NLS8800259, Nebraska Public Power District Annual Rept,1987

Nebraska Public Power District Annual Rept,1987

ML20154F499
Person / Time
Site:	Cooper
Issue date:	12/31/1987
From:	Duren D, Schaufelberger, Trevors G NEBRASKA PUBLIC POWER DISTRICT
To:	NRC OFFICE OF ADMINISTRATION & RESOURCES MANAGEMENT (ARM)
References
NLS8800259, NUDOCS 8805230267
Download: ML20154F499 (41)

Text

, <,. -

.. . ; j m ~ :. -

. . , * .p.~, ,-> .. . . . . '2  :

+

b]=, -+ s s /

a

+

9* * -

t " - [" -i .'

h -

g' ,_ ,, ' . -

i. .

• /g r. -

)

. ,, j #

y c.:

.4 .n ',,

d ' ' '

i

., e

-- s

,1, .e

-,g. , , . -

~ ,' .'

.c .

^

\4,

.. . 1 I,, N~. *

~. *. I

%. .?  : -

,z -. y ; . . . -

e , '# 4 ' ' [ . 3 [, . , , .j i .. , . , , ).f , ,,n Q* } *.' w* - ra i,,,'[ . . ,. 1 y=-

• ~ .+, ~ ,,.

.?. . . . . .

,, J.g. c .

f{ g ;g '.' g ,' e '

^ E, ,E,R. 7.. ;. . , " , O,., ", { ,"'i J . ',' y% ..Y ,.('.,.s .'. N 'W .= T . ,* $

.. ,, e y.

. ,,g ,, -- . 4. 'r i ..'<',

. ,. s

, o v',-

. + . -

- , 1- i s,

y ,

i .. - ,m s y ,. ", 'K h * ,, * ' 5 '

,.4 'j t .f

- 6

- [a 6 ' k,(if ' ',. , if ' , , , ?jh,c- ' '_

y.

,q,h' , -; '_

• t ,/ .. c: _ .r

,,) ' '

l . r,i ' ~ } h .; ,s#.. }4

' h. ; 4 ., ~l- ): Y' ';f'R R'> ' '[ i f ' , .'  % ']

c

., 7

% "5, -

+ -

"t 7.-

,4

x. ,. /

,*- .* .v

,$ e. g * :,,

. $*, *4 . .., , - .

4 - .

'i.. . ,s

-',y_,'_,-..;-,

.- '.4,,-

i h',

g n,<',- '

y..

F

. . .e 3.4,.

u .g g, *

,- + , . . + - -

- j. - , 33 , .,

-c, , .'$g.. ,p(? ,* 'e,4e 7

S < v+ 4. , '. .; . _ ,

, , , +; , , , . . ,. . N . t' .

2 ..- .*- .'g, - ' ,

s,

. 4 , .,, g. . 3 ,Jg ..+ ,-A - %* %i

• g'(. - -~#

.w 2, g J $3@ g C' N

,9*ar e

.'-

• a

(

- % '~. , \ ,. , g,!, l. 4y . . . ; , g n .- g4 - . q' M , i g.. ,

g .

._,, 2 ..

4 ff.h [ d ,#

[ i < g '#

,p .O ; e I '

f} '

, - - ' $ D. J.'j > '?.

,A *

- p '! Yl ~ ~ W * * $ &

hi.jf?'fNf '"'l %g,k :]'"1g-1-'?0 g],, N..'~-(,.g e.

'*  ;' i

.. E' 9._.' ,,_,a

~, i*,, -* '~

i,*, '

8,

$ Q, [., , sg - ,.

, 7 q - ., ,%-

4 ,

p .. . .

9 .

~ ] .. . - ,,\

i 6- '

?

,4, I s' j, w s,S'?

r .j

. {f . .

p. :,

. e s .

.. - _ _ ' . f.y ',- ;-

D. [ .

~

,a

... _g 3' ,

E 5

e

"; fir' _^ ', ,

{'-

g t ,,

,.- f . p , ,, ,

,, g , -

'4 c.c+,

a ~

s. ,

?

e -

+ . .

, S.

.r.

• 9

.' ', s y

• ^ " - - ,? t f.

p .' '* , , . g- ,

'? g 4 y e

, .n

. +. 4

,. ekhi-

.- ?..

~

(

d. ',

7r., ' ,

.a L e ,

' s;,. s4

, A 1 YE s . '. i -

b k .rt

. i *'

,.g

^;r.

• f g .

E 5- I -

$ a - - ' /'

-

he d r

f y', 4,,

v .. ..

3 p' , . ..-

y -

e.

',n i . 40 . # t

%, .- _ - . - yl

,*i 9 . .

g. ,

M I7 . _

k , , .

Mi- .] '

.g ' = .

.a.

. - ,, 4

. '.-~ ,

a,

/ ,e.. ' , 6

'b* -

q .

.. -,  ; ~, -

-4 3' e i: .

N: 1

' ,c+ *

- *i[ * .I'"

,4 g . . , .

~-

f )

m- -

k V i ;- e r?L 1  :'

• L.c.  :

-)-

{yj[ 5.3

" ~

{ .f l (- ([. [ y 7 ..

I

~ '

F 4 A '

' '[

, g,.

.' 8' . . 5 l- ,. , , *:

,e '4

("

. i r .>-$4 w a.-

- x

. ',_ , s.

- : ,. .. . - a . -

4 -

. . m,;

g, a. , .

E * ,- .

s' t

- lg,'. . m , ' ' *

- [ . , g' ?

,4 3,. 1, -t g. .. .. . . .

,- - +

. , o, T .

'4 bg ,& -

8 '- a-

.- 2,'

+ p. / . g [ ',,

(4 . . j+

y ,

.5, * ". ',- *- s T 's . y * ..p.,< ,

, b

• s .. : '.' ' h '

. .. " ' i+ . ,i

, . . , .: ._ l +

[ ' - +- , -

m. _ _

'. ji('Q' 't e

l P

, .. y, t

' Year At A Glance-Electric System Kilowatt. hour Sales.. .. . . . .. ....... .... .. . ..... ....... ...... 9.7 Billion Ope rating R eve nu es . .. . . . . . . . . . . . . . . . . . . . . . . . . . .. . . . . . ... . ..$348.9 Million -

Cost of Power Purchased and Generated (Including Nuclear and Power Supply System) . .... ..........$256.5 Million ,

Other Operating Expenses . .... .. .. .. . .. . . .... ... ....$ 69.9 Million Net Reve n u e s . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ... .. .....$ 10.6 Million Debt Service Coverage ...... ... ...... . ..... ... ... ... .......... 1.76 Reference Guide Statement of Purpose.. ...... . ,. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Pa g e 1 >

Board Officera and Senior Management .. . .. . .. .. .. . . . . . . . . . . . Pa ge 1 Report from the President . . . . . . . . . . .. . . . . . . . . . . . . . . . . . . . . . . . . . . .Pages 2-3 Message from Board Chairman........ . . .. .... . .. . .... .Pages 4 5 Board of Directors.. . .. .. . .. .... ........ ... ... . .. .... . ....Page6 >

1987 in Review.. . . . ., . . .. . ... .. . .Pages 715 Financial Commentary.. . . . ... ... .. .. . .. . ...Page 16 [

Financial Report. . . . . .. . .. . . .Pages 17 33 Map of System . . . . . . . . .... . .. . . . .. .Pages 34 35 i Statistical Review. . . . ... . . .. .. .Pages 36 37 Cour photo cvurtery Nebraska Former i

b P

i

! t

9 Nebraska Public Power District Statement of Purpose Nebraska Public Power District is a public corporation and political subdivision of the State of Nebraska. Control of the District and its operations is vested in a Board of Directors, consisting of11 members popularly elected from dist-icts comprising subdivisions of the District's chartered territory. These districts encompass 85 of the state's 93 counties and portions of two other counties. The District has the power, among other things, to acquire, construct, and operate generating plants, transmission lines, substations, distribution systems, and to purchase, ger ' , distribute, transmit, and sell electric energy, both at wholesale mad retail, for lighting, power, heating, and other purposes. Management and operation of the District is accomplished with a stafrof approximately 2,000 persons.

1987 OFFICERS OF TIIE BOARD OF DIRECTORS David L. Duren, Chairman Thomas O. Michels, First Vice Chairman Wayne E. Boyd, Second Vice Chairman Bruce W. Gustafson, Secretary Darrell J. Nelson,7)easurer 1987 SENIOR MANAGEMENT Donald E. Schaufelberger, President Robert L. Gangel, Vice President Cecil R. Jones, Vice President Lawrence G. Kuncl, Vice President Theodore M. Kyster, Vice President and Assistant Treasurer William A. Merrill, Vice President GENERAL COUNSEL CONTROLLER Gene D. Watson Robert D. Malmstrom 1

l J

, t 1

i .. % g, i w 5

• 1 i i  % -

i .

[ ,-

x  !

i A Report From The PRESIDENT .

1 i

Nebraska Public Power District's 1987 operating revenues reached a I record high of $348,876,021 which continues an upward trend in revenues i

and strongly indicates to me that the District is financially stable. This  !

l record revenue plateau vias reached despite the fact that basic rates in 1987 l for both wholesale and retail customers were not increased. l l The strong revenue increase was due to an increase in kilowatt-hour  !

sales of 9.6 percent compared to 19S6. Weather and an improving economy i were important factors associated with the increase in sales. We are also in  !

I a situation where we have avaihble power and energy in our system at an  ;

attractive cost and thus we are able to pursue participation and non firm  ;

sales to other utilities.  !

Particularly pleasing is the fact that operating revenues during the  !

year increased at a substantially greater rate than operating expenses. The j control of operating expenses did not happen by accident. We are  !

l

continually monitoring costs and activities within the District and we are l prepared to take action when required to reduce expenses. In this manner i we are able to assure our wholesale and retail customers that their power supplier is responsive.

l Some of the cost control measures we enacted during 1987 involved l personnel and these types of decisions are ahvays difficult. We implemented '

a second reduction in the Transmission and Distribution Projects Division ,

workforce during 1987 because of a continuing slowdown in construction activities. The 18 positions we eliminated in this division in 1987 followed an elimination of17 positions in the same area in 1985. l j '

Earlier in the year we announced the closing of our aging Kramer Station coal fired power plant which affected 53 positions. The staff l reduction plan during the year also included the elimination of 25 positions  !

in our line crews throughout the state. We made it adequately clear that  ;

this reduction in operating line crews would not afTect the safety of our people and would have only a minimal, if any, effect on service.  !

Enhanced early retirement programs, where applicable, played a key j role in the fair treatment of many employees whose positions were l eliminated. Management was also strongly encouraged to give due i l consideration to employees whose positions were eliminated and who  :

applied for other vacant positions within the District.

I i -

t

At the end of the year, we had in place a reorganization of our senior management structure and revised reporting relationships. This change resulted in a decrease in the positions at the manager level and above. We recognize that our mission is to operate our facilities in the most cost-effective way possible by making the best use of available talents at our disposal.

All of these efforts are aimed at making the District an emeient and low cost supplier of electrical energy, consistent with maintaining reliability standards. Some of our employees were hurt by these changes cnd I take little comfort in the fact that stafTreduction and management reorganization trends are evident in many businesses - both utility cnd non utility.

'Ib some extent, required increased stamng in our nuclear division offset the personnel reductions in other areas of the District.

During the year the District entered into a new long term wholesale power supply contract with the Norris Public Power District. We view this as cn indication of our strong position in asailable low cost power and cnergy. The Norris District had studied other power supply options but concluded that the interests of both utilities could best be served by the new contract with our utility.

Another success during the year was the signing of a new long term clectrical distribution system lease agreement with the City of Atkinson.

WJ will continue to pursue with existing customers extended wholesale power supply contracts and lease agreements.

Despite a vote of the people that the City of Scribner should not operate its own distribution system, District management was unable to reach an agreement with the mayor and city council of that community and the lease agreement expired. Scribner will continue to be a wholesale customer of the District.

We continue to diligently pursue the Federal Energy Regulatory Ccmmission relicensing of our hydro projects in the Platte River Valley. It is recognized that relicensing these projects will be costly and time consuming.

It is imperative that the District continue to maintain a lead role in informing Nebraskans on the issue of disposal oflow level radioactive waste produced by our nuclear plant and other facilities in the five-state Central Interstate Low Level Radioactive Waste Compact.

Nebraska was chosen as the host state for the low level radioactive waste disposal facility for the Compact. Considerable opposition to the loc: tion of the facility in the state has surfaced. We could find ourselves in th: position where the very existence of our nuclear plant may be threatened due to the action of anti nuclear activists.

So,it is evident that although the District appears to be in a stable fin ncial condition and has an adequate power supply, there are certain forces over which we have no control that will require us to maintain our diligence in protecting our investments for the benefit of our customers.

The years ahead will not be easy but we are prepared to meet these cnd other challenges with the same enthusiasm that brought us to where we cre todav.

q8 I Don E. Schaufelberger President and Chief Executive Officer 3

Message From The CHAIRMAN OF THE BOARD Buoyed by encouraging reports concerning Nebraska's industrial and agricultural economy during 1987 and the prospects for continued economic growth, this Board of Directors of Nebraska's largest electric utility is optimistic about the future of our state and this District.

The year 1987 was a good one for the District. Despite our economic optimism, we fully realize the need to maintain tight fiscal responsibility as we embark on the future. Our fiscal policy must reflect our commitment to provide our customers with electricity at as low a cost as practical consistent with sound business practices.

To assist in our endeavors to maintain an organization that will continue to be responsive to the needs of our customers in a changing environment, we retained a consulting firm to study the District's i management structure and the Board Staff relationships. Some of the

primary recommendations from this firm have been implemented and others are scheduled for implementation on a timely and systematic basis to ensure a structurally sound corporation to meet the challenges of the future.

A Board committee has been established to develop a long-term strategic plan. The planning process, combining members of our Board, management, and staff personnel, representatives of our wholesale customers and community leaders in our service area, will be on-going and will assist us in maintaining a responsive organization with consistent goals to be attained during the years ahead.

Contributing significantly to the economic optimism is a U.S.

Department of Agriculture report that prices farmers received for raw products they produced opened the new year 7.4 percent above January of 1987. Department economists report net cash income of farmers set a record in 1987 of approximately $57 billion. Nebraska agricultural economists say the new year holds promise of rising grain prices and another year of strong livestock prices.

Predictions for improvement in 1988 followed a year that for most Nebraska farmers and ranchers marked a turnaround in the sagging farm economy. Livestock prices rose and there was an increase in g.ain exports during 1987. No matter what the markets might do, most Nebraska farmers had special reasons to smile as they brought in their 1987 crops.

Timely rains during the summer and nearly perfect weather during the harvest made last year's crop a bin buster.

After experiencing a continueus decline between 1982 and 1987, the i value of farm real estate improved during 1987. l 4

Nebraska's business and industrial economy, which also has been stuck in neutral in recent years, could get a solid push during the next few years fr:m more than 14,000 newjobs and from an estimated $1.79 billion of c^pital spending, for building plants and buying machinery. Those payroll cnd business investment numbers represent planned expansion or upgrading of facilities by companies that have applied for tax incentive benefits under the state's new Employment and Investment Growth Act.

The State Revenue Department, at the end ofl987, received 101 c pplications from companies seeking tax benefits under a measure passed by the state legislature in 1987 ns Legislative Bill 775.

Even before the enactment of Legislative Bill 775, a Chicago-based accounting firm ranked Ne sraska as having the second best manufacturing climate in the nation. The low cost ofindustrial electricity was one of the l

factors that led to the etate's high ranking. Nebraska ranks first in the l Great Plains States and seventh in the nation ir lowest average monthly industrial power costs, based on a demand of150 kilowatts and consumption of 30,000 kilowatt hoois.

We are pleased Nebraska has been renked in the number two position in this study of factors which manufacturers find important in business loc:tions. This utility will continue to assist in spreading the word that Nebraska is an excellent place to do business. The national and regional competition for new business and industry is intense and all of us must do our part to be familiar with Nebraska's locational advantages including low-cost energy.

No report from this Board would be complete without a word about the loss during 1987 of a dear friend and long time Board associate. Bernard

51. Olike) Delay, who had served on the Board of NPPD and its predecessor utility longer than any other person, died in October.

Slike, as we affectionately knew him, was elected to the Board of Consumers Public Power District, a predecessor utility, in 1963 and served four terms, retiring from the NPPD Board in January,1987. On four occasions he served as chairman of this Board.

IIis friendship and knowledge of Nebraska and the utility industry will be missed but long remembered. IIis dedication to his family, his community and this utility will be an inspiration to all of us as we continue to guide the District in the future, y

/ y ,

David L Duren Chairman of the Board 5

The Nebraska Public lbu er Districtk UOAltD OY DIItECToltS h

%~l ,

l i

i George II. Ilarber Ways e E. Iloyd Warren it. ('ook M

I) avid I.. I)uren ,

! If atru e. Ein trn al contrai t..r s.n.th so.aa city. .\ttorrw> - - North!k. thovo -rnan Colu rn hu s. lla n kt \

r*# .

\ l i

j . .

l l

(- .

i ,'

l b . -. .;b , L

.~ -

llruce W. Gu tafson Fred A. lierrington Italph E. Ilolzfa ter Italph 1). .lohnson ll ,! ir.;c. Ih rr .. r Ha n I:. r Lunu!n.Huma . man Ib2 t,.n. .krs h. n ne. . Eh rm r Lua oln, Econonu.t '

i Thoma, () .\ lit he l- 1)arrell .1 Nel-on I.e- Ta.slor '

E, r y l +of - , .! E w . cr U. < > Fa . H a .a !. . e

. ibl . lf a va "au ,

t i I IN 31D10ltI('31:  !

llernard 31. ' Alikei I)el.av of Norfolk a former member of the floard 'of I)irectors. died in October. Str.1)el.ay was elected to the lloard i 1 of('on-umers Public Power I)i-trict a predeces-tir tilility. In 19til a!Hl -PI Ved Iollr ,

I term- on t he l'on-umer, and NI'I'll lloard . ,

4 retiring in .lanuary. IN.

I  ;

(

i i U

} I

p-1987 IN ItEVIEW

'l'otal kiloM at t-hou r sales in lim 7 W er e 9 I hillltl!) UtilMpart'd to 5 9 hlllall) In 195b, a 9 ti pe!Ct'Ilt 1110f case Salt? Irtiln Mtill-NI ll) t rit tbitCt itin3, UACltidillM JialllClpittitill sales. InCr ea-ed 33 3 percerit in lib 7 Coln-pitied tti l95I5 alld [ht'it' Wit 3 I U b pt'f-Cent ;l)Creitst* In pal tlClJiat itill ptiW el Nile-tri the 1% o ,N ear pei tod firni M hole-ale

+

d b'- dell \ t'rlt'- tti tit her pulilit ;u,Mi'i district-s .

,y alld ru! al Ot Hipel itt lVt'- I fll f eit-t'd II Vt'-

a- tenth- of one percent in 195, Conipat ed to 195b. fif f n % hidt'3iile ale- tii ilitiniCi-J

'w- .y .

palltles tilCle t-ed I -l pel Cent ICt Wttil t ht' q .

(% ti \ t';t r- l(t*t illl Cu-ttilnt'!% u -ed l I pt'l -

Ut'Ilt llit #!'e t'lt'C t l lCi t \ (lullnd I!hI Clinl-

] pared to 194i

't Elect ric S.\ -t t'n, t i;>t rat in t' i t \ e rlui~ iii 195I M ei t' ;i rt*Clird h315 9 nlllllilll t iilli-p;tl ed lip $ bl $ I nllllliif n Ifl 19 %t i I IJH'litt illM N t'\ pe n -t* h i! 19%I % t'rt' b 52I5 I InlIllt'Il

• i'. ColM pitred 10 bl2.5 2 nll} hon in l9%h I Iper-ations of the Electric SN ten) re-ulted in 4 j;3t

{ net re Vt* flues ol' $lti ti Ibtllliin I hest net

' + ' t i b, l e\ t*n ues . % Ilt'n ild j u-t ed la ir Thill-Ca

• h OI .E' lten t- a- p!'oVided in t he 1)i-ti itt'- Elet t r a

- lyif q% NG .

S3 -teni 1(e\ enue Hood He-olution re-

- 113 , Sult t'd in dellt -t'r\ it e t'* ;\ t'l a dt' l ii } Ili kh,N. .l* Tlie 1)i t rit t -e l \ t d a ri .i\ i raci < d i '

}{ Hi,,5(ll rtiall Cu3toiner- durlhg 19%I Ihe U I)lst!'It t -er\ t'd t ht ti pt.t l I t'q lll! t'!ne llt ' iil b2 nlunlCipalllit'- itiltl 2ii lit Ilt'I' }lu killt' pt i% ta r d t -t f'lCl 3 ;t nd r u f ;ll Ut n i} >t'l itt l \ t"- 'It W hidemalt- Al-ii, t he tia rt ial req uir t iite tit -

Id l9 Inunit Ipalltit'- W el t* -c! \ t d at % h'dtwillt

,g in addition t he l h-t ra t inake- p o t n -

1p.stion -ale- tii t he t )rna ba l'ubla l'.m ei 1)istra t f rom t hi poMer and enere pr m a duled .it (;t rald (;t ntlenia n St at!'in l' nit .jl Nii 1.t rid tii t }ie ( '11 % ist IJ nt i>llt f r iini t h'

• pa su t* l .Ild t'Ile rp [lI'liil u t t'd at I "'[H'I Nut lear Stat nin t ;crald t ientlenian 5t a 7379 lf{"[4 J/ "

+a tp "-

d tion and Sheldon Stat nin o>. f.s c A pp rox i n iat el \ 7 7 pe n e r u of N 1'l'l)-

t O l k . . I 4 k '

2" #

L' ,-/ h' pation a nd ot her non-fu rn .de- M a- t.'

W hole-ale t u-t on,cr . oui n pri t i n t 14 .

r et ail t u-t on wr -

,, gg f

% o,

- 4 ' cI ,h.

'm.% .[I-,

v s: ( J ..

,l ? , {.

"( ,) jf c% c

. . .. . . 4

h?

I 'I ,i s' O "'

,; y

i For the seventh consecutive year, the The Production Cost Adjustment District's firm wholesale and retail cus- (PCA) factor on retail and wholesale bill.

tomera did not set a new summer peak ings during 1987 continued to be a credit demand on the system. This generally due to a surplus in the PCA Account accu.

reflects load control efforts, summer mulated during portions of 1986 and 1987.

weather patterns, and the condition of the Approximately $9.7 million was credited agricultural nnd industrial economy in to customers from the PCA Account our service area.. during 1987, The District's 1987 summer firm A positive or negative PCA factor power demand of1,639 megawatts is results from the difference between esti.

approximately 4.0 percent below the com- mated and actual fuel expenses and other parable record peak demand of1,721 production corts and purchased megawatts set in 1980. The highest winter power costs.

firm power demand of the year was 1,111 County treasurers in 70 counties megawatts. The record system winter received in lieu-of tax payments of approx-peak of1,288 megawatts was set in 1983. imately $4.4 million during the year. The Irrigation and air conditioning loads in lieu-of tax payments are required under in the summer result in the District being state law. Distribution is made by county a summer peaking utility. The District is treasurers to counties, cities, villages and continuing its efrorts aimed at improving school districts according to a prescribed the system load factor with load control formula relating to mill levies.

and a strong marketing cam?aign encour. As a result ofleasing electrical distri.

aging installation of electric heat in our bution systems to the District, the 210 service area. cities and villages with such agreements Efforts to balance the winter load received approximately $9.2 million with the summer load resulted in 557 during 1987, electric heat installations during 1987 NPPD has had an active economic served by the retail system. This repre- development department for many years, sents approximately 8,091 kilowatts. At and the keen competition among states for year's end, the District had a total of developing industry prompted the District 18,938 electric heat installations served by to consider innovative ways to encourage our retail system representing 337,328 industrial expansion.

kilowatts. The year 1987 marked the sixth The District proposed a special indus-year of our cooperative electric heat mar- trial incentive electric rate during 1987 to keting program with our wholesale enhance the sta'e's position in attracting customers, new industries and the expansion of exist.

The District continued to rely heavily ing industries in its service area, liowever, on coal to fuel our electric generating the Nebraska Legislature would have to resources during 1987. During the year, enact enabling legislation before NPPD approximately 49 percent cf the District's could establish the proposed industrial energy supply was from coal fired incentive rate. Nebraska statutes require resources,29 percent from nuclear that rates for all classes of customers resources,21 percent from hydro (water) must be "fair, reasonable and non discrim-resources including our firm purchases inatory." A bill was introduced in the from the Western Area Power Administra. Nebraska Legislature in 19S8 to establish tion, and the remaining energy supply industrial incentive rates.

came from a variety of oil and gas. A United States District Judge, dur-fired resources. ing the year, entered a judgment of $4.4 8

m--i ---

B m,wurman n

/

1 -

T

. C c'6, , .

(, ?: kl, Vy" k , s N. Ar a d o o ta k. / t.. > > l '> . . i . - - < -

F- . .a-

, . ' ' +

a , y t . , +, . ,# o, , , ,

sf',*,g't. 1,, ' 't ,

'O

million against NPPD in a lawsuit filed by cooling water for Gerald Gentleman Sta-Nueor Corporation, a large industrial cus- tion - the state's largest generating facil-tomer, which alleged overcharges for elec. ity - and surface irrigation water and tricity su pplied by NPPD. Nucor filed suit ground water recharge for a large area in in 1985 alleging that NPPD had over- South Central Nebraska. In addition, the charged the company, and the suit sought facilities create wildlife habitat and pro.

$15.7 million in damages, from 1973 vide fishing, hunting, boating and camp-through 1986, ing for outdoor enthusiasts.

A federal court jury had returned a The District and Central are continu.

verdict of $7.49 million against NPPD, but ing efforts to relicense the projects.

the Judge cited the statute oflimitations In October,1986, the State of in enteringjudgment for $4.4 million. In Nebraska filed a motion for leave to file a July,1987, both NPPD and Nucor filed an petition with the United States Supreme appeal to the Court of Appeals for the Court seeking to enforce the North Platte Eighth Circuit, and the case is awaiting Decree which apportions the natural flow oral argument, of the North Platte River among the states During 1987, the Federal Energy Reg. of Nebraska, Wyoming and Colorado, ulatory C-ommission (FERC) issued Nebraska's motion was granted in January, annuallicenses for NPPD and Central 1987. Wyomirg's answer alleged, among Nebraska Public Power and Irrigation Dis- other things, violation by Nebraska of the trict for the continued operation of their North Platte Decree. In March,1987, the Platte River FERC licensed projects which National Audubon Society and the Whoop-include, among other things, certain res- ing Crane Trust filed motions for leave to ervoirs, hydro stations, and irrigation intervene in the lawsuit requesting, facilities. The projects' 50 year licenses among other things, certain Platte River expired during the year. The Districts had flows downstream of the District's Project filed a aplications in 1984 asking renewal No.1835 and Central Nebraska Public ofthe Licenses. Power and Irrigation District's Project No.

In announcing issuance of the annual 1417. The District and Central jointly filed licenses, FERC reported that "ifissuance a motion for leave to intervene in an effort of a new license does not take place on or to preserve water utilized by their respec-before June 30,1988, a new annual tive Frojects. These and other motions to license will be issued each year there- intervene have not yet been decided, after...until such time as a new license is In January,1988, the State of issued, without further notice being given Nebraska filed a motion for leave to by the Commission." FERC initially amend its petition to specifically address -

denied a petition filed by the Platte River flows for "wildlife habitat along the North Whooping Crane Critical liabitat Mainte- Platte and Platte Rivers in Nebraska."

nance Trust asking FERC to impose new Wyoming and Colorado opposed the conditions in the annuallicenses, but sub- motion to amend and on March 4,1988, sequently agreed to reconsider its deci- the U.S. Supreme Court rejected the sion. This matter is currently pending. motion filed by the State of Nebraska.

Recently, American Rivers, Inc., the The Distrieth Cooper Nuclear Station Sierra Club and the Nebraska Wildlife set a generating record in 1987, producing Federation filed a joint petition seeking to more electricity than in any year since it expedite processing of the applications. began operation in 1974. The Station had '

The projects, built in the 1930s and an output in 1987 of 5,522,126 net mega-1940s, provide hydro generation, provide watt hours. The previous high was in 19S2 10

I i

l 1

(

L t

N/ 1

. Di$?

.~c h2 .

1 ..

l lQ l j hf!.

49[ -

) -

r. -

\ g^ ~

1

.p h t!j M kjf

'i; .

' , ; '.!fk ,, ,; . 7t';

. x - -- 1

,,_ 9< ,

}, m yor ,

&@i.;fpp ;

p.1 1 ,

$ 'yj: l ,

y$ ex g;

.. / $$ 5 From ea,a ating the leaders of tomorrou to fur ther educating th leaders of today.

NP!'D and Nebraskans know that knon !vdge fucis prosperity and u ell-being We take pride in the pou erful institution of edue ation an u e plant seeds of knon ledse.

nurture them to maturits and hart est Nr bruska's leader, 11

1 l- t

(

E

,[l when the plant produced 5,276,082 net eral Emergency Management Agency

[ megawatt-hours. (FEMA) completed its review of the alert

. Cooper Station had an availability and notification system installed in the factor in 1987 of 94.7 percent meaning the area of Cooper Station and determined plant was available for production 94.7 that the system is adequate to provide percent of the time. prompt alerting and notification to the The 1987 record generation was public in the event of an emergency at accomplished in part by the fact that the site.

Cooper Station did not have a scheduled With the approval of this system, all onMge for refueling and maintenance dur- aspects of off site radiological emergency ing tr.e year. planning and preparedness at Cooper Sta-During 1987 Cooper Station became a tion have been satisfied and are now branch of the national Academy for approved by FEMA.

Nuclear Training upon the accreditation The District's Fitness for Duty drug by the academy of three plant training and alcohol program was expanded during programs. The Institute of Nuclear Power 1987. This program now requires anyone Operations (INPO) announced accredita- inside the fence, whether they are tion for the programs of senior reactor employees, consultants or Nuclear Regu-operator, reactor operator and station latory Commission personnel, to comply operator training. The District will strive with the testing program or be escorted by to achieve accreditation for the seven other security guards or utility personnel.

Cooper Station training programs. Two District engineers were dis.

A contract was approved during 1987 charged for refusing to be tested after a with The Singer Company of Silver Federal District Court decision that the '

Spring, Maryland, to build, furnish and drug and alcohol testing requirements for install a plant specific simulator for Coop- employees having unescorted access at er Station. The simulator, which will be Cooper Station were constitutional. The housed in the plant's training facility, will decision has been appealed to the United be an exact replica of the nuclear station's States Court of Appeals for the control room and,together with computers Eighth Circuit, which duplicate plant performance and The two units at the District's Gerald -

conditions,will enhance training for Gentleman Station, a coal-fired generat-plant operators. ing facility, produced 4,887,037 net mega-Acquisition of the plant-specific sim- watt-hours during 1987. Dispatchers ulator is part of the District's continuing frequently utilize this plant for "swing efforts to assure the safe operation of loads" as the District's load demand dic-Cooper Station. The contract was for $10.6 tates. The District is continuing with its million and the simulator is to be efforts to lower the fuel costs at installed and ready for use in 1990. Gentleman Station.

Cooper Station's new $1.8 millior;, The District paid a $9,000 settlement 29,000-square-foot training center became to the Nebraska Department of Environ-operational during the year. mental Control (NDEC) during the year Both the District and the State of for alleged violations of Nebraska's opacity Neb aska reached a significant milestone standard at Gentleman Station. The Dis-in oft-site radiological emergency plan- trict did not admit the violations but, in ning and preparedness in the vicinity of order to avoid litigation, NDEC and the Cooper Station during the year. The Fed- District agreed to the settlement. The 12 I

l

ry ri ,'. 7.

i m < p q rl - .,e i-. .. ,. ., ,. ,, _

i As,

_ "7 qw

' ~*

aw.

m ,

1 j 1 I

/

f) s a i

_N ,-  !..

• A

, l  !& i f 4N,Th <

. = ~~ r, og":;., g[wme.

p tf*

- 7 1 .

7,._-

i t J 8- ,y. .

.. bh. . . 4 t g j % $ N f'

3;;sf , .

r so . .

Our early am estors surt iced off of the same land that sustains u.s today 7imes may hc. e changed. but the same cooperatn e spirit that spurr< .! them to settivment fit v, .e on Electrical needs meet agricultural needs here as a e < ontinue to u ork together to accomplish our goals. 5,.;

opacity standard is an aesthetic standard years without a lost-time accident associated with the density of emissions although the total did not reach a million and does not indicate any adverse effect hours because of a lesser number on the health or safety ofindividuals liv- of employees.

ing in the plant's vicinity. The decision was made during 1987 to Employees at Gentleman Station and cease operating the Kramer Station coal-Sheldon Station achieved a significant fired plant. Operating the plant was no safety milestone by completing one mil- longer cost-effective and, because ofits lion work-hours without a disabling in- relatively small size,it was one of the jury. These employees were awarded the least efficient plants in the system.

Board of Directors Gold Award Ibr Safety Rated at 105 megawatts, Kramer Sta-for their dedication to safe work practices. tion began commercial operation in 1949.

Kramer Station employees were hon- In recent years it was used primarily as a ored with the Silver Award for working six peaking generator.

v

- < 4 1 ~ .. ,

(;  % . ,,, '

'l g 1

.p. sq r

4 ,

g

['h

,tr4c$ %

XJ

,f... r ~.: .

\ * - AA I E

1-W b 1 L. h *g,'j, & Q pj.

g; M %*YIW8 E a 'e, gg .

Y hyCh_is g tL%Tu k s

p,. .

dutyddelnMehrawa.' f

,t 3

M. A "hicerful Pride in Nebraska"is a poicerful statement that reDects NPPD's strong

$ commitment to the state. 7bgether, NPPD, represented by President Don

, Schaufelberger, and the administration of Governor Kay Orr have taken a leading

t. . .. role in furthering Nebraska'sfavorable economic climate. Wre proud to provide a

[$$ W potter source you can depend on - to heat homes and fuel industry. We're dedicated to making "the good life" a reality for all of us.

nj

> g-14 e ,

e

ir Er - . .

s Q{E(9%f y ;-y lbk .

l

.r

^

.o j -], ,

yQ _ L." l' QIfif h - "--. , , , <

'jf ; j .

"% c y

'p; ~

"$t?

WQ

^r ,

fu 44_

+ **s f , N ;,,_

)' }

.,., fg  :

A  : , .

'; $ ~

~:

Y  ;- ' ;

In mwatin te< h noluan al ach anvr~ clon 't tu ~ f hoppo n l 'ruj a , ma), the na happen.

u ~ing the ev<nu n e., that a re at ai!ah!e to them NI'I'l) i ~ p!. a ~. <l tu pro :<l the resou n . s that tu rn <! ream , in to ro alit a 15

l-r f

I l

l l FINANCIAL COMMENTARY

{

t The year 1987 started slowly from the Net Revenues in 1987 are $10.6 million, an

f. standpoint of energy sales and revenues. The increase of ?3.7 million or 53.6%. This increase reduction in sales and revenues can be attrib- results from an increase in sales and the abil-uted to abnormal weather conditions during ity to hold increases in operating costs to a January, February and March. Energy sales minimum. These net revenues, when adjusted p and revenues improved during the months of for noncash items as provided in the District's i May through August and exceeded our expec- Electric System Bond Resolution, resulted in a tations as a result of sales to other utilities on debt service coverage of1.76.

a non firm basis and a hot, dry July and Au- During 1987, the District reduced its gust. Energy sales in the months of September short-term debt by $20.5 million, $3.2 million through December approached expected levels. from the Revolving Credit Agreement and I. Due to these conditions, the District's $17.3 million associated with Commercial Pa-megawatt-hour sales increased 9.6% to per. Long-term debt retired was $10.4 million 9,736,010. The peak load in megawatts was in the Electric System, $13.3 million in the 1,639, an increase of 3.3% over 1986. Power Supply System and $13.5 million in the These sales created revenues of $348.9 Nuclear Facility, for a total of $37.2 million, j million, a record high, and exceeded the 1986 Economic indicators, such as employment, revenues by $5.5 million, land values, bank income, farm income and Operating expenses totaled $326.4 million, economic expansion, reveal an improvement in which includes $256.5 million for the purchase the Nebraska economy. Therefore, the District and generation of power and energy. Operating is enthusiastic about the future of Nebraska expenses exceeded 1986 expenses by approx. Public Power District and expects favorable fi-imately $1.2 million. This is a very nominal in. nancial results in the future, crease considering the increase in megawatt-hour sales and the associated fuel costs. Dur- - '

ing 1987 the District's Nuclear Facility pro-vided the Electric System 36% more energy than in 1986, enabling the District to reduce T. M. Kyster expenses associated with Purchased Power. Vice President and Assistant 7husurer 1

16

f Nebraska Public Power District ELECTRIC SYSTEM Ileport ofIndependent INiblic Accountants To The Board of Directors Nebraska Public Power District:

We have examined the balance sheets of the Electric System of Nebraska Public Power District (a public corporation and politica' subdivision of the State of Nebraska) as of December 31,1987 and 1986, and the related statements of revenues and expenses and accumulated net revenues and changes in financial position for each of the three years in the period ended December 31,1987. We have also examined the supplemental schedules of the calculation of the debt service ratios for each of the three years in the period en December 31,1987. Our examinations were made in accordance with ge- , ally accepted auditing standards and, accordingly, included such tests of the accounting records and such other auditing procedures as we considered necessary in the circumstances.

In our opinion, the financial statements referred to above present fairly the financial position of the Electric System of Lbraska Public Power District as of December 31,1987 and 1986, and the results ofits operations and changes in its financial position for each of the three years in the period ended December 31,1987, and the supplemental schedules of the calculation of the debt service ratios for each of the three years in the period ended December 31,1987, present fairly the information set forth therein, all in conformity with generally accepted accounting principles applied on a consistent basis.

Coopers & Lybrand 600 Woodmor. Tower Omaha, Nebraska 68102 March 4,1988.

17

Nebraska Public Power District ELECTRIC SYSTEM Balance Sheets December 31,1987 and 1986 1M7 19M ASSETS rrhou..nd. or poli r.>

Utility Plant, at Cost . . .. .. .. .$676,692 $667,455 Less-Reserve for depreciation and amortization (Non 1) . .. . 284,573 270,900

$392,119 $396,555 Debt Reserve Account. . . . .

..$ 30,947 $ 30,542 Receivables:

Advance to Power Supply System (Note 4).. . .$ 6,100 $ 6,100 Sale of property . . ... . . . . . . 1,439 1,065

$ 7,539 .$ 7,165 Current Assets:

Cash and investments (Note 1).. . . . .$108,741 $111,648 Receivables, less reserves . 34,285 35,178 Materials and supplies, at average cost.. 10,319 12,520 Prepayments and other assets.. . 556 658

$153,901 $160,004 Deferred Compensation Plan Assets (Note 7).. .$ 9,311 $ 8,387 Deferred Charges:

Nuclear Facility billings (Note 1) . . . .$ 29,813 $ 32,124 Power Supply System billings . . .

- 4,170 Unamortized financing costs. . . 2,135 2,327 Other. . . 4,084 3,383

$ 36,032 $ 42,004 l $629,849 $644,657 l

LIABILITIES AND CAPITAL Accumulated Net Revenues .. .. . . $187,721 $177,083 Long-Term Debt (Note 3).. . . . . .$329,611 $340,018 Notes Payable (Note 3):

67"r of prime, noe 1987 to 1989. . . 2,737 5,985 Commercial Paper Notes (Note 4) . .

58,915 76,180

$391,263 $422,183 less-Current maturities (Notes 3 and 4) . . 13,110 32,993

$378,153 $389,190 Current Liabilities:

Current maturities.. .. .$ 13,110 $ 32,993

( Accounts payable . .

19,660 17,280 I Accrued lease payments . 4,941 5,577 Other. . 15,176 12,162

$ 52,887 $ 68,012 Deferred Compensation Plan Liabilities (Note 7).. .$ 9,311 $ __ 8,387 Unamortized Payment Received for Refinancing Costs . . . .$ 1,777 $ 1,985

$629,849 $644,657 The accompanying notes to financial statements are an integralpart of these balance sheets.

18

Nebraska Public Power District '

ELECTRIC SYSTEM Statements of Revenues and Expenses and Accumulated Net Revenues for each of the Three Years in the Period Ended December 31,1987 1947 1986 1985 (Thousands of Dollars)

Revenues and Expenses:

Operating Revenues (Note 2) . . . . .$348,876 $343,360 $329,096 Operating Expenses:

Power purchased-Nuclear Facility and Power Supply System (Note 1) . . .$207,066 $205,561 $185,140 Other. . 34,896 38,944 40,753 Production-Fuel .. .. . .

6,958 6,882 8,569 Operation and maintenance . . 7,572 6,917 6,241 Other operation . 24,820 23,438 22,864 Other maintenance . . .

8,426 7,377 7,262 Lease payments (Note 1) . .. .. 9,332 9,161 9,227 Depreciation and amortization (Note 1). . 22,770 22,509 22,832  !

Payroll taxes and payments in lieu of taxes. 4,543 4,452 6,471  ;

lbtal operating expenses . . . . . .$326,383 $325,241 $309,359 Net operating revenues . .. .$ 22,493 $ 18,Q9 $ 19,737  !

)

1 Interest and Other Revenues:

Allowance for funds used during construction.. .. ..$ 582 $ 1,219 $ 1,233 a

Interest and other, ,. . . . .. . 11,177 12,399 14,375 Total interest and other revenues . .

.$ 11,759 $ 13,618 $ 15,608 Net revenues before other deductions. . .$ 34,252 $ 31,737 $ 35,345 Other Deductions: F Bond interest . .

.$ 20,404 $ 20,891 $ 21,348 Other interest . 3,210 3,913 4,245 Total other deductions . . .$ 23,614 $ 24,804 $ 25,593 Net Revenues (Note 2) . .$ 10,638 $ 6,933 $ 9,752 f

Accumulated Net Revenues:

Beginning balance . .

177,083 170,150 160,398  ;

Ending balance. .$187,721 $177,083 $170,150 The accompanying notes to financial statements are an integral part of these statements.

i 19

Nebraska Public Power District ELECTRIC SYSTEM Statements of Changes in Financial Ibsition for each of the Three Years in the Ibriod Ended December 31,1987 1987 1988 1985 (Thousands of Dollars)

Funds Provided by Operations:

Net revenues . .$ 10,638 $ 6.933 $ 9,752 Add items which require no current outlay of working capital-Depreciation and amortization (Note 1) . 22,770 22,509 22,832 Amortization of deferred charges-Nuclear Facility and Power Supply System (Note 1) . 12,269 14,666 13,324 Other. 1,040 865 778 Total funds provided by operations . .$ 46,717 $ 44,973 $ 46,686 Other Sources of Funds:

Proceeds from commercial paper notes. - - 25,500 Repayment of Advance to Power Supply System . - -

23,900 (Increase) decrease in receivables . 893 (1,500) 6,885 Decrease in materials and supplies. 2,201 2,333 2,981 Total funds provided. .$ 49,811 $ 45,806 $105,952 Funds Applied:

Utility plant additions . .$ 19,769 $ 25,671 $ 22,548 Repayment of commercial paper notes . 17,265 - 29,320 Addition to deferred charges for Nuclear Facility and Power Supply System. 5,788 11,000 22,319 Retirements oflong-term debt . 10,407 9,883 0,432 Repayment of notes payable.. 3,248 9,247 9,248 (Increase) decrease in accounts payable . (2.380) (3,491) 2,967 increase (decrease)in fund balances . (2,502) (5,593) 1,318 Other working capital changes. (1,784) (911) 8,800 Total funds applied. .$ 49,811 $ 45,806 $105,952 The accompanying notes to financial statements are an integral part of these statements.

20

1 I

Nebraska Public Power District ELECTRIC SYSTEM Supplemental Schedules-Calculation of Debt Service Ratios for each of the Three Years in the Period Ended December 31,1987 19M7 1986 19R5 (Thousands of Dollars)

Operating revenues . .$348,876 $343,360 $329,096 Operating expenses, excluding depreciation and amortization of

$23,810,000, $23,374,000, and $23,610,000. 302,573 301,867 285,749

$ 46,303 $ 41,493 $ 43,347 Interest and other revenues, excluding interest on construction funds of

$3,766,000, $4,383,000, and $5,084,000. 7,411 8,016 9,291 Net revenues available for debt service . .$ 53,714 $ 49,509 $ 52,638 Amounts deposited in the Electric System Debt Service Account-Principal.. ..$ 10,073 $ 9,603 $ 9,158 Interest. 20,404 20,891 21,348

$ 30,477 $ 30,494 $ 30,506 Ratio of net revenues available for debt service to debt service deposits. 1.76 1 62 1.73 The accompanying notes to financial . statements are an integralpart of these statements.

21

Nebraska Public Power District financed by revenues is based on a projected rate or borrow-ing. For the periods presented herem, the rates vary from ELECTRIC SYSTEM 6.19 to 10.0%

D. Deferred Charges--

Notes to Financial Statements Deferred charges are as follows:

(1)

SUMMARY

OF SIGNIFICANT  %, n,.j*d'ali, w ACCOUNTING POLICIES: mio-.w. t iu.r.i A. Organization- Nuclear Facility billings:

The District has three separate divisions for account- Fuel cost . $ 2,776 ing purposes as follows: Plant managemen; information Electric System system . 1,901 Power Supply System Pipe replacement . 11,228 Nuclear Facility Renewals and replacements. 13,908 As required by Bond Resolutions, separate records are $29,813 maintained for each division. The Electric System financial statements exclude the Nuclear Facility and Power Supply These deferred charges are expected to be amortized as System, for which financial statements are presented sep- follows: 1988 - $9.C million: 1989 - $7.5 million: 1990 -

arately herein. The Electric System financial statements $7.0 million; 1991 - $6.1 million.

should be read in conjunction with such other financial The carrying costs of the nuclear fuel advances are statements. included in the above amounts. The Dist rict included amor-tization of these deferred charges of $12.3 million in 1987, B. Depreciation, Amortization and Maintenance _

The District records depreciation over the estimated $14.7 milhon m 1986, and $13.3 milhon m 1985 in power usefullife of the property. Depreciation on Utility Plant in purchased expense.

i

! Service was approximately 3.0'Tc in each of the years 1987 E. Unemortized Financing Costs-l 1986, and 1985. These costs represen; issuance expenses on all bonds l The District has long term lease agreements with 210 and the premium to retire the Electric System Revenue I

municipalities. These lease agreemems obligate the Dis- Bonds,19i5 Series, prior to their maturity date and are trict to make lease payments and pay for normal property being amortized over the life of the respective bonds using additions during the term of the lease. The District has the bonds outstanding method.

recorded provisions for amortization of $3.7 million in 1987, F. Unamortized IbymenI Received for Rc/inancing Costs-

$4.4 million in 1986, and $3.6 milhon m, 1985. Leased plant This reimbursement from the Nuclear Facility was for additions, which are fully reserved, totaled $46.1 milh,on at certain refinancing costs of the Electric System incurred in l

December 31,1987, and $43.0 million at December 31,1986. 1968 and is being amortized over the life of the 1968 Reve-Certain mumcipal lease agreements included an obli- nue Bond issue using the bonds outstanding method.

l gation requiring the District to make property additions '

associated with the electric service being provided to such G. Cad and Investments-i municipalities in an amount equal to a percentage of reve- -g igg I nues of the respective leased systems. The District has rrhou..na. or tion ro completed negotiations with all but one of the munici. Revenue Fund... . $ 17,683 $ 19,378 i pahties which resulted m, among other things, the mod- Operating Fund.. . . 14,374 1,949 I ification of the obligation to make such improvements. Dur- Construction Funds . 49,315 48,029

! ing 1987, the District made the final payment to these Commercial Paper Account. 10,172 24,334 municipalities of $y36.000 which was charged to deprecia- Debt Service Account. 193 360 tion and amortization. Reserve and Contingency Fund . 1,236 1,236 The District charges maintenance and repairs,includ- General Reserve Fund.. 15,768 16.362 ing the cost of renewals and replacements of minor items of

$108,741 $111,648 property, to maintenance expense accounts. Renewals and replacements of property (exclusive of minor items of prop- Funds consist of $90.4 million ofinvestment securities erty, as set forth above) are charged to utility plant ac' and $18.3 million ofcash deposits at December 31,1987, and counts. Upon retirement of property subject to deprecia- $89.6 million ofinvestment securities and $21.8 million of tion, the cost of property is removed from the plant accounts cash deposits at December 31,1986. The carrying value of and charged to the reserve for depreciation, along with the nvestment securities approximates market.

removal costs, net of sahage.

Cash deposits, primarily interest bearing, at Decern-C. Allouunce for Rnu, Jsed During Construction- her 31,1987, and tbroughout much of the year, were covered This allowance, representing the cost of funds used to by federal depository insurance or unregistered U.S. Gov-finance construction is capitalized as a component of the ernment and municipal securities held by various deposi-cost of utility plant and is credited to Interest and Other tories. Investments at December 31,1987, were in unreg-Revenues. The capitalization rates for construction fi- istered U.S. Government securities and Federal Agency nanced with revenue bonds are based on the interest cost of obligations held in the District's name by the custodial each issue less interest income. The rate for construction banks.

i 22

l l The Debt Reserve Account in the Debt Service Fund is (3) LONG-TERSI DEBT AND NOTES PAYABLE:

valued semi-annually at January 1 and July 1 at the lower on n_w ,

cost or market in accordance with requirements of the iu2 iua Electric System Revenue Bond Resolution (Electric Resolu. er w .na.ornon.m tion). The securities in the remaining funds are valued at Revenue Bonds:

the lower of cost or principal amount in accordance with Serial Bonds-requirements cf the Electric Resolution. 2.009, due 1987 to 1990. ..$ 1,155 $ 1,875 4.759-d.309, due 1987 to 1990.. 26,705 35,575 H. Deferred Production Costs- 4.909-6.409, due 1991 to 1995.. 31,010 34,010 Actual energy (fueD costs in excess of those included in 5.009-6.109. due 1996 to 2000.. 39,850 39,850 the basic rates are recovered by a Production Cost Adjust- 5.004-6.309, due 2001 to 2005.. 49,740 49,740 ment ( PCA) which is billed to all customers except non-firm 5359-&40% due 2006 to 2009 . 27,820 27,820 and participation customers. When the basic rates do not Term Bonds, with annual sinking provide sufiicient revenues to recover the energy costs, the fund requirements-excess cost is deferred. When the % sic rates provide reve-nues in excess of the energy costs, the excess is excluded e1 from revenues. Present District policy requires that billings 6.759, due 1991 to 1995. 17,100 17,100 for the PCA be made using rates adjusted from time to time 7.009, due 1996 to 2005. 57.250 57,250 so that the variations m actual energy costs from estimated

$327,180 $337,420 energy costs used to derive the basic rates are re< overed by PCA billings either in the current rate period or future rat'e Idase Purchase Payables-2.009, due 1987 to 2005. 3,852 4,145 periods.

Unamortized Bond Discount . (1,421) ~(1,547)

L Revenue Recogm.tmn- $329,611 $340,018 Substantially all wholesale revenues are recorded in the penod in which service is rendered, and,in accordance Principal payments of Electric System Long-Term with mdustry p actice, retail revenues are recorded in the Debt and Notes Payable for the next five years are: 1988 -

month retail customers are billed. Consequently, revenues $13.1 million: 1989 - $12.0 million; 1990 - $12.3 million; applicable to service rendered to retail customers from the 1991 - $22.7 million; 1992 -$13.4 million.

period covered by the last billingin a year to the end of the year are not recorded as revenues until the followir.g year. (4) CO515fERCIAL PAPER NOTES:

The District is authorized to issue up to $100 million of (2) RATES: .

comtnercial paper notes. A credit agreement is maintained The District designs its wholesale and retail electne with a bank to support the sale of the commercial paper seivice rates to cover cost of service, including;l) operating notes. This credit agreement expires in December,1989.

expenses other than depreciation,2) debt service, and 3) The e&ctive interest rates on outstanding notes for 1987 certam capital additions. In the 2 vent the District s rates for and 1986 were 4.69 and 4.89 respectively. The District wholesale and retail service result in a surplus or deficit in does not expect to repay any of the commercial paper notes net revenues during a rate period, such surplus or deficit is in 1988 taken into accour,t in projecting estimated revenue raquire- The proceeds of this iast:e are being used (1) to fina nce a ments for future rate periods. The fol%ing table illus- portion of the costs relating to a plant management infor-trates the effect of these adjustments in revenue require' mation system, and repairs and replacement of piping, both ments on the Statements of Revenues and Expenses. of which have been completed,(2) to finance certain other Adjustments in Itevenue llequirements

~

renewals and replacements of the Nuclear Facility, and (3) n.ww fer other lawful purposes of the District.

-- - -Ipsws iem ps i ma. i >? The notes are anticipated to be retired from repayment ir umaian of the Advance to the Power Supply System and from Elec-Surplus or (Deficit)

' # N#* **""

in Rate Period.. $17.3 ) $17.5) $t 12.21 (5) LONG TER5I OBLIGATIONS:

Adjustment in The District has an agreement for the purchase of the Subsequent hate Periods: entire output of a 100 5IW steam electric generating plant 1984 1985. 2.9 - - through 1991. Under this agreement, the District must 1986-1987. 4.4 14.6 - (with limited exceptions) make minimum payments month-1988-1989 : Projected) . -

( 2.8 ) 18.1 ly. The annual aggregate amount of such required pay- l 1990-1991 iProjected) . -

( 4 'b ( 5.9 ) ments will be $968,000,less an amount associated with the principal a mou nt ofoutstanding bond s which will be retired As provided in the Electric R,esolt. tion, the District from existing reserve funds of the owner, for each of the covenants to charge rates for electne and other services s years 1988 through 1991. In addition, the District is re-that revenues will be sufficient to pay annual operating quired to pay the variable operating expenses of the plant.

expenses, including Nuclear Facility and Power Supply The District's total payments under the agreement were System charges, debt service and other charges payable out $2.3 milhon in 1987, $3.5 million in 1986, and $2.7 million of Electne System revenues. The 1988 hase rates for firm n 1955' wholesale and retail service are expated to increase elec-tric revenues by approximately $2.3 million over 1987 revenuen.

23

(6) RETIREh!ENT PLAN AND This surplus was adjusted by a decrease in the HTS-2 POSTRETIRE5 TENT BENEFITS; electric rate schedule for service provided from 51 arch 1, The District has a retirement income plan covering its 1987, through December 31,1987.

regular full-time em ployees, substantially all of whom have At trial NUCOR expanded their original claim of dam-elected to participate. Employee's contributions to the plan ages to include the years 1985 and 1986. On 51ay 6,1987, at are based on salary, and the District's contributions are the conclusion of trial, thejury returned a verdict in favor of allocated to each employee's trust account based on the NUCOR for $7,492,340. Thejudge then entered judgement employee's contributions to the plan.The plan provides for against the District on Slay 15,1987, reducing this amount retirement incom? equal to the total of the employee's trust as a result of the statute oflimitations to $4,403,547. NPPD account, including trust earnings. The District's contribu- has appealed thejudgement to the Eighth Circuit Court of tion was $5.0 million for 1987, $4.8 million for 1986, and Appeals. NUCOR has filed a cross-appeal and contends

$4.5 million for 1985. that judgement should have been entered on the full The District also provides certain health care, accident amount of the jury verdict. The matter is awaiting oral and life insurance benefits for retired employees. Substan- argument before the Eightn Circuit Court of Appeals.

tially all of the District's retired employees are eligible for NUCOR is also disputing 1987 and 1988 rates with such benefits. The cost of providing these benefits was NPPD. In Starch,19S8, NUCOR withheld payment on the

$949,000 for 1987, $761,000 for 1986, and $412,000 f or 1985. portion of the January,1988, NPPD billing which is in (7) DEFERRED COh;PENSATION PLAN: dispute.

The District offers its employees a delerred compensa- (9) CAPITAL ADDITIONS:

tion plan created in accordance with Internal Revenue The 1988 construction plan for the Electric System Code Section 457. All amounts of compensation deferred includes authorization for estimated expenditures of $20.2 under the plan, all property and rights purchased with million for 1988. These expenditures will be funded from such amounts, and all income attributable to such revenues and other available funds.

amounts, property, or rights are tuntil made available t the employee or other beneficiary) solely the property and (10) CONTINGENCIES ~-

rights of the District t without being restricted to the provi-On October 8,1956, the Environmental Protection sions of benefits under the plant, subject only to the claims Agency (EPA) notified the District of a potential respon-of the District s general creditors. The District has recorded sibility stemming from its having arranged for the trans-the assets ofits deferred compensation plan and the corre' port, treatment or disposal of hazardous substances at the sponding liability to reflect its fiduciary responsibility un- 51 artha C. Rose Chemicals, Inc. site in Holden, hiissouri.

der the plan. In the past, the plan assets have been used for EPA notified the District that public funds have been spent no purpose other than to pay benefits. The District beheves by EPA to investigate and respond to alleged releases and j threatened releases of hazardous substances at the site.

, it is unlikely that it will use the assets to satisfy the claims l of general creditors m the future. The plan is admmistered EPA also notified the District that it may be a responsible by The Equitable Life Assurance Society of the United party, and that responsible parties may be legally obligated States.

for r'esponse actions and costs incurre'd in connection with the site. While the potential legal liabilities of the District (8) LITIGATION: for costs in connectisn with the site may include the total On August 14,1985, NUCOR Corporation (NUCOR), a cost of response actions related to the site at a cost of up to large industrial customer, filed a lawsuit in the United $30 million or more, the District believes that its probable

! States District Court of Nebraska alleging overcharges liability is much less. If the District's liability for such costs f from August 1,1972, to January 1,1980, in en undeter- were determined on the basis of the total quantity of mate-mined amount and $10 million from January,1980, through rials sent by the District to the Rose Chemicals site, and if December,1984. The District's answer, among other things, the entire c'ost of actions at the site were allocated on that denied that the District's rates charged NCCOR were un- basis among those who sent materials to the site, the Dis-fair, unreasonable and discriminatory and further denied trict believes its relative liability for such costs would not that NUCOR had been damaged as alleged, and asserted exceed 34 to 64 of the total costs. A provision has not been various aflirmative defenses. made in the financial atatements because it is not yet deter-Investigation and discovery indicated that revenue col- minable what the District's ultimate liability,if any, will be.

lected by the District from the HTS-2 rate class, of which NUCOR is a member, from September 1,1973, to December

, 31,1956, exceeded the revenue requirements by $L527,301.

l 24

Nebraska Public Power District POWER SUPPLY SYSTEM Report ofIndependent l'ublic Accountants i I

To the Board of Directors i Nebraska Public Power District:

We have examined the 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 31,1987 and 1956, and the related special purpose statements of revenues and costs for each of the three years in the period ended December 31,1987. Our examinations were mar in accordance with generally accepted auditing standards and, accordii y, included such tests of the accounting records and such other auditing procedures as we considered necessary in the circumstances.

The special purpose Gnancial r'atements referred to above have been prepared for the purpose 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, securing the revenue bonds issued thereunder. As described in Note 1(B), these requirements difTer from generally accepted accounting principles.

Accordingly, the special-purpose financial statements are not intended to present and do not present fairly the financial position, results of operations, and changes in financial position of the Power Supply System of Nebraska Public Power District in conformity with generally accepted accounting principles.

In our opinion, however, the aforementioned special purpose financial statements of the Power Supply System of Nebraska Public Power District are presented fairly pursuant to the requirements of the Power Supply System Revenue Bond Re<olution described in Note 1(ID, applied in a consistent manner.

Coopers & Lybrand 600 Woodmen Tower Omaha, Nebraska 68102 March 4,1988.

25

Nebraska Public Power District POWER SUPPLY SYSTEM Statements of Assets and Liabilities December 31,1987 and 1986 Prepared I*ursuant to Hequirements of the Ihwer Supply System Hevenue Bond Resolution 1987 19M6 ASSETS <thou na.or noitar.>

Utility Plant, at Cost . . .$758,208 $761,634 Less--

Reserve for depreciation (Note 1). 74,642 63,758 Amounts funded fiom revenue (Note 1) . .

12,614 13,845

$670,952 $684,031 Prepaid Capital Costs (Note 3) . .$ 68,724 $ 69,414 Cash and Investments (Note 1):

Debt resene account . .$ 58,559 $ 58,559 Resen'e and contingency fund. 6,087 8,510 Additions and improvements account . 3,043 3,027 Construction funds. 35,015 76,627 Revenue fund . 748 2,424 Operating fund . 12,778 15,723 General reserve fund . 58,390 19,407

$174,620 $184,277 Accounts Receivable . . . . _$ 3,847 $ 361 Interest Receivable. .$ 2,682 $ 2,589 Fuel Inventory, at average cost . . .$ 17,354 $ 19,208 Deferred Charges and Other Assets. ..$ 360 $ 507

$938,539 $960,387 LIABILITIES Revenue Bonds (Note 4):

Serial Bonds-5.00%6.00% due 1987 to 1990. . .$ 44,425 $ 57,740 5.5046.80% due 1991 to 1995 . . . 92,545 92,545 5.7047.20% due 1996 to 2000. . 75,240 75,240 6.00% due 2001 to 2005. 5,405 5,405 Term Bonds, with annual sinking fund requirements-5.80% due 1998 to 2012. 168,930 168,930 6.125% due 1999 to 2016. . 239,635 239,635 6.75% due 1999 to 2001. 23,025 23,025 6.90% due 2002 to 2008. 75,345 75,345 7.10% due 2009 to 2016. 129,005 129,005 7.375% due 2001 to 2006. 11,595 11,595 7.50% due 2007 to 2010. 50,320 50,320

$915,470 $928,785 Advance from Electric System. 6,100 6,100 Accounts Payable and Other Accrued Liabilities . 5,999 10,891 Operating Reserves (Note 1) . 10,970 14,611

$938,539 $960,387 The accompanying notes to tinancial statements are an integral part of these statements.

26

Nebraska Public Power District POWER SUPPLY SYSTEM Statements of Revenues and Costs for each of the Three Years in the Period Ended December 31,1987 Prepared Pursuant to Requirements of the Pbwer Supply System Hevenue Bond Resolution 1987 1986 19M5 (Thousands of Dollars)

Revenues (Notes 1 and 2):

Sales to the Electric System . . $134,101 $140,696 $133,104 Investment and other income.. .

15,602 10,736 20,644 Total revenues . .$149,703 $151,432 $153,748 ,

Costs:

Operating expenses-Production-Fuel . .$ 56,455 $ 52,912 $ 60,850 Operation and maintenance (Note 3).. 16,308 18,880 16,241 Provisions for operating reserves (Note 1) . . - 4,044 3,247 General and administrative. 3,971 3,117 2,839 Insurance. . . .

1,101 1,070 973

$ 77,835 $ 80,023 $ 84,150 Debt service-Principal (Note 1). . 13,315 12,095 11,725 Interest. . 58,553 _ 59,314 57,873 Total costs.. . $149,703 $151,432 $153,748 The acwmpanying notes to financial statements are an integral part of these statements.

l i

8eparately herein. The Power Sup;A System financial Nebraska Public Power District statements should be read m conjuncton with such other POWER SUPPLY SYSTEM nnancial statements.

N' U Notes to Financial Statements feh,*nu^Ia ""r'og~nized and billed at an amount equal (1)

SUMMARY

OF SIGNIFICANT to costs as denned by the Power Supply System Revenue ACCOUNTING POLICIES: Bond Resolution (Power Supply Resolution) which include A. Organization- operating expenses (excluding depreciation), and debt ser-The District has three separate divisions for account- vice on the revenue bonds, less investment income. Reve-ing purposes as follows: nues are computed and billed so that no equity is accumu.

Electric System lated in the Power Supply System.

Power Supply System Revenues and costs as defined by the Power Supply Nuclear Facility Resolution difier in the following respects from generally As required by Bond Resolutions. separate records are accepted accounting principles:

maintained for each division. The Power Supply System (1) Amortization, nf the debt principal is included financial statements exclude the Electric System and Nu- as a cost in the accompanying %9ements of Revenues clear Facility, for which financial statements are presented and Costs as "Debt service.Princip!".

27

Depreciation is not recorded as a cost. Had the The Debt Reserve Account in the Debt Service Fund District provided straight-line depreciation over a 40- and the Reserve Account in the Reserve and Contingency year life rather than including amortization of debt Fund are valued semi-annually at January 1 and July I at principal over the same period, costs would have in- the lower of cost or market in accordance with require-creased $6.0 million in 1987, $6.6 million in 1986, and ments of the Power Supply Resolution. Gains or losses on

$6.5 million in 1985. Accumulated depreciation valuations are included in investment inco ne. The securi-through December 31,1957, would have increased ties in the remaining funds are valued at the lower of cost or costs approximately $55.6 million. The reserve for de- principal amount in accordance with requirements of the preciation shown on the Statements of Assets and Wa- Power Supply Resolution.

bilities was provided by recording amounts equal to (2) RATE COVENANT:

repayment of debt. Upon retirement of property sub- The District is required under the Power Supply Reso-ject to depreciation, the cost of property is removed lution to charge rates for electric power and energy from the from plant accounts and charged to the reserve for Power Supply System so that revenues will be at least depreciation, along with the removal costs, net of sumcient to pay operating expenses, aggregate debt service sah age- on the Power Supply System Revenue Bonds, amounts to be (2) Billings to provide capital for renewals and paid into the Debt Reserve Account and Reserve and Con-replacements of property and capital additioris are in- tingency Fund, and all other charges or tiens payable out of cluded in the accompanying statements as -Operating revenues of the Power Supply System. The debt service Reserves" and "Provisions for operating reserves". Un- payments of the Power Supply System Revenue Bonds are der generally accepted accounting principles, capital $71.9 million per year through 1992 and principal pay-additions and provisions for renewals and replace- ments, as a component of debt sersice payments, are $14.0 ments are not expenses but (exclusive of minor items of million, $14.8 million. $15.6 million, $16.5 million, and property) are charged to utility plant. Renewals and $17.4 million for e h of the years 1988 through 1992 replacements of property and capital additions funded respectively.

from revenues are fully reserved. Other income in 1987 (3) PREPAlD CAPITAL COSTS:

meludes $6.2 million of excess funds which have been Prepaid capital costs are associated with the purchase recognized as revenues and applied for the benefit of of the capacity of the Kingslev Project, a 50 MW hydro-the Electne System in reduction of payments by the electric generating facility owned and operated by The Cen-Electne System to the Power Supply System for pur' tral Nebraska Public Power and Irrigation District (Cen-chased power.

tralt The prepayment is being amortized to expense over (3 Interest income on construction fund m. vest-ments(is credited to utility plant. Under generally ac-the life of the 1986 Series Revenue Bonds.

Under terms of the Kingslev Project Construction, Op-cepted accounting principles, such income would haye

, cration and Power Purchase Agreement, Central makes increased revenues $5.1 million in 1987, $5.9 million in available all of the production of the Kingsley Project and 1986, and $7.7 milhon in 195a.

the District pays all costs of operating and maintaining the C. Utihty Plant- facility plus a charge based on the amount of energy deliv.

Interest expense, less interest earned on investment cred to the District. Costs of $498,000 in 1987 are included securities, all financing costs and all other costs related to in "Production-Operation and maintenance" construction projects are capitalized. (O DEFEASANCE OF DEBT:

D. Cash and Incestments- In 1956, the District issued Power Supply System Rev.

Funds consist of $173.5 million ofinvestment securities enue Bonds,1986 Series, to advance refund the outstand.

and $1.1 million of cash deposits at December 31,1987, and ing Power Supply System Revenue Bonds,1985 Series. The

$181.5 million ofinvestment securities and $2.8 million of 1985 Bonds were defeased by placing the proceeds of the cash deposits at December 31,1986. The carrying value of 1956 Bonds in an irrevocable trust account with an escrow investment securities approximates market. agent to provide for all future debt service payments on the Cash deposits, primarily interest bearing, at Decem- old bonds. Accordingly, the trust account assets and the ber 31.1987, and throughout much of the year, were covered liability for the defeased bonds are not included in the by federal depository insurance or unregistered U.S. Gov- District's financial statements. At December 31,1987, $64.0 ernment and municipal securities held by various deposito- million of bonds outstanding are considered defeased.

ries. Investments at December 31, 1987, were in unreg-(5) CAPITAL ADDITIONS:

istered U.S. Government securities and Federal Agency The 1988 construction plan for the Power Supply Sys.

obligations held in the Districts name by the custodial tem includes authorization for estimated expenditures of

~

banks. $5.8 million for 1988. These expenditures will be funded from excess construction funds.

28

Nebraska Public Power District NUCLEAR FACILITY Report ofIndependent Public Accountants To the Board of Directors Nebraska Public Power District:

We have examined the special purpose statements of assets and liabilities of the Nuclear Facility of Nebraska Public Power District (a public corporation and political subdivision of the State of Nebraska) as of December 31,1987 and 1986, and the related special purpose statements of revenues and costs for each of the three years in the period ended December 31,1987. Our examinations were made in accordance with generally accepted auditing standards and, accordingly, included such tests of the accounting records and such other auditing procedures as we considered necessary in the circumstances.

The special-purpose financial statements referred to above have been prepared for the purpose of complying with, and on the basis of, accounting requirements specified in the Nuclear Facility Revenue Bond Resolution adopted by the District on August 22,1968, as supplemented, securing the revenue bonds issued thereunder. As described in Note 1(B), these requirements difTer from generally accepted accounting principles.

Accordingly, the special purpose financial statements are not intended to present and do not present fairly the financial position, results of operations, and changes in financial position of the Nuclear Facility of Nebraska Public Power District in conformity with generally accepted accounting principles.

In our opinion, however, the aforementioned special purpose financial statements of the Nuclear Facility of Nebraska Public Power District are presented fairly pursuant to the requirements of the Nuclear Facility Revenue Bond Resolution described in Note IW), epplied in a consistent manner.

Coopers & Lybrand 600 Woodmen Tower Omaha, Nebraska 68102 March 4,1988.

29

Nebraska Public Power District NUCLEAR FACILITY Statements of Assets and Liabilities December 31,1987 and 1986 Prepared Pursuant to Requirements of the Nuclear Facility Revenue Bond Resolution 1987 1986 ASSETS rrbousand. or poliar.)

Utility Plant, at Cost . . . .. . . . $560,113 $545,697 Less-Reserve for depreciation (Note 1). .. . . 122,665 110,453 Amounts funded from revenue (Note 1) . . . . . . . .

149,673 136,518

$287,775 $298,726 Nuclear Fuel-Net of Amortization (Note 1).. .. .

..$ 83,207 $107,326 Cash and Investments (Note 1):

Debt resen e account . . . . . .$ 28,461 $ 28,596 l Reserve and contingency fund. .

10,666 0,861 Additions and improvements account . 10,487 11,149

, Construction fund . 13,446 14,354 Fuel reserve account. . . 48,848 25,397 Fuel disposal fund (Note 1) . .

3,625 2,889 Operating fund . . . . . 5,096 2,838 Revenue fund . . . . 773 453 Decomissioning fund (Note 4).. .. . 8,724 6,356

$130,126 $101,893 Accounts Receivable . . . . .$ 2,512 $ 6,254 Interest Receivable. . . .$ 2,431 $ 1,435 Deferred Charges and Other Assets. . . . .$ 998 $ 1,826

$507,049 $517,460 LIABILITIES Revenue Bonda:

Serial Bonds-4.809-7.50"r, due 1987 to 1990 . .

.$ 22,900 $ 36,245 6.00%-8.809, due 1991 to 1995 . . . 24,020 24,020 7.375%9.20"r, due 1996 to 2003. . 26,600 26,600 Term Bonds, with annual sinking fund requirements- <

5.10%, due 1987 to 2002. . .

154,805 155,000 6.309, due 1993 to 2003. . 68,430 68,430 6.60%, due 1992 to 2003. .

67,200 67,200

$363,955 $377,495 Operating Reserves (Note 1) . 127,579 123,039 Accounts Payable and Other Accrued Liabilities (Note 1) . . .._ 15,515 16,926

$507,049 $517,460 The accompanying ' totes to financial siatements are an integralpart of these statements.

30

l Nebraska Public Power District NUCLEAR FACILITY  !

Statements of Revenues and Costs  !

for each of the Three Years in the IYriod Ended December 31,1987 Prepared Pursuant to Requirements of the l Nuclear Facility Revenue Bond Resolution i 19M7 19N6 1933 (Thousands of Dollars)

Revenues (Notes 1 and 2): l Sales-Electric System . . ..$ 66,164 $ 60,773 $ 60,479 lowa Power and Light Company 66,169 60,775 60,477 Investment and other income. . . 15,491 7,576 12,590 Total revenues . . . . . $147,824 $129,124 $133,546, Costs:

Operating expenses-Production-Fuel . . . . . . .$ 35,766 $ 26,371 $ 7,177 Operation and maintenance . . . 31,006 34,375 31,783 Provisions for operating reserves (Note 1) . 25,593 18,446 49,870 Technical and administrative. . . 16,406 10,278 5,506 Insurance ., . 2,830 3,439 3,016

$111,601 $ 92,909 $ 97.352 Debt service-Principal (Note 1). .. . . 13,540 12,845 12,185 Interest. 22,683 23,370 24,009 Total costs.. .$147,824 $129,124 $133,546 The accompanying notes to financial statements are an integral part of these statements.

31

Nebraska Public Power District Light Company (lowa Power)in reduction of payments by the Electric Sytem and Iown Power to the Nuclear NUCLEAR FACILITi7

~

Facility ror purchased power.

Notes to Financial Statements (3) Interest income on construction fund invest-ments is credited to utility plant. Under generally ac-(1) SUM 5fARY OF SIGNIFICANT ,

cepted accountmg prmelples, such income would have ACCOUNTING POLICIES: increased revenues $.9 million in 1987, $1.0 million in A. Organiention- 19S6, and $ L2 million in 1985.

The District has three separate divisions for account- ,

ing purpo s y et i Nuclear fuel in the reactor is being amortized on the Power Supply System bas.is of energy produced as a percentage of total energy Nuclear Facility expected to be produced.

The District has entered into contracts for various nu-As required by Bond Resolutions, separate records clear fuel components for fuel loadings as follows:

are maintained for each division. The Nuclear Facility fi.

~

nancial statements exclude the Electric System and Power uunni N onnt gpph n wdITODat.

An MM Supply System, for which financial statements are pre, P sented separately herein. The Nuclear Facility financial Uranium Concentrates. . .Various 1989 statements should be read in conjunction with such other Conversion . .. Allied Corp. 1989 financial statements. Enrichment . . U.S. Dept. of Energy 2014 B. Bam.o/ Accounting-Fabrication. .. General' Revenues are recognized and billed at an amount Electric 1994 equal to costs as defined by the Nuclear Facility Revenue Bond Resolution (Nuclear Resolution) which include oper. Fees for disposal of fuel in the reactor are being pro-

, ating expenses (excluding depreciation), and debt service vided as part of the fuel cost and collected through reve-l on the revenue bonds, less investment income. Revenues nues of the Nuclear Facility. Some of these fees may ulti-are computed and bilkd so that no equity is accumulated mately be the responsibility of General Electric Company in the Nuclear Facility. (GE) under the nuclcar fuel supply contract for the initial Revenues and co'sts as defined by the Nuclear Resolu- fuel for the Nuclear Facility.

tion differ in the following respects from generally ae. The District and GE have entered into an agreement cepted accounting principles: setting out certain rights and responsibilities relating to (1) Amortization of the debt principal is included the shipment from Cooper Nuclear Station to Morris, Illi-as a cost in the accompanving Statements of Revenues nois, of spent tuel associated with the initial fuel supplied and Costs as "Debt servic'e Principal- by GE under the nuclear fuel supply contract. The imtial I

Depreciation is not recorded as a cost. Ilad the shipment of spent fuel was accomplished in August,1984.

I)istrict provided straight line depreciation over a 30 Each party has a full reservation of rights with respect to year life rather than including amortization of debt buyback payments, all shared costs, and ultimate respon-principal over the same period, costs would have in- sibility for disposition of the spent fuel and attendant creased $.1 million in 1987, $.8 million in 1956, and c sts. Buyback payments of $7.1 million for 1987, and $6.4

$1.5 million in 1985. Accumulated depreciation million for 19FG hase been ,meluded m "Accounts Payable through December 31,1987, would have increased and Other Accrued Liabilities",

costs approximately $46.6 million. The reserve for de- D. Cash and Incestmente-preciation shown on the Statements of Ax sets and Lia- Funds consist of $129.1 million of investment securi-bilities was provided by recording amounts equal to ties and $1.0 million of cash deposits at December 31,1987, repayment of debt. Upon retirement of property sub- and $1010 million ofinvestment securities and $.9 million ject to depreciation, the cost of property is removed of cash deposits at December 31,1986. The carrying value from plant accounts and charged to the reserve for ofinvestment securities approximates market.

depreciation, along with the removal costs, net of Cash deposits, primarily interest hearing, at Decera-salvage. ber 31,1987, and throughout much of the year, were cov-d) Billings to provide capital for renewals and erni by federal depository insurance or unregistered U.S.

replacements of property, capital additions, and nu- Government and municipal securities held by various de-clear fuel are included in the accompanying state- positories. Investments at December 31,1987, were in un-ments as

• Operating Reserves" and "Provisions for op- registered U.S. Government securities and Federal erating reserves". Under generally accepted Agency obligations held in the District's name by the cus-accounting principles, capital additions and provi- todial banks.

sions for renewals and replacements are not expenses The Debt Reserve Account in the Debt Service Fund but texclusive of minor items of propeny) are charged and the Reserve Account in the Reserve and Continger.cy to utility plant. Provisions for warking capital for nu- Fund are valued semi-annually at January I and July 1 at clear fuel are not expenses under generally accepted the lower of cost or market in accordance with require-accounting principles until the fuel is used. Renewals ments of the Nuclear Resolution. Gains or losses on valua.

and replacements of property and capital additions tions are included in investment income. The securities ;n funded from revenues are fully reserved. Other income the remaining funds are valued at the lower of cost or in 1987 includes $7.7 million of excess funds which principal amount in accordance with requirements of the base been recognized as revenues and apphed for the Nuclear Resolution.

benefit of the Electric System and Iowa Power and 32

. (2) RATE COVENANT: t5) CAPITAL ADDITIONS: 1 The District is r(quired under the Nuclear Resolution The 198F construction plan for the Nuclear Facility f

to charge rates for electric power and energy from the includes authorization for estimated expenditures of $15.5 ,

Nuclear Facility so that revenues will be at least auf ficient million for 1988. $13.3 million of these expenditures will be to pay operating expenses, aggregate debt service on the billed to participants as "Provisions for operating reserves" Nuclear Facility Revenue Bonds, amounts to be paid into on the basis of estimated cash flow requirements and $2.2 the Debt Reserve Account and Reserve and Contingency million will be funded from Nuclear Facility construction Ftmd, and all other charges or hens payable out of revenues funds.

of the Nuclear Facility. The debt service payments of the (6) OPERATIONS-Nuclear Facility Revenue Bonds are $36.3 million per year The District and Westinghouse were previously en. '

through 1992 and principal payments, as a component of Raged in negotiations with respect to a settlement for dam-debt service payments, are $11.3 milhon, $15.1 million, ages to the turbine generator and extra costs incurred as a

$16.0 million, $16.9 million, and $17.9 million for each of the result of a plant shutdown occurring subsequent to a main-years 1958 through 1992 respectively. tenance overhaul of the turbine-generator by Westing.

(3) POWER SALES CONTRACTS: house. These negotiations have been settled with all mate-Under terms of a power sales contract with lowa Power, rial costs to repair the damages being absorbed by the District makes available one-half of the production of Westinghouse. In addition, Iowa Power and Lincoln re- i the Cooper Nuclear Station to Iowa Power with the balance quested that the District study the recovery of consequen-available to the District's Electric System. Iowa Power and tial damages from Westinghouse resulting from the plant the District's Electric System each pay a proportionate shutdown. Lincoln submitted a claim to the District of share of the nuclear fuel costs (based on energy actually $520,289 for the excess cost of replacement energy as a delivered) plus one-half of all other costs of the facility, result of the plant shutdown. This claim, along with Iowa The District has also agreed to make available, Power's request, hme both been dropped. 4 through its Electric System,12%9 of the output of the (7) CONTINGENCIES:  !

Cooper Nuclear Station to the City of Lincoln t Lincoln). Under the provisions of the Federal Price-Anderson  !

(4) PLANT DECOMMISSIONING COSTS: Act, the District and all other licensed nuclear power plant [

The District has estimated the cost of funding the operators could each he assessed for claims in amounts up t eventual decommissioning of Cooper Nuclear Station. It is to $5.0 million per year per unit owned in the event of any l t expected that the costs of decommissioning will be funded nuclear incident involving any licensed facility in the no- l from (1) revenues developed by a component included in tion with a maximum of $10.0 million per year per unit firm wholesale and retail rates of the Electric System, owned in the event of more than one incident. Iowa Power l including revenues from Lincoln for its purchase of power would be liable to the District for one-half of such assess- ,

and energy from CooperNuclear Stations 2) revenues from ment under the Power Sales Contract. To satisfy the obliga-lowa Power, pursuant to its contract for the purchase of tion, the District has obtained a $5.0 million line of credit  :

power and energy from Cooper Nuclear Station

t 3) eertain and Iowa Power has demonstrated its financial integrity  !

reserve funds established under the Nuclear Resolution; and responsibility for $5.0 million.

l and (4 ) surplus fu nds derived from the ownership and oper-

! ation of the Nuclear Facility. The District continues to re.  :

! view such costs and methods of funding as a result ofchang. i ing conditions and requirements for decommissioning. ,

I i

b i

l i

9 A

v ww --- wwne-=em.. , y s, e - . ,- _ _ - +er-,,-e,---n.-.v,---e,-,,w-s-e. .,,e--ww-row,,e, w r,.w-,---,, rem, no,a ,e m me n wr e. .,+w,-~-- ,-,,wn,

O., ..d.

~

~~~~

. ,K. .

S O U.T.H D A KO TA i

/ '.

I'  % . -. .

1. / .. n E Y  ;

j I '

s

' - Ii (N %.x

. .- 4 y

., /. .

, OA

• E S

,l I

. I 1 e! SIOUX

,t R*L

l. SH ER(0AN C H E R R y g .

. U, f r---.-..

8

( i BRC

[

N

. l  !

o 8 w -, ..,y.,

1

). ' '

l l .

g . / .B0X BUTT E j l e ' N' W _- .

/ 1 .

k - p ---- . _ , _ . _ . I__ g +3,*f a j. 1 l s

. . _ _ _ . l

...... J, v. i j ,

i u ,,

h e"' lf-d ) ,_N I

}  ;  ;

l f, '

l l I

H0OKER IH0W AS 8 L A IN E

. . . . _ ,?,- ..

. c.

i ,

, n. ..

N LM :

~

. - .

• o ~. R _v E N i t

.l MCRRfLL

! j j

• h.4

• • .., ,t.l A R T HUR

~

i W PHERS0N i

LC 3AN I

I

.~ d eN.N{R'd Y@ -

p ^* .Q. ,

y -

j

} i~.

cvs w,w J,-

l i

. i p..- - - - -

i.

_.__4*

j '

EI TH

,* * - *

• t ..

s % ,, g f- - _. .. .

, 1NCOLN

_-_ , . 7 -

. , .s uEt i , , ,, .. .,

I KiWBALL cy [, . N N E' *- t...^ E L.. 6 4.  %,, . . Q -s f . .-

J' u ' -- - _ .'.t.

. 3,

_7v _ _ "." ~ ,.3 w . ..-- ..wh,m"" ,

l ,z ,, . . . .

"T'! .V n., -

'.1. "J.T u l

l C 0 4.oR4 p o

[-

j

'v.

.r-lc &

's g% ,

' P E S K i N 5 ,

i LEGEND l i

l 1

sts mm .m .u r.n

+..e.

. j

\-.

s-

~ ~ '

~ ~ '

7. E, ..... . . . . . . . . ..... *

" - ~ ~ ' - -

{

i , -g

m. .

~ c ., e 4 -

ns av -

H

,,,,,b A '

HAYES ' -

I ota hasis *>Ta nes .

-. .J ., FRONTIER  ;

m a  % - ,y* ,, 3" . ..v.,-- 30SP' r

• e .. - m"---  % *a

,o,s,s,t s , - - - - _ - _ _ , _. . _ _ . , _ _

sai v,.s : , $ 5 ^ ~ ' ' .i

~e-

= m cia , e  ;/ ,

mu s n e,, + e

. = .

0 u,3 , .=

M (; R *lLLO4 ED ,y,,,,

sc,s . me HIT s, e

.o . m.w p#

.cm. t . o ., c.s w s

,$ H c o c(

.. . c, ., c w 5""*

tr., . t c -

eea.e p.* 4 c .c a c u >

t a *4

• ees*we A-ee Psey A ess .e*-s .se e

.. . I

.-c.,~,~,.i,-....~.:

($ e (gsergt gggrge.g Dypq 9 pop gad to pes Desr4e I a $ g. .te (<gge 1 46&T . eseD's.se G & ? Leeg (pete / Darteeef Te 4 ppg

'.1e o Fee w.e ee=e4 to s.* , se + 3e e.4 s..es se en ee M . Fec eeg .,6 e, g g, . e,,e V,qrge g e,s ? ,

e hr , p. .-44, 9 *g t' b y 34

,an.

i 60 0 ' ' ' ' ' ' *

^"

• f jfw q'b. V.&W% d  %

eLecTItic assenATios AND TIIANSMISSION

z t

K N OX ij CEDAR !

h y.

FACILITIES

. . . g

, O I X 0 N ._

.. s I f ; 6, STATE OF NEHRASKA

. .L.-p M

• x -

m u ,, f s '?

OCK

- j,"__,

H 0 LT g

• ,4-j {f

i.-- mtL ,.1

's PIERCE *T

\l

• A,Y N E, *= f"T.

' . b **;*

- -' # \, EXISTING JANUAln' 1,1988 w . ___wn, . . ,.

-[ 'TSTC

A ANTEL QPE I\ ' ' ~ ~ ' \2 .

A " ,,- QUMI40 ' . ' ,.*, ,

~ - ~

LOUP lGARflELO WHEELER I yAs0ISON STANT N C-- . +

, f u% s ,

i s J~ 8 U R :T i e b a*

800 sNE,_ -- d -'--- ~ ~~ ~ " ~ ~ ~ ~ ~ W m

,, f j . . . ll- ,

- VALLEY ! GREELEY  ; COL FAX 000GE W ASH- .

1

3. , *...

\ s.

"l }

^

w

- ' ,_ s'T O N:3 ]/

' T Y **

,,,a 3 --~< .,.~ a< l , , ,

.-o= ,e mm

.? ? - ' - e. eri- -

., N A NCE [) # #

Ud " UE

"* b i s- - r- ' s; [ y , h.Q,,. ,c* jp.

l'W"RICK  ? d' \l

• l' S H E R W A Nl'H0aARD v+

/ P0Lg s uTLER k5AU DERS 't . LY ' "*

A

• j l l ,

'J t11314;f412.Timm u un m u p ud

-'e f

' ~ ~ ~ - '

LANCASIE

) * /*,

9:'VF FA L0 }, g a ,t t *h i , s i

. N . ,, i 'A - ..

CASS I ly0RA . fxi / J  :  :

<-w % _ _s_,,,-

r-.,--- l

,+ . "

l i

f 6cgf __ _ *g- i m-  : ,,

,/ ~* ,,

' j g H AWil T O N =.1.'., IS(eARC 4'- l  % $ .***c

3{'l

• b P_*.. T .

~'

'. , cy.' ,,**

i 0 TOE lM's

. 'f J~ ?,

~

- -* "iADA1D

{r'~'K yggg S A LIN E e .

MI5SOURI

. PHELPS l CLAY '. I l L t .... , e, , ~ ~ - .

K E A*N 'E Y ..Js, l J O H N SO V j., =p .{

i l j_. [.* . Y - _-

L ~* ~"

7--+-

~t h **

y gg .

l l 1 THA ER / I ~' ~ ' - i **

aHARL AN . l . -

- 7

[ F R A N K LIN #EsSTER ;NUCKOLLS ARD i y-!A .i v .i _. .

KANSAS

? J \

9. .. . :. . . . " .3

s. sis Pubic MNebraska -

Power Ostntt 35

STATISTICAL REVIEW { Nebraska Public Pbwer District Electric System, Nuclear Freility, Average Number et Rewnue Customers KWH Sales 4 From Males  %

(Thousands > (Thousandel SALES Retail:

Residential . .

80,712 726,105 7.5 $ 46,401 13.3

. Rural & Farm.. 5,331 82,656 .8 5,679 1.6 Commercial . 17,330 609,584 6.3 37,136 10,7 Industrial . 75 684,416 7.0 24,231_ 7.0 l

Alunicipal & Federal.. . ..J,053 145,554 1.5 8,495 2.4 l Total Retail . .g _2,248,315 23.1 $122,242 35.0 "

l Wholesale:

52 51unicipalities (Total Requirementst 1,096,998 11.3 $ 40,069 11.5 l

19 h!unicipalities (Interconnection-Partial Requirements).. 98,024 1.0 2,771 .8 26 Public Power Districts & Cooperatives (Total Requirements) . 3,123,662 32.1 105,444 30.2 Other Utilities-Non. Firm & Participation . 3,169,011 32.5 69,632 20.0 Total Wholesale . 7,487,695 76.9 $217,916 62.5 Total Electric Revenues.. . 9,736,010 g $340,158 97.5 Other Operating Revenues . 8,718 2.5 Total Electric System Operating Revenues., $3 M 1_00J Production KWH  % Costs '-

GENERATION < Thousands) (Thousands Production:

Electric System (including Interchange) . 477,681 4.7 $ 14,530 5.7 Purchwed:

Power Supply System *. 5,000,113 49.5 $138,327 53.9 Nuclear Facility + . 2,760,685 27.4 68,739 26.8

! Other. 1 857,095 18.4 34,A96 13.6

'Ibtal Power Purchased.. 9,617,893 95.3 $241,99 94.3 Total Power Produced and Purchased. 10.095.574 100.0 $256,492 100.0 (1) The Electric System pitrchanes 1004 of the net generation and power purchases of the Power Supply System and 504r of the net generation of the Nuclea r Facility based u pon the total costs of the respectis e systems. Pursuant to the Power Sales Contract, Iowa Power and Light Company purchased 2,761,441,000 KWii. Ioma Power and Light participation is not included in the table.

1987 1946 Lncrease th GENERAL <thousandm ot Dollars' Utility Plant (at cost):

Electric System . ..$ 676,692 $ 667,455 $ 9,237 Power Supply System. 758,208 761,634 (3,426)

Nuclear Facility. 560,113 545,697 14,416 Total Utility Plant.. $1,995,013 $ 1,974,786 $ 20,227 Number of Accredited Plantsg Capability (NW)

Production Plant Facilities:

Steam-Conventional . 5 1,647,500 Steam-Nuclear.. 1 778,000 si Hyd ro.. 11 161,020 Diesel .. 10 36,849 Peaking Turbine . , 3_ 116,000 Total Productbn Plant Facilities.. 2,739,369 3J (1) Net of retirements

.12) includes two steam plants, six hydro plants, and ten diesel plants under wntract to the District (3) includes 389,000 kW c<mtracted to lowa Ibu er and 1.ight Transmission Facilitlen:

A!iles of Transmission Line in Service. . 6,360 Ivrnonnel:

Number of Permanent Employees . 1.997 36

and Power Supply System Year Ended December 31.1987 NI'I'D's dallar came from NI'l)lh dollar used for .

A

( ( tw1 i et } 'hi 1l fl I l h DN -

Pi M F k * ! PI 'l 'r 9 -l F M mo ,

r - , - , 4 rx. n ,x I,b.

I N 1 i l F \ R F As 11 ! n 19 - /

8 i m ! < 4 i >T H E k i 4'F R M b >N l ggqpqp my si , _ m u usu sw .

F \lt \*F ' +

y h RF'll+ NIlAl , ,; ,4 pi ki H Aw F l e

~, ~ ,-,8 .

4 ,Ja- i ' iv u t k< i u p,, ,y , g g g ,,g g

-~

4 -

m, -1 xi si

_s . a ,N

\

i.

r h, /s'"buaosxu s

s,,,m = x,s,m "=gs,- so N.- @ I M M--

~

v,v1HFFRF\FN!

x x<xm ssAmu . ., s i , m _ , , , ,sr s .4.m I 'MI' I ss: ts 4- +'

, ' i f H F R < 41 M.\ l ! Y ' 'mli Pk' 'i d i l b >\

j i _ 1 kn>v>- ,

,,nu s i.

n j

_x l

k w.'..._.___

im,oim g ex,_,MiT1 T M-A i ac b w.r..mm u_ _ m. ,x l

- *u,

,9 c.y lllll .

Q i' -r \vm n n *4* .

r g*W; e .C,p

,1

. p ' .t

.

• l l

' .y' j', , e' '

- z,,

' %& . . , i

,h 4 '. n, . ' _ . Xe

..,. w.

n. .

';f M

- g j. % ,

~ ~

y & ,

, a w g .p .w.;. - u. w y m p

n. ~

h.a.) ..

m,

.v 4 . .

w c . x a.

(

• i g

w u m

,. ,;7 e -

, -u

..uu. sw n u. m. n

1. y 7 9 * ,

-91W gM*t% ;  : pe -Pr $'

• f #T - g ,P f__

'#5 y q; g a ne m v ~y &, m

, a v.

e

-~

i

+

amn a uy m-m

(*"' 'M ***'t* M*l' T's

.[ . ^

, ' k. .- .

~

kt

". '1 :

A u4~

n

'.',,,s n.

= 2

, .M

ET5

m h A 2,,F ;;c.a W

,e.,b nn e6JW4 f'

ow]!4.a AJ,c 4.Jx Wl. L$4 18 W l -~vy mwy wm yne f*

4

, , + . . tn

% h. sGs ;M-a T'* ,j Y*"' . L'W W. W'ff

[f.

s . . .  :

++

+

m y sr

> t -aw. %

TNew r*e .mp

,e-%

p' <,Te { ap*T*

4

&E3ad g MA k& W 5 bid.

y g ngz, % s.a.

y

-: 3 1 < Lu! .m  % s i

wy pm: ce, m im x=v t- + , m .# . , = .a &.i M4,,a sad As h .,s .a

+

4 y -

y- a res e - ymr r**- vepr w .n # 5a

.a 4 te w.w . g* A.,

, !Kf C%*tgy ' 'W? '-4 4 F%.WW wi. , '**,. ga.s .'. 16 5 s

' ;> . - # i,,nu .tk

+ m w .wy ev.e m y.e h.g , -

w' .

kys r . .i .c ', ' Syt 'A Mb- F

,r_

~

4 ,,

VJ..--

ry

, y c;,

y v7 4.

m

- 2%-

.N .

p' - ,

r :_.. . m a ._m

,i h. .-yr gq'. w - -*7 ye ye w

3 i +, k v.D u s. w.4-y? .;_-

t m 7*e r "nv w TW

, 71

^'np .

l I l

. ;,., . : .t

2 .

L+

A.t - *m U

4

{

i I

Public HNebraska Power District General Offices 1414 - 15th Street P.O.130x 499 Columbus, NE 68601

M " GE P.ER AL OF F ICE

$g'\!(- _ _ _ _ . . _ . - _ _ . _ = _ _ . _ _ _ _ _

""?J #s"Offa'Mt" "

\ Nebraska Public Power District _ _ _ . _ _ . _ _ _ _ _ . . . . _ _ . . _ . . _ . _ _ _ _ _ _ . . . _ _ _ _ . . _ . . _ .

NLS8800259 May 13, 1988 U.S. Nuclear Regulatory Commission Attention: Document Control Desk Washington, DC 20555

Subject:

Nebraska Public Power District 1987 Annual Report NRC Docket No. 50-298, DPR-46 Gentlemen In accordance with the requirements cited in 10 CFR Part 50.71( b), Nebraska Public Power District submits its Annual Report for calendar year 1987.

As specified in Regulatory Guide 10.1, we are enclosing ten (10) copies of the report.

Should you have any questions or require additional information, do not hesitate to contact me.

Sincerely, 6 51 I/ revors Division Manager Nuclear Support

/rg Enclosure (10) cci Regional Office USNRC - Region IV NRC Resident Inspector Cooper Nuclear Station Q0 9e fMD MTTE?UiBi?nTIMN:RlWfit'NTMI% T ~'~ "~~ ' ~