ML20214H280

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Texas Municipal Power Agency 1986 Annual Rept
ML20214H280
Person / Time
Site: Comanche Peak  Luminant icon.png
Issue date: 12/31/1986
From:
TEXAS MUNICIPAL POWER AGENCY
To:
Shared Package
ML20214H218 List:
References
NUDOCS 8705270337
Download: ML20214H280 (27)
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I Texas Municipal Power Agency 1986 Annual Report l

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Texas Municipal Power Agency t

1986 Annual Report

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Boctrd of Directors 4

Marvin Ttzte President Real Estate /Innd Development Mayor Ai8P Bryan. Texas W. R. Allen Jr.

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Garland. Texas Bill Tcrylor Secretary Utility Direcbr Greenville, Texas Marvin Tate W R. Allen Jr.

Avon Acker High Technology Company Management Greenville. Texas b# / '-

Don Hollister Bank President Garland. Texas Hank McQuaide N.- [ %).;

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.V 10 City Councilman Bryan, Texas Richard Stewart Retired American Airlines Pilot Retired Air Force Colonel Bill Taylor Avon Acker Denton. Texas Dr. Roland Vela University Professor Denton, Texas

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The General Manager's Report On beha!! of the management team of the Texas Munic: pal RDwer Agenc'/ lt :s with pnde that th'.s repor1 on the Agency s act:v: ties for the '786 Fiscal Year has been prepared Dunng 1986 ae improved i.

TMPAs statt facilities and

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cha!!enge of prov1d:ng i

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generating capacity for the Vember Cities Several chanaes and addit;ons to

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the challenges T'5A taces Ve have continued cu:

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procrams to trnprove the skills o! our human resources Our focus cn safety allowed us to achieve

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consecutive safe working hours dunng 1986 Our housekeeping and cleanup ettorts continue to improve y-the work environment and

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fcf reduce costs

During 1986. much of the Our strategic planning TMPA was formed staff's attention was focused effort was strengthened because four cities were on developing programs during the year. Each of the seeking a solution to their and facilities for the Board's operating divisions of TMPA long-term power needs The consideration. The major contributed to our future Agency has now completed creas of concem werei vision of the Agency four years as an operating future power generatiort through the establishment of utility The joint action reduction of Agency debt realistic and achievable concept has proven itself to servica fuel costs and other goals be a positive solution to the cxpenses stabilization of In 1979 TMPA acquired a present and future power rates and the Comanche 62% interest in Texas Utilities requirements of om fom Peak Nuclear Power Station.

Member Cities Electric Company's Thn Gibbons Creek Comanche Peak Steam The Agency is excellent Steam Electric Stations' Electric Station. Cost overnms proof that the joint action op* rations and reliability and delays in that project concept can be beneficial improved significantly in have caused great concem to public power in the State Fiscal Year 1986. This year to TMPA and the Member of Texas was tho most successful for Cities Therefore the Board of tio Power Production Directors embarked on a S

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Division since placing the course of action that 6

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GCSES into commercial included filing a lawsuit operation. The Agency staff against the project I negotiated the lignite fuel manager. Texas Utilities Ed L Wagoner supply contract with the Electric Company to protect General Manager suppli r. This new contract our interests and those of our cnabled the Board of Member Cities We are Directors to provide an aggressively pursuing that immediate rate reduction to action in order to achieve tha Cities for Agency power.

our goal of providing During 1986 we focused economical energy to our consid:rable aMention on members planning. The capital improvement needs for the Agency were satisfied through the 1986 Bond Financing Program. The Planning and Operating Committee focused its efforts on future power for the M mber Cities S

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Engineering crnd Opercrtions Improved electric This year we completed preheater elements These generation highlighted computeriza: ion of the were replaced with an performance in Fiscal year Agency's document retrieval improved design which will 1986. Total output was over system. The new system reduce fuel costs by over 2.7 million megawatt hours maintains over 20,000 S750.000 per year.

exceeding Fiscal year 1985 engineering drawings TMPA began a study to by 19% and making this 10,000 equipment manuals identify the future power TMPA's most productive year.

and data sheets. 5,000 generating needs of in addition. the plant's related documents and all Member Cities and efficiency was improved by revisions The ability to delineate altematives to 2% while forced outages quickly access these meet those needs This study were reduced by half.

documents has greatly will be complete in Fiscal increased our ability to plan.

Year 1987.

The improvements in control and coordinate efficiency and productivity This has been the were the rest't of improved projects and maintenance management practices Renegotiation of the ope n

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enhanced training programs mining contract with reliability and availability and a more effective Navasota Mming Company This would not have been preventative maintenance reduced the annual cost of possible without the program.

fuel by over S7 million.

dodication of all Agency Economic evaluatior.s on a Our Planning and employees working together number of existing leases as a team.

Controls Department helped resulted in additional document and plan scegs of over $1.3 million.

improved performance This group produced critical The Construction path computerized Department has become schedules for maintenance proficient in providing and repair outages as well the majority of the Agency's as engineering and construction needs Now construction projects Timely outside contractors are y (.*

cost status reports on over rarely needed. This has

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100 plant systems and over resulted in significant Y

50 projects enabled the savings through elimination 9

Division to reduce of contractor overheads incintenance and profits and mobilization costs

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efficiency One of the major construction efforts of the year was the replacement of

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over 500 tons of air Robert B. McKnight Director of Engineenng and Operations Cost of Energy

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Administrative Services cmd Humcm Resources The Agency's emphasis Power Production training Gibbons Creek Reservoir on improved safe operations continued to be the prionty continues to be a favorite resulted in a significant of the Agency's training among fishing enthusiasts milestone in Fiscal Year 1986.

department The majority of with over 70.000 visitors TMPA employees worked a this effort centered on since the lake opened to the total of 807,774 hours0.00896 days <br />0.215 hours <br />0.00128 weeks <br />2.94507e-4 months <br /> without apprentice programs, public in 1985. The B7ard of a lost time accident shatter-developed in-house and Directors has approved lake ing the old record of 112000 certified by the United States improvements which will be hours lost time accidents Department of Inbor.

financed by lake revenues were reduced from 54 in Twenty-four employees were for Fiscal Year 1987.

Fiscal Year 1985. to only 3 in in various stages of training The TMPA Employees' Fiscal YecI 1986. Reportable in four areas - Mechanical.

Pension Plan underwent a accidents were reduced Electrical. Instrumentation comprehensive study this from 137 to 38 over the same and Operations Fiscal Year to review time periods The Agency This year voluntary investment strategies and to saved approximately upgrade training was assure compliance with new S70.000 in insurance costs initiated and pre-Intemal Revenue Service alone as a result of this employment testing was requirements As a result, improvement.

expanded to insure a ready changes will be made supply of trainable technical effective in Fiscal Year 1987 employees. Management to improve the program.

training sessions were TMPA's selflieured continued for all medical and dental plans

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management and super-continue to be cost-effective visory personnel This year we have identified 4

The Division began a revisions that will improve comprehensive project to the plans without increasing upgrade management cf costs to employees or the information resources Agency These improvements Establishment of the will be implemented in Computer Resources Steering Fiscal Year 1987.

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Committee allowed a This year's emphasis has coordinated approach to been on efficiency Our data storage, processing and overall goal was to maintain retrieval.

our high standards of The programming staff effectiveness and David O. Branham participated in the prcductivity while Dator of Adrrurustrative Services and installation of Finance and containing or reducing coss Materials Management We have succeeded. We Systems to be completed in look to even more Fiscal Year 1987. The 1986 improvement in the coming inventory was the most year.

successfulin Agency history with an error rate less than 1.9%. The Agency's current Equivalent Availability inventory includes 14.184 P,3."',3*f,,st.arn ogc s,jata line items i

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T Financial Services The Financial Services Paper Program. with S40 Division underwent two million invested Some minor major changes this year.

modifications were First. Mr. William E Peak was necessary to comply with appointed as the Director of the revised Federal Tax Financial Services in Codes but the basic

.,4 January Second. the structure of the Agency's N

Division was restructured into program is unchanged three departments: Financial A major project was Accounting. Treasury and initiated this year to Management Accounting.

upgrade financial reporting This year Division capabilities Revisions to the personnel have been automated General ledger.

involved in the activities Accounts Payable and supporting the sale of long-Budget Systems will be term bonds We have completed in early Fiscal employed innovative Year 1987. These revisions will methods to take advantage significantly improve both William F. Peak Director of Rnancial Semces of the decrease in interest financial and management rates which will help hold reporting operations the line on the Agency's Unusually high insurance financing costs costs called for a new TMPA's credit is rated 'A' approach to risk and 'A+' by Moody's and management at TMPA. The Standard & Poor's cost of Agency coverage respectively This reattirma-increased drastically last l

tion of investors' confidence year. Adequate protection 7p j gg, l

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worthiness followed our the changing conditions Cy removal from " credit watch" have led TMPA to seek other status by Standard & Poor's insurance altematives in June.1986 TMPA. along including self-insurance Self-with the Member Cities was insurance remains a future placed on " credit watch" possibility due to the delcy of the TMPA finished the year Comanche Peak Project in sound financial condition.

announced by its Project Plant-in-service is valued at James R. Bailey Manager. Texas Utilities

$765.647.000 with an MenCY AMorney Electric Company additlcnal $353.498.000 of The ratzgs of TMPA and the construction work in Member Cities were progress Approximately reaffirmed upon

$454.188.000 was invested in presentation of tactual our various construction s

financial information to reserve and other current Standard & Poor's.

aset accounts on TMPA has continued its September 30.1986.

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Megawatts Gary T. Parsons Internal Auditor Racal Year 10

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M BKUNICFAL N AGDiCY MANCIAL Sumems September 30,1986 l l

TEXAS MUNICIPAL POWER AGENCY salance Sheets Septernber 30, ASSETS 1986 1985 (Dollars in Thousands) Electric Plant In service $ 765,647 $ 753,988 Less accumulated depreciation (74 S 85) (49409) 'Ibtal-not 690,762 704,179 Construction work in progress 353,498 279,325 Nuclear fuelin progress 23,788 21,771 'Ibtal electric plant 1,068,048 1,005,275 Rostricted Assets Cash and investments 442,581 288,234 Accounts receivable and other 2,660 1,373 Due to unrestricted assets (2,302) (3,199) 'Ibtal restricted assets 442,939 286,408 Current Assets Cash and investments 11,607 32,652 Inventories, Fuel stock 2,794 3,632 Materials and supplies 7,428 4,715 Accounts receivable and other 4,506 3S50 Accrued interest receivable 2,355 3E21 Due from restricted assets 2,302 3,199 'Ibtal current assets 30,992 51,878 Other Assets Unamortized debt issuance costs 27,353 25,465 Unamortized excess cost on advance refunding of debt 106,064 108,434 Deferred expenses to be recovered in future years 64,391 42,961 Deferred fuel costs 14,296 16,886 'Ibtal other assets 212,104 193,746 'ibial Assets $1,754,083 $1,537,307 The accompanying notes me an integral pmt of the financial statements 14

r September 30. ACCUMULATED EXCESS REVENUES AND LIABILITIES 1986 1985 (Dollars in Thousands) Accumulated Escoss Revenues Reserved 3,525 Unreserved 6,432 11383 Tbtal accumulated excess revenues 9,957 11,383 IongTerm Debt Revenue bonds, including amounts due within one year of $14,300,000 and $13,455,000 1,669,885 1,450,870 Unamortized discount and premium (10,794) (7,376) Accrued and matured interest 13,148 10,812 Notes payable 4,108 1,701 Tota 11ong term debt 1,676,347 1,456,007 Liabilities Payable from Restricted Assets Tax-exempt commercial paper 40,000 40,000 Accounts payable 10,426 2,931 Retainage payable 198 214 Tbta111 abilities payable from restricted assets 50,624 43,145 Current Liabilities Accounts payable 6,773 6,478 Accrued distribution to Cities 9,820 19,820 Accrued compensation and pension benefits 562 474 Tbtal current liabilities 17,155 26,772 CSmmitments and Contingencies 3btal Accumulated Excess Revenues and Liabilities 51,754,083 $1,537,307 15 l

i TEXAS MUNICIPAL POWER AGENCY Statements of Operations and Accumulated Excess Revenues Year Ended September 30, 1986 1985 Operating Revenues before Refunds (Dollms in Thousands) Power sales $ 191,180 $ 187,737 Other operating income 749 713 'Ibtal operating income 191,929 188,450 Operating Expenses Fuel 49,322 49,298 Production operation and maintenance 14,508 10,974 Transrrdssion operation and maintenance 6,399 4,134 Administrative and general 9,280 7,74 2 Depreciation 25,056 25,306 Expenses to be recovered in future years (12,055) (14,328) ' btal operating expenses 92,510 83,126 Net Operating Revenues before Interest Charges and Refunds 99,419 105,324 Interest Charges Interest income (25,484) (27,166) Interest expense on debt 122,255 113,343 Amortization of debt issuance costs and excess cost on advance refunding of debt 3,892 3,516 Deferred expenses to be recovered in future years (2,370) (2,010) Other incoma net (129) (266) Allowance for funds used in projects (33,283) (25,783) Interest charges-net 64,881 61,634 Net Revenues before Refunds 34,538 43,690 Renewals and Replacements (627) (590) Refunds to Cities (35,337) (45,337) Change in Accumulated Excess Revenues (1,426) (2,237) Accumulated Excess Revenuea At beginning of period 11,383 13,620 At end of period $ 9,957 $ 11,383 The accompanying notes me an integral pcIt of the financial statements 16

T TEXAS MUNICIPAL POWER AGENCY Statements of Changes in Financial Position Year Ended September 30, 1986 1985 Sources of Funds (Dollars in Thousands) Net revenues before refunds $ 34,538 $ 43,690 Amounts not affecting funds. Depreciation 25,076 25,326 Amortization 6,542 4,469 Costs to be recovered in future years (14,425) (16,338) Funds provided from operations 51,731 57,147 Proceeds from issuance of revenue and refunding revenue bonds 228,991 194,732 Increase in accrued and matured interest 2,336 873 Proceeds from issuance of commercial paper 40,000 1ssuance of notes payable 2,972 75 Net decrease in working capital 11,269 285 'Ibtal sources of funds $297,299 $293,112 Uses of Funds Net increase in restricted accounts $149,052 $ 83,879 Additions to electric plant 87,849 70,154 Retirement of long-term debt 14,020 11,715 Refunds to Member Cities 35,337 45,337 Advance refunding of long term debt 74,429 Excess cost on advance refunding of debt 5,311 Renewals and replacements 627 590 Bond issuance costs 3,410 Deferred fuel costs 303 Second five year mine plan costs 7,004 1,394 ktaluses of funds $297,299 $293,112 l I Th9 accompanying notes are an integral part of the financial statements j 17

y b TDCAS MUNICEAL POWR AGDiCY NOTES TO FINANCIAL STATEMENIS

1. GENERAL The Texas MunicipalPower Agency overhead, at September 30. 1986 (TMPA)was created in July 1975 by and 1985 was $364.349,000 and concurrent ordinances of the Texas $281.872.000, respectively cities of Bryan Denton. Garland and In November 1986. TUEC announ-Greenville (Cities) pursuant to the ced that all reanalysis reinspection.

Acts of the 63rd and 64thlegislature rework and testing activity pre-of Texas (Act). Under the provisions requisite to the loading of fuel in of the Act TMPA is a separate Unit I of Comanche Peak will be municipal corporation TMPA is ex-complete in early 1988. Based on empt from federal income tax that estimata TUEC estimates that under Section 115 of the Intemal commercialoperation of UnitIwill Revenue Coda be achievable in early 1989. TUEC In September 1976.TMPA enteredin-also estimated that Unit II of Com-to identical Power Sales Contracts anche Peakwould not be ready for (Contracts) with each of the Cities commercial operation until citer for the purpose of obtaining the the 1989 summer peak season If economic advantages of jointly that schedule is achieved. TUEC financing, constructing and estimates that the total cost of the operating large electric generating plant excluding AFUDC will be units and related facilities to supply S527 billion. Based on TUEC's the Cities' future energy needs estimata TMPA's share of Coman-Under the Contracts the Cities are che Peak construction would be required to pay for the benefits $326,000.000, excluding AFUDC received or to be received by them TUEC also stated that failure to from such activities an amount suf-secure timely and iavorable ficient to payTMPA's operating and regulatory approvals or further maintenance expenses and the delays occasioned by additional Bond Fund. Reserve Fund and Con-reanalysis reinspection, or rework tingency Fund requirements of the willincrease the cost of the plant Revenue Bond Resolutions and will likely increase financing (Resolutions). requirements TMPA operates the Gibbons Creek TMPA makes no assurances what-Steam Electric Station (Gibbons soever with regard to the construc-Creek), a lignite-fueled generating tion schedule and plant cost plant located in Grimes County established by TUEC and further. Texas with a net generating TMPA makes no assurances of capability of 390 MW The plant when, or if, an operating license will began commercial operation be granted for either or both Units October 1.1983. of Comanche Peak (see Note 10) In January 1979. TMPA executed a Concurrent with the execution of Joint Ownership Agreement the Joint Ownership Agreement (Agreement)withsubsidiariesof the TMPA and TUEC executed a Trans-Texas Utilities Electric Company Inc mission Agrement which provides (IUEC) pursuant to which TMPA for the acq.r.sition of an ownership acquired a 62% undivided owner

  • interest in certain transmission shipinterestin the Comanche Peak facilities and for the use of TUEC Steam Electric Station (Comanche transmission facilities. The Trans-Peak) and the nuclear fuel supply mission Agreement provides for the for the project Comanche Peakis a transmission of power and energy nuclearfueled generating station from both Comanche Peak and currently under ccnstruction, con-Gibbons Creek to certain points of sisting of two units each rated at net interconnection of TMPA on the 345 1.150 MW capability located about kV system. In addition. TMPA has 40 miles southw3st of Fort Worth constructed 16 substations con-near Glen Rose. Texas. TMPA nected by 290 circuit miles of accounts for its ownership in electrical power lina a microwave Comanche Peakin the same man-communications network and an ner as its whollyowned facilities economic dispatch center for TMPA's investment in Comanche control of TMPA and Cities' Peck, including the Allowance for electrical resources Funds Usedin Projects (AFUDC)and 18

r 1

2.

SUMMARY

OF SIGNIFICANT Systemof Accounts-Theaccount-Rates-TMPA's rates for power and l ACCOUNTING POIJCES ing records of TMPA are maintain-energy billed to the Cities are ed substantially in accordance designed to cover annual system with the Uniform System of Ac-costs as defined in the Resolutions j counts prescribed by the Federal and the Contracts In general, costs Energy Regulatory Commission for are defined toinclude TMPA's costs Class A and Class B Public Utilities of operations (except for deprecia-and Licensees tion and amortization),125 times Electric Plant-Electric plant is debt service requirements and cer-stated at historical cost Such cost in. tain renewals and replacements It cludes payrollrelated costs such as is the Agency's practice to budget taxes and employee benefits, 1.30 times debt service re-general and administrative costs quirements The rates are set by the and an allowance for funds usedin Board of Directors annually and are projects required to be reviewed on a semi-annual basis Allowance for Funds Used in Projects-TMPA capitchzes to elec. TMPA's practice is to periodically re-tric plant the net cost of borrowed fund accumulated excess revenues funds used for construction. The to the Cities to the extent of amount capitalized is reduced by available funds the income eamed on funds held Revenues-Revenues from the sale in the Construction Fund. Interest is of electricity are recorded based capitalized during the construction upon billings to the Cities for the period and beyond the date the Agency's fixed costs determined by project is placed in service until the annual budget and the such time that bond proceeds Agency's recovery of variable costs available to fund the interest have based on each Cities' consumption been exhausted.The amount ofin-of electricity terest capitalized will be recovered Deferred Exp9nses to be Re-in future years by setting rates suffi-covered in Future Years-Certain cient to provide funds for the related expenses which do not requhe debt service requirements funds currently and are not defined Depreciation-Depreciationis pro-as costs under the Resolutions and vided using the straight-line method the Contracts are deferred to such over the estimated useful lives of the periods as they are intended to be various classes of plant Annual recovered by rates Deferred ex-depreciation provisions expressed penses will be recovered in future as a percent of overage yecIs by setting rates sufficient to depreciable plant were approx-provide funds for the related debt imately 33% during 1986 and 1985. service requirements Depreciation expense aggregated Renewals and Replacements-In S25,OS6,000 in 1986 and accordance with the Resolutions $25306.000 in 1985. Depreciation and the Contracts the balance of expense amounting to S12.055.000 excess revenuesis charged with the in 1986 and $14328,000 in 1985 has cost of certain renewal and been deferred to future yects as it replacement assets after all re-isintended to be recovered by rates quired deposits into restricted funds Inventories-Fuel stock and have been made The originalcost materials and supplies inventories of these assets is capitchzed in elec-are valued at cost Cost is deter-tric plant in service and on offset-mined using average methods ting contra account is established to Deferred Fuel Costs-The cost of reflect the current cost recovery of mine startup and development theseitems During1986 and1985,ex-have been deferred and are being cess revenues were charged with amortized using the straight-line $627,000 and $590,000, method over the estimated useful respectively life of the mine The current cost of lignite rights, reclamation and royalties are expensed as a cost of coci consumed. 19

7-s Debt Related Costs-Bond pre-five years in concurrence with the mium and discounts are being letter of credit commitment period. amortized over the terms of the Accumulated Excess Revenues-related bond issues under the in-During 1986, the Board of Directors terest method. Issuance expenses authorized $3,525.000 of are beingamortizedoverthe terms Accumulated Excess Revenues be of the related bondissues under the reserved for future plant construc-bonds outstanding or interest tion or renovations methods for allbond issues prior to Reclassifications-Certain a-1986.The19861ssuance expenses cre mounts in the 1985 financial being amortized using the straight-statements have been reclassified line method over the term of the to conform to the 1986 presentation bond issue. The 1986A bond with no effect on results of opera-Issuance expenses are amortized tions or financial position. using the straightline method over i

3. RESTRICTED ASSETS Restricted assets include those assets primarily for the payment of con-comprising the Bond. Reserve. Con-struction and acquisition costs of the struction, Contingency and Tax Ex-Projects Assets in the Contingency empt Commercial Paper (TECP) fund are for use in paying extraor-funds which are established and dinary or unusualcosts Assetsin the maintained pursuant to the Resolu-TECP fund are used to finance tions Substantially all assets in the lignite fuel costs nuclear fuel costa Bond and Reserve funds are and additional worldng capital.

available only to meet the prin-The aggregate amount of assetsin cipalandinterest payments on the each of these funds as of Revenue Bonds Assets in the Con-September 30 is as follows struction fund are available 1986 1985 (Dollars in Thousands) Bond fund $133,567 $ 80,946 Reserve fund 157,809 126,776 Construction fund 119,316 48,097 Contingency fund 2,034 2,020 'IECP fund 32,554 32,365 less Accruedinterest included in the Revenue fund (2341) (3,796) 'Ibtal $442,939 $286,408

4. INVESTMENTS The Agency's portfolioisinvestedin other market considerations the fixed-income securities as approved Agency uses repurchase agree-in the Bond Resolutions and Con-ments consisting of Investment t

tracts (Investment Securities) These Securities whereby the Agency will Investment Securities include US resell, at its cost plus accrued in-Treasury obligationi US Govem-terest, the securities at specific future l ment Agency and Govemment-dates Sponsored Corpora' ion obligations The amortized costs of the Agency's i and collateralized certificates of investment portfolio by security type deposit. For short-term needs and at September 30 are as follows 20

( Restricted Unrestricted 1936 1985 1986 1985 (Dollars in Thousands) US Treasury obligations $ 61,592 $ 15,805 $ US Govemment Agency and Govemment-Sponsored Corporation obligations 60,977 149,741 Collateralized certificate of deposit 220 211 Repurchase agreements 320,226 123,300 11,653 33,278 In the aggregata the amortized cost of these securities approximates market value

5. REVENUE BONDS Revenue Bonds outstanding as of September 30 are as follows, Range of Earliest Series AmountOutstanding Maturing Interest Rates Redemption 1986 1985 hom To From Tb Date (Dollars in Thousands) 1976

$ 47,035 $ 47,830 1986 2011 5.100 % 6.375 % 1986 1978 238,940 242,825 1986 2011 5.600 7.000 1988 1979 291,380 295,805 1986 2012 5.600 7.000 1989 1980 244,575 247,365 1986 2012 E250 9.250 1990 1982 29,525 31,085 1986 1996 9.500 13.500 1996 1983 379,960 379,960 1988 2012 6500 9.500 1993 1985 206,000 206,000 1989 2014 E750 9500 1995 1986 92,470 - 1990 2014 E000 E000 1996 1986A 140,000 1991 2014 1987 'Ibtal $1,669,885 $1,450,870

  • The Series 1986A Bonds bear interest at a variable rate The Bonds are subject to optional firstlien on the net revenues of TMPA redemption prior to their scheduled and the funds established by the maturity date beginnmg in 1987 at Bond Resolutions prices from 103% to 100%. The Debt service requirements as of Bonds are payable solely from,and September 30,1986 are as follows are collateralized by an irrevocable Principal Interest
  • Total *

(Dollars in Thousands) 1987 14,300 $ 91,067 $ 105,367 1988 18,780 89,431 108,211 1989 22,365 103,281 125,646 1990 25,265 126,088 151,353 1991 28,550 126,484 155,034 1992-2014 1,560,625 1,729,851 3,290,476 Total $1,669,885 $2,26S,202 $3,936,087

  • Excludes interest payable from bond proceeds and assumes an interest rate of 5% on the series 1986A Bonds 1986A Revenue Bonds amount of $40.000,000. The The Series 1986A Bonds were issued separate Series of1986A Bonds may in the aggregate principal amount bear interest at the same or different of $140,000,000in three separate rates Series as follows Series 1986A1 in the The Series 1986A Bonds dated principal amount of $50,000,000, August 1,1986, will bear interest from Series 1986A2 in the principal the date of their first authentication amount of $50,000,000, and and delivery and will mature, sub-Series 1986A-3 in the principal ject to prior redemption upon the 21

r-terms and conditions hereinafter set to refund $76.300,000 Series 1982A forth, on September 1,2014. Initially Revenue BondsThe netproceedsof the bonds willbearinterest at a rate the Series 1985 Bonds,related to the of 5.0% per annum through refunding, have been irrevocably l'ebmary1,1987.The record date for deposited with an escrow agent such interest payment shall be and have been used to purchase Jmiucry 30,1987. After February t direct obligations of the United 1987, the Series 1986A Bonds will States GovemmentThese securities bear interest at a rate determined mature at such times and in such on each business day amounts so that the maturing prin-1986A Ibnds Credit Facility cipal, together with the interest in-The1986A Bonds are guaranteedby come thereon,are to be sufficient to an irrevocable hne of creditThein-pay the debt service requirements J itial Credit Facility will consist of of the Refunded Bonds through the j three separate letters of credit issued redemption dates This transaction by a commeIcialbank Eachletter has resultedin net reduction of debt of credit will be identical in terms service cost over the life of the except that each may be drawn Refunding Bonds The excess cost upon and terminated in-on advanced refunding of debt of dependently of the othes $5.311.000 has been deferred and The maximum aggregate credit is being amortized over the terms of available under the letters of credit the Refunding Bonds under the in-terest method. is $142.589,000. (the " Maximum Credit"), consisting of The Resolutions contain certain $140,000,000 availatie for the restrictions and covenants in-payment of that portion of the pur-cluding TMPA's covenant to chase price corresponding to prin-establish and maintain rates and cipalof theSeries1986ABondsand other charges to produce revenues $2.589,000 available for the pay-sufficient to pay operating and mentof theportionof thepurchase maintenance expenses (exclusive price corresponding to interest of depreciation and amortization) accrued on the Series 1986A Bonds to produce net revenues sufficient to pay the amounts required to be Bond Refundings In June

1985, TMPA sold depositedinthe debt service funds

$206,000.000 of Series 1985 and to produce net revenues equal to at least the sum of 1.25 times the Revenue and Refunding Revenue NdsS79,988.900of theSeries1985 nnualdebt service to be paid for the then outstanding bonds Bond proceeds have beenpledged 6 THE TAXEXEMPT The Agency is authorized to issue proceeds from the sale of Bonds COWNCIAL PAPER tax-exempt commercial paper, in proceed.s from the sale of Notes PROGRAM principal amount not to exceed issued pursuant to the Resolution or $40,000,000, to finance the ac-other obEgationsissued pursuant to quisition of lignite for Gibbons Creek, the provisions of law, and amounts nuclear fuel for Comanche Peck, heldinthe Note Payment Fund mid and working capital.The commer-Note Construction Account, further, cial paper is issued in the form of the Notes shallbe collateralized by Bond Anticipation Notes (the a pledge of net revenues subor- " Notes") in denominations of dinate in all respects to the pledge $100,000 or more with maturities in favor of the Bonds presently not to exceed 29 days TMPA has entered into a revolving from date of issua The maximum credit agreement with a bank to maturity date for the Notes issued provide for payment of the Notes under the commercial paper pro-Under the terms of the agreement, gram is March 13, 1990. TMPA in' TMPA may borrow up to tends to issue bonds to refinance $42.800,000 on a revolving basis the Notes with interest as they until March 26,1988. There were no become due borrowings under this agreementin Under the resolution, the notes are the fiscal year ended September special obligations of the Agency 30,1986. TMPA pays a fee of 1/4 of payable from and collateralized by 1% per annum on the unused por-22

I tionof theBank'scommitmentand terminate on March 26,1988 but pro-is obligated to pay interest on any vides for extensions to March 13, borrowings under a formula based 1990. TMPA agrees and covenants upon the prime rate of the Bank that at all times it will maintain with a maximum rate not to ex-credit facilities with banks in ceed that allowed by law The amounts to pay principal and in-current agreement is scheduled to terest of all Notes

7. NOTES PAYABLE The Act permits TMPA to issue non-1986, note payment requirements for negotiable purchase money notes each of the fiscalyears1987 through payableininstallments(< ollateraliz-1991 and in the aggregate for the ed by the properties being ac-years 1992-2005 are $1227,000, quired)in order to acquire land or S558,000, S562,000, S493OOO, fuel resources These notes bear in- $418,0 0 0 and

$750,000, terest rates between 5.7% and 8.0%. respectively For fiscal year end September 30,

8. RErmmWT PLAN TMPA has a retirement plan cover-Employees may contribute, on a ing substantially allemployees The voluntary basis, an additional planis a defined contribution plan amount up to 10% of earrdngs which provides for TMPA to con-l?etirement plan costs for 1986 and tribute an amount equal to 10% of 1985, were S1,173,000 and gross wages to a third party trustee $1,085,000, respectively for the benefit of plan participants
9. COMMITMENTS AND A)ln connection with the acquisi-The above amounts are subject to CONTINGENCIES tion of certain property necessary to escalation under various conditions complete Gibbons Creek. TMPA is as stipulatedin the mining contract obligated to make payments to In addition.TMPAis required to pay Grimes County and three school additional amounts depending districtsin the amount of $543,000 upon the level of mining activity per year (subject to adjustment as Total payments made under the specified in a court settlement) as miningservices contractin1986 and long as the Gibbons Creek station 1985 were approximately is in operation.

$44244,000 and S42,372,000, B)TMPA has entered into a mining respectively TMPA intends to con-services contract with Navasota tinue the mining contract however, Mining Company (Navasota) to the contract can be terminated by operate thelignite mine at Gibbons TMPA at any time subsequent to the Creek.Under an option providedin expiration of aninitialsix and one the contract TMPA elected to have quarter year period, and by Navasota provide the major mining Navasota at the expiration of thein-equipment to be usedin the opera-itialperiod or at the end of any suc-tion of the mine and sold its interests cessive five-year period. Should the in two partially completed contract be terminated TMPA draglines and a coal conveyor would be required to either system, at cost to Navasota for substitute another mining contrac-l $61,709.000. Concurrent with the tor in the lease agreements or in-sales Navasota sold the equipment demnify all parties for losses incur-to third parties and entered into red relating to the cancellation. l l lease agreements with such third C) The Transmission Agreement parties Under the mining contract (Note 1) requires payments to be TMPA is obligated to make made by TMPA to Texas Utilities minimum payments including Generating Company (TUGCO) costsincurred by Navasota underits based on levels of transmission lease agreements for the draglines plant investment The estimated and the conveyor system. The amounts to be paid under this con-amount of annual required tractin future years as of September payments for September 3 0, 1987 and each subsequent year through 1991 is S17274.OOO 23 3

3 0, 1986 are as follows (Dollars in D) The Capital Improvement' Plan Thousands) includes authorization for estimated 1987 $3,914 expenditures of $31,500,000 1988 4,090 (without AFUDC) in 1987 including 1989 4,274 an estimated $16,800,000 for the 1990 4,466 construction costs relating to Unit I 1991 and years and UnitIIof Comanche Nak and thereafter plus the purchase of nuclear fuel. a 5% escalation 4,667

10. LITIGATION-CnMay29.1986, TUECfiledsuitinthe Ownership Agreement by TUEC COMANCHE PEAK A14th Judicial District Court of Dallas knowing and willful concealment CountyTexas againstTMPA,theTex-and misrepresentation of material In Electric Cooperative of Texas Inc information during the negotiation (TexIn) and the Brazos Electric of the Joint Ownership Agreement Power CooperativaInc(Brazos)the and during construction of the two other joint owners of Coman-plant negligence by TUEC in the che Peak. Among other things exercise of their contractually TUEC asked the court to declarei(1) assigned duties failure of considera-an anticipatory breach of the Joint tion under the Joint Ownership Ownership Agreement by TexIn Agreement and violation of the (with TUEC seeking damages Texas Deceptive Trade Practices therefore) (ii) that the defendants Act Defendants seek as reliet alter-are not relieved of their obligations natively, rescission of the Joint to pay TUEC for their proportionate Ownership Agreement and refund shares of the remaining cost of con-to Defendants of all amounts paid struction of CPSES,(iii) that TUEC has on account of Comanche Nak, not breached the Joint Ownership together with interest or modifica-Agreement and,(iv)that TUEC has tion of the Joint Ownership Agree-not violated the Texas Deceptive ment Defendants also seek money Trade Practices Act TUEC has since damagesincludingtreblingof ac-amendedits suit toinclude breach tual damages as allowed by the of contract claims against TexIn Texas Deceptive Trade Practices and Brazos for which it seeks Act Should the Agency be award-damages TUEC has not alleged in edacompleterescissionof theJoint its petitions that TMPA has breach-Ownership Agreement the Agency ed the Joint Ownership Agreement should be entitled to receive a com-TMPA. TexIn, and Brazos (Defen. plete or partial refund of monies dants) have filed various paid to TUEC on account of Com-counterclaims in that action, alleg-anche Peak, and the Agency ing,among other things numerous would no longer own any portion material breaches of the Joint of the Comanche Peak Station.

Auditor's Report 'Ib soard of Directors Texas Municipal Power Agency We have examined the balance statements referred to above pre-sheets of theTexas MunicipalPower sent fairly the financial position of Agency as of September 30,1986 the Texas MunicipalPower Agency l and 1985, and the related as of September 30,1986 and 1985, statements of operations and and the results ofits operations and accumulated excess revenues and the changes in its financial position changes in financial position for the for the years then ended, in con-years then ended. Our examina-fonnity with generally accepted tions were made in accordance accountingprinciples applied on a with generally accepted auditing consistent basis standards and, accordingly in-cluded such tests of the accounting p records and such other auditing procedures as we considered necessary in the circumstances Coopers 8c Lybrand A x In our opinion, the financial g

( Profile of Cities 1986 Bryan Denton Galand Greenville Population 1985 So.089 63.10 0 175275 24.40 0 Popula. ion 1970 33.719 38.874 8t437 22.043 Per Capita income $8234 $9.746 S12.70 0 $7.110 Employment (est) 93.8 % 91 8 % 95 % 9t7% Building Permits (est) 527 954 3210 243 Major Industries Energy-related Diesel trucks Metal pro-Agricultural and Businesses productiort welding ducts circraft chemicals building equipment equipment rubber goods materials business forms trucks am-bakery. items plastic con. lingeria flour. munitiort dril-circraft modi-tainer food multiwall ling equip-fication, wear. products turnt-paper bags ment wearing ing apparel tura business computer soft-apparel wooden doors forms wore micro-recreational wave anten-equipment nas aseptic chemical pro-containers ducts food quarter horse products ranching Other Resources Ranching. og-Two universi-Ranching. in-Inkes and riculture water ties museums terstate high-recreational and hydrocar-historic sites way transpor-facilities in bon deposits lakes and tatiort lakes terstate high-university recreational and rect 4-way transpor-facilities tional facilities tation Electnc Customers 29.963 27.510 57211 11.319 Miles of Lines 102O 336 719 377 Generating Capacity 240 MW 168 MW 424 MW 95 MW Net Energy for load (kwltOOO) 644.66 0 712.94 0 L619A98 320.903 i I i 1

T I l t i I t t i b P Texas Municipal Power Agency PO. Box 7000 l Bryan.TX 77805 l (409) 873-2013 I e 5 -. - -. _,.}}

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