ML20077E895

Orlando Utils Commission 1993 Annual Rept

ML20077E895
Person / Time
Site:	Crystal River
Issue date:	12/31/1993
From:	Stanton C, Todd T ORLANDO, FL
To:
Shared Package
ML20077E790	List: 3F1294-05, Forwards Kissimmee Util Authority 1993 Annual Rept, Comprehensive Annual Financial Rept for Yr Ended 940930 & Orlando Utils Commission 1993 Annual Rept ML20077E825 ML20077E845 ML20077E895
References
NUDOCS 9412130175
Download: ML20077E895 (53)

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CO3fPAllA111E FIN 4NCitL AND STATIS11 CAL filGilLIGilTS For Years Ended Sept. 30 . '1993 1992  % Change 1983 COMBINED OPERATDONS Operating Revenues ,

S - 325,587,973 307,358,507 5.9% 177,100,090 1 Total Operating Expenses S 244.907,644 228,672,111 7.1% 143,630,528 Interest and Other income 5 29,253,422 . 38,320,612 -23.7 % 14,756,228 -

Interest and Other Expenses .S 82,373,929 92,073,497 -10.5% 30,949,233 Not income $ 27,559,822 24,933,511 10.5% 17,276,557 Payments to City of Orlando $ 27,878.895 28,056,968 -0.6% 14,641,096 Utility Plant (Not Book Value) $ 1,155,092,134 1,081,617,810 6.8% 438,274,212 -

Equity S 395,947,473 371,582,892 6.6% - 166,749.637 Long-term Debt (1) $ 1,414,430,819 1,207,387,181 17.1 % 376,327,043

Total Assets $ 1,987,544,535 1,756,302,688 13.2 % 585,621,389 l Debt Service Coverage Senior Lien 3.01x 2.67x 12.7 % 2.76x Junior Lien 3.98x 5.25x -24.2% Combined Debt 1.91x 1.89x 1% 2.76x Senior Bond Ratings (2) AAA,AA+ AAA, Aa1, AA Aa, AA Aa1, AA ELECTRIC OPERATIONS Operating Revenues S 303,150,255 286,780,569 5.7% 165,599.183 TotalOperating Expenses S 227,325,568 211,659.801 7.4% 134,806,785 cuel and Purchased Power S 105,906,513 99,444,938 6.5% 90,311,550 Departmental Operations $ 121,419,055 112,214,863 8.2% - 44,495,235 .

Total Salas (MWH) 4,995,564 5,022,271 -0.5% . 2,792,121 Total Rotad Sales (MWH) 3,609,900 3,543,506 1.9% 2,394,630 Commercial / Industrial Sales 2,363,288 2,331,34d 1.4% 1,462,854 Residential Sales 1,246,612 1,212,157 2.8% 931,776 Sales for Resales (MWH) 1,385,664 1,478,765 6.3% 397,491 Total Active Services 121,910 120,891 0.8% 89,935 Residential 105,137 104,309 0.8% 78,288 Commercial / Industrial 16,773 16,582 1.2% 11,647 Average Annual Residential Use (KWH) 11,857 11,621 2.0% ' 11,902 Average Revenue per KWP Residential Sales 7.81c 7.42c 5.3% 6.68c Heating Degree Days 445 505 11.9% 623 Cooling Degree Days 3,384 3,405 0.6% 3,346 Gross Peak Demand (MW) 824 810 1.7% 581 WATER OPERATIONS Operating Revenues $ 22,437,718 20,577,938 9.0% 11,500,907 Total Operating Expenses 8 17,582,076 17,012,310 3.3% 8,821,743 Sales (Gallons) 25,466,408,000 25,387,719,000 0.3% 17,279,022,000 Total Active Services 103,359 101,985 1.3% 75,168 Residential 86,300 85,423 1.0% 65,416 Commercial / Industrial 10,239 10.155 0.8% - 7,649 trrigation 6,820 6,407 6.4% 2,103 Average Annual Residential Usage (Gal.) 160,006 159,000 0.6% 147,000 Average Revenue per 1000 Gal ons Residential Sales 90.60c 83.79c 8.1% 72.28c Rainfall linches) 47.8 49.3 3.1% 47.3 Peak Pumping (Million Gallons per Day) 142.3 146.7 3.0% 128.2 L includes le90A Bond Anlicipation Notes for Flecel Year 1992, excludes the current portion.

I. Send Ratine Ae'ncies: 1993

• Duff & Phelps. Inc., Fitch investors Serv 6ce, Inc., Mood (s investors Service, and Stendard & Poor's. respectivesy, l Fee 1992. Duff & Phelps. Inc., Moody's investors Service, and Stenderd & Poor's, respectively

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()rlando The Orlando Utilities Commission (OUC) is a $1.98 billion municipal electric and '

cfizities ~ water utility serving the City of Orlando, Florida, and portions of the Greater Orlando Commission metropolitan area. Total combined operating revenues were $325.6 million for Fiscal '93.

. At the end of the fiscal year, OUC had 1,100 employees. .!

OUC was created by the Florida State Legislature in 1923 as part of the City of LI Orlando. The Commission is composed of the Mayor of the City, who serves as an ex-g)' ;'#,. 3l'

l l officio member, and four members nominated by the Commission and elected by the City i@

Council. At least one and no more than two Commissioners must be from the unincorporated "l'.

area of Orange County served by OUC. The remaining must be residents of the City.

B The total generating capacity available to OUC is 1,354 megawatts. It has four steam Electric Generating units and four combustion turbine units at two generating stations. A fifth Business steam unit is under construction. In addition, it owns interests in three other utilities' Unit generating units. A pacesetter in interutility ventures, OUC has sold minority interests in its largest baseload unit,its combustion turbine units and the baseload unit under construction to a combined total of 14 municipal electric utilities. Others have long-term power purchase agreements.

The nation's thirteenth largest public electric utility. OUC's Electric Business Unit has 121,910 retail accounts and serves a Greater Orlando population of approximately 272,000 .

In a 224 square-mile service area. Total operating revenues from retail and interchange energy sales were $303.15 million in Fiscal '93.

p. g OUC operates 10 water treatmert plants interconnected by a 1,447-mile network of g water mains. The water is supplied by 33 welis descending as deep as 1,300 feet into the gg Floridan Aquifer, a naturally recharging reservoir of high-quality drinking water deep below the earth'a surface.

The Water Business Unit serves 103,359 retail accaunts and a Greater Orlando population of approximately 343,000 in a territory covering 165 square miles. Total operating revenues from water sales were 522.4 million in Fiscal '93.

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F M a n a g e r s 1993 was a solid year for OUC. Net income increased by 10.5% despite relatively flat sales and slow customer growth.

We also made important progress in many areas that will help us maintain our superior position in an increasingly competitive industry. By refinancing debt at low interest rates, we reduced q

Fiscal'93 interest expenses by $11.9 million and saved in excess of $245 million in debt service expenses over the life of the bonds.

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We also completed most of our financing for a second Curtis

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H. Stanton Energy Center baseload unit and other capital h" w projects at historically low interest rates. At the same time, we

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maintained high ratings on senior debt while other utilities were v

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I'f, (N ) OUC is well-positioned to meet renewed levels of growth x without making significant capital additions. We are in the process of completing building the infrastructure needed to

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serve our customers well into the next century.

Construction of the 440 megawatt (net) coal-fired generating unit at Stanton is well underway. The all-municipal, jointly owned project is to be completed by June 1996.

Competition is the future of the electric utility industry.

The National Energy Policy Act, opening transmission grids to potential users, has set the stage for restructuring the industry.

In response, two investor-owned Florida utilities and the state's Rural Electric Cooperatives have asked state legislators to protect them from competition by enacting a Territory Bill in 1994.

If passed, such a bill would keep municipal electric utilities from expanding geographically and would secure most of undeveloped Florida for the private utilities and the co-ops.

The City of Orlando and OUC took a lead role in a successful effort to defeat this unbalanced, anti-competition measure.

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To maintain its competitive edge, OUC, on the other hand,

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is taking a positive, proactive approach. To "right-size" the h 9

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work force, we have virtually ceased hiring new employees and {,g4ggg gg}w r- 1 y

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~y nwsonas Prwide a prodwtive and sak trorkplacdcobr.ysitiwl '" m prudently review our requirements. .,-,.--c. i em..,-o.  ; - r t .a a w e V i '

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suvuownseevAsJonrwammenwMlways condud bwinm Vn a f composed of management and alllevels of staff, developed the t m - 2 <G C -c ^ #: ' . - ' ' ' Om H

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. member' 'that meets or exceeds'allapplicable ruler and twgulanons and ~

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new mission statement and guiding principles presented in this  ! 1 that minimizes environtnentalimpact whiliyring cordidehardad[foi *, ^$: 5>,

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C evolving technologieb .. b nprend 6tihndes a,nd altesate' rtsnnnd J report. Members of this interdepartmental team continually L '

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cv:luate OUC's strategic position and develop action plans that j g g m g pg.p d afia,vm M,..IN vf d N U M, h k ,< f

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. ;mpemtive attitude b' and on ioundpw!nen pradien aMopWs fm , fab u '.

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That mission is to continue our effort to be the low cost y -- <

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pervider of high-quality service while striving for excellent [4 , ' commnemrN,smrosmauper BUlds N5rigpaffnership with thi} g ,

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.a customer and community relations. en o a mmmun# unghpa@penJncdfponap ,

l and chdimbli organizations and actibitiesJ ' ' #

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cur strength is our outstanding and diverse employee body. Our

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cmployees have kept OUC's performance ahead of the pack. , -1 is.- ..:. .~. ,,o; . ema c. e o 1Z :n:

,Lewtomm, etnpinyces{the Gy 40rtanda, bnd bondholdern

• Their performance is the real reason OUC has maintained hs L' ' ?,$ ' [ g( sy, M.T'

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c~mpetitive edge for lo years. f,1 .. " .. ,*. W . . . 9fW'"Wim?k * ** ?y,'. !'*lff?d'oding buinm in b j .,. J:.12 % ..

ym opinl impartial, honal, . . . , u andfair,inanner. 00C .e,rreloyses - , s win treat?

' All bmincu relatiouhiN a;ith the higlis. .t degrN qfintegrey,f 'e , ,

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\ programs shal will anist and support intomm in wing energy'enQ

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Indian River Power Plant with its trio of stearn generating units indoors and four peaking units outside.

THE POWER TO FUEL PROGRESS FLEXIBLE, DIVERSE GENERATION The Orlando l'tilities Commission's Ol!C's capacity is also based on a Electric Ilusiness 1: nit is u cil- diserse mix of generating units and positioned to face the challenges fuels w hich enhances efficiency and and opportunities presented by the reliability. It also minimizes exposure increasingly rompetitive electric utility to fuel price volatility and enables OUC 1he Orlando l'tilities . dustry. It has the energy resources, m to be aggressive in fuel purchasing.

I'0"U * '" """"'ntal syMens and O s iaqut ung unn the Commission's Electric Business nell trained workforce to provide 440-\lW coal-fired l' nit I at the Curtis reliable, reasonably priced pon er for ll. Stanton Energy Center southeast of Unit is n cll-positioned to its expanding customer base n ell into Orlando, placed in senice in July 1987.

face competition. Its the next centur). A second unit is under construction.

ily 1996,it will have 1,669 AlW of Iloth are jointly owned, with OUC the enrironmental performance is available capacity; more than halfis majority owner and operator, based on modern, emironmentally safe At its indian lliser Power Plant in unparalleled in the state, generating units less than 10 years old, llrevard County, Ol!C has three steam Nationall),65"o of operable capacity is generating units and four jointly owned 20 3ears old or older. combustion turbine units (cts) with a Aluch of Ol!C's other electric combined net available capacity of 851 infrastructure is also less than 10 years SlW. AllIRP units can burn either oil old. Nearly half ofits 26 substations or natural gas. Ol'C also on ns a and 28"a ofits poner lines were combined Is8-ilW capacity from tuo installed in the last decade. Since 1987, nuclear units and another coal-fired sesen substations base been added, unit.

including the $10 million Sletrou est Substation completed in FT '95.1)uring those six years, we also added 101 cirenit miles of poner lines bringing l that total to 1,557. Nearly 40% of those

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STANTON 2 PROGRESS AIR QUALITY CONTROL Construction on this unit began in ' The environmental performance of 4

March 1991 and is proceeding slightly OUC's power plants is unparalleled in

- ahead of schedule and under budget. the state of Florida. its power plants, l

Scheduled to go on line by June 1996, young and old, operate cleaner than

- the unit is expected to cost an estimated federal and state regulations require.

$522 million. OUC's share will be $373 Its Stanton Energy Center is expected j

million. to be one of the most environmentally Nearly a twin to Stanton 1, Unit 2 benign coal-fired power plant sites in

.will incorporate all the technological the nation, eten aller the second unit i enhaticenients that have evolved since goes on line in 1996. Curtis H. Stanton Energy Center site where a second base-load unit the first unit was built. The unit is being Stanton 1 is one of the nation's is under coristruction. A zero built to help meet anticipated growth cleanest pulverized coal fueled miits, disch,rge piant,it uses grey and customers' increasing energy - operating at annual at erage levels that ****r as cooling water, thus -

- needs not only for OUC but also for ## 8 '#

are up to six times cleaner than required. *,," , # "",#, , ,,

14 other municipal utilities. All major sert, topped by cloud of condensation permits base been secured for the as the cooling water evaporates. .

project. Ily year end,104 of the 105  :

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equipment contracts were secured at a A L,

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cost of $215 million and eight of the 10 construction contracts awarded with a -

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e total value of $56 million. .

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OUC retains a 71,59% ownership ,

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Interest in Stanton 2, and the Florida .

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inteiest on behalf of 14 cities, including * [" ' ' "

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the Illssimmee Utility Authority and the City of St. Cloud. (OUC owns a 68.6%

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> of choice"for ather utilities who participate in its generation projects, Offf;l l ? i' .

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c Stanton 2, now under construction, dioxide emissions from power plants M+ ly$d ;Ae.'

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We m 9 Reduction technology to further reduce For OUC and its customers, this is a gA gyg$,m. 4 v %, , @s t pw swy s- . . , i .

g mtrogen ou.de emissions. boon because its total sulfur dioxide i <

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• 3 in& < , , ' > y' re Even the older Indian River Power emissions are far less than allowed and

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k j, m Plant beats today% tougher air j emissions standards. AllIRP mtits are expected to remain so wellinto the 21st century. It will have excess allowances designed to burn either oil or natural to bank for future use, or to sell to fund fg gas, the cleanest fossil fuel. In F1 '95 projects such as energy conservation di '

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,n j OUC based 74% of1RP's electric q

programs.

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" %+%. +r in March 1993, a rare and severe wind storm struck much of Florida. Blasting Orlando

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with 62-mile per-hour winds at 12:30 a.m., Saturday, March 13,it brought 18 hours2.083333e-4 days <br />0.005 hours <br />2.97619e-5 weeks <br />6.849e-6 months <br /> of near

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.Ae g 1 . hurricane strength gusts, causing outages as fast as OUC employees restored 2

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Aten restored. OnlytheQp ff;; total customers (4,539) were without power more than two 3.7% of OUC's dqJR ' L mae* Aprmusenneers rea5er sWne, as hr 4 a 7N, Mahe sever,48speR fast stormik 5,< d hours.

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e i gn 4 Sunday, an unseasonable cold spell struck the state. At times all seven Indian River t

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A "UTIUTY OF CHOICE" RELIABILITY Many utilities choose OUC as a OUC's power plants often surpass l

. dependable source of economical various nationalindices of reliability,

- power not only through joint projects, and the utility also consistently but also through power purchase ranks at the top in system reliability agreements - and even through a among its peers in peninsular Florida.

power pool Stanton l's forced outage rate was Rural cooperatives and investor- 0.14% compared to a national average owned utilities as weli as municipal of 9.11%, its availability factor 89.85%

ones buy OUC power through a variety compared to a 78.48% national average, of agreements. As a result, we have had OUC's oldest unit,35 years old, had the strong interchange sales averaging 1.46 best availability rate of all(90.65%)

million MWilannually over the past compared to the 84.02% national rate, ,

- five years, llWs three steam units had a

- For those the years, OUC has also combined forced outage rate of 0.11%

played a key role in the Florida compared to the 9.35% national rate.

Municipal Power Pool, providing load The combined forced outage rate for dispatching services and committing the four cts was 9.18% compared to a pool resources for ISIPA pool members 53.83% national rate, and the City of I,akeland. For the third consecutige year, OUC ranked first in system reliability in

-- = ' J' @@yg@$lyv peninsular Florida, based on ' annual average customer outage time. It surpassed its own record, reducing average annual customer outage time to 39.2 minutes,14.5% less than in 1992 and 27% better than in 1991.

h uw More than 260 circuit miles of transmission

' linee deliver electricity from remote power plants to 24 substations within the OUC service territory.

5EVEN ,

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is "better than it has to be. " ,

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regulatory and customer expectations.

l 1 Not only does it have the physical plant l

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a new " road map" to help ensure it . ' . R y^

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a. , a exceeds those expectations. That " road i

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" t;[ map" is OUC's comprehensive Water the water, as well as all system Quality Master Plan, one of the components that can affect the quality

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, y:- of water it delivers. This includes the

& , Following its master plan, OUC source, treatment, and pipelines that k * *[. .

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considered customers' perceptions of carry water to the customer's tap. A

_ water quality assessment study was

• O [ also conducted to better understand E. ygg .. smMW 4

customers' needs and concerns.

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['" 'j customers receive water that is "better than it has to be."

OUC has already begim implementing near-term quality improvements while also establishing new treatment objectives and identifying new treatment processes for future plants and plant upgrades.

The Water Business Unit main base is now at N! '

the multi-purpose Gardenia Operations Center.

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ENHANCING WATER QUALITY Three milestones have been The utility's research team has also identified a much more elTicient, h-reached as the result of research conducted in OUC's own Water Quality advanced air stripping process to use in future water plants, it is also testing OUC's mission is to lab on how to improve water quality and taste. The studies were carried out other treatment processes that may enhance the new air stripping one, ensure that the water it in conjunction with experts in the field.

OUC has determined a way to OUC constantly moniMrs and tests

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reduce corrosivity ofits water and thus its water. Its state-certified stalT has the minimize the potential for home sophisticated testing capahilities t hims to k MW phnnbing to leach copper into drinking detect constituents in the water in water. lly the end of 1994,000 hopes terms of parts per biilien. That's why than it has to be, to receive state approval of its proposed ' we know the water we deliver to

- method and begin preparing to customers is significantly better than implement new procedures. current federal and state standards in a three-year pioneer study of require. The studies OUC conducts nationwide significance, OUC has ensure it will stay ahead of the curve determined that stray electric current in terms of water quality.

has no effect on water quality. The study was sponsored by the prestigious American Water Works Association's itesearch Foundation. AWWA,uhose research experts hate reviewed the study, will publish it in 1994. ,

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OUC alerts customers when extraordinarily high water or electric use occurs. Meters, such as this large commercial water meter, are tested for accuracy and to see if there may be a leak in custome: plumbing.

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• t 1EH The Florida Section of the AWWA gave OUC first place honors for its overall, five-year water conservation plan. Developed by an interdepartmental committee, the plan encompasses internal programs such as checking water mains for leaks and using treated - -

,. wastewater at the Stanton Energy Center, as well as working with residential and i

commercial customers to conserve water. For residential customers, OUC offers water i

I audits, a fix-up program, educational presentations, exhibits, and informational brochures.

OUC has also completed a feasibility study on distributing reclaimed water for irrigation and in 1994 plans to investigate possible interagency cooperation with the city and county, the sources of reclaimed water. It is also working with other avvocies to protect water at the wellhead.

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PRODUCTION AND DISTRIBUTION

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Th> N niillion npansion and

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renmation of 01 C's Pine Ilills Water

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Plant in the northnest section ofits

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scheduled to be emnpleted in the spring

. , e; of 199 L Throughout this project, Ol'C j[d ~

met regularly nith residents of the area and distributed a quarterl) neu sletter to

[ keep them informed of progress.

, In the fast groning southern sector, gronth has nearly outpaced the capacity I'

of the Sky Lake Plant so plans are underna) to increase its capacity. Ol:C is also in the process of securing a site in the southnestern sector for a nen plant to replace the one to be retired.

Although the newest of OUC's 70 water beanse of the Mplosi)e gron'th of troatmerrt facilities, the Sky Lake Plant will the n'aler ser\ ice area sitive the 1970s, t expand capacity by 5 million gallons a day in

' 9y(7 9g,p ygl[ofgy( 9 gge m jglpgg the near future to accommodate rapid T growtr in the southeast portions of Orlando. "" ) Y"" " "YY" V maintenance, renenal and replacement program - enhanced by the quality master plan studies - ensures continued quality and reliability.

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Maintaining A (esipelitive lsoos At right. OUC Conservation Speciaiist advises ~'^^l' ' .i' *  ? 9 WM l customers on how to weatherize their home. ~ -

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Through a Home Energy fix-Up program, . .

OUCpays 85% of the cost of such y'* %f}K:_ [' p.;

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improvements for families with annaa; -

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incomes of $20,000 or iess. Water leak repairs L9:

,L-are also included.

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ENERGY CONSERVATION .

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A4 construction started on Stanton 2, 4 ' '

~ p. i OUC redoubled its conservation efforts. ' M6. c. 4. 4..., ,

As a result, participation in OCC's full ^$- ~ o.-

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range of conservation programs

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increased nearly 50% for the year.

Participation in tuo key programs .: 1.~ .

for residential customers exceeded ,' .

goals by 75% and 101%. Aided by consultants, a new long-range plan management study for OUC and was also developed, calling for direct outlined a 20-year demand-side load control. management plan. It recommended To increase customer participation, OUC retain and modify existing cash incentives were increased programs and implement three new significantly in selected programs - ones: Residential Oirect 1.oad Control, programs that would have the most Conunercial Efficient lleating and Charged up about using energy wisely and tangible benefit for both customers Cooling, and a Commercial Efficient reducing harmfuf auto emissions, OUCis and 00C. Wtor Program. '" #"8 ""##""# "**# # * *' "'

conservation program "on the road"in en l Then, targeting residential The Conunission authorized SRC to ,i,,,ri,.po.,,ed minivan outfitted with l

custoiners,000 launched a high- complete another study by September rooftop solar paneis. One rike that pictured I impact, multi-inedia advertising 1994 on the best technology and the ""'8"8'd'""***d'"*

. between main office, operations centers campaign. This included heasy use costs required to begin implementing a and power plants. in the future, such of televisinii comiriercials during Residential Oirect 1,oad Control artern,tive vehicies are expected te piar an Inorning and esening nens slots Program by 1996. important rose in reducing air poriurion ia during tuo two month periods. Ilirhly Working with

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visible billboards, print ads and bill OUC staff and inserts supported the campaign. All SRC is a one-were based on the theme, *ll's a year-old comfort to sase with OUC." Conunission '

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Participation in a commercial appointed [

eflicient lighting program more than Customer cg e ty,wAC ' '.s doubled as the result of higher rebates Advisory -

and stalfs effecthe direct inarketing elTorts.

Committee on Conservation.

hKi Internationally known S3nergie Resources Corp. (SRC) completed ,, gu r a comprehensise demand-side i

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NEW OPERATIONS CENTERS an Electric Business Unit facility.

Two new complexes place OUC's - llowever, both serve as staging well trained employees close to areas for hundreds of electric, water,i ,

customers and projected growth. and other field personnel. Both also . 'r Costing a combined $U million, they provide utlice and other space for a are expected to meet OUC's space variety of support operations personnel needs for up to 20 years. such as engineering, drafting, and The 22-acre Gardenia Operations materials warehousing, as well as fleet Center was completed in the fall and and facilities senices.

fully occupied by January 1994.A' year Concentrated at Pershing are all of earlier, OUC occupied the new 48-acre OUC's 24-hour operations, including -

Pershing Operations Center. Gardenia computerized energy and water senes the southwest sector of OUC's production control centers,-trouble territory and Pershing, the southeast, teams and senice dispatch.

Gardenia is primarily a Water Business Both complexes have convenient l

Unit facility, while Pershing is primarily full-service customer centers featuring j ' :& . . ( ;fMG

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1.t., :,I The two complexes contain office space, drive-through and walk-in senice. A materials centers and maintenance ** . "" # "'***"*"*I" facilities. All of OUC's 2& hour electric and water operations outside of the power senice, and a temporary southwest plants are at Pershing. omce has been closed.

Pershing and Gardenia replace the Ilighland Operations Center near downtown which was OUC's only operations complex for half a century.

They also relieve overcrowding in the 28-year-old Administration Building.

The Water Quality Lab, still at flighland, will es entually move to Gardenia.

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g (prepared to be offered for redeselopM "

?. ment. 000 has also completed c

' extensive environmental assessments ? i

$ @ " h' arid asked the state's Departm'eni bfi 5 E .

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' Entpronmental Protection to implement ? ,  ; ,

. . l 7 measures tolocate and control thef , F; '

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Ta whi.ch has migrated onto the site.

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4 Studies found that the TCE discovered - -

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Lon site by 000 did riot pose a health or? . [ .

1. safety threat, and also not'ed that J 2 , 6 attempts to reinove 11 could cause eien } ' ' - - .

.; more TCE to migrate to tiie property;;

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. . . 7 .m . . x.. 7 "TOOUNG UP" FOR TOMORROW 11 is deteloping a new Customer To run the electric and water infonnation Reporting and Tracking

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systems reliably, safely and efficiently, System (CillART- pronounced 00C has its own microwave " smart , to meet billing needs for a 3

Infonnation Ilighway touching ahnost utility already serving more than

' every facet of its operations -its 225,000 electric and/or n ater accounts.

people, plants, pon erlines, pipelines, OUC also prosides certain billing substations, mobile radios, phones, services for the city, county and state.

faxes, computers, machines, and in addition, Cil! ART will also provide:

remote terminal units. summary billing, direct debits, and This microwave highway is hiiling for time-of-day rates, direct gradually being comerted to fiber load control, or remote meter reading.

optics, which have already enhanced A similar effort is also underway to

reliability, reduced substation space design and select a Project Estimating fm r nd che o recluirements and, therefore, costs. and Scheduling (PETS) program for 1 i froadrie endplace them closer to areas of : Once the liber optic network is capitalimprovement and construction

[ pro /ected prowth for pystem expansion.'. .

complete, OU(J inay even lease projects.

capacity.

OUC is also "right-siting" computer 1

operations, developing PC-based j systems and sollware to replace the i existing mainframe system first l N'

installed in the 1960s.  !

l THIRTIEN

\

QUC's new " Community Crews

• are being seen frequently - '

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These ore teams of employees >. - l volunteering time and talents s _

after hours to community ,

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' service. This Community Crew .

n, pitched in to fill three Vans full .;

of food during the Salvation - -

Army's Christmas Food Drive.

• n 5 ..

l GOOD CITIZENSHIP served as mentors to youth and OUC employees are good citizens teachers' aides. Scores more gave

-@ and good neighbors, too, concerned up lunch hours to serve meals to the I- about the overall welfare of the homeless and needy.

community. This is most evident in Stanton 2 contractors mobilized OCC is committed to their record pledge of $105,000 in the their workers to build a neighborhood 1993 United Way Campaign,9% more recreation park in Pine Ilills for the building a stronK than for the previous year.They also Nietropolitan Orlando Urban League -

outpaced all corporate teams in and turn a trailer into a Red Cross partnership u ith the Crimeline's annual benefit walk, raising disaster relief and control center.

mom oney , and Genng Men M deMed W aWess community, especially by recycling,it decided to "WANINt IT!'-

the most walkers (367).

Since 1990, employees individually launchingits Waste And Afaterial participating in civic hiinimization program on Earth Day.

have donated 13,664 solunteer hours to various organizations and raised more Within six months, employees collected '

und community scrrice than $10,200 in awards for the agencies over 35,000 pounds of office paper, profects. through OUC's Proud Community aluminum cans and cardboard Volunteer Program. recyclables from all OUC facilities.-

In 1993 000 began formalizing At the power plants, other kinds community relations efforts, creating a of materials are being gathered for

• Community Crews" program to recycling and salvage.

encourage participation in volunteer Employees also carefully sort scrap employee teams for a wide range of materials len after work is performed -

projects. Power plant employees helped on facilities such as distribution lines.

school kids build holiday floats. 0thers Wherever feasible, these materials are reconditioned for 000 reuse.

I Qe D Otherwise, they are sold as scrap or

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• salvage. Even old utility poles are being recycled in a novel way. Aller being specially treated, they are used to create school playground equipment.

Y Students at Challenger Elementary School painted a 158-foot mural titled " Energy and the Environment

• on wall at OUC's Indian River Plant. This was their 'thank you* to

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OUC for schoolprojects the utility andits

,. Indian River Plant staff supported.

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' Ret'lertin FY '93, net income rose 10.5% to $27.6 million from the $24.9 million reported for the previous year. This advance was tied to several factors: higher operating revenues, reduced interest and dobt service costs, float contract gains, and other cost containment j measures.

Combined gross operating revenues s'nd income increased $9.2 million (2.6%) to $354.9 million. Of this total, operating revenues contributed $325.6 million, up 5.9%; income from interest and other sources declined 23.7% to $29.25 million. Combined expenses rose 2%

to $327.3 million. Operating expenses increased 7.1% to $244.9 million, while interest and other expenses declined 10.5% to $82.4 million.

City's Share:OUC contributed $27.9 million to the City of Orlando's general fund, down 0.6% from the previous year's contribution. This was because the $17.3 million dividend portion, based on 60% of a five-year rolling average of net income, was down 1.9%. The revenue-based portion was $10.6 mi!! ion, up 1.6%.

Treasury Management:By refunding a combined $607 million in debt, OUC reduced interest expenses by $11.9 million for FY '93. This helped offset an $8.9 million decline in interest income. Two refunding bond series were issued totalling $555.8 million at an average true interest cost of 5.76% These refundings are also expected to save OUC $245 million in principal and interest expense over the life of the new bonds. A gain of $3.1 million was realized from a " float contract" on escrowed funds. These proceeds were used to help stabilize rates.

In the last quarter, OUC borrowed almost all the funds it will need to pay its share of the cost to build Stanton 2 at historically low interest rates. It issued two bond series with a combined par value of $278.3 million at true interest costs of 5.6% and 5.3%. OUC now projects it will not need to raise new money for capital improvements until at least 1996 when it may issue bonds for approximately $49 million.

Tax Status:In December 1993, the Florida Supreme Court ruled unanimously in OUC's favor in a property tax case initiated l'y Brevard County. Brevard wanted to levy such taxes on OUC's Indian River Plant and associated facilities. Two lower courts had already ruled that, according to the state constitution, one governmental body could not tax another governmental body for property used for public purpose. An unsuccessful attempt to get the state legislature to change that law as applied to municipal electric utilities was also made. It is estimated OUC customers would initially be liable for up to $5.2 million a year in property taxes in et least four counties if such taxation were alloweu.

F1FTEEN

=

Cornhined Operations:Together, electric and water operating revenues rose $18.2

. million to a record high of $325 6 million. Combined operating expenses rose $16.26 million (7.1%) to a total of $244.9 rMilion, primarily due to increases in fuel and -

.s depreciation. These two factors accounted for $12.35 million (75%) of the increase in 9 .

operating expenses.

d Another $900,000 was used to successfully increase participation in OUC's energy conservation programs and to fund a major demand-side management study. The remaining $3 million increase was for customer service and transmission and distribution.

Production and general administration expenses remained almost level.

Fuel expenses rose $6.46 million to $105.9 million primarily because of higher gas and oil prices, snd OUC's increased use of natural gas and lower sulfur oil at Indian River for -

air quality reasons, Depreciation increased $5.97 million (15.8%) to $38.5 million, primarily reflecting the first full year's impact of two new, jointly owned 118.MW combustion turbine units and the completion of a major substation.

l Electric Operations liesults:OUC's electric operating revenues rose 5.7% to $303.15 million because of a 1.9% increase in retail sales and a base rate increase, even though total energy sales dipped 0.5% to 4.99 million MWH. Bulk sales declined 6.3% to 1.39 million MWH, but the economic benefits from this sector of activity rose slightly to $16.5 million because emergency power sales were up. The overall decline in bulk sales is due to mild weather and slower growth around the state.

Residential sales increased 2.8% and commercial / industrial increased 1.4% for a combined total of 3.61 million MWH. The number of retait customers rose 0.8% to a total 121,910, based on active rheters. Gross peak demand for the year was 824 MW, occurring on August 19, stiH tower than the historic system peak of 838 MW recorded December 24, 1989.

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d. Electric Ilates:The price of OUC energy remains stable and competitive. Base rates gf^

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increased slightly in FY '93, but OUC's energy prices remained second lowest compared to the prices residential customers paid to 11 peer utilities in peninsular Florida. In fact, in FY '93 OUC's residential customers paid less per 1,000 kilowatt hours a month than in 1988: 7.297 cents per KWH compared to 7.456 cents during FY '88.

For FY '94 rates implemented November 1 will be up slightly, too, but will still be very competitive. Residential customers using 1,000 KWH a month will pay 7.5 cents per KWH, less than one-tenth of a cent more than in 1988. Furthermore, most commercial and indus-o g ,,,., c.stome,s w,,, pay s,,gh,,y ,.ss pe, _ ,h.n in ,. 89.

a -

SIXTIEN

Ihe lla ms;:r mo nt lau nt R e Vle W l PREVIEW If' uter Operations Results: Revenues from water sales increased 9% to $22.4 million, primarily because of a rate increase. However, expenses rose only 3.3% to $17.6 million.

Retail sales declined 0.3% to 25.46 billion gallons even though rainfall declined 3.1%. Peak .

pumping also declined 3% to 142.3 million gallons per day. Total active services increased 1.3% to 103,359.

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o,,.u i M ,ne r nas Jf'aler Rates:The price of OUC water remained the lowest among 10 peer utilities for

< iser ( . cur v, on,ce, '

FY '93. The typical Orlando customer paid $8.63 a month for 10,000 gallons of water. A slight increase was approved to go into effect November 1,1993, which will raise that bill -

30 cents a month to $8.93. This price, too, is expected to be among the lowest in the state.

Organt:ational Changes:The electric and water departments. OUC's key operational q2 centers, have been renamed Electric Business Unit and Weter Business Unit. The managers of these departments, William H. Herrington and A. Raymond Boyd, Jr., were t :-  ? rmgton Seneur wee Pressdent promoted to Senior Vice Presidents of the electric unit and the water unit, respectively.

D ctrec sus, ness unir Virginia Botts Rutledge was named Vice President of the Financial Services jo . _ . . . m_ _ _ _

Department and a new Fiscal Services Division was created, responsible for treasury 3

management and budgeting. Rutledge joined OUC as head of this department in January 1993, coming here from Massachusetts Municipal Wholesale Electric Co. where she was m

5 Treasurer and Chief Financial O'ficer. OUC's former director of General Accounting, John Hearn, was named Treasurer and Director of the new division.

The Conservation Division was transferred from the Strategic issues group to -

A Raymond Boyd, Je s.nux v,ce President Customer Services. Expanded to Customer Services and Conservation, this department is headed by Vice President H. Pike Telnert who came to OUC in December 1992 from Texas Utilities Electric Co. In addition, a new group has been created in this department to serve

- - only commercial and industrial customers as well as new development. This is an g Important step in OUC's developing new programs and services for non-residential

.k 7 ,

customers in the face of increasing competition.

Prericu':While no one expects th*s decade to bring the phenomenal growth that vireeme 5 Rutledge vece er , dent an,, occurred in the '80s, Orlando's prospects are sunnier than most metropolitan areas in the I#" nation for the long-term.

, Within our service area, Universal Studios plans to build a second theme park, a multi-N billion dollar project. Neighboring Disney also plans major projects that will impact Orlando OUC, and municipal utilities buying power from and involved in joint projects

s f4

_ .E E with OUC. Such developments are expected to help offset the eventualloss of a major

} .

OUC customer, the Orlando Naval Training Center, because of defense cutbacks.

Georee M Standndee we, Pres, dent

• "#F' **~" SIVENT[EN

-1 OUC anticipates maintaining a high level of bulk sales because of its existing and new

. powr,r purchase agreements. It has already signed another firm power purchase contract -

3, with Disney's Reedy Creek improvement District for sales starting in '94. Negotiations ara-also underway with two more energy providers for long-term agreements to buy OUC power.

For the short term, higher retail energy sales are anticipated when OUC begins providing power to the 825-acre Navy Annex early in FY'94. This military facility is expected to close eventually. The annex, however, is near Orlando International Airport and considered prime property for future commercial development.

Taking advantage of low interest rates in the first quarter of FY '94, OUC refunded ancther bond series at a true interest cost of 5.3%, saving another $460,000 a year in interest payments over the next 25 years, it also sold investments at a gain of $580,000

"+? which will go into the rate stabilization fund.

y OUC is also continuing a process of "rightsizing* the organization, primarily hiring from withAn and using lateral transfers where possible to fill vacancies. At the end of FY '93 it had 1099 employees, slightly less than in 1991.

Territory to IUpand:The City of Orlando has voted to annex 5,000 acres which OUC would serve when developed and has unveiled other annexation plans that could significantly increase the size of OUC's service area in the future.

y; Political Challenge! An attempt to get the state legislature to freeze municipal electric utilities' service areas to boundaries existing in 1994 was defeated in the Florida Senate Appropriations Committee. This was the third time in a decade such a measure has been proposed, backed originally by the state's rural electric cooperatives. This time, however, two investor owned utilities, Florida Power Corp. (FPC) and Florida Power & Light Co.

(FP&L) joined the federally subsidized rural electric cooperath es in supporting the measure.

, if passed, such a bill would have limited municJpal electric utilities to existing s boundaries, even if their city-owners annexed more area. It would also have given the Florida Public Service Commission the authority to award certified service areas. In effect, most of undeveloped Florida would have been divided betweea the IOUs and the rural cooperatives.  !

00C, the City of Orlando and the Florida Municipal Electric Association, joined by the Florida League of Cities, led the charge to defeat this measure which all agreed was anti-competitive and which would ultimately have meant higher rates for consumers.

E I G tl T E E N

Orlando Utilities Commission September 30,1993 Audited Financial Statements Commission Members & Of ficers Richard L. Fletcher, Jr. - President Mel R. Martinez - First Vice President Ray D. McCleese - Second Vice President Carol P. Wilson, Ph D. - Commissioner Glenda E. Hood - Mayor / Commissioner Troy W. Todd - Secretary Virginia B. Rutledge Betty J. Perrow Sylvia A. Waldo Assistant Secretaries Managament Troy W. Todd - General Manager and Chief Executive Officer William H. Herrington - Senior Vice President, Electric Business Unit A. Raymond Boyd, Jr. - Senior Vice President. Water Business Unit Virginia B. Rutledge - Vice President and Chief Financial Officer, Financial Services George M, Standridge - Vice President, Support Services Thomas B. Tart, Esq. - Vice President and General Counsel H. Pike Teinert Vice President, Customer Services & Conservation Tracy L, Smith - Managing Director, Communications and Community Relations Donald E. Moore - Strategic Issues Advisor Consultants Black & Veatch - Orlando, Florida, Consulting Engineers - Electric CH2 M Hdi Orlando, Florida, Consulting Engineers - Water Capital Market Consultants,Inc. Orlando, Florida, Financial Advisor Greenberg, Traurig. Hoffman, Lipoff, Rosen & Quentel, P.A. Miami, Florida, Bond Counsel Ernst & Young - Orlando, Florida, independent Certified Pub lic Accountants Contents Balance Sheets A -2 Statements of income and Accumulated Retained Earnings A -4 Statements of Cash Flows A5 Nc,tes to Financial Statements A6 Report of independent Certified Public Accountants A-32

Balance Sheets Orlando Utilities Commission September 30 ASSETS 1993 1992 Utility Plant - Note F In Service.

Electric -- Notes G and I. $ 1.194,990,022 $ 1,148,525,549 Water 146.370,646 14J.041.492 Cornmon 60.032,777 42,987,591 Allowances for depreciation and amortization (deduction) . (367.447,005) (335.503,700) 1.033.946.440 996,050,932 Construction work in progress . 121.145.694 85.566.879 1,155.092.134 l.081.617,811 Restricted Assets - Notes B and D Debt service and related accounts 207.848,153 228,116,988 Construction and related accounts. 317,273,561 116.239.857 Renewal and replacement account. 31,324.474 30,932.909 Customer meter deposits 12.555.638 I I,776.598 569.001.826 387.066.352 Current Assets Cash and investments -- Note D. 15,951.664 27,960,088 Customer accounts receivable, less allowance for doubtful accounts (l993 -- $900.797,1992 -- $806.768) 33,720,776 29.658,629 Accrued utility revenue 15,853.437 15.606,389 Fuel for generation . 9.252.186 7.688.519 Materials and supplies. 27,136,424 25.824,287 Accrued interest receivable . 321,496 580,446

_ Miscellaneous receivables and prepaid expenses 8.175.669 1.855,689 110.411,652 109.174.047 Other Assets and Deferred Charges Self-insurance account - Notes C and D. 6.043.406 6.055,132 Investment fund - Note A. 24,876,873 122.052.339 Fuel stabilization account . 23,713,968 33,556.274 Rate stabilization account . 15,372.048 8.320.071 Unamortized debt expenses - Note E - 76.161,585 2.692.11I Deferred compensation plan investments - Note H . 6.871.043 5.768.550 153.038.923 178.444.477 otal Assets $ 1.987,544.535 $ l.756.302.687 See notes to the financial statements A-2

Capit2ilzation l and Liabliities September 30 l CAPITALIZATION 1993 1992 Equity: l Accumulated retained earnings.

Reserved for debt service . $ 158.699,014 $ 182,224,709 j Reserved for renewal and replacement. 31,324,474 30.932.909 Unreserved -- invested in or designated for l plant and working capital . 128.633.474 93,481,078 318,656,962 306,638,696 i Contributed capital. 77.290.511 64,944.196

.l 1

395,947,473 371.582.892 Long-Term Debt-- Note E Bond and note principal. 1,491,266.165 1,281,580.800 Unamortized discount (deduction) . (76.835,346) (74,193,619)  ;

l 1,414.430,819 1,207,387.181 l Total Capitalization 1.810,378,292 1.578,970,073 l Current Liabilities -- payable from restricted assets Accrued interest payable on notes and bonds . 31,884.143 40.297,279 l

Current portion of long-term debt-Note E . 17.265,000 5,595,000 i Customer meter deposits and interest thereon 12,555,638 11,776.598 l 61.704,781 57/>68,877 Current Liabilities ~ payable from current assets Accounts payable and accrued expenses. 32.674.729 25,655,999 Billings on behalf of state and local governments. 9,176.635 8,227.539 Accrued parnents to the General Fund of the City of Orlando - Note i . 665,039 1,612.620 42,516.403 35.496.158 Other Liabilities and Deferred Credits Fuel stabilization account . 23,713,968 33,556.274 Rate stabilization account . 15.372,048 8.320,071 Water and electric construction deposits 24.858,495 33,826,551 Deferred materials and supplies. 2,129.505 2.696,133 Deferred compensation plan liability - Note H 6,871.043 5.768,550 72,945.059 84,167,579 Total Liabilities and Deferred Credits 177,166.243 177,332,614_

Total Capitalization and Liabilities $ 1,987.544,535 $ I,756.302.687 See notes to the financial statements P

A-3

Statements of income and Accumulated Retained Earnings Year Ended September 30 1993 1992 Operating Revenues $ 325.587,973 $ 307,358.507 Operating Expenses:

Fuel for generation and purchased power . 105 906.513 99.444.938 Production 38.059.810 37,823.886 Transmission and distribution 13.947,855 12.262.464 Depreciation and amortization . 38.540.309 32.571.942 Customer servicec 10.256.809 9.252,832 General and administrative . 21.974.771 21,738,778 State utilities gross receipts and property taxes. 5.506.682 5,123,303 Revenue based payment to the General Fund of the City of Orlando -- Note i 10.624.895 10.453,968 Total Operating Expenses 244 007,644 228.672,1 I I Operating income 80.680,329 78,686.396 Non-Operating income (Expense):

Interest income. 28.311.635 37,250.737 Other income 941,787 1.069,875 Interest expense . (75,844.920) (87,722,911)

O!her expenses . (6.529.009) (4.350.584)

Net income 27.559,822 24.933.51i Accumulated retained earnings at beginning of year 306.638.696 297.676.602 Dividend payment to the General Fund of the City of Orlando -- Note i . (17.254,000) (17.603.000)

Depreciation of contributed utility plant. I,712.444 1,631,583 Accumulated Retained Earnings at End of Year $ 318.656.962 $ 306.638.696 See notes to the financial statements l.

l A-4

^

Stat:msnts of Cash Ficws Year Ended September 30 1993 -

1992 ,

Cash Flows from Operating Activities Operating Incorne $ 80.680.329 $ 78.686.396 Adjuv rents to reconcile operating income to net cash provided by operating activities:

Depreciation and amortization of plant charged to operations. 38.540.309 32.571.942 Depreciation and amortization charged to fuel costs . 2.470,661 2,588.465 Depreciation of vehicles and equipment charged to general and administrative costs . 1,540.266 1.458.637 Provision for bad debts. 94,029 47.828 Other expenses (2.010.446) (2.565.219)

Changes in operating assets and liabilities:

(Increase) Decrease in accounts receivable and accruals. (10.356.204) 1.095.620 l increase) Decrease in fuel and materials and supplies (2.875,804) 55.894 increase in accounts payable and accruals 2.851.805 8.354.784 (Decrease) locrease in deposits payable (8,755.642) 29.818.757 Net cash provided by operating activities 102.179.303 152.113.104 Cash Flows from Non-Capital Financing Activities Dividend payment to the General Fund of the City of Orlando. _

i18.224.000) (19.792.000)

Net cash used in non-capital financing activities i18.224.0001 t 19.792.000)

Cash Flows from Capital and Related Financing Activities ,

Debt interest expense {68 774.142) (84.593.044)

Principal payments on long-term debt. (5.645.647) (75.324.213)

Debt issuances 815.643.973 170,749.927 Debt issuance expenses paid (l.201.356) t 547,326)

Construction and acquisition of utility plant (116.068.725) (131,426.9781 Proceeds from sale of utility plant 758.618 40.930.201 Contributed capital 12.694.069 3,896.664 Payment to escrow . . 1679.983.152)

Net cash used in capital and related financing activities 142.576.362) 176.314.769)

Cash Flows from investing Activities Net purchases of investments (42.141.750) (81.488.090)

Investment income . . .

29.840.558 39.680.234 Net cash used in investing activities (12.301.192 ) (41.807.856)

Increase in Cash and Cash Equivalents 29.077.749 14,198.479 Cash and Cash Eaulvalents at Beginning of Year 96.616.755 82.418.276 Cash arid Cash Equivalents at End of Year $ 125.694.504 $ 96,616.755 See notes to the linancial statements.

L A-5

Not:s To

• Financial Statements September 30,1993 NOTE A-

SUMMARY

OF SIGNIFICANT ACCOUNTING POLICIES The financial statements of the Orlando Utilities Commission are presented in conformity with generally accepted accounting principles as applicable to governments. The existing hierarchy provides that accounting guidance should first be sought in statements of the Governmental Accounting Standards Board (CASB). If the GASB has not issued a standard applicable to a situation, then pronouncements of the Financial Accounting Standards Board are presumed to apply. Additionally, the financial statements are presented substantially in conformity with accounting princides and methods prescribed by the Federal Energy Regulatory Commission (FERC) and other regulatory cuthorities except for the method of accounting for contributed capital described in the notes to financial statements.

The following is a summary of the more significant accounting policies:

Reporting Entity: The Orlando Utilities Commission (the Commission) was created in 1923 by a Special Act of the Florida Legislature as a statutory commission of the State of Florida The Commission consists of five rnembers, including the Mayor of the City of Orlando. Members, with the exception of the Mayor who is an ex-officio rnember of the Commission, serve without compensation, may serve no more than two consecutive four year terms and new members are selected in the following manner: The Nominating Board of the City of Orlando, which for this purpose functions only as a screening committee, submits the names of three persons to the Commission for consideration. The Commission may nominate one of these persons or reject all three. The nominee is then subject to election or rejection by the Orlando City Council. Once elected. Commission members cannot be removed for any rr ason by the City Ccuncil.

The Commission meets the criteria of an "other stand-alone government" as defined in Statement 14 of the Governmental Accounting Standards Board No component units exist as definea in Statement 14.

Measurement Focus: The Commission operates the electric and water system in a manner similar to private business, therefore, operations are accounted for as an enterpnse fund where costs (expenses, including dcpreciation) of providing services to customers on a continuing basis are recovered through user charges Basis of Accounting:The Commission's financial statements are prepared on an accrual basis of accounting with revenues being recognized when earned and expenses recognized when incurred.

Budgets: Revenue and expense budgets are prepared on an annual basis in accordance with the Commission's bond indentures and submitted to the Com- ion for approval prior to October i of the fiscal year Legal adoption of budgets is not required Act al revenues and expenses are compared to the budgets on a line item basis within departments and an analysis of variances report is prepared and submitted to the Commission each month as required by bond indentures.

Utility Plant: Utility plant is stated at historical cost which includes cost of contract work, labor, materials and allocated indirect charges for equipment, supenision and engineering and labor related costs. Donated assets are recorded at the cost provided by the developer which approximates fair marf et value at date of donation. The Commission charges the cost of repairs and minor replacements to maintenance expense. The cost of electric or water plant retired or otherwise disposed of, together with removal wsts less salvage, is charged to accumulated depreciation at such time as property is removed from service A-6

NOTE A-

SUMMARY

OF SIGNIFICANT ACCOUNTING POLICIES--Continued ..

The following is a summary of utility plant at September 30.1993, by major classes:

Electric Water Common Total I..a nd $ 18.654.211 $ 838.508 $ 1,730.508 $ 21,223,227 Electric generating plant 760.582,925 760,582,925 Water wells 13.219.437 13.219,437 Structures and improvements 70.051,648 5.702,294 30.032.639 105.786.581 l

Equipment 345.701,238 126.610,407 28.269.630 500.581,275 1,194.990.022 146.370,646 60.032,777 1.401,393,445 Allowances for depreciation i and arnortization (310.612.896) (35,405.610) (21,428,499) (367,447,005) l Construction work in progress 90.758.766 7,112,329 23,272.599 121,145.694 Net utility plant $ 975,135,892 $ i 18.079,%5 $ 61.876.877 $ 1,155.092.134 The following is a summary of changes in utility plant.

Balances Balances September 30 September 30 1992 Additions Deletions 1993 bnd $ 20,978.566 $ 244.661 $ 21,223.227 Electric generating plant 751,608.024 13,919.410 $ (4,944.">09) 760.582,925 Water wells 13,951.231 157,301 (889,095) 13,219,437 Structures and improvements 85,280,805 20.505.776 105,786.581 Equipment 459,736.006 51,747.338 (10.902,069) 500.581,275 t 1,331.554,632 86,574,486 (16,735,673) 1.401,393,445 Allowances for depreciation and amortization (335.503.700) (43.067,094) i1.123.789 (367,447,005)

Construction work in progress 85,566 879 100,492,731 (64,913,916) 128,145.694 Net utility plant $ l .081.617,811 $ 144,000.123 $(70.525.800) $ 1.155.092,134

'd A-7

NOTE A-

SUMMARY

OF SIGNIFICANT ACCOUNTING POLICIES--Continued Depreciation: Utility plant is depreciated using the straight-line method for each of the various plant cl.wsifications at rates which will amortize the costs over the estimated economic useful lives of the assets.

Depreciation of vehicles and other construction equipment is .. irged to departmental operating expenses or const ruction work in progress Amounts for all other assets are charged to depreciation expense. The estimated useful hves of utility piant are as follows-Electnc plant:

Generating plant 30 - 40 years iossil 30 - 36 years Nuclear Structures and improvements 30 - 50 years 6 2/3 - 50 years Equipment Water Diant: 25 - 50 years Waser wells .

Structures and improvements 50 years 6 2/3 - 50 years Equipment Common Plant- 50 years Structures and improvements 141/3 years Ofhce equipment Vehicles and ether construction equipment 5 - 30 vears Cash and Investments:The Commission maintains cash in demand accounts. Investments are recorded at cost Ilorida Statutes and applicable debt resolutions authorize the Commission to invest in obligations of the U S 1reasury and various agencies of the linited States government The Commission is also authonzed to invest m state and local government tax-exempt debt in addition. the Commission may insest in interest bearing time deposits or savings accounts of banks and savings and loan associations prosided the deposits are collateralized by federal government securities.

Additionally. Florida Statutes and apphcable debt resolutions permit the Commission's investments to mclude repurchase agreements, that is. a purchase of securities f rom authorized dealers or banking institutions, with a simultaneous agreement that the dealers or banking institutions wdf repurchase them in ihe future at the same price plus a contract rate al interest The market value of the securities underlying repurchee agreements normally exceeds the cash received. providing a margin against a decline in market value of the securities Except for overnight repurchase agreements with our depository bank. securities underlymg repurchase agreements are held in our accounts by a third party if the dealers default on their obligations to repurchase these securities from the Commission. the Commission would suffer an economic loss equal to the difference between the market value plus accrued interest of the underlying securities and the agreement obhgation. includmg accrued interest The Commission has established that authorized dealers are primar3 dealers as dehned by the Federal Reserve Bank and report to the Securities and Exchange Commission and authorized banking institutions are limited to the fifteen largest U.S banks Statement of Cash Flows: For purposes of the Statement of Cash Flows. cash and cash equivalents includes all cash accounts and investments iincluding restricted assetst with a maturity of three months or less when purchased Customer Accounts Receivable: The Commission bills customers monthly on a cyclical basis and accrues resenues at the end of the fiscal year for electric and water consumed but not billed See ' Rates

,md Resenues" below The customer accounts receivable balance of $3L720.776 includes billings done on behalf of state and other h> calt ;ovemments The net liability of 59.176 635 ibillings on behalf of state and local governments less expensesi represents the September billings of these governments fuel for Generation and Materials and Supplies: Fuel oil, coal and mater!als and supplies inventories are stated at average cost Nuclear toel is included in electnc utihty plant and amortized to fuel expense as it is used A-8

L (

NOTE A-SUMM ARY OF SIGNIFICANT ACCOUNTING POLICIES--Continued Interest Rate Swap Agreement: The differential to be paid or received is accrued as interest rates change and is recognized over the life of the agreement.

Investment Fund: Since 1991 the Commission had planned to accumulate resources for the retirement of outstandmg debt using the investment f und in December of 19n2. the Commission refunded the Series 1985 Bonds with the Series 1992 Bonds; As part o' the refunding. $68.215.495 was transferred from the investment Fund to the escrow agent for deposit into the escrow fund $32,109,000 of the Investment Fund was used to fund construction projects in 1991 The balance of the funds are antic: pated to be used over the next several years for construction projects Contributed Capitah The Commission considers amounts received for construction of utility plant and utility plant contributed by developers as capital contributions Accordingly. these capital contributions are added to plant assets and are treated as a separate component of Commission capitalization Depreciation apphcable to contnbuted utility plan! H included as an operating expense in determining net income and is subsequently charged a;.;ainst centributed capital from accumulated retained earnings Debt Discount and Expenses Debt discount and issue expenses are deferred and amortized to operations over the oves of the related issues using the bonds outstandmg method of amortization.

Rates and Revenues: Each year, the Commission s staff performs a rate adequacy study to determine the electric and water revenue requirements. Based on this study. current cost of service studies, and I regulations of the Florida Pubhc Service Commissien regarding electric " rate structure". the Commission's stalf develops its electric and water rate schedules which are presented to the Commission at a public workshop and then presented for their approval at a public heanng.

The Commission statt makes its determination of revenue requirements using the rate base method and includes construction work in progress in the rate base. Therefore. in accordance with proper ratemaking theory. the Commicsion does not use an allowance for funds used during construction ( AFUDC)in determinmg resenue requirements Since the Commission's lesel of revme requirements and subsequent revenue is determined without regard to AFUDC. the Commission does not capitalize interest on construction work in progress Operating revenues are recorded based on actual bil lings to customers plus an estimate for accrued unbilled electric and water consumption at the end of each fiscal year The Commission has estabhshed a policy on recovery of fuel costs in accordance with guidelines from the Pablic Utihties Regulatory policies Act of 1978 (PURPA) Under PURPA only fuel costs incurred are to be recosered The Commission estimates on an annual basis a fuel component charge to be applied during the next fiscal year The ditference between the fuel costs actually charged to the customers and the fuel cost actuaHy incuned is apphed to the fuel stabihzation account During the process of determining the fuel compenent the Commission determines what portion of the fuel stabihzation account will be utilized Costs Iresenuest w hich are to be recovered by lused to reduce) rates in periods other than when incurred treah ed) are defened until the periods in which the Commission recogmzes them in utility rares These items are included in the rate stabilization account Specific Commission approval is required for all increases or decreases to this account The balances in the fuel stabihzation account and the rate stabdization account are funded by internally re>tricted cash accounts and earn the same interest rate as the Commission's operating investment portfolio Compensated Absences:The Commssion records compensation for unused vacation and sick leave as an expense in the 3 ear in which the vacation and sick lease is earned in accordance with National Council on Gosernmental Accounting Statement 4 At September 30.19M annual vacation leave eamed but not taken was SI M4310 and sick leme accumulated but not taken was $2 A06321 When operations and scheduhng perrmt compensatory time to offset overtime hours on an hour for hour hasis may be granted through mutual agreement between the employees and their supervisor A maximum of 40 hours4.62963e-4 days <br />0.0111 hours <br />6.613757e-5 weeks <br />1.522e-5 months <br /> compensatory time may be accrued and carried oser from pay period to pm, period Compensatory time is expensed in the period eamed At September 30.190 the hability was S73 473 f\ - 9

9 NOTE B-RESTRICTED ASSETS Certain assets are restricted by bond resolution; additionally, some assets have been classified as restricted in accordance with governmental accounting standards for enterprise funds and utility industry accounting practices. The Commission's restricted assets consist of the following accounts:

September 30 1993 1992 ,

Debt service and related accounts-Note E:

Investment account $ 36.250,739 Principal and interest accounts $ 49,149,140 46.474,685 Debt service reserve accounts 134,859,159 122,568,649 Capitalized interest 23,839,854 22,822,915 Tctal debt service and related accounts 207,848,153 228,116,988 Construction and related accounts:

Nuclear generation facility decommissioning accounts 5,259,204 4,399,701 Bond construction accounts 312,014,357 111,840,156 Total construction and related accounts 317,273,561 116.239,857 Renewal and replacement account 31,324,474 30,932,909 Customer deposits and interest thereon . 12.555.638 11,776,598 Total restricted assets 569,001,826 387,066,352 The accounts consist of:

Cash 391,533 7.288,855 Investments 562,668,791 372,757,729 Accrued interest receivable 5,941,502 7,019,768

$ 569,001.826 $ 387,066,352 A - 10

NOTE C-SELF-INSURANCE ACCOUNT The Commission's self-insurance program covers a portion of its workers' compensation, general liability and automobile liability exposures During 1993, $248,285 was expended for claims and $236.559 of interest income was added to the account. Claims expense and interest income for 1992 were $464.600 and

$336.847. respectively. Under the self-insurance program the Commission is liable for all claims up to certain maximum amounts. Claims in excess of the maximum amounts are covered by insurance. The maximum amounts are as follows Workerg compensation . $400,000 Generalliabihty . 500,000 Automobile liabihty 500,000 Total claims incurred but not reported at year end are estimated to be less than $25.000. It is the opinion of general counsel that the Orlando Utilities Commission, as a statutory Commission may enjoy sovereign immunity in the same manner as a municipahty, as allowed by recent Florida Courts of Appeals rulings. =

Under said rulings. Florida Statutes limit liability for claims or judgernents by one person to $100.000 or a total of $200.000 for the same incident or occurrence, greater liability can result only through an act of the Florida Legislature Furthermore, any defense of sovereign immunity shall not be deemed to have been ,

waived or the hmits of liability increased as a result of obtaining or providing insurance in excess of statutory limitations It is also the opinion of general counsel that the Commission, as a municipal utility, ,

is statutorily immune from suit for malicious prosecution NOTE D-CASH AND INVESTMENTS At September 30.1993 and 1992. the carrying amount of the Commission's cash was $558.121 and

$ 1.285.100, respectively, and the bank balances were $315.417 and $1.087,995, respectively. The bank balances were covered by federal depository insurance or collaterahzed by a pool of U S. Government ,

securities held in trust by a third party bank in the name of the Commission's banking institution.

in the following schedule the Commission's investments are summarized and categorized to give an indication of the level of risk assumed by the Commission at September 30,1993 and 1992. Category I includes investments that are insured or registered or for which the securities are held by the Commission or its agent in the Commission's name Category 2 includes uninsured and unregistered investments for which the securities are held by the bank ~s trust department or agent in the Commission's name Category 3 includes uninsured and unregistered investments for which the securities are held by the bank's trust department or agent but not in the Cornmission's name.

Deferred compensation plan benefit investments are not categorized because they are not evidenced by securities Ihat exist in physical or book entry form The market value of the U S Gosernment securities and other U S Government backed securities were ,

obtained from Sun Bank Trust Department's market value statements dated September 30.1993. Market values of municipal investments were obtained from Pnnton. Kane Group, Inc.

A - 11 -

NOTE D-C ASH AND INVESTMENTS--Continued Category Carrying Market 2 3 Amount Value 1

i investments .__.._ ___ .

September 30.1993 Repurchase $410.856.838 $410,856.838

$405.807.838 $ $5.049.000 agreements U S Government 197.316.085 212.947.682 securities 197.316.085 Other U S and agency 22.883,086 22.676,945 backed securities 22.676.945 State and local 16,936,477 17,785.955 governrnent securities 16.936.477 .__

$5.049,000 $647.786.345 $664,473.561

$642.737.345 $

September 30.1992 Repurchase $201,652,435 $201.652,435

$ 190.852,435 $ $ 10.800.000 agreements U S Government 354.271,657 340,056.296 340.056 296 securities Other U S 17.233,770 17.675.51i backed secuntles t 7,? 33,770 State and local 10.121.650 10.000.041 government securitles 10.000.041

$ 10,800.000 $568.942,542 $583.721.253

$558.142.541 $

These investments are held in the following accounts September 30 1993 1992

$569.001.826 $387.066 352 Restricted assets 15,951,664 27.960,088 Cash and insestments 580.446 321.496 Accrued interest receivable 6.043,406 6.055.132 Self-insuranc e account ,

122.052.339 24.876.873 Insestment fund 23,713.968 33,556274 Fuel st abilizatic,n accoun! 8,320.071 15.372.048 Rate stabilization account 655.281,281 585,590.702 6 333.035 14.308.623 Less Cash and accrued , m 3st receivable from restricted assets 558.121 1,285.100 Cash frorn cash a- awstment 321,496 580.446 Accrued interest receivable 473.991 282.284 Accrued interest receisable f rorn investment fund

$647.786,345 $568.942,542 Total ins est ments

$ 125.694.504 $ 96.616.755 Cash and ca,h equisatents 480.899,742 523.041.495 Insestments 6,545.282 8.074.205 Accrued interest _

A - 12 _ _ _

NOTE E-LONG-TERM DEBT Long term debt principal outstanding is as follows:

Issue-Date 1993 1992 SENIOR LIEN:

Series 1985,5 25% to 8 625% due serially December 1986 to 2000 and in term form from 1985 2000 to 2010 $ 538.315,000 Less current portion of Series 1985 5.595.000 Long-term portion of Series 1985 532,720.000 Series 1992. 2.40% to 6 00% due serially December 1993 to 2010 .

I992 $ 467.820.000 Less current portion of Series 1992 17,265.000 Long-term portion of Series 1992 450.555 000 Series 1993. 4 75% to 5.00% due serially September 201I to 2013 and 5125% and 5.00% 1993 in term form 2019 to 2023 139.020.000

$ 589.575.000 $ 532,720.000 IUNIOR LIEN:

Series 1989C. 7 00% due serially 201 ! August to 2015 and in term form in 2023 1989 $ 75,000.000 Series 1989D. 5 00% to 6 75% due in term December form in years 2017,2020. and 2023 1989 $ 253.945.000 253.945,000 Series 1991 A,5.50% to 6.50% due in term January form in years 2020 and 2026 1991 235.820.000 235.820.000 Senes 1992A,6 00% and 5 50% due in August term form in years 2020 and 2027 1992 74.520.000 74.520.000 Series 199 3A,2.75% to 5 50% due serially lune 1994 to 2010 and 5 50% and 5.25% in 1993 ,

term form in years 2012. 2014 and 2023 87.950,000 l Series 1993B. 415% to 5 40% due serially August 1997-2009,5 25% in term form 2023 and 1993 1 Select Auction Vanable Rate Securities and Residual Interest Bonds 5 00% and 5 664% due 2013 and 2017 139.240.000

$ 791.475.000 $ 639.285.000 OTHER DEBTr Series 1990M 710% Capital Appreciation March "Minibondi maturing February 8. 2000 1990 $ 10.221.165 $ 9.580.800 Series 1991 Variable Rate Demand December Bond Anticipation Notes. maturing 1991 December 1996 99.995.000 99,995.000 I

$ 110.216.165 $ 109.575.800

$ 1,.491.266165 $ 1.281.580.800 l

A - 13 u_ _:_ __ _ . _ _ _ _ _ _ _ _ _ _ ___ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _--

4 NOTE E-LONG-TERM DEBT--Continued

' Following is a schedule of annual principal and interest sinking fund requirement on the revenue bonds and notes outstanding at September 30.1993.

Fiscal Debt Service for Debt Service for Debt Service for Year Series 1992 Bonds Series 1993 Bonds Series 1993A Bonds Jnding_ _ Prl.ncipal Interest Prin ipal interest Principal interest

$ 24197.417 $ 7 066. I 86 $ 325.000 $ 4,608.940 i994 $ I7.680.000 1995 I8.280.000 23 596 298 7.007,788 335.000 4.600.003 1996 19.015.000 22,865.097 7 007,788 345.000 4.588.613 1997 19 750,000 21028 438 7,007.788 355.000 4.575.I58 1998 20,745.000 21.135.187 7.007.788 370 000 4.560.603 1999 21.730.000 20.149.800 7.007,788 390.000 4.544.693 22 8I5.000 19.063.300 7.007.788 405.000 4.527,143 2000 2001 24.000.000 17.876.920 7.007.788 425.000 4,508.108 --I 4

16.604.920 7.007.788 445.000 4,487.283 4

2002 25.270.000 15.240.340 7.007.788 465,000 4.465,033 2003 26.635.000 2004 28.130.000 13.748.780 7.007.788 490.000 4.441.783 2005 29.730.000 12.I45.370 7,007.788 515 000 4.416.793 20n6 31.440.000 10,435,895 7,007,788 540.000 4.390.013 8.612.375 7.007.788 570.000 4.361,393 2007 33.265 000 2008 35.195 000 6.683.005 7.007.788 600.000 4.330.613 2009 37,270.000 4 606,500 7.007.788 635.000 4.298.213 2010 39 505.000 2.370.300 7.007.788 670 000 4.263.288 2011 $ 7 880.000 7,007.788 4,430,000 4.226.438 8.230,000 6.613.788 4.675.000 3,982.788 2012 2013 8.690 000 6.222 863 4 930 000 3.7N.663 2014 9,1IO 000 5.788.363 5,I85.000 3.466.838 2015 9.510 000 5 321.475 5.460.000 3.194.625 2016 10.050.000 4.834.088 5,750.000 2.907.975 2017 10.590.000 4 319.025 6.050.000 2.606.100 2018 11.030.000 3,776.288 6.370,000 2.288.475 20l9 I l .600.000 3 211.000 6.705,000 1.954.050 2020 12.19"> 000 2 616.500 7.055 000 1.602.038 202I I2 805.000 2.006 750 7.425.000 1.231.650 2022 13.450,000 1.366.500 7.815.000 841.838 2023 13.880.000 694,000 8 220.000 431.550 2024 2025 2026 2027

$ 261,359.942 $ 139 020,000 $ 172.969,222 $87.950.000 $ 108.427,701

$ 450.555.0u0 For the Series 1989D.1991 A.1992,1992A.1993, and 1993A Bonds, interest is payable on April and October 1. with priittipal payments due on October 1.

(1) For the Senes 1993B Bonds interest payable on April and October I, with principal payments due on October I on the serial and term portion of the bonds which totals $93.740.000. The balance of the Series 1993B Bonds is issued as Select Auction Variable Rate Securities and Residual Interest Bonds.

Interest is due esery 35 days with principal due on the October dates.

(2) Represent accreted value of the Minibonds due and payable at their maturity on February 8 2000. after puts through September 1.1993 13l The Series 1991 Notes are vanable rate A swap rate of 3 57% was used to determine interest through lanuary 10.1994. an estimated rate of 5 5% was used thereafter.

A - 14 . .

fiscal Debt Senice for Debt Senice f or Debt. Service for Year Series 19X9 D Bonds Series 1991 A lionds Series 1992A Bonds f.nding Principal interest Principal Interest Principal Interest tool 511 us? 425 4 14 174 500 $ 4 J74 Itw1 lou, l a 9.17.415 la l 74300 4.171 100 1900 119X7 415 14 174 500 4.274,1(x) 1997 14 9.s7 als 14.171 500 1.274.100 looX 14 oM7.425 14.174 Six) 4 271.100 1909 11 oM7.425 14.174 300 4 274.100 Jt H10 14 uM7 4/5 14.174 500 4.274. l t k) 2001 14 9X7 425 14.174 500 4.274_l00 2001 14 4X7.425 14.I74,500 4 274,100 200? 14.9X7.425 14.174,500 4 274 100 2004 14 9X7.425 14,174.500 4 274.100 2005 14.9X 7.4 25 14.174.500 4 274.100 2000 14.uX7.425 14.174,500 4.274.100 2007 14 9X7 425 14.I74.500 4.274.100 Jo0X 14 9X7,425 14.174 500 4.274.100 J009 14.9X7,425 14.174 500 4.274.100 1010 14 9X7 425 14.174.500 4.274.100 2011 S 13 065 000 14.UX7 425 $ X.925 000 14.174.500 $ 2 005.000 4.274.100 Jull I L945 000 14.105.537 9.505.000 13 594.375 2 X25 000 4 l l4.200 Juli 14 XX5 000 l1 164.250 10.120 000 12.970.550 2.990 000 3.944 700 J014 15 X40 000 12 159 511 10.7X0.000 12.3 l X.750 3.170 000 3.765.300 J015 16 065 000 l l 0X0,937 l 1.4 X5.000 ll,61X.050 3.300 000 1.575,100 1010 1X.110 000 9.941XOO l 2.2 30,000 10.X71,525 3.505 000 3.373,500 20l7 l u l in Di n t X 719,375 13,02 5.0fM.I 10.076 575 3.775 000 3.159.600 20lX 20.635000 7 414 600 13 X70.000 9 224 950 4 005 000 2,9s3.100 2010 11,770 000 6270675 14,770 000 X.32X 400 4.245 000 2.692.XOO 2020 22965ono 5 OX'.325 2 15.730.000 7.36X. 3 50 4 500.000 2.4 3X,100 2021 24 210 000 3 X19 250 10 750 000 6 345 000 4,770 000 2.16X 100 1022 25 440 000 1 007 750 17.670.(X h) 5,424.650 5 030.000 1.905.750 l 2023 20 715 000 l 135.750 I X.64 5.000 4.4 5 2,X00 5.110 000 1.629.10()

2024 19.670.000 3.427.325 5 600 000 1.337 050 j 2025 20 750 000 2,345 475 5.005 000 1.020 050 2026 21.X95 000 1.204.225 6.230 000 704.275 2027 6.575.000 361.625 S253.045000 $ 365 400 412 $235 X20.000 $374.723 900 $ 74.520 000 $ 116.065.150 l

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i

Ieval Debt Senio for Series Debt Sersite for Year Series 199111 flondsill 1990AA Series 1991 Notes 135 Ending Principal Interest Minibonds 121 Principal Interesl T otal l'PJ) 5 3 01t119 $4.9ti9002 $ 100. 'l l h I N)4 199; 7.350429 5 449 725 I 00.205, .'6M 1996 7,235 09X $ 00.995 000 1.1 b9.191 105.557 0 l 2 l'PJ7 $ 2f,05 000 7,207.51'1 47 124 722 ltruM 25)5000 7,15i724 97,123 327 I O'P) 2E70 f H IO 7 001.200 97,.124.5 l 2 2000 2 755 000 7.111.737 515.919 000 111.04l.493 2001 1 115 000 6.756.300 97,l25.247 2fW)2 '1 045.000 ftM21.774 97,119,700 2001 1405.000 6.463 806 97.117 442 2004 1 Wi 000 6 512 242 97. l 21.(M 2005 1 755 000 6. l l 511X 47,121.294 2006 3 945 000 5 922,X74 97,i17.595 2007 3.910_000 5,95M.M7X 97,12).459 2f Hl3 4.160 000 5.510.437 47,122.9 l M 2004 4.150 000 5.5iM I63 97, i 2 I .639 2010 4.800.000 5 050.193 97.102,799 20ll 4.800 000 4.987.524 91,422.775 2012 5.100 000 4 527.131 41,417.M 14 2013 5 500.000 4 274 765 91.423 791 2014 5 700 000 4.033.107 91,42 l M71 20l5 6.200.000 3.646 436 91.421.123 2016 6 400 000 3.3M4.764 01,413 652 20l7 6.800 000 2,97 i 00X 41.421.681 20l3 7.200.000 2 603 93X 41.421.401 2019 7 640 000 2 227.M3M 41.423 763 2020 X 045 000 1 X26.738 41,424.051 2021 X 465 000 1 404 375 91 421.025 2022 MfJ 10.000 454 463 41.421.451 2023 4.375 000 492. I M8 4 I . I 80.3MM 2024 30 034.375 2025 30 029.525 2026 30,033.500 2027 6.936.625

$139 240 000 $149 427 667 $i 5 419 000 $49 495 000 $1153M.IIX $3.056 966.112 i

)

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A - 16 i l

JOTE E-LONG-TERM DEBT- Continued Senior Lien Bonds: Tim wmer hen h .nd, .nc p.nal,le md sn med in a mst hen upon and pledge of t he nct nwnne , h nmi in Ilm G %mn +n in m t he e na! h m of t he w ah i and clo inc etem . uni f rom t ert,m mu t m. nt nu.w l!n 4 7 ti: !)n . . ill II.sw i n t1h uilo i ni tlle sellh 4 IU11 l n tled rtN 5 lid h ill 16 e lls ehtalnhsh inhi Inamtant r.itt'%

,oid (ollni such hvs rentals or uther t harges lor Ihe servites and facihlies of the water and electric system u hn h shall he.nlettuate al all tunes to pay m each hs(al year at le.nt one humhed Iwenty-Inc percent i12W of Ihe annual debt scruce retpurements for Ihe bonds and that the net revennes shall be solhcient to make all of her payments required by t he tenus el t he senior bond resolution.

The senior hond resolunon estabhshes the Revenne Fund Auunnt. Nenewal and Replatement Fund Account and Smking Fund Account. which is comprised of Ihe k1terest. Pnn(ipal. Investment. Bond '

Redemption. Debt Service Reserse and Demand Charge Component accounts in accordance with the senior bond resolution, gross revenues derived from the operation of the water and electric system are to be deposited in the Revenue Fund and shall be applied only in the following rnanner.

i. Revenues me first to be used Io pay the corrent operating expenses of the water and electric system and then all Smking Fund and Renewal and Replacement Fund requirements

2. The balance of any resenues remaining m the Revenue Fund shall at Ihe option of the Commission be used li) for any lawfut purpose in connection with the water and electric system and (iit to make any payments of funds to the City of Orlando, provided however that none of the revenues is ever to be used for Ihe purposes described in til and hil unless all payments required in (lI above. including any deficiencies for prior payments have been made in full to the date of such use, and the Commission shall have fully complied with all covenants and agreements contained in the bond resolution.

lunior Lien Bonds: The lunior lien bonds are payable from. and secured by a lien upon and a pledge of

, the net revenues derived by the Commission from the operation of the water and electric system and certain irnestment income. sublect to the prior lien thereon of the Commission ~s outstanding senior lien bonds The Comrnission has covenanted in the junior lien bond resolution to fix establish and maintain such rates and collect such fees. rentals or other charges for the services and facihties as will always provide in each fiscal year, net revenues which will be adequate after the deduction of amounts required to be deposited from net revenues in each fiscal scar to provide for the annual debt service tequirement for senior hen bonds to fund any debt service reserve requirement for such senior lien bonds and to make any required deposit to other funds and accounts established under documents evidencing or securing senier hen bonds at all times to pay m each hscal year the sum of at least hl one hundred percent i100%I of the annual debt service requirement for the bonds issued pursuant to the resolution and any pari passu ad'Jitional bonds hereaf ter issued for the then current fiscal year and lii) one hundred percent t 100%) of the amount required to be deposited into the Demand Charge Component Account for the then current fiscal year. and that such net resenues will be sufhcient to maice all other pa> ments required by the terms of the resolution and that such rates. fees. rentals or ether charges shall not be reduced so as to be insufficient to provide adequate revenues for such purposes The jumor hen bond resolution establishes the Sinking Fund which includes the interest. Principal. Bond Redemption and Demand Charge Component Accounts in accordance with the resolution gross revenues are to be ap;2 lied in accordance with the senior lieri bond resolution and then to be applied to the lunior Lien Sinking Fund accounts.

A - 17

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VOTE E-LONG-TERM DEBT--Continued l Other Debt: I hn atu s.1 Iln t rn Sat unha ihn Res enne Bonds. s ne, e loooAA IMauln m t a .ne issnod aw hilly registered capital apprn latton bonils m Ihe mihal poniipal amount of $150 and nihtral .

muh iple, t hercol %e Munhonds bear mierest at 7 ItrL per annum wmpounded senu,mnnally. and are I not subit st he redemphon poor to malunty 't he Munbonds are payable solely f rom and set ured by a hen ul15in lhe fiel f eieflues (lcrhnj ii) lite Oloninnh'Il hom t he tyleration o{ t he water and ele (t rk s) stem .ind of (erlain msestment income a'. provided m t ho Minibond Resolution The tien of Iho Mmibonds upon the net revenues a lunior and subordmate to the poor hen thereon of Ihe Commission's outstandmg semor <md jumor 'ien debt obligations.

The Vanable Rate Demand Water and Electric Revenue Bond Anticipation Notes Series 1991 ISeries 1991 Notesi are due December 10.1996 and were issued in the weekly pricing mode. On lanuary M,1992 the Commission and a commercial bank entered into a two year swap agreement on the notional amount of

$99.995.000 The agreement will guarantee the Commission a fixed rate of 3 57% unut lanuary 10.1994 at which time the Series 1991 Notes will revert to the weekly pricing mode The Commission is exposed to credit !oss in the event of nonperformance by the other party to the interest rate swan agreement. However. l the Commission does net anucipate nonperformance by the counter party.

The Series 1991 Notes are payable from and secured ratably by a tien on and pledge of li) the proceeds of Bonds to be issued by the Commission to pay the principal of and accrued and unpaid interest on Ihe Series 1991 Notes tother than proceeds of Ik>nds deposited in a reserve fund or funded interest accounts therefore or used to pay costs of issuance thereof). which lien and pledge are superior to all other liens thereon lii) the moneys on deposit in the Note Debt Service Reserve Account. which lien and pledge are superior to all other liens thereon and tiiil the moneys on deposit in the Construction Account, which lien and pledge are superior to all other liens thereon. In addition to the sources described in clauses (ii) and liii) above, payment of interest on the Series 1991 Notes is payable from and secured by a lien on and pledge of Net Revenues.

Defeased Bonds: Dunng 1978 the Commission provided for the advance refunding of all of its

$123.325.000 water and electric revenue bonds (Refunded Bonds) outstanding at April I,1978 by Ihe sale of

$110.330.000 Water and Electric Revenue Refunding and Improvement Bonds. Senes 1978 and $94.650.000 Special Obligation Bonds. Series 1978. The Refunding and improvement Bonds were subsequently advance refunded in December 1935 From the proceeds of the sale of the two 1978 issues, mon:es were invested in United States obligations in an irrevocable Escrow Deposit Trust Fund Such United States obligations mature at such time so as to provide sufficient funds for.the payment of maturing principal and interest on the Refunded Bonds. All interest earned or accrued on the United States obhgations has been pledged and will be used for the pay ment of the pnncipal and interest on the Special Obhgation Bonds. Series 1978 The Refunded Bonds are treated as extinguished debt for financial reporting purposes, were removed from the balance sheet and have a remaining principal balance of $48.340.000 at September 30.1993.

In December 1085. the Commission provided for the advance refunding of all of its water and electric revenue bonds then outstanding in the aggregate principal amount of $577.730.000 (Refunded Bondst by the sale of $565.0.10.000 Water and Electric Refundmg Bonds. Series 1085 ($950 million authorized and validated and confirmed by the Supreme Court of Floridat Sale proceeds were invested in United States obligations in an irrevocable Escrow Deposit Trust Fund Such Umted States obligations will mature at such time and in such amounts so as to provide sufficient funds for the payment of maturing principal and interest on the Refunded Bonds. The Refunded Bonds are treated as extinguished debt for financial reporting purposes, were removed from the balance sheet and have a remaining principal balance of

$538.050.000 at September 30.1993 in August 1092. the Commission refunded the $70 000.000 Unit Priced Demand Adjustable Water and Electric Revenue Bond Anticipation Notes. Series 1990A Il990A Notes) with the Water and Electric Subordmated Revenue Bonds Senes 1992A (the "Senes 1992 A Bonds 7 to lock in favorable long term fixed rates A - 18

NOTE E-LONG-TERM DEBT--Continued in December 1992, the Commission provided for the advance refunding of all of its senior lien water and electnc revenue bonds then outstanding m the aggregate principal amount of $532.720,000 iRefunded Bonds) by the sale of $467.820,000 Water and Electric Revenue Refunding Bonds. Series 1992. Sale proceeds were invested m United States obligations in an irrevocable Escrow Deposit Trust Fund. Such United Statpbligations will mature at such time and in such amounts so as to provide sufficient funds for the paymetit of maturing principal and interest on the Refunded Bonds. The Refunded Bonds are treated as extinguished debt for financial reporting purposes, were removed from the balance sheet and have a rernaining principal balance of $532.720.000 at September 30,1993. Present value savings of $51,659,344 or l I l 34% of the Refunded Bonds resulted from the transaction. An economic loss of $67,742,680 is included in Unarnortized Debt Expense and will be amortized over the life of the Series 1992 Bonds.

In June 1993, the Commission issued the Water and Electric Subordinated Revenue Refunding Bonds Series 1993A ISeries 1993A Bonds) in the amount of $87,950,000 to advance refund $75.000,000 of the Series .

1989C Bonds IRefunded Bonds). Sale proceeds were invested in United States obligations in an irrevocable Escrow Deposit Trust Fund. Such United States obligations will mature at such time and in such amounts so as to provide sufhcient funds for the payment of maturing principal and interest on the Refunded Bonds.

The Refunded Bonds are treated as extinguished debt for financial reporting purposes, were removed from the balance sheet and have a remaining principal balance of $75,000,000 at September 30,1993 Present value savings of $4,778.284 or 6.37% of the Refunded Bonds resulted from the transaction An economic loss of $7.927,818 is included in Unamortized Debt Expense and will be amortized over the life of the Series 1993A Bonds.

Related Debt Information: In September 1993 the Commission authorized the issuance of not exceeding $45.000.000 Water and Electric Subordinated Revenue Refunding Bonds Series 1993C. The purpose of the issue is to advance refund a portion of the Series 199] A Bonds to obtain interest savings.

Actual issuance will be based on market conditions.

The Commission has no materia l operating or capital leases.

A-19 - - --

l NOTE F-PARTICIPATION AGREEMENTS h Company In 1980 the Commission entered into a Participation Agreement with Florida Power and (FPL1 to purchase a 6 08451% (52 net megawattsi undivided owners l t d at 853 net nuclear powered eiectric generating facihty constructed by FPL This l unit is present t ed into a y ra e megawatts tMW) and commenced comme cial operation in 1983 h Cornmission The Commission has a so e Reliatnuty Exchange Agreernent with FPL The Rehability Exchange St. Lucie UnitAgreement No. results in t e exchanging 50% of its share of the output from St Lucie Unit No. 2 for a hke amount from I, a nucls powered electric generahng facility. FPL has operationall control of both projects The Commission also has a Participation Agreement with the City hip of Lakeland, Florida by the interest in a 340 net MW refum and coal-fired steam generati City of Lakeiand The City of Lakeland has operational control of this project. l ida Since 1975, the Commission has owned a 160 f 5% (13 netRiver d Crystal MW) Unitundivided ownership in Power Corporation's 835 net MW nuclear powered electric generating plant ih designate No. 3 This ownership interest was acquired urder the terms of a single i l Participation Agreeme Florida Power Corporahon and ten Ilorida municipal utihties. Flonda Power Corporation has control of this project d Municipal Power in 1984 and 1985. the Commission entered into Participation Agreements Center Unit #1 with Flori a Agency (FMPA) and the Kissimmee Utility Authority (KUA) to h sell afthese portion of Stanton Energy ISEC 1) excludmg common and external facilities. hSEC4 8193% 1 is rated undivided 440 net MW Under t e ter at agreements. FMPA has a 26.6265% undivided ownership interesthipand KUA interest has as a ownership interest The Commission, which has retained a 68.5542% undivided owners operational control of this project ll a portion of in 1988 the Commission entered into Participation Agreements d B excluding with FMPA and KUA to se common b i the Commission's Indian River Plant Combustion l Under the terms of these Turbine Project for turbines which can generate elecincity utilizing natural gas or light diesel divided oi ownership ti al agreements, FMPA has a 19% undivided ownership interest and K control of this project fh in 1990, the Commission entered into a Participation Agreement with FMPA to sell a portion Commission s Indian River Plant Combustion Turbine Project for Units C and D excluding comm ladlities The Commission's Combustion Turbine Project for Units l il Unit C wasC and D includes two i1 combustion turbines which can generate electricity utilizing natural b 1992. Under gas and the light diese o .

placed m commercial operation in August.1992. with Unit D placed i hich has in service in Octo er terms of this agreement FMPA has a 2i% undivided ownershipi interest l control of The thisCommiss on.w retained a 79"o (93 net megawatts per uniti undivided ownership interest has operat ona project in 1991, the Commission entere.1 into a participation agreement with FMPA to sell a p Energy Center Umt r:2 which is yet to be constructed Under the terms of th undivided ownership interest of 28 4091" The closing on this sale took place in f une ownership interest. will have operational control of this project 30.1943 was $75.871,508 1492 Construction in progress at September f

l A - 20

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NOTE F-P ARTICIPATION AGREEMENTS--Continued Following is a summary of the Commission's proportionate share of each jointly owned plant. SEC I, l McIntosh (Jnit No. 3. and the Indian River Plant Combustion Turbine Projects include the cost of common l

and/or external facilities The other plants do not. but the participants pay user charges to the operating entity According to the paiticipation agreements, each participant must provide its own financing and each participant's share of expenses for the operations of the plants are included in the corresponding operating -

expenses of its own income statement. Allowance for depreciation and amortization on utility plant in service is determined by each participant based on their depreciation methods and rates relating to their share of the plant.

Plants as of September 30,1993 Stanton Stanton ._

l Energy Energy indian River St. Lucie McIntosh Crystal River Center Center Combustion Unit No 2 Unit No 3 Unit No. 3 Unit No. I Unit No. 2 Turbines Utility plant l in service $ 106.5 42.799 $ ln2,977.004 $ 16.506 ( 55 $374.108 l17 $55,134 030 i Alimince for depreciat h >n i 6 anortization 137.378 161) 132.988 ouol 19.6X0,4 H ) (57.58 1215) 14.121.1681 Construction werk in progress 205 642 375 871.508 753.767 Cornrnission's ret share $ 69.164 638 $ 679X9.095 $ 6.916.181 $ 316.730.544 $75.871.50X $51.766 624 It has been determined that none of the participation agreements to which the Commission is a party meet the cntena of a joint venture as specified in Statement 14 of the Governmental Accounting Standards Board The Commission lacks operational control over the St.1.ucie Unit No 2 Crystal River Unit No. 3 and l McIntosh Unit No 1 plants. SEC 1 and Indian River Combustion Turbine Projects are controlled by the Commission Fiscal and budgetary control of SEC 1 and the Combustion Turbine Projects remains with the Commission No separate governing authority exists for any of the participation plants.

The Commission also has an agreement with Orange County. Florida to share operating costs of a waste I

water treatment facihty at the SEC l site The Commission operates the facility Effective luly 1.1993 the County's annual fee for the operation and maintenance of the facility is $612.940. The fee is subiect to l annnal increa3es based upon inflationary factors and is subject to renegotiation within the form of the contract The annual fee is dassified as a reduction to SEC 1 operating and maintenance expenses.

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I NOTE G-ELECTRIC SUPPLY AGREEMENTS Capacity Commitment: In 1985, the Commission entered into an agreement with the Florid Power Agency if MPA) to provide FMPA with a total of 130 MW of thei Commission's 619 MW o and 3 generating capacity of the Indian River plant on a take or pay basis. Payment to the Commis based upon a demand charge plus 2165% share of the cost of o and extends to 2001 FMPA has an option to extend the contract for a five-year ramp h down.

In 1989, the Commission also entered into capacity commitroent contracts with FMPA and KUA f 15 years to receive 20 MW of generating capacity of the Commission's system generating capacity or in September 1989. the Commission entered into two capacity commitments with Reedy Creek improvement District for 15MW of generating capacity of the Commission's system gene 10 years plus a twogear ramp down. and to receive 6MW of reserve capacity of the Commission generating capacity for 1I years.

In 1990, the Commission entered into capacity commitments with FMPA . FMPA 1994 will receive an additional 20MW of generating capacity of the Commission's system generating capacity for 199I to and 10MW for 1995.

On August 13.1992, the Commission entered into a contract withd the City energy fromofthe St Cloud. Florida (STC).

whereby the Commission will supply STC SMW of generating capacity operation of SEC 2 Florida Municipal Power Pool: In May 1988, an agreement was entered into d between the Commis the City of Lakeland, Florida, and the FMPA's All-Requirements f Project h systems'to cooperate in the inter operation of the respective electric supply systems. so as to obtain the fullest advantage o eac l generating resources A management committee consisting of a representative fromdeach i organization t supervises t of this Pool The Commission operates the dispatching service and administers d the l Pool Pro uct on cos savings due to the operation of the Pool are accounted for and allocated to each organization b pool participation d The term of the agreement is for one year, to be automatically renewed frorn year to year until ter by the consent of all participants, however. any one participant may withdraw at any time u wntten notice i

1 A- 22

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NOTE H-DEFERRED COMPENSATION PLAN The Commission offers its employees a deferred compensation plan created in accordance with Internal Revenue Code Section 457. The plan, available to all Commission employees permits employees to contnbute 25% of their base salary exclusive of total pension and dependent medical care contributions up to $7.500 per year. Assets and liabilities of the plan are recorded at market The deferred compensation is not available to employees until termination. retirement death, or unforeseeable emergency.

All amounts of compensation delerred under the plan. all property and rights purchased with those amounts. and all income attributable to those amounts, are (until paid or made available to the employee or other beneficiary) solely the property of the Commission (without being restricted to the provisions of benefits under the planj, subject only to the claims of the Commission's general creditors. participants' rights under the plan are equal to those of general creditors of the Commission in an amount equal to the f fair market value of the deferred account for each participant.

It is the opinion of the Commission's legal counsel that the Commission has no liability for losses under _ .

the plan but does have the duty of due care that would be required of an ordinary prudent investor. The Commission beheves that it is unlikely that it will use the assets to satisfy the claims of general creditors in '

the future NOTE l-PAYMENTS TO THE CITY OF ORLANDO AND ORANGE COUNTY Two types of payments are made to the General Fund of the City of Orlando, a revenue based payment and an income based payment. The revenue based payment is calculated at six percent of gross retail electric and water billings to cust< crs within the City. This payment is classified as nn operating expense.

The income-based dividend paynn t is calculated at 50% of a rolling five year average of net income. For income based dividend payment calculations involving fiscal years 1991 through 1996 only. 60% of net income will be used This payment is recorded as a reduction of retained earnings and is not considered an expense for rate making purposes Payments are made to Orange County based on one percent of gross retail electric billings within the County but outside t he city limits of the City of Orlando. This payment. which was $512.430 and $594.499 for fiscal years ended September 30.1993 and 1992 respectively, is classified as an r perating Igeneral and administrative l expense All payments are made pursuant to a policy established by the Commission.

l A-23

e NOTE J-COMMITMENTS AND CONTINGENT LIABILITIES 1.

The Commission and the other participants in SEC 1 have a coal supply contract with a term that ends on December li.1999 with the option of two successive live year terms The contract requires at least 850.000 tons m 1994 and 850.000 tons per year thereafter. The usage is estimated at 5,100.000 tons f rom 1994 through 1999.

2.

The Commission and the other participants in SEC I have also agreed to a contract that expires on December 31,2007 for rail delivery of the unit's coal purchases.

3 In 1989 the Commission was informed by the Property Appraiser of Brevard County, that the Commission s property in that county is no longer exempt from certain real and tangible personal property taxes and should be removed from it's previous tax exempt status. The Commission has filed a Complaint for Declaratory and injunctive Relief in Brevard County Circuit Court asking the Court to declare said assessment and levy of taxes unconstitutional and void under the Constitution and Statutes of Florida The Commission believes that the Florida Constitution exempts such facilities from taxation. The case has been tried The District & Appeals ludges have entered judgment in favor of the Commission that the property in question is exempt f rom taxation. The Brevard County Property Appraiser is appealing this judgment with the Florida Supreme Court. If the Indian River plant and associated tacilities are allowed by the Supreme Court to remain on the tax rolls of Brevard County, the 1989 through 1993 taxes will amount to $4.047.526 in the aggregate The property in Brevard County in question is owned exclusively by the Commission and used in the production and transmission of electricity The 4 in September 1992 the Commission approved construction of a second coal fired generating unit unit is a 440 net MW unit that will supply 315 MW to the system. The Commission will pay an estimated $350.000 000 for its 71.59% ownership of the unit with an estimated completion date of lune 1996 At September 30.1993 the Commission has entered into contracts totaling $277.197.616 NOTE K-PENSION PLAN The Orlando Utihties Commission has a single employer defined benefit pension plan covering all employees who regularly work 20 or more hours per week Employees participate in the plan immediately upon employment.

The pension plan approved by the Orlando Utilities Commission states that the Commission shall make such contnbutions to the retirement fund as shall be required under accepted actuarial principles to at least be sufficient to maintain the plan as a qualified employee defined benefit plan meeting the minimum funding standard recuirements of the internal Revenue Code with respect to its members as shall be determined from time to time by the actuary.

The Commission shall not base any right. title. or interest in the contributions made to the retirement fund under the plan. and no part of the retirement fund shah revert to the Commission, except that:

a Upon complete termination of the plan and the allocation and distribution of the retirement fund as provided herein any funds remaining in the retirement fund because of an actuarial computation after the satisfaction of all fixed and contingent liabihties under the plan with respect to the Commission may resett to the Commission b if an excess con;ribution is made to the retirement fund by the Commission, then such contnbution may be returned to the Commission within one year after the payment of the contribution.

c.

If the internal Revenue Service determines that the plan does not meet the requirements of Code section 40llat the plan shall be null and void. and any contributions shall be retumed to the Commission within one year following the determination that the plan does not meet such requirements. unless the Commission elects to make the changes to the plan necessary to receise a determination from the Inteinal Revenue Service that the requirements of Code section 40llal are met A- 24

4

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NOTE K-PENSION PLAN--Continued Each participant contributes weekly to the Plan four percent of earnings until the completion of 20 years of service. After completion of 20 years of service, each member contributes weekly to the plan two percent of earnings. Required contributions cease upon a member ~s completion of 30 years of service i The Commission's contribution is determined using an actuarial cost method. The actuarial pension plan =

l obligations were used as a basis for calculating the contribution requirements for the fund Pension expense for the fiscal years 1993 and 1992 was $3.650.692 and $3.483.906 respectively, which represents the normal cost The assumed rate of return used in determining the actuarial present value of accumulated l plan benehts was 8 25% The method used to determine the normal cost and actuarial liability is the l Aggregate Actuarial Cost Method.

The participant's pension benefit is 2h % of the highest three consecutive years average base earnings tirnes years of employment A maximum of 30 years of service is credited Benefits are vested after 5 years of service.

Investment earnings for the plan years 1992 and 1991 were 8.2'1,and 15.3% respectively. The overall l cumulative average annual rate of return for the plan has been 13 2% since October I,1984 The pension benefit obligation presented as the actuarial present value of accumulated plan benefits is a standard measure of the present value of pension benefits. adjusted for the effects of projected salary l increases of 6% estimated to be payable in the future as a result of employee service to date.

l 1 The pension plan's assets are administered by The Mutual Life Insurance Company of New York (MONY)

The pension plan's funds may be invested in money market accounts, bonds, and stocks and are presented at market value 9

e A - 25

l

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l NOTE K-PENSION PLAN--Continued I

I i

i>lan data as of October 1.1992 (latest actuarial valuation) as developed by consulting actuaries is as l follows.

Actuarial present value of accumulated plan benefits: S 76.444.215 Present value of vested benefits . . 969 497 Present value of non-sested benefits

$ 77.413.712 Total present value of all accumulated benefits Projected benefit funded status:

Vested.

Retirees and bericliciaries currently receiving benefits.

$ 41.395.096 terminated & disabled employees not yet receiving benefits Current employees 12.709.169 Accumulited employee contributions 22.339.950 Employer-financed Non Vested- 22.747.738 Ernployer-financed _.

$ 99.191.953 Total pension benefit obligation

$ 110,048366 Net assets available for benefits

$ 10.856.413 Net assets in excess of pension benefit obligations The plan activity for fiscal year 1992 is as follows: $ 101.441.727 Asset value as at October I.1991 Contributions for 1991-92: $ l.191,504 P.tud during the year - Ernployee 3.284,554 Paid during the year - Commission

$ 4.476.058 Total contributions 0 Contributions receivable at beginning of year 0 Contributions rewivable at end of plan year

$ 4.476.058 Contributions for- 1991-92 plan year _ . _ _ _ , . _ _ _ _ .._.__ _

Disbursements for 1991-92: $ 4.144.902 r3eneut payments 750 Expenses and fees

$ 4.145.652 Total disbursements for 1991-92

$ 8.276.233 Imestment return for 1991 92

$ I 10.048366 Actuarul asset value as of October ! .1942 815%

Approximate rate of return af ter expenses and fees A - 20

f NOTE K-PENSION PLAN--Continued Contribution and payrollinformation for the year ended September 30,1993 follows:

Contributions:

Employer $ 3.617,983 Employee 1,241,167 Total contributions S 4,859,150 Total payroll $42.883 835 Covered payroll $38.566.33 7 Contributions as a percent of covered payroll 12.6%

Actuary recommended contribution for fiscal year 1993:

Employer . $ 3.226,220 Employee 1.305.210

$ 4.531.430 l Recornmended contnbutions as a percent of covered payroll I l .83%

Trend information for the precedmg five years follows Net Assets Available Unfunded Contributions Year Ended for Benefits as a Percentage Pension Benefit as a Percentage September 30 of Pension Benefit Obligation Obligation of Covered Payroll 1992 1109% _

123%

1991 111 3 _

11.7 1990 104 8 _ lI 6 1989 119 6 _

l I .6 1988 120,4 _ l I .6 A- 27

o e,

s

- NOTE L-PENSION PLAN SUPPLEMENTARY INFORMATION (UNAUDITED)

This schedule presents required supplemental historical pension benefit information for the last ten years currently available.

(6)

(1) (4) Overfunded Net Overfunded Pension Assets (2) Pension (5) Obligation as Year Available Pension 13) Benefit Annual a Percentage Ended for Benefit Perct ri.)ge Obligation Covered of Annual September Benefits Obligation Fun kd (2HI) Payroll Covered Payroll 30 (Millions) (Millions) (1)/(2) (Mil! Ions) (Millions) (4)/(5) 1992 $ 110.05 $9919 l 10 95% $(10.86) S38 57 ' (28.16)%

1991 101.44 91.14 111.30 (10 30) 36.97 (27.86) 1990 87 84 83 80 104 82 (4 041 32 43 (12.46) .

1989 85 68 71 64 I lo 60 (14.04) 30 43 (46 14) 1988 74.58 61 05 120 39 (12.63) 28.33 (44.58) 1987 (A) 70.74 60.72 116.50 (10.02) 28 04 (35.73) 1986 42 57 24.90 170.96 (17.67) 19.72 (89 60) 1985 33,79 24 36 138 71 (9.43 ) 18 23 (51 731 1984 28 92 22.09 130.92 (6 83) 17.00 (40 18) 1983 28 13 22.I4 127.06 15.991 16 24 (36 88)

Analysis of the dollar amounts of net assets available for benefits, pension benefit obligation and unlunded pension benefit obligation in isolation can be misleading. Expressing the net assets available for benefits as a percentage of the pension benefit obligation provides one indication of pension funding status on a going-concern basic Analysis of this percentage over tirne indicates whether the system is becoming financially stronger or weaker. Generally, the greater this percentage, the stronger the pension plan. Trends in unfunded pension benefit obligation and annual covered payroll are both affected by inflation.

Expressing the unfunded pension benefit obligation as a percentage of annual covered payroll approximately adjusts for the effects of inflation and aids analysis of the Commission's progress made in ,

accumulating sufficient assets to pay benefits when due. Generally, the smaller this percentage, the stronger the pension plan.

( Al The pension benefit obligation was valued by the actuary (Hewitt Associates) as prescribed by the Governmental Accounting Standards Board Statement 5 in 1987. This method differs from prior years in that projected benehts are allocated on a level basis to employee's years of service. This resulted in a 39 2% increase. Contract amendments increased the pension benefit obligation by 68 8% and net assets available for benefits by 44 3%.

A-28 f

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NOTE M-OTHER POST EMPLOYMENT BENEFITS in addition to the pension benefits described in Note K, health care benefits and life insurance coverage is provided to all employees who retire on or after attaining age 55 with at least to years of service or at any age after completing 25 years of service. Currently 269 retirees meet the eligibility requiremeri Retirees may also elect to provide health care insurance for their qualifying dependents by paying 35 percent of the calculated premium. The Commission is a secondery provider for those retirees and/or their dependents who are eligible for Medicare benefits.

The Commission's health care plan is administered through an insurance company on a Minimurn payrnent plan but operates as a self-insurance program with an additional purchased insurance policy to cover those claims over $100.000. In this plan the insurance company administers the plan and processes the claims according to insurance coverage with the Commission reimbursing the insurance company for it's payouts. Expenses are recorded by the Commission when paid to the insurance company. Total postemployment health care costs recognized by the Commission for the years ended September 30.1993 and 1992, were $1,051.879 and $795,767 respectively; postemployment life insurance costs during the same periods were $78.896 and $100.121.

ilealth care coverage is offered to former employees who voluntarily terminate and certain dependents who are no longer eligible for employee dependent coverage in accordance with federal law (COBRA).

Currently there are 6 COBRA participants. All participants are responsible for 100 percent of their insurance premiums I

t A - 29

s f NOTE N-REGULATION According to existing laws of the State of Florida, the hve board members of the Orlar,do Utili Commission act as the regulatory authority for the establishment of electric and water rat Public Service Commission (FPSC) has authority to regulate the electric f " rate structures' o utilities in Florida it is believed that ~ rate structures" are clearlyb distinguishable f ll from the total revenues which a particular utility may receive from ratas, and that distinction has thus far een care made by the FPSC.

Prior to implementation of any rate change. the Commission files the proposed tariff with Public Service Commission and has established the prerequisite of a Public Notice and the Public Heanng As noted above, the FPSC has jurisdiction to regulate electric ' rate Florida Public Service Commission: h structures of municipal utilities. In addition, the Florida Electric Power Plant Siting Act and t e

~

Transmission Line Siting Act have given the FPSC exclusive authority ffi i to approve d the need for ne plants and transmission lines The FPSC also exercises jurisdiction under the Florida Energ Conservation Act as related to electric use conservation pro agreements and settles teMorial disputes.

Environmental and Other Regulations: Operations of the Commission h are subject to regulation by Federal, State and local authorities and to zoning regulations by local authori Commission's interconnection agreements with investor owned utilities are subject to by the FERC. FERC also exercises furisdiction over the Commission under the Publ Policies Act of 1978 Federal and State standards and procedures that govern i the control of the env change These changes can arise from continuing legislative, regulatory, i and tion, judicial action respe standards and procedures Therefore, there is no assurance that the electric and ill water plants n ope under construction. or contemplated will always remain subject to the regulations currently in always be in compliance with future regulations.

An inability to comply with environmental standards or deadlines could result in reduced operati levels or complete shutdown of individual electric generating units or water plant facilities not in compliance. Furthermore, compliance with environmental standards or deadlines may increase capital and operating costs.

NOTE O-INCOME TAXES It is the opinion of the Commission and its counsel, that the Orlando Utilities Commission is e from federal and state income taxes I

A 30

.r NOTE P-BUSINESS SEGMENTS The Commission operates in two business segments -- the generation, transmission and distribution of electricity an'J the production, treatment and distribution of water. A summary of the segment information follows:

Electric Water- Total Year Ended September 30,1993:

Operating revenues S 303.150,255 $ 22.437,718 $ 125.587.973 Depreciation and amortization 35.141.378 3 398.931 38.540.309 Operating income . 75.824.687 4.855.642 80.680.329 Net income 22.769.039 4.790.783 27,559.822 Dividend payment to the General Fund cf the City of Orlando 14.493.360 2.760.640 17,254.000 Contributed capital 25.485 861 51,804.650 77 290.5Ii Utility plant additions 106.728.240 15.425.061 122.153.301 Utility plant deletions 4.703.183 908,701 5.611.884 Net workmg capital 67,443.726 451,519 67.895.245 Total assets 1.809.197.668 178.346,867 l.987.514.535 Long-term debt - net 1.350.074.621 64.356.198 1.414.430.819 l Total equity (accumulated retained earnings and contributed plant) . 284 681.946 111.265.527 395.947.173 Year Ended September 30,1992:

Operating revenues $ 286. < 80.569 $ 20.577.938 $ 307.358.507 Depreciation and amortization 29.537.599 3 034,343 32.571.942 Operating income . 75.120.768 3.565.628 78.686.396 Net income 21.344,028 3.589.483 24,933.51i Dividend payment to the General Fund of the City of Orlando 14.610.490 2.992.510 17,603,000 Contributed capital 15.163,477 49.780.719 64,944,196 Utility plant additions 129.345.717 10.932.339 140.278,056 Utility plant deletions 46.473.295 153.345 46.626.640 Net working capital 72.305,530 1.372.359 73.677.869 Total assets 1.584.541,479 171.761.208 1.756 302.687 Long-term debt - net 1.151.045,780 56,341.401 1.207.387.181 Total equity laccumulated retained earnings >

and contributed planti . 265 430.503 106.152.389 371.582.892 There were no sales to any single customer in excess of 10% of operating revenues for the fisc I years

, 1993 and 1992 l

A-31  !

I

o l

i Report of Independent Certified Public Accountants l Commissioners of the Orlando lJtilities Commission l

We have audited the accompanying balance sheets of Orlando Utilities Commission as of September 30 1993 and 1992, and the related statements of income and accumulated retained earnings and cash flows for the years then ended These financial statements are the responsibility of the Commission's management Our responsibility is to express an opinion on these financial statements based on our audits.

We conducted our audits 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 staternents are free of material misstatement. An audit includes examining. on a test basis, evidence supporting the arnoonts and disclosures in the financial statements An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.

In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of Orlando Utilities Commission at September 30,1993 and 1992, and the results of its operations and its cash flows for the years then ended in conformity with generally accepted accounting principles Y

November 19,1993 t

A - 32

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