ML20202G750
| ML20202G750 | |
| Person / Time | |
|---|---|
| Site: | River Bend  |
| Issue date: | 12/31/1985 |
| From: | CAJUN ELECTRIC POWER COOPERATIVE, INC. |
| To: | |
| Shared Package | |
| ML20202G746 | List: |
| References | |
| NUDOCS 8607160091 | |
| Download: ML20202G750 (36) | |
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Contents Company Statement Financial liighlights 1 Cajun Electric Power Cooperative, headquartered in President's Report. 2 Ilaton Rouge, l.ouisiana, is a non-profit electric genera-tion and transmission cooperative corporation supply-Executive Vice President & General Slanager's Report. 4 ing wholesale electric energy to thirteen electric distribution cooperatives, with a total consumer mem-Finance. 8 bership exceeding 310,000, located throughout 54 of Operations 10 the state's 64 parishes. Production . 12 The Cooperative owns and/or operates a two-unit, Administration 14 230-megawatt, gas-fired generating plant, Ilig Cajun I, Construction. 16 and a three-unit,1,620-megawatt coal-fired generating floard of Directors 18 plant, Ilig Cajun 11 (42 percent of Unit 3 is owned by 20 Gulf States Utilities Company), with an annual generat-Statistical Information ing capacity in excess of 1I billion kilowatt-hours. Ad-lloards of Directors of Distribution Cooperatives 22 ditionally, Cajun is a 30 percent owner of River llend Auditor's Report . 23 Nuclear Station, a 940-megawatt boiling water reactor, Financial Statements . 24 scheduled for commercial operation in mid 1986. 31anagement Directory. Inside llack Cover 1985 Financial Highlights (Doiiars in rnonsands> Increase % Increase 1985 1984 (Decrease) (Decrease) Operating Revenues 5 355,987 5 329,825 5 26,162 7.9 Operating Expenses 5 366,5 il 5 354,411 5 12,131 3.4 Nonoperating Alargin 5 17,2i8 5 30,806 5 (13,558) (44.0) Net .\targins 5 6,693 5 6,220 5 473 7.6 Plant Additions 5 292,508 5 295,025 5 (2,517) (.9) Energy Sales (.\legawatt ilours) A. 'Ib .\lembers 5,216,123 1,978,926 267,497 5.i
- 11. 'Ib Others 839,""I 603,185 236,586 39.2 System Peak Demand in 31erawatts 1.258 1,187 71 6.0 Cost of Fuel l' sed in Generation 5 135,0i6 5 13-4,56i 5 4S2 .4 Assets 5 2.96i,166 5 2,712,29I 5 252,175 9.3 Accumulated Stargins and I:quity 5 31,00i 5 2 t,310 5 6,69i 27.5 Emrdoyees Full Time 58) 593 (s) (.7)
Hevenue Per KWil Sold 6.ic 5.7c 7C 12.3 l RoN r 00% 1 R. t oil bJrge on the Minisippi Nh er arris Ing JI liig Cajun ll, located Jr .\cn Rtuds. ioutsi.tn.1 INsIDl? I RoNT Covi-R: Fisc hundred LV qLdosolt) transmision hne near the switchyard at Ilig Carun 11 connects Cajun niih the EllY (thtra liigh %Itage) interconnected Transminion by stem. allon ing C2jun to dchstr its generated poner throughout Louisiana. I
l President's Report u .b wm - w
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gifty years ago, before the fi>rmation of rural > F electric cooperatives in the State, electric serv- . 9 .. ice in non-urban areas was virtually nonexistent. Ile- l'
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cause providing electric service in areas of low-density l tc , n!< ' ,O population was unprofitable to investor-owned electric utilities (LOU's)- rural Louisiana was forced, durmg [ ", h n . '
+04 the 1920's and 1930's, to live without the liberating j
force of electricity that was available to pcopic living in populated areas. Candles and kerosene lamps pn>- y) l l vided limited lighting, while human and animal labor supplied limited power to the farms and villages of ; Louisiana well into the late 1930's. People living on farms and in village 3 realized that i the only way they were ever going to receive electric l service was by creating their own electric cooperative ) system. Mbrking together, for the betterment of all, the rural electrification movement in this state has grown, in less than fifty years, from a few determined dreamers and doers into an entity which employs over 1,900 people and has invested 5 i billion-plus in the future of rural 1.ouisiana. This investment assures every rural resident the availability of electric service. j As the number of rural electric cooperative cus-tomers grew during the 19iO's and 1950's, the need
; for additional bulk power to serve these people ex- W. W. Scanlan, Jr., President panded. A number of the state's rural electric coopera-i tives joined together to consider methods to best meet cooperatives with power after 1980. During this per-l the short- and long- term future bulk electric energy iod Cajun's member cooperatives' electric loads were requirements for all their members. growing at 10% - 12% per year. Faced with this di- ,
, This joint planning venture resulted in the creation lemma, a feasibility study was commissioned by the j ] in 1962 of the 1.ouisiana Electric Cooperative - later Cajun lloard that recommended Cajun build two 5 in i j to be renamed. Cajun Electric Power Cooperative, Inc. megawatt coal-fired generating units. Another study, [
- its directors - then as now - are farmers. civic and completed in 19~9. recommended Cajun build a third l husiness leaders, elected annually by their fellow dis- 5 60 megawatt coal-fired unit at the same site.
tribution cooperative members. Their principal mis- Additionally, in 19~8 the federal government passed sion - then as now - is to strive to provide reliable the Industrial Fuel l'sc Act which prohibited any util- ; electric service to their members at the least possible it) from building a new gas or oil fired generating cost, and at no profit. The brst tangible step toward plant, and also required utilities using gas in existing ; achieving this goal was taken in late 1968 when the generating units to stop by 198 This law was in re-member couperatives submitted a 556 million loan sponse to our nation's movement towards energy in-J' application to the Rural Electrification Administration dependence as a result of the wildly escalating cost of (REA) for funds to build what would become liig Ca- imported oil and reduced availability of natural gas. ' jun I, a 230 megawatt, gas-fired power plant u hich Faced with the enormous annual growth in electri- ! went on line in 19 2. cal de nand, uncertain future supply from the IOlc s, Though Ilig Ccjun I was an important sour (c of inahY.ty to build oil or natural gas generation plants
- w holesale electric power for 1.ouisiana's rural electric because of federal law, and the economic studies that cooperatives. it was never intended to supply all of supported coal as the economic (hoice, the Cajun the electric requirements to Cajtm's member coopera- Iloard embarked on a major building program at liig tives. The majority of the cooperatives' bulk needs, as Cajun 11. The construction of l' nits I and 2 was com-had been the case since the founding of the rural elec- picted in 1981 and l' nit 3 was completed in 1983 tric cooperatives, continued to be met by wholesale 'Inday, liig Cajun 11 employ s 365 people, making it the powei supplied by the lotr s. largest employer in Pointe Coupec Parish. This plant in the mid-19 O's. however, the imestor-owned burns Western coal that is transported 1,128 miles by utilities told Cajun they would be unable to supply rail from Wyoming to St. louis, Missouri. and then
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l 850 nules lu harge troI63r4uun t ming on line durmg 1986 there w ill hc l Not un h docs ( alun nim supph its members u uh nii need to build new. cxpensn e lusc-h ud pimer all of the required bulk cln tra n t u alsi> nim nun plants for at least the next dn.ide ( alun s unestment ages us im o ent rgs t ontrol t enter Itased in New in t oal .ind nut ic.ir generation insures ilut us mem-l Roads this tentcr monnors ( apin s cln tra gencra hers cln tra supph w ill he sutta icnt to meet their tom as u til as t oordmatt s imcrt lunges bri n cen ( a grim mg denutids and u dl he su ure against f uture lun and .dl the mcmhcrs < >t the N int hw est Pi m er Pool .a r u ins of t he ( it'l ( oil t artel tlut s< > p.irah /cd the an orgamration of utihncs m I omsi.u u and ncighbor I mtal st.ucs m the l'Fil s. .md t he t ont oma.uu im-tilg states t h.it hus aiid scll lh iu cr n > i,nc anin hcr Ihe p.a t (in tut tir.il g.is pra r clast a ils and as ailabilit s i ncrgs ( i mt rol ( coter nn initors the cocrgs req ui re . \ g.u n . t h e f u t u re f o r ( alun .md us member cooper-ments of the member (ooper.unes and supphes the ai n es is s en ont ouraging no new. cxpensn e base necded pow er w hen .ind u here a is req uired Ibc h ud power plants w dl he needed tiir .o least the next ( onununs .u n ms ss stem th.a makes thcsc msununc dn ade .m d ( .q un s im estment in (< ul and r.uclear iius t ra n sas i n ins piissible is hokcd to I;n dcInen generanon w di mean th.a members cin tra rates u di p< u n t s t h ri >uyhiiui t he ( alun sen a t terrinin and o > not dr.unatu alk mt rease due to at nons ist the ()PI( hilt h t il ( aitln s gt Ilcrating pl.ults t ill t .ii tcl
\ nuli >r reslhinsihllit s ill ( .ilun l In t ra is planning \lans lhisiin c aild niti h needed lluprt h ements t.ir t he f ut urc c!n t ra energs needs i st rural l i >msuna w ere impicmented at ( .qun during 1985. and are rc tiir lu o h t he sh< >rt and h mg tcrm h w as u uh the tin ted in this repi ir t l hesc unprin cments led to a f uturc cln tra sn urin i>t us members m nund that in renew ed < < >moutment and drn e < >n the part of ( alun's l'r4 ( .qun con red um > a t i nu rat t u.d agru ment w u h emph a ces and lii urd < >t I hrn tors to hetter sen e the
(. ult suics I nhtics i(ist i h > ou n ;i r <>l( sl s Rn cr needs of l <ini,una s rural cln trit t i noperat n es Hcnd N ut Ic.ir st.u n in i nit 1. .i 9 U n nicu.iw at t tat ihn htmu huilt hs (nl m st I rant iss dlc. I < >uisuna
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Executive Vice President & ,, General Manager's Report - Iam pleased to report that Cajun lilectric [s Power Cooperatise accomplished a great deal
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for its members m. 1985. Operating results throughout y" ~ . #
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) the organi/ation were demonstrably improved over f# 198a. . . l Specifically, member sales for the year were i.216ce23 megawatt hours, an increase of 5. a percent _ cj A j os er 1981. while non-member sales were 839.~~ l ;i1?" . .
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megawatt hours, an increase of 39.2 percent oser 198 i. Net margins for the year were 56.693,381, a
.6 percent increase over 198 4. These increases came about despite the loss in I)cccmber 198 a of a pn>-
posed 50 megawatt sale of capacity and energy to 5am Rayburn G & T. -
"y Member kilowatt hour cost did not increase during the Scar. The aserage member kilowatt hour cost for < v id 1985 was approximarch 63.~ mills, compared to a -
A budget estimate of 65.3 mills. .M I)uring the year extremely positive results were ?f obtained in response to several actions undertaken by I manJgement to contain and reduce costs to better yg meet competition. ()ne such development that oc- y' m j *< i curred during the past year was Cajun's weighted aser- , *s ,; l age nominal interest rate on its total debt portfolio . was reduced by ~8 basis points, from 10.59 percent as ' of December 31,1981 to 9.81 percent as of Decem-
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her 31,1985. This reduction was caused, in part, by Da id 1.ce Mohre the decline in interest rates in our country, as }vell as 7 , , g.g, g,y& m & Q mM hm' r-by Cajun's innovative debt management activities which included working with theJackson llank for plant availability factor of 88 percent. This was a truly Cooperathes on match-funding hundreds of millions remarkable performance for large coal-fired units, of dollars of short term debt and Cajun's strategic particularly so in light of the fact that nationally, a l management of the variable rate pollution control plant availability factor of between 75 percent to 85 j bonds. percent is considered excellent. Cajun's debt management actions were responsibic limergency outages were contained to less than I for reducing the effective interest rate on operating percent for l' nits I and 2, at liig Cajun II, and 2.2 plant from i 1.16 percent to 9.5 percent, thereby re- percent for l'uit 3. All three nnits achieve.1 cmcrgency ducing Cajun's 1985 rate-base interest expenses by outage percentages appreciably better than the goal of , more than $21 million. Over 0i80 million of varian!c- 3 percent vhich was estab:ished at the beginning of l
- rete otht with the brm C-coit System was n'atch. the tear. Ilecause of air flow huprosements made to funded for penods of up to one , car. Cajun took l' nit 3, this unit operned for extended periods at a i advantage of the general downturn in interest rates to 580 megawatt net output, exceeding its rated output permanently fix the rates on another 9 percent of the by 60 megawatts.
cooperatives's total debt portfolio, which at the year- liig Cajun I, l' nit 2, maintained a 98.5 percent avail-end vas 43 p(rcent fixed long-tern, at an average rate ability f;ctor, while Unit 1, due to the repair of the i of 10.3 percent. generator, maintained a 71.2 percent availability factor.
- On the power production side, Cajun's maximum Importantly, after the repair of the generator, l' nit 2 '
gross system generation reached 1,785 megawatts on has maintained a 98.8 percent acadahih:y. l December 16,1985, a level of generation that is sixty- With regard to fuel costs, after extended negotia-five megawatts under Cajun's total system generating tions, an agreement was reached with one of Cajun's ! resource of 1,850 megawatts. major coal suppliers which will result in a sasings of liig Cajun 11 burned in excess of 4.4 million tons of over S is million during 1986 and 1987, as well as i coal during the past year, and maintained an average into the future. i l L_ 1
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- qualified facilities (Ql"s) as required under the Public During June and.luly, Cajun installed a groundwater i l'tilities llegulatory Policy Act (Pl'lIPA) was completed monitoring system consisting of five monitor wells, 30 i .md a revised policy was adopted by the Cajun lloard. feet to 50 feet in depth, that surrounds liig Cajun II's Support services for member cooperatives included solid waste facilities. Groundwater samples are taken the preparation of two power requirement studies, on a regular schedule from these wells to analyze
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SUMMARY
OF OPERATIONS Operating Revenue 5 32,936 5 16,910 5 22,537 5 15,-163 5 79,217 5 15,629 5 14,507 Expenses: Purchased Power 5 2i,197 5 11,712 5 17,194 5 10,263 5 55,196 5 12,065 5 11,263 Operation and Maintenance 1,025 2,590 2,226 2,896 8,940 2,133 1,980 Depreciation 1,359 717 819 830 3,673 619 502 Taxes 881 311 351 1,957 371 286 235 Interest 2,376 1,080 9 17 1,221 5,92i 737 715 Other 11 5 0 0 419 1 7 Operating Margins 5 59 5 192 5 670 $ (101) $ 3,108 5 (242) 5 (225) Non-Operating Margins 1,399 380 647 298 1,613 429 780 Net Margins $ 1,658 5 872 5 1,317 5 197 5 4,721 5 187 5 555 BALANCE SIIEET DATA Assets: lbtal Utility Plant 5 51,312 5 25,051 5 30,116 5 31,811 5 125,316 5 22,119 5 19,580 Less: Accum. Depreciation 9,686 5,091 8,032 6,803 15,611 4,079 4,927 other Property and Investments 4,844 2,i36 2,891 3,291 10,123 2,010 2,179 Current and Accrued Assets 5,769 1,874 4,775 1,134 13,071 2,398 3,013 Deferred Debits 38 86 3 0 3.101 82 0 lbtal Assets 5 52,277 5 21,356 5 29.783 5 29.436 5 136,300 5 22,830 5 19,875 Liabilities: Margins and Equities 5 10,541 5 4,553 5 10,289 5 4,716 5 18,618 5 5,610 5 5,591 Long Term Debt 38,726 17,892 17,333 22,613 108,806 14,825 12,896 Current and Accrued Liabilities 2,997 1,910 2,098 2,049 8,878 I,123 1,368 Deferred Credits 0 1 63 20 (2) 912 20 Operating Reserves 13 0 0 8 0 0 0 Total Equity and Liabilities 5 52,277 5 24,356 5 29,783 5 29,136 5 136,300 $ 22,830 $ 19,875 OTIIER STATISTICS Miles of Line 4,272 1,883 3,i12 2,416 6,233 1,490 2,299 Consumers Served 27,015 12,063 17,982 10,982 51,228 8,740 13,310 Consumers Per Mile 6 6 5 5 8 6 6 Total Mwil Sold 315,015 165,079 242,112 145,203 755,322 181,45, 152,100 KWII Sold Per Custoraer 12,757 13,707 13,465 13,221 14,74 1 20,76I i1,450 Revenue Per KWil Sold (cents) 9.546 10.214 9.309 10.649 10.488 8.613 9.519 Annual Revenue Per Consumer 5 1,218 5 1,104 5 1,253 5 1,408 5 1,516 5 1,788 5 1,090 Imestment Per Consumer $ 1,863 5 2,065 5 1,619 5 2,615 5 2,404 5 2,472 5 1,387 Retail Consumers Served i98:
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e, 1984 o setase5 i9H1 ' M - 33M 2(d).f M M) 2'0J M W) 2HO.lM N) 290fMMI 3(N),(MM) 310JHN) 320,(M N) 20
l mmmmmmmmmmmer l Pointe South Southwest Washington Coupee laulslana louisiana Teche Valley St. Taminany Total
SUMMARY
OF OPERATIONS Operating Revenue 5 11,139 5 32,997 5 118,925 5 11,723 5 39,000 $ ?6,874 5447:857 Expenses: Purchased Power 5 7,958 5 23,697 5 94,681 5 8,827 5 27,343 5 29,493 5334,169 Operation and Alaintenance 1,567 3,374 9,333 1,456 5,636 3,802 49,958 i Depreciation 4 67 1,361 3,787 211 1,730 1,375 17,523
'llixes 202 676 1,363 139 815 777 8,397 Interest 728 2,495 2,998 86 2,812 2,196 21,376 Other 19 30 46 0 0 176 744 Operating Alargins 5 218 5 1,366 5 6,717 5 971 5 601 5 (915) $ 12,690 Non-Operating 51,trgins 323 829 H,983 188 835 723 17,427 l Net Alargins 5 541 5 2,193 5 15,700 $ 1,159 5 1,439 5 (222) $ 30,117 BALANCE SIIEET DATA Assets:
'Ibtal Utility Plant 5 17,522 5 51,952 5 126,692 5 8,572 5 62,611 5 52,095 5625,079 Lesa: Accum. Depreciation 2,056 6,160 20,075 1,691 9,923 8,421 102,555 Other Property and Investments 2,060 4,306 9,729 872 5,828 4,645 55,217 Current and Accrued Assets 2,287 5,516 30,165 1,788 4,652 5,905 82,677 Deferred Debits 132 13 108 35 546 131 1,605
'Ibtal Assets 5 19,945 5 55,657 5 146,919 5 9,576 5 63,714 5 51,355 5665,023 Liabilities:
Alargins and Equities 5 3.553 5 12,813 5 83,941 5 7,261 5 13,191 5 10,739 $ 191,446 Long Term Debt 14,353 40,210 15,730 1,230 43,176 40,787 418,607 Current and Accrued Liabilities 1,899 2,636 15,989 793 7,329 2.788 52,155 Deferred Credits 48 0 1,259 292 18 41 2,702 Operating Reserves 92 0 0 0 0 0 1I3 lbtal Equity and Liabilities 5 19,915 5 55,657 5 146,919 5 9,576 _5 63,714 5 54.355 5665,023 OTIIER STATISTICS Stiles of Line 985 1,132 7,559 770 6,260 4,171 42,882 Consumers Served 8,421 15,520 76,423 8,264 33,921 26,148 310,027 Consumers Per Niile 9 11 10 l1 5 6 7 Total AlWil Sold 109,017 353,273 1,396,785 121,855 372,301 116,037 4,755,888 KWil Sold Per Consumer 12,950 22,762 18,277 11,715 10,976 15,911 15,310 l Revenue Per KWii Sold (cents) 10.211 9.310 8.516 9.620 10.175 8.863 9,417 Annual Revenue Per Consumer $ 1,323 5 2,126 5 1,556 5 1,119 5 1,150 5 1,110 $ 1,115 l Investment Per Consumer 5 1,890 5 3,181 5 1,582 5 1,025 5 1,711 5 1,888 5 1,933 l Kilowatt Ilours Sold Per Consumer 1981 I5514 B eman - . _ _ . _ 1982 I5IO5Q 1983 14979 1984 , 15054 1985 15340 t imo inn a sexo asum is2m isum i s ux, issm 21
Board of Directors of Distribution Cooperatives,1985 Ileauregard Electric Cooperative, Inc. Dallas Matthews, Adsimry liturd, I thel Norris Andras, Storgan City I reddy Meti, St. Franciu ille inriin Riset, Ghcrns Edward D. lirandt, President. DeRidder Jack V. Millican, llaton Rouge Nick Mewina, llouma llomer C. licewn. Vite Pre ident, Pitkin Carric l.. Thomas, Clinton Lloy d Gibmn, Adsimr to the lloard, Gibson I.arry W. Stephenum. Secretary /Ircasurer. Eugene O. Traylor, llammond I ake Charin Donald 11 williams. Pme Gnne James llall.trd. Lake Charles I croy S. /cIlcr. Walker Southwest inuisiana Electric Alember-C. R. Cooley, DcRidder ship Corporation Eva W. Case) Ficids James il liardin, Lecnille Jefferson Davis Electric Cooperative, M W. Scanl.m. Proident Church Point Gloria Granger. DcRidder Inc. Clark Gra) Su retar), Cnmicy R. Edward Goins, DcRidder Dn c A5 mond, Treasurer, I afnette l ugene C. 'li>dd, President, Welsh llarrol[I Kcnnison, Cecilia Louis O. Trah.in. Jr., first Vice President, I)cnnis J. Ilrouward, Kaplan llossier Rural Electric Membership Guc> dan Jacqun Camptwil, Gucydan Corporation 4. F. Ilenry, Jr., Second Vice President, 4 liiam R. Iluval, St. Martimille Cameron Deucy inlout Jr., Opelousas Donny M. thux1, President. Elenton Charin M Dais Secretar)/ Treasurer, Jen-C. A. Rodgers, Vice President, Plain Dealing Jerry F. Meaut Dumn ning' 11. F. Young, Jr, Opciousas Dianne licard, Secretary! Treasurer. Elm Richard J. II)ler, t ake Arthur G rove Sidney Derouen, licll City O. II. Mitchell, Doyline F. Ga'ncr r Nunei, Grand hhenier Teche Electric Cooperative, Inc. Sheila T. Durbin, Princeton Charles S. linkett, licll City 5 uran Murphy, Doyline Joseph I Tupper. Sr , I lton I rnest I rc>ou, President, New Ilwri,i Gerald R. Robinette, Coushatta Richard t egnon, Vice President, I ranklin Ireddie D. Merritt, Ringgold Anthont Donald Sigue, $ccretart, icancrette R. D. Ilston, Lim Gnne Northeast louisiana Power Cooperative, Dolan P. Kleinpcter, Treasurer, New Iberia Inc. Rol.md J, Stansbury, Sr., Jeancrette Antoine S. I uke, Franklin Claiborne Electric Cooperative, Inc. John E. Randall, Prnident, Neucilton Ernnt Metr, Iranklin E. W. Patrick, Vice Prnident, Lakt Pnni, liarold J. Junca, Sr. I ranklin James S. Wade, Prnident Farmersille dcnce Joseph M. Da is, Jr, Jeancrette Ralph liarmon, Vice Prnident, llomer Ray tiryan, SecretaryfFreasurer, Winnsboro Jn kie Judice, New Iberi.t A. J. Smith, Secretaryffrcasurer, lin new ille George A. Price Sr., Winnsboro Llo)d licrard, St. Martinville G. F. Thoma, llay nen ille Curtis L lienry, Ra)ville C. O. Ilrow n, Farmers ille Roy W. M(Intyre. Delhi Dnid Sanders, Minden Mkhact llarnidge, Fpps Valley Electric Membership Corporation IIcz Elkins, Spearnille Rudolph M. Elkins Oak Gnne Lonnic Mirell, lictlin Columbus II. (Lum) Day, llastrup G. A. lletcher, President, Montgomery Leroy Perritt, Arcadia William 5. Wren, Vice President, Coushatta Illwrt Gaw. Secretary fircasurcr. Ilornbc(k Pointe Coupec Electric Membership J. C. Miley, Campti Concordia Electric Cooperative, Inc. Corporation Ottis Icwing Many P. E. Cloutier, Jr, Natchitoches L. C. Cun., Prnident, Jena J. M. Ilolloway, Prnident, Maringouin John G. Ilurford, Jr. Gloster W. T. McM Ilin, Vice Prnident, Joneuille Richard S. Glynn, Vice President Ventren I.arry llalthazar, Natcher W. W. Martin, Sc(retary, Jonenille Ernest Swanson, Treasurer Port Allen Cy nthia Garner, Many Darrell Wckh. Treasurer, Vidalia Mrs Frank II. Rice, Secretary, llatchelor Ann llarron, Sicily Idand L. G. Cnxhet, Labarre Keith Ford, Aimwell John Greiaffi, llatchelor W. D. llackney, liarrimnburg Washington.St.Tammany Electric Coop-McVea llenton, l ettsworth erative, Inc. R. G. Price, Sicily Island Preston Wckh, Monterey J. T. Wmx1, Prnident, Talisheck South Inuisiana Electric Cooperathc Clifton Fauntkro), Ykt Ibiant, ilush Association W. A. Potts Secretary, Kentwood Dixic Electric Membership Corporation Alcous Stewart Treasurer, Ilogalusa Alexander Do)le, President. Ilouma Joe I aird, Folmm A. C. Roux, Jr. Prnident, Prairiesille Dnid Luke, Vice Prnident, llouma J. J. Warner, Jr, Franklinton T. N. Samuel, Vice Proident. Zachary Robert A) cock, Secretary, llouma Rev. Reuben Cornist, Mount flermon Lanic McCall, $ccretay/ Treasurer, Clocland Daigle, Treasurer, Gray Ernest !! ranch, Angic Springfield lluford Aucoin, Amelia Gary liailey, l.acombe Cy ril "Cy" Ilarrios, llaton Rouge Margaret Ledet. Racciand licien 11. Carter, Greensburg James E. Lott, Albany Ross Maggio, Slaughter 22
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Ernst&Whinney 726 touisi2na saiionai iianu iiuiidiny llaton Rouge, Louisiana 70801 50s/383-0166 Iloard of Directors Cajun Electric Power Cooperative, Inc. i llaton Rouge, Louisiana We have examined the balance sheets of Cajun Electric Power Cooperative, Inc. as of December 31,1985 and 1984, and the related statements of revenue and expenses, changes in equity and margin and changes in financial position t for the years then ended. Our examinations were made in accordance with generally accepted auditing standards { and, accordingly, included such tests of the accounting records and such other auditing procedures as we considered necessary in the circumstances. I In our opinion, the financial statements referred to above present fairly the financial position of Cajun Electric Power Cooperative, Inc. at December 31,1985 and 1984, and the results ofits operations and the changes in its financial position for the years then ended, in conformity with generally accepted accounting principles applied on a consistent basis. t i 4 1 1 , Ilaton Rouge, Louisiana March 7,1986 l 23 _ _ - - . . _ - _ - - _ _ _ . - _ _ _ _ - _ _ . . . _ - - - - - _ - - - . - - _ _ _ _ _ _ - _ - _ - - _ . . - - _ _ - - . _ _ _ _ _ - - - - - _ - _ --__--_-----_.-__.._s.-_~.- _- -o
BALANCE SHEETS December 31 1985 1981 UTILITY PLANT - Notes ll, C and F Electric plant in service $ 1,186,991,84 5 51,178,831,771 Construction-in-progress 1,390,101,256 1,261,21 j,16 i Nuclear fuel at amortized cost 47,i10,750 2,621,533 851 2,410,078,938
- 1. css accumulated depreciation 13i,660,068 98,280,029 2,489,873,783 2,341,798,909 Electric plant held for future use 9.776,813 380,126 2,499,650,626 2,342,179,035 OTIIER PROPERTY AND INVESTMENTS Nonutility property 685,079 685,079 Restricted fund 3 held by trustees-Note F 27,631,627 i3,549,417 Other restricted funds 17,189.135 Investments in associated organizations
- Notes D and F 72,066,189 63,185,776 Notes receivable from associated organization 210,000 210,000 100,622,895 121,819,107 CURRENT ASSETS Cash and short-term investments 3,767,616 618,169 Certificates of deposit 360,000 3i3,177 Accounts receivable-electric customers (including amounts due from nonmembers of $7,130,477 in 1985 and 51,251,716 in 1984) 31,688,891 26,392,023 Accounts receivable-other 13,17-1,694 10,825,335 Fuel and supplies inventories-Note J 43,156,936 56,391,424 Prepayments 837,195 741,011 Other 735,372 1,114,013 93,720,704 96,458,212 DEFERRED CIIARGES - Notes E and F 270,172.259 148,804.760
$ 2,961,466.484 52,712,291,41i EQUITY AND MARGIN Memberships S 1,300 $ 1,300 Patronage capital credits 30,596,520 23,903,139 Donated capital 405,962 405,942 31,003,762 24,310,38i LONG-TERM DEBT, less current portion - Note F 2,858,060,264 2,577,710,542 SilORT-TERM DEBT EXPECTED TO BE REFINANCED 5,281,316 CURRENT LIABILITIES Notes payable -Jackson llank for Cooperatives - unsecured 18,611,198 Notes payable - National Rural Utilities Cooperative Finance Corporation -
unsecured 1,600,000 3,461,324 Accounts payable - general 423,141 99,060 Accounts payable - construction, including contract retainage of
$2,378,894 in 1985 and $3,072,481 in 1981 2,478,632 3,101,373 Accrued interest and other expenses 29,818,415 32,036,313 Current portion of long-term debt - Note F 17,716,831 12,684,518 52,037,319 69,993,816 DEFERRED CREDITS - Note K 23,365,139 31,992,329 l COMMITMENTS AND CONTINGENCIES - NoteJ
$ 2,961,166,484 $2,712,291,414 See notes to financial statements.
24
STATEMENTS OF REVENUE AND EXPENSES Year Ended December 31 1985 1984 OPERATING REVENUE Sales of electric energy: Members 5 33i,185,598 5 285,688,15i Ot hers 19,i87,238 19,77I,259 Proceeds from amendment of gas purchase contract - Note i 15,891,000 Other 2,311,596 H,474,556 355,987,132 329,825,269 l OPERATING EXPENSES l INmer production: 1:uci - Note J l 35,016.27~ l 3 i,56 i,305 j Operations and maintenance 20,515,926 18,906,621 Purchased power 13,121,679 l 1,.118,622 Other power supply expenses 350,696 301,288 Transmission 25,853,321 20,865,698 i Administratise and general - Note 11 3,972,i67 i,197,160 Depreciation and amortization - Note 11 36,226,787 35,989,602 Taxes, other than income 1,900,532 1,627,671 Interest - Note I: 118,582,129 122,536,816 Other deductions 10,672,6-46 973,060 366.5i2,160 356,411,I43 OPERATING DEFICIT (10.555,028) (24,585,87s) NONOPERATING MARGIN Interest, rents and leases 1,322,757 9,589,865 Other income 870,683 727,350 Extraordinary item: Sale of tax benefits - Note K 15,05i,969 20,488,659 I 7,218. i09 30,805,876 NET MARGIN 5 6,693,381 5 6,220,000 STATEMENTS OF CIIANGES IN EQUITY AND MARGIN Years Ended December 31,1985 and 1981 Patronage Member- Capital Donated ships Credits Capital Total HALANCEJANUARY 1,1984 5 1,300 517,683,139 5 405,912 518,090,381 Net margin for the year 6.220,000 6.220,000 HALANCE DECEMBER 31,1984 1,300 23,903,139 405,942 21,310,381 Net margin for the year 6,693,381 - 6,693,381 CALANCE DECEMBER 31,1985 5 1,300 530,596,520 5 605,912 531,003,762 See notes to financial statements. 25
STATEMENTS OF CHANGES IN FINANCIAL POSITION Year Ended Deccinher 31 1985 1986 FUNDS WERE PROVIDED BY Net margin S 6,693,381 5 6,220,000 Add items not requiring a current outlay of funds: Depreciation expense 35,705,858 35,468,673 Amortization of deferred charges 9,941,432 1,519,463 TOTAL FROM OPERATIONS 52,340,671 43,208,136 issuance of long-term debt 325,765,230 535,985,000 Decrease in nonutility property 28,063 Decrease in restricted funds held by trustees 15,917,790 Decrease in other restricted funds 17,189,135 10,168,726 Decrease in notes receivahic 15,000 358,872,I55 546,196,789 FUNDS WERE APPLIED TO Increase in utility plant-net 193,177,149 29i,007,696 Increase in investments 8,880,412 7,711,596 Increase in restricted funds held by trustees 41,40i,538 Increase in deferred charges 131,608,931 34,112,581 Decrease in short-term debt expected to be refinanc(d 5,284,346 25,800,024 Decrease in deferred credits 11,627,185 22,577,717 Reductions'in long-term debt 45,i15,515 F9,797,347 395,993,838 515,411,499 INCREASE IN WORKING CAPITAL 5 15,218,988 5 73,993,126 CIIANGES IN COMPONENTS OF WORKING CAPITAL Increase (decrease) in current assets: Cash and short term investments and certificates of deposit 5 3,166,270 5 (58,689,710) Accounts receivable 7,646,227 3,744,304 Fuel and supplies inventories (13,237,488) 463,920 Prepayments 96,I54 338,13I Other (408,67I) (213,016) (2,737,508) (51,386,101) (Increase) decrease in current liabilities: Notes payable 20,472,522 (5,326,852) Accounts payable 298,360 48,076,384 Accrued interest and other expenses 2,217.897 36,103,052 Current portion of long-term debt (5,032,283) 49,527,213 17,956,496 128,379,827 INCREASE IN WORKING CAPITAL 5 15,218,988 5 73,993,426 See notes to financial statements. 26 l
NOTES TO FINANCIAL STATEMENTS December 31,1985 NOTE A - SIGNIFICANT ACCOUNTING of Ilig Cajun No. 2, Unit 3 (see Note K). These POLICIES credits will be recognized in future years in Method of Presentation: The accompanying accordance with the rate making policy as financial statements have been prepared in determined by the lloard of Directors of the accordance with generally accepted accounting Company. principles, including those prescribed by the United Income Taxes: Certain revenue and expense items States Department of Agriculture Rural Electrification are recognized in different periods for financial Administration (REA). reporting and income tax purposes, thus creating Electric Plant in Service: Electric plant in service timing differences. Deferred income taxes are is stated on the basis of cost. Depreciation is provided on thes timing differences which are computed using the straight-line method over the principally rciated to depreciation on electric plant in expected useful lives of the related component assets. service, income and deductions related to the The cost of units of property replaced or retired, additions to and amortization of deferred charges including costs of removal, net of any sahage value, and credits and the sale of tax benefits. is charged to accumulated depreciation. The Company uses the flow through method for Construction-in-Progress: recognizing investment tax credits. Construction-in-progress is stated on the basis of Patronage Capital Credits: The Company is cost, which includes interest on borrowed funds and organized and operates on a nonprofit basis. allowance for funds used during construction, Patronage capital credits represent that portion of the adjusted for costs allocable to joint participation Company's retained net margins which have been agreements and, during the testing phase of assigned to member cooperatives. As provided in the construction, certain operating expenses offset by a Company's bylaws, all amounts received from the portion of the sales of test energy generated. furnishing of electric energy in excess of the sum of Investments: The terms of financing arrangements operating costs and expenses and amounts required with the National Rural Utilities Cooperative Finance to offset any current year losses are assigned to Corporation (NRUCFC) and the Jackson Ilank for members' patronage capital credit accounts on a Cooperatives (JilC-formerly the New Orleans llank patronage basis, or, at the discretion of the Iloard of for Cooperatives) require investment in capital term Directors, may be offset against losses of any prior certificates and Class "C" stock, respectively. These fiscal year. All other amounts received from its investments are carried at cost in the accompanying operations in excess of costs and expenses are used financial statements together with undistributed to offset losses incurred during the current or any patronage capital from these organizations, prior fiscal year and to the extent not needed therefor are assigned to members on a patronage The Company allocates patronage received from basis. As of December 31, 1985, no retirements of associated organizations to assets and expenses in the same ratio as the interest paid to these organizations patronage capital credits have been made. is capitalized and expensed, respectively. Fuc1 and Supplies Inventories: Fuel and supplies NOTE B - ELECTRIC PLANT IN SETVICE inventories are stated at cost (average cost method). Electric plant in service at December 31, consisted of the foHowing: Deferred Charges and Credits: Deferred charges represent costs incurred which are recoverable from 1985 1984 future revenues. Deferred charges consist primarily 51,179,023,808 $ 1,171,030,336 of certain costs associated with an abandoned hgm,'teProduction 7,968,037 7,8n4,438 General plant project and the costs of development and operation , 9 gg of electrical generating facilities (including costs assoc' lated with common facilities and resulting from stockpiling fuel inventory) prior to commercial included in production plant in service is Big Cajun operation status and/or thereafter, but before the No. 2, Unit 3, a coal fired facility, which was facilities achieved full capacity, or as otherwise constructed under a joint ownership and specifically approved by the REA. These costs are participation agreement with Gulf States Utilities being amortized over periods prescribed by REA Company (GSU) whereby the Company was which generally do not exceed 15 years. Deferred responsible for managing construction and certain credits consist primarily of proceeds received in a financing of the project and GSU participated in sale of the tax benefits associated with certain assets 42% of the cost of constructic,n and ongoing 27
operation of the facility and certain common unanimous vote of appnwal by the Nuclear facilities in return for a similar percentage of future Regulatory Commission on November 15,1985.The plant output (see Note C). project is now in an expedited start-up and test The net change in accumulated depreciation is as program leading to full commercial operation, and follows: has recently produced power at approximately i935 3934 three-fourths of its capacity. Charged to operating Athough the estimated cost of River llend to the expenses s 35,70s,858 5 35,168,673 Company is in excess of twice the original estimates, Deferred depreciation: the Company forecasts that it should be able to l'uel inventories - coal establish, with moderate rate increases, electric rates handling equipment 1,243,912 1,276.438 sufficient to fully recover its investment in River 36,969,770 36,745,11I Ilend. As a condition of Cajun's participation in the Less asset disposals (569.731) (259.365) River llend project, in 1979 the Company and GSU S 36,380,039 5 36A85,746 entered into a contractual agreement wherchy GSU is obligated to buy back a portion of the Company's NOTE C-CONSTRUCTION-IN-PROGRESS share in the aggregate capacity and output of River Construction-in-pn>gress at December 31, consisted llend in stages following the commercial operation of: i- M N dK-Company's share in the first twelve months, 198s W81 two-thirds of the Company's share in the second River Bend, Unit 1 $ I,376,1 i s,85 4 51,1-i0,432,671 twelve months and one-third of the Company's share Planned lignite facility 108,052,646 other 13,956A02 in the third twelve months. The price to be paid by 12,758.847 GSU for this capacity is dependent upon the final s1,390.101,256 51,261,2ii,164 cost of the River llend unit; however, during the huy back penod, the Company will be reimbursed for all lliver llend, Unit 1, a nuclear facility, is being fixed and variable costs related to that portion of its constructed under a joint ownership and capacity subject to the agreement. In an effort to participation agreement with GSU, wherchy GSU is further minimize the effect of River llend on future responsible for managing construction and certain electric rates, the Company is currently pursuing and financing of the project and the Company will share considering several courses of action (see Note 1.), in 30% of the cost of construction and ongoing including (I) a phase-in of certain costs related to operation of the facility in return for a similar River llend, (2) leveraged Icases of certain Ilig Cajun percentage of future output. The estimated cost to No. 2 assets (3) the issuance of additional pollution the Company to complete construction of its portion control bonds and (4) the sale of a portion of its Ilig of River llend was $ 129,000,000 at December 31, Cajun No. 2 generating capacity. The Company 1985. This cost estimate is based upon GSU's current forecasts that it will accomplish some or all of these commercial operation forecast date of March 31, or other actions sufficient to meet all loan and debt 1986. For each month thereafter that the unit is not service covenants and all cash flow requirements for in commercial operation, the estimated cost to the the foreseeable future. Company to complete construction will increase by The Company currently estimates that as a result of approximately $ 12,000,000. 'Ib finance these the River llend buy back agreement with GSU, it will construction costs, the Company had restricted funds receive approximately 5600,000,000 during the held by trustees for the pollution control bonds, 3-year period. GSU has recently filed applications totaling $7,000,000 at December 31,1985,and with the applicable regulatory bodies in I.ouisiana subsequent to December 31,1985 (see Note 1.), the and Texas for increases in in retail ciertric rates Company has obtained an additional REA loan related to River llend and other matters. The commitment guarantee in the amount of outcome of these applications cannot be predicted, $ 200,000,000. however, GSU has stated that unfavorable The use of nuclear technology at River llend presents determinations by regulatory bodies in citner or both various risks not inherent in conventional fossil fuel states could have a significant negative effect on its electric generating plants. The substantial length of financial position and future results of operations. time required for construction of the generating Notwithstanding these uncertainties, it is the opinion facilities and the complex federal regulatory of management of the Company that GSU will be proceedings related to the approval of River llend ahic to meet its contractual obligations related to the have compelled the Company to make substantial buy back agreement, investments in the project GSU, the construction The Company and GSU also executed a Financial manager, operator and co-owner of the plant, was Options Contract dated November 3,1980 which granted a full-power operating license following the provides in part that if the Company defaults under 28
N the River llend Agreement, GSU can require the at Big Cajun No. 2 allocable to Unit 3 11,785,056 12,573,577 < Company to purchase GSU's interest in flig Cajun Preliminary surveys and No. 2. Unit 3 to the extent of the amount of the investigations and other 16.344,664 14,5HM,975
- l. Company's River llend default. The agreement has a 5 270,472,259 8 148,H04,760 contra provision related to GSU default under the flig
, Cajun No. 2, Unit 3 agreement whereby the l Company can require GSU to purchase the Effective January 1,1984, the Company, with the Company's interest in River llend to the extent of the approval of the REA, suspended until 1986 the amount of GSU's Unit 3 default, amortization of deferred charges relating to interest on excess coal, charges for nondelivery of coal and in January 1985, the Company decided to defer losses resulting from decrease in iltu content of development of a planned lignite facility and determined that certain incurred project costs, stockpiled coal. , aggregating approximately $99,000,000, had no future benefit.-These costs, less salvage value, were NOTE F - LONG-TERM DEBT 1 reclassified to deferred charges in 1985 and are being 1.ong term debt at December 31, consisted of the amortized over a period of 15 years (see Note E), following: The land has been retained as the site for a future ,9g3 39g4 1 generating facility and its cost, 59,396,717,is Alortgage notes payable
< included in electric plant held for future use in the to Rr.A, interest at
! accompanying 1985 balance sheet. 2% to 5% per
"" "" * ' d"* I" Other construction-in-progress consists primarily of "' "'
new transmission facilities and general additions to }"n*"*g ne s 36,156,65H 5 37,471,451 extst,mg plants. 'Ihe estimated cost to complete these C" ' j projects at December 31,1985 was $16,000,000. "" ,","[ interest at 7.7% to NOTE D - INVESTMENTS IN ASSOCIATED 14.6% per annum,
! ORGANIZATIONS due in quarterly investments in associated organizations at December ta n en u@
1,840,H63,217 1,622,390,677
, 31, consisted of: ! Excess coal notes l payable to FFB, l National Rural Utilities interest at H.9% to Cooperative Finance i1.2% per annum, j Corporation 5 9,761,626 $ 9,656,0H7 due 7 years after first Jackson llank for advance, due in 1988
) Cooperatives 62,239,817 53,476,00i and 1989 125,000,000 125,000,000 Other 66,716 53,6H5 Construction notes . 5 72.066.189 5 63,185,776 payable to JHC,
} interest at urying rates as determined i The Company's investment in the JISC is substantially by the JHC (H.7% to l , ; pledged to secure certam borrowings from that 10.0% at December organization (see Note F). 31,1985), due in I quarterly installments NOTE E - DEFERRED CIIARGES through December 2016 661,607,220 593,3H2,962 l Deferred charges at December 31, net of I accumulated amortization, consisted of the industrial Develop.
ment Revenue Honds, following Series 1982, interest j 19H5 198I at two-thirds of Abandoned project costs prime (6.365% at 5 90,770,983 December 31, 1985), (see Note C) 4,500,000 1,500,000 J 79.521,735 5 66,456,256 due July 1997 Interest on excess coal Charges for nondelivery Pollution Control of coal 5H,233,112 41,371,265 Refunding Revenue I.osses resulting from Honds, Series 198 6, j decrease in Htu interest at varying content of rates based on a
- stockpiled coal 13,H 16,709 13,H 16,709 nationally recognlied Depreciation and interest index of comparable on common facilities tax-exempt bond 29 i
J
- issues (4.75% to The indenture agreements of the Series 1984 H.25% at December pollution control revenue and refunding revenue
< 31,1985), due no later than December bonds contain certain provisions whereby the 2014 88,250,000 88.250,000 bondholders may, at their option, redeem the bonds 1 Pollution Control at the end of( ch interest adjustment period, which l
"#**""""""d'- typically is from I to 90 days. In the event that the Series 1984, interest bpany, through its remarketing agent, is unable to
! at varying rates based mmadet sud adeemed Nn6, it b We aMy to j on a nationally refinance such Imnds through long-term financing I recognized index of commitments from the FFH and/or through the use j comparable of the restricted funds held by the trustees (see l tax-exempt b<md below). Accordingly, these Imnds have been classified j issues (4.85% to 5.625% at December as long-term debt in the accompanying financial statements. The long-term financing commitments ater el an a 2 14 5 25,H00,000 5 25.800,000 "*PI '" I" V#'I I"E "*"""I" I'"" I988 though 1991. The Company anticipates that the Series 1984 honds Pollution Control Revenue Bonds, will he converted to serial and/or term bonds with i Series 198 6, interest sinking fund arrangements at some time prior to the 3 at varying rates based expiration of these commitments. j on a nationally l recognized index of At December 31,1985, restricted funds held by I '""P* HIC trustees were restricted to the payment of the costs
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P' " of acquiring, constructing and installing pollution [u 2 control equipment at Big Cajun No. 2 and River December 31, 1985), Bend, Unit 1, and to the payment of principal and due no later than interest on the pollution control bonds. December 2014 38,600 000 38,600,000 Maturities on long-terin debt were as follows at Pollution Control December 31,1985: i Revenue Bonds, Due Amount Series 19H 4, interest {. at varying rates based 1986 $ 17,716,H31 on a nationally 1987 26,788,364 recognized index of 1988 I l 5, I 42,273 l comparable 1989 78,834,949 tax-exempt bond 1990 33,923,220
- issues (4.75% to Thereafter 2,603,391,4 5H i H.0% at December $ 2.875,777,095 31,19H5), due no s
later than November Under the terms of its loan agreements, the 2014 55,000,000 55,000,000 Company is subject to certain covenants, including 2,875,777,095 2,590,395,090 the maintenance of certain levels of interes coverage Less current portion (17,716,831) (12,684,54H) and annual debt service coverage, As of December s 2,H58,060,264 s2,577,710,542 31,1985, the Company was in compliance with all such convenants. Interest incurred on notes payable and long-term l Construction notes payable to the FFH have, at the debt consisted of the following: ! [ option of the Company, maturity dates of 2 to 7 I985 3984 i years from the date of the advance, unless the Charged to operating Company elects a long-term maturity, in which case expense s llH,5H2,129 s 122,536,H16 ; , the maturity date would be 34 years after the end of d s to defened l
; the calendar year in which the advance was made,
- Interest on excess coat 13,065,966 13,635,H59 Principal repayment is generally deferred for 7 years. Preliminary surveys and j Under the terms of the notes outstanding at investigations 1,860 5,774 l December 31,1985, aggregate g rincipal repayments Additions to l of $611,032,0(M) mature in 1986 and 1987; however, construction-in-in-progress 135,296,916 118,H93,679
) the Company plans to ultimately refinance these s 266,946,871 s 255,072,128 1 notes for 34 years under the above options, 3 therefore, the priacipal amortization on these notes Substantially all of the Company's utility plant and l'as been mcluded in future maturities beginning in its investment in theJBC are pledged to secure 1988 in the maturity schedule below. long-term debt payable to the REA, the FFH and the 30
1 l JBC. In addition, long-term debt payable to the FFH NorE I - AMENDMENT OF NATURAL GAS 1 and substantially all of the long-term debt payable to CONTRACT ] the JBC is guaranteed by the REA. In April 1983, the Company negotiated an j At December 31,1985, the Company had amendment to its primary natural gas purchase unadvanced and available loan commitments from contract, whereby the supplier of the gas was 'j the FFH and theJHC of approximately $108,tHM),tHH) released of its obligation to deliver a portion of the j in excess of the pollution control bond commitments gas stipulated in the contract for the period January i discussed above. See Note L for additional loan I,1983 to January 1,1987, in exchange for cash commitment obtained subsequent to December 31, consideration, of which the last installment, f $7,571,(MM), was received and recognized in 1984. l 1985. j The Company estimates that its gas consumption
- NOTE G - INCOME TAXES requirements for 1985 and 1986 will not exceed the luantitics of gas it has a contractual right to purchase i During 1983,less than 85% of the income of the i under the terms of that portion of the contract not Company was collected from members for the sole affected by the amendment. Also included in the purpose of meeting losses and expenses. As a result, amendment is a provision whereby the Company
! pursuant to Section 501(cXI2XA) of the Internal i Revenue Code of 1954 as amended, the Company may sell to the supplier its right to receive certain became a taxable entity in 1983. The Company has quantities of gas under the amended delivery schedule. Sales under this pn> vision totaled ! received a private letter ruling from the internal 58,320,M in 198L l Revenue Service stating that once taxabic, the j Company shall remain taxable until an application is j submitted and approved for redetermination of its NOTE J - COMMITMENTS AND taxable status The Company has made an election CONTINGENCIES l j under the Internal Revenue Code to remain a taxable The Company is a party to two contracts related to i entity through the year 2003 in order to participate the acquisition of coal. Purchases under the terms of ~ in certain equipment leases. these and related transportation contracts (including ! charges for nondelivery of contractual quantities) The Company had no current income tax provision during 1985 and 1981 were approximately for the years ended December 31,1985 and 1981. i S165,000,090 for each year. Under the. terms of j .I.he Company had no deferred income tax provision these contracts, the Company is obligated to , 4 for the year ended December 31,1985. Certam 2*C 031. O c e nex e Fars, in Pu timing differences existed at December 31,1984 which resulted in a deferred income tax pnnision "EE" *"'#'I " # """8""'"""'" 3 ' which was substantially offset by 58,600,000 of , investment and energy tax credits. 1988 - s146,000,000 At December 31,1985, the Company had general 1989- 4 154,000,000 l 1990 - s161,000,000 4 husiness credit carryforwards which can be used to offset future income taxes of approximately Slanagement is of the opinion that these coal f $ 208.000,000, of which approximately 512,000,000 j contracts will meet the anticipated coal fuel needs of expire in 1998, $35,(N)o,000 expire in 1999 and the Company thn> ugh the final contract year,1997. 5161,000,(MH) cxpire in the year 2000. In addition, the Company has loss carryforwards of The Company and GSU are currently in dispute 1 approximately $750,000,00() which may be used to regarding the terms of a transmission contract offset future taxable income. hetween the two companics. This dispute concerns 4 the interpretation and application of certain sections i NUI'E H - EMPLOYEE BENEFIT PLAN of the contract regarding the dedication of i Substantially all of the Company's employees transmission facilities. The ultimate outcome of this dispute cannot he predicted. The Company is also participate in the National Rural Electric Cooperative the defendant in certain litigation concerning claims
) Association (NRECA) Retirement and Security
- Program. The Company makes annual contributions of contractors, principally related to the construction to the plan equal to the amounts accrued for pension of its utility plant and its abandoned lignite facility.
I expense. In this master multiple-employer plan, The results of these lawsuits cannot be predicted j which is available to all member cooperatives of with certainty. It is management's opinion that the i NRECA, the accumulated benefits and plan assets are final outcome of these matters will not have a j not determined or alk>cated separately by individual material adverse effect on the Company's financial employer. The Company's pension expense under position. The Company is also the plaintiff in other litigation concerning related construction issues, {l the plan for 1985 and 1984 was $1,237,899 and j $ 1,399,090, respectively. i 4 31 i
NOTE K - EXTRAORDINARY ITE31 a leveraged lease of certain liig Cajun No. 2 facilities I)nring 1983, the Company entered into safe harbor totaling at least 5275,000,000. In connection with leases for income tax purposes and sold the rights to the accomplishment of these items, the Company has tax benefits as ociated with its undivided ownership agreed to termination of related existing loan interest in the boiler and turbine assets of liig Cajun guarantee commitments and to repay certain FFil No. 2, l' nit 3. ' Intal cash proceeds received on the debt. Additionally, as a requirement of the guarantee, sale were 5 5~,816,913 The Company was required the Company requested termination of an REA by the REA during 1981 to use the proceeds and guarantee in the amount of $ 1,087,000,000 related interest earned thereon exclusively to par all to its abandoned lignite facility. The guarantee also transaction costs and retire outstanding I IH1 debt sdpulaws diat a inaxinuun of SWHHLOOO of the The Company has agreed to indemnify the loan proceeds is provided for payments owed am' purchasers against the occurrance of certain esents accrued by the Company under the River llend,lo ,:t w hich could result in the loss of the purchased tax Ownership Participation and Operating Agreemem benefits. l. citers of credit issued by the JilC provide for River llend Unit I construction and related the source of funding for any potential overhead costs and that a minimum of $ 1 i 6,000,000 indemnification payments. of the loan proceeds is reserved for the payment of interest during construction due on Riser llend REA in 1985, 515,658,680 of the proceeds less $603,~I I guaranteed debt. The Company has executed and of related costs, was recogni/cd in nonoperatmg issued all items required to cau ,e enactment of the margin as an extraordinary item. In 1981, guarantee and management belicscs that the 521,279,600 of the proceeds less 5790,9 s I of related Company can accomplish and comply with the costs, was likewise recogni/cd as income.1)ue to the terms of the guarantee. existence of general business credit and loss carryforwards at 1)cccmber 31,1985 0,cc Note G), .I' H M dM mud R'M b o d an ande m ib hmm Na "1 and the anticipated lowes expected to originate in of o i f hem- n l'ps of f uture years for tax purposes, future income taxes . payable related to the sale of the tax benefits are Regulation.,, .l.he amendment would impose requ nwnts r ate to accoundng or phase-in cxpected to be minimal. The balance of the proceed , remaining at 1)cccmber 31,1985, 59,851,~35, is """""""*""" '""*"""I'""I. included in deferred credits in the accompanying newly completed plants. }I'he Company has not balance sheet and will be recogni/cd m. f.uture determmed whether a will phase-in certain of its period 7m. accordance with the rate making policy as operating costs related to Riser llend, I.n it 1, determmed by the lloard of Directors of the
; g ,gg gg g Compan '
requirements of the amendment, such phase-in could significantly affect f uture reported operations. NOTE L - SUllSEQUENT EVENTS enain cowb app a to dw ompany coal ed facilitics, w hich were capit ali/cd during 1981 and The REA, by letter to the Company dated l'chruary 1982 suhyuem to commercial operation of the 20,1986 iwued a commitment to guarantee a loan facilities but before achieving full capacit), may al,o to the Company in the amount of 5200,000,000 for be allected hv the proposed amendment: the additional investment requirements for River llend, ' recoserv of the ,e costs under the proposed l' nit I (see Note C). In conjunction with the guarantee, the REA issued a Commitment Notice amendnwnt mas require retroactise adjustment to the Company's financial statements and also may which evidenced the Fill's commitment to loan the ' aUcet current and future oper;nions. The amendment 5200,000.000 to the Company. would require that deferred costs related to phase. ins Pursuant to the guaramec, Cajun has agreed to use its he capitali/cd and recoscred within ten ) cars of the best efforts to (1) extend the long-term status of the inception of the phase-in plan. A final decision by 593.600,000 of Pollution Control Revenue lionds, the FA511 is not expected until the fourth quarter of Series 198 6 related to River llend Unit I (see Note 1986. If enacted, the Company intends to follow the il, (2) develop additional long term pollution control applicable accounting methods presenbed by the bond financing for Riser llend, l' nit I in the amendment. approximate amount of $52,000,000 and (3) desclop 32
Officers PRESIDENT VICE PRESIDENTS SIANAGERS M. W. Scanlan J. L. Gambrell G. C. Filender Operations Environmental AITairs VICE PRESIDENT J.T. Wam W. W. Holloway I""'"" ' '* #"" "N ' G. A. Fletcher W. C. 'lbibert D.11. Calvert Construction Power Supply SFCRETARY-TREASURER D. J. Ilarpole, Jr. V. J. Elmer E. J. Poss F nance Operations Engineering & Design R. D. Iluffman A. W. Johnson EXECUTIVE VICE PRESIDENT Administrative Services Power Engineering AND GENERAL. 31ANAGER M. F. Ilarker D. L. Mohre SPECIAL ASSISTANT TO TIIE Fuels & Transportation GENERAL 31ANAGER J. G. Chustz
,p, Accounting J. M. Purtle Auditing CORPORATE COUNSEL llussell D. Wasson W. E. Ilrown Etx and 1. case R. L. McCabe DIRECTOR Purchasing T. Tarbox D. J. Courtney Public Affair 3 Data Processing D. N. Keith General Services J. A. Daily Personnel & Industrial Relations PLANT MANAGERS M. I.. Ilart liig Cajun 11 G. II. llartee liig Cajun I GENERAL COUNSEL l
l John Schwab l llaton Rouge, I.a. 1 CORPORATE AUDITORS Ernst & Whinney Information llaton Rouge, l.a. Rcquests for general information about Cajun Electric should be directed to Public Affairs. Equal Employment Opportunity Employer M/F
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