ML20196B874

Taunton Municipal Lighting Plant 1987 Annual Rept

ML20196B874
Person / Time
Site:	Seabrook
Issue date:	12/31/1987
From:	TAUNTON MUNICIPAL LIGHTING PLANT
To:
Shared Package
ML20196B791	List: ML20196B785 ML20196B814 ML20196B821 ML20196B834 ML20196B841 ML20196B851 ML20196B874 ML20196B902
References
NUDOCS 8806300395
Download: ML20196B874 (20)

Text

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, A Messagefrom the GeneralManager. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2 Ibu er Pmiuction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4 kansmission arulDistribution . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ................6 EnergySerckes andPlanning . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9 Customer Services . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .' . . . . . . . I 2 FinancialHighlights. . . . . . . . . . . . . . . .....................,...............14

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l

l C0MMi$SiONERS1988 89 l

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L I- SE ATED FROM LEFT:

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c 1 [s. ,' JOHN A.MARTYNIAK.

'l COMMIS$10NER

'. ARTHUR G. PIMENTA.

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i . CHAIRMAN a JOSEPH MEDEIROS.

4 W- SECRETARY Stf l' q  :( .' ..

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'T51LP has met the needs of the growing industrial and residential base in our area with proficiency and a w x 2, conscientious concern for the ratepayer.1 heir

= ,,... RICH ARD JOHNSON.

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accomplishments are recognized as a critical MAYOR component of the growing prosperity of

southeastern 5tassachusetts."

$A A year of growth for DILP was not without loss: the death of Commissioner 5!anuel Paiva. IIis dedicated senice toD!LP's t AUGUST 4.19M -

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mission will be remembered for many years , i 1 M A Rcw 8. issa to come.

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A' M E S S A G E FROM T N E. S E N.E R-A L MANASERl . '. .

"...syear of

, unprvcedented ne long-awaited economic bwm in southeastern 51assachusetts growth." has finally begun, and 1987 was a year in which the Taunton ilunicipal Ughting Plant played a sital role in assuring its continuation in our senice area.

Since 1986, our retail energy sales increased nearly nine percent, peak load was up by more than 12 percent,1135 new customers joined the DILP family, and more than 500 new residential and commercial construction projects got y the timely senices they needed to meet their dewlopment goals.

I w" A All the while, T5tLP still delivered rate reductions to q

bi its customers for the second year in a row, Plus, we tmnsferred h $1,420,000 to the City of Taunton for the reduction of taxes - an increase of 12.6 perrent over 1986.

i , For this public power utility,1987 was certainly a

ok fonsard to doing our part to foster continued interest and economic development in the region.

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IT T AKES G000 W ATER T0 M AKE GOOD STE AM - ONE Of THE MANY TESTS TH AT arf c0N-OUCTED DAILY AT 1MLP S GENER ATING ST ATION LABORATORY l ML I .MN t

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n eRODUC TION SY STE M A

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l PROACTivt M AINTIN ANCf eRocRA M 1 A. s o, s,n,0 l ) TO MINiMlli R, P A1R g; y OUT,GFflMF 3

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" men andscomen e.tper/encedand DILP's ability to respond quickly and successfully to diverse factors pract/cedin the impacting the pnduction of electricity was demonstrated on many fmnts thmugh-mult(facetedsc/ence out 1987.

. ofgenerat/ng Power production surged. Compa ed to 1086, T51LP's turbines electricity." and boilers nearly doubled energy output in 1987, thereby playinga vital role in easing the power stmin felt thmughout New England. Our Cleasy-Fhxxi Station generated approximately 350 million kMh (349,799 SNh) compared to approximately 182 million kMh (182,435 5Nh)in 1986, a production factor increase from 15.4 percent to 29.6 percent.

, Mhile meeting this significanJy increased demand for power, our avalability rvord hit a new high of 94.1 percent.

't , Environmental concerns satisfied. In 1987, our pnxiuction staff responded successfully to new regulations imposed by a 90-day cease and desist order from the DEQE' by designing and constacting an interim waste water treatment j system. DEQE stipula ted tha t our "waste wuter"(purified municipa' N  ! water) had to be treated before disposal. D1LP's Power Pnxiuction m n. 7 Department acted quickly and efficiently to satisfy this emiron-

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~ 5 mental concern - while maintaining full plant operation.

POWER PRODUCTION MAN AGER Proactive maintenance program instituted. 51aintenance crews completed scheduled overhauls of tuihines and boilers on Unit 8 and l' nit 9.1hrough attention to detail and careful use of outside contractor support, each overhaul was completed one week before the scheduled completion date, reducing maintenance i I outage time and b(x> sting our 1987 antilability statistics.

To ensure maximum availability of electric power, D!LP's Pimer Production Department ! aid the founktion for a pmactive maintenance program l during 1987. L'nder this nev, program, inspection of all mechanical components will be scheduled at regular intenuls, a "look-ahead" program that will help ensure AVAll ABILITY RATES IN 1987 against long-temi, repair-related outages. i EXCEEDED THE $TAND ARDS SET ,,

! tribute to the company's phik> sophy of [si IsT '~~" ~ "92.i5 ENGLAND POWER POOL BT employing seasoned energy pmfessionals M- -

NEARLY 10 PERCENTAGE ~

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P0lNTS. UNIT 8'S AV AILABf tlTT g '

M RATE WAS 92.1 PERCENT: UNIT generating electricity. BitlTY Aj R I

, 9'S. 94.1 PERCENT.

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P O W E R P R O D U C' T 10 00

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i f f't ' k$"  % A VIEW ')F TMLP'S NEW" 8- ,

GENERATING STATl0N IN !907,

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< 1" TEN TEARS AFTER THE C TY OF e h

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l;- l AUNTON PURCHASED THE Tl y, . '-

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UTILITY FOR $125.000.

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'4 ~ g gi~ .- TMLP'3 CLEARY FLOOD sene <wic e/matc.a=7 me,rs w eer GEN E RATING ST ATION TOO AY PROYlDES E FFICIENT ELECTRIC POWER FOR MORE TH AN 25.000 i CUsit MERS - WITH THE CAPACITY TO SUPPORT THE EQU1V Alf NT OF MORE TH AN 20.000 NE W H O ME S.

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" effklent, economically Responding to unprecedented eranomic growth has kept DILP's distributedpouer 45-person Transmission and Distribution Department in full swing throughout 1987.

for our customers..." ne result: a well-balanced system designed to keep pace with continued load growth in the greater Taunton area through the end of this century.

A busy year, successfully completed. A new one year growth record in commercial and residential development resulted in DlLP's meeting a load

_ demand increase of nearly 13 percent - and an emiable recon! of achievement for the Transmission and Distrihu-tion Department. i In 1987, Engineering processed 457

, . senice requests. Fu.hllment of these requests allowed the 1 o gg Q many developers and contractors involved in the suq;e of y a new construction in our senice area to receive their

1. - electricti senice oc schedule.

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%w';g DlLP's six meterinstal!ers also

-# j3 i measured up to the challenge in 1987. In addition to an L3 $ already busy senice schedule, they installed more than

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, I 1100 new meters, without any additional staff.

~ i ne line department was just as active, TRANSMlf 510N AND installing 308 poles, 24 transformer banks,154 single phase transformers,46 pad-013TRIBUT10N MAN AGER mount transfomiers, 366 street lights,8.2 miles of line extensions - also with no MICHAEL J. H0RRIC AN increase in staff.

New transmission line and substation. To pro ide a firm source of power to meet the rapid growth in our senice area, DlLP contracted with the Slassachusetts Electric Constmction Company to construct a 3.8 mile, double circuit i 15,000 Volt line for our northern territory. DILP's line crews completed all tie-ins to existing 115,000 Volt lines and to the new\nittentonJunction Substation, which was substantially complete at the end of w WATER ST.

l THE NEW WHITTENTON SUBSTAil0N816 1987. De 115,000 Voltline was con-l SUBSTATION WITH SIX 13.800

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et' -MYLE S STA NDISH iN0uSTRiAt rARK Voti f EEDER LINES WAS stmcted at a cost of $2,522,000. He y' N. .

final cost for the new substation will m '$ NEW uYus: TAN 0isu INDUSTR At PARK

$UBSTANTIALLT COMPLETE AT be $1,162,000. wurinkiON THE END OF 1987. li WILL -wHITTENT0N AREA ne newline will ,- N gugh,$ ig PROVIDE A flRM SOURCE OF N N

sent the needs of residential, /' #

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PODER TO TMLP'S NORTHERN _

conh,nuedonpage 8 . y' SERYlCE TERRITOR) THROUGH 4s 7,C ,

-RAYNHAM CENTER

( THE END OF THIS CENTURT.

. CLEARY-FLOOO i

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l commercial and industrial customers in Whittelton, Oakland, Raynham and M>les Standish Industrial Park.1he 115,000 Volt line and substation will also reduce line losses and improve system mitage levels for all customers. I The Whittenton substation, with six 13,800 Volt feeder lines, offers a capability of 41,000 INA, enough power to serve the equimlent of 20,000 additional homes. ,

Power Factor improved. Conscious of our commitment to efficient energy distribution throughout the region,DiLP's distribution team installed 10 MVAR of additional capacitors in 1987.1hese capacitors will significantly improve voltage levels. DILP's tmnsmission system now operates with a 99 percent power factor at peak load.

Productisity was the "buzz wurd" in transmission and distribution I throughout 1987. With a long list of new developments already proposed for 1988, we anticipate the demands of new construction will keep us equally active, and again, the end result will continue to be efficient, economically distributed power for our customers during the coming year. l l

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g PROVIDING A flRM SOURCE OF p, C ECONOMICAL POWER TO '

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TMLP~S SERYlCE ARE A. i, 8

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E-N E R S Y S E R V I C E S .A N D P .L A N N I N G i " meetingour Progressive energy management programs, sophisticated computer customers' energy l

modeling capabilities, a growing mix of supply options, and careful attention to our needs at the /ou est customers' energy needs aUowed the Energy Senices and Planning Department to possible cost."

realize its primary goal once again in 1987: meeting our customers' energy needs at  ;

the lo',sest possible cost.  :

1 Rates down again in 1987. Spurred by rapid commercial and residential destlopment in DILP's senice area, electricity sales grew by nearly nine perrent in 1987. Increased income from these sales, combined with sasings realized through careful buying and seUing in the .

regional pawer marketplace, have resulted

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in rate reductions for our customers for the .

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second year in a row. With the implementa- '~a m"~ s 1 -

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tion of a $2 million rate reduction in 46- .

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l December 1987, we can continue to offer ENERGY SERYlCES aND very competitive commercial rates and one of the lowest residential rates in the PLANNING MANAGER

, Commonwealth.

Fuel mix broadens. Recognizing the security that comes from fuel disersity. we negotiated and signed a contract that will add coal fired production to D1LP's mix of supply sources. Mhen completed, the Rhode Island p(mer plant wiu be able to supply DILP with up to 10 MW of capacity, enough power to handle 15 percent of all D!LP's energy requirements.

Another step in broadening fuel options was realized in 1987 when t

our new gas comersion system completed its first full year of operation. sht system allowed us to switch quickly from oil to gas whenever fuel cost sasings could be realized.

SOURCES 0F ENERGY 1987 into negotiations to purchase electricity generated by a waste-i 00ll44%

l to+nergy facility. We plan to D GAS 39 o maiNiaiNiNa a BRoao mix or continue those negotiations in a HYORO- FUEL SOURC'S ENSURES THE 1988 to further expand our fuel ELECTRIC 708 *.h'~ -

LOWEST POS$1BLE POWER source options.

..; NUCLEAR 10% COSTS FoR TMte S continuedonJuge i1 9

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l l TMLP S COMMERCIA L ENERGY AU0lf PROGRAMS BRING A LOCAL NEWSPAPER REPRESENT ATIVE AND JOSE PH DESMONO.ONE OF TMLP S 4

ENERGY EXPERTS TOGETHER TO l

OISCOVER WATS TO CUT THE ,

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'k ADV ANCE0 COMPUTER j' M00EllNG TECHNIQUES EN A8t f ,,.y TMLP $ ENERGY SERVICES AND -

j PLANNING DEPARTMENT TO PROJECT THE MOST ECONOMICAL MIX OF ENERGY iiSDURCES f

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Marketing Energy Efilciency.

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SU BEj Energy Senices and Planning mosed well beyond careful supply-side plannmg in FN WEggggf4Sf3 ,

uus TE cmc TY 1987. Recognizing that maintaining low Pumcfm8 2 c

w ,a electric rates must be a community M

! "" Tu-gggig

, effort, v.e took majcr strides in market-AT TMLP, HOLDING 00WN THE W, ing energy efficiency to our customers.

WWIEWMYW

, gggpag To increase customer involvement in the areas of consenu-

'l INTEGRATION OF SUPPLY Sl0E amW ,

'j" tion and efficient use of energy, we AND DEMAND Sl0E PLANNING J l instituted a new residential energy audit j'f /4 ' program in 1987. The program netted a TECHNIQUES.

73 percent savings over last year's program, which was conducted by an outside agency. Performing our own energy programs willalso allow us to work more closely with ratepayers, to better understand their needs and to ensure efficient use of electric power.

A quarterly customer newsletter called "Ught Reading," free energy sasing devices, a successful celebration of Public Power Week,includingan open house at the Cleary Flood generating station, and several speaking engagements for educa-tional and civic groups rounded out our residential activities for 1987.

We also stepped up our commercial and industrial energy programs,

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offering on site audits and intemiptible load programs to existing ratepayers, and planning assistance to ensure economical design of *7 energy systems for the many new construction projects undensuyin our region.

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l Eth supply and demand side planning systems xc%,

in place, we look fonsurd to 1988, when we anticipate increased emonggiw]sp customer invohrment in consenution and efficient energy use.

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C 'U S T O M E R . S E R V 8 C E S . _- ' -

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" thefoundatton of successfulInteraction D!LP's Customer Senice Department proved to be a good baro-uith ourpubl/c." meter for the rise in economic acthity in the region. In 1987, our customer senice representatives processed more than 10,000 senice orders, arranged temporary l power for more than 500 new residential and commercial constmction projects, added 1135 new customers to the DlLP family, and answered other customers' questions about usage and billing at the rate of about 1500 telephone calls per month.

Ilealthy cash Gow got healthier. Even with a record increase in senice requests, the departmen t remained a model g;

of efficiency - demonstrated by the results of a customer sunty and 1 our cash flow statistics.

An independent customer suney revealed that 94 percent of the respondents said BlLP was "efficiently managed." On the cash flow side, the average number of days for account receiv-ables dropped nearly 3 full days to 28.1 days from 30.9 day. 'n 1986.

In addition to the department's commitment to team wurk, this reduction can be attributed to two other factors: D!LP's computer-

_jg ized meter reading program, which completed its first fv" mr of S'f{;',{ operation in 1987, and our pmmpt palment discount pn ms.

L' sing a l'tilicorder", a paperle.

ACCORDING TO AN programs not only succeeded m encouraging prompt payment,  ?

INDEPENDENT SURVEY they aise delivered $348,700 in sasings to timely ratepayers.

CONDUCTED BY XENERGY. lNC. A. 00ES TMLP PROVIDE in all, our ongoing commitment to be available, REllABLE POWER?

consistent, helpful and courteous with all customers is the B. COMMUNICATE HONESTLY WITH THE PUBLIC7 foundation of our successfulinteraction with the public. His C. PROVIDE ELECTRICITY AT A REASONABLE COST 7 philosophy of top-quality senice will remain our charter through-D. IS TMLP EFFICIENTLY MANAGE 07 '

out the coming year. ,

12

.CUS OiM E R S E R'V I C E S

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13

BALANCE S H -E E T .

December 31, Assets . 1987 1986  !

l'tility Plant - at cost Plant in senice . . . . . ... . .. .... .. . .. .. . $65,858,659 $60,822,001 less accumulated depreciation (note A2) . ... .. .. .. 34.789,869 32.439,785 Net utility plant in senice . .. .. . .. . .. . .... .. 31,068,790 28,382,216 5.479.298 7,579,228 Construction work in progress (note E) . .... . .. . . .........

36,548,088 35,%1,444

)

Total utility plant . . . . . . .. . . .. ... ..... 1 Depreciation Fund (note A2 and B)

Cash and cash equivalents . . . . ... . .. 5,974,433 5,S61,488 l Sick leave Trust Fund l Cash and investments (note A5) . .... . . . 1,352,000 1,207,000 Current Assets Cash (note B) .. . .. . ... .. 4,328,268 1,085,781 Customer deposits (note B)

Principal fund . . . . . . .. ... 292,438 268,924 Interest fund . . .. . . . 47,091 48,706 Accoun:s receivable 4,658,935 4,844,550 Irss allowance for doubtful receivables . . . . (361.684) (446,497) 4.297,251 4,398,053 Materials and supplies inventory (note A4) . . . . . . 1,428,999 1,658,535 Prepaid expenses . . . ... . .. 315,405 327,286 i

Total current assets .. ... . 10.709.452 7,787,285 554.583.973 $50.817.217 Liabilities and Surplus 1987 1986 Surplus Appropriated surplus loans repaymert . . . . .... . ... $12,512,000 $12,067,000 Construction repayment . . . . . . . . .. 32.434 32,434 12,544.434 12,099,434 l'nappropriated surplus . . .. . ... .. . .

17,002.947 13.563.773 Total surplus . . . . .. . ... ... 29,547,381 25,663,207 tong Term Debt (note C)

Bonds payable . . .. . 20,185,648 20,669,002 Current Liabilities Accounts payable . .. .. ... . . 1,856,344 1,726,810 Customer deposits . . .. .

292,438 268,924 Current maturities of long-term debt (note C) .. . . .. . 480,009 445,000 Accrxd liabilities Interest .. . . . 688,832 697,984 l .. .

Compensated absences (note A5) . . .. . ... 1,463,520 1,298,760 Payroll. .. ... . .. . . .. . 69.810 47,530 1

Total Current Liabilities . 4,850,944 4,485,008 Commitments and Contingencies (note E) . .

$54.583.973 350.817.217 Ibe accompanying notes are an Integralpart ofIbis statement 14

-S T A T E M E N T .0 F EARNINGS Years ended December 31, Operating revenues 1987 1986 Sales of electricity Commercial and industrial . .. . .. .. . .. . $18,793,749 $14,103,670 Reddential. . . .... . . .. . . 10,869,106 9,535,609 Sales for resale (note E) . . ... 8,937,687 7,356,975 Municipal . .. .... .. . . 1.720.011 1,587,504 40,320,553 32,583,758 Other operating revenues . . . 77.(>l5 88,265 Total operating revenues . . . 40,398,198 32,672,023 Operating expenses

, Power production . 24,865,579 19,723,145 Transmission and distribution 1,513,516 1,352,440 Customer accounts . . . 888,629 827,987 Administrative and general (notes A3 and AS) . 3,549,618 3,251,420 Depreciation (note A2) . . . . 2.408.104 2.344,557 Total operating expenses . .. 33.225.446 27,499,549 Earnings from operations . . . 7,172,752 5,172,474 Other income (expense)

Interest income . .. 255,411 273,499 Interest expense on bonds (1,619,142) (1,650,190)

Loss on write down of investment (note E) (487,360)

Other . (17,487) (13,167)

Total other expense (1.868.578) (1,389.858)

Net earnings before provision for payment in lieu of taxes . 5,304,174 3,782,616 Protision for payment to the City of Taunton in lieu of taxes (note D). 1.420.000 1,2(4 000 1 Net Earnings . $ 3.884.174 $ 2.522.616 l

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. . '$ TL A T E M E N Ti 0 F 5 U R-P~L U S Years ended December 31,1987 and 1986 Appropriated Surplus loans Construction L'nappropriated Repayrnent Repayment Surplus Balance atJanuary 1,1986 . . . . . . . . . . . . . . . . . $ 1 1,657,000 $32.434 $11,451,157 Add (deduct)

Transfer from unappropriated surplus of bond payments . . . . .......... . 410,000 (410,000)

Net earnings . . . . . . . . . . . . . . . ... .. . . .. 2.522.616 Balance at December 31,1986 .. .... ......... 12.067,000 32,434 13,563,773 Add (deduct)

Transfer from unappropriated surplus of bond payments . . . . . . . . . . . . . . . . . . ...... 445,000 (445,000)

Net earnings . . . . . . . . . . . . . . .. ...... .... 3.881.174 Balance at December 31,1987 . . . . . . . . . . . 512.512.00() 532.434 517.002.947 summmmme 11W dccompas)ing notes att en intepalfwl oflbi.s 21.Jtement 15 I

Years ended December 31, Sources of worldng capital 1987 1986 from operations Net camings before provision for payment in lieu of taxes . . . . . . . $ 5,304,174 $ 3,782,616 Charges (credits) to earnings not using (providing) working capital Depreciation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2,408,103 2,344,557 unortization of bond premium . . . . . . . . . . . . . . . . . . . . . . . . (3,354) (3,354) oss on wTite down of inwstment 487,360 Funds from operations before payment in lieu of taxes . . . . . . 8,1%,283 6,123,819 Prosision for payment to City in tier of taxes . . . . . . . . . . . .... 1.420.000 1.260.000 Working capital provided from operations . . . . . . . . . . . . . 6,776,283 4,863,819 Applications of working capital Increase (decraase) in depreciation fund 112,945 (495,311)

Payments and current maturities of long-term debt . . . . . . . ........ 480,000 445,000 l'tility plant additions (nct) . . . ..... ..... .. . ... ... 3.482.107 5,174.478 Total applications of wurking capital . . . . . . . . . . . . . . . . . . . . 4.075.052 5,124,167 increase (decrease) in working capital . . ............... 2,701,231 (260,348)

Working capital at beginning of year . . . . . . . . . . . . . . . . . . . . . . . . . 3.302.277 3,562.625 Working capital at end of year . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 6.003.508 5 3.302.277 Charges in components of working capital increase (decrease) in current assets Cash . . . . . . . . . . . . . . . . . . . .. . ......... . . . . $ 3,242,487 $(2,681,475)

Customer deposits . . . . . . . . . . . . . . . . . . .. ....... 21,899 36,437 Accounts receivable ............. . .. . .... ..... (100,803) 1.230,581 Inventory ... .. ..... .... ........... ........ . (229,536) (633,703)

Prepaid expenses . .. ....... ............ ... ...... (11.880) 117.281 2,922,167 (1,930,879)

(Increase) decrease in current liabilities Accounts payable . . . . . . . . . . . ....... .. . .. .. (129,536) 1,675,486 Customer deposits . . .... . ..... .. ........ (23,514) (35,466)

Current maturities of long-term debt . . . .... ...... ... (35,000) (35,000)

Accrued liabilities ........... .. .. ........ .. ... 0 2.888) 65,511 (220.936) 1.670.531 Increase (decrease)in working capital . . . . . . . . . . . $ 2.701.231 $ (260.348)

The accompanying notes are an integralpart <{ thts statenent 16

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l

- N0YES 0 FI 5 'ANC1AL STATEMENTS Note A - Samanary of S(gesykset Accounting Pohdes-A summary of Taunton Municipal Ughting Plant's ("the Plant") signifant aaounting p4cies am-sistently appbed in the preparation of the naompanying fmancial statements fallons.

1. kates-Rates charged by the Plant are not subject to the apprtns) of reguhtory agendes Pursuant to state hus, rates must be such that the resulting net earnings Irfore pe>1nent to the Oty. less bond payments and interest iname, do not exceed 8% of the cost of utility phnt. The Plant's earnings, less bed paytnents, amounted to 7.5% and 4.7% of uuhty plant in 1987 and 1986, respecthely.

2. Deprrristios-Pursuant to the Department of Pubhc thhties reiplations, depreciation is cskulated as a percentage of depreciable property at January I. Deprecia-tion is naputed at 4% of the cost of deprecable property. Depreciation fund cash is used in anordance with state has for replacements and additi ms to the eintnc plant in service.

3. Prssion Pias-Substantially all employees J the Phat are anrred by a contnbutory per sum phn admtmstered by the Oty of Taunton in conformity with State Reurement Board requirements in addition, the Plant has a separate Fanployees Retirement Trust for the fmandng of future pension pa)1nents the Recrement Trust had net assets of $6,005,251 and $5,429,497 at December 31,1987 and 1986 re pathely.1he Plant contributed $1,466,584 and $1,403,832 for pension in 1987 and 1986, which included $350,000 in each year to the separate Reurement Trust (see note T).

4. /nwstory-Matenals and supphes inwntory is carried at cost, pnncipa!!y on the awrage cost met!vxt

5. Skk leare Trust-The Nant estabhshed a Sicilesw Trust (Trust)in 1982 for the rmancing of future sick lean pay 1nenti It is the Plant's intention that the Trust be funded to the extent of the Phnt's sick leave habibry, at which time the Trust mill make all sici lesw habe.ty payments required under current Phnt pohcies. The assets of the Trust are shown on the financial statements of the Plant to proiide a more meaningful presenution, as the assets of the Trust are for the sole benefit of the Plant. The assets of the Trust, shown at cost, which approximates market, are imested in money market funds, trenury notes, mutual funds which inwst in gmern-ment saunties and a corporate bond. Net imestment income of approximately $111,000 of the Trust is reflected in the earnings statement as an offset to compensated absence expense, as these funds are restricted and can only be used for the pa>1nent of sick lean benefits.

Note # - Cash--The Phnt's cash is in the custody d the Oty of Taunton Treasurer and is commingled mith other city funds.1% Oty maintains the cash in Interest beanna aaounts and credits the interest earned each year to the Piant's accoun:.

Note C - Long Term Dc6t-long-term debt is comprised of the following 1987 1986 Aggregate matunties of hmg-term debt are as fouums:

13ectric loan, Act of 1969 1988 .............................. $ 480.000 Interest rate - wrious rates from 7% to 1989 . ........... ................ 520,000 8.5% dated February 1,1976. Interest pay- 1990 ............... ..............  % 5,000 able February I and August 1. Due serially 1991 .............................. 610,000 from February 1,1977 to February 1,2006 $20,605,000 $21,050,000 199 2 . . . . . . . . . . . . . . . . ............. 660,000 l'nanuatized premium 60M8 64.002 1993-2006 . . . . . . ... ................ 17.770.000 20,%5,M8 21,114,002 Band premium . . . . . . .................. 60 648 less current maturides 480.000 444.000 $20.Mih48 Totallong-term debt $20.184648 $20M9 002 Note D - Contr1&stion to the City of Tamstom im IJew of Taxes-lhe Plant voluntarily contnbuted $1,420,000 and $1,260,000 in 1987 and 1986, respec-tiwly, to the Oty of Taunton in lieu of t,ues. All contnbudons to the Oty are med by the Munidpal Ught Qamissi n Note E - Commitments sa4 Contingendes /nterronnert/on Agreement-The Oty of Tx.nton, acting by me of its Municipal Ughung Plant Onmis-sinn, entered into an agreement with Montaup I.lectric Qupany ("Montaup"), dated July 31,1970, as amended, concerning int-.eui, of electrical operatxms, purchase and sale of kilomstt capaaty, and constructum by Taunton of a generating unit of approtirnately 110 megantt capabihty, lhe agreement, onginally for the twehe (12) ) ears foDoming the commencement of operations of l' nit No. 9 on Dnember 1,1975, ass amended and the term extended to October 31,1988. L'nder the interconnecuan agreement, the Oty agrees to exchange with Montaup Electne Cornpany twenty (20) megantts of L' nit No. 9 capacity for ten (10) meganstts of capac-ity frta the Canal No. 2 genentmg unit,50% of which is owned by Montaup. This agreement indudes a protiske uhich states the Oty agrtts to seB and Montaup agrees to purchase an additional fifteen (15) megantts of capacity and associatal energy from l'ait No. 9. Montaup shall pay for the fifteen (15) megantts at a nte of $35.00 per kikmtt-> ear. The Plant credited to saks for resale $2,796,642 and $5,173.997 of capaory and energy charges bdled to Montaup Electric Qepany in 1987 and 1986, respectmly, for its share of poner under the interconneccon agreement; joint Ouwersbrp-The Phnt is a 0.10034% Joint omner of the Seabrook l' nits I and 2 'nudear gener:Ung station kxated in Seabrock, New Hampshire. Seabrock ltit 2 has been cancelled by the joint omnen, and the Plant wrote-off their imtstment of $687,000 in the L' nit during 1987.1he Phnt's inwstment in Seabrock l' nit I at December 31,1987 and 1986 uss approximately $3,500.000 and $3,300,000, respectinly, mhich is included in construcuan work in progress.1he Plant is not capitaliz-ing interest costs on Seabrtx4 l' rut 1. Seabroc4 l'ait I is currently 99% complete and an32ung reguhtory approval for licensing before it can begin commercial opera-tkn It cannot be estimated when, or if, l' nit I will be put into commercial operation due to hcensing problems. The Phnt's htest estimates put its share of the cost for the completion and maintenance at approumately $200,000 for 1988 in addition, Pubbc Senice Company of New thmpshire. the lead partiopant in the Seabrook project, fded for Cupter 11 Bankruptcy in January 1988. The Plant is unable to predict whether this also 32 haw any effect on the ultimate commercial opentka of the t' nit EsrironmentalMatten-in 1986, the Plant mis noufied by the t'nited Sutes Fmittemental Protection Agency that a release of hazankes substances occurred at the Rose Onemical site in Holden, Missnuri. Pohcidorinated lxphenyls (PCB) shipped by the Plant to the site may have been disposed of improperly, which created habdity under the Cumprehensne Response, Comperaation and Liabihty Act.1he Plant is unable to predict, mith any degree of certainty shether it miB ultimately be held hable for any costs associated mith this matter.

1. )doph Agreement-The Plant has entered into an agreement mith the Massachusetts Municipal hiesale Ekttric Cornpany and other New England tidiues to support the operation ci a transmission hne to permit the interthange of electricity between such uuhues and Ilydroqueba Electric Corpontkn l Note F- Deperfere from Generally Arrepted Arromating Mariples-Pension expense is not recorded in accordance mith genently accepted account-ing principles uhich equire, as a minimum, an annual protision equal to the total of normal costs of present employees under the plan, an amount equinient to inter-est on any unfunded prior senice costs, and a prusision for wsted benefits. The Plant's pension expense is based on the current year contnbutions to the Oty's recrement fund and the Plant's Reurement Trust. The cminbuton to 6e Oty's reuremmt fund is based on the progtted benefits to be paid dunng the year, mhde the contnbution to the Reurement Trust is a straight.bne funding of $350,000 per year for ten years. The Plant contnbuted $HO,000 to the Reurement Trust in both 1987 and 1986 (see note A3). The effect on the acctapanying f nancial statements of this depsrture frte generally accepted accounung pnnciples has not tan determined.

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