ML20247J847
| ML20247J847 | |
| Person / Time | |
|---|---|
| Site: | Wolf Creek  |
| Issue date: | 03/30/1989 |
| From: | Withers B WOLF CREEK NUCLEAR OPERATING CORP. |
| To: | NRC OFFICE OF INFORMATION RESOURCES MANAGEMENT (IRM) |
| Shared Package | |
| ML20247J852 | List: |
| References | |
| WM-89-0092, WM-89-92, NUDOCS 8904050105 | |
| Download: ML20247J847 (21) | |
Text
i W6JLF CREEK L
NUCLEAR OPERATING CORPORATION Bart D. Withers President and Chef Executhre Otheer t
March 30, 1989 WM 89-0092
-U. S. Nuclear Regulatory Commission ATTN: Document Control Desk Mail Station F1-137 Washington, D. C. 20555 Subj ect: Docket No. 50-482: Transmittal of 1988 Annual Financial Reports Gentlemen:
I Wolf Creek Nuclear Operating Corporation is transmitting one copy of each of the Kansas Cas and Electric Company 1988 Annual Report, Kansas Electric Power Cooperative, Inc.
1987 and 1988 Audited Financial Statements, and j
Kansas City Power and Light Company 1988 Annual Report. This information is l
being submitted in accordance with 10 CFR 50.71(b).
If you have any questions, please contact me or Mr. O. L. Maynard of my staff.
Very truly yours,
m =
Bart D. Withers President and l
Chief Executive Officer l
BDW/j ad l
Attachments I
cc:
B. L. Bartlett (NRC), w/a E. J. Holler (NRC), w/a R. D. Martin (NRC), w/a D. V. Pickett (NRC), w/a
[})8h 8904050105 890330._,
FaliR ADOCK05000,g P.O. Box 411 / Burlington, KS 66839 / Phone: (316) 364-8831 An Equal Opportunity Employer WFHC/ VET
}
t
Audited Financial Statements Kansas Electric Power Cooperative, Inc.
December 31,1988 EW Ernst &Whinney
Audited Financial Statements KANSAS ELECTRIC POWER COOPERATIVE, INC.
December 31, 1988 Report of Independent Auditors.
1 Balance Sheets.
2 Statements of Patronage Capital (Deficit) and Other Equities.
4 Ftatements of Operations.
5 Statements of Cash Flows.
6 Notes to Financial Statements.
8 l
l
EulErnst&Whinney
= 0 o oe xamsas c ay eiace 1200 Main Street Kansas City, Missouri 64105 816/474-8050 l
REPORT OF INDEPENDENT AUDITORS Board of Trustees Kansas Electric Power Cooperative, Inc.
Topeka, Kansas We have audited the accompanying balance sheets of Kansas Electric Power l
Cooperative, Inc. (KEPCo) as of December 31, 1988 and 1987, and the related statements of income, patronage capital (deficit), and cash flows for the years then ended. These financial statements are the responsibility of KEPCo's management. Our responsibility is to express an opinion on these financial statements based on our audits.
We conduded our audits in accordance with generally accepted auditing stands;ds. Those standards require that we plan and perform the audit to obtr.in reasonable assurance about whether the financial statements are f;ee of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.
The Company presents its financial statements in conformity with accounting practices prescribed by the Kansas Corporation Commission for rate making purposes, which vary from generally accepted accounting principles as described in Note A and discussed in Notes B, C and D.
The effect on the accompanying financial statements of the variances between such practices and generally accepted accounting principles are summarized in Note A.
In our opinion, except for the effect of the matters referred to in the preceding paragraph, the financial statements referred to above present fairly, in all material respects, the financial position of KEPCo et December 31, 1988 and 1987, and the results of its operations and its cash flows for the years then ended in conformity with generally accepted accounting principles.
Also, in our opinion the financial statements referred to above present fairly, in all material respects, the financial position of KEPCo at December 31, 1988 and 1987, and the results of its operations and its cash flows for the years then ended in conformity with accounting practices prescribed by the Kansas Corporation Commission.
Ae-at V Y Kansas City, Missouri February 27, 1989 _ - _ _ _ - _ _ _ - _ _ _.
BALANCE SHEETS KANSAS ELECTRIC POWER COOPERATIVE, INC.
December 31 1988 1987 ASSETS UTILITY PLANT-Notes B, C and E Electric plant in service
$195,323,702
$193,768,894 Construction work in progress 570.313 286.492 195,894,015 194,055,386 Less allowances for depreciation 13.495.555 11.186.323 182,398,460 182,869,063 Nuclear fuel, less accumulated amortization of $6,789,651 and
$5,229,248 at December 31, 1988 and 1987, respectively 2.876.892 2.466.662 185,275,352 185,335,725 CURRENT ASSETS Cash and short-term investments 11,866,259 3,556,672 National Rural Utilities Cooperative Finance Corp. patronage capital certificate 4,703 2,316,004 Accounts receivable f rom members 5,313,065 6,643,889 Receivable from power suppliers 4,730,000 Materials and supplies inventory 2,234,630 2,185,281 Other assets and prepaid expenses 735.689 637.062 20,154,346 20,068,908 OTHER ASSETS Investments in associated organizations 2,862,555 2,690,536 Deferred debits, less accumulated amortization of $840,998 and
$377,640 at December 31, 1988 and 1987, respectively--Note C 29,897,349 31,045,430 Unamortized bond issue costs 1,472,324 794,834 Bond fund reserve 3,957,556 3,969,000 l
l Decommissioning fund assets 378.970 255.109 38.568.754 38.754.902 1243.998.452
$244.159.542 ___- _ _ _ - _ _ _ _ _ - _ _ _ _ _
l December 31 1988 1987 LIABILITIES AND PATRONAGE CAPITAL PATRONAGE CAPITAL (DEFICIT)
AND OTHER EQUITIES Memberships 2,800 2,800 Patronage capital (deficit) unallocated (10,426,005)
(9,419,733)
Other equities 3.285.789 2.027.986 (7,137,416)
(7,388,947)
LONG-TERM DEBT, less current portion--
Note E 237,380,269 238,860,689 CURRENT LIABILITIES Accounts payable 5,377,283 5,851,112 5,029,000 Accounts payable to members Payroll and payroll related liabilities 43,359 27,630 Accrued property taxes 673,207 673,900 Accrued interest payable 3,221,351 230,857 Deferred retained refund--Note D 1,940,000 Current portion of long-term debt--Note E 1.4842h52 62H,122 12,739,657 12,432,691 OTHER NONCURRENT LIABILITIES Decommissioning liability 378,970 255,109 Other liabilities 636.972 1,015,942 255,109 COMMI1MENTS AND CONTINGENCIES--Notes C, F and I s243.998.452
$244.159.542 See notes to financial statements -____
STATEMENTS OF PATRONAGE CAPITAL (DEFICIT) AND OTHER EQUITIES KANSAC ELECTRIC POWER COOPERATIVE, INC.
l Patronage l
Capital Member-(Deficit)
Other
__ ships Unallocated Equities Total BALANCE AT JANUARY 1, 1987
$2,800
$ (7,534,162) $1,230,095
$(6,301,267) 1987 Net Margin (1.885.571) 797.891 (1.087.680)
(loss)
BALANCE AT DECEMBER 31, 1987 2,800 (9,419,733) 2,027,986 (7,388,947) 1988 Net Margin
__L1.006,222) 1.257.803 251.531 (loss)
BALANCE AT DECEMBER 31, 1988 s2.800 s(10.426.005) 13.285.789 s(7.137.416)
See notes to financial statements
_4_
STATEMENTS OF OPERATIONS KANSAS ELECTRIC POWER COOPERATIVE, INC.
Year Ended December 31 1988 1987 Operating revenue from member cooperatives
$67,303,597
$68,917,263 Operating expenses:
Power purchased 36,590,689 38,835,145 Nuclear fuel 1,987,293 1,921,626 Nuclear plant operations 2,755,642 2,426,389 Nuclear plant maintenance 1,860.032 1,643,295 Nuclear plant administrative and general 3,410,638 2,859,605 Administrative and general 1,949,053 1,729,249 Amortization of deferred debits 463,358 377,640 Depreciation 2,302,461 2,012,198 Interest 18.930.703 18.997.687 70.241dfi2
_ZL302.834 LOSS FROM OPERATIONS (2,946,272)
(1,885,571)
Other income (expense):
Interest income 1,257,803 797,891 Refund retained--Note D 1.940.000 3.197.803 797.891 NET MARGIN (LOSS) s 251.531 s(1.087.680)
See notes to financial statements
1 STATEMENTS OF CASH FLOWS KANSAS ELECTRIC POWER COOPERATIVE, INC.
Year Ended December 31 1988 1987 CASH FLOWS FROM OPERATIONS Net margin (loss) 251,531
$(1,087,680)
Adjustments to reconcile net margin (loss) to net cash provided by operating activities:
l Depreciation 2.302.461 2,012.198 l
Amortization of nuclear fuel 1,560,403 1,508,493 Amortization of deferred debits 463,358 377,640 Amortization of bond issue costs 55,798 29,041 Decrease in bond fund reserve 11,444 Increase in decommissioning fund assets (123,861)
(118,339)
Increase in decommissioning liability 123,861 118,339 Increase in deferred debits (178,812)
(957,887)
Decrease in investments in associated 2,232,897 organizations Depreciation charged to deferred debits 8,446 487,359 Decrease in patronage capital certificate (176,722)
Net change in current assets and liabilities:
National Rural Utilities Cooperative Finance Corp. patronage capital certificate 2,316,004 (174,945)
Accounts receivable from memberr 1.330,824 1,352,458 Receivable from power suppliers 4,730,000 Materials and supplies inventory (49.,349)
(95,672)
Other assets and prepaid expenses (98,627)
(324,677)
Accounts payable (528,256) 791,560 Accounts payable to members (5,029,000)
Payroll and payroll related liabilities 15,729 2,408 Accrued property taxes (693) 138,936 Accrued interest payable 2,990,494 86,968 Deferred retained refund
. 1.940,000 TOTAL ADJUSTMENTS 11.663.502 7.466.777 TOTAL PROVIDED FROM OPERATIONS 11,915,033 6,379,097 CASH FLOWS FROM INVESTING ACTIVITIES Additions to utility plant (932,734)
(2,067,313)
Additions to nuclear fuel (2.014.668)
(1.800.765)
TOTAL USED IN INVESTING ACTIVITIES (2,947,402)
(3,868,078) - _ _ _ _ _ _ - _ _ _ _ _ _ _ _ _ _ _ _
l STATEMENTS OF CASil Fi<0WS--CONT'D KANSAS ELECTRIC POWER COOPERATIVE, INC.
Year Ended December 31 1988 1987 l
CASil FLOWS FROM FINANCING ACTIVITIES l
Refinancing of long-term debt (62,487,163)
Proceeds from issuance of long-term debt 62,487,163 1,473,000 Repayment of long-term debt (616,155)
(691,958)
Increase in unamortized bond issue costs (733,288)
Increase in other liabilities 733,288 Payment of other liabilities (41.889)
TOTAL USED IN FINANCING ACTIVITIES (658.044) 781.042 INCREASE IN CASH AND S110RT-TERM INVESMENTS 8,309,587 3,292,061 Cash and short-term investments at beginning of year 3.556.672 264.611 CASil AND SIIORT-TERM INVESmENTS AT END OF YEAR
$ 11.866.259 1 3.556.672 See notes to financial statements
NOTES TO FINANCIAL STATEMENTS KANSAS ELECTRIC POWER COOPERATIVE, INC.
Dectmber 31, 1988 NOTE A-
SUMMARY
OF SIGNIFICANT ACCOUNTING POLICIES K:nsas Electric Power Cooperative, Inc. (KEPCo) maintains its accounting records in accordance with the Federal Energy Regulatory Commission's chart of accounts as Edopted by the Rural Electrification Administration (REA) and in accordance with accounting practices prescribed by the Kansas Corporation Commission (KCC).
Such practices vary from generally accepted accounting principles.
Th3 Financial Accounting Standards Board Statement of Financial Accounting Standards No. 92, " Regulated Enterprises--Accounting for Phase-in Plans (FASB No. 92), which is effective for 1988, requires that allowable costs deferred for future recovery for rate making purposes which do not meet specified criteria, be charged to expense.
Ths methods of depreciation for utility plant, as described in Note B, and the mathods of amortization of certain deferred debits, as described in Note C constitute phase-in plans which do not meet the requirements of FASB No. 92.
In addition, as described in Note D, the method of accounting for a refund of purchased power costs is not in accordance with generally accepted accounting principles. The effect of these departures on the accompanying financial statements is as follows:
(Amounts in Thousands) 1988 Utility Deferred Patronage Net Plant Deferred Retained Capital Margin Costs Debits
_ Refund _ (Deficit)
(Loss)
BALANCES PER FINANCIAL STATE-MENTS AT DECEMBER 31, 1988
$185,275
$ 29,897
$ 1,940
$ (7,137) $
252 Adjustments pursuant to FASB No. 92:
Wolf Creek Nuclear Plant (see Note B)
(8,694)
(8 694)
(4,539) 3 Disallowed costs (see Note C)
(1,263)
(1,263)
(1,263)
]
Utility plant costs (see Note C)
(1,848)
(1,848)
(1,848)
Revenue and expenses for the period September 3, 1985 through September 30, 1985 (see Note C)
(103)
(103)
(103)
Deferred retained refund (see Note D)
_II,2AD) 1.94Q 1.940 BALANCES AT DECEMBER 31, 1988 IN / ;CORDANCE WITH GENERALLY ACCEPTED ACCOUNTING PRINCIPLES
$176.581_
s 26.683 s
s(17.105) s (5.561)
NOTES TO FINANCIAL STATEMENTS-CONT'D KANSAS ELECTRIC POWER COOPERATIVE, INC.
NOTE A--
SUMMARY
OF SIGNIFICANT ACCOUNTING POLICIES--CONT'D (Amounts in Thousands)
Utility Patronage 1987 Plant Capital Net Costs (Deficit)
Loss-BALANCES PER FINANCIAL STATE-MENTS AT DECEMBER 31, 1987
$185,336
$ (7.389) $(1,088)
Excess of straight line depreciation over present worth depreciation for the Wolf Creek Nuclear Plant for the period ended December 31, 1987 (see Note B)
(4.155)
(4.155)
(4.155)
BALANCES AT DECEMBER 31, 1987 IN ACCORDANCE WITH GENERALLY ACCEPTED ACCOUNTING PRINCIPLES
$181.181 s(11.544) s(5.243)
The more significant accounting policies are described below.
H11111v Plant: Utility plant (see Note B) is stated at cost. Through January 31, 1987, the provision for depreciation for electric plant in service was computed on the straight-line method at a 3.44% annual composite rate. Effective February 1, 1987, the provision for depreciation is computed on a present worth (sinking fund) method which provides for increasing annual provisions over the next 26 years. The composite rates for the year ended December 31, 1988 and the eleven months ended December 31, 1987 were 1.1835% and 1.0846%, respectively.
The provision for depreciation of other componente of utility plant are as follows:
Transportation Equipment 25 to 33%
Of fice Furniture and Fixtures 10%
Leasehold Improvements 20%
Transmission Equ!pment 10%
I i
_9_
NOTES TO FINANCIAL SIATEMENTS--CONT'D KANSAS ELECTRIC POWER COOPERATIVE, INC.
(
NOTE A-SUtf1ARY OF SIGNIFICANT ACCOUNTING POLICIES--CONT'D 1
Depreciation for 1988 and 1987 amounted to $2,310,907 and $2,499,557, j
respectively, of which $2,302,461 and $2,012,198, respectively, was charged to depreciation expense with the remaining amount being charged to various deferred debits (see Hote C).
I Leases which meet the criteria of the Financial Accounting Standards i
Board (FASB) Statement No. 13 are accounted for as capital leases.
Amortization of equipment under capital leases is computed on the straight-line method over the lease period and is included in depreciation in the financial statements. Amortization expense for 1988 and 1987 amounted to $27,283. Rentals paid under operating leases are charged to operations as incurred.
N E lmar h : The cost of nuclear fuel, including a provision for the disposal of spent fuel, is being amortized to fuel expense based on core i
b urn-up.
The owners of the Wolf Creek Nuclear Plant have entered into a contract with the Department of Energy that provides for the permanent disposal of spent fuel.
InYeltments in Aasnciated Organizations:
Investments in associated organizations consist principally of patronage capital certificates and subordinated term certificates of the National Rural Utilities Cooperative Finance Corp. (NRUCFC). NRUCFC patronage capital certificates maturing within a year of the balance sheet date are reflected as a current asset.
Shor1-Ienn Investments: Short-term investments consist of NRUCFC commercial paper and are stated at cost which is approximately equal to market.
Enctlyable From Power Suopliers: Receivable from power suppliers consists of refunds from power suppliers for retroactive rate and fuel adjustments. A corresponding payable to member cooperatives is included in accounts payable to members.
Materials and Supplies _Jnventory: Materials and supplies inventory for the Wolf Creek Nuclear Plant (see Note B) is stated at average cost. )
NOTES TO FINANCIAL STATEMENTS-CONT'D KANSAS ELECTRIC POWER COOPERATIVE, INC.
NOTE A--
SUMMARY
OF SIGNIFICANT ACCOUNTING POLICIES--CONT'D Unamorligsd Bond Issue Costs: Unamortized bond issue costs related to the issuance of the floating / fixed rate pollution control revenue bonds and mortgage notes payable to the National Rural Utilities Cooperative Finance Corporation (see Note D) are being amortized over the estimated period the debt is expected to be outstanding.
l Decommissioning Fund Assets / Decommissioning _Liab.ility: KEPCo is responsible for a six percent share of the decommissioning costs for the Wolf Creek Nuclear Plant (see Note B).
KEPCo is currently collecting approximately $106,000 per year through rates to fund their share of this liability. At December 31, 1988 and 1987, $378,970 and $255,109, respectively, has been collected and is being segregated from KEPCo's general fund account.
Statement of Cash Flows:
In November 1987, the Financial Accounting Standards Board issued Statement No. 95, " Statement of Cash Flows."
KEPCo adopted the provisions of the Statement in its 1988 financial statements and restated the previously reported statement of changes in financial position for 1987.
Jannme_Iaxes:
In December 1987, the Financial Accounting Standards Board (FASB) issued FASb Statement No. 96, " Accounting for Income Taxes," which was later amended by FASB Statement No. 100, " Accounting for Income Taxes--Deferral of the Effective Date of FASB Staterent No. 96."
Companies are required to adopt the new method of accounting for income taxes no later than 1990. KEPCo has not adopted early application of the provisions of FASB Statement No. 96 and has not determined the effects that such adoption will have on its financial statements.
NOTE B-' WOLF CREEK NUCLEAR PLANT KEPCo owns six percent of the Wolf Creek Nuclear Plant, near Burlington, Kansas. The remainder is owned by the Kansas City Power and Light Company (KCPL) and Kansas Gas & Electric Company (KGE). KEPCo is entitled to a proportionate share of the demand and energy from Wolf
)
Creek which is used to supply a portion of KEPCo's members' require-ments. KEPCo is billed for 6% of the operations, maintenance, and administrative and general costs related to Wolf Creek.
The KCC d?clared Wolf Creek commercially operable on September 3, 1985.
KEPCo's total investment includes interest and administrative costs during construction, and first project developmental costs incurred prior to January 1, 1982..- _
NOTES TO FINANCIAL STATEMENTS-CONT'D KANSAS ELECTRIC POWER COOPERATIVE, INC.
NOTE B--WOLF CREEK NUCLEAR PLANT--CONT'D Effective February 1, 1987, the KCC issued an order to KEPCo to utilize a present worth (sinking fund) depreciation method which does not conform with generally accepted accounting principles and constitutes a phase-in plan under FASB No. 92.
If depreciation on electric plant in service was calculated using a method in accordance with generally accep'>d accounting principles, depreciation expense and KEPCo's loss itom operations would be increased by $4,539,460 and $4,154,568 for years ended December 31, 1988 and 1987, respectively.
In addition, utility plant and patronage capital (deficit) unallocated would be decreased by
$8,694,028 and $4,154,568 at December 31, 1988 and 1987, respectively.
NOTE C--DEFERRED DEBITS Reimbursable Construction Costs: Reimbursable construction costs amounting to $1,451,976 invoiced by KEPCo to KCPL and KGE along with related accumulated depreciation amounting to $70,429 were reclassified to deferred debits by management pursuant to a KCC rate order dated February 1, 1987 and were reflected as such in the 1987 balance sheet.
Depreciation and interests costs associated with the invoiced amounts are also included in deferred debits. During 1988, KEPCo and KGE reached an agreement whereby $786,191 in reimbursable construction costs previously invoiced to KGE were reclassified to utility plant.
Disallowed Coala: Effective October 1, 1985, the KCC issued a rate order relating to KEPCo's investment in Wolf Creek which disallowed $22,818,028 of KEPCo's investment in Wolf Creek. A subsequent rate order, effective February 1, 1987, allows KEPCo to recover these disallowed costs, as well as interest costs and property taxes related to the disallowed portion for the period f raa September 3,1985 through January 31, 1987, over a 27.736 year period starting February 1, 1987. Annual amortization of such corts under this order will increase over the recovery period.
The amortization method used constitutes a phase-in plan which does not meet the criteria of FASB No. 92 and accordingly, an additions 1 $1,262,983 should be charged to expense for 1988.
Utility Plant _Conia: Certain utility plant costs were not included in KEPCo's 1985 rate request because the KCC required KEPCo to file the rate request based on projected total utility plant costs. The February 1, 1987 rate order included these costs in KEPCo's rate prospectively.
However, no provicion was made in the rate order for recovery of the related depreciation, property taxes and interest costs for the period from September 3, 1985 through January 31, 1987. Accordingly, KEPCo included the related depreciation, property taxes and interest costs for the period from September 3, 1985 through January 31, 1987 in deferred debits in the accompanying balance sheets.
l L ________-
NOTES TO FINANCIAL STATEMENTS--CONT'D KANSAS ELECTRIC POWER COOPERATIVE, INC.
NOTE C--DEFERRED DEBITS--CONT'D Tha KCC issued a rate order dated February 11, 1988 which provided KEPCo with the option to recover these costs from savings achieved from the refinancing of a certain portion of KEPCo's long-term debt in 1988 or to include them in a future rate request. The Board of Trustees of KEPCo elected to recover the costs from future savings and, accordingly, will amortize these costs starting January 1,1988 over 26.82 years. Annual amortization will increase over the recovery period. The amortization method used constitutes a phase-in plan which does not meet the criteria of FASB No. 92 and accordingly, an additional
$1.847,567 should be charged to expense for 1988.
I Rerenue_and_Expenes for.the Perind_ September 3.1985 through Seplember 30. 1985:
e Although the Wolf Creek Nuclear Plant began commercial operations on September 3, 1985, the KCC ordered KEPCo to accumulate all revenues and expenses related to the operation of Wolf Creek for the period from September 3, 1985 through September 30, 1985 in a deferred dsbit. These net expenses amounted to $1,884,003 and are included in deferred debits in the accompanying balance sheets at December 31, 1988 and 1987. The KCC issued an order on February 1,1987 which will allow KEPCo to recover these costs over a ten-year period.
Annual amortization of such costs will increase over the recovery period. The amortization method used constitutes a phase-in plan which does not meet the criteria of FASB No. 92 and accordingly, an additional $102,860 should be charged to expense for 1988.
The following table summarizes the above described deferred debits as of December 31, 1988 and 1987 related activity for the years then ended:
Revenue and Expenses for the Period September 3, 1985 Reimbursable Utility through Construction Disallowed Plant September 30, Costs Costs Costs 1985 Other BALANCE AT JANUARY 1, 1987
$ 3,995,008
$1,490,046
$1,884,003
$ 3,352 l
Additions 186,461 276,686 381,288 113,452 (119,312)
Amortization (258,328)
Transfer from utility plant at net book value 1.381.547 21.711.227 BALANCE AT DECEMBER 31, 1987 1,568,008 25,724,593 1,871,334 1,764,691 116,804 I i
NOTES TO FINANCIAL STATEMENTS--CONT'D KANSAS ELECTRIC POWER COOPERATIVE, INC.
NOTE C--DEFERRED DEBITS-CONT'D Revenue and Expenses for the Period September 3, 1985 Reimbursable Utility through Construction Disallowed Plant September 30 Costs Costs Costs 1985 Other BALANCE AT DECEMBER 31, 1987 1,568,008 25,724,593 1,871,334 1,764,691 116,804 120,270 Additions 58,542 (300,662)
( 23, ','6 7 )
(138,929)
Amortization Transfer to utility plant at net book (77.344) value (786.191)
BALANCE AT DECEMBER 31, 1988 s 840.359 s25.423.931 s1.847.567 si.625.762 s159.730 NOTE D--DEFERRED RETAINED REFUND During 1988 KEPCo received a refund of purchased power costs attributable to retroactive rate and fuel adjustments. The KCC ordered KEPCo to retain $3,880,000 of the refund and to include it in operations equally in 1988 and 1989. Generally accepted accounting principles requires that the entire refund retained be included in operations in 1988.
If tha refund retained were recorded in accordance with generally accepted accounting principles, net margin for 1988 would be increased by $1,940,000.
In addition, deferred retained refund would be decreased and patronage capical (deficit) unallocated would be increased by $1,940,000 at December 31, 1988.
NOTE E--LONG TERM DEBT Long term debts consists of:
December 31 1988 1987 Mortgage notes payable to the Federal Financing Bank (FFB) at rates varying from 7.316% to 9.366%, payable in quarterly installments (interest only through 1988) through 2018.
Utility plant assets with a cost of
$174,041,730 are pledged as collateral.
$122,085,500
$162,900,000 NOTES TO FINANCIAL STATEMENTS--CONT'D KANSAS ELECTRIC POWER COOPERATIVE, INC.
December 31 1988 1987 Mortgage notes payable to the Federal Financing Bank at rates varying from 7.784% to 9.206%, principal and interest payable in quarterly instal-1ments through 2015. Utility plant assets with a cost of $174,041,730 are pledged as collateral.
11,047,769 32,829,225 Mortgage notes payable to the National Rural Utilities Cooperative Finance Corporation at a rate of 10.0281%
through December 1997 and 9.83%
thereafter, payable semi-annually, principal payments commencing in 2003 and continuing annually through 2017.
Utility plant assets with a cost of
$174,041,730 are pledged as collateral.
51,340,000 Mortgage notes payable to the National Rural Utilities Cooperative Finance Corporation at a rate of 9.5274%
through December 1997 and 9.33%
thereafter, payable semi-annually, principal payments commencing in 1989, and continuing annually through 2002.
Utility plant assets with a cost of
$174,041,730 are pledged as collateral.
11,075,000 Floating / fixed rate pollution control revenue bonds, City of Burlington, Kansas, Pooled Series 19850, variable interest rate, payable annually through 2015. Utility plant assets with a cost of $44,100,000 are pledged as collateral.
43,300,000 43,700,000 Capital lease obligation 16.457 51,434 238,864,726 239,480,881 Less current portion 1.484.457 620.192
$237.380.269
$238.860.689 w__-__-___
l NOTES TO FINANCIAL STATEMENTS--CONT'D KANSAS ELECTRIC POWER COOPERATIVE, INC.
NOTE E-LONG-TERM DEBT--CONT'D Aggregate maturities of mortgage notes payable to the Federal Financing Bank and National Rural Utilities Cooperative Finance Corporation and floating / fixed rate pollution control bonds as of December 31, 1988 are as follows:
Xsar Amount 1989
$ 1,468,000 1990 1,689,000 i
1991 2,559,000 1992 2,770,000 1993 3,166,000 Thereafter to 2015 227.196.269 l
$238.848.269 At December 31, 1988, KEPCo has approved FFB loans guaranteed by REA with balances of $133,133,269. KEPCo has the option on $5,757,000 of the outstanding amount in FFB mortgage notes to elect a short-term maturity j
date of two years, continuing for the remaining term of the loan, or may elect a long-term maturity date of December 31, 2017. On each maturity of a short-term advance, KEPCo may refinance the advance with another short-term advance with a maturity date of two years or may elect to i
I refinance with a long-term maturity date of December 31, 2017. At December 31, 198E, KEPCo had $5,757,000 with short-term maturity dates between January 1, 1989 and December 31, 1989.
During 1988, KEI o refinanced $62,487,163 in mortgage notes payable to the FFB with $62 487,163 in mortgage notes payable to the National Rural Utilities Cooperative Finance Corporation. No gain or loss resulted from the refinancing.
During 1988 and 1987, interest incurred totaled approxir.Ately $18,898,000 and $19,356,000, respectively, of which $18,841,600 and $18,997,687 respectively, was charged to interest expense and the remaining amount was charged to various deferred debits (see Note C).
$15,816,036 and
$18,968,816 of interest expense was paid in 1988 and 1987, respectively.
Additionally, $2,615,180 of interest accrued in 1988 was paid on January 3, 1989.
1 - _ - - ___-_ _ ___
NOTES TO FINANCIAL STATEMENTS-CONT'D KANSAS ELECTRIC POWER COOPERATIVE, INC.
NOTE F--0PERATING LEASE KEPCo leases of fice space under a non-cancellable operating lease. The related rental expense for 1988 and 1987 was $62,300 and $61,250, respectively.
Future minimum lease payments'for space currently leased at December 31, 1988 are as follows:
Itar Amount 1989
$65,448 1990 65,448 1991 65,448 1992 65,448 1993 65,448 The minimum lease payments can be increased to the extent that taxes and insurance paid by the lessor exceed 1988 levels.
NOTE G-PENSION PLAN KEPCo participates in the National Rural Electric Cooperative Association (NRECA) retirement and security program for its employees. All employees of members of NRECA are eligible to participate in the program. KEPCo makes annual contributions to the plan equal to the amounts accrued for pension costs.
In the master multiemployer plan which is available to all members of NRECA, ' te accumulated benefits and plan assets are not determined or allocatra by individual employee. KEPCo had no pension expense for the plan for the year ended December 31, 1988. KEPCo's pension cost for the plan for the year ended December 31, 1987 was
$16,082.
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NOTES TO FINANCIAL STATEMENTS--CONT'D KANSAS ELECTRIC POWER COOPERATIVE, INC.
NOTE H-INCOME TAXES At December 31, 1988, KEPCo had net operating loss carryforwards totalling approximately $70,088,000 available to reduce future taxable income and investment tax credit carryforwards of $7,735,089 as follows:
Net operating Investment l
Available loss tax credit Through carryforward narrvforward 1996
$ 7,055,000 1997 12,410,000 203 1998 17,124,000 896 1999 21,467,000 1,210 2000 4.443,000 7,732,780 201 3,418,000 2002 4.155.000
$70.072.000
$7.735.089 The difference between the net operating loss shown in the accompanying financial statements and the net operating losses for tax purposes in 1988 and 1987 is due primarily to operating expenses deferred for financial statement purposes (see Note C) and expensed for tax purposes and timing differences related to depreciation expense.
NOTE I--CONTINGENCIES In connection with the purchase of KEPCo's six percent interest in Wolf Creek, KGE and KCPL have filed lawsuits against KEPCo for approximately
$3,700,000 of KEPCo's capital credits from CFC.
KEPCo's management believes there is no basis to the claims, however, should KGE and KCPL prevail, any amounts paid will be added to KEPCo's investment in Wolf Creek.
KEPCo is a defendant in various lawsuits which are in various stages of investigation and litigation.
In the opinion of manngement and KEPCo's legal counsel, these lawsuits are of doubtful merit and will be settled in KEPCo's favor.
Nuclear _Insuranne: The Price-Anderson Amendment to the Atomic Energy Act currently limits the public liability of all the owners of 113 nuclear reactors combined to $765 million for a single nuclear incident.. -..
NOTES TO FINANCIAL STATEMENTS--CONT'D KANSAS ELECTRIC POWER COOPERATIVE, INC.
NOTE I--CONTINGENCIES--CONT'D The Wolf Creek owners purchase the maximum available private insurance of I
$200 million and the balance is provided by an assessment plan mandated by the Nuclear Regulatory Commission. Under this plan, the Wolf Creek owners are jointly and severally subject to a retrospective call-in of l
approximately $63 million payable at $10 million a year. KEPCo's total share would be approximately $3.96 million. KEPCo's management is not aware of any claims which are covered by the provisions of the Price-Anderson Amendment.
The owners also carry the maximum amount of decontamination and property damage coverage available and the maximum amount of extra expense (or cost of replacement power) coverage available.
These policies also contain potential assessment provisions which could total $12.26 million in the event of an incident with an insured. KEPCo's share would be approximately $1.07 million; payable on a one time basis.
KEPCo's management is not aware of any assessments under the provisions of these policies.
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