ML20248E886
| ML20248E886 | |
| Person / Time | |
|---|---|
| Site: | Catawba  |
| Issue date: | 12/31/1988 |
| From: | Bobo J, Clay G NORTH CAROLINA MUNICIPAL POWER AGENCIES |
| To: | |
| Shared Package | |
| ML20248E878 | List: |
| References | |
| NUDOCS 8910060087 | |
| Download: ML20248E886 (29) | |
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[, 1988 Annual Report i; I k- North Carolina Municipal f' Power Agency
. Number One i.
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NCMPA1
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6910060069 890928 PDR ADOCK 05000413
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74 i,,L '#;;if[W M' ' gij Message from the Chairman 4d, Mg and General Manager 2 Q a ?~ X, . _ _ J NCMPA I Statistical liighlights 2
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77 Profile of Participants 4 Organization and Management 5
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h Board of Commissioners 6-7 Finance 8 Operations 9 Project Power Supply 10 Load Management i1 i All-Requirements Rates 12 \ .--__ - _ Management Staff / Consultants / Trustees / Paying Agents 12 l f Independent Auditor's Report 13 1 Financial Statements 14 _. -- . -27 I (4
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~ ~ ~ ~ = . -anwm.,. -m.....-..-sm...m-+.~ee m- s ww- *s.--~ men, Message From The Chairman And General Manager North Carolina uunicipairower Agency For whatever the reason, we are making step, these were momentous Number i (NCAfrA is was chartered in January conditioned to take note of our milestones milestones,indeed. And yet, when these 1976 under enabling legislation enacted by the in increments of five and ten. Traditionally, dates-and other important ten-year 1973 North Carolina General Assembly. It has 20 a tenth anniversary is a particularly special anniversaries-arrived for our power member municipalities,19 of which are time to pause, take stock and, frequently, ar,ency in 1988, we hardly noticed, if at all. q l panicipants in ajoint project involving a 75 to celebrate. Why? We were probablyjust too busy- 1 1
percent ownership interest in Unit 2 of catawba While preliminary activities can be too busy working to meet the latest j l l Nuclear station. constructed and operat<d by traced back at least to 1975, our power challenges to confront our power agency l DuAr rower company (t>uAc). agency officially came into being in 1978. andihe public power communities we since /nly 1,1933, AcAfrA 1 has been the A number of significant events took place serve. all-requirements power supplierfor its partici- that year, climaxing on November 16 with We were busy with a load management pants, whichformerly werr wholesale customers the sale of our first bond issue in the program that helped save participating of tauAc. Isoth AcupA i and the North corolina amount of $4(X) million, and culminating cities and towns more than $4 million. Eastern Municipal rower Agency are provided 13 days later when the power agency and We were busy with another bond issue, professional management staff and services by Duke Power Company closed on the again in the amount of $4(X) million, to Electricities of North Carolina, Inc. purchase of our ownership in the Catawba help achieve debt service savings totaling ] Nuclear Station. approximately $41 million by refunding q For the 19 local public power commu- outstanding bonds previously issued at nities in Piedmont and westem North higher interest rates. For our first decade as Carolina that took this bold, history- a whole, savings associated w ith refunding NCMPA1 statistical Highlights-
-1988 ' 1987' 1906- 1985 ' 1984 Kilomandoursales(thou and4 3,473,529 ' 3.358 447 ' 3.190.842 3.020,916 ; 2.894.769 fe4 Dillmg Demand (kilowaith) 723.078 ~ h66,802 653,210 610,358 597,979' i operating Revenues ,
$425,772.0(X) , $430,546JXXI - $334,907JXU ' $206,195JXX) ~ $110.003,000 (Deficiency)IIxcessof Revenues over Expemes $ . (6,034fXU) $ BJ97JX10 - $ 6.075fX0 . S.' 4,4'T7JXX) $ 2,399fX0 Sales to Duke (Revenues) ; $269,443JXX) $280.8103XU ' . 5194.986JXX) . . $ 83.175JX0 , 5'_ . 33/K10 l i I Average Monthly Power Purchases -
try Cites 4Wh ohnusamis) 289A61 ' 279.871 - 265,4(64 .- 251,743I- 241.231 I Average Momhly Bilhngs toCnies $ 13.02?JMXi' $ 12A78JXX) $ 11,410/XO - $ 10,252JXX) . 5 9.164,000 i 2
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activities, calculated over the life of the Our regional infonnational work-G bonds, totalled $84.6 million. shops-inspired by the need to confront a _. , We, collectively, were busy, too, putting new set of challenges-also ser ed to into place improvements to our local remind us ofjust w hat did happen back in i distribution systems adding up to more 1978.The people who forged those than $5(X),(KX)in ex[rcred first-year contracts and issued those first bonds were i > _ savings, projects made possible through motivated by the need to assure their cities MI our statewide System Betterment Program. and towns of a strong, reliable power Jasnes T. Bo/m, General Munarer, and l'oward the end of the year, many of us supply program; to reassume, collectively, George W. Clay. Jr. Chairenan . were busy attendm.g regional infonnational the control over their power supply that i' workshops, especially designed for kical they had relinquished to the private power elected officials. At these workshops, we companies; to halt the trend of rapidly addressed our biggest challenge-that of increasing wholesale power rates. dealing with changing costs brought about All of those things were accomplished; by a variety of circumstances ranging from all of those goals were reached. those the impact of Three Mile Island on the challenges met. An.1 big challenges they regulation of nuclear power plants to the were--as big as any we face today or can 1986 Federal Tax Refonn Act. expect to face tomotrow. We learned, in 1988, that each of us That's worth pausing to reflect upon-concemed u ith this vital public power and to celebrate. program must put forth a major effort in Hut just for a moment. We've got work 1989 and beyond if we are to continue to to do. I follow the bright, promising path laid for I i us a decade and more ago. 1 (Lyrth /d ' .E ! V l James T. Ilobo George W. Clay, Jr. General Manaecr Chairrnan I i { 1 I l ) 3 l )
i i. Profile of Participants NCMPA 1 participants are as diverse as is home to Henry Link and Young- phannaceutical laboratory, an artist tools products made in those cities and towns. Hinkle fumiture manufacturers. Each manufacturer and computer-related 1The 19 participants that receive their fall and spring, High Point is host to one companies. Monroe, for example, serves power from NCMPA 1 include customers of the world's largest fumiture markets, two chicken processing firms, Holly Fanns in the textile and fumiture industries for attracting nearly 50.0(K) wholesale and and Cuddy Farms. which Piedmont North Carolina is well retail buyers. Statesville, an NCMPA 1 participant,is known. Local dairies, bakeries, restaurants North Carolina's oldest municipal power I Izod Lacoste sportswear is manufac- and gmcery stores are served by system, celebrating its 100th year of i
- tured in High Point, sweaters in Cher- participant systems. A Pepsi plant in service in 1989. ,
l ryville, and hosiery in Drexel. In addition, Granite Falls and a Coca-Cola facility in NCMPA 1 serves more than 280,000 there are numerous other textile-related Morganton further illustrate the partici- people in the state's Piedmont region, an i indusnies in panicipant cities and towns. pants' diversity. area bounded on the west by the Blue Fumiture manufacturers are large Power agency cities and towm also Ridge mountains, and on the east by the customers of several participants. Maiden have a variety ofindustries that contrib - Coastal Plains. Participants range in size ! serves an Ethan Allen plant, and Lexington ute to the hical economy, including a from Bostic, with 475 people, to High Point, with a population of 63,000.
> , < Revenue generated from electric sales i
totaled more than $217 million for the fiscal year ending June 30,1988, an ! increase from the nearly $202 million the
. a r:ord""'sYe"$,#ammas
. . eHgh Point
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cj< , l Bostice eLincointonecornehus ' . i
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e Pneville. 'e%nm,;?n'"'8 I
- . eMoinoe casa 64" H City Customers . Sales 'j
' 9,9hD 515,189,232 C,i. - Albemarle Bustic. 160 107,0h2 cherryville 2,300. 3,517,147
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Cornehus . 938 f f)20,tXX) , Drexel 1,050 IJm807 !
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Gastonia ' 21.876 33,872JW2 Gnnite Falls - 1,597 2A01,926 i y thgh hiini- 29,483 913 .. 46,621,135 1A03,854 lluntersville .. Landis 2.40h ., 2,338.762' j lexinguin .. 15A67 24,590,348 1.incolnton - 2 A82 .. 3,(M898 , 912 -2,650.526 N1aiden l Monne . 7.840 20,989,320 ; Morgarnon .. 7,114 .- 14,917,772 Newum- 3.9H7 .- 7,757,523 j hneville . l.650 . 1.924.439 Shelby 7A99 -- 11,256,583 Statesville lljl0K 23fl25,976 ) 8 217,655,352 ; 128.642 I i j i
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. Organization And-Management-The 19poweragency participants ElectriCities of N.C., Inc., a non-profit from Catawba Nuclear Power Plant I have control over their power supply . service organization based in Raleigh. owners a portion of the $700 million the L . .
L l , through NCMIM l's Board of Commis. provides management staff and services to utility invested in the abandoned Cherokee 1
- sioners. Each participant appoints a NCMPA 1.The staff carries out the and Perkins projects.
p . representative to sent on the board. The . agency's daily operations, which include Power agency participants saved more h board of commissioners is irsponsible for ' financing and accounting, billing, planning than $4 million in demand charges during making decisions that agcci the partici- and budgeting op rations, it also provides 1988 through the agency's load manage-l1 pants, including rates, bondfinancing, participants with load management, retail ment program. r andpower supply. rate assistance, and other services. In in March, the North Carolina Local addition, it cic,sely monitors Duke's - Govemment Commission sold an issue of performance with regard to the utility's $401,482,000 in tax-exempt electric fulfmment of obligations in the project. revenue bonds on behalf of NCMPA 1. The sale allowed for refunding of Agency highlights for 1988 are: l_ $334,155,0(X1 in outstanding bonds that The power agency moved into its new . , were previously issued at higher interest I- building in May. The building is jointly-rates. As a result of the refunding, the owned by NCMPA I and North Carolina . . . agency will realize reductions m the cost Eastern Municipal Power Agency. Situated of debt service totaling approximately $41 on approximately 4.6 acres in Raleigh's . million or about $23.1 million in present .. - Highwoods Office Park, the facility has l value savings. The lower debt service will about 48.000 square feet of office space. .. be reflected in the electncity rates charged in January 1989, the District of Colum-by the power agency to its 19 participant bia Court of Appeals rejected Duke's .. . mumcipah. . ties in future years. appeal of a Federal Energy Regulatory - In November, the power agency began Commission (FERC) decision to prevent . . conductmg regionalinformational the utility from charging the power agency workshops for elected officials. The for portions of costs associated with the . history of national, state, and local pubh.c cancellation of Duke's Cherokee and . . . power, cost projections, and cost-savmg Perkins nuclear projects. One year earlier, . projects were covered in the workshops, in January 1988. Duke announced plans to attended by more than 350 elected and appeal the decision and filed a notice of .. mumcipal officials. intent to appeal the order with a federal i t appeals court in Washington, D.C. As a result of the decision, Duke cannot recover r 5
Board of Commissioners
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-{ f Row 1 (Left to Right)- Georg W. Clay, Jr., Chairman: A. W. Iluffnuut. Jr., ric e Chairman: R. Duke Whisenant.Sec retary-Ticamrer. Morris Baker, Etecutive Commuter Rou 2 - Gary D. Hicks. Execrtin e Comnutter: J. E. IknLet. L.tecutive Committee; Arthur E. Peterson. Lxec uture Conunince; David E. Exwe. Eterature Commitee Row 3 - Ruth K. Stenhouse; Klynt Ripple; Marcus C. Midyctt; Robert it. Gage Row 4 - Jack F. Nect; Janice llovis; Roy B. Culler, Jr.; Mary Ann Creech 6
_ ~ . _ - . . . ~ . _ _ _ _ _ _ . . . _ _ _ _ _ _ . _ . lI I iBoard of'Commissisnersf 4 ,
-e ,
DJack F. Neel? : Morris Baker ! Bobby OJWood ~ Robert H. Gage .
. Asst. h,hlic Works Director L C,mn. II Member;.. Town Manager ' / CemacilMember :.
L,Allemarle :
'9'
/ , Drexel . ' .K l .-_ Landes -
' Morganton
. . , . . . .. e f H. Max Gunter : i Gary D. Hicks' ; >
,Klynt Ripple 1 . , . Richard L. French -
1 ' Ma.ww . '" , City Manager a Utilities commission Member . . City Manager
' Bastic _ \ Ga.nonia 7 Lesingrem Newtsm .
' : A. W.' Huffman, Jr.:.
- 5 Janice Hovis t , ', i David E. Lowe" George W Clay,Jr.
< City Manager : i Mayor L , '
- CityManager ,
Mawr-u Cherryvale .. ; Granite Falls ; ; Limwinton . l[Shelby ; iJames 12 DSrton" ;Roy B. Culler, Jr. . Marcus C. Midgett " Arthur E. Peterson
. Alderman ; '
- Council Memtwr : .: CouncilMember .
- Mayor .
i Concord ; ; Hiih h>unt % Maiden Statesville . . TNannie Potts i d , Ruth K.Stenhousel ' J. E. Hinkel L Mary Ann Creech Commissioner ~ ~ Commissioner . City Manager ; Town Adnunistrauw Ctwnelius , ' ; Huntersville Monroe , ' hnevolle 2' Alternate Commissioners Raymondi Allen.' Jack R. Clark . Stacey S. Foster'~ - Charles R. Yandell : Ctty Manager Commusioner . CeumcilMember : Town Administrator Albenuorte - ' Granise Falls - , Lexington . harville c ,f,*, M,,cSwainJr. ' Linda K. Story- iR. Duke Whisenant c : Stephen Royster . Allwmarle . ; Town Manager . . City Manager : _ Alderman
; GraniteIalls 9 - Lt.ungeon Sheloy ,
Wayne Sheppard ' g g,4,is Price CmmcilMember Jerry L. Campbell Smith D. Lingerfelt - O'^""' y,, y _ y,, y,,.truced Supermtendent
. thgh Point LirEvinton Shelby .
John E. McGinnis l Lloyd D. Shank.'Jr'.' .
- JeNrey S. McConnell- Peter T. Connet fh "I le ' ' Director of Mectric tstihties : Town Manager : _ CityManager High haint Maiden i Statesville David W. Bailey i ' Larry M. Cranford 1 George Royster, Jr.
Town Administrator . (,,,,,,,,,,,. l p,,,,,c, Don M,itchell g,,,,,,, y,,,,g, yg;yyy y;,,cyg, ; Cornehus . y,,,,,,,,y,, y,,, , _ Sgagmy;, ain l Steve D. Carpenter /l af] ' Carl D. llennessee . pri,x,; . 7 tun Manager , Director.Pubhc Utilities Huntersville _ Morganton Ro F. Caldwell, Jr. c, . W.C. Deadmon T. Jack Matthews ! Gastonia Direeuw opublic %jorks i.
' Director.habhc Usiinies (
Lambs .- y,wum . 1988 Officers Al-Large .. > Executive Committee Members f Chairman - George W. Clay Jr..' Mayor. Shell>y ' Vice Chairman
- A, W. Iluffman.Jr.. Mayor Granhe Falls :
b l Secretary-Treasurer - R. Duke Whisenant. City Manager. Le.tington Members-Al Large:-
- An of December n.1988. Morris Baker. Town Manager. Drexel
( ' A eny or town may ap;wns as man > hy R hh 00 mnager, Gastonia I an imo Ahemate Omnminiewrs. J. E. Ilinkel, City Manager, Monroc David E.1swe, City Manager. Lincolnlon Arthur E. Itterson Council Member. Statesville t 7
Finance
' The financing pmgram for NCMPA 1 was relatively quiet during 1988 with only / 563 " 8 one bond issue for refunding completed. Bonds Outstanding
- 12/31/88 Since the estimated funding needs for the 52A52.552200 project were completed in 1986, the ,
W 482 s389 145 % ' , proceeds of any future issues should be used to refund higher cost debt that may be - ,3 7, , 5202.96 outstanding in order to lower the agency's cost of capital. hhp' isiE N Q In March 1988, the agency took advan- , sa2.s y sasm i ! tage of declining interest rates to refund 9 78 un w81 m82 M83 M84 MBS M85A M858 M86 M86 approximately $334 million of bonds previously issued at higher interest rates. Bad 5=$
*m Maons of 000.us These bonds were refunded with proceeds of Series 1988, the amount of which was
$401,482JXKl and which had a true interest for bonds with semi. annual interest imponant credit enhancement not available cost of 7.97 percent. As a result of this payments which makes them available to in other states. This unique state txxly, a refunding, the agency will real~ze reduc- more investors. division of the Department of the State tions in debt service totaling approxi- As of December 31,1988. NCMPA 1 Treasurer,is involved in all phases of the mately $4I million, or $23.1 million in had outstanding $2,452.552JKX) with a agencies' debt financings, monitors the present value savings. These lower debt weighted average interest cost of 8.275 financial condition of the agencies and the service costs will be reflected in the percent. participants, and has statutory authority to electricity rates charged by the agency to Again,1988 proved to be a challenging require pow er agency-served cities to set its 19 participant municipalities in future year for portfolio imesting.The NCMPA 1 electric rates sufficient to meet their years, portfolio generated approxi:nately $55.6 obligations to the agency under the take-or-As a part of the refunding issue, million in investment income in 1988 pay contracts.
NCMPA 1 included an amount of zero- which was used primarily to off set power coulun bonds in response to a new costs to participants. For 1988, the portfolio 7 , w ;. q . ~ ~ approach in tax-exempt financing. These had an 8.60 percent rate of return and as of N[O - bmds are sold at a large discount at the December 31 the market value of the y time of issuance, but do not receive any investments in the various funds totaled %.y ' , interest or principal payments until the approximately $721.1 million with an average maturity of 2.63 years. txmd matures. For example, a $1JXX) zero-coupon bond due in 15 years was issued As always, the presence and involve- ,. by NCMPA 1 for $331.83. These tunds ment of the local Government Commis-
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are typically issued in smaller increments sion of North Carolina continues to provide than the standard $5JKX) principal amounts Nonh Carolina's two pm er agencies an 8
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l Operations NCwA i has a 73 perceni interest in 2i3 m egaw atts or payect pow ertro m securii) forthe agency s bond s
- Cataw ba Nuclear Station l' nit 2. which N1cGuire i show n atxn e L !{ach of the panicipams also signed a i
began conunercial operation on August 19 l'nder the agency 's contract w ith I) uke. Supplemental Power Sales Agreement 1986. The agency i ow ner ship interest in the utihty company built the Cataw ba with the agency by which the municipahty this project is approximately X60 mega- station and is responsible 1or its t'uelmg and agreed to purchase all ol its electric pow er w atts ot' capacity, operanon.1) uke also is contractually and energy f rom the agency, m er and l'nder two reliability euhange obligated to prmide NC %1PA I with alune NCNIPA l's ow nership entalement i agreements with 1) uke, the agency 's adtlinonal t supplemental power to meet and culuding any power and energy made 1 ow nership resources are ewelltlall) the needs ot !!s parthipant% asailable by the Siiutheastern Power distnbuted in equal amounts os er each of liach of the 19 participants executed a Adnumstranon i hl .PA l. the regional the four units of the Cataw ba and N1cGuire Project Power Sales Agreement with the marketing agent for federal hydroelectric nuclear stations agency. In these agreements. the munici. power. Those agreements are in the form Through the McGuire Reliabihty pahties agreed to pay for 100 percent of the of "take and-pay.' lischange. the agency w as able to beg;n cost of the agency 's payect. These are l'ull operanon on July 1.19N3 by recen mg "take-or-pay " agreements and f orm the 9
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Project Power Supply The four nuclear generating units from gf g g nye QGg gg.lg.aL which NCMPA 1 receives project power k . Y%kh d%j [ y[. ((I}t}?]r,{K]{?f;f{g a.s . . . . .
.j ~ ' 7 i / .' ' ' ; c. \
/ y%, J i Md, g# 7h are in commercial operation. They are: - ' :
, _ ,.3 McGuire Nuclear Station ;
i , j Units 1 and 2 ' ' '
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. g Lake Norman. rwrth of Chartone. '
l North Carolina , I Fuel Type
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i 5,gy, . MNDC ~ iiiY MWIUisil l140 MW(Una 2) Initial Operation
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iielember NYXI(Una ij~ . March lYM (Unit 2) l Unit Highlights Catawba Nuclear Station January 1,1988.This change has been Duke has reduced the McGuire units. Units 1 and 2 challenged, and negotiations are ongoing. maximum net dependable capacity from wher3 Catawba Unit I was available for Lale Wylie. Sourh Carohna (l7 miles 1 1180 megawatts to 1119 megawatts for southwest of Chartone, North Carnhna j service 80 percent of the time in 1988 and Unit 1, and to 1140 megawatts for Unit 2 Fuel Type had a capacity factor of 77 percent.
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effective January 1,1988. This change has Amtrar Cataw ba Unit i began its third refueling l been challenged, and negotiations are MNDC outage on November 24 and continued in I I12b MW (Unit iI this outage for the remainder of 1988. ongoing. jfyy uw ,v,u,2; McGuire Unit I was available for initial Operation Cataw ba Unit 2 began its first refueling service 77 percent of the time in 1988 and June 19x5 IUna /> outage December 24,1987. As a result of August 1986 (Unit 2) additional work requirements and testing, had a capacity factor of 74 percent. McGuire Unit I underwent a refueling the end of the outage was delayed from Unit Highlights outage w hich began on October 12 and was ebmary 23 unW Man'h R Because of Due Power Company decreased the still in this outage at the end of 1988. this delay, Unit 2 was available 72 percent i maximum net dependable capacity rating Unit 2 was available for service 82 of the time and had a capacity factor of 62 of each Catawba unit, from i145 mega-percent of the time in 1988 and had a gn'ent. watts to 1126 megawatts for Unit 1, and to capacity factor of 81 percent.The unit 1132 megawatts for unit 2 effective underwent a refueling outage which began on May 27 and ended on July 27. j i 1 i I I 10 i i
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Load Management 1 l I l Participants can have any combination forecasting for participants with more As participants continue to search for I ways to make their distribution systems of voltage control, municipal load shed- established load management programs. I more cost-effective, loud management ding, residential appliance control, and To realize cost savings through load L I' programs are gaining importance. peak shaving generation programs. Load management, participants must operate g In 1988, load management saved management also enables participants to their systems during the time of the participants more than $4 million in power offer customers innovative rate structures. combined system peak each month. The bills. Commercial and industrial customers may participants are assisted with this goal More participants than ever are have time-of-use rates, w hich encourage through the agency's monthly peak ) realizing savings because of their load through rate incentives reduced usage forecasting efforts. { management efforts. Of the 19 NCMPA 1 during normally times of high demand. Using state-of-the-art equipment, participants,17 have a load management Those customers with another source of agency staff notifies load management
- program. generation benefit from coincident peak participants of the predicted peak period. l 1
Load management is any program that rates. The less expensive generation is During 1988, agency analysts predicted 1i 1 reduces electrical requirements during used during periods of peak demand, of 12 monthly peaks, averaging 9.4 hours times of peak demand, usually during the reducing costs for both the customer and per month of recommended load manage-hottest or coldest weekday of the month, the participating municipality. ment. Ily minimizing load management depending on the season. A unit of energy The power agency offers participants periods, overall system efficiency is used during the peak costs more than 400 load management assistance in the form of maintained and customer inconvenience is times w hat it would cost during any other system feasibility studies for municipali- reduced, i hour of the month, ties just getting started, to monthly peak I W^ '[
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All-Requirements Rates f All electric power requirements for comparatively lower so that withdrawals The all-requirements rates were i l NCMPA I participants are provided by the can be made in later years as costs unchanged through 1988. ) power agency except for a small amount increase. Any changes in the all-require- ) of power received from SEPA, Power ments rates are made by the NCMPA i received from SEPA consists of capacity Board of Commissioners. and energy allocations from federal hydroelectric generating units.
. Consultants l The all-requirements rates paid by North Carolina Counsel Bond Counsel .
participants to NCMpA l are based on the Poyner & spruill _ n*ood Dawwn Smith & IIellman Rocky hfount, North Carolina h,ew Yan k, New York power agency's costs. These costs include ., L'nriarM Casalth
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Spiegel & AlrDiarmid R. W, Berk and Aswriates f debt service; other ownership project Washington, D.C. Orlando. Florida costs, including operation, maintenance, l fuel and transmission costs; and the cost of . Irustees additional power purchased to supplement $,#(a"/IaI'k n, ' ha"["[,s" A frank"and
' New York, New York Trust Comtway, N.A. l the Cataw ba project ownersh,p, i Win 3,,,n. salem, North Carohna The power agency's rates also support e '
Paying Agents-rate stabilization fund. This fund consists Chemical Bank Conrinentu/ Illinois Nationa/ Bank New York, New York and Trust Company of Chicago' of deposits made in years when costs are Chiraxo. Illinois Wachovia Bank and Trust Company, N.A. Winston-Salem, North Carohna l l I Management Staff F
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c ._ ;; %N 3-ITotil ttit to Right: 1 red M. Mdis, Jr. Dun tor . Governnernt Ayant Wdham G. Wemhoff, />nn ror . I.nguercrmx James T. t%obo, Gennat Atanaun.Wdham ll. Iluu, Irun ran - I unance and A,immunanon lad S. Chdds. Dun vor commuma arwns 12
y INDEPENDENT AUDITOR'S REPORT l i OToucheRoss i Board of Commissioners North Carolina Municipal Power Agency Number 1 Raleigh, North Carolina We have audited the accompanying baiance sheets of the North Carolina Municipal Power Agency Number 1 as of De-cember 31,1988 and 1987, and the related statements of revenues and expenses and changes in fund balance and changes in linancial position for the years then ended Theso financial statements are the responsibility of the Agency's management. Our re. ) sponsibility is to express an opinion on these financial statements based on our audits. We conducted our audits in accordance with generally accepted auditing standards Those standards require that we plan and perform the audit to obtain reasonable assurg1ce about whether the financial statements are free of mg terial misstate-ment 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 pnncoles used and significant estimates made by management. as well as ev-aluating the overati financial s'aiement presentation. We believe that our audits provide a reasonable basis for our opinion. In our opinion, tho financial statements referred to above present fairly, in all matenal respects, the financial position of the North Carohna Municipal Power Agency Number 1 as of December 31,1988 and 1987, and the results of its operations and changes in financial position for the years then ended in Conformity with generally accepted accounting principles. Our audits were conducted for the purpose of forming an opinion on the basic fir'ancial statements taken as a whole. The information on pages 25 through 27 is presented for purposes of additional analysis and is not a required part of the basic fin-ancial statements Such information has been subjected to the auditing procedures apphed in the audits of the basic financial statements and, in our opinion, the information is fairly stated, in all matenal respects. in relation to the basic financial statements taken as a whole WO e Certified Pubhc Accountants Research Tnangte Park, North Carchna March 20,1989 i l 13 u - . - - _
vry- . < , g., , y ,
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CALANCE SHEETS ,
^ , - [,
- 'N NORTH CAROLINA MUNICIPAL POWER AGENCY NUACER 1 '
' %l (IN THOUSANDS OFDOLLARS) . . , .
~
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' ASSETS j:
December 31, . .! W '. _ , . . 1988 1987
"' . ; ELECTRIC UTILITY PLANT (Notes B, C, and F): 1 Electric plant in service, net of accumulated depreciation of -
.l
$114,399 and $74.863. ..-.'. . ..-.. , $1,272,217 . $1.311,752
" Construction work in progress ,, . , ,. .. a ,125,228 '1 %.688
- Nuclear fuel, net of accumulated amortization of $96,126 and $61,749.. . 78.246 - 90.886 '
~
', 1,475,691- '1,519,326 .
7^ k
f
< NON-UTILITY PROPERTY ANC EQUIPMENT, NET (NOTE B) . ...-.. 2,222 '. 1,490 e ' SPECIAL ' FUNDS INVESTED (Notes B. D, anE F):. ,,
" Construction fund . 16,011 22,224 1(
, Bond fund . ..c. ..w.. . . ~ . . . . . , 316.045 317.529 < -l Reserve and contingency fund . ,, . ~ . . . . - . .
.21.58 ( 21,514 -!
.10,081' Decommissioning fund.. ..-.. - 13,516 )
Special reserve fund . . . . . , . 1,034' 1,114 368,188' 372,462 [. ,-
- CURRENT ASSETS:
Funds invested (Notes B, D, and .F):
'. Revenue fund . ..
. 267.808 225,925
. Operating fund ; . . . . 75,937 66,198 j Supplemental fund . .,-.. . .. 22.924 52.752 -
366,669 344,875, ,j
'. Participant accounts receivable.. , , 13,100- 12,262 Operating accounts receivable.. . . . . 6,227 5.477 - y
. Prepaid expenses ., 29 223' 30 644 l'
415,219 - 393,258 e
~
DEFERRED COSTS: i
' Unamortized debt issuance costs (Note B) .. 43.615 46,959 .I Net costs to be recovered from future billings to participants (Note E) , , 111.780 54.174 ..q
$2.416.715 $2,387.669 )
' See notes to financial statements. ,
1 I ; 1 l l l l 1 l I s
)
-14, s l
l 1 LIABILITIES AND FUND BALANCE l December 31, 1988 1987 LONG TERM DEBT: j Bonds, net of unamortized discount (Notes B, C, and F) .. $2,286.909 $2.242,109 j Note payable (No'.e G) . 445 2.286.909 2.242,554 l' SPECIAL FUNDS LIABILITIES. Construction payables 4 3.715 ( f Current matunties of bonds (Note F).. 5.385 5,100 Accrued interest on Donds .. 93.396 94.988 98.785 103,803 CURRENT LIABILITIES. Current maturdies of note payable (Note G) . 445 80 I
' Accounts payable . 220 383 Accrued taxes . 8.367 12.826 9,032 13,289 I
COMMITMENTS AND CONTINGENCIES (Notes H and I) FUND BALANCE . 21.989 28.023 ) I
$2.416.715 $2.387.669
) t i I i 1 i l 15 ___. _- .. .-. l
m., 3 [ STATEMENTS OF REVENUES AND EXPENSES AND CHANGES IN FUND BALANCE NORTH CAROLINA MUNICIPAL POWER AGENCY NUM:ER 1 (IN THOUS 4NDS OF DOLLARS) ' Year Ended December 31 j 1988 1987 l OPERATING REVENUES: . ; Sales of electricity to participants . ,
$156,329 $149,736 i 269.443 '280.810 l Sales of electncity to utilities .
425,772 430.546 ; l OPERATING EXPENSES: I Operation and maintenance.. 61,160 54,706 ! 39,708 41,088 -I Nuclear fuel . Interconnection services: . Purchased power , , . . . . 122.605 126.854 Transmission and distribution . 11,224 11,731 Other . . . - . , 221 242 f 134.050 138.827 Administrative and general . 16.293 15.886 j Gross receipts and excise taxes (Note B) . 7,599 9.644 l Property tax (Note B) .. 7.067 6,839 ' Depreciation 39.761 37.801 305.638 304.791 I I NET OPERATING INCOME . 120,134 125,755 i l INTEREST CHARGES (CREDITS): Interest expense . 187,638 190,147 Amortization of debt discount and issuance costs .' 2.040 1,452 investment income . (55,631) (53.219) Net interest capitalized (Note C).. (146) (1.323) , l 133.901 137,057 j NET COSTS TO BE RECOVERED FROM FUTURE BILLINGS TO PARTICIPANTS (Note E).. 57.606 19.499 EXCESS OF REVENUES OVER EXPENSES BEFORE EXTRAORDINARY ITEM . 43.839 8,197 EXTRAORDINARY ITEM. Loss on bond refundings (Note F) . (49 873) (6,034) 8,197 (DEFICIENCY) EXCESS OF REVENUES OVER EXPENSES . i FUND BALANCE, beginning of year .. 28.023 19.826 FUND BALANCE, end of year . $ 21.989 $ _28.023 See notes to financial statements. 16 ; i
STATEMENTS OF CHANGES IN FINANCIAL POSITION NORTN CAROLINA MUNICIPAL POWER AGENCY NUM:ER 1 p (IN THOUSANDS OFDOLLARS) b L Year Ended December 31, 1988 1987 SOURCE OF FUNDS: Operations: Excess of revenues over expenses before extraordinary item.. $ 43,839 $ 8,197 Depreciation and amortization . . 41,801 39.253 Amortization of nuclear fuel.. 40,257 41,088 hot costs to be recovered from future billings to participants . (57.606) (19.499) Funds provided by operations . 68.291 69.039 Extraordinary item , (49.873) Decrease in special funds invested . 4.274 100.277 ). ' Proceeds from sale of bonds . 401.482 424,174 169.316
' APPLICATION OF FUNDS:
Bonds refunded.. 334,155 Additions to electric utility plant . 36,158 42,236 Not additions to unamortized debt discount and issuance costs . 15,838 54 Provision for retirement of bonds . 5.385 5.100 Decrease in special funds liabilities .. 5.018 3,529 Additions to non utility property and equipment.. 957 466 Provision for retirement of note payable . 445 378 397.956 51.763 INCREASE IN WORKING CAPITAL . $ 26.218 $117.553 CHANGES IN COMPONENTS OF WORKING CAPITAL: Increase (decrease) in current assets: Funds invested . $ 21,794 $110.515 Participant accounts receivable.. 838 602 Operating accounts receivable.. 750 (3.042) Prepaid expenses . (1.421) (5.539)
.21,961 102,536 (Increase) decrease in current liabilities:
Current matunties of note payable .. (365) 194 Accounts payable . 163 22,947 Accrued taxes . 4.459 (8.124) l ) 4.257 15.017 1 INCREASE IN WORKING CAPITAL . $ 26.218 $117.553 ) See notes to financial statements. 17
a j
, NOTES TO FINANCIAL STATEMENTS '
YEARS ENDED DECENT:ER 31,1988 AND 1987 l NORTH CAROLINA MUNICIPAL POWER AGENCY NUMBER 1 l A. General Matters
. North Carchna Municipal Power Agency Number 1 (agency) is a joint agency organized and existing pursuant to Chapter 1598 of the General Statutes of North Carolina to enable municipahties owning electric distribution systems, through the organization of the agency, to finance, construct, own, operate, and maintain electric generation and transmission facilities. The agency has twenty members, nineteen ~ j (participants) which receive power from the agency and one which receives power from Duke Power Company (Duke).
The agency has entered into several agreements with Duke which govern the purchase, ownership l construction, operation, and mainte-nance of the project: The Purchase, Construction, and' Ownership Agreement provides; among other things, for the agency to purchase a 75% undivided ownership interest in Unit 2 of the . Catawba Nuclear Station (station) and a 37.5% undivided ownership interest in certain support Scilities of i the station. However, by virtue of various provisions in the interconnection Agreement and the Operation and Fuel Agreement, the agency (1) bears the costs of acquisition, construction, operation, and maintenance of 37.5% of Unit 1 and 37.5% of Unit 2, and (2) has the same pro-portionate right to the output of and bears the risks associated with the lack of operation of such units.- The Interconnection Agreement provides for the interconnection between Duke's electric power system and the agency's project and for the exchange of power between Unit 1 and Unit 2 of the station and between the Catawba units and Duke's McGuire Nuclear Station. The agreement also provides for the purchase and sale of capacity and energy, and the transmission of energy to the agency's participants. The Operation and Fuel Agreement provides for Duke to operate, maintain, and fuel the station, to make renewals, replacements, and capital additions as approved by the agency; and for the ultimate decommissioning of the station at the pnd of its tJseful life.
- The agency's acquisition of its ownership interest is being financed by the issuance of electric revenue bonds pursuant to Resolution No.
R-16-78, as amended, (resolution) of the Board of Commissioners of the agency. The resolution established special funds to hold proceeds from debt issuance, such proceeds to be used for costs of acquisition and construction of the project, and to establish certain reserves The resolution also estabhshed special funds in which project revenues are deposited and from which project operating costs, debt service, and other specified payments relating to the project are made. Tho agency has entered into a Project Power Sales Agreement and a Supplemental Power Sales Agreement with each participant. These agreements provided for each participant to purchase from the agency its all requirements bulk power supply, in excess of power allotments from Southeastern Power Administration (SEPA), which includes its total share of project output (as defined by the Project Power Sales Agreement). The agency is obligated to provide all electric power required by each participant at the respective delivery points. Each participant is obligated to pay its share of the operating and debt service costs of the project. The agency's participants receive their total electric power, exclusive of power allotments from SEPA. from the agency. Such power is providtrd by project output together with supplemental purchases of power from Duke. Pursuant to two 'Rehability Exchanges
- contained in the interconnection Agreement. project output is provided in essentially equal amounts from Catawba Unit 2 and three other nuclear units (Catawba Unit 1, McGuire Unit 1, and McGuire Unit 2) in operation on the Duke system, all of similar site and capacity. The reliabihty exchanges are intended to make more reliable the supply of capacity and energy to the agency in the amount to which the agency la entitled pursuant to its ownership interest in Catawba Unrt 2, and to mitigate potentral adverse economic effects on the agency and the participants from unscheduled outages of Catawba Unit 2. Correspondingly, the agency bears nsks resulting from unscheduled outages of any Catawba or McGuire Unit.
ElectriCities of North Carohna, Inc (ElectnCities), organized as a joint municipal assistance agency under the General Statutes of North Carolina, is a pubhc body and body corporate and pohtic created for the purpose of providing aid and assistance to municipahtles in connection with their electnc systems and to joint agencies, such as tne agency. The egency has entered into management agreements with ElectnCities. Under the current management agreement witn the agency ElectriCities is required to provide all personnel and personnel services necessary for the agency to condact its business in an econornic and efficient manner. l i
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t j. l B. Significant Accounting Policies Basis of Accounting The accounts of the agency are maintained in accordance with the Uniform System of Accounts of the federal Energy Regulatory Commission. and are in conformity with generally accepted accounting principles (GAAP). L Electnc Plant in Service All expenditures associated with the development and construction of the agency's ownership interest in the
. Catawba station. Including interest expense net of investment income on funds not yet expended, have been recorded at original cost and
- are being depreciated on a straight-kne basis over the average composite hfe of each unit's T.ssets.
Cons"uction Work in Progress All expenditures related to modifications identified poor to commercial operation and to capital additions, including interest expense net of investment income on funds not yet expended are capitahzed as construction work in progress until such l; time as they art completed and transferred to Electnc Plant in Service. Depreciation expense is recognized on these items after they are transferred. ) Nuclear Fuel All expend:tures related to the purchase and construction of nuclear fuel cores, including interest expense net of invest. ment incomo on funds not yet expended, are capitahzed until such time as the cores are placed in the reactor. At that time, they are v amortized and charged to fuel expense on the units of production method. Amorti7ation of nuclear fuel costs includes estimated disposal j costs of $5,331.000 and $5,393.000 for the years ended December 31,1988 and 1987, respectively Non-Utihty Property and Equipment All exponchtures related to purchasing and installing an in-house computer, jointly owned with North Carohna Eastern Municipal Power Agency (NCEMPA), have been capitahzed and are being depreciated over four years Also included are the land and administrative office build'ng jointly owned with NCEMPA and used by both agencies and ElectriCities The administrative office building is being depreciated over 371/2 years on a straight-kne basis investments investments are carried at amortized cost Discounts and premiums, if any, are amortized on the straight-kne method. In those instances where market values are below amortized cost, no provision for loss has baen provided since it is the agency's intention to hold the secunties to maturity. Deferred Costs Unamorhzed debt issuance costs, shown net of accumuin9d amortization, are being amortized on the interest triethod over the term of the related debt Net costs to be recovered from future bilkngs to participants is not amortized but will be recovered through future rates (See Note E) Discount on Bonds Discount on bonds is amortized over the terms of the related bonds in a manner which yields a constant rate of interest Taxes income of the agency is exempt from Federalincome tax under Section 115 of the internal Revenue Code Chapter 159B of the General Statutes of North Carohna exempts the agency frora property and franchise or other pnvilege taxes in heu of North Carohna property taxes, the agency pays an amount which would otherwise be assess 6d on the non-utshty property and equipment of the agency in lieu of a ! franchise or priviloge tax, the agency pays to North Carolina an amount equal to 3 22% of the gross receipts from sales of electricity to l participants. Electnc utlkty property is located in South Carokna and subiect to South Carohna property tat An electnc power excise tax equal to .05% (5/10 milt) for each kdowatt-hour of electnc power sold for resale within South Carohna is also paid. Reclassibcations Certain reclassifications have been made to the prior year's financial statements to conform to classifica!#ons used in the current year. C. Construction Program l b Interest costs of $809.000 and $2.842,000 were capitakzed as part of the cost of capital addWont and power plants under construction dunng 1988 and 1987, respectively The capitahzed interest costs were offset by $663.000 ar-1 $1h19.000 of interest earned on related unexpended bond proceeds for 1988 and 1987, respectively D. Investments The resolution authorizes the agency to invest in 1) direct obbgations of, or obhgations of which the puncipal and interest are uncond: tion-ally quaranteed by, the United States (U S ), 2) obhgations of any agency of the U S. or corporation wholly ownnd by the U S.,3) direct and general obbgations of the State of North Carchna or any pohtical subdivision thereof whose securities are rated "A" or better,4) repurchase agreements with the Bond Fund Trustee, Construction Fund Trustee, or any govemrnent bond dealer reporting to the federal Reserve Bank of New York which mature within nine months from the date they were entered into and are collaterahzed by previousiy described obliga. tions, and 5) bank time deposits evicenced by certificates of deposit and bankers' weeptances l l l ! 1 t 19 l l l J
D. Investments (Continued) Dank time deposits may only be in banks with capital stock, surplus, and undivided profits of $20,000,000 or $50,000,000 for North Carchna banks and out-of-state banks, respectively, and the agency's investments deposited in such banks cannot exceed 50% and 25% respectively, of such banks' capital stock, surplus, and undivided profits The resolution oermrs the .;gency to estabhsh official depositones with any bank or trust company quahfied under the laws of North Crrolina to receive deposits of public moneys and having capital stock, surplus, and undivioed profits in excess of $20.000,000. At December 31,1988 and 1987, the agency had $651,000 and $98,000, respectively, so deposited The agency's investments are categonzed in the following table to give an indication of the level of nsk assumed by the agency at year-end Category 1 includes investments that are insured or registered or for which the securities are held by the agency or its agent in the l agency's name. Category 2 includes uninsured and unregistered investments for which the secunties are held by the broker or dealer, or by [ i its trust department or agent in the agency's name Category 3 includes uninsured and unregistered investments for which the securities are held by the broker or dealer, or by its safekeeping department or agent in the agency's name. (in thousands of dollars) Category Carrying Market 1 2 3 Amount Value Repurchase Agreements . $ 31,264 5 $ $ 31264 $ 31,264 124.002 5,436 129,498 127,890 U.S Government Secunties .. U.S. Government Agericies . 487,557 10,697 498,254 496.093 Bankers' Acceptances - 24,933 8,385 33,318 33.301 Commercial Paper , 21.934 21,934 21.931 Certificates of Deposit .. 10,000 10.000 10.000
$699.750 $ $24.518 724,268 $721.079 Cash. 651 Accrued interest - 9 938 Total Funds invested . $734.857 Consisting of.
Special Funds invested . $368,188 Current Assets- 366 669
$734.857 The repurchase agreements are the only collaterahzed investments, in accordance with the provisions of the resolution, the collateral is segregated and held by the trustee for the agency At December 31,1987, the agency had investments of approximately $668,873.000, $105,000. and $37,936 000 under Categories 1,2, and 3, respectively, and approximately $10,423 000 representing cash and accrued interest E. Net Costs To Be Recovered From Future Billings To Participants Rates for power bilkn6s to participants are designed to cover the agency's ' costs" as defined by (1) the resolutions, (2) the Project Power Sales Agreements, and (3) the Supplemental Power Sales Agreements The agency's rates are structured to systematically provide for the debt requirements, operating funds, and reserves as specified by the resolution and power sales agreements Recognition of ' expenses
- i (defined according to GAAP) which are not incluoed as 'costsf is deferred to such penod as it is intended that such ' expenses' be covered by rates Recognition of those ' revenues / which under the resolution and the power sales agreements, are cohected to cover ' costs
- that are l
not ' expenses / is deferred to such penod as it is intended that such ' revenues' cover " expenses
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P i E. Het Costs To Be Recovered From Future Billings To Participants (Continued) All rates must be approved by the Board of Commissioners Rates are designed on an annual basis and are reviewed quarterly. If determined to be inadequate, rates may be revised. Net costs to be recovered frcm future bilhngs to participants includes the following (in thousands of dollars): Year Ended inception to December 31, December 31, 1988 1987 1988 1987 GAAP ITEMS NOT !NCLUDED IN BILLINGS TO PARTICIPANTS: Interest expense not capitakzable . $191,995 $ 188,694 $538,366 $346.371 Depreciation .. 39,761 37,801 116,717 76.956 Loss on bond refundings . 49.873 89.627 39.754 281,629 226,495 744,710 463.081 BOND RESOLUTION REQUIREMENTS INCLUDED IN BILLINGS TO ' PARTICIPANTS. Special funds deposits . 28,852 72;182 233,475 210,623 Debit service , 191,766 124,195 372,830 181,064 investment income not available for operating purposes . 18,509 18.789 48.450 29.941 Special funds excess valuations . (15.104) (8.170) (27.825) (12,721) 224.023 206.996 632.930 408.907 Net costs to be recovered from future billings to participants . $ 57.606 5 19.499 $111,780 $ 54,174 in August 1987, the Financial Accounting Standards Board issued Statement of Financial Accounting Standards No. 92 "Regu!ated Enterprises - Accounting for Phase-in Plans"(SFAS No. 92). Although the agency initially believed the requirements of SFAS No 92 were ap-plicable, it was determined dunng 1988 that the agency has no phase-in plans as defined by SF AS No 92. F. Bonds The agency has been authonzed to issue Catawba Electoc Rever.ue Bonds (bonds) in accordance with the terms, conditions, and limitations of the resolution. The totat !c be issued is to be sufficient to pay the costs of acquisition and construction of the project as defined, and/or for other purposes set forth in the resolution. It is currently estimated that these costs will require the issuance of up to $2,467,082.000 of bonds including bonds presently outstanding Future refundings may affect the amount of bonds to be issued On August 5,1986, the Local Government Commission of the State of North Carchna (LGC), approved the issuance of such bonds up to a maximum pnncipal amount of $2,490,000.000, additional LGC approval must be obtained for the issuance of bonds in excess of this amount. As of December 31,1987, the agency had outstanding $2,390.325.000 of bonds with an unamortized discount of $143,116.000 On January 1,1988, the agency made principal payments of $5.100.000 for matunng bonds in March 1988, an additional $401,482,000 of bonos was issued (Senes 1988) Proceeds of this issue were used to establish trusts for advance refunding portions of the Senes 1984, 1985, and 1985A Bonds totalkng $334.155,000, as discussed below, bonging the total outstanding bonds at December 31,1988, to
$2,452.552,000 as fol:ows (in thousands of dollars)
SERIES 1978 5.5% to 6 45% matunng annually from 1989 to 2000. $ 67,050 6 0% maturing in 2003 with annual sinking fund requirements beginning in 2001 25,870 6 7% matunng in 2008 with annual sinking fund requirements beynning .n 2004 . 55.935 6,875% maturing in 2020 with annual sinking fund requirements beginning in 2009 . 240 290 389 145 SERIES 1979 6% to 6 9% matunng annually from 1989 to 2000 23,525 7.1% matunng in 2004 with annual sinking fund requirements beginninD in 2001 12.905 7.375% matunng in 2020 with annual sinking fund requirements beginning in 2005 . 109.895 146.325 SERIES 1981 9 4% to 10% maturing annually from 091 to 1995. A750 8 5% matunng in 2017 with annual sinking fund requirements beginning in 2011 25.000 29.750 21
- F. Bonds (Continued)
SERIES 1982 7.5% maturing in 2018 with annual sinking fund requirements beginning in 2009 . $ 25.000 SERIES 1983 8% to 9 25% maturing annually from 1991 to 1996.. 7.300 7% maturing in 2018 with annual sinking fund requirements beginning in 2009 . . . . . . 25.000 32.300 SERIES 1984 8.5% to 10.2% maturing annually from 1991 to 1998. 36.295 j 7.5% maturing in 2019 with annual sinking fand requirements beginning in 2017 . 50.000 j 86 295
. SERIES 1985 4 7.25% to 9.1% maturing annually from 1991 to 2000 . , 52.445 9.375% maturing in 2005 with annual sinking fund requirements beginning in 2001. 40.000 i 9% maturing in 2013 with annual sinking fund requirements beginning in 2005 136.760 7% maturing in 2020 with annual sinking fund regarements beginning in 2019 . 50.000 279.205 SERIES 1985A 7.3% to 9.2% maturing annually from 1991 to 2000.. 8,510 9.375% maturing in 2005 with annual sinking fund requirements beginning in 2001. 21.005 9% maturing in 2014 with annual sinking fund requirements beginning in 2006 . 95.270 7% maturing in 2020 . 39.545 164.330 SERIES 1985B 7.4% to 8.75% maturing annually from 1991 to 2002 - 109,865 I
8.75% maturing in 2005 with annual sinking fund requirements beginning in 2003 . 61.935
' 8 5% maturing in 2017 with annual sinking fund requirements beginning in 2006 . 338.345 6% matunng in 2020 with annual sinking fund requirements beginning in 2018 . 125 615 j 635.760 SERIES 1986 'l 6% to 7 5% maturing annuaHy from 1991 to 2000.. 37,465 j 7.5% maturing in 2006 with annual sinking fund requirements beginning in 2000 . ..~. 38.915 !
7% maturing in 2010 with annual sinking fund requirements beginning in 2006 . 148.305 5% maturing in 2020 with annual sinking fund requirements beginning in 2018 . 38.275
]
262.960 ' SERIES 1988 l 1 7.3% to 7 6% zero troupon matunng annually from 2000 to 2003 . 11.052 7.7% matunng in 2008 with annual sinking fund requirements beginning in 2003 - 16.100 f' 7.75% rnaturing in 2010 with annual sinking fund requirements beginning in 2008 - 8.310 ,j 7.625% maturing in 2014 witn annual unking fund requirements beginning in 2010 . 80.000 l 6% maturing in 2015 with annual sinking fand requn ements beginning in 2013 . 35.000 .;
- 7% matunng in 2016 with annual sinking fund requiremer'ts beginning in 2014 . 60.000 7.5% maturing in 2017 with annual sinevig fund requirements beginning in 2016 . 25.000 7.875% matunng in DJ19 with ur m , enhng fund requirements begrnning in 2015 . 166.020 401.482 2.452.552 Less. Current matunties cf bonds. 5.385 Unamortized discount . 160.258 12.286.909 I i
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F. Bonds (Cordinued) Certain proceeds of the Series 1984,198SA,1985B and 1988 bonds were used to establish trusts for advance refunding of
$1.367,810,000 of previously issued bonds At December 31,1988, $3.615.000 of these bonds have been redeemed. Under these Refund-ing Trust Agreements, obiqations of or guaranteed by the United States have been placed in irrevocable Refunding Trust Funds maintained by the Bond Fund Trustee. The govemment obligations in the respective Refunding Trust Funds, along with the interest earnings on such -
obligations will be sufficient to pay all interest on the refundatsle bonds when due and to redeem all refunded bonds at vanous dates prior to their onginal maturites, in amounts ranging from par to a maximum redemption price of 103% The mones on deposit in each Rofunding Trust Fund, including the interest earnings thereon, are pledged solely for the benefit of the holders of the refunded bonds. Since the estabhshment of each Re'unding Trust Fund, the refunded bonds are no longer considered outstanding obligations of the agency. A loss on refunding of $49,873,000 was recognaed in 1988. This loss has been recorded as an extmrdinary item, is included in net costs
'o be recovered from future bilhngs to partic pants, and is to be recovered through the principal payments of the debt service on the new bonds As a result of the refunding. the agency will benefit from reduced debt service costs over the hfe of the new bonds.
Interest on the bonds is payable semi-annually, The bonds are subject to rcdemption pnor to matunty at the option of the agency, on or after the following dates at a maximum of 103% of the respective pnncipal amounts: Series 1978.. January 1,1989 Seres 1979.. January 1,1990 Senes 1981, January 1,1991 Series 1982 and 1983 . January 1,1993 Senes 1984. January 1,1994 Series 1985. January 1,1995 Series 198f %,1985B, and 1986.. January 1,1996 Sones 1988. January 1,1998 The bonds are special obligations of the agency, payable solely from and secured solely by (1) project revenues (as defined by the resolution) after payment of project operating expenses (r.s defined by the resolution) and (2) other monies and securites pledged for payment thereof by the resolution. The resolution requires the agency to depos!t into special funds all proceeds of bonds issued and all project revenues (as defined by the resolution) rpnerated as a result of the Project Power Sales Agreements and Interconnection Agreement. The purpose of the individual funds is specifically defined in the resolution. Matuntes of outstanding bonds through 1993 and thereafter are as follows (in thousands of do!!ars): 1989. $ 5,385 1990. 5.690 1991. 21,020 1992. 22.485 1993 24,105 Thereafter .. 2.373.867
$2A52.552 l
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1 G. Note Payable The agency, together with NCEMPA, borrowed $1.420.000 to finance the acquisition of real estate joint!y owned with NCEMPA, on which the administrative office building for the two agencies and ElectriCities is located. The agency's obligation to repay this unsecured borrowing is limited t $10,000, plus accrued interest thereon at the rate of 9 86% per annum, and is being repaid in equal monthly installments, including erwest, of $10,000 through April 1989 with a payment of $410,000 due in f.iay 1989. H. Commitments { The agency has a contractual agree: tent with ElectriCities vdiereby ElectnCities provides, at cost, general management services to the agency.~This agreement continues tt fesgh December 31,1992, and is automatically renewed for successive three-year periods unless terminated by one year's notice by either party pnor to the end of the corn act term. For the years ended December 31,1988 and 1987, the agency paid ElectnCities $1.861,000 and $2.034,000, respective!y, of which
$28.000 and $46,000 have been capitalized as construction work in progress.
- 1. Contingencies l The Pnce-Anderson Act limits the pubhc liability for a nuclear incident at a nuclear generating unit to $7,216,000.000, which amount is to j be covered by pnvate insurance and agreements of indemnity with the Nuclear Regulatory Commission. Such private insurance and j agreements of indemnity are carried by Duke on behalf of all co-owners of the station. The terms of this coverage require the owners of all j hcensed facilities to provide up to $63,000.000 per year per unit own.o in the event of any nuclear incident involving any bcensed facility in the nation, with an annual maxirnum assessment of $10,000.000 per unit owned. If any such payments are required, the agency would be hable for 37.5% of those payments applicable to the station.
Property damage insurance coverage presently available for the statio1 has a maximum benefit limited to $1,625.000,000 Such available coverage has been obtained. I 24
SCHEDULES OF REVEt'UES AND EXPENSES PER BOND RESOLUTION AND OTHER AGREEMENTS NORTH CAROLINA MUNICIPAL POWER AGENCYNUMBER 1 (IN THOUSANDS OFDOLLARS) Year Ended December 31,1988 Year Ended December 31,1987
~
Project Supplemental Total Project Supplemental Total REVENUES-Sales of electncity to participants . $ 27.250 $129.079 $156,329 $ 68 $149.668 $149,736 Sales of electncity to utilities . 269.443 269.443 280.810 280.810 investment revenue available for operations .. 33.574 2,885 36.459 30.068 2.842 32.910 330.267 131,964 462.231 310.946 152,510 463.456 EXPENSES. Operation and maintenance . 61,160 61,160 54.706 54.706 Nuclear fuel . 36.542 36.542 41.088 41,088 Interconnection services: Purchased power . 2.752 119.853 122.605 1,623 125.231 126,854 Transmission and distnbution . 11.224 11.224 11,731 11.731 Other .. 221 221 242 242 2,752 131.298 134.050 1.623 137.204 138.827 Administrative and general-Duke . 13.019 13.019 12.839 12,839 Administrative and general-agency . 1,007 2.167 3.174 1.036 1.981 3,017 Miscellaneous agency expense . 100 100 30 30 Gross receipts and excise taxes . 3.506 4.093 7,599 4.887 4.757 9,644 Property ttx . 7.067 7.067 6.839 6.839 Debt service . 191.466 340 191.806 123.916 341 124.257 Reserve and contingency fund valuations . (13.918) (13,918) (8.098) (8,098) Bond fund reserve account valuation . (1,186) (1.186) (72) (72) Special funds deposits: Decommissioning fund . 2.456 2.456 2,400 2,400 Revenue fund . 1.898 1,898 3.080 3,080 Rate stabilization fund . 5.356 5.356 49.961 49.961 Reserve and contingency fund . 19.142 19.142 16.741 16,741 28.852 28.852 72.182 72.182 l 330.267 137,998 468.265 310.946 144.313 455.259 l (DEFICIENCY) EXCESS OF REVENUES l OVER EXPENSES $ $ (6 034) $ (6.034) $ $ 8,197 $ 8.197 25 -- _ _ - - _ _ _ _ - _ _ _ - - _ _ - _ _ _ _ _ _ _ _ _ _ - _ _ _ . _ - _ _ _ _ _ _ _ _ _ __ _ _ _ _ - _ _ - _ _ - _ _ _ _ _ _ . _ _ _ _________a
l SCHEDULE OF CHANGES IN ASSETS OF FUNDS INVESTED ' l NORTH CAROLINA MUNICIPAL POWER AGENCY NUAGER 1 ,
)
. (IN 7HOUSANDS OF DOLLARS) i a
v 1 f 1 Funds- : Invested Power . l January 1, Billing investment 1987- Receipts income Disbu sements. Transfers Construction fund. -
' Construction account . .:....... $ 54.578 - $ $ 2.311 $ (34.537) -$ (128)
Construction intorest account -.. 71,637 ' 3,566 (75,203) Construction revolvtng account.. . . . 102 6 (108) 126.317 5.883 34.537) - (75.439), Bond fund. Interest account .. . . . . . . - 94,429 1,674 . (188.622) .188,356 Reserve account..-.. , 217,440 21.280 (22,206) L Principal account .. .
. . - . . 4.907 160 (4.840) . 4.951 316,776' 23.114 (193,462) 171,101 i
Reserve and contingency fund 21.639 2,494 (8.776) 6.157 l Decommissioning fund .. . 6,974 710 2,397 - Special reserve fund .. . . . . 1.033 81 i Revenue fund:. -i Revenue account... . 35,860 38,970 1.381 130,838 (179.580)
. Rate stabilization account . 115.862 13.715 68.879 151,722 38.970 15.096 130,838 (110.701)
Operating fund: Working capital account . 17,740 3,080 (94.550) 97,991 , Fuel account . 20.613 21.324 38.353 3.080 (94.550) 119,315 i 1 Supplemental fund . 44.285 + 110.238 2.761 8 298 (112.830)
$707.099 $149.208 $53.219 $(192.189) $
1 ( l-l l
= 26 !
1 l j
f Funds .
' Funds invested Bond and ~ Power Invested December 31, Note Billing Investment. December 31, 1987 Proceeds Receipts income Disbursements Transfers - 1988
$ 22.224 $ $ $ 1,318 5 (7,005) $ (526) $ 16.011 5 22,224 1.318 (7.005) (526) 16.011 95.837 (2,758) 3.169 ' (184.811) 183,708 95.145 5 -- 216.514 21,066 (22.246) 215,334 l 5.178 194 (5.100) 5.294- 5.566 L 317,529 . (2,758) 24,429 (189.911) 166,756 316.045 '
21.514 2.617 (5.442) 2.893 21,582 10,081 984 1 2,450 13,516 1.114 82 (162) 1.034 27,469 51.289 2,200 138.844 (172.675) 47,127 198.456 16.854 15 5.356 220.681
- l. 225.925 51.289 19.054 138.859 (167.319) 267.808
- 24.261 4.344 (120.151) 117.289 25,743 41.937 8.257 50.194 66.198 4.344 (120.151) 125.546 75,937 52.752 104.240 2.803 (7.233) (129.638) 22.924
$717.337 $(2.758) $155.529 $55.631 $(190.882) $ $734.857 I
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f' North Carolina Municipal Power ADency Number 1 1427 Meadowwood Boulevard P.O. Box 29513
. Ra;eigh, North Carohna 27626 (919) 832-9924
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