ML20210C164
| ML20210C164 | |
| Person / Time | |
|---|---|
| Site: | Catawba, 05000000 |
| Issue date: | 12/31/1985 |
| From: | Bauer J, Lanford J PIEDMONT MUNICIPAL POWER AGENCY |
| To: | |
| Shared Package | |
| ML20210C127 | List: |
| References | |
| NUDOCS 8609180258 | |
| Download: ML20210C164 (18) | |
Text
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l AXNLAL REPORT 1985 PIEDM03T ML NICIPAL POWER AGENCY
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1 aTable of Contents The PMPA Story In Brief . . ..1 Chairman's Message . .. .2 General Manager's Report . .... .3 Participants .. . . .. .4 Board of Directors / Officers / Staff . . 8 Auditor's Report . . ..... .9 Financials . . . .. .. . .10 PMPA kWh Sales Participants' Shares lune 21,1985 to December 31,1985 cn u.ousans of kn> of Catawba Project Output Abbeville Q 20,892 . ] 2.6786 %
- . ym ,J7.&l38%
Clinton im ir;;,; 51,178 . .J g.
.as;gy. gp
_ am:. r-wz ...m. gg,93.; 7_-~7,,-~_~~;,-w
. ~ , , - 3 1.3.2126%
Gaffney .71?%CC 73.521 .O 5 110.0#7%
C>n t r P. '.7'5,m _5 *t 6>6r..*19.1 a '~~_~'n na .
9.3116ab e - ra eg - - w wi laurens ,.a i .a 41,,4 ,gJ.,s . .s 6.48.,.89,u
.m ,,7 ,,
N.ewberry m -,., _ as.1 68/m.. r_ s, 10.47, 3,2 ,M, Rock liill '"If'"! '%$EJE? ~~.0"'5399,517]
- TJ TTIZTT.C'"28.0374%'!
Union TMT(3 58;131 '~i"1 ~7.;] 10.0131%
Westminster ] 12,229 ] 1.8358 %
TOTAL SAllS 679,153 TOTAL 100.0000%
I a The PMPA StoryIn Brief Piedmont Municipal Power Agency establish FMPAas the wholesale in phasing in rate increases can help (PMPA) was formed when Duke supplier for these utilities. keep the cost of living and the cost of Power Company offered to sell g gg goods and senices produced in the 9g; portions of its Catawba Nuclear PMPAis able to issue tax-exempt '*E I " * ""C"*""E ##"**
Station to a group of its wholesale sudden jumps in electricity rates.
electric revenue bonds at interest customers m North and South . .
rates significantly below the capital Utilities participating in PMPA own, Carohna in 1975. Duke made the offer c sts of an investor-owned utility. operate and manage the Agency in an effort to meet unprecedented As an operating power. supply utility, through a Board of Directors, fmancing requirerr.ents for its PMPA pr sides power to its comprised of one appointed member construction schedule in the 1980s.
particip ting utilities at rates from each municipality. The Board The two-unit generating facility has an designed to recover the actual meets each month to establish the expected net dependable capacity of operatmg, maintenance and policy of PMPA. Reports from the staff 1115 meg;iwatts for each reactor unit.
debt-senice expenses. PMPA does and legal, financial and engmeering PMPA acquired a 25 perctat undisided not include in its rates typical consultants are resiewed and ownership interest in Catawba Unit insestor. owned utility costs, such decisions on rates, bond sales,
- 02. Participating utilities in the as stockholders'disidends, income budgets, contracts and other matters Agency have executed a project power taxes, and rate of return, making are made. Participation in sales contract, agreeing to purchase their rates more competitive. single-purpose committees prosides a fixed percentar,e of the project's Board members with a more detailed t, nipetitivenessin electn.c rates output, and in return, to pay the knowledge of PMPA operations. PMPA should contribute significantly to same fixed percentage of the ofI cers are elected annually by the project's total costs. Other cortracts e pment n e
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0 Chairman's Message w.
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. I l When the price of electricity started its dramatic rise in than the national average for comparable plants.
the early 70s, the people of (ities sened by municipal n We hate as a partner in the ver.ture, Duke Power ulikties began to call on the utility management to find a Company with an outstanding record as an expctienc(d j better, more cost effective way to obtain power. The offer designer, builder and operator of nuclear power plants.
I to sell Catawba made by Duke in 1975 provided a way to
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I respond to these demands, and the long and arduous task ObuousL PMPA's first year of operations was a I of turning that offer into signed contracts and an tremendous success. Our risks have been minimized aud '
I operating system was begun. our future savings increised. The hard work, however, j 1985 saw the completion of that task with the initial does not end with the success of 1985. In order to serve i deliveries of power by PMPA to its ten participating its growing cities and to take advantage of the cost sasings !
, u'ilities. This official beginning of operations was a of joint action agencies, PMPA must continue to search j historic milestone for the Agency but there were abo out additionalasenues of responding to the needs of the l
i many other significant accomplishments during 1985. citizens of its members. This process has already begun. l The Board is examining ideas for prosiding additional i
, D PMPA's financing was completed at lower interest senices to the members through PMPA. Not esery idea is accepted and each is judged on whether the same senice !
) rates than projected in the Agency's feasibihty study.
could be provided nmre effec tisely through other groups.
Prospects are g9od for refunding mu< h of this debt at !
esen lower rates. No one can arcurately predict the future and escry l n The Piedmont region of South Carolina and PMPA's organization must be able to respond to the (hanging i member cities are booming n onomically and < onlinue to world in whi(h we hse. The coestant examination of l l grow at a substantially faster rate than predicted in our objectiu's and plans by local Board members who are !
I feasibihty study. readily acces.sible to the people in their communities l anures that MA will respond to the changing needs of (
!I E PMPA has employed a sery professional and competent ,
hs rnend'en. The people of the ninnber coinnunutn's, staff to c omplement the seasoned Board of Dirnfors to l through their repn'sentatin's on the NA 1loant wd insure that the day to day operations will be handled well and the long term growth of the Agency wdl continue. &tennjnt' Ho' futuni coune of N Duu,s as k douM j
, be-this is the power of the people, ,
n Umt '# I at I,alawba is iomplete and performing well.
Unit #2 is 99 percent complete,6 months ahe id of s( hedule; has an operating licens"; and (ost estimates nase been redu< cd f rom sim per sw in sim pn xw.
Unit #2 will be the least expensise nuclear unit of its
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[ period and the entire station will t ml 10 percent less cha m m ! I 2 r i
l 0 General Manager's Report
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~.a Esen though PMPA has custed since 1979, a major kWh. The 1985 PMPA budget was deseloped to have zero transition occur red December 21, lW1 when the ag"ncy earnings for the year. The audit report shows that the dosed on one of the largest niunicipal finan(ial actual figure was within 0.7 percent of this goal. This is transa< tions of its Lind, an excellent record for the first year of operation.
Shortly thereaf ter a staff was hired and permanent offices liy agreement, we sell surplus power back to Duke at were estabkshed in one of the PMPA member cities, prices fixed by contract. These sales will provide a Gre"r, South Drointa. Since then, we hase: (1) significant portion of the resenues needed to operate cenpleted bond sales sutficient to finance construrtion PMPA for many years. Because PMPA is able to sell back of our portion of the nuclear unit; (2) initiated power surplus power to Duke in the early years while our sA s to oar members; and (3) responded to tax utilities' electrical needs are growing, there is no risk iegislation threats aimed at reducing our ability to issue that PMPA will be without a market for surplus power tax esem9t bonds by selbng two refunding issues at the in the meantime. end of 193i A program, known as the Rate Stabil;zation Program, Tot 4 debt issued thongh Dec"n.ber,1985 was $1 A allows us to smooth out rate increases so that they are billion, while total debt outstanuing was $1.3 Idllion, the phased in gradually rather than coming all at once. This, difference being bonds that have been refunded. It is too, wili help keep costs down to the minimum possible noteworthy that while our initially estimated aserage levels, assisting consumers in managing their personal irterest cost was 10.97 percent, the artnal aserage or business budgets, interest cost for outstandmg debt is 8 68 percent. Taken altogether this program results in lower cost power To minnmze problems whir h might anse if timely being made mailable to the citizens sened by PMPA operation of Catawba Unit #2 did not occur, we entered member utihties. That is why PMPA was formed and this into en hange agreements with Duke to trade power from first year of operation showed that it ran accomplish Unit #2 for power from three other units-Catawba Unit that goal.
#1 and McGuire Units #1 and 2. Under the terms of these contra (Is, we receised power and began supplying power to our participating utihties on June 21, l%5. Since
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that time, we base supplied the power requirements of our member uhhhes. Sescral of them hase had some / James A Bauer power supplied at 104 cost by the federal Southeast (;eneral#anaerr Power Adnunistration. Total sales to paruripants f rom June 21,1985 through December 31,19% were $ 25 A nulhon, and 679.5 million 3
It is more widely known for its Spring It is known for its Whitten Center, Oy The Power restivat in May, and for its opuient a unique schooi for the mentally opera House, which featured greats retarded which has become a Of the Peonle r like ranny Brice or Jimmy Durante worldwide model. Presbyterian Participant utilities represent cities in its heyday. College contributes to the city's that are an important segment of m cultural climate, while a variety of South Carolina's Piedmont and [ manufacturers undergirds its surrounding areas from the Georgia l' industrial diversification. to the North Carolina state lines. The y effort to achieve power supply savings through forming PMPA unites them m a commonality of purpose, but _ population patterns, growth trends, and future priorities differ, making w.
// ' 3]4 each city's needs as unique as its
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historied past.
? t 31 It is unique within PMPA, being the g((r e y ; a 1 ,
only member city with its own hydroelectric and diesel generation
!I facility. The Abbesille utility senes a j population of 6,500 in the city and 1, surrounding county areas.
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) Its electric senice covers 25 l square miles, sening a population bI1
- of more than 11,500in Clinton and unincorporated areas of
\bbeville
/1 Named for Abbeville, france,
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., -;,. - Laurens County, this city is known as the birthplace j/ ,
( and deathplace of theConfederacy. hasing been the site for the first secessionist meeting and the final llD100 session of the Confederate States of Clinton grew from a crossroads Amen s Council of War, ore to a market center for farms, i qy
'.. and then into a cultural and industrial <
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; city with the coming of the railro, j f nag;~fKEi I
,T ' -q e g 2aSley
, , . }J The city is named for
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e . i I Gen. William K. f.asley, who was t - e . . instrumentalin bringing the railroad h - to the area in the late 1800s. 4 . l
It is widely known for its Foothills " " ' ' * ' ' ' = ri g l Festivalin August, celebrating its , , , 3 dGreer has the distinction of scenic grandeur as a foothills city of ~ being the second largest cityin both the Blue Ridge Mountains.
,y X,a, " Greenville and Spartanburg Counties, 1
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' 3, and hosts the counties' combined jetport. Its first industry a rived in M._ the 1880s, and a diversifier' industrial ab
, base is evident today.
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- The city's uniqueness is readily ,
! apparent to travelers along the scenic highway and I-85 as a million gallon k
! The largest city in Pickens County, capacity water tower, shaped like a Easley senes a number of peach, heralds the South Carolina , L 1 i manufatturers in its 15-square mile Peach Festival held each July. - I senice area, cosering a population in excess of 21,900. g m - - l j
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" The city holds an annual Family b
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- Festival each August, and is known l { t. l i O ,, g as a close knit community, whose l ., +M citizens share concern for neighbors Avariety of manufacturers supports and town.
the local economy, and Limestanc
/ College contributIs to the quality of
- l life through its cultural and j O affney educational programs. The city's l bCounty seat of Cherokee electric system senes an estimated ,
i County, Gaffney is the eastern 11,500 persons. l , terminus of the Cherokee foothills ! S( enic liighway, near the Cowpens j National Battlefield. . r
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Q" Its central location among PMPA L , participants merited selection as
- permanent headquarters location.
- The electric sptem senes a
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s 4 population in excess of 20,000. 5 I _ __v.
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M l f i p[. Q ) ' 7 .. {c m' ~ N i .t h., A > industrial diversification joins a strong lumber and farming economy to provide stable economic growth, j while Newberry College adds to the N4. , city's enrichment. [if Laurens' electric system senices t over 4,850 residential, commercial and industrial customers over an E 8-square-mile area with a population exceeding 11,000.
- l gurens The seat of Laurens County, H
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(l. 6 Its electn.c system senices only the this city was named for Revolutionary N City of Newberry, numbering War statesman llenry Laurens, s approximately 4,540 residential, and was once home to President ' ' commercial and industrial customers Andrew Johnson. w . over a 6-square-milc area. w::9 h- ll l !!Uh7 d a,', diu . a s i a
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ewberry
\. The County's seat and largest city, Newberry is located adjacent to Sumter National Forest, near
-l Columbia. An annual Egg Festivalis
% *3 held to celebrate its being the largest 4 x % egg-producing countyin the state.
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it is known for its 1812 James Dunkhn t flouse-a prime example of upcountry Carolina architecture and Southern era antiques-and for
# kock Hill n Rock liillis York County's l
Laurens Glass bottles and jars. The city is focal point each May for the largest city and is one of the fastest county-wide celebration called Pride growing cities in the Charlotte l of Ihe hedmont " POP" Jubilee. metropolitan area. 6
.i l I t :. 010n . 1 Seat of Union County, the city
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was organized in 1785. It is named
- for Union Church, which combined ,
Episcopal and Presbyterian . congregations. f "8ter l Vle't*>.' Foothills city of Oconee
; Count) Westminsteris near the 3 western terminus of the Cherokee Foothills Scenic Highway.
It is widely known for its extensive recreational facilities, for the colorful k& " ' * *
- i Glencairn Gardens, and for Winthrop ,
Col lege which is a part of the state > college system.
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Union is the home of Rose H
, Plantation, antebellum estate of ~#'" '
in population,it is the smallest
' , ' South Carolina's Secessionist Governor William H. Gist, which is participant in PMPA. The cityis widely listed on the National Register of known for its annual Apple Festival m >
'N m Historic Places. The cityis uni.pe in on Labor Day weekend, and for its 4 Rock Hillis the largest member of the nation as the only known place puimity to the Keowee-Toxaway PMPA with its electric system sening which celebrates with a festival \'isi rs Center, a self-guided a 22-square-mile area with a dedicatea to the kudzu plant. tour tracing man's efforts to population of approximately 48,000. harness energy.
The city owns and operates the water Westminster's electric system serves and sewer systems in the urban area a 2 square-mile area and a population and is making great strides in .N of 3,000. expanding its economic base.
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h, 4._ . . , , its electric system . serves a large, ' 35 square-mile rural area with some ,
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16,000 population which includes Mk I/ seniu to the village of Buffalo. - 7 l
i 2 PMPA Board of Directors
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i l l t Tom Sherbert Joe lanford, Jack Mdlumi. Ken Smith. John Eargle. [at e Knimu'rede. Stete Hale. Gary Cobb. Russell Allen. Coleman Smaak. David H. Krumwiede Jack E. Millwood John C. Eargle, Sr. l City Manager Member of Board of Public Works Retired l Abbeville, S.C. Gaffney, S.C. Newberry, S.C. J. Russell Allen Kenneth Smith Joe B. Lanford Vice President Operations Manager City Manager Jacobs Press, Inc. Commission of Public Works Rock Hill, S.C. l Clinton, S.C. Greer, S.C. l T. D. Sherbert, Jr. l Coleman F. Smoak, Jr. Utility Director Richard S. Hale General Manager Union, S.C. General Manager Commission of Public Works Commission of Public Works Gary L. Cobb Easley, S.C. Laurens, S.C. Superintendent Commission of Public Works Westminster, S.C. Officers Chairman Joe B. Lanford City Manager, City of Rock Hill g(( General Manager James A. Bauer Vice Chairman J. Russell Allen Finance Director Frank S. Myers Vice President, Jacobs Press, Inc. Investment Manager John N. Glover Accountant Christopher M. Hemmings Secretary Kenneth M. Barnett Secretary Sarah C. Greene Finance Director, City of Union Secretary Nancy C. Piner Treasurer Frank S. Myers Finance Director, PMPA 8 l I
i
@ Auditor's Report A MEMBER OF ARTHUR YOUNG INTERNATIONAL 1900 Daniel Building r Ur OUng creenviiie.soutn caroi.na 29602 Telephone: (803) 271-9286 The Board of Directors Piedmont Municipal Power Agency Greer, South Carolina We have examined the accompanying balance sheet of Piedmont Municipal Power Agency at December 31,1985, and the related statements of revenue and expense and changes in retained earnings (deficit), and changes in financial position for the year then ended. Our examination was made in accordance with generally accepted auditing standards and, accordingly, included such tests of the accounting records and such other auditing procedures as we considered necessary in the circumstances.
In our opinion, the financial statements mentioned above present fairly the financial position of Piedmont Municipal Power Agency at December 31,1985, and the results of its operations and changes in financial position for the year then ended,in conformity with generally accepted accounting principles applied on a basis consistent with that of the preceding year, k April 3,1985 l 9
Piedmont Municipal Power Agency BALANCE SHEET / DECEMBER 31,1985 ($ in thousands) ASSETS
; Utilityplant:
Electric plant in senice $ 244,815 Nuclear fuel '6,444 Construction work in progress 279,163 540,422 Less accumulated depreciation and amortization (7,393) Net utility plant 533,029 Restricted funds 705,296 Current assets: Revenue fund 25,549
' Operating fund 8,909 Participant accounts receivable 3,928 Other accounts receivable 1,866 Materialand supplies - 810 Totalcurrent assets 41,062 Deferred charges:
Unamortized debt issuance costs 33,383 Net deferred expenses to be recovered from future revenues 17,776 Excess cost on advance refunding of debt 41,260 92,419 - Organization costs 1,135
$1,372,941 LIABILITIES AND RETAINED EARNINGS (DEFICIT)
Long-term debt: Bonds $1,169,925 Unamortized discount (44,155) 1,125,770 1 Notes 200,000 1,325,770 Restricted fund liabilities: Accrued interest payable 45,818 Deferred compensation 13 , 45,831 Current liabilities: i Accounts payable 1,618 Retained earnings (deficit) (278)
$1,372,941 e
See accompanying notes. 10 l
Piedmont Municipal Power Agency STATEMENT OF REVENUE AND EXPENSE AND CHANGES IN RETAINED EARNINGS (DEFICIT) FOR THE YEAR ENDED DECEMBER 31,1985 1 ($ in thousands) l l Operating revenues: Sales of electricity to participants $ 25,785 Sales of electricity to other utilities 28,720 54,505 Operating expenses: Operation and maintenance 10,730 Power supply services: Purchased power 23,930 Transmission 1,605 Other 3,107 Administrative and general 176 Depreciation 4,168 43,716 Net operating income 10,789 Other (charges) and credits: Amortization expense (926) Interest income 7,065 Interest expense (35,080) Other expense (3) (28,944) Net deferred expenses to be recovered from future revenues 17,776 Expenses (over) under revenues (379) Retained earnings, beginning of period 101 Retained earnings (deficit), end of period $ (278) l l l l l l l See accompanying notes. Il
Piedmont Municipal Power Agency STATEMENT OF CHANGES IN FINANCIAL POSITION ( FOR THE YEAR ENDED DECEMBER 31,1985 ($ in thousands) Funds presided by:
!ncrease in long-term debt $1,012,513 Decrease ininvestments - 686,340 Deletion of bond discount and issuance costs 13,655 Establish deferred compensation fund 13 Total funds prosided 1,712,521 Funds used for:
Funds absorbed by operations: Excess expenses over revenues 379 Items not affecting working capital: Depreciation (4,168) Amortization (2,745) Amortization of nuclear fuel (3,225) Net deferred expenses to be recovered from future revenues -17,776 Working capital absorbed by operations 8,017 Reductions of long-term debt 410,538 Additions to utility plant 64,986 Purchase ofinvestments 1,162,526 Debt issuance costs 25,560 Excess cost on advance refunding of debt 41,260 Total funds used 1,712,887 Decrease in working capital $ (366) Changes in components of working capital: Increase (decrease) in current assets: Cash $ (6) Revenue fund 25,549 Operating fund 8,596 Participant accounts receivable 3,928 Other accounts receivable ~ 1,866 Prepaid expenses 810 40,743 Increase in current liabilities: Accounts payable 1,336 Accrued interest payable 39,773 41,109 Decrease in working capital $ (366) See accompanying notes. l 12
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depre n od*c gy. refle e. Thise ATEMENT - ;j
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- 1[ 3g'.b hf mR.q.. accRe tricted RICTED $4. 084 Net r dby 9te such edto whi o s tso f I. to accordance fun ds FUNDS defer s. pe iodsd ar r e f ; q 7. g<,,1 1 . are r ou with weres 3.225 topartici e rde o theAge a [: 'f. k 4 @,, s nt fe the re 84 6pa xpens as theyar n tin c ludedncy. T
.h i c os ts. debe oc e trictedrpr ec tablished $7,393 nses n
pa tsin m e c lod s to be in hose 7i tse bythee ds efspe tiv bo bytheAge Depre a h(2[49qM.%.[: f M M' :; @ $ P g 4 The re str follow ing ated nic e re o
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; as s fun ds er ns fo a dn o teis a or tiz tion xpense e se m ludedwingatD ec e m futur b
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? p atDec e n. expe Y/ U g' g .E i -
.k'. c y :g. co Fu nd stated m r ied ntof co at (oe be 3Lpurpose.s nstr cand suances Ir.tere ofcr st e xpe edi t fees ns e n
c u lear fuel ilhngs topae r 1985: be 3,1 i Bo ns tr u< n wrketabst, which con u tion a1985 Ra nse rticipa n ts: -
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$ sc Debt le prpo sist of the to enues t4,083) 2 An r xima tes re ygg o: Re'me annes m participants ceiv ed.n (416)
%v W intereued fd>[ M.;. h--MA
- 28. 35 L,.1 o $
S: nn d"d 4 M529 st arket: : ot co y U wenn a 983 Re1e A Intere ' (926 d
- y 120. 041 n able nside e t645))
d : Rate stin m 14ft..( 4, 1 1 y *' f s"'"""""""'"" pe Refu na re s m 64 3ts
- 6. 909 Totai receiv com" stabihz tio ed to a rd mb dlings f35,080)
*b %3.M s e 3. 928 . Y G \
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- 6. 010
$301 438 tic e n (rev (41. 150)
%.$y. 152 . 69
$ -",u om 206 d 4 2
Net e )r du nts c enues e y Ho 1 203 T 1;
- 15. 20 184.941 1 fr o defe r e
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he Agen u2 ON e - mimm cy is $40.620 !707 T illings to s te be u r y heAgenG-TERM
- 31. 19 mbalamequired 15. 3 0 recove b $65L x60 186.332 ' g cyhad DEBT participa n s t rd e thanorX5. the es amou m c r y the bo '
21 996
-n equ l nts e tam r nd ie $12. Mb.
- " the follo w
- 5. A s o $7 13 se mg lo T s lun o he Age GENCY n
a to the m the e tri<ted re se r quired es tncr fu n to -05. 629 Se ne ne s 19M ng te $t17,776) f oper cy fu FUNDS ma se s 1985 "" rm deb t T as e anons s ts nds w minim u edfunds mb nds. At De mtainc ne 1985 s 19,85 8 $ inam at Dece - of ere wer embe 134 300 r mber y Dec stated the Age estab alanc e gr r se Refu n gdm 340 "" o tued ? e mbe at c s n e.s a e ter nes 000 cyan dchshed 2s0. 000 $2 - r 3L to ac .. L 465 o t, which o u- F 198& co '"tes nsist 8. 2 45 kn ana ap r x of unt fo s ene _ 445.325 $ p o im the follo i ates r the s 19M i169 113. 135 eaue pe r i i m w ng 925 33L 557 anng r ash Wrketab le 14 445
$ s Debt arket at 250.000 -
etu &r i c 2% fM 44 155 inEle Dec tricRe nne s . ~ 2.220 $ Intereued st ven 25 430. 880 .
\
- 6. NET Rn e 24.951 Rev m e L1
$2.220 FUTli D nba le en ee ber ,198 n 25. 770
- 6. 6?8 u Bo ds, SeK55 *
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5U $598 of n REBILLIN EFERRED u Bo ds. Se invs $23.500 4, the Age Total ries19 is de s 579 EXP 61 2W are s r o c bed - GST ENS ' $65t $25.5 49 g e tmen forthe ries 19- ncyis ~ 84 V ^AM [
fimim0nt Municipal P0wer Agency NOTES TO FINANCIAL STATEMENTS / DECEMBER 31,1985 ($ in thousands)
- 1. DESCRIPTION OFTilE ENTITY Organization costs - Organization costs of $1,135 (net of ,'
Piedmont Municipal Power Agency (the Agency) was accumulated amortization of $32) are amortized on the incorporated in 1979 under the South Carolina joint straight line method over a period of 40 years. Municipal Electric Power and Energy Act. The Act was Discounts on bonds payable - The discounts on the bonds adopted in April,1978 to enable municipalities in South payable of $44,155 (net of accumulated amortization of $848) Carolina to form a joint agency to plan, finance, develop, are being amortized on the bonds outstanding method. own and operate electric generation and transmission income taxes - The Agency is exempt from federal income facilities. The Agency is composed of ten member utilities taxes under Internal Revenue Code Section 115. South owned by municipalities or municipal commissions of public Carolina has adopted Section 115 by reference; therefore, works located in northwestern South Carolina and the Agencyis exempt from state income taxes, represents the member utilities in dealings with Duke Power Comparable presentation - Due to the fact that 1985 was the Company (Duke) and other entities. In June,1985, the Agency's first year of operations, the financial statements for Agency began to receive power from Duke for sale to the the year ended 1984 are not presented. It is management's
~
member utilities. intent to present future financial statements in in order to secure a reliable source of power for the comparable form. member utility consumers, the Agency purchased a 25% 3' UTILITY PLANT undisided ownership interest in Duke's Catawba Nuclear Maj r classes of the Agency's electric plant in senice as of Station Unit 2 and its initial nuclear fuel core. The Agency December 31,1985, are as follows: has no legal ownership in Unit 1 or the support facilities used by both units. However, under the exchange Land $ 274 Structures andimprovements 69,028 agreements the Agency receives 121/2% of the output of Reactor plant equipment 113,843 Unit I and 121/2% of the output of Unit 2. Furthermore, the Turbo generator units 28,544 Agency's cost for 25% legal ownership in Unit 2 is based on Accessory electric equipment 25,548 121/2% of Duke's costs associated with both Unit I and Unit Miscellaneous plant equipment 7,519
- 2. Therefore, even though the Agency has no legal ownership rights in Unit I, for accounting purposes, the Agency does Other 59 own a revenue producing interest in Unit I and when Unit 1 $244,815 went into commercial production on June 29,1985, the Agency transferred approximately one half of its total M 6M veWe M &iM nuclear fuel core, partial cost of reload fuel assemblies, and expected costs for the Catawba project from construction g; 9g g g work in progress to utility plant in senice. Since June, based on burn rates using a unit of production basis.
1985 the Agency has received electnc output through exchange agreements from Unit 1. Additionally, the Agencyis The construction work in progress of $279,163 is for the Catawba Nuclear Station as explained in Note 1. Certain - charged for its pro-rata portion (121/2%) of operation and maintenance expenses of Unit 1. It is estimated that Unit 2 direct and indirect expenditures allocable to the Agency's will go into commercial senice in December,1986. As of wnership interests in the project are capitalized as part of December 31,1985 the total estimated costs of the Catawba the costs of acquiring or constructing the utility plant. The Nuclear Station to the Agency is approximately $550,000. Agency also capitalizes net interest costs on borrowings used to finance the construction. Total net interest costs
- 2. SIGNIFICANT ACCOUNTING POLICIES capitalized were approximately $35,500 (r'et of interest Basis of accounting - The accounting records of the Agency income of approximately $30,700).
are maintained cn an accrual basis in conformance with the Electric plant in senice, excluding nuclear fuel, is Federal Energy Regulatory Commission's Uniform System of depreciated on a straight line basis at rates calculated to Accounts and generally accepted accounting principles. amortize the composite assets over their respective Certain items are included and excluded from the rates estimated useful lives and begins when assets are placed charged currently to participants for power billings. The into senice. The depreciation expense for electric plant in Agency's rate structure is generally designed to cover debt senice includes a factor to provide for the expected cost of cenice and operating costs, which in turn are sufficient to decommissioning (dismantling) the nuclear facility. The cover depreciation now being deferred. Agency's portion of decommissioning these jointly owned Unamortized debt issuance costs - Unamortized debt facilities is based on current price levels and assuming issuance costs of $33,383 (net of accumulated amortization decommissioning will occur promptly after the unit is taken of $2,06?) are amortized on the bonds outstanding method. out of senice is estimated at approximately $22,000 for the 13
Piedmont Municipal P0wer Agency NOTES TO FINANCIAL STATEMENTS / DECEMBER 31,1985 ($ in thousands) present electric plant in senice. This estimate will be requirements and operating costs of the Agercy. Those adjusted periodically to reflect changing price levels expenses and revenues which are not included in rates, and technology. are deferred to such periods as they are intended to be Total depreciation expense from these components is covered by rates. as follows: Net deferred expenses to be recovered from future billings Depreciation - electric plant in senice $4,084 to participants include the following at December 31,1985: Amortization of nuclear fuel 3,225 Expenses incurred, not included in billings to participants: Decommissioning 84 Depreciation expense $ (4,083)
$7,393 Amortization expense - nuclear fuel (416)
Amortization expense . (926)
- 4. RESTRICTED FUNDS Letter of credit fees (645)
Restricted funds were established by the Agency,in Interest expense (35,080) accordance with the respective bond and note resolutions, (41,150) to account for proceeds of the bond and note issuances and Revenues received, not considered in billings are restricted by the resolutons for payment of construction to participants: costs, debt senice, ar.d other specified purposes. The restricted funds at December 31,1985 consist of the following assets stated at cost, which approximates market: Add: Rate abiHzation (reve es Marketable Accrued Debt Interest. ti@s) E996 Fund Cash Securities - Receivable Total Net deferred expenses to be recovered Construction $ $294,529 3 6,909 $301,438 from future billings to participants $(17,776) Bond 28,354 120,410 3,928 152,692 Note 11,983 31,220 43,203 7. LONG-TERM DEBT Reserve and The Agency had the following long-term debt at December contingency 64 6,010 140 6.214 31* 1985-* Decommissioning 71 71 Unamortized Special reserve 15,201 ,?2 t 15,333 Bonds Principal Discount Total Refunding trust 206 184,419 1,707 186,332 Deferred Series 1984 $ 134,600 $21,465 $ 113,135 compensation 13 13 Series 1985 340,000 8,245 331,755 Series 1985B 250,000 250,000
$40,620 $651,860 $12,816 $705,296 1985 Refunding Series 2 445,3_25 14.445 430,880 l The Agencyis required by the bond resolution to maintain minimum balances in certain restricted funds At December 1,169,925 44,155 1,125,770 Notes 31,1985, the ameunts in these restricted funds were greater than or equal to the required minimum balances, Series 1984 200,000 200,000
$1,369,925 $44,155 $1.325.770 S. AGENCYFUNDS The Agency funds were established to account for the Electric Revenue Bonds, Series 1984 operations of the Agency and consist of the following in December,1984, the Agencyissued $530,000 of Electric assets stated at cost, which approximates market at Revenue Bonds, Series 1984 at an originalissue discount December 31,1985: of $23,500 for the purpose of financing the Agency's Marketable Accrued investment in the Catawba Nuclear Station described in Note
- 1. As described in Note 8,in December,1985, the Agency Fund Cash Sec r ties Receivable Total defeased $395,400 of the Electric Revenue Bonds, Series
' 4' Op r)ing 1984. Thus at December 31,1985, $134,600 of the bonds were 2.220 66 6 8,909 recorded as outstanding.
$2.220 $31,579 $69 $34.458
==--
The bonds are special obligations of the Agency and are
- 6. NET DEFERRED FXPENSES TO BE RECOVERED FROM secured by future revenues as defined by the bond FUTURE BILLINGS TO PARTICIPANTS resolution and other monies and securities pledged under As described in Note 1, rates charged to participants the bond resolution.
are structured to systematically provide for the debt 14
The outstanding bonds bear a semi annualinterest rate date of redemption. If the bonds have been converted to a ' ranging from 7% to 10.875% with maturity dates ranging from fixed rate, the bonds are redeemable at the option of the January 1,2004 to January 1,2014. The bonds are redeemable Agency at prices ranging from 103% of the bond principal at the option of the Agency at prices ranging from 103% amount from 1986 to 2013 to 100% in 2024. of the bond principal a nount in 1935 to 100% in 1998 Electric Revenue Bonds,1985 Refunding Series and thereafter. In December,1985, the Agencyissued $445,325 of Electric Electric Revenue Bonds, Series 1985 Revenue Bonds,1985 Refunding Series at an originalissue in May,1985, the Agencyissued $340,000 of Electric Revenue discount of $14,457 for the purpose of prosiding funds Bonds, Series 1985 at an originalissue discount of $8,355 necessary to refund $395,400 of Electric Revenue Bonds, for the purpose of financing the Agency's investment in the Series 1984 described earlier in this footnote. Catawba Nuclear Station described in Note 1. The bonds are special obligations of the Agency and are The bonds are special obiigations of the Agency and are secured by future revenues as defined by the bond secured by future revenues as defined by the bor.d resolution and other monies and securities pledged under resolution and other monies and securities pledged under the bond resolution, including the Bond Reserve f'und. the bond resolution. Under the terms of an existing Under the terms of an existing insurance policy, the. payment insurance policy, the payment of principal and interest on of principal and interest on the bonds maturing on the $81,245 bonds maturing on January 1,2014 is insured. January 1,2019 is insured. The bonds bear a semi annualinterest rate ranging from The bonds bear a semi-annual interest rate ranging from 7% 7.5% to 10.25% with maturity dates ranging from January 1, to 9.7% with maturity dates ranging from January 1,2013 to 2004 to January 1,2025. The bonds are redeemable at the January 1,2025. The bonds are redeemable at the option of option of the Agency at prices ranging from 103% of the bond the Agency at prices ranging from 103% of the bond principal principal amount in 1995 to 100% in 1998 and thereafter. amount in 1996 to 100% in 1999 and thereaf ter. Electric Revenue Bonds, Series 1985B Electric Revenue Notes, Series 1984 In November,1985, the AgencyissueJ $750,000 of Electric in December,1984, the Agencyissued $200,000 of Electric Revenue Bonds, Series 1985B due January 1,2025 to provide Revenue Bond Anticipation Notes, Series 1984 for the the funds necessary to pay the $100,000 principal amount of purpose of financing the Catawba Nuclear Station described the Agency's 8.50% Electric Revenue Bond Anticipation in Note 1. Notes, Series 1984, maturing on January 1,1988, and the The notes are special obligations of the Agency and are
$100,000 principal amount of, and a portion of the interest secured by a lien on future revenues as defined under the on, the Agency's 9% Electric Revenue Bond Anticipation note resolution.
Notes, Series 1984, maturing on January 1,1990 The lien on revenues securing the notes is subordinate to The bonds are special obligations of the Agency and are the lien on revenues securing payments required under the secured by future revenues as defined by the bond bond resolution. The notes are further secured by resolution and other monies and securities pledged under irrevocable letters of credit which are in amounts sufficient the bond resolution, including the Bond Reserve Fund. The to pay the principal of the notes plus 7 months' accrued bonds are further secured by an irrevocable letter of credit interest. No borrowings under the letters of credit have which is in an amount sufficient to pay the principal of the occurred as of December 31,1985. bonds and $11,875 to pay accrued interest on the bonds. N The notes consist of two principal amounts of $100,000 which borrowings under the letter of credit have occurred as of bear semi-annualinterest rates of 8.5% and 9% and mature December 31,1985* on January 1,1988 and 1990, respectively. These notes are The bonds will bear interest at a daily, weekly, monthly, not subject to optional redemption by the Agency prior long, or fixed rate as determined from time to time. The to maturity. Remarketing Agent determines the rate of interest. The Agency's Board of Directors determines the length of time. From the issue date through December 31,1985 the interest on the bonds have been at a weekly rate ranging from 4.85% to 8.15%. Also, the bonds may be permanently converted to a fixed rate. Anytime prior to their conversion to a fixed rate, the bonds are redeemable at the option of the Agency at a price equal to 100% principal plus any accrued interest at the 15
Piedmont Municipal Power Agency , NOTES TO FINANCIAL STATEMENTS / DECEMBER 31,1985 ($ in thousands) Sinking fund requirements 8. IN-SUBSTANCE DEBT DEFEASANCE The following is a summary of the principal debt and in December,1985 the Agency purchased $423,024 in U.S. sinking fund requirements for the bonds payable at government securities and deposited them in an irrevocable December 31,1985: trust. The principal and interest from these securities'will Year Ended Year Ended be used solely for the purpose of making interest and December 31 Principal December 31 Principal principal payments on the following Electric Revenue Bonds, 1996 $ 6,665 2011 $ 31,930 Series 1984: $27,47511% bonds due 2014, $100,00010.5% 1997 7,210 2012 34,460 bonds due 2019, and $267,92511% bonds due 2025. The 1998 7,790 2013 37,290 bonds will be redeemed on January 1,1995, (the first optional redemption date) at the then applicable redemption price of
- 7. 0 2001 2016 47,370 103% of the,ri aggregate pnncipal amount. Because the above 13.490 2002 14,630 2017 51,105 transaction qualifies as an in-substance defeasance, the 2003 15,960 2018 55,490 government securities and applicable defeased bond issues 2004 17,405 2019 59,925 are not recorded on the balance sheet. The traasaction 2005 18,485 2020 67,585 resulted in an extraordinary loss of $41,260 which is deferred as excess cost on advance refunding of debt. The Agency 2007 2 , 00 2022 o' 0 2008 25,435 2023 87,740 defeased the debt primarily to reduce debt service, thereby 2009 27,485 2024 95,790 postponing or reducing future electric rate adjustments.
2010 29,580 2025 48,120 See Note 7.
- 9. DEFERRED COMPENSATION PLAN The following is a summary of maturities of principal debt The Agency has established a deferred compensation plan for which there are no sinking fund requirements at f r all employees. Payments made by the Agency remain as December 31,1985:
Year Ended Year Ended December 31 Principal December 31 Principal withdrawal until such time as the funds are distributed to the employees in accordance with the provision of the plan. 1988 $100,000 1998 $ 2,725 1989 100,000 1999 2,985 It is the Agency's policy to fund the plan based on 10% of 1996 2,290 2000 3.270 Payroll cost as incurred. The deferred compensation 1997 2,495 2025 56,430 expense at December 31,1985 was $13. 16
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