ML20210C176
| ML20210C176 | |
| Person / Time | |
|---|---|
| Site: | Mcguire, Catawba, McGuire, 05000000 |
| Issue date: | 12/31/1985 |
| From: | Bobo J, Clay G NORTH CAROLINA MUNICIPAL POWER AGENCIES |
| To: | |
| Shared Package | |
| ML20210C127 | List: |
| References | |
| NUDOCS 8609180263 | |
| Download: ML20210C176 (26) | |
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l contents 1985: Second Full Year of Operationsi . .. . . .1 f2,3
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A Brief History . .......... .. ... ..... ..
Organization and Management . ....../ . .. . .4 Beard of Commissioners and Alternates . . 15 The Participants . . . . . .. . .. . . . 6, 7 -
Operations / Construction . ......' . .. . 8 10
' Finance ' . . . . . . . . 11, 12 Auditors' Opinion . . . . .. ... ... < 13 Financial Statements . ... . ...... .. . 14 24 Management Steff, Consultants, Trustees, Paying Agents . ... . . Inside Back Cover l
about the cover At left, uranium fuel is loaded into the reactor vessel at Unit 1 of Catawba Nuticar Station. At both Catawba Unit I and Unit 2. the reattor vessels tontam 2N fuel ne, eath of whith carries 272 ennthed uranium fuel pellets wath an energy capability equal to more than a ton of mal.
At nght is the William 11 hkGuire Nutlear Station on Lake Norman. Under an enhange agreement with Duke Power Company NCN!"A 1 participants receive elettnary from hkGuire as well as from the Catawba Statien.
1985...
second full year of operation
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George W. Clay, Jr., Chairman James T. Ibbo Ibard of Commissioners General Manager I tNumber is a pleasure
! (NCNIPA to1)bring for theyou yearthis 1985,report our second on the fullactivities and gfinancial year of providir power to our status of North participating cities Carolina and townsMunicipal Ibwer Agency (participants).
In many ways, it was a landmark year for the power supply program provided by the agency to the 19 participants. One milestone was reached on June 29 when Catawba Nuclear Station Unit I began commercial operation. We also were pleased, of course, by the considerable progress made during the year by Catawba Unit 2, of which the agency has a 75 percent ownership interest. Not only did we see that unit move steaddy down the regulatory path nearer the goal of full licensing, but we also saw construction proceed at a pace that permitted its builder, Duke Power Company (Duke), to advance the projected commercial operation date by some six months. We now kiok forward to the unit going into service in December 1986. During 1985, the agenty initiated load management activities that, when in full operation, will result in significant cost reductions for participating cities. We also installed a central computer system, shared jointly with North Carolina Eastern Ntumcipal Power Agencv, tha t is enabhng us to carry out many essential functions for our participants more efficiently and economically. We aho are very pleased that Juring 1985, the agency was able to reduce its cost of debt service by arrroximately $3.5 mdlion per year over the next 15 3 ears. This was acwmphshed by the issuance of bonds to advance refund Ivnds issued in earlier years when intees: rates were higher. Further benefits resulted from our tax-exempt commercial paper program and from the prudent invesonent of idle funJs. Our state has a rich tradition of municipal power, and our 19 participants continue that tradition in the areas they ser e. Our goal continues to be to provide the participants with a rehable surply of electricity at the lowest cost available. The success to date has oscurred because of the spirit of cooperation brought to NCNtPA 1 by our 19 participants. With the same Lind of continued woperation, we are confident that the agency will continue to meet its challenges in the coming years.
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j 4 .' . &wQ (? F / George T. Clay, Jr., Ch.urman { James T. Bobo Ibard of Commissioners General Ntanager i
A BRIEF HISTORY NChtPA 1 CHARTERED - On January 13,1976, NChiPA FIRST BONDS SOLD - On November 16,1978, NChiPA 1 was chartered as a municipal corporation under the I sold a $400 million electric revenue bond issue at a true enabling act passed by the North Carolina General interest cost of 6.837 percent. It was, at the time, the second Assembly in hiay 1975 (the Joint hiunicipal Electric Power largest issue of its kind ever offered by a public utility in this and Energy Act). country. CATAWBA PROJECT APPROVED - On February 27, PURCHASE CIDSED - On November 29,1978, the 1978, after two and a half years of negotiations between agency and Duke closed on the agency's purchase of 75 NChiPA 1 and Duke, the NChiPA 1 Board of percent, undivided ownership interest in Unit 2 of Catawba Commissioners approved the Catawba project and Nuclear Station and 37% percent of the common support authorized execution of joint ownership contracts with facilities. Duke. ADDITIONAL FINANCINO - NChiPA 1 has issued hiUNICIPALITIES APPROVED CONTRACTS - By July electric revenue bonds since 1978, and will continue 10,1978,19 of the agency's 20 member cities had approved periodically through 1987 to issue debt to finance its share the essential contracts between each city and the agency. of the construction of Catawba Unit 2. The City of Concord, an agency member, elected not to participate in the project. CATAWBA CONSTRUCTION - Catawba Unit I began commercial operation in June 1985. Catawba Unit 2 is h1ANAGEhiENT SERVICES - In October 1978, NChiPA scheduled to begin commercial operation in December 1986. 1 - along with the state's other power agency - contracted At the end of 1985, the project was ahead of that schedule. with ElectriCities of North Carolina, Inc., to provide the By contract the power agency has agreed with Duke to . agency, at cost, with staff and professional management exchange 50 percent of the capacity and output from Unit 2 services needed to operate its business. Through this with a like amount from Unit 1. This is called the Catawba arrangement, the unnecessary and expensive duplication of Reliability Exchange and remains in effect until both separate agency staffs was avoided. Catawba units are retired. m, ,e- . JGwf 9 s
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l The interior of the spent fuel building for Catawba Unir 2, showing the sgnt fuel pool where fuel whnh has been removed from the reattor willlv stored until a federally hcenwd, permanent repository for high level waste is available. 2
t l y ;" J ~. htCGUIRE STATION - Unit I at Duke's William B.
, , hicGuire Nuclear Station, a " sister" plant to Catawba,
- began commercial operation in December 1981. Unit 2 at
._,s hicGuire began commercial operation in hiarch 1984..
1 NChtPA 1 has reliability exchanges with Duke involving the
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- NicGuire plant which enable the agency to receive project i ... .
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-.f POWER DELIVERY BEGINS - On July 1,1983, by f utili:ing a provision of the agreements called the Pre-
,- '% N Operational hicGuire Reliability Exchange involving hicGuire, NChiPA 1 replaced Duke as the all-requirements
" 4 power supplier for the 19 municipalities participating in the 6 , Catawba project.
9 This is how it koks on the inside of the diesel generator buildmg at Catawha Unit 2. Seen is one of the two dmsel generators which supply the 5.75 megawatts of power needed in the event of a loss of offsite power to the plant.
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NORTH CAROLINA EASTERN htUNICIPAL POWER AGENCY
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% Thirty two municipalities in the eastern part of North Carohna
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(NCEhiPA). This agency was chartered in December 1976 I . under the state's 1975 enabling act. All ofits members are p - k...
- participants in a joint project mmhing ownership interests in
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six generating units operated, or being constructed, by
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] Carolina Ibwer & Light Company (CP&L).
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4r . I 1 \ On December 30,1981, NCEhiPA became the all-requirements power supplier for 11 participating municipalities that formerly 1
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, had been wholesale customers of Virginia Electric and Pbwer '
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g .. requirements power supplier for its other 21 participants, which , had presiously been served by CP&L j . l Like NChtPA 1, NCEhtPA has contracted with Electricities of An overhead view of the contadiment buildmg housing the 1,145 North Carolina, Inc., to provide it with professional megawatt reactor at Catawba Unit 2. Shown are the four steam management staff ahd sersices. generators surroundmg the missile shield for the reactor vessel. In front of the missile shwld is the crane used for fuel handhng. 3
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ORGANIZATION AND MANAGEMENT N ChiPA 1 is Each participant. governed by may participant a Board of Commissioners, also appoint one member as many as two alternate of which commissioners, cither is appointed by each of wham may represent the city at board meetings when the commissioner cannot attend. The agency board elects its cwn officers. Ibr 1985, the Board of Commissioners re-elected Shelby hiayor George W. Clay, Jr. as its chairman. Others elected were Earle E. Riddle, Irxington utihties commission chairman, as vice chairman, and David E. Iowe, Lincolnton city manager, as secretary. treasurer. The officers serve on the executive committee along with six at-large representatives, also elected by the lward. At-large members for 1935 were hiolly ht. Darwin, htorganton City Council member; William T. Gill, Statesville city clerk: Jack E Neel, Albemarle city manager; and R. Duke Whisenant, Newton city manager. hianagement staff and services for NChtPA I are provided by ElectriCities of North Carohna,Inc., a joint municipal assistance agency. The scaff carries out the power agency's daily operations, including the financing and accounting, billing, planning and budgeting programs. In addition, it closely. monitors the project agreements and monitors the performance of Duke with regard to the utility's fulfillment of obligations in the project. During 1985, General hianager James T. Bolm filled two senior management staff positions. William H. Batt was appointed in August as Director. Finance and Administration, and Jack S. ChilJs was named to the newly created post of Director-Communications in October. As authori:ed by the NChtPA 1 Board of Commissioners, a 4.66-acre parcel ofland was purchased jointly with NCEhtPA, the state's other municipal power agency, as the site of a proposed administration building that also would be jointly owned by the two agencies. An architect was retained to prepare preliminary drawings and cost estimates for the building. In Ntarch 1985, the agencies' staff moved into leased quarters in Smoketree Tower in Raleigh's Highwoods Park. The move helped make possible the installation of a central computer system to support the two power agencies' business activities. Previously, the agencies had been receiving computer services through a more costly time sharing arrangement. The agency's role as a power supplier requires the use of integrated computer systems to support its various activities, such as planning and budgeting, accounting, load and energy forecasting, verification of Duke bills to the agency, collection and reporting of monthly load statistics, tax-exempt commercial paper, and rate studies and analyses. By the end of 1985, projected savings to be reali:ed from the in-house computer center had risen to 45 percent. Combined savings for the two power agencies are now projected at $5.4 million in the first five years, and the investment in these resources is expected to be recovered in 19 months. 4
BOARD OF COMMISSIONERS *
.: .v, jatk E Neel Nannie Ports r -- -
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City Manager Commmioner __ Albemarle Cornehus j .. p , [,, g r. 2 9 '
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James L Ikrton A. W. Huffman, Jr. * '3 g9 I Q-[ . Alderman Mavor s. 5 ~." s i' + x Contord Granite Falls ; j .i , 1 ji b [ k f -
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[K Ibnnie E. Ransom Gary E. Miller =[, fr i'f,
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Counal Member Direttor of Pubhc Utihties - 4 " - r. 7 ;7 & - Gatoma LanJis a .. 74I U" ..%' 4 & .[N ~ -
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Ruth K. Stenhouw Manus C. Midgett 1 Commmiener Counal Member !
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C.ity Manager uity Manager
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'- f /a Lincolnton New ton Scared left to ridit: Jatk E Neel (Albemarle). Ruth K. Stenhouse (Huntersville), George M. h
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Molly M. Darwin Arthur E. Peterson W Clay Jr. (Shelby), R. Duke Whisenant (Newton), Arthur E. Peterson (Statesulle), Counal Member Counal Member Morns Baker (Drexeb. 4 %d Morganton Statesulle Stand:ng Icfr to nght: Wilham M. Edwards (Cherryulle), Judith P. Mendenhall (high / ' .D George W. Clav. Jr. Wilham M. EJwards nd. Uy M. Darwin %ntonb A. W Hudman Jr. Cranke fan, J. E Hinkel Df Mavor Counal Member
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Shelby Cherrynlle " ' .I
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H. Max Gunter Morris Baker Judith P. Mendenhall Earle E. Riddle J. E. Hmkel Margarer S. Wmgate G. , Mavor Manager / Town Clerk Mayor Former Utihties City Manager Council Member b . ,p Bostic Drexel High Point Commission Chairman Monroe - Pinculle ',% f. trungton x g {T.,
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.l'-J.Q) 3.4 79 ; n e y ALTERNATE COMMISSIONERS * % s s
Pauhne T. Helms Stephen Royster A. E. Tarr H. Lewis Price Council Member . Aldennan Council Member City Manager Albemarle Shelby Lincolnton High Point Preston Page Wayne Sherrard Wayne Dellinger . Alton K. Patton
- Administrator - Council Member Mayor Alderman Cornelius , Bostic - Newton bndis l Kenneth Harris i Peter T. Connet P. E. Bazemore
- Jaik R. Clark - ~
Comnussioner i Mayor City Manager Council Member Granite Falls Drexel State <ville Monroe Drew Saunders Linda K. Story John E McGinnis Joseph E. Baker, Jr. Commisioner Town Manager Council Member Town Manager Huntersville Grarure Falls Cherryville Pineville Belvin B. Beck. Jr. Charles Kenneth Barnes Gary D Hicks Larry M. Cranford City Manager . Alderrna City Manager Utility Director bxington - bndis i Gastonia Statesville
. Douglas O Bean City Manager Morganton
*As of Detember 11.145 5
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N Ch!PA 1 participants Carolina, a 40-county area include 19 from stretching municipalities in Piedmont the western edge of the North Coastal Plains to the foothills of the Appalachian hiountains. hiore than half of North Carohna's residents live in the Piedmont, one of the fastest growing areas of the country. Home to much of the nation's textile, furniture and tobacco industries, the North Carolina Piedmont continues to experience rapid expansion and diversification of its industrial base. htore than 30 colleges, universities and technical institutions are located within this region, which has become , internationally known as a center of medicme, research and technology. 1 Agriculture, another important component of the region's economy, also has become increasingly diversified in recent years. NChtPA 1 participants occupy large portions of 14 Piedmont counties. Their combined service areas are home to about 280,000 residents. For the year ended June 30,1985, sales of power from the 19 NChiPA 1 cities to their customers generated almost $161 million in electric revenues. i hiunicipal electric systems are North Carolina's clJest electric utilities, and
- some of the oiJest still in existence are among the participants of NChfPA
- 1. Three were established prior to 1900 and eight were operating by 1910, although none of the 19 now owns any inJependent generating facility.
Through their joint action in creating NCh!PA 1 and participating in the Catawba project, these municipalities are continuing a rich tradition while strengthening their historic role as a full partner in North Carolina's electric power supply community. 1 i i i e THE PARTIC PANTS I I i l j Cotowbo g k I MD9'"ade 11 Lenington y 2 60sfic f 2 Lincointon
)g 3 Cheefysme 13 va,een v
4 Cornehus 14 von,o, b Y 5 Drevet 15 go,gonton 0 M5'on'a 16 Newton i % 7 G<anite Foits i; pin,,gi, 8 Mrgh Point is sne,by 9 Huntersvitfe 19 Statesvdre IO tonois a i 6
OPERATIONS / CONSTRUCTION
. *" " "r 1 ChiPA 1 has a 75 percent ownership interest in Unit 2 of Catawba. The unit is scheduled for P commercial operation in late 1986. The agency's ownership
{. , , entitlement in the project will be approximately 860 gp , t . megawatts c(capacity.
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'O agency's ownership resources are essentially distnbuted in
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-l1 equal amounts over each of the four units of the Catawba and hicGuire nuclear stations.
. p g4 g Through the hicGuire Reliabihty Exchange, the agency was able to begin full operation on July 1,1983, by receiving 215
* .j;, , I megawatts of project power from hicGuire.
bW - The hicGu.re station is located on Lake Norman in North Lf Carohna,17 miles north of Charlotte. Construction began The two-unic Catawba Nuclear Station as seen from the air. Iocated on in April 1971. The two hicGuire units have a maximum net the west shore of Lake Wyhe in York County, S.C., the station is named dependable capacity rating of 1150 megawatts each. Unit I for the nver whith long has been identified with the power supply of the at hicGuire began commercial operation in December 1981 riedmont can&nu. and Unit 2 on hiarch 1,1984. Under the agency's contract with Duke, the utihty will build, fuel and operate the Catawba plant, and will supply NCNiPA 1 additional (supplemental) power to meet the needs of its 19 participants. Each of the 19 participating municipahttes has executed a project sales agreement with the agency. In those contracts,
. the cities have agreed to pay for 100 percent of the cost of the agency's project. Those agreements are "take-or-pay" contracts and form the security for the agency's bonds.
1' Each participant also has signed a supplemental power sales agreement with the agency by which it has agreed to purchase all of its electric power and energy from the
, fp agency, over and above that provided by the agency's C. Ownership entitlemen and excludmg any power and energy
[.' '.. hi made available by the Southeastern Power Administration, the regional marketing agent for federal hydroelectric power.
- g. ; Those agreements are in the form of"take-and-pay" contracts.
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The Catawba Station A reaaor o rati mon tors attivities in the control room for Catawba The Catawba Station is located on Lake Wylie in York County, South Carohna,19 miles southwest of Charlotte, North Carohna. Construction of the Catawba Station began in hiay 1974. 7
OPERATIONSCONSTRUCTION (continued) Carawba is a two-unit station with a maximum net dependable capacity of { 1145 megawatts for each unit. Each , unit contains a htinghouse i _ pressuri:ed water reactor system
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Providing steam to a General Electric turbine-generator. The nuclear steam jh - a supply system is substantially similar in power rating anJ general design to i '
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b the system employed in sixteen other F f e T Westinghouse units unh construction _ 7. s. f' permits and nine others with
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operating licenses, including NhGuire W ^. 4 : * '
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N was stheduled for June 1485 and Unit %i g ~Q'
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2 for June 19S7. The unit achieved the Y' 6 major mdestone ofinitial criticahty on January 7,1985. Initial criticahty
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'O ouurs in the initial start-up of the ;O [ ; .' M Q Y 'p s chain reaction (the sphtting of the 1 sr TnL N . -- -
atoms continumg on a self-sustaining in this view inside the Catawba Unit 2 turbine buddmg can be seen the three low pressure basis) within the reattor vessel. The turbmes and one high pressure turbine, all manufactured by heinghouse. Also shown on either unit first generated electricity on a side are the moisture separator reheaters and crossswer pipmg used to impnwe the quahry of the low-level testing basis on January 22 secam between use m the high pressure and low pressure stages. 1985. Atter approximately five months of power escalation testing, Unit I began commercial operation on schedule on June 29,1985. On July 26,1985, the Appeal Board of the Atomic Safety and Licensing Board issued a ruling resolving all current outstanding issues concerning the operation of Catawba Nuclear Station. Unless new issues coulJ be raised, the ruhng meant that all licenses required for the operation of Unit 2 should be issued without any major problems. On October 14, 1985, hot functional testing (HFT) on Unit 2 was completed. HFT is the heat-up of systems to normal operatmg temperature and pressure without the presence of nuclear fuel in the reactor. With the unit 99 pertent complete, this set the stage for fuel loading to begin in the first quarter of 1986. In January 1986, Duke revised the commercial operation date to December 1986, an imrrovement of six mont hs. On June 14, 1985, the lloard of Commissioners of NCMPA 1 voted to deliver the required six-month notice to Duke that the agency intended to initiate the hhGuire Reliability Exchange with resrect to Catawba Unit 2, effectne January 1,1986. Imtiation of this exchange meant that NCMPA 1 was entitled to the same capacity and energy outrut from the NkGuire station that it would receive if Catawba Unit 2 were in tommercial oreration. NCMPA 1 STATISTICS 1935 1984 Kdowatt-hours sales (thousands) 1,020,916 2,894,7o0 Maximum Hourly Load (kilowarts) 622,708 605,465 Operanng Resenues 5206,195AY 5110,003,000 Euess of Roenues over Expenses 54,407aV0 52,No,000 Sales to Duke (Res enues) 581,175 AY0 5 33,tY0 Aserage monthly power purthases by cities Kdow att hours (thousanJ-) 251,743 241,211 Average monthly bdhng to (ines $ 10,2 51,667 50,164,167 8
All Requirements Power Rates day to implement load control measures. Er a recent 12-month period, staff recommended that load control NCMPA l's all-requirements power rates are the means by whith the agency bills its parucipants. The rates are measures be undertaken during 42 days for a total of 96 designed to recover agency costs, including the costs of hours. This represents an average of eight hours per month. projett ownership, project operation and maintenance, As a result of these recommendations, controllable load project finance obligations, aJministrative and general costs, w uld have been managed during 10 of the 12 monthly supplemental power purchases and other special obhgations. peak periods, representing potential annual power cost reductions in excess of a half million dollars. The all-requirements rates alm indude a rate stabili:ation funJ whith operates to stabih:e the differences between the At its February 1986 meeting, the board approved a contract all-requirements rates and the projected cost of service from with Southern Engineering, Inc., of Atlanta for the Duke. The fund involves the collettion of revenues from development cf an agency-wide automated load management current bilhngs to pay a portion of project power cost in system. When completed, this system should greatly increase future periods. the accuracy ofload control strategies and result in greater cost reductions. NCNtPA l's all-requirements rates are reviewed and recommended by the agency's six-member rate committee (all of whom are members of the Board of Commissioners) and must be approved by the full board, which includes a Joint Owners rtpresentative from each participant. The agency began Subsequent to NCNtPA l's purchase of a 75 percent bilkng participants u3ing the all-requirements power rates on wnership interest in Catawba Unit 2 (and 37.5 percent July 1,1983. Two rate increases occurred in 1984. interest in the Catawba stations support facilities), in February 1981 Duke sold a 75 percent interest in Catawba On January 1,1985, a new rate schedule RS-3A became Unit I to a group of rural electric cooperatives located in I effective representing a 2.87 percent reduction in the all- the two Carolinas, and in December 1984 sold the requirements rates to reflect the conversion by the North remaining 25 percent of Catawba Unit 2 to P;edmont Carolina General Assembly of the state gross receipts tax Niunicipal Power Agency, w hich represents 10 Sotuh into a sales tax. On June I,1985, all requirements rate Carolina municipalities. i sthedule RS-3B became effective to more accurately reflect the costs of leased delivery facihnes. Although for individual participants this new schedule causes some slight annual Duke Power Company change in power costs, for the agency overall there wa: n Duke Power Company was established in 196'4. It is an change in annual revenues. bvestor-owned electric utility serving approxinwely 1.45 Rate schedule RS-4 became effective October I,1955, as the million customers in North Carchns arid South Carolina. result of Catawba Unit I becoming commercially operable. Its power is produced by a balanced gene ation mix This sthedule increased overall power costs for participants primarily of coal and nuclear plants. P'"*" During the 12 months ended December 31,1%5, Duke's electric revenues amounted to appro6n.ately $2.9 billion, of load Management which approximately 65 percent was derived from North NChlPA 1 participants terresenting approximately 75 Carolina customers. Among inte ter-owned utibties, the percent of the agency's total load are receiving load control company ranks seventh in the Unved 5tates in kilowatt. recommendations from agency staff on days and times of hour sales. NCMPA 1 Power Supply Program CAPACITY W omif (December 31. 1985) uma C ATAWBA UNIT 2 (Nuclear) 1145 Late:86
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C ATAWBA UNIT I (Nuclear) H45 us5
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MCGUIRE UNIT 1 (Nuclear) 1180 12/81 s,..r ;, . . amm MCGUIRE UNIT 2 (Nuclear) g3g 33, , tv m n. . n. l 9 i
FINANCE D eclining interest debt at the rates lowest cost in 1979. since 1985During afforded 1985, NCMPA 1 the three NCMPA 1 issued opportunity to issue series of bonds. The first, Series 1985 in the amount of $450 million, was issued m June at a true interest cost of 9.657 percent. The proceeds of this issue prosided monies to repay at their maturity (January 1,1986) the entire $100 million principal amount of Series 1983 Bond Anticipation Notes, and to continue financing the agency's portion of the costs of constructing the Catawba project. The proceeds of the second and third 1985 issuJs were used to advance reft.nd bonds previously issued at higher interest costs. These issues, $277.69 million Series 1985A issued in November and $637.76 million Series 1985B issued in December, had true interest costs of 9.795 percent and 9.166 percent, respectively. By the advance refunding of a total of $758.655 million of previously issued bonds, the agency was able to reduce its cost of debt evice by approximately $3.5 million per year over the next 35 years. Another important component of NCMPA l's financing program, tax. exempt commercial paper (TECP) marked its first full year in 1985. The agency-continued to meet the TECP program's goals, w hich included obtaining funds at a lower cost, expanding the agency's financial flexibility and reaching a new source of investors for the agency. During the year, $196 million of TECP remained outstanding with an average interest cost since inception (November 29,1984) of 5.196 percent. Since inception of the program, the use of TECP as a financing vehicle has saved the agency in excess of $11 million in interest. As of December 31,1985, outstanding debt of the Catawba project included
$2,136,795,000 of bonds and $106,000,000 of TECP. A'so outstanding was
$100,000,000 of bond anticipation notes which were retired on January 1,1986.
NCMPA 1 currently estimates the need to issue $263.2 million of additional bonds to complete the financing of the project, assuming the projected December 1986, commercial operation date for Cat 2wba Unit 2. Approximately
$220 milhon of these bonds will be used to refund outs,tandmg TECP and the remain &r will be used to pay construction costs. The total funding requirement for the Catawba project is currently estimated at $2.4 billion, which reflects the June 29,~ 1985, commercial operation of Unit 1, and the improved projected commercial operation date of December 1986, for Unit 2.
10
The investment of idle funds is also an important aspect of the agency's operations. During 1935 NCMPA 1 entered into 847 investment transactions totalling $4.002 billion. The investments earned $58.8 million for NCMPA 1 at an average yield of 9.55 percent. As of December 31,1985, the investment portfolio balance of all NCMPA 1 accounts was $762,944,000. When reviewing the agency, an important factor is the involvement of the North Carolina Local Government Commission. This unique state body, a division of the Department of the State Tuasurer, is involved in all aspects of the agency's financing. The commission actually sells the agency's bonds and has stitutory authority to require participating cities to set electric rates at levels sufficient to meet their obligations under the agency's takeer-pay contracts. SHORT TERM PROJECT DEBT (os of 12 3185) 1983 BOND ANTIOPAflON NOTES ($100 miNon) MATURE 1184 b LONG TERM PROJECT DEBT ' (os of 12:3185) o l l EEEIEEEIEEEEEEiEEiB 1983 BOND SERIES ($32 3 memon) 1982 BOND SERIES ($25 milhon) 1981 BOND SERIES ($29 75 minon) EEEEEEEEEEEEEID ; n m79sooo ' l SONDS PErL%DEO $758655000 E5fiMA'ED IUNDING REQUI.7(M{Nf5 $2 4 billcn 11
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e auditors' opinion ' OhcheRoss Board of Cornmissioners North Ccrol'no Municipal Power Agency Number i ., Raleigh, North Carolino
. We have examined the balance cheets of North Carolmc ' Municipal Power Agency Number 1 as of December 31,1985 and 1964, and the related statements of revenues and expenses and changes in fund balance and changes in financial position for tho years then ended. Our examinatPans were made in accordance with generalty accepted auditing s\cndards and, accordingly, included such tests of tne accounting records crtd such other auditing procedures os we considered necessary in the circumstances.
In our opinien, the financial statemen?s referred to above present!airly the financlot position of North Carolina. Municipal Power A]9ncy Number i at
~'
December 31,1985 and 1934, and the results cf its cperctions ono the changes in its financlai p,osition for the years then ended, in conformity with generally accepted accounting pnnciples app!!ed on a cons! stent basis. Our examinations were made for the purpose of forming an opinion on the basic financial statements taken as a whole. The information on poge.s 22,23, , and 24 is presented for purposes of additional analysis and is nc! a required / part of the basic financial statements. Such information has been subiopted to the auditing procedures app!!ed in the examination of the basic Cnancial statements and, in our opinion, the inforrrahon is fojrly stated in cll(noterial respects in relation to the basic financial statements icken as a whole.
%clu. L>. + c. . l Certified Public Accountants Raleigh, North Carolinc !
March 13,1986 i i _ _ _ _ . . - - . - . _ . _ . _ - - - _ - - - . _ -x -
l __ _ - balance sheets December 31 ($000s) 1985 1964 Ik[ SETS ELECTRIC UTILITY P:. ANT (Notes B, C, and E): E!ectric piant in service, net of occumulaied depreciation of $10,424 $ 708,850 $ Constructicq work in progress 710,543 1,214,546 Nuclear fue!, net of occumulated ornortizat. ion of $8,626 fri 1985 104,064 88,5 tC 1 523,457 1 1,303,061 NON-UTillTY PROPERTY AND EQUIPMENT (Notes 8 cnd G) 1,350 SPECIAL FUNDS INVESTED (flotes B ond E): Constructioo fund 330,230 114,580 Bondfund 275,913 240.470 Reserve and contingency fund 21,322 17,084 Decommissioning tund 4,278 2,270, Special reserve fund 1,153 1,136. Commerclci paper account 33,699 128,079 666,595 503,569 CURRENT ASSETS: Funds invested (Notes B and E): Revenus fund 53,791 13,621 Operating fund 13,775 2.468 Supp!emental fund 28,783 3i,703 96,349 47,992 Participcnt accounts rece!vable 11,087 9,845 Rece!vocie from Duke Power Com' pony 10,797 Prepold expenses 2,171 99 120,404 57,936 DEFERRED COSTS: Unamortized debt issuance costs (Note B) 44,219 34,632 Net costs to be recovered froin future billings to pcrticipenis (Note D) 34,949 Development costs 20
$2,390,974 $1.899,216 See notes to financial statemates.
north Earolina__ Hsunicipal
. M'Ar 1 aggn g _ _ l
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number 1 o.combu 31, !
=-
1985 1984 LfA5;LITIES AND FUND BALANCE LONG TERM DERT. i Bond:(Np'ie,s C and f) .
$2,132,205 $1,532,000 l 2,of d on'icipation notes (Nc';c F) 100,000 l Notes paycbre (Ncte G) 1,097 )
Unamo.fized d:scount _( 127,648) (37,362) ! 2,009,654 1,594.618 SPECIAL $UhD5 LIABILITIES Constn,totien po*/abms 523 6,807 Curtzni moturifics of bcnds (Nate E) 4,590 Bcttd en4c!poten ncte$ INote f) 100,000 forcx:mpt.commerclai pdper(Ncte H) 196,000 196,000
~ A6ctued interest on bonds 60,086 69.218 Accrued inforest on bcnd ons!cipation notes 3,250 3,250
_Ar cruic irVerest on comrna'cialpaper 1,693 896 366,142 276.171 CURRENT LIAtillTIES:
, Nct s poyable (Note G) 254 Accounts pcycble 196 9,734 Accruid taxes 977 91 1,427 9,825 i i
DEFERRED REVt.NUES (Note D) 9,350
' COMM;TMENTS AND CONTINGENCIES (Notes C. H, I, and J) )
FUND '8ALANCE 13,751 9.254
$2,390,974 Si,899,218 l
l I l t .
statements of revenues and expenses and changes in fund balance Year Ended December 31, ($000s) 1985 1984 OPERATING REVENUES: Sales of electricity to part;cipants $123,020 $109,970. Sales of electricity to utilliles 83,175 33 206,195 110,003 OPERATING EXPENSES: Operation and maintenance 15,090 Nuclear fuel 10,490 Interconnection services: Purchased power 108,450 79,144 i Transmission and distribution 13,309 12,491 Other 315 347
-122,074 91,982 Administrative and general 5,087 1,477 Gross receipts tax 3,899 6,488 Depreciation 10,512 167,152 99,947 NET OPERATING INCOME 39,043 10,056 INTEREST CHARGES (CREDITS):
Interest expense 175,899 146,359 1 Amortization of debt discount and issuance costs 3,700 2,674 l Investment income (58,777) (46,466) )
, Net interest cap!!alized (Note C) (81,731) (103.976) 39,091 (1,409) !
NET COSTS TO BE RECOVERED FROM FUTURE BILLINGS TO PARTICIPANTS i (DEFERRED f<EVENUES)(Note D) 44,299 (9,066) 1
\
EXCESS OF REVENUES OVER EXPENSES BEFORE EXTRAORDINARY l TEM 44,251 2,399 i EXTRAORDINARY llEM: Loss on bond refundings (Note E) 39,754 EXCESS OF REVENUES OVER EXPENSE 3 4,497 2,399 FUND BALANCE, beginning of year 9,254 6,855_ FUND BALANCE, end of year $ 13,751 S 9,254 See notes to financial statunents.
north l StatetNBNtSOfCh0NSBS carolina
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"""5'5O"I power
~aRency numlier 1 YearEnded.
December 31, 5985 1984 ($000s) SOURCE OF FUNDS: Operations: Excess of revenues over expenses before extraordinary item $ 44,251 S 2,399 14,212 2,674 i Depreciation and amortization Amortization of nuclear fuel 10,490 (Nel costs to be recovered from future billings to participants) (44,299) 9,066 deferred revenues 24,654 14,139 Funds provided by operations Extraordinary item (39,754) 1,363,450 432,000 Proceeds from sale of bonds Increase in special funds habilities 89,971 97,679 Proceeds from notes payable 1,510 Decrease (increase) in development costs 20 (20) 1,439,851 543,798 APPLICATION OF FUNDS: 758,655 275,000 Bonds refunded Additions to electric utility plant 241,310 286,123 Increase (decrease) in special funds invested 163,026 (44,404) Provision for retirement of bond anticipation notes 100,000 99,553 14,284 Net additions to unamortized debt discount and issuance costs Provision for retirement of bonds 4,590 Additions to non-utility property and equipment 1,438 Provision for retirement of notes payable _ 413 1,368,985 531.003
$ 70,866 S 12,795 INCREASE IN WORKING CAPITAL CHANGES IN COMPONENTS OF WORKING CAPITAL:
Increase in current assets: Funds invested $ 48,357 $ 14,569 Participant accounts receivable 1,242 1,462 Receivable from Duke Power Company 10,797 Prepaid expenses 2,072 41 62,468 16,072 (Increase) decrease in current liabilities: Notes payable (254) Accounts payable 9,538 (3,416) (886) 139 Accrued taxes 8,398 (3,277)
$ 70,866 S 12,795 INCREASE IN WORKING CAPITAL ,
See notes to financial statements. 1
notes to
'nancial statements '
Years Ended December 31,1985 and 1984 GENERAL MATTERS North Carolino Municipal Power Agency Number 1 (ogency)is a joint agency organized and existing pursuant to Chapter A gonization of the 159B of the General Statutes of Northogency, to finance, Carolina to enable municipalities owning electricconstruct, operate, distribution systems, through the or-ogency has twer,ty members, nineteen (participonts) which receive power from the ogency and one which receives power from Duke Power Company (Duke). The ogency hos entered into several ogreements with Duke which govern the purchase, ownership construction, operation, and main-tenance of the project: The Purchase, Construction, and Ownership Agreement provides, among other things, for the agency to purchase a 75% undivided ownership interest in Unit 2 of the Cotowba Nuclear Station (station) and a 37.5% undivided ownership interest in certain support facilities of the station. However, by virtue of various provisions in the Interconnection Agreement and the Operation and Fuel Agreement, the ogency (1) bears the costs of ocquisition, construction, operation, and molntenance of 37.5% of Unit 1 and 37.5% of Unit 2 ond (2) has the some proportionate right to the output of and beors the risks associated with the lock of operoflon of such units The ogency's shore of costs ossociated with Unit i and the support facilities were transferred from construction work in progress to e!ectric plant in service otter Unit i began commerclol operation on June 29,1985. The Interconnection Agreemerit provides for the interconnection between Duke's electric power system and the agency's project and for the exchange of power between Unit 1 and Unit 2 of the station and between the Catawba units and Duke's McGuire Nu-clear Station. The agreement also provides for the purchase and sole of capacity and energy, and the tron & mission of energy to I the agency's porticipants. I The Operation and Fuel Agreement provides for Duke to operate, maintain, and fuel the station; to make renewals, replacements, and capitol additions as approved by the ogency; and for the ultimate decommissioning of ina sto? ion at the end of its useful lifa The ogency's acquisition of its ownership interest is being financed by the issuonce of electric reveriu9 txnds pursuant to Resolution No R 16-78, os amended,(resolution) of the Board of Commissioners of the agency. The resolution estobbsbes special funds to hold proceeds from debt issuance, such pioceeds to be used for costs of acquisition and construction of the project, and to establish certain reservet The resolution also establishes special funds in which project revenues are deposited and from which pro'ect operating costs, . debt servica, and other payments relating to the project are mode. I The ogency hos entered into o ProPct Power Sales Agreement and a Supplemental Power Sales Agreement with each of the l participontt These ogreements provide for each participant to purchase from the ogency its oli requirements bulk power supply, in i excess of power allotments from Southeastern Power Administration (SEPA), which includes its total shore of project output (as defined by ttle Piolect Power Sales Agreerr.ent). The agency is obligated to provide oil electric power required by each porticipant of tr.3 respective delivery points Each participant is obligated to pay its shore of the operating and debt service costs of the project. In July 1983, the ogency's porticipants began receiving their total electric power, exclusive of power allotments from SEPA, from the ogency Such power is provided by project output together with supplemental purchases of power from Duka Pursuant to two 'Rellobility Exchanges" contclnod in the Interconnection Agreement, project output will be provided in essentially equal amounts from Cotowba Untt 2 and three other nuclear units (Cotowba Unit 1. McGuire Unit 1, and McGuire Unit 2) In operation on the Duke system, all of which are of strNior size and capacity The reliability exchanges are intended to make more relloble the supply of capacity and energy to the ogency in the amount to which the agency is entitled pursuant to its ownership Interest in Catowba Unit 2, and to miti. gote potential adverse economic effects on the agency and the participants from unscheduled outages of Cotowbo Unit 2. C7respondingly, the agency bears risks resulting from unscheduled outoges of any Cotowba or McGuire Unit. SIGNIFiCANT ACCOUNTING POLICIES Basis of Accounting B foryThe Commission, and accounts of the ogency are molntched are with in accordance intheconformity Uniform System of Accounts with genero!!y of the Federal Energy Regulo- ac Electric Plant in Seevice All direct and indirect expenditures assoc!ated with the development and construction of the agencyt 37.5% cost responsibility associated with Cotowbo Unit i now in commercial operation, und tas reAoted irnerest in certain support facilities of the station, including interest ex,nense net of Imestment income on funds not yet expended, have been transferred from construction work in progress to electric plant in service of celginot cost Depreciation commenced as of June 29,1985, the date of commerciol operation of Cotowba Unit 1, and is Colculoted on a shoight-line basis cher thirty 4tve yoors Corwtruction Work n Progress All direct and indirect expenditures associated with the deselopment and construction of Cotowba Unit 2, including interest expense net of investment locome on funds r of yet expended, are capitolized os construction work in progress until such time os Unit 2 becomes operational. Dopreciation expense will te recognued on Unit 2 when operations commence, currently scheduled for late 1986. Nuclear Fuel All d; rect und indirect expenditures related to the purchase and construction of nuclear fuel cores, including interest expense net of Imestruent income on funds not yet expended, are capitalized until such time os the cores are placed in the reactor and the reactor becomes operationot At that time they are omortized and chorged to fuel expense on the units of production method. Amortization of nu-clear fuel costs begon lor the ogency's shore of Cotowba Unit 1 when it become operational on June 29,1985 and includes a provision of $1,664,000 for est:moted disposot costs Hon 47ttlity Property and Equipment G) direct and Irerect expenditures related to purchos.ng and installing on in-house computer, jointly owned with North Carolino Eastem Municipalibwer Agency (NCEMPAL are capitolized and are being depreciated cher four years Also included is the land, jointly owned with NCf MPA, to be uwd as the site for administrotne offices for both ogencies and ElectnCities of North Carolino, Inc (ElectnCatiest
! north carolina municipal ~ power agency number i SIGNIFICANT ACCOUNTING POLICIES (continued) Irwestments included in the funds invested categories are stated at amorttzed cost, which opproximates market wluet plus occrued Interest. Irwestments include securities of the US Gommment and govemmental agencies and securities collaterolized by securtiles of the US Goernment and governmental agencies Unomortland Debt leeuence Costs Uncmortized debt issuance costs shown net of occumulated amortization, are deferred and amortized on a strolght-line basis over the term of the related debt. Taxes income of the ogency is exempt from Federal income tax under Section 115 of the Internal Revenue Code Chapter 1598 of the General Statutes of North Carolino exempts the agency from property and franchise or other privilege taxes in lieu of North Carolino property taxes the agency will pay on omount which would otherwise be ossessed on the non-utility property and equipment cf the ogency. South Coro-lino does not require the payment of property taxes on generating units until they begin commercial operation. Property taxes will be due on Cotowbo Unit i beginning in 1986. During 1984, in lieu of a franchise or privilege tax, the ogency pold to North Corolina on amount equal to 6% of the gross receipts from sales of electricity to porticipants Effectie January 1,1985, the gross receipts tax rote was reduced to 322%. Decloselficottons Cericin reclassifications have been made to the prior yeart financlot statements to conform to classifications used in the current year. CONSTRUCTION PROGRAM The ogency hos substantloi commitments to Duke in connection with the construction of the station. The ogency) direct costs of C construction, including nuclear fuel but excluding capitolized
$1.117.520.000. These costs together with prowsions for working capital and debt service costs during the construction period, will I
require the use of the proceeds from the issuance of up to on estimated $2,400.000.000 of Cotowbo Electric Reenue Bonds (bonds). Any future changes in the construction schedule may offect the cost of such facihties and therefore offect the amount of bonds to be issued. Interest costs of $135,336.000 ond $146.093.000 were copitalized as port of the cost of power plants under construction during 1985 ond 1934, respectiwly. The capitalized interest costs were offset by $53.605.000 and $42,117,000 in interest earned on related unexpended bond proceeds for 1985 ond 1984, respectively. NET COSTS TO BE RECOVERED FROM FUTURE BILLINGS TO PARTICIPANTS Rotes for power billings to porticipants are designed to cover the agency) " costs" as defined by (1) the resolution, (2) the Project D Ebwer Soles Agreements and (3) the Supplemental her Sales A provide for the debt requirements operating funds and reserves os specified by the resolution and power soles agreements Recognit on of txpenses" (defined according to GAAP) which are not included as tosts" is deferred to such period as it is intended that such txpenses" be covered by rotes Recognibon of those " revenues" which under the resolution and the power sales agreements, are collected to cover tosts" that are not txpenses" is deferred to such period as it is intended that such " revenues" coer 1 expenses" All rates must be oppromd by the boord. Rates are designed on on annual basis and are reviewed quarterly. If determined to be inadequate, rotes may be revised. Net costs to be recovered from future billings to participonts include the lollowing (in thousands of dollors): Year Ended incepflon to December 31, December 31, 1965 1984 1985 1964 GAAP ttoms Not included in Billings to Porticipants: Interest costs not capitalizable $43,047 $ 2.940 $47,457 $ 4.410 Loss on bond refundings 39,754 39,754 Depreciation 10,512 10,512 Amortization of debt discount and issuance costs 930 930 TECP dealer and bank fees 197 197 94,440 2.940 98,850 4.410 Bond Resolution Requirements included in Billings to Participonts: Speciol funds deposits 48,297 11.334 61,374 13.077 Debt service 159 159 investment income not ovo'loble for operating purposes 2,290 672 2,973 683 Reserve and contingency fund voluotion (605) (605) 50,141 12.006 63,901 13.760 N3 costs to be recovered from future billings to porticiponts (de-ferred revenues) $44,299 $(9.066) $34,949 $(9.350)
notes to
'nancial staternents Years Ended December 31,1985 and 1984 BONDS The agency hos been authorized to issue bonds in accordance with the terms, conditions, and limitotions of the resolution.
E The total to be issued is to be sufficient to pay the costs of ocquisition and construction of the project, as defined, ondlor for other purposes set forth in the resolution. On November 6,1985, the Local Govemment Commission of the State of North Coro. lino (LGC) opproved the issuonce of such bonds up to o maximum principal amount of $2,400,000,000; odditional LGC approval must be obtained for the issuance of bonds in excess of this amount. As of December 31,1984, the ogency had issued $1,532,000,000 of the total authorized bonds. During 1985, on additional $1,363,450,000 was issued (Series 1985,1985A, and 19858) with $758.655,000 (portions of Series 1981,1982,1983, and 1984, and the remainder of Series 1981A) refunded, bringing the total outstanding bonds at December 31,1985 to $2,136,795,000 os follows (in thousands of dollars): SERIES 1978 SERIES 1985 5.2% to 6.45% maturing annually from 1986 to 2000 $ 77,905 7.25% to 9.1% maturing annually from 1991 to 2000 $ 52,445 6.6% maturing in 2003 with annual sinking fund 9.375% maturing in 2005 with annual sinking fund requirements beginning in 2001 25.870 requirements beginning in 2001 40,000 6.7% maturing in 2008 with annual sinking fund 9% maturing in 2013 with annual sinking fund requirements beginning in 2004 55,935 requirements beginning in 2005 136,760 6.875% maturing in 2020 with annual sinking fund 9.5% maturing in 2019 with annual sinking fund requirements beginning in 2009 240,290 requirements beginning in 2014 170,795 400,000 7% maturing in 2020 with annual sinking fund requirements beginning in 2019 50,000 450,000 SERIES 1979 5.75% to 6.9% maturing annually from 1986 to 2000 27,200 7.1% maturing in 200.e with annual sinking fund SERIES 1985A requirements beginning in 2001 12,905 7.3% to 9.2% moturing annually from 1991 to 2000 8,510 7.375% maturing in 2020 with annual sinking 9.375% maturing in 2005 with annual sinking fund fund requirements beginning in 2005 109.895 requirements beginning in 2001 21,005 150.000 9% maturing in 2014 with annual sinking fund requirements beginning in 2006 95,270 9.625% maturing in 2019 with annual sinking fund SERIES 1981 requirements beginning in 2015 113,360 9.4% to 10% maturing annually from 1991 to 1995 4,750 7% maturing in 2020 39,545 8.5% maturing in 2017 with annual sinking fund 277,690 requirements beginning in 2011 25,000 SERIES 19858 7.4% to 8.75% maturing annually from 1991 to 2002 109.865 SERIES 1982 8.75% moturing in 2005 with canual sinking fund 7.5% moturing in 2018 with annual sinking fund requirements beginning in 2003 61,935 requirements beginning in 2009 25,000 8.5% moturing in 2017 with annuoi sinking fund requirements beginning in 2006 338,345 SERIES 1983 6% maturing in 2020 with annual sinking fund 8% to 9.25% maturing annually from 1991 to 1996 7,300 requirements beginning in 2018 125,615 7% maturing in 2018 with onnual sinking fund 635,760 requirements beginning in 2009 25.000 g 32,300 4.590 Less current moturities of bonds
$2.132,205 SERIES 1984 8.5% to 10.2% maturing annually from 1991 to 1998 36,295 10% maturing in 2014 with annual sinking fund requirements beginning in 2011 50,000 7B% rr.aturing in 2019 with annual sinking fund requirements beginning in 2017 50.000 136.295 Certain proceeds of the Series 1985A and 1985B Bonds were used to estabilsh truns for refunding portions of the Series 1981,1981 A, 1982,1983, and 1984 Bonds, totalling $95,250,000; $25,000,000; $175,000,000; $167,700,000; and $295,705,000, respectively. Under both Refunding Trust Agreements, obligations of or guoronteed by the United States have been placed in irrevocable Refunding Trust Funds maintained by the Bond Fund Trustee. The government obilgations in the respective Refunding Trust Funds, along with the interest earnings on such obligations, will be sufficient to pay all interest on the refunded bonds when due and to redeem all refunded bonds of various dates prior to their originot moturities, in amounts ranging from por to a maximum redemption price of 103%. The monies on deposit in each Refunding Trust Fund, including the interest earnings thereon, are pfedged solely for the benefit of the holders of the refunded bonds. Since establishment of each Refunding Trust Fund, the refunded bonds are no longer considered outstond:ng obligations of the ogency.
Under GAAP, the agency 15 required to recognize a loss on refundings, aggregating $93,300,000 for both refundings. of this omount,
$53.546,000 hos been capitalized as construction work in progress. The remaining $39,754,000 has been recorded as on extraordinary itCm, is included in net costs to t e recovered from future billings to participants, and is to be recovered through the principo!
payments of debt service on the Series 1985A and 1985B Bonds. As o result of the refundings, the agency wilt benefit frem reduced debt service costs over the lives of the Series 1985A and 19858 Bonds.
north carolina municipal power BONOS (continued) agency" E Interests on the bonds is payable semi-annually. The bonds are subject to redemption prior to moturity of the ophon of the agency, on or otter the following dotes of a mox!murn of 403% of tho resoective pnncipal amounts: Sertos 1978 January 1,1989 Sorles 1979 January 1 iC90 Series 1981 January 1,1991 Series 1982 and 1983 January 1,1993 Series 1984 January 1,1994 Series 1985 January 1,1995 Series 1985A and 19858 January 1,19% The bonds are special obilgotions of the ogency, payable sctely trem ond secured solely tr/ (1) prcject reverraes (as delined by the resolution) otter payment of project operating Upenses (os defined by the resolution) orid (2) other monies and securtt'es pledggd for payment therect by the resolution. The resolution requires the ogencv to dercsit into speclot funds oli proceeds of bonds isttied Ond oli project rev9eues (os detsned by the resolution) generated as a rest,.it of the Project Tower Sales Agreements and Interconnect.on Agreemerut. The parpose d the individual funds is specificotty defhed in the reWution. Maturities of outstonding bonds arough 1990 and thereoffer ore os follows (in thousan<1s of dollorth 1986 $ 4.590 1987 4.840 1988 5,100 1987 5,385 1990 5,a'N Thereafter 2,111,1 %
$2.136,795 BOND ANTICIPATION NOTES Bond anticipo9on notes in the oggrego's principot amount of $100,000,000 matured January 1.1986 and were retired stom F the proceeds of tne Series 1985 Boncs, /T s NOTES PAYABLE l Q-j in March 1985, the ogenci ogether t with NCEMPA, borrowed $1.600,000 to finance the acquisition of a computer jo%tly
(' / owned by the ogency and NCEMPA. Tne ogency's ob'igation to repoy ttus borrowing, which is currently not collateral; zed, is ( / limited to $800,000, plus accrued in'erest thereon ci o rate of 7.85% per annum, and is being rapoid in equol monthly installments including interest, of 320,000 through April 1989. In April 1965, the agency, together with NCEMPA. bocowed $1,420,000 to finance the acquisit!on of evol estate }ointly owned we NCEMPA, which is proposed to be tho site of administratie offices for the two agencies and ElectrlCities. The ogsneys obligation to repoy this borrowing, which is current'y not colloteroilzed. Is lwnitod to $710 000, plus ocerued intereit thereon of the rcte of 8.15% per Ennurn. and is being repold in equal monthly Installments, including interest, of $10,000 through April 1989 with a payment of $410.000 in May 1989. Th] outstanding balonce on these notes is $1.351,000 at December 31,1985. The ogency has authorized the issuance of tax-exempt commerctot paper UTCP) to provide interim financ ng in on amouSt H TAX EXEMPT COMMERCIAL PAPER not to exceed $200,000,000. As of December 31 1985 the agency had $196.000.000 TECP outstanding with on overope maturity of 112 days ond on overage interest rote of 5137%. To provide funds to pay principal and interest on th s TECP when dua the agency has a letter of credit with o Dank for which the ugency pays a fee of cpproximately $625.000 per yect there were no borrowmgs against tne le'ter of credit of December 31,1985. COMMITMENTS The ogency hos o contractual agreement with Electricities whereby E'ectricities provides, of cost, genero' management I services to the agency This agreement is for thiee years continuing through December 31. '986, and shall ne ctfon'oticolly tenewed for successive three. year periods unless terminated by one year's nct!ce by either porty prior to the ervd of the controct term. Such notice has not been tendered by either por*y. For the years ended December 31,1985 and 1984, the agency po;d ElectriCities $1,932,000 ond $1.463 C00. rce,3ective'y of which j
$2'2,000 ond $231,000, respectively, has been capitalized as construction work in progress.
CONTINGENCIES J A full oower hcense for Cotowbo Unit 1 was issued by the Nuclear Regulatory Commission (NRC) on Januory P,1925. Duka hos orptied to the NRC for on operating license for Cotowba Unit 2. The license is expected to be recofved prior to the end et it e construction period. However, there is no assurance that the NRC will issue o license and Cato sbo Unn 2 connot be placed into service without it. The P(ice-Anderson Act timits the public l'obility for o nuclear incident at a nuclear generating valt to $653,000,000, which omount h to be coveted by privote insurance and agreements of indemnity wito the NRC Such prtwte insurance and agreements of indemnity . cre corried by Duke on behalf c4 cIl co owners of the station. The terms of this coverage require the owners of olilicemed locillflos 'o i provide up to $5,000.000 per year per unit owned in the event of any nuclear incident Irwiving any licensed bcility in P50 nomon with o I moxl mum of $40.000.000 per voor per unit owned in the event of more than one incident. It any such paymets are required derthe i sto9on hos received its operatirig license, the ogency would be liable for 37.5% of those payments oppt;coble to the station. Property domoge insurance coverage presently avo!!Obie for the station has a maximum benefit limited to $1090,000.000. Such ovo.!- oble coverage hos been obtained. l (
c schedules of changes in assets offunds invested ( Funds 5 invested Bond and Power i January 1, Note Billing Investment ($000s) 1984 Proceeds Receipts income Disbursements
- CONSTRLClON FUND:
Construction account $120,873 $ 86,859 $ $ 7,733 $(234,856) Construction interest account 151,755 2,032 10,694 Construction revolving account 102 9 (2) Note interest account 14,908 457' (11,500) Note interest 1983 occount 17,572 1.169 (6,500) 305.210 88,891 20,062 (252,858) BOND FUND: Interest account 65,624 5,440 491 '(134,702) Reserve account 160,200 8,612 18,194 Principal account 225.824 14,052 18,685 (134,702) RESERVE AND CONTINGENCY FUND 15,299 861 1,716 DECOMMISSIONING FUND 613 150 SPECIAL RESERVE FUND . 1,027 109 COMMERCIAL PAPER ACCOUNT > 196,000 1,583 (210) REVENUE FUND: Revenue account 3.218 22,037 413 (377) Rote stabilization account 663 672 3,881 22.037 1,085 (377)
' OPERATING FUND:
Wotiting capital account 2,245 171 (11,496) Fuel account 2,245 171 (11,496) SUPPLEMENTAL FUND ?',2 % 86,566 2.905 (85,065) w..,s (*dU $299,804 $108,603 $46,466 $(484,708)
.t '
north caroljna
.muntctpal power ggency number 1 Funds Funds Invested Bond and Power invested December 31, Note Billing investment December 31, Transfers 1984 Proceeds Receipts income Disbursements Transfers 1985 $ 38,423 $ 19,032 $197,742 $ $ 7,627 $(118,702) $ . 57.913 $163.612 (80.248) 84,233 162,943 12,746 (97,288) 162,634 (5) 104 7 (10) 101 (3,865)
(1,030) 11.211 520 (6,500) (1,348) 3,883 (46,725) 114,580 360,685 20,900 (125,202) (40,733) 330,230 132,466 69,319 . (21,255) 235 (138,436) 148,262 58,125 (15,855) 171,151 40,700 20,687 (19,400) 213,138 186 4,464 4,650 116,611 240,470 19,445 21,108 (138,436) 133,326 275,913 (792) 17,084 4,070 1,955 (9) (1,778) 21,322 1,507 2,270 289 1,719 4,278 1,136 116 (99) 1.153
'(69,344) 128,029 9,407 (10,456) (93,281) 33,699 (21,954) - 3.337 22.606 365 18,814 (40,089) 5.033 9,149 10,484 2.291 35,983 48,758 (12,805) 13,821 22,606 2,656 18,814 (4,106) 53,791
.11.548 2,468 349 (26,947) 30,720 6,590 7,185 7,185 11,548 2,468 349 (26,947) 37,905 13,775 31,703 1,510 99.314 1,997 (72,788) (32,953) 28,783
$ $551,561 $385,710 $121,920 $58,777 $(355,024) $ $762,944
a
" "h schedules of revenues and carolina expenses per bond resolution *","$"'
o and other agreements W,"g,j Year Ended Yoor Ended December 31, December 31, 1985 1984 ($000s) Project Supplemental Total Project Supplemental Total REVENUES: Sales of electricity to participants $ (3,120) $126,135 $123,015 $22,880 $87,084 $109,964 Sales of electricity to - utilities 83,175 83,175 33 33 Investment revenue available for opera-tions 770 2,112 2,882 770 2,907 3,677 Other revenues 5 5 1 5 6 80,825 128,252 209,077 23,684 89.996 113,680 EXPENSES: Operation and maintenance 15.090 15,090 Nuclear fuel 10,490 10.490 Interconnection services: Purchased power 3,854 104.596 108,450 10,307 68,837 79,144 Transmission and distribution 13,309 13,309 12,491 12,491
!Other 315 315 347 347 3,854 118,220 122,074 10,307 81,675 91,982 Administrative and general-Duke 2,873 2,873 Administrative and i general-agency 926 1,288 2.214 670 807 1,477 '
Gross receipts tax (100) 3,999 3,899 1,373 5,115 6,488 Debt service 4.590 248 4,838 Reserve and contingency fund valuation (605) (605) Special funds deposits: Decommissioning fund 1,769 1,769 1,507 1,507 Revenue fund 349 349 171 171 Rate stabilization fund 40,919 40,919 9,656 9.656 Reserve and contingency fund 670 670 43,707 43,707 11,334 11,334 80,825 123,755 204,580 23,684 87,597 111.281 EXCESS OF REVENUES OVER EXPENSES $ $ 4,497 $ 4.497 $ $ 2,399 $ 2,399
L l AW NCMPA 1 North Carolina Municipal Power Agency Number i 3100 Smoketree Court, Suite 600 P. O. Box 29513 Raleigh, North Carolina 27626-0513 _ _ _ _ _ _ _ _ _}}