ML20248H656
| ML20248H656 | |
| Person / Time | |
|---|---|
| Site: | Cooper  |
| Issue date: | 12/31/1997 |
| From: | Cook W, Mayben W NEBRASKA PUBLIC POWER DISTRICT |
| To: | |
| Shared Package | |
| ML20248H647 | List: |
| References | |
| NUDOCS 9806080191 | |
| Download: ML20248H656 (46) | |
Text
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TABLE oF CONTENTS j i MESSAcE FRoM THE CH AIRMAN 1 Pow ER SUPPLY SYSTEM 31 MEsSAcE FRoM THE PRESIDENT 2 NUCLEAR PACIUTY 36 1997 IN NEVIEW 6 MAP 42 1997 STAT!sTICAL REviEr is BOARD oF DIRECTORS AND EXECUTIVE TEAM 44 ELECTRIC SYSTEM 20 l
YEAR AT A GLANCE KILOWATT HOUR SALES (EucTaic Srsnu) 14.7 BituoN KILOWATT HOUR SAI.F.S To MiDAMERICAN ENERcT COMPANY (Nectum FActun) 2.7 OILLloN OrERAriNo REVENUES (Eucinic Sysnu) $485.2 MILLloN OPERATINc REVENUES rRoM SALES To MiDAMERICAN ENEHcY COMPANY (NecuAn EActun) $103.1 MILLloN Cost or power PURCHASED AND CENERATED (INCLUDING Nucura F4ciuTY AND POWEn Scretv Systru) $346 6 Mittion OTHER OPERATING ExetNsEs $t18.4 MittroN NET REVENUES $8.6 MittioN DERT StRviCE CovERAcE 1.83 NEBRASKA PURtic power DISTRICT Nebraska Public Power District (NPPD)is a public corporation and political subdivision of the State of Nebraska. Control of NPPD and its operations is vested in an si-member Board of Directors popularly elected from subdivisions within NPPD's chartered territory, which includes all or parts of 9 of the state's 93 counties. NPPD operates an integrated electric utility system, including facili-ties for generation, transmission and distribution of electric power and energy for sale at wholesale and retail, and a surface water irrigation system.
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its business with a "no regrets" approach. No matter what the future holds, we are making changes to our operation that will allow NPPD to serve our wholesale MESSAGE FROM TIIE and retail custome'es in the best manner possible. In CllAlHMAN OF Tile BOARD that vein, this Board reaffirmed its opposition to any
.i . federal mandate of retail competition. We believe that the Nebraska Legislature is in a much better positior.
to decide what operating scenario wouhl be in the best interest of Nebraskans. As the only totally public FROM TOWNS SUCH AS CH ADRON IN TH E NORTHWEST power state in the nation, the Nebraska utility industry is a tremendous asset for the state, and its elected rep-PA RT O F N E R RAS KA TO B MT RIC E IN THE SOUT H MST, resentatives should decide its fate. That being said, some issues involved in this debate. such as a long-NEBRASKA PURt:C POWER DISTRICT's (NPPD) EMetOr-term solution to the private-use tax issue will need to be resolved at the federallevel. Private use involves the EES LIVE AND WORK IN THE COMMUNITIES THEY SERVE, potential taxation of tax-exempt debt, if competition
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GIVING BACK TIM E AND ENERGY TO CAUSES WHICH BENE-ties over and above the Internal Revenue Service rule FIT E D U CATI O N , CH ARIT1 LS. LOCAL BUSINESSES, AND limits. We will continue to work with our congressional delegation and others to seek a solution on this issue.
ECONOMIC D EVE LO PM E NT. WHEN THE END OF THE From a customer perspective, we were pleased to lower rates to our wholesale customers by an average of WORKDAY COM FS, TH ESE EM PLOYEES H EAD OUT TO H ELP 3.6 percent for the 1998 99 rate period. Additionally.
we made adjustments to our retail rates to better reflect WITH THE GIRL SCOUTS, COACH SOCCER T MMS, AND the cost of serving different classes of custon'ers. Urban I residential rates increased 2 4 percent, while rural res- !
WORK WITH LOCAL LEADERS TO ATTRACT N EW BUSINESS TO '
idential and irrigation rates went up 4 percent. Early in THE . RM. ACrivrSM Ry NPPD EurtOrEr5 CONTRIBUTES i99 8, we added an additional temporary rate option for
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our largest retail customer, NUCOR Steel. With its )
TO STRONG COMMUNITIES IN ALL OF Nr.BRASKA, IN TURN, recent plant expansion and our addition of a new sub-station to serve it, we modified our large industrial rate l BUILDING A FOUNDATION FOR FUTURE ECONOMIC GROWTH. to offer greater flexibility for the customer during the I project. As the industry continues to change, we will Membus of the Board of Directors identify with work toward creating more options for our customers that spirit and embrace it t y representing the citizens of and lowering rates whenever possible.
Nebraska on this elected body. We, and the employees of These progressive changes wouldn't be possible NPPD. know that each person's effort to improve the without the 2,200 dedicated employees of NPPD. If we quality oflife in his or her ow n community through vol- are to expect and encourage innovation and efficient unteer service adds up to building strong communities operation of this organization, we need to have a cora-in the entire state. As Board members, we are commit- pensation system that rewards those values. In February ted to setiing policies that help NPPD remain a leader in of i99 ,8 NPPD employees were rewarded for exceptional the industry and a pivotal part of our state's continued i997 performance with their individual share of gain-I growth, share funds. The gainshare program sets target financial l
With competition looming on the horizon for the goals for the organization, and the savings that occur as electric utility industry, NPPD's Board is approaching . result of meeting or exceeding these targets are split I l l
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between our customers, in the form of lower rates, and our employees. The Board is supporting the pay-for-y performance concept by continuing gainshare in 1998 MESSAGE FROM THE .~ $
and evaluating incentive compensation. .
Finally, the Board continued to carefully monitor PRESIDENT ANo CEO ' '
several issues relating to the operation of our nuclear )
powei plant. Our Board stands firmly behind manage-me n t's improvement effo rts at Cooper Nuclear , h j Station, and we will continue to authorize the rmurces necessary to allow us to operate this facility BUILDING ST RO N G E R COM M UNITIES IS HOW WE saf ely and efficiently.
Coupled with improving our operation of Cooper FULFILL OUR MISSION TO IMPROVE THE QUALITY OF LIFa.
Nuclear Station comes the Board's responsibility to IN NEBRASKA. FROM FINDING NFW AND BETTER WAYS TO continually consider the expenditures related to the disposal of radioactive waste. Nebraska is the host state SERVE OUR CUSTOM ERS TO VOLUNTEERING TO H ELP LOCAL of the planned storage facility for the CentralInterstate Low-Level Radioactive Waste Compact Commission. CAUSES, NEBRASKA PustIC POWER DISTRICT'S (NI?D) and the process to license this facility has been fraught with difficulties and slow progress. Our Board is so EM PLOYE ES RECORDED ONE OF THE BEST YEARS OF concerned with this issue that we consider our financial OPERATION IN OUR HISTORY, ON TH E PAGES OF THIS support of this project on a month-to-month basis. We fully realize that we will need a facility to dispose of our ANNUAL RMRT, YOU WILL READ ABOUT OUR OMRA-low-level radioactive waste, but have to carefully con-template continued support of this project. considering TIONAL SUCCESSES AS WELL AS SEE THE COMMITMENT, its lack of progress toward its goals.
In this time of change, many issues will warrant CHARACTER, AND STRENGTH OUR EMPLOYEES BRING TO thoughtful consideration. This Board takes seriously its responsibility to serve the citizens and customers il COMMUNITIES THROUGHOUT NEBRASKA.
represents. We know our decisions guiding the future of NPPD affect the organization and the strength and .As you will see, we are interested in the long-term vitality of the communities of this great state. success of each and every community we serve, as well as the state as a whole. We are public power and proud y that our primary focus is serving our customers with
') low rates and excellent service. As the electric utility k industry continues its transformation to an openly !
competitive marketplace. NPPD will be a voice of the Warren R. Cook customers in rural America. The needs and interests of Chairman of the Board our customers are foremost in our minds as public and private debates accelerate on this complex issue.
At the state level, the Nebraska Legislature, a uni-cameral body, is in the middle of a three-year study of the electric utility industry and its future. At the turn of the century, that body will decide how the only totally public power-served state in the nation should be structured. The group is focused on protecting the 2
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a advantages that public power brings to Nebraska, such envbonment is as well. It is important that industry as rates 22 percent below the national average, and leaders work with the federal government to balance allowing consumers to take advantage of more choices, the needs of the environment with economics. To that including products and services. I, personally, serve end, I was invited by the Clinton Administration and on the Advisory Committee to the Legislature's Natural attended a Global Climate Challenge conference at the Resources Committee conducting this study, and White Ilouse. As one of to electric utility industry another NPPD staff member works on the study's Task C.E.O.s in attendance, I expressed the industry's con-Force. Through the American Public Power cern that any restrictions mandated should apply to all Association the National Rural Electric Cooperative countries and that emission trading should be a part of Association, and the Large Public Power Council, the any greenhouse gas reduction program. This issue nation's 2 largest public utilities, we carry the voice of could drastically affect every generating utility and the our customers to the federallevel. economy of the nation.
Knowing our customers' needs allows us to oper- On a final note, I want to express my pride in the ate NPPD in a manner ' hat better serves them. In light performance of NPPD's employees. During these chal-oft' aew products and services we intend to offer and lenging times. our employees continue to impress me the additional options our customers desire, we need with their willingness and desire to make positive to rebuild some of our internal technology systems to changes that will benefit our customers. We've been support the part of our business. For the past year, a working hard on improving the way we do business, project team has been working toward development of which is leading to savings in our operating budgets an integrated customer support system that will handle and more customer-focused business processes. In the billing as well as customer information. Additionally, case of the procurement of goods and services, we another teem is developing a business system to expect to save $3.2 million in the first year of imple-consolidate and improve our internal accounting mentation of a newly designed process. They are also and information systems. Both of these tools are gaining advantages in nes marketplaces with bold and necessary for us to make a smooth transition to a more creative thinking. I am confident that through our col-competitive environment. lective efforts, we will improve the past and invent a The first sign of our future success in a competi- future that will ultimately build a stronger Nebraska.
tive environment can be seen in our energy supply business. Our generation facilities operated extremely well during 1997, breaking record after record along the way. While we will continue to optimize the use and value of our current resources, we are also looking toward the future generation needs of the area. We are in the midst of a baseline study on Cooper Nuclear William R. Mayben Station in cooperation with MidAmerican Energy President and Chief Executive Officer Company and the Lincoln Electric System, our two partners in the plant, Our power supply contracts with these two entities end by 2co4, but the facility is licensed to operate until 2o:4. The preliminary results look promising for continued operation as long as the improvements in the operation of the plant continue.
l Later in the report, you will read about other reaource planning issues including our research and evaluation of renewables. While low-cost electricity is important to our customers, the protection of the j 3 j I j
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~A GROWING ECONOMY...lNCitEASING throughcct the state. NPPD demonstrated it is Nebraskn energy leader.
NEEDS FOR ELECTRICITY. . LOW UNEMPLOY- NPPD's strong financial picture reflected these successes with net revenues of $8.6 million MENT. . STEADY EX PANSION OF llOUSING for the year and a debt service coverage ratio.
which refietts the amount of Electric System STAhTS... LOW ELECTRIC RAT ES. . QUALIFY net revennes available to meet the annual debt service payments on outstanding revenue EDUCATION . . RELI ABLE ELECTRIC bER- bonds, of 1.83:i. The credit ratings by Standard & Poor's (S&P) and Moody's on our V I C E . . TilESE FACTORS INDICATE Tl!E outstanding revenue bonds remained A+ and Ai. respect ively.
STRENGTil OF COMMUNITIES IN NEBRASKA. NPPD reduced total outstanding revenue hond debt to $1.3 billion by retiring $7 : mil-TilROUGilOUT 1997, TIIE STATE CON- lion of revenue bonds during 1997. The
$184 5 inillion of Nuclear Facility revenue TINUED ITS STRONG ECONOMIC SilOWING OF bonds that remain outstanding will be retired by January 1. 2oo.4 THE 1990s. AS Tile ELECTRIC UTI LITY During 1997. NPPD completed a tax-exempt commercial paper offering which SERVING T.llE LARGEST PART OF NEBRASKA. authorizes us from time-to-time to issue up to
$150 million of Commercial Paper Notes for NPPD CONTRIBUTED TO Tills SUCCESS. financing certain costs relating to the Electric System. NPPD had approximately $63 million of WORKING TOGETilER WITil OUR MUNICIPAL the notes outstanding at year end.
As a testament to the economic growth in AND RURAL WilOLESALE AND RETAIL PART- Nebraska. and NPPD's role in contributing to this growth, an all-time electric-generating NERS TO BUILD STRONG COMMUNITIES, MEET record was set in 1997. Overall, N PPD's gener-ating facilities produced 15 81 million CUSTOM ER NEEDS AND SERVE CITIZENS megawa t t - hou rs (MWhs) of electricity.
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1 breaking the previous record set in i996 by year. It is the fifth year GE has recognized CNS I more than a half-million MWhs. with this awaid. l Three facilities set individual generating in 1997, CNS generation was the fourth records in i997: Gerald Gentleman Station highest year in its history. However, this was (GGS), a coal-fired plant south of Sutherland; the highest generation ever during a year Sheldon Station, a coal-fired facility near that included a refueling outage. CNS's goal llallam; and the North Platte Hydro. The is to continue improving operations to records resulted from a combination of power retain ito role as part of NPPD's diversified plant availability, greater availability of trans- generating mix. and operate through its mission lines and gro..:ng power sales. GGS 2ci4 icensed l period.
was on track to be one of the lowest cost coal- In addition to generation records. NPPD fired power plants in the country for i997, if set a record in i997 or f the amount of clee-not the lowest. Rankings on specific facilities tricity it transported across its transmission are scheduled to come out later this year. system. The transfer of 28.82 million "Ths Greater efficiencies in running NPPD's broke the previous record of 26 93 million M Whs coal-fired plants contributed to our succers in set in 1996. The transmission figures include ,
maintaining low-cost electricity for customers. electricity transported from N PPD's and In i99 .8 NPPD plans to continue finding ways neighboring utilities' generation facilities. ,
l to reduce costs and operate generating facili- Record generation by the Western Area Power ties more efficiently to offer more competitive Administration also contributed to N P PD's rates to customers. success in this area. Sales were up due to Additionally. Cooper Nuclear Station higher native loads and aggressive efforts by (CNS) reached a cumulative milestone of too NPPI) power marketers.
million MWhs of electric generation since its NPPD's transmission figures have risen startup in i974. The nuclear facility hourly everyyear since i994, and increased nearly 50 gene rates approximately 800 megawat ts percent since 1990. By aligning maintenance gross. CNS was honored in November by and power plant outage schedules instead of General Electric (GE) for achieving a reducing generation, and by doing " bare 92 3 percent " capacity factor" during 1996 hand" work on energized lines, crews kept which shows how effectively a nuclear facility transmission lines available an average of uses its resources on average during the entire 98 percent of the time.
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Unplanned transmission outages to Efforts to reduce wholesale rates were but wholesale customers are measured against a one part of the equation in 1997 as NPPD nine-year industry averabe on a per month sought new ways to interact with customers basis. The industry averag 's .27 unplanned and lay a foundation for stronger communi-outages per month, and M PD bettered the ties. In the retail area, NPPD restructured its industry average at .i4 unpinned outages per organization to emphasize greater customer month. Another accomplishment in the contact and services, and focus on our distrib-transmission area during 1997 was the refur- ution system. The changes reduced levels of bishment of almost 28o miles of iis kilovolt management and stressed more frequent lines, including structures, hardware and meetings with customers to get feedback on j installation of over i,ooo new poles, while what services work best for them. Combined j maintaining high reliability for the system, with this strategic change, the retail reorgani- l Along with these refurbishment more than zation placed greater reliance on self-directed 1o0 miles of fiber optic cable were installed employee teams.
on these lines to support internal communi- NPPD's success depends on its employees.
cation needs. In i998. NPPD will continue to By asking employees to take more responsi-look for opportunities to market power and bility on business decisions facing them maintain a high level of transmission reliability daily, we will react more quickly to market to serve customers. changes and be capable of responding to new The increased revenues from generation demands rapidly. As a result, our employees and transmission, along with a number of worked to streamline a number of billing and other cost savings allowed NPPD to reduce collection services that improved retail ser-prices to its wholesale customers as pre- vice. Our new retail structure is designed to viously mentioned in Warren Cook's column. maintain community presence by keeping For.the so-year period i988-1997, NPPD's customer service offices open and responding wholesale customers' rates rose only two to the needs of local customers, which helps percent cumulatively, for an average yearly build stronger communities throughout the increase of o.2 percent. In contrast, the state and enhance our role as Nebraska's Consumer Price Index during the same energy leader.
no year period rose 42 percent cumulatively, These business and strategic moves in or 4 2 percent annually. our customer service area strengthened ties AVERACE REVENUE PER KTH SOLD A V f. R A C E REVENUE pen KWH SoEn dirm Wholesale Cusnomers onto diesast-All Classes >
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" l with our customers and the communities we evaluate power generation by small-distrib-serve. Also this year, a new Corporate uted wind power facilities for use in Nebraska.
Development and Marketing business unit NPPD also took another step in the got up and running. Research and develop- direction of renewable electric-generating, ment of new products and services is inte- resources in i997, when it partnered with a gral to this area, but i997 saw some critical number of organizations to place trans-breakthroughs in applications and partnering portable and stationary solar panels on a with others to strengthen NPPD's bond with ranch south of Ainsworth. The panels gener-its customers. ate electricity to pump groundwater for cattle A unique product was a new technology and allow the rancher to protect land from developed by NPPD employees and patented in overgrazing as herds are moved to different October. The product, a Nitrogen Oxide Lance pastures along with the transportable solar (NOx Lance), reduces nitrogen oxide emissions arrays. Called the "Pinney Ranch Project,"
from coal-fired generating plants by roughly N PPD paid for the purchase and installation of 50 percent. The significance of this invention materials to operate the two sets of panels.
puts NPPD on the cutting edge of pollution These three new products-the NOx control technologies. NPPD is aggressively Lance, wind turbines and solar panels-are seeking opportunities to provide this technol- examples of NPPD's leadership in meeting ogy to other utilities throughout the United and exceeding customer needs. But we have States, and is pursuing a patent application in not stopped therei NPPD has also taken steps 18 European countries. to enter into an alliance to explore ways to As part ofits efforts to continue diversi- brir g other new services to customers. Near fying its generating mix, NPPD joined with a the end of 1997. N PPD began carefully eval-group of Nebraska utilities to construct 'wo uating a new marketing alliance. This 75o-kilowatt wind turbines in north central alliance will be a network of utilities which .
Nebraska near Springview. Negotiations are may give us additional options to research I ongoing to finalize terms with the manufac- and develop new products and services to I turer of the two wind turbines so construction bring to the marketplace. It will allow us to j may begin later this year. The goal of the pro- maintain our identity while delivering cost- j ject is to verify the performance of the latest effective products and services to our eustomers. l designs of commercial wind turbines and Sou ncrs or EN E RGY ungy Hrdro io. o %
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NPPD is also piloting two new products to drawing 70 percent of its energy from the gauge customer needs and market demand. We ground-a free resource that the customer are currently developing business plans on owns. The system helps conserve long-term both for our wholesale and retail customers. fuel resources and reduces emissions to the air.
One of the pilots, termed "TeCom," monitors NPPD's push to strengthen communities ,
electrical, water and gas usage for customers. throughout the state doesn't stop with new l The system allows customers to verify their products and services. It extends to partnering utility bill, monitor their usage real-time, efforts with businesses, schools and local l
aggregate load for multiple sites, look at esti- officials. During 1997. NPPD rededicated its j mated monthly bills and notify the customer Kearney Hydro facility in partnership with the I of a power outage, among other things. NPPD city, the University of Nebraska-Kearney and a has about 25 of the TeCom systems in place, local group working to preserve and enhance !
and we are gat he ring in fo rmation to the historical significance of the facility, which determine the value of the product to our first delivered electricity to the surroun, ling customers. The attributes of the product vary area in 1888. Through the Kearney Canal, depending on the type of customer. NPPD delivers water to the city for irrigation The other pilot is a geothermal heating and recreation. while driving the hydro to pro-and cooling system. Sixteen schools in duce low-cost, reliable electricity.
NPPD's service territory currently use the This type of partnering not only builds system, which utilizes heat from the ground strong communities, but also enhances ties to warm buildings in the winter, while with other groups important to Nebraska's reversing this process to cool the buildings future. For example, NPPD Water Resources in the summer by circulating air through an personnel worked diligently for years with underground well field. NPPD is responsible officials from Wyoming and Colorado, as well as for designing, constructing and maintaining environmental groups, water users and the well field, and the Central City School Nebraska officials, to develop a cooperative Board recently voted to accept a proposal to agreement for management of the Platte River.
install this system for its elementary school, in 1997, the governors of Wyoming, Colorado In addition to yearly cost savings through its and Nebraska signed an agreement, along with operation, the system benefits customers by the U.S. Secretary of the Interior, to continue m i m o rio, m os o o n,so m es onnu,- nm,ms l
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1 efforts toward producing a basin-wide recovery One community is already using this new program for endangered and threatened species service and others are discussing the potential in the Central Platte River basin. for applying it in their towns. The other initia-In 199 8. efforts by Water Resources per- tive passed in i997 allows NPPD to lease and sonnel to work with parties holding diverse sell facilities and/or assets to private entities interests and resolve other complex issues not engaged in the electric business. These are concerning Platte River water use will con- two more examples of N PPD working with local tinue. Together with several parties, NPPD leaders to build strong communities and offer submitted an agreement to the Federal Energy new services which meet the demands of cus-Regulatory Commission (FERC) concerning tomers, long-term operating licenses fo r the in 1997. NPPD also pursued state legisla-Sutherland Project. NPPD hopes to see FERC tion which would have allowed public utilities accept the terms of the agreement in 1998 to utilize excess capacity on fiber optic cable.
The agreement produces benefits for all those We saw this as a public service. While this involved-from NPPD and the states of legislation did not pass, NPPD remains Nebraska, Colorado and Wyoming, to the local committed to working with any other parties in farmers, businesses, communities and the the state who would like this service. We do not environment relying on the water. This plan to introduce legislation on this issue in
" cooperative" effort among the parties i99 8, but will offer support if groups come reduces long-term uncertainty about water forward to sponaor legislation.
used for cooling purposes at GGS, for farmers' During i99 8 , we will work on our irrigation and to drive the North Platte Hydro. legislative initiatives carried over from the During 199 8, the Environmental 1997 session, which are designed to make Depart ment will spearhead a group to examine procurement more efficient and reduce global warming implications for NPPD and costs in the purchasing area. NPPD will also the state as a whole. This group is expected support a legislative initiative which to develop a series of options to determine increases competitive bidding thresholds the economic and environmental costs and and exempts used equipment from the benefits stemming from the global warming competitive bidding process.
issue. Our goal will be to make economic and NPPD took a number of strides into new environmental decisions which are in the terrain during i997, from introducing best interests of all Nebraskans. legislation to marketing new products. With NPPD's Legislative Affairs Office proac- the demands of an increasing!y competitive tively pursued six initiatives in i997 designed electric utility market evident, NPPD brought to enhance our competitive position: two to its customers the benefits of this explo-passed and two carried over to the 1998 ration into new business areas. In the coming Legislative session. Of the two initiatives years, NPPD pledges to continue this explo-passed, one allows public utilities such as N PPD ration, building strong communities with its to offer expanded services to communities. wholesale and retail partners throughout the NPPD is now authorized to combine meter state while fulfilling its vision as " Nebraska's reading (gas, electric and sewer, for example) Energy Leader."
and send them on one bill to the customer.
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9 e
1997 ShTISTICAt. REVIEW Electric System, Power Supply System and Nuclear facility Combined Revenues from Average Electric Energy Electric Sales Number of hiWil Sales (Thousands)
Customers Amount % Amount %
SALES Retail:
Residential 86,096 949,187 6.5 4 69,769 14.4 Rural & Farm 3.187 60,352 0.4 4,600 1.0 Commercial 19,296 843,962 5.8 49.229 10.1 l
Industrial 68 1,044,315 7,1 32,709 6.7 Public Lighting 248 25,362 0.2 2,390 0.5 Municipal Power 196 45,243 0.3 2.656 0.6 Miscellaneous Municipal 2,784 123,496 0.8 5,667 1.2 Total Retail 111,875 3 091,917 21,1
- 167,020 34.5 Wholesale, 48 Municipalities (Total Requirements) 1,468,154 10,0 4 50,950 10.5 2 Municipalities (Interconnections & Partial Requirements) 50,769 0.4 1.518 0.3 25 Public Power Districts & Cooperatives (Total Requirements) 4,609,939 31.4 139,867 28.8 Total Wholesale Sales (Excluding Nonfirm and Participation Sales) 6.128,862 41.8 4 192,335 39.6 Total Retail and Wholesale Sales (Excluding Nonfirm and Participation Sales) 9,220,779 62,9
- 359,355 74,1 Other Utilities (Firm and Nonfirm) 2,794.989 19.0 42,072 8.7 Participation Sales (d 2,656.308 18.1 61,680 12.7
___ Total Revenues from Electric Energy Sales 14.672,076 100.0 s 463,107 95.5 Other Operating Revenues (Net of Deferred)
- 22,0_49 4.5__
Total Electric System Operating Revenues s 485,156 100.0 Production Costs MWil (Thousands)
GENEMTION Amount % Amount %
Production:
Electric System (including Interchange) 1,599,550 10.4 4 43,626 12.6 l Purchased: {
8,961,437 s 140,686 Power Supply System (i)
Nuclear Facility 6) 2.728 009 58.2 17,7 111,651 40.6 32.2
)
l Other 2,110,155 13.7 50.651 14.6 Total Power Purchased 13,799,601 89.6 6 302.988 87.4 Total Power Produced and Purchased 15,399,151 100.0 $ 346,614 100.0 6)The ricetric Svetem purcha ee too% of the act generatma and power piarchases of ine Power Supply System and so% of she Nudear racWey b4*ed upon the total comis of the respechve s.wems Pursuant to the Power Sales Comract, MidAmenvan Energ Company purchased 2127.688MTH from the hudear heility- EdAmerican Energ, Company perticipatmn is not included in the table.
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a G E.N ERAL 1997 1996 i995 t994 I993 (Thousands)
Utility Plant (at cost): (1)
Electric System 993.288 s 943.107 s 892,069 s 857,762 4 820.498 Power Supply System 847.553 842.248 817.689 765.542 748,906 Nuclear Facility 743,097 731.381 717.273 694.382 679.346
_ _ . ~ _ Toyal U_tility Plant 6 2.583.938 s 2,516.736 s 2.427.031 s 2.317.686 s 2.248,750 Outstanding Debt:
Elect ric System (2) s 350,502 4 361.399 4 390,889 4 363.023 $ 370.284 Power Supply System 827,105 855,465 881.765 830,765 855,235 Nuclear Facility 184.520 208.985 232,360 254,725 276.170
_ ____ Total Outstanding Debt 1,362,127 s 1,425,849 s 1 505.014 s 1,448.513 $ 1.501,689 Accredited Number of Capability Percent Productior. I'lant Facilities: '"
Steam - Conventional 2 1,590.0 58.5 %
Steam - Nuclear (4) 1 769.0 28.3 Ilydro 9 158.8 5.9 Diesel 9 46.7 1.7 Combustion Turbine 3 152.0 5.6 Total Production Plant Facilities 24 2.716.5 100.0 %
b) ks ofretsremenu W Inchides hs raempn CommmualPeper (3)Indudn ess hyde pianu and see drawlpianu unde rensrace sa she knes 4)Indudre go% of MFransrocsed so Med4meraen Anerp Compoor Miles of Transmission Line in Service 6,343 Number of Permanent Employees 2,139 5997 Contractual and Tax Payments (Thousands)s Lease Payments to Retail Towns 4 15.951 5% Gross Revenue Tax s 5.728 in Lieu of Tax Payments s 207 How NPPD's Dorun Won.xs rom You-1997 I ~~~ * " " " " * "
i M BMG kW . Cost of Production-roi.nippysnam 29.0%
M.,"M > '"~ #"* , 2. Cost of Production- Ada.,neau.r ,3.0%
- ' % a q 8 J Ti A315( 3 A3 E l 5_
- 3. Cost of Other Operation and Maintenance Expenses 14.9%
i 10[ {d i p a lo M N . Cost of Purchas,a Power.oa, 11.3%
t; a gig B LJt4431503 A j ' 4 r
bk 5. Bond Retirements. Construction Frois Revenues. Etc. 9.1 %
10 5 .'~ ' ' 6. Cost of Production-om, eM.~ m$ k10 9.0%
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- 7. Interest. Other income Deductions and Taxec 3.7%
<nas almuma .m .,4 othe reanue.)
m_- _ _ _ - - - _ _
a NPPD Eucraic SysTru Report ofindependent Accountants To the Board of Directors Nebraska Public t'ower District:
We have audited the accompanying balance sheets of the Electric System of Neb.sska Public Power Disti.ct (a public corporation and political subdivision of the State of Nebraska) as of December 31,1997 and 1996, and the related statements of revenues and expenses and accumulated net revenues, and cash flows for each of the three years in the period ended December 31,1997. These fin ncial statements are the responsibility of the District's management. Our
.mponsibility is to exprns an minion on these financial statements based an our audits.
We conducted our audits in accordance with generally accepted auditing standards and Government Auditing Sr.ndardr. Those standards require that we plan and perform the andit to obtain reasonable ssurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall n..ancial statement presentation. We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in all matenal respects, the financial position of the Electric System of Nebraska Public Power District as of December 31,1997 and 1996, and the results ofits operations and its cash flows for each of the three years in the period ended December 31,1997, in conformity with generally accepted accounting principles.
Our audits were made for the purpose of forming an opinion on the basic financial statements taken as a whole. The supplemental schedules of the calculation of the debt service ratios in accordance with the Electric System Bond
' Resolution for each of tue three years in the period ended December 31,1997, are presented for purposes of additional analysis and w not a required part of the basic financial statements. Such supplemental schedules have been subjected to the auditing procedures applied in the audits of the basic financial statements and, in our opinion, are fairly stated in all material respects in relation to the basic financial statements taken as a whole.
In accordance with Government Auditing Standards, we have also issued a report dated March 16,1998 on our consideration ofNebraska Public Power District's intemal control over financial reporting and our tests of its compliance with certain provisions oflaws, regulations, contracts and grants.
Coopers & Lybrand L.L.P.
Omaha, Nebraska March 86,1998 l
20 l
l l
O NPPD Ei rcimc SysTru Balance Sheets - December 31,1997 and 1996 1997 1996 (Thousands)
ASSETS Utility Plant, at Cost S 993,288 $ 943,107 Less-Reserve for depreciation and amortization (Note 1) 508,425 474,038
$ 484,863 $ 469,069 Debt Reserve Account (Note 1) $ 35,795 $ 35,690 Receivables from Sale of Property $ 1,998 $ 2.694 Current Assets:
Cash and investments (Note 1) $ 87,692 ! 85,932 Receivables, less reserves 51,684 56,475 Materials and supplies, at average cost 9,381 10,502 Prepayments and other assets 1,038 1,445
$ 149,795 $ 154,354 Deferred Compensation Plan Assets (Note 6) $ 15,159 $ 14,638 Deferred Charges:
Nuclear Facility billings (Note 1) $ -
S 7,039 Unamortized financing costs (Note 1) 2,181 2,445 Other 1,829 1,155
$ 4,010 $ 10,639 TOTAL ASSETS $ 691,620 $ 687,084 LIABILITIES AND CAPITAL Accumulated Net kevenues (Note 1) $ 264,154 $ 255,576 Long-Term Debt (Note 3) $ 287,527 5 305,484 Co imercial Paper Notes (Note 2) 62,975 55,915
$ 50,502 $ 361,399 Less-Current maturities oflong-term debt (Note 3) 19,115 18.271
$ 331,387 $ 343,128 Current Lir.bilities:
Current maturities oflong-term debt $ 19,115 $ 18,271 Accounts payable 34,638 25,195 Accrued lease payments 3,654 3,540 Other 10,264 9,374
$ 67,671 $ 56,380 Deferred Compensation Plan Liabilities (Note 6) $ 15,159 $ 14,638 Deferred Revenues (Note 1) $ 12,990 $ 17,006 Unamortized Payment Received for Refinancing Costs (Note 1) $ 356 259 _$
TOTAL LIABILITIES AND CAPITAL $ 691,620 $ 687,08d The accompanying notes tofinancial statements are an integralpart of these statements.
u
NPPD Eucraic Snim Statements of Revenues and Expenses and Accumulated Net Revenues for each of the Three Years in the Period Ended December 31,1997 1997 1996 1995 (Thousands)
Revenues and Expenses:
Operating Revenues (Note 1) $ 485,156 $ 467,871 $ 452,402 Operating Expenses:
Power purchased-Nuclear Facility and Power Supply System (Note 1) $ 252,337 $ 258,914 $ 266,607 Other 50,651 43,470 33,851 Production-Fuel 11,279 12,414 12,888 Operation arid maintenance 32,347 20,070 16,376 Other operatiori and maintenance 60,656 50,602 46,059 Lease payments (Note 1) 16,065 15,555 15,235 Depreciation and amortization (Note 1) 35,558 37,426 35,624 Payments in lieu of taxes 6.127 5,971 5,935 Total operating expenses $ 465,020 $ 444,422 $ 432,575 Net operating revenues $ 20,136 $ 23,449 $ 19,827 Interest and Other Revenues:
Allowance for funds used during construction $ 913 $ 782 $ 1,742 Interest and other 7,219 6,885 7.159 Totalinterest and other revenues S 8,132 $ 7,667 $ 8,901 Net revenues before other deductions $ 28,268 $ 31,116 $ 28,728 Other Deductions:
Bond interest $ 16,496 $ 13,288 $ 16,382 Other interest 3,194 3,000 2,235 Total other deductions $ 19,690 $ 16,288 $ 18f 17 Net Revenues (Note 1) $ 8,578 $ 14,828 $ 10,111 Accumulated Net Revenues (Note 1):
Beginning balance 255,576 240,748 230,637 Ending balance $ 264,154 $ 255,576 $ 240,748 The accompanying notes tofir,ancial statements are an integralpart ofthese statements.
22
NPPD Eucmc Sysmt Statements of Cash Flows for each of the Three Years in the Period Ended December 31,1997 1997 1996 1995 Cash flows provided by (used in) operating activities: (Thousands)
Net operating revenues $ 20,136 $ 23,449 $ 19,827 Adjustments to reconcile net operating revenues to net cash provided by operating activities:
Depreciation and amortization 35,558 37,426 35,624 Vehicle depreciation charged to operations and capital 1,320 1,358 1,331 Reduction of deferred charges-Nuclear Facility 7,039 14,688 15,708 Changes in assets and liabilities:
Receivables, less reserves 4,791 (8,918) (3,505)
Materials and supplies 1,121 82 (324)
Prepayments and other assets (563) 27 109 Addition to deferred charges-Nuclear Facility -
(4,796) (10,418)
Other deferred charges (674) 968 (782)
Accounts payable and accrued leased payrnents 9,557 9,844 (3,176)
Deferred revenues (4,016) (1,656) 10,324 Other liabilities 2,027 (844) 669 Net cash flows provided by operating activities S 76,296 $ 69,472 $ 67,543 Cash flows provided by (used in) capital and related financing activities:
Utility plant additions $ (51,642) $ (52,829) $ (38,404)
Other non-operating revenues 606 590 1,432 Proceeds from notes receivable for sale of property 696 744 691 Repayrnent oflong-term debt - principal (18,271) (59,984) (18,385)
Payment ofinterest on long-term debt (16,184) (12,794) (16,121)
Repayment of notes payable principal - -
(30,000)
Payment ofinterest on notes payable (3,194) (3,000) (2,235)
Net change in Debt Reserve Account 6,135 (6,995)
(105)
Issuance oflong-term debt - -
75,679 Issuance of notes payable 7,060 30,000 -
Net cash flows (used in) capital and related financing activities $ (81,034) $ (91,138) $ (34,138)
Cash flows provided by (used in) investing activities:
Interest on cash and cash equivalents $ 182 $ 232 $ 408 Interest from investments 6,432 6,063 5,320 Sale of available-for-sale securities 216,251 259,823 329,768 Purchase of available-for-sale securities (207,870) (228,32I) (376,579)
Amortization of accrued interest - -
(666)
Net change in gross unre31ized gains on available-for-sale securities 119 (235) (279)
Net change in gross unrealized losses on available-for-sale securities (214) 252 (1)
Net cash flows provided by (used in) investing activities 7 14,546 5 38,168 $ (42,029)
Net increase (decrease)in cash $ 9,808 $ 16,502 $ (8,624)
Cash beginning of year 33,966 17,464 26,088
, Cash end of year $ 43,774 $ 33,966 17,464 The accompanying o.otes tofinancial sta'eme sts are on integralpart ofthese statements.
_ 23
NPPD Et.Ecraic SYSTEM Supplemental Schedules-Q!culation of Debt Service Ratios in accordance with the Electric System Bend Resolution for each of the Three Years in the Period Ended December 31,1997 1997 1996 1995 (Thousands)
Operating revenues (Note 1) $ 485,156 $ 467,871 $ 452,402 Operating expenses (Note 1)* (465,020) (444.422) (432,575)
Net operating revenues . $ 20,136 $ 23,449 $ 19,827 Interest and other revenues 8,132 7,667 8,901
-Interest deductions (19,690) (16,288) (18,617)
Net revenues - $ 8,578 $ 14,828 $ 10,111 Add:-
Accrued revenues included in operating revenues (Note :) $ 7,449 $ 351 5 8,303 Interest deductions- 19,690 16,288 18,617 Depreciation and amortization 36,878 38,784 36,955
$ 64,017 $ 55,423 $ 63,875 Deduct:
Provision for operating expense reserve (Note 1)** $ 7,449 $ 351 :$ 8,303 Allowance for funds used during construction 913 782 1,742 Gain on sale of property 344 344 -
Investment income retained in construction funds 724 215 439
$ 9,430 $ 1,692 $ 10,484 Y revenues cvailable for debt service under the Electric
$ 63,165 $ - 68,559 $ 63,502
. ;.: em Bond Resolution (Nota 1)* _
Amot.nts deposited in the Electric System Debt Service
- Account:
Principal - $ 18,070 $ 16,519 $ 18,100 Interest ' 16,497 13,288 16,382 l
)
$ 34,587 $ 29,807 $ 34,482 !
.I Ratio of net revenues available for debt service to debt j
. service deposits (Note 1) 1.83 2,30 1.84 The accompanying notes tofinancial statements are an integralpart of these statements.
l
- ~ The reduction of deferred charges is reflected in these summary statements as Operating Expenses to avoid l overstating Net Revenues. These deferred charges werefunded by commercialpaper notes and other matured l l short-term indebtedness, wiich s cc nstitute subordinated indebtedness under the Electric System Bond Resolution.
The Electric Resolution requires subordinated indebtedness to be paidfrom the General Reserve Fund created .
l under the Electric Resolution. .
- The Electric Resolution defines Operating Expenses to include payments into reserves in the Operating Fundfor "thepayment offuture operating expenses. Theprovi(oisfor operating expense reserve repra ,ents the net change
- in the cumulative surplus revenues in each respectiveyearfrom both whclesale and retail service.
24
NPPD Eucrme Sysm Notes te Financial Statements was approximately 3% in each of the yea:s ended December 31,1997,1996, and 1995.
The District has long-term lease agicements with I.
SUMMARY
OF SIGNIFICANT ACCOUNTING 203 municipalities. These lease agreements obligate the POLICIES: District to make lease payments and pay for normal property additions during the term of the lease. The A. Organization- Distrie has recorded provisions, net of retirements, for The District has three separate divisions for amortization ofleased plant additions of $8.3 million in accounting purposes as follows: 1997, $9.2 million in 1990, and $9.1 million in 1995.
These leased plant additions, which are fully reserved, Electric System totaled $110.5 million at December 31,1997 and Power Supply System $102.2 million at December 31,1996.
Nuclear Facility The District charges maintenance and repairs, including the cost of renewals and replacements of minor As required by Bond Resolutions, separate records are items of property, to maintenance expense accounts.
maintained for each division. The Electric System Renewals and replacements of property (exclusive of financial statements exclude the Nuclear Facility and minor items of property, as set forth above) are charged Power Supply System, for which financial statemente are to utility plant accounts. Upon retirement of property presented separately herein. The Electric System subject to depreciation, the cost of property is removed financial statements should be read in conjunction with from the plant accounts and charged to the reserve for such other f.nancial statements. depreciation, along with the removal costs, net of salvage.
Nebraska Public Power Distr'ct, a public corporation and a political subdivision of the State of Nebraska, is an C. Allowance for Funds Used During Construction electric utility which sells electric energy to wholesale (AFUDC)-
and retail customers la the Midwest. The District's This allowance, which represents the cost of funds contracts and rate schedules specify the time period in used to finance construction, is capitalized as a which billings are to be paid after services are rendered. component of the cost of utility plant and is credited to Accounting guidance followed in preparation of these Interest and Othen Revenaes. The capitalization rate financiM statements is provided by the Governmental depends on the source of financing. The rate for Accountmg Standards Board (GASB). Absent GASB construct;on financed with revenue bonds is based upor standards on any particular situation, the pronouncements the interest cost of each bond issue less interest income.
of the financial Accounting Standards Board (FASB) are The rate for construction financed by revenues is based presumed to apply. upon the weighted average rate ofinterest of the current The preparation of financial statements in conformity outstanding borrowings. Construction Enanced on a with generally accepted accounting principles requires short-term basis with tax-exempt commercial paper management to make estimates and assumptions that (TECP) is charged a rate based upon the weighted affect the reported
- wunts of assets and liabilities and average of TECP outstanding. For the periods presented
. disclosure of contingent assets and liabilities at the date of h? rein, the AFUDC rates for construction funded by the financial statements and the rerorted amounts of revenue bonds or revenues vary from 5.1% to 6.2%. For revenues and expenses during the reporting period. construction financed on a short-term basis with TECP, Actuai resuits could differ from those estimates, the rate charged was 3.5% in 1997,3.8% in 1996, and Certain prior year amounts have been reclassified to 3.9% in 1995.
conform to current year presentation.
D. DeferredCharges-B. Depreciation, Amortization.and Afaintenance- Deferred charges represent Nuclear Facility billings The District records depreciation over the c"imated for certain capital additions. The District has written off i usefullife of the property. Depreciation on Utr Plant deferred charges of $7.0 million in 1997, $14.7 milhan in n
NPPD Eucriuc Srsitu 1996, and $15.7 million in 1995, and included such AVAILABLE-FOR-SALE SECURITIES' reductions in power purchased expense. l' DEBT SECURITIES ISSUED BY Tile U.S. TREASURY AND OTilER E. UnamortizedFinancing Costs-
.G ERNMENT CORPORAMNS nese costs represent issuance expenses on all bonds AND AGENCIES and are being amortized over the life of the respective bonds using the bonds outstanding method. December 31,1997 Debt Reserve F. Unamorti:ed Pays nt Received for Refinancing Investments Account Costs- (Thousands)
His reimbursement from the Nuclear Facility was for $ 43,580 Amortized Cost $ 35.144 certain refinancing costs of the Electric System incurred Gross Unrealized Gains 412 7 55 in 1968 and is being amortized over the life of the Gross Unrealized Losses 74 122 1968 Revenue Bond issue using the bonds outstanding Approximate Market value $ 43,916 $ 35,787 method.
December 31,1996 G. Cash andInvestments- Debt Reserve Investments Account December 31, 1997 1996 (I housands)
Am rtized Cost $ 52,078 $ 35,106 -
(Housands) 679 Gross Unrealized Gains 177 Debt Service Fund S - $ 43 Gross Unrealized Losses 288 107 Revenue Fund 21,422 24,527 Approximate Market Value $ 51,967 $ 35,678 Operating Fund 22,265 9,235 Construction Funds 8,189 18,828 The U. S. Treasury and Government Agencies Securities, Commercial Paper Account 10,212 *,225 at December 31,1997, have maturity ranges as shown Reserve and Contingency Fund 1,282 1,278 below:
General Reserve Fund 24,322 27,796 Investments Debt Reserve Account S 87,692 $ 85,932 Maturity Market Amortized Market Amortized Range Value Cost Value Cost Funds consist of $43.9 million of investment Less than (Thousands) securities and $43.8 million of cash deposits at Iyear $ 40.662 $ 40,259 $ 13,579 $ 12,942 December 31,1997, and $52.0 million of investment 1 - 5 years 3,756 3.321 22.208 22.202 securities and $33.9 million of cash deposits at TQ AL $ 43.918 5 43.580 $ 35,787 5 35.144 December 31,1996.
Cash depos.its, pinnanly interest bearing, at Unrealized holding gains and losses for securities December 31,1997, and throughout much of the year, classified as available-for-sale are reported in Deferred were covered by federal depository insurance or Revenues until realized.
unregistered U.S. Government and municipal securities -
i amounts and appmximate market values De carrf ng held by various depos.itones. Investments at of.mvestment secunties are summanzed in the following December 31, 1997, were in unregistered tables. The specific identification method was used in U.S. Gavernment securities and Federal Agency
- computing realized gains or losses. '
obligations held in the District's name by the custodial banks.
The Debt keserve Account is valucc semi-annually at January 1 and July I at the lower of cost or market in accordance with requ'rements of the Electric System h Revenue Bond Resolution (Electric Resolution).
26 e
o NPPD Eucmc Systm i1. DeferredRevenues- 3. AccumulatedNet Revenues-As provided in the Electric Resolution, the District Accumulated net revenues consist primarily of covenants to charge rates for wholesale and retail electric cumulative operating revenues collected for utility plant service so that revenues will be sufficwnt to pay annual additions net of related accumulated depreciation. The operating expenses including: 1) Nuclear Facility and remaining accumulated net revenues will be fully offset Power Supply System charges,2) operating expenses by future depreciation expense. In addition, accumulated other than depreciation,3) debt service, and 4) certain net revenues include cumulative interest income carned capital additions. on Construction Funds which is not subject to the Variations between actual energy costs (primarily deferred revenue accounting described in Note 111. This fuel) and the estimated energy costs included in the basic interest income was $1.0 million in 1997,$2.1 m;llion in rater, have been recovered by a Production Cost 1996, and $0.8 million in 1995.
Adjustment (PCA). Billings for the PCA have provided for the recovery of the variation in energy costs either in 2. COMMERCIAL PAPER NOTES:
current or future years. i in the event the District's rates for wholesale and retail The District is authorized to issue up to $150.0 million service, excluding the PCA, result in a surplus or de6 cit of commercial paper notes. A credit agreement is in revenues during a rate period, such surplus or de6 cit is maintained with a bank to support the sale of the taken into account in projecting estimated revenue commercial paper notes. This credit agreement expires in requirements for future rate periods. Such treatment of August 1998. The effective interest rates on outstanding wholesale revenues is stipulated by the District's notes for 1997 and 1996 w;re 3.6% and 3.4%,
long-term wholesale power supply contracts. respectively.
The surpluses and dencits which arose in current and The proceeds of these notes have been used (1) to prior years from the PCA, wholesale, and retail finance certain capital additions of the Nuclear Facility, service have been accounted for in these Gnancial (2) to provide short-term Gnancing for certain capital statements by either a deferral or an accrual of revenue. additions of the Electric System, and (3) for other lawful Beginning in 1998, the District will no longer compute purposes of the District.
and tase a PCA to recover differences in energy costs. In 1996, the District issued $30.0 million of Instead, differences in energy costs will be accounted for commercial paper notes. The proceeds from this issue, the same as other surpluses and dencits in revenues together with other available funds, were used to during a rate period. Such surplus or deficit in energy currently refund the Electric System Revenue Bonds, costs will be taken into account in projecting estimated 1978 Series A.
energy costs for future rate periods. In addition, The $63.0 million of commercial paper notes unrealized gains and losses related to investments held for outstanding at December 31,1997, are anticipated to be sale are included in deferred revenues. The cumulative retired by future collections through electric rates and surplus at December 31,1997, to be reDected in future long-term borrowings. The carrying value of commercial revenue requirements is approximately $13.0 million. paper notes approximates market.
- l. Revenue Recognition- 3. LONG TERM DEBT:
Wholesale revenues are recorded in the period in which service is rendered, and retail revenues are in March 1996, the District called the 1978 Series A recorded in the month retail customers are billed. Bonds as indicated in Note 2.
]
Consequently, revenues applicable to service rendered to The debt service payments of the Electric System i l
retail customers from the period covered by the last Revenue Bonds are $34.6 million for each of the years bil"ng in a year to the end of the year are not recorded as 1998 through 2001 and $34,7 million for 2002. Principal revenues until the following year. Operating revenues are payments, as a component of debt service payments, are also impacted by the surplus or deficit in revenues as $19.1 million, $20.0 million, $21.1 million, described in Note 111. $22.1 million, and $23.3 million for each of the years 1998 through 2002, respectively. n 7 i
NPPD Et.rcraic Sysn u The fair value of existing debt at December 31,1997, requirements are established and may be amenched by the is determined using rates currently available to the District's Board of Directors.
District. The fair value is estimated to be $297.5 million. The financial statements are prepared using the accrual basis of accounting. Employer and Plan member December 31, 1997 1996 contributions are recognized in the period that the (Thousands) contributions are due. The District's contribution was Revenue Bonds: $7.8 million for 1997, $7.9 million for 1996, and 1995 Series A $7.8 million for 1995.
Serial Bonds Plan.mvestments are reported at fa.ir value. Short-term 1997-2009 4.10 % - 6.00 % $ 17,700 $ 18,735 investments are reported at cost, which approximates fair Term Bonds 5.50 % 6,475 6,475 value. Securities traded on national exchanges are valued j 2010-2012 2013-2014 5.40 % 4,930 4,930 at the last reported sales price, in,estments that do not 2015 2027 5.25 % 47,935 47,935 have an established market are reported at estimated fair 1993 Series A values.
Serial Bonds Concentrat. ion of m. vestments representmg 5% or 1997-2009 4,10 % - 5.40 % 82,355 90,075 m re f Plan net assets is as follows:
1992 Series A American Express Trust Money Market Fund 1127.5%
. Serial Bonds 1997-2002 5.10 % - 5.70 % 34,675 40,605 American Express Trust Equity Index Fund 111 25.6%
Term Bonds PIMCO Total Return Fund 14.1 %
2003-2005 6.00 % 25,920 25,920 T. Rowe Price Equity income Fund 10.8 % ;
2006-2021 6.25 % 49,450 49,450 IDS Growth Fund 10.1 %
.1973 Series Franklin Small Cap Growth Fund i 5.8%
Serial Bonds {
1997-2002 5.00 % 2,930 3,430 5. POSTRETIREMENT BENEFITS:
- ?68 Series Term Bonds The District, for employees hired on or prior to 1997-2002 5.10 % 16,895 19,800 December 31, 1992, pays the entire cost of certain
$ 289,265 $ 307,355 hospital-medical and life insurance premiums for these emPl oyees when they retire. Substantially all of the Lease Purchase Payables-1,532 1,710 District's retired and active employees are eligible for 2.00%, due 1997 to 2005 (3.270) (3.581) such benefits. Currently, the cost of these benefits is Unamortized Bond Discount
$ 287,527 $ 305,4P4 recognized es expense as the premiums are paid. The
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total cost of postretirement hospital-medical and life insurance benefits was $2.4 million for 1997, $2.3 million
- 4. RETIREMENT PLAN:
for 1996, and $2.0 million for 1995.
The District's Employees' Retirement Plan (Plan) is a The District amended the plan effective January 1, ;
I defined contribution pension plan established by the 1993. Employees hired on or after that date must District to provide benefits at retirement to regular Panicipate in the plan as an active employee the last five full-time or regular part-time employees cf the District. years of employment in order to qualify for these At December 31,1997, there were 2,223 Pla1 members, benefits. In addition, employees hired on or after 1 l
Plan members av required to contribute a minimum of January 1,1993, are subject to a contribution cap that 2%, up to a maximum of 5%, of covered salary. The limits the Distric's portion of the cost of such coverage to District is required to contribute two times the Plan the full premium the year the employee or retired member's contribution based on covered salary up to employee reached age 65, or the year in which tne l $40,000. On covered selary greater than $40,000, the employee retires if older than age 65. Any increases in j
District is reqaired to contribute one times the Plan - the cost of such coverage in subsequent yeart would be members contribution. Plan provisions and contribution Paid by the retired employee, i 28
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o NPPD EucTarc SysTm Statement 12,' Disclosure of Information on similar allegations. The District has been and intends to Postemployment Benefits Other Than Pension Benefits continue defending the LES case vigorously; however, no by State and Local Govei.: mental Employees (OPEB), assurance can be given at this time as to the outcome of issued by the GASB provides that entities should provide this case. The District has net accrued any amount for certain minimum disclosures regarding the OPEB this claim, which could total $14 million.
provided. Additionally, Statement 12 provides for A number of other claims and suits are pending differing methods for financing OPEB. The District, ac %t the District for alleged damages to persons and indicated above, currently funds OPEB on a ropay and for other alleged liabilities ari Emg out of
pay-as-you-go" basis and has not elected to fund OPEB matters usually incidental to the operation of a utility such through advance funding on an actuarially determined as the District. In the opinion of management, the basis. The District does not contemplate any changes to exposure under these clain>s and suits would not the method for funding OPEB until results of the G ASB's materially affect the finasial position, results of project on recognition and measurement of OPEB are operations, and cash flows of the District as of available for analysis. December 31,1997.
- 6. DEFERRED COMPENSATION PLAN: 8. CAPITAL ADDITIONS:
The District offers its employees a deferred The E!:ctric System 1998 construction plan includes compensation plan created in accordance with Internal authorization for future expenditures of $70.9 million.
Revenue Code Section 457. All amounts of compensation These expenditures will be funded from existing bond deferred under the plan, all property and rights purchased proceeds, revenues, and other available funds.
with such amounts, and all income attributable to such amounts, property, or rights are (until made available to 9. FERC HYDROELECTRIC PROJECT LICENSES:
the employee or other beneficiary) solely the property and rights of the District (without being restricted to the The District is currently seeking a new long-term provisions of benefits under the plan), subject only to the license from the Federal Energy Regulatory l '
claims of the District's general creditors. The District has Commission (FERC) for the District's hydroelectric wcorded the assets ofits deferred compensation plan and Project No.1835. Project No.1835 includes the North the corresponding liability to reflect its fiduciary Platte hydroelectric generating station and related responsibilny under the plan. In the past, the plan assets facilities which are part of the Electric System. Lands have been used for no purpose other than to pay benefits, and waters of Project No.1835 are utilized by Gerald -
The District believes it is unlikely that it will use the Gentleman Station for cooling wa:er purposes. Gerald .
assets to satisfy the claims of general creditors in the Gentleman Station is part of the Power Supply System.
Sture. The plan is administered by The Equitable L'le The Central Nebraska Public Power & Irrigation Assurance Society of the Umted States. District (Central) is currently seeking a new long term license for FERC Project No.1417. Project No.1417 j
- 7. LITIGATION: includes the Kingsley Dam, take McConaughy, four 9 hydroelectric generating plants and related facilities.
On May 19, 1995, MidAmerican Energy The relicensing of both projects is addressing
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Company (MEC), a 50 percent participant in the District's numerous environmental issues including, among other j Oooper Nuclear Station, filed suit against the District things, species protected under the Endangered Species alleging that the District failed to operate and maintain Act. In order to obtain these new long-term licenses, the Cooper Nuclear Station in accordance with the Power District and Central could be required to meet certain j Sales Contract. The District incurred costs of terms and conditions which may adversely impact the
$11.7 million in 1997 related to the litigation and operations of the project facilMes and Gerald Gentleman settlement of this suit with MEC On May 23, 1995, Station. The District iv unable to predict the terms and Lincoln Electric System (LES), a 12.5 percent participant conditions that %i be contained in the new licenses for l in the District's Cooper Nuclear Station, filed suit, making the projects, n j
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NFPD Er.tcTarc Systru As of December 31,1997, $20.5 million of costs '
incurred related to obtaining the new long-term license for Project No.1835 are being capitaliad. When the license is obtained these costs will be amortized over the 3
. life of the license.
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1 NPPD Powen Sumr SysTru i l
1 Report ofindependent Accountants j l
To the Board of Directors Nebraska Public Power District:
We have audited the accompanying special-purpose statements of assets and liabilities of the Power Supply System of Nebraska Public Power District (a public corporation and political subdivision of the State of Nebraska) as of December 31,1997 and 1996, and the related special-purpose statements of revenues and costs for each of the three years in the period ended Dacember 31,1997. These financial statements are the responsibility of the District's management. Our responsibility is to express an opinion on these financial statements based on our audits.
We conducted our audits in accordance with generally accepted auditing standards and Government Auditing Standards. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence suprarting 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 evah cling the overall financial statement l presentation. We believe that our audits provide a reasonable basis for our opinion.
The accompanying special-purpose financial statements referred to above have been prepared for the parpose of complying with, and on the basis of, accounting requirements specified in the Power Supply System Revenue Bond Resolution adopted by the District on September 29,1972, as supplemented, as described in Note IB, and are not
'ntended to be a presentation in conformity with generally acceped accounting principles.
In our opinion, the accompanying special-purpose financial statements of the Power Supply System of Nebraska Public Power District present fairly, in all material respects, the assets and liabilities as of December 31,1997 and 1996, and its revenues and costs for each of the three years in the period ended D-=nber 31,1997, on the basis of accomting described in Note IB.
In accordance with Government Auditing Standardr, we have also issued a report dated March 16,1998 on our consideration of Nebraska Public Power District's internal control over financial reporting and our tests of its compliance with certain provisions oflaws, regul.itions, contracts and grants.
Coopers & Lybrand L.L.P.
i Omaha, Nebraska l March 16,1998 si )
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NPPD Powra Surety Systru Statements of Assets and Liabilities December 31,1997 and 1996 Prepared Pursuant to Requirements of the Power Supply System Revemie Bond Resolution 1997 1996 (Thousands)
ASSETS-Utility Plant, at Cost (Note 1) ' $ 847,553 $ 842,248 Less--
Reserve for depreciation (Note 1) 202,266 176,894 Amounts funded from revenue (Note 1) _ 16,114 16,114
$ 629,173 $ 649,240 Prepaid Capital Costs (Note 3) $ 68,234 $ 69,941 Cash and Investments (Note 1):
Debt reserve account $ 47,621 $ 47,539 Debt service fund -
54 Reserve and contingency fund . 15,039 16,353
' Additions and improvements account 19,168 19,871
. Construction funds 5,392 7,522 Revenue fund 880 1,048 Operating fund . 22,023 22,199 General reserve fund 5,796 8.556
$ 115,919 $ 123,142 1 Accounts Receivabie $ 281 $ 287 Interest Receivable $ 1,558 $ 1,676 Fuel Inventory, at average cost .$ - 7,932 $ 4,023
. Deferred Charges and Other Assets (Note 1) $ 36,387 $ 37,329 TOTAL ASSETS $ 859,484 $ 890,638 LIABILITIES Revenue Bonds (Notes 4 and 5):
1993 Series Serial 1997-2009 4.60 % - 6.10 % $ 154,320 $ 163,390 Term ' 2010-2014 A125% 96,080 96,080 2015-2019 3.75 % 58,890 58,890 1993 Series B Serial 1997-2007 : 3.90% - 5.30% 65,485 70,560 Term 2008-2013 . 5.25% 47,120 47,120 1 1993 Series C Serial 1997-2009 3.70 % - 5.00 % 210,I90 223,395 Terra 2010-2016 5.00 % 119,695 l 19,695
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1995 Series A' Serial 1998-2010 4.10 % - 6.00 % 17,315 18,325 Term 2011-2012 5.50 % 6,330 6,330 2013 7 '4 5.375 % 4,815 4,815 ;
2015-1921 5.25 % 21,365 21.365 j 2022-2027 5.25 % 25,500 25,500 )
$ 827,105 $ 855,465 j
- Accounts Payable and Other Accrued Liabilities $ 15,304 $ 19,915 l
' Operating Reserves (Note 1) $ 19,075 $ 15,258 )
TOTAL LIABILITIES $ 859,484 $ 890,638 I The accompanying notes tofinancial statements are an integralpart ofthese statements
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NPPD Pom Surrty Sysnu
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Statements of Rever5ues and Costs for ea:h of the Three Years in the Period Ended December 31,1997.
Prgared Pursuant to Requirements of the Power Supply System Revenue Bond Resolution 1997 1996 1995 (Thousands)
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Revenues (Notes 1 and 2):
Sales to the Electric System $ 144,828 $ 154,528 $ 159,380 Investment and other income 8,364 8,595 7,970 Total revenues $ 153,192 $ 163,123 $ 167,350 Costs (Note 1):
Operating expenses- ,
Production-Fuel (Note 7) $ 49,798 $ 56,369 $ 70,673 Operation and maintenance (Note 3) 22,663 32,556 22,744 General and administrative 7,860 6,379 6,117
$ 80,321 $ 95,304 $ 99,534 Debt service-Principal (Note 1) 28,360 26,300 25,335 Interest 44,511 41,519 42,481 Total costs $ 153,192 $ 163,123 $ 167,350 The accompanying notes tofinancial statements are an integralpart ofthese statements.
Notes to Financial Statements B. Basis ofAccounting-Revenues are recognized and billed at an amount
- 1.
SUMMARY
OF SIGNIFICANT ACCOUNTING equal to costs as defined by the Power Supply System POLICIES: Revenue Bond Resolution (Power Supply Resolution) which include operating expenses (excluding A. Organization- depreciation), and debt service on the revenue boads, less
%e District has three separate divisions for investment income. Revenues are computed and billed so accounting puipose n, follows: that no equity is accumulated in the Power Supply System.
Electric System Revenues and costs as denned by the Power Supply Power Supply System Resolution differ in the following respects from generally Nuclear Facility accepted accounting principles:
(i) Amortization of the hbt principal is included As required by Bond Resolutions, separate records are as a cost in the accompany ing Statements of Revenues maintained for each division. The Power Supply System and Costs as Debt service-Principal.
j financial statements aclude the Electric System and Depreciation is not recorded as a cost. Ilad the j f . Nuclear Facility, for which financial statements are District provided straight-line depreciation over a presented separately herein. The Power Supply System 40-year life rather than includiig amortization of debt financial statements should be read in conjur.sion with principal over the same period, costs would have such other Gnancial statements. decressed $5.9 million in 1997, $4.3 million in 1996, l
$4.4 million in 1995, and accumulated depreciation n 1 i
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NPPD Powra Surety SrsTru through December 31,1997, would have increased D. Cash and/nvestments-l costs approximately $63.8 million. The reserve for Funds consist of $101.7 million of investment depreciation shown on the Statements of Assets and securities and $14.2 million of cash deposits at Liabilities was provided by recording amounts equal December 31,1997, and $116.1 million of investment to repayment of-debt principal. Upon retirement of securities and $7.0 million of cash deposits at property subject to depreciation, the cost of property December 31,1996, is removed from plant accounts and charged to the Cash deposits, primarily interest bearing, at reserve for depreciation, along with the removal costs, December 31,1997, and throughout much of the year, net of salvage. were covered by federal oepository insurance or (ii) Previous billings to provide capital for unregistered U.S. Government and municipal securities renewals and replacements of property and capital held by various depositories. Investments <t additions are included in the Statement of Assets and December 31, 1997, were in unregistered Liabilities as Operating Reserves. Under generally U.S. Government securities and Federal Agency accepted accounting principles, capital additions and obligations held in the District's name by the custodial provisions for renewals and replacements are not banks.
expenses but (exclusive of minor items of property) The Debt Reserve Account and the Reserve Account are charged to utility plant. Renewals and in the Reserve and Contingency Fund are valued replacements of property and capital additions funded semi-annually at January 1 and July I at the lower of cost from revenues are fully reserved. Renewals and or market in accordance with requirements of the Power replacements and capital additions are currently being Supply Resolution. Gains or losses on valuations are funded from existing bond proceeds that have been included in investment income.
transferred to the General Reserve Fund.
(iii) Interest income on construction fund E. DeferredCharges-investments is credited to utility plant. Under Costs arising from the termination of incomplete generally accepted accounting principles, such generation and transmission projects are being amortized income would have increased revenues $0.3 million over the life of the bonds, the proceeds of which were in 1997, $1.0 million in 1996, and $0.8 million in used in part to pay these costs. This amortization is 1995. included as part of debt service cost.
(iv) Investment securities are classified as being available-for-sale and are recorded at cost. Interest 2. RATE COVENANT:
income on these investments is recognized ratably over the term of the securities. Under generally The District is required under the Power Supply accepted accounting principles, the difference Resolution to charge rates for electrd power and energy between the carrying value of the securities and the from the Power Supply System so that revenues will be at fair value is to be recognized as a net amount in least sufficient to pay operating expenses, aggregate debt equity.1 lad this method been followed, Cash and service on the Power Supply System Revenue Bonds, Investments as of Det;eaber 31,1997, would have amounts to be paid into the Debt Reserve Account and s increased by $1.1 mill'on and Accounts Receivable Re:erve and Contingency Fund, ano all other charges or would have decreased by $1.1 million as the Power liens payable out of revenues of the Power Supply Supply System has no equity as stated above. System. The debt service payments of the Power Supply System Revenue Bonds are $72.9 million per year for the C. Utility Plant- years 1998 through 2002 and principal payments, as a Interest expense, less interest earned on investment component of debt service payments, are $29.6 million, securities, all fhancing costs and all other costs related to $30.8 mi!! ion, $32.2 million, $33.7 million, and j construction projects are capitalized. $35.4 million for each of the years 1998 through 2002, respectively.
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l NPPD Powrn Sumy Sysuu
- 3. PREPAfD CAPITAL COSTS: Liabilities. The defeased bonds were called and redeemed from proceeds in the irrevocable trust account Prepaid capital costs are associated with the purchase on January 1,1996.
of the capacity of a 50 MW hydroelectric generating facility owned and operated by The Central Nebraska 6. CAPITAL ADDITIONS:
Public Power and irrigation District (Central). Th prepayment is being amortized over the life of the bonds, The Power Supply System 1998 construction plan the proceeds of which were used to pay these costs. The includes authorization for future expenditures of amortization is included as part of debt service cost. $100.3 million. These expenditures will be funded from he District has an agreement whereby Central makes a future bond issue, revenues and other available funds.
available all of the production of the facility and the District pays all costs of operating and maintaining the 7. COAL SUPPLY AND RAll TRANSPORTATION facility plus a charge based on the amount of energy AGREEMENTS:
delivered to the District Costs of $0.7 million in 1997,
$1.0 million in 1996, and $1.0 millicn in 1995 are The District has two coal supply agreements which included in Production--Operation and maintenance. permit the District to purchase certab quantities of coal.
One agr:ement provides for purchase of a minimum of
- 4. LONG-TERM DEBT: 3,000,000 tons and up to a maximum of 3,900,000 tons annually through 2000. The other agreement provides for In June 1995, the District issued Power Supply purchase of a minimum of 850,000 tons and a maximum System Revenue Bonds,1995 Series A, in the amount of of 1,150,000 tons annually through 1999. The District
$76.3 million. Proceeds from the bond issue were used also has two rail transportation agreements which provide for the purchase of the Canaday Station Steam Plant from for, among other things, transportation of coal to Central and construction costs associated with the Gerald Gentleman Station. Both transportation Pauline-Moore Transmission Line. Net interest expense agreements expire December 31, 2002 and both through December 1996 and bond issuance costs of transportation agreement rates are escalated oi
$2.7 million were treated as construction and acquisition de-escalated pursuant to an index promulgated by the l costs. Proceeds of the 1995 Series A Bonds, together with Surface Transportation Board. l other available funds, were used to increase the Debt Reserve Account to an amount equal to the maximum 8. LITIGATION:
annual interest on all Power Supply System Bonds outstanding after issuance of the 1995 Series A Bonds. In 1996, a settlement was reached with Burlington ne fair value of existing debt at December 31,1997, Northern Railroad Company, the amount of which was is determined using rates currently available to the used to decrease Production-Fuel expense. j District. The fair value is estimated to be $841.8 million.
A number of claims and suits are pending against the
- 5. DEFEASANCE OF DEBT: District for alleged damages to persons and property and for other alleged liabilities arising out of matters usually The Power Supply System Revenue Bonds, incidental to the operation of a utility such as the District.
1986 Series, were defeased by placing a portion of the in the opinion of manag. ment, the exposure under these proceeds from the 1993 Series Bonds in an irrevocable claims and suits would not materially affect the financial trust account with an escrow agent. Such funds were position and results of operations of the District as of used to purchase direct obligations of the United States December 31,1997.
Government, the principal of and interest on which is sufficient to pay for all future debt service payments on the old bonds. The defeased bonds are treated as extinguished debt for financial reporting purposes and have been removed from the Statements of Assets and y, I
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NPPD NUCI. EAR FACIlm Report ofIndependent Accountants l
To the Board of Directors Nebraska Public Power District:
We have audited the accompanying special purpose statemettts of assets and liabilities of the Nuclear Facil,ity of Nebraska Public Powe District (a public corporation and political subdivision of the State of Nebraskd a.s of December 31,1997 and 1996, and the related special-purpose sta+ements of revenues and costs for each t.f the three years in the period ended December 31,1997. These financial statements are the responsibility of the Distrids
- management. Our responsibility is to express an opinion on these financial statements based on our audits.
- We conducted our audits in accordance with generally accepted auditog standards and Government Auditing Stimdards. Those strndards require that we plan and perform the audit to obtaw reasonable assurance about whether the financial staten'ents are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounu and disclosures in the financial staternents. An audit also ecludes assening 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 accompanying special-purpose financial statements referred to above have been piepared for the purpose of complying with, and on ti:e basis of, accounting regteirements specified in the Nuclear Facility Revenue Ibnd Resolution adopted by the District on August 22,1968, as supplemented, as described in Note IB, and are not h) tended to be a presentation in conformity with genera 31y accepted accounting principles.
In our opinion, the accompanying special-purpose fiteancial statements of the Nuclear facib!y sof hebrasks PuNic Power District present fairly, in all material respects,the assets and liabilities as of December 31,1997 and 1996, and its revenues and costs for each of the three years in the pedod ended December 31,1997, on the basis of xecounting described in Note 1B. .
1 In accordance with Government Auditing Standards, we have also issued a report dated March 16,1998 on our considerate <r of Nebraska Public Power District's internal contrul over financial repvrting and our testy ofits compliance with certain provisions oflaws, regulations, contracts and grants.
Coopers & Lybrand L.L.P.
Omaha, NeFraska '
Ma.ch 16,1998
e NPPD NGCLE.AR FACIUM Statements of Assets and Liabilities December 31,1997 and 1996 - l Prepared Pursuant to Requirements of the Nuclext Facility Revenue Bond Resoiution 1997 1996 (Thousands)
ASSETS Utility Plant, at Cost S 743,097 $ 73I,381-Less-Reserve for depreciation (Note 1) 292,285 276,126 Amounts nmded from revenue (Note 1) 333,885 321,960
$ 116,927 $ 133,295 Nuclear Fuel--Net of Amortization $de 1) $ 79,085 $ 95,553 Cash and Investments (Nate 1):
Debt Service fund S 6,972 $ 6,663' Debt reserve account 19,725 19,788 Reserve and contingency fimd 10,341 14,720 Additions and improvemer,ts occount 1,063 1;629 Generalreserve fond 800 1,769 Construction fumd 5,,490 4,920 Fuel reserve account 63,662 43,941 Operating fund 16,106 20,498 Revenue fund ' 157 .359 Decommissioning fund (Note 4) 19,318 19,292
$ 143,634 S 133,599
- Acsoubs Receivai>lc _
$ 16,461 $ 17,348 Interest Receivable ' $ 1,782 $ 1,625 Deferred Charges and Othy Assets '- 3 ~ l 8,351 S 16,538 Extemal Decommissioning Fund (Note I and 4) $ 137,147 $ 106,039
' TOTAL ASSETS $- $13,387 $ 503,997 LIABILITIES levenue Bonds (Note 9):
q 1992 Series Serial' 1997-2003 - 4.60 % - 5.70 % $ 119,690 $ 133,.015 D68 Series Term 1997-2002 5.10 % 64,830 75,970
$- .184,520 $ 208,91'5 Operating Reserves (Note 1) $ 159,244 $ '147,623 l (Ac. counts Payable and Other Accrued Liabilities (Note 1) $ 15,096 $ 25,287
- External Decommissioning Fund (Note 1 and 4) - $ 137,147 $ 106,039 -
DOE Facilities Decommissioning Assessment (Note 8) $ 17,380 $ 16,063
. TOTAL LIABILITIES $- $13,387 $ 503,997
% accompanying notes tofinancialstatements are an integralpart ofthese statements.
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.NPPD NUCMAR FACICU Statements of Rt.enues and Costs for each of the Three Years in the Period Ended December 31,1997. Prepared Pursuant to Requirements of the Nuclear F6cility Revenue Bcod Resolution 1997 1996 1995 (Thousands)
Revenues (Notes 1 and 2):
- Sa!cs- .
Electric System $ 103,126 $ 92,408 $ 101,290 MidAmerican Energy Company 103,125 92,410 101,290 investment and other income 12,288 8,557 7,903 Total revenues $ 218,539 $ 193,375 $ 210,483 Costs (Note 1):
Operating expenses-Production-Fuel (Note 1) $ 31,858 $ 35,295 $ 22,158 Operation and maintenance (Note 1) . 102,375 75,434 98,403 Provisions for operating reserves (Note 1) 38,721. 36,779 42,848 General and administrative - 10,198 10,483 11,693
$ 183,152 $ 157,991 $ 175,102 Debt service-Principal (Note 1) 24,775 23,650 22,613 Interest 10,612 11,734 12,768 Total costs $ 218,539 $ 193,375 $ 210,483 The accompanying notes tofinancial statements are an integralpart of these statements.
' Notes to Financia'l Statements financial statements should be read in conjunction with such other financial statemems.
1,.
SUMMARY
OF SIGNIFICANT ACCOUNTING POLICIES: B. Basis ofAccounting-Revenues are recognized and billed at an amount A. Organization- equal to costs as defined by the Nuclear Facility Revenue The i District i has three separate divisions for Bond Resolution (Nuclear Resolution) which include accounting purposes as follows: operating expenses (excluding depreciation), and debt service on the revenue bonds, less investment income.
Electric System Revenues are computed and billed so that no equity is Power Supply System accumulated in the Nuclear Facility.
Nuclear Facility - Revenues and costs as defined by the Nuclear Resolution differ in the following respects from generally As required by Bond Resolutions, separate records are . accepted accounting principles:
maintained for each' division. The Nuclear Facility (i) Amortization of the debt principal is inc!uded financial statements exclude the Electric System and as a cost in the accompanying Statements of Revenues Power Supply System, for which financial statements are and Costs as Debt service-Principal.
presentedi separately- herein. - The Nuclear Facility 1- 38 1-
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NPPD NUCUAn FACIUTY
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Depreciation is not recorded as a cost. Ilad the increased by $3.3 million had this method been District provided straight-line depreciation over a followed.
30g ear life rather than including amortization of debt principal over the same period, costs would have (v) As part of a 1989 rettlement agreement with decreased $11.1 millint in 1997, $10.0 million in General Electric Company (GE), the Distrist will ;
1996, and $9.0 million in 1995. Accumulated receive discounts on future purchases of certain depreciation through December 31,1997, would have equipment and services for Cooper Nucler.r Station decreased costs approximately $4.3 million. The (CNS) and will receive credits and discounts under an I reserve for deprecianon shown on the Statements of amendment to the fuel fabrication contract. The Assets and Liabilities was provided by recording District amortized over a two-year period ending in amounts equal to repayment of debt principal. Upon 1991 the entire amount of the benefits allocated to j retirement of property subject to depreciation, the cost operations. Under generally accepted accounting l of property is removed from plant accounts and principles, such benefits would be recognized when charged to the reserve for depreciation, along with the received which in the case of the settlement would be removal costs, net of salvage. over the next 15 years. This difTerence results in an (ii) Billings to provide capital for renewals and increase in revenues during the two-year amortization replacements of property, capital additions, and period and increased costs thereafter. Nege Nions nuclear fuel are included in the accompanying held with GE to determine the extension of discounts statements as Operating Reserves and Provisions for for future purchases of certain equipment and services operating reserves. Under generally accepted that were to expire in 1994 resulted in a portion of the accounting principles, capital additions and provisions discounts being extended beyond 1994 and a write for renewals and replacements are not expenses but down of the related receivable for a portion of the (exclusive of minor items of property) are charged to unused discounts that expired in 1994. The agreement utility plant. Provisions for working capital for stipulates that the dollar value of the settlement should nuclear fuel are not expenses under generally not be disclosed.
accepted accounting principles until the fuel is used.
Renewals and replacements of property and capital C. Nuclear Fuel-additions funded from revenues are fully reserved. The District has entered into several long term (iii) Interest income on construction fund contracts for the various nuclear fuel components of I investments is credited to utility plant. Under uranium concentrates, conversion, enrichment, and generally accepted accounting principles, such fabrication. Nuclear fuel in the reactor is being amortized income would have increased revenues $0.2 million on the basis of energy produced as a percentage of total in 1997, $0.3 m!!! ion in 1996, and $0.2 million in energy expected to be produced. Fees for disposal of fuel l 1995. in the reactor are being provided as part of the fuel cost (iv) Investment securities are classified as being and collected through revenues of the Nuclear Facility.
available-for-sale and are recorded at cost. Interest income on these investments is recognized ratably D. Cash and/nvestments-over the term of the securities. Under generally Funds consist of $127.1 million of investment accepted accounting principles, the difference securities and $16.5 million of cash deposits at between the carrying value of the securities and the December 31,1997, and $127.3 million of investment fair value is to be recognized as a cet amount in securities and $6.3 million of cash deposits at equity. Had this method been followed. Cash and December 31,1996.
Investments as of December 31,1997, wwld have Cash deposits, primarily interest bearing, at decreased by $0.4 million and Accounts Receivable December 31,1997, and throughout much of the year, .
( would have increased by $0.4 million as the Ntelear were covered by federal depository insurance or Facility has no equity as stated above. Additionally, unregistered U.S. Government and municipal securities the External Decommissioning Fund would han held by various depositories. Investments at December 31, 1997, were in unregistered n j
's a NPPD NucuAR FACitTrY U.S. Government securities and Federal Agency energy actually delivered) plus one-half of all other costs obligations held in the District's name by the custodial of the facility, banks. The District has also agreed to make available. l The Debt Reserve Account and the Reserve Account through its Electric System,12.5% of the output of CNS l in the Reserve and Contingency Fund are valued to the City of Lincoln, Nebraska.
semi-annually at January I and July I at the lower of cost or market in accordance with requirements of the Nuclear 4. PLANT DECOMMISSIONING COSTS: f Resolution. Gains or losses on valuations are included in investment income. Pursuant to regulations promulgated by the Nuclear Regulatory Commission (NRC), the District established E. Operation and Maintenance- in July 1990, an external trust fund segregated from the Beginning in 1996, the annual excess nuclear property District's assets in which amounts accumulated to pay the insurance premium was paid directly by the District's decommissioning costs of CNS are to be deposited. The Electric System and MidAmerican Energy NRC presenbed minimum amount to be accumulated by Company JEC) with each paying one-half the cost as the District in said fund for decommissioning costs, in described in Note 3 under terms of a power sales contract. 1997 dollars, is approximately $522.8 million. This None of the premium is included in the Nuclear Facility's amount does not include the cost of removal and disposal Stateraent of Revenues and Costs. Had the premium been of spent fuel or of nonradioactive structures and materials included, Sales and Production---Operation and beyond that necessary to terminate the District's operating maintenance expense would have increased $2.9 million. license. For purpose of accumulating amounts for complete dismantlement and site restoration of CNS, the
- 2. RATE COVENANT: District is estimating the total decommissioning costs, in 1997 dollars, to be approximately $493.0 million.
The District is required under the Nuclear Resolution It is expected that the costs of decommissioning will to charge rates for electric power and energy from the be funded from revenues, certain reserve funds Nuclear Facility so that revenues will be at least sufficient established under the Nuclear Resolution, and surplus to pay operating expenses, aggregate debt service on the funds derised from the ownership and operation of the Nuclear Facility Revenue Bonds, amounts to be paid into Nuclear Facility. The District anticipates s ificient funds the Debt Reserve Account and Reserve and Contingency will be available in accordance with the NRC Fund, and all other charges or liens payable out of decommissioning rules to decommission CNS at the end revenues of the Nuclear Facility. The debt service of its useful life. The District intends to periodically payments of the Nuclear Facility Revenue Bonds are review the costs and methods of funding as a result of
$35.1 million for 1998, $35.0 million for the years 1999 changing conditions and requirements for through 2001 and $34.9 million for 2002. Principal decommissioning.
payments, as a component of debt service payments, are
$25.7 million, $26.9 million, $28.3 million, 5. CAPITAL ADDITIONS:
$29.8 million, and $31.3 million for each of the years 1998 through 2002, respectively. The Nuclear Facility 1998 construction plan includes authorization for future expenditures of $18.3 million.
- 3. POWER SALES CONTRACTS: These expendit ires will be billed to participants as Provisions for operating reserves on the basis of estimated Under tenns of a power sales contract with cash flow requirements.
MidAmerican Energy Company (MEC), the District makes available one-half of the production of CNS to 6. CONTINGENCIES:
MEC with the balance available to the District's Electric Sy> tem. MEC and the District's Electric System each pay Under the provisions of the Federal Price-Anderson a preponionate share of the nuclear fuel costs (based on Act, the District and all other licensed nuclear power 40 plant operators could each be assessed for claims in
e.
O NPPD NUCUAR FAcNU amounts up to $79.3 million per urit owned in the event 8. DEPARTMENT OF ENERGY FACILITIES of any nuclear incident involving any licensed facility in ASSESSMENT:
the nation, with a maximum of $10.0 million per year per
- incident per unit owned. .MEC would be liable to the Under the provisions of the National Energy Policy Disuict for one-half of such assessment under the Power Act adopted in 1992, the District is subject to assessments Sales Contract. To satisfy the obligation, the District has estimated to be $1.67 rnillion per year (to be adjusted for obtained a $5.0 million,line of credit and MEC has inflation) for a period up to 15 years for the purpose of demonstrated its financial integrity and responsibility for paying the costs of decontaminating and
' $5.0 million. decommissioning. Department of Energy , operated As part of the 1989 settlement agreement between GE uranium enrichment facilities. Such assessments and the District, GE has agreed to store at its facility at commenced in 1993. The present value for such annual Morris, Illinois, the 1,056 spent nuclear fuel assemblies assessments for the 9 remaining years is approximately from the first two core loadings at no cost to the District $17.4 million. The District has recorded on the Nuclear until May 2002, which is the expiration of the current Facility financial statements, the present value of such license for the GE facility. After that date, storage wiil be annual assessments by recording a liability and a at no cost to the District so long as GE can maiatain, matching deferred charge of approximately $17.4 million without certain additional costs, the NRC license for the as of December 31,1997, and $16.1 million as of facility. If . after May 2002, storage of the December 31,1996.
1,056 assemblies results in certain additional costs to GE then the District shall be responsible for such costs. Such 9. LONG-TERM DEBT:
costs would be collected through revenues of the Nuclear Facility 'as part of fuel costs. The fair value of existing debt at December 31,1997, is determined using rates currently available to the
- 7. LOW-LEVELRADIOACTIVEWASTEDISPOSAL: District. The fair value is estimated to be $189.1 million.
The Low-Level Radioactive Waste Policy 10. LITIGATION:
Amendments Act of 1985 (the "1985 Act") requires each smte to be responsible for providing for the availability of A number of claims and suits are pending against the capacity for the disposal of low-level radioactive wastes District for alleged damages to persons and property and generated within its borders except for ceitain defense for other alleged liabilities arising out of matters usually -
related radioactive wastes Among other things, the incidental to the operation of a utility such as the Distret.
'1985 Act authorizes and encourages states to enter into in the opinion of management, the exposure under these
. interstate compacts, subject to Congressional consent, to claims and suits would not materially affect the financial provide for the establishment and operation of regional position and results of operations of the District as of
- disposal - facilities forc low level . radioactive waste December 31,1997.
generated within the states entering into a compact.
Pursuant to the 1985 Act, Nebraska has entered into
' the Central Interstate Low-Level Radioactive Waste Compact (the " Central Interstate Compact") with the states of Arkansas,1(ansas, Louisiana, and Oklahoma.
- The Centrt Interstate Compact has been apprcved by -
l 'ench of seid staics and by Congress. ;
j ThE District is a party to an agreement under which putiali funding for, the relicensing costs . of a proposed disposal facility .has been provided by the owners / operators of nuclear plants within the Central L
- Interstate Compact. '
41
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IhtJ'u D. joliwot ECONOMIST. LINCOLN, sr.Rv1No siNCE J4hUARY 1985: DostuiNt Wti n. BUSINESS %oMAN/IloMEMAkfR. KEARNfY, SERMNG SiNCE j ANUARY 199 3 ; LARRY G. KrNCL, ENciNt tRINc CONSULTANT. COLUMROS, sERMNG SINCE JANUARY I997; DiNNis l Il%ML h%LN, LEctstATIVE CONsrtTANT, LINCOLN, SERVlNG SINCE J ANUARY 1997; WONE E. RoVD. ATTonNEY, Sotrni Siorx CITY, SE RvlNG SINCE M ARCH i98 2; D ARRt t.: j. Ne tsos SECRf1 ARY, FARMFR/lhNCilER OcoNTo. srRviNo siNcE J ANUARY 19 8 5; W4RREN R. Cook.
CHAIRMAN. BUSINESSMAN. NoRrot K. SERVING SINCE J ANUARY 19 8 7; RM ril E. IlotM ANTE R, AchitsesrN15SM AN/ FARMER, P/ XToN.
sEnviNo stNCE J ANOARY 198 1; GARY G.Tlioursos FIRST VICE CHAIRM AN. ATTORNEY, BEATRICE. SERV 1NG SINCE J ANUARY 1993; %EATFD:
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