ML20077K925
| ML20077K925 | |
| Person / Time | |
|---|---|
| Site: | Marble Hill |
| Issue date: | 07/14/1983 |
| From: | Loy C WABASH VALLEY POWER ASSOCIATION, INC. |
| To: | |
| Shared Package | |
| ML20076L352 | List: |
| References | |
| NUDOCS 8307190143 | |
| Download: ML20077K925 (23) | |
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.6$5E The Assoaation 1 President anJ Genera!
Manager's Messay 23 I Fower Suppiy 45 Lcad Mawfment 6 Tien smMon and DisMbut:,an 7 Internal Se vices S9 Board at Duecers 10-11 Fin v en! Repo" 12 13 I Aud ! ors' Repc;t 14 Balance Sheets 15 Statements of Revenues and i Patroncge Capua! lb Statements of So' aces of Funds ) used for Utiiny Plant Additions 17 Notes to Financial Stateinents l19 I ( l I l d 4 I 1 d F W i 1 M N _ __ _ _ _ _ _ _ _ _ _ _ _ _ . _ . . _ _ _ . _ _ _ . _ _ _ _ _ _ _ _ . _ _ . _ _ . . _ _
I The Association
, The 24 Rural Electric Membership f
,,,,7 ,,L7 Cooperatives (REMCs) who are ;
ELEC.CO OP members of Wabash Valley Power Association, Inc., (WVPA) own a ,
--.E generation and transmission D d M cooperative in order to provide their
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l CO "'"C "'"C - distribution cooperatives with a con- _g tinuous source of power at the lowest ) .
"A""A"I'VEu'Y no
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- '"'"C_ , co $^" u c Q--- Located in Indianapolis, Indiana,
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' O"-, t' 'ggy-WVPA supplies approximately 176,000 member-consumers.
. ._ _ . u , _ , g g..... .--i WVPA, incorporated in 1963, has
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; cass ;ajfc a Ein C: - #7 been an all requirements purchaser.
cEnoa ,y , --- ,j_ With the purchase of transmission and - l
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distribution facilities and 25% of Gib- i
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W nigico .__ $AY Co son *5, a coal fired unit built by Public aime ~. - t - , a, . name Service Indiana (PSI), WVPA assum-
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imour namc_ s __. , ed a full utility status. The Association
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is a 17% owner of the Marble Hill I- Isoown co - _ Nuclear Plai.: under construction by l
,. 4 P'"C -- . __ M = PSI at Madison, Indiana.
, "i, . . . i 0HOo The Association has been im-
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; plementing a load management pro-gram whereby water heaters will be
-1 7 c 4 controlled either at the member system headquarters or by a central system located at WVPA headquarters.
L I 1 I
( l < \ l The President & General Manager's Message ; l 1 i A look back l to 1982 -
. A. -
l The year 1982 was a year of matur- . . t. . ing abilities for Wabash Valley Power R' .' ' ( Association. Physically, we settled into % . our new headquarters and increased j the staff from 31 to 39. The member
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I i systems of Wabash Valley went e through a learning exercise of working together when they resolved the rate l problems among themselves through the establishment of a change in form of the wholesale rate. Furthermore, , Wabash Valley successfully completed l l the installation of its local load i management system for each of its sf' 1 twenty four member systems. The improved working relationship between Wabash Valley and Public , i Service Company of Indiana was
.< J graphically displayed through the sign-ing of a new Power Coordination &
Agreement between the two organiza- ' tions. As a new and pleasing ac- - . complishment in working together with _m -
- - wss em s
others, Wabash Valley significantly im' Calvin Loy. President and Edward P. Martin, General Manager proved its relationship with Indiana & Michigan Electric Company and its transmission facilities operations The cash returned to ultimate con-parent, American Electric Power Com. through Public Service Company of sumers because of this settlement is Indiana. Distribution substations pur- something in excess of $6.1 million. l pany, through the settlement of two J major wholesale rate cases. chased from Public Service Company 1982: Prepared for 1983 and Several years of differences between of Indiana went through their first year beyond . Wabash Valley and the Michigan of operations. The installation of the local load management systems in- Wabash Valley continued the : Public Utilities Commission were itiated Wabash Valley's operation of its development of its financing base resolved through a favorable ruling by load management functions. Wabash throughout 1982. On the revenue
)
an Administrative Law Judge in a case Valley operators assisted member side, Wabash Valley prepared and ! involving Wabash Valley's right to ex-ist. system managers and operators in filed a 5.4% increase in its rate to ) determining load level set points for cover its 1983 operations involving the ! The Board of Directors reviewed 1 and revised its policies and bylaws control, performed system load management system, transmis-during the year to reflect the major ma:ntenance, and supported in other sion and distribution systems and changes in business form that Wabash areas of load management operations general administrative functions, as . well as the operation of 15% of ! Valley has experienced. as requested. Finally, in the area of In addition to the above significant operations, Wabash Valley was able to Wabash Valley's 25% ownership in . resolve four major wholesale rate the Gibson No. 5 coal-fired generating ( accomplishments in maturing abilities, disputes with its supplying investor unit. On the capital side, Wabash Wabash Valley also began operations in 1982 for the first time. It began owned utilities. Of these four, the Valley secured a $133-million loan most significant was the settlement of guarantee from the Rural Eeletrifica- l the Indiana & Michigan Elev ic Com- tion Administration for its ownership . I pany rate case which bem a 1978. participation in 25% of the Gibson unit. 2 l l
From the standpoint of business ac- complete power purchases to an own- To tie all of its arrangements tions, Wabash Valley took two highly ership position of greater control of together, Wabash Valley has significant steps that will have great our power supply. The completion of developed a dispatch and load impact in the future. Notice was serv- our agreement for the ownership and monitoring system in conjunction with ed to Northem Indiana Public Service use of Pubic Service Company of in- its load management project. This cen-Company by Wabash Valley that its diana's Gibson Unit No. 5 clearly in- tral load management system will bc
) Service Agreements would be ter- dicates our proposed method for housed at Wabash Valley's head-minited upon the expiration of one meeting our future responsibilities for quarters with a satellite installation in ye:r. The date set was August 1, power supply. Finally, the far reaching the headquarters of each member
) 1983. From that date onward, Power Coordination Agreement be- system. Load data gathered for load Wabash Valley must be prepared to tween Public Service Company of In- management purposes will allow serv its own members' loads in the diana and Wabash Valley shows that Wabash Valley to determine its total Northem Indiana Public Service Com- we intend to work together. system loads on a real-time basis. pany area. Secondly, Wabash Valley The long standing differences be- Communication connections with ent:. red into negotiations with Hooster tween Wabash Valley and Indiana & neighboring utilities have Len En:rgy for the use of a portion of that Michigan Electric Company were negotiated in several instances and company's new generating plant, significantly reduced during 1982. negotiations for additional connections M rom. Informal agreements between Through negotiations with American are continuing. The completion of this m nagements indicate that the use of Electric Power Company for the center in Wabash Valley's head-this power would be available to resolution of a wholesale rate case, quarters will provide the technical W; bash Valley for the life of the plant. Wabash Valley reached informal capability for the fullintegration of This power could be used to serve agreements for purchases for the areas both the electric resources and the Wtbash Valley members in the Nor- currently served by Indiana & electric loads of Wabash Valley's th:m Indiana Public Service Company Michigan in which Wabash Valley members. tru. members are located, and for trans-mission of electric power through a 8"""*'Y I:tegration of Wabash Valley wheeling service in the Indiana & The year 1982 has been a suc-Resources and Electrical Re- Michigan area and through the cessful year for Wabash Valley Power
.f,co lishments of Wabash American Electric Power system. Association. The year 1983 will be The working relationsh,pi with another year of challenge both in Vtlley over the past six years provide Northem Indiana Public Service Com- working together and in resolving con-a sound base in partnership with pany has declined as much as the flicts with others. Through the united Public Service Company of Indiana for w rking relationship with Indiana & efforts of the twenty-four member W; bash Valley's future development. ,
Michigan has improved. The service systems of the Wabash Valley Power Thz 17% ownership in the Marble Hill terminati ns for both the Service Association, these problems can be nuclear plant has cemented our work-Agreement and the Marble HillInter- tumed into opportunities which will ing r:lationship. The joint ownership c nnection Agreement supplemental yield our ultimate consumers substan-in trinsmission and distribution power purchases are strongly in- tial benefits. facilities has moved us away from dicative of the decline in this working relationship. Wabash Valley will con-tinue nonetheless, to seek ways t work with Northem Indiana Pubhc Calvin Ley, President Service Company, but at the same Edward P. Martin, General Manager time Wabash Valley will be working to secure power from other sources which would be a more favorable price. 3
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MARBLE HILL I Wabash Valley Power Association is i- . ld a 17 percent owner of the Marble Hill Nuclear Plant now under construction m i)I v by Public Service Indiana (PSI) near iM 4 ~ Madison in southern Indiana.
, ^ %w e < *. The station will utilize two pressur-i
'a'of,- '
tzed water reactor units manufactured E" by Westinghouse Electric Corporation. i e The steam supply will drive two (2) tandem-compound turbines. When completed in late 1986 and 1988, the two 1,130,00 KW units will provide low cost energy from nuclear fuel. 4
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.__1 _ e l GIBSON UNIT NO. 5 During 1982, Wabash Valley Power Association made substantial progress
! toward the procurement of reliable, i low cost power supply resources. WVPA entered into 25 percent owner-ship participation with Public Service ! Indiana (PSI) in that company's Gib-i son Unit No. 5 located in south-western Indiana near Princeton. Gibson Unit No.5 is a coal-fired steam turbine equipped with wet lime-
; stone scrubbers for air emission con-trol. Gibson Unit No. 5 has a net
- generating capability rating of 625,000 KW. PSI formally declared Unit No.5 I
commercially operational, October 1, 1982. i 5
1 Lead Management l l i The twenty-four (24) member P rr' ' ~ " ~ " ' ~ m '-! i l systems of Wabash Valley Power O ,,, t Association (WVPA) are actively im-plementing a radio-controlled load ~ management system. The ~ 512,750,000 system is being installed - .
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in two portions, local and central con- 'r/w
&. ,N trol. The local control portion is the in- '
p l stallation of 50,000 switches on the - , ua
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electic water heaters of their member- 'l f.1
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consumers and the installation of con-trollers at each REMC headquarters. a
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l This portion of the project is opera- , S \, tional wiih approximately 25,000 switches installed by the member. ,i ~ , .crv M systems. WVPA member systems ex- 1
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pect to reduce their power costs by a ~ total of $85,000,000 through the ; - - , ]s operation of the load management - Bmd Henderson, Hancock County REMC system over the next 15 years. The Central Con:.ul Load Manage-ment and Dispatch System will be operational in early 1983. The Central i Control System will have the ability to
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operate the Local Load Management ,/ ,_ System from WVPA's headquarters to reduce our demand upon each of our 27 -- power suppliers, which effectively 1 .
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reduces our wholesale rate respon- Machine Load Management System , sibility to those suppliers. As a part of \ this system, we also will have the abili- ducted during the summer of 1982 on \ ( ty to forecast daily loads, and in the the control of air conditioners using a future to buy and sell power off radio-controlled switch. The project \ system on an hourly basis. was successful and will be expanded This load management system is where applicable. The member also capable of controlling other ap- systems of WVPA are studying the control of the electric heat component pliances. A " pilot project" was con-of a home heating system using both , [)g electricity and petroleum products to Tom Allender, Hendricks County REMC produce heat. The residential con-sumer survey showed that approx- consumers currently use oil or pro-imately 50 percent of the member- pane to heat their homes. These member-consumers can reduce their home heating cost by converting to a dual fuel heating system. At the pres-ent time a pilot project on the dual l program is underway. i 6 l l
Transmission and Distribution
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WVPA's ownership of high and low voltage transmission facilities in the Public Service Indiana (PSI) area became a reality on January 5,1982. At that time, WVPA paid PSI approx-j imately $29,704,000 for joint owner-
, '/. ship in their transmission system. Of
, '1 p / this amount, $12,657,000 was for
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/ bulk, common and sole use facilities in service. The remaining $17,047,000 g -
l ' was for facilities under construction. Construction payments have con-4 tinued through 1982 and at the pres-
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ent time, are anticipated throughout II C" 1983. 1N X' The purchase of these high and low voltage transmission facilities is being i made pursuant to a loan from the 5 " ' ' h Rural Electrification Administration g l} which was approved September 4, 1981. This loan provides $64,250,000 . for the purchase of high voltage transmission facilities and $7,750,000 for the purchase of low voltage transmiaion facilities. WVPA's pur-Q chase of these facilities has received
,V s - approval by the Public Service Com-mission of Indiana and the Federal Energy Regulatory Commission. The
, w , environmentalimpact of these facilities e has been analyzed in a Borrower's En- -
vironmental Report (BER) and this lO-h[p 4 y, -Nd _ report also has the approval of the
-----.-.-A Rural Electrification Administration.
{E-Q( _) _, p / The purchase of these facilities, both in service and under construction, will 7Y p -_. - Cf .(
-i, result in net savings of $123,149,000 3- " N '
\ /I/' in purchased power costs through jj s 1999.
The facilities cover a range of fi'
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voltage levels from a 69/12 KV y substation to a 765 KV transmission _ y _ 3 ,3 .
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;ffa.y';f Kathy Cobb, Rates Department *~
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. I Wabash Valley. Power Association, f , p. s E Q, s - ; f.
Inc. has used a timesharing service as *h "- b#gyi'n, Ug^Ce - ~ ' ' ^V ^ d its business computer since 1979. As the business has grown, the cost of Jeff Laslie, Alice AfcGuire, and Kathy Cobb operation using this service has risen above acceptable levels. During 1982, \WPA initiated a new equipment, and a general ledger research the subject of majority rule. project to convert its automated pplication software package was pur- This was the first year that the Board systems to an inhouse computer. A chased. This substan91 business in- functioned without Alternate Directors feasibility study addressing WVPA's in, vestment will result in improved infor- as a result of a bylaw revision. Policy formation requirements and outlining mation services and a significantly now allows for a Member System attemative methods of satisfying those reduced information processing cost to Representative who serves and votes requirements was prepared and ac. tWPA in the years ahead. on committees but does not vote for cepted, requisite computer equipment The office of General Counsel and the Director. All expenses of the and operating system software was the administrative staff review bylaws Representative are the responsibility of placed on order, the computer room nd policies regularly, with the the member system. ! was enlarged to accommodate the Management Advisory Committee making recommendations to the Board of Directors regarding revisions, l deletions, or additions in order to meet the needs of an expanding business and staff. As a part of the continual review, the office of General Counsel extensively researched and prepared a paper on Director Respon-sibility; the Committee continues to 8
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o ) e je Mari Lee Worrell, Accounting Department A- - -
~ , lie, Rates Departm Jeff Las Alice McGuire, Rates Department In addition, when changes in
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The WVPA staff shares connecting WVPA rates necessitate retail rate ad-facilities with the Indiana Statewide justments WVPA prepares and files i 7 Association of Rural Electric Coop- the required exhibits on behalf of the
< eratives, Inc. The organizations share member systems. This service is per.
meeting rooms and kitchen faciDties formed without reimbursement. ; allowing for ease of access for member WVPA conducted the consumer i d systems. In addition, the organizations survey for the member systems in have contractualy arranged for Indiana 1982 with an overall usable return of p Statewide to do the printing / copying 78.89%. The information obtained in i work of WVPA. Joint efforts in the the survey is used in the end-use videotaping medium began in 1982, mcdels for the power requirement with WVPA contracting the services of studies which are prepared by WVPA
, Indiana Statewide. The expansion of in conjunction with the REMC staff.
T, fu videotape services for the member
// systems will receive attention in 1983.
_ , As a service to its member systems, the WVPA rate staff is available to Dennis Power, Accounting Department assist member systems in their retail rate matters according to a policy adopted by the Bcard of Directors. At a member's request, WVPA will pro-vide services ranging from assisting the members' other rate consultants to preparing an entire rate case. The cost of these services is reimbursed by the individual member system. l I i l 9 l l i
. - , - - - . , _ ,,..,...-,.-m.,,--. .,...--.--,,....-r- _ ._mm-. -.. -_ _
I Board of Directors i I 1 l The Board of Directors of Wabash Valley Power Each member system selects a Member System j Association is comprised of 24 Directors (D), one Representative (MSR) to represent the views of the from each member system. Each Director serves on system to the Board of Directors. Each MSR serves a committee which meets monthly to review its on a committee where he is entitled to a vote; various responsibilities. The chairman of the com-however, he has no vote when the Board meeting mittee is an Executive Board Member. The Executive Board, composed of the four of, is in session. ficers and two executive committeemen, serves in A WVPA staff member serves as a representative
]
an advisory capacity to the General Manager. to each committee. 1 + l e s , POWER SUPPLY COMMITTEE 4 Front row, left to right: Robert ' i 1 Neterer. MSR. Fruit Belt EC; Kenneth .s F \ Gordon, D, Newton County REMC, Y ;V
^ &z Chairman; Emil Knoska. D, Fruit Belt gQ ,~ ,? ,,,a'[ l EC. Second row, left to right *
$j Phi lip Carrington, D. Parke County ' T',, s% ~ - Hr Y REMC; John Cash, D, Hendricks b ; $4 ~'
&V 0 Wq i
i County REMC; John Bowmar, D, Kankakee Valley REMC. Back row, I j, _
,( '
g left to right: Roger Burlingame, L. \ .
; \ ,n 3*
[ tj; . i MSR, Steuben County REMC; Steve *l% ?i
$'b- AL i L *
'v 4 Moore, MSR, Kankakee Valley ~L h - ~ ' Ah REMC; Floyd Furrow, MSR, Paulding- POWER SUPPLY COMMITTEE PURPOSE: To review proposed WVPA power Putnam EC; Gene Ruesch, MSR. supply projects and to oversee the development of any such project authorized by Hancock County REMC. the Board. :
... n ,.
Y
- :t, .
l
~
OPERATING COMMITTEE w ,,f
~
Front row, left to right: Alvin Long, s l 1^
)
D, Wabash County REMC; Max i & :s .
\
Guldin, D, LaGrange County REMC; *? ? . Richard Davis, D, Boone County .
~
N ' h, ' REMC, Chairman; Jamcs Fordeck, D, .. : l Noble County REMC. Second row. - i , 1:ft to right: 0.J. Whitenack, MSR, .I - l Jay County REMC; William Corbin, MSR, Newton County REMC, Bruce s- - Billow, MSR, Noble County REMC; Robert Hippensteel, MSR, Wabash OPERATING COMMITTEE PURPOSE: To oversee all WVPA activities that re-Cou1ty REMC. quire an operating function. 10 __.-.. _ _ . _ _ _ - . . _ - _ _ . _ _ _ _ _ , . . . _ . _ _ _ _ _ _ _ _ _ _ . _o
l
.g 9 MANAGEMENT ADVISORY COM-gg
- MITTEE j;, Left to right: James Weaver, MSR, l Jasper County REMC; Paul Fry,
, }j('W]'i y '
. MSR, Whitley County REMC; Earl Gentry, D, Jasper County REMC;
~.;
' ' u.y "Y \ '
L'
.'q Don Kaufman, D, Marshall County REMC; James Yates, MSR, Miami-l
. ; 's Cass County REMC; Harley Justus, l m ';; .- -
MSR, Marshall County REMC; Joe i Scott, D, Carroll County REMC; Herb l u s.+Wt
, . , _w . .. +n- -
isaacs, MSR, Carroll County REMC; MANAGEMENT ADVISORY COMMITTEE PURPOSE: To review the WVPA Robert Brickley, D, United REMC, Board of Directors' management responsibilities and to recommend needed changes. Chairman.
~ y_py ;;
z.q _m p.
,g 1 w
.3 jy Y ~x .,4"Wa 6pj t ;. MEMBER RELATIONS COMMIT-
.o 4 . ..
TEE g. Front row, left to right: Roy
,g'
- ?
\ -d
'. Meharry, D, Tipmont REMC; Ralph Finster, D, Miami-Cass County REMC; Max Walther, D, Kosciusko k, 4) Ws' . , j f i " I., f ' 1 g County REMC; Elmer Stocker, D, w-> W $i , .
, :" f y Whitley County REMC, Chairman.
~h f {k N
~
Second row, left to right: Arden l
. ,' ' 8 Warner, MSR, Kosciusko County MEMBER RELATIONS COMMIT EE PURPOSE: To review WVPA activities REMC; Robert Wood, MSR, United and projects that relate directly to WVPA member systems' operation and to oversee REMC; James Pauley, MSR, Boone the development of any such projects authorized by the Board. County REMC.
l
' FINANCE COMMITTEE f k: -
Front row, left to right: Ernest 1 ~I L.
* $- Cook, D. Hancock County REMC; I
, (
~y4 1 1.i ' ', [ Gordon Sams, D Steuben County
-' *^
^[, REMC; Roy Schipper, D, Fulton l
g ; County REMC; Melvin Coonrod, D. V3 67.e White County REMC; Edu'in Beucler. j :. - 7,Y. ; ; D. Paulding-Putnam EC. chairman. 1 flyj^ ~ ,h'[^i-M Second row, left to right: Robert Burroughs. MSR. LaGrange County REMC; Harold Wilson, MSR. Fulton County REMC; Keith Heifner, MSR, FINANCE COMMITTEE PURPOSE: To review and approve the financial ac- Parke County REMC; Ronald Hale. tivities of WVPA. MSR, Hendricks County REMC. 11
Financial Report Financial statements mi!Iion is directly associated with a tions for 1982, and to change
$72.5 million increase in utility plant \WPA's rate design from a pooling The financial statements of Wabash during the nine months ended rate to an area rate.
V;11ey Power Assoc. ia tion, Inc., for the September 30,1982, and the $43.1 Approval of \WPA's request from ynr ended December 31,1981, have million reduction in unbilled construc- the PSC came in three separate been audited by Arthur Anderson & tion costs payable. The unbilled con- orders. On December 30,1981, the Co. and are presented on the follow- struction costs payable of $43.1 I PSC approved a 2% temporary ing pages. Additionally, unaudited mi!! ion at December 31,1981, con- emergency increase of WVPA's rate tc fin:ncial statements for the nine sisted of an ad,iusting entry made at provide \WPA with sufficient months ended September 30,1982, year end for approximately $11.3 revenues to cover the costs of owner-ue presented to give the readers of million to accrue WVPA's share of un- ship and operation of transmission, the r:nnual report the most current vouchered liabilities on the Marble Hill distribution, and load management financial position of WVPA at the time Nuclear Station construction project, facilities that were added to WVPA's f printing. and $31.8 million which represented operations in 1982. On March 26, The financial statements are WVPA's accrued commitment to pur- 1982, the PSC made permanent the r:pr:sentations of the management of chase transmission and distribution 2% temporary emergency increase, WVPA who are responsible for the ac-facilities from Public Service Company and approved the remaining 1.38% curacy and fairness of their present - of Indiana at December 31,1981. increase that (WPA had requested to tion. The financial statements are The Statements of Revenues and cover increases in WVPA's other prepared in conformity with generally Patronage Capital reflect a net margin operating costs during 1982. On May eccepted accounting principles, and of $1,001,904 for the nine months 20,1982, the PSC approved \WPA's follow the rules and regulations of the ended September 30,1982. This requested change in its rate design Uniform System of Accounts prescrib- margin is attributable to an increase in from a pooling rate to an area rate for ed by the Rural Electrification Ad-gross margins from sales of electricity a twelve month trial period. At the ministration (REA) and the Public resulting from increased energy sales end of the trial period, WVPA must Service Commission of Indiana (PSC). during this nine month period and in- request approval for continued use of Par review of the financial creases in the rates that WVPA the area rate. stst:ments, explanations for the charges for the power sold to the When \WPA became the power 1' following changes in the Balance Member Systems. In 1982, WVPA ex- supplier for its member systems in She:ts between December 31,1981, perienced increased fixed and variable 1978, the pooling rate was instituted and September 30,1982, are given costs resulting from the ownership and for billing the member systems for for the convenience of the reader: operation of transmission, distribution their power purchases on a pooled The increase in utility plant in serv- and load management facilities. (blended) cost basis. The pooling rate ice from $22.8 million to $41.2 million However, WVPA experienced lower was designed to pool the costs of the is due primarily to the placement in purchased power costs in 1982 as a power purchased by \WPA from its service during 1982 of approximately result of its ownership of transmission four power suppliers. Because signifi-
$13.5 million and $4.9 million of and distribution facilities. cant variances in the costs of power tunsmission and load management am,nq the four power suppliers oc-facilities, respectively. These increases. WVPA rates co,,,, c ,,,n 1973,ng 1931, tiong with a $61.4 million increase in \WPA is required by its mortgage WVPA's Board of Directors directed construction work in progress for the indentures to increase the rate it the management of WVPA to seek M;rble Hill Nuclear Station and the charges for sales of electricity when approval from the REA and PSC for nuclear fuel associated with that pro- the current rate is not sufficient to modification of the pooling rate to ject, account for the majority of the in- generate operating revenues to cover reduce the impact to the member crerse in total assets from $297.5 operating costs, debt service payments systems of the difference between the million at December 31,1981, t and working capital requirements. pooling rate and the rates charged by $369.7 million at Septembef 30, During 1981-82, WVPA requested the predominant power supplier in (
1982. two increases to the rate it charges for each member system's area. The The increase in members' equity the sale of electricity, in November, cnd patronage capital is due entirely t 1981, WVPA filed requests with the ( the net margin of $1,001,904 REA and the PSC for a 3.38% in-reflected in the Statement of Revenue crease to its rate to cover revenue re-cnd Expense for the nine months end- quirements for changes in its opera-ed September 30,1982'. The increase in REA Mortgage Notes from $240.7 million to $355.5 12 i-
modification of the pooling rate fund to WVPA of $6.1 million plus mitment is warranted for the Marble resulted in a compromised 50% pool- interest for up to six (6) months. This Hill Nuclear Generating station at this ing/50% area rate. This modification refund, passed on to \WPA's time due to the time frame involved does not have a significant impact on member systems, will be reflected in and the uncertainty of future interest WVPA's operating revenues. WVPA's financial statements as reduc- costs. The REA concurs with this deci-WVPA received approval from the tions in revenues and purchased sion. REA on March 8,1982, for the re- power; it will not impact \WPA's A loan guarantee commitment in qurst d 3.38% increase in rates. Ap- operating margin. the amount of $133 million was ap-provtl for \WPA's change in rate in other supplier rate activity, proved for WVPA by the REA on design from the pooling rate to area WVPA has negotiated settlements September 9,1981. This loan will rats was received from the REA on with Public Service Company of In- provide WVPA with the funds needed August 3,1982. diana, Inc. (PSI), Indianapolis Power to finance the cost of its participation in August,1982, WVPA filed re- and Light Company (IPL), and I&M in the Gibson No. 5 coal-fired quests with the REA and the PSC for duilng the past year. Negotiations will generating unit. A condition of the a 5.36% increase in the rates WVPA begin in late 1982 with PSI for settle- loan requires \WPA to finance charges for the sale of electricity to its ment of their proposed increase ex- qualified pollution control facilities member systems. WVPA has re- pected to be effective in early 1983. associated with Gibson Unit No. 5 quested that this increase become ef- p aEe through the issuance of Pollution Con-f ctive on the date \WPA acquires its trol Revenue Bonds. The amount of 25% interest in Gibson Unit No. 5, The years 1981-82 have been very financing obtained through the is which is now anticipated to occur eventful in securing the financial future suance of long-term Pollution Control tround year end 1982. The purpose of WVPA. On September 4,1981, a Revenue Bonds may be rescinded of this requested increase is to provide loan guarantee commitment in the and withdrawn from the REA loan WVPA with sufficient revenues to amount of $673 million was approved guarantee commitment for Gibson cover its increased ownership, opera- for WVPA by the REA. This loan Unit No. 5 at the discretion of the tion and administrative costs provides WVPA with $588 million to REA Administrator. \WPA is current-associated with Gibson Unit No. 5 finance the increased costs of its par- ly proceeding with the financing of the end the additional transmission, ticipation in the Marble Hill Nuclear qualified po!!ution control facilities with distribution and load management Generating Station, $72.5 million for long-term Pollution Control Revenue facilities that will be placed in service the purchase and construction of Bonds, guaranteed by the National dung 1983. The REA approved transmission and distribution facilities, Rural Utilities Cooperative Finance WVPA's request for the increase in and $12.5 million for the construction Corporation (CFC). \WPA anticipates r:tes on September 3,1983, subject of the radio-controlled load manage- that this financing will be completed to approval by the PSC. WVPA ex- ment system. before year end 1982. pects approval from the PSC by year PSI announced on July 28,1982 end 1982. that the schedule and cost of the Mar- Equity management ble Hill Generating Station had again in 1981, the Board of Directors Power supplier rates been revised. Marble Hill Unit No. I adopted an Equity Management WVPA was charged rates during continues to be planned for commer- Policy for WVPA stating that \WPA 1979 and 1980 by Indiana & cial operation by December 31,1986, shall finance major capital additions to Michigan Electric Company (I&M) but Unit No. 2 has been slipped six plant with debt capital a'nd emphasiz-which were subject to retroactive ad- months from December,1987, to ing the importance of the REA's justment based on final disposition of June,1988. The resulting cost in- guaranteed loan program. The policy the rate request by the Federal Energy crease to WVPA is estimated to be requires that the rates charged by Regulatory Commission (FERC). $39 million above the present loan \WPA for sales of electricity to its WVPA's Board of Directors approved commitment of $948 million for a member systems will be based upon e settlement with I&M which, if ap- total estimate of $987 million. This dif- the revenue requirements of WVPA proved by FERC, will result in a re- ference is within normal bounds of which will be determined and ap-engineering accuracy and, in WVPA's proved annually by the Board of judgment, no further REA loan com- Directors. WVPA's equity will be reviewed by the margins earned and retained in meeting its annual revenue requirements. WVPA plans to retire capital credits on a 15-year revolving cycle. 13
Auditor's Report To the Board of Directors of Wabash Valley Power Association, Inc.: We have examined the balance sheet of Wabash Valley Power Association, Inc. (an Indiana not-for-profit corporation), as of December 31,1981, and the related statements of revenues and patronage capital and sources of funds used for utility plant additions for the year then ended. Our examination was made in accordance with generally accepted auditing stand-ards and, accordingly, included such tests of the accounting records and such other auditing procedures as we considered necessary in the circumstances. In our opinion, the financial statements referred to above present fairly the financial position of Wabash Valley Power Association, Inc., as of December 31,1981, and the results of its operations and the sources of its funds used for utility plant tdditions for the year then ended, in conformity with generally accepted accounting principles applied on a basis consistent with that of the preceding year. The accompanying balance sheet of Wabash Valley Power Association, Inc., as of September 30,1982, and the related statements of revenues and patronage capital and sources of funds used for utility plant additions for the nine months then ended were not audited by us and, accordingly, we do not express an opinion on them. ARTHUR ANDERSEN & CO. Indianapolis, Indiana February 11,1982 (Except with respect to the matters discussed in Notes 4,5 and 8, as to which the date is Sep-tember 9,1982) l 14
Wabash Valley Power A8sociation, Inc. Balance Sheets (Unaudited) September 30 December 31 ASSETS 1982 1981 UTILITY PIANT (Notes 2,3 and 4): In service at original cost - Transmission 28,782,635 5 15,286,268 3,845,974 3,830,058
- Distribution 3,684,408
- General . , , 8,537,643 41,166,252 22,800,734 Lese accumulated depreciation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5,590,740 4,441,359 35,575,512 18,359,375 Construction work in progress- 215,885,774 Marble Hill Nuclear Station 270,743,36; 37,338,407 30,839,279 Nuclearfuel . ,
15,173 0 Generalplant . _..... 2,902,140 4,890,839 Load Management system . 17.319,472 Transmission system . 12.036,111 358,610,704 287.294.739 CURRENT ASSETS: 14,867 Cash ,...... ..... 16.221 Temporary Cash investments . ......... . 0 490.000 Headquarters building bond construction fund . 2,350 10 000 Accounts receivable- 8,366,366 7,115,720 Power . 42,479 Other . . . . 33,133 0 319,190
. Unbilled fuelcost 11,673 Prepayments . . . 134,621 l 6,824 0 Other cunent assets 8.558,161 8,005,283 Totalcurrent assets .
OTHER: 1,456,440 1,132,168 Deferred charge, . 1,046,432 1,046.432 Other investments . 2.502,872 2,178,600 5369,671,737 5297,478,622 CAPITALIZATION AND LIABILITIES MEMBERS' EQUITY AND PATRONAGE CAPITAL: Membership certificates, 24 outstanding S 120 $ 120 Patronage capital (Note 4) . 2,518,553 1,516,649 Total members' equity and patronage capita; , 2,518,673 1,516,769 LONG-TERM DEBT. NET OF CURRENT MATURITIES: 355,545,000 240,734,000 Rural Electrification Administration Mortgage Notes (Note 4) . Economic Development Revenue Bonds (Note 4) . 2,710,000 2,720,000 Totalcapitalization . 360,773,673 244,970,769 CURRENT LIABILITIES: 20,000 20,000 Current maturities of long-term debt (Note 4) . Notes payable (Note 6) , , 220,000 375,000 Accounts payable-Purchased power 7,135,047 7,856,729 320,267 311,836 Trade . ..... ... ..... 10,085 43,119,875 Unbilled construction costs payable . , Contract retainages payable , 13,276 338,736 1,094,428 485,677 Accruedliabilities . Overcollected fuel . . 84,%1 0 8,898,064 52.507,853 Totalcurrentliabilities . COMMITMENTS (Notes 3,7 and 8): 8369,671,737 5297,478,622 The acrorrqpanying notes are on integraf part of these stadements 15
Wabash Valley Power Association,Inc. Statements of Revenue and Patronage Capital (Unaudited) Nine Months Ended Year Ended September 30, December 31, 1982 1981 OPERATING REVENUES (Notes 1,2 and 5) $ 78,604,537 5 84,299,6 % OPERATING EXPENSES: Purchased power (Notes 2 and 5) . . . 71,146,908 83,071,535 y Operation and Maintenance. 775,598 0 Administrative and general. . . 1,748,932 1,518,872 , Depreciation (Note 2) . 924,010 53,326 < TOTAL OPERATING EXPENSES . 74,595,448 84,643,733 ELECTRIC OPERATING MARGIN (LOSS) 4,009.089 (344,039) INTEREST EXPENSE: Interestincurred ... ... . 27,745,220 21,476,354 1 Interest charged to construction (Note 2) , (24,641,522) (21,285,459) NET INTEREST EXPENSE . . 3,103,698 190.895 NET OPERATING MARGIN (LOSS). . . . . 905,391 (534,934) NONOPERATING MARGIN-Interest Income . %,513 91,984 PATRONAGE CAPITAL ALLOCATIONS 0 1,190 NET MARGIN (LOSS) . . . . . . . . . . . . . . . . . . . . . . . . . . 1,001,904 (441,760) PA1RONAGE CAPITAL-BEGINNING OF PERIOD 1,516,649 1,958.409 PATRONAGE CAPITAL-END OF PERIOD . S 2,518,553 $ 1,516,649 The accompanying notes are an integralpart of these statements.
\
J 16
Wabash V:lley Power Association, Inc. Statements of Sources of Funds used for Utility Plant Additions (Unaudited) Nine Months Ended Year Ended September 30, December 31, 1982 1981 FUNDS GENERATED (USED) INTERNALLY: Net margin (loss) . . $ 1,001,904 $ (441,760) l Depreciation . . . 924,010 53,326 ) Amortizatbn . 55,153 128,178 1,981,067 (260,256) l FUNDS FROM DEBT FINANCING AND OTHER SOURCES: 1 Long-term debt .... .......... 114,801,000 73,637,000 Net change in working capital and other items- , Defened charges and other investments . . (372,428) (1,206,%2) ! Cash. ..... . 1,354 (1,809) j Temporary cash investments ..... 490,000 (490,000) Headquarters building bond construction fund 7,650 1,274.503 Accounts receivable . . . (1,241,300) 116,623 Unbilled fuelcost . . 319,190 (286,656) f Prepayments . (122,948) (7,065) Other cunent assets . . . ..... (6,824) 0 , Current maturities of long-term debt 0 20,000 Notes payable . . . (155,000) 275,000 l Accounts payable . .... (713,251) 1,193,087 Unbilled construction costs payable (43,109,790) 38,270,364 f Contract retainages payable (325,460) 162,289 i Accrued liabilities . . . . 6(8,751 174,141 ! Overco!!ected fuel . . 84,%1 0
$ 72,246,972 $112,870,259 ADDITIONS TO UTILITY PIANT AND CONSTRUCTION WORK IN PROGRESS:
Utility Plant ... $ 18,147,144 $ 18,323,401 7 Construction work in progress 54,099,828 94,546.858
$ 72.246,972 $112.870,259 7he accompanying notes are an integral part of these statements.
) I f u f -
f Wabash Valley Power Association, Inc. Notes to Financial Statements For the Nine Months Ended September 30,1982 (Unaudited) and for the Year Ended December 31,1981
- 1. NATURE OF OPERATIONS suant to the provisions of Section December 1986 and June,1988. The 501(c) (12) of the Intemal Revenue Association estimates its share of the Wabash Valley Power Association, Code. total costs of the Marble Hill Project to inc., is an association of 24 member e. Pension Plan be approximately $987 million.
Rurtl Electric Membership Coopera- Certain employees of the Associa- Due to certain construction prob-tiv:s. In January 1978, the Assocla- tion are members of and contribute lems at the Marble Hill project, all tion received a Certificate of Conven- to a pension plan administered by safety-related work was suspended in lence and Necessity from the Pubhc $ Indiana Statewide Association of August,1979. In response to a Service Commission of Indiana Rural Electric Cooperatives, Inc. Nuclear Regulatory Commission tuthorizing it, among other things, t The Association's pension expense (NCR) confirming order, outlining , be the power supplier and to conduct was $15,157 for the nine months necessary steps to resume safety-r: lated activities for its members. All of ended September 30,1982, and related work, PSI has restructured its th2 Association s operating revenues $22,027 for the year ended project management and quality tr2 derived from sales to members. December 31,1981. assurance staffs and added a substan.
- 2.
SUMMARY
OF SIGNIFICANT f. Operating Revenue and Pur- tial number of personnel with exten-ACCOUNTING POLICIES chased Power sive commercial nuclear experience, The Association records sales and Safety-related work was resumed on
- c. Basis of Accounting purchases of power from suppliers March 27,1981, and the 1979 The Association maintains its ac- based on billing dates prior to the confirming order was rescinded by the counting records substantially in ac-end of each month. Revenue and NRC on February 12,1982.
cordance with the Uniform System On December 31,1981, the of Accounts of the Rural Electrifica, purchased power expense are not rec rded for energy unbilled at the Association purchased from PSI tion Administration. end of each month. transmission and distribution facilities
- b. Utility Plant under provisions of agreements per-Construction costs include alloca- 3. CONSTRUCTION COMMITMENT talning to proportionate ownership of tions for payroll related costs and The Association has a 17 percent such facilities. The assets purchased administrative and general expenses wnersh p interest in the Marble Hill were comprised of both in-service and as well as interest on borrowed Nuclear Station, which is being con- construction work in progress facilities.
funds used during construction . structed by Public Service Company of Indiana, Inc. (PSI). The ownership The Ass on provides deprecia- agreement between the Association tion on utility property on a and PSI provides that each party shall straight-line basis over the estimated be responsible for the financing of its service lives of the depreciable ownership share of the project costs. property. Depreciation rates are as The in-service dates for the two I II *S: Marble Hill units are scheduled for Transmission 2.52 % Distribution 3.71 % \ General Plant Load management equipment 6.7% Structures and improvements 2.5% Transportation equipment 20.0 % Office fumiture 10.0 % Other general plant 6.0 %
- d. Federal Income Taxes <
The Association is exempt from l Federal and state income taxes pur-4 18
r i The original cost of the facilities in- of $133 million was approved for the equity is less than 40 percent of total service amounted to $18.9 million Association by the REA. This loan assets. As of December 31,1981, with accumulated depreciation of $4.4 guarantee commitment will provide equity was less than 1 percent of total million. The amount purchased as the Association with the funds needed assets. construction work in progress was to finance the cost of its participation Financing for construction of a L $17.3 million. During 1982, construe. In the Gibson Unit No. 5 coal-fired headquarters building was obtained tion has continued on certain facilities generating unit. A condition of this through the issuance of City of In-acquired from PSI. loan guarantee commitment required dianapolis Economic Development e Associadon to Snance quah Revenue Bonds at a raw of 8.875 4.LONG TERM DEBT pollution control facilities a;sociated percent, interest payable semiannually, On September 4,1981, a loan with Gibson Unit No. 5 through the is- with semiannual principal payments guar;ntee commitment in the amount suance of long-term Pollution Control from November,1981 through May, of $673 million was approved for the Revenue Bonds. The amount of finan- 2010. Payment is guaranteed by the Association by the Rural Electrification eing obtained through the issuance of National Rural Utilities Cooperative Administration (REA) of the U.S. long-term Pollution Control Revenue Finance Corporation. Department of Agriculture. This loan Bonds may be rescinded and The notes and the bonds are gu:rintee commitment will provide withdrawn from the REA loan secured by all property of the Associa-the Association with $588 million to guarantee commitment for Gibson Son. fin nce the increased costs of its par- Unit No. 5 at the discretion of the The estimated principal payments ticip tion in the Marble Hill Nuclear REA Administrator. commencing in 1982 through 1986 Gen: rating Station, $72.5 million for Mortgage notes are payable to the for the REA mortgage notes and the the purchase and construction of Federal Financing Bank with interest Economic Development Revenue tr:nsmission and distribution facilities, rates ranging from 8.418 percent to Bonds are as follows: - cnd $12.5 million for the construction 16.725 percent. The notes have Economic of a radio-controlled load management maturities through December,2016. REA Development systim. Interest payable quarterly, with Morts.se nevenue I On September 9,1982, a loan quarterly principal payments com- Notes Bonde I guarantee commitment in the amount mencing in 1985. Under the terms of 1982 0 $20,000 the loan agreement, unadvanced loan 0 1983 funds of $678,139,000 are currently available to the Association to cover 1984 0 20l000 20 000 1985 345,000 30,000 future construction expenditures. 787,000 30,000 1986 Under terms of the mortgage agree-ment, the Association is restricted from 5. RATES making distributions of patronage
- a. Association capital so long as the Association,s The Public Service Commission of Indiana approved on December 30, 1981,a new Schedule of Rates for the Association which generated an approximate 2% increase in revenues from electric sales, an-nually. These rates were approved j effective January 1,1982. The pur-
' pose of this increase was to provide the Association with sufficient revenues to recover the costs of j
1 19
Notes to Financial Statement (Continued) I ownership of certain transmission anticipated to occur around year September 30,1982, and no amounts cnd distribution facilities acquired end 1982, were outstanding at December 31,1981 from Public Service Company of in- b. Power Supplier diana, Inc. on December 31,1981, The Association was charged rates
- 7. LEASE COMMITMENTS tnd constructed during 1982; and during 1979 and 1980 by Indiana Future rental commitments under ex-to recover the costs of ownership of & Michigan Electric Company isting leases are not significant. Total ren-load management facilities which which were subject to retroactive tal expense was $23,427 and $36,280 hav: become used and useful dur- adjustment based on final dispost- for the nine months ended September Ing 1982. tion of the rate request by the 30,1982 and the year ended December The Association also had ap- Federal Energy Regulatory Com- 31,1981, respectively.
proved by the Public Service Com- mission (FERC). The Association's 8. PURCHASE COMMITMENT mission of Indiana on March 26 Board of Directors approved a set-1982, an additional 1.38% increase tiement with Indiana & Michigan The Association contractually agreed of its permanent rate. In conjunc- which, if approved by FERC, will on August 27,1982, to purchase a 25% tion with this increase, the Associa- result in a refund to the Association interest in Gibson Unit No. 5, a 625 MW tion changed its rate design from a of $6,135,903 plus interest for up coal-fired unit from PSI. The transfer of 100% pooling rate to a 50% pool- to six (6) months. These refunds the ownership of the unit to the Associa-ing/50% area rate. The purpose of will be passed on to member tion will occur subsequent to receiving tha change was to more closely REMCs and will be reflected in the approval from the Public Service Com-reflect through purchased power financial statements as reductions in mission of Indiana and the REA. The costs of the member system, the revenues and purchased power. estimated cost of the purchase is ritis of the area in which each These refunds will not impact the $101,003,000. member system serves. Association's operating margin. The Association has requested an edditionalincrease of 5.36% in 6. LINE OF CREDIT rat:s. The purpose of this increase is to provide the Association with The Association has a short-term line sufficient revenues to recover the f credit available in the amount of costs of ownership of the transmis. $24,000,000, which may be used for sion, distribution, and load manage- general corporate purposes as determin-ment facilities, as well as increased ed by the Board of Directors. Borrowings administrative and general ex, bear interest at the prevailing prime com-penses. In addition, the rate in- mercial rate + 1%. Borrowings of cr:tse requested will be required $220,000 were outstanding at for the Association to recover the costs of ownership associated with its requisition of a 25% interest in Gibson Unit No. 5 from PSI. A public hearing on the 5.36% in-crnse was held on October 21, 1982. Final Public Service Commis-sion approval of the rate increase is still pending. The Association has riquested that this increase coincide with its purchase of 25% of the . Gibson Unit No. 5 which is now
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Departenents i Edward P. Martin GeneralManager Don F. Morton General Counsel Administrative i Nancy R. Ross ', Drector ofAdministranue Serukes Nell R. Pierce Office Manager Engineering Wdliam W. James Drector of Engineering Thomas L Dane
- Manager of Operanons Finance & Accounting Michael E. Eh Drecsarof Fhnee & Accounang Rick D. Coons cbnooser i
s E l i e i l Wabash Valley Power Association, Inc. 722 North High SchoolRoad Indianapolis, Indiana 46224 Ph. (317) 247-15%}}