ML20246M401

1988 Annual Rept for Orlando Utils Commission

ML20246M401
Person / Time
Site:	Saint Lucie, Crystal River, 05000000
Issue date:	12/31/1988
From:	Pope T ORLANDO UTILITIES COMMISSION
To:
Shared Package
ML20246M380	List: 3F0789-05, Forwards Financial Repts for Kissimmee Util Authority, Orlando Utils Commission & Cities of Bushnell & Ocala ML20246M401
References
NUDOCS 8907190145
Download: ML20246M401 (40)

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CONTENTS '

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Growth Watch g

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trends 2n this dynarnic

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d nephenP.a us e M /: a A r

.a Commission Profiles m,nce,oussomermissessE a A.

4 Jondsuppbr:C,.i"9 e ',

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,4 Localleaders who care N W kBN*y,, Mp

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?3 about the quality oflife 1 Manager, Phennosal bp e

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tu lhis corn rnunity ope,agy,,a 999 _

ymy COVER: The dancing lights and waters of the fountain in Lake F.ota have regulate Orlando qDbnald bl tzin came to life again in 1988,its rebirth made possihAs by Orlando Utili-

' P h shapX O@ M b [E become a symbol of Orlando's renaissance. Still for a decade, the f vun-Utilitles.

, MannperJerufelpe$

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' ng%"'l tits and its Maintenance Division. (See insid(' back cover also.)

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20eners enu met? 2 3 w M

?Temhlad$sorg*

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.gr fcomnameason, -

j Management Profiles Electrospectives Two-year Financial comessemas,,G" '&

f Review

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Meet the people who Since 1981fuelcosts o

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natnage Orlando drop l9% while sales Statistical highlights and ggggggggg Q Qf m

Utilities, yuided by one clirnb36% becausc of comrnentant.

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goal: to be the best.

switch to coal, Black 4Vesteh t M

A S Konens,Gty;K3sou@ @)y4, h vm.~.n 20-FinanenalConsultantsA..yp,"

tr<ar Man ' seccitsi,hich '

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Audited Financial M '1 J "*'"> 3 S U Power Plants Surpass Strength in Joint Statements ysonilcamaeQ m u,

.D g M $$$

Air Quality Standards Action for Utilities 6..,.g ( '

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Coal-fired Stantagi Powerpool, otherpacts etrtually Fl<nida s benefit custorners, curb cleanest power plant.

costs, enhance reliability

"..Certmed Paldic Aeoountants' %

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A oriendegnorMag,,,,gg y y 3,y fG:y Indlan Riversurpasses c

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standards, too.

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We Don't Kid Around About Water Quality D

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customers conserve lhis

$MaamiYttn? 'l waterquality. And helps (l*eaned); dL h J

?.?,, Y precious resource, too.

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M9 lando Utilitics Cum mission gggg i

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R Mayor,,7 4

.4-I,or more Iryormattart yoyee g(yl,g F

T about Orlando Utilities 14 limmediate fhat Preskirmt2

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contact: Tracy L Smith'

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? 7heodorea'Popeg...

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~q Proud to Serve

!!annuinnI>irector of psy g 3 3

Communicatwns,

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$bbu58 E" +. 0 lo Nirl1-featu res,1nsl$e

[Q, gggS9yg yyy pg rrow?

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ylirnpses and the HESI Orlando, FL 32801 ty P ace to shop forenergy (407) 433.y100 LSyMa A WaldtV lmI..

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.d saving ideas.

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aa j-ggdi;p g ith Orlando a " hot" topic for magazine and newspaper stories, pf, m'

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Orlando Utiliths Commission, too, is " making news" in its own way.

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E.rjy i -l h M, T. ?Aw The articles included here give a snapshot of Orlando Utilities for 1988. They ML

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. mW - P depict an innovative electric and water

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_, ::q s.,,[.e,.. L4g.$gi{ ph' utility well positioned to meet the

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with the facilities and people necessary to 1

m d6 gha stay ahead of short-term peaks and the lj projected future development of Orlando.

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o We hate responded well to a decade in p

y which growth has been a driving force.

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Since 1978 our assets have risen from $245 million to $1.2 billion as we added the

';:p - r infrastructure to serve a 41% increase in s.

j electric and water customers. In this gp a9 sq y-

,y decade we have also been able to stabilize g g,r 9 rates.

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Our outlook is bright and the

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<3 immediate future will bring more innovation and change. During 1989, we will

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explore new, creative financial arrangements which will give employees and 4

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7 customers greater opportunities to share in our successes. In other areas we wiP

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>4 enhance our ability to keep ahead of growth by forming new alliances with other o

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municipal electric utihties so customers can be assured of rellatae, adequate, and

h. l competitive energy resources.

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b The most important focus will be on our continuing commitment to providing

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service that exceeds expectations. Our people, spirited by our 65 year tradition of 1

g excellence, will continue to find creative ways to provide superior service to our Yf((N': Q (f f x ~Tf customers, both within and without the utility.

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h e -ff T.C. Pope

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Executive Vice President W. !

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and General Manager

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l Alive And On The Move 0 and work," says Newsmert The riando, Florida.the heart of the renird $385 milhon. excenhng the Orlando is the business and govern-nation's second fastest growing previous high by about 3rA rnental center of Orange County which Utet rii business area. Is "one of According Io liv. Inagazine, the Greater contatris two thirds of the Orlando inetro Amenca.s 19 best places to hve Orlando Metro area is the second fastest area population and w here population and growing busmess cornruunity m the job growt b are expected t o remain st rong maganne also desenbes Orlando as a city nation lietween l!Niand 1987. 38"x, of Forecasters project that over 63.009 new that is "econonncally and culturally ahve," a the $ 13 bilhon new industry Invested in jobs will t e created in Orange County by city "where you can have it all" Plonda flowed into the greater Orlando 1991, t he second highest rat e of job Orlando has become a model urban area growt h in Flonda center--a city that exceeds expectations -

Growmg at an as erage of 40.nno people Walt I hsney Worhl put this area in the in less than a decade Since 1980 a year since 19% the tn county Metro global spothght when it opened its Magic Dow nt ow n Orlando office space has more Orlando area population has reac hed the Kinedom in 1971 and Epcot Centerin 1981.

than tripled. increasing froin 15 inilhon one nulhon rnark Greatt r Orlando now Ilut Orlando has t.aken its place on < enter square feet to 6 67 nulhon in 19%

ranks 121h among the 30 fastest grow mg stage by creating its own magic-a posi city wide construction pernuts reached a met to areas in the nation five envirotonent for busines s and people.

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experiencing growth that Center. With Stanton on line, OUC's essets c

1 exceeded expectations,the have grown to $1.2 billion.

6 Orlando Utilities Commission During this decade, the utility worked at

] has had to exceed expectations. an increasingly feverish pace to install and it has been on a fast track for upgrade infrastructure essential to serve h

five years, keeping ahead of the unparal-this flood of new customers. Up went leled growth that has occurred in its metro nearly 7,400 new utility poles. Above and service area.

below ground went almost 6,000 new OUC is a municipal power and water transformers to boost distribution

.,y utility owned by the City of Orlando.

capacity fi9%-from one million KVA However,it serves not only the (kilo-volt amperes) to 1.6 million KVA.

4 71-square-mile city but also 150 square Substations were added and expanded.

t miles of unincorporated Orange County, Fire hydrants and fire protection l

Between the end of Fiscal 1978 and services nearly doubled to almost 8,000.

l 1988,its total number of active electric Hundreds of miles of water pipe were laid l

and water services increased 41%, a total in an aggressive renewal, replacement and

)

of 59,026.Significantly,almost two-thirds expansion program to keep ahead of l

of these new services-37,05fr-have been growth, city improvements and public connected since 1981 projects.

Between the end of Fiscal 1978 and Throtshout this period of growth 000 1983, new customers arrived at an average service continued to be among the most rate of 4,400 a year. Then growth shifted reliable in the state and its financial into high gear and 000 hit the fast track.

condition remains sound. And its Customers Dooded in at an average rate of

" stockholders", the City of Orlando and 7,400 a year for the next five years.

its citizens, continue to receive high During the first five years of the decade, dividends.Since 1978,OUC has OUC bought ownership mterests in other transferred a total of $ 148.8 million into utilities' power plants to k ap up with the city's general fund. These transfers growth and acquire reliable, economical have helped Orlando pay for the services nuclear and coal fueled power its asset' and improvements that contribute to grew from 5245 million to $585 million.

making it a model city They have also Then,in 1983, OUC began to build its helped the city keep the brakes on new plant, the Curtis ll. Stanton Energy property taxes.

What a Difference a Decade Makes View of Orlando from Lake Enla. Emerging Combined downtown skytine and the renovated park Operations Highlights' 1978 1983 1988 characterize the city which Newsweek describes as "a etty of gleaming marble Total Assets

$245,080,562

$585,130.367

$1,195,899,050 office towers, balanced by quaint street 4evet touches.... " Tho magazine Long term Debt 110,330,000 377,106,021 831,604,780' chose ortendo as one of the to best places Debt Service Coverage 3.27X 2.76X 2.15X to live, att

• growing cities" that " combine RMg

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%M MM good jobs and affordable housing with livabnity."

Operating Revenues 96,649,494 177,100,095 244,516,879 Operating Expenses 90,188,484 143,151,745 182,359,495 Cost of Fuel and Purchased Power 51,032.848 91,753,065 77,340.353 Transfers to City 9,120,474 14,641,096 17,529,496 Electric Sales (MWH) 2,634,687 2,792.120 3.649,488 Water Sales (MG) 14,072 17,279 22,914 Active Services 143,132 165,103 202,158 Total Employees 747 778 1,032

t. Emtorkcar earhyes t k,crudescunentportions r

3

. MANAGEMENT t

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A Stable' i

Progressive Team i

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y UC management is characterized by professionalism, continuity and stability. These

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executives have been with or involved with the utility industry between 15 to 40 years as it experienced one wave ofchange after another tn an era social commentators said would produce " future shock". In OUC's case, it produced pacesetting metro utility committed to providing customers with service that exceeds expectations. At its head is a man whose goal is simple and straightforward: to be the best, Theodore C. Pope took a completely new turn. In 1972, he became Manager of Water Operations, k,

x Executive Vice Prvsident and Genend which had 128 etnployees and 150,090 Afanager

,4 customers at the time. By 1984, whc n he moved to top management, the

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A nationvide search was conducted before Mmment served 300,000 customers Theodore "Ted" Pope was named assist wt w enn fewmmpi yees because of ger,eral manager in i984.The person innovations he had implemented.

's selected for that pon would, hopefully, The American Water Works Association qualify to become chief executive officer as

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has awarded him its highest honors for Pope did in 1986. He was uniquely qualified A

his leadership role in transforming the to lead this dual utility for he had served

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AWWA's research foundation from a with distinction in key management

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$60W0 a year agency to a $4 million a positionsin both Electric and Water

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year center of applied research. Pope has Operathas Throughout his career,he l

been named " Central Florida Engineer of e

earned n'any state and national honors for the Year" by a board representing area OUC from the electric and water industries.

engineering enapters. lie is also a An irmovator, he is also a facilitatory of

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s change lie never hesitates to ask or to I

registered Professional Engineer.

encourage others to ask "what if we did 9 ",

(

Featured in "Who's Who in Frontiers this.. " and to listen to new ideas. As a c-of Science and Tecimology

• he has result, sweeping changes have been made authored and presented many papers pertaining to both the electric and water within OUC in the last few years to yx' utility industries. lie also invented a new streamline, moderruze, and improve operations and service, a vital financial resource for cities and water purification process which has been An advocate of consensus, he encourages their citizens as well as a provider of patemed and is used by OUC to remove l

the exchange of ideas with both senior essential services. Thus, he strongly hydrogen sulfide.

p management and middle management, supports for'ning coahtions with other Currently executive corunittee striving to listen until a consensus is municipal utilities so all remain viable, chairman of tht Florida Electric Power reached on matters of conunon evacern.

competitive alternatives to the sole Coordination,t Group, Pope is also a lie sees people as the utility's most option-investor owned utilines.

director of the Florida Municipal Electric important retource. As assistant general A Sanford native, Popejoined OUC in Association and a member of the manager, he immediately began to 1959 as part of the start-up team at the American Public Power Association.

implement plans to ensure that OUC hvfian River Power Plant after receiving Equally mterested in civic activities, he is provides a work emironment that exceeds a Bachelor's degree in Mechanical currently on the boards of The Economic employees' expectations. Education and Engineering and a Masters of Business Development Commission of Mid-Florida, 9

training prograras have been vastly Administration from the University of the Greater Orlar:do Area Chamber of expanded in jttst the last few years.

Florida. By 1970, he was assistant manager Commerce,and United Arts of Central Committed to public power, he sees it as of Electric Operations. Then his career Florida _

4

MANAGEMENT 4

t Louis E. Stone William II. IIerrington assistant manager of Water Operations in 1977, leading the negotiations that Assistant t]em miManager Manager ofElectric Operations resulted in the acquisition and merger of the Dr. Phillips OUC's " dean of electric generation,"

lierrington started at OUC in 1969 as a y

x-

,.Iy Water System and Stone's career spans three generations of mechanical engineer at the Indian River 3

i V

% p its fa,000 customers power plants, each plant significantly plant after graduating from the University i

. +,

into the OUC different and inore advanced than the of Florida. By 19'78, he was responsible for preceeding one.

total plant management and fuel R

syst em.

In 1984, he I

Ilis special ability to learn ne w systems procurement.

1 succeeded Pope as and teach them to others led to his The next year he became involved in

. )

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manager of de becoming the first superintendent of the the planning, permitting and design of the department which y,

Indian River Curtis 11. Stanton Energy Center He also has experienced l

y Power Plant in partichsted in management of the an esen faster pace of growth than the

!' h V

19T;9. Ile was construction and start-up of the Stanton l

= g electric system in the last five years.

responsible for Energy Center,on time and within budget, He has a Masters Degree in

. ' "' Q selecting and in 1983, he was promoted to assistant Management from Rollins and is studying training the manager of Electric Orutions, respon.

for a masters in Public Administration. A

- k' originalstaff and sible for all power pCaction and system Distinguished Military Graduate of The the start-up of the operations. During this same period, Citadel, he has a Bachelor of Science t'

plantin 1960.

Ilerrington attended 1(ollms, receiving a A product of the MastersinI3usiness Administrationin 1985 Degree in Civil Engineering.

i A registered Professional Engineer, he Space Age, the Indian River power plant Since becoming Electric Operations is a member of the Florida Engineering represeraed a quantum leap forward manager in 1986,)lerrington has Society, National Society of Prohssional technologically. It was OUC's first reheut implemented many changes. One of his Engineers and the American Society of cycle stetun turbine power plant and it first moves was to develop a plan using Civil Engineers. lie is also active in the became a benchmark for reliabihty and energy futures markets to hedge price Kiwanis Club of Odando and Reserve stabihty in the state.

volatility in natural Officer Association.

J gas and No. 6 oil, Manager of Electric Operaticts from 1967 to 1986, Stone guided the L) % ;

s3 savingcustomers over $13 million.

Stephen P.Willis department through an era of new fuel OUC was the first procurement strategies, expanding inter utility activities, computerized load electric utility in Manager of CustomerRelations and the natior to use Support Opemthms dispatching and power brokering, oil futures to stabilize crises,andjoint power plant projects.

A University of Miami graduate, Willis fu( l costs and has And he was a key player in the planning, joined OUC in 1966 as marager of public design,and construction of the Curtis H.

gained national relations. Prior to that he was public Stantt a linergy Center, recognition for this program, relations director of Orlando Reg.ional A member of the Corporate Couned.of A RolU w graduate with a degree in I

Rollins' Crmnmer Graduate School of g

phymes and %emistry, Stone hadjoined f3usiness, Herrington is alsc on the South A.,'

• II OUC in 1949 as an industrial water H sp?n'a*O and a Orange Blossom Trail Developinent Boar d f

ss chemist at the start up of the lake and is a Rotarian. He is a registen d

+b

.oi ibghland Power and Water Plant. In 1966 Professional Engineer, active in several tf dp', i

"'"*II*l' I

Administration from R. lins. Ihs thesis professional societies.

far k he received a Masters in Business was on a concept that is now the basis of C responsible for five time of day pncitig. load control and off A. Raymond Boyd, Jr.

/\\

support operations peak rates in the electnc utinty industry.

. &Is 6 visions. Toda),

messamm Manager o(Water Opemtions this diverse department encompasses cus-I A member of tiu lvanhoe I,oundadon boacd, he is chairman of the buikhng in 1988 Boyd was n uned Man of the tomer relations and customer service, new committee that is transfonning OUCi first Year by the American Water Works Asso-development services, personnel, em-plant into a performing art s center. St one ciation. Florida Section, for outstanding ployee benefits and facihties maintenance.

has also served on the boards of the service to tht state's water utility industry.

He was responsible for opening OUC's United Fund, Orlando Youth Cent er, and The standard he sets for Water Opera first satellite customer service center in YMCA-tions is to provide customers with wat er April of 1988, and has implemented many While m.uiager, he was one of two that is leter than it has to he. And it is.

other changes in customer relations and members of the Southeastern Reliabihty He is also drawing national attention for customer service.

Council named to the Technical Advmry his communication efforts to assure Past chainnan of the Pubhc Information Conunittee of the Nanonal Electrie consumera that OUC dehvers safe, clean Comnmtees of the Florida Electne Power Reliabihty Council He also helped

. vater to thnt homes.

Coordinating Group and the Ametican organize the Canaveral Council of Joint Boyd joined OllC in 1970 as an engmeer Water Works Association,le now serves 1

j TechnicalSocietics and the Canaveral aft er four years of service in th" U. S.

on the Florida Municipal Ek ctric Society of Mechanical Engineers.

Anny. Advancing steadily, he became Association's Member Semees Committee.

5

)

/

MANAGEMENT i

s s

lie has held leadership positions in a for establishing OUC's annual cost-to-rights and claims management. Tart must variety of civic associations A former vice serve review and rate recommeridations also stay in close touch with state i

president of the Orlando Area Chamber of procedures. He was also responsible for regulations and legislation.

Conunerce, he has been a director of developing electric and water forecasting Before law school, Tart u ent t 9 the United Way, the Central Florida Fair and methodologies and University of Florida, receiving a degree Tangerine Sports Associations. In foridentifying the in Business Administration with a dual if need and timing addition, he is a former director and major in rnanagement and marketirig.

Advisory Conunittee Chairman of the Dr.

g foradditional Elected to the university Hall of Fame, P. Phillips Memorial Nursing llome.

O aq generationand he was a member of the Florida Blue Key transmission and was also named to Who's Who in Richard D. Brown facilities.

American Colleges and Universities. He Under Moore's was student body president at Manager, Mnancial Operutions leadership, Stetson.

l A Certified Public Accountant and internal system A member of the American Bar,the

• graduate of St. John's University, School of planning has evolved into sophisticated Florida Bar and the Orange County Bar, Commerce,Brownjoined OUC in 1979 as forecasting combining econometrics and Tart is also active in the Rotary Club. A l

assistant manager of Financial Operations, customer end use load shapes. Financial one time Gator team member, he is a advancing to manager in 1982.

corporate riodels are also developed to Ga'or Booster and on the board of the However, for 23 of his 25 years in public guide management decisions on rates, Orhmdo Touchdown Club.

accounting Brown was in charge of the bonds, and other financial Inatters.

field work on the 00C audit for a national Moore expanded OUC's conservation Tracy L. Smith CPA firm through its Orlando office, efforts to help customers use energy and A participant on OUC's Finance water wisely. In addition, he established

"""#I"#

Committee responsible for developing and energy services and demand-side planning Smithjoined OUC in September 1985 implementing plans to finance the utility's for commercial and industrial customers, as Managing Director of Communications.

capital improve.

initiating energy audits and other lie brought with him 13 years of utility E"/

Sincehebecame s

ments, Breen programs for businesses.

and conununications experience gained plays a key ole in Currently chairman of the Tecludcal at Florida Power Corporation.

the issuance of Advisory Group of the Florida Electric Smith and his staff are responsible for Q

bonds and Power Coordinating Group, Moore has allinternal and external public investment of OUC been active in the FCG over the past 20 communication. The diverse operation assets.

years, holding many other leadersidp includes publications, audio / visual positions lie is a licensed Professional j

wm ~mrmust production, media manager,OUC has Engineer in both Florida and Ohio.

relations, speech also become For 16 years,he has served the b

wnting, adver-self insured in many areas, saving millions community as trustce and treasurer of the p i; tising, and y

of dollars in the process. His department is Messiah Choral Society which performs Fi

, S, employee also responsiUe for OUC's rapid move into Handers masterpiece in the Bob Carr motivation, office information systems that are Auditorium each Christmas.

UnderSmith's revolutionizing the workplace, automating direction. an much of the clerical work for the first time.

Thomas B. Tart, Esq.

j nternal ihs diverse department iaciudes C"**""IC"lI "

~

Genenal Counsel budgeting, computer and data base.

program called "PROUD To Serve YOU, settices.genend accounting,internai A Stetson University Law School Your Orlando Utilities," was introduced audits, purchasing, office systems, risk graduate, Tart joined OUC as staff counsel in 1986.

management, safety and stores.

in 1981. lie was named general counsel in The motivational,information project A charter member of the Mid Flonda 1986,succeedaig J.

was designed to enhance employee spirit Chapter of the National Association of

@g ThomasGurney, and introduce management philosophy Accountards, he is past president of the Sr. After receiving through guidelines to achieve new levels Central Florida Chapter Florida Institute fyW his law degree in ofexcellence.

of CPAs and a current board member of

~ '

1968, Tart was a The.1wo-year program riceived kical the Orlando Chapter of the Financial partner of the law and national etvntion.

Executives instit ute.

firm of Gurney &

Smith serves as chairman of the Public Handley for 14 Information Committee of the Florida Donald E. Moore years beloie Electric Power Coordinating Group. His c ming to OUC.

civic activities include leadership roles on Manager, StmtegicPlanning in addition 1o advising OUC and hand the Florida Citnis Bowl Media Relations A Penn State graduate, Moorejomed ling lewd mattera directly, Tart manages Committee.

000 as an electrical engineer in 1966 after the professiomd services provided by After discharge from the U. S. Air nine years with Ohio Edison Company. lie independent law firms engaged by OUC.

Force, Smith entenxl college and soon became eh ctric department planner.

The utility % legal matters are varied, earned his bachelor's degn ein Mass Next he was staffed to the assistant rangmg from municipal bond law, con-Communications from the University general manager as planner responsible tracts, property acquisition to employee of South Florida.

6

-- O

w m,mu,ma maw. wAmmmmmemmmm w

2 amu F'ower Plants Surpass Air Quality Standards he Curtis H Stanton Energy Center Unit 1 is virtually the cleanest powerplant in Florida, and one of the cleanest in Ihe nation, according to studies conducted during the plant 'sfirst year ofoperation. Infact, the coal-fired Stanton plant has had no measurable impact on the air according to continuous air quality monitoring which began sevemi years before the plant began operation.

This continuous air monitoring reveals are allowed by the standards that apply to Indian River emitted only a fraction of the Stanton is adding less than one microgram them. Annual emission data submitted io sulfur dioxide allowable under the of each regulated pollutant per cubic meter the Florida Department of Muvironmr ntal Existing Source Standard for older plants on an annual average basis, compat ed to Regulations in 1988 clearly show that OUC and,in fact, averaged better than the New l

the 20 rnicrograms ailowable under was the lowest emitter of rulfur dioxide Source Standards.

regulations designed to prevent the per heat input of all major generators in Stanton, wh':h began commercial significant deterioration of air quality. That the state.

operation July 1,1987,is equipped with is equivalent to less than one billionth of Stanton, which must c amply with New state-of the-art environmental protection an ounce per cubic foot of air.

Source Standards, emitted only 12% of the equipment designed to thorougidy cleanse lloth Stanton and the Indian River Power allowable sulfur dioxide emissions, and combustion gas before it enters the Plant an emitting far less pollumnts than f>0% of aflowable particulat.e etnissions.

chimney.Newsweck magazine charact erized Stanton as a "non-polluting" m m m-w m,

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power plant in an article on Orlando.

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yp 14l yp First an electrostatic precipitator d.g

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each step of the way-as they exit the

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precipitator, the scrubber, and the stack.

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The Orlando UtlHtles Commission is

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committed to protecting the quality of life p

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in Central Florida. Almost 20% ei the eest of jl

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the Curtis H. Stanton Energy Center, over 4 4 }g

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stai+oi++=ri environmental protection o,, y. s Qp,,

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'*" """"" " in Power Plants Wann gweqpagy,m%

33"8.

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W P C' q;Qv6@wg%q Rank High in W

OuC took full advantage of

' bg umee mmsuai fueimas et Efficiency V ' ' ~t g

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conditions because ofits fuel

$,hg#[yAM flexibdity at the Indian River UC-operated power

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Plant. And that market

. n. y c plants achieved the (h[V condition existed primarily lowest combined heat rate in c

q C because the nation flexed its the utility's history in Fiscal j@ G c.

muscles in the last decade, 1988. That heat rate places fgf replacing oil / gas fired power OUC among the top utilities in d}.gg with coal and nuclear fueled die nation in terms of thermal generation-eff ciency.

The combined heat rate for S

0 81 the Curtis n. stanton Energy How could. fuel costs drop wh.ile.a.les. climbed? In t 1, ouC's fuel mix

...m and nat.a gas. c.

wa..moa

Lowest Cost

%;"""%d$2!!,"" ""

Coal Use Curbs Fuel Costs Fossil Fuel o-mat units na kilowatt hour (BTU /KWIll This cate O pur' chased power was UC s cost of fuel and OUCN fuel costs dropped to a tanton supplied 51.4% of ranks 23rd when measured low of $69 million priritarily total system generation in against the performance of 19% less in 1988 than in 1981, because OUC saved millions Fiscal '88, consuming 982,918 100 atilities, mostly investor-even though total sales were through the stabilization tons of coal Excellence of owned, according to Electric up 36%! All because OUC has program initiated in 1986.

operation, combined with a raght & Powermagazinei some new muscles to flex-At ihat time, OUC hought renegotiated coal 1988 annual survey.

fuel flexibility.

Crude and lleating Oil Fares transportation contract, Thermal efficiency is an in 1981, fuel costs contracts when crude oil resulted in a consumed coal indicator of how well a power skyrocketed to $95 milhon prices were at their lowest in a emt for Stanton of $1.93 per plant is operated and main-because of the oil crises and cecade to provide a hedge million British Thermal Units.

tained, and how efficiently it embargoes of late 1979. Total against fuel price increases By comparison, the average uses fuel.The lower the heat sales that year were 2,681 and to insure level fuel costs at consumed costs of oil and rate, the more energy you get gigawatt hours (GWlb its gas / oil-fired Indian River natural gas were $2.35 and for the amount of fuel used.

Ily 1988,OUC's cost of fuel Plant until the coal fired

.$2.41 pd million BTU.

And that saves fuel do!!ars.

and purchased power were If OUC plants had ranked down o $77 mil! ion though 50th, operating at a heat rute

)

tutal sales had reached a high higher, fuel costs would have s

that was 398 BTU /KWu of 3,649GW1L Fuel costs per KW1I of gross been $1 A raillion higher, generation were also lower in c

o 1988 than in 1981-1.88 cents pm xwu compared to a, Stanton Tops cents per xwn.

in Availability OUC accomplished du.s a

turn about in fuel costs Q tanton performed because it is no longer IJ significantly better than dependent on oil and natural other power plants during its gas. It can base generation on first full year of operation. It the most economical fuels

^,,

s achieved an equivrient available, whether it be coal, availability factor of 88%,

oil or natural gas.

'7 i

compared to a national in 1981, OUC's fuel mix was average of 77% and an 97% oil' gas and 3% nuclear.

Y equivalent forced outage rate liy 1988, with Stanton in s,,.

of 1.8%, compared to a opeiation for the fal! year, national rate of 11.f,%. Such OUC's fuel mix was 67"t coal, 21% cil end gas., rnd 12%

I

,g performance is exceptional for a new power plant.

iiuclear.

OUC's fuel costs increased t

in 1988 for the first time in y

Decorative lampposts at Beardall seven years because of Senior Center shed a brighter fight, reflecting the care with increasing sales and the etul of Its first Fuel Price Stabihzation

. j k YII -

N

which OUC selects, installs, A

inalntains thousands of prognun. The year before, a

streetlight.

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wMan.u n winsuw wwn.wacwwuu w wwuu x Business average rate of 5.9% compared Reliability to an average growth rate of tops 99.99%

Dr.iving Force

.iw in residenuai customers.

in Electric

^$ " res" t ">mm*i "

O cen's electric system, UC industrial sales accounted for Sales Growth c4% or OuC's totai retanales

,1stenoyamengthe in Fisced '88.

most reliable,is getting even S ituated in the heart of an The latest studies forecast a better, with customers area that ranks second in 51% increase in retail sides in receiving service more than business growth in the nation, the next decade, driven by a 99.99% of the time in Fiscal OUC has experienced 62% increase in sales to 1988.OUC customers were extraordinary growth in conunercizd and industrial without service an averrge of commercial / industrial sales customers. At this time only a only 52 minutes over a and customers for the past five 31% increase is forecast for 12-month period, years. Furthermore, this trend residential sales. Becauw of approx!mately 25% less than is expected to continue for the the continued economic the' year before. (It is not next decade.

growth forecast,it is projected unconunon for other utilities' Last year the utility spent From 1983 through 1987, that business will account for to hcve annual customer

$50 million to improve and expand infrastructure.Over the number of these 69% of OUC's total retail sahs outages ranging from 60 to customers increased at an by 1998.

120 minutes.)

the next three to five years, OUC made a good record OUC estimates it willhave to yu.

even better through teamwork invest between $70 million to Jl ECTfUC RETAKSALES and its committment to

$100 million on infrastructure ea

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. E providing sound, adequate to maintain, upgrade, expand

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4 infrastructure needed to substation, transmission and F

ensure reliability and to stay distribution facilities and to ahead of growth.

build new ones.

4,gy OUC Generation 84' 8F 8088 p#,

(Net winter capacity)

T OT At

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SALM ich(

"p indian River Power Plant 645 MW 1Aeb,

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1ABB OUC owns and operates this plant located in Brevard County it has s

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three gas' oil-fueled generating units.150 MW of capacity is ccm-

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s. =a,.s mitted to the Flonda Municipal Power Agency on a firm basis and 13EF ggi

, 20 MW to the Kissimmee Utility Authonty. Two 38 MW combustion Ressos q

! turbine units are being installed here with OUC retaining 48 8%

l ownership, FMPA. 39%. KUA 12.2%.)

Curtis H. Stanton Energy Center 440 MW l

Coal-fired plant 12 miles southeast of Downtown Orlando. Major Commercist energy soles growth projected to continue to outpece ratidentist in OUC electric service area.

owner' operator OUC retains a 68.6% (302 MW) ownership interest l in Unit 1. FMPA and KUA own a 26.6% and 4.8% interest in the unit.

136 MW Indian River increases Capacity l McIntosh Unit 3 l OUC owns a 40% interest in this coal refuse fueled unit. Plant nutjor turbine generator thousand homes and was

, owner, operator is the City of Lakeland Electnc & Water Utilities overhaul and generator acquired at a cost ofless than l with a 60% interest in this unit.

stator rewind kept Indian

$14 per kilowatt.The total net l

I 52 MW River's Unit 3 out of service 11 vader capacity of this power

{ St.Lucie Unit 2 l

months. As a result this gasioil piant has beeri uprated to 645 Nuclear. Owned. operated by Flonda Power and Light Co. OUC fired generating station MW.

owns a 6% interest in the unit and has a reliability exchange provided only 19.2% of system Units 1 and 2 operated agreement for nuclear power from St. Lucie # 1.

generation in 1988.

reliably, with Unit 2 nchieving Crystal River Unit 3 13 MW l j fowever, the unit returned a 5% equivalent foreod outage io service in September with rate compared to a national Nuclear. Owned, operated by Flonda Power Corp OUC owns a f

approximately 29 MW ruore average of 10%, and a 92%

1.6% interest in this unit.

l capacity primarily as the equivalent availability factor,

! Total Capacity 1,286 MW '

result of plant staff compared to a national TotalCapacity Available 9'T8 MW*

maintenance work on the average of 83%. Unit 1, which for cuC customers boiler.This additional capacity went on line in 1960, equalled 3 equivalent to the power natiorud performance

)*l[r$M,,',$","Z,[$"[nQ"""' * # " '"

required to serve several standards.

l 9

l

PACE 5ETTERS a

p Seven Municipal Electric H

c 1

Utilities Form Power Pool Whelm, seven

- tai responsible for ith OUC at the u.....

out of Orlando and is H

Florida cities began conunitting and loading

't pooling their p>wer Ni1 resources in 1988. As a

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all of the pool's gen-

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erating units and power result, they anticipate resources in the most j

saving customers at economical manner.

least $54 million in the The FMPP currently first fullyear of viol consists of. OUC, the op ration.

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City of Lakeland The Florida Mun-Electric & Water 3

icipal Power Pool (FMPP) began Utilities,and the Florida Municipal Power operation July 1. It is the state's first fully Agency All Requirement Project:

A integrated municipal electric power pool.

Jacksonville Beach, Ocala, Leesburg, OUC operates the Pool Dispatch Center Bushnell, and Green Cove Springs.

.e.i the amount of energy either might have to buy or generate through costher sources, FMPA, KUA Join in especially in emergencies.

A unique feature of this agreement is Peaking Unit Proj.ect that each party can setur accounts annuauy by " banking energy credits" T "wo 38-MW combustion turbine instead of exchanging cash. 0U0 " banked peaking', units are being installed at over 44,000 MW1I in 1988 to use during "Most people, when it really OUC s Indian River Plant and are Stanton # 1 outages. This " energy credit" gets right down to it, like scheduled to begin commercial operation is e valent to a five-day power supply k

in June and July,1989.

owning theirlocalutility

( based on average annual sales 1 %, orth an Participating with OUC in this $25.2 estimated $880,000, this amount of power N M W N M N N N. N N S b million project are the Florida Municipal would cost twice as much if purchased on localfolks who care about Power Agency, with a 39% interest in 'he an anergency basis.

q units,and the Kissinunce Utility A 4thority, them, people rz. ht in trez.r g

12.2%. OUC retains a 48.8% intert st '.n the town that liv 3 with them and i

units and will be the operator.

~

respond to theirconcerns. And These compact units will provide Power Supply Paets they know theirutilitu keeps quick start capabilities as well as other IIeln Offset Costs their taxes doum. The cities economic benefits associated with peaking r

unit capacity. In addition to aihng UC is selling 130 MW of power from have viaMe mun@al capacity needed for growth. the units als6 its gas / oil fired Indian River Power utilities are the healthy cities...

provide operational flexibihty that will Plant to the FMPA for its All Require ~

the ones that provide high save fuel dollars. They are gavoll fueled.

ments Project cities through a long term The highly portable modular units were cont ract Ihat extends through 2001.

quality services to their.

manufactured and pre assembled by in another 15 year contract, FMPA and ClllOCRS,,-

General Electric-the Kissimmee Utility Authority each agreed to buy 20 MW of OUC system 8

generation beginning January,1989.

Ted. C. Pope, General Manager Negotiations are underway with other Utilit,es Can Now i

utihi,es_ private and pubhc-imerestea Bank Energy Credits i" """" *"""tr """" "it h OUC These contracts help OUC offset its own Cooperative have entered into a UC and the Seminole Electric generating costs while helping other util-ities provah an adequate, reliable supply five year reciprocal agreement to provide of power at the lowest possible cost.

each other with up to 140 MW base load in 1965,000 was the first municipal y

capacity from specific coal fired units in generating utility in the state to tie into g

gy case of outages and to coordmate outages the state's high voltage grid and sell bulk This agreement enhances rehabihty and power to inves. tor-owned and municipal helps both parties save money by reducing utihties 10

PACESETTERS l

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JointAction 5

Strengthens M

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electric utility industry in the last F[y

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% Developments in Florida's f

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decade has been the increase injoint

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action among municipal electric utilities.

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1,h h This development was heralded in

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MM YM[1 1978 by the formation of the Florida 5-4 s

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n Municipal Power Agency (FMPA),a bp;'

t p$i now composed of 27 of the state's 33 non-profit joint action agency. It is

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.e municipal electric utilities. FMPA is y9 authorized to plan, finance, build or buy power plants, transmission l

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facilities, and fuel supplies.

That same year two municipal pp f g

y utilities agreed to a jomt power plant n

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project,a first for the state.OUC 7.

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Lakeland's coal / refuse fueled 9:

B-agreed to buy a 40% interest in o..

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\\/MM C McIntosh #3.

W k.

Then 000 took the lead in ajoint s ~

jp project, selling a 26.6% interest in 1

-4 Stanton #1 to FMPA on behalf of 11 d

7 cities, and a 4.8% interest to the

.~

7i Kissimmee Utility Authority.The D

FMPA cities are: Bushnell, Fort y

0O Pierce, Green Cove Springs,

' 7

-e..y/.ffM' '

ilomestead, Jacksonville Beach, Key West, lake Worth, Leesburg,0cala, J/g/-

Starke,and Vero Beach.Thus Stanton

,b W provides economical coal fired power 4

to approximately three-quarters of a

.p y 4 million Floridians and 13 cities in all, W

including Orlando.

j

.,C Joint action is now a fact oflife for e. j Florida's progressive municipal f'

Fourteen municipal

,hg' 1,;;,

electric utilities have 5m' d '

booninvolvedin a variety

' n,,

utilitles. It helps them provide

>'%e MM customers with a reliable, adequate y

- of pacesetting participation supply of p wer at the lowest possib'e kh

• y i

cost in the face of growth. And it l

these utilithi$ provide power for a

Is rapidlyenopoaching the can help them paya return to their 1,000,000 anark.Like OUC, half p

cities to maintain and enhance the of these unanies am in counues d

quality oflife in their communities 6eNW facing doulde digkipopulation p/

OUC continues to enter mto a and employrnett* growth by p

1991, accordhtg% fourth variety of precedent-setting 81uarter19081erecasts by

,[j_

participation and e!ectric supply pacts, seeking " win-win" agreement s Mehkind & Associanos.

to enable all participants to pass on y

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benefits to their customers and their communities.

l 11 l

WATER OPERATIONS

',. g s

We Don't Kid Around About Water Quality ear after year, the water

~

OUC supplies its customers N

beats all safe drinking water 4-standards. And 1988 was no is eure of this imcause it i

y exception. Water Operations doesn't just double check, it triple checks.

e

• Every year,000 performs a highly detailed arudysis of water from its wells and at its treatment plants, even though the Federal Safe Drinking Water Act only h <- +

requires this analysis every three years.

This thorough study covers everything

1. ~

from general wat er chemistry to a search L

~ ' '

for 174 possible contaminants measured, e

in some cases, in the " parts per billion" range. 000 conducts these tests annually

~

in its own highly sophisticated, state certified Water Quality hab.

It supplements this full scale analysis with weekly tests of water samples taken

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from throughout the system. The 1988 r.

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3a startup of its own Mass Spectrometer has more than doubled the number of organic g

7

% *g' 5 compounds OUC water chemists can test 7

1/./.,

for in OUC dnnking water.

p m

p s

4 V,

.- p

.;p Water Quality Issue Muddied By

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" Bad News"

. &y '

Iconfusion and concern about the safety

. 'j '

3' ronically,1988 found 000 fachig rising

~.

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4, ofits water because of beadlines and news-casts reporting on pollution and contam-fsp eM t.

ination elsew here in the state and nation.

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~-

The utihty also experienced an morease 3

Q ';

in the number of calls from customers Mg

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i

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reporting that sales tw ople were claiming 4

."..,p,. ?446$

OUC water was unsafe and were staging i

-b demonst rations allegedly proving that claim.

,I y

h'

-c[if

" y E n. - s - + ;{ ]c Thus, Water Operations launched an

..i

" 5.:'O ~ 7 / ^

all-out communications effort to reassure customers that the water OUC dehvers to

~ " '

"O their homes and businesses is safe, that it is " water everyone can feel good about" One less thing to worty about. opc water. safe to drink (and great for chud's playt) 12

W ATE R OPE,R ATIONS -

y. Wp* MSW"k]% initiated a newlife exte The department has also p[^ h

< mN and "one less thing they have to worry C'

'~

alxsut" because "We don't kid around about water quality."

prograin designed not only to OUC took these inessages to the public extend the usefullife ofits through an extended newspaper ad facilities but also toinsure the continued safety and reliability campaign It also mailed notices directly to

.p 7I of the water supply.

each customer in bills urging them to call OUC's Water Quality Lab with any it has begun scheduled water plant maintenance outages and questions or concerns they might have e

about their water and publicizing the fact within three years anticipates that detailed reports about OUC water completely refurbishing its nine quality are available upon request.

existing plants. In addition, the An important benefit of this conununica-

,"*,",,Q','

J,,j"j"{*,'[,",",(",",d '

program will encompass enhancing d*

d tion campaign was to enable customers to Lake and Winegard Roads. A reflection of reliability of pumping capacity while also make informed decisions before going to ooc's " good neighbor" policy Dealoning modernizing instrumentation and

.the expense of buying unnecessary, and

• $",[,*,['igh r( [d jr lnbs chemical control systems.

potentially unsafe, water treatment devices.

districts.

Construction activity in the water dis-tribution system returned to e more nor-rn i p ce More than 28 miles of pipe wue 1988 Water Production Resources Looking Ahead?

"dded "d 3 "*S ""vf roni smte df Approximately 90% of this work was done Stay ng Ahead by contractors while OuC's own water Treatment Pbnts 9

Pumping Capacity (MGD)

Construction crews continued to be heavily ne om,ater Operations, major goals involved in an aggressive water main t hgh Service 215 for 1989 is to begin its own studies renewal and replacement program. Close to Well 142 Storage Capacity (MG) and research inta new water treatment 80% of this work was related to public pro.

Ground 20 methods. OUC wants to provide the jects such as governmental road and drain -

Overhead 4

highest quahty water possible and to be age projects, the completion of the Orlando sure it will have the capabihty and Arena, North Onmge Avenue renewal and

{

Startup of the Sky Lake plan &ill add 24 MGD high service and 10 MGD well flexibility to meet or exceed new liiawassee Road widening Over 2,600 new pumping cepacity, and 3 MG ground standards or requirements.

M'n'e conwionere installed.

storage. Navy and Kirkman plant Nearing the end of its present improvernents will add, respectively, 3 long range plan, the Conunission has MGD high service and 5 MG well awarded a contract to Boyle Engineering pumping capacity.

Ogmtion to develop a 20-year Master OUC Water Source mo. -

w,,c,p,,,,,,, pro 3 c,cd wo,e, demand through uie year 30ia Ample, Quality High Consulting Engineers Black & Veatch UC water comes from one of the complet ed the design of the new Sky Lake purest sources in the nation,the Water Plant and modifications to OUC's 66WaterWISe Floridan Aquifer. This is an Navy Water Plant. Construction has begun 82ooo-s9" re-mile"aturalunderground Campaign" on the Sky hake piant, the system s 10th msemir beneath north and central water plant. It is scheduled to begin com.

F1 rida and south Georgia.

O UC's new water conservation promercial operation by the summer of 1990 The Aquifer receives and filters rain gram moved into high gear in 1988 g

as it began distnbuting its "Let's Be Water-water through hundreds of feet of porous rock and sand in a natural cleansing wise" bnichure," Leak Detective Guide,"

and "Your OUC lawn Watering Guide" to process. OUC's deep wells pump water from the cleanest portion of the Aquifer, customers. It has also implemented a one quarter of a mile below the surface.

home water conservation audit for customers receivmg horne energy surveys.

This high quahty water requires very Water Production personnel, working 4

little treatment. Chlorine is added to eliminat e I aet eria growth according to with OUC's water conservation speciahst, established health standards,and fluoride built an education;d nuhde complete with

~

to help prewnt tooth decay.The only a water meter dbl and digital dispby depicting mont bly water consumption and objectionable element the raw wat er costs. At the rhek of a switch, school contains is hydrogen sulfide-harndess but undesirable because of its taste. OUC children can see how much water is used removes this element through aeration when they take a shower, or water the lawn, or wash clothes.

and its own patented carbon treatment process.

y W"D h

[%

gr anted That is why it maintains its own j

j Firs hydrants mean protect 6on for 3s1,000

%'N customers, recognmon forv/ater operations rztirees.

h st ringent quahty control program.

I f

13 i

l l

h b

hCedy pr gress toward an integrated a

office mformation system and Expectations work is performed.

conunue taransfmn the way T hroughout Orlando The new mainframe can Utilities, every effort is process up to three times the being made to provide service amount of work in the same that exceeds customers' a,

amount of time with the same g

expectations. Or, as one w ouo,.

"I >

q' number of people. This will "We're concentrating on f

j enable other departments and seasoned supervisor said:

divisions to use even more satisfying customers their way

{

applications software.

An automated Purchasing as often as possible "

9 At every level, staff is b, ' p, j and Material Management analyzing and evaluating ways System is in place. It has ouc takes service to the custone by opening southwest customer to streamline, modernize and service Center. supervisor Deborah Wright assists one of the hundreds reduced costs and and improve operations so OUC of customers who visit the new setemte f acmty deny.

enabled the division to handle provides even inore prempt, an increasing work load with personal and corivenient High Tech Transforms Workplace no st rfinerea*e Data entry service while also strivmg to staffin one division has been achieve even higherlevels of nternauy, the workplace is users, giving PC users easier reduced by two thirds as employee productivity,Two being revolutionized by access to more information others ent er data directly. An key ways 000 is using to automation as OUC progresses and letting them share on line cashier system has accomplish all of this is toward an integrated office expensive equipment.

streamlined service to walk-in through decentralization and information system Increasing Networked PCs expanded customnts, enabling staff to ctunputerization.

use of microcomputers employees' capabilities, serve some customers almost

("persond computers")is impacting every facet of OUC, twice as fast.

streamlining many tasks, from engmeering, drafting, A Human Resource System Tc.. king Service ehminaung dupheauon and maintenance and inventory is impmving um contra, CloSe To You vaunms of paper work.

control to trategic planning.

accuracy and speed of One of the first areas at That impact became even processing information for Decentralize because its he utihty has begun to OUC to be revolutionized has more profound when,in payroll, personnel and been ineter reading For two January 1988, a new 4381 IBM benefits.

service area is so widespread years, ernphiyees have been mainframe computer was Like many other growing and it is outgrowing its reading electric and water installed and connected to the businesses, OUC has realized Downtown Administration meters using hand held local area net works. Data that to maximize efficiency Building and Lake liighland microcomputers to record and conununications capabilities and increase productivity, the operations center. Satellite double-check usage on the emanating from the workplace had to become facilities are being established spot.

mainframe were also more automated-especially if to enable OUC to serve As a result, each meter expanded to extend to employees are to exceed customers faster,more reader is reading an average of outlying facilities via OUC's

" int ernal" customers' conveniently,and inore nearly 1,000 more meters a existing microwave / fiber expectations and provide efficiendy. OUC opened its month than they were a optics conununications better service to fellow first satelhte facihty, the decade ago. They have network.

empicyees so they,in turn, can Southwest Custorner Service achieved a 99.9% rate of These developments have exceed external customers' Center April 1988 in a accuracy on first readings and vastly accelerated the expectations.

conunercial office center near sharply reduced re reads. Data the intersection of I. H that used to take days to r4, rgg McLeod Road and Bruton process is now loaded into a Employee sob curnett y%.

Iloulevard. It serves nearly PC in an hour, to be brings hand-held 8,000 customers a Inonth. A transferred to the mainframe ob"to b

e i

i second satelhte customer for billing t he next daV.

computer specialist service center is planned in In three years, there has Deborsh Ramsey who tig southeast. In tuH 1989, been an explodon in the

[***[**

7

.. pMy.

5818-000 will open its first satelhte nuinber of PCs used by OUC download data into her operations and warehouse "information workers", from PC and then into

""^ ', ? '

,"l,*,d[*[,7,

.' O. 'G center.This 10,000 square-clerical to mamigement level mainframe for bamng.

foot buildmg, with 6,000 square who deal with infortnation feet of outside storage space, daily. Hetween 1985 and 1988, each hand-held device.

is locatr liiext to the Pershing um number of PCs at OUC ouc meter readers read Substation in the southeast. A grew from eight to 135. Local

"* g

,7,f,,,,,

'~

second such center is plaruwd area networks (LANS) were 1978, and at a 99.9%

in the southwest, instaued to link groups of accuracy ratet

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14

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OUC-The B.E.S.T. Place to Shop yy {g g

g j ^

for Energy and Water Savings K.,.

4 y

2 a_

s '

~

c p..

mouvate them to buy energy v<'*

vf J

wide range of programs

@ cent appliances such as

[

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]

0 riandoUtilitiesoffersa

~f.-

- ',,e' designed to help customers refrigerators, wall air i.

,y "He Energy Smart Today" and conditioning units, heat

, ' *)

. l a-t Jr

~-

nA

' f 9A

~ M[N j

to be "WaterWise"in its efforts pumps, central air conditioning

, '-- *~

)

to encourage consumers of all and to insulate or re-insulate I

ages to use energy and water attics OUC also offers to a1 g

3L wisely, not wastefully.

install trippers free on

}

9'

'? L-

'l in 1988,2/M residential residential pool pump motors

• N3 ^4

<J customers remved Free so they run during"off peak"

.~ "

o a".-

fi[*.-

Ilome Energy Surveys to help hours i ',

PQj prevent wastmg energy and OUC) Educational Out-M., * ' %,,

A

.1 W ~. y water.The audits now include reach Program takes electric, 11 k}g.

3 3

~

1. "~

_ ' ~ ~

Free Home Water Surveys for water and safety classroom customers using 15,000 presentations to as many as opc conservation specialist Joanne Wheeler and puppet Wande gallons of water or more per 5,000 students a year in the West-Welcher team up to teach youngsters at R6chenond Heights month. OUC also alerts Orange County School System Eternentary school how to use energy, water wisely.

j customers when electric or A surge protection program water usage is above normal, was also tntroduced m 1988 to 1

offering free home audits help customers protect KW load can also receive bill inquines from conunercial l

The three-year-old lew electronic ettuipment from computer analyses from an and residential customers l

Income Home Enerry F'ix"U damage caused ny voltage engmeermg consulting firm. A annually. tracking dan t he l

Program has helped nearly spikes that occur especially more comprehensive causes of and resolvuct 1,000 customers make home during the summer hghtning engineering consulting report problems.

weatherization improvements season.

is available for commercial OUC mvests in these to reduce energy and water Several commercial audit customers with more than programs and a total use. Many were senior citizens programs are well underway.

300 KW load who parucipate markenng effort to promote living on fixed mcomes includmg conunercia, energy in the cost of these more them because they will benefit i

Nearly 1,800 customers walk-thru audits Olic staff extensive audits.

all customers, helpmg t hem participated m RE.S T performed %4 of these audits OliC staff also personally save inoney and conserve programs designed to Customers with less than 300 investigates hundreds of high precious resources j

Growth Watch ituated in the heart of one of the most dynamic metro Growth in the water sernce area, which is smaller but more areas t.T the state and nation, OllC keeps a constant densely populated. is projected te bring a 39"w merease m watch on growth in its electric and water service areas tetal retail consumptmn, raising it irom 23 88 tallion gallons a i

According to the utuity's latest forecasts, retail electric sales year to 3187 bilbon Average daily consumption is expected are projecte1 to grow at an aver me annual rate of 41"w and to reach 97 21 nulhon gallons, compared to an average of water sales at a rate M 3.]"m through the next 10 years 66.98 nulhon, and the peak pumping rate is expected to hit l

At that pace, total retail electric sales would increase 51"w 203.3 mihion gallons a day, compared to a system high of 163 by 1998. from 3,046 gigawatthours ui 1988 to 4,597 GWH The MGD St udies are being conducted now to deternune when net winter peak is prolected to reach 989 MW by 1998 and where new wells and high sernce pumps wdl be added to l

l Commercial and industrial growt h is expected to be ihe the system to keep ahead of this growth (See Water driving force behind flus growth ( See Page 8 )

Operations, Page 13 i To stay ahead of growth, OltC has already had 'o develop There are also clear signs an upsurge in retail electric sales tentative plans for addmg generating capacity However, no and customers is just around t he corner The value of Elec,tric i

I formal Commission decision has been made on these Engmeering and Distnbution const ruction work ordered in proposals yet as OUC contmues its growt h watch 1988 reached a record tugh of $16 4 million compared Io The prehminary proposals call for mstalluig tw o additional

$ 12 6 million the year before This increase is a kc3 mdicati 'n compact combustion turbine peakmg units at its Indian River of contmumg econonur growth expected in ihe ( H !F sernce Power Plant in tune to begm operation in iH > Tm area jointly-owned mots begin operation m the summer of 1989 )

These work orders are to unprove and expand the existmg in addition, the utihty is considering adding anot her 416 not distribution system to pron + wrvice to new customers This MW coal fired unit at Stanton by 1997 and makmg work ranges from a sernce dr% to a new home to installation approximately one third of the capacity of that second unit of nuyor underground conduits for new conunercial l

available for joint ownerstup development l

\\

15 I

COM MISSIONE RS,

^

The Orlando Utilities COmm1SSIOR l

l l

T OrlandoandtheMayorh he Orlar# Utilities James H. Pugh, Jr.

serve as first vice presi&nt for 1989.

Conunission was created Chicone is considered to be a man with by a special act of the Conanissioner James Pugh has been a genuine concern for the city of Orlando Florida Legislature in 1923.

re-elected Conunission president for 1989.

and his record shows it. In the early 19Ps, it is part of the City of lie has also been re-elected to serve a when the city's business core had deterio-second rated almost completely, he was an active consecutive Jaycee already working to revitalize down-an ex officio Commissmner. The remaining

[

members of the Commission are elected four-year term town and ms founding chairman of the by City Council.

which expires in Downtown Development Ikiard.

~

Significantly, the Commission functions 1991.

lie is deeply committed to civic Orlando Utilities activities as well as business and independently. It f.as the full authority to manage and finance electric and water is not the first professional ones. Inunediate past operations and to prescribe rules, rates peblic conunission president and current chairman of the Greater Orlando Area Chamber of and regulations governing the sale and use g cn which he has e

of electricity and water in its service served. During Commerce, Chicone is also chairman on, territory Governor Reubin Askew's administration, the University of Central Florida The Legislature has modified and he served on the State of Florida Pwsident's Council and the Florida Citrus 11 11 of Fame Committee.

strengthened the Commission chart er Compensation Commission.

Nationally, he is r. board member of the over the years. Nevertheless, the struct ure Pugh is president of Epoch Properties Am can Qwss Sma r

remains one that enables the C.munission Inc., a multi-family housing developer. One to function in a very sound, progressive of the nation's giants in housmg g

g manner and to operate in a businesslike development, Epoch has developed over Federation of environment rather than a highly political 23,000 housing units m 48 cities froin 1

Independent

~

one.

Florida to California. Pugh is also a Business. A past As a result, the utility has experienced a stockholder and member of the board of president of the high degree of stability, and continues to directors of Central National Bank.

Orlando Jaycees' attract civic and business leaders of the lie received his Bachelor of Science Chicone remains highest caliber to serve cn its degree in building construction from the active in many Conunission-citizens u ho live in and care University of Florida. lie then served a an other civic and about Greater Orlando and who believe in officer in the U. S. Army. ile was an Airborne business organizations.

"peying their civic dues".

RANGER, Infantry Company Commander A University of Florida graduate with a All four Commissioners serve without and Commander of a Special Forces Unit.

degree in Business Administration and a i

compensation for staggered, four-year Active in kical civic and community member of Florida P4ue Key, Chicone's terms.They may serve up to two organizations, Pugh has served on the civic service has meiited nmeerous consecutive terms.

Wards of various associations such as the as ards, including t he Jaycees' Distin-i At least one of the Commissioners must Central Florida Fair and the Central guished Service Award and Downtowner I

be an OUC customer residing outside the Florida Chapter of the American lleart of the Year. In addition, he has been Orlarlo city limits; at least two must Association-named Volunteer of the Year by the reside within the city limits. The fourth The Florida Jaycees named him one of American lleart Association and National Commissioner may be an OUC customer the state's five outstanding young men in Agriculture Spokesman of the Year.

eitherincide or outside the City of 19'73. lie is a past president cf the C' : mdo Orlando. This makeup reflects the fact Jaycees and past president of the local Royce B. Walden that, although OUC is a municipal utility,it chapter of the University of Florida Alumni serves a metro area, too.

Association. lie was born in Winter llaven.

Educationalleader Royce R Walden is

)

The selection pmcess starts with the completing his first term on the Orlando Nominating Board of Orlando which Jerry Chicone, Jr.

Utilities Commission. A past Commission subnuts three persons' names for president, he has been elected to serve as consideration to the Orlando Utilities Citrus grower Jerry Chicone, Jr. has second vice president m 1989 Commission board. The Commission may been elected to serte on the Commission Currently the associate superintendent then nominate one or reject all three. The through Dec. 31,1990, completing the for Management Services for the Orange nominee's name is then suunutted to the unexpired term of the late James R County Public Schools, Walden has also City Council for final action.

Creene, Jr. lie has also been elected to been associate superintendent of 16

COM MISSf 4NE RS personnel services

" Protector of the Environment Award" lie thousands of single-family homes and for the school has also served on the Florida Speaker of condominimus throughout the state.

system and was the House's Comn ittee on Water Quality in appreciation of his service,the formerly a member and the State Comprehensive Plan Commission adopted a resolution of the school Committee.

recognizing him for his " exemplary

/e system's collective Graduating from Duke University with leadership and oustanding service" and bargaining team.

Acadenue Distinction, he received Ids juris describing him as "a man whose success Starting out as a doctor degree from the Urdversity of can be measured by his contributions and classroom science Florida College of Law. A Phi Beta Kappa charact er...a man who had a meaningful and band teacher, at Duke he was an associate editor of the voicein shaping the destiny of the Walden advanaed into school University of Florida Law Review and later Commission and the community."

administration early in his career and inducted into Florida illue Key.

continued to advance steadily up the Appointed public defender in 1973, he E

ranksinto management was then elected to a four-year term. lie At the same time, he has been very has also served as Central Florida In Memoriam active in civic and community affairs lie Campaign chairman for former Governor James B. Greene has served on the Project 2000 Steering LeRoy Collins' race for the U. S. Senate.

Committee of the Greater Orlando Area Governor Reubin Askew appointed him t

"& M #s th Mved Chamber of Commerce and is past the Fourth District Court of Appeals iper eing others."

president and chairman of the board of Nominating Commission.

United Way.

A founder and partner of the law firm of The Commission and staff deeply flis other community affiliations include Frederick, Woot en & lioneywell, P.A.,

regret the death of Commissioner James the ik>tary Club of Orlando, the Economic Frederick resigned in 1980 to assume

11. Greene who Development Commission of Mid Florida full-time duties as Orlando's mayor, lie is 8

/

die.. September and the NAACP. Chairmaa of the board of originally from Winter llaven.

29,1988. Serving directors of the Metropolitan Orland 5

as first 5 a i

I Urban League, he is also a member of the W. M. " Wally" Sanderlin president, he was tw~1 of the Washington Shores Savings less than half-way llaa and first vice president of the board Former Commission President N

through his first of the Guardian Care NursingIlome.

Sanderlin has completed eight the Commission.

four-year term on llorn in Sanford, Walden received his consecutive years of service on the board.

Bachelor of Science degree from Florid llis successor is to be named in early 1939.

President of his A. & M. University, Tallahassee, and Ids The prominent own highly successful insurance agency, Master of Science degree from the builder has Mr.Greene was most well known for his University of Pennsylvarna, Philadelphia.

devoted more than service as chairman of the Orlando-three decades to Orange County Expressway Authority Mayon BillFrederick public service. lie from 1971 to 1985.

served 30 The Orlando Sentinel praised him for Orlando MayorIlill Frederick,an ex continuous years having the vision to work to start a system officio member of the Commmission,was on the Orlando of toll roads around the city at a time when elected to his third term as mayor in 1988.

[

City Council, little was being done to provide As mayor, he has attracted statewide retiring as infrastructure. In an editorial tribute to Mr.

and national attention. :n 1985, Florida Commissioner Emeritus in 1974.

Greene, the newspaper described him as Trend magazine tagg ed him as one of 10 Then he was named chairman of the

" Strong and quiet. Aleader others can Floridiaas to watch and he has been listed Greater Orlando Aviation Authority, follow," and as "a quiet leader who simply in IFho's H7m ir American Politics and serving fot.r years during the planning, got thejob done "

li ho's il7m in financing and construction of the Orhtndo llut his contributions to the community E America.Ithas International Airport which in 1988 served were not confined to the expressway been during his more than 16 million passengers.

effort ile had served in a leadership administration that lie served as president of the capacity in nearly 30 civic organizations.

Orlando has Conmussion during the storm of Ilis devotion to public service was such undergone such a controversy over the Curtis II. Stanton that in 1987 the Greater Orlando Chamber dramatic rebirth, Energy Center. llis many other civic of Commerce presented it highest honor especially affiliations included serving as director of to him, the J. Thomas Gurney Sr.

downtown.

the Orlando Area Chamber of Commerce headership Award, for "a lifetime of His background and the Florida League of Cities.

achievement and commitment to in law, pohtics and pubbe service reveals Born in Inh % Oy. Mo, Sanihilin is t ommunity a tvi e.

an early involvement in environmental nonetheless considered a " pioneer in a memorial resolution concerns. lie has been chairman of both Orlandoan," having lived here since 1933.

conunemorating Mr. Greene, the Orlando the Florida Department of Pollution A self made success, Sanderlin left Utilities Commission honored him for Control and the Florida Environmental insurance to become a builder. !!is demonstrating the highest degree of Regulation Conunission. In 1978, he ce mpanies,W. M. Sanderlin Construction dedication and devotion to conununity received the Florida Engineering Society's nd Catalina llomes, have built and sold service.

17

)

j C OM P A R A TIV E H IGH LIGHTS

)

]

1

% Increase F:r Years Ended Sept.30 1988 1987' (Decrease)

Combined Operations Operating Revenues -

$244,516,879

$217,832,489 12.2

. Operating Expenses 182,359,495 152,398,974 19.6 Customer Accounting Generaland Administrative Expenses

$ 23,025,505

$ 20,060,062 14.8 %

Interest. otherincome 18,822,969 24,419,210 (22.9)

Transfers to City of Orlando 17,529,496 16,328,359 7,4 Funds available from annual revenues,

$102,103,939 98,350,612 3.8 income for debt service' Debt Senice Coverage 2.15X 2.07X 3.9 Bond Ratings AA, Aa AA, Aa Netincome 6,478,834 18,456,701 (64.9)

Utility Plant (Net book value)

$895,454,450 858,297,616 4.3 Equity (Accumulated Retained Earnings) 295,470,708 278,264,628 6.2 Long-term Debt 831,604,780 834,138,191 (0.3)

EI:ctric Operations Operating Revenues

$228,193,719

$201,193,183 13.4 TotalExpenses 151,583,999 125,359,965 20.9 Fuel / Purchased Power 77,340,353 69,213,228 11.7 DepartmentalOperations 74,243,646 56,146,737 32.2 TotalSales(MWH) 3,649,488 3,396,311 7.5 Total RetailSales(MWH) 3,046,237 2,990,436 1.9 Commercial /IndustrialSales 1,948,845 1,891,402 3.0 ResidentialSales 1,097,392 1,099,034 (0.2)

Sales for Resales (MWH) 603,251 405,875 48.6 Total Active Services 109,874 105,939 3.7 Residential 94,740 91,294 3.8 Commercial / Industrial 15,134 14,645 3.3 Average Atmual Residential Use (KWH) 11,583 12,038 (3.8) i Average Revenue per KWH Residential Sales' 7.53&

7.18&

4.9 Heating Degree Days 604 469 28.8 Cooling Degree Days 3,255 3,799 (14.3)

Gross Peak Demand (MW)6 695 673 3.3 m

Water Operations Operating Revenues

$16,323,159 16,639,306 (1.9)

Department Operation Expenses 7,749,991 6,978,947 11.0 Sales (Million Gallons) 22,914 22,971 (0.2)

Total Active Services 92,284 89,757 2.8 Residential 78,318 76,440 2.5 Commercial / Industrial 9,547 9,319 2.4 Irrigation 4,419 3,998 10.5 Average Annual Residential Usage (Gallons) 151,000 157,000 (3.8)

Average Revenue per 1,000 gallons Residential Sales

• 78.1t 77.5C 0.8 Rainfall (inches) 59.8 53.5 11.8 Peak Pumping (Million Gallons per Day) 139.2 152.0 (8.4)

1. Includes subsequent year reclassifications.

2. From 1988 Comprehensive Annual Financial Report.

3. Includes Bond Anticipation Notes (HANs)

4. Includes e sonthly customer charge.

New peak of 765 MW reached Feb. 24,1989.

l 18

1 I

FIN ANCI AL REVIEW

~-

s The year in review Water Operations: Ilecause of a sharp Rates: In 1989,both electric and water E lectric Operations revenues increased $27 million in increase in rainfall and mild weather, rates will be close to 1985 levels. The cost Fiscal 1988 to a record high water sales and revenues dropped slightly of water for the tynical city residenthd of $228,193,719, boosted by in Fiscal 1988 in spite of continued growth customer remained at $7.43 per 10,000 a sharp increase in sales to in ntunber of customers and services. This gallons a menth for four years, through other utilities, growth, and a was the first such drop in at least a Fiscal 1988 and part of Fiscal 1989.

fuel rate change. Ilowever, verrnild decade.

Effective February 1,1989, that cost weather produced a less than anticipated An 11.8% increasein rainfallled to a increases slightly, to $7.63 per 10,0(X) total sa;es herease of 7.5%.

3.8% decline in average annual residential gallons a month.

Sales to other utilities increased 48.6%,

usage which fell to 151,000 gallons a year Fiscal 1988 electric rates were $75.70 bolstering total sales and revenues. These compared to 157,000 the year before.

per 1000 KWil per month for the typical sales for resale topped the 603 GWil mark, The peak pumping rate fell 8.4% to residential customer and drop slightly to the highest level of bulk sales since 1980, 139.2 million gallons per day, compared

$75.fi7 starting February 1,1989 This new and are expected to continue to climb.

to a system high the year before of cost is scheduled to stay in effect for 12 000 experienced a healthy 3.7%

152 MGD.

months. It is only slightly ahead of the increase in electric customers, but an

$74.41 cost in effect auring 1985 while the extremely mild summer and winter Combloed Operations: The Orlando Stanton Energy Center was still under Utilities Commission continues to construction.

curbed retail electric sales growth. Cooling maintain its excellent standing in the degree days dropped 14.3%,and no extremely cold weather occurred. As a financial conununity. That confidence Comment on Debt: The Conunission's is reflected in the fact that for the 1985 liond Anticipation Notes (IIANs) result, retail electric sales, which have been growing at an average rate of 4.3%

40th consecutive year the utility mature May 31,1989, and a total of $294.6 for a decade or more, increased only 1.9%

retains Aa ratings from Moody's investor mution in llANs has been reclassified in Service and AA ratings from Standard the 1988 Andited Financial Statements as j

in 1988.

and Poors, enrrent liabilities. When these ilANs are 4

u refinanced, they will again be classified as Energy Peaks: For Fiscal 1988,the in revenue and income available for debt long term debt electric sfstem recorded a peak of only service, reaching a total of $102 million.

Ilecause of tl$e IIANs reclassification, 695 MWin August,while the Fiscal 88 As a result current debt service coverage the 1988 Audited Financial Statements winter peak was only 677 MW.Howeecr, advanced to 2.15X.This gain was reflect a $199.9 million decrease in February 24,1989,0UC recorded an primarigy gue to a sgtarp increase in working capital. However, if the IMNs historicpeak of 765 AlW, shattering the depreciation and amortization, cxpensed were still classified as long-term debt, three-year-old wcard, a 715 AfW,mnter items which do not require cash outlay.

the statements would show a $29.8 peak.

The value oi these items increased 36.5%,

million gain in working capitaland to $26.4 million, a $7.1 million increase.

total working capital at the end offiscal Expenses: The increase in Electric's Accumulated retained earnings Pear 1988 would be $67.4 milli m. If the departmental operating expenses reflects increased $17.2 million, to a total of IIANs had not been reclassified, Current the first full year's operation of the Curtis

$295.5 million Liabilities payable from Current Assets II. Stanton Energy Center with its Net income dropped $12 million to $6.5 would total only $27.4 millioninstead of state of-the art envirc.unental protection million primarily because interest income

$257 million.

systems.

dropped sharply as 000 expended $54.2 The ie~ ease in the cost of fuel and million of its remaining $55.9 million in purchas' d power to $77 million reflects construction funds. Interest expense also l

increased sales and the end of OUC's first increased $2 million.

Fuel Price Stabihzation program. From Operatingincome also dropped $3 July 1986 through September 1987, this million to $62 million. as increases in im Adted program saved 000 customers $12.3 overall operating expenses exceeded Financial million, reducing fuel costs to $69 million revenue increases by $3 million.

m Fiscal 1987 in spite of growth.

The expense incteases were State e nts (These savings were passed directly on associated with:

to customers in 1987 in the form of 1)cxpanding and improving customer (Pages 20-36) sharply reduced fuel charges.These services; charges returned to normal levt is the next

2) fundmg the first full year's operation year, another factor in the 1988 revenue of Stanton Energy Center, and increase.)

3) increased fuel costs.

19

Balanca Sheets Orlando Utilities Commission l

1 September 30 1988 1987

)

ASSETS Utility Plant-Note F

}

In service:

{

Electric-Notes G and J.

.8 957,023,770

$ 906,729,640 Water,

102,992,591 93,865,221 Conunon,

21,755,011 20,665,643 l

Aliowances for depreciation and

~

are rtization(deduction)

,(219,022,288)

(192,003,448) 862,749,084 829,257,056 Construction woric in progress..

32,705,366 29,040,560 895,454,450 858,297,616

. Re:tricted Assets-Notes B and D Debt service and related accounts,

167,084,144 174,443,564 Construction and related accounts,

1,615,670 55,855,299 Itenewaland replacement account.

22,042,291 19,912,171 Customer deposits.

6,882,045 5,333,158 197,624,150 255,544,192 l

Current Assets Cash and investments-Note D -

25,802,856 9,552,396 Customer accounts receivable, less allowance for doubtful accounts (1988-$539,160; 1987--$644,078) 24,367,210 18,030,559 Accrued utility revenues..

14,758,123 13,262,492 Fuel for generation.

7,412,750 6,251,354 j

Margin deposit on futures contracts 1,899,791

-j Materials and supplies,

14,477,958 9,075,778 i

Accrued interest receivable 1,220,115 887,115 Miscellaneous receivables and prepaid expenses,

4,848,910 2,495,313 94,787,713 59,555,007 OtherAssets and Deferred Charges Selfinsurance fund-Notes C and D 5,432,770 5,153,216 Unamortized debt expenses 98,621 78,945 Deferred compensation plan investments-Note 11.

2,501,346 2,003,888 8,032,737 7,241,049 l

Total Assets 81,195,899,050

$1,180,637,864 l

1 l

l l

l l

l.

l N

I September 30 -

1988 1987

)

CAPITALIZATION AND LIABILITIES

')

~ Capitalization Accumulated retained earmngs:

j

- Reserved for debt service 8 71,782,254

$ 146,203,964 i

Reserved for renewal and replacement.

22,042,291.

19,912,171 j

Unreserved-invested in or designated i

151,491,244 71,476,575 '

]

for plant and working capital.

245,315,789 237,592,710

'I Contributed capital 50,154,919 40,671,918 295,470,708 278,264,628 J

Long-term debt-Note E:

?

Ilond principal 553,205,000 557,585,000 Hond anticipation notes.

294,600,000 Unamortized discount (deduction)

(20,399,149)

(22,196,809) 532,805,851 829,988,191 Total Capitalization 828,276,559 1,108,252,819 Current Liabilities-payable from restricted assets

. Accrued interest payable on notes and bonds.

26,227.285 24,089,000 Current portion oflong-term debt-Note E 4,380,000 4,150,000 Bond anticipation notes-Note E.

64,694,605 Accounts payabkwonstruction funds.

9,928,936 Customer meter deposits and interest thereon..

6,882,045 f>,333,1f>8 102,183,935 43,501,694 Current Liabilities-payable from current assets llond anticipation notes, net of amortized discount of $181,071-Note E.

229,724,324 Accounts payable and accrued expenses.,

21,962,820 16,897,501 Collections on behalf of state and local 5,424,678 4,883,896 governments.,

Due to the General Fund of the City of Orlando.

187,267 257,111,822 21,968,664 Other Liabilities and Deferrrd Credits Fuel cost recovery account.

2,288,984 (1,875,316)

Customer water and electric line extension deposits.

3,536,404 6,781,115 Deferred compensation plan liability-Note 11.

2,501,346 2,008.888 8,326,734 6,914,687 Total Liabilities 367,622,491 72,385,045 Total Capitalization and Liabilities

$1,195,899,050

$ 1,180,637,864 See notes tofinancialstatements.

21

Statements OfIncome And Accumulated Retained Earnings Orlando Utilities Commission Year Ended September 30 1988 1987 Operating Rerv?nues.

$244,516,879

$217,812,489 Operating Expenses:

Fuel for generation and purchased power.

77,340,353 69,213,228 Production 33,109,161 23,415,744 Transmission and distribution 9,545,340 9,242,407 Depreciation and amortization.

26,415,010 19,348,281 Customer accounts.

5,918,664 5,158,382 Customer service and information.

1,750,888 1,292,306 Generaland administrative.

17,106,841 14,901,680 State utilities gross receipts taxes 2,902,742 2,564,587 Payments to the General Fund R

of the City of Orlando.

8,270,496 7,262,359 Total Operating Expenses 182,359,495 152,398.974 OperatingIncome 62,157,384 65,433,515 Non-operuting income (Expense):

Interest income.

18,023,224 23,761,490 Other income 799,745 657,720 Interest expense.

(61,688,466)

(59,338,746)

Other deductions (3,554,053)

(2,9917.i'j)

Income Before Payments to the General Fund of the City of Orlando 15,737,834 27,522,701 Pagments to the GeneralFund qf the City qfOrlando-NoteI.

(9,259,000)

(9,066,000)

Net income 6,478,834 18,456,701 Depnclation qfcontributed utilityplant.

1,244,245 803,757 Increase in Accumulated Retained Earnings 7,723,079 19,259,458 Accumulated Retained Earnings at Reginning of Year.

237,592,710 218,333,252 Accumulated Retained Earnings at End of Year

$245,315,789

$237,592,710 M

4 Sec notes tofinanciala sements.

22

p L

i':;

Statem nts Of Changa In Financial Positirn

' Orlando Utilities Commission September 30 1988 1987

' Source qfFunds Net income 8 6,478,834

$ 18,456,701 Charges to operations not requiring current outlay of working capital:

Depreciation and amortization of plant charged to operations.,

26,415,010 19,348,281 Depreciation and amortization charged 3,717,393 3,371,694 to fuel costs,

Depreciation of vehicles and equipment charged to general and administrative costs.,

895,470 751,302 Amortization of bond discount and 1,655,705 1,903,748 expenses.

Total from Operations 39,162,412 43,831,726 Contributed capital 10,727,246 10,621,60,1 Increase in current liabilities.--restricted 58,682,241 604,065 Decrease in restricted assets.

57,920,045 55,289,446 Increase in otherliabilities and deferred credits.

919,589 167,411,533 110,346,838 Application qfFunds Additions to utility plant-net 68,184,711 112,542,646 Reduction oflong-term debt-net.

298,798,929 4,150,000 Increase in other assets and deferred charges 338,345 5,153,216 Decrease in other liabilities and deferred 2,210,136 credits 367,321,985 124,055,998 Decreaseln Working Capital

$(199,910,452)

$ (13,709,160)

Changes in Components qf H*orking Capital increase (decrease) in current assets:

Cash and investments

$16,250,460

$(19,687,872)

Cus=r accounts receivabk' net 6,336,651 2,800,164 Accrued utility revenues,

1,495,631 827,465 Fuel for generation.

1,161,396 (2,290,655)

Margin deposit on futures.,ntracts.

1,899,791 (3,536,000)

Materials and supplies.

5,402,180 4,364,311 Accrued interest receivable 333,000 767,451 Miscellaneous receivables and prepaid expenses 2,353,597 1,685,916 35,232,706 (15,069,190)

Increase (decrease) in current liabilities:

Ikmd anticipation notes.

229,724,324 Accounts payable and accrued expenses.

5,065,319 (2,2P1,257)

Collections on behalf of state and local governments -

540,782 1,3.1975 Due to he General Fund of the City of Orlando (187,267)

(438,748) 235,143,158 (1,360,030)

Decrease in Working Capital

$(199,910,452)

$ (13,709,160) i See notes lofinancial statements.

23

N:tes To Financial Statements Orlando Utilities Commission

- September 30,1988 NOTE A matters. The City of Orlando has been excluded from these finan-cial statements since it has no operational, managerial, budgetary involvement or fiscal responsibility for the Commission. No other Summary of Significant component units exist in which the Conunission has any oversight Accounting Policies respmsibihties which wouid require inciusion in the Commission's financial statements.

The financial statements of the Orlando Utilities Commission are presented in conformity with generally accepted accounting prin-Meas uremen t focus: The Commission operates the electric and ciples as apphcable to governments and substantially in conformity water systems of the City of Orlando in a manner similar to private with accounting principles and methods prescribed by the Federal business; therefore, operations are accounted for as an enterprise Energy Regulatory Commission (FEftC) and other regulatory fund where costs (expenses, including depreciation) of providing authorities except for the method of accounting for contributed services to customers on a continuing basis are recovered primarily capital described in the notes to financial st atements.

through user charges.

The following is a summary of the more significant accounting policies:

Basis ofAccounting:The Conunission's financial statements are prepared on a full accrual basis of accounting with revenues being Reporting Entity: The Orlando Utilities Commission (the Com-recognized when earned and expenses recognized when incurred.

mission) was created by a Special Act of the Florida State Legisla-ture and is a part of the government of the City of Orlando, Florida.

Budgets: Eevenue and expense budgets are prepared on an The Conunission consists of five members, including the Mayor of annual basis in accordance with the Commission's bond indentures the City. Members, with the exception of the Mayor who is an ex-and submitt ed to the Commission icr:yroval prior to October 1 of officio member of the Commission, serve without compensation.

the fiscal year. Legal adoption of budgets is not required. Actual may serve no more than two consecutive four year terms and new revenues and expenses are compared to the budgets on a Ene item members are selected in the following manner. The Nominating basis within departments and an analysis of variances rcport is pre-lloard of the City of Orlando submits the names of three persons to pared and submitted to the Conunission each month ss required by the Commission for consideration. The Commission may nominate bond indentures.

one of there persons or reject all three,The nominee is then subject to election by the City Council.

Utility Plant: Utility plant is stated at historical cost which The accompanying financial statements present the financial pos _

includes cost of contract work, labor, materials and allocated indi-tion, results of operations and changes in financial position of the rect charges for equipment, su;)ervision and engineering and labor Commission, in accordance with the National Council on Govern.

related costs. Donated assets are recorded at the cost provided by mental Accounting (NCGA) Statement No. 3 and affirmed by the the developer which approximates fair market value. The Commis-Govermnental Accounting Standards lloard.

sion charges the cost of repairs and minor replacements to mainte-nance expense. The cost of electric or water plant retired or The reporting entity of the Conunission includes the operation, otherwise disposed of, together with removal costs less salvage,is management, and oversight responsibilities of the electric and charged to accumulated depreciation at such time as property is water systems of the City of Orlando. Oversight responsibility removed from service.

includes but is not limited to financial inter-dependency, selection of governing authority, designation of management, ability to The following is a summary of utility plant at September 30,1989, significantly influence operations and accountability for fiscal by major classes:

Electric Water Common Total Land

$ 17,840,744

$ 424,081

$ 1,739,485

$ 20,004,310 Electric generating plant 702,5)8,335 702,518,335 Water wells 6,244,448 6,244,448 Structures and improvements 21,568,068 3,557,620 10,099,468 35,225,156 Equipment 215.096,623 92,766,442 9,916,058 317,779,123 957,023,770 102,992,591 21,755,011 1,081,771,372 Less: allowances for depreciation and amortization (185,230,018)

J5,187,767)

(8,604,503)

(219,022,288)

Construction work in progress 23,988,904 6.580M2 2,136,420 32,705,366 Net utility plant

$795,782,656

$ 84,384,866

$1f>,286,928

$ 895,454,450 24

y 7,

J i

1 4

i a

1 The following is a sununary of changes in utility plant:

Balance Balance September 30 September 30 1987 Additions Itletions 1988 Land

$ 19,659,601

$ 344,109

$ 20.004,310 l

Electric generating plant 695,531,690 9,420,645 t 2,434,000 702,518,335 Water wells 5,403,f>58 840,890 6,244,448 Structures and improvements 16,668,985 18,556,171 35,225,156 Equipment 283,996,670 52,626,587 18,844,134 317,779,123 1,021,260,504.

81,789,002 21,278,134 1,081,771,372 Less: allowances for depreciation and amortization (192,003,448)

(30,981,490)

(3,962,650)

(219,022,283)

Construction work 11 progress 29,040,560 76,367,350 72,702,544 32,705,366 5t utility plant

$858,297,616

$127,174,862

$90,018,028

$ 895,454,450 Depreciation: Utility plant is depreciated using the straight-line interest bearing time deposits or savings accounts of Florida or method for each of the various plant classifications at rates which national banks and savings and loan associations provided the will amortize the costs over the estimated economic useful lives of deposits are collateralized by federal govenunent scarities.

the assets. Depreciation of vehicles and other comtruction equip-Additionally, Florida statutes and applicable debt resolutions per-ment is charged to departmental operating expenses or construc_

mit the Commission's pooled investments to melude repurchase tion work in progresc. Amounts for all other assets are charged to agnments; that is, a purchase of securities from authorized deab depreciation expense. The estimated useful lives of utility plant are ers or banking instit utions, with a simultaneous agreement that the as follows dealers or banking institutions will repurchase them in the future Electric Plant at the same price plus a contract rate ofinterest. The market value Generation Plant of the securities underlying repurchase agreements normally Fossil,

. 30 - 40 years exceeds the cash received, providing a margin against a decline in Nuclear,

. 30 - 36 years market value of the securities. If the dealers default on their obliga-Structures and Improvements 30 - 50 years tions to repurchase these securities from the Commission, the Equipment..

,, 6 2/3 - 50 years Conunission would suffer an economic loss equal to the difference between the market value plus accrued interest of the underlying

Water, securities and the agreement obligation, including accrued inter-Water Wells.

. 25-50 years est.

e Conunissbn has established that authonzed dealers are Structures and improvements

,50 years primary dealers as defined by the Federal Reserve Bank and report Equipment.

. 6 2/3 - 50 years to the Securities Exchange Commission and authorized banking Common:

institutions are limited to the fifteen largest U.S. Banks.

Structures and improvements,

,50 years Office Equipment,

.141/3 years Customer Accounts Reccleable: The Commission bills cus-Vehicles and Other Construction tomers monthly on a cyclical basis and accrues revenues at the end Equipment,

, 5 - 30 years of the fiscal year for energy and water consumed but not billed.

Ccsh and investments: The Commission maintains cash in Fuelfor Generation and hfaterials and Supplies: Fuel oil, demand accounts. Investments are recorded at cost. Florida coal and materials and supplies inventories are stated at the lower statutes and applicable debt resolutions authorize the Commission of average cost or market. Nuclear fuelis included in electric utility to invect its pooled investments in obligations of the U.S. Treasury, plant and aniortized over the estimated usage of the fuel.

the Federal Farm credit Banks, Federal ilome Loan Mortgage Cor-poration, Federal llome loan Bank or its district banks, including Futures Contracts: During 1988 and 1987 the Commission Federal Home Loan Mortgage Corporation participation certifi-ent cred into oil futures contracts to offset the price fluctuations of cates,or obligations guaranteed by the Government National Mort-anticipated future acquisitions of fossil fuels. The Conunission had gage Association. The Commission is also authorized to invest in a $ 1,899,791 margin deposit on open fut ures contracts with an orig-municipal obligations. In addition, the Conunission may invest in inal cost of $11,445,370 and a market value of $10,368,500 at 25

l

)

l l

l J

l Note A-Summary continued Policies Act of 1978 (PURPA). Under PURPA only fuel costs September 30,1988. The market value of these contracts as of incurred are to be recovered. The Cor,. mission's policy includes l

. December 20,1988, was $12,216,200. There were no open futures computing a fuel aWustment and a "true-up" adjustment. The fuel

]

contracts at September 30,1987.

adjustment is dete mined on an annual basis and is designed to q

recover estimated fuel costs from the Commission's customers.

J The difference between the original cost and market value of "he "true-up" adjustment is designed to recover (rebate) the dif-

$ 1,076,870 on open futures contracts at September 30,1988 as well ference between estimated fuel costs billed and fuel costs incurred.

as realized losses of $10,982 and gains of $11,026,765 on closed Commission policy for fuel costs incurred in 1987 requ, red the i

futures contracts during the years ended September 30,1988 and "true-up" acUustment to be for the entire amount that fuel costs 1987, respectively, have been recognized through the fuel ecst billed exceeded (were less than) actual fuel costs. In 1988 the Com.

recovery account. See " Rates and Revenues" below.

mission established a fuel adjustment stabilization policy. The intent of the policy is to moderate any dramatic increases or Contributed Capital: The Commission considers amounts decreases in the fuel aWustment by utilizing only a portion of the received for construction of utility plant and utility plant con-balance in the"true-uliaaccount at the end of each true-up perk)d.

3 tributed by developers as capital contributions. Accordingly,these Differences between fuel costs billed and incurred are recorded in I

capital contributions are added to plant assets and are treated as a the fuel cost recovery account on a monthly basis.

separate component of Commission capitalization. Depreciation applicable to contributed utility plant is included as an operating Pre-Commerrial Plant Operations: In accordance with FERC expense in determining net income and is subsequently charged accounting principles, revenues and associated fuel costs arising against contributed capital from accumulated retained earnings.

from energy produced by the Stanton Energy Center prior to its commercial certification were capitalized. For the fiscal year Debt Discount and Expensesi Debt discount and issue ended September 30,1987, the effect of this treatment on the Com-expenses are deferred and amortized to operations over the lives of mission's prorata share of pre-commercial operations was to the related issues using the bonds outstanding method of amortiza-redace operating s evenues by $5,727,910 and fuel of>erating tion.

expenses by $1,435,955, resultmg in a $4,291,955 reduction of the capitalized cost of the Commission's share of the project. All oper-Rt.fes and Recenues: Each year, the Commission's staff per-ating and maintenance expenses prior to commercial operation forms a rate adequacy study to determine tise electric and water were capitalized.

revenue requirements. Based on this study, current cost of service studies, and regulations of the Florida Public Service Commission Compensated Abuences: The Commission records compensa-regarding electric " rate structure", the Conunission's staff devel-tion for unused vacation and sick leave as an expense in the year in ops its electric and wat er rate sched ules which are presented to the which the vacation and sick leave is earned in accordance with Commission at a public workshop and then presented for their NCGA Statement 4. At September 30,1988, annual vacation leave 1

approval at a public hearing.

earned but not taken approximates $659,000 and sick leave accu-mulated but not taken approximates $1,809,000.

The Commission staff makes its determination of revenue require-ments using the rate base method and includes construction work Reclass(ficaf fon: For comparability purposes, certain reclassifi-in progress in the rate base. Therefore,in accordance with proper cations have been made to the 1987 financial statements to con-ratemaking theory, the Commission does not use an allowance for form with the 1988 financial statement presentation.

funds used during construction (AFUDC)in determining revenue requirements. Since the Commi.ssion's level of revenue require-NOTEB ments and subsequent revenue is determined without regard to AFUDC, the Commission does not capitalize interest on construc-Restricted Assets

. tion work in progress.

Certain assets are rest rict ed by bond resolution; additionally, some Operating revenues are recorded based on actual billings to cus-assets have been classified as restricted in accordance with gov-tomers plus an accrued estimate for unbilled electric and water ernmental accounting standards for enterprise funds and utility consumption at the end of each fiscal year.

industry accounting practices.

The Commission has established a policy on recovery of fuel costs in accordance with guidelines from the Public Utilities Regulato 26

The Commission's restricted assets consist of the following accounts:

September 30 1988 1987 Debt Service and Related Account &-Note E:

Investment Account.

$13,646,ft1

$ 8,966,161 Principal and Interest Accounts...

27,563,477 27,438,802 Debt Service Reserve Accounts -

81,557,073 80,902,834 1985B Bond Anticipation Note CapitalizedInterest Account.

44,317,403 57,135,767 l

167,084,144 174,443,564 j

Construction and Related Accounts:

1985B Bond Anticipation Nate Construction Account.

51,276,502 i

Nuclear Generation Facility l

Deconunissioning Accounts 1,615,670 1,138,255 Retainage and Surety Accounts 3,440,542 1,615,670 55,855,299 Renewal and Replacement Account..

22,042,291 19,912,171 Customer Deposits and Interest thereon.

6,882,045 5,333,158 28,924,336 25,245,329 3

$197,624,150

$255,f>44,192 The accounts consist of:

)

Cash,

8 1,224

$1,490 j

Investments.

192,271,707 240,432,640 Interest receivable 5,351,219 6,110,063

$197,624,150

$255,544,192 Estimated claims incurred but not reported at year end were NOTE C inunaterial. It is the opinion of general counsel that the Orlando Salf-Insurance Fund utihties Commission, as a statutory Commission and a part of the govermnent of the City of Orlando, Florida, may enjoy sovereign Effective November 1,1986 the Commission implemented a self-immunity in the same mar aer as a municipality, as allowed by insurance program to cover a portion of its workers' compensation, recent Florida Courts of Appeals rulings. Under said rulings, Flor.

general liability and automobile liability exposures. In accordance ida Statutes limit liability for claims orjudgements by one person to with recommendations of the Commission's insurance consultants,

$ 100,000 or a total of $200,000 for the same incident or occurrence; an initial cash reserve of $5 ruillion was established to cover greater liability can result only through an act of the Florida Legis-expenses and claims against the Commission. This reserve is sub-lature. Furthermore, any defense of sovereign immunity shall not ject to a re-evaluation and recommendation by the insurance con-be deemed to have been waived or the limits ofliabihty increased as sultants every three years. During 1988, $84,842 was expended for a result of obtaining or providing insurance in excess of statutorial claims and $364,396 of interest income was added to the fund.

limitations, it is also the opinion of general counsel that the Com-Claims expense and interest income for 1987 were $50,177 and mission, as a municipal utility, is statutorily immune from suit for

$203,393, respectively. Under the self-insurance program the Com -

malicious prosecution.

mission is liable for all claims up to certain maximum amounts.

Claims in excess of the maximum amounts will be covered by insurance carriers. The maximum amounts are as follows:

Workers' compensation.

$250,000 Generalliability.

500,000 Automobile liability 500,000 27

I I

s The Commission's investments are summarized and categorized

.I l

NOTEQ bejow to give an inaicetion of the level of risk assumed by the Com-4 l

mission at September 30,1988 and 1987. Category 1 includes Cash and Investments investments that are insured or registered or for which the securi-Cash: AtSeptember30,1988and 1987,the carryingamount of the tles are held by the Conunission or its agent in the Conunission's

. Commission's cash was $1,024,151 and $1,320,540, respectively, name. Category 2 includes uninsured anr1 unregistered invest-l and the bank staement balances were $577,193 and $1,295,756, inents for which the secunties are held by the broker's or dealer's I

respectively The bank balances were covered by federal deposi.

trust department or agent in the Commission's name, Category 3 tory insurance or cr.llateralized by a pool of U.S Government secu.

includes uninsured and unr(gistered investments for which the I

rities held in trust by another bank in the name of the Conunission's securities are hekt by the bank's trust department or agent but not banking institution.

in the Commission's name.

1 j

Category Carrying Market 1

2 3

Amount Value September 30,1988:

I investments:

Repurchase Agreements

$40,500,000

$11,165,000

$ 51,665,000

$ 51,665,000 U.S. Government Securities 148,441,957 148,441,957 153,965,626 Municipal Obligations 28,947,559 28,947,559 28,947,559 Clearing account 1,224 1,224

$217,889,516 8

$11,165,000

$229,055,740

$234,579,409 September 30,1987:

Investments:

Repurchase Agreements

$ 39,000,000

$ 6,142,000

$ 45,142,000

$ 45,142,000 U.S. Government Securities 221,043,642 221,043,642 224,900,811 i

l Other U.S. Backed Securities:

Federal Farm Credit Bank 1,641,512 1,641,512 1,682,140 Federalliome loan Bank 1,987,735 1,987,735 1,986,337 Clearing account 1,490 1,490 l

$263,672,889

$ 6,142,000

$269,816,379

$273,712,778 These investments are held in the following accounts:

September 30 1988 1987 Restricted assets

$197,624,150

$255,544,192 Cash and investments 25,802,856 9,552,396 Accrued interest receivable 1,220,115 887,115 Selfinsurance fund.

5,432,770 5,1f,3,216 230,079,891 271,136,919 less: Cash 1,024,151 1,320.540

$229,055,740

$269,816,379 l

l 28

l No gain was recognized from these advance refundings since the gains of approximately $3,507,000 and $71,000 on the bonds and the BAN's, respectively, were used to reduce unamortized debt Long-Term Debt issuance costs,a nona discount.

In December 1985, the Commission provided for the advance The series 1985B BAN's mature on May 31,1989. The capitalized refunding of all of its water and electric revenue bonds then out-imerest account of $44J317,403 and debt service reserve account Manding in the aggregate principal amount of $577,730,000 of $23,568,000 have been classified as restricted assets with a (Refunded Bonds) by the sale of $565,040,000 Water and Electric related amount of the 1985B llAN's recorded as current liabilities Revenue Refunding 13onds, Series 1985 ($950 million authorized payable from restrict ed asset s. The balance of the 198511 BAN's has and validated and confirmed by the Supreme Court of Florida).

been classified as payable from current assets on the financial Sale proceeds were invested in United States obligations in an irre-statements. It is the intent of management to refinance the Series vocable Escrow Deposit Trust Fund. Such United States obliga-1985B BAN's by May 31,1989.

tions will mat ure at such time and in such amounts so as to provide sufficient funds for the payment of mat uring principal and interest During 1978, the Conunission provided for the advance refunding on the Refunded Bonds.The Refunded Bonds are treated as extin.

of all of its $133,325,000 water and electric revenue bonds guished debt for financial reporting purposes, were removed from (Refunded Bonds) outstanding at April 1,1978 by the sale of the balance sheets and have a remaining principal balance of

$ 110,330,000 Wat er and Electric Revenue Refunding and improve-

$567,410,000 at Septemter 30, loss ment Bonds, Series 1978 and $94,650,000 Special Obligation Bonds, Series 1978. The Refunding and Improvement Bonds were Also,in December 1985 the Commission issued $294,600,000 subsequently advance refunded in December 1985. From the pro-Series 1985B Water an ; Electric Revenue Bond Anticipation Notes ceeds of the sale of the two issues, monies were invested in United (BAN's). Proceeds of the Series 1985B BAN's, together with other States obligations in an irrevocable Escrow Deposit Trust Fund.

available funds, were used to refund the principal and accrued Such United Stat es obligat ions mat ure at such time so as to provide interest of the Series 1985A BAN's, to fund all the interest require sufficient funds for the payment of mat uring principid and int erest ments on the Series 1985B BAN's and to establish a debt service on the Refunded 13onds Allinterest earned or accrued on the reserve fund for the Series 1985B BAN's. The interest rate on the United St ates obligations has been pledged and will be used for the BAN's is variable and has ranged between 3.75% to 6.50% during payment of the principal and interest on the Special Obligation the year ended September 30,1988.

Bonds, Series 1978. The Refunded Bonds are treated as extin-The outstanding bonds are payable from and secured by a first hen guished debt for financial reporting purposes, were removed from upon and pledge of the net revenues derived by the Commission ibe balance sheets and have a remaining principal balance of from the operation of the water and electric system and from

$78,615,000 at September 30,1988 investment income earned on monies and obligations in certain Bonds ud Bond Anticipation Notes principal outstanding is as sinking fund accounts.The lien of the holders of the BAN's on net ygijgwy revenues is subordinate to the lien of the holders of the bonds.

September 30 1988 1987 Bonds:

Series 1985,5.35% - 8.625% due serially 1986 to 2000 and in term form from 2002 to 2010.

$557,585,000

$561,735,000 Less current portion oflong term debt 4,380,000 4,150,000 553,205,000 567,585,000 Bond Anticipation Notes:

Series 1985B Unit Priced Demand Adjustable Notes due May 31,1989.

294,600,000 "a4,600,000 Irss current portion oflong term debt 294.600,000 l

394.600,000

$553,205,000

$852,l85,000 29

9 N:te E-Long-term Debt continued

. Following is a schedule of annual principal and interest requirements on the bonds and BAN's outstanding at September 30,1988:

i Payment for Series 1985B Year Ending Payment for Series 1985 fk>nds Bond Anticipation Notes September 30 Principal Interest Principal Interest (1)

Total 1989

$ 4,380,000

$ 45,799,223

$294,600,000

$ 9,820,000

$354,599,223 1990 4,640,000 45,486,023 50,126,023 1991 4,955,000 45,139,173 50,094,173 '

1992 5,295,000 44,757,933 50,052,933 1993 5,595,000' 44,343,903 49,938,903 1994 10,105,000 43,575,923 53,680,923 1995 13,895,000 42,499,060 56,394,000 1996 14,975,000 41,310,035 56,291,035 1997 16,150,000 40,007,885 56,157,885 1998 17,465,000 38,558,290 56,023,290 -

1999 18,910,000 36,969,850 55,879,850 2000 20,495,000 35,227,775 55,722,775' 2001 22,245,000 33,3'16,950 55,581,950 2002 24,135,000 31,255,306 55,390,306 2003 26,210,000 28,994,694 55,204,694 2004 28,480,000 26,538,294 55,018,294 2005 30,930,000 23 '70,581 54,800,561 2006 71,685,000 (2) 17,687,750 89,372,750 '

2007 36,640,000 14,573,350 51,213,350 l

2008 39,755,000 11,194,175 50,949,175 2009 43,135,000 7,527,700 50,662,700 2010 46,800,000 3,549,700 50,349,700 2011 50,710,000 50,710,000

$557,585,000

$702,209,573

$294,600,000

$ 9,820,000

$1,564,214,573 (1)Baand upem an amu med sraerrst mie of 6% timnath ofay 31,1989 (2) Annual paymeras to theinvestment Account mngmgfrom 32,397,6tA? to 36,523,280 plus numies on hand en the account at Septemter 341988 will tw used to nuvt 338,090,000 qf the prancipal payment dur Octoter l, MX)5 The Commission has covenanted to fix, establish and maintain in accordance with the bond resolution, gross revene;s derived i

rates and collect fees, rentals or other charges for the services and from the operation of the water and electric system are to be facilities as will always provide in each fiscal year net revenues deposited in the Revenue Fund and shall be applied only in the which shall be adequate at all times to pay in each fiscal year the following n.nner:

sum of at least one hundred twenty-five percent (125%) of the W

ues are first to be used to pay the current operating annual debt service requirement on the outstanding bonds and expenses of the water and electric system and then all that net revenues shall he sufficient to ma'ke all other payments SinW FM nd Renewal and Replacement Fund i

required by the terms of the bond and note resolutions.

requirements.

l The Series 1985 hond resolution establishes the Revenue Fund 1 The balance of any revenues remaining in the Revenue Account, Renewal and Replacement Fund Account and Sinking Fund shall at the option of the Commission, be used (i) for Fund Account, which is comprised of the Interest, Principa!,

any lawful purpose in connection with the water and Investment, Bond Redemption, Debt Service Reserve and Demand ectric system and (ii) to make any transfers of funds to a

Charge Component accounts, j

ne City of Orlando; provided however, that none of the revenues is ever to be used for the purposes described in (i) and (ii) 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.

The Commission has no material operating or capital leases.

30

i I

I 1

In 1984 and 1985, the Commission entered into Participation Agreements with Ph>rida Municipal Power Agency (FMPA) and the Kississmee Utility Authority (KU A) to sell a portion of Stanton Participation Agreements Energy Center Unit #1 (sEc 1) excluding conunon and external in 1980 the Commission entered into a Participation Agreement facilities. The Commission's coal fired electric generating plant is rated at 435 net MW. Under the terms of these agreements, FMPA l

with Florida Power and Light Company (FPL) to purchase a 6.08951% (52 net megawatts) undivided ownership interest in St.

has a 26.6265% undivided ownership interest and the Kississmee Lucie Unit No. 2 nuclear powered electric generating facility Utility Authority has a 4.8193% undivided ownership interest. The constructed by FPL. This unit is presently rated at 852 net Commission, which has retained a 68.5542% undivided ownership megawatts (MW) and commenced commercial operation in 1983.

interest, has operational control of this project.

The Commission has also entered into a Reliability Ex-hange Agreement with FPL. The Reliability Exchange Agreement results in 1988, the Conunission entered into Participation Agreements with FMPA and KUA to sell a portion of the Commission's Indian 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 River Plant Combustion Turbine Project excluding conunon nuclear powered electric generating facility. PPL has operational facilities. This project is currently under construction and will include two 38 MW combustion turbines. Under the terms of these controlof this prqiect.

agreements, FMPA has a 39% undivided ownership interest and the KUA has a 12.2% undivided ownership interest. The The Commission also has a Participation Agreement with the City of Lakeland, Florida dated April 4,1978. Um'er the te'm> of this Commission, which has retained a 48.8% undivided ownership Agreement the Commission has a 40% (135 mi. MW) undivided interest, has control of this project.

ownership interest in a 338 net MW refuse and coal-fired steam generating unit (McIntosh Unit No. 3) owned by the City of Below is a summary of the Commission's proportionate share of Lakeland The City of Lakeland has operational control of this each jointly owned plant. SEC 1 and the la fian River Plant Combustion Turbine Project include the cost of common and prt> Ject.

external facilitles. The et her plants do not, but the participants pay Since 1975, the Commission has owned a i.6015% (13 net MW) user charges to the operating entity. According t o the participation undivided ownership interest in Florida Power Corporation's 825 agreements, each participant must provide its own Gnancing and net MW nuclear powered electric generating plant designated each participant's shale of expenses for the operations of the Crystal River Unit Fo. 3. This ownership interest was acquired plants are included in the corresponding operating expenses of its under the terms of a single Participation Agreement with Florida own income statement. Allowance for depreciation and Power Corporation and ten Florida utilities. Florida Power amortization on utility plant in service is determined by each Corporation has operational control of this project.

participant based on their depreciation methods and rat es relatieg to their share of the plant.

Plants Stanton Indian River Energy Combustion St. Lucie McIntosh Crystal River Center Turbines Unit No.2 Unit No. 3 Unit No. 3 Unit No.1 A and B Utility pint m service

. $101,359,877

$95,190,984

$12,130,215

$401.707,262 Allowance for depreciation and amortization 21,222,643 18,643,846 5,762,986 12,931,749 Construction work in progress.

1,235,748 4,694,117

$6,065,009 Commission's net share.

80,137,234 76.547,138 7,608.977 393,469,630 6,065,009 It has been determined that none of the participation agreements bustion Turbines Project are controlled by the Commission. Fiscal to which the Commission is a party meet the criteria of a joint ven-and budgetary control of SEC 1 and the Project remains with the ture as specified by the NCG A Statement 7. The Commission lacks Commission. No separate governing authority exists for any of the operational control over the St. Lucie Unit No. 2, Crystal River Unit participation plants.

No.3 and McIntosh Unit No. 3 plants SEC 1 and Indian River Com-31

{

1

The Commission also has an agreement with Orange County, Flor-NOTE H ida to share approximately 50% of the cost of a waste water treat.

ment facility at the SEC 1 site. The Commission operates the I

Deferred compensation Plan j

facility. Effective July 1,1988, the County pays a $495,000 annual fee for the operation and maintenance of the facility. The fee is sub-The Commission offers its employees a deferred compensation ject to annual renegotiation and is classified as a reduction to SEC plan created in accordance with Internal Revenue Code Section 1 operating expenses.

457. The plan, available to all Commission employees, permits employees to contribute 25% of theirbase salary exclusive of total I

NOTE G pension contributions up to $7,500 per year. Assets and liabilities of the plan are recorded at market. The deferred compensation is not Electric Supply Agreements avai able to eniployees until tennination, retirement, *aut or unforeseeable emergency.

Capacity Commitment:In 1985 the Commission entered into an agreement with the Florida Municipal Power Agency (FMPA) to Allam unts fe mpensationdeferred undertheplan,allproperty provide FMPA with a total of 130 MW of the Conunission's 045 MW and rights purchased with those amounts, and all income generating capacity of the Indian River plant on a take or pay basis.

attributable to those amounts, are (until paid or made available to Payment to the Commission is based upon a 21.65% share of the the employee or other beneficiary) solely the property and right of cost of operation of this oiPgas fired plant. The contract's initial the Conunission (without being restricted to the provisions of ben-term began during 1986 and extends to 2001. FMPA has an option efits under the plan). subject only to the claims of the Commission's to renew the contract for an additional five years.

general creditors. Participants' rights under the plan are equal to those of general creditors of the Commission in an amount equal to Maintenance Exchange Service: An agreement between the the fair market value of the deferred account for each participant.

Commission and the Seminole Electric Cooperative,Inc. t' Semi-nole), effective January 1,1988. provides for energy to be supplied It is the opinion of the Commission's legal counsel that the Commis-during planned or forced outages at certain of the participants, sion has no liability for losses under the plan but does have the duty electric gene. ating plants, subject to proper notification and f due care that would be required of an ordinary prudent investor, schedule of enet gy needed from the supplying party. The agree-The Commission believes that it is unlikely that it will use the assets ment's initial t err i is five years, automatically ex tended for succes.

t s tisfy the claims of general creditors in the future.

sive one year perQds unless cancelled with one year's notice by the The asset and liability of the Deferred Compensation Plan pre-Commission a Seminole. Ilowever, the initial term may be can-ented in the 1987 financial statements have been restated to celled by either party upon ninety days notice at any time between reflect market value. The restatement had no effect on net income.

January 1,1989 and December 31,1989. Transactions under this agreement are recorded as inwrchange sales or purchased power.

NOTEl Florida MunicipalPowerPool:In May 1988,an agreement was entered into between the Conunission, the City of lakeland, Flor-Payments to the City of Orlando ida,and the Florida Municipal Power Agency's All-Requirements Project to cooperate in the interconnected operation of the respec-and Orange County tive electric supply syst ems, so as to obtain the fullest advantage of Two types of payments are made to the General Pund of the City of each systems' generating resources.

Orlando. One payment is based on six percent of gross retail elec-A management committee consisting of a representative from each tric and water bilhngs to cus'omers within the City.This payment is organization supervises the operation of this Pool. The Commis.

classified as an operating expense. The other payment is based sion operates the dispatching service and administers the Pool.

upon 50% of a rolling five year average ofincome, with some exclu-Production cost savings due to the operation of the Pool are si ns, before deduction for the payment and is not considered an accounted for and allocated to each organization by individual pool expense for rate making purposes.

participation.

Payments are made to Orange County based on one percent of The term of the agreement is for one year, to be automatically gross retail electric billings within the Coumy but outside the city renewed from year to year until tenninated by the consent of all

} unit s of the City of Orlando. This payment is classified as an operat-participants; however, any one participant may withdraw at any ing expense.

time upon one year's written notice.

All payments are made pursuant to a policy established by the Commission.

32

1 i

I 3

o

b. Interest credited on employee contributions was NOTE J nereased from 5% to the assumc d valuation rate (cur-rently 71/2%)

C:mmitments and

c. Upon being hired employees are required to contribute C ntm. gentLiabilities 4% of their regular time earnings. Prior to April 1,1988

1. Claims have been received from various contractors relating to employees were required to contribute 4% of their regular the construction of SEC 1. It is anticipated that thew claims will time ( arnings after one year of service.

be settled by negotiation and will not result in a significant The plan year was changed during 1987 from the year beginning increase to the cost of SEC 1.

September 1 to the year beginning October 1. For the short plan

2. The Conunissioc and the other participants h bEC 1 have a coal year September 1,1987 to September 30,1987, the required supply contract w'th a 10 year primary term that began on July employer contribution was $208,536.

1,1987 with the option of two successive five year terms. The The Commission's contribution is determined using the actuarial contract covers all of the coal requirements of SEC 1 during the cost method. Pension expense for the fiscal years 1988 and 1987 first five years of the contract. During the second five years, the was $2,394,321 and $2.066,525, respectively, which includes contract covers at least 600,000 tons per year with an option to normal costs plus amortization of past service costs,if any, over a j

purchase 100% of the coal requirements. The usage is estimated period of approximately 30 years.The assumed rate of return used at 8,250,000 to 12,000,000 tons over the ten year contract n determining the actuarial present vcue of accumulated plan period.

benefits was 71/2%.

3. The Commission and the other participants in SEC 1 have also The pension benefit obligation presented as the actuarial present agreed to a twelve year contract for rail delivery of the unit's coal value of accumulated plan benefits is a standard measure of the purchases.

present value of pension benefits, adjusted for the effects of

4. In 1969, the Comr.vission pledged $480,000 of its annual rev.

projected salary increases and any step-rate benefits, estimated to enues in connection with the issuance by the City of Orlando of be payable in the future as a result of employee service to date.

$5,500,000 Improvement Revenue Bonds. This pledge is for a Plan data as of October 1,1987 (latest actuanal valuation) as period of 22 years from the date ofissuance by the City of the developed by consulting actuaries is as follows:

Improvement Revenue Bonds or such longer period as shall be required to pay and retire all principal and interest on such Actuarial present value of accumulated plan benefits:

bonds. This lien on the Commission's revenues isjunior and sub.

Vested:

ordinate to the lien of holders of any obligations of the Commis" Retirees and beneficiaries currently sion outstanding or pari passu obligations hereinafter issued for receiving benefits, terminated & disabled purposes of the Conunission, but shall be prior and superior to employees not yet receiving benefits.

. $18,340,778 any lien, pledge or encumbrance hereafter made of such rev' Current employees:

enues for any purposes other than said obligations of the Com' Accumulated employee contributions.

.7,946,073 mission for water or electric purposes.

Employer-financed.

32,365,888

5. The Conunission has been named in a number oflawsuits claim-Non Vested:

ing discrimination or wrongful discharge by former employees.

Management and legal counsel consider these lawsuits to be Employer financed.

2,064,423 without merit and will not result in a material liability.

$60,717,162

6. There are a number of bodily injury cases pending in which the The actuarial value and types of plan assets follows:

Conumssmn is named as a defendant. It is believed that any pos-sible recoveries by the plaintiffs will be adequately covered by Guaranteed Accumulation Fund

$42,675,946 insurance and the Commission's self insurance fund.

Short-Term Account Pooled Fund No. 5 2,926,510 Equity income Fund, Pooled Account No. 6 13,443,489 NOTE M D versified Equity Fund,"ooled Account No.10A 7,725,256 Pension Plan Spwial Equity Fund, Pooled Amunt Na 10B 3,97U23

.$70,741,724 The Orlando Utllities Commission has a single employer defined benefit pension phm covering substantially all employees. During 1988,the Plan was modified as follows:

a. Participation begins on date of hire for employees hired after April 1,1988 and includes all full-time employees.

33 i

L

i l

I NoteK-Pension Plan continued Contribution and payroll information for the year ended NOTE M September 30,1988 follows:

adOn Contributions:

Employer

$ 2,394,321 According to existinglaws of the State of Florida, the five members i

Employee 862,884 of the Orlando Utilities Commission act as the regulatory authority

$ 3,257,205 for the establishment of electric and water rates.The Florida Pub-lic Service Cammission (PPSC) has authority to regulate the elec-t ric " rate structures" of municipal utilities in Fiorida. It is believed j

Total payroll

$31,614,144 that " rate structures" are clearly distinguishable from the total i

amount of revenues which a particular utility may receive from rates, and that distinction has thus far been carefully made by the Covered payroll

$28,043,415 FPSC.

Prior to implementation of any rate change, the Conunission files Contributions as a percent of covered payroll 11.6 %

t he proposed tariff with the Florida Public Service Conunission and has established the prereqmsite of a Public Notice and the holding of a Public Hearing.

Trend information for the preceeding three years follows:

Florida Public Service Commission: As noted aboro, the Net Assets FPSC has jurisdiction to regulate electric " rate struct ures" of Available for Contribu~

municipal utilities. In addition, the Florida Elect ric Power Plant Sit-Benefits as a tions as a ing Act has given the FPSC exclusive authority to approve the con-Percentage of Unfunded Percentage struction of new power plants. The FPSC also exercises Year Ended Pension Benefit Pension Benefit of Covered jurisdiction under the National Energy and the Florida Energy Effi September 30 Obligation Obligation Payroll _

ciency and Conservation Acts as related to electric use conserva-1987 116.5 %

13.9 %

tion programs and prescribes conformance to the Federal Energy j

1986 170.6 14.2 Regulatory Commission's Uniform System of Accounts.

1985 138.7 19.4 Environmental and Other Regulations: Operations of the Required supplemental historical information is present Conunission are subject to emironmental regulation by Federal, l

immediately following the notes to financial statements.

State and local authorities and to zoning regulations by local authorities. Federal and State standards and procedures that gov-Un mn en mnM can 6 ne m 6angs can NOTE L arise from continuing legislative, regulatory, and judicial action Post Employment "SI"""g aw standards and pm&dums. WmfomJhem is no assurance that the electric and water plants in operation, under 1

IIealth Care Benefits construction, or contemplated will always remain subject to the regulations currently in effect, or will always be in compliance with The Commission provides certain health care benefits and life future regulations.

insurance for retired employees. Substantially all employees may become eligible for those benefits if they reach normal retirement An inability to comply with environmental standards or hadlines age while working for the Commission. The cost of retirees health could result in reduced operating levels or completc shutdown of care and life insurance for the year ended September 30,1988 was individual electric generating units or wat er plant facilities not in

$437,757.

compliance. Furthermore, compliance with environmental stan-dards or deadlines may substantially increase capital and operating costs.

Eff MSC Business Segments The Commission operates in two business segments - the genera-tion, transmission and distribution of electricity and the produc-tion. treatment, and distribution of water.

34

1 i

./

1 l

A sununary of the segment information follows:

Electric Water Total YearEnded September 30,1988:

Operating revenues.

$ 228,193,720

$16,333,159

. $244,516,879 Depreciation and amortization.

24,1M,239 2,230,'.'71 26,415,010 i

Operating income..

58,047,611 ~

4,109,773 62,157E84 Payments to the City of Orlando General Fund

. 6,759,070 2,499,930

' 9,259,000 Netincome 4,769,500 1,709,334 6,478,834 Contributed capital 14,574,237 35,580,682 50,154,919 Net capitaladditions 59,305,294 8,879,417 68,184,711 Net working capital (deficiency)

(167,507,620) 2,894,526 (164,613,094)

Total assets.

1,096,543,047 99,350,003 1,195,899,050 Long term debt.

523,401,366 9,404,485 532,805,851 Total equity (accumulated retained earnings and contributed capital) 212,294,071 83,176,637 295,470,708 I

Year Ended September 30,1987:

Operating revenues

. $ 201,193,183

$16,639,306

$ 217,832,489 1

Depreciation and amortization.

17,366,915 1,981,366 19,348,281 Operating income..

59,597,175 5,836,340 65,433,515 4

Payments to the City of Orlando General Fund.

7,162,140 1,903,860 9,066,000 Net income 13,910,179 4,546,522 18,456,701-i Contributed capital 9,093,115 31,578,803 40,671,918 Net capitaladditions 102,185,903 10,356,744 112,542,646 Net working capital 37,947,207 1,514,452 39,461,659 Totalassets..

1,089,778,174 90,859,690 1,180,637,864 Long-term debt.

820,509,246 9,478,945 829,988,191 Total equity (accumulated retained earnings and contributed capital) 203,222,877 75,041,751 278,264,628 There were no sales to any single customer in excess of 10% of operating revenues for the fiscal years 1988 and 1987, NOTE O i

l Income Taxes it is the opinion of the Commission and its counsel, that the Orlando Utilities Commission is exempt from federal and state income taxes.

l l

4 I

35 a__

Pcnsi n Plan Supplementary Information (unaudited)

Orlando Utilities Commission

' September 30,1988 i

L This schedule presents pension benefit information for the last six years currently available. This schedule will expand to ten years as the information becomes available.

(6)

Unfunded/

y (4)

(Overfunded)

(1)

Unfunded/

Pension Net (Overfunded)

Obbgation as Year Assets (2)

(3)

Penmon (5) a percentage Ended Available Permion Percentage Benetit Annual of annual Septernber for Benefit Funded Obhgation Covered covered payroll I

30 Henefita Obligation (l y(2)

(2)-(l)

Payroll (4y(5) 1 1987(A)

$70.7

$60.7 116.5 %

$(10.0)

$27.0 (37.0%)

i 1986 42.5 24.9 170.6 (17.6) 19.7 (89.3) 1985 33.8 24.4 138.7 (9.4) 18.2 (51.6) 1984 28.9 22.1 130.7 (6.8) 17.0 (40.0) 1983 28.1 22.1 127.1 (6.0) 16.2 (37.0) 1982 23.4 19.5 114.8 (2.9) 14.7 (19.7)

Analysis of the dollar am6unts of net assets available for benefits,

,REPdRT OF INDEPENDENT AuDaToFfs pension benefit obligatbn, and unfunded pension benefit obhga-l tion in isolation can be misleading. Expressing the net assets avail-able for benefits as a percentage of the pension benefit obligation Orlando Utilities Conunission provides one indication of pension funding status on a going-con-Orlando, Florida cern basis. Analysis of this percentage over time indicates whether

. the system is becoming financially stronger or weaker. Generally, the greater this percentage, the stronger the pension plan. Trends We have audited the accompanying balance sheets of Orlando Ut11-in unfunded pension benefit obligation and annual covered payroll itles Commission as of September 30,1988 and 1987, and the are both affected by inflation. Expressing the unfunded pension related statements ofincome and accumulated retaining carnings, benefit obligation as a percentage of annual covered payroll and changes in financial position for the years then ended. These approximately adjusts for the effects of inflation and aids analysis financial statements are the responsibility of the Commission's of the Commission's progress made in accumulating sufficient management. Our responsibility is to express an opinion on these assets to pay benefits when due. Generally, the smaller this per-financial statements based on our audits.

centage, the stronger the pension plan.

We conducted our audits in accordance with generally accepted (A) The pension benefit obligation was valued by the actuary auditing standards.Those standards require that we plan and per.

(Hewitt Associates) as prescribed by the Governmental form the audit to obtain reasonable assurance about whether the Accounting Standards Board Statement 5 and 6 in 1987. This financial statements are free of material misstatement. An audit method differs from prior years in that projected benefits are includes examining, on a test basis, evidence supporting the allocated on a level basis to employee's years of service. This amounts and disclosures in the financial statements. An audit also resulted in a 39.2% increase. Contract amendments increased includes assessing the accounting principles used and significant j

the pension benefit obligation by 68.8% and net assets avail-estimates made by management, as well as evaluating the overall able for benefits by 44.3%

. financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.

In our opinion, the financial statements referred to above present fairly,in all material respects, tre financial position of Orlando Utilities Commission at Septemt er 30,1988 and 1987, and the results of its operations and chang ;s in its financial position for the years then ended in conformity with generally accepted account-ing principles.

fSs e 71lb.-.

Orlando, Florida December 20,1988 36

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"A Little Gift" There was a tirnein days gone by Solcing pmblems one by one,

\\\\' hen it th rilled the hea rts qfall,

\\\\'e look them allin stride, its sparkling lights, the ememld darne To us this pmject meant so m uch, its cascading waterfall.

Ourlabors spent with pride.

Risingfman the waterline Like an island on its own, This night thefinal test would come, it was clear to see, it askedfor help, flut not without a hitch, llow tired it had gnnen.

\\\\'e suffered thmugh one more delay,

)* cars qffaithful service ik' fore we'd turn the switch flad worn it dou n with age, Then like a vision bi:fon> our eyes, it was time to start it over, Ourjears replaced with awe, it was time to turn the page.

The crou'ds that gathered with us

\\\\'ere touched by what they saw.

So we made uurpla ns and saw ourgoal Gathering tools and might, Once again itjetmps to life We envisioned it withiri our miuds, To Iight our evening sky, A NElf'fouutain was i sight Ercited waters bubbling down, For months we gathered oursupplies,

\\\\'ater canons shooting hinh The pipes went everyu here, l'alves and switches, pu mps and gauges, A long time in the making, installed with surgeons care.

Just to give our park a lift, A1iles and miles qfwerinn.

To Orla nda "The City lleautiful" Pulled and cut by hand, From OUC. "A littlegift".

Connect it all together, and check it strand by stra nd.

OUC Employee

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