ML20205C171
| ML20205C171 | |
| Person / Time | |
|---|---|
| Site: | Rancho Seco |
| Issue date: | 12/31/1985 |
| From: | Lowe D SACRAMENTO MUNICIPAL UTILITY DISTRICT |
| To: | |
| References | |
| NUDOCS 8608120269 | |
| Download: ML20205C171 (28) | |
Text
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SACRAMENTO - ' MUNICIPAL ' s i 1 M2 * , .: I
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- - . - The Sacramento Municipal Utihty Dis. d, k. J. v . . t n'.
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. Cahfornia's capital city This Distnct is
(-? ky'[31 . 77Q~%dM governed by a Board of five Directors yJ .g <c / QY' elected for staggered four-year teims. f,, g y f. . 7 ,Q M,:..' Q J f, a,' ,.-N4, 24;.,)311y A:.C ' a 4 3, , .k ~ . f ' p :
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SMUD 1985 HIGHLIGHTS wm wnmons totaled an aH time high of
- Two new hydroelectnc power plants were added to SACRAMENTO M U NIC IPA L 14,617. Ihls was the largest number of single year the SMUD system, mcreasing the peaking capacity utility new connections since 1979 b310 megawatts and incre mug the total energy by DISTRIC T 67EM kwh m a norma! water year
- Total customers served a:so reached a record high of 383.7% by the end of the sear The Distnct is now
- Construction of the Distnct's first gas-turbme peak CONTENTS the third :argest pubhc4 owt.ed utihty in the con- mg plant was completed and m:tial testmg began in tinenta! United States in terms of number of customers. December 1985 Page 2 Management Commentary Page 4 Operations Reuew
- Peak demand soared to a new high of 1.851 mega-
- A refundmg bond sale Aas successfully complet ed.
watts on July 9.1985 This was also a record chmb of produc:ng ; present value saungs to the ratepayers Page 12 Lookmg Aboad 121 megawatts above the preuous peak mark of of $13 3 mdhon
- Page 14 Five Y dummary 1.730 megawatts set in Ju!y of 1984
- SMUD's geothermal piant (SML:DGEO el) estab Page 15 Fmancial Statements
- Total energy sales to customers mcreased 8.2 per hshed itself as the world's leadmg performer w'th a 1 cent over 1984 Sales reached a record 6.881h31,000 record 99 9 avaliabihts factor and a capacity factor of Page 25 SMUD Directory kdowatt hours tkwh) (excludmg sa!es of surplus 98 6 for the year This plant enjoys an enuable repu-power i for an increase of 521.820.000 kwh tation among utthties for its design mnovations. as wel} as its performance
{: ABOUT THE COVER 1 l It was the Veterans Day week- - end Suddenly. an early winter - f storm har the Sierras, trapping . many surprised campers Men. ; .,." '
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winds. and freezing temper- ..q atures Rescue operar rons were R * . .G[g CW quickly mobilized by the El Dorado County Sheriff's Depart- '
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SMUD's hydro crews were a . key factor to the successful res- ,- cue of close to 70 stranded camp- A.
- l ers Detailed knowledge of the
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uable assets in the search-and- . n rescue operations They worked
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tirelessly through three long -K w days, taking rescue teanns ss fsr as 50 miles in from the main highway and using their Sno-cats to take campers out to the rescue station i
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Management Commentary Sacramento Municipal Utility District i a Dewey K. K. Lowe was appointed SMUD gewey K. K. Lewe General Manager in September 1985, after the Generai Manager retire.nent of John J. Mattimoe. This appointment followed a career of more than 35 years of highly commendable service with the United States Air Force. His last military l assignment was as Commander of the Sacramento Air Logistics Center, a systems management, engineering, andindustrial complex of 15,000 people, where he held the rank of Major General. During my first few months with the District, one thing has become We recognize that, for the District to perform well during these " growing clear: we have the strength, talent, and commitment within our organization pains," we must continue to seek new and innovative solutions. Current to meet any challenge. computer technology is one of our key resources in this area. Our Manage-When John J. Mattimoe retired from his post as SMUD's General Man- ment Information System is being expanded and upgraded. When the new ager in September 1985, he left behind an enviable record of outstanding designs are completed, it will assure that timely, accurate information is accomplishments. His career with the District spanned three decades, and he accessible to all Department Managers through their individual computer ! played a leading role in the success of every major generation project the terminals. This will not only provide budget and performance indicators l District undertook. But even more important, he left behind a legacy of pride through a centralized system, but will also enable us, through pooling, to and spirit in the District's most valuable resource-its staff. effect the most economical use of our financial resources. ; t First and foremost, I commend the District's staff for their dedication. We are eminently aware that SMUD is one of the key reasons the They have consistently demonstrated a clarity of purpose and will to succeed, Sacramento area is growing at such an accelerated pace. As a municipal and this, coupled with their impressive levels of creativity and ski!!s, assures utility, we are accountable to the public; hence, it is incumbent upon us to the team's success. operate with utmost efficiency. The District has grown tremendously during the past several years. We The communities we serve throughout the county of Sacramento cannot have added more than 700 jobs to the area's economy in just the last five maintain employment levels and compete for business and economic growth years alone, swelling our work force to over 2,700 employees. During that unless they can be assured a reliable energy supply at affordable rates. There-same period, nearly 300 of our long-time employees have retired; and we have fore, we are commitled to that mission. l faced the challenge of replacing those valued years of experience. Today, we During 1985, we have taken a number of actions that will enable us to i are serving about 385,000 customers over an area of 890 square miles. Cur- give our elected Board of Directors even greater assurances that the District 1 rently, the District is the third largest publicly owned utility in the continental is being managed cost-effectively. United States in terms of customers served. As the demand for power has This report presents numerous facts and figures about the District ana : grown, so toe has the need to meet that demand with both tradit;onal and its operations in 1985. But, along the way, we also share with you a few of the l innovative measures. Our hydroelectric facilities and nuclear plant have interesting activities and events we experienced. Perhaps you will see why 1 served us well over these years, providing a total of 1,563 megawatts of they say at SMUD,"We are more than just a service - we're a team." A . baseload capacity. We have also added various other generating sources to team dedicated to the people we serve. Our system, such as geothermal, photovoltaic, as well as gas-turbine and ! some new hydroelectric. Even with conservation and good power manage. ment, we know it is just a matter of time before more generation will be i g needed, so still other resources are being considered. The future holds both g ,,,,# high hopes for success and enormous challenges for SMUD. New growth and new circumstances made it necessary to evaluate our g = ' operations and procedures as well, and to make changes according!y. Just as t a decade ago our nuclear plant hurled the District headfirst into a new era of l techno!ogy, the circumstances of the early 80's have forced us to seek new DEWEY K. K. LOWE : solutions and explore new management techniques. GENERAL MANAGER 2
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Clifford R. Wilcox John T Kehoe s Presu!ent Vwe Prudent =" m S s f_ ' L-BOARD OF " DIRECTORS / y
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Chfford R. Wilcox w m< . President ; O im t< 'r V%rd Four y%4 F John J Matrimoe, who served as General Manager since 1982, retired in September after John T kehoe vu v pn s v7 pgul p_ gg77 h _ nearly 30 years of outstanding service to the 9, , , ( ,, nsa Tw Distnct In one of his final acts as General
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Manager, he was able to successfully negotiate Paul W Carr , . _ . , , . . .,_ ,, _ _ an important extension to the contract which O W l' n L%rd Three permits SMUD and PGandE to purchase power Cortus T Koehler N'[;y;;fj;Q^y,,_,,,;f.[\g' f '
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from each other Thanks to John. this pact. D:!wtor L%rifne ?: * },.: . \s 1.y
- which onginated more than ten years ago. will Ann L. Taylor l Q\
now continue until 1990 "
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p - k_ John J. Mattimoe m ^ General MJndger
!Hetired in September 198b > Ann L Taylor L
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_ _ _ _ . - - _ - - __ _ _ _ _ _ - ~ _ - . _ . - -. . . - Operations Review Sacramento Municipal Utility District
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HYDRO POWER .;p 4- .
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#4.. f Yk.h. .y y ' E-yyI" g -.. ' , t, .;a:. . .t, SMUD first entered the field of power generation over p. <
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two decades ago, when it built a series of six hydroelec- f. . y , *.;.W ; i tric powerhouses in the Sierra Nevadas on the South *; q' 4. % Q' 7. . '5 "i '7v', y; .y. ** Fork of the America, River. Construction of this 650- '2"J . v? s . '~ ~ '
- a. f 3 i megawatt project started in 1958, and Sacramentans
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were receiving their first power from the project in the i * ,. 3 % - n -: . ? ' .A T3 .. d ,.1 -
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I spring of 1%1. 8":H<..# , Even today, SMUD's hydroelectric power plants .+1.". +
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$$. . $ 7 ' ff electricity. One of the basic strengths of the District's ?V ?'J $ 4 "@ ? O _. / ' t U ; C r ." "
i overall energy resource mix continues to be its hydro- n.; ' ..H ' f q.@ , , : (s i electric generation system which helps meet the custo- _ . Y. - g yy <' yp. , i,r;G' ~ . l mers' needs at affordable rates. This economical system, '.h.' '" N ."
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made possible by the foresight of SMUD's Directors and the dedication olits employees, has also helped build and
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strengthen the economy of the territory SMUD serves. l.p. m" QD ' hu --
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. ,e SMUD completed and dedicated two new hydro- 4 ~ c.
electric projects in 1985. The 10-megawatt Jones Fork r'ongressman Robert Matsui, Powerhouse, SMUD's most recent addition to its Upper would also force full consideration of energy conserva. SMUD Director Ann Taylor, Ameriran River Project, was dedicated in June. It is tion, as well as environmental and antitrust concerns at and B ard President Cliff , located on the Jones Fork of Silver Creek between two the time of relicensing. In addition to local press confer- # ## " #"8"' M "*8# "8 #' *
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existing reservoirs. This plant required no new reservoir ences on the bill, Director Ann Taylor testified in f the hyd re1 cer si ssue
- and it takes advantage of water that presiously had not Washington, D.C. before both Senate and House com- to SMuD's ratepayers.
J been used for power production. The project was fin- mittees on this subject. . l ished in just 5% years, nearly 18 months ahead of sche. j du!e, and was within the original project's construction I capitalcost budget. The Camp Far West hydroelectric project began WASHINGTON SCENE commercial operation on February 1,1985, culminating , five years of cooperative effort between the South Sutter u l Water District (SSWD) and SMUD. While SSWD is the , i owner of the project, SMUD was responsible for the .* planning and construction of the 6.4-megawatt facility a
! Jones Fork Powerhouse, a 10-megawatt addition to the and will purchase all of the power produced. The plant
, upper American River Project, l
- will be controlled remotely from the SMUD Headquar.
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ters Building in Sacramento. ~ k 5 (# l Like the Jonts Fork Powerhouse,it also represents s' an extended use of an existing water resource. SMUD s.l ' N will eperate the powerhouse to take advantage of water ,a M a j releases for SSWD that were previously used only for N g3 } , .V irrigation. ln an average water year, SMUD ean expect to W ' A data-gathering system, obtain about 27 million kilowatt-hours of energy. M ' 1 designed by the staff and
+ tailored to the needs of the District's hydroelectric facilities.
Frances Francis, partner in the has been completed and will RELlCENSlNG BILL internationally recognized law firm of Spiegel be oper tional soon. when all
& McDiarmid, has joined the SMUD team as system testing is complete, l Congressman Robert Matsui,(D) Califorma, clearly sup- '
r dio, c ble, and microwave its federal representative in washington, D.C. ports the pubhc,s nght to compete for hydro resources. She replaces Tim Dillon, who retired this signals will automatically 1 SMUD s Board of Directors gave their praise and full year after serving as SMUD's eyes and ears provide data from 52 remote ! support to Matsui this year for his hydroelectric relicens- in washington for a quarter of a century, devices to the District's ! ing bill. The bill, " Fair Competition in Hydroelectric General Manager Dewey Lowe (far right) and headquarters. The key to the Licensing Act of 1985(HR 1815), provides for fair com- Director Cortus Koehler (far left) welcome system's value is the improved petition between municipal and privately owt.ed utdities, Frances Francis to the SMUD team, and speed and accuracy of the data, including reservoir-level which uttimately would lead ta lower energy costs. His bill commend Tim Dillon for his outstanding , readings to 1/100 of a foot career. andprecipitation to 1/500 of f an inch. l i 4 ; } l
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Operations Review Sacramento Municipal Utility District Wismer and Becker President GAS TURBlNE
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SOLAR John Berude, SMUD's J.D. ( Stack, and Sacramento County l SMUD's 49-megawatt gas-turbine facility, located on ~~ -
,, Supervisor C. Tobias "Toby" McChilan Air Force Base, generated electricity for the Johnson listen to an first time on January 17,1986. Since that time, emission '
i explanation of refueling and priormance testing has been completed. This plant r s activities by Nuclear Plant will give McClellan complete emergency backup power, Manager George Coward making it the first Air Logistics Center in the United inside the containment
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States to have such capabDity. For SMUD,the plant also % building. means a new source of extra power during peak demand periods, greater reliability, and another step closer to energy independence. The plant will be operated by remote control from SMUD's Headquarters Building. k- - S In 1984, the District dedicated a one-megawatt solar Visit rs stop by the Rancho NUCLEAR POWER generating plant, the world's first commercial central-Cente for a es ha d7ook at station photovoltaic facility to be built and operated by a the nuclear power plant. Rancho Seco, SMUD,s 913-megawatt nuclear plant, utility. Since then, construction has bcen completed on a colortu/ display panels explain located 25 miles southeast of Sacramento, began supp!'l- second one-megawatt phase.These twohow units, located power at is generated, what ing power to the system October 13,1974. During its the Rancho Seco nuclear facility, use photovoltaic ceUs hssion nuc/rar to is, and how the llyear history, Rancho Seco has generated enough convert sunlight to electrical energy. The District's plant works. The centeris power to satisfy more than 70 percent of the needs of accomplishments with photomitaic technology drew open everyday from /0 a.m. to Sacramento County residents. it has more than paid for international attention in 1985 when a paper 4 p.m., prepat ed bymajor holidays. except Itself by avoiding the use of higher-cost gas or oil, saving SMUD's Graeme Cox was submitted to the Sixth Euro-customers more than $800 million. pean Photovoltaic Solar Energy Conference in London, England. The paper focused on the design aspects of the facility as well as the equipment used. DUKE POWER SHARES EXPERTISE WITH SMUD c lt is not uncommon for clectric utilities to share their 1 expertise, and even their experts, with each other. In 3 3 fact, nuclear engineers irom SMUD were among the first , to assist Metropolitan Edison during the 1979 incident at ) ( j. 7 1 Dree Mile Island. In a continuing effort to assure the o-highest standards of excellence in management systems f i ,. -
~N and procedures, as well as in training, qualifying, and /V I *
, safety, the District is borrowing top-level managers from s vi % < '
@ ?.a f ,
i across the United States. The first "on-loan" executive \. y ks 'i "h /
/ 1 "2
( was J. Ed Smith of Duke Power Company, South Carol- ' ( ? ina, a 25-year veteran of the nuclear industry and part of the senior management team for Oconee Nuclear Power - t pi-( . , ' Stations. Smith arrived in September and completed his work in late November. During his brief stay, he provided 3d ~ 3 7 . i the Rancho Seco staff with invaluable guidance through Ap g W .,. - management changes and made significant contributions N _;, I' to our District's goals for excellence. Duke Power's Ed Smith and George Coward, SMUO's Nuclear Plant Manager. (Mf. U 7 6
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wth the Northern Cahfornia Power Agency. Modesto - GEOTHERMAL POWER Irngotion Distnct, and the aty of Santa Clara Compie- 7 SMUDGEO sl is a 72 megawatt geothermalsteam tion is targeted for 1990 - power plant placed into commerc al operation on Decem , ber 1,1983. This plant's model of excellence is a key _ source of pnde for the Distnct it enjoss an enviabie = reputation for its 1985 record it mamtained an availabihty iactot of 99 9 percent and a capacity factor of 98.6 per cent The plant's unsurpassed record of performance - and availabihty makes it a world leader in the field of geotherma! power producers Production for the year totaled 610 gigawatt hours , , SMUD feels this record settmg year was due to the m- / 9 outstanding preventative maintenance program the staff w ] " engmeered for example, the mnovative practice of regular on line cleaning of the turbine, which involses g = injecting water into the steam This procedure avoids q costly shutdowns of about one week to remove, clean, , and remstall the turbine SMUD's procedure also takes a week to 10 days, however,it does not in;errupt produc h SMUO's geothermal plant tion. Our program also includes a unique coohng water " (SMUDGEO #1) estabhshed treatment which keeps algae growth under control- itself as the world's leading am Anot her tac tor is t he geothermal operatmg team. Opera performer with a record 99.9 tors pay keen attention to the efhciency to minimize availabihty factor and a j steam costs capacity factor of 98 6 for -'- The plant is located in the Geysers-Calistoga area in 1985. Ca:torniai Sonoma County, about 75 miles west of Sacramento. Its steam source is from a well field oper 1 ated by Geysers Geothermai Company. Power pro- #e duced by the plant is currently being transmitted to the _] Dismet over Pacific Gas and Electnc (PGandE) tacihties The Cache Creek Bald Eagle Study, which is part of 5 under a transmission agreement which provides for that the GPPL ngh of-way grantmg process by the U.S. d service through 1989 Bureau of Land Management (BLM), is proceeding - rapidly and very tt oroughly toward a fruitful conclusion. _ The two-year study is one of the most mtensive Bald M1 ;' i .-.m.. . . . , _ Eagle studies ever done in Cahfomia. i - COLDWATER CREEK lts mtensity and success have been possible largely a GEOTHERMAL PLANT because of funding and other assistance from SMUD and
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Construction was started on July 1,1985, for the Cold other jomt owners of the GPPL, as well as the CEC and Fj[~ . g - ' water Creek Geothermal Power Plant project it will the BLM. The study began m November 1084, and was % .- _ consist of two 65-megawatt generating units ar.d is bemg designed to identify the eagles' behavior patterns in the 9_ J L 1 E nabitat along Cache Creek and to determine if they built under a joint powers agenc9, called CCPA No 1, [-J'i. tormed by SMUD, the Modesto Irngation Distnct, and would be affected by a power hne. E -
]q the city of Santa Clara Both generating units are
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expected to becorne operational dunng 1988 . -
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"In this day and age, the best solutions to potential problems seem "?' '
2 - GEOTHER M AL to come from shared commitments to [1/ s PUBLIC FOWER LINE the resources, ta the regulatory r ' Ultimately, :he powei generated by the SMUDGEO al pr cesses, and to the need for = funding. In this case the shanng has g!Pri . and Coldwater Creek fauhties wiD be transmitted over _ been real and substantive, and for - the pianned Geothermal Pubhc Power Line IGPPL) new 7- , in the hcensmg pmcess The GPPL project's Notice or the bald eagles benefit, the approach ., p , Intent was approved by the Cahfornia Energs Commis has been excellent. ; sion ICECi on August 13. 1985 The Distnct plans to Ed Hastey
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Operations Review Sacramento Municipal Utility District OTHER CONSERVATION 7 , TRANSMISSION LINES AND LOAD t.. ,~ y ., m -, MANAGEMENT F
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SMUD's service area enjoyed a relatively mild summer in 1J U
]g;yh[jj contrast to last year's record-breaking heat wave. How-3 8: 1 l
ever, the combination of new customers added by the 4 fpq g a 141-square-mile Folsom Annexation (November of 1984) q - 9
< and the record-breaking new connections made in 1985, -I$ 3 D
t; drove the peak demand to a record high of 1,851 meg- ;~ p awatts. This was a jump of 121 megawatts over the 1984 c 9 .
., i record peak. ! -
f The District is committed to providing an effective '9 + I 3 e energy conservation program which will promote the g
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[ fO N " IN ' J cost-effective use of energy and optimize the use of Dis- Bgg ' j
, trict resources. In 1985, approximately $6.3 million was p P
- ., allocated for programs and activities designed to reduce (' [
consumption and to improve system load factor. SMUD M now has over 20 ongoing programs; 13 of these focus on ? 4 7 our commercial and industrial customers. Through the s .
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% addition of new load management programs and an ,
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% d expansion of the existing programs, the District expects ( -
[! up to a 345-megawatt load reduction by the year 2005. i < n ,. The Commercial and Industrial Energy Audit Pro- p
\ 1gram is the foundation of the District's load management 1 ~; -
ag; program. Since the program started, nearly 2,000 audits < E
'Q, , j have been completed and 27 megawatts ofload reduction f opportunities have been identified. If all these audit > g recommendations are implemented, the savings would D' 9
The District and Sierra Pacific Power Company (SPPCo) represent enough power to supply over 5,000 homes. By of Nevada are currently in the licensing phase of a trans- the end of 1985, participating Sacramento businesses
'0 1 e mission line project that would interconnect the two utili- achieved savings of over 9 megawatts. In recogni: ion of ties. The line is expected to be in service by 1990 and their 1985 efforts, and to encourage greater participation would have a capacity of 400 megawatts.
b JMI EN N by others, special Energy Manager Awards were given to 12 firms.
- The District and several other California public utili-t ties have farmed a joint powers agency called the Trans-
, mission Agency of Northern California (TANC). This agency plans to jo:n with most other California utilities to l share in the construction and ownership of a third 500,000 volt transmission line between Central California and Southern Oregon. TANC will be the lead agency for Cahfornia in the environmental analysis of the project. - The District will be entitled to approximately 200 meg. ) . Congressman vic Fazio, (D) awatts of transmission capacity, which will facilitate - # / Calif rnia, explained the power exchanges with the Northwest. The project con- .,e Pacific Northwest Interrie's sistsof theupgradeof aportionof aWestern AreaPower i l' g "#$*forn a at a press Admmistration (WAPA) transmission line from 230,000 volts to 500,000-volts and the construction of a new M conference in Sacramento.
? 4 4'f Fario stated, "This liru would 500,000-volt line from Oregon to near Redding, Cahfor-nia. The project has been authorized by federal legisla- " ,. .O & transport surplus electricity 3 from the Pacific Northwest, tion, and the environmental process and studies have S' A , (. where federalstudies show been initiated. It is expected to be completed in the early . E that four bi// ion kilowatt-hours
,^
1990's ar.d to cost $425 million. The District's share of the 5j.? .4 3
+
. of hydroelectricity which could have been generated over the project costs will be approximately $60 million. . t . .,
p t ten year have been 1985 BOARD PRES / DENT Cliff Wi/cox (L) presents an Energy Manager Award to Paul w ted. The was.'e occurred McMemus, building supervisor for Pacific simply a r ines Cahfornia market ' 10
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- Looking Ahead Sacramento Municipal Utility District r
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;4 POWER .
MANAGEMENT [. [Mfp E When the District first started distributing electricity a .
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YW M;- little less than 40 years ago, it had no generating facilities .' xt e~ of its own and had to rely completely upon purchased power for its consumerowners. Today those tonsu-mers, through SMUD, own and operate seven hydro-4"77 ;c electric plants, a nuclear plant, a geothermal plant, a solar photovoltaic facility, and a gas turbine (peaking) facihty.
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! The aggregate generating capacity of these plants is t,655 megawatts. Any power produced that is surplus to the common needs is sold to PGandE under a contract that
' .' ' %u ~' ~
extends to January 1,1990. In looking ahead, we realize that the challenge for n " ..' 1 tomorrow lies in sound power management. Just as yes- 'L terday's leaders planned for and built the foundation of ,
; U~ SMUD this generation system, we are now planning for and 4 7
building the foundations of our power management and j brokering system.
- u -- .-
- Source Jacksonvale Electrec Authority. Jacksonvate. Florida. March,1986 COMMITTED FUTURE As is typical of utility workers RESOURCES District assets. Property coverage is now being provided throughout the nation, the by both the domestic a-d London markets. performance of SMUD's people For the past several years, the District has had a surplus The Distnct reported a net loss of $9.2 million in 1985. is absolutely wonderful during c of resources after meeting peak demand and energy This loss resulted largely from reduced bydroelectric gen. the most adverse of conditions. requirements.The extension of the PGandEcontract will eration due to a below-average water year, reduced nuclear When the high winds and provide for the District's backup and reserve require- generation due to a prolonged outage of Rancho Seco, and ' "*"'i"' 8' ""8 # "i" < ments and an assured market for surplus energy gener- increased costs of purchased power. Revenue from sa!es to #88##"# "# " "8h* ### "8'"'" ?- ated through 1989. The District plans to meet future customers was substantially higher than 1984 because of power requirements through cost-effective load man- economic groch in the Sacramento area, an increase in agement, development of additional resources, pur- the number of customers served, and rate increases during chased power, and pooling and exchange agreements the year. Additionalinformation, pertinent to the results of SMUD dispatchers work around with other utilities. To better match the District's load operations, certain contingenaes related to the Rancho the clock to keep the electric
- - characteristics, peaking resources will be added to the Seco outage, and PGandE's recent actions and claim system running smoothly.
c._ District's current resource mix which is now predomi- against the District,is provided in the Notes to the Financial { nantly baseload resources. Statements
/t was the quick action and timely training of SMUD FINANCIAL DISTRICT RATES *
- P' "**' 8##'"' L"d' '""'
saved the life of a little girl During 1985, two 14-percent rate increases were put into during what started out to be a In July of 1985, $164 million of bonds from three series effect. While District rates have risen, they corInue to be picnic. The Lari family arrived
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{ previously issued by the District was defeased. In competitive with other utilities. Residential rates in areas ,,"8" 1
,holb y be ,le December, $597 million in outstanding debt was re- surrounding the District are approximately 25 percent
_ from the lake. She was nearly - funded with a $492 million issue (Subordinated Electric higher than the District's under the present rate schedule. drowned and had stopped _ Revenue Bonds,1985 Refunding Series). These two With more emphasis being placed on rate options breathing. Riffat, who had refunding actions resulted in a present value savings to for customers, the District assumed an active role in the completed Cardio Pulmonary the ratepayers of $13 million. development of a standard residential time-of-use meter. Resuscitation (CPR) training at Despite a generally unfavorable insurance climate The CALTOU meter project was thejoint effort of major SMUD just two days earlier, ' nationally, the District was able to maintain both prop- California utilities and regulatory agencies and was aimed rushed to her side and
- - erty and liabilify insurance coverage with minima! changes at producing a statewide standard for a meter which immediately began the in self-insured retentions and sufficient limits to protect would make time-of-use rates more cost-beneficial. procedure. Minutes later, the f child began to breathe again.
=- Between 800 and 1000 SMUD L employees take advantage of this training annually. A 12 l i b T . . . .
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E Five-Year Summary (unaudited; = = Sacramento Municipal Utility District 1985 1984 1983 1982 1981 OPERATING STATISTICS Customers at Year End 383,7 % 369,179 354,757 347,835 343,159 KWH Sales (thousands): . Sales to Customers - Residential 3,193,193 3,086,443 2,909,676 2,781,353 2,794,412 - Commercial, Industrial and Other 3,688,438 3,273,368 3,044,942 2,891,900 2,900,053 lE Total 6,881,631 6,359,811 5,954,618 5,673,253 5,694,465 566,883 2,539,326 2,043,256 2,649,166 1,312, % 2 J Sales of Surplus Power
~! Total 7,448,514 8,899,137 7,997,874 8,322,419 7,007,367
.- Revenues (thousands of dollars): 1 Sales to Customers - Residential $ 156,920 $ 130,604 5 116,513 $ 97,667 $ 82,789 Commercial, Industrial and Other 149,659 111,888 100,388 86,627 73,174 Total 306,579 242,492 216,901 184,294 155,963 E Sales of Surplus Power 50,957 102,300 50,329 56,857 38,839 7 Total $ 357,536 $ 344,792 $ 267,230 $ 241,151 $ 194,802 c Avg. KWH Sales per Residential Customer 9,544 9,609 9,287 9,022 9,211 - Average Revenue per Residential KWH Sold 4.915 4.234 4.00C 3.51C 2.%* i Power Supply (thousands of KWH): Hydroelectric Generation 1,348,244 2,1 % ,200 3,369,585 3,187,987 1,267,717 Nuclear Generation 1,889,885 3,747,854 2,846,179 3,357,4 % 2,624,286
- Geothermal 609,636 600,873 88,984 - -
Photovoltaic 1,986 327 - - - Purchases 4,034,428 2,829,598 2,033,831 2,130,141 3,467,830 r System Peak Demand (KW) 1,850,695 1,730,128 1,640,5 % 1,489,009 1,617,028 Equiv. Full-Time Employees at Year End 2,562 2,419 2,223 2,094 2,001 b FINANCIAL STATISTICS (thousands of dollars) Operating Revenues $ 357,536 $ 344,792 5 267,230 $ 241,151 $ 194,802 Operating Expenses: E Purchased and Interchange Power 94,327 32,827 18,620 22,390 118,238 30,045 1 = Operation and Maintenance 200,327 171,926 116,872 109,339 Depreciation and Decommissioning 46,955 42,208 36,814 33,243 31,016 Total Operating Expenses 341,609 246,961 172,3 % 173,871 170,400 T Operating Income 15,927 97,831 94,924 67,280 24,402 21,820 Other Income 48,656 34,329 16,653 22,557 ' Income before Interest Charges 64,583 132,160 111,577 89,837 46,222 73,739 47,693 40,321 32,012 Interest Charges 60,402 __ Net Income (Loss) from Operations (9,156) 71,758 63,884 49,5'6 14,210 - Settlement of Western Litigation - - 47,134 - - Net income (Loss) $ (9,156) $ 71,758 $ 111,018 $ 49,516 $ 14,210 Funds Available for Revenue Bond Debt Service $ 115,001 $ 191,602 $ 209,711 $ 132,169 $ 82,629 Revenue Bond Debt Service $ 88,326 $ 78,643 $ 70,121 5 56,063 $ 42,651 Revenue Bond Debt Service Coverage Ratio 2.36 1.30 2.44 2.99 1.94
- . Bonds Repaid $ 16,490 $ 15,445 $ 14,420 $ 11,765 $ 17,170 Electric Utility Plant - Net $1,533,419 $1,398,352 $1,289,038 $1,146,223 $ 979,272 h
Capitalization: Long Term Debt $ 894,038 $ 975,983 $ 782,963 $ 728,405 $ 607,820 Z- Customers' Equity $ 658,869 $ 668,025 $ 5%,267 $ 485,249 $ 435,733
=
14 h
Financial Statements Sacramento Municipal Utility District. AUDITORS' REPORT TO THE BOARD OF DIRECTORS OF SACRAMENTO MUNICIPAL UTluTY DISTRICT: We have examined the balance sheets of SACRAMENTO MUNICIPAL UTILITY DISTRICT (a political subdivision of the State of California) as of December 31,1985 and 1984, and the related statements of income and funds used for construction and nuclear fuel for each of the three years in the period ended ' December 31,1985.Our examinations were ma6e in accordance with generally accepted auditing standards and, accordingly, included such tests of the accounting records and such other auditing procedures as we considered nec ssary in the circumstances.
' In our opinion, the financial statements referred to above present fairly the financial position of Sacramento Municipal Utility District as of December 31,1985 and 1984, and the results of its operations and funds used for construction and nuclear fuel for each of the three years in the period ended December 31,' 1985, in conformit with generally accepted accounting principles applied on a consistent basis.
San Francisco, Cahfornia, ARTHUR ANDERSEN & CO. February 25,1986(except with respect to the mat-ters discussed in Note 7, as to which the date is April 17,1986).
~
FINANCIAL CONTENTS Page 15 Auditors' Report Page 16 Balance Sheets Page 18 Statements of Income Page 19 Statements of Funds Used for Constnrtion and Nuclear Fuel Page 20 Nots to Financial Statements i 15
Balance' Sheets
. Sacramento Municipal Utility District December 31, ASSETS 1985 1984
-(thousands of dollars)-
ELECTRIC UTILITY PLANT Plant in service, at original cost . . . . . . . . . . . . . . . . . . . . . . . . $1,418,221 $1,311,639 Less - accumulated depreciation . . . . . . . . . . . . . . . . . . . . . . 323,804 286,533 Plant in service - net . . . . . . . . . . . . . . . . . . . . . . . . . 1,094,417 1,025.1 % Construction work in progress . . . . . . . . . . . . . . . . . . . . . . . . 185,684 152,014 Jointly owned projects under construction (Note 3) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 55,794 36,073 Nuclear fuel, at amortized cost (Notes 1 and 2) . . . . . . . . . 197,524 185,159 Electric utility plant - net . . . . . . . . . . . . . . . . . . . . . 1,533,419 '1,398,352 RESTRICTED FUNDS Revenue bend reserves . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 78,694 76,072 Nuclear decommissioning fund (Note 1) . . . . . . . . . . . . . . . . 33,397 27,516 Funds for jointly owned project under constmction (Note 5) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 99,565 110,624 Total restricted funds . . . . . . . . . . . . . . . . . . . . . . . . . 211,656 214,212 CURRENT ASSETS Cash and investments Unrest ricted . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 59,903 178,222 Restricted for payment of debt service . . . . . . . . . . . . . . . . 20,859 27,880 Accounts receivable, net Cust omers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22,207 15,987 Sale of surplus power . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9,312 14,988 Other............................................ 2,788 2,702 Materials and supplies, at average cost . . . . . . . . . . . . . . . . . 23,707 22,750 Accrued interest . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5,773 10,492 Prepayment s . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2,722 _ _ 1,600 Total current assets . . . . . . . . . . . . . . . . . . . . . . . . . . 147,271 274,621 DEFERRED CHARGES Unamortized loss on refunding (Note 5) . . . . . . . . . . . . . . . . 24,205 - Unamortized debt expense . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17,077 11,346 Other.............................................. 6,930 9,213 Total deferred charges . . . . . . . . . . . . . . . . . . . . . . . 48,212 20,559 Total asse t s . . . . . . . . . . . . . . . . . . . . . . . . . . . . $1,940,558 $1,907,744 The accompanying notes are an integral part of these statements. 16
E December 31,- cal'!TALIZATION AND LIABILITIES -1985 1984
-(thousands of dollars)-
CAPITAf 'ZATION t Customers' equity employed in the business
?
Balance, beginning of year . . . . . . . . . . . . . . . . . . . . . . . . . . $ 668,025 $ 5%,267 e Net income (loss) for the year . . . . . . . . . . . . . . . . . . . . . . . (9,156) 71,758 Total customers' equity . . . . . . . . . . . . . . . . . . . . . . . . . . . 658,869 668,025 Long term debt (Note 5) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 894,038 975,983 ~ 6 Total capitalization . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,552,907 1,644,008 t i CURRENT LIABILITIES i Commercial paper (Note 6) . . . . . . . . . . . . . . . . . . . . . . . . . . . 100,000 90,000 m Accounts payable . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . :56,343 48,975' Long-term debt due within one year . . . . . . . . . . . . . . . . . . . . 5,%1 17,039 Accrued interest . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22,363 22,159 , Customer deposits . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8,493 6,322 _ Accrued salaries and vacation . . . . . . . . . . . . . . . . . . . . . . . . . 7,885 6,879 :
- Energy exchange account (Note 1) . . . . . . . . . . . . . . . . . . . . . 23,842 1,549 I Total current liabilities . . . . . . . . . . . . . . . . . . . . . . . . ~ 224,887 192,923 z
r. E-r NONCURRENT LIABILITIES AND DEFERRED CREDITS . L Unamortized gain on refunding (Note 5) . . . . . . . . . . . . . . . . - 113,817f . Spent nuclear fuel disposal (Notes 1 and 2) . . . . . . . . . . . . . 33,735 Decommissioning accrual (Note 1) . . . . . . . . . . . . . . . . . . . . . .33,397 27,516 Energy exchange account (Note 1) . . . . . . . . . . . . . . . . . . . . . 2,625 - Other.............................................. 12,925 9,562 Total noncurrent liabilities . . . . . . . . . . . . . . . . . . . . 162,764 70,813 - . COMMITMENTS AND CONTINGENCIES (Notes 7 and 8) l Total capitalization and liabilities . . . . . . . . . . $1,940,558 $1,%7,744 = 9 P p c E 17 l
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. Statements of income-Sacramento Municipal Utility' District Year Ended December 31, 1985 1984~ 1983 (thousands of dollars)
OPERATING REVENUES - . Residential . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $156,920 $130,604 $116,513
- Commercial and industrial . . . . . . . . . . . . . . . . . . . . . . . . . 138,431 107,245 .
96 732 . Sales of surplus power (Notes 1 and 2) . . . . . . . . . . . . . 50,957 102,300 :50.329 Other........................................... 11,228 4,643 3,656 Total operating revenues . . . . . . . . . . . . . . . . . . . . 357,556 ' 344,792 267,230-OPERATING EXPENSES Operation Purchased and interchanged , power (Notes 1 and 4) . . . . . . . . . . . . . . . . . . . . . . . . 94,327 32,827 18,620 ' Nuclear fuel used for generation . . . . . . . . . . . . . . . . . 12,475 23,790 14,892 Adjustment of spent nuclear fuel disposal costs (Note 2) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (14,387)-
- Production . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 73,691 58,227. 36,525 Administrative and general and other . . . . . . . . . . . . . 56,500 51,501 42,645 .
Maintenance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 57,661 38,408- 37,197
' Depreciation and decommissioning (Note 1) . . . . . . . . . 46,955- 42,208 36,814 ~
Total operating expenses . . . . . . . . . . . . . . . . . . . . 341,609 246,961 172,3 % ( Operating income . . . . . . . . . . . . . . . . . . . . . . . . . . 15,927 s 97,831 94,924
- OTHER INCOME .,
Interest income and other (Note 2) . . . . . . . . . . . . . . . . . 35,513 ,) 23,229 9,442 Allowance for equity funds used during ;': .Q construction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13,743 - 11,100 7,211-Income before interest charges. . . . . . . . . . . . . . . 64,583 132,160 111,577 1 INTEREST CHARGES .s Interest on debt . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .79,102 70,185 59,907 J Allowance for borrowed funds used durir,g i construction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (5,443) (9,7831 (12,214) Net interest charges . . . . . . . . . . . . . . . . . . . . . . . 73,739- '60,402 47,693 NET INCOME (LOSS) FROM OPERATIONS . . . . . . . . . . . . . . . (9,156) % 71,758 63,884-SETTLEMENT OF WESTERN LITIGATION (Note 4)...... - - 47,134-s , NET INCOME (LOSS) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ (9.156): ' $ 71,758 $111,018 m, . I
-N 4
3 N The accompanying notes are an integral part of these statements. 18 ~ -.
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. 4 - i _ o * -
iStatements of Funds Used.for:Constructioniand Nuclear Fuel -
! Sacramento Municipal Utility District Year Ended December 31, 1985 1984- 1983
' (thousands of dollars) FUNDS PROVIDED FROM
' Operations Net income (loss) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ - (9,156) .: $ 71,758 $111,018 Items in net income (loss) not affecting working capital-Depreciation and decommissioning . . . . . . . . . . . . 46,955 - 42,208 36,814 Nuclear fuel used for generation . . . . . . . . . . . . . . 12,475 23,790 505
- - Allowance for equity funds used during construction . . . . . . . . . . . . . . . . . . . . . '. . . . . . . . . (13,143)- (11,100) (7,211)
Other ..................................... (1,485) . 2,521 2,477 4 - Total funds provided by operations. . . . . . . . . . 35,646 - 129,177 143,603 External financing Electric revenue bonds . . . . . . . . . . . . . . . . . . . . . . . . ' 659,802 207,420 68,673 Commercial paper, net . . . . . . . . . . . . . . . . . . . . . . . . 10,000 45,000 " 4,775 i South Sutter Water District bonds (Note 5) . . . . . . 16,880 - - Total funds provided by external financirig . . . 686,682- 252,420 73,448 Other Changes' . Decrease in working capital (excluding commercial paper) . . . . . . . . . . . . . . . . . . . . . . . . . . 149,314 - - Reduction in restricted funds . . . . . . . . . . . . . . . . . . . 2,556 - - Deferral of gain from refunding bonds . . . . . . . . . . . L 114,056 - - g Other....................................... 18.643 - - Total funds provided by other changes '. . . . . . 284,569 ~ - - r Total funds provided . . . . . . . . . . . . . . . . . . . . . 1,006,897 381,597 217.051 FUNDS USED FOR OTHER THAN CONSTRUCTION r r AND NUCLEAR FUEL -
- E
- Increase in working capital (excluding commercial paper) . . . . . . . . . . . . . . . . . . . . . . . . . . . . .- 76,052 8,474 Payments of long-term debt . . . . . . . . . . . . . . . . . . . . . . 777,830 15,445 14,420
- Additions to restricted funds . . . . . . . . . . . . . . . . . . . . . -
134,962 11,185 i Deferral of loss from refunding bonds. . . . . . . . . . . . . . 24,292 - - [ Payment for disposal of spent nuclear fuel. . . . . . . . . . 28,570 - - 5 Other......................................... - 2,309 2,775
' Total funds used for other than construction
[ and nuclear fuel. . . . . . . . . . . . . . . . . . . . . . . . . 830,692 228,768 36,854 i FUNDS USED FOR CONSTRUCTION AND NUCLEAR FUEL E Construction and nuclear fuel expenditures . . . . . . . . 176,205 152,829 180,197
- - Allowance for equity funds used during const ruction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13,143 11,100 7,211 l-F TOTAL FUNDS USED FOR CONSTRUCTION AND h NU C LEAR FUEL . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 189,348 $ 163,929 $ 187,408
= E W ? c E The accompanying notes are an integral part of these statements. E E 19 r a 5 t
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n 4Notessto Financial Stdtem'ents) E USacramento Municipal Utility' District: O ? NOTE 1.
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SUMMARY
OF SIGNIFICANT ACCOUNTING POLICIES F %- Orgn==adia= and e===peia= frem income taxes.The Sacramento - ; not in 1984. . 4 W- . MunicipalUtiutyDatnctwasformedandoperatesundertheStateof f Nuclear fuel The District amortizes the cost of nuclear fuel to nuclear p" 1' Califorma Municipal Utiity Datnct Act.The Act confers upon.the L 1 fuelexpense on a unit ofproductxm method. Prior 1o 1983 the Detnct
. District the rights and powers to 6x rates and charges for commode meluded as part d nuclear fuel expense the estimated costs of the
!', J ties or services furmshed, to incur indebtedness and issue bonds or ; deposalof spent nuclear fuelwalated for inRation to the anticipated W time of deposal. As of January 7,1983,the Nuclear Waste Policy Act ! u L other obligatxms and, under certain'cacumstances, to levy and col- ~ , i of 1982 became e J lect ad valorem property taxes. The Datnet's power to levy property >J taxesisrestrictedbythe CaliforneC*Ma, ArticleX1B A,which ; . assumed responsbility for the permanent deposal of spent nuclear b' ; placeslimits on the taxing power of ailCalifomia public agencies.The L fuel. Effective April 7,1983, the Datnet is charged a fee for the ? U ' District is exempt from payment d Federal and State income taxes. . . disposal of spent nuclear fuelin the amount of one mil per kWh on F' Method of accounting. The District's books and accounts are based - - electricity generated by the nelear power reactor. The Datnet
- *- upon the Undorm System of Accounts for Public Utilities and Licen- ~ records this charge as a current period expense. For disposal costs sees presenbed by the Federal Enery Regulatory.Commemon related to nuclear fuel used to generate eiertncity prior to April 7, k (FERC), the same accounting system which investorowned electric; ; 1983, the govemment has mueued a one-time fee averaging one mil
! L utilities operating in California are required to falow. .
. perkWh.TheDatncthasaccountedforthisfeeasexplamedinNote a J 2.
invese===e= Theinvestmentsinrestnctedfundsandincurrentassets- j e E are valued at cost which approxanates market. . . I'- n 1 Decommemonmgof thenuclearplantisestimated 4 Surpluspowertransactions.Capacityandenerywhichisgenerated - . at$121.7milionin1985douars.Thisamountisreviewedandadiusted - 'l ' by the District but not required to serve Detnet load is sold to the ~ annualy to reRect the latest practices of nuclear plant decom-s Pacific Gas and Electnc Company (PGancE) pursuant to a power sale masonag. The District mantams a fund restricted by the Board of p contract. The January 1,1988, termmatum date of the contract was ~ Directors to provide for decommemonmg costs over the remanmg i recently extended to January 1,1990.: .. . . . life of the plant. The $121.7 milion estimate is used as a basis for_ : K The contract estabished an energv exchange accountin which the ~ Ecomputing the decommemones accrual and mantanmg the as- 'y K. District is requred to depast and maintam a posisve balance of 350 tricted fund. Fund management is under Datnet contrut .
- ' GWh. The District may withdraw energy from that account during ; A5owance for funds used during construction.The Dutnct capdal- 'e P times when Detnet generation is insu8icient to serve Dutrict load.' ? izes as an adthhnnal Cost of Constructen Work in profess, nuclear '
i/' ' Nter a withdrawal from the enery exchange account,'the Detnet . fuel, and its partcipation in; jointly ou,ned projects under con-1
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. must replace the eners withdrawn from the account _and restore the ? struction, an alowance for funds used during constructen which ' ,
L postive balance to 350 GWh' prior to malung sales of enery to represents the cost d borrowed funds used for such purposes and a - PGandE under other prowsons of the~ contract. At December 31,1 - retum on equity funds when so used. in the maiority of applicatens, @F, .1985, the Detnet was obligated to return 1729 GWh in the energ' : the amount capitahad is determmed by a formula prescribed by4
- exchange account ' ' _, ." . .. . < FERC. N totalalowance for funds used during construction for the -
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L, ; PriortoJanuary1,1986,therewasnolimitontheamountofenery ? years 19M,1984, and 1983 amounted to approximately 7.5 percenti - ( which could be withdrawn from the enery e'xchange account even if 17.8 pero nt, and 7.0' percent, respectively, of eEgible plant under1 , the amount withdrawn' exceeded the 350 GWh maintained in the ' constrution, nuclear fuel, and partcipation in jointly owned projects J
< ' account by the District. The ayeement which' extended the term of : undertonstructen. . .
the contract to January 1,1990, however, placed limits on the amount Retirement plan. The District's employees are covered by a contribu. : of enery which could be withdrawn from the enery exchange i tory retirement plan admmstered by the Public Employees Retire . y account elfective January 1,1986. Any enery which the Detnet ment System of the State of Califomia (PERS).The District's policyis i requires in excess of suchlimits must be purchased from PGandE at . to fund retirement costs as accrued. Contributions for the years 1985, - l i FERC-approved tariffs. The limits for 1986 through 1989 are 1250 1984, and 1983 amounted to $17.6 milon, $15.8 mibon, and $11.8 > GWh,1000 GWh,750 GWh, and 500 GWh, respectively milion,respectively ContributionstoPERSin1983werereducedby: l Eners which is deposited in'and withdrawn from the energ 3 a one-time adjustment of $1.7 milon. PERS has reported that the J l, . exchange account is recorded in the Detnet's income statement as - . Datnct's share of the actuanally determmed unfunded obbgation asi surplus power sales and power purchases, respectively, with the ' - of June 30,1984 (date of latest actuanal report), was approximately = F corresponding amounts re8ected as a deferred charge or as aliabibty $101 milion after taking into conaderation accumulated assets availi y Enery exchange account liabibties are valued at the producton cost 1 able for benefits of approximately $118 milon. PERS does not pro- ; ,_ of future generation which wi!! be used to return the obligaten. vide sufficient data to enable the Datnct to report separately the E DegeA The District provides for depreciation on the historical amounts of the actuarial present value of vested and nonvested - cost of electric propertus on a straight-line, service-life basis at rates accumulated plan benents. The assumed rate of retum used in determmed by engmeenne studies. The average annual composite determmmg the actuanal present value of accumulated plan benefits deprecia6on rates for the years ended December 31,1985,1984, and was 8.5 percent. 1983 were 3.26 percent,3.11 percent, and 2.99 percent, respectively Reclamadicatiana TheDistricthaschangedthebalancesheetpresenta- , The costs of replacement property units are capi *alized. Repair and tion ofitsinvestment injointly owned projects under construction and maintenance costs are charged to expense, including such costs the format of the Statements of Funds Used for Construction and associated with refuehng the Rancho Seco nuclear plant. Plant modi- Nuclear Fuel for 1984 and 1983 to conform to the presentations in the fications that do not meet the criterion for capitaEzation are also 1985 financial statements. charged to expense. Rancho Seco was refueled in 1983 and 1985 but 20 n
NOTE 2.
' NUCLEAR WASTE POLICY ACT OF 1982 The District has calculated its liabHity to be $28.7 mEion for the scvings to PGandEwith interest. As a result, surplus power sales were disposal of spent nuclear fuel used in generation prior to AprH 7,1983, reduced by $7.0 mHlion and interest income was reduced by $5.4 in accordance with the provisions of the Nuclear Waste Policy Act of million. The net effect of these adjustments was to increase 1983 net 1982 (see Note 1). The accumulated provision for estimated spent income by $2.0 million.
nuclear fuel disposal costs through AprH 7,1983, was $43.1 million, in 1984 the District accruedinterest amounting to $5.2 million onits which exceeded the $28.7 million calculated Hability by $14.4 mHlion. spent nuclear fuel disposal obligation as a result of tentatively select-Accordingly, in 1983 the recorded liabHity for spent nuclear fuel ing a deferred payment option under the Act. In 1985, the District disposal costs and nuclear fuel expense was reduced by $14.4 million. opted to select a current payment option, paying its obligation in fuH Under the provisions of the PGandE contract, the reduction of on June 30,1985. The $5.2 miDion of previously accrued interest is nuclear fuel expense resulted in the District retuming a portion of this included in other income in 1985. NOTE 3. PARTICIPATION IN JOINTLY OWNED PROJECTS UNDER CONSTRUCTION Central California Power Agency No. l. In 1982 the District and two opmentof thesteamsupplyis$5million.TheDistrict'stotalobligation other northern Califomia public agencies formed a joint powers of $35 mulion under these agreements had been paid at December 31, agency entitled Central Califomia Power Agency No.1 (CCPA No. 1985. 1), for the purpose of participating in the exploration, development, CCPA No. I will own and be responsible for constructing and and production of electricity from geothermal resources. Since its operating the two generating plants.The District has been designated formation, CCPA No. I has entered into a series of ag eements for project manager for construction of both power plants which are the development of a geothermal steam project with ce rtain entities estimated to cost $225 million. The District wiH fund 50 percent of havingleasehold interests in the Califomia Geysers geothermal area. both plants and will be entitled to S0 percent of the power produced. Under this series of agreements, CCPA No. I advanced $26 million At December 31,1985, the District had expended $ 11.7 million under towards the acquisition of rights to purchase steam, agreed to provide this obligation. Both plants are expected to be in commercial opera-additional funds toward steam field exploration and development tion in 1988. It is the intent of the District and the other members of costs for approved acreage, and committed to construct two 65 MW CCPA No. l to enter into power sales contracts with CCPA No. i to geothermal steam electnc generating units. In exchange, CCPA No.1 tAe and pay for aH of the power from the project. acquired rights to a production payment (a royalty based on the Transmission Agency of Northern California.The District and four-revenue from steam sales) and the exclusive right to purchase steam teen other California municipal utHities formed a joint powers agency under a contract. In December 1985, the agreements were amended entitled the Transmission Agency of Northem Califomia (TANC). and restructured resultingin a reductioninthelevelof funding toward TANC has joined with nearly all Califamia utilities to share in the steam field exploration and development costs from $151 million to construct;on and ownership of a 500-KV transmission line between
$62 mHlion. In exchange for its reduced level of funding, CCPA No.1 central Califomia and southem Oregon which w21 facilitate power accepted a reduced production payment percentage. if adequate exchanges with the Pacific Northwest.
steamis not produced and sold from the project acreage,CCPA No.1 TANC has agreed to pay 46.67 percent of the project cost esti. may not receive production payments sufficient to recover its steam mated to be $425 million for approximately 43.75 percent of the field investment. The steam contract terms require CCPA No. I to transnussion capacity estimated to be 1,600 MW. The District has a take a minimum of, or otherwise make payment for,50 percent of the 30.6 percent interest in TANC and will be entitled to approximately annual steam requirement. 200 MW of transmission capacity at an estimated cost of $60 million. Under the series of agreements for steam field exploration and As of December 31,1985, the District had expended $0.2 miDion for development,CCPA No.1had expended $57 million as of December the administration of TANC and preliminary development work on 31,1985. Its remaining conmutment for participation in the devel. the project. I NOTE 4. PURCHASED POWER RATE INCREASE In August 1983, the District and the U.S. Department of Energy funds held in escrow, rate discounts for the period between June 1, i settled a dispute covering rate increases for power purchased from 1983, and November 1,1984, and various other benefits including an y the Westem Area Power Administration. The settlement cancelled extension of the term of the contract under which it purchases 'J the liability which had been recorded in the event the District lost the Central Valley Project power. In return, the District agreed not to suit, giving rise to a $47,1 miDion gain for the District. contest the validity of proposed rate increases for the period between i Under the provisions of the settlement, the District received November 1,1984, and June 1,1988. 21 <
Notes to Financial Statements monuous Sacramento Municipal Utihty District NOTE 5. LONG-TERM DEBT Long-term debt outstanding at December 31,1985 and 1984 was as foHows: 1985 1984
--(thousands of dollars)-
Revenue Bonds Bectnc Revenue Bonds,4%%9%%,19862016. $402,550 $873,730 White Rock Project Bonds . . .. 82,445 UARP Refunding Bonds . - 31,500 Subtotal . .. . . ... 402,550 987,675 Subordinated Bectric Revenue Bonds,7%%9%,1993-2010. 491,495 - Total Revenue Bonds . . 894,045 987,675 General Obreation Bonds,2%4%% 1986-1992 . 5,829 6,854 l South Sutter Water District, Hydroelectric Revenue Bonds,10-9/10511%%,1986 2002 16,545 - Purchase Agreement,3%% 1986-2000. . 1,098 1,152 . Total Long Term Debt Outstanding . 917,517 995,681 Less-Amount due within one year . 5,961 17,039 Bond Discount White Rock Project, Series C . 281 Dectric Revenue Bonds 9,408 1,776 Subordinated Bectric Revenue Bonds 8,10 - Total Long-Term Debt . $894,038 $975,983 Annual debt matunties for 1986 through 1990 are $6.0 million, $6.0 million, $5.9 miDion, $5.9 million, and $6.1 miDion, respectively. Refunding Bonds. On Julv 9,1985, the Distnct legally defeased under Water District in August 1982. Accordingly, the obligation and project the terms of its master bond resolution $163.8 million of its electric have been capitalized, effective in February 1985 when the project revenue bonds, Series 1, J, and K, by using the net proceeds of the became operational. The bonds mature seria!!y through 2002 The Bectric Revenue Refunding Bonds, Series P, and $11 million of Dis. District is obligated for annual debt service payments of approxi-trict funds. The net present value of the future debt service of the mately $2.3 million which commenced in 1985 without regard for the Series P bonds results in a substantial savings to the District as level of operation of the project. Amounts evnded under this compared with the defeased bonds. The principal amount of Series P agreement have been reported as purchased power. bonds issued exceeded the outstanding principal amount of defeased Restricted Demand Bonds. In 1984, the District issued $120 million of bonds. This resulted in a loss under generally accepted accounting Bectric Revenue Bonds, Series 0, the proceeds of which were res-principles of $24.3 million. The District's Board of Directors hcs tricted by the Board of Directors to fund the District's participatory authorized a deferral of this loss ta be recognized for accounting and share in the geothermal plant described in Note 3. Fund management i ratemaking purposes through amortization over the life of Series P. is under District centrol. In January 1986, the Board of Directors y' On December 4,1985, the District legally defeased under the terms authorized the District to release $30 miDion if funds are needed for c of its master bond resolution its outstanding White Rock Project other projects. I' is the intention of the Distnct to replenish funds ..? Bonds, Upper American River Project Refunding Bonds, and Clectric withdrawn. ,. Revenue Bonds, Series A through H, L, and M amounting to $597 The effective interest rate on Series O bonds was 8.1 percent in milhon by using the net proceeds of the Subordinated Bectric Bonds, 1985. On designated dates commencing in 1986, the interest rate can
- 1995 Refunding Series, and $10.3 million of Distnct funds. The princi- be adjusted within a range based on a three-year yield evaluation of ..
pal amount of the Subordinated Bectric Fevenue Bonds,1985 similar securities not to exceed 12 percent or, at the option of the Refunding Series was less than the outstanding principal amount of bondholder, the bonds can be tendered. In the event the interest rate , defeased bonds. This resulted in a gain under generally accepted is adjusted, the new rate will be effective and the option to tender .. atcounting pnnciple< a $114 milhon. The Distnct's Board of Direc. suspended for a tbree year period. In lieu of adjusting the interest rate, tors has authorized a deferral of this gain to be recognized for the District may elect to establish a fixed interest rate to be applied to accounting and ratemaking purposes through amortization over the the remaining term of those bonds subject to adjustment. - life of the 1985 Refunding Series. Bondholders may tender up to $20 million on September 1,1986, South Sutter Water District, Hydroelectric Revenue Bonds. The $40 million on September 1,1987 and 1988, and $20 miHion on Sep-District is obligated to purchase power from the South Sutter Water tember 1,1989, and to more than $40 minion in any year thereafter District project under a contract that has the effect of transfernng An agent has been appointed to remarket any bonds tendered. The - substantially all the economic benefits of the project to the Distnct District has entered into a bank credit agreement which would pro- - dnd making the District liable for all debt service on $16.9 million of vide the Distnct with the funds necessary to repurchase up to $40 ?: s bonds issued at an effective cost of 11.48 percent by the South Sutter million of bonds. 22
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K- - m NOTE 6. COMMERCIAL PAPER As of December 31,1985, $100 million of the District's commercial million.Proceedsfromtheuseof thisauthorityareusedtoreimburse paper was outstanding at an effective interest rate of 5.89 percent. the District for prior nuclear fuel purchases. The approximate effectiveinterest rate for the commercial paper sold A line of credit is maintained to support the sale of commercial during the 12 months ended December 31,1985, was 5.31 percent, paper.The District compensates the bank for the line of credit by fee the average commercial paper outstanding was $95 4 mHlion and the payments. The line of credit has not been used since 1980. average term was 30 days. The District's authority to issue commer- The Municipal Utaity District Act provides an additional $25 million cial paper is limited by state law to approximately $225 million, based of short-term borrowing authority which is limited to the purchase of T upon a percentage of outstanding long terra debt. The District's electricity. As of December 31,1985, this authority has not been used. Board of Directors has set alimit on the use of this authority of $100 NOTE 7. RANCHO SECO NUCLEAR POWER PLANT h The Rancho beco Nuclear Power Plant (Rancho Seco) is a 913 MN to the NRC in the spring of 1986. No restart date can be determined generating plant designed by Babcock and Wilcox. Normally Rancho until the development of the program is completed to the point of p Seco provides approximately 55 percent of the District's generating identifying necessary pre startup changes and the program is ap-L capacity and energy production. HistoricaDy, Rancho Seco has oper- proved by the NRC. The District's management believes and its [ ated at an average . apacity factor of 50 percent as compared to an financialplan anticipates that Rancho Seco wiu return to power during industry average of approximately 60 percent. 1986 and be able to achieve a 26 percent capacity factor for the year. Recent Operating History. In March 1985, the District brought the On January 27,1986, the NRC announced it wiD start work imme-r- diately to reassess the long-term safety of nuclear reactors designed = plant down for a planned refueling outage.The plant was scheduled to by Babcock and Wilcox. A number of recent eventsincluding those at resume operation in June 1985 and continue operating at a capacity
? factor of 79 percent through the year. Due to several prolonged Rancho Seco has led the NRC to this conclusion. The NRC believes i unplanned outages the plant operated at a capacity factor of 25 that the reactors can operate safely in the interim.
' percent for all of 1985. Disputed Surplus Power Sales.In February 1986, citing the prolonged The unit has been out of service since December 26,1985, when it Rancho Seco outage as a basis for its action, PGandE requested - experienced a loss of power to the Integrated Control System (ICS) modifications to the surplus power sales contract described in Note 1. followed by a rapid overcooling during the automatic shutdown. On PGandE proposed to pay for capacity only on an as delivered basis February 25,1986, a Nuclear Regulatory Commission (NRC) fact untilcommercial reliability is established and to require the District to finding team concluded the fundamontal causes of this incident were pay cash currently for interest on negative capacity and energy design weaknesses and vulnerabilities in theICS andin the equipment exchange account balances. PGandE has stated it will withhold pay-w- controDed by the system and that the weaknesses and vulnerabdities ment for undelivered capacity and withheld payments aggregating li were not adequately compensated by other design features, plant $5.8 millior for December 1985 and January 1986. The District i procedures or operator training. The NRC further concluded the believes that the position PGandE has taken is not in accord with the weaknesses and vulnerabilities were largely known to the District and contract. As the District owed PGandE approximately $73 million for E the NRC sta'f, yet plant modifications which would have reduced the Jacuary 1986 transactions, it plans to recover the $5.8 million with-likelihood of this event were not made. held by PGandE through offset. On March 11,1986, the District The District has agreed not to restart the plant untilit has presented initiated a proceeding before FERC to obtain a ru:ing that PGandE's to the NRC its program which reviews the December 26,1985 inci- action was improper. dent in detail and,in addition, identifies and implements those actions On Apri 4,1986, PGandE filed with the District a formal claim against which are found to be necessary to improve the margin of safety and the District for $34.8 miHion plus interest. PGandE claims that SMUD ' reliability of the piant. The District is undertaking this program in wrongfuDy coHected $27.5 miHion of capacity pagnents for the period order to provide reasonable assurance that future plant trips will not Janua y 1985 through November 1985,"because SMUD has failed over
- - result in unanticipated plant responses and subsequent lengthy plant an extended time period, including 1985, to operate and maintain its outages. The program will include three phases
- (i) the initial phase, Rancho Seco Nuclear Power Plant in a manner intended to reasonably
- comprised of review of historical plant responses and plant systems; insure Rancho Seco's reliabdity and usability."The remanng $73 miHion (ii) the disposition phase comprised of review of the findings from the represents amounts the District has offset PGandE billings as dis-initial phase and the development and prioritization of necessary cussed above. The District has formally rejected the PGandE claim. On April 23,1986, PGandE filed a " complaint for dedaratory relief on administrative, training and hardware changes, and (iii) the implemen-tation phase, comprised of the implementation of any required written contract" naming the District as defendant. PGandE seeks a changes. judgement on matters relating to the operation of Rancho Seco and - The District has implemented a number of changes that relate its impact on the surplus power sales contract. P directly to the December 26,1985 loss of ICS power. The program The District's Board of Directors, which has full power to establish Ei identified above is expanding the initialinvestigationin order to review the level of rates charged for all District services, has established a - and address previous plant trip responses and other precursors prior rate-making mechanism for losses arising from adverse resolution or g to plant restart.Thc District expects to present its proposed program settlements of claims and litigation. This rate-making mechanism E 23 I r
n . Notes'to Financial Statements fcontinuem
' LSacram:nto' Municipal . Utility District NOTE 7. (Continued) provides that materiallosses that have not been previously considered current unplanned outage wE result in a net income level less than in District rates shal be deferred and recovered on a prospective _ historicaHy reported by the District and a reduction in cash flow. The basis for rate-making purposes. Therefore, the ultimate outcome of additional cost of rantramont power u it be financed through the issu-these disputed surplus power sales will not have a materialimpact on1 ance of up to $25 miEon of commercial paper described in Note 6. To the District's financial position and results of operations. the extent necessary to cover its operating costs and maintain suffiaent FinancialImpact of Unplanned Outages.The recent amendment to - revenues, management wE seek authorization from the Board of Direc-J the PGandE contract described in Note 1 requires energy from ' tors to increase rates. The District's master bond resolution requires the
' PGandEabovecertaintimitsbeacquiredandpaidforonacashbasis . District to estabBsh and maintain rates suffiaent to meet the District's rather than an exchange basis starting in 1986. As a result,'during requirements for maintenance and operation costs and debt service.
unplanned outages of Rancho Seco, it may be necessary for the Thus, management believes cash flow during 1986 wil be suffiaent to District to acquire and pay for substantial amounts of energy for meet its cash requirements for operations. which no provision for cost recovery has been made in the District's The District intends to continue to meet its construction require-rates, thereby, reducing net income and cash flow. . ments during 1986 through external financings.The District plan the
' At current District rates, the cost of replacement power, the unsched - issuance of up to $150 million of revenue bonds in mid 1986 as part of :
uled maintenance at Rancho Seco ard other costs associated with the this program. NOTE 8.
- COMMITMENTS AND CONTINGENCIES Commitments. The. District's capital expenditures (excluding aHow- of containing Polychlorinated Biphenylis (PCBs) and responsible for ance for funds used during construction) for 1986 through 1988 are contaminating the dealer's site. Tests are being conducted to deter-estimated to be $652 milEon. Approximately $178 mulion is for trans- mine the extent of contamination. Clean-up costs may be substantial, mission and distribution projects, $197 miDion for nuclear plant modi- depending on the results of such tests. The dealer intends to file a fications and repairs,$187 million for nuclear fueland other construc- daim forindemnitywith respect to such costs, and a damage claim for tion, and $90 million for committed generation projects including the aHegedbusinessimpacts.Managementisof theopiniontheseclaims development of the projects described in Note 3. w21 not have a material adverse impact on the District's financial
'Ihe District's first geothermal unit became commerciaHy opera- position and results of operations. .
tional in December 1983. Under its steam supply agreement, the On November 15,1979,13 electrical contractors filed suit against District is obligated to pay a minimum of $6.6 milton annually during - the District alleging that the District's practice of installing its own
- the operating life of the plant subject to price level adjustments and, undergrounddistribution facuities instead of permitting developers to under a transmission service agreement, the District is also obligated install such facilities, and its methods of pricing street and outdoor '
to pay a minimum of $1.1 million annuaDy until 1990 for transmission lighting, are in violation of the antitrust laws. After various legal ~ ; of the energy to the District. actions, the Ninth Circuit Court directed the suit be disnussed and on i 1.itigation. A $1 billion class action suit and $16.3 million in claims were January 27,1986, the United States Supreme Court denied the con . filed against the District alleging the District aHowed excessive tractors
- petition for certiorari. A petition for rehearing has been filed amounts of radioactivity in the liquid effluent discharges from the with the United States Supreme Court by the contractors. It is the District's nuclear power plant, Rancho Seco, injuring the claimants opionion of District's Counsel that it is unlikely this petition wiu be and their land, crops, livestock and businesses. Tests conducted by granted.
nationauy recognized experts show that maximum exposure to any Nuclear Liability Insurance. The District's public liability for claims one individualin the Rancho Seco area is well below the rate allowed resulting from any nuclear incident was limited to $640 million, at by the United States Environmental Protection Agency (EPA). The December 31,1985, under provisions of the Price-Anderson Act District believes that any liability on account of such discharges is (Act). The coverage for this liabuity is provided by insurance, assess-limited to and covered byliabilityinsurance and a federalgovernment ments and government incemnification under the Act. The District is indemnity agreement and will not have a material adverse impact on subject to a retrospective assessment of up to $5 miHion in the event the District's financial position and results of operations. there is a nuclear incident involv5g any licensed reactors in the The District has been notified that scrapped distribution trans- United States and limited to $10 million in retrocpective assessments formers, which were sold and disposed of by a dealer, are suspected in any one year. The Act expires in August 1987. 24
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Clifford R.'Wilcox', PresidentM , a .
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' . iDave Brown, Distnbution Plannms ~ mA-k(JohnT;Kehoe,VicePresidenf k p 2 J George CowardiNuclear. Plant ' ; - #
tPaul WJCair1 - ' E - Diane Demanett,' Customer Services? - ? F LCortus T(K6ehler " yJ Bob.DieterichtNuclearIxensms 4 _q;> f Ann L: Taylor! -
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!_ OFFICERS *, i . P, ~ ~ 1, Ge. orge Fraser, D. irector; Elect.ricRM. zum
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.: Dewey K.K. Lowe, Genemi Manager ' l William Hammond; DMEctor $f Irifoimotion l James DeLasaux, Executive Assistant to b - L and Services -
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- Manager, Finance and AJnumstmtnon p G6rdon p Merrill, Purchases and Storesi- =
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w inese magniheent birds of prey :, Dallas G. Raasch, Asssstant, Genem! i are usuativ sonrary nowever in p. ; Manager, Engnneenng and Operats.ons , . Roge,r PowersdAct) Nuclear Engmeenne my L s,m t w,nter tney tena to garner ,n ~ Ronald J. Rodriguez, Assistant Gerieral L _ ; John Ravera, Engm.eenng.. ~, .. ma, - groups m ino same area ,1inere iManager, Nuclear < Andy Schwneger, Quality; .~L' is an abundant f nni supply One such area is aiong tne cache Franh $ HW&sista Generyg ' Pa~m Stewart, Land [ t ~ J Frank Tindal,'_ Accounting ? f~
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