

' Deductions-Unamortized discount on new series bonds. .. . . . ... . . . (87,454) "(93.256)

Unamortized discount on capital appreciation bonds.. . .. . . . . .... ... . . . (287,062) (301.591)'

Revenue bonds. net.. . ...... . . . .. . . . . . . . . . . . . 2,347,954 2.621,903 ,

Commercial paper (Notc 5).. . . . . . . . .. . . . . . . . .. . . . . . 282.300 30.000- l Long-term debt, net .. . . . . . . .. . .. . . .. .. . . .. . . 2,630,254 2,651,903  ;

6

.-EQUITY:

Appropriated retained earnings (Note 3)-

Bond current requirements Old series .. ... . . . . . . .. . . . . . . . . . .. . . . .. 607 216

' Bond reserve-Old series . . . . . . . - . . .. .. . . . . . . . .. . . . .. .. .17,052 17.398 New series. . . . .. . . . . . . . . . . . . . .. -146,218- 159.807 Commercial paper redemption requirements. .. . . .. . . . .. .. .. . 143 -

Improvements and contingencies fund. . .. . . . . .. ... .. . . . . . 93,918 111,770 j Total appropriated retained earnings.. .. . . . ... . . . . .. .. . . ~ 257,938 289,191 Reinvested earnings.. . . . . . . .. .. . .

. . . . . . . . . .. . 1,480,732 , ' l .489,65 i Total equity . .- . . .. . . .. .. .. . . .. . . . . . - . . 1,738,670 1.778.842 CURRENT LIABILITIES: 'I Current maturities of revenue bonds (Note 4).. .. . .... .. . . . . . . . . . . ... ... 76,580 ' - 86.455 Current portion of commercial paper redemption (Note 5). . . . .. . . . .. . . . . . .. 16,100 0 Accounts payable and accrued liabilities.' . . . . . . .. . .. . . . . . .. .. . . . . . 77,294 68.929 Litigation settlement benefits payable to customers (Note 10).. . .. . . . .- 8,814 9.338 Construction retainage payable . . . . . . . . . . . . . . - ... . ..... 21,739 0 Customer service deposits.. . . . . . . . . . .. . .. 24.608 23,509 Total liabilities . . . . . . .. .. . . .. . . 225,135 188.231 l DEFERRED CREDITS AND OTilER:

l Customer advances for construction.. . . . .. . . . 9,463 7,203 Construction retainage payable. .. . ... . . . .. . . . .. . . . 0 21.628 Other... . ... . . . . . . . . . . . . . .. . . . . ... . 40,542 29.076 l Total deferred credits and other . . . . . . ... . .. . . 50,005 57.907 LITIGATION SETTLEMENT BENEFITS PAYABLE (Note 10)... . . . . . . 0- 8,800

COMMITMENTS AND CONTINGENCIES (Notes 3. 6,7. 9, and 10) . . .. .. . . . 0 0 TOTAL . . . . .. .. .. . ... . .. . .. .. $ 4.644,064 $ 4.685.683 l

The accompanying notes are an integral part of thesefinancial statements.

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y -2 , -

1. .- - , , ,- .. .r-w-<-,ery...-,--.m.9 y

Stat:m:nt cf Revenus2 cnd Application cf Revenu:s  ;

Years Ended January 31, l 1994 1993 )

(In thousands)

REVENUE (Note 1):

Electric.. .. . . .. . . . $ 781,661 $ 708.257 Gas.. . . . . . 125,491 112,611 Interest and other income . . . .. . .

23,353 26.508 Gross revenue., . .. . . . .. . 930,505 847,376 EXPENSES (Note 1):

Fuel, purchased power and resale gas . . . . 260,215 201,699 Other operating and general . .

166,054 143,753 Maintenance.. . . . 88,528 65,170 Depreciation.. . .. . . . . 136,957 120,879 Interest and debt expense.. _. . . . . 196,017 201,265 Allowance for interest used during construction (Deduction) . , . - - (1,977) (29.055) l l Tax equivalent to City of San Antonio (Note 8).. . . . 11,817 11.244 Total Expenses . ., . . . .

857,611 714.955 EXCESS OF REVENUES OVER EXPENSES.. .. .. 72,894 132,421 ADD:

Depreciation.. . . .. 136,957 120.879 Amortization of capital appreciation bond discount .. . . .. 14,529 13,549 Amortization of bond discount and refunding debt costs. 20,672 19,010 Bond call premium costs.. .. ... 852 0 l

Interest requirements on new series bonds .. . . 150,588 159,169 l

Interest requirements for commercial paper redemption.. . 2,686 0 AVAILABLE FOR APPLICATION. . . . $ 399,178 5 445.028 APPLICATION:

To pay long-term debt requirements (Note 3)

Old series bonds-Principal payments. 13,112 12,306 Bond reserve (Deduction). . .. . . (346) (239)

To improvements and contingencies fund l Minimum requirements (121/2 percent of gross revenue).. . .. I16,313 105,922 Additional cash payments to and services for the City of San Antonio (Note 8).. . .. I13,065 102.27i To improvements and contingencies fund Balance of available net revenue.. .. 157,034 224.768 TOTAL APPLICATION . . . . $ 399,178 5 445,028 l

l The accomparrying noirs are an integralpart of thesefinanciar statements.

20 l

I'

[ Statem:nt cf Changes in Equity l

[ Years Ended January 31, 1 1994 1993 l- BOND CURRENT REQUIREMENTS, old series bonds: (/n thousands)

Balance, beginning of year $ 216 $ 0 Additions - Old series bond principal payments .. , 391 216 Balance, end of year,. .. $ 607 5 216 BOND RESERVE, old series bonds:

Balance, beginning of year. $ 17,398 $ 17,637 Deductions-Transfer of income.. , (346) (239)

Balance, end of year., 5 17,052 $ 17,398 BOND RESERVE, new series bonds:

Balance, beginning of year - .. $ 159,807 $ 154,239 Additions-Transfer from improvements and contingencies fund for debt service.. 1,239 5,568 Deductions-Transfer for bonds called.. (14,828) O Balance, end of year.. $ 146,218 $ 159,807 CONiMERCIAL PAPER REDEMI' TION FUND:

Balance, beginning of year.. $ 0 $ 0 Additions- Transfer from improvements and contingencies fund for debt service.. 8,429 0 Deductions- Transfer to improvements and contingencies fund for redemption and interest.. (8.286) O Balance, end of year.. $ 143 $ 0 IMPROVEMENTS AND CONTINGENCIES FUND:

Balance, beginning of year .. $ 111,770 $ 109.645 Additions-From application of revenue-Minimum requirement (121/2 percent of gross revenue).. I16,313 105,922 Balance of available net revenue. 157,034 224.768 l Total - $ 273,347 $ 330,690 Deductions- i

New series bonds- l (5,568) l Additions to reserve -- (1,239) l Payment of bond interest.. . (150,588) (159,169)

Payment of bond principal.. . (66,460) (69,965)

Commercial Paper-Payment of commercial paper redemption interest.. (2,686) 0 Payment of commercial paper redeemed.. .. (5,600) 0 Additions to commercial paper redemption fund.. (143) O Construction expenditures.. .. (64,483) (93.863)

Total .. (291,199) (328.565)

Balance, end of year.. $ 93,91 $ 111,770 REINVESTED EARNINGS:

Balance, beginning of year . , $ 1,489,651 $ 1,467,171 Additions- l From improvements and contingencies fund-For construction .- , 64,483 93,863 For new series bonds principal payments.. . 66,460 69,965 For commercial paper principal payments.. . 5,600 0 From application of eamings-For old series bonds principal payments .. 12,720 12.090 From new series reserve fund used to call bonds.. .. 14,828 0 Total .. $ 164,091 $ 175,918 Deductions -

Depreciation . (136,957) (120,879)

Amortization of capital appreciation bond diacount.. (14,529) (13,549)

Amortization of bond discount and refunding debt costs . (21,524) (19.010)

Total .. $ (173,010) $ (153.438)

Balance, end of year.. $ 1,480,732 5 1,489,651 The acrompanying notes are an integralpart of thesefinancial statements.

Statement cf Cash Flows ,

l Years Ended January 31, i

1994 1993 On thousands)

CASil FLOWS FROM OPERATING ACTIVITIES: l Excess of revenues over expenses... . . .. . $ 72,894 $ 132,421

• Nonrevenue related items .;

Bond call premium costs.. . . .. .. .. .. 852 0 Noncash items included-Allowance for interest used duri*. ; ,'onstruction.. . .. . . . (1,977) (29,055)

Depreciation expense.. . . . .. . 136,957 120,879 Amortization expense-Refunding costs and issue expenses . . .. .. .. . . 14,870 14,043 Discount on new series bonds. .. .. .. .. 5,802 4,967 l

Amortization of capital appreciation bond discount . . . 14,529 13.549 Additional cash payments to and services for the City of San Antonio. . . . .. . (113,065) -(102,271)

Changes in current asycs and current liabilities (Note 1).. . .

44,684 (4,821)

Proceeds from freight litigation settlement.... . . . . 8,601 9,231 Refund of freight litigation settlement benefits pay able to customers.. . .. . (9,324) (9.779)

(Increase) decrease in other assets.. . .. . . . (9,012) 5,631 Increase (decrease) in other liabilities . . . . . .. (20,185) 312 i

Net cash provided by operating activities. . . . . . . . 146,626 155,107 CASif FLOWS FROM CAPITAL AND RELATED HNANCING ACTIVITIES:

Additions to utility plant.. . . . . . . .. .. (124,591) (142,783)

Contributions in aid and customer advances for construction.. 7,082 5,608 l Proceeds from STP litigation settlement.. . .. . . 0 15,000 ,

Sale of refunjilg bonds.. .. .. . 0 664,600 Sale of comm. cial paper.. . .. . . . 274,000 68,000 i Defeasance or call of bonds.. . . . . (232,250) (422.215)

Commercial paper redeemed.. . . . .. . . (5,600) (198,000) ,

Bond issue expenses . . . .. . . 0 (723)

Excess of reacquisition amounts over principal of bonds refunded in advance.. . 0 (44,434)  !

Pri,ncipal payments on revenue bonds . . .. . (71,905) (82,055) -t Net cash used for capital and related financing activities . . . . (153,264) (137,002) .

NET INCREASE (DECREASE) IN CASif AND CAS11 EQUIVALENTS. .. $ (6,638) 5 18,105 l t

CASil, CURkENT RESTRICTED CASil. AND TEMPORARY INVESTMENTS:

Beginning of year.. . . .. . . . .. . $ 48,8 % $ 49,854 End of year.. . . . . 84,862 48.806 Net increase (decrease). . . . .. . .. , . . 36,056 (1,048)

RESTRICTED CASil AND INVESTMENTS: ,

Beginning of year.. . . . . .. 389,435 370,282 ,

End of year.. . .. . . . . . .. . .. . ... . 346,741 389,435 .

Net increase (decrease). . . . . . . (42,694) 19,153 '

NET INCREASE (DECREASE) IN CASil AND CASil EQUIVALENTS. . . . . $ (6,638) $ 18,105 The accompanying notes are an inteuralpart of thesefinancial statements.

22

• l t

s

N: tis 13 Fin nci:1 Stat:m:nts J:nu ry 31,1994 cnd 1993

1. Significant Accounting Policies studies. Depreciation as a percentage of average depreciable ORGANIZATION - City Public Service (CPS), a municipal utility owned by the City of San Antonio (the RESTRICTED CASil AND INVESTMENTS - These City), provides electricity and natural gas to San Antonio funds, which are generally restricted as to use for other than and surrounding areas. As a municipal utility, CPS is current operations or are designated for expenditures in the exempt from payment of income taxes, state franchise and acquisition or construction of noncurrent assets, consist sales taxes, and real and personal property taxes. CPS primarily of the current ponion of the New Series Bonds provides certain payments and benefits to the City as sinking fund, customer assistance program funds, insurance described more fully in Note 8. reserves, retainage on long-term construction contracts, and short-term investments of tax-exempt commercial paper HASIS OF ACCOUNTING -The financial statements of proceeds.

CPS are presented in acco: dance with generally accepted accounting principles for u,e-regulated enterprises. The Investments are stated at cost which approximates market accounting records of CPS fojow the Uniform System of value. The specific identification method is used to deter-Accounts for Gas and Elecaic Utilities issued by the mine cost in computing gain or loss on sales of securities.

National Association of Regu'atory Utility Commissioners. Amortization of premium and accretion of discount are Certain prior period amounts have been reclassified for recorded over the terms of the investments.

comparative purposes.

DEFERRED DEHITS AND OTilER - These amounts FISCAL YEAR - The fiscal year ended January 31,1994 consist primarily of the unamortized balances of bond is referred to herein as 1994; the year ended January 31, issuance expenses and the excess of reacquisition amounts 1993, as 1993. over revenue bond principal amounts refunded in advance, Amortization is recorded over the period of the outstanding REVENUE AND EXPENSES - Revenue is recognized as bonds. Also included are assets of an employee deferred billed on a cycle basis. Rate schedules include fuel and gas compensation plan held by a trustee.

cost aojustment clauses that permit recovery of fuel and gas costs in the month incurred. CPS recognizes fuel and resale STATEMENT OF CASil FI,0WS - For purposes of gas costs on the same basis as it recognizes revenue. reporting cash flows, CPS considers all highly liquid debt instruments purchased with a maturity of approximately CPS amortizes its share of nuclear fuel for the South Texas three months or less to be short-term investments. Accord-Project (STP) to fuel expense on a unit-of-production ingly, CPS' temporary investments and restricted cash and method. Under the Nuclear Waste Policy Act of 1982, the investments are cash equivalents. No material noncash federal government assumed responsibility for the per- investing or financing transactions occurred during 1994 manent disposal of spent nuclear fuel. CPS is charged a fee and 1993.

for disposal of spent nuclear fuel, which is included in fuel expense, in the amount of 5.(XX)94 per kilowatt hour in rder to determine net cash provided by operating (KWH) for its share of electricity produced by STP. For etivities, net earnings have been adjusted by, among other further discussion regarding the STP, see Note 9. things, changes in current assets and current liabilities, excluding changes in cash and temporary investments, cur-UTILITY PLANT - Utility plant is stated at the cost of rent maturities of long-term debt and litigation settlements construction, including costs of contracted services, direct benefits receivable and payable. Those changes shown as an material and labor, indirect costs, including general (increase) decrease in current assets and as an increase engineering labor and material overhead, and an allowance (decrease) in current liabilities are as follows:

for interest used during construction (AIUDC). CPS computes AlUDC using rates representing the cost of pm pm borrowed funds on projects estimated to cost in excess of g, % ,,gg

$250,(XX). Retirements of utility plant, together with couomer accounn receindie. s 6.2io 5 (935: >

removal cost less salvage, are charged to accumulated o her nxeivabies. nef or curreni maiorine. or iinganon depreciation. The maintenance of property, as well as replacements and renewals of items determined to be less 3,,,72","7y,fflT'""h'" y$ g Premmenn aminther . (40 4 Um than a unit of property, are charged to maintenance expense. General utility plant assets consist of land, gl",'["b[""[*y*jh"""di"-

cowomer serme depo n, -

Q um

"[

v,4 buildings, and equipment for general and administrative chanyn in cuant ae naumnt habdawn _ 164  % EO21 )

purposes that are used commonly in electric and gas operations.

Cash interest paid by CPS, net of AIUDC was $163,913 and CPS computes depreciation using the straight-line method $141,565 in 1994 and 1993, respectively, over the estimated service lives of the various classes of depreciable property as determined by periodic engineering 3

2. C:sh and Temporary inv ctm:nts payable to the City. At such time as the trust indenture covering the Old Series Bonds becomes inoperative, CPS cash deposits at January 31,199/ and 1993 were revenues will be applied as follows: (a) for maintenance and entirely collateralized by banks for the .munt of CPS. operating expenses of the systems, (b) for pa) . ents of 'he Deposits are collateralized by securities held by a third party New Series Bonds, (c) for the payment of any oblign e o in CPS' name. nferior in lien to the New Series Bonds which may be issued, (d) for an amount equal to 6 percent of the gross At January 31,1994 and 1993, CPS' investments, both revenues of the systems to be deposited in a repair and restricted and unrestricted, were all in U.S. Treasury se- replacement fund,(e) for cash payments and benefits to the curities and were held by a third party in CPS' name. CPS' City not to exceed 14 percent of the gross revenues of the-investments are generally limited to U.S. government or systems and (f) any remaining revenues to the repair and U.S. govemment guaranteed obligations. Investments were replacement fund. The New Series Bonds ordinances

$416.9 million with a market value of $421.9 million at require that a bond reserve fund at least equal to the average January 31,1994. annual principal and interest requirements of all out-standing New Series Bonds be established.

3. Revenue Bond indenture Requirements As of January 31,1994, bond reserve requirements for the The trust indenture executed by the City in conjunction with Old Series Bonds and New Series Bonds have been met, the issuance of the revenue tonds dated February 1,1951 through August 1,1974 (Old Series Bonds) contains, 4 Revenue Bonds among others, the following provisions:

A summary of. revenue bonds . is. as follows:

(1) All of the assets of the gas and electric systems, together with the net revenues of the stems, as defined, weigwed-Anwe are pledged with the Harris Trust and Savings Bank of ,',"C'(

Chicago, Illinois, as Corporate Trustee, to secure the nona. m January 3:

payment of the Old Series Bonds. %nues ; ary 3i. im im iw3 Ihr IIweewndd (2) Gross revenues of the gas and electric systems U'd7 %y ,, 3 3g 3 g,,o shall be applied to: (a) expenses of operating and main- New Sene Senai Bonds, v 6 34e 2m.235 23a670 taining the systems, (b) debt service and reserve require- g ,77, 1 3, 7 20i7 ments on the Old Series Bonds,(c) payment of an "in lieu nonds issue m-m a7.4s4 ) <93.256 )

of tax" amount to the City [ tax equivalent), (d) an amount Negag'*"I ^gid' g" haA equal to 12 1/2 percent of gross revenues to the im- una ,nma copoi Appn.n.non provements and contingencies fund, (e) additional benefits Baad e=$ '287^2 ) MN 6.310 2.424,534 2.70M,358 and payments to the City to bring City benefits and pay- t-rrem mmeicuiminas 76.580 8u55 ments to 14 percent of gross revenues (f) additional Reveme tmh. net payments to the improvements and contingencies fund until

• ""** "'""" ** 523#' " 52*2' "

such fund equals 20 percent of the value of fixed capital

• All new series bonds, including capital appreciation bonds.

assets and (g) the balance to a surplus fund.

(3) The following funds are established: (a) general fund. (b) improvements and contingencies fund, (c) bond Prinopai the i construction fund (containing the proceeds of revenue Year Old Senes Bonds New Senes Bonds Total bonds), (d) principal and interest current requirements 1995 5- 12.000 s . 64.580 5 76.580 ,

(containing the monthly payments of annual debt re-quirements), and (e) bond reserve fund (containing an 1998 -

(535 83.460 83.460 I

amount equal to the next fiscal year's principal and interest 1999 -

8 (210 84.210  !

requirements). These funds may be invested with authorized depository bant s or in U.S. government securities. In prior years, CPS refunded certain previously issued and  ;

outstanding New Series Bonds through the issuance of New ,

Beginning with the fiscal year ended January 31,1976, new Series Revenue Refunding Bonds. The refunded bonds and (

series electric and gas systems revenue improvement bonds related trust accounts are not included in CPS financial (New Series Bonds) were issued. These bonds are junior statements. At January 31,1994, portions of the bonds ,

and subordinate to the Old Series Bonds. The bond or, which have been defeased were still outstanding as follows:

dinances authorizing these issues provide that no further bonds or obligations will be authorized or issued under the Fiscal year 1987 refunding.. . $ 253,350,(XX) &

terms of the trust indenture for Old Series Bonds. While any Fiscal year 1988 refunding. . .. . . . . 168,725,(X)0 of the Old Series Bonds are outstanding, the New Series Fiscal year 1990 refunding. . . .. 324,925.(XX) j Bonds are payable solely from the net revenues of the Fiscal year 1992 refunding. 33,765,000 systems (1) deposited and available for deposit in _the Fiscal year 1993 refunding. . . 202,555,(XX) -

improvements and contingencies fund and (2) from funds

Subsequent to January 31,1994, CPS issued $777.7 million Retirement benefits are based on length of service and of New Series 1994 Revenue Refunding Bonds at an compensation, and benefits are reduced for retirement average interest cost of 5.01 percent, with delivery on before age 55.

February 23,1994. 'Ihese bonds were issued to redeem

$666.7 in certain outstanding N.ew Series Bonds and $65 The total employer and employee pension funding, which million in Tax Exempt Commercial Paper (TECP). This E

"I" ."## Y.*""

usmg the unit credit cost actuarial method, is summanzed will result in interest savings, fixed long-term bond rates, 7g and restoration of a portion of CPS

• borrowmg capacity gq94 3993 under the Commercial Paper Program. undmsand3>

Employee coniributkms 5 5.497 5 5370

5. Commercial Paper ces conmduno,m i6. ion isass In October 1988, the City Council of San Antonio, Texas malmneune . 5 2w7 s 2n325 (City Council) adopted an ordinance authorizing the " ""U")""" 5 ' *" * ' "#

issuance of up to $300 million in TECP to assist in the a apu 5 22 5mm financing of eligible projects, including fuel acquisition and CPS contributions have amounted to 14 percent of covered capital improvements to the utility systems (the Systems). payroll in 1994 and 1993, and 13 percent in 1992. Of the The ordinance was amended effective April 26,1093 to amounts contributed during years 1994,1993, and 1992, allow the additional use of TECP to refinance or refund any approximately $12.9 million, $12.8 million, and $11.7

, outstanding obligations which are secured by and payable rnillion, respectively, was funded each year to cover normal from a lien on and/or a pledge of net revenues of the co%s oi a.e Plan. The remaining contribution in each year Systems. The ordinance was also amended to allow CPS to was funded to cover the amortization of the unfunded enter into enhancement financing agreements. The pro- actuarial accrued liability, gram's scheduled maximum maturities will not extend t:eyond November 1,2028. As of January 31,1994, $298.4 The Governmental Accounting Standards Board (GASB) million in principal amount was outstanding, with a Statement No. 5 requires that a pension benefit obligation weighted-average interest rate of approximately 2.39 per. be measured using the actuarial present value of credited cent and an average life outstanding of approximately 78 projected benefits, as adjusted for projected salary increases, days. The amount of outstanding TECP at January 31,1993 This measure is independent of the funding method used to was $30 million. During 1994, CPS issued $211 million of determine contributions to the Plan; however, the signi-TECP to call long-term bonds and $63 million to fund ficant actuarial assumptions used to compute the contri-construction costs. Under a planned payback, $5.6 million bution requirement are the same as those used to compute of the 5211 million was redeemed during 1994. Planned the pension benefit obligation. On February 1,1993, the redemption in 1995 amounts to $16.1 million. Plan was amended to change the reduction in early The TECP has been class.fied i as long-term m accordance retirement benefits prior to age 55 from 4 percent per year to 6 percent. The effect of this change was a decrease to the with the refinancing terms under a revolving credit agree-ment with a consortium of banks which suppons the com- total pension benefit obligation of approximately $1.7 million and a decrease in plan contributions of $240.000 for mercial paper. Under the terms of the agreement, CPS may borrow up to an aggregate amount not to exceed $300 fiscal year 1994. The actuarial valuation and the actuarially million for the purpose of paying amounts due under the determined contribution requirement as of December 31, 1993 were computed using an assumed rate of return of 8.5 TECP. The credit agreement has a term of two years' currently extended until hovember 1,1995, and may be re- percent and projected salary increases averaging 6.5 newed for additional periods. There have been no bor- percent. As a result, under GASB No. 5, the following represents CPS' pension benefit obligation (in thousands) as rowings under the credit agreement as of January 31,1994.

of December 31,1993 and 1992:

The TECP is secured by the net revenues of the Systems.

Such pledge of net revenues is subordinated and inferior to '** '*2 the pledge securing payment of the Old Series Bonds, 'he New Series Bonds and any New Series Bonds to be is;ued

")"'NN" rmwnepamp-w s u7sm 5 i22,62o I mployer and empk.yec-rinarwed m the future. ,,,,ed wmern, 2o3342 iv7.427 Employer-fin.orwed mmveved trirfits 5W5 41.220

6. Benefit Plans T%wns a.nerin+,nr aa. 3ua.723 3e267 Net auch asanlable for plan tenrrits CPS has a self-administered, defined-benefit contributory w rair martei vaiuet _ m.3m 322mi pension plan (Plan) covering substantially all employees '"'""d'd P""'" "*f'"*'h 8 ** * " ' " "4 5 2" who have completed one year of service. The Plan assets are held in a separate trust that is penodically audited and Net assets available for plan benefits were 91 percent of total pension benefit obligation in 1993, as compared with which statements melude histoncal trend mformation.

89 percent in 1992, and 84 percent in 1991. Unfunded Generally, participating employees contribute 5 percent of pension benefit obligation was equal to 33 percent of annual their total compensatyon and are normally fully vested in CPS

• contnbution af ter completing 15 years of credited covered payroll in 1993, as compared with 37 percent in 1992 and 49 percent in 1991.

service. Normal retirement is age 65: however, early retirement is available with 25 years of benefit service.

Prior to GASB No. 5, CPS reported the Plan status as the dependents eligible for health care and life insurance actuarial present value of accumulated plan benefits. Under benefits, as compared to approximately 1,456 in 1993.

such method, the actuarial present values of accumulated in d w of the potential economic significance of these plan benefits using an assumed rate of return of 8.5 percent benefits, CPS has imtiated a preliminary review of the was $269,203,(XX) at December 31,1992. At that time, net pmwnt salue of the pmtemployment benefit obligations for assets available for plan benefits were $322,031,(MX) at fair market value. As of December 31, 1993, the actuarial cunent mth. W amouna am cunenth Mmad m N million for health and $12.5 million for life insurance present value of accumulated plan benefits w benent\ e Thpreliminary actuarial analysis of the present 5313,021,(XX). This value compares to the net asset value of va ue of pmtemphment bene 61 oMgadons fm oWn 5357,591,(KK) as reported above.

p.eticipants fully eligible for benelits are estimated to be Employees who retired prior to 1983 are receiving annuity $42 million for health, $66,(XX) for life insurance and SI payments from an insurance carrier as well as receiving million for disability benefits. CPS began partial accrual some benefits directly from CPS. CPS costs for 1994 and and funding of projected future benefits in 1992. Funding 1993 were 5586,(XX) and 5625,(XX), respectively, and were totaled 55 million in both 1994 and 1993.

recorded when paid.

8. Payments to the City Dcferred L,ompemation Plan The trust indenture provides for benefits and services CPS offers its employees a deferred compensation plan , totaling 14 percent of CPS gross revenues, as defined, to be created m accordance with Internal Revenue Code Section paid or pmvided to the City. Payments to the City for 1994 457. The plan receises no contributions f rom CPS. It is and 1993, based on allowable resenue, were as follows:

available to all CPS employees and permits them to defer a Iwd IW3 portion of their salary until future years. Funds are managed by an independent trustee. The deferred compensation is not , [g ,'j*"'"3 ,

available to employces entil termination, retirement, death, Retund gas and ciectric senices .. 16.464 16.3x 7 or unforeseeable emergency. Addnional cash pay ments .. %6ni 85M4 Additional cash pa) mena to and All amounts of compensation deferred under the plan, all scrwes for ihe ot> or San Antonio.. I 13 n65 in2.27 I property and rights purchased with those amounts, and all h al a)"*c"htMbc P G'N 5324 " 2 103535 income attributable to those amounts, property, or rights are m the year ended Januay M, M. m eleM to mpm (until paid or made available to the employee or other payments to the City of San Antonio as an application of beneficiary) solely the property and rights of CPS (without mwnues ratha than as npenws mept fm Me peon of being restricted to the pmvisions of benefits under the plan),

the payments that is for tax equivalents. Related amounts subject only to the claims of CPS' general creditors.

Participants' rights under the of plan are equal to those of fm y ye bmn mdamGed to be cmnparaNe. M mdawfwanon pmvides excess of revenues oser expenses, general creditors of CPS in an amount equal to the fair which better presents results of operations and applications market value of the deferred account for each participant.

of revenues required by the bond covenants and follows it is the opinion of management that CPS has no liability GASB reporting requirements.

for losses under the plan and that it is unlikely CPS will use the assets to satisfy the claims of general creditors in the 9. South Texas Project (STP)

%re.

CPS is one of four participants in the STP, w hich consists

7. Other Postemployment Benefits of two 1,250-megawatt nuclear generating units in Matagorda County, Texas. The other participants in the CPS prosides certain health care and life insurance benefits pmjnt am the pmjat managn Wmton UgMog & Pown for retired employees. All former CPS employees are Company OIL &P), Central Power and Light Company eligible for these benefits upon retirement from CPS. The

, an y Amdn ( A n na etumsd annual cost of retiree health care and life insurance benefits the STP Participation Agreement, each participant provides funded by CPS is recognized as an expense of CPS as funding for its share of construction and operating emploser contributions are made to the programs. These 5 expenditures, full power operating licenses were issued by costs approximated SI,788.(KX) and 51,590JXX) for 1994 the Nuclear Regulatory Commission (NRC) on March 22, and 1993, respectively. In addition, beginning February 1, 1988 for Unit I and March 28,1989 for Unit 2. In-sersice 1993, CPS reimbursed 536.60 per month for Medicare dates for STP were August 1988 for Umt I and June 1989 supplement for certain retirees and their spouses enrolled in for Unit 2. CPS' 28 percent ownership in the STP repre-Medicare Part B. Effectise January 1,1994, this amount sents 700 megawatts of plant capacity. The plant was idle increased to 541.10.

for virtually all of fiscal 1994 pendmg resolution of issues Retired employees and covered dependents contributed raised by the NRC. At January 31, 1994, CPS' investment

$654JXK) and 5573JXX) for their health care and life in the STP utility plant was approximately 51.9 billion, net insurance benefits in 1994 and 1993, respectively. In 1994, of accumulated depreciation.

there were approximately 1,535 retirees and cosered

LITIGATION - The participants in STP have made NRC regulations require licensees of nuclear power plants claims against ilL&P regarding the performance of its to obtain on-site propeny damage insurance in a minimum obligations as Project Manager during construction of STP amount of 51.06 billion. NRC regulations also require that

- Austin by suit filed in 1982, and CPL and CPS by call for the proceeds from this insurance be used fi st to ensure that arbitration made in 1988 in response to llL&P's suit for the licensed reactor is in a safe and stable condition so as to contribution for any damages owed Austin. The Austin trial prevent any significant risk to the public health or safety, in 1989 resulted in a jury verdict in favor of liL&P which and then to complete any decontamination operations that has been upheld on appeal. Pursuant to a 1992 settlement may be ordered by the NRC. Any funds remaining would between CPL and IIL&P, CPL withdrew its demand for then be available for covering direct losses to property.

arbitration and IIL&P reimbursed CPL for certain costs and expenses incurred in pursuing the arbitration and litigation. The participants of STP currently maintain on-site property Also IIL&P and CPL have agreed to support and to seek damage insurance in the amount of $2.7 billion, which was consent of the other owners of STP to certain amendments the maximum amount of such insurance available at Dec-of the Participation Agreement, including changes in the ember 31,1993. The $2.7 billion of nuclear property management of the Project through which IIL&P would be insurance is composed of a $1.3 billion primary layer of replaced as Project Manager by an independent entity. insurance and a layer of excess insurance that would Although the settlement does not directly affect CPS' contribute $1.4 billion of additional coverage that is subject pending demand for arbitration of issues similar to those to a retrospective assessment from each electric utility raised by CPL, ilL&P and CPL have agreed that the which is a member of Nuclear Electric Insurance Limited arbitrator named by CPL for that proceeding will be (NEIL). An additional $50 million of primary layer replaced by one mutually acceptable to IIL&P and CPL. insurance coverage became available on January 1,1994.

These and/or additional proceedings are expected to include The participants of STP increased the primary insurance issues relating to the liability of IlL&P for the failure of coverage to the $1.35 billion maximum available on the STP to operate during most of fiscal 1994. In the opinion of policy renewal date of March 1,1994. In the event that management of CPS, the outcome of such proceedings will p peny losses as a result of an accident at the nuclear plant not have a material adverse effect on the financial position of any utihty insured by NEIL exceed the accumulated or results of operations of CPS. funds available to NEIL, the maximum retrospective assessment for STP would be approximately 57.6 million NUCLEAR INSURANCE - The Pnce-Anderson Act, a for the current policy year that began November 15, 1993.

comprehensive statutory arrangement prosiding limita-tions CPS would be liable for its ownership interest share of any on nuclear liability and governmental indemnities, is in retrospective assessment with respect to STP and for the effect until August I,2002. The limit of liability under the c st of cleanup, repair or replacement in excess of the policy Price-Anderson Act for licensees of nuclear power plants is hmits.

$9.4 billion per incident. The maximum amount that each licensee may be assessed following a nuclear incident at any NUCLEAR DECOMMISSIONING - In July 1990, CPS, insured facility is 579.3 million, which may be adjusted for together with the other owners of the STP, filed with the inflation, for each licensed reactor, but not more than $10 NRC a certificate of financial assurance for the decom-million per reactor for each nuclear incident in any one issioning of the nuclear plant. The certificate assures that year. CPS and each of the other participants of STP are CPS will meet the minimum decommissioning funding subject to such assessments. CPS and the other panicipants requirements mandated by the NRC. CPS' portion of the have agreed that any such assessments will be borne on the estimated costs for decommissioning the STP nuclear power basis of their respective ownership interests in STP. CPS. plant is approximately $150 million in 1989 dollars, which ownership interest in STP is 28 percent. For purposes of exceeds NRC minimum requirements. This cost estimate these assessments, STP has two licensed reactors. The will be reviewed and updated periodically and could change participants have purchased the maximum limits of nuclear by a material amount. CPS will record ratably the expense liability insurance, as required by law, and have executed f decommissioning over the life of the STP nuclear power indemnification agreements with the NRC, in accordance plant. Beginning in 1991. CPS simkJ accumulating the with the financial protection requirements of the Price, decommissioning funds in an external trust, in accordance Anderson Act. with the NRC's regulations. the trust accounts and related decommissioning liability are not included in CPS' A Master Worker Nuclear Liability policy, with a maximum financial statements limit of $400 million for the nuclear industry as a whole, provides protection from nuclear-related claims of workers At January 31,1994, CPS has accumulated approximately employed in the nuclear industry after January 1,1988 who 527.0 million of decommissioning funds in the external do not use the workers' compensation system as sole trust. Decommissioning expenses were approximately $5.1 remedy and bring suit against another party. STP could he million for each of the fiscal years 1994 and 1993.

assessed up to approximately $3.1 million per reactor or a total of 56.2 million to pay its maximum share for this

10. Commitments and Contingencies liability coverage during the life of the plant. In December 1986, CPS approved a settlement offer from

two railroads involved in disputed issues about the proper come of such pmceedings will not have a material adverse and law ful freight rates. As a result, CPS received payments effect on the financial position or results of operations of of 59.2 million and 517.6 million in fiscal year 1993 and CPS.

1992, respectively. CPS received an additional final Purchase and construction commitments amounted to payment totaling 59.6 million during fiscal 1994 f rom the approximately 5690 million at January 31, 1994. This railroad settlement that is expected to be returned to cus- amount includes approximately $419 million that is ex-tomers as payments are received. The final amount due in pected to be paid for natural gas purchases to be made under 1994 was recorded as litigation settlements benefits the contracts currently in effect: the actual amount to he receivable as of January 31,1993, paid will be dependent upon CPS

• actual requirements OTilER - In the normal course of business, CPS is during the contract period and the price of gas. Also insolved in other legal proceedings related to alleged included is $33 million for coal purchases, $175 million for personal and property damages, breach of contract, con- coal transportation and $20 million for treated cooling demnation appeals and discrimination cases. In addition, water based upon the minimum firm commitment under CPS power generation activities and other utility operations these contracts. )

are subject to extensive state and federal environmental regulation. In the opinion of management of CPS, the out-

11. Segment Information 1994 1993 Electric Gas Total Electric Gas Total (In thenuands) (In thousands)

REVENU E.. 5 781,661 5 125.491 5 907.152 5 708.257 5 112.611 5 820,868 EXPENSES:

Operating and maintenance expenses.. 426.190 88.607 514.797 332.608 78,014 410,622 Depreciation.. 128.446 8.5 l i 136,957 112.689 8,190 120.879 Total expenses .. 554.636 97,118 651.754 445,297 86.204 531.501 OPERATING INCOME . 5 227.025 5 28.373 255.348 5 262,960 5 26.407 289,367 Interest and other income . 23.353 26,508 Net interest and debt expense and tas equivalent to the City of San Antonio .. (205,857 ) _f 183.454 )

EXCESS OF REVENUES OVER EXPENSES.. 5 72.894 5 132.421 CAPITAL EXPENDITURES.. 5 101.547 5 22,61

..__-,5 5 124.162 5 152.537 5 19.415 5 171.952 Identifiable assets.. 5 3.777,914 5 233.250 54,011,164 5 3.811.277 5 223,692 54.034.969 General assets .. 632,900 650,714 TOTAL ASSETS . 54.644.064 54.685.683

R2 port of Independent Auditors EERNST& YOUNG GARZA, PREIS, GARCIA & CO.

i l

1 Board of Trustees City Public Service i

We have audited the accompanying balance sheet of City Public Service as of January 31, 1994, and the related statements of revenues and application of revenues, changes in equity, and cash flows for the year then ended. These financial statements are the -

responsibility of the management of City Public Service. Our responsibility is to express an opinion on these financial statements based on our audit. The financial statements of City Public Service for the year ended January 31,1993 were audited by other auditors whose report dated March 12,1993 expressed an unqualified opinion on those statements.

We conducted our audit in accordance with generally accepted auditing standards. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes i examining, on a test basis, evidence supporting the amounts and disclosures in the  !

financial statements. An audit also includes assessing the accounting principles used and -  ;

signi0 cant estimates made by management, as well as evaluating the overall financial i statement presentation. We believe that our audit provides a reasonable basis for our opinion.

I In our opinion, the Gnancial statements referred to above present fairly, in all material respects, the financial position of City Public Service as of January 31,1994, and the results of its operations and its cash flows for the year then ended in conformity with generally accepted accounting principles.

San Antonio, Texas Y

y,S., 5f .

March 14,1994

Five Ye:r Fin:nci:1 Review Years Ended January 31, tin flumsands)

(Unaudited) 1994 1993 1992 1991 1990 REVENUE AND APPLICATION Revenues:

Electric Sales.. . . $ 781,661 $_ 708,257 $ 672,434 $ 677,062 5 683,106 ,

Gas Sales.. . . . . . '125,491 112,611 106,927 104,360 118,607 j interest and other income . . 23,353 26.508 36,023 37,088 34,773 <

Total revenues . . $ 930,505 5 847.376 $ 815.384 $ 818.510 $ 836.486 l Revenues applied:

Cost of operating systems:

Fuel, purchased power and resale gas . . $ 260,215 $ 201,699 $ 174,758 $ 201.803 $ 223,008 Other operating and general expenses.. 166,054 143,753 136,975 127,081' 117,423 Maintenance.. . . . 88,528 65,170 63,860 63.200 60,508 ,

Total.. - . . . $ 514,797 5 410.622 5 375,593 $ 392,084 $ 400,939 Operating fund, $ 0 $ 0 $ 0- $ 0 $ 0 Debt requirements for Old Series Llonds:

Interest expense.. . . $ 3,390 $ .-4,067 $ 4,720 $ 5.337 $ 5,938 Principal requirements.. .. 13,112 12,306 - 11,500 10,945 10.375 Reserve requirements... .. . (346) (239) 83 154 121 Debt expense . . . . 6 _

7 9 10 l!

Total.. . . . $ 16,162 $ ^. 6,141 5 16,312 $ 16,446 5 16.445 P,1yments and services to City:

Tax equivalent to City of San Antonio.. . $ 11,817 $ 11,244 $ 11,722 $ 11,353 $ 11,050 Refunds for services.. 16,464 16,387 17,110 17,378 17.059 Additional payment.. . 96,601 85,884 80,185 80.922 84.236 Total... . . . . $ 124,882 $ 113.515 5 109.017 $ 109,653 $ 112.345 i Debt requirements for New Series Bonds /Other:

l Interest expense.. . $ 150,588 $ 159,169 $ 160,959 $ 165.787 $ 168,675 Principal requirements.. .. 66,460 69,965 62,520 53,625 42,995 i Reserve requirements.. , 1,239 5,568 13,886' I,588 10,3N Debt expense . .. 42 69 81 (95) 110 ,

Other interest.. . . 3,252 5,394 9,158 10,883 7,310 Commercial paper redemption requirements. 8,429 0 0 0 0 t Total... . $ 230,010 $ 240,165 5 246.6N $ 231,788 $ 229,394 Allowance for interest used during construction $ (1,977) $ (29,055) $ (31,418) $ (22,093) $ (24,780)

Additions to plant:

Total expenditures for year. $ 124,162 $ 171,952 $ . 229.831 $ 272,468 $ 295,139 Less construction funds provided by sources other than revenues. 59,679 78,089 134,497 179,003 145,365 Revenues used for additions to plant. $ 64,483 $ 93,863 $ 95,334 5 93,465 $ 149,774 Additions to improvements and ~

Contingencies fund.. .. (17,852) 2.125 3,942 (2,833) -(47,631)

Total.. $ 46,631 5 95,988 $ 99,276 $ 90,632 5 102,143 Total revenues applied... . . . . . $ 930,505 5 847,376 $ 815.384 $ 818,510 $ 836.486 BALANCE SHEET DATA

' Utility plant at cost * . $ 4,911,599 5 4,793,976 $ 4,641,841 5 4,444,335 5 4,194.614 Annual construction additions. . 124,162 171,952 229,831 272,468 295,139 Accumulated depreciation.. . 1,042,183 917,783 806,770 704,212 608,257 Annual depreciation allowance.. . . . 136,957 120,879 114,332 111,158 102,498 Principal and interest coverage. , 1.72x 1.78x 1.83x 1.81x 1.91x

• Priorfiscalyears rec'assified to reficct Contributions in Aid of Construction.

Five Year Opemtions Revi w Years Ended January 31, (in thousands)

(Unaudited) 1994 1993 1992 1991 1990 OPERATING REVENUES Electric:

Residential... .. _

,. .. ., $ 350,583 $ 320.067 $ 306,709 ' . $ 305,974 $ 311,104 Commercial and industrial . . . . 315,156 284,289 267,241 268,098 268,738 Street lighting... , , . . , 10,468 9,845 9,367 9,207. 9,015 Public Authorities.. .. . . . . 86,370 78,061 75.392 78,100 79,538 Other utilities . .. . . , .. 13,569 10,805 8.548 10,426 9,133 i Miscellaneous... . 5,516 5,190 5,177 5,257 5,578 I Total electric .. .. . .. $ 781,662 $ 708.257 S 672,434 5 677,062 5 683.106 i Gas

• I Residentia!.. . . . .. $ 75,708 $ 68,208 $ 65.768 $' 63,779 5 73,330 l Commercial and industrial . . . . . , 41,944 37,332 34,110 33,614 '37.112 l' Public Authorities.. . . . . . 6,905 6,283 6,225 6,230 7,367 Miscellaneous.. . . 934 788 824 737 798 Total gas.. . . . . -$ 125,491 $ I12,611 $ 106,927 $ 1(M,360 $ 118,607 )

SALES (000 OMI7TED) l Electric- KWII:

Residential.. .. .- . 5,005,292 4,831,794 4,793,631 4,711,423 4,732,736 Commercial and industrial . 5,604,418 5,420,383 5,281,292 5,157,802 5,001,737

)

Street lighting.... 90,619 87,567 86,661. 85,058 82,791 i Public Authorities.. . 1,668,884 1,619,005 ~ 1,623,979 1,650,207 1,646,668 l Other utilities . .. . 356,164 328,547 225.942 296,500 238,741 Total.. . . . . . . . 12,725,377 12.287,296 12,011,505 11,900,990 11,702,673 Gas - MCF:

Residential.. ., 13,921 13,397 13,340 13.,116 15,237 Commercial and industrial . 10,584 10,166 9,658 9,467 10,291.

Public Authorities.. . 1,803 1,800 1,812 1,816 2,131 Total... - . . . 26,308 25,363 24.810 24,399 27.659

' PURCIIASE FOR RESALE:

Electric (l000) KW11*.. .. 70,977 292,686 67,900 24,214 3,986 Gas (1000) MCF.. .. - 27,112 25,326 25,078 25,260 28,286 ELECTRIC GENERATION-(1000) KWH**.. . ... 13,431,946 12,710,278 12,621,547 12,509,782 12,425,044 Electric Gen. Capacity, KW (Gas)***_ . 2,400,000 2,400,000 2,400,000 2,400,000 2,400.000 Electric Gen. Capacity, KW (Coal)., 1,336,000 1,336,000 836,000 836,000 836,000 Electric Gen. Capacity, KW (Nuclear).... 700,000 700,000 700,000 700,000 350,000 ELECTRIC PEAK DEM? ND- KW.. 2,908,000 - 2,817,000 2,799,000- 2,741,100 2,697,000 NUMBER OF CUSTOMERS:  !

Electric.. . 494,385 485,345 476,122 469,962 466,478 )

! Gas.. . 792,241 290,497 287,502 285,699 284,324 ')

l. RESIDENTIAL AVERAGES: I Electric:

Revenue per customer.. $ 814.44 $ 756.51 $ 734.82 5 740.93 $ 758.65 l- KWH per customer.. . . I1,628 11,420 11.485 11,409 11,541 L Revenue per KWH.. . .. 7.00c 6.62c 6.40e 6.49g 6.57e Gas:

Revenue per customer.. . . $ 279.13 $ 253.96 $ 247.32 5 241.32 5- 277.94 MCF per customer.. 51.3 49.9 50.2 49.6 57.8 l Revenue per MCF.. . $ 5.44 5 5.09 $ 4.93 $ 4.86 5 4.81 l

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• I993 includes Test Energy of 226.794.

• • 1990 includes Test Energy of149.972.

• Oil ratingfor the gastoil units is 2.198/xy) AWfor thefive.yearperiod.

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City Public Service P.O. Box 1771 San Antonio, Texas 78296 Phone: (210) 978-2545 FAX:(210) 978-3058

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