ML20213G847
| ML20213G847 | |
| Person / Time | |
|---|---|
| Site: | La Crosse File:Dairyland Power Cooperative icon.png |
| Issue date: | 05/08/1987 |
| From: | Mueller R DAIRYLAND POWER COOPERATIVE |
| To: | NRC OFFICE OF ADMINISTRATION & RESOURCES MANAGEMENT (ARM) |
| References | |
| LAC-12203, NUDOCS 8705180483 | |
| Download: ML20213G847 (15) | |
Text
.F' Z-e D
DA/RYLAND hhh[ COOPERATIVE. P O box 817
- 2615 EAST AVE. SO
- LA CROSSE 1608) 788-4000 May 8, 1987 RE:
LAC-12203 DOCKET NO. 50-409 l
U.S. Nuclear Regulatory Commission Attn:
Document Control Desk Washington, D.C. 20555 Gentlemen:
DAIRYLAND POWER COOPERATIVE LA CROSSE BOILING WATER REACTOR (LACBWR)
PROVISIONAL OPERATING LICENSE NO. DPR-45 FINANCIAL STATEMENTS AND AUDITORS' REPORT
Reference:
1) 10 CFR 50.71.(b)
In accordance with the requirements of Reference 1, we are forwarding three (3) copies of the annual financial report and certified financial j
statements for Dairyland Power Cooperative for the years 1986 and 1985. We will forward our 1986 Annual Report to you as soon as it is completed.
Sincerely, DAIRYLAND POWER COOPERATIVE
/
R bert C. Mu. ler Assistant General Manager and Controller RCM:pw Enclosures cc:
C. Bert Davis, Regional Administrator, NRC-DRO III NRC Resident Inspector - LACDWR Tony Bournia, NRC Project Manager J. Parkyn, LACBWH 87pS1f
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ARTHUR o
ANDERSEN i
i i
Dairy anc 30wer Coooerative anc Suasic'iary O
ConsolidatedFinancialStatements as of December 31,1986 and 1985 Together with Auditors' Report 1
i O
AltTIIUH ANDEIf SEN & CO.
StINNI:A POI.!S, blINNI SOTA l
To the Members and the Board of Directors, Dairyland Power Cooperative:
We have examined the consolidated balance sheets of DAIRYLAND POWER COOPERATIVE (a Wisconsin cooperative) AND SUBSIDIARY as of December 31, 1986 and 1985 and the related g
consolidated statements of revenues, expenses and patronage capital and cash flow for the years then ended.
Our examinations were made in accordance with generally accepted auditing standards and, accordingly, included such tests of the accounting records and such other auditing procedures as we considered necessary in the circumstances.
In our opinion, the consolidated financial statements referred to above present fairly the financial position of Dairyland Power Cooperative and Subsidiary as of December 31, 1986 and 1985 and the results of their operations and their cash flow for the years then ended, in conformity with generally accepted accounting principles applied on a consistent basis.
ARTHUR ANDERSEN & CO.
March 6, 1987.
O
DAIRYLAND POW)
.(
CONSOLIDATED BALANCE (In The ASSETS 1986 1985 ELECTRIC PLANT (Notes 1, 2, 7 and 10) :
Plant and equipment, at original cost
$499,041
$489,773 Less-Accumulated depreciation (197,911)
(182,866) 301,130 306,907 j
i Construction work in progress 4,786 5,585 i
Nuclear fuel, at amortized cost 16,446 18,261 Total electric plant 322,362 330,753 OTHER ASSETS:
Investments (Note 1) 32,271 25,816 Investment in fiber optics venture (Note S) 6,351 1,272 Investments in capital term certificates of National Rural Utilities Cooperative Finance Corporation 9,856 9,856 Pollution Control Bond proceeds on deposit with trustee 1,869 2,111 Deferred charges 5,087 2,018 Total other assets 55,434 41,073 CURRENT ASSETS:
Cash and temporary cash investments 25,951 30,111 Accounts receivable-Energy sales 15,002 15,972 Other 1,850 919 Inventories, at average cost-Fossil fuels 40,924 32,850 Materials and supplies 9,516 8,942 Prepaid expenses 915 1,009 Total current assets 94,158 89,803
$471,954
$461,629
==
==
The accompanying notes are an integral 6'
- R COOPERATIVE SHEETS--DECEMBER 31 u Enda)
CAPITALIZATION AND LIABILITIES 1986 1985 CAPITALIZATION:
Member and patron equities-Membership fees 10 10 Patronage capital (Note 4) 71,505 69,670 Total member and patron equities 71,515 69,680 Long-term obligations, less current maturities (Note 2) 353,718 352,094 Total capitalization 425,233 421,774 DEFERRED CREDITS (Note 5) 21,989 14,032 COMMITMENTS AND CONTINGENT LIABILITIES (Note 6)
CURRENT LIABILITIES:
Current maturities of long-term obligations 8,185 7,712 Advances from member cooperatives (Note 3) 7,278 6,235 Accounts payable 2,734 4,769 Accrued liabilities-Payroll and vacation pay 2,081 1,970 Taxes ef{
1,310 2,079 Interest 937 1,332 Other APERTURE 2,207 1,726 CARD Total current liabilities 24,732 25,823 Also AvaMahle On
$471,954
$461,629 Aperture Card part of these consolidated balance sheets gisovf'3-o/
p
Tl DAIRYLAND POW 1 CONSOLIDATED BALANCE (In Tho ASSETS 1986 1985 ELECTRIC PLANT (Notes 1, 2, 7 and 10) :
Plant and equipment, at original cost
$499,041
$489,773 Less-Accumulated depreciation (197,911)
(182,866) 301,130 306,907
/ U\\
Construction work in progress 4,786 5,585 Nuclear fuel, at amortized cost 16,446 18,261 Total electric plant 322,362 330,753 OTHER ASSETS:
Investments (Note 1) 32,271 25,816 Investment in fiber optics venture (Note 9) 6,351 1,272 Investments in capital term certificates of National. Rural Utilities Cooperative Finance Corporation 9,856 9,856 Pollution Control Bond proceeds on deposit with trustee 1,869 2,111 Deferred charges 5,087 2,018 Total other assets 55,434 41,073
, CURRENT ASSETS:
i Cash and temporary cash investments 25,951 30,111
}
Accounts receivable-i Energy sales 15,002 15,972 Other 1,850 919 f
Inventories, at average cost-Fossil fuels 40,924 32,850 Materials and supplies 9,516 8,942
/
Pr ep&id ' expenses 915 1,009 f;
Total current assets 94,158 89,803
/
$471,954
$461,629 j/
==
==
The accompanying notes are an integral
$1' i
DAIRYLAND POWER COOPERATIVE CONSOLIDATED STATEMENTS OF REVENUES,
. C-EXPENSES AND PATRONAGE CAPITAL FOR THE YEARS ENDED DECEMBER 31 (In Thousands) 1986 1985 OPERATING REVENUES:
Sales of electric energy
$155,325
$159,085 Other 896 708 Total operating revenues 156,221 159,793 OPERATING EXPENSES:
Fuel 72,737 80,821 Purchased and interchanged power, net 3,968 1,823
()
Other operations 23,708 22,657 Maintenance 8,836 9,603 Depreciation and amortization (Notes 1 and 10) 16,453 16,169 Taxes 5,651 5,780 Total operating expenses 131,353 136,853 Operating margin before interest and other deductions 24,868 22,940 INTEREST AND OTHER DEDUCTIONS:
Interest 24,552 24,655 Allowance for borrowed funds used during construction (Note 1)
(1,105)
(1,040)
Other 511 854 f
Total interest and other deductions 23,958 24,469 s,
Operating margin (deficit) 910 (1,529)
NONOPERATING MARGIN, principally investment income 4,853 4,911 Net margin 5,763 3,382 PATRONAGE CAPITAL, beginning of year 69,670 69,257 RETIREMENT OF CAPITAL CREDITS (Note 4)
(3,928)
(2,969)
PATRONAGE CAPITAL, end of year, including margins assignable of $5,763 in 1986 and $3,382 in 1985
$ 71,505
$ 69,670
==
==
The accompanying notes are an integral l
d$m part of these consolidated statements I
i l
I l
~ ~., _
p-DAIRYLAND PO CONSOLIDATED STAT FOR THE YEARS E (In Th CASH FLOW PROVIDED FROM (USED FOR) :
Operations-Net margin Add noncash items:
Depreciation and amortization Amortization of nuclear fuel Other Change in current operating items:
Accounts receivable Inventories Prepaid expenses Accounts payable Accrued liabilities Cash provided from operations Retirement of capital credits Net cash provided from operations Financing activities-Proceeds from long-term obligations Pollution Control Bond proceeds withdrawn from truste Repayments of long-term obligations Cash provided from (used for) financing activit Investing activities-Electric plant additions, net Increase in other investments Investment in fiber optics venture Other, net Cash used for investing activities Increase (decrease) in cash and temporary cash The accompanying notes are an integral L
eu
y 3R COOPERATIVE hENTSOFCASHFLOW DED DECEMBER 31 usands) 1986 1985
$ 5,763
$ 3,382 16,453 16,169 2,751 6,259 2,792 1,942 39 (859)
(8,648) 12,734 94 (129)
(2,035) 465 (572)
(3,854) 16,637 36,109 (3,928)
(2,969) 12,709 33,140 9,980 5,639 e
242 1,187 (7,904)
(9,118)
Les 2,318 (2,292) g (12,552)
(16,212)
(6,455)
(4,016)
APERTURE (5,079)
(1,272)
CARD
__4,89?
181 (19,187)
(21,319)
Kiso AvaMable On investments
$ ( 4,16 0)
$ 9,529 Aperture Card
=
=
part of these consolidated statements 37o5 1864%3 o 1
DAIRYLAND POWER COOPERATIVE NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (1)
Summary of Significant Accounting Policies-Organization:
Dairyland Power Cooperative (the Cooperative) is an electric generation and transmission cooperative association organized under the laws of Wisconsin.
The Cooperative provides wholesale electric service to Class A members engaged in the retail sale of electricity to member consumers located in Wisconsin, Minnesota, Iowa, Illinois and Michigan and provides electric and other services to Class C, D and E members.
The accounting records of the Cooperative are maintained in accordance with the uniform system s
of accounts prescribad by the Federal Energy Regulatory Commission as adopted by the Rural Electrification Administration (REA), the Cooperative's principal regulatory agency.
The consolidated financial statements include the accounts of the Cooperative and its wholly owned subsidiary, Curtis Telecommunications, Inc. (CTI).
All intercompany accounts and transactions between the Cooperative and CTI have been eliminated.
Depreciation:
Depreciation is provided based on the straight-line method at rates which are designed to amortize the original cost of properties over their estimated useful lives and include a provision for the cost of removal and decommissioning of the properties.
The provision for depreciation averaged 3.8% of depreciable plant balances for 1986 and 1985.
Amortization of Nuclear Fuel:
i The cost of nuclear fuel is charged to fuel expense based on heat produced for the generation of elec-tricity.
The cost of disposal of spent fuel is recorded over the lives of individual assemblies.
Income Taxes:
The Cooperative is exempt from federal and state income taxes and, accordingly, no provision for such taxes is reflected in the consolidated financial statements.
b'.
DAIRYLAND POWER COOPERATIVE D
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (1)
Summary of Significant Accounting Policies (continued)-
Allowance for Funds Used During Construction:
-Allowance for. funds used during construction represents the cost-of borrowed funds used for construction purposes and is capitalized as a component of electric plant.
The amount of such allowance is determined by applying a rate to the balance of nuclear fuel in stock and in fabrication and certain' electric plant additions under con-struction.
The rates used varied from 6.6% to 11.1% and from 9.7% to 11.0% in 1986 and 1985, respectively, depending on the source of funds.
()
Property Additions:
The cost of renewals and betterments of units of property (as distinguished from minor items of property) is charged to electric plant accounts.
The cost of units of property retired, sold, or otherwise disposed of, plus removal costs, less salvage, is charged to accumulated depreciation.
No profit or loss is recognized in connection with ordinary retirements of property units.
l Maintenance and repair costs, and replacement and renewal of minor items of property'are charged to operating expenses.
Investments:
1 Investments of the Cooperative consist primarily of commercial paper and government obligations.
All
()
investments are recorded at the lower of aggregate cost or quoted market value.
The carrying value of the investments is adjusted for amortization of premiums and discounts.
O _-_
DAIRYLAND POWER COOPERATIVE r
p.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (2)
Long-Term Obligations-Long-term obligations at December 31 consist of the following (in-thousands):
1986 1985 REA Obligations,.2%
$ 77,302
$ 82,076 REA Obligations, 5%
33,973 34,519 FFB Obligations,'7.7% to 10.8%
208,668 200,142 NRUCFC Obligations, 8%
6,810 7,106 City of Alma, Wisconsin, Pollution Control Bonds:
Fixed rate (6.383%)
11,910 12,185 Adjustable rate (3.98% at December 31, 1986) 13,900 13,900
{}'
City of La Crosse, Wisconsin, Industrial Development Revenue Bonds, adjustable rate (3.98% at December 31, 1986) 4,160 4,160 Capitalized lease obligations, principally at implicit interest rates of 7%, due in varying amounts to 1995 5,180 5,718 361,903
-359,806 Less-Current maturities (8,185)
'(7,712)
Total long-term obligations
$353,718
$352,094
--...==
==
Long-term obligations to the REA are payable in equal
~
quarterly principal and interest installments through 2015.
Principal repayments on the long-term obligation to the Federal Financing Bank (FFB) extend through 2018.
Principal and interest ~ payments on the National Rural Utilities Cooperative Finance Corporation (NRUCFC) obligations are payable quarterly through 1999.
The fixed rate Pollution Control Bonds are payable in increasing annual amounts through 2008.
The adjustable rate Pollution Control and Industrial Development Revenue Bonds mature in 2015 unless pre-viously called for redemption.
Bank letters of credit aggregating $19,000,000 and terminating in February 1991 have been issued on behalf of the Cooperative to the trustee to provide funds for payment of principal of any such bonds to be redeemed or repurchased prior to that DAIRYLAND POWER COOPERATIVE j
. NOTES TO' CONSOLIDATED FINANCIAL STATEMENTS (2)
Long-Term Obligations (continued)-
date.
Accordingly, the-entire principal amount of these bonds is classified as long-term debt.
Substantially all of'the Cooperative's assets are pledged as collateral for these obligations.
The Cooperative is required to and has maintained certain financial ~ ratios related to earnings and liquidity in accordance with the covenants of its loan agreements.
Maturities of the Cooperative's long-term obligations are as follows (in thousands):-
Year Amount
[]
1988 8,394 1989 8,687 1990.
9,026 1991 9,327 Thereafter 318,284 Total
$353,718
==
(3)
Lines of Credit-To provide interim financing, che Cooperative has arranged lines of credit aggregating approximately $34.7 million, principally through NRUCFC.
Borrowings (which were not significant in either 1986 or-1985) are at the prime interest rate and prime minus 1/4%.
' ]r-Compensating balance requirements or fees relating to the
(
lines of credit are not significant.
The Cooperative also allows member cooperatives to prepay their power bills and pays interest on these prepayments based on current short-term borrowing rates.
Interest income earned by the Cooperative on prepayments in excess of its working capital requirements has been netted with the related interest expense on member cooperative advances and reflected as nonoperating margins in the accompanying consolidated statements of revenues and' expenses.
(4)
Retirement of Capital Credits-The Cooperative's Board of Directors has adopted a policy of retiring capital credits allocated to members on a hh; DAIRYLAND POWER COOPERATIVE L(j NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (4)
Retirement of Capital Credits (continued)-
"first-in, first-out" basis so that'at all times the.
. Cooperative will not retain as patronage capital any capital contributed or deposited more than 20 years-prior 6
to the current year.
Accordingly, the 1966 and 1965 capital credits were retired in 1986 and 1985, respec-tively.
Implementation of this policy is subject to annual review and approval by the Board of Directors and the REA, and'no cash retirements are to be made which would impair the financial condition of the Cooperative or violate any terms of its agreements.
(5)
Shared Transmission Agreements-hh The Cooperative has entered into shared transmission agreements with the Southern Minnesota Municipal Power Agency (SMMPA) and'the Western Wisconsin Municipal Power Group (WWMPG) which provide SMMPA.and WWMPG use of the i.
Cooperative-owned transmission system to deliver power and energy _ requirements to SMMPA and WWMPG members in the i
Cooperative's electric service area for a period of 50 years.
Payments received from SMMPA and WWMPG for use of the: Cooperative's transmission system are reflected as deferred credits in the consolidated balance sheets and are being amortized over the terms of the related agreements.
The Cooperative may be entitled to further i
I payments depending on the investment in, and joint use l
of, the system.
1 (6)
Commitments and Contingencies-The Cooperative has been named a defendant in several (7r lawsuits and claims, primarily related to construction and operation of its electric plant.
Although the outcome of these matters cannot be determined at the present time, management and legal counsel believe these actions can be successfully defended or resolved without a material adverse effect on the financial position of the Cooperative.
(7)
Construction-t L
The Cooperative's 1987 estimated construction program is l
$20.4 million.
Financing of construction is expected to be provided by borrowings from the FFB, proceeds from the l
issuance of Pollution Control Bonds, short-term lines of l
credit with the NRUCFC, advances from member cooperatives f
and funds generated internally.
.lb i
1 DAIRYLAND POWER COOPERATIVE i
{}'
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (8)
Pension Plan-Pension benefits for substantially all employees are provided through participation in the National Rural Electric Cooperative Association Retirement and Security
. Program.
The cost for this defined benefit pension program was approximately $2.030,000 in 1986 and
$1,528,000 in 1985.
Contributions are determined in accordance with the provisions of the program and are based on salaries, as defined, of each participant.
Information from the plan's administrator is not available to permit the Cooperative to determine its share, if any, of unfunded vested benefits of the program.
During 1986, the Cooperative began paying the employee contribution of the plan for its union
(]7 employees.
As of December 31, 1981, the last available actuarial valuation, net. assets of the plan available for benefits exceeded the actuarial present value of accumulated plan benefits.
Effective January 1, 1986, the Cooperative adopted an amend-ment to the pension plan which reduced the normal retirement age from 65 to 62.
This amendment resulted in the creation of an unfunded prior service cost of approximately $2,452,000, which is included in deferred credits in the consolidated balance sheets; an intangible asset of the same amount is included in deferred charges to reflect the expected future economic benefits associated with the amendment.
The intangible asset will be amortized to expense on a straight-line basis over 30 years with $82,000 being charged to expense in 1986.
Additionally, interest at 8% will also be recognized on Nm the unfunded prior service costs.
(9)
Fiber Optics Venture-The Cooperative's wholly owned subsidiary, CTI, owns a 23.5%
partnership interest in Norlight, a venture with four other partners, to construct and operate a fiber optics network in the Upper Midwest.
CTI's investment in and advances to Norlight totaled $5.2 million at December 31, 1986 and, based upon present commitments and financing plans, CTI may be called upon to invest additional capital.
Norlight began operation of its fiber optics line on March 1, 1987.
The Board of Directors has approved a policy whereby losses incurred by CTI (principally due to recognition of its proportionate share of Norlight losses) will be deferred.
Similarly, payments received by the Cooperative from
(),
DAIRYLAND POWER COOPERATIVE I
p NOTES TO CONSOLIDATED FINANCIAL' STATEMENTS (9)
Fiber Optics Venture (continued)-
Norlight for use of'the Cooperative's right-of-way have also been deferred.
Both the deferred CTI losses and
.the. deferred right-of-way payments will be amortized to operations (with appropriate recognition in service rates charged to members) over a period commencing the first year-in which CTI becomes profitable with all deferred amounts amortized'by 1997.
Amounts deferred in 1986 include the-approximate $1 million loss of Norlight and the $1.3 million payment received for_right-of-way in 1986 which are included in investment in fiber optics venture and deferred credits, respectively, in the consolidated balance sheets.
At' December 31, 1986, the Cooperative had a receivable of $687,000 from Norlight j[p related to right-of-way payments.
(10)
Nuclear Reactor-The Cooperative operates a nuclear generating facility under the terms of.a continuing temporary provisional operating license.
The Cooperative has applied to the Nuclear Regulatory Commission (NRC) for a permanent. operating license.
The NRC's consideration of construction permits and operating licenses, including.the Cooperative's application for an operating license,.has been delayed due to'other regulatory priorities.
The provision for depreciation includes a factor to provide for the estimated costs of decommissioning the nuclear generating facility; however, the manner of decommission-ing may not be determined for many years and the even-
~c tual cost of retiring a nuclear generating facility is
')
uncertain at the present time.
The Cooperative continues
%c to review its decommissioning cost estimates and expects that any increases in such costs will be-recovered through future rates.
The Cooperative has adopted a policy of funding decommissioning costs currently and~the related investments are included in other investments'in the consolidated balance sheets, while the decommissioning reserve is included in accumulated depreciation.
Under the Nuclear Waste Policy Act of 1982 (Act), the United States Department of Energy (DOE) is responsible for the storage and disposal of spent nuclear fuel removed from nuclear reactors.
Under the provisions of the Act and a contract with DOE, the Cooperative makes quarterly payments for nuclear fuel burned during the year.
DAIRYLAND POWER COOPERATIVE g
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (11) Event Subsequent to Date of Auditors' Report-On April 24, 1987, the Cooperative's Board of Directors approved the recommendation that the Lacrosse Boiling Water Nuclear Reactor be taken out of service and operation of the nuclear reactor terminated.
The termination of operations of the nuclear reactor is expected to occur in mid-1987, at which time a-
" possession only" license from the NRC will be sought.
The facility is expected to be placed in a " safe storage" status until the year 2000, at which time it would be decommissioned.
As of December 31, 1986, the Cooperative had an investment in plant at the nuclear facility of $5.8 million, net of
(]t accumulated depreciation, and an investment in nuclear fuel, net of amortization, of $16.4 million.
In addi-tion, a decommissioning reserve of $7.6 million has been established and funded with long-term investments (see Note 2).
Based upon present circunstances, management believes that all remaining assets of the nuclear facility, all costs associated with the termination of operations, including carrying costs, and all future funding required for decommissioning will be recoverable through service rates charged to members.
8 v.
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