NLS8900188, 1988 Annual Rept

1988 Annual Rept

ML20246H880
Person / Time
Site:	Cooper
Issue date:	12/31/1988
From:	Duren D, Schaufelberger, Trevors G NEBRASKA PUBLIC POWER DISTRICT
To:	NRC OFFICE OF INFORMATION RESOURCES MANAGEMENT (IRM)
References
NLS8900188, NUDOCS 8905160215
Download: ML20246H880 (40)

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M 1988 ANNUALREPORT 8905160215 881231 PDR ADOCK 05000298 I PDC

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. . ,1 .c YEAR AT A GLA'NCE ELECTIllCSYSTDI Kilowatt-hour Sales . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10.6 billion Operating Revenues . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $392.1 million Cost of Power Purchased and Generated

.(Including Nuclear and Power Supply System) . . . . . . . . . . . . . . . . . . . . $288.4 million Other Operating Expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 70.7 million Net Revenues . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 23.6 million Debt Service Coverage . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2.16 IlEFEllENCE GUIDE REFEllENCEGUIDE Repon from the President . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Pages 2-3 Message from the Chairman of the Board . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Page 4 Board of Directors . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Page 5 1983 in neview . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Pages 6-13 Financial Commentary . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Page 14 Financial Report . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Pages 15-31 Map of System . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Pages 32-33 Statistical Review . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Pages 34-36 1

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N P P D P11ESIDENT As we has e done on a Wennial basis since 1980,we againin 1988 commissioned a market study tomonitortheimage and positioning of the District in terms of speciGe services being offered and the actual promotion and utilization orthose services. Continuing ihe t rend estab-li3hed in past studies, the vast majority of cur retailand wholesale customers surveyed hold the District in high regard andihink wearedoingagoodjob.

Approximately 54 percent ofour retail customers surveyed rated the service l theyreceive from usas excellent and another 37 percent rated our service ns good. Approximately 96 percent of the respondents,whether served directly by theDistrictorser edbyoneofour wholesale customers, rated us average or i above. Some 75 percent of this group said they thought we were doing a"far above average"or"above aserage" job of service. Seventy-six percent of the respondents"stronglyagreed"or

" agreed"with the statemenh"NPPD cares about you, the people they provide R eviewingmy40yearawithNebraska Public Power District and its predecessor power to."

utilities, including the last sis as Chief It is my firm belief that these high marks Executive OfGrer,lriew the past arc a direct result of the dedication and accompiishmentswith pnde andthe

, connnit ment of our employees. It will be a future withagreat dealofoptumsm.

continuing challenge for the District and in 1988,the District made steady prog- itsemployees tomaintain this very I ress from the depth of a recession that positiveimage. I seemed tolingerin the Midlandsand We receised some other high marks contributed to a pen,od ofdepressed farm duringtheyear, prices. Although electricity sales m our service area fell below the levels that had F 1 he Institute of Nuclear Power Operations beenforeca4 severalyearsago,the (INPO),after conducting a corporate Di3triet has made signideani finan-ial evaluation ofour Cooper Nuclear Station, gains and sales continued their concluded that the plant's"overall per-upward trend. formance is exemplary "The District re-ceived awards for past safe work practices Dur.mg1988,the District expericiced from the American PublicPower record revenues,recordkilowatt hour Association and the Safety Council of sales,and customersset a new peak Nebraska.The Tourism Division of the demand record. Fully reahnng that our State Department ofEconomic utility's power and energy sales are very Development cited the District for its w eather dependent, record-setting years efforts in a unique business and tourism such as we enjoyed are also an mdicahon promotion by saying,"NPPD has, greatly that the stagnant economy in our service increa.,ed the n wareness of Celebfate areais recovermg.

Nebraska'88 and the Department Just as satisfying as our Gnancial condition appreciates its efforts to support this is our" human" condition. statewide campaign."

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I was pleased that Nebraska voters,dur.

ing the year, overwhelmingly rejected an 7 initiative petition that would have with-drawn the state from the five-state

~ CentralinterstateLowLevelRadioactive

' Waste Compact and would have required '

two separate votes before a low-level radioactive waste disposal facility could lelate 1950s,the former Consumers

' have been constructed in the state.The hblic Power District pioneered neclear District was a leader in efforts to educate powergenerationin the state at the

, ? thecitizensregardingnuclearpowerand' llallam Nuclear Facility, now the site of L thesafe disposaloflow-level - the coal-fired Sheldon Power Station.

This short-lived joint project with thi systems.We rebounded from each of radioactive waste.

. Atomic Energy Commission preceded those and other challenge.a stronger and Nebraska has been chosen as the host for more dedicated utility. Project construction of the 800-megawat t Cooper theCompacidspmalfacilityand Station, the state's largest nuclear power cancellations,staffreduction,and ~

considerable oppaition surfaced is the stringent cost control measures were all a plant,which weownand operate.That 1 desgnation ofNebraska bemg the host r,c;;;gy ,,ngon_l;nein1974, sign ofilw times, but threugh it all we state. Our Board of Directors has been on have maintained our integrity and have record favoring the Compact concept for T n 1982,we began commercial operatioa not compromised service even though the safe and mwt cost-effective dispwal } of the second of two units at the siste'* structure has remained well ourrate cflowlevel radioactive waste from our largest power plant, the 1,300-megawatt below the nationalaverage, nuclear plant. coal-fired Gerald Centleman Station.

s we look to the future, the District,like

. That unit was the last major generation Through the succeedingpagesof this resource on oursvstem,andat a time

~ f ottwrsintheelectricutilityindustry,

- annual report,I mvite you to look us over when some utilities were facing serious facedmany serious challenges, andformyourownopinionconcerning Competition fromofherenergy financial problems bringing new plants on

. the financial and human condition of the suppliers,the continuing attacks on the i;ne,our conggruct;on program,,3 District as it positions itselffor the decade g; weog;;;z,,cyg.egy,cg; e nuclear poweroption,Ihe acid rain ofthe % mix ofcoal, uranium and bydro to serve controversy and other real or imagined 9 inally,because ofmy announced iniention the requirements ofour eustomers, and environmental concerns are but a few of d ot retire as President and Chief Executivewe havein place a modern and reliable the manyproblemswe must address.

Ollicer of this utility during 1989,1 would high voltage transmission system to 11 is with a complete sense ofpride and like to briefly cite some of the primary - deliver bulk power and energy across our satisfaction in the many accomplishments accomplishmentsof thisandits vast service area. we have achieved that I leave the District predecessor public power entities during during 1989.1am contentinthe A stable financial condition has allowed myassociation with the mdustry. Lnowledge that this vibrant utility is the District to issue bonds and establish a

' Fir:t and foremost was the merger of- commercial paper program at attractive thriving andwillcontinue to be a dominant forcein the Midlands,due three public entities and the realignment interest rates. In the past six years, we of a fourth that resulted in the creation of have reduced our bonded indebtedness primarily tothededicationofits employeesand Board ofDirectors.

NPPDin1970.1amconvinced that this by $205.072,000.

NPPDb futi.reisbright.

historic event has been beneficial to the Sm.ce the early 1970s,we have surm.ed a

'MI" critical energy crisis, a neriod of rampant inflation, a recession, drought, a period of .

g depreswed farm prices,and even a devastatingwinterstorm that caued millions ofdollars in damage io a portion Don E.Schaufeberger ofouriransmission anddidribution President and Chie/E2 ecutive 0//icer l

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C II A I R M A N 0 F T1H E B 0 A R D- S'e ="d caa'ia"e ="*"a* ' aa

• Is state and independent morganiz attractingbusinessandindudryto .

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Nebraska and to encourage the orderly growthofthosewhohave already '-

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f uring1988,ourDistrictjoinedwith .

Covernor Kay0rr,the Department of

. The State Hevenue Department reported {

Economic Development, and private ..

that dunng 1988 companies applying for '

econonne expansion tax benents i bipwi@Maik '

" Celebrate *88" campaign. Our role was -

promisediocreate 6,263 newjobsand g, .g g .

spend $822.4 milhon mjob-related various segments of the media, to invite mvestments in Nebraska. That rollows their friends, family,and businem 1987 applications projecting 11,498 jobs _.g ,,

aml investments totaling $ 1.318 bilh,on. g,; .

Those applications were submitted under advantagesthatNebraskaoffers.We fp heeconomyinourservicearcais provisions of the Nebraska Employment ggy g g, rebounding from a farm recession. Our . . andinvestment Crowth Act,which

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{ District faces the year ahead in a secure Provales tax meenhves to companies that significant.Our utilityis obviously -

financial condition and with a renewed promisetoexpandinNebraska. ;g,g;  ;  ;  ;,

sense of.opimusm. n feourse,parlayingthesegenerally segments and regions of the state succeed.

i encouraging economic barometers int Even adrought insomeportions ofour

. robust economic grow 1lus not automah.c.

N' PPD p M W M W service area failed to detract from the the electrical needs ofits customers generaienthusiasm thatprevailed The state must remain alert toother throughthe1990s.Thisiloardis regarding the state's economic future, factors which afTect agricultural and confident that NPPD will continue to be a busmess growth such as a stable tax base

. Due to the more serious drought cond,. i . financ. ia llyhealthyandphys. icallysound.

tions in other portions of the nation's  ; ;  ;;,  ;;, ,

utility for the benefit orour ratepayers, breadba4ket, crop and livest ock pnces lo hah Me"kain drainofouryounger During the year, we mourned the death of -

remained good durmgmost of theyear, population inust receive a high priority. a longtime member of this Board, George and Nebi aska farmers were m a position 11.Barher.Since 1977,he had to capitalize on that situation. Indications Thisutility must cont.mueio playamaj. or represented eight counties in southeast i are that livestock prices will remain role m developing the state's economie Nebraska and had served this Board as -  !

generally stable during 1989,but there is Potential.Maintammg electne rates at as chairman, first vice chairman, secretary future price uncertainty in the grain and low a level as practical consistent with I and treasurer.

commodity markets where prices could sound busmesapracheesisacontmu,mg 1 heaffected by bumper, average,or challenge. We realize we have little or no This Board expressesrespect forand j drought-reduced eropsnationwide. control over innation, environmental gratitude to Mr. Barber for his devotion of j

. costs,andNuclear Regulatory time and cont ributions to public power j in many portions of the state, Nebraska's and irrigation, to Nebraska Public Power -1 Commission-mandated cosisat our envied underground water supply as well as the highly developed surface gravity nu& ar plaM.However,we will continue District,andtothiestate. -)

i scrut. .mize theroperatm.gandcap. da l irri stion 6 systems in the central Platte expenest besureourelectnerates Covernor0rr appointed Cwen M. ]1 Hiver Valley and other locations contrib- Cooper to fill the unexpired term ofMr.

remaiae mPetihre. Barber, and we welcome her in this body.

uted supplementary water to cropland. .

. . Service is a partner to rates in a successful 1 to fo , a ou e d er i n in ,'; '"',' j ; 7 f "",7 the state,amimany feelthis maymean i cu tomers hare come toexpect from us.

more cattle willbeslaughtered m Nebra kathananyofhersiate. Aileastit fyeIbardo/ Directors is dramatic evidence that meatpackmg companies again view the npper Plains states as an attractive place to operate.

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B E Eg Wayne E.Boyd uti oux City Warren it. Cook Businessman Norfolk Gwenbl. Cooper B

liome Economist /

Ilomemaker innlemoriarm N#'""

Georgelf.Barbe ol t Beatace,a mem tofdie NPPDBoardof Directors,diedinMay ,

Mr.Barberbepnsenn:

on the Boardm 1977a DavidL.Duren hadheldth ce' I CPA/ Banker

' "  ; Columbus c itta,*ee*'Yand w W. Gustafson trea3urerduringhis yanner/Bancher 3enice on the Board. lloldrege ojohrwon Fred A.llern.ngton Econornist 9

Bu.sinessman Lincoln Lincoln Thomas o.Michels Ralph E.llolzfaster ProfessionalEngir .cr Agribusiness /Fannn gearney Paxton DarreHl NeI3on Fanner /ftancher oconto Les Taylor Businessrnan York b

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5 1 TH E Y E ail 1N RE VIE W Di*idisaadaaiasiaehdai=ed at improving the system load factor with a 1

loadcontrelprogramandastrong 1 marketing campaign encouraging install.

ation ofelectric heat in our service area. '

Thehighed wintertimeErmpower demandin1988 was1,193 megawatis.

The District served an average of106 645 The recordfirm winterpeak of1,288 -

cudomersat retailduring1988and megawattswassetin1983,but was kilowatt-hour sales to those customers subsequently broken in February 1989, ,

totaled 2.4 billion,an increase of 7% with a firm winter peak demand currendy j over 1987. estimatedat 1,348 megawatts. E ]

j Approximately77.3% ofNPPD's total.. fforts to balance the winter load with the kilowatt-hoursalesincludingparticip - summer load resulted in 416 electric heat j J

ation and other non-firm sales were to installations during 1988 served by the otal kilowatt-hour sales, peak system wholesale customers and22.7% to retail system. Thia represents approxi. -

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demand and total operating revenues set retailcustomers. mately 6,037 kilowatts. At year's end, the '

l records forNebraska Public Power . Electric system operating revenues in Districthadatotalof19,354eledrich

- Distrid in1988. 1988were$392.1 million compared to installations served by the retail system 1 Total kilowatt-hour nales in 1988 were $348.9 millionin 1987. Operating representing 343,365 kilowatts.

' 10.6 billion compared io 9.7 billion in expenses for 1988 were $359.1 million The Distrid continues io rely heavily on

- 1987, an 8.8 percent increase. Sales from compared to$326.4 millionin1987. coalto fuelitselectricgenerating non-firm transactions accounted for the OperationsoftheElectricSystem resources. During 1988, approximately

. larged percentageinerease,up 14.8  : resulted in net revenues of$23.6 million. 59% of the Dist rict's energy supply was percent in 1988 compared io 1987. Sales These net revenues,when adiusted for fromcoel-fired rnources,20% from associated with non-firm transactions non-cashitemsasprovid hhe nuclear resources,19-7. from hydro -

during 1988 were 1.7 billion kilowatt Didrict's Electric System Revenue Bond (water) resources including our firm hours. Non-firm sales are made to other resolution, resulted in debt service purchases from the Western Area Power ,

utilities or municipalities either through coverage of 2.16. Administration,andihe remaining short-term contrad or on an hour-by. T T irm wholesale and retail customers of the energy supply came from a variety ofoil hourbasis. and gas-firedresources, f District set a new summer peak demand '"

j The Distrid's Electric System makes on the system by using 1,743 megawatts The Production Cost Adjustment (PCA) participation sales to the Omaha Public for the hourendingat 5 p.m., July 14, fador on retail and wholesale billings - l PowerDistrict fromthe power and 1988.The previouspeak of1,720 during 1988 continued to be a credit due j

- energyproducedatCeraldCendeman megawatts was setin August of1980. to a surplusin the PCA Account accumu-Station Unit No.1 andtotheCity of That 1.3% increase in demand generally lated during 1987. Approximately $10.4 Lincoln fromthepowerandenergy reflects a hot and dry period during the million was credited to customers from produced at CooperNuclearStation, summer when electric irrigation pumps thePCA Accountduring1988.

Gerald Centleman Station and Sheldon and air conditioners were being flowever, due principally to higher than Station. Participation power sales during heavilyutilized. - anticipated coalcostsat our Gerald 1988 were 1.8 billion kilowatt-hours, a 7% District and wholesale customer load Centleman Station generating plant and increase over1987 sales. control efiorts, summer weather patterns, the fact that our Cooper Nuclear Station Kilowatt-hours sold to firm wholesale and the generalcondition of the was out ofservice longer during the year customers in 1988 totaled 4.7 billion or an agricult ural and industrial economy in than anticipated, there was a deficit

- 8.5% increase over 1987.The District our servicearea were among the major balance in the PCA Account at the end of

- served the totalrequirements of54 components which controlled the peak 1988. This sit uation will result in a change municipalities and 26 other public power demand below the 1980 level for so many in the PCA factor applied on customers' districts and rural cooperatives at whole- years. Irrigation and air conditioning billings commencing with billings for sale. Also, the partial requirements of18 loads in the summer result in the District January 1989eledricservice.The

. municipalities were served at wholesale, beingasummerpeaking utility.The wholesale and retail PCA factors were 6

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established for 1989 to recoveran the plant's boilers by approximately 7% Sheldon Station has been burning coal estimated de ficit of $3.5 million in the during 1988. 0ther discussions were held primarily from Wyoming'sllanna Basin PCA Account at the end ofl988. with Burlington Northern to further region which is high in BTU content but is A positive or negative PCA factor results reduce the delivered cost ofcoal.The also relatively expensive. Following a from the difTerence between estimated Dist riet also continued discussions with series of test burns ofother coals and coal and actual fuel expenses and other pro. Atlantic Richfield, the primary supplier of mixtures,it was learned that with certain duction costs and purchased power costs. coal at Centleman Station,in an elTort to modifications, Sheldon Station could New basic rates went into effect for the lowercosts forthe coalwehave burn a mixture consisting of nine parts of District's wholesale and retail customers contracted to purchase from them. less expensive sub-bituminous, in1988. Centleman Station,with agross Wyoming's Powder River Basin coal and generating capacity of 1,300 megawatts,is one part llanna Basin coal.The resulting D ates for wholesale customers are based on mixture provides about 8,500 BTUper N demand and energy sales and also on the the largest generating facility on the District'ssystem.During 1988, pound, compared with 11,200 BTUper uw of applicable transmiwion facilities.

Centleman Station produced 5,335,802 pound for the higherpriced coal but the The wholesale rate adjustment, together with the credits from the PCA Account, megawatt-hoursat an average per. result waslowerincrementalcosts.

for the firm requirements wholesale megawatt-hour cost of$27.52. The burning orlower cost coal and certain customers that donot have direct A District study showed that it would be modifications at Sheldon Station reduced allocations oflow-cost federal hydro technically feasible to build a second the per-megawatt-hour cost of producing

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power, which includes 26 public power railroad spur line to Centleman Station. electricity from approximately $64.56 districts and rural cooperatives and 41 The second spur line, which would link to $26.23.

municipalities ranged from adecreaseof with the Union Pacific's mainline-about T he District undertook a project during

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1.3% toanincrease of1.1%in 1988 six miles away-would provide the j 1988 thatisexpectedio reducedust compared to 1987. generating station with an ahernate coal conditionsresultingfr aoalhandlingat delivery route. At present, the plant's Centleman Station. A 6,500-foot track For the first time since 1985, the District only delivery route is over a District. was constructed on-site to store empty increa3ed basic elect ric rates for its retail owned spur track that interconnects with coaltrains,whileloaded trainsare customers at the beginningofl988.

Hurlington Northern to the south.The unloading coal.The project will allow the Increases in the cost of material, supplies and labor plus additional improvements cost fbuildingasecond spurlineis 100-plus-car coaltrains tounload to the system required anincreasein currently estimated at $20million. approximately 80 percent ofthecoal The District's present contract with directly into the plant, thereby reducing retail revenues of 2.45% in 1988 over llurlington Northern requirescoal coal dusting. While the slower unloading 1987 and the 1988 basic retail rates were shipments ofa minimum of2.4 million process is proceeding, the t rain power based on that revenue requirement.

i ns Per year io Centleman Station. The units can connect onto the unloaded cars County ireasurers in 70 countles receis ed plant burns approximately 3 million tons and pull them back to the nune while the in-lieu-of-tax payments ofapproximatelv ~

fe alperyearatnormaloperation. loaded carsare bemg unloaded at the

$4.5 million during the year.The in-lieu-Funds have beenincludedin future dumper. The process reduces the use of of tax payments are required under state law. Distributions made by county budgets for the proposedrailspur treasurers to counties, cities, villages, and pr ject.h,manticipapthaHwora,d school districts according to a prescribed carners would resuli m more competiin. e formula relating to milllevies. fre,ght rates.

As a result ofleasing electrical distri- h uring1988,the District'scoal-fired bution systems to the District, the 206 1) Sheldon Power Station generated cities and villages with such agreements 965,248 megawatt-hours for the grid received approximately $9.6 million system, a hich was about four times more during 1988. thanit generatedduring 1987.The Negotiations with Burlington Northern jnereaseg generation at Sheldon Station is due pnmarily to the fact that the facility Railroad resulted in a reduction in the has become one ofthelowest cost freight cost for coal delivered to our resourceson the system.

Centleman Station from Wyoming's l Powder River Basin.This reduction lowered the overall costs of fuel burned in 8

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1 the stacker reclaimer which piles coalin megawatt-hourcost ofS32.98 during The SALP reixwt concluded that the the coalstorage yard and thenlater 1988. Cooper Stationis thelargest Cooper Stationoperations were well transfers the coalinto theconveyor nuclear generating plant in the state.The managed. Plant operations, radiological system for the plant. facility a as out ofservice for about 120 control, Gre protection and licensing nother process-seeding a portion of the daysduringihe year for ascheduled activities were signincant strengths rated

. coalpilewithgrass-isafurtherattempt refueling and maintenance outage and as a"1," Maintenance, sun eillance,

' to prevent coal dust from blowing onto t wo forced outages. In addition, certain emergency preparedness, outages, adjoiningproperties. About20acresof plant improvement projects including quality programs and administrative coal-reshapedin pilestoprovide a Control lloom panet upgrades, Security controls, and training and qualification windbreak for the active coal handling System upgrade and moisture separator effectiveness were rated as a"2." .

area-have been planted with grass.This modiGeations wcre performed. Category 1,in essence, means that ihe )

coal will be held in reserve for possible q ooper Station was made a full member or functionalareahas ahighlevelof j use in case of future emergency, such as a I the National Academy for Nuclear Iwrformance with aggressive manage-coal shortage caused by a transportation d Trainingduring 1988 by receiving ment attention oriented toward safety, or mining disruption. Another 10 acres of accreditation for all 10 ofits training Category 2 denotes an adequately satis-coal, in a " ready storage area" has been programs.The accreditation w as factory performance with an adequate sprayed with heavy tack oil and this coal awardedI y the National Accrediting amount ofresources and attention.

would be used first in case of a shortage. Iloard, awociated with the Institute for The Station's security wastheonly The 20 acres of vegetation, covering an Nuclear Power Operations (INPO). category given a"3"whichindicates estimated 525.000 tonsofcoal,was In its 1988 plant evaluation of Cooper minimally satisfactory performance planted after analysis showed that the Station,1NPO concluded that the facility's where resourcesand attention can be coal contains many of the same nutrients "overallperformanceisexemplary. improved.The SALPreport noted, j as Sandhills soil.The seeding program ladustry standards ofexcellence are met "Notwithstanding the s ontinued need for was selected following a study ofpossible in many areas.There w ere no signiGeant management attentlon,ihe NilC Review alternatives w hich included windhreaks, weaknes esnoted." Iloard did note a positis e upward trend in i Gya3h treatment,chemicalerusting the security area."

INPOis anindependent,nonproGt agent s, water spraying and tack oil em er. organization made up of utilities that own ALP is supplemental to the normal regu-It was determined that the needing nuclear plants. it establishes standards for ~ latory processes used to ensure compli-method ofdust control would be the most nuclear facilities and assists utilities in ance w ith NitC rules and regulations.

practical,most effectise and meeting those standards. The District paid Iwo civil penalties least expensis c. imposed by the NilC for alleged violations The District received an 18-month The 800-megawatt Cooper Nuclear S$,tematic Assessment ofLicensee atCo perStationduringtheyear. A Station produced 4,200,610 megaw att- P'erformance(SALP) report from the $150,000 civil penalty alleged violations hours ofenergy at an averageper. Nuclear Regulatory Commis, ion based on forinadequate"enviromnental j 46 inspections indiving 5,928 man-hours qualification"(EQ)ofelectrical mer the period August 1,1986,through equipment important tosafety for January 31,1988. nuclear pow er plants. A $25,000 civil penalty ulleged violations of rertain necurity requirements, m~ The process of transferring spent nuclear fuelrods from Cooper Station to the General Elect rie storage facility near

-  ; Morris, Illinois, continued successfully

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• began in 1984 and the nnal ship.

M ,, . ment was made cariv in 1989 In total,

( $. sesen shipments were made by railin 1988. A total of 30 shipments were made for the tof alprogram.

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A tbree-judge panel of the United States Court of Appeals for the 8th Circuit, during the year, upheld a low er court's decision that Ihe Constitutional rights of two former District engineers u ere not violated by the Districti Fitnes* for Duty {

drug and alcohol iesting program. They w ere discharged in 1986 for refusing to be 'g tested after a Federal District Court g decision that the testing requirements for ,

employees having une corted accew at Cooper Station w ere constitutional. They 4 appealed that dermon.

[] ur Dist rict and The Central Nebraska i Public Pow er and Irrigation District

(# (Central)continuedduringtheyearto work elo elv with federalandstate Centleman Station and Centrali100 agencies in the process of applying for megawatt Canaday Station.

newlicennes tooperate separate but The Projects provide water to non-related hy droelectric and irrigation project facilitiesincluding NPPDi 1 projects in w est-central and southentral Dawson County Canalwhichirrigates Nebraska. about 19,750 acres,the Gothenburg each customer class.each classi The Di tricts base been gis en a May 1990 Canalwhich senes aboe 14.200 acre. contribution to system peak demands, deadline for completing the new license and the ficarney Canal wirch acrves and overall utilization of the Districti applications.The Districts filed an initial about 2.550 acres.The five tyhelectric generation and traugnission resources.

application with the FederalEnergy F( nerating plants have s nei generatinF { random sample of the District's retail llegulatory Commission (FEllC)in May capacity of approximately 128 megawatts. "Q residentialcustomersandresidential 1984. FEllC requested that the Dintricts Approximately 14.000 rainbow trout custome rs ofutilities sen ed at wholesale provide additionalinformation about u ere stocLed in the supply canal which are being asked for information about Platte Ilh er wildlife habitat and continue flows out of Lake Ogallala. below LaLe their homes, elect ric appliances, conser-to work with the U.S. Fish and Wildlife McConaughy,and runscast to supply vation measures and household energy Serviceand theNebra*La Cameand Sutherland Ilesen oir and Lake Maloney, usage patterns in the fifth biennial appli- ]

Parks Commi,* ion to addres* n ildlife The stocking was part of a 10-year an e survey. This information anninta the i, ues. Fifty-yearlicen e*tooperatethe agreement to enhance trout ihhing in the Di trict in managing loads and planning i Projects expired in 1987, and the Projects canal *ystem. for future electric energy requirements.

are now being operated on annual rP he District isimplementingaload A project todesign andimplement a license

• granted by FERC.  ; research program io collect additional computer-based Energy DataManage.

The originallicen e* had been Franted by ' information on energy usage of ment System (EDMS) to support District the FederalPower Commis* ion (now customers. Approximately 425 tape personnel was implemented during the FEllC) to Central and the Platte Valley recording meters w ere installed in 1988 } ear. EDMS is being develcped as part of Public Power and Irrigation District,one to measure the usageofa sample of the information Systems Plan as w ere the ofthepredecen orsofNPPD. Numerous commercial, industrial, municipal and Customer information System, Payroll /

a pectsoftheProjects. including irrigation customers.The magnetic tape iluman Resources Sy* tem, and Financial irrigation, recreation, hydroelect ric meters collect energy u age data on an Management Information System pre-production.economicimpacts and hour-by-hour basis and ahe information viou !y.EDMS willbe a corporate data wildlife impacts, are being analyzed in the collectedfromthinampleofcu tomers base for recording various events along ,

relicensingprocess. willbe used to modeleystem-wide with theit times oforcurrence. These I The Projects include more than 150 miles customer usage. es ents can occur st regular inten als, such ofsupply canals.The canals provide One of the primary use of the data will be as hourly kilowatt and Lilowatt-hour water ror irrigation. operating live in cost-of-servis c and rate design studies. meter readings, or irregidar intervals.

hydroelectric power plants, and cooling The demand and energy data accumu- such autorm damage and outage occur- i for NPPDil,300 megawatt Gerald lated will help quantify peak demand for rences, or es en asbestos recordleeping. l l

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FIN A NCI A L C OM M ENT Ally Net revenuesin1988were $23.6 milh.on, an increase of $13.0 million over 1987.

This increase resulted from increased sales and, reflecting in our rate design, amounts to partially recover deficiencies in revenuesin prioryears.Thesenet o do its job effectively, Nebraska Public revenues, when adjusted for non-cash items as provided in the District's Electric TPowerDistrict programsthat provide the financiaj must maintainsound System Bond Resolution, result in a debt resources for both current operations and servicecoverageof2.16.

future expansion.We feelthe 1988 During 1988,the District reduced its operating results met this objective. short-term debt by $2.2 million. Long.

Electric energy sales, including firm term debt retired by the Electric System, ,

wholesale and retail and non-firm, totaled Nuclear Facility and the Power Supply 10,595,391 megawatt-hours during the System was $10.8 million, $14.3 million, year 1988.These sales exceeded the 1987 and$14.0million,respectively, salesby B59,380 megawatt. hours,or ebraska's agricultural picture improved 8.81The sales also exceeded budgeted during1988.Eventhough muchof the salesby 1,041,163 megawah-hoursor Midlands was plagued by drought in 1988, 10.91Electricsalesin 1988 were the availability ofirrigated farm lands in affected by variations in temperatures, Nebraska and somea-eas of thestate which affect heating and air conditioning benefiting from timely rainfall resulted in loads, and in tainfall,which affects animprovedeconomicelimateinour irrigation pumpingloads. state. Commodity prices increased more Revenue 8 from power and energy sales, than the cost ofproduction for most orour plus revenues from rents and water sales, agricultural producers which has resulted created total revenues of $392.1 million, a inimproved',alance sheets.

record high, and exceeded 1987 revenues Other economic indicators, such as higher by$43.2million or12.41 Rates than projectedsalesandincome tax established for electric service for the receipts, bank income, new jobs cre ated year 1988 and l'#89 reflect a recognition andexpansion ofmanufacturingalso ihet nel revenues in previous rate periods revealanimprovement inthe did not equal the requirements projected Nebraskaeconomy.

for those periods,therefore,1988 revenues also include amounts associated with prior years' deficiencies which were included in 1988 revenue requirements.

7 [*

and therefore were used in setting rates llobert L Cangel for1988. lice Preddent ElectricSystem operatingetpenses Finance & Administ.ation totaled $359.1 million, which included 5288.4 million for the purchase and generation ofpowerand energy.The total operating expenses exceeded the 1987operatingexpenses by $32.7 million.Thisincrease wasduc to increased sales, costs associated with a three-month outage at Cooper Nuclear Station and increases in operational coi ts at Gerald GentlemanStation.

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Nebras .s 1%hlic Power District ELECMiCSYSTEM Heport of Indepemient Accountants To The llourd of Directors Nebraska Public Power District:

We have audited the accompanying balance sheets of the Electric System of Nebraska Public Power District (a public corporation and political sulativision of the State of Nebraska) as of December 31,19118 and 19'17, and the related statements ^

of revenues and expenses and accumulated net revenues, ami cash flows for each of the three years in the period ended December 31,191111. These financial statemeuts ,

are the responsibility of the District's management. Our responsibility is to espress q- an opinion on these financial statements based on our audits.

We conducted our audits in accordance with generally accepted auditing I standards. Those standards require that we plan and perform the audit to obtain

. reasonable assurance about whether the financial statements are free of material mientatement. An audit includes esamining, on a test basis, evidence upporting the ,

amounts and disclosures in the financial statements. An uudit also includes awessing the accounting principles used and significant estimates made by management, as well as evaluating the merall financial statement presentation. We beliese that our audits provide a reasonable basis for our opinion.

in our opinion, the financial statements referred to 4.bmc present fairly, in all material respects, the financial position of the Electric System of Nebraska Public Power District as of December 31,1988 and 1987, and the results of its operations and its cash flows for each of the three years in the period ended December 31, 1988,in conformity with generally accepted accounting principles.

Our audits were made for the purpose of forming an opinion on the basic financial statements taken an a whole. The supplemental schedules of the calculation of the debt service ration for each of the three 3 cars in the period ended December 31,1988, are presented for purposes of additional analysis and are not a D' required part of the basic financial statements. Such supplemental schedules have l heen subjected to the auditing procedures applied in the audits of the ha*ic I

financial etatements and, in our opinion, is fairly stated in all material re*pects in L .i relation to the basic financial statements taken as a whole.

Coopers & l.3 brand Omaha, Nebraska March 3,1989 t

15 ~.

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Jebraska Public Power District N ' ELECTRIC SYSTEM n

Italance Sheets '

Deeendeer 31,1983 and 19117 yq 1988- 1987 mc ASSETS two. a. or o um>

> Utility Plant, at Cost.. . ....... . ..... ...... ..... .. ... .. . . .. ....... ..... .. ....... . .. 8688,666 $676,692 "s

. Less-Heserve for depreciation and amortization (Note 1). . . . . . . . . . , . . . . . , , . . . . . . 304.780 284,573-

$383.886 $392.119 t Debt Heserve Account.. . . . .... ...... . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 30,216 $ 30.947

' Receivables:

Advanee to Power Supply System (Note 4) .... .... ... ..... ........... . . . ... ......$ 6,100 $ 6,100 Sale of property ..,4 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,4 M - 1,439

$ 7,504 $ 7,539

~ Current Assets:

Cash and investments (Note 1) ... . . . . . . . . . . . . . . . . .. . .. .... ..... .6110,380 $108,741 Receivables, less reserves .... . . . . . . . . . . . . . . . . . . .. . . . . . . . . . . . ... 45,118 34,285 Materials and supplies, at average cost.. .. .... . . . . . . . . . . . . . . . . . . . . . 9,417 10,319 Prepayments and other assets .. . . . . . . . . . . .. . . . . . . . . . . . . . . . . . . . . . . 2,426 556

$167,341 $153,901 Deferred Compensation Plan Assets (Note 7) . . . . . . . . . . . . . . . . . . . . . . . . $ 10,293 $ 9,311

(. Deferred Charges:

Nuclear Facility hillings (Note 3)... ... . .... .. . . ... . .. . . . . . . .... ..$ 26,071 8 29,813 Unamortized financing costs .. .... . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,948 2,135

~ Other.. .. . . .... . . . . . . . . . . . . . . . . . . . . . . . .. . . .. .. . . . . ..... 5,325 4,084

$ 33,344 $ 36,032 i

$632,584 $629,849 LIABILITIES AND CAPITAL Accumulated Net Revenues (Note 1) ... . . . . . . . . . . . . . . , , . . . . . . . . . .$211,302 $187,721 Long-Term Debt (Note 3) .. . . . . . . . . . . . . . . . . . . . . , . . . . . . . . . . . ...... . . . . . . . $318,84 3 $329,611 Notes Payable (Note 3):

67c/c of prime, due 1988 to 1989. . . .. .. . . . . . . . . . . . . . . . . . . . . . . 517 2,737 Commercial Paper Notes (Note 4) . . . . . . . . . . . . .. . . . . 58,915 58,915

$378,275 $391,263 Lese-Current maturities (Note 3) . . . . . . . . . . . . . . . . ... .. ... . . . 11,993 13,110

$366,282 $378,153 Current Liabilities:

Current maturities , . . . . . . . . . . . . . . . . . . . . . . . . .. . .. ... ...$ 11,993 $ 13,110

' Accounts payable .. ... . . . . . . . . . . . . . .. ... , ,. 20,459 19,660 Accrued lease payments.. . . . . . .. . . . . . . . . . .. .. . . 5,324 4,941 1 Ot her . ... . . . . . .. . .. ... ... .. . . . . . . . . . . .... .... 5,353 15,176

$ 43,129 $ 52,887

, Deferred Compensation Plan Liabilities (Note 7) . . ..... .. . . . . ..$ 10,293 $ 9,311 Unamortized Payment Received for Hefm' ancing Costs ... . ........ .... ..........$ 1,578 $ 1,777

$632.584 $629.849 7'he accompanying notes tofinancial statements are an integralpart of these statements. l 16 m._ _ _ _ _ _ _ _ _ _

.L .,

Nebraska Public Power District ELECTRIC SYSTEM Statements of Revenues and Expenses and Accunndated Net Herenues for each of the Three Years in the Period Ended December 31,19 fill 1988 1987 _ 1986 (Thousaml of Dollare Hevenues and Expenses:

Operating Hevenues (Note 2) . . . . . . . . . .

. $392,136 $348,1176 $343,360 Operating Expenses:

Power purchased-Nuclear Facility and Power Supply System (Note 1). . . . . . . .$218,617 $2'n7,066 $205,561 Other.. . . .. ... . . . .. . . . . . 46,718 34,896 38,944 Production-Fuel . .. . . . . . . .. . . . . . . . 11.571 6,958 6,882 Operation and maintenance.. . .. .. . . . I1,500 7.572 6,917 (2,079)

Deferred production cost (Note 1).. . . . .. .. .

Other operation.. . . .. . .. . . .. . 23,701 24,820 23,438 Other maintenance. ... . ... . . . I1,356 8,426 7,377 lease payments (Note 1). . . . . . . . . 9,965 9,332 9,161 Depreciation and amortization (Note 1). . . . . 22,931 22,770 22,509 Payments in lieu of taxes . . . . . . .. . .. .

4,1100 4,543 4,452

'Datal operating expenses. . . . . . .

. $359,080 $326,383 $325,24I Net operating revenues. ... ... .

.$ 33,056 $ 22,493 $ 18,119 Interest and Other Revenues:

Allowance for funds used during construction. . . . . ..$ 558 $ 582 $ 1,219 Interest and other. ... . .. . . . . 12,771 11,177 12,399 Totalinterest and other revenues. .. . . . .$ 13,329 8 11,759 $ 13,61tl Net revenues before other deductions . . . . ... . . 6 46,3fl5 $ 34.252 $ 31,737 Other Deductions:

Bond interest . . . .. .

.$ 19,877 $ 20,401 $ 20,891 Other interest . . . .

2,927 3,210 3,913 Total other deductions .. .$ 22,804 $ 23,614 $ 24,8M Net Hevenues (Note 2). .8 23,581 $ 10,638 $ 6,933 Accumulated Net Herennes:

lleginning balance. 187,721 177,083 170,150 Ending balance . .

.8211,302 $187,721 $177,083 Tine acconspanying notes sofinnncial staternents are an integralpart of alsene staternents.

17

Nebraska Public Power District ELECTRIC SYSTEM Statements of Canh Flown for each of the Three Years in the l'eriod Ended December 31,19118 19f18 19117 19a6 Ghou ande of Dollars)

Cash flows provided by (used in) operating activities:

Net resennes. . . . . . .8 23,581 $ 10,638 $ 6,933 y Adjustments to reconcile net income to -

net cash provided by operating activities:

Depreciation and amortization . . . . . . . 22,931 22,770 22,509 Depreciation charged to operatians .. .. . 982 1,040 865 Amortization of deferred charges-Nuclear Facility and l'ower Supply System. . . 13,100 12.269 14,666 Changes in current and deferred items:

lleceivables, less reserves . (10,798) 519 (1,116)

Materials and supplies . . . 902 2,201 2,333 1* repayments and other assets . . .. (1,870) 102 (60)

Addition to deferred charges -

Nuclear Facility and l'ower Supply System. (9,358) (5,788) (11,000)

Other deferred charges . .. . . .. . . (1,054) (509) 1,173 1 Accounts payable . .. 1,182 1,744 2,835 Other current liabilities. . (9,900) 2,931 38 Net cash flows provided by operating activities.. .$ 29,698 $ 47,917 $ 39,176 ,

Cash flows provided by (used in)inscating activities:

Utility plant additions. . , . .$ (15,680) $ (19,438) $ (25,854) l'roceeds from sale of property. . . - 65 215 Net change in Debt Ileserse Account.. 731 (405) 126 g

Sale of investment securities . . 226,777 274,788 388,197 l l'urchase of investment securities.. . .(213.830) (275,354) (374.272)

Net cash flows used in imesting activities. ..$ ( 2.002) $ (20,344) $(11.588)

Cash flows provided by (used in) financing activities:

liepayment of commercial paper notes . . . .$ - $ (17,265) $ -

llepaynu ut of long-term debt . (10,890) (10,533) (9,883) llepayment of notes payable (2,220) (3,248) (9,247)

Net cash flows used in financing artisities . .$(13,110) $ (31,046) $ (19.130)

Net increase (decrease) in cash. .$ 14,586 $ (3,473) $ 8,458 Cash beginning of year. . 18.334 21.807 13,349 Cash end of year. .8 32,920 $ 18.334 8 21.807 The accompanying notes sofinancial staternents are an integral part of these staternents.

18 .

Nebraska Public Power District ELECTRIC SYSTEM Supplernent.s' Schedule.-Calculation of .

Debt Service !!atios for each of the Three Years in the IVriod Ended Decendier 31,191111 19HH 19H7 1986 (Tisonaeaulo of Dollare)

Operating revenues .. . ... . . . . . . . . . . . ., .. . . . $392,136 $348,876 $343,360 Operating expennes, excluding depreciation and amortization of

$23,913,000, $23,810,000, and $23.374,000 .. . . 335,167 302,573 301,867

$ 56,969 $ 46.303 $ 41,493 Interest and other revenues, excluding interest on construction futids of ~~

$3,863,000. $3,766,000, and $4,383,000. . . . .. . , . . .. 8,908 7,411 8,016 Net revenues available for debt service. . . . ..... . ..$ 65.877 $ 53,714 $ 49,509 Amounts deposited in the Electric System Debt Service Account-Principal ... . .. . . . .. . . . .... .

.$ 10,593 $ 10,073 $ 9,603 Interest . . . . . . . 19,877 20,404 20,891

$ 30,472 $ 30.477 $ 30,494 t

• flatio of net revenues available for debt service to debt service deposits. . . .. 2.16 1.76 1.62 y

The accompanying notes tofinancial statements are an integralpart of these statements.

4 Nebraska Public Power District i,,,.cin. ne Electric Spiem nnancial statements should he read ELECTRIC SYSTEM in conjunction with such einer nnancia siniements.

B DePuciation, Anmnization and Unintenann -

soie io rinancial Staierneni. 1 he District records depreciation mer the est, mated useful i (1) SUMMAltY OF SIGNIFICANT life of the propciit. De preciation on Utility Plant in Service was ALCOUNTING pol 3CIES:

approximandy 3.0c4 in each of the scars 1988,1987 and 1986.

A. Organization - The District has long-term leane agreements with 206 mu-The Dintrict has three separate disinions for accounting nicipalitie.. Theme lease agreement obligate the District to make purposes as follows: lease payments and pay for norinal property additions during Electric Splem the term of the leane. The District han recorded prmisions for Power Supply Sptem amortization of $3.9 million in 19H8. $3.7 million in 1987, and Nuclear Facilit) $4.4 million in 1986. Leaned plant additiona, which are fully As required by Hund Henolutions separate records are rescrsed, totaled S49.6 million at December 31,1988, and $46.1 f maintained for each disinion. The Electric Sptem financial million at December 31,1987.

statements exclude the Nuclear Facility and Power Supply Sp- One municipal leane agreement includen an obligation re-tem, for which financial statements are presented separately quiring the District to make property additions annociated with 19 - .-

the electric service being provided to such municipality in an Ftmds consist of $77.5 million ofinvestment securities and amount equal to a percentage of revenues of the leased system. $32.9 million of cash deposits at December 31,1988, and $90.4 The District is negotiating with the municipality to, among other million of investment securities and $18.3 million of cash de.

things, modify the obligation to make such improvements. posits at Decemb r 31,1987. The carrying value ofinvestment The District charges maintenance and repairs, including securities approximates market.

the cost of renewals and replacements of minor items of prop. Cash deposits, primarily interest bearing, at December 31, erty, to maintenance expense accounts. Henewals and replace- 1988, and throughout much of the year, were coscred by federal ments of property (exclusive of minor items of property, as set delmsitory insurance or unregistered U.S. Gosernment and mu-forth above) are charged to utility plant accounts. Upon retire- nicipal securities held by various depositories. Investments at ment of property subject to depreciation, the cost of property is December 31,1988, were in unregistered U.S. Covernment secu-removed from the plant accounts and charged to the reserve for rities and Federal Agency obligations held in the District's name depreciation, along with the removal costs, net,of salvage. by the custodial banks.

The Debt Hmm Account in the Debt Service Fund is C. Alloucancefor Funds lised During Construction -

valued semi-annually at Jarmary I and Jtdy I at the lower of cost This allowance, representing the cost of funds used to fi.

or market in accordance wah requinments of the Electric Sys-nance construction is capitalized as a corrponent of the cost of ,

utility plant and is credited to Interest and Other Revenues. The ym Resenue Hund Resolution (Electne Resolutmn). The securi-

"*s in the remaining funds are valued at the lower of cost or capitalization rates for construction financed with resenue .

prmcipal amount in accordance with requirements of the Elec-honds are based on the interest cost of each issue less interest income. The rate for construction financed by revenues is based

' "C N"I"I'""-

on a projected rate of borrowing. For the periods presented 11. Deferred Production Costs -

herein, the rates sary from 6.1% to 8.25%. Actual energy (fuel) costs in excess of those included in the D. Deferred Charges - basic rates are recusered by a Production Cost Adjustment Deferred charges are as follows: (PCA) which is billed to all customers except non-firm and n, .DIt" naa participation customers. When the basic rates do not proside n,.,%.

N"""""",

imo .i.or tm.ii. i 70 # ?*"*"""b " W "A acierred. V hen the basic rates provide resenues in excess of the Nuclear Facility billings:

energy costs, t5e excess is excluded from resenues. Present Fuelcost. $ 556 District policy requires that billings for the PCA be made using Plant management information 1,425 rates adjusted from time to time so that the variations in actual ss stem .

8,421 energy costs fr m estimated energy cents used to derise the basic Pip'c replacement .

15.669 rates are reemered by PCA billings either in the current rate Henewals and replacements..

period or future rate periods.

$26,071

1. Recenue Recognition -

The District included amortization of these deferred Substantially all wholesale revenues are recorded in the charges of $13.1 million in 1988, $12.3 million in 1987, and $14.7 period in which service is rendered, and, in accordance with million in 1986 in power purchased expense. The ahme deferred industry practice, retail resenues are recorded in the month charges are expected to be amortized as follows: 1989-$11.4 retail customers are billed. Consequently, revenues applicable million; 1990-$8.5 million; 1991.$6.1 million. to sersice rendered to retail customers from the period covered by thelast billing in a year to the end of the year are not recorded E. (!namortized Financing Costs -

as resenues until the following year.

These costs represent iuuance expenses on all bonds and the premium to retire the Electric Sptem Herenue Hands,1975 J. Accumulated Net Herenues -

Series, prior to their maturity date and are being amortized user The auumulated net revenues consist primarily of cumula-the life of the respectise bonds using the bonds outstanding tis e operating revenues collected for ntility plant additions net of method. related accumulated depreciation. The remaining accumulated net resenues will he fully offset by future depreciation expense.

F. I namortized Payment Receiiedfor Ik/inancing Costs - In addition, accumulated net res enues include cumulative mter-This reimbursement from the Nuclea'r Facility was for cer-est income earned on Constructmn I unds.

tain refinancing cuts of the Electric System incurred in 1968 and is being amortized over the hfe of the 1968 Hevenue Hond K. Statement of Cash Flmrs -

inue using the bonds out.tanding method. The District has changed from a Statement of Changes in Financial Position to a Statement of Cash Flows in accordance G. Cash and Inreatments - with Financial Actounting Standard No. 95. The 1987 and 1986 t i,,..m ,,, a t ,

1988 1987 Statements of Chaeges in Financial Position have been restated (Timunamin of Dollare to conform to the new reporting requirement.

Hesenue Fund.. ..$ 19,652 $ 17.683 (2) HATES:

Operating Fund.. 12,931 14,374 Wholesale and retail electric service rates are designed to Construction Fimds . 15,311 49,315 coser the District's costs including; l) operating expenses other Commercial Paper Account.. 12,995 10.172 than depreciation,2) debt ser-ice, and 3) certain capital addi-Debt Sersice Account . 198 193 tions. In the esent the District's rates for wholesale and retail Henerse and Contingency Fund . 1.236 1.236 service result in a surplus or deficit in net resenues during a rate General Heserse Fund . 18A57 15,768 period, such surplus or deficit is taken into account in projecting

$110.380 $ 108.741 estimated resenue requirements for future rate periods. The A

9

.s cumulative surplus at December 31, 1988, to be reflected in other renewals and replacements of the Nuclear Facility, and (2) future resenue requirements is approximately $12.5 million. for other lawful purpaes of the District.

The following table illustrates the effect of these surpluses or The notes are anticipated to be retired from repayment of deficiencies on revenue requirements. the Adsance to the Power Supply Sptem amt from Electric IWect on Itevenue Itequirenwnt. Spiem revenues.

a- %,.a (5) LONG-TEllM OllLIGATIONS:

ava u ssa I m .itat tuan.i n' The District has an agreement for the purchase of the entire

• '" output of a 100 MW steam electric generating plant through 1991.

mn. .r n, n.,.

Under diis agreennent, the District nmet (with limited excep-Surplus or (Deficit) in

$ 9.1 ti""8) ""k' *i"i"""" P")**"t* """ithly. The annual aggregate Hate Period. $(7.5) $(11.8)

"'""""' "I "uch required payments will be $968,0(K), leu an Effect in Subsequent Rate p,,.iodo amount anociated with the principal amount of outstanding bonds *,hich will 1.c retired from existing rescrse funds of tlw 1986-1987 .. 18.6 - -

18.1 owner, for each of the years 1989 through 1991. In addition, the 1988-19fl9 . (2.8) -

District is required to pay the sariable operating expenses of the 1990-1991 (Projected) . (4.3) (6.3) (9.1) plant. The Didrict's total payments umler the agreement were As provided in the Electric Ilesolution, the District rose- $LS miHion in 1988, $2.3 million in 1987, and $3.5 million in nants to charge rates for electric and other services so that 1986, resenues will be sufficient to pay annual o[wrating expenses, including Nuclear Facility and Power Supply Sptem charges, (6) IIETillELIENT PLAN AND POSTH ETIHEMENT llENEI'ITS:

debt service and other charges payable out of Electric Sptem The Distnct has a retirement income plan cosering its revenues.

regular full-time employecs, substantiate all of u hom hase elect-(3) LONG-TERM DEllT AND NOTES PAYAllLE: ed to participate. Einployce's contribudoun to the plan are based n.c.mi.ee S t. on salary, and the District's contributions are allocated to each 19sa its7 g.mployee's trust account based on the employre** contrilitations (mu mi. of t>ollar.' to the plan. The plan provides for retirement income equal ta the Hevenue Honds: total of the employce's trust account, including trust earnings.

Serial llonds- The District's contribution was $5.3 million for 19118, $5.0 mil-2.00%, due 1988 to 1990. ..$ 770 $ 1,155 lion for 1487, and $1.8 million for 1986.

4.75%-6.30%, due 1988 to 1990.. 18.355 26,705 The Dierict also provides certain Iwalth cart , accident and 4.90%-6.40%, due 1991 to 1995.. 3 L010 3 LO10 life insurance lwnefits for retired employees. Substantially all of 5.00%6.10%, duc 1996 to 2000.. 39,850 39,850 du Didrin's n tired emplmeen are eligible for such twnefits.

5.0046.30ch , due 2001 to 2005.. 49,740 49,740 Tbc cod of prmiding tlwse benefits was $1,012M)0 for 19fl8, 5.7546.40%, due 2006 to 2009.. 27,820 27,820 $949,000 for 1987, and $761,000 for 19tl6.

Term Bonds, wid annual sinking fund requirements- (7) DEFERHED COMPENSATION PLAN:

38,495 49,350 Tim Didrict offers its einployees a deferred comiwnnadon 5.10% due 19fl8 to 2002.

6.60%, due 1993 to 2003. 33,200 33,200 plani created in accordance with Internal Revenue Code Section 17,100 17,100 457. All amounts of compensation deferred under ilm plan, all 6.75% duc 1991 to 1995.

57,250 57,250 prop-rty and rights purchased with such amounts, and all in-7.00% due 1996 to 2005.

mne aus uta e to such anmunts, property, or rights are (until

$3 M,590 $307,180 made asaitalde to dw employee ew other beneficiary) solely the Lease Purchase Payables- ,

3,552 3,852 propeny aml n,4ts of the Distnct (without being restricted to 2.00%, due 1988 to 2005, (1,299) (1.421) the prosisions of benefits under the plank yubject only to the Unamortized lland Discount . claims of the District a general creditors. Ihe Distnct has re-

$31fl.fM3 $329.611 corded the apets of its deferred compensation plan and the corresponding liabilits to reflect its fiduciary respon*ibility un-Pn. neipalpayments of Elertn.e Sptem lemg-Term Debt and der the plan. In the p'ast, the plan anets hair twen m.ed for no Notes Payable for the next fise years are: 1989-812.0 mdlion; p on odn Omn to pay tenefits. The District twlieses it in 1990-812.3 million; 1991-$12. , mdlion; 1992-$13.4 nullion; ulibiv de it will w du apets to satinft the claims of general 1993-$14.1 mdlion. creditors in the future. The plan is administered by The Equita.

(4) COMMERCI AL 1%PER NOTES: ble Life Anurance Society of the L'nited States.

The District is authorized to inue up to $100 million of (8) LITIG ATION:

commercial paper notes. A credit agreement is mamtamed with On August iL 1985, NOCOH Corporation (NUCOH), a a bank to support the sale of the commercial paper notes. 'llu" large industrial customer, filed a lawsuit in the United States credit agreement expires in December,19fi9, at which time th" Didria Coun of Nebramka alleging oscrcharges from August I, District anticipates hasing a new credit agreement in effect. The 1972, to Jumary 1,1980, m an undetermined amount and $10 effective interest rates on outstamling notes fur 1988 and 198'

) were 5.4% and 4.6CA respectively.

million from Januarw 19fl0, through Decemtwr,19M. Tlw Dio trin's awr, amoh odwn dii% denied dmt dw Dicin's The proceeds of these notes are being nacd (1) to fmance a  : Mn h- d NUCOH m ufain wmmbk ed di nimi-portion of the costs relating to a plant management information w ad fmber denied that NL COH had been damaged as my stem, repairs and replaecment of piping and to finance certam alk A ed memd sarie dirwiw defemm 9d

Investigation and disemery indicated that revenue col- tain, sarious allegations of NCCOH's petition, which motion lected by the District from the IITS-2 rate clan, of which remains pending before the court.

NUCOH is a member, from September 1,1973, to December 31, in 1988 NUCOR began withholding payment of a portion of 1986, escecded the resenue requirements by $1,527,301. This their monthly billings. As of December 31,1988 approximately surplus was adjusted by a decrease in the IITS-2 electric rate $1.5 million has been withheld on total billings of $10.9 million.

schedule for service prmided from March 1,1987, through NUColl continues to withhold on billings rendered in 1989.

December 31,1987.

. .. M1TAL ADDITIONS:

At trial, NLCOH espanded their or gmal clau.n of damages .

I 'I*""

to include the wars 1985 and 1986. On May 6,1987, at the

' "C'' b"* *""*""#U"" P""'

~ non or estimated expenditures of

.on S29.6 nuth."'I*Ibene for 1989.N'I ""N conclusion of trial, the jury returned a serdict in fasor of expen tures wdi be funded from resenues and other avadable NUCOH for $7,492.340. The judge then entered judgement I"" *

• against the District on May 15,1987, reducing this amount as a result of the statute oi limitations to $4,403,547. NPPD has (10) CONTINGENCIES:

appealed the judgement to the Eighth Circuit Court of Appeals. In late 1986, the Emironmental Protection Agency (El%)

NUCOH has filed a crou-appeal and contends that judgement notified the Di*trict of a potential responsibility stemming from shouhl have been entered on the full amount of the jury wrdict. its hasing arranged for the e ransport, treatment or disposal of The matter is awaiting wat argmnent before the Eighth Circuit hazardous substances at the Martha C. Rose Chemicals,Inc. site Court of Appeals. in llohlen, Miuouri. EPA notified the District that public funds On July 11, 1988, NUCOR filed a second lawsuit in the haw been spent by El% to investigate and respimd to alleged United States District Court for the District of Nebraska re- releases and threatened releases of hazardous substances at the questing judgement for alleged overcharges in an undetermined site. El% also notified the District that it may be a responsible amount from January 1,1987 to the current date, requesting party, and that responsible parties may be legally obligated for treble damages in an undetermined amount for alleged viola- response actions and costs incurred in connection with the site.

tions of the Federal Sherman and Clayton Acts, and for damages While the potential legal liabilities of the District for costs in and attorney's fees for alleged violations of the Nebraska Con- connection with the site may include the total cost of response sumer Protection Act. The District has filed a motion to strike actions related to the site at a cost of up to $35 million or more, NUCOR's complaint, in whole or in part, based on lack of the Diatrict beliews that its probable liability is much len. If the jurisdiction, failure to state a claim, and other pleading irregu. District's liability for such costs were determined on the basis of larifes. Such motion is currently under submission to the court, the total quantity of materials sent by the District to the Rose and the District's answer to the complaint,if any is required, will Chemicals site, and if the entire cost of actions at the site were not be filed until after the court's ruling on the motion. allocated on that basis among those who sent materials to the On July 12, 1988, NUCOR filed a lawsuit in the District site, the Dist rict believes ita relatiw liability for such eost6 would Court of Stanton County, Nebraska, requesting judgement for not exceed 3% to 6% of the total costs. A steering conunittee alleged mercharges of at least $15,744,844 from August 1,1972 composed of representatiws of certain other potential responsi-to December 31, 1987, and for an undetermined amount of ble parties has been formed to negotiate with El% and other damages for exceu payments after December 31,1987. NUCOR resp <maible authorities for the conduct of response actions at the also requests damages in an amount not yet ascertained for site. The District is not a nember of the steering <ommittee, but alleged siolations of the Nebraska Consumer Protection Act. has proposed to contribute to the committee's artisities in con-This lawsuit in state court emers the same rate periods as the two nection with the site. Appresimately $1.1 million has been ac-lawsuits filed in federal court by NUCOR against NPPD. For its crued as an espem.e in 1988 to cmer the District's anticipated preliminary response to the law suit, the District filed a motion to coat s.

strike, and to require NUCOR to make more definite and cer.

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Nebraska Public Power District U 4 POWER SUPPLY SYSTEM t-Ileport ofIndependent Accountants b

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To the Board of Directors ,

i Nebraska 1%blic lbwer District: '!'

O We have audited the accompanying special-purpost statements of assets and (. -

liabilities of the 1%wer Supply System of Nebraska 1%blic 1%wer District (a public corporation and political subdivision of the State of Nebraska) as of December 31, 1988 and 1987, and the related special-purpose statements of revenues and costs for each of the three years in the period ended December 31,1988. These financial (E "- i statements are the responsibility of the District's management. Our responsibility is to express an opinion on these financial statements based on our audits.

o We conducted our audits in accordance with generally accepted auditing ,

standards. Those standards require that we plan and perform the audit to obtain -

reasonable assurance about whether the financial stateme nts are free of material 3 misstatement. An audit includes examining, on a test basis, esidence supporting the  !

amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.

.m "

The accompanying special-purpose financial statements have been prepared for ,

the purpose of complying with, and on the basis of accounting requirements specified in the Ibwer Supply System Bevenue Ilond llesolution adopted by the 3 District on September 29,1972, as supplemented, as described in Note 1(B), and are not intended to be a presentation in conformity with generally accepted accounting ,

c principles.

i' In our opinion, the accompanying special-purpose financial statements of the m;

~

Ibwer Supply System of Nebraska 1%blic Power District present fairly,in all 4 material respects, the assets and liabilities as of December 31,1988 and 1987, and l: its revenues and costs for each of the three years ended December 31,1988, on the basis of accounting described in Note 1 (B).

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d f7 Coopers & la brand g.

Omaha, Nebraska March 3,1989.

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Nebraska Public Power District POWER SUPPLY SYSTEM Statements of Assete and I.laleilitice December 31,1988 nnd 19117 Prepared Pursuant to Requirements of the Power Supply System Herenne liond lies <dution 1988 1987 ASSETS cn .mi. or pon. .i 4

Utility Plant, at Cost (Note 1) .. . . . . . . . . . . . . . . . $717,158 $715,315 Ins-Reserve for depreciation (Note 1). . . . . . . . . . . .. 87,030 74,642 Amounts funded from revenue (Note 1) . . .. . . .. 13,526 12,614

$616,602 $628,059 Prepaid Capital Costs (Note 3) . . .. . . . ...$ 67,987 $ 68,724 Cash and Invest nents (Note 1):

Debt reserve account . . . . . . . . . . ..$ 58,559 $ 58,559 Reserve and contingency fund. , . .. . . . . ., .. .. . . 6,610 6,087 Additions and improvements account . .. . . . .. . 4,668 3,043 Construction funds. . . . . . . . 31,654 35,015 Revenue fund. . . . . . . . . . 673 748 Operating fund. . . .., , . . . .. .. . . 18,142 12,778 General reser e fund . . . . 56,896 58,390

$177,202 $174,620 Accounts lleceivable . . .. . . ..$ 4,679 $ 3,847 Interest Receivable. . .. . . . .. . .$ 3,418 $ 2,682 Fuel Inventory, at average cost . . . .. .. .. ..$ 13,502 $ 17,354

- Deferred Charges and Other Assets (Note 1). . . . . . . ..$ 42,590 $ 43.253

$925,980 $938.539 LIABILITIES Hevenue Bonds (Note 4):

Serial Bonds-5.00%-6.00%, duc 1988 to 1990. , . ..$ 30,395 $ 44,425 5.50%-6.80%, due 1991 to 1995. . .

92,545 92,545 75,240 4 5.70%-7.20%, due 1996 to 2000.. . . . 75,240 6.00%, due 2001 to 2005 . . 5,405 5,405 Term Bonds, with annual sinking fund miuirements-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 2019 . 50,320 50,320 ,

$901,440 $915,470 ,

Advance from Electric System. 6,100 6,100 Accounts Payable and Other Accrued Liabilities. . . . 7,875 5,999 Operating fleserves (Note 1) . 10.565 10,970

$925,980 $938,539 The accompanying notes tofinancial statements are an integral part of these statements.

24

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Nebraska Public Power District POWER SUPPLY SYSTEM Staternents of Herenues and Costs for encli of the Three Years in the Ibriod Ended Decendier 31,19811 Prepared Pursuant to Requirements of the

• Ibwer Supply Systetu Hevenue Bond Resolution 1988 1987 198f>

(Timunende et Dollare) llevenues (Notes 1 and 2):

Sales to the Electric System. .. . . . . . .. . . . . . . . . , , , , . $ 145,294 $134,101 $140,696 Investment and other income . . .. ... . . . . . .. . . . . . , 13,124 15,602 10,736 Total revenues. . .. . , , . . $ 158,418 $149,703 $151,432 Costs:

Operating expenses-Production-Fuel . , . . . . .. . . . ... .. . . .$ 60,480 $ 56,455 8 52,912 Operation and maintenance (Note 3) . ,, . . . 21,426 17,409 19,950 Provisions for operating reses ves (Note 1) .. . . . .

- - 4,044 General and administrative . . ... . . . ,, .. , . 4,643 3,971 3,117

$ 86,549 $ 77,835 $ 80,023 Debt service- A Principal (Note 1) . . .... . ..... ,, . . . .. . . , 14,030 13,315 12,095 Interest . .. ,, . . . . . . . . .., . .. . .. 57,839 58,553 59,314 Total costs. .. . . . , . . .. . . 8158,418 $149,703 8151,432 l

l The accompanying notes tojinancial statements are an integral part of these statements.

Nebraska Public Power District H. nasis ofAccounting -

POWER SUPPIX SYSTEM Haeana are recaraired and hiHed a' an amanat e'iaal'a costs as defined by the Power Supply Sy6 tem Hnenue liond Notes to Financial Statements Henolution (Power Supply He olution) which include operating expenses (excluding depreciation), and debt service on the reve-(1)

SUMMARY

OF SIGNIFICANT ACCOUNTING POLICIES: nue bonds,less investment income. Hevenues are computed and billed so that no equity is accumulated in the Power Supply A. Orgaru.zatmn -

\

The District has three separate divisions for accounting I#[,'

g venues and costs as defined by the Power Supply He ohr purposes as foHows:

Electne system tion difb in die followig repts from peraHy aged

• accounting principles:

Power Supply System Nuclear Facility (1) Amortization of the debt principalis included as a .

cost in the accompanying Statements of Hnenues and Costs As required by llond Resolutions, separate records are

,, ,, ,, Debt sen i< e-Priwipal.

maintained for each divmon. The Power Supply System finan- Dyn cision is not recorded as a cost. Ilad the District cial statements exclude thc Electnc System and Nuclear l acdity, ided draiAline de pciation mer a 40 3 car life for which financial statements are presented separately herem. rather than including amortization of debt principal over

'Ihe Power Supply System financialstatements should he read m du same period, costs would base increased $4.3 million in conymetton with such other financial statenwnts.

9

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1988, $6.0 million in 1987, end $6.6 million in 1986. Accu- E. Deferred Charges -

mulated depreciation through December 31,1988, would Costs arising from tlw termination ofincomplete generation base increased reis approximately $59.9 million. The re- and transminion projects are being amortized m er the life of the serse for depreciation shown on the Statements of Assets bonds, the proceeds of which were used in part to pay these and Liabilities was prmided by recording amounts equal to cmts. Timse costs base been reclassified in the 1987 financial repayment of debt. Upon retirement of property subject to statements to cemform with the 1988 presentation.

depreciation, the cost of property in remmed from plant m HATE COVENANT:

accounts and charged to the reserse for depreciation, along The District is required under the Puwer Supply Resolution with the removal costs, net of salvage. to chage rates for electric power and energy from tlw Power 1 (2) llillings to provide capital for renewals and replace- Supi dy System so that revenues will be at least sufficient to pay ments of property and capital aciditmns are included in the operating expenses, aggregate debt sersice on the Power Suppl'y accompanying statements as Operating Heserses and System Hesenue llonds, amounts to be paid into the Debt He-

" Provisions for operating reserves". Umler generally ac- serse Account and Reserse and Contingency limd, and allother cepted accountmg pnnciples, capital additions and prmi- charges or tiens payable out of resenues of the Power Supply sions for renewals and replacements are not expemes but Spu m. The debt service payments of tlw Power Supply Sptem (exclusive of nunor items of property) are charged t.. utility Hevenue Hands are $71.9 million per year through 1993 and plant. Henewals and replacements of progwrty and capital primipal payments, as a component of debt sersice pasments, '

additmns funded from resenues are fully reserved. Other are $14.8 million, $15.6 million, $16.5 million, $17.4 million, and mcome in 1987 includes $6.2 million of excess fund, w hich $18.5 millin for each of the ycars 1989 tbrough 1993 have been recognized as revenues and applied for the bene- respectiselv.

fit of the Electric System in reduction of payments by the Electric System to the Power Supply Spiem for purchased (3) PHEPAID CAPITAL COSTS:

power.

Prepaid carital costs are anociated with the purchase of (3) Interest income on const ruction fund imestments is the capacity of a 50 MW hydnwlectric generating facility owned credited to utility plant. Under generally accepted account. ami operated by The Cent ral Nebraska Public Power and Irriga-ing principles, such income wouhl have increased resenue, tion District (Centrath The prepayment is being amortned to

$2.5 million in 1988, $5.1 million in 1987, and $5.9 million in expeme mer the life of ihe bonds, the proceeds of which were 1986, used to pay th-se cmts.

The District has an agreement whereby Central makes C. Utility 1%nt - ,

nailable all of dw production of tbe facility and the District pays

, Interest expense, leu m. terest earned on investment secun- all ws of operating and maintaining the facility plus a charge tws, all financing costs and all other costs related to construction based on the amount of energy delivered to the District. Coste of projects are capitahred. $317,000 in 1988, $498,000 in 1987, and $676,000 in 1986, are D. Cosh and inressments - included in " Production-Operation and maintenance",

Funds comist of $174.5 million ofimestment securities and (4) DEFEASANCE OF DEllT:

8.7 million of cash depmits at Decemtwr 31,1988, and $173.5 in 1986, the District inued Power Supply Spiem Resenue million ofimestment securities and $1.1 million of cash depmit" Honds,1986 Series, to advance refund the outstanding Power at December 31,1987. The carrymg salue ofinvestment securi- Supply Spiem llesenue lionds,1985 Series. The 1985 Bonds ties appn ximates market. we re defe ase d by placing the proceeds of the 1986 Honds in an Cash depmits, primarily interest hearing, at December 31, irrevocable trust account with an escrow agent to prmide for all .

1988, and throughout much of the year, were emered by federal future debt service pay ments on the ohl bonds. Accordingly, the depository insurance or unregistered U.S. Cmernment and mu* trust account assets and the liability for the defcased bonds are nicipal securities hehl by various depmitories. Imentments at not included in the District'* financial statements. At December December 31,1988, were in unregistered U.S. Government secu- 31,1988, $63.6 million of bonds outstanding are considered rities and Federal Agency obligations hehlin the District's name defcase d.

by the custodial banks.

The Debt Hewerse Account in the Debt Service Fund and the (5) CAPITAL ADDITIONS:

Henerve Account in the Reserse and Contingency Fund are sal. The Power Supply System construction plan includes au-ucd semi-annually at January I and Julv I at the lower of emt or theorization for estimated expenditures of $4.2 million for 1989.

market in acco.rdance with requirements of the Power Supply These nienditures will be funded from execu construction Hesolution. Gains or f ones on ialuatium are included in imest- funds.

ment income. The securities in the remaining funds are valued at the lower of cost or principal amount in accordance with re-quirements of the Power Supply Resolution.

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NUCLEAR FACILITY 7-s l Iteport ofImlependent Accountants b y- u To the lloard of Directors g A

. Nebraska Public Power Hmict:

I. We have audited tl utompanying special-purimse statements of assets and .

liabilities of the Nucleu & sity of Nehraska Public Power District en public .;

^

corporation and political subdivision of the State of Nebraska) as of December 31, 4 s 19118 and 1987, and the related special-purpose statements of revenues and costs for

, each of the three 3 cars in the period ended December 31,1988. These financial -

g  ;; s statements are the responsibility of the District's management. Our responsibility in to express an opinion on these financial state nents based on our audits. E We conducted our audits in accordance with generally accepted auditing x standards. Those standards require that we plan and perform the audit to obtain I i reasonalde assurance about whether the financial statements ure free of material misstatement. An audit includes examining, on a test basis, evidence supporting the j ,

amounts and disclosures in the financial statements. An audit also includes assessing

' . , ' . "i the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our  !

R audits provide a reasonable basis for our opinion.

The accompanying special-purpose financial statements referred to above have i heen prepared for the purpoac of complying with, and on the basis of accounting ,

requirements specified in the Nuclear l'acility Hevenue lland flesolution adopted by the District on August 22, 1968, as supplemented, as described in Note 1(II), and are not intended to he a presentation in confortnity with generally accepted accounting principles.

In our opinion, the accompanying special-purpose financial statements of the Nuclear Facility of Nebraska Public Power District present fairly,in all material respects, the assets and liabilities as of December 31,191.'f! and 1987, and its revenues and costs for each of the three years ended Decen.her 31,19118, on the basis of accounting described in Note 1 (11).

g-m , Coopers & l.3brand p' .

Omaha, Nebraska

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~ Nebraska Public Power District - 1 L  ? NUCLEAR FACILITY t

Statements of Assets and Liabilities Decendeer 31,1988 and 1987.

. Prepared Pursuant to Requirements of the j Nuclear Facility Revenue Bond Resolution "

1988 1987 ASSETS rn a. or pon.,.>

Utility Plant, at Cost.... ... .. . . . . . . . . . . .... . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8 58 7,5 31 $560,113.

. Less-Heserve for depreciation (Note 1)... .... . . . . . . . . . . ......... ......... .... ... .. 135,594 122,665 Amounis funded from revenue (Note 1) .. ..... ..... .. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 175,866 149,673

$276,071 $287,775

!. Nuclear Fuel-Net of Amortization (Note 1). . . . . . . . . . . . . . . . . . , . . . . . . . . .. . . . . .$ 83.875 _$ 83,207 Cash and Investments (Note 1):

. Debt reserve account . . . . . . . . . . . . . . . . ....... .. . . . . . . . . . . . . . . . . . . . . . $ 28,389 $ 28,461 Reserve and contingency fund.... . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9,163 10,666 Additions and improvements account . .. .. . ... , , , . . . . . . . . . . . . . . . . . . . . 9,883 10,487 Construction fund . . . . . . . . . . . .. . . .. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9,325 . 13,446 Fuel reserve account .. . . . . . . . . . . . . . . ... . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 52,459 48,848 Fuel disposal fund (Note 1). .. ... ..... . . . .. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3,605 . 3,625 Opera ting fu nd . , . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .. . . . . . . . . 5,382 5,096 Revenue fund . . . . . . . . . . . . . . . . . . .. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,311 773-Decommissioning fund (Note 4).. . .. .... ........ . .... . . . . . . . . . .. . . . . . . . . . . . . . . . I1,596 8,724

$131,113 . $130,126 Accounts Hereivable . . ... . . . . . . . . . . . . . . . . . . . . . . , . . . . . . . . . . . . . ..$ 3,751 .$'2.512

. Interest Receivable. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . , . . . . . . . . . . . . . . $ ' 3,419 $ 2,431 Deferred Charges and Other Assets . ... . ..........................................$ 348 .$ 998

$498,577 $507,049 LIABILITIES .1 Revenue Bonde Serial Bonds-4.8047.50c/c, due 1988 to 1990... . . . . . . . . . . . . . . . . ... . .. . . . . . . $ 15,730 $ 22,900 6.00%-8.80%, due 1991 to 1995... . . . , . . . . . . , . . . . . . . . . . . . . . . . . . . . .. 24,020 24,020 7.37549.20%, due 1996 to 2003.. .. . .. . . . . . . . . . . . . . . ... . . . . . . . 26,600 26,600 Term Bonds, with annual sinking fund requirements-5.10%, due 1988 to 2002 . .. .. ,, . . . . . . . . . . . , . . . . .. . ,, . . .... 147,685 154,805 6.30%, due 1993 to 2003 . ... . . .. . . . . . . . . . .. .. 68,430 68,430 6.60%, due 1992 to 2003 . . . . .. . . . . ... 67,209 67,200

$349,665 $363.955 Operating Henerves (Note 1) ...... . . . . . . . . . . . . . . ... . . . . . . . 132,963 127,579 Accounts Payable and Other Accrued Liabilities (Note 1).. . . .. .. . . . . . . . . 15,949 15,515

$498,577 $507,049 l'he accompanying notes tofinancial statements are an integralpart of these statements. ,

f i

91

f" 4 .e .,;

Nebraska Public Power District - ,

NUCLEAR FACILITY Statements of Hevenues and Costs -

' for each of the Three Years in the 1%riod Ended Decendier 31,1988 :

Prepared Pursuant to Requirements of the Nuclear Facility Revenue Bond Hesolution 1988 1987 1986 (Thousands of Douare)

Revenues (Notes 1 and 2):

Sales .

Electric System .. . . . . . . . . . . . . . . .... . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 69,282 $ 66,164 $ 60,773 Iowa Power and Light Company ... . .. . . . .... . . . . . . . . . . . . . . . . . 69,274 , 66,169 60,775 laivestment and other income...... . .. . . . . . . . . . .. . ... ... ... 10,293 15,491 7.576 '

Total reve nues... .... . . . . . . . . .. . ..... ... ....... . . . . . . $ 148,849 $147,824 $ 129,124 Costs (Note 1):

Operating expenses-Production-Fu el . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8 25,954 $ 35,766 $ 26,371 Operetion and maintenance......... .... . . . . . . . . . . . .. . . . . . . . 49,450 33,836 .$7,814 -

Provisions for operating reserves . . ... . . . . . . . . . . . . . . . . . . . . . . . . 31,781 25,593 18,446 -

Gensai and administrative . .... .. ... . ...... .. ... . . . . . . . . . . . . . . . . . . . . . . . . . -' 5,425 16,406 10,278'

$112,610 $111,601 $ 92,909 Debt service-Prin ci pal . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14,290 .13,540 12,845 '

Interest .... . . . . . . . . . . . . . . . . . . . . . . .. ... . .... ..... ... ...... 21,949 22,683 23,370 Totalc< . .. ... .......... . . . . . . . . . . . . . . . . . . . . .. .. .$148.849 $147.824 $129,124 Tine accompanying nntes sofinancial statements are an integralpart of afsese statements.

90 as E___i__....___ . _ _ _ -

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Nebraska Public Power District ~ (3)loterest income on construction fund imestmenis ts credited io ntility viant. Unaer generatiy accepted account.

NCCLEAR FACILITY ing principles, such income would huse increased revenues

$.8 million in 1988,8.9 million in 1987, and $1.0 million in u7 Notes to Financial Statement.

P, 1986.

(1)

SUMMARY

OF SIGNIFICANT 1 s , ACCOUNTING POLICIES: C. Nuclear Fuel -

A. Organization - .

Nuclear fuelin the reactor is being amortized on the basis of The District has three separate divisions for accounting energy produced as a percentage of total energy expected to be purposes as follows: produced.

Electric System : The District has entered into contracts for various nuclear L Power Supply System - fuel components for fuel loadings us follows:

Nuclear Facility . wr m sh Neelear Fuel Elsich Heepiirremente Jl 'As required by Bond Resolutions, separate records are w- o s Mi ~ 4~ r= i .i maintained for each division. The Nuclear Facility financial Uranium Concentrates . ..Various 1989

% statements exclude the Electric System and Power Supply S P- Conversion . . . .. Allied Corp. 1989 tem, for which financial statements are presented separately Enrichment . .. .. ..U.S. Dept, of

, herein. The Nuclear Facility financial statements should he read Energy - 2014 in conjunction with such other financial statements. Fabrication. . . .. General Electric 1994 B. Basis ofAscounting - .

Revenues are recognized and hilled at an amount equal to Fees for disposal of fuel in the remor are being provided as costs as defined by the Nuclear Facility Hevenue Hond Resolu- part of the fuel cost and collected through revenues of the tion (Nuclear T coolution) which include operating expenses 4x- Nuclear Facility. Some of these fees n,ay ultimately be the re-chiding depreciation), and debt service on the revenue bonds, sponsibility of General Electric Company (GE) under the nu-less investment scome. Hevenues are computed and hilled so clean fuel supply contract for the initial fael for the Nuclear that no equity is accumulated in the Nuclear Facility. Facility.

' Herenues and costs as defined by the Nuclear Resolution The District and GE hase entered into an agreement setting differ in the following respects from generally accepted account- out certain rights and responsibilities relating to the shipment ing principles: from Cooper Nuclear Station to Morris, Illinois, of spent fue!

(1) Amortization of the debt principalis included as a associated with the initial fuel supplied by GE under the nuclear cost in the accompanying Statements of Revenues and Costs fuel supply contract. The final shipment of spent fuel supplied as " Debt service - Principal". by GE under this contract was accomplished in January,1989.

Depreciation is not recorded as a cost. Ilad the District Each party has a full reservation of rights with respect to provided straight-line depreciation over a 30-year life huyback pay ments, all shared costs, and ultimate responsibility rather than im

• Jing amortization of debt principal over for disposition of the spent fuel and attendant costs. Iluyback the same perion, costs would have decreased 8.6 million in payments nf $7.5 million for 1988, and $7.1 million for 1987 huse 1988, and increased $.1 million in 1987, and 8.8 million in been included in " Accounts Payable and Other Accrued 1986. Accumulated depreciation through December 31, . Liabilities".

1988, would have increased costs approximately $46.0 mil-

. D. Cash and investments -

tion. The reserve for depreciat.mn shown on the Statements 1Ws miMN Mb dim M db d of Assets and Liabilities was provided by recording amounts $1.4 million of cash deposits at December 31.1988, and $129.1 equal to repayment of debt. Upon retinment of property inillion ofinvestment securities and $1.0 million of cash deposits subject to deprenatmn, the cost of property is remove <l at December 31,1987. The carrying vahie ofinsestment securi-from plant accounts and charged to the reserve for deprece ties approximates market.

ation, along with the removal costs, net of nahage. Cash deposits, primarily ,mterest hearing, at December 31, (2)llillings to provide capital for renewals and replace- 1988, and throughout much of the year, were covered by federal ments of property, capital additions, and nuclear fuel are included in the accompanying statements as " Operating d'I!ontory insuranec or unregistered U.S. 6 nernment and mu.

meipal securities held by various depontones. Investments at Reserves" and " Provisions for operating reserves". Under December 31,1988, were in unregistered U S. Gmernment secu- .

generaHy accepted accounting principles, capital additmns rities and Federal Agency obligations held in the District's name and provisions for renewala and replacements are not ex- & mmdid Wh penses but (exclunve of nmmr stems of lyroperty) are The Debt Reserve Account in the Debt Service Mmd and the charged to utility plant. Provmons for workmg capital for Ileserse Account in the Reserve and Contingency Fund are val-nuclear fuel are not expenses under generally accepted ned semi-annually at Januarv 1 and July I at the lower of cost or secounting principles until the fuelis used. Henewals and replacements of property and capital additmns funded m e in d-ie hirmam of & Mu Hesob .

h."" C"I"' "' I""ses on valuations are included .m mvestment from revenues are fully reserved. Other inco ne in 1987 imwne. The securities m the remaining funds aw salued at the includes $7.7 million of excess funds

• hich have been recog-nized as nvenues and applied for the benefit of the Electric I"" "I C"' "' P 'i"'iP "I " *"""' " ""*"'d ""#" "'"' '"9 "I'"'

ments of the Nuclear Hesolutmn.

Sy stem and Iowa Power and Light Company (Iowa Power)in reductLn of payments by the Electric System and towa E. Classification of Costs - ,

i Power to the Nucl%r Facihty for purchased power. In 1988, a significant portion of the costs asusciated with nuclear engineering support is included in " Prmluction - Opern-30

y&

X:

. pnaintenance." In prior years these costs were included liccince's anets and outside of its adminie atise controit or by

' Ql,aeral and administrative." surety or insurance payable to a trust . ' inhed for deconunis-DATE COVENANT: "I""I"E ""'

Y The District is required umler the Nuclear llenolution to The District is currently reviewing options available to c$harge rates for electric power and energy from the Nuclear e nigdy wa, h the NHC decomnu,uiomng rules. It is expected tiw costs of deconuniuioning will be funded from revenues, certam

! Facility so that rnenues will be at least sufficient to par operat.

ing expenses, aggregate debt senice on the Nuclear Facility resene funds established under the Nuclear llesolution and linenue lionds, amounts to be paid into the Debt Ileserve surplus f(mde derned from the ownerslup and operation of the Account and Hesene and Contingency Fund, and all other Nuclear Facility. The District anticipates sufficient funds will be charges or liens payable out of revenues of the Nuclear Facility. available m accordance with the NHC decomnunw, mng rules to The debt senice payments of the Nuclear Facility llevenue deconmumon Cooper Nuclear Statmn at the end of its useful llonds are $36.3 mill' ion per year through 1993 and principal life. The District is currentiy rerwwing and updating the esti-pa3 ments, as a component of debt senice payments, are $15.1 mated cost of deemnnuunnu,ng Cooper Nuclear Station.

million, $16.0 million, $16.9 million, $17.9 million, and $18.9 (5) CAPITAL ADDITIONS:

million for each of the years 1989 through 1993 respectively. The Nuclear Facility construction plan includes authoriza-(3) POWEI! SALES CONTHACTS: 'i"" I"'""timated expenditures of $8.9 million for 1989. These Under terms of a power sales contract with lowa Power, the expenditures will be billed to participants as " Provisions for District makes asailable one-half of the production of the Coop- "P"#atm, g resenes" on ihe ham of estimated cash flow er Nuclear Station to lowa Power with the balance available to ""4"""""'

the District's Electric S 3stem. Iowa Power and the District's (6) CONTINGENCIES:

Electric System each pay a proportionate share of the nuclear Under recently approved amendments extending the prosi-fuel costs (based on energy actually delivered) plus one-half of sinne of the Federal Price-Anderson Act for fifteen 3 cars, the all other costs of the facility. District and all other licensed nuclear power plant operators The District has also agreed to make available, through its could each he assened for claims in amounts up to $63.0 million Electric System,12%% of the output of the Cooper Nuclear per unit owned in the neut of any nuclear incident involving any Station to the City of Lincoln. licensed facility in the nation, with a maximum of $10.0 million (4) PLANT DECOMMISSIONING COSTS: per year perincident per unit owned. lowa Power would be liable The Nuclear Regulaton Comminion (NHC) recently to the District for one-half of such asseument under the Ibwer adopted new deconuninionin[rulen requiring reactor operators Sales Contract. To sati.fy the obligation, the District has ob-to certify that sufficient funds,in amounta not leu than cerinin tained a $5.0 million line of credit and Iowa Power has demon-prescrib'ed minimums which for the District would he approx- strated its financialintegrity and responsibility for $5.0 million.

imately $12f, million, will be available for decomwinioning.

These funds may be in the form of prepayments or external sinking funds, either of which mu+t be segregated from the 31

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e tion and maintenance." In prior years these costs were included licensee's asects and outside ofits administrative control; or by in " General and administrative." surety or insurance payable to a trust established for decommis-(2) HATE COVENANT: 'I""I" A ""'

The District is required under the Nuclear Resolution to The District is currently reviewing options available to charge rates for electric power and energy from the Nuclear comply w,thi the NRC decommissioning rules. It is expected the costs of decomminionm, g will be funded from resenues, certain Facilitv so that resenues will be at least sufficient to pay operat-ing ex'penses, aggregate debt eersice on the Nuclear Facility resem funds established under the Nuclear Resolution and Revenue Ronds, amounts to be paid into the Debt Reserve surgdus funds derised from the own, eship and operation of the Account and Reserve and Contingency Fimd, and all other Nuclear l'acility. The District anticipates sufficient funds will be charges or liens payable out of revenues of the Nuclear Facility. asailable m accordance with the NRC decommissioning rules to The debt sersice payments of the Nuclear Facility Revenue decommission Cooper Nuclear Station at the end of its useful llonds are $36.3 mill' ion per year through 1993 and principal life. The District is currently resiewing and updating the esti-payments, as a component of debt sersice payments, are $15.1 mated cost of decommissionmg Cooper Nuclear Statwn.

million. $16.0 million, $16.9 million, $17.9 million, and $18.9 (5) CAPITAL ADDITIONS:

million for each of the years 1989 through 1993 respectively. The Nuclear Facility construction plan includes authoriza-titm for estimated expenditures of $8.9 million for 1989. These (3) POWER SALES CONTRACTS:

Under terms of a power sales contract with lowa Power, the expenditures will be billed to participants as "Provismns for District makes available one-half of the production of the Coop-operating reserses on the basis of estimated cash flow er Nuclear Station to Iowa Power with the balance available to 4*"*"

the District's Electric System. Iowa Power and the District's (6) CONTINGENCIES:

Electric System each pay a proportionate share of the nuclear Under recently approved amendments extending the provi-fuel costs (based on energy actually delivered) plus one-half of sions of the Federal Price-Anderson Act fur fifteen years, the I all other costs of the facility. District and all other licensed nuclear power plant operators The District has also agreed to make asailable, through its could each be assessed for claims in amounts up to $63.0 million i Electric System,12W7c of the output of the Cooper Nuclear per unit ow ned in the event of any nuclear meident invols ing any i Station to the City of Lincoln. licensed facility in the nation, with a maximum of $10.0 million per par per incident per unit owned. Iows Power wouhl be liable (4) PLANT DECOMMISSIONING COSTS:

The Nuclear Regulatory Commission (NHC) recently to the District for one-half of such anscument under the Power adopted new decommissioning' rules requiring reactor operators Sales Contract. 'lo satisfy the obligation, the District has ob-to certify that sufficient funds,in amounts not less than certain tained a $5.0 millmn line of credit and Iowa Power has demon-prescribed minimums which for the District wouhl be approx- strated its financialintegrity and responsibility for $5.0 million.

imately $125 million, will be asailable for decommissioning.

These funds may be in the form of prepayments or external sinking funds, either of which must be segregated from the l

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Power District 33

I

. l STATISTICAIS HEVIEW l ' NPPD Electric System, Nuclear Facility,and Piwsr Supply Syst:m / Year Ended December 31,1988.

Averane .

. Number of Revenue ]

, SALES Customere KWH Sales #4 From Male. e4

- Hetail:~

(*"**"d") f31*""d*> l Residential, ,, . , , , , . . . . . 80,735 782,215 7.4 $ 51.265 13.1 .j Hural & Farm., ,, , , , , , , .. ., 5.330 89,*351 , 8 6,374 1.6 j Commercial, , , . . . 17.440 - 630,472 5.9 40,329 10.3 l Industrial . ,, , . . .. . . . .., 75 750,425 7.1 28,834 ' 7.3  ?

Municipal & Federal. , , . .. ., . ,, 3,065 153,769 1,5 9,334 ' 2. 4 -

Total Retail. .. . . , ,, , . , ,.106,645 2,406,432 22.7 $136,136 -34.7 4

Wholemale 54 Municipalities (Total Requirements)., ,4 . 1,179,344 11.1 $ 45,114 - 11.5 18 Municipalitica (Interconnection-Partial Requirements).. 74,435 .7 2,466 .6 261%blic Power Districts & Cooperatives (Total Requirements)... . 3,430,070 32.4 120,556 30.8 Other Utilities.-Non-Firm & Participation, . . . .

3,5u5,110 33.1 79,492 20.3 Total Wholesale ., , , .. . . . 8,188.959 77.3 $247,628 63.2 Total Electric Resenues .. . , , , . 10,595,391 100.0 $383,7M 97.9 Other Operating Hesenues .. . . .

8,372 2.1 Total Electric System Operating Hevenues., , . .

$392,136 100.0 I% duction Kril c4 Co t. 84

. CENERATION : twu.and.) t m u.anda Production:

Electric System (Including Interchange) , , . ,, 1.087,929 9.8 $ 23,071 8.0 Purchased:

1%wer Supply System * . . . . . , , 5,433,546 48.8 $145,337 50.4 Nuclear Facilitym.. ., . 2,100,976 18.8 73,280 25.4 Other., , , , , ,, , .. 2,522 4 80 22.6 46,718 16.2 Total Power Purchased., .

10,057,202 90.2 $265,335 92.0 j Total Nwer Produced and I%rchased. . . I1.145,131 100.0 $288,406 100.0 (1)The Electric System purchance 100% of the net generation and power purchases of the Power Supply System and 50% of the net generation of the Nuclear Facility haned upon the total coat of the respective systems. Pursuant to the Power Sales Contract,lowa Power and Light Company purchased 2,099,634,000 KWit lowa Power and Light pulcipation is not included in the table.

1988 1987 Increene (l)

GENERAL. (mu.and..f Douar.

Utility Plant (at cost):

Electric System , ,, , . , ..$ 688/>66 $ 676,692 $ 11,974 Power Supply System., , . , 717,158 715,315 1,843 Nuclear Facility. . . . . . , , , 587,531 ' 560,113 27,418 Total Utility Plant. . . , , ..$ 1.993,355 $1.952.120 $ 41,235 Numlier of . Accredited -

Plant. (h Capabilier (KW) f Production Plant Facilities:

Steam-Conventional . 5 1,643,000 i Stenm-Nuclear . I 778,000(3) llydro.. 10 161,020 Diesel . 10 40,437

- Peaking Turbine . .

_3 116,000 Total Production Plant Facilities . g 2,738,457 f t) Net orretirements (2) laeludre t we eteamplants, eis hydro planta. and ten dienelplants under contreet te the District (3) includee 380,000 KWeontracted to fowa Power and Light Transmission Facilities:

Miles of Transmission Line in Service . .6,32 5 IVrnonnel:

Number of Permanent Employees.. . 2,037 34

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t m.

1 Cost OfProduction- "

Power Supply Systern 37.1% Coat OfProductiors Nuclear Facility 18.7%

llenidential Salen -

13.1%  %

Cemt Of Purchased Power 11.9%

g

, .. j g Other Operating Cornmercial Revenuen Salen 2.1% 10.3% ,e Taxen,interent bY ' Coat Of Other Operation s

And other ' And Maintenance Incorne

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V Expennen 11.5%

r . t mey

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Industrial Munici Sale" Cost Of N>nd Itetircoinentii, Itural &Fpal, arrn Federal, Salen .3% p,.oduction- Construction M Other Frorn ites enuen,0tc.

5.9% 11.3%

35

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~i GENERAL OFFICE

, Nebraska Public Power District "%sYs"%#*"^1% e 3 s """" - . -

l NLS8900188 May 11, 1989 I

)

U.S. Nuclear Regulatory Commission Attention: Document Control Desk i Washington, DC 20555  !

l

Subject:

Nebraska Public Power District .

9 1988 Annual Report NRC Docket No. 50-298, DPR-46 ]

l Gentlemen:

F- ,

In accordance with the requirements cited in 10 CFR Part 50.71(b), Nebraska i I Public-Power District submits its Annual Report for calendar year 1988. As j specified in Regulatory Guide 10.1, we are enclosing ten (10) copies of the j report, j Should you have'any questions or require additional information, do not  !

hesitate to contact me.

Sincerely, l

G. . Trevors Division Manager Nuclear Support i i

/rg Enclosure (10) cc: Regional Office .

USNRC - Region IV d

[T)OOf l NRC Resident Inspector Cooper Nuclear Station # /0 i

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