ML20217J118
| ML20217J118 | |
| Person / Time | |
|---|---|
| Site: | Crystal River  |
| Issue date: | 12/31/1997 |
| From: | Haven R, Mccleese R ORLANDO UTILITIES COMMISSION |
| To: | |
| Shared Package | |
| ML20217J034 | List: |
| References | |
| NUDOCS 9804300169 | |
| Download: ML20217J118 (120) | |
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15 Ruual Report Comparabelilyhiiyin
% Increase /
For Years Ended Sept. 30 1997 1996 Decrease 1987 COMB!NED OPERATIONS Operating Revenues
$ 414,777,668 5
381,068.126 8.8 %
$ 217,832,489 Total Operating Expenses
$ 308,496,046 S
283,791,622 8.7 %
S 152,398,974 Interest and Other income 22,312,806 32,493,942 31.3 %
24,419,210 Interest and Other Expenses S
89,527.876 90,021,485
-0.5 %
S 66,838,442 Net income 39,066,552 39,748,961 1.7 %
27.522,701 Payments to City of Orlando S
35,714,884 S
39,574,442
-9.8 % '
S 16,328,359 Utikty Plant (Net book value)
$ 1,480,274,268
$ 1,445,916,494 2.4% *
$ 858,297,616 Equity.
$ 503,708,071 481,602,851 4.6%
$ 237,592,710 Long term Debt S 1,294,527,788
$ 1,210,358,088 7.0%
$ 829,988,191 l $ 1,979,998,584 -
S 1,976,211,519 0.2%
S 1,180,637,864
, w, Total Assets; i:_W Debt Service Coveragei u
r
'g
. ' J.y Senior lien.
3.77x. -
- 3.83x 1.6% '
2.07x v
. c,.
i7
- Junior heni Fs
- 3.10x '
. 3.14x
.-l.3 %
WA 4 l M { Combined debt r ~
(1.98x i
, M 1.93x:O W Ne $2.07x
)
.. c@a f~~ Senior, Bond Raking $ (y.,;, y, / 4;-'N,AA,'Aal'[AA W W. 6N 2 AA+ Aal'AA P
'r N
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A ELECTRIC BUSINESS UNITJ5% ? $2WtrM.m WD t. L n + & lz;
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39,rsf..WWYgR$:d W WQdgqW h..Mi@#Mi74d,W@6W W$8% W,.F ZGP 1
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Total Operating Expense @Q,, y olG $ -385,949,421]@ ?,f $ M 354,418,910MW 8 79f[D Operating revenues W q ; $ K 201,193,183 " N
- h $ $288,949,925M
- % $j 1143,661,065 g "$ $ y 264,656,650 ] '
~~,,t 9.2%
i j $3141,596,008 9:$
@f d.. Fuel and Purchased Power M Departmental Operations (2) '
!,;S 0 131,998,173..
8.8 %.. : $;i'69,213,228 '
$ U;132,658,477 Q 9.5 %. 3 ' Sy a 72,382,780
$T 145,288,860) 4,&m.#4. A Total Sales (MWH);
~ d, J-
% 6,956,995 : ' > ? !.,t 6,235,125
- y, A,
d:: 3,396,312 -
(4,011,919 Dy'.C f'4,031,190 dB M11.6%*.
0.5%7 ".s
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$" g]ifg Total Retail Sales (MWH); '.
2 " 2.4%~ ' T ' +E*P2,990,436 6-
"g b
'f. CommerciaMndustrial Sales i2,659,6871 2,596,979 1
- y 11,891,4021 as
, M :q.
' 1,434,2112.
A-5.7 %E N Njk. 1,099,034 W
R. esidential. Sales ' 04. o6*
,/,.
1,352,232 1
, 4,
. N. %.,.m 3
t m
g; Sales for Resales (MWH) %
c-2,945,076 t..
J2,203.935; i_ '. 33.6% ;
D; ' 405,876 :
- }W.h.f75Totol Active Services './.p -
f, WN133,496 b(; g 3W
,,129,714h T ' t
?'
R 111,658 [ hyy,'. 2.9% 1 "
N,,'?+g4j, :
L A
105,939,
^
M.kh.p n (> Residential i,
,. f
.,a 1
, 2.9 %
4[
J 91,294.~
- y, $s$,b18,605'<4,,. V,h. M.
, % 114,891:
R, 18,056i '
- c 3.0% c
- 14,645 Dt.; M Commer,ciaMndustrial flC N 4
~.
m
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n-r m-J,l.l,938,i W woA @ 12,983. Gi s. 8.0% : ', a 1.. 6
- d. _ ' V...+; n.$rAv.erage, Annual Residential Us.,e.(KWH) i
- 12,298
- 3 j
-n y.
r wc&v.g' 9' r* J Q
... Y,' % ', (Q.
,;4 - -
n D..,,.T.tQ$ Average Revenue.f.M 7 Resideriti$iSalesNC, a
. Y.'. MI. 8.0641 "
~, 7. f 809 5 53.0%
4 469
. per KWH O' M #
6
. D,.,97 dl " ' [1,1 % 1 '
1.184 7
m s
m5->
4 s
I A
V M.a, L7 Heatirig Degree Da'ys.W.e.
'i
- t3801.
.y Op l 4QCooling Degree Days ; f,@j < w % a. w,3,395
,, 3,538 i
.. 'c
..t -4.0 %
23,799 k.2%l i,, 7 MM %n*,G,ross, Peak Der 6.and (MW)'@. n # MCN,p% o.e sM922b,,ca?
d" J933? *~
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1 Operating RevenuesMy& Nr. T $37428,828,247 % 'W v
&nJQ W
M Sid 26,649,216 M bW 8.2% WW S ul6,639,306 - '
hh Yik,TotaIOpesting EipNes%g% % $W 19,546,121Ll/. 57 99,134,972 [
')/ 9.1% 7 M Sy 10,802,%6 :
2 TMA, i ',.~ Sales,(000iaso,ns)'M wh,6c-Q.w,N. 310,595 f.y.,9 M,2,7,253,499 ' m'M 0.2%'.,n MFn, 22,971,000 l.
- M
- HM27,
. -. e%
g #pM, v
E89,757 L IXTotal Actme Services @NMU4 O v.p 111,497? X ^
. < 1 Jc 109,437 ;
. < 1.9 %.
7 2, #
Q._;hN,,,MCommerciaMndustrialNg. MOON 91,27i,Y, ;
- .W.-
NM,,a m dW,Y 76,440 :
NM RMd'nb, al+l.M, < %
Mb,tM, o w,129,SM 41;3%?... t.1
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y
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uob.C 410,7581 *
, t ;9,319
$q khrrigat6n ' QyMg g$}3158,000 'fi,, ' - 4, g 1163.000 ;Q9,46
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> 3,998 '.
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-3.1 % 4 d "'
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e, i> ~ y @ i U,
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- 0.774 MS
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- Peak Pumping (Million Gallons per Day) 152.0 151.0 0.7 %
135.0 e
ae
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/,5-l Ortando Utitsbes Commission Chief Execunve Otheer Bob Haven and Commission President Ray McCleese stand near one of the pmsses at The Orfando Senonef where en sveisge of 43,000 copies of tne newspaper are pnnted in an hour. The Sennnel has signed a long term contract with OUC to ensure at has a rehabie, competthve energy supply to keep those presses runnsng.
2 G
i 09 Bountaries.Da brders.
The,.Orlando Utilrbes Commission (OUC) marked one historic milestone after another in Fiscal 1997 - milestones that demonstrate OUC can extend its business opportunrbes beyond traditional boundaries and borders.
The Florida Legislature unanimously approved changes in OUC's charter that clarify and expand the kinds of energy and water services we can provide and allow us to offer these services in Osceola as well as Orange County.
Based on a new power partnership with the City of St. Cloud, OUC now provides complete management and operational services for that city's municipal electric utihty, On May 1 OUC fully integrated $t. Cloud's operations and staff with its own, making the transition smoothly. Through this new alliance, OUC has gained direct access to a ISO-square-mile electric service area with a rapidly growing customer base, At the same time, St. Cloud's rates have decreased significantly, and service reliability has improved measurably.
OUC is also exploring new business opportunities. We have entered into a strategic alliance to build and operate a chilled water plant to serve Lockheed Martin's Electronics and Missiles Company, one of our major customers, We are currently studying the possibihty of building and operating other such facilitiet a
With the second Stanton generating unit on hne for its first full year of operation, bulk sales to utilit>es outside and inside Florida soared, driving total electric sales and revenues to record highs for the second year in a row. Total sales were more than double what they were a decade ago when the first $tanton unit began operation. Because of increased revenues combined with cost controls. OUC's competitive retail electric rates will remain unchanged for the fourth consecutive year in Fiscal '98.
Through Water Project 2000. OUC is well on its way to converting its entire water system to ozone treatment by the year 2000, The H 0UC Southwest Weter Treatment Plant, its first ozone treatment plant, was completed on time and on buoget and 2
placed into service last spring. To help finance Water Project 2000, OUC will implement the third of five planned 10% water rate increases in Fiscal '98. Even so, OUC's water rates will remain among the lowest in the state.
Our competitive position continues to improve, putting us above the industry average. One agency rates OUC in the top 10 out of the 89 public and private utilities it has ranked. Major customers, attracted by OUC's hir5 rehability and competitive
)
rates, are entering into long term contracts to buy power from us.
All in all, this has been a remarkable year for OUC - one that reflects the creativity, energy, and dedication of its employees
- both past and present. The accomphshments cited are the result of their commrtment to making OUC increasingly competitive year after year while maintaining the highest levels of service and reliabihty. There are truly no hmits to what they can contmue to accomplish in the future, j
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Ray D. McCleese Roben C. llaven. P. E.
President GeneralManager and Orlando Utilities Commission ChicfErecutive Officer 3
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yspion't id not wait to color outside tradstnonal bourYdaries. The utiltt entered into an innovative power partnership with a neighboring municipal electric utility. In addition OUC asked for - and received - charter changes from the Florida Legislature that significantly broaden its business horizons and opportunities.
Ahufmerfarbership
~
In a precedent-setting move, OUC has Ircome linking St. Cloud to OUCs Stanion Energy the first municipal electric utihty in the state to Center - a move which will enhance St. Cloud's manage, operate, and maintain another municipal rehabihty and help conuul power costs.
electric utihty. It is also sclhng power at the retail De new agreement became effective May 1, price level to that utihty's 16,000 customers, a total 1997. Because of the extensive cooperation and that is equivalent to an immedute 12% increase in advance preparation of both utihties and their OUCs own retail customer base.
employees, the transition was seamless.
OUC accomplished this by entenng into a 25-year Interbcal Agreement with a wilhng Beflefits for St. Cloud partner - its neighbor, the City of St. Cloud. The The prirx of power for St. Cloud customers innovath e alliance is a win-win situation. ne decreased significantly on May 1 to a more additional rwenues it generates for OUC help compeutive level that will help fuel growth in keep rates competithv. For St. Cloud, it means this area.
lower rates, and keeping an important source of Within just seven months, reltabihty improved a revenue for that city and its citizens.
dramatic 34%. His improvement staned immedi-
- I OUC has also, in effect, added 150 square ately, donng the most challenging tune of the miles to its own 2443quare-mile electric service year - the summer storm season. By the end of area - additional temtory with great growth November, total outage timc dropped from a potential. Most of the vacant land hes in Osceol.:
system-wide average of 139.7 minutes to a record County - one of the fastest growing counces in low of 92A minutes. This was achieved as the Flonda. Energy use in the St. Cloud service area resuh of OUC3 extraordinary efforts grew at an average rate of 6.8% for the last to improve rehabihty when
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outages are most hicly The new alitance grew out of a 1995 all-require.
to occur.
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competing against two investor-owned utihues and a consonium of municipal utihties. OUC also agreed to build a nearly 20-mile transmission hne f
To 6mprove rehabiltry. OUC immediately began buildmg new power knes for St. Cloud and doubhng up on trouble crews. Combmmg the resources of OUC and former
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St. Cloud employees like Lead tJne Techmcian Mike Moore has produced construction t
and trouble teams that are helping achieve rehability goals at an accelerated pace, f
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'The new aNience with OUC was a good move," safs Met Michaels, manager of the Mercury Marine component manutecturing piant in St. Cloud. *we're gettmg better service and better rates - you can't best that. And the community sell recewes an econome benefit from its utlhty," he odds.
Funbermore, the City of St. Cloud is guaranteed remain the same for the fourth consecutive year, a return on its utility that can increase as new even though OUC has Just felt the impact of the customers amve, helping the city provide the first full year of operating a second 460-megawatt, services a growing community requires.
coal-fired generating urit.
Finally, its electric utihty employees were assured of jobs. In all,81 St. Coud emplo>tes became full-fledged OUC employees on hlay 1 Q,
DE and were immediately integiated into the 130th Houses of the 1997 Florida legislature consolidated workforce, unanimously approved changes to the OUC c.harter that significantly bnxiden its energy and Rates More Competitive water business opponunities ik fore htay 1, St. Couds residential ra:es OUC can now buy, build, maintain and/or were 14% lugher than OUC's rates. Rates for small operate power plants, power hnes. and other commercial custorner> s ere 2% higher. blay 1, facilities and also build and maintain facilities ~ f-the differences were reduced to 8% and 17%
associated with energy senice.s M any existirig').J ;,,,
respectively. St. Coud% larger commercial
, ',,~,muryicipal electric service area in Osceola t':9untyf customers' rates were henveen 40 7% and 45%',# Mas mell'as Oringe County if invited tEdo'.so, higher than OUC's. blay 1 those differeng/f I
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- dropped to 20%.13y 2004, St. Coud cus,to,.me.r.s'.
if in.vited now rates are to be only 4% higher,thanD.UC's/ -
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- g chilled water - to In terms of actual decreases j{i gloud'sP.
customers in<an approximatek50-square-mile residential rates dechned 5 %'
kh',5f'thl St. Coudpu'nippalTvater service small bunnesses declined For.(
' area iri Osceola Cognff and in Orange County as large commercial custo ra't$s
- rpill as build and ritaintain water mains along and 1
and 12S% respective can p
? under roads and high' ways in those areas.
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-is nothingjew to Power. Resources - fyOn overage, all units at OUC's Stanton Energy yilas'15:3INd acti?eiritfie'wiibl$dlek, e Chih[Ind the Indian River Generating Station pow t*.$ t$ fem $ddat'idr((
nerform more reliably than the national average.
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.a restructuring o the e ectne industry, PR13U is They also consistently meet or surpass all changing the way it does business.
apphcable air quahty stanuards.
In n' '97, PR13U's new Power Marketing During the first year of Stanton 2 operation, Division ircame responsible for all wholesale the unit's equivalent availabihty rate was 92.8%,
energy transactions beyond the next business day.
compared to a national average of 79.2% Its Wholesale prims are now based on the market, equivalent forced outage rate was 0.93% compared not just on costs. Forecasting is also based on a to the national average of 8A%.
dynamic competiuve market, not only on the The new unit is also the first pulvenzed coal predetennined prosecuans of a regulated industry, unit of its size in the nation to use Selective PR13U is positioning itself for the day it may Catalytic Reducuon to remove nitrogen oxide.1his have one customer - an Independent System new process and all other air quahty systems in Operator that is the broker running the trans-the unit performed well. As a realt. Stanton 2 mission grid. And it is studying ways to grow into successfully met all of its air perns requirements more highly efficient technology so its assets will for sulfur dioxide as well as nitrogen oxide.
be more economical and more profitable.
Record Bulk Sales, Benefits
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OUCs bulk sales reached record heights for em s2ww curm H. stanton the second year, reflecting the first full year of Energy Center. Exponenced in operauon for the new 4604N' coal-fired unit at overall ptent and air quahty the Curtis IL Stanton Energy Center. For n' N)7, control opersoons, sus environ-bulk sales rose 33.6% to 2.9 milhon MWil in n-n=ntal engineer is committed
'97 compared to 2.2 milhon MWii in n' %
" keepsg stanen a reliam, llefore Stanton 2 was on hne, OUC3 bulk sales
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record was 16 milhon hM11.
Gross revenues from the n97 bulk wies rose to $108 6 million. twice what they were the year
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hefore Stanton 2 went on line. The economic benefit from the latest bulk sales and transmission I
fees was $353 milhon. a 3% increase over n' % These net revenues offset other expenses, thereby helping OUC keep the retail pnce of power compeuuve and impacung net income favorably.
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4 petition is nothing new to Power Resources, yf On sverage, all units at OUC.s Stanton Energy
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,e pas n th'e faccTfleregulanonJnd perform more rehably than the national average.
a restruaurrng of the cleane industry PRilU is They al.so consistendy meet or surpass all changing the way it does business, applicable air quahty standards.
In IT '97, PR11L?s new Power Marketing Dunng the first year of Stanton 2 operation, Dwision became responsible for all wholesale the unit's equivalent availabihty rate was 92%
energy transactions beyond the next business day.
wmpared to a national average of 79.2% Its Wholesale pnces are now based on the markei, equivalent forced outage rate was 0.93% compared not just on costs. Iorecasting is also based on a to the national average of M%
dynamic competiuve market, not only on the Die new unit is also the first pulvenzed coal predetermined projecuons of a regulated industry, unit of its size in the nation to use Selectwe PR13U is posiooning itself for the day it may Catalytic Reduction to remove nitrogen oxide. This have one customer - an Independent System new process and all other air quality systems in Operator that is the broker running the trans-the unit performed well. As a result, Stanton 2 mission gnd. And it is studying ways to grow into successfully rnet all of its air permit requirements more highly efficient technology so its assets wiu for sulfur dioxide as well as nitrogen oxide.
be more economical and more profitable.
Record Bulk Sales, Benefits
%,,e sc,,,,tt is tne d, ecto, e OUCs bulk sales reached record heights for tne 92t>uw curtis H. stanton the second year, reflecung the first full year of Energy center. Expenenced in operapon for the new 460-Mu coal fired unit at overati plant and air cuahey the Curus it Stanton Energy Center. I:or IT '97, control operations, thss environ-bulk sales nx 33% to 2,9 milhon MWil in lY
"*"tal '"8'a"r is commetted
'97 compared to 2.2 milhon MWil in IT %
- k"P'ng stanton a ret.atile, llefore Stanton 2 was on hne, OUC's bulk sales eninninnwntauy sak sece record wa31.6 m!! hon MW11
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- Gross resenues from the lY 'T bulk sales rose to $10% milhon. twice what they were the year before Stanton 2 went on hne. The economic benefit from the latest bulk sales and transmission fees was 53V m lhon. a.h increase over IT % These net revenues offset other expenses.
therebs helping OUC keep the retail pnce of power wmpetiuve and impacung net income favorahl).
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f R's a pleasure to visit grandmother at Kinneret, a residentiat high-rise providing attractive, conWortable, and affordable apartrnents and many services senior clurens require. To help keep its 300 units affordable, Kinneret has entered into a long-term agreement to buy rehable, competrbvely priced power from OUC.
Generating More Revenues, Savings PRIlU is also working to turn its wet hmestone Plant which once had a staff of 89 is now serteer operations at Stanton into a profitable operating smoothly with 58. At the 9204fW business. It is taking steps to reduce the cost of Stanton Energy Center with coal-handling and hnxstone additives used in the process and to environmental operations, staff was increased to make more OUC fly ash available to sell to the only 185 employees when the new unit went on concrete industry.
hne, instead of the 225 originally planned.
To reduce the cost of hme additwes, OUC is buying limestone sludge from two lirevard water Off000!10rsDUC utilities, in addition, it is buying fly ash with lime already in it from another utility This step will In 199", the American Public Power Association nuke more of OUCs fly ash available for
( APPA) presented the coveted E. F. Scanergood marketing to the concrvie industry and could System Achievement Award to OU/C.utstanding generate net revenues, accomplishments cited included 1) OUCs in a move that will help pawnt air pollution.
completing the second 5t:tf on time and OUC will stan burning methane from the Orange 562 million under btiddeI ' nInte pact on 3
County landfill next to Stanton in IT W The customersiand 2) OUCs evels electne system reliabilityg[*[h cawthM k
utihty expect that it wi! use the landfill gas to
- This is the second time in generate 8 to 12 megawatti, of energy in 5tanton
$as MNNWgtoh two awards.
Unn I for fuel cost savings of at least 5 50,000 a year. The new unit is also being modified to burn
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Pld!U productwity has increased. un, through than 2,000 public itses.
reorganization. The 963-MW Indian River Power
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(Tlansmission Basiness Units are continuing to provide exceptionally reliable service.
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nit (EDl3tD service in 78 minutes. It took three investor owned 1
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' reli[blit[t [ ~ opQliusin/ss' nd to prosper 165 minutes to restore power.
In a d'ereg'litsftitgry}Indisk i To nuke a g<xxl record even better, EDl3U has u
in FY y7 it restrugund th6 business unit to take created a new Operations Division comprised of it to the nextlevel of performance, it established a Operations, Power Quahty and Customer Senice new Division of Costs'and Conuel responsible for Dispatch to funher enhance neliabihty as well as all of the business unit's financut operations. EDBU provide expanded power quahty senices.
has also added a director of business development to nurket its expemse to other utihties and secure Partnering with Business other revenue-making oppununines for OUC.
Supponing communtry development and EDIlU is also going beyond the meter to offer improvement. EDilU pannered with the South customars expanded power quahty senices.
Orange Illossom Trail Development Ikurd to (Sm Tierrmg Dunn to busmess"on page 11.)
renew and reiuvenate the commercial area along implementing the new alhance especially impact.
U. S. Highway 441 by moving its ponion of the ed this business unit, which ab3 orbed more dian ekttnc distribution system along this highway half of the 81 St. Cloud employees that joined underground nie total project cost 55.2 milhon OUC. EDIlU now deploys distribution crews from with OUC contributing 52 milhon to the under-three operations centers in two counnes to serve a taking. More than 40% of OUC% distribution nearly 400-square-mile area.
system is now underground.
EDI)U is also keepmg pace with Universal Maintaining High Rehabikty Studios' plans to add a second theme
- g For FY '97, the average outage ume per OUC park and a reson hotel center.
customer was 40.76 nunutes, a level dut histoncally These addiuons will require has nude OUC one of the most rehable utihties in enough power to energize the state.
approximately 8,500 homes.
9 in addinon, OUC has an excellent record for This year pcmer was prov Jed the time it takes to restore outages, a measure of for die first phase of what will reluhihty required by the Flonda Pubhc Service he the world's largest parking Conunissnin to be reponed on a calendar year structure - two parking basi.s For calendar year 1990. OUCs aserage length garages for 28.00u vg k
of individual service interrupuons was significandy vehicles J
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For the Orlando Regional Healthcare $ystem, reliability is critically important - especially for the tiniest patients like this infant in the Neonatalintensive Care Unit of the Arnold Palmer Hospital for Children and Women. That's one of the reasons ORHS has made a long term commitment to buy OUC power.
I0d OChiBVBS OBC 0fd OBlIBhilitJ,0BVIDgS OUC Pool Benefits Double For IY '97 the Transmission Business Unit TilU is not only responsible for OUC and St.
(THU) achieved record reliability. Outage 3 related Cloud's transmission system and 29 substations, to the transmission system and substations reached it also dispatches all generation for OUC and the an all-time low of only 0 9Mi, of total OUC Florida Municipal Power Pool (FMPP). OUC's net outages,10 times better than the national average revenues from it.s pool transactions doubled in IY of 10%. T15U's previous low was 2.5%
'97, rising to $8.2 milhon. Combined net revenues in addition, T13U is saving hundreds of for all pml participants were $17.5 milhon, thousands of dollars annually by implementing a compared to $10.1 milhon in TY '96 A key factor Reliabihty Centered Maintenance (R ',MI program in this increase was high hulk sales in the summer and increasing productnaty. Ihe RCM program, of 1997. The pool consists of OUC, Lakeland, crew restructunng and flex time saved $220.0(n Kissimmee and seven Florida Municipal Power j
Equipping staff to perform work formerly done Agency members. TBU has operated the pool by contractors and to perform other tasks more since it.s inception in 19S8.
effccively and efliciently is saving more than Construction Underway 5200.0(n $taff reduction through normal attntion TBU is building a combined 523 3 milhon in is saving $240.tyn new tran.smission hnes in the OUC and $t. Cloud TllU also contmues to generate new revenues service areas. It n building a six mile underground by leasing space on OUC lacihtie.s for wireless transmission hne in Orlando to increase capacity personal communicanons systems and leasing dark fiber to other telecommunicauons companies It.
andjeplace 40-year-old overhead power hnes.
too. ts marketing its expemse to other utihues and
%under construcdon is a nearly 20-mile
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n8rhead tie line from Stanton to St. Cloud to commercut customers To mmply with new federal rules. TBd has yhtnhapx rsbbibt'y and redtik wheehng costs.
vinually separated itsett from its fon}/r "mgtj$astaprII%{th,14uid)esiyRalso completed rule. It now transacts only same-day and text day 7, d mile int rnal fiber optic
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Construction is under way on OUC's first Cer4ral ton capacity, enough to cool the equivalent of Energy Chiller Plant, a new business venture that 2.2(o homes. li will also use environmentally safe will generate addnional revenues for the utihty.
Jrigerant and use reclaimed water in its own The plant will also provide savings for the major coohng system.
OUC customer it will serve, lockheed Ma tin's OUC has contracted with the desigrthuild firm Electronics & Missiles company. This is lockheed S.I. Goldman of longwuod for this project. This Mamn's leading business unit for research, linn tus built nuny major chiller plants. including devek>pment and production of elearo-optic and dw one at the Orlando Arena, Work is expected to tactical missile combat systems. This urut employs he complete by the winter of 1998 OUC will approximately 3.800 people at a 3Coacre complex operate the central plant, which will be kcited on located south of Orlando on Sand lake Road.
Lockheed Manin propeny lockheed Manin will lockheed Martin needs the plant to replace 11 cirrate the distribution system.
older chillers and 85 to 90 large air conditioners While the plant will mean continued strong tlut presently serve nine buildings (untaining revenues for OUC, lockheed Martin expects to approxinutely 1 A milhon square feet of space to reduw energy expenses by using chillers wah be cooled.
higher efficiencies t!un the existing systems.
The company has alm taken another step to maintain its compeutive position by entering into a commament to purchase energy from OUC. lused upon OUC's commament to furntsh electnc power throughout the agreement at competitive, market-based pnces.
OUC's Director of Retail Markets Douglas Spencer is used to gettmg down to busmess.
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-s A lead physictst at Lockheed Martin's Doctronics & HissAss company examines the highly pohshed surface of a speciallens used on advanced targeting systems for fighter aircraft. This company counts on reliable power for the sensitive, strategic work it performs - and on buying power at a compettuvo price from a utiirty that provides energy solutions, too.
Saing Beyond the meter ta [nsure Paujer Quality A customer calls to find out if an upgrade is An ofGce tower is so large it uses the same needed to provide power for a new tenant in an amount of power that 1,600 to 2,000 homes would office building. OUC first analyzes its own equip-require. This customer hr:es OUC's Power Quahty ment, finding it to be sufficient for the new load.
Services to perfon, an infrared inspection of the However, OUC analyzes the customer's electnc building's eiertncal system. It also hires OUC circuits and discovers one phase is overloaded.
speciahsts to inspect and test spare transformers OUC recommend.s a simple measure to balanw Now it is planning to use OUC resource 3 to the kud. As a result, the offia building's energy maintain its pnmary switchgear in tl e future.
capacity is increased 18%. The customer now has local business - discrwenng that OUC. well power to spare for the new tenant at no extn cost.
known for its own highly rehable elecincal system.
Responding to a power quahty call, an EDilU can he an imponant strategic ally. Now OUC goes engineer investigates and finds no voltage beyond a traditiorul boundary - the electnc arregularines in the utihty's equipment.
meter - to proude energy solutions to customers investigaung funher at the customer's request.
that will prevent the lugh cost of lost time and lost OUC discovers that internal voltage is being pmductivity.
distoned by harmonics generated within the While the.c new.scrvices are expected to customer's facihry. OUC identifies the source and generate additional revenues for OUC. they are recommends equipment design clanges The expected to gener.ite greater saungs for customers' customer pruerds to make mahhcations to lioth the Electnt Distribution liasiness l' rut and prevent power outapes f rom internal causes and the 1ransnussion liusiness l' nit are oftenng lost productiuty.
customers new energy solutions. assisted by Ol'C's intai! Markets Division.
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,2 s first ozone trea plant began treatment to remove a naturally occurring
,in the !.pnMMf997 and is delivering a compound - hydrogen sulfide - from the ot new " product" called,HpUC - ozone-treated raw water. Thus ozone treatment ehminates the water that tastes as good or better than bottksi unpleasant taste and odor caused by this water, and costs much less. The new, $30 million compound. Only one other water plant in the plant -II;OUC Southwest - has a capacity of nation removes hydrogen sulfide with ozone.
30 milhon gallons a day (MGD) and will replaw A May dedication and open house drew two older, less reliable plants - Mamn and Dr.
approxmmtely 1,500 visitors to the site, including Philhps. Dr. Philhps customers Irgan receiving some 300 industry and government leaders as well ozone-treated water fully two years ahead of as hundred.s of customers and OUC employees.
schedule.
Both the product and new plant are drawing Moving Ahead on Other Projects praise. One long-time customer reports he no Construction is well under way on a second k>nger buys lxxtlal water, saying the plant deliven, new ozone treatment plant which is scheduled to
- clear water and ice cules with a good taste and go on hne in the spnng of 1999. With a capacity no chlonne odor." Another customer who original.
of 32 MGD, this plant will replace the nearly 50-ly opposed building the plant nearby praised the year-old lake Highland plant, OUC's oldest. Three plant as a " quiet neighixir." Diners at a restaurant plants being converted to ozone - Conway, Pine served by the plant noticed the improved taste of Hills. and Sky Lake - are expected to trgin the water, ton ozone treatment in 1998. By also increasing
- Die strongest disinfectant in the water supply Conway capacity to 32 MGD, the utihty will le industry, ozone has long been used to treat water.
able to close two of its oldest plants - Pnmrose Ozone treatment minimizes chlonne use. h will and Kuhl. A fourth plant.
also enable OCC to accommodate future changes Kirkman, will ir convened g
in water quahty and regulations. Howeser. OUC to ozone ueatment by has taken ozone technology to a new level 1: is the spnng of 1999.
the hrst utihty to con:rol ozone water treatment The combined cost plants from a remote facihty with no full-ume of all of these protects staff at the plant. Instalhng a highly sophisucated is an esumated 582 milbon.
g.,gn computer-based control system as pan of k'-
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'Everything about my job is ynportant,*'says employee Artinar g
h gg3O ph Beckworth As the inspector of distnbubon and transnwssion
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l in 1% ot C will hegni tomemne c N.n y Confirming Quahty Plant to omne. llus plant is adpcent to the N.n al Orlando has an abundant supply of highquahty Training Center which the City of Orlando plans to water drawn from a protected sourty more than acquire to be developed into a new residential one-quaner of a mile underground - the Fkmdan and business community. Innger-range plans call Aquifer. OUC treats this water with extraordinary for a new plant to serve areas south and east of care to presetve its high quahty and improve its OrlandoInternational Airpon.
taste.
Frequent and exhaustive testing in OUCs Reviewing Water Project 2000 sophisticated, state-cenined water quauty When Water Project 2000 is completed, OUC laboratory consistently connrms that the water will have seven ozone treatment plants in service, OUC delivers to the tap exceeds all regulatory including two new ones. It will al3o have replaced standards.
approximately 60 miles of old pipeline and added in FY '97 alone, Water Quality staff performed an estimated 10 miles in new transmission mains.
13,443 chemical analyses and 5,043 bacteriological lhe total cost of Water Project 2000 is an estimated tests on 10,058 samples taken from throughout the j
$156 milhon. To help fund this program OUC system.1hese tests also confirm that the high implemented the third of five 10% water rate quality of OUCs water supply has not changed increases in Fiscal '98. Water rates, however, will since such analysis was initiated in 1958.
remain among the lowest in the state. Vinually all Other utihties, such as Winter Park, are tapping OUC water customer rate payers will receive OUCs water quality expenise.1he lab has also ozone-treated water within five years.
been recenified to perform environmental testing on wells at OUCs power plants.
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,,One gement Team consisted At the same time, OUC continues to provide 24-niosd' t-1 CuIito rvic hour automatic voim response assistance as well
,Repre s - th ople who ith as 24-hour trouble sernw every day of the week.
customers y - either face to face n the As a result of this team-think approach, OUC is
-phone. Rey met three kys a week for s'
- weeks, also implementing other changes. Now customeis guided by a consultant, a closely
' ized can call in as late as 6 p.m. Monday through and evaluated all processes lat mer Friday to have their water and/or electricity turned service. Deir conclusion: make se more on that same evening. A new payment option is hassle-free and convenient for customen now, being considered, as well as a more convenient following the team's recommendations, OUC and economical "Irave Senice Active" option for has extended hours at its senix centers. He three apartment complex managers, telephone centers in Orlando will be staffed with Intemal processes and procedures were also representauves seven days a week,12 hours1.388889e-4 days <br />0.00333 hours <br />1.984127e-5 weeks <br />4.566e-6 months <br /> a day examined ck>sely and changes in those proce-from 7 a.m. to 7 p.m. except on some maior dures are being implemented that will improve hohdays. The three walk-in unters in Orlando productn sty, call response time, and overali and the one in St. Cloud will be open from 7 a.m.
senice response. Significantly, all of these to 7 p.m. on Fridays and 7 a.m. to 6 p.m. Monday changes are being made with existing staff, j
through nursday.
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St. Cloud walk-in center will also be open on Saturday > from 8 a.m. to 1 p.m. The St. Cloud call center hours will also be extended to match the walk-in center hours.
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'We need to work areemd today's customers' busy schedules." says OUC y employee Terry Torres. She is part of the ResKlenbal Customer Serwce /
team that en implementing a plan to extend personal customer service [
hours and offer more convernent sennces for customers.
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homes or businesses.
m If0m CBSil OBgIStBf tu C0mmunicatIDOS could be provided such as %ible bilhng dates, Within the industry, the electric meter is the unobtrusive meter reading,. iled usage data, equivalent of a cash register. ne first goal of and load profiling. With mo data, customers OUCs Information Technologies Process could obtain the best price for senice, use the Management Team (PMT) is to turn the meter product more efliciently, and benefit from into an information machine that provides for the long-range cost savings.
two way exchange of utility related data. This OUC is already reading meters by radio information would then be used to improve frequency on a linuted scale. It is doing this customer service and OUCs overall efficiency.
where meters are inaccessible, in locations that With growing customer needs and technologies pose a safety threat, such as billboards along that are changing daily, this interdepanmental major highways, and in targeted electric-only areas.
1 team has focused its attention on idenufying, in addnion, OUC now provides automatic outage o
selecting, and implementing a system that will detection and notification for key commercial enable OUC to achieve its goals, accounts and organizations that serve entical public Technologies exist that read electric meters on needs, such as hospitals.
denund, detect utility theft, and alen the utility to ne team is also keeping an eye out for similar an individual customers power outage or paer technologies to use with water meters, which are quahty problem. ney also allow fce real-ume f.et in the ground and pow a greater challenge for r,ervice connec00n or disconnection from a remote ' two-way communication and automation. Most location, which would benefit both OUC and its'.
ntly, thi team is querying customers customers. Future technologies will make it gh focus groups and surveys to find out which ble for customers to take advantage of ced products and senices they want, and at pncing, security monnonng, and 'sr lost. [~
automation systems.
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' As to ' serving the community. It takes environmental stewardship seriously vard and Orange counties.
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Stanton starting in FY '98. Methane gas, when Dedicated to safe water, OUC is well on its way released into the atmosphere, is considered to be to converting its water system to ozone treatment 20 times worse than carbon dioxide in terms of
- an environmentally friendly process which will possible global warming effects. Both Stanton units minimize the use of chlorine, will have the capability of burning methane.
Dedicated to clean air, OUC has equipped its In planning a new transmission line to link power plants with the best available emironmental Stanton and St. Coud, OUC employed the best protection systems. As a result, even with a second management practices in route i. election and unit in operation, the Stanton Energy Center design. In addition it is using low-impact i
remains one of the cleanest coal-fired generating construction and cleanng techniques to further stations in the nation. That new unit is the first minimize the effect of this project on the of its size and kind in the nation to use Selective emironment. As a result, the state required no Catalytic Reduction (SCIO to remove nitrogen addinonal mitigation measures.
I oxide (NO ). Using SCR and low-NO bumer OUC has also voluntarily implemented a x
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technology, Stanton 2 successfully met the more produc substitution program not only to protea stringent air quality requirements imposed upon it, workers' heahh and safety but also to minirruze i
Both the 920-MW Stanton Energy Center and the hazardous waste generation and to prevent 960-MW Indian River Generaung Station remain in emironmental impacts. Environmental Affairs and full compliance with all applicable air quality the Safety Division constantly review and replace 1
l{g standards and emission limits, pmducts to eliminate the use of luzardous substances. To further prevent pollution and reduce waste generation, OUC also reuses and recycles many products.
Central Florida FarrWy magarme named OUC's Mce President of Corporate Services Al Frazier "FanWy Champen of the Year,"
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Franer spearheaded '..,........J.g many programs that help OUC employees balance worti and farrWy life, l
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F OUC is not just horsing around when k comes to community l.@g serv 6ce and fightmg crime. The utilety gave this horse, $g" Reliable, to the Orlando Police Department. k was,bo'ught] (
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j,'p-OUC hosts July 4th fireworks for North Brevard at its Indian River Power Plant and is a major sponsor for St. Cloud's July 4 lakefest and i
fireworks display.
A United Ans trustee OUC has also allowed its Iamily-fn. dlyandaBaadlleighbor en historic lake Ivanhoe Power Plant to be turned Owned by the community, OUC is especially into a performing arts center. lhe Commission is committed to being a good corporate citizen and aho a corporate donor for WMFE pubhc television neighbor in the reas it senes or impacts.
and a co-sponsor of the " Power Station' exhibit at in Orange, Brevard and Osaol; Qmnties, it the Orlando Science Center, gives its wholeheaned support to education, it is involved in the Onmge and Osceola diversity, the ans, and to social-service agencies.
Foundations for Education, and is also a business A Chamber of Commerce supponer in cities in panner of Brevard scimols.
all three counties, OUC is also committed to the OUC's employees also have great community economic development of these commu.'ities.
spirit. For the fifth year in a row, they were the top OUC is a major sponsor of many community fund-raisers for Cnmehne, raising a record $11,100.
programs such as liabitat for llumanity, the They aho raised $6,300 forJunior Achievement, Minonty/Tomen Business Enterprise Alliance, Inc.,
placing them among the top fund-raisers for the and the Brevard Eco Trek youth emironmental founh consecutive year. Throughout the year, they aho donate their time :.nd talents to many organizations.
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8 Corporate 5enices. Al I razier, was named Iamily 7
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As anticipated. OUC had a good year for
,l Water revenues rose $2.2 milhon to $28.8 with a solid financi.nl perfomrana. Total rev
/million primarily as the result of a planned 10%
increased to $414.8 milhon, up 8#6 over the, increase in rates implenwnted to fund Water previous year, Net income totaled $39 million.,
Project 2000 improvements. Water sales were 27.3 Dectric operaiing revenues increased $31,5 )
biihon galkms, also at vinually the same level as in miunon to $385.9 miUion due primarily to increases IT %
in hulk sales and the new St. Cloud-OLC alliance.
OUCs total operating expenses increased 8.7%
ikilk sales revenues increased 42% to $10tl6 to $308.5 million. Dectric ornerating expenses rose million reflecting the first full year of Stanton 2
$24.3 million to $288.9 million. Of that increase, operation as well as the economic benefits of the
$11,7 milhon was for fuel, related to higher hulk new alliance with St. Cloud. In the first five sales and purchased power. The non-fuel months the new alhance was in effect, OUC expenses reflected the first fuu year of Stanton 2 reaived a total of $11.8 million for power and operation and new expenses associated with senices.
operating tlw St. Cloud utility system. Water Because of milder weather, retail electric sales operating expenses rose 2.1% to $19.5 million, remained at the same. level as the previous year, reflecting the stan up of die new th0UC although the number of electric customers Southwest water plant.
increased 29%. Wholes:de power consumption, however, increased 33.6% to 2.9 million megawa t Orlando, St. Cloud Benefit hours (hMID. As a resuh, total electnc sales were Transfers to the City of Orlando tcxaled $35.7 7 million MWii, rnore than double OUCs total million, which includes a dwidend payment of
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$23 4 million based on net income. Tlw balance Sta:uon generating unit went on hne.
is revenue based. his total payment is down from the previous year's record high, which Total Electric Sales transfer resuhing from a change in the method 8.0 -
of calculating this payment.
Transfers to tlw City of St. Cloud totaled $1.9 IU '
y million for the five months the new agreement was in effect. Part of this transfer is based on EO.
revenue and pan is paynwnt for the use of
,, 5 0 -
St. Ch>ud's electne system. The revenue based f
portion which the City receives is expected to increase over time with growth. %e uw payment.
!3.0-apphed to the utihty's debt, matches the debt a.
y senia paynwnt stream.
EE 2.0 -
E i$ 1.0 -
5 5 0 1987 1997 18 O
0 b
. j.
N[ September 3d[1997 arid 199@d+$7;{!7hf..[f Competitwe Ranking A
="~
OUC3 competitn'e st.inding is heuer than the undustry average a<xording to a Fall l'/)7 repon by Fitch investors $enice. LP, Fitch reponed tlut OUCs competitne index had improved to 2.18 from 2.35, making OUCs score much better dian the industry average of 2.71. This ranking also placed OUC among the top 10 out of 89 utihties ranked by Fitch. (On Fitch's index,1 is the best rating given, and 5 is the lowest.)
Fitch noted that its decision to improve OUCs score was supponed by "OUCs astute nunage-ment team, very competitive retail rates, and low-cost generating resources
- According to Fitch, OUCs retail rates are kiwer dtan the average for Florida, and are lower than the average for Flonda investor-owned utilities.
a Rate Outlook
[
OUC will keep its retail electric prices the same W
and for the fourth consecuuve year. In FY '98, the typicd Orlando resident will continue to pay a y
competitive price of $77A7 a month for 1,000 qq kilowatt hours of power. Retail rates for St. Cloud
. P. Kaionek service area customers were lowered signincantly on May 1 when the new alliance went into effect and will remain the same through FY '98. A St.
Coud residential customer will continue to pay IW
$83.67 a month per 1,000 kwh compared to the g,
^ J'residearand -
$88A2 charged before May 1.
. 7+
==!stphancent As anticipated, OUC water rates will increase
.___w sondose 10% in FY '98 to $11.89 a month for 10.000 gauons of water, a price that is still among the lowest in the state. This will be the third in a series of five 10% increases to be implemented to help finance Tater Projea 2000, the most comprehensive water system improvement program in the utility's
.m history.
asun;
,ey s,
~~
<O Financial Serwces' Treasury p,.,
.((
4 7
Adtnirustrator Franido Coebel keeps N
' J i ?-!j' 'Ng@
. keen ere n ih. nottom an.. si.
. --r@N8alence is moonsi* h>r monitorins e=
utility's daity cash flow and manages A2
',7
-h: p yW its $300 mui.on investnwnt portfoho.
4 Statements of Revenues,%,M.%
~
-a g*ws e
f M m ;.. m.h Cas e$ m,i.s w rwanew st.i.menis 52 l
VA u
$ %e v,:, unu@marcRpg #
- f
-Sj g
s
,:ae n -
19
,x
Balance Shiets Orlando Utilities Commission Septernber 30 ASSETS 1997 1996 j
Utility Plant - Note B in Service:
1 Dectric-Notes H and K...
$1.624,536.993
$1.594,508.852 Water.
196,860,147 168,262,011 Common...
88.319,618 90,896,561 Allowances for depreciation and amcrtization (deduction).
(541,436.528)
(493,571.323) 1,368.280.230 1,360.096,101 Construction work in progress..
111.994,038 85.820.393 4
1.480.2741 68 1.445.916.494 Restricted Assets - Notes C and D Debt service and related accounts.
198.937,360 193,323,755 Construction and related accounts...
11,412.593 25.687.548 Renewal and replacement account...
37.120,494 35.270.972 Customer meter deposits..
15,663,319 15.129.355 263.133.766 269.411.630 Current Assets
)
Cash and investments--Note D...
52.471,875 54.564.671 Accounts receivable, less allowance for doubtful accounts (1997 - $1,489.181,1996 - $1,164.454).
46,145.689 40,544,291 Accrued utility revenue.........
18,026.298 15,727,194 Fuel for generation inventory..........
9,015.525 13.664.536 j
Materials and supplies inventory...
29,347,627 26,910,279 Accrued interest receivable.,
3,636.396 2,691.172 Miscelbneous receivables and prepaid expenses....
7.220.252 7,080,088 165.863.662 161,182.231 1
Other Assets Self-insurance account.....
5.229.898 5.642.853 investment fund....'..
25,108,350 Fuel stabilization fund................
4.693.782 8,716,259 Rate stabilization fund 28,444.503 25.178.941 Unarnorbzed debtissuance costs.
2.386.793 2.321,369 Minibond sinkirig funds-Note D.....
11,488.464 9.855.527 Deferred compensation plan investments-Note i...
8.282.206 12.268.573 Deferred interest expense on bonds.
10.201.242 10,609,292 70.726.888 99,701,164 Total Assets
$1,979,998.584
$1,976,211.519 See notes to the imancial statements.
A-2
Capitalizatirn and Liabiliti:s September 30 CAPITALIZATION 1997 1996 Equity Accumulated retained earnings; Reserved for debt service.
$137,778.224
$ 127,416.669 Reserved for renewal and replacement..
37,120.494 35.270.972 Unreserved -invested in or designated for plant and working capital.
213,188,919 206.593.344 l
388,087,637 369,280.985 Contributed capital-Note F..
115,620,434 112.321,866 1
503.708.071 481,602.851 Long. Term Debt - Note G Bond and note pnncipal.
1,431,153,043 1.353.821,871 Unamortized discount and deferred amount on refunding..
(136,625,255)
(143,463.783) l 1,294.527.788 1.210.358.088 j
Total Capitalization 1.798.235.859 1,691.960,939 LIABILITIES Current Liabilities - payable from restricted assets Accrued interest payable on notes and bonds......
37,694.137 35,972.586 Current portion of long-term debt-Note G...
23.465.000 29,934,500 Customer meter deposits and interest thereon.
15.663,319 15,129.355 76.822.456 81.036.441 Current Liabilities - payable from current assets Accounts payable and accrued expenses.
42,451,480 45,514,493 i
Billings on behalf of state and local governments -Note A.
9,496.045 9,367.892 l
Accrued payments to the City of Orlando - Note J.................
2,251,320 4,108.502 89.995.500 Current portion of long-term debt-Note G..
54.198.845 148.986.387 Other Liabilities and Deferred Credits Fuel stabilization account..................
4,693.782 8,716.259 28.444,503 25.178.941 Ratestabikzationaccount....
l Water and electric construction deposits..
9.165.654 7.942.342 Other-S0: allowance.,.
155.279 121.637 8.282,206 12.268.573 Deferred compensabon plan liability - Note 1...
i 50.741.424 54.227.752
' ~ ~
tal Liabilities 181,762,725 284.250.580 Total Capitalization and Liabilities
$1.979.998,584
$1,976.211.519 See notes to the financial statements.
J l
A-3
Stat:ments of Revenues, Expenses and Changes in Retained Earnings Year Ended September 30 1997 1996 Operating Revenues
$414,777.668
$381.068.126 Operating Expenses:
j Fuel for generahon and purchased power.
143,661.065 131.998,173 Depreciation and amortization....
53.773.968 44.413.198 Production..
43,837.439 39,321,263 General and administrative.
20.436,549 22.881,739 Transmission and distribution..
14.847,154 15,700,699 l
Revenue based payments to the City of Orlando - Note J.
12,274.968 12.161.469 Customer services..
11.177.274 10,869.324 State utilities gross receipts and property taxes.
6.619.147 6.445,757 Interlocal agreement payments to the City of St. Cloud - Note Q.
1.868,482 l
Total Operating Expenses 308.496,046 283,791.622 I
Operating income 106,281,622 97.276.504 Non-Operating income (Expense):
Interest income...
20.921,465 23.603,175 l
Other income -Note B.
1,391.341 8,890,767 Interest expense.
(80,433,638)
(80.948,117)
Amortization of deferred amount on refundings and other expenses...
(9,094,238)
(9.073.368)
Net income 39,066,552 39,748,961 Accumulated retained eamings at beginning of year.
369.280.985 354.311.629 Dividends to the City of Orlando - Note J........................
(23,439,916)
(27,412.973)
Depreciation of contributed utility plant.
3,180,016 2,633,368 Accumulated Retained Earnings at End of Year
$388,087.637
$369.280.985
!If See notes to the financial statements.
l li lI l
A-4
I Statem:nts of Cash Flows Year Ended September 30 1997 1996 Cash Flows from Operating Activities l
Operalingincome.
$106.281.622
$ 97,276.504 l
Adjustments to reconcile operatmg income to l
net cash provided by operating activities:
Depreciation and amortization of plant
~
53,773.968 44,413.198 charged to operations..
Depreciation and amortization charged to fuel costs.
2.159.206 2.072,850 Depreciation of vehicles and equipment charged to general and administrative costs.
1.606,044 1,597,358 l
Changes in operating assets and liabilities:
i (Increase)in receivables and accrued revenue.
(8,040,666)
(6.557.455)
Decrease (increase)in fuel and materials and supplies inventories.
2.211,663 (5.778,017)
(Decrease) Increase in accounts payable and accruals.
(566,607) 14,312.668 Increase in deposits payable and deferred items.
4.429,466 2.329,276 (Decrease)in fuel and rate stabilization accounts.
(756,915)
(405,973)
Net cash provided by operating activities 161.097.781 149,260.409 Cash Flows from Non-Capital Financing Activities Dividend payment to the City of Orlando..
(25,345.889)
(25,112,000)
Net cash used in non-capital financing activities (25.345.889)
(25.112.000)
Cash Flows from Capital and Related Financing Activities Debtinterest payments.
(78,051.087)
(78,886.940)
Principal payments on long-term debt.
(120.026,406)
(17,807,142)
Debtissuances..
99,995.000 Debt issuances expenses paid..........
(285,164)
(93,442.296)
(130.843.375)
Constmetion and acquisition of utikty plant.
Proceeds relating to utility plant..
556.316 6.580,776 Contributed capital.......
2.509,561 2.216.200 l
Net cash used in capital and related financing activities (188.744.076)
(218.740.481)
Cash Flows from Investing Activities Purchases ofinvestment secunties.
(4,611,090.860)
(4,020,573,823)
Proceeds from sales and maturities of investment secunties.
4,659.014,575 4,073,530.931 Investment income.
20,194.247 26.479.090 Net cash provided by investing activities 68.117.962 79.436.198 (Decrease) Increase in Cash and Cash Equivalents 15,125.778 (15.155.874)
Cash and Cash Equivalents at Beginning of Year 93.302.663 108.458.537 Cash and Cash Equivalents at End of Year
$ 108,428.441
$ 93.302.663 Supplemental disclosure of non-cash financing activities: During the years ended September 30,1997 and 1996, approximately $2.639.000 and $22.125.000, respectively, was transferred from water and electnc construction deposits to contnbuted capital.
See notes to the financial statements.
A-5
Financial Statern:nts September 30,1997 NOTE A-
SUMMARY
OF SIGNIFICANT ACCOUNTING POLICIES The financial statements of the Orlando Utihties Commission (the Commission) are presented in conformity with generally accepted accounbng pnnciples as apphcable to governments. The existmg hierarchy provides that accountmg guidance should first be sought in statements of the Governmental Accountmg Standards Board (GASB). If the GASB has not issued a standard apphcable to a situabon, then pronouncements of the financial Accounting Standards Board (FASB) are presumed to apply except as described below under Measurement focus and Basis of Accounting. Additionally, the financial statements are presented substantially in conformity with accountmg principles and methods presenbed by the Federal Energy Regulatory Commission (FERC), except for the method of accounting for contnbuted capital desenbed in the notes to the fmancial statements.
The followingis a summary of the more significant accounting policies:
Reporting Entity: The Orlando Utilities Commission (the Commission) was created in 1923 by a Special Act of the Florida legist?ture as a statutory commission of the State of Florida. The Commission consists of five members, including the Mayor of the City of Orlando. Members, with the exception of the Mayor who is an ex-officio member of the Commission, serve without compensation and may serve no more than two consecutive four year terms. The process for new member selections begins when the Nominating Board of the City of Orlando, which for this purpose functions only as a screening committee, submits the names of three persons to the Commission for consideration. The Commission may nominate one of these persons ar reject all three. The nominee is then subject to election or rejection by the Orlando City Council. Once elected, Commission members cannot be removed for any reason by the City Council The Commission meets the enteria of an *0ther stand-alone government" as defined in Statement 14 of the Governmental Accounting Standards Board, The Financial Reporting Enbty. No component units exist as defmed in Statement 14; however, the Commission has undivided interests in a number of power plants through participation agreements, as described in Note B. Under these arrangements, the title to the proacrty is held in the proportion of each party's interest and each party is obligated for its share of operations. There are no separate entities or organizations associated with the agreements. The Commission reports its proportionate share of assets,liabihties, revenues and expenses that are associated with the joint operations on its financial statements.
Measurement Focus and Basis of Accounting: The Commission operates the electric and water system in a manner similar to private business; therefore, operations are accounted for as an enterprise fund where costs (expenses, including depreciation) of providing services to customers on a conbnuing basis are recovered through user charges. The Commission's fmancial statements are prepared on an accrual basis of accounting, with revenues being recognized when earned and expenses recognized when incurred.
j The Commission has elected to not apply FASB statements and interpretations issued after November 30,1989, as permitted by Statement No. 20 of the Govemmental Accountmg Standards Board, Accounting and Financial Reporbng for Proprietary Funds and other Governmental Entities that use Proprietary Fund Accounting.
Budgets: Revenue and expense budgets are prepared on an annual basis in accordance with the Commission's budget policy and bond resolutions and submitted to the Commission for approval prior to October 1 of the fiscal year. Legal adoption of budgets is not required. Actual revenues and expenses are compared to the budgets on a line item basis within departments and an analysis of variances report is prepared and submitted to the Commission each month as required by the Commission's budget policy and bond resolubons.
Utility Plant: Utikty plant is stated at histoncal cost, which includes cost of contract work, labor, materials and allocated indirect charges for equipment, supervision and engineering and labor related costs. Donated assets are recorded at the cost provided by the developer, which approximates fair market value at date of donation. The Commission charges the cost of repairs and minor replaceW lts to maintenance expense. The cost of electric or water plant retired or otherwise disposed of, together with removal costs less salvag, is charged to accumulated depreciation at such time as property is removed from service.
A6
NOTC A-SUMM ARY OF SIGNIFIC ANT ACCOUNTING POLICICS-Continued d
Depreciation: Utihty plant is depreciated using the straight line method for each of the vanous plant classifications at rates which will amortae the costs over the estimated economic useful hves of the assets. Deprecia$on of vehicles and other construction equipment is charged to departmental operating expenses. Amounts for all other assets are charged to depreciation expense. The estimated useful lives of utthty plant l
are as follows:
l Dectric Plant:
Generating Plant:
Fossil.
20 - 40 years i
Nuclear..
27 36 years l
l Structures and improvements..
30- 50 years l
Equipment..
6 2/3 - 50 years Water Plant:
Water wells 25 - 50 years Structures and improvements.
50 years Equipment 62/3 - 50 years Common Plant:
Structures and improvements.
50 years Office fumiture.
3 - 141/3 years Vehicles and other construction equipment.
4 - 30 years Cash and Investments: Cash and investments are recorded at cost or amortized cost, except for Deferred Compensation Plan investments which are reported at market value. The Commission's investment policy. related Florida Statutes and applicable debt resolutions define investment parameters. The Commission is authorized to invest in the Surplus Funds investment Pool Trust Fund administered by the State Board of Administration of Florida. obhgations of the United States Treasury and its various agencies, interest-bearing time certificates of deposit, repurchase agreements, reverse repurchase agreements, state and local govemment obligations, bankers' acceptances and prime
[
commercialpaper, r
f Repurchase agreements are purchases of securities with a simultaneous agreement that the dealers or banking institutions will repurchase f2 them in the future at the same price plus a contract rate of interest. The market value of the securities underfying repurchase agreements exceeds l
{
the cash received, providing a margin against a decline in market value of the securities. Except for overnight repurchase agreements with the Commission's depository bank, securities underfying repurchase agreements are held in the Commission's accounts by a third party, il the a
J dealers default on their obligations to repurchase these securities from the Commission, the Commission would suffer an economic loss equal to the drlference between the market value plus accrued interest of the undertying securities and the agreement obhgation, including accrued interest Statements of Cash Flows: For purposes of the Statements of Cash flows, cash and cash equivalents include all cash and investment accounts (including restricted assets) with a maturity of three months or less when purchased.
Customer Accounts Receivable: The Commission bills customers monthly on a cyclical basis and accrues revenues at the end of the fiscal year for electne and water consumed but not billed. See " Rates and Revenues" below.
The customer accounts receivable balance of $46.145.689 and $40.544.291 at September 30,1997 and 1996. respectively. includes billings on behalf of state and other local governments. The net liabihty of $9.496.045 and $9.367.892 at September 30,1997 and 1996, respectively, (bilkngs on behalf of state and local governments less expenses) represents the September billings of these governments.
Fuel for Generation and Materials and Supplies inventory: Fuel oil, coal and matenals and supphes inventories are stated at average cost Nuclear fuelis included in electnc utility plant and amortized to fuel expense as it is used.
Investment Fund: The Investment fund consists of monies set aside for the retirement of outstanding debt and payment of construction costs These funds were disbursed during 1997 for construction costs.
A-7
I NOTE A-SUMM ARY OF SIGNIFIC ANT ACCOUNTING POLIClLbContinued Unamortized Debt issuance Costs: Unamorteed debt issuance costs represent issuance costs related to bond issuances which are amorteed usmg the bonds outstandmg method and recorded net of accumulated amorteation.
Opferred Interest Expense on Bonds: Deferred interest expense on bonds represents interest costs on Series 1993 and 19938 bonds which are in excess of interest costs that would have been incurred on short-term debt. The Commission elected to defer this addition interest cost for rate-settmg purposes until fiscal 1996. Deferred interest expense on bonds is amortaed to interest expense over the hfe of the Senes 1993 and 1993B bonds beginning in fiscal 1996, amount ng to $408.050 in both 1997 and 1996.
Contributed Capital: Amounts received for construction of utility plant and utihty plant contributed by developers are recorded as capital contributions. Depreciation applicable to contributed utility plant is included as an operating expense in determining net income and is i
subsequently charged agamst contributed capital from accumulated retained earnings.
I
\\
interest Rate Swap Agreements: The Commission enters into interest rate swap agreements to modify interest rates on outstandmg
)
l debt. Other than the net interest expenses resultmg from those agreements, no amounts are recorded on the financial statements.
Unamortized Discount and Deferred Amount on Refunding: Unamortized discount on outstanding bonds is amortized using the bonds outstanding method and is recorded net of accumulated amortization. Deferred amount on refunding represents deferred losses on bond refundings which are amortized over the shorter of the lives of the refunded debt or refunding debt using the straight-line method and are recorded net of accumulated amorteation.
Compensated Absences: The Commission records compensation for unused vacation and sick leave as an expense in the year in which the vacation and sick leave is earned in accordance with the Governmental Accounting Standards Board 16, Accounting for Compensated Absences. At September 30,1997 and 1996, annual vacation leave earned but not taken was $1,303,731 and $1,183.725; sick leave accumulated but not taken was $2.666.238 and $2,505,316, respectively.
Rates and Revenues: Each year, the Commission's staff performs a rate adequacy study to determine the electric and water revenue i
requirements. Based on this study, current cost of service studies, and regulations of the florida Public Service Commission regarding electric l
- rate structure", the Commission's staff develops its electric and water rate schedules which are presented to the Commission at a pubhc j
l workshop then presented for approval at a subsequent Commission meeting.
I The Commission staff makes its determination of revenue requirements using the cost of service rate base method and includes construction 1
work in progress in the rate base. Therefore, in accordance with proper ratemaking theory, the Commission does not use an allowance for funds i
used during construction (AFUDC) in determining revenue requiremects. Since the Commission's level of revenue requirements and subsequent i
l revenue is determined without regard to AFUDC, the Commission does not capitalize interest on construction work in progress.
Operating revenues are recorded based on actual billings to customers plus an estimate for accrued unbilled electric and water consumption at the end of each fiscal year.
i The Commission has established a policy on recovery of fuel costs in accordance with guidelines from the Public Utikties Regulatory Policies Act of 1978 (PURPA). Under PURPA only fuel costs incurred are to be recovered. The Comrnission estimates on an annual basis a fuel component l
charge to be applied dunng the next fiscal year. The difference between the fuel costs actually charged to the customers and the fuel cost actually incurred is applied to the fuel stabilizabon account. The Commission determines what portion of the fuel stabilization account will be utihzed to reduce rates annually during the rate-settmg process.
In addrbon to fuel, costs (revenues) which are to be recovered by (used to reduce) rates in periods other than when incurred (realized) are l
deferred until the periods in which the Commission recognizes them in utility rates. These items are included in the rate stabihzation account.
l Specific approval is required by the Commission's governing board for all increases or decreases to this account.
The balances in the fuel stabihzation account and the rate stabilization account are funded by internally restricted cash accounts and earn the same interest rate as the Commission's operatmg investment portfoho.
l l
l I
A-8 l
f ollowing is a summary of ce'e red costs (revenues) resulting from the Commission's poley on recovery of fuel costs and from actions by the Commission s governing board for rate setting purposes September 30 1997 1996 Deferred interest expense on bonds
$ 10.201,242
$ 10,609,292 Fuel stabilization account (4,693,782)
(8.716,259)
)
(28,444,503)
(25,178,941)
Rate stabilization account.
Other-SO, allowance (155.279)
(121.637)
$ (23,092,322)
$ (23,407,545)
NOTE B-UTILITY PLANT The following is a summary of utihty plant at September 30.1997, by major classes:
Electric Water Common Total j
Land
$ 19,774,620
$ 3,893.584
$ 1.730,508
$ 25,398,712 1,099,900,149 Dectric generatmg plant...
1,099,900,149 19,122,495 19,122,495 Water wells.
Structures and improvements.....
72,123.786 13.556,734 53,423,122 139,103,642 I
Equipment..
432,738,438 160,287,334 33,165,988 626,191,760 1,624,536,993 196,860,147 88,319,618 1,909,716,758 Allowances foi depreciation and amortization..
(463,749,086)
(47,659.648)
(30.027,794)
(541.436,528)
Construction workin progress.
49,126,393 52.325.407 10,542,238 111,994.038 1
Net utility plant
$ 1,209,914,300
$ 201.525,906
$ 68.834,062
$ 1,480,274,268 The following is a summary of utility plant at September 30,1996, by major classes:
Electric Water Common Total Land
$ 19,768,820
$ 3,544,181
$ 1,730,508
$ 25.043,509 1,092.523,710 Dectric generatmg plant...........
1.092,523,710 16.703.600 16.703,600 Water wells..
1 Structures and improvements.
72,123.786 6.189.841 53.407,408 131.721,035 Equipment.
410.092,536 141,824,389 35,758,645 587,675,570 1,594,508.852 168.262,011 90.896,561 1,853.667,424 Allowances for depreciation and amortization..
(417.384,578)
(44,187,011)
(31,999.734)
(493,571.323)
Construction work in progress..
39,066,351 39,744,970 7,009,072 85,820,393 Net utility plant
$1,216.190.625
$163.819,970
$ 65,905.899
$ 1,445.916.494 A-9
1 MOTE B-JTILITY PLANT-Continued Participation Agreernents: In 1980 the Commiss:on emered into a Participatton Agreement with Florida Power and Light Company (FPL) to purchase a 6.08951*. (52 net megawatts) undivided ownership interest in St Lucie Unit No. 2 nuclear powered electnc generating facihty constructed by FPL This unit is presently rated at 853 net megawatts (MW) and commenced commercial operation in 1983. The Commission has also entered into a Rehabihty Exchange Agreement with FPL The Rehabihty Exchange Agreement results in the Commission exchanging 50% of its share of the output from St Lucie Unit No. 2 for a like amount from St Lucie Unit No.1, a nuclear powered electric generahngiacihty. FPL has operational controlof both projects.
The Commission funds nuclear decommissioning costs for St Lucie Unit No. 2 on an annual basis in accordance with the estimate included in Florida Public Service Commission's (FPSC) docket # 941352-Elissued December 12,1995. A trust fund has been established to provide certain financial assurances that funds will be available when needed for required decommissioning activities. The annual funding is calculated based on en estimated earnings rate of 6.5% expected over the hfe of the trust The total obligation of the Commission as approved by the FPSC in 1995 is
$22,494,913, of which $14,121,982 is not presented on the Commission's Balance Sheet The recorded amount of $8.372,931 and $6,655.086 at September 30,1997 and 1996, respectively,is included as part of accumulated depreciabon and a related amount has been set aside as a restricted asset in a trust fund (see Note C - Restricted Assets). Estimated costs of decommissioning are periodically adjusted in response to requirements of the FPSC and the Nuclear Regulatory Commission (NRC).
The Commission also has a Participation Agreement with the Ci'y of Lakeland, Florida dated April 4,1978. Under the terms of this Agreement the Commission has a 40% (136 net MW) undivided ownership interest in a 340 net MW refuse and coal-fired steam generating unit (McIntosh Unit No. 3) owned by the City of Lakeland. The City of Lakeland has operational control of this project.
Since 1975, the Commission has owned a 1.6015% (13 net MW) undivided ownership interest in Florida Power Corporation's 835 net MW
~
nuclear powered electric generabng plant designated Crystal River Unit No. 3. This ownership interest was acquired under the terms of a single Participation Agreement with Florida Power Corporation and ten Florida municipal utilities. Florida Power Corporation has operational control of this project The Commission funds nuclear decommissioning costs for Crystal River Unit No. 3 on an annual basis in accordance with the estimate included in FPSC docket #941352-El issued December 12,1995. A trust fund has been established to provide certain financial assurances that funds will be available when needed for required decommissioning activities. The annual funding is calculated based on an estimated earnirigs rate of 6.5% expected over the life of the trust The total obligation of the Commission as approved by the FPSC in 1995 is $6,479,823, of which
$3,440,258 is not presented on the Commission's Balance Sheet. The recorded amount of $3.039,565 and $2,544,404 at September 30,1997 and 1996, respectively,is included as part of accumulated depreciation and a related amount has been set aside as a restricted asset in a trust i
fund (see Note C-Restricted Assets). Estimated costs of decommissioning are periodically adjusted in response to requirement's of the FPSC and the NRC.
In 1984 and 1985, the Commission entered into Participation Agreements with Florida Municipal Power Agency (FMPA) and the Kissimmee Utility Authority (KUA) to sell a portion of Stanton Energy Center Unit #1 (SEC 1), excluding common and external facilities. SEC 1 is rated at 440 net MW. Under the terms of these agreements, FMPA has a 26.6265% undivided ownership interest and KUA has a 4.8193% undivided ownership interest The Commission, which has retamed a 68.5542% undivided ownership interest, has operational control of this project In 1988, the Commission entered into Parbcipation Agreements with FMPA and KUA to sell a portion of the Commission's indian River Plant Combustion Turbine Project for units A and B, excluding common facilities. The Commission's Combustion Turbine Project for units A and B includes two 48 MW combustion turbines which can generate electricity utilizing natural gas or hght diesel oil Under the terms of these agreements, FMPA has a 39% undivided ownership interest and KUA has a 12.2% undivided ownership interest The Commission, which has retained a 48.8% undivided ownership interest, has operational control of this project.
In 1990, the Commission entered into a Participation Agreement with FMPA to sell a portion of the Commission's Indian River Plant Combustion Turbine Project for Units C and D, excluding common facihties. The Commission's Combustion Turbine Project for Units C and D includes two 118 MW combustion turbines which can generate electricity utilizing natural gas and light diesel oil. Unit C was placed in commercial operation in August,1992, with Unit D placed in service in October 1992. Under the terms of this agreement, FMPA has a 21%
undivided ownership interest The Commission, which has retained a 79% (93 net megawatts per unit) undivided ownership mterest, has operationalcontrolof this project.
A - 10
NOTE B-UTILITY PL ANT-Continued in 1991,tne Commission entered into a Participant Agreement with IMPA to sell a portion of Stanton Energy Unit # 2 (SEC 2L SEC # 2 is a coal fired generating unit that was placed in service on June 1.1996. The unit is a 440 net MW unit that supplies 315 MW to the system. Under the terms of this agreement. FMPA has an undivided ownership interest of 28.4091% The Commission, which has retained a 71.5909%
undiv ded ownership interest, has operational control of this project i
Following is a summary of the Commission's proportionate share of each jointly owned plant SEC 1, SEC 2 McIntosh Unit No. 3, and the Indian River Plant Combustion Turbine Projects include the cost of common and/or external facilities; the other plants do not, but the participants pay user charges to the operating entity. According to the participation agreements, each participant must provide its own financing and each participant's share of expenses for the operabons of the plants are included in the corresponding operating expenses of its own income statement Allowance for depreciation and amortization of utility plant in service is determined by each participant based on their depreciation methods and rates relating to their share of the plant Plants as of September 30,1997 Stanton Stanton Energy Energy Indian River St. Lucie McIntosh Crystal River Center Center Combustion Unit No. 2 Unit No. 3 Unit No. 3 Unit No.1 Unit No. 2 Turbines Utility plant in service..
$109,098,981
$111,161,507
$16.533,201
$375,200,173
$325,583.451
$55,806,500 Allowance for depreciation
& amortization.
(50,495,498)
(47,655,795) (16.533,201)
(94,536,526)
(10.985,173)
(12,080,931) l Construction work in progress,,,
1.303,432 2,784,685 3.337,740 Commission's net share
$ 58.603.483
$ 63.505.712
$281.967,079
$317.382.963
$47,063.309 Plants as of September 30,1996 Stanton Stanton Energy Energy indian River St. Lucie McIntosh Crystal River Center Center Combustion Unit No. 2 Unit No. 3 Unit No. 3 Unit No.1 Unit No. 2 Turbines Utility plant in service......
$109,556,081
$108,764,978
$16,607,136
$374,501,221 $320,901.939
$55.809,035 Allowance for depreciation
& amortzation.
(47,572,714)
(44.031,179)
(13.159.354)
(85.244.770)
(2.666,715)
(10.089.726)
Construcbon work I
in progress 1.272.109 6.121.878 453.062 Commission's net share
$ 61.983.367 1 64.733.799 $ 3.447.782
$290.528.560
$324.357.102
$46.172.371 A-!!
i j
NOTE B-UTILITV PLANT-Continued l
The Ccmmissm presents its sna e of jomt!y caned assets in util.ty plant classifications shonn above. Ine Commission also presents its i
share of related operations m respective revenue and expense classrfications on the Statements of Revenues. Expenses and Changes in Retamed 1
Earnings.
~
It has been determined that none of the participation agreements to which the Commission is a party meet the criteria of a joint venture as specified in Statement 14 of the Governmental Accountmg Standards Board. The Commission lacks operational control over the St. Lucie Umt No.
2, McIntosh Unit No. 3 and Crystal River Unit No. 3 plants. SEC 1. SEC 2 and indian River Combustion Turbine Projects are controlled by the i
l Commission. Fiscal and budgetary control of SEC 1. SEC 2 and the Combustion Turbine Projects remains with the Commission. No separate governing authority exists for any of the participation plants.
l The Commission also has an agreement with Orange County, Florida to share operating costs of a waste water treatment facihty at the SEC 1 and SEC 2 site. The Commission operates the facihty and charges Orange County an annual fee amounting to $1,335,571 and $818,261 during the years ended September 30,1997 and 1996, respectively. The annual fee is classified as a reduction to SEC 1 and SEC 2 operating and maiMenance expenses.
During fiscal year 1997, the Commission authorized an additional $3,054.000 in amortization of its interest in the Crystal River Unit No. 3 nuclear generating plant.
j During 1996, the Commission sold 25% of the 230,000 voit Taft-to-Lakeland transmission line to Tampa Electric Company (TECO) and received a portion of a 69 KV underground transmission line and substat on. (The Commission owns 17.9% of the substation and 26.4% of the transmission ime.) In turn, TECO is now paying 25% of t'ie operating and maintenance costs of the 230,000 volt line. The Commission's gain on the entire transaction was $6,000,000, recorded as other inenme at September 30,1996.
l During 19%, the Commission commenced a $178 million expansion / upgrade of the water utilities systems, known as Water Project 2000. As part of the fundmg of this project, a plan to implement a 10% water rate increase each year for five years was developed. The first two increases were implemented October 1,1995 and October 1,1996. These increases yielded revenues that were greater than the actual cost to provide water service. The difference in revenues is reflected as part o' the rate stabilization account deferred credit described in Note A. The deferred 4
credit of $6,599,796 at September 30,1997, will be recognized as revenue in future years when the cost to provide the service is greater than the rate r:harged.
In connection with this project four water plants are planned to be closed in future years: Primrose, Lake Highland Dr. Phillips, and Kuhl. The Commission has determined that the disposition af cost for thes.e water plants, which have a net carrying value of $3,331,292 at September 30, 1997, will be addressed as the project progresses.
)
i l
l r
l A-12
NOTE C-RESTRICTED ASSETS Certam assets are restncted by bond resolution. addrtionally. some assets have been classified as restncied m accordance with governmental accounting standards for enterpnse funds and utikty industry accocnting practices. The Commission's restncted assets consist of the following accounts:
~
September 30 1997 1996 Debt service and related accounts-Note G:
Principal and interest accounts.
$ 61,159.136
$ 55,907,587 Debt service reserve accounts.
137.778,224 137,416.168 Total debt service and related accounts 198,937.360 193.323,755 Construction and related accounts:
Nuclear generation facility decommissioning accounts......
11,412,593 9,199,490 Bond construction accounts 16,488,058 Total construction and related accounts 11.412,593 25,687,548 Renewal and replacement account 37,120,494 35.270.972 Customer deposits and interest thereon 15,663,319 15.129,355 Total restricted assets
$263,133,766
$ 269,411,630 The accounts consist of:
Cash..
9,631 5.239 investments 260.320.004 266,918.105 Accrued interest rece:vable..
2,804.131 2.488.286 1263,133.766
$ 269,411,630 NOTE D--CASH AND INVESTMENTS At September 30,1997 and 1996, the carrying amount of the Commission's cash was $ t,318,877 and $1.061,183, respectively, and the bank balances were $2,161,480 ani! $866,685, respectively. The bank balances were coverid by federal depository insurance or collateralized by a pool of U.S. Government securities held in trust by a third party bank in the name of the Commission's banking institution.
The Commission invested funds throughout the year with the Local Government Surplusf unds investment Pool Trust Fund (the " Surplus Funds investment Pool"), an investment pool administered by the State Board of Administrat.on of Florida. Throughout the years ended and as of September 30,1997 and 1996, the Surplus Funds investments Pool contained certain floatin,l tate notes which were indexed based on the prime rate and/or une and three month London Interbank Offered Rate rates. These investmen+s, representmg approximately 4.1% and.8% of the Surplus Funds investment Pool portfolio at September 30,1997 and 1996, respectively, were purchased to add relative value to the portfolio.
J Funds held with the Surplus Funds Investment Pool at September 30,1997 and 1996 totaled $20,686,592 and $16,630,547, respectively.
In the following schedule the Commission's investments are summarized and categorized to give an indication of the level of risk assumed by the Commission at September 30,1997 and 1996. Category 1 includes investments that are nsured or registered or for which the securities are held by the Commission or its agent in the Commission's name. Category 2 includes uninsuret! ano unregistered investments for which the secunties are held by the bank's t'ust department or agent in the Commission's name. Category 3 includes uninsured and unregistered investments for which the securities are held by the bank's trust department or agent but not in the Commission's name.
A - 13
NCTE D-C ASH AND INVESTMENTS-Continued Deferred compensation p!an benefit mvestments and the Surplus f und investment Pool mvestments are not categonzed because tney are not j
evidenced by secunties that east in physical or book entry form.
Category Carrying Market Investments 1
2 3
Amount Value September 30,1997:
Repurchase agreements.
$ 35,000,000
$14.446,000
$49,446.000
$49.446,000 U.S. Government securibes 194,364,688 194,364.688 200,886,482 Other U.S. and agency backed securities 65,690,482 65,690,482 66,021,000 State and local government securities 23.230.515 23.230.515 23,775.606 Commercial paper.
6,911,372 6.911.372 6,998.932
$325.197,057
$14.446,000
$339.643.057
$347,128.020 l
September 30,1996:
Repurchase agreements,
$ 53.877,241
$23,359,000
$ 77,236,241
$ 77,236.241 U.S. Government securities 218,469.861 218,469,861 219,524,316 Other U.S. and agency backed securities 61,115,787 61,115.787 61,140.379 State and local government securities 15.961.034 15,961,034 15,909.909 Commercial paper.
4,976.203 4,976,203 4,976,203
$354,400,126
$23.359.000
$377.759.126
$378.787,048 These investments are held in the following accounts:
September 30 1997 1996 Restricted assets..
$263,133,766
$269,411,630 Cash and investments.
52,471,875 54,564,671 Accrued interest receivable.
3.636,396 2,691.172 Self-insurance account.
5,229.898 5,642.853 Investmentfund...
25,108,350 Fuelstabilization account 4.693,782 8,716,259 21,844,707 20,612,483 Rate stabilization account..
Water stabilization account 6,599,796 4,566,458 7
Minibond sinking funds..
11,488,464 9.855,527 369,098,684 401.169,403 Less:
Cash from restricted assets.
(9.631)
(5,239)
Accrued interest receivable from restncted assets.
(2,804,131)
(2,488.286)
Cash from cash and investments..
(2.318.877)
(1.061.183) i Accrued interest receivable on current assets.
(3.636,396)
(2,691,172)
)
Accrued interest receivable from mvestment fund.
(533,850)
Surplus Fund lovestment Pool.
(20.686,592)
(16,630,547)
Totalinvestments
$339.643.057
$377,759.126 Cash and cash equivalents..
108,428.440 93.302,663 Investments..
254.229,717 302.153,432 Accruedinterest.
6.440,527 5,713,308
$369.098.684
$401,169.403 A - 14
NOTE E-SELF-INSUR ANCE The Commission's se!f-msurance propam covers a pomon of its workers' compensation. general habihty ano automobile hability exposures A self-msurance cash and mvestments account is used to pay claims as incurred. Changes in the balances of tne self-insurance program hability during fiscal 1997 and 1996 were as follows:
1%.9.Z 122.f Balance, beginning of year.
$ 403.348 Claims and changes in estimates.
720,998 747,754 Payments of claims.
(601.556)
(344.406)
Balance, end of year.
}j]2]J0,
$ 403 348 j
Under the self-insurance program the Commission is liable for all claims up to certain maximum amounts per occurrence on an annual basis.
Claims in excess of the maximum amounts are covered by insurance. The maximum amounts at September 30 are as follows:
1992 1996
~
Workers' compensation..
$ 250.000
$ 250,000 Generalliabihty.
1,000.000 1,000.000 Automobile liability.
1,000.000 1,000,000 The Commission's transmission and distribution system is not covered by insurance, since such coverage is generally not available.
It is the opinion of general counsel that the Orlando Utihties Commission, as a statutory commission, may enjoy sovereign immunity in the i
same manner as a municipality, as allowed by florida Court of Appeals rulings. Under said rulings, Florida Statutes limit liability for claims or judgements by one person for general liability to $100,000 or a total of $200,000 for the same incident or occurrence; greater liability can result only through an act of the Florida Legislature. Furthermore, any defense of sovereign immunity shall not be deemed to have been waived or the j
hmits of liability increased as a result of obtaining or providing insurance in excess of statutory limitations. It is also the opinion of general j
counsel that the Commission, as a municipal utihty, is statutority immune from suit for malicious prosecution.
NOTE F-CONTRIBUTED CAPITAL Changes in Contributed Capital are as follows:
i September 30 1997 1996 Source:
i Dectric
$ 1.525.162
$ 22,503.929 i
Water 4.953.422 2.344.545 Totaladditions..
6.478,584 24.848,474 Depreciation....
(3.180,016)
(2.633.368)
Contnbuted Capital at the Beginning of the Year..
112.321,866 90.106,760 Contributed Capital at the End of the Year
$115.620.434
$ 112.321.866 A - 15
NOTE G-LONG TERM DEST Long term debt pancipal outstandmg is as follows-Issue Date 1997 1996 SE_NIOR LIEN:
Series 1992,4.5% to 6.00% due serially December
$ 395,580,000
$ 414,595,000 I
1997 to 2010 1992 Series 1993,4.75% to 5.00% due serially September 139,020,000 139,020,000 2011 to 2013 and 5.125% and 5.00% due 1993 in term formin years 2019 and 2023 Series 1996A, issued in Term Rate Mode with November a mandatory purchase date of 2001 1996 60,000,000
]
ataninterestrateof 4.25%
Series 1996B issued as a fixed rate bond November 39,995,000 due 2011 at a rate of 5.10%
1996 634,595,000 553,615,000
,1UN10R LIEN:
Series 19890,5.00% to 6.75% due in term December 253,945,000 253,945,000 formin years 2017,2020 and 2023 1989 Series 1991 A, 5.50% due in term form in January 115,380,000 115,380,000 year 2026 1991 Series 1992A,6.00% and 5.50% due in term August 74,520,000 74,520,000 formin years 2020 and 2027 1992 Series 1993A,4.1% to 5.50% due serial'y June 86,945,000 87,290,000 1997 to 2010 and 5.50% and 5.25% in 1993 term form in years 2012,2014,2023 Series 1993B,4.15% to 5.40% due serially August 139,240,000 139,240,000 1998 to 2009,5.25% in term farm in year 1993 2023 and Select Auction Variable Rate Securities and Residuat interest Bonds, 5.60% and 5.664% due 2013 and 2017 Series 1994A,3.40% to 5.00% due serially January 136,730,000 137,305,000 1997 to 2012 and 5.00% in term form in 1994 years 2014 and 2020 806,760.000 807,680,000 OTHER DEBT:
Series 1990AA,7.10% Capital Appreciation March 13.263,043 12.461,871 Bonds, *Mmibonds", maturing 1990 February 8,2000 Senes 1991 Variable Rate Demand December 99,995,000 Water & Electric Bond Anticipation 1991 Notes, matured December 1996 13,263,043 112,456.871 Less current portion (23,465,000)
(119,930,000)
$1,431,153,043
$1,353,821,871 A 16
NOTE G-LONG TERM DEBT-Continued Iollowing is a schedule of annual prmcipal and mtetest sinking fund requirements on the revenue bancs and notes outstanding at September 30,1997:
Fiscal Year Ending Principal Interest Total 1998
$ 24,245,000
$ 76,871,095
$ 101,116,095 1999 25,625,000 75,738,256 101,363,256 2000 42,297,500 74,486,437 116,783,937 2001 28.225,000 73,119,568 101,344,568 2002 29,475,000 71,650.696 101,125,696 2003 2007 174,220,000 332,069,215 506,289.215 2008-2012 258,640,000 274,229,858 532,869,858 2013-2017 268,905,000 198,726.037 467,631,037 2018-2022 381,400,000 114,105,447 495,505,447 2023-2027 200,520,000 20,793,788 221,313,788
$1,433,552,500
$1,311,790,397
$2,745,342,897 Senior Lien Bonds: The senior lien bonds are payable and secured by a first lien upon and pledge of the net reveliues derived by the Commission from the operation of the water and electric system and from certain investment income.
The Commission has covenanted in the senior hen bond resolution to fix, establish and maintain rates and collect such fees, rentals or other charges for the services and facihties of the water and electric system, which shall be adequate at all times to pay in each fiscal year at least one hundred twenty-five percent (125%) of the annual debt service requirements for the bonds, and that the net revenues shall be sufficient to make
.all other payments required by the terms of the senior bond resolution.
The senior bond resolution establishes the Revenue fund Account, Renewal and Replacement Fund Account and Sinking Fund Account, which is comprised of the Interest, Principal, investment, Bond Redemption, Debt Service Reserve and Demand Charge Component accounts.
In accordance with the senior bond resolution, gross revenues derived from the operation of the water and electric system are to be deposited in the Revenue Fund and shall be applied only in the following manner:
1, Revenues are first to be used to pay the current operating expenses of the water and electric systern and then all Sinking Fund and Renewal and Replacement Fund requirements.
The balance of any re' enues remaining in the Revenue Fund shall, at the option of the Commission, be used (i) for any lawful purpose in 2.
v connection with the water and electric system and (iD to make any payments of funds to the City of Orlando; provided however, that none of the revenues is ever to be used for the purposes described in (i) and (iD unless all payments required in (1) above, including any deficiencies for prior payments, have been made in full to the date of such use, and the Commission shall have fully complied with all covenants and agreements contained in the bond resolution.
Junior Lien Bonds: The junior lien bonds are payable from, and secured by, a lien upon and a pledge of the net revenues derived by the Commission from the operation of the water and electric system and certain investment income, subject to the prior lien thereon of the Commission's outstanding senior lien bonds.
A 17
WOTE G-LONG.TERf/ DEBT-Continued The Commission has covenanted in the junior lien bond resolution to fa. establish anc mamtam such rates and collect such tees remals or other charges for the services and f acihties as will always provide in each fiscal year, net revenues which will be adequate after the deduction of amounts required to be deposited from net revenues m each fiscal year to provide for the a e Abt service requirement for senior lien bonds, to funOny debt service reserve requirement for such senior lien bonds and to make any required deposit to other funds and accounts established under documents evidencing or securing senior lien bonds at all times to pay in each fiscal year the sum of at least (i) one hundred percent (100%) of the annual debt service requirement for the bonds issued pursuant to the resolution and any pari passu additional bonds hereafter issued for the then current fiscal year and (ii) one hundred percent (100%) of the amount required to be deposited into the Demand Charge Component Account for the then current fiscal year, and that such net revenues will be sufficient to make all 9ther payments required by the terms of the resolution and that such rates, fees, rentals or other charges shall not be reduced so as to be insufficient to provide adequate revenues for such purposes.
The junior lien bond resolution establishes the Sinking Fund which includes the Interest, Principal, Bond Redemption and Demand Charge Component Accounts, in accordance with the resolution gross revenues are to be applied in accordance with the senior lien bond resolution and then to be applied to the Junior Lien Sinking Fund accounts.
Other Debt: The Water and Electric Subordmated Revenue Bonds, Series 1990AA (Minibonds) are issued as fully registered capital appreciation bonds in the initial principal amount of $250 and integral multiples thereof. The Minibonds bear interest at 7.10% per annum compounded semi-annually, and are not subject to redemption prior to maturity. The Minibonds are payable solely from and secured by a lien upon the net revenues derived by the Commission from the operation of the water and electric system and of certain investment income, as provided in the Mmibond Resolution. The lien of the Minibonds upon the net revenues is junior and subordinate to the prior lien thereon of the Commission's outstanding senior and junior lien debt obligations.
Proceeds from the Series 1996A Bonds, which were issued in the amount of $60,000,000 as Multi-Modal bonds with a Mandatory Tender Date of October 1,2001 yielding 4.34%, and the Series 19968 Bonds, which were issued as term bonds in the amount of $39.995,000, maturing on October 1,2011 at a yield of 5.30%, were used to refund the Variable Rate Demand Water & Electric Revenue Bond Anticipation Notes Series (Series 1991) that matured December 10,1996.
Defeased Bonds: Refunding proceeds were invested in United States obligations in irrevocable Escrow Deposit Trust Funds. Such United States obligabons mature at such time so as to provide sufficient funds for the payment of maturing principal and interest on the Refunded Bonds. Allinterest earned or accrued on the United States obligabons have been pledged and will be used for the payment of the principal and interest on each respective bond series.
All Refunded Bonds are treated as extinguished debt for financial reporting purposes and have been removed from the balance sheet.
i l
A 18
NOTE G-LONG TERM DEBT-Continued Defeastd de:;t principal outstanding is as folbus; Remaining Remaining Refunded Refunding Final Outstanding as Principal @
Principal @
Series Series Payment of Refunding 9/30/97 9/30/96 1971 1978 1998
$ 31,530,000
$ 3,005,000
$ 10,005,000 1973 1978 2003 13,525,000 5,725,000 5,875,000 19758 1978 2005 9,730,000 5,270,000 5,700,000 1976 1978 2002 8,500,000 4,500,000 4,950,000 1978 (1) 1978 4/1/2008 94,650,000 4.465,000 6.120,000 1978 1985 4/1/2006 110,330,000 81,215,000 89,160,000 1978A 1985 4/1/2008 40,000,000 30,855,000 32,800,000 19788 1985 4/1/2003 75,000,000 49,165,000 50,890,000 1982 1985 10/1/2003 110,000,000 66,475,000 71,830,000 1989C 1993A 10/1/2000 75,000,000 75,000,000 75,000,000 1991A(2) 1994A 10/1/2020 120.440,000 120,440,000 120,440,000
$688,705,000
$446,115,000
$472,770,000 (1) Special Obligation Bonds, Series 1978.
(2) The Series 1994A bonds only refunded a portion of the Senes 1991 A Bonds.
Related Debt Information: On May 18,1994 the Commission entered into a five year interest rate swap agreement on a notional amount of $25,000,000. Under the terms of the agreement the Commission receives a fixed rate of 5.07% and owes interest calculated at a variable rate based on the Bond Market Association (BMA) Rate until April 1,1999. On December 1,1996, the Commission entered into two additional interest rate swap agreements in the notional amounts of $60,000,000 and $40,000,000. These agreements provide that the Commission receives fixed rates of 4.2843% and 4.976%, respectively, and owes interest calculated at a variable rate based on the BMA Rate.
The agreements terminate on October 1,2000 and October 3,2001, respectively.
Under the swap agreements, only the net difference in interest calculated at fixed and variable rates is actually exchanged with the counter party. The notional amounts are the basis on which interest is calculated; however, the notional amounts are not exchanged. A termination of the swap may result in the Commission's making or receiving a termination payment. However, the Commission does not anticipate nonperformance by the counter party.
The Commission has no material operating or capital leases, A - 19
{
MOTE H-ELECTRIC SUPPLY AGREEMENTS Power Sales Contracts: The followmg table provides a summary of the Commission's power sales contracts with other compames?
Unit Sales System Sales Total No. of Amount of No. of Amount of No. of Amount of Year Contracts Sales MW Contracts Sales MW Contracts Sales MW 1998 5
320 5
159 10 479 1999 5
325 5
159 10 484 2000 5
345 4
54 9
399 j
2001 3
225 3
31 6
256 2002 3
203 1
20 4
223 2003 3
182 1
20 4
202 2004 2
139 0
0 2
139 2005 1
43 0
0 1
43 2006 1
22 0
0 1
22 4
- Some of the change in contract totals is directly related to the Commission's agreement with The Crty of St Cloud. See Note Q for more information.
Florida Municipal Power Pool: In May 1988, an agreement was entered into between the Commission, the City of Lakeland, Florida (LAK) and the FMPA's All-Requirements Project to cooperate in the interconnected operation of the respective electric supply systems, so as to obtain the fullest advantage of each systems' generating resources. In 1995, KUA was added as a member to the Florida Municipal Power Pool NOTE I -DEFERRED COMPENSATION PLAN The Commission offers its employees a deferred compensation plan created in accordance with Internal Revenue Code Section 457. The plan, available to all Commission employees, permits employees to contribute 25% of their base salary, exclusive of total pension, dependent medical
{
care and flexible spending plan contributions, up to $7,500 per year. The deferred compensation is not available to employees until termination, i
rebrement, death, or unforeseeable emergency. Assets and liabilities of the plan are recorded at market value.
The plan is administered by independent plan administrators. Employees' deferred compensation is deposited with the Public Employees BeneF. 3ervices Corporabon (PEBSCO) or Aetna/ Life insurance and Annuity Company (Aetna).
M amounts of compensation deferred under the plan and administered by Aetna, all property and rights purchased with those amounts, and all income attributable to those amounts, are (until paid or made available to the employee or other beneficiary) solely the property of the Commission (without being restricted to the provisions of benefits under the plan), subject only to the claims of the Ccmmission's general creditors. Participants' rights under the plan are equal to those of general creditors of the Commission in an amount equa! to the fair market value of the deferred account for each participant it is the opinion of the Commission's legal counsel that the Commission has no liabihty for losses of the plan administered by Aetna, but does have the duty of due care that would be required of an ordinary prudent investor. The Commission believes that it is unlikely that it will use the assets to satisfy the claims of general creditors in the future.
Effective January 1,1997, Section 1448 of the Small Business job Protection Act (SBJPA) of 1996 was adopted for the portion of the plan administered by PEBSCO. All amounts of compensation deferred and administered by PEBSCO, all property and rights purchased with those amounts, and all income attributable to those amounts, are now held in a trust, custodial account or annuity contract for the benefit of participants and their beneficiaries, and are no longer subject to the claims of the Commission's creditors. As a result, the $8,268,252 of plan assets administered by PEBSCO at September 30,1997, have been removed from the Commission's balance sheet The portion administered by Aetna for which Section 1448 of the SBJPA is scheduled for adoption in fiscal 1998, remains as deferred compensation on the Commission's balance sheet at September 30,1997.
A - 20
NOTE J-PAYMENTS TO THE CITY OF ORL ANDO AND ORANGE COUNTY Two types of payments are made to the City of Orlando pursuant to agreements between tne Commission and the City of Orlando, a revenue based payment and an income-based dividend payment. The revenue based payment is calculated at six percent of gross retail electric and water bilhngsTo customers within the City. This payment is made pursuant to a policy established by the Commission and classified as an operating expense. The income-based dividend payment, which is recorded as a reduction of retained earnings rather than as an operating expense, is calcul6ted using 60% of net income. Dividends for fiscal 1997 and 1996 amounted to $23,439,916 and $27,412,973, respectively, including accrued dividends at September 30,1997 and 1996 of $1,044,000 and $2.949,973, respectively, and for 1996, $3,564,000 that was made as a finalinstallment under the previous agreement.
Payments are made to Orange County based on one percent of gross retail electric billings within the County but outside the city limits of the City of Orlando. This payment, which was $643,102 and $662,827 for fiscal years ended September 30,1997 and 1996, respectively, is classified as an operating (general and administrative) expense. Payments are made pursuant to a policy e:tabiished oy the Commission.
NOTE K-COMMITMENTS AND CONTINGENT LIABILITIES l
1.
The Commission and the other participants in SEC 1 and SEC 2 have entered into coal supply contracts which expire in 2000,2005 and 2006, with renewal options of two, two and five years, respectively. The contracts require minimcm annual purchases as follows:
1998
$47,714,362 1999
$48,290,792 2000
$42,200,516 2001
$29,950,533 2002
$30,267,289 2003
$30,593,548 2004
$30,929,594 2005
$31,275,722 2006
$12,240,234 2.
The Commission and the other participants in SEC 1 and SEC 2 have also agreed to a contract that expires on December 31,2007 for rail delivery of the units' coal purchases.
3.
The Commission has a natural gas contract with a term that ends on March 31,1999. The contract requires minimum annual purchases of 5,140,000 MMBTUs. -
e 4.
The Commission has also entered into contracts which expire in 2004 and 2014 with ten year renewal options for delivery of all natural gas purchases. The contracts require minimum annual delivery as follows:
1998
$6.662,495 1999
$6,440,171 2000
$6,400,46b 2001 2003
$6,761,456 2004
$6,832,106 2005-2014
$6,348,927 G.M
NOTE L-PENSION FL AN lhe Commission has a singte employer defined beneht pension plan covenng all employees who regularly work 20 or more hours per week Employees participate in the plan immediately upon employment and receive a pension benefit equal to 2 h % of the highest inree consecutive years average base earnings times years of employment A maximum of 30 years of service is credited. Benefits are vested after 5 years of serGce.
The pension plan states that the Commission shall make such contributions to the retirement fund as shall be required under accepted actuarial principles to at least be sufficient to maintain the plan as a quahfied defined benefit pension plan meeting the minimum funding standard requirements of the internal Revenue Code with respect to its members, as shall be determined from time to time by the actuary.
The Commission shall not have any right, title, or interest in the contributions made to the retirement fund under the plan, and no part of the retirement fund shall revert to the Commission, except that; a.
Upon complete termination of the plan and the allocation and distribution of the retirement fund as provided herein, any funds remaining in the retirement fund after the satisfaction of all fixed and contingent liabilities under the plan with respect to the Commission may revert to the Commission.
b.
If an excess contribution is made to the retirement fund by the Commission, then such contribution may be returned to the Commission within one year after the payment of the contribution, c.
If the Internal Revenue Service determines that the plan does not meet the requirements of Code section 401(a), the plan shall be null and void, and any contributions shall be returned to the Commission within one year following the determination that the plan does not meet such requirements, unless the Commission elects to make the changes to the plan necessary to receive a determination from the Internal Revenue Service that the requirements of Code section 401(a) are met.
Required participant contribution obligations are four percent of earnings until the later of age 62 or completion of 30 years of service, with no required contributions thereafter. The benefit reduction for early retirement prior to age 62 is 1% per year.
Total payroll and covered payroll for the year ended September 30,1997, amounted to $45.932,639 and $41,682,198, respectively. Employer and employee contributions to the Plan for the year ended September 30,1997 amounted to $3,662,399 and $1,602,389, respectively, reptesenting 8.8% and 9.1% of covered payroll. Payroll and contribution data for fiscal 1996 is included in the three year trend information.
The Commission's contributions for the years ended September 30,1997 and 1996 were made in accordance with actuarially determined contnbution requirements to cover normal cost, utilizing the aggregate actuarial cost method. Significant actuarial assumptions used to compute actuarially determined contribution requirements are the same as those used to compute the pension benefit obligation, including a rate of return on the investment of present and future assets of 8.25% compounded annually and projected salary increases of 6% per year.
The pension benefit obligation is a standard measure of the present value of pension benefrts estimated to be payaole in the future based on employee service date, adjusted for the effects of projected salary increases of 6% per year.
I A - 22
NOT E 1.-P ENSION PL AN-Continued Pan data as of October 1.1996 Catest sctuanal valuahon) as developed by consulbng actuanes is as follows.
Proj!cted benifit fund:d status.
Vested:
- Rebrees and beneficiaries currently receiving benefits, terminated &
disabled employees not yet receiving benefits.
$ 69,885,310 Current employees:
Accumulated employee contributions.,...
17,715,723 Employer-financed (vested),...
50,176,585 Employer-financed (non-vested).
920,401 Total pension benefit obligation
$138,698.019 Trend informahon gives an indication of the progress made in accumulating sufficient assets to pay benefits when due. The following information is presented for the three most recent years available:
Year Ended September 30 1996 1995 1994 Net assets available for benefits.......
$152,202.484
$140,666,432
$127,557,755 Pension benefit obligations (PBO)......
$138,698,019
$130,578,503
$117,414,855 Overfunded PB0..
$ 13.504,465
$ 10.087,929
$ 10,142,900 Net assets available for benefits as a percent of the PB0 109.7 %
107.7 %
108.6 %
lotal payroll..
$45,478.520
$43.577,202
$43,361,111 Annual covered payroll...........
$40,540,266
$40,525,414
$40,645,961 l
Overfunded PB0 as a percent of annual covered payroll 33.3 %
24.9 %
25.0 %
Actuarially determined employer contributions
$ 3,470,125
$ 2,706,006
$ 2,960,272 Employer contributions...
$ 3,555,309
$ 2,896,534
$ 3,230,549 Employer contributions as a percent of covered payroll 8.8%
7.2%
8.0%
i o.
i i
A - 23
NOTE M-PENSION PLAN SUPPLEMENTARV INFORMAYlON (UNAUDITED)
This schedule presents required supplemental histoncal pension benefrt information for the last ten years currently available. This trend information provides information about progress made in accumulatmg sufficient assets to pay benefits when due.
(6)
(1)
(4)
Overfunded Net Overfunded Pension Assets (2)
Pension (5)
Obligation as Year Available Pension (3)
Benefit Annual a Percentage f
Ended for Benefit Percentage Obligation Covered of Annual Septernber Benefits Obligation Funded (1)-(2)
. Payroll Covered Payroll I
30 (Millions)
(Millions)
(1)/(2)
(Millions)
(Millions)
(4)/(5) 1996
$152.20
$138.70 109.73 %
$13.50
$40.54 33.30 %
1995 140.67 130.58 107.73 10.09 40.53 24.90 1994 127.56 117.41 108.64 10.14 40.65 24.97 1993 125.48 107.66 116.55 17.82 40.32 44.20 1992 110.05 99.19 110.95 10.86 38.57 28.16 1991 101.44 91.14 111.30 10.30 36.97 27.86 1990 87.84 83.80 104.82 4.04 32.43 12.46 1989 85.68 71.64 119.60 14.04 30.43 46.14 1988 74.58 61.95 120.39 12.0 28.33 44.58 1987 (A) 70.74 60.72 116.50 10.02 28.04 35.73 (A) The pension benefit obligation was valued by the actuary as prescribed by the Governmental Accounting Standards Board Statement 5 in i
1987. This method differed from prior years in that projected benefits were allocated on a level basis to employee's years of service. This resulted in a 39.2% increase. Contract amendments increased the pension benefit obligation by 68.8% and net assets available for benefits by 44.3%.
NOTE N-0THER POSTEMPLOYMENT BENEFITS in addition to the pension benefits described in Note L, the Commission has a policy to provide health care benefits and life insurance coverage to all employees who retire on or after attaining age 55 with at least 10 years of service or at any age after completing 25 years of service. Currently 346 retirees meet the eligibility requirements. Retirees may also elect to provide health care insurance for their qualifying dependents by paying 35 percent of the calculated premium. The Commission ic a secondary provider for those retirees and/or their dependents who are eligible for Medicare benefrts.
The Commission's health care plan is administered through an insurance company on a Minimum Payment Plan but operates as a set!-insurance program with an addrtional purchased insurance policy to cover those claims over $150.000. In this plan, the insurance company administers the plan and processes the claims according to insurance coverage, with the Commission reimbursing the insurance company for its payouts. Expenses are recorded by the Commission when paid to the insurance company. Total post employment health care costs recognized by the Commission for the years ended September 30,1997 and 1996, were $1,490.103 and $1.439,900, respectively. Post employment life insurance costs during the same periods were $38,553 and $91,011.
Health care coverage is offered to employees who terminate before retirement and certain dependents who are no longer eligible for employee dependent coverage in accordance with federallaw (COBRA). On September 30,1997, there was one COBRA participant. All participants are responsible for 100 percent of their insurance premiums.
A - 24
NOVE O-REGULATION AND COMPETITIVE ENVIRONMENV According to eusting laws of the State of Ilonda the five boa'd members of the Orlanco utilities Commission act as the repatory autho%
for the estabhshment of electnc and water rates. The Flonda Pubhc Service Commission (FPSC) has autnanty to regulate the electnc rate structures" of municipal utilities in Florida. it is believed that " rate structures" are clearly distinguishable from the total amount of revenues which rparticular utihty may receive from rates, and that distinction has thus far been carefully made by the FPSC.
Prior to implementation of any rate change, the Commission files the proposed tanff with the Florida Pubhc Service Commission and has estabhshed the prerequisite of a Public Notice and the holding of a Pubhc Hearing.
Florida Public Service Commission: As noted above, the FPSC has jurisdict:on to regulate electnc " rate structures" of municipal utikties. In addition, the Florida Electric Power Plant Siting Act and the Transmission Line Siting Act have given the FPSC exclusive authority to approve the need for new power plants and transmission lines. The FPSC also exercises jurisdiction under the Florida Energy Efficiency and Conservation Act as related to electric use conservation programs and prescribes conformance to the Federal Energy Regulatory C:,mmission's Uniform System of Accounts. The FPSC also approves territorial agreements and settles temtorial disputes.
Environmental and Other Regulations: Operations of the Commission are subject to environmental regulation by Federal, State and local authorities and to Zoning regulations by local authorities. The Commission's interconnection agreements with investor owned utilities are subject to review and approval by the FERC. FERC also exercises jurisdiction over the Commission under the Public Utility Regulatory Policies Act of 1978. Federal and State standards and procedures that govern control of the environment can change. These changes can anse fron, o
continuing legislative, regulatory, and judicial action respecting the standards and procedures. Therefore, there is no assurance that the electric and water plants in operation, under construction, or contemplated will always remain subject to the regulations currently in effect or will alwaya be in compliance with future regulations.
An inabihty to comply with environmental standards or deadlines could result in reduced operating levels or complete shutdown of individual electric generating units or water plant facilities not in compliance. Furthermore, compliance with environmental standards or deadhnes may substantially increase capital and operating costs.
Competition: The electric utihty industry is facing increasing competitive pressure. The Commission currently faces competition from other suppliers of electrical energy to wholesale customers and from alternative energy sources for other customer groups. In 1997 operating revenues from wholesale customers represent approximately 23% of the Commission's total operating revenues.Various states, other than Florida, have either enacted legislation or are pursuing initiatives designed to deregulate the production and sale of electricity. By allowing customers to choote their electricity supplier, deregulation is expected to result in a shrft from cost-based rates to market-based rates for energy production. Similar initiatives are also being pursued on the federal level. Although the legislation and initiatives vary substantially, common areas of focus include l
. when market-based pricing will be available for wholesale and retail customers, what existing prudently incurred costs in excess of the market-based price will be recoverable and whether generation assets should be separrted from transmission, distribution and other assets.
further, other aspects of the business, such as generation assets and long-term purchase power commitments, would need to be reviewed to o
assess their recoverability in a changed regulatory environment.
A - 25
NOTE P-BUSINESS SEGMENTS The Commission oparates m two business segments - the generabon. transmission and distribution of electricity and the production,
]
treatment, and distnbution of water. A summary of the segment information follows:
Electric Water Total Year Ended September 30,1997:
Operatmg revenues,.
$ 385.949,421
$ 28,828,247
$ 414,777,668 Depreciation and amortization.
49.714.222 4,059.746 53,773,968 Operating income.
96,999,496 9.282,126 106.281,622 Federal Emergency Management Assistance Grant..
Netincome..
36.268,382 2,798,170 39,066,552 Dividends to the City of Orlando 21,799,122 1,640,794 23,439.916 Contributed capital additions....
1,525,162 4,953,422 6,478.584 Utility plant additions (excluding CWiP)...
26,765,502 2.942,793 29.708,295 Construction work in progress additions..
25,004.410 39,715,540 64,719,950 Net utility plant deletions (exclu6mg CWIP).
1.877,198 1,877,198 Net working capital.
108,715,683 2.949,134 111,664,817 Totalassets 1.731,579,922 248,418,6G2
? o'9.998,584 Long-term debt - net....
1,135,809.037 58,718,750
.,;34,527,788 Total equity (accumulated retained earnings and contributed plant)....
376,273,415 127,434,657 503.708,071 Electric Water Total Year Ended September 30,1996:
Operating revenues..
$ 354,418,910
$ 26,649.216
$ 381,068.126 Depreciation and amortization.
40,518,802 3,894,396 44,413,198 Operating income.
89,748,349 7,528,155 97,276,504 i
Federal Emergency Management Assistance Grant..
133,009 133,009 Netincome..
37,179,367 2,569,594 39,748,961 Dividends to the City of Orlando....
26.042,324 1,370,649 27,412,973 Contributed capital additions..
22,503,929 2.344.545 24.848.474 Utilrty plant addrbons (excluding CWIP)...
7,495,550 947.182 8,442,732 Construction work in progress additions.
82,630,314 31,329,449 113,959,763 Net utility plant deletions (excluding CWIP),
1,271,781 41,757 1,313.538 t
Net working capital......
17,402,418 (5,206,574) 12,195,844 1,775,161,075 201,050.444 1,976,211,519 Totalassets..
Long-termdebt net..
1,160,464,140 49,893,948 1,210,358.088 Total equity (accumulated retained earnings and contributed plant) 360,263.955 121,338.896 481,602,851 NOTE Q-INTERLOCAL AGREEMENT BETWEEN THE COMMISSION AND THE CITY OF ST. CLOUD On April 25,1997, the Commission entered into an interlocal agreement with the City of St. Cloud (STC) to assume responsibility for providing retail electric energy services to all STC customers and to assume control and operation of STC's electric transmission and distribution system and certain generation facilities. In return, the Commission is obligated to pay STC 9.5% of retail sales provided to STC customers (a mmimum of
$2,361,000 annually, unless certain events occur) and to pay STC approximately $2.232.000 annually. less certain contingent credits, for use of its electric system. The term of the Agreement commenced May 1,1997 and contmues in effect until September 30,2022. The Commission's revenue increased $11,900.000 dunng 1997 as a result of this agreement.
s A 26
l Diloitte&
ToucheLLP Certified Public Accountants Sune 1800 200 South Orange Avenue Orlando, Florida 32801 Telephone: (407) 246-8200
{
j Facsimile: (407) 422-0936 l
l INDEPENDENT AUDITORS' REPORT i
To the Commissioners of the Orlando Utilities Commission:
We have audited the accompanying balance sheets of the Orlando Utilities Commission (the
" Commission") as of September 30,1997 and 1996, and the related statements of revenues, expenses, and changes in retained earnings and of cash flows for the years then ended. These fmancial statements are the responsibility of the Commission's management. Our responsibility is to express an opinion on these fmancial statements based on our audits.
l We conducted our audits in accordance with generally accepted auditing standards and Government Audmng Standards, issued by the Comptmlier General of the United States. Those standards require that we plan and perform the audits to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall fmancial statement presentation. We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the fmancial statements referred to above present fairly, m all material respects, the fmancial position of the Commission at September 30,1997 and 1996, and the results ofits operations and its cash flows for the years then ended in conformity with generally accepted accounting principles.
t in accordance with Government Auditing Standards, we have also issued a report, dated November 17, f
1997, on compliance and on intemal control over fmancial reponing.
hA$ /A U November 17,1997 DeloitteTouche Tohmatsu international
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Utilities Commission, City of New Smyrna Beach, Florida x
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Comprehensive Annual Financial Report (A Component Unit of the City of New Smyrna Beach, Florida)
September 30,1997 and 1996
Utilities Commission, City of New Smyrna Beach, Florida (A Component Unit of the City of New Smyrna Beach, Florida)
Comprehensive A nnual Financial Report For the Fiscal Years Ended September 30,1997 and 1996 UTILITIES COMMISSIONERS Peter E. Mallory, Chairman Carolyn F. Bosiger, Vice Chairman William F. Feger, III, CPA, Secretary-Treasurer Raymond E. Custer, Assistant Secretsy-Treasurer James U. Martin, Commissioner DIRECTOR OF UTILITIES Ronald L. Vaden CHIEF FINANCIAL OFFICER Roberto O. Montalvo, CPA LEGAL COUNSEL INDEPENDENT AUDITORS Hal Spence, P.A.
Brent Millikan & Company, P.A.
TABI2 OF CONTENTS
. COMPREHENSIVE ANNUAL FINANCIAL REPORT September 30,1997 and 1996 -
UIlLITIES COMMISSION, CITY OF NEW SMYRNA BEACH, FIDRIDA NEW SMYRNA BEACH,FIDRIDA Refamace
- Panes latroductor
. Title Page........................................y Section i
^d= Chart..........................................................
iii
(
CertiScate ofAchievennant iv Ietter of Trsnsmittal.................................... -....................
v-x Fi=== rial Section Indepandant Auditors' Report.................................................
1 Financm3 Stat =nant=-
Comparative R=1ance Sheeta.......................
Statement 1 2-3 St=*=nants ofRevenue, Expenses, and Changes in Retamed Earmass..............
Statamant 2 4
Stat =nants of Cash Flows...............................................
Statement 3
=5 Notes to the Financial Statamante...........................................
6-16 Supplemental Detail laformation of the Utility Systems Schedule ofRevenue, Fvpanaam and Changes in Pat = mad Earnags..............
Wh-hila 1 -
17 Schedule of Revenue. Receipts, Fvpanm and Disbur=amants - Budget and Actual-Electric System (Non.GAAP Budgetary Basis)...................
Schedule 2 18 Schedule ofRevenue, Receipts, Expenses and Disbur= aman *= - Budget and Actual-Water System (Non GAAP Budgetar Basis).....................
Schedule 3 19 j
Schadule ofRevenue, Receipts, Expenses and Disbur=amante - Budget and Actual - Pollution Control System (Non GAAP Budgetary Basis),,...........
hh~ hila 4 20 Schedule ofRevenue, Roompts, Fvpan-and Disburnamants - Budget and Actual - Water Reuse System (Non GAAP Budgetsy Basis)..................
hhahile 5 21 Sch-hile of Operatag Fvpansas - Electnc System '..............................
Sch-hite 6 22 Schedule of Operstmg Expenses - Water System..............................
Schedule 7 --
23 Schedule of Operstag Fvpannan - Pollution Control System,......................
Schadale 8 24 Schedule of Operatag Expenses - Water Rouse System..........................
Schedule 9 25 bhadale ofInterest Earmngs..............................................
Schadule 10
' 26 hhadale ofDebt Service Requumnanta to Maturity.............................
Schedule 11 27 StatisticalSection Schadula of Expenses by Function - Last Ten Fiscal Years............................
TableI 28-29 Schedule ofRevenues by Source - Last Ten Fiscal Yenn............................
Table H 30-31 Demosmphic Statistics.....................................................
TableHI 32 Property Value, Construction, and Bank Deposits -Iast Ten Fiscal Years.................
TableIV 33 Rehadule ofinsurance in Force...................................,.............
Table V 34 Ten largest Electric Customers.............................................,..
Table VI 35 -
- Ten largest Water Customers..................................................
Table VH 36 Schedule of Revenue Certificate Coverage...................
Table VHI 37 Histancal Peak Demand and Electric System Net Energy Raph:., Water Damand, and Sewage Flows.................................................
TableIX 38 Utility Rate Schedule - Electric Service Table X 39 Utility Rate Schedule - Water Scrvice........................................
Table XI 40 Utility Rate Ach-hile - Pollution Control and Water Reuse Service....................
TableXII 41 Suppleniental Audit Reports
' Th Auditors' Report on Wi"......................................
42 1
' Auditors' Report on Internal Control Structure...............
43-44 I' m - t Comments....................
45-46 1:
I ORGANIZATION CHART
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l ORGANIZATION CIIART IJr!LITIES COMMISSION. CITY OF NEW SMYRNA BEACII. FLORIDA NEW SMYRNA BEACl!. FLORIDA
[
Utilities t
Commissioners
(
Professional Director Commission Consultants ofUtilities Attorney Water System Personnel /
Engmeermg Finance Electric Pollution Control Operations /
Public Relations Operations Water Reuse Generation Risk Management Water Environmental
[
Engineering Accounting Transmission /
Production /
System Distribution Treatment Operations
(
Operations Customer Pollution Electrical Service /
Fleet Control Generation Engineering Meter Maintenance Treatment Reading Operations Management substation l
Water Information and Reuse Systems Relay Treatment Maintenance Operations
{
Water L
Materials Distribution Management Field Operations Sewer
(
~
Collection Field Operations F
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CERTIFICATE OFACIIIEVEMENT For the year ended September 30,1996 The Government Finance Officers Association of the UnitedStates and Canada (GFOA) awarded a Certificate of Achievementfor Excellencein FinancialRepmting to the Utilities Commission, City of New Smyrna Beach, Florida, for its Component Unit Financial Reportfor thefiscalyear ended September 30,1996.
In order to be awardeda Cert:Jicate ofAchievement, a governmental unit must publish an easily readable and efficiently organized comprehensive annualfinancial report, whose contents conform to program standards.
Such reports must satisfy both generally accepted accounting principles and applicable legal requirements.
A Certificate ofAchievement is validfor aperiod ofone year only.
Management believes that this repori continues to conform to Certificate ofAchievement Program standards.
l
l l
CERTIFICATE OF ACIIIEVEMENT For the Yest Ended Septembez 30,1996 UTILDTES COMMISSION, CITY OF NEW SMYRNA BEACH, FLORIDA NEW SMYRNA BEACH, FLORIDA Certificate 0::
Acaievement for Exce..ence in Financia Reporting Presented to Uti.ities Commission, City of New Smyrna Beaca, Forica For its Comprehensive Annual Financial Report for the Fiscal Year Ended September 30,1996 A Certificate of Achievement for Excellence in Financial Reporting is presented by the Government Finance Officers Association of the United States and Canada to government units and public employee retirement systems whose comprehensive annual financial reports (CAFRs) achieve the highest standards in government accounting and financial reporting.
K
--do President ut Executive Director iv
- - ~ ~ ^
-n w_
w LETTER OF TRANSMITTAL
N UTILITIES COMMISSION CITY OF Nc0 SMYRNA BEACH, FLORIDA l
ELECTRIC, WATER, POLLUTION CONTROL Pbet Office Box 100 200 Canal St.
New Smyne Beach, Florida 32170-0100 (904) 4271M1 November 21,1997 To the Chairman and Members of the Utilities Commission City of New Smyrna Beach, Florida The Comprehensive Annual Financial Report of the Utilities Commission, City of New Smyrna Beach, Florida, for the fiscal yean ended September 30,1997 and 1996, is hereby submitted. Responsibility for both the accuracy of the pmsented data and the completeness and fairness of the presentation, including all disclosures, rests with the Utilities Commission. To the best of our knowledge and belief, the enclosed data are accurate in all material aspects and an reponed in a manner designed to present fairly the financial position and results of operations of the Utilities Commission. All disclosures necessary to enable the reader to gain the maximum understanding of the Utilities Commission's financial affairs have been included.
This fisncial repon is presented in four sections: introductory, financial, statistical, and cortpliance (Auditor General of the State of Florida). The introductory section includes this transmittal letter, the Utilities Commission's organization chart, a list of principal oflicials, the table of contents and a reproduction of the Certificate of Achievement for Excellence in Financial Reporting for 1996. The financial section includes the basic financial statements and the independent auditors' repon on the financial statements. The statistical section includes selected financial and demographic information, generally presented on a multi-year basis, and selected ten-year historical financialinformation.
The Utilities Conunission is required to be audited in accordance with Chapter 10-500, Rules of the Auditor General of the State ofFlorida. Information related ta this audit, findings and recommendations, and auditors' reports on the internal control structum and compliance with applicable laws and regulations, are included in the compliance section of this report.
REPORTING ENTITY AND SERVICES PROVIDED The Unlities Commissicri, City of New Smyrna Beach, Florida, provides a full range of electric, water, pollution control and water reuse senices to its customers both inside and outside the city limits. These activities are fully accounted for in this financial repon.
The funds and entities related to the operation of the Utilities Commission which are included in these financial statements am a component unit of the City of New Smyma Beach, Florida, and an integral pan of the City's reporting entity. The Comprehensive Annual Financial Report of the Utilities Conunission is issued separately to provide a comprehensive financial reponing summary and presentation to the Utilities Commission and its revenue certificate holders. Audited financial statements of the Commission's oversight unit (City of New Sm>Tna Beach, Florida), are available upon request from the City of New Smyrna Beach, 210 Sams Avenue, New Smyrna Beach, Florida, 32168.
ECONOMIC CONDITION AND OUTLOOK The economic condition and out'ook of the Utilities Commission have continually improved during the past several years due in large part to the controlled development of residential and commercial propenies which in turn has increased the Cormnission's quality customer base. In addition, substantial increases in the local tourism, light manufacturing, and senice related business industries have had a positive effect on the area's employment statistics.
v
To the Chairman and Memben of the Utilities Conunission City of New Smyrna Beach, Florida November 21,1997 Page 2 MAJOR INITIATIVES The Commission has established a Capital Improvements Plan (Plan) through 2002. The capital expenditures of this Plan are scheduled to be funded through a combination of connection fees, Renewal and Replacement Fund proceeds, proceeds of the State Revolving Fund Wastewater Construction Loan Program, and other funding. These ctpital improvement plans are in addition to the annual capital requirements for routine extensions of existing utility facilities l
to serve new customers.
W Significant system improvements contemplated in the Plan consist of the following:
Voltage conversion from 13 kV to 23 kV of the Commission's 13 kV electric system in the mainland area; e
e North Causeway Intracoastal Waterway undenvater electric cable crossing; e
Western area expansion of the water system plant in the Interstate 95-State Road 44 area; Construction of a western 6 MGD wastewater pollution control facility; e
i e
Expansion of force mains and lift stations to link with the westem pollution control facility; and Development and constmetion of additions to the water reuse system which consists ofIdgh senice pumping e
facilities, extension of the transmission system to connect to the western pollution control facility, and transmission lines to provide irrigation senice to prospective customers.
The construction of the 6 MGD wastewater pollution control facility will be a significant addition to the Commission's pollution control system. It will provide advanced wastewater treatment capabilities, additional capacity for future growth and the means to meet and/or exceed current emironmental regulatory requirements. The financing of this facility will be through the Stnte Revohing Fund Wastewater Construction Loan Program.
Commission forecasts for the ciectric, water, pollution contrL1, and water reuse systems indicate that the existing and planned major facilities will be adequate to accommodate the expected growth during the five year period of the Plan.
FINANCIALINFORMATION Management of the Commission is responsible for establishing and maintaining an internal control structure designed to ensure that the assets of the Commission are protected from loss, theft or misuse and to ensure that adequate accountmg data is compiled to allow for the preparation of financial statements in conformity with generally accepted accoundng principles. The intern:d control structure is desigt.ed to provide reasonable, but not absolute, assurance that these objectives are met. The concept of reasonable assurance recognizes that: (1) the cost of a control should not 3
exceed the benefits likely to be derived; and (2) the valuation of costs and benefits requires estimates and judgements g
by management.
Budgeting Controls l
The Utilities Commission maintains an integrated system of budgetary controls. The objective of these budgetary l
controls is to ensure compliance with legal prmisions embodied in the approved annual budget. The operating l
l aethities of the electric, water, pollution control and water reuse systems are included in the annual budget. The level 5
of budgetary control (that is, the level at which expenditures cannot legally exceed the appropriated amount) is I
e I
o J
To the Chairman and Members of the Utilities Commission City of New Smyrna Beach, Florida November 21,1997 Paga3 established by function and activity within each individual operating system. The Commission also maintains a separate encumbrance accounting system as one technique of accomplishing budgetary control. This system is used exclusively to maintain budgetary control and is not utilized for purposes of presenting financial statements prepared in accordance with generally accepted accounting principles.
As is demonstrated by the financial statements and schedules in the financial section of this report, the Utilities Commission continues to meet its responsibility for sound financial management.
Utility Operations In compliance with Resolution No.16-75, the electric, water end pollution control systems are accounted for as a single enterprise fund. As of September 30,1997, the Utilities Commission served 20,501 electric customers,16,727 water cimamm.14,356 pollution control customers, and 188 reclaimed water customers. Service totals for the last five years are summarized below:
Pollution Reclaimed Fiscal Electric Water Control Water Xgg Accounts Accounts Accounts Accountc 1993 19,596 10,378 8,051 1994 19,907 10,618 8,188 20 1995 (*).....
20,055 16,148 13,762 105 1996 20,139 16,275 14,017 165 1997 20,501 16,727 14,356 188
(*)
The incitase in customers experienmd in 1995 was the result of a change in the method of billing water and pollution control senices for multi-family customers, which were previously billed as a single utility Customer.
The current year's operating revenue from the combined utilities systems totaled $32.85 million, a decrease of 2.7%
below last year's $33.76 million. This anticipated decrease, which was primarily the result of a substantial reduction in electric utility rates effective October 1,1996, was implemented in conjunction with the Commission's planned expense reduction program in an effort to become more competitive in providing electric senices. The amotmt of revenue from various sources and the increases and decreases over/under last year are shown in the following tabulation:
Over 1997 (Under)
Amount Percent 1996 Source of Ooeratinc Revenue
_(000's) ofTotal (000's)
Electric system..
24,901 75.81 %
$ (972)
Water system...
4,188 12.75 %
42 Pollution control system.
3,326 10.13 %
(7)
Water reuse system 432 1.31 %
20 Totals 32.847 _100 00 %
$ (917) vii
i I'
To the Chairman and Members of the Utilities Commission City of New Smyrna Beach, Florida Noveeuber 21,1997 Page 4 The current year's operating expenses from the combined utilities system totaled $28.71 million, a decrease of 2.1%
g i
below last year's amount of $29.32 million. This decrease is the combined result of new expense control measures gI implemented during the fiscal year. Increases and (decreases) in the levels of expenses for the indisidual systems over the preceding year are shown in the following tabulation:
Over 1997 (Under)
Amount Percent 1996 "l
Ooeratine Emnse by Function (000'st ofTotal (000's)
Electric system 22,562 78.57 %
(182) g Water system 3,218 11.21 %
(194)
E Pollution control system 2,758 9.61 %
(242)
Water reuse system 177 0.61 %
17 Totals 28.715 100,00 %
$ (601)
DebtAdministration The revenue certificate debt coverage ratio is a useful indicator of the Utilities Commission's debt position. The revenue certificate coverage has continued to remain strong over the past three years even in years of debt issuance as is summarized in the following in the following three year tabulation:
1997 1996 1995 Operating revenues
$ 32,847,472 33,763,090 33,135,452 Interest and other income.
1,097,587 1,076,766 1,117,899 Capacity and other fees 1,785,424 1,383,945 798,090 Assessment collections 559 1.331 3.106 Revenues per certificate resolution 35,731,042 36,225,132 35,054,547 Cost of Operation and Maintenance, net of depreciation and required payments to City.
23.314.340 23.853.373 24.481.770 Net revenues per certificate resolution 12.416.702 12.371.759 10.572.777 Annual debt service requirement 5.083.448 5.542.574 5.521.252 Coverage ratio 2.44 Times 2.23 Times 191 Timsji As of September 30,1997 the Utilitie:: Commission had outstanding $61.63 million of revenue certificates payable.
All of these obligations are secured by a first lien on and a pledge of the net revenues of the system.
I viii I
To the Chairman and Members of the Utilities Commission City ofNew Smyrna Beach, Florida November 21,1997 Page5 The Commission's outstanding revenue certificates ratings from Moody's, Standard & Poor's, and Fitch's as follows:
Moody's Standard & Poor's Fitch's Utilities System Revenue Certificates, Series 1992 Aaa AAA(FGIC Insured)
Utilities System Refunding Revenue Cenificates, Series 1993 Aaa AAA (FGIC Insured)
Utilities System Refunding Revenue Certificates, Series 1996 AAA (AMBAC Insured) AAA The debt service requirements on these obligations are detailed in the notes to the financial statements and in Schedule 11 of the supplementary section of the financial statements.
Cash Management Cash temporarily idle during the year was invested through the use of a competitive bid procedure in short-term time deposits and medium short-term investments. Shoner im'estment periods were utilized by the Utilities Commission due to the rapid changes and uncertaintics ofinterest rates experienced during the fiscal year. The amount ofinterest carned during the year was $923,930, of which $25,670 was credited to reduce capitalized interest expense for the year.
The Commission's cash and investments on hand at September 30,1997 and 1996, totaled $20.1 million and $18.6 million, respectively. The individual components are as follows:
1997 1996 Current assets:
Operating cash and cash equivalents..
1.856.949 1.667.600 Restricted assets:
Debt service funds 8,377,546 7,939,483 Renewal and replacement funds 5,426,009 3,731,600 Construction funds 583,125 Customer deposits 1,041,558 1,023,920 CR-3 decommissioning fund Mandate pollution control plant fund 1,427,542 1,245,542 863,221 Rate stabi'ization fund 1.982.120 1 532.965 18.254.775 16.919.856 Total cash andinvestments
$ 20.111.723
. I 8.587.4M The Commission's imestment policy is to minimize credit and market risks while maintaining a en vtitive yield on its ponfolio. Accordmgly, deposits were either insured by federal depository insurance or collateral tn accordance with the Florida Security for Public Deposits Act (the "Act"). All collateral on deposits was held either by the Commission, or by the State of Florida in accordance with the applicable provisions of the Act. All of the Commission's investments held at year-end are classified in the category oflowest credit nsk (backed exclusively by the full faith and credit of the U. S. government) as defined by the Governmental Accounting Standards Board.
ix
To the Chairman and Members l
of the Utilities Commission City of New Smyrna Beach, Florida November 21,1997 Page 6 1
OTHER INFORMATION IndependentAudit l
Resolution Number 28-78 and other local and state statutes require an annual audit of the books of account, financial E
records and transactions of all administrative departments of the Utilities Commission by an independent certified B
public accountant selected by the Utilities Commission. The certified public accounting firm of Brent Millikan &
i Company, P.A. was selected by the Commission to satisfy this requirement. Their independent auditors' report on the financial statements and schedules of the Commission has been included in the financial section of this report.
Awards - Certipcate ofAchievement i
l The Govermnent Finance OfIlcers Association (GFOA) awarded a Cenificate of Achievement for Excellence in l
Financial Reponing to the Utilities Comnussion, City of New Smyrna Beach, Florida, for its component unit financial repon for the fiscal year ended September 30,1996. We are also quite proud of the fact that we have been awarded g
with this Certificate for the nineteenth consecutive year.
g in order to be awarded a Certificate of Achievement, the Commission must publish an easily readable and efliciently 3
organized component unit annual financial report, whose contents conform to program standards. Such reports must g
satisfy both generally accepted accounting pdaciples and applicable legal requirements.
A Cenificate of Achievement is valid for a period of one year only. We believe our current report continues to conform to Cenificate of Achievement Program iequirements, and we are submitting it to GFOA to determine its eligibility for I
another certificate.
Acknowledgments The preparation of this repon on a timely basis could not have been accomplished without the efficient and dedicated g
services of the entire staff of the Finance Depanment. Each member of the depanment has our sincere appreciation g
for the contributions made in the preparation of this repon.
l We would also like to thank the individual members of the Utilities Commission for their interest, support, and l
leadership in planning and conducting the financial operations of the Utilities Commission in a most responsible and progressive manner.
Respectfully submitted, l
0 b h.
&G Ronald L Vaden Roberto O. Montal o, CPA Director of Utilities Chief FinancialOfIicer I
X I
1l FINANCIAL SECTION '
This section is composed of thefollowing:
Independent Auditors' Report FinancialStatements '
Supplemental Financial Information
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INDEPENDENTAUDITORS' REPORT
f BRENT MILLIKAN & COMPANY, P.A.
CERTIFIED PUIElC ACCOUNTANTS INDEPENDENT AUDITORS' REPORT To the Honorable Chairman and Commissioners Utilities Commission, City ofNew Smyrna Beach, Florida New Smyrna Beach, Florida f
We have audited the accompanying balance sheets of Utilities Commission, City of New Smyrna Beach, Florida, as of September 30,1997 and 1996, and the related statements of revenues, expenses and changes in retained earnings, and cash flows for the years then ended. These financial statements are the responsibility of Utilities Commission, City of New Smyma Beach, Florida's management. Our responsibility is to express an opinion on these financial statements based on our audits.
We conducted our audits in accordance with gener:'lly accepted auditing standards and GovernmentAuditing Standards, issued by the Comptroller General of the United States. Those standards require that we plan and perform the audit to obtain reasonable assurance about whethef the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonabic basis for our opinion.
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In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of Utilities Commission, City of New Smyrna Beach, Florida, as of September 30,1997 and 1996, and the results ofits opcrations and its cash flows for the years then ended in conformity with generally accepted accounting principles.
In accordance with Government Auditing Standards, we have also issued a report dated November 7,1997, on our consideration of Utilities Commission, City of New Smyrna Beach, Florida's internal control structure and a report dated November 7,1997 on its compliance with laws and regulations.
Our audits were conducted for the purpose of forming an opinion on the basic financial statements taken as a whole. The supplemental schedules listed in the table of contents are presented for pmposes of additional analysis and are not a required part of the basic financial statements of Utilities Commission, City of New Smyrna Beach, Florida. Such information, except for the statistical data, has been subjected to the auditing procedures applied in the audit of the basic financial statements and, in our opinion, is fairly stated in all material respects in relation to the basic financial statements
(
taken as a whole. The statistical data has not been subjected to the auditing procedures applied in the audit of the basic L
financial statements and, accordingly, we express no opinion on it.
In connection with our audit, nothing came to our attention that caused us to believe that Utilities Commission, City of f
New Smyrna Beach, Florida, was not in compliance with any of the terms, covenants, provisions, or conditions of section 16 ofResolution No. 28-78, dated June 30,1978, as amended. However, it should be noted that our audit w~as not directed primarily toward obtaining knowledge of such noncompliance.
New Smyrna Beach, Florida November 7,1997 1
205 MAGNOLIA ST.
- NEW SMYRNA BEACil, FL 32168 + (904) 427-1333 + FAX (904) 427-5823 MEMBER: Amerkan Institute of Certdied Pubhc Accountan.ts.nd AICPA Private Companies Practke Sectmn
FINANCIAL STATEAfENTS
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Il COMPARATIVE BALANCE SHEETS September 30,1997 and 1996 E
UTILITIES COMMISSION, CITY OF NEW SMYRNA BEACH, FLORIDA E
NEW SMYRNA BEACH, FLORIDA ASSETS I
1997 1996 Ii Utility Plant:
El e ctri c plant...................................................................... $ 58,408,08956,848,537 Waterplant........................................................................
29,054,597 28,292,647 Pollution control plant.............................................................
23,909,762 23,521,591 Water reuse plant...................................................................
5,186,078 4,517,993 l
Ge ne ral plant........................................................................
9,579,804 9,251,418 126,138,330 122,432,186 E
Less: accumulated depreciation and amortization.............................
(47,097,682)
(44,074,957)
E 79,040,648 78,357,229 Construction work in progress....................................................
4,973,836 4,723,089 Utility plant, net of accumulated depreciation and amortization......
84,014,484 83,080,318 Restricted Assets:
g Cash and cash e quivalents........................................................
17,922,575 13,542,156 g
Investments, at cost................................................................
332,200 3,377,700 Total restricted assets..........,............................................
18,254,775 6,919,856 Current Assets:
Cash and cash equivalents.......................................................
1,856,949 1,667,600 Accmed interest receivable......................................................
158,253 139,611 Accounts receivable (ne t)..........................................................
. 1,769,124 1,661,242 Unbilled accounts re ceivable.....................................................
2,138,304 1,873,170 Inve ntories..........................................................................
1,623,986 1,622,995 E
Prepaid expenses and o ther assets................................................
76,227 150,084 g
Assessments re ceivable............................................................75,130 75,689 Total current assets..........................................................7,697,973 7,190,391 Deferred Charges and Other Assets:
Unamortized debt e xpense........................................................
640,885 703,865 Deferred amount on advance refunding.......................................
1,321,782 1,491,663 Total deferred charges and other assets.................................
1, % 2,667 2,195,528 To tal asse ts................................................................... $ 111.929.899 109.386,093 I
The accompanying notes are an integral part of the financial statements.
2
i Statement 1 I
LIABII2 TIES AND UTilJTYEQUITY 1997 1996 Utility Equity-
- I Contri buted capital................................................................. $ 34,679,972 32,804,356 i
Retained Earnings:
Reserved for restricted debt service funds..........................
4,618,055 4,868,056 I
U nre served.....................................................................
4,199,964 2,323,932 8,818,019 7,191,988 Total utility e quity..........................................................
43,497,991 39,996.344 I.ong-Term Debt:
Revenue certificates payable (net of current portion).........................
59,435,000 61,630,000 Less: unamortized debt discount................................................
(1,100,063)
(1,190,294)
Total long-term debt.........................................................
58,334,937 60,439,706
'l Restricted Fund Liabilities:
m Revenue certificates payable (current portion)...............................
2,195,000 1,680,000 Accrued interest payable...........................................................
1,564,491 1,391,427 i
Ac counts payable...................................................................
101,335 163,359 I
Customers' deposi ts...............................................................
1,041,558 1,023,920 Deferred allowance for decommissioning costs................................
1,427,541 1,245,542 Total re stricted fund liabilities.............................................. 6,329,925 5,504,248 Current Liabilities:
Accounts payable..................................................................1,750,517 1,588,731 I
Accrued habili ties..................................................................
680,358 745,169 D ue to other governments.........................................................
799,728 674,390 Tots! current liabilities..................................................... 3,230,603 3,008,290 Other Noncurrec. Liabilities:
De ferred compensated abse nces.................................................
439,262 381,781 De ferred credits - other..........................................................
97,181 55,724 Total other noncurrent liabilities........................................
536,443 437,505 Total liabilities................................................................
68,431,908 69,389,749 Total liabilities and utility e quity.......................................... $ 111.929.899 109.386.093 I
3 I
STATEMENTS OF REVENUE, EXPENSES AND Statement 2 CIIANGES IN RETAINED EARNINGS For the Fiscal Years Ended September 30,1997 and 1996 UTILITIES COMMISSION, CITY OF NEW SMYRNA BEACH, FLORIDA NEW SMYRNA BEACH, FLORIDA 1997 1996 Operating Revenue:
Sales........................................................
$ 32,525,896 33,466,952 Other revenue.......
321,576 296,138 Total operating revenue...................................
32,847,472 33,763,090 Operating Expenses:
E Prod uction e xpe nse s..........................................................
16,469,270 16,0N,020 E
Transmission, distribution. and sewage collection and treatment.....
2,624,394 3,053,810 Customer accounting..................
726,214 819,986 m
Administrative and ge neral...............................................
3,312,462 3,778,385 g
Required payments to the City of New Smyrna Beach...
1,949,594 2,076,104 Deprecianon and decommissioning.........................................
3,632,710 3,S83,478 Total ope rating expenses..................................................
28,714,644 29,315,783 Ope ra ting income.........................................
4,132,828 4,447,307 Nonoperating Revenue (Expense):
I nterest earni ngs...........................................................
898,260 824,645 O the r inco me....................................................................
199,327 252,121 Interest and debt expense.........................................................
(3,462,756)
(3,731,690)
Othe r e x pe nse s.....................................................................
(39,840)
(20,647)
Loss on disposal of asse ts...................................................
(101,788)
(38,871)
Total nonope rating (expe nse)...............................................
(2,506,797)
(2,714,442)
Ne t i nco me................................................
1,626,031 1,732,865 Retained earnings, beginning of year.....................................
7,191,988 5,459,123 Retained earnings, end of year...................
8.,818,019 7.191.988 I
l The accompanying notes are an integral part of the financial statements.
4 I
STATEMENTS OF CASII FLOWS Statement 3 For the Fiscal Years Ended September 30,1997 and 1996 UTILITIES COMMISSION, CITY OF NEW SMYRNA BEACH, FLORIDA NEW SMYRNA BEACH, FLORIDA 1997 1996 Cash Flows From Operating Activities:
Opera ti ng inco me..................................................................... $ 4,132,828 4,447,307 Adjustments to reconcile operating income to net cash provided by operating activities:
Depre ciation and decom missioning........................................
3,632,710 3,665,974 Provision for losses on receivables.......................................
51,328 89,769 Decrease (increase) in operating assets:
A ccounts receivable................................................
(159,211)
(192,974)
Unbilled accounts receivable........................................... (265,134) 905,577 Assessments and interest receivable...................................
559 (14,463)
Inve nto rie s................................................................
(991) 4,481 Prepaid expe nses...................................................
73,857 (10,980)
Increase (decrease) in operating liabilities:
A ccounts payable..........................................................
99,762 207,320 Due to other governments.............................................
125,338 30,257 Customer depos its.......................................................
17,638 15,339 A ccrued liabilities.........................................................(64,811)
(148,164)
De fe rred liabilities...................................................
98.938 (338,634)
Net cash provided by operating activities.................................
7,742,811 8,660,809 Cash Flows From Noncapital and Related Financing Activities:
Nonope rating revenue................................................................
199,327 252,121 Nonoperating expe nses..............................................................
(39,840)
(20.647)
Net cash provided by (used in) noncapital and related financing activities...................................................
159,487 231,474 Cash Flows From Capital and Related Financing Activities:
D ebt reduction outlays............................................................
(1,680,000)
(1,720,000)
Amount paid in advance refunding..............................................
(880,7%)
Contributed capital...................................................................
1,875,616 1,483,084 Proceeds from sale of property and equipment..................................
12,448 10,209 Acquisition and construction of ca Interest paid..........................pital assets................................
(4,499,112)
(3,959,749)
(2,966,60j0 (3,849.280)
Net cash provided by (ities.........pital and used in) ca related financing activ (7,257,648)
(8,916,532)
Cash Flows From Investing Activities:
Purchase of investment securities.................................................
(3,500,000)
Proceeds from sale and maturities ofinvestment securities..................
3,045,500 7,493,500 Interes t recei ved..................................................................
879,618 996,021 Net cash provided by (used in) investing activities......................
3,925,118 4,989,521 Net increase (decrease) in cash and cash equivalents...................
4,569,768 4,%5,272 Cash and cash equivalents, beginning of year......................................
15,209,756 10.244,484 Cash and cash equivalents, end of year............................................. $ 19.779,524
,_ 15 209,756 t
Noncash Capital and Related Financing Activities:
Acquisition of capital assets from developer contributions.................... $
116,481 The accompanying notes are an integral part of the financial statements.
5
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NOTES TO THE FINANCIAL STATEMENTS
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NOTES TO THE FINANCIAL STATEMENTS September 30,1997 and 1996 ITflLITIES COMMISSION, CITY OF NEW SMYRNA BEACH, FLORIDA l
NEW SMYRNA BEACH, FLORIDA f
Notc 1:
General Summary The accounting policies of the Utilities Commission, City of New Smyrna Beach, Florida, (the " Utilities of Commission") conform to the generally accepted accounting principles as promulgated by the American
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Significant Institute of Certified Public Accountants, the Financial Accounting Standards Board, the Gmernmental Accounting Accounting Standards Board, and the Federal Energy Regulatory Commission.
Polices
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Reporting Entity i
The Utilities Commission, was created in 1967 through the passage of Chapter 67-1754, Laws of Florida, Special Acts of 1967 (House Bill 1669) which amended the Charter of the City of New Srnyrna Beach, f
Florida, to create the Utilities Commission. In a referendum held October 2,1984, City voters approved amendments to the City Charter echliching criteria requiring the funds and entities related to the operation of the Utilities Comnussion be included as a component unit of the City of New Smyrna Beach, Florida, and anintegral part of the City's reponing entity. The basic financial statements are incorporated in the City's Comprehensive Annual Financial Report as an enterprise fund actisity.
In 1983, the Utilities Commission entered into a participation agreement with Florida Municipal Power Agency (FMPA) for an entitlement share of electric capacity and electric energy from FMPA's undisided ownership interest in Florida Power and Light Company's St. Lucie Unit No. 2, a nuclear generating unit.
The Utilities Commission's role in the agreement is limited to that of a participant contractually obligated to purchase electric capacity and electric energy. The agreement between the Utilities Commission and f
FMPA does not meet the criteria for inclusion within the reporting entity of the Utilities Commission. The agn:ement eihHy prmides that the arrangement is not ajoint venture and neither FMPA nor the other utilities which entered into participation agreements with FMPA for entitlement shares from FMPA's undivided ownership interest in St. Lucie Unit No. 2 are accounting for the agreement as a joint venture.
Accordingly, the Utilities Commission is not accounting for the agreement as a joint senture.
Basis ofAccounting Basis of accounting refers to when revenues and expenses are recognized in the accounts and reported in the financial statements. It relates to the timing of the measurements made, regardless of the measurement focus
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applied. The Utilities Commission utilizes the accrual basis of accounting. By utilizing this method, revenues are recognized when they are earned, and expenses are recognized as they are incurred. Unbilled utility senice receivables are recorded so as to provide a better matching of senice restnues and the costs of providing the senice. Based on the accounting and reporting standards set forth in Gmernment
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Accounting Standards Board (GASB) Statement No. 20, " Accounting and Financial Reporting for Proprietary Funds and Other Governmental Entities that use Proprietary Fund Accounting," the Utilities Commission has opted to apply only those accounting and reporting pronouncements issued by the GASB subsequent to November 30,1989.
Budget andBudgetary Accounting An annual budget was adopted for the electric, water, pollution control and water reuse utility systems. The f
budget was adopted on a basis consistent with generally accepted accounting principles (GAAP) except that certain other cash receipts and payments are treated as budgetary items to maintain effective fiscal and budgetary control over the collection and disposition of all commission resources. Specific budgetary control
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is exercised over internal operating transfers to restricted funds, payments of principal on long-term debt obligations, and collections of contributed capital which are recogmzed in the budget as additions and/or deductions to reconcile budgeted net cash receipts to reported net income (loss) for each system. Budget
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appropriations are prepared by the administrative staff and approved as prmided by law by the Utilities i
Comnussion. Budgetary control is exercised at the departmental level. Budget amendments, if any, can be requested by the Director of Utilities. However, all budget amendments must be approved by the Utilities Commission. Unexpended appropriations for operations lapse at year end. No supplemental appropriations were required for the current 3 car.
6
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NOTES TO THE FINANCIAL STATEMENTS (Contizued)
September 30,1997 and 1996 UTILITIES COMMISSION, CITY OF NEW SMYRNA BEACH, FLORIDA NEW SMYRNA BEACII, FLORIDA Note 1:
Cash and Cash Equivalents Summary The Utilities Commission invests all cash balances in interest bearing accounts. Earnings from these of investments are appmpriately allocated to the investing fund accounts based upon the investment equity and Significant are used, where applicable, to finance general Utilities Commission operations. For purposes of the Accounting statement of cash flows, the Utilities Commission considers all highly liquid debt instruments purchased with j
Polices original maturity dates of three months or less to be cash equivalents.
(Continued)
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Investments Investments are recorded at cost or amonized cost, which approximates market. Adjustments are made to
)
cost, for any premium or discount, which is amortized over the maturity of the investment.
Receivables Accounts receivable have been reponed net of an allowance for uncollectible accounts which hns been provided based upon management's analysis of historical trends. Utility operating revenues are recognized on the basis of cycle billings rendered monthly. Unbilled accounts receivable are accrued at September 30th, to remgnize the sales revenues earned between the last meter reading date made through the end of the year.
Inventories Inventories are priced at cost by the use of the "first-in, first-out" method of accounting. The effect of this method is to flow the costs of the materials and supplies in the order in which they are purchased and to assign a balance sheet inventory valuation more nearly at current replacement value. Electric line g
tmnsformers, electric meters, and replacement units for the generating plants are classified as utility plant 3
in accordance with accepted industry practices set forth by the National Association of Regulatory Utilities Commissioners (NARUC).
UnamortizedDebt Discount, Issuance Expenses, and Deferred Amountfrom Refunding Original issue discounts, issuance expenses, and deferred amounts from refundings of utilities certificates are appropriately deferred and amonized over the remammg terms of the applicable revenue certificate issues (or life of the old debt, whichever is shorter, for deferred amounts from refundings) using the bonds outstandmg method which approximates the interest method. Unamonized revenue certificate discounts are presented in aggregate in the finatxaal statements as a reduction of the carrying cost of the related long-term debt. Unamortized debt issuance msts and deferred amounts from refundings are presented as other assets.
I RestrictedAssets f
Proceeds from debt, funds required to be set aside for the payment of revenue bonds debt ser ice and contingencies, and other specific assets set aside for restricted purposes which cannot be used for routine operations are classified as restricted assets since their exclusive use is limited by applicable bond covenants and other legalindentures.
Utility Plant Utility plant is stated at historical or estimated historical cost. The costs of additions, replacements, and renewals of units of property are added to utility plant. The cost (estimated, if not known) of units of 1
property retired, less net salvage, is charged to accumulated depreciation and the appropriate asset account.
1 Donated utility plant is stated at its estimated fair market value on the date donated.
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Maintenance and repaus ofproperty and replacements and renewals of items determined to be less than units ofproperty, are charged to operating expense as incurred. Construction period interest is capitalized net of interest earned on unernenM construction funds in accordance with the applicable provisions of Financial Accounting Standard Number 62 and, therefore, deprectated over the remaining useful lives of the related assets.
7 I
J
NOTES TO THE FINANCIAL STATEMENTS (Continued)
September 30,1997 and 1996 L7ILITIES COMMISSION, CITY OF NEW SMYRNA BEACII, FLORIDA NEW SMYRNA BEACH FLORIDA Note 1:
Depreciation is provided for by utilization of the straight line method (half-year convention in year of Summary acquisition) calenhted on a senice life basis to amortize the cost of the assets over their economic estimated of usefullives which are as follows:
Significant Accounting Years Polices Electric System:
(Continued)
Production plant:
Nuclear production 27 Diesel production.
20-40 Transmission plant 30-55 Distributionplant.
28-45 Generalplant:
Structures and improvements 40 Other general plant 5-20 Water System:
Source of supply plant..
25 50 Pr.mping plant..
35 Water treatment plant.
40-50 Transmission and distribution plant.
25-50 General p' ant:
Structures and improvements....
35 Other generalplant 10-35 Pollution Control System:
Collection plant....
35-50 Pumping plant:
Structures and improvements 50 Pumping equipment...
25 Treatment and disposal plant..
25-40 General plant 10-50 Common Plant:
Structures andimprovements.
35 Other general plant....
5 15 Water Reuse System:
Structures and improvements.
50 Transmission and distribution plant 50 CompensatedAbsences The ponion of employee payroll costs paid subsequent to year-end attributable to senices performed prior to year-end is recorded and recognized as a current liability. Employees earn annual vacation leave at the rate of 80 hours9.259259e-4 days <br />0.0222 hours <br />1.322751e-4 weeks <br />3.044e-5 months <br /> per year for one through five years of senice and 80 hours9.259259e-4 days <br />0.0222 hours <br />1.322751e-4 weeks <br />3.044e-5 months <br /> plus eight hours for each two years senice over the first five years to a maximum of 160 hours0.00185 days <br />0.0444 hours <br />2.645503e-4 weeks <br />6.088e-5 months <br /> per year. All outstanding vacation leave is payable upon termmation. Employees accumulate ten hours of sick leave credit for each month on regular pay status. Employees make an irrevocable election regarding the accumulation of credits and the amounts of credits which can be received upon termination. One option provides for the payment of 75 percent of unused sick leave at the existmg pay rate at ternunation. The second option requires the " banking" of at least 240 accumulated hours. Hours accumulated in excess of 240 hours0.00278 days <br />0.0667 hours <br />3.968254e-4 weeks <br />9.132e-5 months <br /> 5.111 be paid annually at 75 percent of the preceding July 1st pay rate.
8
NOTES T3 THE FINANCIAL STATEMENTS (Continued)
September 30,1997 and 1996 UIILITIES COMh0SSION, CfrY OF NEW SMYRNA BEACH, FLORIDA NEW SMYRNA BEACH, FLORIDA Note 1:
Deferred Credits and Operating Reserves (for Nuclear Re-Fueling and Decommissioning Costs)
Summary The resent for nuclear re-fueling and maintenance outage is an operating reserve established to account for of the estunated charges to be incurred for the removal and installation of nuclear fuel assemblies. Charges are Significant made against the reserve at the time the actual re-fueling takes place. The reserve for nuclear plant g
Accounting decomnussioning costs was established to account for the estimated costs of nuclear plant decommissioning.
g Polices Amounts charged to expense annually (and appspriately credited to deferred allow ance for decommissioning (Continued) costs) are based on estimated future decommissioning costs in accordance with Federal Energy Regulatory Commission requuements. Charges against the reserve will be made at the actual time of decommissioning.
Contributed Capital Contributions of capital to a proprietary fund from any source received are recorded in an appropriately captioned contributed capital account.
Equity Reserves a
Funded reserves are used to record a portion of retained earnings which must be segregated for some future I
use and which are, therefore, not available for further appropriation or expenditure.
Use ofEstimates Management uses estunates and assumptions in preparing finanM statements in accordance with generally accepted accounting principles. Those estimates and assumptions affect the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities, and the reported revenue and expenses. Actual results could vary from the estimates assumed in prepanng the financial statements.
Rates, Revenues andFuelExpense a
Revenues are recogmzed based on monthly cycle billings to customers. The rate schedules are approved by g
the Utilities Comnussion. The electric rate schedule contains an energy cost adjustment clause which reflects the cost of fuel as well as the energy and fuel components of purchased power. Generally, the effect of the increases and/or decreases in the cost of energy is recovered over a twelve month period and is determined as the difference between actual applicable fuel costs and the costs actually billed during the same period.
The cost of nuclear fuel is amortized to fuel expense based on the quantity of heat produced for generation of electric energy in relation to the quantity of heat expected to be produced over the life of the nuclear fuel core.
Note 2:
Pursuant to the applicable provisions of Chapter 280, Florida Statutes, The Florida Securio for Public Ca.h DepositsAct("the Act"), the State ofFlorida, Department ofInsurance, Bureau of Collateral Securities, and Deposits the Department of Treasury have established specific requirements relative to the security and and collateralization for public deposits. Accordingly, banks qualifying as a public depository in the State of Investments Florida must adopt the necessary procedures outlined in these statutes and meet all of the requirements of this chapter to be Mgn*d by the State Treasuret as eligible to receive deposits from municipal depositors.
Collateral having a market value equal to 50% of the average daily balance for each month of all public deposits in exo:ss of any applicable depmitwy insuranm is required to be pledged or deposited with the State Treasurer to secure such deposits. Additional collateral, up to a maximum of 125% may be required if deemed nemssary under the mnditions set forth in the Act. Securities eligible to be pledged as collateral are generally limited to obligations of the United States government and any state thereof and are held in the name of the State Treasurer's office. Compliance with the provisions of Chapter 280, Florida Statutes, is t
I monitored by the Department ofInsurance.
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L N3TES TO THE FINANCIAL STATEMENTS (Coethued)
September 30,1997 and 1996 UIILITIES COMMISSION, CTTY OF NEW SMYRNA BEACH, FLORIDA NEW SMYRNA BEACH. FLORIDA
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Note 2:
Deposes Cash At kir - -x 30,1997 and 19%, the carrying amounts of the Utilities Commission's deposits, indama-Deposits certificates of deposit, were $11,675,937 and $13,597,987, respectively. The September 30,1997, bank
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and balances totaled $12,445,987 of which $100,000 was covered by federal depository insurance and lavestments
$12,345,987 was secured in accordance with the statutory provisions of the Act. Included in the canying (Contimmed) amount of Commission deposits is $9,100 in petty cash and change funds.
Invenenents The Utilities O- -
' 's investment pohcies are governed by state statutes and local resolution. Allowable
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investment instruments include: bonds, notes, certificates ofindebtedness, treasury bills, or other securities which are guaranteed by the full faith and credit of the United States of America, interest bearing savings a-n's mterest bearing certificates of deposit and interest beanng time deposits. At September 30,1996, the Comrmssioats investments included United States Treasury State s'id I.ocal Government (SLGS) Bonds and overnight investments in money market funds which were secured by U. S. Treasury obligations. The inwstments are categorized to give an indication of the level of risk assumed by the Commission at year-end.
Category 1 includes investments that are insured, registered, or collateralized under the applicable sections of the Act, or for which the securities are held by the Commission or its agent in the Commission's name.
Category 2 includes umnsured and unregistered imestments for which the securities are held by the banks' trust departments or agents in the Commission's name. Category 3 includes umnsured and unregistered investmentc for which the securities are held by the banks, or by their tnist departments or agents but not in
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the Commission's name.
At September 30,1997, the Commission's cash and imestments are categorized as follows:
Canying Market Tyne ofInvactmant Pa'**a'v 1 Pa'**a'v 2 cana ary 3
.Yalus
.Yahic
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U.S. Treasury State and Local Government Series (SLGS) Bonds...........
$ 332,200 332,200 332,200 Repurchasc agreements............
- 8.045.346 8.045.346 8.045.346 Totals.......................
$ 332.200 H.Qsj,J_46 8.377.546 8.377.546
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Note 3:
A summary of net accounts receivable at September 30, is as follows:
Accounts 1997 19 %
Receivable
~
Billed customer accounts receivable.
$ 1,826,162 1,718,733 Less: allowance for doubtful accounts.............
(57.038)
(57.491)
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Totals......................................
$ 1.769.124 1,6fd,2dl
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10 b
NOTES T@ THE FINANCIAL STATEMENTS (Continued)
September 30,1997 and 1996 ITTILITIES COMMISSION, CTIY OF NEW SMYRNA BEACH, FLORIDA NEW SMYRNA BEACH, FLORIDA Note 4:
A sununary of restricted assets at Septernber 30, is as follows:
Restricted Assets Deposits /
Accrued 1997 1996 Cash Investment Interest Totals Total Debt service funds:
622,526 621,736 622,526 1992 Sinking Fund 1,074,200 1,074,200 1992 Reserve Fund 1,074,200 1,117,874 1,107,587 1,117,874 1993 Sinking Fund 1,655,129 1,655,129 1,655,129 1993 Reserve Fund.
1,304,091 877,104 1996 Sinking Fund 1,304,091
- 2.603.727 2.603.727 2.603.727 E
1996 Reserve Fund 8.377.547
- 8.377.547 7.939.483 g
Renewaland replacement funds:
- 3,169,351 2,666,368 Res. No. 28-78.......
3,169,nl 2.256.658 1.065.232 Capacity fee fund 2.256.658 5.426.009 5.426.009 3.731.600 Constmetion funds:
583,125 1992 Certificates 1,041,558 1,023,920 Customer deposits 1,041,558 l
CR-3 decommissioning fund 1,427,541 1,427,541 1,245,542 863,221 Mandate pollution control plant fund Rate stabilization fund..
IS82.120 1.982.120 1.532.965 1
Totals
$ 9.877.228 8.377.547
- 18.254.775 16.919.856 Note 5:
A summary of utility plant at September 30, is as follows:
Utility Pollution Water Plant Elscas hsr.
C. coni Esms common 1222 La25 Land and land rights
$ 1,672,728 487,145 220,433 591,906 2,972,212 2,972,212 Structures and ;ue.
a.
2,595,332 5,102,778 4.292,467 1,685,684 2,918,320 16,594,581 16,299,509 Production plant, nuclear fuel and treatment plant.
11,353,852 6,116,454 4,304,131 21,774,437 21,437,081 Transnussion, distribution, and collection and treatment plant 42,378,541 17,348,220 15,092,731 3,500,394
- 78,319,886 75,423.347 l
Other general plant and equipment 407.636
- 6.069.578 6.477.214 6.300.037 58,408,089 29,054,597 23,909,762 5.186,078 9,579,804 126,138,330 122.432,186 j
Accumulated depreciation (25.612.292) (7.505.560) (8.780.670)
(363.341) (4.835.819) (47.097.682) (44.074.957) l 32,795.797 21,549,037 15,129,092 4,822,737 4,743,985 79,040,648 78.357.229 j
Constructionin progress 1.065.692 999.634 1.762.241 833.477 312.792 4.973.836 4.723.089 t)tility plant, nct
$ 33.861.489 22.548J21 16.891.333 5.656.214 5.056.777 84.014.484 83.080.318 l
Depreciation expense totaled $3,450,710 and $3,468,802 for 1997 and 1996, respectively. Capitalized i
interest on m'ending tax-exempt revenue certificates charged (credited) to projects during construction was
$50,830 and $18,557, for 1997 and 1996, respectively (net ofinterest earned on unexpended long-term debt proceeds totaling $25,670 and $171,376, respectively).
I 11
NOTES TO THE FINANCIAL STATEMENTS (Continued)
September 30,1997 and 1996 UTEJTIES COMMISSION, CITY OF NEW SMYRNA BEACll, FLORIDA NEW SMYRNA BEACll, FLOlGDA Note 6:
A summary oflong-term debt outstanding at September 30, is as follows:
Long-Term Debt 1222 122fi Utilities System Revenue Certificates, Series 1992--4.10% to 5.60%
due serially to 2004, with $515,000 (5.35%), $1,020,000 (5.80%)
$1,230,000 (6.00%) and $10,160,000 (6.00%) term bonds due in 2002,2007,2010, and 2013, respectively........
$ 14,380,000 14,575,000 Utilities System Refunding Revenue Certificates, Series 1993-3.20% to 5.25% due serially to 2011, with $3,685,000 (5.00%) and $6,245,000 (5.00%) term bonds due in 2014 and 2019, respectively 21,970,000 22,525,000 Utilities System Refunding Revenue Certificates, Series 1996--4.10% to 5.30% due serially to 20ll 25.280.000 26.210.000 Total utilities certificates outstanding......
61.630.000. 63.310.000 Less: current maturities:
Series 1992 Certificates...
200,000 195,000 Series 1993 Cenificates..
575,000 555,000 Series 1996 Certificates 1.420.000 930.000 2 195.000 1.680.000 Long-term certificate debt.
59,435,000 61,630,000 Less: unamortized debt discount...
(1.100.063) (1.190.294)
Totallong-term debt, net
$ 58.334.937 60.439.706 The authorization for the above described revenue certificates outstanding (collectively referred to as the "Cemficates") provides that the Commission will not issue additional obligations except for the construction and acquisition ofadditions, extensions and improvements to the system or for refunding purposes and except upon the parity conditions provided in the authorizing resolution. The Certificates are payable from and secured by a first lien upon and pledge of the net revenues derived from the operation of the system. The Certificates do not constitute general indebtedness of the Commission or the City of New Smyrna Beach, Florida (City), and the City is not obligated to levy any taxes for the payment thereof.
Under the terms ofits long-term debt agreements, the Commission has agreed to maintain certain restricted funds and to comply with the covenants contained in such agreements which require specific actions to be taken by the Commission. Certain of these agreements contain the following prosision relating to the right of the obligation holder:
"Any holder of certificates or any coupons appertammg thereto issued under the pu, ion hereof or any tmstee acting for the liolders of such certificates may by suit, action, mandamus or other proceedmgs in any court of competent jurisdiction, protect and enforce any and all rights, including the right to the appointment of a receiver, existing under the laws of the State of Florida, or granted and contained herein, and may enforce and compel the performance of all duties herein reqmred or by any applicable statutes to be performed by the Commission or by any ofIicer thereof. Nothing herein, however, shall be construed to grant to any holder of the certificates any lien on any real property of the Commission or the City."
i 12
NOTES TO THE FINANCIAL STATEMENTS (Continued)
September 30,1997 and 1996 ImIIHES COMMISSION, CITY OF NEW SMYRNA BEACH, FLORIDA NEW SMYRNA BEACH, FLORIDA Note 6:
On August 15, 1996, the Commission issued $26,210,000 in Utilities System Refunding Revenue Long-Term Certificates, Series 1996, with an average interest rate of 4.72% to advance refund $18,690,000 of Debt outstanding 1978 Series Certificates with an average interest rate of 7.1% and $6,500,000 of outstanding (Continued) 1987 Series Certificates with an average interest rate of 6.9% The net proceeds of $26.02 million (after payment of $296,893 in undenvriting fees, insurance, and other issuance costs) plus $868,526 in excess 1978 and 1987 sinking fund monies were used to purchase $26,386,878 in U.S. government securities and to pay a $505,014 transferred proceeds penalty at the date of closing. The U.S. government securities were deposited in an irrevocable trust with an escrow agent to provide for all future debt senice payments on the g
1978 and 1987 certificates through October 1,1996, when the 1978 and 1987 Series certificates will be called a
for complete redemption. As a result, the 1978 and 1987 Series certificates are considered to be defeased and the liability for those certificates has been removed at August 15,1996.
Although the advance refunding resulted in the recognition of a deferred loss on advance refunding in the amount of $1,513,137 (which will be amortized over the life of the refunding certificates) for the year ended September 30,1996, the Commission in effect reduced its aggregate debt senice payments by almost $4.2 million over the next 15 years and obtained an economic gain (difference between the present values of the old and new debt senice payments, adjusted for old and new sinking funds on hand) of $2.1 million.
The aggregate annual debt senice requirements in each of the next five years are as follows: $5,309,403 -
1998; $5,309,348 - 1999; $5,317,215 - 2000; $5,307,235 - 2001; $5,334,545 - 2002; and $67,542,021 -
thereafter.
Note 7:
In prior years, the Utilities Commission defeased certain ofits outstanding utilities revenue certificates (and Prior certam general obligation bonds of the City of New Smyrna Beach, Florida), originally issued for the System Years' and payable from revenues derived from the operation of the utilities systems by placing the proceeds of new Defensance certificates in irrevocable trusts to provide for all future debt senice payments on the defeased l
of Debt certificates / bonds. Accordingly, the trust account assets and the liabilides for the defcased bonds are not u
included in the accompanying financial statements. They include the following at September 30, M
M 1978 Refunding:
Series 1962 refunding-3.5% due through 1999 35,000 35,000 Series 1962-3.9% to 4.2% due through 2000 540,000 780,000 Series 1965--4.2% to 4.25% due through 2004 1,565,000 1,610,000 l
Series S-1963-3.9% due through 2002 125,000 150,000 Series T-1963--4.0% due through 2003 383,000 438,000 g
Series B-1965-3.7% to 4.1% due through 2003 230,000 260,000 5
Series 1975-3.75% to 6.2% due through 2004 1,350,000 1,470,000 Series 1975A-5.0% to 6.6% due through 2005..
2,000,000 2,140,000 g
Series 1976--4.5% to 6.2% due through 2001 1,800,000 2,245,000 g
1993 Refunding:
Series 1990-6.10% to 7.10% due through 10/98 call date..
13,840,000 14,065,000 1996 Refunding:
Series 1978-7.00% to 7.125% due through 10/96 call date..
18,310,000 Series 1987--6.00% to 7.10% due through 10/96 call date 6,500,000 13 l
1
I NOTES TO THE FINANCIAL STATEMENTS (Contitued)
September ?9,1997 and 1996 UTILITIES COMMISSION, CITY OF NEW SMYRNA BEACH, FLORIDA NEW SMYRNA BEACH, FLORIDA r
Note 8:
The followmg is a summary of changes in contributed capital:
Contributed Capital Customer Federal Customer Contnbutions fgants Assessments Igals Balances, September 30,1995
$ 22,180,151 7,306,904 1,717,736 31,204,791 Additions.......................
1.599.565 1 599.565 Balances, September 30,19%
23,779,716 7,306,904 1,717,736 32,804,356 Additions........................
1.875.616 1.875.616 Balances, hpe-br 30,1997
$jffg g _21Q(i2Qi 1.717.736 M Note 9:
The hp'*-, that created the Utilities C=mi=4on requires it to pay to the general fund of the City of New Required Smyrna Beach a sum equal to six percent (6%) of the gross revenues from utilities under Commission Payment control. This payment is subordinate to the debt service requirement of all utilities revenue certificates and To City is semrded as a quasi. external transacuan for financial reporting purposes Amounts paid to the City for the j
years ended September 30,1997 and 1996 totaled $2,004,159 and $2,130,079, respectively. Of these payment amounts, $1,949,594 and $2,076,104 were charged to operations for the years ended September 30,
)
1997 and 1996, respectively. The -. r.ir.g amounts totahng $54,565 and $53,975, respectively, attributable to contributed capital collections from the Mandate Pollution Control Plant cost surcharge, were appropriately recogmzed as reductions of contributed capital by the Commission. The balances due to the l
City at September 30,1997 and 1996, totaled $417,870 and $397,626, respectively.
Note 10:
DqRnedBeneRt Pension Pfan Employee Plm: Dexription. The Commission contributes to the Florida (public employee) Retirement System of the Pension State ofFlorida, a cost-shanng, multiple-employer defined benefit pension plan created in December,1970, Plans that acts as a common mvestment and administrative agent for municipalities and other qualifying political subdivisions in the State of Florida. The pension plan, which is administered by the State of Florida, Department ofF=k :
-i Division ofRetirement, provides retirement and disability benefits and death benefits to plan members and beneficiaries. All retirement legislation must comply with Article X, Section 14 of the State Constitution and with Part VII, Chapter 112, Florida Statutes. Both of these prmisions require that any increase in retirement benefits must be funded concurrently on an actuanally sound basis.
The Florida Retuement System issues a publicly available financial report that includes financial statements and required supplementary information for the plan. That report may be obtained by writing to Florida Retirement System, Department of Administration, Division of Retirement, Cedars Executive Center, Building C, 2639 North. Monroe Street, Tallahassee, FL 32399-1560.
Funding Policy. The fundmg methods and deternunation ofbenefits payable are provided in the various acts of the Florida Legislature, which created the fund, including subsequent amendments thereto. In previous years, these acts provided, in general, that funds were to be accumulated from employee contributions, employer contributions, State appropriations and income from investments of accumulated funds. The act also provides that, should the accumulated funds in the fund at any time be insufficient to meet and pay the benefits due, the employer shall supplement the funds by an appropriation from current funds, or from any revenues which may lawfully be used for said purposes, in an amount sufficient to make up the deficiency, l
l 14 i
NOTES TO THE FINANCIAL STATEMENTS (Conti~ued)
September 30,1997 and 1996 UIILITIES COMMISSION, CITY OF NEW SMYRNA BEACH, FLORIDA NEW SMYRNA BEACH, FLORIDA Note 10:
The Comnussion's contnbutions to the plan for the fiscal years ended September 30,1997,1996, and 1995 g
Employee were $782,675, $919,453 and $984,120, respectively. The contribution percentages for qualifying E
Pension compensation were 17.43%,17.00% and 16.91% for the 1997,1996, and 1995 calendar years, respectively.
Plan There were no employee contributions made during these years.
3 (Continued) g Defined Contribution Pfan The Commission contributes to the Utilities Commission of New Smyrna Beach Retirement Plan, a defined contribution plan which is administered by the Principal Mutual Life Insurance Company, P. O. Box 9396, Des Moines,IA 50306-9396. Under Resolution No. 54-95, the Commission established this plan for all regular full time and regular part time employees hired on or after January 1,1996 by revoking its participation in the Florida Retirement System pursuant to Chapter 95-338, Laws of Florida with respect to g
such employees. All qualifying employees at least 18 years of age participate in the plan on the date of 5
employment. Normal retirement and disability benefits are available after 5 years of senice and attaining age 62. Early retirement and disability benefits are available after 5 years of senice and attaining age 55.
3 Employer contributions to the plan are 8% of the gross employee wages. Employees may make supplemental g
contributions to the extent permitted by law. Employer and employee contributions to the plan were $3,244 and $-0, respectively, for the year ended September 30,1997. No contributions were made during the year ended September 30,1996.
Note 11:
The following is a summary of the segment information for the Commission's individual utility systems:
g Segment E
Information Pollution Water Electric Water Control Reuse Ssstem System Sistem System Iglal Operating revenue..
$ 24,901,225 4,187,748 3,326,421 432,078 32,847,472 Depreciation / decommissioning 2,051,502 730,188 749,715 101,305 3,632,710 l
Operatingincome.
2,339,122 969,715 568,267 255,724 4,132,828 m
Required payments to City.
1,479,852 258,520 207,918 3,304 1,949,594 Net income (loss).
1,183,181 195,810 275,519 (28,479) 1,626,031 g
Contributed capital 1,314,206 11,914,725 21,436,041 15,000 34,679,972 g
Utility plant acquisitions.
2,108,639 918,947 552,693 668,085 4,248,364 Utility plant retirements.
352,056 74,900 115,265 0
542,221 Revenue certificates payable 31,333,851 18,111,668 6,092,224 6,092,257 61,630,000 Utility equity 12,181,209 13,284,561 18,772,686 (740,465) 43,497,991 Total assets.....
53,666,344 30,572,636 21,229,563 6,461,356 111,929,899 Note 12:
The Commission is engaged in routine litigation incidental to the conduct of its utilities affairs. In the Iegal opinion of legal counsel to the Commission, no legal proceedmgs are pending or threatened against the g
Matters Commission which are not covered by applicable insurance which would inhibit the Commission's ability 3
to perform its operations or materially affect its financial condition.
Note 13:
The Commission, acting thmugh the Florida Municipal Power Agency (FMPA), the Utilities Commission Commitments is a participant in a portion of Florida Power and Light Company's (FPL) St. Lucie Unit No. 2, a nuclear generating unit. FMPA originally acquired an 8.806% undivided ownership interest of St. Lucie No. 2 together with rights to receive electric capacity and electric energy under a reliability exchange agreement.
The Commission's participation provides for a 9.884% entitlement share of FMPA's owtiership interest. A reliability exchange agreement prmides for FMPA's exchanging 50% ofits share of the output from St. Lucie 15 I
E I
NOTES TO THE FINANCIAL STATEMENTS (Continued)
September 30,1997 and 1996 UTIIIITES COMMISSION, CITY OF NEW SMYRNA BEACH, FLORIDA I
NEWSMYRNABEACH, FLORIDA I
Note 13:
No. 2 for a like amount from FPL's exclusively owned St. Lucie No. I to mitigate the potential for economic Commitments loss resulting from the extended or permanent outage or early retirement of St. Lucie No. 2. The (Continued)
Commission, as a participant, has also entered into a power sales contract which requires pa7 ment on a "take-and pay" basis for the Commission's entitlement share of the project capability for the St. Lucie Project i
for each month during any portion of which electric capacity and electric energy are available to the Commission fmm the St. Lucie Project, including electric capacity and electric energy under the reliability exchange agreement with FPL. In the event payment is not required for any month under the Commission's I
power sales contract, it is required to make payment for such month under its project support contract on a "take-or-pay" basis. The payment under the project support contract would be the amount the Utilities Conunission would have been required to pay under its power sales contract for such month if any electric l
capacity and electric energy fmm the St. Lucie Project had been made available to them. As a result of these l
agreements, the Commission is obligated to provk payments of approximately $4.2 million annually.
Based on an updated engineering report dated February 20,1995, the Commission's anticipated share of I
decommissioning costs applicable to its participation in Florida Power Corporation's (FPC) Crystal River Unit No. 3, a nuclear generating unit, is expected to be approximately $10.9 million at its expected date of decommissioning in 2016. An operating reserve was established to provide advanced funding for these I
estimated future costs. Funding of the reserve began in 1985. The balance in the fund, plus the interest earned thereon, are expected to be sufficient to meet the Commission's portion of the estimated future decommissioning costs. The provision for decommissioning expense recognized during the years ended September 30,1997 and 1996, totaled $182,000 and $197,172, respectively.
During 1997, the Commission had additional unrecogmzed construction contract commitments of approximately $1.7 million for utility plant expansion and upgrading.
The Commission is exposed to various risks ofloss related to torts; theft of, damage to, and destruction of assets; errors and omissions; injuries to employees; and natural disasters, all of which is satisfactorily insured I
by general liability insurance Commercial insurance policies are also obtained for all other risks ofloss, including workers' compensation and employee health and acrident insurance Sett!cd claims resulting from these risks have not exceeded commercial insurance coverage in any of the past three years.
I Note 14:
On September 16,1997, the Commission successfully obtained the consent of the holders of more than two-Subsequent thirds of the principal amount of outstanding revenue certificates on the Record Date of January 15,1997, I
Events to amend Resolution No. 28-78, as amended and supplemented, to provide for the use of a surety bond, insurance policy or smular credit facility in lieu of or in combination v.ith a cash funded debt senice resen e fund, as currently required by the Resolution. Subsequent to obtaining the formal consent, a surety bond was purchased on October 15,1997 to replace restricted debt senice resen e funds totaling approximately $5.5 million. It is anticipated that the Commission will use these funds, which are restricted for approved capital projects, to partially finance the costs of constructing a new 6 MGD Advanced Wastewater Treatment Plant and related reclaimed water efIluent disposal system.
l On October 8,1997, the Commission awarded a contract for the construction of a 6 MGD Advanced Wastewater Treatment Plant in the amount of $16,156,705, subject to final approval by the Florida Depanruent of Emitonmental Protection. The majority of the costs for this construction project will be met with financing obtained through the State Revohing Fund loan program, which the Commission is in the process of obtaining and from the proceeds obtained from the replacement of a surety bond held in lieu of a funded debt senice resent fund.
16
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SUPPLEhfENTAL INFORMATION This section is composed of the following:
Supplemental Detail FinancialInformation of the Electric System, Water System, l
Pollution ControlSystem and Water Reuse System StatisticalSection I
These schedidcs provide a more detailed view of the " Basic FinancialStatements"presentedin theprecedingsubsection.
I Resolution Numbers 16-75 and 28-78, as amended, established the electric, u ater, pollution control, and water reuse systems as a i
single enterprisefund These schedules are presented toprovide detailed information on the individual utility systems and to i
present the budgetary comparisons that are not necessaryfor afair presentation in conformity with generally accepted accounting principles.
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g SCHEDUIE OF REVENUES, EXPENSES AND Schedule 1
['
CHANGESIN RETAINED EARNINGS For the Fiscal Year Ended hgda=1=r 30,1997
- With Comparative Actual Amfunts for the Fm* eal Year Ended September 30,1996 UTIIlTIES COMMISSION, CITY OF NEW SMYRNA BEACH, FIDRIDA NEW SMYRNA BEACH, FIDRIDA Pollution Water Totals Electric Water Control Reuse 195rl 1996 f, Operating Revenue:
Sales............................................
$ 24,700,939 4,084,4 %
3,308,383 432,078 32,525,896 _ 33,466,952 Other revenues...............................
200,286 103,252 18,038 321,576 2 %,138 Total operating revenue.............. _24,901.225 4,187,748 3,326,421 432,078 _32,847,472 33,763,090 Operating Expenses:
Pi i d a expenses.........................
15,624,349 844,921 16,469,270 16,004,020 Transmission, distribution, and sewage collection and treatment................
1,092,371 410,340 1,050,867 70,816 2,624,394 3,053,810 Customer accounting........................
442,180 174,080 109,954 726,214 819,986 Al==wrative and general................
1,871,849 799,984 639,700 929 3,312,462 3,778,385 Required payments to the City of New Smyrna Beach......................
1,479,852 258,520 207,918 3,304 1,949,594 2,076,104 Depreciation and decommissioning......
2,051,502 730,188 749,715 101,305 3,632,710 3,583,478 Total operating expenses............
22,562,103 3,218,033 2,758.154 176,354 28,714,644 29,315,783 Operating income......................
2,339,122 969,715 568,267 255,724 4,132,828 4,447,307 Nonoperating Revenue (Expenses):
Interest earnings.............................
472,879 219,890 183,359 22,132 898,260 824,645-Other income.................................
187,823 11,504 199,327 252,121 Interest and debt expense..................
(1,729,201)
(987,147)
(440,073)
(306,335) (3,462,756) (3,731,690)
Other expenses...............................
(19,158)
(8,004)
(12,678)'
(39,840)
G0,647)
Osin(Loss) on disposal of assets.........
(68,284)
(10,148)
(23.356)
(101,788)
(38,871)
Total nonoperating revenue.........
(1,155,941)
(773,905)
(292,748)
(284,203) (2,506,797) (2,714,442)
{
Net income (loss).....................
1,183,181 195,810 275,519 (28,479) 1,626,031 1,732,865 Retained earnings, beginning of year.......
9,683Q 1,174,026 (2,938,874) 0 26,986) 7,191,988 5,459,123
{
Retained earmngs, end of year............... $_10,867.003 __L36L836 _ (2,663,355) 0 55,465) _8 818,019 7.191.988 L
L L
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17
SCHEDULE OF REVENUE, RECEIPIE EXPENSES AND DISBURSEMENTS -
Schedule 2 BUDGET AND ACTUAL FLECTRIC SYSTEM (NON-GAAP BUDGETARY BASIS)
For the Fiscal Year Ended September 30,1997 UTILITIES COMMISSION, CITY OF NEW SMYRNA BEACH, FLORIDA NEW SMYRNA BEACH, FLORIDA Variance Favorable Budget Actual (Unfavorable)
Revenue and Receipts:
Direct Sales:
Ele ctric sales.................................................... $ 24,117,797 24,559,830 442,033 Other revenues..................................................
184,500 200,286 15,786 E
Nonoperating revenue:
E Intere st earnings...............................................
325,000 472,879 147,879 Meter deposit interest expense..................................
(41,613)
(41,613)
Other revenues (expenses)..................................
200,000 168,665 (31,335)
Total revenue and receipts..................................
24,827,297 25,360,047 532,750 Operating Expenses:
Po wer production and fuel........................................
14,753,471 15,442,349 (688,878)
Transmission and distribution......................................
1,185,173 1,092,371 92,802 Customer accounting.................................................
465,490 442,180 23,310 Administrative and ge neral.......................................
2,067,707 1,871,849 195,858 Required payments to the City of New Smyrna Beach.......
1,456,818 1,479,852 (23,034)
De commis sio ning e xpe nse..........................................
124,185 182,000 (57,815)
Total ope rating expense s.....................................
20.052,844 20,510,601 (457,757)
Net revenue and receipts...................................
4,774,453 4.849,446 74,993 Operating Transfers in (Out):
Sinking Funds:
197 8 Ce rtificates................................................
(1,006,581) 1,006,581 1987 Ce rtificates................................................
(330,759) 330,759 1992 Ce rtificates..................................................
(498,459)
(498,459) 1993 Certificates..................................................
(885,012)
(885,012) 1996 Certi ficates..............................................
(1,126,798) (1,126,798)
(2,720,811) (2,510,269) 210,542 l
Renewal and Replacement Funds:
g Required contribution........................................
(1,590,742) (1,590,742)
Restricted fund contribution to Rate Stabilization Fund.......
(462,900)
(542,915)
(80,015)
Tota.1 ope rating trans fe rs (out).............................
(4,774,453) (4,643.926) 130.527 Budgeted net cash receipts................................ $
205,520 205.520 Additions (Deductions) Required to Reconcile Net Cash Receipts to Net Income (GAAP Basis):
Unbilled reve nue.......................................................
231,299 Capitalized nuclear plant improvements recovery charges.....
(90,191)
Principal portion of required Sinking Fund transfers...........
956,281 Capitalized interest costs..........................
24,232 Net transfers to Renewal and Replacement Fund..............
1,590,742 Net transfers to Rate Stabilization Fund.....................
542,915 Gain (loss) on disposal of property and equipment............
(68,284)
Depreciation and deconsnussiomng..............................
(2,051,502)
Amortization of debt expense and loss on refunding...........
(157,831) l 977,661 Ne t inco m e...............................................
$ 1,183,181 l
l 18
SCHEDULE OF Ri'.* VENUE, RECEIPTS, EXPENSES AND DISBURSEMENTS -
Schedule 3 BUDGLT AND ACTUAL - WATER SYSTEM (NON-GAAP BUDGETARY BASIS)
For the Fiscal Year Ended Septenher 30,1997 UTILITIES COMMISSION, CITY OF NEW SMYRNA BEACH, FLORIDA NEW SMYRNA BEACH, FLORIDA Variance Favorable Budget Actual (Unfavorable)
Direct Sales:
Water seJes.
$ 4,193,930 4,257,617 63,687 Other revenues..................................................
1W,500 103,252 (4,248)
Nonoperating reverm:
Interest earnings...................................................
235,000 219,890 (15,110)
Meter deposit Interest expense................................
(7,802) p,802)
Other revenues (expenses)..............
20,000 3,500 (16,500)
Capacity and other fees...............................................
286,390 455,468 169,M8 Meter setting installation charges.................................
93,847 93,847 Total revenue and receipts................................
4,842,820 5.125,772 282,952 Operating Expenses:
Water production..................................................
827,453 844,921 (17,468)
Tranonussion and distribution.....................................
364,705 410,340 (t5,635)
Customer accounting................................................
181,679 174,080 7,599 A dministrative and general..........................................
936,101 799,984 136,117 Required payments to the City of New Smyrna Beach..........
255.986 258.520 (2,534)
Total operating expenses.....................................
2.565,924 2,487,845 78,M9 Net revenue and receipts.....................................
2,276,8 %
2,637,927 361,031 Operating Transfers In (Out):
Sinking Funds:
197 8 Certificates..................................................
(562,458) 562,458 1987 Certificates.................................................
(352,811) 352,811 1992 Certificates................................................
(146,716)
(146,716) 1993 Certificates..................................................
(572,293)
(572,293) 1996 Certificates..............................................
(771,092) 671,092) 1 (1,634,278) (1,490,101) 144,177 Renewal and Replacement Funds:
Required contribution...................
(359,398)
(359,398)
Restricted fund contribution...............................
(216,390 (455,468)
(239,078)
T575'7BS})(814,866)
(239,078)
Proceeds of transfer from Rate Stabilization Fund................
125.000 (125,000)
Restricted fund contribution to Rate Stabilization Fund.........
(46,4MJ (46,464)
Reuse Subsidy Surcharge...................................
(191,83Q (195,007)
(3,177)
Total operating transfers (out)...............................
(2,276.8%) (2,546,438]
(269,542)
Budgeted net cash receipts........................
S.
91,489 91 4_89_.
1 Additions (Deductions) Required to Reconcile Net Cash Receipts to Net Income (GAAP Basis):
Unbilled revenue........., o.........
21,885 Capacity and other fees............................................
(455,468)
Meter setting installation charges...................................
(93,847)
Principal portion of required Sinking Fund transfers...........
605,656 Capitalized interest costs............................................
7,132 Net transfers to Renewal and Replacement Fund............
814,866 Net transfers to Rate Stabilization Fund.....................
46,464 Gain (loss) on disposal of property and equipment.............
(10,148)
Depreciation............................................................
(730,188)
Amortization of debt expense and loss on refunding.......
(102,031) 10%,32F Net (loss)......................................................
191 8_1_0_
19
SCIIEDULE OF REVENUE, RECEIFTS, EXPENSES AND DISBURSEMENTS -
Schedule 4 BUDGET AND ACTUAL - POLLUTION CONTROL SYSTEM (NON-GAAP BUDGETARY BASIS)
For the Fiscal Year Ended September 30,1997 UTILITIES COMMISSION, CITY OF NEW SMYRNA BEACH, FLORIDA NEW SMYRNA BEACH, FLORIDA Variance Favorable Budget Actual (Unfavorable)
Revenue and Receipts:
Direct Sales:
Pollution control c hn.,.s...................................... $ 3,512,770 3,478,355 (34,415)
Other revenues...........................
15,000 18,038 3,038 Nonoperating revenue:
Interest earnings...............................................
125,000 183,359 58,359 Meter deposit interest expense..................................
(2,601)
(2,601)
Other revenues (expenses).....
10,000 (12,678)
(22,678)
Mandate PCP Fund fees......
847,661 852,450 4,789 Capacity and other fees.........................................
2M,767 286,017 78,250 Total revenue and receipts........
4.718,198 4,802,940 84,742 Operating Expenses:
Collection and treatment system................................
1,160,086 1,050,867 109,219 Customer accounting................................................
114,848 109,954 4,894 Administrative and general.................................
718,237 639,700 78,537 Required payments to the City cf New Smyrna Beach......
261,626 2 M,918 53,708 Total operating expenses.............................
2,254,797 2,008,439 246,358 Net revenue and receipts..
2,463,401 2,794,501 331,100 Operating Transfers In (Cnst):
Sinking Funds:
1978 Certificates.....
(518,003) 518,003 1987 Certificates.............................................
(51,451) 51,451 1992 Certificates..................
(142,745)
(142,745) 1993 Certificates..................................................
(53,476)
(53,476) 1996 Certificates............
(479,822)
(479,822)
(765,675)
(676,043) 89,632 Renewal and Replacement Funds:
Required contribution.......................................
(382,110)
(382,110)
Restricted fund contribution......................
(2M,767)
(286,017_1 (78,250)
(589,877)
(668,127)
(78.250)
Mandate PCP Fund contribution.................................
(847,661)
(852,450)
(4,789)
Water Reuse System...................................
(48,593)
(48,593)
Reuse Subsidy Surcharge..................................
(183,410)
(184,122)
(712)
Rate Stabilintion Fund..........................................
(28,185)
(303,922) -~T2757371 Total operating transfers (out)...........
(2,463,401) (2,733,257)
(269,856)
Budgeted net cash receipts.................
61,244 61,244 Additions (Deductions) Required to Reconcile Net Cash Receipts to Net Income (GAAP Basis):
Unbilled revenue...............................................
14,150 l
Capacity and other fees.............................................
(286,017) g Pnneipal portion of required Sinking Fund transfers..........
281,941 Capitalized interest costs.............................................
6,939 Net transfers to Renewal and Replacement Fund.............
668,127 E
Net transfers to Rate Stabilization Fund.........
303,922 g
Net transfers to Water Reuse System.....................
48,593 Gain (loss) on disposal of property and equipment.....
(23,356)
Depreciation.......................................................
(749,715)
Amcutization of debt expense.......
(50,309) 214,275 Net income...............
275.519 E
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l SCHEDULE OF REVENUE, RECEIPTS, EXPENSES AND DISBURSEMENTS -
Schedule 5 r
(
BUDGET AND ACTUAL - WATER REUSE SYSTEM (NON-GAAP BUDGETARY BASIS)
For the Fiscal Year Ended September 30,1997 UTILITIES COMMISSION, CITY OF NEW SMYRNA BEACH, RORIDA
(
NEW SMYRNA BEACH, FLORIDA
{
Variance Favorable Budget Actual (Unfavorable)
(
Revenue and Receipts:
Direct Sales:
Reuse wate r sales..............................................$
51,783 55,150 3,367
[
Reuse subsidy surcharge.......................................
375,240 379,129 3,889 Nonoperating revenue:
Interest earnings................................................
25.000 22,132 (2,868)
[
Total revenue and receipts..................................
452,023 456,411 4,388 Operating Expenses:
(
Transmission and distribution system..............................
69,675 70,816 (1,141)
Administrative and general.........................................
3,400 929 2,471 Required payments to the City of New Smyrna Beach........
3,107 3,304 (197)
Total operating expenses...................................
76,182 75,049 1,133 Net revenue and receipts.....................................
375,841 381,362 5,521 Operating Transfers In (Out):
Sinking Funds:
1992 Certi fica tes................................................
(257,068)
(257,068) 1993 Certificates................................................
(149,966)
(149,966)
(407,034)
(407,034)
Renewal and Replacement Funds:
Required Contribution..................................................
(17,400)
(17,400)
Rate S tabilization Fund.............................................
(3,383 (3,383)
Proceeds of transfer from Pollution Control System............
48,593 4,
Total operating transfers (out)................................
(375,841)
(379,224)
(3,383)
Budgeted net cash receipts................................... $
2,138 _
2.138 Additions (Deductions) Required to Reconcile Net Cash Receipts to Net Income (GAAP Basis):
Unbill ed reve nue.................................................
(2,200)
Principal portion of required Sinking Fund transfers..........
101,123 Capitalized inte re st costs.............................................
12,496 Net transfers to Renewal and Replacement Fund...............
17,400 Net transfers to Rate Stabilization Fund...........................
3,383 Proceeds of transfer from Pollution Control S Depre ciation....................................... ystem..........
(48,593)
(101,305)
Amortiza tion of deb t expense.......................................
(12,921)
(30,617)
N e t (lo ss)......................................................
(28,479) 21
SCHEDULE OF OPERATING EXPENSES-Schedule 6 ELECTRIC SYSTEM For the Fiscal Years Ended September 30,1997 and 1996 UTILITIES COMMISSION, CITY OF NEW SMYRNA BEACH, FLORIDA NEW SMYRNA BEACH, FLORIDA 1997 1996 Power Production and Fuel:
Nuclear Power Generation:
Fue l.............................
82,496 Operation.................................................................
543,852 469,403 Mai nte nance....................................................................
536,045 311,243 Diesel Power Generation:
Fuel.....................................................................
39,729 32,673 E
Ope ration..............................................................
86,013 167,354 5
Main te nance..................................................................
135,065 118,842 Other Power Supply:
Purchased porer......................................................
13,954,907 13,522,661 System control and load dispatching........................................
328,738 359,057 15,624,349 15,063,729 Transmission and Distribution:
Operation.................................................................
768,723 1,050,168 Mainte nance..................................................................
~323,647 314,340 l 0923F 1,364,508 Customer Accounting:
Ope ra tio n................................................
442,180 508,557 Administrative and General:
Operation......................................................................
1,794,568 2,057,671 Transportation..........................................................
77,281 103,528 1,871,849 2,161,199 Required Payments to the City of New Smyrna Beach.......................
1,479,852 1,609,406 Depreciation and decommissioning.......................................
2,051,502 2,036,669 Total operating expenses.........
$ 22,562,103 22,744.068 I
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SCHEDULE OF OPERATING EXPENSES-Schedule 7 WATER SYS""EM For the Fiscal Y< ars Ended September 30,1997 and 1996 UTILITIES COI(MISSION, CITY OF NEW SMYRNA BEACH, FLORIDA NEW SMYRNA BEACH, FLORIDA 1997 1996 Water Production:
Source of Supply:
Operation.........................................................................
60,680 60,689 Maintenance......................................................................
5,860 14,890 Pumping:
Operation.........................................................................
148,031 168,149 Mainte nance.....................................................................
13,252-5,583 Water Treatment:
j Operation.........................................................................
602,277 680,901
^
Maintenance.....................................................................
14,821 10,079 844,921 940.291 Transmission and Distribution:
Operation.............................................................................
357,429 379,176 Mainte nance........................................................................
52,911 33.892 410,340 413,068 1
Customer Accounting:
Operation.............................................................................
174,080 191,521 Administrative and General:
Operation.............................................................................
754,357 847,215 Transporta tion.......................................................................
45,627 48,630 799,984 895,845 Required Payments to the City of New Smyrna Beach...........................
258,520 256,106 Depre cia tion............................................................................
730,188 715,240 Total operating expenses.................................................... $
3,218,03_3_
3.412,071 23
SCHEDULE OF OPERATING EXPENSES-Schedule 8 POLLUTION CONTROL SYSTEM For the Fiscal Years Ended September 30,1997 and 19%
UTILITIES COMMISSION, CITY OF NEW SMYRNA BEACH, FLORIDA NEW SMYRNA BEACH, FLORIDA I
1997 1996 Collection and Treatment System:
Collection and Pumping:
Operation.......................................................................
304,435 425,050 Mainte nanc e....................................................................
43,880 34,?O4 Treatment and Disposal:
Operation...................................................................
676,734 730,148 Mainte nance...............
25,818 18,186 1,050,867 1,207,688-Customer Accounting:
Operation.............................................................................
109,954 119,908 Administrative and General:
Operation..........................................................................
612,504 679,487 Transportation..................................................................
27,1 %
36,856 639,700 716,343 Required Payments to the City of New Smyrna Beach...........................
207,918 208,474 D ep re cia tio n.......................................................................
749,715 748,096 Total operating expense s................................................... $
2.758_,15_4_
3.000.509 I
I I
24
SCHEDULE OF OPERATING EXPENSES-Schedule 9 WATER REUSE SYSTEM For the Fiscal Years Ended September 30,1997 and 1996 UTILITIES COMMISSION, CITY OF NEW SMYRNA BEACH, FLORIDA NEW SMYRNA BEACH, FLORIDA 1997 1996 Transmission and Distribution System:
Operation.............................................................................
65,475 65,361 Mainte nance.........................................................................
3,341 3,185 70,816 68,546
- Administrative and General:
Operation.............................................................................
929 4,998 Transporta tion.......................................................................
92T 4,998 Required Payments to the City of New Smyrna Beach...........................
3,304 2,118 Depre cia tion............................................................................
101,305 83,473 Total operating expenses.................................................... $
176.354 159.135 25
I SCIIEDULE OF INTEREST EARNINGS Schedule 10 For the Fiscal Years Ended September 30,1997 and 1996 UTILITIES COMMISSION, CITY OF NEW SMYRNA BEACH, FLORIDA NEW SMYRNA BEACH, FLORIDA 1997 1996 Interest Earnings By Source:
From Investments:
S inking funds............................................................ S 415,166 351,824 Renewal and replacement funds................
236,403 205,598 E
Customers' deposits..
50,939 61,946 5
Other....................................
168,674 181,324 87T,lHT 800,692~
From Assessments...................................
27,078 23.953 Total interest earnings..
8_9826_0 824,645 Interest Earnings By System:
El e ctri c syste m...............................................................
472,879 425,570 Wate r syste m..................................................
219,890 227,388 Pollution control system.....
183,359 160,314 Water re use system................................................
22,132 11,373 Total interest earnings........................
S 898.260 824.645 I
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s('
1 STATISTICAL SECTION Statistical tables differfromfinancial statements because they usually cover more than onefiscalyear and may present non-accounting data. 7hese tables reflect social and economic data andfinancial trends of the Utilities Commission, City ofNew Smyrna Beach, Florida.
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[
L
~
SUPPLEMENTAL AUDITREPORTS
(
l
SCHEDULE OF EXPENSES BY FUNCTION LAST TEN FISCAL YEARS September 30, UTILITIES COMMISSION, CITY OF NEW SMYRNA BEACH, FLORIDA I'l NEW SMYRNA BEACH, FIDRIDA Operating Regiired Transmission, Payments Distribution Admmistrative to City of Fiscal Total Production and Customer and New Smyrna Year Expenses Expenses Collection Accounting General Beach 1988 25,687,082 12,681,390 2,657,153 647,001 2,888,994 1,481,102 1989 27,368,501 13,793,020 2,795,429 660,210 3,025,338 1,589,082 1990 29,666,505 14,971,670 2,856,957 721,935 3,541,852 1,781,241 1991 30,650,259 15,718,072 2,989,885 753,860 3,856,593 1,785,889 1992 30,884,894 15,831,890 2,750,121 790,405 3, % 7,885 1,818,257 1993 32,046,964 16,033,390 2,930,222 811,560 4,088,053 1,878,058 1994 31,988,494 15,514,926 2,937,195 811,963 4,015,134 1,922,423 1995 33,634,761 15,736,225 3,433,468 808,391 4,300,729 1,945,294 1996 33,068,120 16,004,020 3,053,810 819,986 3,778,385 2,076,1G4 1997 32,217,240 16,469,270 2,624,394 726,214 3,312,462 1,949,594 I
1 I
28
1 Table I Expenses Nonoperatmg F=am Interest State Depreciation Total and Other Total Utilities and Operating Debt Nonoperating Nonoperating Tax Decommissioning Expense Expense Expense Expenses 291,187 2,218,323 22,865,150 2,775,470 46,462 2,821,932 308,843 2,322,753 24,494,675 2,737,217 136,609 2,873,826 321,159 2,447,565 26,642,379 2,781,553 242,573 3,024,126 2,616,987 27,721,286 2,840,798 88,175 2,928,973 l
2,788,649
'27,947,207 2,876,926 60,761 2,937,687 2,988,477 28,729,760 3,250,343 66,861 3,317,204 3,210,370 28,412,011 3,458,792 117,691 3,576,483 3,540,923 29,765,030 3,791,166 78,565 3,869,731 3,583,478 29,315,783 3,731,690 20,647 3,752,337 3,632,710 28,714,644 3,462,756 39,840 3,502,5 %
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29
I SCHEDULE OF REVENUES BY SOURCE LAST TEN FISCAL YEARS September 30, UTILITIES COMMISSION, CITY OF NEW SMYRNA BEACH, FLORIDA NEW SMYRNA BEACH, FIDRIDA Operating Revenues Pollution Water Total Fiscal Total Electric Water Control Reuse Operating Year Revenues System System System System Revenue 24,442,765 1988 25,269,603 19,467,476 3,050,904 1,924,385 1989 27,431,708 20,841,500 3,184,987 2,390,120 26,416,607 1990 29,103,071 22,362,293 3,305,107 2,444,813 28,112,213 1991 30,989,578 24,261,715 3,414,240 2,437,303 30,113,258 1992 31,115,463 24,116,658 3,618,061 2,575,895 30,310,614 1993 32,292,107 24,8L0,055 3,938,507 2,826,245 6,405 31,651,212 1994 32,222,023 24,352,192 3,923,279 3,165,162 7,650 31,448,283 1995 34,253,351 25,612,207 3,972,005 3,168,544 382,696 33,135,452 1996 34,839,856 25,872,665 4,145,975 3,332,543 411,907 33,763,090 1997 33,945,059 24,901,225 4,187,748 3,326,421 432,078 32,847,472 I
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Table II Nonoperating Revenues Total Interest Other Nonoperating Earnings Income Revenue 668,355 158,483 826,838 818,148 1 %,953 1,015,101 801,086 189,772 990,858 696,413 179,907 876,320 595,302.
209,547 804,849 370,830 270,065 640,895 495,971 277,769 773,740 762,206 355,693 1,117,899 824,645 252,121 1,076,766 898,260 199,327 1,097,587 f-31
DEMOGRAPHIC STATISTICS Table III LAST TEN FISCAL YEARS I
September 30, UTIIJTIES COMMISSION, CITY OF NEW SMYRNA BEACH, FLORIDA NEW SMYRNA BEACH, FIDRIDA New l
Smyrna County E
Beach's Per County
. School Estimated Capita Unemployment School Percent Fiscal Population Income Rate Enrollmert Attendance Year (1)
(2)
(3)
(4)
(4) 1988 15,647
$14,494 4.4%
4,240 94.0 %
1989 17,266
$15,266 4.5 %
4,445 95.0 %
i 1990 18,600
$15,648 5.6%
4,488 96.0 %
)
1991 16,543
$16,122 7.3 %
4,663 95.0 %
1992 17,084
$16,635 8.3%
4,852 96.0 %
1993 17,231
$16,706 6.6%
5,009 96.0 %
1994 17,989
$17,778 6.4%
5,053 96.0 %
1995 17,853 N/A 4.9%
5,348 96.0 %
1996 18,239 N/A 4.5%
4,978 96.0 %
1997 18,327 N/A 3.9%
5,008 95.9 %
(1) Obtained from University of Florida, Dureau of Economics and Business Research.
(2) Obtained from U.S. Department of Commerce, Bureau of Economic Analysis.
(3) Obtained from State of Florida, Department of Labor and Employment Security.
(4) Obtained from Volusia County Schel Board - includes grades K-12.
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32
PROPERTY VALUE, CONSTRUCTION AND 2ANK DEPOSITS (4)
Table IV
{
LAST TEN FISCAL YEARS I -
Segeand-30, UTIUTIES COMMISSION, CITY OF NEW SMYRNA BEACH, FIhRIDA NEW SMYRNA BEACH, FIDRIDA l
Savings 1
Dollar and Property Number Value Bank loan Assessed I
of of Deposits Deposits Value l
Fiscal Permits Construction (2)
(2)
(3)
Year (1)
($000's)
($000's)
($000's)
($000's) l l-1988 2,246
$30,640
$190,477
$284,244
$834,038 l
1989 2,502
$23,382
$244,312
$228,568
$894,694 j
1990 2,416
$27,492
$310,746
$285,541
$975,234 1991 2,333
$22,310
$379,110
$300,960
$1,030,656
{
1992.
2,391
$18,909
$426,878
$317,964
$1,094,024 j
1993 2,421
$28,848
$531,036
$331,636
$1,117,205 1994 2,266
$18,103
$397,165 (5)
$303,670 (5)
$1,149,931 1995 2,177
$33,581
$304,421 (6)
$233,412 (6)
$1,199,523 1996 2,561
$23,785
$321,772 (6)
$228,108 (6)
$1,231,515 1997 2,301
$28,975
$311,807 (6)
$230,986 (6)
$1,275,232 l
l (1) Obtained from City of New Smyrna Beach Building Department.
(2) Obtained from ingdry of officials of banks and savings and loan associations.
(3) Obtamed from Volusia County Finance Department.
(4) The above data is related exclusively to area within the municipallimits of the City of New Smyrna Beach.
(f) Deposit information mAer 1993 does not include deposits from bank and savings and loan branches which are located outside the municipal boundaries of the City of New Smyrna Beach. Prior to 1994, branch deposits i
were based <.n regional hanHng/ savings and loan center totals which included branchee located outside of the City. Prior year data cannot be easily segregated due to the large number of banking changes / mergers j
that have occured during the last ten years.
1 (6) Deposit infonnation obtained from Florida Bankers Association.
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33 j
I SCHEDULE OF INSURANCE IN IT)RCE Table V September 30,1997 l
UTILITIES COMMISSION, CITY OF NEW SMYRNA BEACH, FLORIDA E
NEW SMYRNA BEACH, FLORIDA Coverage and Policy Policy Insuring Company Number Period Details of Covemme Liability Limits Comprehensive General Liabilty:
Titan Indemnity Co.
10GLO2420 01/01/97 Combined bodily irdury
$3,000,000 with $5,000 12/31/97 and pmpeny damage deductible Business Auto:
Titan Indemnity Co.
35BA04479 01/01/97 Liability
$1,000,000 bodily injury and 12/31/97 pmperty combined Comprehensive Actual cash value less
$250 deductible Collision Actual cash value less
$500 deductible No fault Statutory Business Property:
Florida League of Cities / Florida Self-FMir 400 10/01/97 Buildings and contents
$16,838,918 with $10,000 g
insurers Fund 09/30/98 deductible (agreed value) g Valuable papers / records
$100,000 with $100 deductible Contractors equipment
$544,274 with $2,500 deductible Computer equipment
$150,000 with $500 deductible Crime:
Florida League of Cities /Aetna 23S101004044 12/01/96 Employee cdme
$100,000 aggregate, $1,000 Casualty and Surety Co.
12/01/97 deductible Money and securities
$60,000 C<nmterfeit currency (Included)
Depositors' forgery
$100,000 Boiler and Machinery:
Great Northern Insurance Co.
7827-44-32 01/01/97 Breakdown due to accident $5,000,000 with $10,000 Chubb Group Insurance Co.
01/01/98 deductible Flood Insurance:
Capital Assurance Company,Inc.
366-2016744 09/02/97 Building
$798,800 09/02/98 Contents
$1,000,000 Deductible
$10,000 Nuclear Energy Damage:
American Nuclear Insurarme and
%P147 10/09/95 Primary property
$500 million 3
Mutual Atomic Energy Liability 10/09/96 g
Underwriters and Nuclear X96015 11/15/96 Excess property
$1.400 billion Insurance Ltd.
I1/15/97 (Excess of $500 million)
(These amounts represent the NF195&MF91 01/01/97 Primary liability
$200 million total insurance coverage for 01/01/98 Florida Power Corporation's Crystal NS347&MS65 01/01/97 Suppliers and transporters $200 million River nuclear plant, of which the 01/01/98 liability Commission owns a 0.05608 %
N35&M35 01/01/97 Secondary financial
$30 million per occurrence undivided ownership interest) 01/01/98 protection NW103&MW62 01/01/97 Master Workers Torts
$200 mulion aggregate 01/01/98 Public Official / Employee Liabilty:
Corregis Insurance Orgaruntians 524-440966-6 07/28/97 Liability
$1,000,000 Retentions-$10,000 07/28/98 per loss Workers' Compensation:
Govemment Risk Insurance 130058 10/01/97 Statutory coverage Statutory Trust 10/01/98 Employer's liability
$100,000 Pollution Liability:
Florida Petroleum Liability Insurance FPL - 8078984 07/10/97 Liability - fuel spillage
$2,000,000 aggregate 07/10/98
$500 deductible 34
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(
TEN LARGEhT ELECTRIC CUSTOMERS Table VI
. September 30,1997 UTILITIES COMMISSION, CITY OF NEW SMYRNA BEACH, FIDRIDA NEW SMYRNA BEACH, FIDRIDA Kilowatt Hour Sales Revenues Billed Percent Percent (kWh) of of t
l (000's)
Total Amount Total l
- 1. Bert Fish Medical Center........................
7,929 2.59 %
$558,284 2.27 %
l
- 2. Winn Dixie (#2304)...............................
3,172 1.04 %
222,117 0.90 %
I
- 3. Publix Food Store (#2019100)..................
3,001 0.98 %
209,790 0.85 %
i
- 4. Publix Food Store (#2033500)..................
2,797 0.92 %
197,127 0.80 %
- 5. Utilities Commission (Pollution plant).........
2,771 0.91 %
197,207 0.80 %
- 6. Wal-Mart (#01-1079).............................
2,572 0.84 %
181,803 0.74 %
l
- 7. Reddy Ice...........................................
2,442 0.80 %
174,148 0.71 %
l
- 8. Food Lion (#829).................................
2,263 0.74 %
157,500 0.64 %
1 I
- 9. Board of Public Instmetion (New Smyrna Beach Middle Sebool)..........
2,133 0.70 %
178,278 0.73 %
- 10. K-Mart (fl447).....................................
1,973 0.65 %
143,746 0.59 %
Totals.........................................
31,053 10.17 %
$_2,220,000 9.03 %
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35
I' TEN LARGEST WATER CUSTOMERS Table VII September 30,1997 UTILITIES COMMISSION, CITY OF NEW SMYRNA BEACH, FLORIDA NEW SMYRNA BEACH, FLORIDA l
Consumption
_ Revenues Billed Percent Percent l
Gallons of of (000's)
Tote?
Amount Total i
- 1. Board of Public Instmetion 20,579 1.52 %
$41,870 0.99 %
- 2. Sea Woods Homeowners Association............
18,905 1.40 %
34,332 0.81 %
- 3. Federal Housing Authority.........................
16,278 1.20 %
38,351 0.91 %
l
- 4. Bert Fish Medical Center.....................
15,511 1.15 %
27,549 0.65 %
- 5. Errol by the Sea Condominium Association....
13,843 1.02 %
25,476 0.60 %
- 6. The Inlet Condominium Associaiton.............
12,067 0.89 %
17,366 0.41 %
- 7. Islander Beach Lodge.............................
10,302 0.76 %
19,766 0.47 %
l
- 8. Oceanview Nursing Home..........................
9,733 0.72 %
16,877 0.40 %
l
- 9. Pelican Condominium Association...............
9,380 0.69 %
13,158 0.31 %
- 10. Ocanview Towers.................................
7,696 0.57 %
12.812 0.30 %
Totals...........................................
134,294 9.92 %
$247,557 5.85 %
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36
SCIIEDULE OF REVENUE CERTIFICATE COVERAGE Tcble VIII LAST TEN FISCAL YEARS September 30, UTILITIES COMMISSION, CITY OF NEW SMYRNA BEACH, FLORIDA I
NEW SMYRNA BEACH, FLORIDA l
1997 1996 1995 1994 1993 Gross Revenue Per Certificate Resolution:
l Operating revenues................................ $ 32,847,472 33,763,090 33,135,452 31,448,283 31,651,212 l
Interest and other income (excluding construction fund interest earnin 1,097,587 1,076,766 1,117,899 773,740 640,895 Capacity and other fees............. gs)........
1,785,424 1,383,945 798,090 727,054 1,521,443 j
Assessment collections.........................
559 1,331 3,106 (301) 5,576 Gross revenue per certificate resolution....
35,731,042 36,225.132 35,054,547 32,948,776 33,819,126 i
1 Expenses Per Certificate Resolution:
Operating expenses............................
28,714,644 29,315,783 29,765,030 28,412,011 28,729,760 i
Less: Depreciation expense.............
(3,450,710)
(3,386,306)
(3,337,966)
(3,179,382)
(2,889,647) j Required payments to the City..........
(1,949,594)
(2,076,104)
(1,945,294)
(1,922,423)
(1,878,058)
Expenses per certificate resolution..........
23,314.340 23,853.373 24,481,770 23,310,206 23,962.055 income available for debt service.......... $ 12,416,702 12,371,759 10,572,777 9,638,570 9,857,071 Annual Debt Service Requirements:
Principal......................................... $
1,945,000 1,855,000 1,680,000 1,595,000 1,015,000 Interest (less accrued interest) (1)...........
3,138,448 3,687.574 3,841,252 3,923,144 3,780,962 Annual debt service requirements............ $_5,083M8_
5,542,574 5.52L252 5,518,144 4,795,962 Cuverage ratio (Times)......................
2.44 2.23 1.91
- _1g5, 2.06 l
1992 1991 1990 1989 1988 Gross Revenue Fer Certificate Resolution:
Operating revenues............................... $ 30,310,614 30.113,258 28,112,213 26,416,607 24,442,765 Interest and other income (excluding l
construction fund interest earnings)........
804,849 876,320 990,858 1,008,728 820,417 Capacity and other fees........................
761,039 756,866 1,001,968 806,571 756,976 Assessment collections..........................
13,152 36,239 45,828 69,750 71,284 l
Gross revenue per certificate resolution....
31,889,654 31,782,683 30,150.867 28,301,656 26,091,442 Expenses Per Certificate Resolution:
j Operating expenses.............................
27,947,207 27,721,286 26,642,379 24,494,675 22,865,150 Less: Depreciation expense....................
(2,675,521)
(2,495,360)
(2,328,833)
(2,212,241)
(2,119,675)
Required payments to the City.......
(1,818,257)
(1,785,889)
(1,781,241)
(1,589,082)
(1,481,102)
Expenses per certificate resolution.........
23,453,429 23,440.028 22,532,305 20,693,352 19,264,373 Income available for debt service.
8,436,225_
8,342,655 7.618E2_
7.608,304 6 827,069 2
Annual Debt Service Requirements:
Principal.......................................... $
1,080,000 1,020,000 805,000 765,000 725,000 Interest (less accrued interest) (1)............
3.266,873 3,550,972 2,553,281 2,597,110 2,637,382 Annual debt service requirements........... $
4,346,873, 4,570,972 3,358,281 3,362,110 3,362,382 Coverage ratio (l'imes).......................,
1.94 1.83 2.27 2.26 2.03 (1) Interest expense for the fiscal years ended September 30,1993,1992, and 1990, is stated net of $613,763, $222,792 and $783,7 respectively, in interest expense which was funded from the proceeds of the issuance of revenue certificates.
(2) Includes actual amouts funded throughout the year for subsequent April 1 and October I debt service payments.
37
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UTIIJTY RATE SCHEDULE-Table X ELECTRIC SERVICE September 30,1997 UTIIJTIES COMMISSION, CITY OF NEW SMYRNA BEACH, FiDRIDA NEW SMYRNA BEACH, FLORIDA Effective: October 1,1997 Electric System Rate Schedule:
Residential Service - Monthly Rate Customer Charge:
Single Phase Service
$5.65 Three Phase Service
$7.85 Energy Charge:
All kWh per month at:
$0.06917 per kWh (plus fuel and purchased power cost adjustment)
General Service - Non-Demand - Monthly Rate Customer Charge:
Single Phase Service
$6.05 Three Phase Service
$8.85 Energy Charge:
All kWh per month at:
$0.07439 per kWh (plus fuel and purchased power cost adjustment)
General Service - Demand - Monthly Rate Customer Charge:
$33.50 Demand Charge:
All kW of bhg demand
$5.80 per kW Energy Charge:
All kWh per month at:
$0.05677 per kWh (plus fuel and purchased power cost adjustment)
Fuel and Purchased Power Cost Adjustment Clause:
The Fuel and Purchased Power Cost Adjustment Clause (FPPCAC)is an integral component of the monthly charges, and is designed to allow for accurate bhg of fluctuating applicable fuel ard purchased power costs.
In order to mimmim changes in customer bhgs, the FPPCAC is developed on a twelve month projected basis, with provision to "true-up" any over or under recovery of any applicable fuel and purchased power cost in each subsequent twelve month period. A provision is provided in the clause for the FPPCAC to be modified if significant circumstances arise during the twelve month bug cycle. The adjustment for the toelve month period ending October 1,1997 is $4.35 per 1,000 kWh.
(1)
The above information is provided pursuant to the requirements of Section 2(B) of the Commission's Continuing Disclosure Certificate which was issued on August 15,1996 in conjunction with the sale of $26,210,000 Utilities Refunding Revenue Certificates, Series 1996.
39
UITLITY RATE SCIIEDULE -
Table XI
,I WATER. SERVICE September 30,1997 UTILITIES COMMISSION, CITY OF NEW SMYRNA BEACH, FLORIDA NEW SMYRNA BEACH, FLORIDA Meter Base Reuse Billing Total Size Facility Subsidy Charge Monthly 1
(Inches)
Charge Charge Monthly Billing Residential Service (2):
5/8" 8.85 $
0.90 $
1.90 $ 11.65 + Gallonage Charge Single Family 1"
22.15 2.25 1.90 $ 26.30 + Gallonage Charge 1 1/2" 44.25 4.50 1.90 $ 50.65 + Gallonage Charge 2"
70.80 7.20 1.90 $ 79.90 + Gallonage Charge 3"
141.60 14.40 1.90 $ 157.90 + Gallonage Charge 4"
221.25 22.50 1.90 $ 245.65 + Gallonage Charge 6"
442.50 45.00 1.90 $ 489.40 + Gallonage Charge 8"
708.00 72.00 1.90 $ 781.90 + Gallonage Charge Gallonage Charge /1,000 Gallons Block 1 Block 2 Block 3
$1.05
$1.25
$1.70 Monthly Rate Blocks (Gallons)
Block 1 Block 2 Block 3 All Meter Sizes 0-7000 7001-14000 14001 and over Base Reuse Billing Total Billing Facility Subsidy Charge Monthly Account Charge Charge Monthly Billing Mulit-Family Each Unit $
8.85 $
0.90 $
0.00 $ 9.75 Master Meter 0.00 0.00 1.90 $ 1.90 + Gallonage Charge @
$1.05 per KG - all usage irrigation and Non-Residential (2):
" (Same Minimum and Gallonage Charges as Residential) "
Meter Sir.c Blockl Blosk.2 BlorJL1 5/8" 0 - 7,000 7,001 -
14,000 14,001 and above 1"
0 - 15,000 15,001 -
40,000 40,001 and above 1 1/2" 0 - 30,000 30,001 -
75,000 75,001 and above 2"
0 - 50,000 50,001 - 100,000 100,001 and above 3"
0 -100,000 100,001 - 200,000 200,001 and above 4"
0 -200,000 200,001 - 400,000 400,001 and above 6"
0 -300,000 300,001 - 600,000 600,001 and above 8"
0 -600,000 600,001 - 1,000,000 1,000,001 and above (1) The above information is provided pursuant to the requirements of Section 2(B) of the Commission's Continuing Disclosure Certificate which was issued on August 15,1996 in conjunction with the sale of $26,210,000 Utilities Refunding Revenue Certificates, Series 1996.
(2) A surcharge of twenty-five percent (25%) is added to bills of users outside the City limi's.
I g
o
[
UTIIJTY RATE SCHEDUIE.
Table XH POLLUTION CONTROL AND WATER REUSE SERVICE f+;-
' r30,1997 f
UTIIJTIES COMMISSION, CITY OF NEW SMYRNA BEACH, FIDRIDA NEW SMYRNA BEACH, FIDRIDA
(
Pollution Control Rate Schedule Residential, (Single-Family) and Non-Residential (2):
Meter Base Reuse Billing Charge Total Size Facility Subsidy Charge Per Monthly (Inches)
Charge Charge Monthly KG Billing 5/8" 9.35 $
1.05 $
1.50 $
1.55
$ 11.90 + Gallonage Charge l'
23.40 2.65 1.50 1.55
$ 27.55 + Gallonage Charge 11/2" 46.75 5.25 1.50 1.55
$ 53.50 + Gallonage Charge 2'
74.80 8.40 1.50 1.55
$ 84,70 + Gallonage Charge 3'
149.60 16.80 1.50 1.55
$ 167.90 + Gallonage Charge 4"
233.75 26.25 1.50 1.55
$ 261.50 + Gallonage Charge 6'
467.50 52.50 1.50 1.55
$ 521.50 + Gallonage Charge 8"
748.00 84.00 1.50 1.55
$ 833.50 + Gallonage Charge Multi-Family (2):
[
Each Unit 9.35 1.05 0.00 0.00
$ 10.40 t
Master Meter 0.00 0.00 1.50 1.55 1.50 + Gallonage Charge
{
Reclaimed Water Rate Schedule:
Meter Minin=m Flow Size Monthly Charge (Inches)
Charge per KG Pnmary Tier Rate: Service:
5/8" X 3/4" $
10.00 N/A
[
l' 25.00 N/A L
11/2" 50.00 N/A Metered:
2' O.00 0.10
[
3" 0.00 0.10 4"
0.00 0.10 6"
0.00 0.10 f
h 1-y Tier Rate:
$10.80/ acre / month for metered users whose anticipated capacity exceeds 100,000 gallons per day and which must provide a mininnim of three (3) days of wet weatha storage for the rainimum flow rate of 1,900 gallons / acre / day on an =n===1 average
{
(1) The above information is provided pursuant to the requirements of Section 2(B) of the Commission's C~*:-N Disclosure Certificate which was issued on August 15,1996 in conjunction with the sale of $26,210,000 Utilities Refunding Revenue Certificates, Series 1996.
(2) A surcharge of twenty-five percent (25%) is added to bills of users outside the City limits.
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41
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BRENT MILLIKAN & COMPANY, P.A.
CERTIFIED PUBLIC ACCOUNTANTS
(
INDEPENDENT AUDITORS' REPORT ON COMPLIANCE WITH LAWS AND REGULATIONS BASED ON AN AUDIT OF FINANC[AL STATEMENTE PERFORMED IN ACCORDANCE WITH
{
GOVERNMENTAUDITINGSTANDARDS To the Honorable Chairman and Commissioners Utilities Commission, City of New Smyrna Beach, Florida New Smyrna Beach, Florida We have audited the financial statements of Utilities Commission, City of New Smyrna Beach, r
Florida, as ofand for the year ended September 30,1997, and have issued our report thereon dated i
November 7,1997.
{
We conducted our audit in accordance with generally accepted auditing standards and Government t
AuditingStandards, issued by the Comptroller General of the United States. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the fmancial
(
statements are free of material misstatement.
Compliance with laws, regulations, contracts, and grants applicable to Utilities Commission, City of
(
New Smyrna Beach, Florida, is the responsibility of Utilities Commission, City of New Smyrna Beach, Florida's management. As part ofobtaining reasonable assurance about whether the financial statements are free of material misstatement, we performed tests of the Commission's compliance
[
with such provisions oflaws, regulations, contracts, and grants. However, the objective of our audit of the financial statements was not to provide an opinion on overall compliance with such provisions.
Accordingly, we do not express such an opinion.
The results of our tests disclosed no instances of noncompliance that are required to be reported herein under Government Auditing Standards.
This report is intended for the information of the Utilities Commission, management, and applicable
[
federal and state regulatory bodies. This restriction is not intended to limit the distribution of this t
report, which is a matter of public record.
New Smyrna Beach, Florida November 7,1997 r
42 l
205 MAGNOI.IA ST + NEW SMYRNA BEACH, FL 32168 + (904) 427-1333
- FAX (904) 427 5823 MI MBI R; Amer 6un institute of Certdied Public Accountanta and AICPA Prwate Companies Practwe %rtion
BRENT MILLIKAN & COMPANY, P.A.
CERTIFIED PUBLIC ACCOUNTANTS INDEPENDENT AUDITORS' REPORT ON INTERNAL CONTROL STRUCTURE RELATED MATTERS NOTED IN A FINANCIAL STATEMENT AUDIT CONDUCTED IN ACCORDANCE WITH GOVERNMENTAUDITINGSTANDARDS To the Honorable Chairman and Commissioners Utilities Commission, City of New Smyrna Beach, Florida New Smyrna Beach, Florida We have audited the financial statements of Utilities Commission, City of New Smyrna Beach, Florida, as of and for the year ended September 30,1997, and have issued our report thereon dated November 7,1997.
We conducted our audit in accordance with generally accepted auditing standards and Government Auditing Standards, issued by the Comptroller General of the United States. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement.
The management of Utilities Commission, City of New Smyrna Beach, Florida, is responsible for establishing and maintaining an internal control structure. In fulfilling this responsibility, estimates and judgements by management are required to assess the expected benefits and related costs of internal control structure policies and procedures. The objectives of an internal control structure are to provide management with reasonable, but not absolute, assurance that assets are safeguarded against loss from unauthorized use or disposition and that transactions are executed in accordance with management's authorization and recorded properly to permit the preparation of financial statements in accordance with generally accepted accounting principles. Because of inherent limitations in any internal control structure, errors or irregularities may nevertheless occur and not be detected. Also, projection of any evaluation of the structure to future periods is subject to the risk that procedures may become inadequate because of changes in conditions or that the effectiveness of the design and operation of policies and procedures may deteriorate.
l 43 20s MAGNOLIA ST.
NEW SMYRNA DEACH, FL 32168 + (904) 427-1333
- FAX (904) 427-s823 i
MEMtH R: American Anatitute af Centhed Puth Accountanen and AK'PA Pnvate Companies Practere hection
I, l
To the Honorable Chairman and Commissioners Utilities Commission, City of New Smyrna Beach, Florida Page 2 of 2 In planning and performing our audit of the financial statements of Utilities Commission, City of New Smyma Beach, Florida, for the year ended September ';0,1997, we obtained an understanding of the internal control structure.
With respect to the internal control structure, we obtained an understanding of the design of relevant policies and procedures and whether they have been placed in operation, and we assessed control risk in order to determine our auditing procedures for the purpose of expressing our opinion on the financial statements and not to provide an opinion on the internal control stmeture. Accordingly, we do not express such an opinion.
Our consideration of the internal control structure would not necessarily disclose all matters in the internel control stmeture that might be material weaknesses under standards established by the American Institute of Certified Public Accountants. A material weakness is a condition in which the design or operation of one or more of the internal control structure elements does not reduce to a relatively low level the risk that errors or irregularities in amounts that would be material in relation to the financial statements being audited may occur and not be detected within a timely period by employees in the normal course of performing their assigned functions. We noted no matters involving the internal control stmeture and its operation that we consider to be a material weakness as defined above.
However, we noted other matters involving the internal control structure and its operation that we have reported to the management of Utilities Commission, City of New Smyrna Beach, Florida, in a separate letter dated November 7,1997.
This repon is intended for the information of the Utilities Commission, management, and applicable federal and state regulatory bodies. This restriction is not intended to limit the distribution of this report, which is a matter of public record.
0 Y.,
New Smyrna Beach, Florida November 7,1997 o
I
t BRENT MILLIKAN & COMPANY, P.A.
CERTIFIED PUBLIC ACCOUNTANTS MANAGEMENT COMMENTS To the Honorable Chairman and Commissioners Utilities Commission, City ofNew Smyrna Beach, Florida New Smyma Beach, Florida We have audited the financial statements of Utilities Commission, City of New Smyrna Beach, Florida, as of and for the year ended September 30,1997, and have issued our report thereon dated November 7,1997.
We conducted our audit in accordance with generally accepted auditing standards and Government AuditingStandardr, issued by the Comptroller General of the United States. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement.
I In planning and performing our audit of the financial statements of Utilities Commission, City of New
]
Smyrna Beach, Florida, for the year ended September 30,1997, we considered the Commission's intemal control structure in order to determine our auditing procedures for the purpose of expressing our opinion on the financial statements and not to provide assurance on the internal control structure.
As a result, no weaknesses in procedures and controls came to our attention which are required to be reported.
In addition to testing your financial operations for compliance with applicable laws, we are required to comment on those items required to be included in this report by reason of the Rules of the Auditor General of the State ofFlorida. Those items are included in Exhibit A attached.
This report is intended for the information of the Utilities Commission, management, and applicable fedtral and state regulatory bodies. This restriction is not intended to limit the distribution of this report, which is a matter of public record.
New Smyrna Beach, Florida November 7,1997 45 205 MAGNOLIA ST. + NEW SMYRNA BEACH, FL 32168 + (904) 427-1333
- FAX (904) 427-5823 MEMillR: American institute of Certified Pubhc Accountante and AKTA Private Companies Practice f ection
Exhibit A Management Comments Page1of1 Prior Year Findings and Recommendations All findings and resultant recommendations made in the preceding year were appropriately implemented and/or resolved to our satisfaction. No irregularities were reported in the preceding year.
Current Year Findings and Recommendations No additional items are presented for consideration.
Oversight Unit The Utilities Commission, was created in 1967 through the passage of Chapter 67-1754, Laws of Florida, Special Acts of 1967 (House Bill 1669) which amended the Charter of the City of New l
Smyma Beach, Florida, to create the Utilities Commission. In a referendum held October 2,1984, City voters approved amendments to the City Charter establishing criteria requiring the funds and entities related to the operation of the Utilities Commission be included as a component unit of the City of New Smyrna Beach, Florida, and an integral part of the City's reporting entity. The Commission's basic financial statements are incorporated in the City's Comprehensive Annual Financial Report as an enterprise fund activity.
Florida Department of Banking and Finance Financial Report The financial report required to be filed with the Florida Department of Banking and Finance pursuant to Section 218.32 (1)(b), Florida Statutes, has not yet been completed by the Commission's oversight unit (City of New Smyrna Beach, Florida, Unit ID#251) at the time of submitting this report. Upon completion of the financial report, we will compare the report with the financial audit report and state our findings, if any, in an amended or supplemental management letter.
We compared the Commission's financial data for the fiscal year ended September 30,1996, as included in the Annual Financial Report filed with the Florida Department of Banking and Finance pursuant to Section 218.32 (1)(b), Florida Statutes, with the Commission's Comprehensive Annual Financial Report and found all items to be in substantial agreement.
Determination of Financial Emergenc' - Section 218.503(1). F.S.
y Nothing came to our attention which indicated that the Utilities Commission, City ofNew Smyrna Beach, Florida, is, or during the year ended September 3v,1997, was in a state of financial emergency as a consequence of conditions described in Section 218.503(1), F.S.
46 I