ML20206R921
| ML20206R921 | |
| Person / Time | |
|---|---|
| Site: | La Crosse File:Dairyland Power Cooperative icon.png |
| Issue date: | 05/10/1999 |
| From: | Mueller R DAIRYLAND POWER COOPERATIVE |
| To: | NRC OFFICE OF INFORMATION RESOURCES MANAGEMENT (IRM) |
| References | |
| LAC-13680, NUDOCS 9905210014 | |
| Download: ML20206R921 (16) | |
Text
y
- , .'D
- DAIRYLAND
[k COOPERATIVE
- 3200 EAST AVE. SO.
- P.O. BOX 817
- LA CROSSE. WISCONSIN 54602-0817 OFFICE: (608) 7884000 L . WEB SITE: www.dairynet.com L May 10,1999 In reply, please refer to LAC 13680 DOCKET NO. 50-409 U.S. Nuclear Regulatory Commission Attn: Document Control Desk Washington, D.C. 20555
SUBJECT:
. Dairyland Power Cooperative
- La Crosse Boiling Water Reactor (LACBWR)
Possession-Only License No. DPR-45 Financial Statement and Auditors' Report -
REFERENCE:
- 1) 10 CFR 50.71.(b)
In accordance with the requirements of Reference 1, we are forwarding three (3) copies of the annual financial report and certified financial statements for Dairyland Power Cooperative for the years 1998 and 1997. We will forward our 1998 Annual Report to you as soon as it is completed.
Sincerely, DAIRYLAND POWER COOPERATIVE obe C. Mueller Vice President Finance and Administration RCM:pls .
P W APL5\WOfLihAAACOMUDIT DOC Enclosures h.
cc: Paul Harris, NRC Project Manager
. David Nelson, Regional Administrator, NRC-DRO 111 R. Christians, LACBWR t i
9905210014 990510 'O PDR ADOCK 05000409 k A Touchstone Energf Partner h I
ARTHUR ANDERSEN LLP Dairyland Power Cooperative and' Subsidiaries Consolidated Financial Statements as of December 31,1998 and 1997 Together With Report of Independent Public Accountants 1
~'
ARTHUR ANDERSEN LLP REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS To the Members and Board of Directors of Dairyland Power Cooperative:
We have audited the accompanying consolidated balance sheets of Dairyland Power Cooperative (a Wisconsin cooperative) and Subsidiaries as of December 31,1998 and 1997, and the related consolidated statements of revenues and expenses, member and patron equities, and cash flows for the years then ended. These consolidated financial statements are the responsibility of the Cooperative's management. Our responsibility is to express an opinion on these consolidated financial statements based on our audits.
We conducted our audits in accordance with generally accepted auditing standards and the standards applicable to financial audits contained in Governinent Auditing Standards, issued by the Comptroller General of the United States. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statememt presentation. We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of Dairyland Power Cooperative and Subsidiaries as of December 31,1998 and 1997, and the results of their operations and their cash flows for the years then ended in confonnity with generally accepted accounting principles.
In accordance with Governinent Auditing Standards, we have also issued our report, dated February 26,1999, on our consideration of the Cooperative's internal control over financial reporting and our tests of its compliance with certain provisions of laws, regulations, contracts and grants.
ARTHUR ANDERSEN LLP Minneapolis, Minnesota, February 26,1999
l i lll1)1!{ f 1 287 78 5 5 8017 135 5 3 9 6 7123 9 9 7 7 04 3 04 7 2 9 9 0, 7 8, 6, 4, 8, 7,0,2,7, 7,9,8 9, 1, 5
5, 9 8 G8 7 4 1
8 S1 0 5 2236 5 1 2 6 8 3 12 5 1 4 5 5
5 279 88 6 5 6091 198 94 4 7 7 07 9 17 80 2 3 8
4, 4 9 8 64 3 4 3 5 9 9, 9 9 1 13 5 4,2,3,4, 4,1 0 7, 9, 7, 1 6 4 4 31 5212 4 7 9 90 9 6 13 1 3 3 7 3 5 5 5
S E )
I T 7 I S e L e E I
t o
I m s T B
o ie I N s A c L (
n I n it I S o L i u q B E i t
D e e A C I
a s
v I ig e N is n L N l v .
n o E b s A e r G o i
t t e
t N G a r s e N he ap I N m e ie h O -
s r n N I r p t s S e p d T e o i
I n o O t y
l e
E T i t
m a i
t I N g o
c a b i
c n
R I
A i u o a S O n p a u A Z I
q e
c er s iz S l I C o s e r n
l i
t la a
I L r e b n a M mo t D
S: fl Eonm gb o n e
b D
A : r nslah oet t ei ip M N I T s i - a i
t r d w e e I t r S
B T Nt fei I
P Oa pad p o ma a O g c C
A I e Li mleseac u c
t a
r man t
b s v U
S st A Anr I
Td gl pi ce shea t
l i talb oo o D l
t a E S T B riborroyed I
At uo apn l
a d
l i
o C N 'o.
D ee N h Zaea I rb mm u T rmT DE E 1
I a L mms f px a s el l t s
T s
n o
e Tt r et AS 1 L A bemr et cu t
a c t
g T
A h
T I Nnt ec nder et na u uyx eh os er er e c e
E e 3 ) TmMPA e n M M E r r v or aat t s
e V cn reds I M Ruh d cc ccPTInO R r o ht I
PM e I T ab n Al a ma s A
C l I c
t O
C U CSAAA C
f t
o r
R E B e c u a p
P d e o )
OteDh O a f T 7 80 09 89 11 7
3 73 7 0 665 75 6 7
7 0
5 90 2 9 880 989 5 9 l
a r
g Cd os n( 9 3, 6, 6, 0, 6, 2, 5, 1, 5, 8, 3, 9 0, 2, 479 4 5 e
i I 9 23 84 5, 5, t Rl 1 2 21 974 5 55 89 0 8 n E soA 10 02 3 51 5 3 1 i 63 1 5 1 3 3 n Wn 5( 1 5
5 a
Oo P C 37
)
68 4 06 695 6 1 37 n
a 91 77 5 63 868 3 3 8 767 1 3 3 4 93 3 s D 9 68, 8, 8, 7, 7, 7, 1, 3, 8, #, 4 4, 5, 8,9,8 8 5 7 e N 9 04 59 5 13 0, t o
95 6 6 A 1 31 63 12 3
4 3
31 6 2 62 11 49 2
5 6
7 3
n L 5( 1 5 g Y 5 n R iy I
A n a
p D
m o
c l
a c r a u e tsR h nl T ean tm i o st ean vNo in f i t r oar t
s hes t t epo S
T o
c oacor E l a n diC ni f
S no s ar ec t t s
S iga i
s s e n u nc t
A e t a r s g an i r t - t ir c oe t r o l p l amin o
rF g
n ess t
s t
s t
s o s e
s s
. p r p c e n c e a
' a, e t nl e t in a e e i e ai v l t t
n d in ir s o r a g l
p n ed kr t
c iemia t t iss e ve -
a p e r
T: mte o e l e t i
r -
ppr ae cpemt s i h o
3qa iub l v
r e u s s r
u Nipa l wl a: Sceuk nogml 1 ev a d es c sesanpen oa s
Auqmu n t o T s e evior a d: sh cl t
iee t l
L P e u o T E edt sCao h c o t
d ae a s a, l s
t dc it Sl iceens cdr e T Acr d s y gr ire lfuli a e T Cnc c u S b i d r x R aA I
r Atammie e ot li r t
r a Tn Na nr t
e oied st t
e uehns t T n s- Rka r n e e o ia a
t s st n el E h ont Ca s e o E o vUfeuc R s cEOvFMp e iMEIc l
E Pl l
C n DN Rac n r L
E T
O U CA I P C
11
. . _ _ _ - _ _ _ _ - _ - - _ _ _ _ - _ - - - - - - _- - - _ - - - - . - - - - - - - - - - - - ---- - - - - - ~
DAIRYLAND POWER COOPERATIVE AND SUBSIDIARIES
- Consolidated Statements of Revenues and Expenses For the Years Ended December 31 (In Thousands) 1998 1997 OPERATING REVENUES:
Sales of electric energy $157,326 $179,976 Other 7,655 8,292 Total operating revenues 164,981 188,268 OPERATING EXPENSES:
Fuel 52,338 59,676 Purchased and interchanged power 13,837 29,875 Other operating expenses 35,110 36,264 Maintenance 16,141 12,173 Depreciation and amortization 25,321 26,157 Taxes, other than income 7,417 7,960 Total operating expenses 150,164 172,105 Operating margin before interest and other 14,817 16,163 INTEREST AND OTHER:
Interest expense 20,232 21,775 Other expense, net 308 513 Total interest and other 20,540 22,288 Operating deficit (5,723) (6,125)
NONOPERATING MARGIN, principally investment income 9,582 10,368 Net margin 5 3,859 5 4,243 The accompanying notes are an integral part of these consolidated financial statements.
e
DA!RYLAND POWER COOPERATIVE AND SUBSIDIARIES Consolidated Statements of Member and Patron Equities (In Thousands)
Accumulated Other Membership Patronage Comprehensive Fees Capital Income Total December 31,1996 $11 $87,184 $148 $87,343 Comprehensive income:
Net margin 4.243 4,243 Other comprehensive income-Unrealized gain on securities - -
609 609 Comprehensiveincome -
4.243 609 4,852 Membership issued 1 - -
1 Retirement of patronage capital -
(3,339) -
(3,339)
December 31,1997 12 88,088 757 88,857 Comprehensiveincome:
Net margin 3,859 3,859 Other comprehensive income-Unrealized loss on securities - -
(268) (268)
Comprehensiveincome 3,859 3,591 (268)
Retirement of patronage capital -
(450) -
(450)
December 31,1998 $12 $91,497
$489 $91,998 The accompanying notes are an integral part of these consolidated financial statements.
_ _ - - - - - - -- - - '~
DAIRYLAND POWER COOPERATIVE AND SUBSIDIARIES Consolidated Statements of Cash Flows For the Years Ended December 31
.- (In Thousands) 1998 1997 OPERATING ACTIVITIES:
Net margin 5 3,859 5 4,243 Adjustments to reconcile net margin to net cash provided by operating activities-Depreciation and amortization 25,321 26,157 Other 1,059 956 Changes in operating elements:
Accounts receivable (8,661) (1,089)
Inventories (6,548) 10,563 Prepaid expenses 152 (155)
Accounts payable 4,754 (1,197)
Accrued expenses 1,289 (57)
Net cash provided by operating activities 19,879 40,767 INVESTING ACTIVITIES:
Electric plant additions (29,106) (27,688)
Purchase of investments (23,580) (9,089)
Sale ofinvestments 41,864 11,147 Advances to nuclear decommissioning trust (7,904) (8,054)
Deferred charges, net (568) 3,456 Net cash used in investing activities (19,294) (30,228)
FINANCING ACTIVITIES:
Short-term borrowings, net 12,200 6,000 Borrowings under long-term obligations 50,185 23,605 Repayments of long-term obligations (63,177) (38,555)
Retirement of capital credits (450) (3,339)
Advances from member cooperatives 138 1,585 Net cash used in financing activities (1,104) (10,704)
Net decrease in cash and cash equivalents (519) (165)
CASH AND CASH EQUIVALENTS:
Beginning of year 950 1,115 End of year 5 431 5 950 SUPPLEMENTAL CASH FLOW INFORMATION:
Cash paid for interest, net of amounts capitalized $20,065 522,441 The accompanying notes are an integral part of these consolidated financial statements.
DAIRYLAND POWER COOPERATIVE AND SUBSIDIARIES Notes to Consolidated Financial Statements Decernber 31,1998 and 1997 (In Thousands)
- 1. Nature of Business and Summary of Significant Accounting Policies:
Organi:ation and flusiness Dairyland Power Cooperative (the Cooperative) is an electric generation and transmission cooperative organized under the laws of the states of Wisconsin and Minnesota. The Cooperative, whose principal offices are located in Wisconsin, provides wholesale electric service to Class A members engaged in the retail sale of electricity to member consumers located in Wisconsin, Minnesota, Iowa, Illinois and Michigan, and provides electric and other services to Class C, D and E members.
The accounting records of the Cooperative are maintained in accordance with the uniform system of accounts prescribed by the Federal Energy Regulatory Commission as adopted by the Rural Utilities Service (RUS), the Cooperative's principal regulatory agency.
During 1997, the Cooperative formed Gen-Sys Energy (Gen-Sys), an integrated generation alliance cooperative with Cooperative Power (CP). Gen-Sys functions as an energy marketing organization by integrating the power generation capabilities of the Cooperative and CP, leading to increased efficiency of both entities' power generation systems and reduced operational costs. The Cooperative accounts for its 50% ownership interest in Gen-Sys under the equity method, with the Cooperative's share of Gen-Sys operating results included in purchased and interchanged power in the accompanying consolidated statements of revenues and expenses. Subsequent to December 31,1998, the Cooperative agreed to purchase CP's membership interest, at which time CP's generation capability will no longer be part of Gen-Sys.
During 1996, the Cooperative made an initial investment in Private Fuel Storage LLC (PFS),
which had been organized by eight utilities to establish a site to store spent nuclear fuel. The Cooperative's total investment is not material and will be recovered in service rates.
Principles of Consolidation The consolidated financial statements include the accounts of the Cooperative and its wholly owned subsidiaries, Curtis Telecommunications, Inc. and Genoa FuelTech,Inc. All significant intercompany balances and transactions have been eliminated in consolidation.
Income Taxes The Cooperative is generally exempt from federal and state income taxes and, accordingly, no provision for such taxes is recorded in the consolidated financial statements.
Plant Additions The cost of renewals and betterments of units of property (as distinguished from minor items of property) is charged to electric plant accounts. The cost of units of property retired, sold or
~ otherwise disposed of, plus removal costs, less salvage, is charged to accumulated depreciation.
No profit or loss is recognized in connection with ordinary retirements of property units.
Maintenance and repair costs and replacement and renewal of minor items of property are charged to operations.
Depreciation Depreciation is provided based on the straight-line method at rates which are designed to amortize the original cost of properties over their estimated useful lives and includes a provision for the cost of removing and decommissioning the properties. The provision for depreciation averaged 4.3% and 4.5% of depreciable plant balances in 1998 and 1997.
Allowancefor Tunds Used During Construction Allowance for funds used during construction represents the cost of external and internal funds used for construction purposes and is capitalized as a component of electric plant by applying a rate (7.7% in 1998 and 6.4% in 1997) to certain electric plant additions under construction. The amount of such allowance is included in interest and other deductions and approximated $1,551 in 1998 and $771 in 1997.
Casis and Casis Equivalents Cash equivalents include all highly liquid investments with original maturities of three months or less. Cash and cash equivalents consist primarily of commercial paper, stated at market, which approximates cost. The Cooperative classifies certain cash and cash equivalents as investments when they relate to trust funds held for long-term purposes (see Note 2).
Investunents In accordance with Statement of Financial Accounting Standards (SFAS) No.115, " Accounting for Certain Investments in Debt and Equity Securities," investments in marketable debt and equity securities classified as held-to-maturity are reported at amortized cost; securities classified as trading are reported at fair value, with unrealized gains and losses included in nonoperating margin; and securities classified as available-for-sale are reported at fair value, with unrealized gains and losses excluded from margins and reported as other comprehensive income as a separate component of member and patron equities.
Regulatory Assets The Cooperative's accounting policies and the accompanying consolidated financial statements conform to generally accepted accounting principles applicable to electric cooperatives in accordance with the provisions of SFAS No. 71, " Accounting for the Effects of Certain Types of Regulation." In the event that a portion of the Cooperative's operations is no longer subject to the provisions of SFAS No. 71 as a result of the effects of competition, the Cooperative could be required to determine any impairment to assets and write down the assets to their fair value.
' In 1996, the Cooperative's board of directors authorized a plan whereby all regulatory assets or liabilities included in deferred charges or credits were accumulated and are to be recovered 6 service rates over a three-year period. Remaining deferred charges of $2,627 will be amurtized to expense with appropriate recognition in service revenues.
The Cooperative follows the provisions of SFAS No.121, " Accounting for the Impairment of Long-Lived Assets and for Long-Lived Assets to Be Disposed Of," which requires that the recoverability of long-lived assets be periodically reviewed if there are indications that such assets might be impaired. SFAS No.121 has not had a material effect on the Coopeistive's financial position or results of operations.
Revenue Recognition Revenue from electric energy deliveries is recognized when such electric energy is delivered.
Use ofEstionates The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosures of contingent assets and liabilities at the date of the fmancial statements and the reported amounts of revenues and expenses during the reporting period. Ultimate results could differ from those estimates.
Reclassifications Certain 1997 amounts have been reclassified to conform to the 1998 presentation. These reclassifications had no effect on net margin or patronage capital as previously reported.
Recently issued Accounting Pronouncernents The Financial Accounting Standards Board has released SFAS No.130, " Reporting Comprehensive Income," effective for fiscal years beginning after December 15,1997.
SFAS No.130 establishes standards for reporting and display in the financial statements of total net income and the components of all other nonowner changes in equity, referred to as comprehensive income. The Cooperative adopted SFAS No.130 on January 1,1998, recognizing other comprehensive income from the Cooperative's marketable securities. Other comprehensive income is presented in the accompanying consolidated statements of member and patron equities.
.I l
- 2. Marketable Securities:
Investments classified as available for sale, including the nuclear decommissioning trust, at December 31 include the following (in thousands):
1998 1997 Fair Fair Value Cost Value Cost Cash and cash equivalents 5 5,699 $ 5,699 5 4,563 $ 4,563 U.S. government securities 37,653 37,103 52,378 51,924 Corporate bonds 25,834 25,290 26,664 26,442 Common stocks 29,449 19,551 23,537 17,059
$98,635 $87,643 $107,142 $99,988 Since the Cooperative intends to adjust rates in the future to reflect changes in the market value of investments held in its nuclear decommissioning trust, unrealized gains of $10,503 and $6,397 on these investments at December 31,1998 and 1997, are included in estimated decommissioning liabilities.
The contractual maturities of marketable debt securities, which include U.S. government securities and corporate bonds, at December 31,1998 were as follows (in thousands):
Fair Value Cost Due within one year 5 3,324 5 3,403 Due after one year through five years 27,697 27,268 Due after five years through ten years 17,980 17,563 Due after ten years 14,486 14,159
$63,487 $62,393 Gross unrealized gains and losses at December 31 (excluding investments in the nuclear decommissioning trust) were as follows (in thousands):
1998 1997 Unrealized gains $3,215 $2,014 Unrealized losses (2,726) (1,257)
Net 5 489 $ 757 4
4
Information regarding the sale of marketable securities for the years ended December 31 is as follows (in thousands):
1998 1997
. Proceeds from sale of securities (substantially all of which have been reinvested) $41,864 $11,147 Realized gains 763 11 Realized iosses 105 177 For the purposes of determining realized gains and losses, the cost of securities sold is based upon specific identification.
- 3. Lines of Credit:
To provide interim financing, the Cooperative has arranged lines of credit aggregating approximately $37 million, principally through the National Rural Utilities Cooperative Finance Corporation (NRUCFC) at a rate no greater than prime plus 1% (6.15% at December 31,1998).
Borrowings outstanding were $34.2 million and $22.0 million at December 31,1998 and 1997.
Average borrowings outstanding were $19.6 million in 1998 and $12.3 million in 1997.
Compensating balance requirements and fees relating to the lines of credit were not significant in 1998 or 1997.
The Cooperative also allows member cooperatives to prepay their power bills and pays interest on these prepayments based on current short-term borrowing rates. Interest expense on member cooperative advances ($404 in 1998 and $377 in 1997) has been included in interest expense.
- 4. Long-Term Obligations:
Long-term obligations at December 31 consisted of the following (in thousands):
1998 1997 Federal Financing Bank obligations,5.0% to 9.9% $193,976 $201,141 RUS obligations,2% 24,238 28,013 RUS obligations,5% 24,724 25,714 NRUCFC obligations,6.0% 600 1,349 NRUCFC intermediate loan,6.4% -
33,304 CoBank note,5.8% 50,185 -
City of La Crosse, Wisconsin, Pollution Control Bonds, variable rate, 5.1% at December 31,1998 23,605 23,605 Other,4% due in installments through 2009 1,096 18,290 318,424 331,416 Less- Current maturities (14,476) (12,778)
Totallong-term obligations $303,948 $318,638
- Quarterly principal and interest payments on the long-term obligations to the Federal Financing Bank (FFB) extend through 2021. Long-term obligations to the RUS are payable in equal
quarterly principal and interest installments through 2016. Principal and interest payments on the NRUCFC obligations are due in varying installments through 1999.
The note payable to CoBank was issued in 1998, with the proceeds used primarily to repay the NRUCFC intermediate loan and other previously outstanding debt. Principal and interest on
.- the CoBank note is due quarterly through 2008.
Approximately $7,545 of the City of Lacrosse, Wisconsin, Pollution Control Bonds are due in September 2014 and $16,060 are due in February 2015, unless previously called. Bank letters of credit aggregating $23.6 million, which expire in July 2002, have been issued on behalf of the Cooperative to the trustee to provide funds for payment of principal of any such bonds redeemed or repurchased prior to that date.
Substantially all of the Cooperative's assets are pledged as collateral for these obligations. The Cooperative is required to and has maintained certain financial ratios related to earnings and liquidity in accordance with the covenants of its loan agreements.
Scheduled maturities of the Cooperative's long-term obligations at December 31,1998 were as follows (in thousands):
Year Amount 1999 5 14,476 2000 14,463 2001 15,109 2002 15,052 2003 15,418 Thereafter 243,906
$318,424
- 5. Fair Value of Other Financial Instruments:
The fair value of the Cooperative's financial instruments other than marketable securities and short-term borrowings, based on the rates for similar securities, is estimated to be as follows at December 31 (in thousands):
1998 1997 Carrying Fair Carrying Fair Value Value Value Value Assets:
Economic development loans and other investments 5 13,736 5 12,985 $ 11,503 5 10,736 Investments in capital term certificates of NRUCFC 9,176 6,230 9,176 5,818 Liabilities:
Long-term obligations 318,424 319,074 331,416 326,541
- 6. Retirement of Capital Credits:
The Cooperative's board of directors has adopted a policy of retiring capital credits allocated to members on a first-in, first-out basis so that at no time will the Cooperative retain as patronage capital any capital contributed or deposited more than 20 years prior to the current year.
Accordingly,1978 and 1977 capital credits were retired in 1998 and 1997. Implementation of this policy is subject to annual review and approval by the board of directors and the RUS, and no cash retirements are to be made which would impair the financial condition of the Cooperative or violate any terms ofits agreements. Patronage capital at December 31,1998 and 1997 includes margins assignable of $3,859 and $4,243.
- 7. Commitments and Contingencies:
The Cooperative's estimated 1999 construction program expenditures are $27.4 million.
Financing of construction is expected to be provided by borrowings from the FFB and internally generated funds.
In connection with the termination of a coal supply agreement, the Cooperative has established an escrow account to fund any future contingencies relating to the terminated agreement. The escrow account is included in other investments on the accompanying consolidated balance sheets.
The Cooperative is a party to a number of generation, transmission and distribution agreements, under which costs and/or revenues are recognized currently based upon the Cooperative's interpretations of the provisions of the related agreements. Differences between the estimates used in the consolidated financial statements and the final settlements are recorded in the year of settlement.
The Cooperative relies extensively on computerized systems for operations, information systems and other programs and has implemented a program to identify and address possible issues resulting from the use of date-sensitive systems. The Cooperative does not believe the costs of the remediation will be material, but unanticipated costs, delays or an inability to complete the program successfully could have an adverse effect on the Cooperative.
The Cooperative has been named as a defendant in various lawsuits and claims arising in the normal course of business. Although the outcome of these matters cannot be determined at the present time, management and legal counsel believe these actions can be successfully defended or resolved without a material effect on the financial position or results of operations of the Cooperative.
- 8. Pension Plan and Postretirement Benefits:
Pension benefits for substantially all employees are provided through participation in the National Rural Electnc Cooperative Association Retirement and Security Program.
Contributions are determined in accordance with the provisions of the program and are based on salaries, as defined, of each participant. Pension costs for this pension plan were $2,195 in 1998 and $1,592 in 1997. As of January 1,1998, the date of the last available actuarial valuation, net assets of the plan exceeded the actuarial present value of accumulated plan benefits.
I l
- 9. Nuclear Reactor:
The La Crosse Boiling Water Nuclear Reactor (LACBWR) was voluntarily removed from service by the Cooperative elfective April 30,1987. The intent was to terminate operation of the reactor, and a " possession only" license was obtained from the Nuclear Regulatory Commission in August 1987. The facility is in a " safe storage" status and is expected to remain so until at least the year 2019, at which time decommissioning is expected to commence, although the manner
', of decommissioning has not been determined. All LACBWR-related fixed assets have been amortized to operating expense.
The provision for depreciation for the estimated costs of decommissioning the nuclear generating facility is equal to the amounts contributed to the nuclear decommissioning trust as well as the related earnings of the trust. The provision for the cost of decommissioning was
$7.9 million in 1998 and $8.5 million in 1997. The Cooperative has adopted a policy of funding decommissioning costs currently, and the related investments of $66.9 million are included in other assets, while the estimated decommissioning liabilities are reflected as a long-term liability.
- 10. New Accounting Pronouncements:
Staternent of Financial Accounting Standards (SFAS No.133)
In June 1998, the Financial Accounting Standards Board issued SFAS No.133, " Accounting for Derivative Instruments and Hedging Activities." The statement establishes accounting and reporting standards requiring that every derivative instrument (including certain derivative instruments embedded in other contracts) be recorded in the balance sheet as either an asset or liability measured at its fair value. The statement requires that changes in the derivative's fair value be recognized currently in earnings unless specific hedge accounting criteria are met.
Special accounting for qualifying hedges allows a derivative's gains and losses to offset related results on the hedged item in the income statement and requires that a company must formally document, designate and assess the effectiveness of transactions that receive hedge accounting.
SFAS No.133 is effective for fiscal years beginning after June 15,1999.
The Cooperative has not yet quantified the impact of adopting SFAS No.133 on the financial statements and has not determined the timing of or method of the adoption of SFAS 133.
e
-