RBG-29285, Forwards 1987 Annual Rept
| ML20206G189 | |
| Person / Time | |
|---|---|
| Site: | River Bend  |
| Issue date: | 11/03/1988 |
| From: | Booker J GULF STATES UTILITIES CO. |
| To: | NRC OFFICE OF ADMINISTRATION & RESOURCES MANAGEMENT (ARM) |
| References | |
| RBG-29285, NUDOCS 8811220130 | |
| Download: ML20206G189 (1) | |
Text
{{#Wiki_filter:19
. s 8
*P GULF STATES UTILITIES COMPANY P O S T O F F I C E D O X 2 9 51 + BEAUMONT. TEXAS 77704 AREACODE409 838 6631 November 3, 1988 RBG-29285 File No. G9.5 U. S. Nuclear Regu7atory Commission Document Control Desk kashington, D.C. 20555 Gentlemen:
River Bend Station - Unit 1 Docket No. 50-458 Annual Report Gulf States Utilities' (CSU) June 13, 1988 letter (RBG-28088) transmitted ten (10) copies of GSU's 1987 Annual Report and committed to provide Cajun Electric. Power Cooperative, Inc. (Cajun) 1987 Annual Report when it became available. Please find attached ten (10) copies ' of the Cajun 1987 Annual Report in accordance with Section 50.71 of Title 10 of the Code of Federal Regulations and U. S. Nuclear Regulatory Commission Regulatnry Guide 10.1. If you have any questions, pleasa contact us. Sincerely, Y- Y J. E. Booker Manager-River Bend Oversight JEB/ DIN /do l l Attachment cc U. S. Nuclear Regulatory Commission 611 Ryan Plaza Drive, Suite 1000 Arlington, TX 76011 NRC Resident Inspector P. O. Box 1051 St. Franciaville, LA 70775 k Rey 22o1soconos y ADOCK 05000450 PNV J
l l CAJ UN ELECTRIC POWER COOPER ATIVE, INC. l l 1 W h 1 98 7 A NNUA L REPORT ( eertonDn1 2ppp,
r . f. ". 1 r. ( - . , ],.; . , y ,,,( ,',..,y ;, .y , . y y 7,-lj,,.. ;., 3. . l , ; ;;j 4. , % 1.Q .g-{ c 4. ,9, p.hs M +,',,;p.J.,,y,, y... ,. -
. .y s . . r:$ e . -' . a y . , , :. .. . . ... , es -
. ,, ,9st; ; n
+.'; . .)-, , .. ,' .f. ,' .
-',..E.
'* 3 ; .- ,,, , N. } , .. , ,.
., f- - . .'
} . k' lIQ*.,4 ', .'e %.
q . : 0 *'
.y ,o , . .-
g ,1~ e , ,
- v. b
- e . - . . .
=.,,' *m '
1
^
y;
; L . ..
s_-
- i. .[, * .
- g I
*r.
,- w , .. e. I ,
.4.'
\,. . gn . '
.o _
- 8. .g *,. '
" ,)
- p .
( [f ', . -
- o ' '
4
.- c. . .z a .. i et. . .- s an ( - .
v .
;.W.y a :Q. .
* , ~-
)
1,. '4,.) '. . , f m
. l *.
c
,. p R.
2 e- , . y =*
* %.f a
3
.f b ..
't.., . " -
k-V
.e s
h ' ; g, . 7. s v'. g . . *- y , , ~
'.f. .'l.f . - ' - . o . . mm '. .
g' .
)
g' . ' y - . , , . . , .
, . . 's ? .}~ _ ' '.
~,,e .
'k . I '.*. 4. g
- 7. i 5 . - . . . . . ,
.$. @.- , 9 ? - .
, -. .- .- , . , - - . . s .
;. e, -
. . . '- ' i '
..~. f- .,
.. ;^ .
+, _. .l ' ,
_ . [ , k
^' * **
..... .~.y....
+( .. , ,. .
- a. -s;w....
. .i.. ... .
w
. . . . . . . . . . . . . . ...c.....,s . . . . . . .. . . .. . ,
h.4 . -Ufd "d'M[;I[.h,% [ T $$kN M.xMh,N$,$e[hMR[QQ.M D'N[s .,, h,b.k. .. L [ ; j Q,::,.,,ik. T R.. - f % i W p M g k
.x . , ~
]S*MQ .;
Y .: ...4-Mhhk . .
.i .
i .
. M. p e"
Mk
$,f . M gr48WSDM~1e "
1
~
a . .gw
-C ,
.y,y M<,
eb e. m 97;, i
.. .. Mf, g,1.Q ,m y* .m
..o . M# .
.- , .. . . .. . ~. 1 .
'l lh [ !.fQ,
,u. 4 y ,.e Q y y @ Q{.y%y g* Q y. p'@
,., p a .n. n . ., .2, .,4 m:p. . g.p y,s ..; . - ;
yg gl,ey
,.e y :g .j. ~~.c;;. pm n,q + 3 m ,+ ym 9 , y g y ;.y y . g la.;;,.;y..,,,,.w y. .,. ,p A)y..y q;-. 3343 2 z. . m, :, ,. . L_
,, ~ < . , ,. w ._ p ,..,,v.. 3 . .; . x.g.; . , . ; ..
. .,, ,,z .
q <tp v > . 7....* ~(4p, ;
.g a,_ :
.;...gW v, y, ; .7 .p, . , ,, r .
;. +g_. ,.,..y_
J.aW, _
.,y; .3.gg o .. ,- < -r.
, . . , _...;,, __s_, ,
g .c .. : .. m
. *- / - -
- a.
a ...,.w .. . ; - y T' .Q ;l. y.n :
.i. j!. [ . v Q.,.:;< .b.- . p, M ytm .,. : :* f.~, .p.y ., .s ., n ;,
. .4. .L4 g /. f,
.[ j e.
s ..
.s. s . .3 . ., ,.
.c ,. .,,, g . , .. %. , n .,#
a,:.g, ;;, : ; z , 1,
..,, ..p
... - n- . . -.. .,. :
. . ,a . -- ;.-
. ,n . . .
i - . . . > .s, n. -
-2hs- .g,..:.* L
. ;,;w - .
JPy s. . ?a . ' . . .R- ,, .' .; - .
~ ~
- t. . . . . - : . , ., .
Q'.# 9 w . *. f-
,.l, ,
. . ,, :. .. : . . %i=* - L -
_ f .
' ,) ? . _ .,
*- . . . , , , _ _ _ ., q s . g
" ,,..p, .
..r " ' ,,
$ j v; ,. ,
.' /.
- e- .
,,,,y, .
. . .. . ~,
a w._
.' . - ...s./,, A
.. e -
,y .l s.
{ i.h* 7 - .og. ..e- . r p , F, . s . .* . . . , . m y : .. . y :- - r , , ,7 . ,;. se.- ,,
, ,.- r,a, . . . . < .
f.
- j. .
.. '. - y : ,. -a , . ' f .*;
- j ' . , M ,
- a ey . . n[f. 'y,3 J. '*
.:q- .
Q- .. ...,l v . . c. an - .. t ga . , . . ,; ; . _ ;. , f, , -
,L y, , .#
.'s 4 y '_,
. J7, . a ,,. .' t s; <.,e . , . -_ .. , s ~..,,4,.
j g;. .g f,s y .
, ,g,.. ; j g .
3
-.a, . . , w. U ,c . , . i. .g. ,,,: ,~a.y .7,t ; n .,
; ; ,., < y,
- g. y ee ., ,
., g , kj (
.,. : ,, .. ,.. . . , , y , , ,.
g, .. ,, \. * , . , 7. . . .- ~. . . .; r'
,t , .. . ..ne ,, ,4 ',..
.r - . _ . .
y n,.., .. ....- .,.,..,. -
,, 1w.g,, ,. /.), . . .Jt. . ;. G.
. 3 .. ,.,,, {,.
t . 4.;. f.c
- C;,., .., ,l9: *
,y , ' ,.
.. f - ..
. , . J, , , g g . .. ,
.s g . .. -
hY '-< fik. k hl ll &Nf h* { j.Y h ,'A'h Q YQ f . h f , k -L f j h
. m. m,.~, y u
. ~,.
.. :s. . . . ,n . .
,~m
.a c
. q n, . , , ,.- . .
cc , !5/' .fyg' -:. > ( i . . E
. ..i.
a i = 5,i
'y-' '_( t . .t. L
'+$
E.1 % t .t [ t
' 8 q
g u.. ' . .y. . . 4 M .* g
- s ,
an ,+- , 3e ,
, u '%', ' .N f 'p ?
4
~ ,:f S :. ; ;. m n . ,- .
7 . ,
, .., , t
.z..G - , 2 i . 5' r, ' g
, ,.. k
, {
.m
.x ,.
, , 2 .
uI , k . f g S i o
't, .
- 3. .
- r ,%
.j-1 .
4
+ .
Y.y gg \\ < ec , i
+ #
4 3 4 ' b
,.9 p . .s. .. . . .
L - j t s, . - - t #
"h d f
s
.j ,
9 CONTENTS: Financial Highlights . . . . . . . . . . . . . I President's Report . . . . . . . . . ... 2 Gencial Manager's Report . . . . . . . . 4
< Finance, Audit & Rate Committee R e port . . . . . . . . . . . . . . . . . .. ... 6 Power Supply & Fuels Ccmmittee R e port . . . . . . . . . . . . . . . . . . . . . . 8 Operations Committee Report . . . .10 Cooperatives' Statistical Information . . . . . . . . . . . . . . . . . 12.
' - Louisiana's Electric Cooperatives . .14
+
1987 Board of Directors . . . . . . . . .. 15 Financial Statements . . . . . . . . . . . 16 Notes to Financial Statements . . . . . 20 Auditor's Opinion '. . . . . . . . . . . . . . 31 Officers & Directors . . . . . . . . . . . . . 33
1987 fin ANCIAL HIGHLIGHTS tinmusana.) Ircrease l 1987 1986 (Decrease)
~ ~~
~ ' Operating Revenues $ 511.877 ~$ 463,639 ' $ ~ ~ 48,238 ~ Operating Expenses $ 328,904 $ 276,827 $ 52,077 ~ Operating hiargin $' 182,973 $ 186,812 $ (3,839)~ N:t hf argins 5 (66,402)_ ; _ 5,936 . _$ (72,338)
~ <'lant Additions ~$~ ~ 13,517 $ 155;356 ~ $ (141~,839)
Energy Sales (hiegawatt Hours) A. To hiembers 4,889,550 5,013,963 -(124;413) B. To Others 1,315,895 1,468.392 ' (152,497) C. River Bend Sellback 963,010 527,129 435,881 System Peak Demand (hiegawatts) 1.200 1,280 (80) Cost of Fuel Used in Generation $' 121,378 '$ 135,943 $ ~ '(14.565) _ Assets $ 3,050,602 . $ 3,092,947 .$ (42,345) Accumulated hf argins and Equity 5 (29.462) $' 36,940 $ (66,402) Employees Fulltime 575 594 (19) Revenue Per kWH Sold to Niembers (Cents) 6.0 6.5 (0.5) I
PRESIDENTS REPORT 4 j. ' reduce coal and coal transportation costs and better manage our debt l-- through a series of ongoing measures. By the end of1986, Cajun was begin-ning to experience some imtsortant
@; measures of success. For example, Cajun had lowered its delivered coal
' costs for boiler fuel to a level under
- i that of any electric utility in our state. Also, by the end of 1986 Cajun l was successfulin reducing the aver I age interest rate by 1.5 percentage l points on our $ 3 plus billion debt. l This alone resulted in a $45 million
' annual reduction in interest exrense, 3
4 m and did much to offser cost increases M C C related to the commercial operation g {t g' ~ of the River Bend Nuclear Power
- Plant.
i
/ 2- These important early steps M r scantan.rreifen: enabled Cajun to hold the average
. member wholesale cost to $0.0649 During the late nineteen seventies Electric. Cajun's annual forecast per kilowatt hour for 1986. In 1987, I and early eighties, Louisiana's elec- projected the 1986 average wholesale additional negotiations with fuel ! tric cooperatives made tremendous rate to be $0.073 per kilowatt hour suppliers and other cost savings steps, , , capital investments in new coal and and a 1987 average wholesale rate of including the successful refinancing l , nuclear power plants in order to 50.079. Additionalincreases in sub- of $1.045 billion of our high cost ! accommodate prevailing national sequent years were also forecast. The Federal Financing Bank debc, enabled :(
- energy policy and federal law and to Cajun Board of Directors made the Cajun to reduce the average whole.
I meet the growing demand for elec- decision that wholesale rates to sale price of electric power to its ; tric energy in Louisiana. Unfor- members could not be increased until members to $0.0600 perkilowatt hour ! tunately, as a consequence of the six Louisiana's economy began to re- for the year. This was a rate reduc-vear energy based recession which cover from its deep economic depres- tion of approximately ten percent l has devastated the very foundations sion and electric distribution coor- which was ' of Louisiana's economy, the antici- erative retail electric rates were proximate 'pwed along to the pared load crowth which these elec- reasonably competitive with those of of Louisian: ~, thirteen membership tric power plants were budt to serve other state utility systems. The cooperatives. The 1987 wholesale has f ailed to materialize. battle to cut our costs, remain com- kilowatt hour cost average of l l In late 1984, Louisiana's elec- petitive and viable, and to retain $0.0600 was about two cents lower ! 1 tric cooperative member / customers market share was launched on several than the 1984 forecast had pre- l were faced with the grim prospects of major fronts. dicted. This rate reduction, how-steadily increasing w holesale power Since our major costs of opera- ever, resulted in a $66 million net l rates well into the future from Cajun tion are fuel and Jebt service, Cajun , l Electric Power Cooperative, Inc. l instituted an aggressive program to ; 1 4
- i 2
d
)
i ~ loss for the year 1987. In July of ~ ~ ~ ~was developed recogniie tha'r Loulst- ~ Caju~n workout in 'c~ooperation with-~R 1987, Cajun asked the Rural Electri- ana's rural electric cooperatives all parties, including the REA, i fication Administration (REA) to cannot currently charge rate levels Cajun's major creditor. The Bohd of - , glace the cooperative in the that fully support their nuclear ~ ~ Directors of Cajun has targeted l national work ~out group" composed ' investment considering the current November 1,1988 as the~date by , ~primarily of other generation and economic depression, the high costs which the final voluntary plan must~ " " ~ transmission cooperatives that were associated with the construction of ~ be in plac~e. in financial distress due to their ~ the River Bend Nuclear Station, and'~ Cajun's long tum strategic ~ investments in nuclear power p'lants.' the low ~world market prices of plan'is predicated on offering com. ~~ ~ A large measure of Cajun s fi- natural gas and oil. petitive retail electric rates in rural ~ nancial problems of today stem from~ Cajun's ability to achieve a Louisiana in order to hold or increase Cajun Electric's 30 percent owner-
~
voluntary workout is currently our market share and increase off- ~~ ship position in the River Bend affected by the Chapter 11 bank. ~~ system sales to other utilities in order Nuclear Power Plant, built and ruptcy proceedings of one of Cajun's to maximize payments to its creditors. operated by Gulf States Utilities. thirteen distribution cooperative Cajun's challenge is to be fair to its ~ ' Although this plant only represents member / owners. In July of 1987, member / customers who will ulti- ~~ 15 percent of Cajun's electric gen. Washington St. Tammany Electric' mately benefit and must ray for their ' ; erating capacity, it constitutes 51 Cooperative, Inc. filed for bank- power supply and to be fair to the percent of Cajun's debt service ruptcy under the termsofChapter i! creditors who have helped make burden. Even though the reduced and, as of July 31,1988, is approxi- these avestments in the future of
~wholesale rate level was vital to the' mately $16 million~in arrears to rural l_ouisiana possible, protecelon of Louisiana's rural Cajun on its wholesale power in-voices. In addition, Washington.St.
economy, the Board of Directors knew that the reduced rate level Tammany has filed a motion with the ' ~~ would be insufficient to cover its Bankruptcy Court in New Orleans to ^ debe service on its nuclear ir vest- reject its all requirements wholesale ; ment. On July 10,1987 C.jun filed contract with Cajun. Cajun is vig. 1 with the REA a proposed workout orously defending against this move i plan intended to secure needed relief to reject this fundamental contract. from its pressing debt service obliga. Ca un'sgoalofprovidingalong term, tions. The plan called for this relief stable, affordabic supply of electric f eo be granted without having to place power to rural Louisiana will be in- i the cooperative under the protec tion creasingly difficult to achieve if of the federal courts in a formal Washington St. Tammany succeeds - bankruptcy proceeding. Important' in rejecting the contract which sup-tenants on which the workout plan ported the building of Big Cajun II , and other generating assets. Our aim with Washington St. Tammany, as with all others with whom Cajun transacts business, is to achieve a negotiated solution, grounded in a realistic, voluntary ,
'1
GENERAL MANAGFR'S REPORT 1987 was a very significant year for Cajun. We initiated a coriprehensive ~ plan to resolve our pressi,e financial problems related *o our ir. vestment , n r " in the River Bend Nuclea Power f- 2 Plant. This plan is hichtehted by jf 2 - a major restructuring 5t our debt bil7 . . . service piyments to majo* creditors T./ under voluntary, negotiated wowut ^ u agreements. Our objectives in this f w'orkout Process include full debt / repayment over time, but under new ' terms which allow Cajun to rrovide wholesalywer to member coopera-tives priced low enouch to enable a ww,4, them to offer electric service at rates v w hich are comretitive and fair in Dat iJ Lee M4re. Execurit e We Prendent & Gen <ral Manager light of the pressing economic Prob-lems of our state and maintain or enhance market share. As a part of were 1,316 GWhs, down 10 percent ability of Unit 3 was 88.5 percent. this strategy, Cajun is also attempt- from 1986. A, a result oilower This $40 megawatt unit generated inc to become a major recional energy wholesale charees to member coop- 2,152 GWhs with a capacity factor of supplier in order to improve the eratives and a decrease in total 45.5 rercent. Cajun's 1987 operat-etticiency of our power plants and kilowatt-hour sales. Cajun ended ine statistics for its coal fired units maximi:e ,epayments to our creditors. 1987 with a net loss of 366.4 million. continued to compare very favorably Cajun's staff and Board of During the year, Cajun cut ex- with industry norms. Directors have been working Jili- renses in esronse to reduction in Even though Cajun's 30 per-gently with the REA, other creditors, revenue ani & filitie ofits financial cent investment in the River Bend and all suppliers in order to achieve workout r an 'aiun's overall ex- Nuclear Power Plant is the primary a comprehensive, equitable and ac- penses fo he year were $3.5 million reason for our current financial prob. below the 1987 budeer. Carital out- lems, the riant is operatine well and certable workout. While the final its t'erformances compares favorably structure of the workout has not yet lays amounted to $2 3.4 million dur-been aurceJ to, the neentiations are ine the year, $ 30.2 million below the with other nuclear Pl ants. River continuing. The REA has aereed to 1987 budeet. Unfortunately, as a re- Bend completed its first fuel cycle an interim rlan that has sienificantly suit of a full oreratine year a the durine 1987, and despite the sched-imrroved the comretitive position of River BenJ Nuclear Power Plant, uled refueline outace, operated at a Louiuana's electric cooperatives. interest expense it creased to $251 capacity factor of 60.6 percent. million, an increase of 25 rercent River 3end 1 set an American record comrared to 1986. for General Electric's boiline water Year End Results reactor 3eries six (BWR/6) with 151 Cajun lowered its averace wholesale continuous days of oreration durine charges to Louisiana's electric dis- Power Productien the first fuel cycle. tribution cooperatives from $0.064 8 During 1987 Cajua's power plants to 50.0600 during 1987 in an effort performed very reliably anJ effi-to allow member cooperatives to ciently. The two-unit Bin Cajun 1 Off Syr, tem Sales offer electric service at more com- gas fired power plant exrer,enced in 1987, Cajun began aggressively retitive prices. Reasonably comp ti- only one unscheduled outace and pursuinu business orportunities in rive rates in rural Louisiana are had a 96.9 percent availability factor the bulk power energy market and especially important considerine he for the year. Gross eeneration from has gained recoenition as a depenJ. current economic problems of oui Big Cajun I amounted to 172 GWhs, able regional supplict of power. state. re ultine in a combineJ 8.5 percent increased off system sales enables The 1987 coinddent Peak for capacity factor. Cajun to more efficiently orerate its 1 ouisiana's electric distnbution Unit 1 of the Bie Cajun !! coal- power Pl ants at all times of the year, cooperatives was 1.159 megawatts. fired electric cencratin;' plant op- improve cash flow and attiin coal T his represents a 6. 3 percent de- erated at 9 3.1 rercent availability contract usaec minimums. crease compareJ to the 1986 member and generated 2,16 3 GWhs at a 45.7 in Serrember, Caiun consum-i comcident telemetered reak. In rercent caracity factor. Unit 2 haJ mated a M0 MW aercement with 1987, sales to member cooperatives 92.1 percent availability for 1987 Louisiana Power and Licht for econ-m re 4,885 GWh ., 2.6 percent low er and eenerated 2,0 39 GWhs at a 4 3.1 omv capacity throuch 1988. Neuoti-than 1986. Sales to non members rercent capacity factor. The avad- ations were also completed for a 105 l 4
hiW ten yearsaleafsemi firmexcecs through Congress, which ultiraately ing out of cancellation of a proposed energy to South hiississippi Electric resulted in Cajun receiving trore north Louisiana lignite generating Power Association. A wheeling ar- than 50 percent of the total FFB plant which was determined not to rangement was also established r: financing allocation of $2 billion be needed by our member / customers. through hiississippi Power and Light that the U.S. Congress arrhved for While major litigation is always time Company for excess energy deliveries the entire United States. consuming and expensive, Cajun's to the Tennessee Valley Authority. Cajun sold $1.045 billion in obligations to both i st members and Sales to the Tennessee Valley Au- securities to the Jackson Bank for the ultimate rural electric consumers thority have ranged from 100 to 400 Cooperatives (JBC) and used the justify and require our rursuit and megawatts. proceeds from that sale to rrepay its defense of these matters. Addition. Off system sales revenues were outstanding high interest loans ally, Cajun has preserved and will
$28,013,102 in 1986, $21,450,727 owed to the FFB and guaranteed by continue to preserve its rights and in 1987 ud are $34,370,515 for the the Rural Electrification Adminis. claims against Gulf States Utilities first ha* of 1988. Negotiations are traticn. The sale of the certificates to Company (GSU) arising out of the continuing with several other utili- the J BC provides initial financing foc construction of the River Bend ties and Cajun fully expects to close Cajun's prepayment of outstanding Nuclear Plant.
additional off system sales in 1988. high interest FFB loann Long term financing is being provided through a public offering of Cost Reduction Efforts Cooperatives Utilities Trust Certifi- Economic Development During 1987 and early 1988, Cajun cares. Smith Barney, Harris Upham Lcuisiana has for too long been achieved several successes in its & Co. , Inc. is the senior manager for overly dependent on the oil and gas efforts to lower recurring operating the offering, with additional partici. industry. As a result of Louisiana's costs. Cajun negotiated significant pation coming from hianufacturers six year oil-based recession, the transportation cost reductions with Hanover Trust Company, hlorgan state's covernor, BuJJy Roemer, the Burlington Northern Railroad Stanley & Company Inc. anJ Nomura began the tremendous rebuilding job and with American Commercial Securities International, Inc. that was so urcently needed. Cajun Barge Lines. Our efforts, however, to Since 8 3.0 cents , f every anJ Louisiana's electric distribution get a negotiated price reduction from operating dollar at Cajun coes to rav cooperatives are committed to ac-our coal supriier have not yet been for fuel, production maintenance, tively working with Governor successful As a consequence, we are interest and depreciation costs, Roemer to assure the full economic seeking relief from the courts in order Cajun has concentrated on reJucing recoven ofour state through the to gain what we believe is due us these costs first. However, CAo Jiversincation of our economic base. under the provisions of our existing management has aim endeavored to Cajun is implementing an eco-contract with the surplier. reduce other costs of operation and nomic development program which in early 1988, Cajun refinanced has instituted a stringent capital involves working with America's at lower interest rates $ 1.045 billion adJirion minimi:ation Procram. business leaders and encouragine of high cost Federal Financing Bank Over the rast five years, Cajun has them to invest in the Productive (FFB) debt carrying an average reduced its annual carital outlays capacity of rural Louisiana. We interest rate of 10 8 rercent. This from $ 397 million in 1983 to $2 3 believe that rural Louisiana hn refinancing culminatrd several years million in 1987. much to offer comranie5 Pl anning to of effort and should result in esti- make plant and equirment invest. mated annual interest cost savings of ments and that its reorle are a,nonu
$1015 milliori Per year for each of Major Litigation the most pnxluctive and harJ-
, the next ten years. Another key element of Cajun's workire in America. - Congress passed the Omnibus overall cost control and containment We believe that as a result of Budget Recondiiation Act of1987 efforts is Cajun's vigorous pursuit of the positive and vital sters we have (P.L.100 203) in 1987 whichPer- litigative claims against Riley-Stoker taken to lower the w holesale price of mitted generating and transmission Corporation. which surplied defec- power to rural Louisiana, Cajun has cooperatives to borrow money at rive equipment for the Big Cajun 11 become well positioneJ to help fuel today's lower interest rates to use the coal fired generating plant, Units I Louisiana's rermanent economic funda to repay FFB loans incurred and 2, and against Fischbach & revitali:ation. We are conf Jent that when interest rates were much hieher. hioore, Inc. and several other na- we are back on the important road to U.S. Senators J. Bennett tional electrical contractors which economic viability and Imk e Johnston and John Breaux, and the Cajun has alleged were guilty of price promise of a bricht future for the r Louisiana House Delegation, includ- fixing and bid riguing during the reorle of rural Louisiana, whom we l ing Governor Buddy Roemer who construction of the Bie Cajun 11 are Privileced to serve. units. Conversely, we have resisted f j waa a member of Congress at the i time, deserve a large share of the claims of certain other Parties, Prin-I credit for helping get the leg 41ation cipally Phillirs Coal Comrany, aris-5
FINANCE, AUDIT AND RATE COMMITTEE REPORT The Fit.ance, Audit and Rate Department of Justice (DOJ) w hich amounted to more than fifty percent' waives officers' and directors' of the entire national refinancing Committee oversees the financial activities of Cajun. Its responsibili- personal liability to the federal allocation approved by Congress and ties include accounting and tax government for cash shortfalls is expected to save betw een $10 and matters, operating and capital related to debt service payments. $15 million per year in interest ex. budgeting, financial forecasting, At year end 1987, Cajun was $44.8 pense over each of the next ten years rate design and regulatory compli- million in arrears to the federal despite the recent deterioration in ance, cash management, procure- government for debt service the bond markets. mont of short term and permanent payments. Approximately 50 percent of Assets un um,-no financing, relations with bankers and lending institutions, business debt service requirements are related reporting, risk management and to Cajun's $ 1. 5 billion investment in av financial audit activities. the River Bend Nuclear Station con-To.al revenue for 1987 was structed and operated by Gulf States nx
$511.9 million compared to $463.6 Utilities. Cajun is presently operat- "
million in 1986, an increase of 10.4 ing under an interim workout ar- 3av 2m 9 percent. The coorerative's operating rangement approved by the REA and mz margin for 1987 was $183.0 million the 3713 waiver approved by DOJ. nx m' compared to $186.8 million in 1986, Cajun continues to negotiate with a decrease of 2.1 percent. Interest the REA concerning a permanent :xy and debt related expenses were restructuring arrangement.
$246.2 million in 1987, an increase The interim workout plan ap. isx of 28.6 percent over 1986 interest proved by the REA is explicit that expenses of $191.4 million. Cajun Cajun is to continue operating as a ny im no o* on enJed 1987 with a net loss of $66 4 reliable provider of electric service to million compared to a ner margin of rural Louisiana and to make pay- Rates and Regulations $5.9 million for the prior year. Total ments of routine costs and expenses In 1987 Cajun instituted a Large assets at year end totalled $3,05 as they come due. A permanent Power Incentive (LPI) rate designed workout plan is expected to be com- to aid the economic recovery oflarge biilion.
pleted and arproved in November, commercial and industrial customers 1988. During 1987, Cajun was able in the members' service area. During Operating Revenues on e,o to reduce the average wholesale rate 1987 eighteen customers of the to its thirteen member / customers by members took advantage of the LP! sy approximately 9.1 percent. Averace rate. A total of 90.5 million kWh's whole< ale charges to member coop- were sold to these LPI customers in
,a m eratives decreased fror,64.9 mills to 1987, generating energy revenues of sx $2.5 million for Cajun, while saving 60.0 mills durine 1987.
3 5,, these customers arproximately 4x w 'ederal Financing Bank Debt $800,000 for the year. As of May, 3x ' V 3efinancing 1988 five additional customers have in 1987, Congress passed the taken service under LPl. Omnibus Budget Reconciliation Act In a further effort to promote
- x economic development and en-which permitted generation and no transmission cooperatives to refi- courage new industry to locate in no ny no n, nance at lower interest rates part of rural Louisiana, Cajun expects to their Federal Financing Bank (FFB) offer an economic development ser.
Voluntary Workout Program loans incurred when interest rates vice rate in the latter part of 1988. Cajun filed a voluntary restructuring were much higher. United States in adJition to the economic develop-proposal with the Rural Electrifica- Senators J. Bennett Johnston and ment rate for new business, Cajun tion Administration (REA)in July, John Breaux and th-I ouisiana expects to receive arsproval from ' 1987. As a part of the plan, Cajun House delceation, n iding Gov- regulators to expand applicability of sought REA approval to restructure ernor Buddy Roemei, who was a the LPI rate to additional existine Cajun's $3 billion debt and reduce member of Congress at the time, cu%mers. wholesale electric prices to allow deserve a larce share of the credit for During 1987, the Louisiana Louisiana's distnbution cooperatives helping get this vital piece of lecis- Public Service Commission (LPSC) to become price competitive with lation through the Cor,eress. asserted jurisdiction over Cijun and surre mding utilities and awist the On February 25,1988 Cajun all thirtetn members. Cajun and six of its memixrs filed for declaratory economic recovery of rural Louisi- w as able to close a $ 1.045 bilhon refinancing. The Cajun rerinancing judement in the 19th Judicial Dis.
)
ana. Cajun has also requested and i received a 3713 Waiver from the trict Couri, and in March 1988, the l ,
7 7 n (GSU) o continue making sellback
-te y a
;% . y.. . ." ~
payments to Cajun and other matteis related to Cajun's current inability to fully recover costs as well as certain
^) "
departures from generally accepted
/ accounting principles related to the
< .. }
forecoing matters which would have V increased the net deficit. The ability j ,
) of Cajun to develop a permanent LM, // -a
, g. ,
workout plan with the REA and its other sigmficant creditors, and the
~ -
remlution of related matters will 4 . uhiinately determine the type of a x ' auditor's opinion Cajun will receive
.7 ,ue? <. . in the future.
AmG ;.6 % y . , M
~
; Other Financial Highlights D= Interest and debt related expenses increased by $54.8 million because River Bend was in commercial orera.
Fronil<ft to Rh Duford Aimn. MX Scantan. Gary F. Hall. ElmerJ Poss, Charks M. Daus. tion for the full twelve months of Charles L. Osermar. A C. Rour. Jr. 8. Glynn Famer. W. Leo Payne. JM Hoffoicay. 1987 compared to 6.5 months in the D. Jack Harpole, Jr. Not Pururel Ann Barron. p ior year. Construction in Progress (CWIP) dropped to $12.1 million at court ruled that the LPSC could Central Financial Planning year-enJ-the lowest level since assert constitutional authority over System 1974. the cooperatives. That decision has Cajun im lemented a new central Proceeds from one term Jebt been arrealed to the Louniana fin ncial lanning system in 198t. nsues were only $ 1.0 million in 1937 Supreme Court. Tb state of-the art system inte- comrared to $ 156.0 million the Prior The Board of Directors of grates the fmancial data from various yrat y Cajun continued its Program Cajun has resolved on several occa- internal sources and is enhancing to minimi:e further debt. sions that the cooperative will coor- Cajun's financial planning ability Total debt cutstanJine Jc. erate with the lhC in all resrects. and accuracy. The integrated and creased at year end for the first time in keeping with this resolution, expanded data bases have been es- since 1973. Debt payments since the l Cajun coorerated fully and comrhed sential in prepatine surrortine docu- inception of Cajun accrecated l with all requests for information ments for the Federal Financine $14 3.4 million at year-end. I i when ;he LPSC sent an auditor to Bank refinancing and the workout Revenues from sales to non- ! Cajua in late 1987 to examine the necotiations. members amounted to almost $218.0 l records of the cooperative. In May of milhon incluJine River 3end sell-1988 the L DSC held a hearing on the General Ledger Accounting back revenues, the highest level ever ! l rates and charges assessed by Cajun System in the history of Cajun. i to its members. To date, Cajun has Cajun successfully converted to a ' received no report as .. result of the ne.v general ledeer accounting sys-audit, tur has the LPSC issucJ any tem during 1987. This autornated Weighted Average interest Rate i i orden w;th respect to Cajun's rates. computer system will Provide a more " " """'"~" : At present , the cooperative is uncer- expeditious and complete response u- l l tain as to i ts obligations to the LPSC to Cajun's financial reporting re- l l with resrect to rate matters and this quirements. Certain related ac. n c mi uncertainty may persist for an ex- counting subsystemi are scheduled - in tended reriod of time, in the mean- to be completed in 1988, ec 2 time, Cajun intends to vigorously pursue any and all nece swy ap- ,e .. H
-~~~
provals to charge rates that are com- Aeditor's Opinion petitiv. with those being charged by Caiun received ., quahfied auJitor's e other previders of electricity in orimon for the year ended Decc nber Louisiana and which will promote 31,1987. T ne orinion was quahfied no r ou i~ m: economic devebrment in the state. due to the uncertainty of the alihty of Gulf Swees Utilities Company
' I
POWER SUPPIX & FUELS COMMITTEE REPORT The Power Supply & Fuels Commit- provemente at N Cajun !! will also mits Cajun to better gather and tee is responsible for power mpply Promote better md more efficient monf ror data from the nuclear plant. I planning construction, operations plant oreration. Improvements at Cajun's careful monitoring of the , and maintenance o' generation, Biy Cajun H :n 1987 included in. plant helps assure Louisiana coop-transmission, substation and cora. scallation.of automatic cold end seal erative member / customers that l munications facilities: and the . adjusting systems en the Unit 3 air charges are fair and prudent. I curement and delivery c.f fuel. pro- haten, modifications to the bottom i ash rank wat:r supply which will allow the plant to re-use wastewater. Fuel and Fuel Transportation l Power Production Plants and installation of the coal reclaim Costs Cajun owns 1,M5 hiW of steam rotary plov wet suppression system. During 1987, Cajun continued its
- lectric generatingpower plant ag ressive contract renegotiation capacity. A totalet 1,675 htW or 89 Average Generating Unit program with its boiler fuel and fuel percent of this capacity uses coal or Availability meno transportation suppliers. These ne-nuclear energy for boiler fuel. Cajun gotiations are being conducted under is less dependent on natural gas and ix m us the hardship provisions of the origi-oil than any electric utility in the ,a m n4 - nal contracts negotiated with these State of Louisiana. As a consequence, y - . ~*, suppliers. The tremendous economic Louisiana's electric cooperatives are .'*L5 84 4 46 problems of the Louisiana economy well positioned to keep fuel costs e na have made successful renegotiation relatively stable even in renods of of these contracts very vitalin our rising prices of natural gas and fuel e ability to compete with other eneigy oil, suppliers. Thus far, the renegotia-Cajua operates three 540N :: tions have been Productive and en-NiW coal fired units. During 1987, couraging.
the employees of Big Cajun 11 con. no nu so su on In 1987, Cajun purchased 4.2 tinued to imrrove the availability ._ __ million tons of coal at an average and efficiency of all units. The plant ma c um ma crit N u price of $1.62 per million BTU's de-continued to successfully blend high livered to Big Cajun 11 and 1,800,000 BTU eastern coal with low er BTU Cajun owns 282 NiW of the hihiCF of natural gas at an average western coal, thereby irarroving River Bend Nuclear Plant orerated price of $1.59Per million BTU's. their heat rate. Cajun owra 1,393 by G3U. During 1987, River Bend htW of the Big Cajun 11 t.aits. The completed its first fuel cycle. Despite remainder is owned by Gulf States the sheduled refueling outage, the Coal Price: Big Cajun 11 Utilities (GSU). During 1937, these plant completed the year with a ***"e units operated at a combined avail. capadry factor of 60.6 rercent. : 4 tn ability of 90.9 percent comrared to Rivt r Bend set an American record 8 3.6 rercent in 1986 de$ rite con- for General Electric's boiling water : i 'N tinuing prcNems with ti.e coal reactor series six (BWR/6) with 151 'u pulve:i:ers at 'mits one and two. conrir.uous Jays of operation Juring : Big Cajun !! generawd 6,354 GWhs the first fuel cycle. in 198 /. Cajan's on site monitoring Pro 2 : Cajun owns two 105N hiW gram of the oreraticns of the River gas-fired steam electric stations. Bend Nuclear Station received con- ye AlthougL Big Cajun I units were siderable attention and has been the primarilv taed for praking purposes impetus in the for nation of a national i2 i9N.y i dunn,: 1987, the t.r.its h id an avali- organization cf forty non crerating abilite factor of 96.9 percent. They neclear pow er plant owners called no no n.5 ny su generated 172 GWh* wirta caracity the Nudur Nono, cratim owners factor ois.5 percent. G roup. Capital improvements were C .jun compiered an a 4hr of Transmission / System completed at Big Cajun I during ALnistrative and Genera. 0ver. Improvements 1987 to improve Pl a,e efficiency and hea Emen es being chcrged to tl.e Cajun's 1987 member coincident to bette, monu rlant Performance Rivu &nd Nuclear Plant by GSU telemetered peak was 1,159 mega-InchMcJ in en imrrovements for andi .cgoSting with GSU rega.d. watts. This occurred on June 2 3 Big Cajen ~ was the imtallation of a iag 'hw. charges. A terote terminal ; 987 st 600 P.hi. , anJ rerresen ted a unit (RTU) was so in: . '.leJ at <he 6. 3 p rcent decrease compared to i new sevnce of events ecorder the 1,248 megawatts telemetered on
/ systm a the riant. Carita!im Fano Iw tn Subtation which rer-I
1
~
July 30,1986. '"9 , During 1987, Cajun made sev- === l eral major improvements to the high voltage transmission system. The i p c ( ' Archibald and Loreauville 34.5 kv '\ 4 5 1r
;^
delivery points were completed to - - - - ' improve reliability and capacity. 1 .: The RTU installation of Fancy 0 ,N l Point, negotiated in 1986, was i completed and provides continuous P $ 3 ower genera- ks 1' E update tion. The ofpermanent River Bend [ine bays and [% . s loop feed to Semere Road were com- i -a ~ g pleted. A 230 kv line switch at Landry was completed to upgrade the Lt T 0 $ i f
/
metering facdities of French Settle-
..bg /
ment, Landry, hiinden, Black River
'W ,
/
and Persimmon hiill. Site acquisi-tion was finali:ed for the Ruston East . _ -]J E delivery point and preliminary engi- From Left to Ryht: Jchn E. RanMI. Gloru Grango.11run Ra<c. rMp G Harru James T. Wave. F.eering wotk began. GnaU R. Rohnene. Charles UnJ<,md Leon] Wel Touc Gcad. Ross Map Cajun negotiated and entered 1<n<rm Datu. A into a new transmission intercon-nection aereement with Southwes;ern Electric Power Company which will save Cajun's customers $ 3.4 million hiember Gigawatt Hours Sales Safety annually. mar % "H"> Cajun's emplovees worked very safely In December, the Board of Di sw durine 1987. Only eight recordable rectors approved the purchase of a injuries occurred in Cajun's 578 new computer syst-m and associated sw person work force during the year software for a new energy control ya with a total of six lost work days. system. The system will be installed uv 4w m2 ** in 1987, Cajun employees worked
*4,,,,.
and tested over the next two years. 1.1 million hours and had an inci-This system will enhance Cajun's 4w dent ofinjury rate of 1.4 compared to ability to operate and control the a national average of 4.7 and a Lou-bulk power supply and better meer 4w isima state average of 6.9. Althoueh oblications to the Southwest Power Cajun is P l eased with its enviable Pool and the North American Elec- oc vy vi v. v,- eafety record, the Coorerative is tric Reliability Council. constantly st-ivine to imrrove. Frequency relays were installed in 1987, Die Cajun 11 emrlmees at sixteen h> cations across the trans. had the best safety record in the hii. mission system. These relap will im. Off System Sales tory of the Pl ant. Emrlovee5 at Bic Prove the system's ability to control Cajun made significant rroeren in Cgun I cometered another outstanJ. and regulate voltace. hiotor orcrator 1987 towards its goal of becomine a ing veanvith 932 consecutive Jays switches were installed at four sub- reMonal pwer surrlier. This is one worked without a lost time injury. stations. An addressable raJio sys- of Cajun s major strategic goals in its Cajun's substation maintenance Je. tem ( ADRS) was also succeufulls efforts to satisfactorily work out ofits partment continued their outstand-installed and rested in 1987. The financial Problems with creditors. In me v ork record of 1,171 consecutive ADRS willimrrove sy tem reliability August, Cajun completed necotia. Jays worked without a lost time and lower communications costs by tions for a 300 htW per hour con- acci lent. replacing higher cost telephone leased omy energy sale through 1989 with lines. Cajun co. tinues to study and Louisiana Power anJ Licht (LP&L). evaluate the transminion system to Necotiations w ere also comrleted for enhance service rehability to 300 hiW per hour of energy to the memi er cooperatives. Tennessee Valley Authority. f 9
OPERATIONS COMMITTEE REPORT The Operations Committee is Director / Employee Education --~ n responsible for matters relating to During 1987, more than 1,000 dis- ' the overall management and aJmin- tribution cooperative directors, em- , istration of Cajun. Responsibilities loyees and members toured Cajun's a b i include the development of strategic kicilities and participated in infor. ' dY; plans, management informat on i sys- marional meetines. These informa-tems, legal matters, environmental ticnal and educational meetines ! and external affairs, rutchasine were a pirt of an effort to help all . li policies, internal auditine, human employees of Louisiana's electric 0 resources, and the general manaue- cooperatives better undarstand the ,' ment of company property and massive effort and exrense associ-auxiliary services. ated with t he generation and trans- . mission of tlect ric power. Comments have been quite favorable and the Management Information Project will continue Jurine 1988. Systems In 1987, Cajun installed a new !L computer / data processing system Environmental Affairs and began imrlementing an exten. Environmenta' laws prompted Cajun " sive Portfolio of software. The new to update and renew Ocenses for our system is a key part of a five year power plants in 1987. The National Pollution Discharge Elimination > strategic information system plan. "I This plan was the rnxluct of an ex- System (NPDES) rermit for Bie tensive study ivhich called for more Cajun 11 was renewed for a five year comprehensive computer surport for period to allow Cajun to release sre-the vatious departments within cific amounts of water discharee from l Cajun. the plant site into the Mississirri From left to Rd Geralf T. Pelfar. One of the advantages of the River. Also, the Corps of Engineers G F. Thu. Oms Leuw new computer system and software is permit was renewed to allow for the intecration of data from various maintenance dreJeing arounJ the sources for improved manacement of coal unloading structure and the information vital to the decision Unit 3 intake structure, makine process. The software The passace of "Richt to Know" Purchasing includes general ledeer, accounts reenlations required Cajun's Envir- The Purchasiou Derartment Pro-ravable, fixed auets, purchase oomental Affairs Department to Je- ceued almost 9,800 rurchase orders orders, capital rrojects and payroll. velop ha:ardous materials listines of durine 1987. Because of extensive This system will Provide acceis to chemicals used at all Cajun facilities. u<e of blanket aercements and more timely and accurate informa. These reculations require that moni- quantity discounts throughout 1987, tion, as well as allow for more torine and record.xcerine be utili:ed documented cost savines amounted i efficient use of financial and huma, in the event of an emereency involv- to arrroximately $400,000 for the roources. ine ha:ardous chemicals. Cajun is year. The Purchasine Derartment As a part of the strategic plan, also monitorine Acid Rain leckla- also beean testine the McCormack & the Information Services Depar - tion beine considered by the Lt.S. Ibdee Accounts Payable / Purchase ment was organi:ed into three units Concreo to determine its potential Order System to be implemented in durine 1937: the Data Center, User and Probable effect on Cajun's coal. 1988. The Accounts Payable /Pur. Services and System Develorment5. fired units. chase Order System is Part ofCajun's User Services is an important new overall strategic information system I l function which rovides P comruter rian and will rovide f timely access to training and surport to Cajun budeet and financial information, j employees. Implementation of the historical data and forecast moJets five year Strategic Information which will auist in the riannine Service Plan is ahead of schedule proccu. I and under budget. i
\
t)
" ' ~
this nationally recoeni:ed account. 1987 Total Expenws- $588 Million T-"E ;:< ing firm:
~ ' ' "
EZJ - w.mmr:1 nru wen i.es
". . . We believe Cajun is u ell run and G E w e ~ w m.~ m atn 2.:%
~
, has effectit ely dealt u ith major prob. , mp ,
y-lems, man, of u hich are common to a - 2"
, the industr'y. Cajun's management T., y -.
procedures and organi~ations hat e m- 4.2% J
, also changed rapidly and effectit ely m jf pf?;%3P'c 1
, ^
w T recent years. Fuel and intercsr are the largest e.spenditures. That is rypical w'h.dVK 4pmfeeN Q b' for other utilities u hich hat e been jNfid g{f{J{,W. .' l. lNR'- ?DX l.b , t.n. '. heavily involt ed in construction Jur-
, ing the 1970's and 80's. In our z . w:y ,n f, i.h j
^
mion, as discussed m the report. ajun management has dealt t cry ;;f; , ~ -elgf n, ; f.,,!pf. il. 4,y < %. ' L v ' 9*L M* W / mV: v cffectively uith both areas. " ... T a ; Wa m.s .M;M
.J ~i The executive summarv of he EA Jk
'= = A;. 9.: o'. T'D W.
r' 1
$tf' / 'u- Jm;m
, survey also Jiscuwed Cajun's k, t 2 . r s
q ' W4 ius r [e reent ownership of the River BenJ
'ggg.
q . uclear Power Plant, an inue which
.v .o
~
h has Presented and will continue to s '~ Tfg
- i. w i . F
~),j present sienificant challences to 6g( '. d.y g ' w';
g ,_ 1 'k Cajun. The survey confirmed that . Cajun recocni:es the sieniticance of o T.; J V s, . 0
~
Frerrn Left to Ridt: U'. D Ifadne, the River Bend inue anJ is adJreu. L ,..r 1.H JCwJosa. Arthur L Wrrer; ine it effectivelv: 'O C A Rm!zers. Jr., J~hn C Tt. der.
&t PuttarcJ RwhrJ % Ghnn 'One of the most significant concerns a :0 n facmg Ca un uas and stillis the ; cpm-W- ^ ~
g aJJitiona expenses associated uith the ". . Management Audit / Wage and commercul operari-n of the Riser Salary Survey Hend Nuclear Facu.ty u hich Caiun A special committee of the Board of ouns Jointly uith Gulf States L'tilmes Directors was established to select (GSU). Dealmg effectn ely uith Rn er and oversee the work of an inderen. Hend is a strategie inne Cajun must a dent management consultine firm in aJJress and u e bchet e is doing so ; effectn ely. " a 'recial auJit of the manaeement tracticci anJ rroceJures of Cajun. The Deloitte Haikins & Sells firm The Wyatt Comrany was em. : 1s 4% was selected and submitred the find- P oved to conduct an inJerenJent l i-6 ines ofits manacement audit to the wace and salarv survey of Cajun Jur. Board in 1987. ine 1987. The w ace and alarv survev in the e ecutive summan, the w as rerformed to insure that alaries fotb) wine stateillents w ere 111ade by p. tid ti> (:.ijun Persi>nnel are is4th ex. ternallv comretien c anJ internally equitaHe.
-o
,4 41 9s
- w u r ..,6-...--,J ll
MEMBER COOPERATIVES STATISTICAL INFORMATION RMlarsinThousandsl Year Ended December 3 I,1987 13cauregard 13ossier Claiborne Concordia Dixie Jeff Davis Operating Revenue , ,. $ 32,036 5 13.808 $ 21,849 $ 13,661 5 73,936 $ 14,35? Expenses: Purchased Power . $ 23,144 5 9,622 $ 16,156 $ 8,682 $ 51,364 $ 10,249 Operations & hiaintenance 5,191 2,526 2,700 2,586 8,931 1,984 Depreciation . .. 1,459 679 923 864 4,196 /13 Taxes. . 947 3.0 405 401 2,398 353 Interest. . . . . 2,283 1,137 882 1,073 7,044 829 Other Deductions (225) 33 32 60 1.164 1 Orcrating hiargins . . 5 (763) $ (529) $ 751 $ (5) $ (1,161) $ 228 Nonorerating htareins 1,009 142 371 813 586 157 Net hiargins . . . $ 246 $ (157) $ 1,122 $ 808 $ (575) $ 385 Assets: 30.996 $ 137.869 $ 23,411 4 Total Utility Plant . $ 55,044 5 27,484 $ 31,973 $ Less: Accum. Depreciation . (10,168) (6,056) (9,498) (8,115) (20,318) (4,443) Other Property and investments 6.458 2,540 3,263 2,631 11,622 2,219 Current and Accrued Assets . 4,526 2,424 5.019 3,424 9,529 2,445 Deferred Debi:s 193 217 38 695 3,180 151 Total Assets $ 56.053 $ 26 609 $ _30,795 $- - _296 3_1
$_1_41,882 $ 23,783-_-
Liabilities: htareins and Equities . $ 10,767 $ 4,914 5 12,183 $ 6.122 5 19,434 5 6,420 Long Term Debt 31,169 20,225 lo 472 22.223 113,467 13,437 Current and Accrued Liabilities. 3,084 1,469 2,059 1,264 8,924 1,278 Deferred Credits 11,033 1 81 18 57 648 0 0 0 4 0 0 Orcratine Reserves Total Eqmry and Liabilities 5 56,053 $ 26 609 $ 30.795 $ 29._631 $141,88} $ 23,783 _ Other Statistics: Niiles of t ine 4,381 1,924 3,455 2,431 6,291 1,489 Consumer $ Served . 27,945 12,150 19,247 10,857 53,182 8,685 Consumers Per hiite 6 6 5 4 8 6 Total NiWil'sSolJ . 339,136 140.110 241,499 128,370 768.342 166,262 KWil's Sold Per customer 12,136 11,503 13,235 11,824 14.447 19,144 Revenue Per KWil SolJ (cents) . 9.446 9.955 9.047 10.642 9.623 8.635 Annual Revenue Per Corsumer . $ 1,146 $ 1.134 5 1.197 $ 1,258 $ 1,390 $ 1,653 Investment Per Consumer $ 1,927 $ 2,220 $ 1,722 $ 2,778 $ 2.552 $ 2,659 i i l 12
Pointe South Southwest Washington Northeast Coupec . Louisiana Louisiana _ Teche Valley
- St.Tammany Total 5 14.192 $ 9,%9 $ 25.726 $ 100.417 $ 11.152 $_ 36.074 5 3 4,318 . . . . . . . . . . . . . . $ 401,495
$ 10,077 $ 6,890 $ 18,234 $ 78,704 $ 8,242 $ 23,880 $ 2 8,2 5 8 . . . . . . . . . . . . . . $ 293,502 1,924 1,629- 3,068 10,170 1,540 5,763 4,902 . . . . . . . . . . . . . . 52,914 549 538 .1,477 3.877 307 1.780 1,56 7 . . . . . . . . . . . . . . 18,929 233 211 690 1,709 158 1,002 933.............. 9,780 755 936 2,161 2,656 162 2.942 2,3 8 5 . . . . . . . . . . . . . 25,245 6 12 39 78 0 0 411.............. 1,611 1 643 $ (247) $ 57 $ 3,223 $ 743 $ 707 $ (4,13 8) . . . . . . . . . . . . . $ (486) 759 8_8 398 5.246 66 3% (51)............. 9.978 5 1.407 5 (159) $ 455 $ 8.4e9 $ 809 $ l.103 $ (4,191) . . . . . . . . . . . . . $ 9.492 $ 20.159 $ 19,310 $ 51,955 $ 139,126 $ 10,921 $ 67,258 5 5 7,5 5 8 . . . . . . . . . . . . . $ 673,064 (5,166) (2.974) (7,226) (22,205) (2,015) (11,812) ( 10,0 5 3) . . . . . . . . . . . . . (120.049) 2.456 2,282 4,833 10,802 !,039 6,522 5.414.............. 62,081 3,721 1,791 5.008 30,560 2,449 6,350 8,691 . . . . . . . . . . . . . . 85.937 0 134 196 216 49 460 405.............. 5.934 $ . 21.170 $ 20.343 $ 54.766 $ 158.499 $ 12,443 $ 68,778 6 2.015 . . . . . . . . . . . . . . 706. % 7
$ 7,343 $ 3,312 $ 15,179 $ 101,109 $ 8.%9 $ 18,561 5,739.............. 220.052 12,476 15,911 37,452 42.682 2,480 45,414 4 2,7 55 . . . . . . . . . . . . 418,163 1,339 1,132 2,132 13.811 663 4.803 13.4 5 3 . . . . . . . . . . . . . . 55,411 12 117 3 897 331 0 68.............. 13,266 0 71 0 0 0 0 0.............. 75 $ 21,170 * $ 20,543, $ 54.766 $ 158.499 $ 12,443 $ 68.778 $ _
62.015 . . . . . . . . . . . . . . $ 706.967 2,303 904 1,148 7,555 798 6,343 4,324.............. 43,406 13,110 8,390 14.481 72.237 8.338 33,982 2 7,046 . . . . . . . . . . . . . . 308.680 6 9 13 10 10 5 6.............. 7 143.927 101,256 288,301 1.246,764 121,346 353,278 422,137.............. 4.462,728 10.978 12,069 19,909 17,259 14,553 10,455 15,608 . . . . . . . . . . . . . . 14,457 9.861 9.845 8.923 8.054 9.190 10.154 8.1 3 0 . . . . . . . . . . . . . . 8.997
$ 1,083 $ 1,188 $ 1,777 $ 1,390 $ 1.337 $ 1,062 5 1,2 69 . . . . . . . . . . . . . . $ 1,301 $ 1,534 $ 2.276 $ 3.557 $ 1,873 $ 1,298 $ 1.768 $ 2 ,03 9 . . . . . . . . . . . . . . $ 2,117
- WIIey's fmancuj ,Lu. u J<med from wudted retest n
1 l LOUISlANA'S ELECTRIC COOPERATIVES l ) 1 Association of Louisiana Electric Cooperatives, Inc. 1072 $ Airline liighwav. Batc,n Rouge LA 70816 2 lleauregard Electric Cooperative,Inc. P O. Dra er 970. DeRiJJer. LA 70634 3 Bossier Rural Electric Membership Corporation P.O. !W 5756, Ibnier City. LA 71171 I Cejun Electric Power Cooperative,Inc. I' O. Ibn 15540. Baton Rouce. LA 70995 4 Claiborne Electric Cooperatise,Inc. P.O. Ibn 719 11omer. L A 71040 5 Concordia Electric Cooperative,Inc. 1302 North E E. Wallac e IbulevarJ. FerridaY. LA 71314 6 Disie Electric Membership Corporation P.O. Ibn 15659, Baton Rouge, LA 70695 7 Jefferson Dasis Electric Cooperatise,Inc. P.O. INamer 1279. Jenni.sgs. LA 70546 8 Northevt Louisiana P,wer Cooperatise,Inc. P O.1% 151. Winnilvro, L A 71295 9 Pointe Coupee Electric Membership Corroration l' O. Ibn 160. New RoaJ.. LA 70760 0160 g 10 South Louisiana Electric Cooperatise A ssociation P 0 IW 4037. liouma, L A 70161 11 Southwest Louisiana Electric Membership Corporation 1426 liishnav 167 N< rth, Ldnette, L A 70907 12 Teche Electric Coenrative,Inc. P O thner 472, Jeanerette. L A 70544 11 Valley Electric Membership Corpration P O. IW 65). Natchirm hei. LA 714 57 14 Washington.St.Tammany Electric Coope ra tis e. Inc. P O. (%.er N. Fr anklinton. L A 704 H Pow er Generatinr Plants Q P.is C4:un 1. New ILaJ., LA Q 10 Cajun 11, New Pm. LA g Rme Ikrd Nalear 5tnei. St Iranoiulle. LA I4
1987 BOARDS OF DIRECTORS 1 Besiresord Electric Cooperative, Inc. Dixie Electric Membership Corporation Southwest. l oulslana Electric Membership
' Edward D. Orandt. President. DeRidder A. C. Roux, Jr., President, Prairieville Corporatic'i C. R. Coo.ey, Vke President. De Rdder Ross Marzio, Yke Presider Elaughter M. W. Scanlan, President, Church Point Lury W. Sterhenson, Secretary / Treasurer. Cynl"Cy" Banios Sectenrv/ Treasurer, Clark Gray, Secretary, Cro. ley Lake Charles Baron Rouge Dave Aymond, Treasurer, Lafayette Ray Hruse:, DeRidder T. N. Samuel, Zachary Harrold Kennison, Cecilia L RethShererd Sulrhur Rk hard "Dicky" Sitman, Greensburg Dennis J. Broussard, Kaplan
' Gloria Orsneer, DeRidder James E Lott, Albany Jacques Campbell, GueyJan R. Ed.arJ Goins, der 6JJer Roland Martin, Livingston Wilham R. Huvat. St. Martinville W.W. Rivers, Pitkin FreJJr Metz. St. Francisville Dewey Ledoux, Jr., Opeloucas Hartert E. Strange, Jr., DeRidder Jack Y. Millkan Baton Rouge Jerry F. Meaux. Dumon Canie L. Thomas, Cinnton H. F, Youns. Jr., Opelousas i Eugene O. Travlor, Hammond Bossier Rural Electric Membership "'"8'""*'""" Steve Irving. Bat n Rouge Corporation Teche Electric Cooperative, Inc. Donny M. Hood, President. Benton Ernest Freyou, President. New Iberia C. A. RoJsen, Vke President Plain Dealms Rkhard Legnon, Vice President, Franklm Dianne Beard, Secretary / Treasurer. Elm Grove hffenon Davis Electric Cooperative,Inc. Anthony [bnalJ Sirue. Secretary, Jeanerette O. B. Mitchell. Dnyhne Eugene C. ToJJ, PressJent, Wehh Dnlan P. Kleinreter Treasurer. New Iberia Sheila T. Durbin, Pnnceton Lana 0, Trahan, Jr., Fust Vice Presidene, Gueydan Antoine S. Luke, Franklm Sussn Murrhy, Doylme W. F. Henry, Jr., Second Vke President Cameren Joserh M. Davis, Jr., Jeanerette Gerald R. Robinette, Coushatta Charles M. Davis, Secretary / Treasurer, Jennmes Jackie Judice, New Iberia FreJJie D. Merritt, RinagolJ Richard J. Byter, Lake Arthur Lloyd BerarJ. St. Martinville R. D. Ehton, Elm Grove Sidney Derouen, BellCity Ear!me Hills, Jeanerette E. Garner Nunes, Grand Chenier Glenn Landry, Jeanerette Charles S. Hackett, Bell City James Rodriguer, Franklm Jae urre, Jr, Jennings Chiborne Electric Cooperative,Inc. Ra$p a n. ice Pre i n er Valley Electric Membership Corporation A. J. Smit h. Secretary / Treasurer, Haynemtle Northeast Loulslana Power G. A. Fletcher. Preudent, Montgomery G. F. Thomas Haynesville Cooperatives.Inc. P. E. Cloutier, Jr., Vke President, Natchitoches Daniel Green. Marion John E. Ranall, President, Ne.cIlron Larry Balthasar, Secretary / Treasurer. Natche: David Sanden. Minden E. W. Patrick, Yke President, Lak e Providence CharlesUnderwood Leesville Het Elkins, Speanville Ray Bryan, Secretary / Treasurer, Winnskro Ottis Lewin g. Many Lonnie Mizell. Heilm George A. Price, Sr., Winnskro Sa mmie Guilliams, Camrti Leroy Pernte, Arcadia Corbs L Henry, Rayville Bill Bacle. Coushatta Roy W. McIntyre Delhi John G. BurforJ. J r.. Gloster Michael Bamidge, Errs Cynthia Garner, Many Concordia Electric Cooperative, Inc. Rudotrh M. Elkins Oak Grove Columbus H. (Lum) Day, Baitrop Chester FloyJ. President Jena , W. D. Hackney, Jr., Vice President. Hantionburg ashlngton St.Tammany Electric W. F. Gandy, Secretary. Fernay Coornatin, Inc. Danell Wekh Trescurer, viJaha Pointe Coupee Electric MemberihlP EJward C. Saware Prestfene, Slidell Ann Barron. Sicily ! land Corporation Kerry HamR Yke Pet. dent. Possba Joe V. Colhns. Jena J. M. Holloway, Preudent. Mannrum imeme Reynolds Secretary, Anse Charles A. Ennsht, Sicily hbnd Rkhard S. Givnn, Vke President, Ventress RichstJ Sm aletary. Treasurer, Pearl Rivet i Ibbby Ray Ewme Jonesville Emest Swanson, Treasurer, Port Alle, George Dawson, Fobom T. W. Martin, Jonemite Mn. Frank H. Rke, Sesretarn Batchelot l B. Glynn Farmar. Annie L. G. Crochet Labarre Toile Gerald, Franktmron John Greratfi, Batchelot Will Smith, Jr., Frank!mron McVea Benton, Letts. orth Dewayne Grace. Amite South Inuislana Electric Cooperative Association Atenar Jer Dotle, President, Houma David Luke, Vice Prendent Houma Robert Atcock, Secretsty, Hovma Cleveland Daisle. Treasurer, Gray Buford Auccwn. Amel a H.reld Fohe, Rauland Eroy J. Acosta. Merran Cars Bnan Rivet. Gherna Terry J. Trahan Houma Llo,J Gib en, AJvime to ehe IbarJ. Gibeon w
1 . l BALANCE SHEETS linmusanasi - December 31 l 1986 1987 l l ASSETS UTILITY PLANT
$2,678,718 $2,670,164 l Electric plant in service . . . . . . . . .. .... . . . . . . . . . .
12,126 14,650 Construction in progress . . .... . ....... . . . . . .. .... . 84,436 92,408 Nuclear fuel at amortired cost . . ... ... . . .. . . . . . . 2,775,280 2,777,222 280.004 195,957 Less accumulated depreciation . ... . .. . . . . .. 2,495,276 2.581,265 Electric phnt held for future use . . . . . . 10.182 10.182 2,505.458 2,(91.447 OTilEh PROPERTY AND INVESTMENTS Nonutility property ... ... ... . . . . .. .. . . .. . 675 675 Restricted funds held by trustees . .. . . . . .. .. . 28,690 28,956 investments in associated organi:ations . . . .. .. . . 77,176 74,!!! 11,908 Other receivables . . . . . .. . . . . . . ... 118,449 103,742 CURRENT ASSETS 52,071 55,589 Cash and short. term investments . . . .. . Accounts receivable - electr:: customers: 13,662 16.723 Members . .. . . . . . . . . 7 32,679 4,380 Nonmembers . . . . . . .. . ' 4,161 2,995 Accounts receivable other . . 35,902 32,686 Fuel and supplies inventories . . . . . . 1,784 1,248 Prepayments . .. . 627 1,113 Other. . .. . . . . . 140.886 114,734 285,809 283,024 DEFERRED Cil ARGES . . 33.050.602 53.092,947 16
( December 31 1987 1986 EQUITY AND LIABILITIES 1 EQUITY AND MARGIN (DEFICIT) M 4 m be rsh i ps . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5 1 $ 1 i* Pa t ron a ge capi t al c re d i t s . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35,533 36,533 Un a lloc a t ed ( de fi c i t ) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (66,402) Do n a t ed c a p i t a l . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 406 406 (29.462) 36,940 I I LONG TERM DEBT less u h ed vled m a tu ri t ie s . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2.868,397 2,982,188 . I l-r CURRENT L: ABILITIES A c cou n t s pa yable . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2,105 3,215 Accrued int e rest and ather expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 78,742 32,856 Scheduled maturities of long term debt . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 122.030 30.q8 202.877 66.579 , L ~ D E FE R R E D C R E D I T3 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8,790 7,240 4 COMMITMENTS ASDCONTINGENCIES i i t i 1 53.050.602 $3,092,947 l f 1 i 9 I I i r I I , fl I See notes to fm.mcid st.atements. ! t I i l 17 ;
STATEMENTS OF REVENUE AND EXPENSES tinThe i Year Ended December 31 1987 1986 OPERATING REWNUE Sales of electric energy: Members . . . ..... . . . ... .. . . .. .. . . .. ... ... .. $ 293,538 5 325,535 217,696 137,176 Nonmembers . .... . . .... ..... .. ..... . .. ... Other. ... .. .. . ... . . . . . ... ..... .. .. . .. . . .... 643 928 511,877 463,639 OPERATING EXPENSES Power production: 121,378 135,943 Fuel . .... ... .. ... .... . . . . . . . .. . . ... . ... 64,029 34,681 Operations and maintenance . . . . .. . ... .. . .. .. 10,181 12,361 Purchased power . . .. . . ... ... .... . .. ... .. . . . ...... .... Other power supply expenses . ..... . ...... . . . .. . ... . .. 758 718 24,934 27,209 , Transmission .. . . .. ... . .. .. .. ... .. . .. . .. ... . Administrative and general . .. .... .. .. . ... . ..... . .. .. . 15,472 5,905 89,692 57,985 Depreciation and amortization . . .. ... .. .. . . . . . .. . . .... Taxes, other than income . ...... .. .. . .. . . . .. . . 2.460 2,025 328,904 276,827 182,973 186,812 OPERATING MARGIN . .. .. . .. . . .. . OTilER INCOME AND EXPENSES Interest, rents and leases . . . . .. . . .. 5,626 3,996 2,893 5,135 Other income ... . . . . .. . . Allowance for funds used during construction . . . . .. 1,218 908 Amorti:ation of deferred charges . . . . . . (12,945) (9,349) Extraordinary item . . 9,852 (3,208) 10,542 179,765 197,354 M ARGIN 13EFORE INTEREST AND OTilER DEBT EXPENSE . . 246.167 191,418 INTEREST AND OTilER DEBT EXPENSE ..
$ (66_,402) $ 5,936 NET M ARGIN (DEFICIT) . .
STATEMENTS OF CHANGES IN EQUITY AND MARGIN (DEFICIT) tinThousanasi Years Ended December 31,1987 and 1996 Patronage Member. Capital Unallocated Donated ships Credits (Deficit) Capital Total 13 ALANCE J ANUARY 1,1986. . $1 $ 30.597 $406 5 31,004 Net margin for the 3 ear 5.936 5.936 36.533 406 36,940 13Al.ANCE DECEM13ER 31.1986 1 Net (deficit) for the year $(66.402) (66.402) 13 A1. ANCE DECEMilER 31,1987 $1 $ 16.511 $(66,402) $406 $(29.462) S<enatiNbn e d u m { 10
STATEMENTS OF CASH FLOWS (in Thousands) . Year Ended December 31 1987 _1986 OPERATING ACTIVITIES Net margin (deficit) . . . . . . .... .. .. ... .. . . .. ... . $(66,402) $ 5,936 Adjustments to reconcile net income to net cash provi&d by operating activities: .. .. Depreciation . . . . .... ... . .. .. . . .. . . .. . . . . . .... . 84,050 57,465 Amortiration of nuclear fuel . 15,456 6,095 Amortization of t' %rred charges and credits- net . . . .. . 10,195 9.173 (Increase) decrease in accounts receivable . . .. . . (26,404) 20,766 , (Increase) decrease in fuel and surplies inventories .... . . .. . .. . . .. (3,216) 10,471 (Increase) in prepayments . .. . (536) (410' Increase (decrease) in accounts payable . ..... . .. ... . .. . .. .. . (1,109) 313 Increase in accrued interest and other expenses . . . . 45,885 3,038 (Increase) decrease - other . . . . ... . . . . . . . ... . 487 (379) r , NET CASil PROVIDED BY OPERATING ACTIVITIES . . . 58,406 112,468 INVESTING ACTIVITIES Purchases of utility plant . . . . . . .... . . (13,517) (155,356) (Increase) in investments . . . . . . .. . (14,972) (1,805) (Increase) der case in restricted funds helJ by trustee .. .. . .. 265 (1,324) Payments for deferred charges . . (15,731) (38,469) Receipts of deferred credits . . . .. .. ... 4,300 619 Proceeds from sale of non. utility proretty . .. . . 10 NET CASil USED IN INVESTING ACTIVITIES . .. _( 39,655) (196.325) .. FINANCING ACTIVITIES Proceeds from long. term debt . 1.000 155.952 . Payments on long. term debt and notes payable . . . (23,269) (20.634) NET CASil PROVIDED (USED) BY FINANCING ACTIVITIES . . . (22.269) 135.318 INCREASE (DECREASE)IN CASil AND CASil EQUIVALENTS . . (3,518) 51,461 Cash anJ cash equivalents at beginning of year . . . __55,589 _ 4,128 CASil AND CASil EQUIVALENT 3 AT END OF YEAR . . . $ 52.071 $ 55,589 u
'w l i See notti tv [mJN MI Stdl(m(Mil g
NOTES TO FINANCIAL STATEMENTS loecember 31,19871 ' 2 NOTE A-COMMITMENTS AND ceiving low interest rate substitute loans or REA equiva. CONTINGENCIES lent relief to reduce futurc interest costs; d) negotiating with suppliers to reduce future operating costs; e) selling On December 31,1987. Cajun Electile Power Coopera- **II"fed cash to the REA: g) implementmg app unnee tive, Inc. (the Cooperative) did not make full payment on accounting changes, subsequent to December 31,1987, quarterly debt service obligations and was in arrears by the Cooperative is contmumg negotiations with its crede approximately $44.8 million. (See Note F for other events t of default and Note Q for subsequent events regarding debt Pyrs,
"* suppliers and others rerarding the workou service in arrears.) The Cooperative and its major creditors l had anticipated the pay.nent default end took actions that During 1987, as a result of Board of Directors' action, the
! allowed the Cooperative to avert the immediate need to Cooperative implemented a change in the accounting for seek court protect!on from creditor actions. The events of certain fuel related costs that resulted in an ap roximate default, through cross default provisions of the variou five mill per kWh decrease in the fuel cost a ustment debt agreements, cause an event of default to exist on component of wholesale rates to Members. The pera. substantially all of the Cooperative's debt. tive is negotiating with its suppliers and creditors to achieve further reductions in whole: ale rates to Members. On December 14,1987, the United States Department of The Cooperative intends to char wholesale rates to its , Ju6tice(DOJ),l klectrification Administration hiembers (REA),re resenting that will theallow U.S.itsDepartment Mem rs to charge comperi-of Agri. culture, Rura du utad pdces t thei patrons. E! ctne utilities operat. i on behalfof the REA, would ' stated not bring bysuit letter apainst that indivi the DOJ, dual officers and directors of ing inyouisiana have bcen, and continue to be, subjected l the Cooperative with respect to monies used by the Coop, ! sesere business conditions that limit their ability to incuase raus c mmensurate with added investment in i erative to pay reasonable operating expenses and certain uctive generating assets. As a result, the Cooper tive other requirements for continued reliable operation of the [res n t believe that it can charge rates to recover its i C(* Perative (the 3713 Waiver). The 3713 Waiver relates additional investment in River Bend in the ordinary to Section 3713 of Title 31 of the U.S. Code and is course of business, and estimates the deficiency between ! effective for the period December 31,1987 through March cash produced by competitive rates and cash required to f 30,1988 (see Note Q ror subsequent events); however, meet normal operating expenses and existing debt service ! i tly DOJ reserved the nght to revoke or modify any pr ~ requirements could be subs'antial before a turnaround can ! vision of its action on seven days wntren notice to the be expected. The Cooperative believes the deficiency Cooperative. In the event of the DOJ s revocation of the could be mitigated, moderated or eliminated entirely 3713 Waiver, the Cooperative may seek protection from under certain workout / restructure alternatives and is its creditors under Chapter 11 of the Bankruptcy Code. negotiating with its creditors to restructure existing debt
- The Cooperative engaged special counsel to assist in service requirements so that a default condition does not workout / restructure negotiations and bankruptcy matters. exist in perpetuity.
In similar situations involving other troubled coopera. The Coopentiu has remised its workout / restructure j tives, the DOJ has issued a series of 3713 Waivers during plan negotiatforr sa the belief that al' parties (unsecured , j the rendency of workout negotiationi and the Coopera- tiers, regulators, the Coopera- . i elve anticipates the DOJ to continue to proviie a renewed and rive and secured its Members) creditors, are surbetter served ((th
- 3713 Walver each ninety days as it has previously done in remains a reliable producer of com critively priceu whole- t I similar situations. The 3713 Waiver did not provide pr ~ sale electricity for the long term. [he Cooperative cannot L rection from legal action by the DOJ with respect : predict the outcome of the workout / restructure negotia-payments made by the umperative on unsecured debt; tions currently underway.
i accordingly, the Cooperative ceased making payments , with respect to debt service and fees on pollution control On luly 17, 1987, one of the Cooperative's Members, , i revenue bonds. Washington St. Tammany Electric Cooperative, Inc. [ (WST), sought protection from its creJirors under Chap. On July 10, 1987, the Cooperative filed a workout /re' ter 11 of the U.S. Bankruptcy Code. At the time of filing, structure plan with the REA. The Cooperative i plan WST owed the Cooperative $6.7 million in pre petition involves several actions by the Cmperative, its supplie" power bills. WST resumed payments for power, but at L i and creditors, and its Members designed to achieve re- amounts b-low the billed rate. The Cooperative continued : 1 liable, competitively priced electricity for turall.outilana. lying power to WST in order to preserve its rights : i The workout / restructure plan prorosed by the Cooper sur[er un the terms of the power surply contract between the t l tive includes the following major provisionu a) reducing Cooperasve and WST. I wholesale rates charged Members and indexing future rate r increases; b) restructuring debt service payment obliga. On November 17, 1987, the Cooperative and WST en. ; tions to be commensurate with future cash dows; c) re- tered into a temporary agreement calling for full rayment l I i ! N ,
l l of power bills for the period of November 1987 through On February 14, 1987, the Cooperative's directors and . March 1988. That agreement was approved by the Bank- officers insurance expired. The brerative has not been l ruptcy Court on February 22,1988. Payments under the successful in obtaining replacement coverage at a reason- I agreement were predicated upon WST's ability to main- able cost but intends to continue in its efforts to replace I tain ce7tain minimum cash levels. the insurance. Post petition amounts unpaid at December U, bl87 At December 31,1987, the Cooperative had unadvanced i amounted to 52.05 million. The Cooperstive is th agle loan commitments from the Federal Financing Bank (FFB) largest unsecured creditor in the WS' bankrurb y Pro- (guaranteed by, and subject to control of, the REA) and ceeding. Recovery of the amounts owed to the Ibarera- two unsecured lines of credit totaling arpt simately $150 tive for power supplied to WST cannot be pr&ed with million. The Cooperative does not expect the commit. certair , 4 (See Note Q for subsequent evmts eegarding ments to be available until the workout / restructure nego-WST. ) tiations have progressed further and it has established cash As discussed more fully in Note 0, Gulf Sates Utilin.es on hand above levels normally required for day to day operations. At December 31,1987, the Coorerative had Company (GSU) owes the Cooperative arproximately
$300,000,000 over the remaining three and one half years unadvanced loan commitments (the FFB set asides) amounting to approximately $182 million related to pilu.
of the Sell back Agreemcot which is related to the Joint tion control assets and outstanding pollution control Ownership Participation and Operaung Agreement for h>nds. The FFB set asides are guaranteed by, and subject the River Bend nuclear facility n!s Sell back Agreement to the control of, the REA. The Cooperative is uncertain L has the effect of mitigating the cost and rate impcct of the ofits ability to draw down funds under the FFB set asides. ) Ceoperative s $1.5 billion investment for its 30% share of j the River Bend nuclear plant Should these revenues not See Note P regarding possible regulation of the Coopera. I be received fiam GSU in the amounts and in accordance tive by the Louisiana Public Service Commission (LPSC). cith the schedule contractually agreed to, the Coorerative could be further impaired in 6 s ability to meet its obliga-tions. GSU is not only a compnitor, it is also a cint ownei of major generating and transmission assets anc , as a result NOTE B- SIGNIFICANT ACCOUNTING l cf the Sell back Agreement, is the Cooperative's largest l POLICIES I single contractual customer. The continued financial via-bility of OSU is a critical factor in the Coorerative's Generah The Cooperative is a rural electric generation continuing negotiations with its creditors. (See Note O as and transmission cooperative owned by 13 distribution l to certain claims by GSU which are disputed by the Coor- cooperatives (Members) providing electricity to arproxi-l erative.) mately 300,000 metered customers representing oser 1,000,000 pe pie iesiding throughout 80% of the land i of The Coobcrative is a party to contracts coal. urchases under the terms of these and related for the acquisition
8 I L $5'ana, ne Cooperative and its 13 Member >
l trancportation contracts during 1987 and 1986 were ar- have entered into wholesale rower contracts which require l proximartly $114,000,000 and $145,0Cf,000, resrec, the Members to purchase all of their electric energy re. eively. The base contract rurchases are subject to certain guirements from the Cooperitive through the year 2021. i p ice escalators and deflators, to minimum quantity takes tinancing assistance is provided by the REA and, there. fare, the Coorerative is subject to certain rules and regula-and to i prices, bcriodic price reoreners at then current anacement is of the opinion that these coal market ti ns pr mulgated for turat electric borrow ers by the REA. contracts will properly meet the anticipated coal fuel l needs of the generating units. The transrottation ton. System of Accounts: The Cooperative maintons its ac. tracta expire in 1999 while the coal contracts are for the c uneing records in accordance with the Federal Energy usefullives of the uits. (See Note Q for subsequent event, Regulatory Commission s (FERC) chart of accounts as rega rding coal surplier and coal t ransportation contrac ts. ) modified and adorted by the REA. , ne Cenperative is the defendant in certain litigatwn Electric Plant in Service: Electric plant in service li stated ! totaling approximately $U million concerning claimi of on the bash of cost. Depreciation is computed using the l contractors Principally
- elated to the construction of its straight line method over the expec*ed usefullives of the coal fired utility plant and an abandoned lignite facility, related component assets. The cost of units of proretty The Cooperative is also the plaintiff in other litigation replaced or retired, incluJing costs of remeval, net of any totahng approximately 5450 million concern;ng const ruc. salvage value, is charged to accumulated depreciation, tion hsues. The results of these lawsuits cannot be Pre-dicted eith certainty, and the final judgments in either Nuclear Fuels ne cost of nuclear fuel, including interest f situation could be significant and material to the Coor- on borrowed fundi and allowances for other funds used crative. during construction, is being amorti:ed to fuel exrense on n
the basis of the actual number of units of thermal energy the flow-through methm , ecogni:ing investment tax produced, raultiplied by a unit cost which "ects the total credits. thermal units expected to be produced over the life of the fuel (see Note L). Patronage Capital Credits: The Cooperative is organi:ed and operates on a not for profit basis. Patronage capital Construction in Progress: Construction in progress i, credits represent that portion of the Cooperative's net stated on the basis of cost, which ir.cludes interest on margins which have been assigned to Member coopera-tives. As provided in the Cooperative's By Laws, all borrowed funds 4nd allowance for other funds used durirx amounts received from the furnishing of electric energy in construction, adjusted for costs allocable to joint pai.ici. excess of the sum of or,erating costs and expenses and pacien agreements and, during the testing phaw, certain amounts required to offset any current year losses are operating costs net of amounts received from the sales of assigned to Members' patronage capital credit accounts on test energy generated. a patronage basis or, at the discretion of the Board of Directon, mai be offset againn losses of any pior fiscal Investments: The terms of financing arrangements with ye r. All ther amounts received frotn its operatmns in the National Rural Utilities Cmperative Finance Corpo- excess f c sts nd expenses are used to offset losses in-ration (CFC) and the Jackwn Bank for Cooperatives (JBC) curred during the current or any prior fiscal year and to the rquire investment in capital term certificates and Class extent not needed therefore, are assigned to Members on a "C" . stock, respectively. These investments are carried at asn. In acc rdance with the Cmperative s {atre ge-L ws, the 1987 net deficit has not been allocated to the cost in the accom[anying witF iadistnbute financial patronage capital statements credits from thesetogether h[ ember emperatives. organi: tions. The Cooperative allocates ratronage capital credits re. Cash Equivalents: The Cooperative considers all highly ceived from awciated organi:ations to assets and expenses liquid investments with a maturity of three months or less in the same ratio as the interest paid to these organi:ations when purchased to t,e cash equivalents. is capitali:ed and expensed resrectively. Reclassifications: Certain reclassifications have been made to the 1986 financial statements to conform to the fuel and Supplies laventories: Fuel and supplies inven. 1987 presentation. In November 1987, the Financial Ac-tories are stateo at cost (weighted averace cost method). counting Standards Board issued Statement No. 95, Latement of Cash Flows. The Cocperatice adopted the Deferred Charges and Credits: Deferred charges represent movisions of the Statement in 1987 and restated the costs incurred which are deferred pursuant to approval b previously reported statement of changes in financial post-the Board of Directms and the REA. Deferred charge
- tion for 1986.
consist primarily o; certain costs amciated with an aban-doned lignite project, the costs of development and opera-tion of electrical generating facilities (including costs as- NOTE C - UTILITY PLANT. I" sociated with common facilities and stod riling fuel in. . Electric plant in service at December 31 consisted of the ventory) prior to commercial operation status and/or following ( in thousands): thereafter, but before the facilities achieved ful: . ,racity and certain costs amciated wi h the am.ndmem to the m7 im River Bend Sell.1ack Agreement. The costs, with the trA rion exception of costs associated with exceu com!. are beinc s a,., sussi si. m . m amorti:ed over periods prescribed by the Board of Direc- co.l nd on . u i2 4* u t s.m tors and by the REA which do not exceed 15 years (see T rarunmion . 9.5te s u e: Note E). Deferred credits at December 31,1987 consise Gene ral 10421 w0 primarily ofinsurance claims, environmental closure funds 52xuis-- -s2. - mis
- - ~
and Member prepayments of power bills. s,i cmer.ii., cmer. i . Income Taxes: Certain revenue and expense items are % ...n o . n m hi, u,, . . . .. recogni:eo in different periods for financial reporting and c,n,r.c,, unie n.i;n, ro,i s h.c. s h. ,, income tax purposes, thus creating timing differences. g,,any gny i ne ya,, m ,3
, Deferred income taxes are provided on these timing differ. 3,, cmn ii, enn i se cmi ixg se ences which are principally related to der:eciation on n,, con n. enn 2 se emi ixs se electric plJnt in service, income and deductions related to non ti. ena i se ce.i us si3 the additions to and. amerti:ation of deferred charges and s eemni. Una i 105 Numi Gu iN% 105 credits, and the sale of tax benefits. The Cooperative uses < con 1. Una : 105 Nomion txs 105 32
l E ._ . . j l River Bend, Unit I and Big Cajun II, Unit 3 are jointly im im owned by the Cooperative and GSU (see Note O). CFC. $ 9.525 $ 9.753 Construction in progress consists of general as, ions to JBC. . . . 6/.277 61.992 Other. .. . . .. 17i 36: cxisting p,lants. The estimated cost to comp,ete these projects at December 31, 1987 was approximately 8d7 '.76 a 'd*3 57,616,000. See Note Q for subsequent events regarding an agreement to sell a partial share in Big Cajun 11, Unit 1. The Cooperative's investment in the JBC it substantially Nuclear fuel represents the Cmperative's 30% shai, of pledged to secure certain borrowings from that organi:a. River Bend fuel and as reported by OSU at December 31 ti n bee Note F). consisted of the (allowins (in thousands): 1947 1956 Nuclett fuelin rrmeu $ 41,m $ 55,15s NOTE E- DEFERRED CilARGES Nucle:r fuel in re.ctot 61.54 47.571 Frent nuclear fuci . 5.2s; Deferred charges at December 31, net of accumulat<d iio.is7 102.72, amcati:ation, consisted of the following (in thousands): Less nucicar fuel amortu. tion (21.72li (10.12 il ion 1986 Net nuclear fuel . 5 84.4 4 $ 92.409
~
~-
AbandoncJ rtotec t costs . ,1 75.017 $ 82.060 Interest on enceu coal . 61.760 72.293 Nuclear fuel in process represents the accumulated co.t. $,**,',j,"l,"$'7,I,';',I; " " including interest, of fuel required for four complete ,e* Bm content dstdrdeJ co.i . 12.561 12.56: loads. The futi is in varying stages of conversion, enrich. Amenamene ro na,, B,na ment or fabrication. Nuclear fuel in the reactor was initially scii b.ck Agreement. 10.997 is.22s loaded in February 1985 and is being amorti:ed to fuel Derrniarion & interest on common expense. It will be replaced over three operating cycles f>ohnei st B( cyun it covering approximately five years. The first operating .tioc.ble co un.i s . 9.506 t i. i io cycle was completed in late 1987 and in December 1987, L'k "J'" *ad "'h" . 27.2*0 2i.cs4 the first replacement of nuclear fuel (totaling aprroxi- s 285.<09 s me24~~~ mately one third of the initial fuel load) was completed. -- Spent nuclear fuel consists of the original cost 'of fuel bundles removed from the reactor during the first fuel In January 1985, the Coorerative abandoed a planned reload which have been fully amorti:ed. lignite rroject and determinebhat ccrtain in:urred costs, aggregating approximately $99,000,000, had no future See Note E for electric plant held for future use. benefit. These costs were reclassified to deferred charges in 1985 and are being amorti:ed over perials not exceed. The net change in accumulated Jerreciation for the year $ ing 15 years. The land has been retained as a possiHe site ended December 31 was as follows (in thousands): for a future generating facility and its cost, $9,802,000, is included in electric plant held for future use. chmea vo orer.nns e=rensei . 5 $4.050 5 57.g Effective Januari 1987, the Cooperative, wit'i the arproval chmea o fuciinienienes i.2is i.070 of the REA, suspended until July 19SS the expensing of chmea to ascerewere. interest on the excess coal notes and the amortiration of (see Note n . . un deferred charges relating to interest on excess coal, charges em om for nondelivery of coal and lones resulting from decreases t e.. mc. + r.. i. . (i.2im z i, in Bru content of stockpiled coal.
- s 84.047 sim The Cooperative has deferred costs of certain River Bend
== = = =
energy resulting from the amended Sell.back Agreer ent. These costs applied to the portion of energy taken by GSU from the commercial operation date ofJune 16,1986 until the Sell liack Agreement was amended S:rtember 2,1986. , Prior to December 31, 1988, GSU is obligated, at the i NOTE D-INVESTMENTS IN ASSOCI A'!; - option of the Cooperative, to replace in kind or pay for i ORGANIZATICNS that portion of the power that they received from River l Bend operations during this reried which, due to the Investments in associated organi:ations at December 31 l retroactive change in the Sell back Agreement, belonged consisted of the following (in thousands): to the Cooperative. The total cost associated with River f' I l
Bend oper3tlOns for this period was approximately en nemre tenJ iaun ts.5s to s.6s ee
$ 15,183,000. The variable costs of this power, afproxi- Dnemkr 31,19sn. Jue no bter th.m mately $2,830,000, will be expensed concurrently with Dnemkr 2014. . 88.250 s u so the future payments or in kind replacement received from PoHu' ion Controt Rnenu h nJ,. snin i984, GSU. The fixel cost of tbis power, approximately
$12,353,000, will be amortired over the remainder of the '"'"""'"i"8'""""'d""*""ia"*"'
rnornucJ indo ohoquaNe tu nempe amended sell back period ending on J, 16,1991 (see h""d '""" '
- Notes A and 0)' 1997). oue no h- ^.n "May" 2014
*"".*'"- 25,W 25.00 PoHutton Control Revenue h>nJa. Senn 1984 NOTE F-LONG TERM DEBT inroen a varym, run a.,a on a nanonan, e orwJ mJn dwarnaNe in e=*rt Substant: ally all of the Cooperative's long-term debt to bond iaun ts 0S at twember 3i i9sn.
the FFB and the J BC U guaranteed by the REA. Unda the Ju no lun t'an Dnember 2014. MM 38m , terms of its loan agreements, the Cooperative is required i to maintain certain ratio covenants, including interest PoHunon Control Revenue h,nds. Serin 1984, 1
'"'"""'"*8'""bd""*"'"o"*"' I coverage and annual debt service coverage. The Coopera-tive was unable to meet the above mentioned ratio cove.
'"""""'d 'd" "'""ruaHe en u nnre nants for 1987. On December 31,1937, the Cooperative fn'$"""[lif,,",[,,$',I'"'2I' ' ss m ss e did not fully meet its quarterly debt service obligations and '
j the REA, as guarantor of the debt, was required to make g,,, is,na ,on,,,,, non com m,,,,,,, io,,,,, payment torahng M4,8 million to the FFB. As a result, a is ,o %,n,, pnm, ,,,, c s.ws , cubstantially all of ehe Cooperative's debt is subject to tw,mwr 3i. w3n, a,in mon,u, accelerat.on and ether actions by creditors, innanmenn d 5W.000 (indu,' ne menne) beginning July 1939. 24.066 17,178
, Though generally accepted accounting Principles require ! otherwise, the Cooperative has elected to treat all debt :x4:7 3xiz.696 L '"
- h'J "d * " """" - ('22 0* "0 '08) subject to acceleration as long term debt until the work-out/ restructure negot iations have progressed further. On i2 m ! UMe i that basis long term debt at December 31 consisted of the following (in thousands): Them m mo es of notes paul,le to the FFB. The fint gy g type can have, at the option of the Cooperative, short.
term maturity periods of 2 to 7 yean Juring the first 7 years an advance is outstanding, unless the Cooperative elects a Moncage noen pmHe to the RE A. meernt av jong term maturity, in which case the maturity date would '
- s io 5 s, due en quanniv innanmenu throu,h be 34 years after the end of the calendar year in which the June 0i6. . s 41.:ss s 4us* adv:,nce was made. Principal repayment is generally de-
' erred b 7 gam h secd We obe can W, at de i Neves ranH. to FFB, intere,t at e. 7% to it n. Ju m quannty muanmenn ihnmeh "PU periods " "f or.the Cooperative, recurring short r rm 2 years during the term of:he note, unless the twember :0:1 i.99.444 i .9s i .4n Gmperative elects a long term maturity, in which case the ma*urity date would be a maximum of 34 years from Eucu mai neen rmHe to HB mo rnt u the end of the c,h ndar year in which the note was issued. 6 7s to 9 :s. J. 7 mn en r,ni aduna, Ju in 1984. mo ,nJ Wi. 1:5M 12s W Principal amorti:ation on the second type cf note is re-lated to the projected commercial operation date of the Notes pnabb to jlC, meete t at uning rate, project as prescribed by the REA. (s.1% to 8.9% at twember 31,199), Joe m Under he terms of the notes outstanding at December 31, quanni, muatimene. ihrough twemwr :0i6. des.ss nun 1937, aggregate FFB notes of $i38.469,697, excluJing excess coal notes, mature in 1989; however, the Coopera-laduana Wick eneni t Rnenue hvna,. senn rive plans to ultimately extend these notes on a long term i basis under the above options: therefore, the principal m2. mrerne u i.o.ch,ra.of rnme ine (smi twemN, n. asn. Jue m ic amorti:ation on these notes has been included in future anno.t inuanmenn trom ms throuch in?- 4.5M 4. 5N maturities beginning in 1989 in the maturity schedule l below. Pouunon cenina Retund n, anenue n na.s snnio44.munu u nnmerun b.eJena The inJenture acreements of the Series 1984 pollution l , nanoruuv rewenced man orwmruase control revenue anJ refunJine revenue bonds contain I l :4
certain provisiens whereby the bondholders may, at their Substantially all of the Cooperative's assets are pledced to option, redeem the bonds at the end of each interest secure long term debt payable to the REA, the FFB and adjustment period, s,hich is typically from I to 90 days. In the JBC. the event that the Coopera4ve, through its remarketing agent. is unable to remarket such redeemed bonds, the At December 31, 1987, the Coo erative had, subject to certain restrictions, unadvanced Ioan commitments from bond :rustees have the ability to use the restricted funds hcid by the trustees or draw on irrevocable letters of credit the FFB (guaranteed by, and subject to the control of, the issued by Citibank, N. A., e the Cooperative may restruc. REA) sion andof apbroximately or er ca ital projects. 590,000,000 related Additionally, to transmis-the Cwp-ture the debt through RF . aaranteed long term financing commitments from the ; r8 (the FFB set asides). Accord- native set asides had (guaranteed availaSte abproxi y, ar-) subject to thenately control of,$182 million in ingly, these bonds have been classified as lonc term debt in,the accompanying financial statements. The FFB set- the REA) related to llution controlassets. (See Note A for discussion of avaib,bility. ) asides and the letters of credit expire in varying amourts from 1988 through 1991. The Cooperative is currently At December 31,1987 the Cooperative was continuing negotLeing with Citibank, N. A. and the REA for th: efforts to refinance over $1 billion of its hicher cost FFB extension of the letters of credit and the FFB ser asides. debt. (See Note Q for subsequent events iegarding reft. At December 31,1987, re3tricted funds held by trustees nancing ( FFB debt. ) were lim' feil primarily to the rayment of the costs of
.ncquiring, constructing and installing pollution control equipment at Big Cajun 11 and River Bend, and to the NOTE G - SilORT. TERM INVESTMENTS paymene of principal and interest on the pollutien control bonds. Substantially ell of these funds were invested in At December 31,1987, the Cmperative's cash and short.
U.S. Government securities, U.S. Acency securities and term 1.westments were substantially invested in short term certificates ofdeposit with maturities ofless than one year. instruments issued by CFC. The objective of the Coopera-(See Note Q for subsequent events regarding the status of rive's investment strategy for short term investments is the pollution control bonds. ) the achievement of an ortimal balance between maximum Scheduled maturities on long term debt at December 31. vielJ nd minimum risk. All investments conform with 1987 are shown below (in thousands). These maturities the , guidelines established by the REA and the Cmrera-include excess coal notes which are due in 1988,1989 and rive s Bo rd of Directors. Maturities are selected to cor-1991 in the amounts of 581,000,000, 540,000,000 and nspond with cash flow requirements and are generally for penods ofless than two weeks. 54,000,000, respectively, flowever, the Cmperative in-tends to request from the REA an extension of the maturi. ties of these notes :o 27 years as an element of the debt l restructuring as more fully discussed in Note A. NOTE 11-INCOME TAXES io s i22 m go d,m Dueing 1983, less than 85% of the income of the Coorera-im 43,427 tive was collected from Members for the sole purpose of iwi 4tm meeting losses and expenses. As a result, pursuant to tw2 4uoi Section 5015c)(12)(A) of the Internal Revenue Cede f Thf rC aittf 2.615.c15 1954 as amenJed, the Cooperative became a taxable entity 3 2.m,4j; in 1983. The C-operative has received a Private letter ruhng from the Internal Revenue Service stating that Interest and other debe expense incurred on notes payable once taxable, the Cooperative shall remain taxable until and long. term debt for the years ended December 31 an application is submitted and arrroved for the rede-coneicted of the following (in thousands): tennination of in taxable status. The Coorerative has made an election under the Internal Revenue Code to
"* ? I"* remain a taxable entity through the year 2003 in order to Intere.n hargeJ to crarmg einn.e . 5 2 42. H 4 $ iMoso participate in certain equipment leases.
I Other Jch eignse , DH 2Je? Aajaionoo d,f err,J c harge, The Coererative had no current or deferred income tax interne on cu e.. ml . im provisions for the years ended Decen'ber 31,1987 and AmnJment to Rner Bend Sell bad 1936. ann ~rInkeu set AJJa enno wnerm ten in try,, ues ne o4 sg At December 31,1037, the Coorerative had ceneral busi-ness creJit carryforwards of arrroximately $175,000,000, of which arrroximatelv $10,000,000 exrire in 1998; l 'M^52%' $28,000,000 expire in 1999; 5135,000,000 expire in 2000; l
- s
and $2,000,000 expire in 2001. As a consequence of the NOTE I-EMPLOYEE BENEFIT PLAN Tax Reform Act of ;986, the general business credit carry-forwards were reduced by 17.5% for 1987 and will be Substantially all of the Coorerative's emrloyees rattici. further reduced by an additional 17.5% to $138,000,000 pare in the National Rural Electric Cooperative Associa-for years subsequent to 1987. tion (NRECA) Retirement and Security Program. The Cooperative makes annual contributions to the plan equal in aJJition,$1,566 the Cookerative hasbeloss to theof amourus accmed for pensa, g expense. In this mas-arrroximately T,000 which may usedcarryforwards to offset ter multiple employer pl n, which is available to all mem-future taxable income. The expiration dates and amounts ber cmperarius of the NRECA, the accumulated benefits of the net operatine loss portion of the total loss carry- nd plan assets are not determined or ellocated separately forwards are as follows (in thousands): by individual employer. The Cooperative s pension ex-pense under the plan for 1987 and 1986 was $422,000 and im w ,:g, ma $ 1,304,000, respectivdy. As a result of a better than 35,m anticipated return from investments of the NRECA's Re-
- x tiretaent and Security Program, the Coorerative's 1987
- x: in a contributions to the plan were significantly reduced.
3 Th- remaining loues of arrroximately $885,000,000 are NOTE J - AMENDMENT OF NATURAL GAS attributable to member activities and may be carried for- CONTRACT ward indefinitely. In April 1983, the Cooperative negotiated an amendment The Cooperative has available arrroximately $601,000,- to its primary natural gas rutchase contract, whereby the 000 in tiet operating loss carryforwards for alternative Cooperative could sell to the supplier its right to receive minimum tax purposes. The exriratior dates and amounts certain quantities of gas under the amended delivery of these loss carr3torwards are as follows (in thousands): schedule. In 1986, the Cwrerative received final pay-ments of $13,895,000 under this provision and accounted for the funds as a reduction in fuel cous through its fuel j[xiy 5$ , ika cost adjustment clause in accordance with the approvalof
- x: nm the Board of Directors.
sm.m NOTE K - RELATED PARTY TR ANS ACTIONS Also, ths Cooperative has approximately $799,000.000 of In December 1986, the Cooperative purchased certain losses attributable to Member activities for alternative substation equipment owned by eight of its Memb<r coor-minimum tax purpwes which may be carriul forward in- eratives. The rurpose of the transaction was to better definitely. Additionally, the arproximate $138,000,000 defmr operatme responsibilities of the transmission sys-ofinvestment tax credit carr forwards of the Cooperative tem. The accregate purchase Price of $12.359,000 was may be used to offset future alternative minimum tax. punally fu, ,anced by the Cooperative assumine lone. term These credits (in thousands) expire in: notes payable to the REA in the amount of $8,372,000. In p addition, the Cooperative agreed to make future payments 3 su im am to certain Members and to the REA for the benefit of these am Members totaline $3,987dTO over 25 years. Fmal REA tw 2xi i. m arproval for cer:ain of these transactions is still rending as of December 31,1987. 3m m In December 1987, the Financial Acwunting Standards NOTE L-SPENT NUCLEAR FUEL AND Board irued Statement of Financial Accounang Standards DECOMMISSIONING COSTS (SFAS) No. 96, Acc,unting for income Taxes. Manace-GSU has executed a contract with the Department of ment is in the Process of analv:me thi- Statement and its Energy (DOE) whereby the DOE will turmsh disposal potential effect upon the Cooperative. The implementa. rion of SFAS No. 96, which must be aderted betore 1990, service for the spent nuclear fuel from River Bend. Cur-may have a -icnificant imract, the extent of w hich has not rently, the cost amounts to 0. I cents per kilowatt hour of yet been determined. net generation. 'This cost is subject to chance in accordance , :s
l
- l. .
L with the provi.lons of the Nuclear Waste a ' icy Act of pany exceed the accumulated funds available, ne Coop. i
- 1982, erative's maximum assessment for incidents occurring dur-ing a p Ucy year is appmximately $2,550,001
- The Nuclear Regulatory Commission (NRC) has recently
- proposed an amendment to its regulations which sets forth i lthe technical and financial criteria for decommissioning NOTE N- EXTRAORDINARY ITEM AND i licensed nuclear fac!!ities. The rule addresses decommis. OTHER INCOME lsioning alternatives, timing, financial assurance and en- i lvironmental review requirements. The rule re uires elec. During 1983, the Cooperative entered into certain leases Jric utilities either to certify thae a minin um del ar amount sill be available to decommission the facility or to submit for income tax purposes and sold the rights to tax benefits i t
la decommissioning funding plan. The Cooperative plans associated with assets its undivided ownershib, interest Total in the to establish a decommissioning reserve fond for its nuclear boiler and turbine of Big Cajun Unit 3. I facility and is accruing an amount currently estimated t cash proceeds received on the sale were $57,817,000. The be sufficient to pay for its share of the cost of decommis- CooWye was required by :he REA during 1984 to use s n ng at the end of the estimated useful life of River the proceeds, and interest earned thereon, exclusively to , pay all transaction costs and retire outstanding FFB debt. The Cooperative has agreed to indemnify the purchasers i against the occurrence of certain events which could result , in the loss of the purchased tax benefits. Letters of credit i NOTE M-NUCLEAR INSURANCE issued by the JBC are available for funding any potential
- indemnification payments. The letters of credit expire in -
Under the Price Anderson Act (Price Anderson), GSU, 1988 and the Cooperative is currently negotiating with as the operator of River Bend, together with the Coopera- the JBC for an extension. In 1986, the final portion of the tive, maintains private insurance and agreements of in- proceeds, $9,852,000, was recognized in other income 'demnity with the NRC to cover public liability arising if a and expenses in accordance with the rate making policy of nucleae incident were to occur at River Bend. Price. the Board of Directors of the Cooperative. Due to the Anderson expired on August I,1987, and Congress has existence of general business credit and loss carryforwards t not subsequently passed any replacement legislation, at December 31,1987 (see Note H), and the anticipated t However, since Congress has passed no replacement legis. tax losses expected to originate in future years, future k lation, the terms of Price Anderson continue to apply income taxes pavable related to the sale of the tax benefits ! until new legislation is enacted. The Cooperative is unable are expected to be minimal. t predict what effect Congressional action might have on ! In 1987, the Cooperative received and recogni:ed as other t Ccaperative s potential liability. income approximately $2.8 million from GSU resuhing Currently, public liability in case of a nuclear incident at any licensed nuclear facility in the U.S. is limited to from a calculation of the difference between transmission compliance rates and transmission settlement rates for the i
$715,000,000 under the provisions of Price Anderson. period July 25,1985 through December 31,1986, in ac. l His amount is funded by the Cooperative and GSU, cordance with a FERC order.
partially by insurance and the remainder by an assessment i against each licensee of a U.S. nuclear power plant. Private I insurers provide $ 160,000,000 of the required amount and NOTE O - GULF STATES UTILITIES COMPANY ! the additional $ 555,000,000 is to be obtained by assessing oach licensee up to $5,000,000 for each occurrence, sub. In August 1979, the Cooperative and GSU entered into a ; jict to a maximum assessment in one year of $10,000 000, contractual agreement for the joint ownenhip of River ! The Cea rative's maximum share of this assessment is Bend, Unit 1, a 940 net megawatt boiling water nuclear : 01,500,0L for onc incident and 53,000,000 in one year. reactor (see Note C). The generating facility is located ! near St. Francisville, Louisiana. Construction has been The Cooperative, together with GSU, maintains $500,- l 000,000 property damage insurance and $250,000,000 of c mpleted and the unit was declared in commercial opera. ; dxcess insurance for River Bend from the private insur. non as f June 16,1986. He Cooperative has a 30% : undivided interest in River Bend and is responsible for snce market. Additionally, the Cmperative is a member- 30% of River Bend s costs of construction, ca tal addi. , jnsured of Nuclear Electric insurance Limited 11 (NEIL 11) ti ns and operations. GSU is the operator of th facilit3 phich provides $775,000,000 of insurance coverage for Groperty damage sustained by the member insured in ex. In November 1980, the Cooperative and GE'1 entered bess of $500,0N,000 caused by radioactive contamination into a contractual agreement for joint ownenhip ef Big l br other specified damage. As a member insured, the Co. Cajun 11 Unit 3, a 540 net megawatt coal fired generadng l Operative, in exchange for the protection it receives, is unit and certain common facilities at Big Cajun II (se-cubject to assessment if the losses of the insurance com- l Note C). The Cooperative has a 58% undivided interev j i n ,
i Unit 3 and an approximate 86% undivided interest in District Cou t in Baton Rome and as of this date a decision the common facilities. The Cooperative is the operator of in this matter has not been redered. the facilities' In November 1986, GSU requested a $144 million rate In August 1979, the Cooperative and GSU also entered increase in Texas. In April 1987, GSU was awarded a $40 into a Sell back Agreement whereby, commensurate with million emergency rate increase by the PuNic Utility the commercial operation date of River Bend, GSU will Commission of Texas (PUCT). On February 23,1988, the purchase, regardless of availability,100% of the rights of PUCT issued a rreliminary ra:e case decision orected to the Coorerative to the output of River Bend for the (N result in a rate decrease of approximately $14 rMllion to twelve months,67% the second twelve month. nd 33% $19 million. Additionally, the PUCT rejected a 10 year the third twelve months. phase in of River Bend costs as premsed by GSU. GSU has stated that if the Texas decision stands, it will deplete On September 2,1986, the Cooperati e and GSU amend- its c sh in late April or early May 1988. Additionalb, the ed the Sell back Agreement sucn aat, retroactive to June PUCT, in its preliminary rulme, stated that OSU had 16, 1986, GSU will urchase, regardless of availability, 70% of the rights of the Cooperative to the output of River pr ven the Prudency of only 50.5% of les River Bend investment, r $ 1.6 billion out of a total plant investment Bend for the first twelve months, 56% the second twelve ( $3.15 billion. The remainder was not di; allowed or months, 42% the third twelve months, 28% the fourth f und imrrudent, but will be held m abeyance pending a twelve months and 19% the fifth twelve months. The further attempt by GSU at justification of the costs in Cooferative received approximatelv 198 and $ 109.000,000 in 1986 from GSU, and expects to $196,125,000 in a rehear ,4 or a future rate case. The PUCT re-either duced GSU s Lowed return on equit< from 16.25% to ceceive a total of approximately $300,000,000 over the 1 A wnuen order has not been issued 1y the PUCT remaining term of the amended Sell back Agreement (see due to the preliminary status ofits findings and settlemeat y A h negotiations are at this time continuing between GSU, The following three paragrarhs are unaudited and repre- the PUCT and the intervenors m Texas. sent manacement's understanding based upon review of GSU ceased paying dividends to common stockholders in
, ourt, LPSL and PUCT documents, media reports, and discuscons with GSU attorneys. the second quarter of 1986. GSU has exrressed concern that the NRC could suspend the operation of River Bend if in December 1987, the i PSC renJered a decision in the GSU's tmancial condition continues to deteriorate, and GSU rate cne involving River Bend. The LPSC arpros ed has indicated in its filings with the Securitic, and Ex-an initial rate increase of $63 million which included a change Commission, in regulatory commission hearings, previously allowed $57 million emergency rate hike with- in Press releases and in notices to investon, that without out specifying future rate increases under a rate moJera- adequate rate relief, it may have to seekP rotecti,n from its tion plan which had been submitted by GSU. The LPSC creditor, under Chapter 11 of the Federal Bankruptcy also allowed GSU a 12% return on equity citing the most Code. The Cooperative cannot Fredict if GSU will re-recent FERC benchmark rate as surport for their determi- ceive adequate rate relief, the amount or timing of such nation. In addition, the LPSC disallowed as imrrudent relief, not can the Cooperative tredict whether GSU will 44% or $1.4 billion of GSU's total investment in River seek protection under the Bankruptcy Code.
Bend of $3.15 billion, thereby disallowing 5670 million During 1987, setelement talks with GSU on a dispute from the Louisiana jurisdictional share of GSU's rate base. regarding service schedule CTOC of the Powee Intercon-GSU appealed the LPSC order and, on February 18,19SS. nection Agreement between the Cooperative and GSU the District Court arproved e 14% retum on equity in, failed to reach a satisfactory conclusion. Accordingly, on River Bend account, resulting in the followine ciudinfrate annua increases: ulv17,1987, the Cqerative filed a complaint with the [FERC alleging that GSU had improperly calculated the nn 5 su um,,, equali:ine charge under service schedule CTOC resulting so e um-n nu e um-n in estimated overcharges of $37 million as of December i s"c e umen 31,1986 The Cooperative has not raid or accrued these mi a u m en amounts. Service schedule CTOC was intended to proviJe
,; q u mmn the access, ownership and right to use GSU's and the Cooperative's integrated transmission system. Service sehedule LTOC provides that an equali:ing charge willbe The LPSC has arreated the judgement of the 19th Judicial levied on the Coorerative or GSU to the extent the District Court to the Louisiana State Supreme Court and Cooperanve's traromission investment is below or above the outcome of the LPSC's appeal cannot be predicted. its required investment. The criteria determining what GSU's overall petition to arreal the LPSC finJine as to facilities are to be included in quahfied transmission facio.
prudency is still under consiJeration by the 19th Judicial ties for the purpose c.f calculating the equali:ine charge are
- o - _ - _ _ _ _ _ _ _ _ _ _ _
I l l I broadly set forth in service schedule CTOC. GSU now rates and reports to facilitate the then existing regulatory l asserts that the Cooperative owes it approximately $40 pmcess of the seven hiembers. i million for transmission service including interest and a ' true up of the equahr,ng charge. Testimony in this case is During ings, as 1987, thebyCoo [erative conducted Stature two public hear. i continuing with a hearing date set for September 13, required ouisiana Revised 12:409, 1988. The Cooperative is unable to predict the outcome of enacted in 1983. One public hearing led to implementing l these preedings, an incentive rate designed to facilitate the economic im-rov ! The Ccoperative and GSU are continuing negotiations hers.ement De REAofapproved certain the large retail The change. customers of the hiem-second public related to certain provisions of the River Bend Sul back hearing led to the Board of Directon' approval to reduce Agreement. GSU asserts that the Cooperative owes ap- base rates, and that matter is still pending before the RE A. proximately $21.1 million in adjustments in Sell back In September 1987, the LPSC issued Spuial Order 8 87 payments for the The cember 31,1987. penod from June Gmperative 16,1986 disputes through GSU De'. s asser asserting jurisdiction over the Cooperative and all thirteen hiembers. The Cooperative and six ofits hiembers filed for tion. The Coo rative is unable to predict the timing or a declaratory judgement in 19th Judicial District Court l the outcome o negotiations at this time, seek ng to clarify if State statutes enacted after 1974 per- i l As previously reported in the Cooperative's 1986 annual raining to LPSC regulation of the Gwrerative and its ayment for the January hiembers were valid o if the LPSC did in fact have plenary i ' report, GSU($15,575,000) 1987 billing did not remitunits[et the River Bend Sell- authority over the cooperatives in Louisiana, l back Agreement. GSU has indicated publicly that it as. i On February 28,1938, the 19th Judicial District Court l serts a right to offset the January 1987 billing against ruled that the LPSC could assert constitutional authority ! amounts pnesently in dispute with the Looperanve involv-over the Cooperative and its hiemben, and that the ability l ing service schedule CTOC transmission costs. The Co-l operative denies that GSU has a nght of offset and is of the LPSC to exercise its jurisdiction was not [reempted l assessme GSU penalties and interest for the missed pay- by ment federal law.toThe and expe-ts Gvperative be joined plansone in the appea to oraka the judge-more ment. OSU has remitted all subsequent payments for hi* mbe"- billings under the Sell back Agreement subject to the items under negotiation as noted above. At present, the Qvrerative is uncertain as to its obliga. The Geperative has informed GSU that it intenda to
~
ti ns t the LPSC with respect to rate matters and the uncertainty may penist for an extended period of time, in exercise its option under the River Bend Joint Ownenhip the meantime, the Cooperative intends to vicorously pur. Participation and Operating Agreement to perform a final v l(s) to charge rates that are competitive with I cost audit of the River Bend nuclear facility. The Coop. '"' P those {ing charged by other providen of electricity m erative expects the results of this audit to be a matter of L "I'i'"' ' extensive necotiations. As discussed in Note 0, the LPSC disallowed 44% of GSU's River Bend costs as imtrudent. GSU has appealed this finding to the 19th Judicial District Court and has ' NOTE P-RATES AND REGULATION indicated that the final adjuJication of the prudency issue may result in a significant write off of its investment in Through calendar year 1937, the rates of the Generative River Bend in accordance with Statement of Financial cere set by the Board of Directon and generally designed Accounting Standards No. 90, Regulated Enterprises - in accordance with its not tar profit character and provi- Accounting foi Abandonments and Disallowances of Plant , sions of the REA mortgage which require that mies be Costs. As mentioned above, the Cooperative may now be i designed to recover allcosts and pay alldebts. Any change sub ect to the jurisdiction of the LPSC. A sirailar impru-in rates was to be included fine in a notice to its Members Jen'cy finding by tbe LPSC regarding the Cooperative's Lnd be the subject of a public hearing. Followine the nvestment in the River Bend nuclear generating facility public hearing, the Board of Directon may, in accordance could have a material and significant irapact on the finan- . with the State law, enact a chance in rates. Through cial condition of the Cooperative. provisions in ban documents, the REA exercises control d and supervision in matters of accounting, issuances of secu ities, rates and charges for the sale of electricity, and the operation of facilities. Prior to December 31, 1987, seve, of the Cooperative's NOTE Q- SUBSEQUENT EVENTS thirteen hiembers had voted for voluntary LPSC regula-tion in accordance with the Louisiana Revised Statute See Note P for subsequent events regarding rate and 12:426, enacted in 19s?, and the Cooperative designed its regulatory matters. n
Refinancing FFB Debtt On Feb-uary 25,1988, as a part of unable to be remarketed and were reacquired by the re-the restructure of the Cooperative's debt, the Cooperative specdve bond trustees. As a result, the respective band executed final documents and closed on the refinancing of trustees have drawn approximately $169,050,000 against
$ 1.045 bill.5n ofits highest cost FFB debt (average coupon tbree of the four letters of creda to pay all principal, rate of 10.82%). interest, and certain fees with respect to the bonds. Drawn n the letters of credit constitute demand notes with an I The initial funding utili:ed the issuance of Certificates of eerest rate t prime r te plus er percentage points. The Beneficial Interest (CBI's) to the JBC at rates varying from hmper tive is neg tiating with Citibank N. A., the R 6.98% to 7.19%, for an average initial variable rate of nd 3thers to restructure the provmons of the three bond 7.06%. The Proceeds from the sale of the CBI's were used documents so that the bonds can be remarketed. One of I to prepay FFB loans. Within a period of time specified in the pollution control revenue bonds (Series 1984 for $38. I the documents, the Cooperative will cause one or more 600,000) continues to be remarketed daily in accordance public of'ering(s) of the CBI's to be conducted. The er ' with provisions of the bond documents, but the Coopera-ceeds of the public offering (s) will be used to repay the J BC tive is uncertain that remarketing can centinue pending and ause the rates to be fixed for the remaining life of the CBIs.
f changes to the 3713 Waiver. On March 24,1988, $ 500 million of CBI's were sold in the 3713 Waiver: On Maxh 1, $88, the Cooperative for-public capital markets calling for semi annual interest mally requested a renewalof the 3713 Waiver (as discussed payments and annual principal payments with final ma. in Note A). On March II,1988, the Coorerative received eurities and coupons as follown a renewal of the 3713 Waiver from the 00) for the period be : inning March 31,1988 and ending on June 30,1988.
$ 21,696,000 at 8.08% due March 15,1993
$ 37,750,000 at 8.93% due March 15,1998 Payments in Arrears: As of March 15, 1988, the Coop-
$440,354,000 at 9.52% due March 15,2019 erative is in arrears as to interest on debt in the amounts stated below (in thousands):
The Cooperative expects to cause other boblic offerings of FFB.... . ..... 2 466 a t least $400 million to be conducted v'it in the next 90 to 120 days' JBC.... . . .. ... . t ,957 REA ... . ..... .. SSS Washington St. Tammany Electric Cooperative,Inc.: In $36j011, January 1988, NST issued a request for proposals (RFP) for wholesale power to .'our power suppliers. The Cooper:- The REA, as guarantor of the debt, has paid the FFB and rive declined to render a bid on the grounds that a valid JBC the respective arrearages and, in connection with the contract already existed between the Cooperative and FFB tefinancing mentioned elsewhere, required the Coop-WST for the supply of all of the power needs of WST. erative to execute, on February 25, 1988, a promissory WST inJicates that one response to the RFP was received note to evidence its obligation to the REA for payments along with an expression of interest from a second poteorial made by the RE A under its guarantee.
'"I #'
Additionally, as of March 15, 1988, the Generative has On March 8,1988, WST fded a motion with the Bank- been billed approximately $3.4 million in various fees and ruptcy Court to reject the existing contract with the Co- expenses relating to the pollution control bonds. The operative for the supply of power. Based upon an agree- Cooperative has not patJ the amounts related to the bonds nent entered into November 17,1937, and approved by inasmuch as legal counsel has advised that to do so may the Bankiuptcy Court on February 22, 1988, WST has subject the directors, officers and managers of the Coop-agreed to pay the Goperative the full rate for its wholesale crative to personal liability. (See Note A and Pollution power for the period of November 1987 through March Gintrol Bonds above as to a discussion of the 3713 Waiver.) 1988. WST has not paid the full amount of subsequent billings as called for in the November 17,19S7 agreement. Environmental Closure Fund: The Generative is required The outcome of these and cther matters regardine WST by the State of Louisiana Department of Environmental cannot be predicted with certainty. (See Note A for dis- Quality (DEQ) to provide assurance that it has the ability cussion of the agreement between the C orerative and to fund the work which will be necessary to secure and WST. ) refurbish its Big Cajun 11 fly ash pond areas which, as the Cooperative's solid waste dispo:al sites, are subject to Pollution Control Bonds: Citibank, N. A. provided letters DEQ review and supervision. Prior to 1937, the Qvrera-of credit with respect to each of the four pollution control rive has provided evidence to the DEQ, by means of a revenue bond issues of the Cooperative. Subsequent to letter of financial assurance, stating that the Greerative December 31, 1987, three of the four bond issues were for the year in question had a net worth of at least $10 v
AUDITORS' REPORT million. As a result of the net deficit for 1987 and its Board of Directors Impact upon the equity position of the Cooperative, this Cajun Electric Power Cooperative, Inc. form of assurance cannot be provided to the DEQ. He Baton Rouge, l_ouisiana Cooperative is presently discussing with the DEQ other forms of assurance including insurance, letters of credit or trusts in an effort to find an acceptable alternative. The We have examined the balan:e sheets of Cajun Electric total cstimated liability for funding the solid waste disposal Power Cooperative, Inc. (the Cooperative) as of December site rehabilitation is currently estimated to be approxi. 31,1987 and 1986, and the related statements of revenue mately $4 million (1987 dollars), of which GSU is respon- and expeases, changes in equity and margin (deticit) and sible for approximately $500,000. GSU has recently fur- cash How. for the years then ended. Our examinations nished to the DEQ a letter of financial assurance for 1987, were made in accordance with generally accepted auditing The actual payments for site rehabilitation will not occur standards and, accordingly, included such tests of the until the end of the estimated usefullife of the Big Cajun 11 accounting records and such other auditing procedures as coal fired facility. The Cooperative does not expect the we considered necessary in the circumstances. cost of the new form of assurance to be significant. As described in Note A, the Cooperative has determined that due to present market conditions and escalating cc:ts Co:1 Suppliers and Coal Transportation Compcnies: As related to its inve,tment in the River Bend nuclear gen-the Cooperative coinmitted to in its workout / restructure crating facility, it will not be able to increase its wholesale plan filed in July 1987, the Cooperative entered into power rates to a level necessary to recover the recorded l negotiations with its coal supplier and coal transportation costs of its assets nor to liquidate its liabi!ities in the comp nies in order to further reduce costs. As of this date, ordinary course of businen. The Cooperative sustained a two coal transportation companies have essentially agreed net deficit for the year ended December 31,1987, and was to a restructuring of contract term 3 and conditions. If all unable to meet certain mortgage covenants end to pay all parties involved settle at the price levels proposed by the of its scheduled interest payments on certain of its notes Cooperative, it will significantly reduce coal costs. (See payable to the Federal Financing bank when due; these Note A for a discussion of the base contracts.) One coal events of default placed substantially all of the Coopera-transportation company brought suit against the Coopera- tive's long term indebtedness in dofault under cross de-tive in 1987 based upon anticipatory breach but it is fault provisions contained in the debt instraments. The expected by the Omperative that this suit will be dropred Cooperative is presently negotiating with the United upon conclusion of the settlement. Additionally, in March brates Department of Agriculture Rural Electrification 1988, the coal supplier brought legal action against the Ad;ninistration (REA), its major creditor as guarantor of Cooperative as a result of a reduction in payments by the substantially all of its long term debt, and with other , l Cooperative to the supplier. The timing or ultimate out- significant creditors to su'atantially restructure its debt I come of these matters cannot be prcdicted with certainty, agreements to defer and reduce its debt service rnquire-i ments to a level which will pmvide for recovery of its l recorded assets and liquidation of its liabilities in the l P rtial Sale of Big Cajun 11 Unit 1: On March 18,1988, crdinary course of business. Tb- Omrerative is presently the Cooperative and Sam Ra) burn G & T Cooperative, unable to determine whether such a restrusturing will ! Inc. (SRG&T) entered into a joint ownership participa- occur. The financial statements do not include any ad-tion and operating agreement en=bling SRG&T to acquire justments relating to the recoverability and classiucation i a 7% undivided ownership share in Big Cajun 11, Unit 1 of recorded asser amounts or the amounts and classifica-(subject to REA approval). Under the terms of the agree- tion of liabilities that might be necessary in order for the , ment, the closing of the sale to SRG&T must take place Cooperative to continue 3. a going concern. Reclitation , prior to June 1,1990. of its assets and paym-nt of its liabilities are dependent upon the Qvrerative's ability to successfully obtain the necen ry rentucniring f its Jebt agreements and the Subse uent 1itigation (unaudited): On Aueust 29.1988 a Fedfral Dutrict Court jury in Baron Rouee awarded I
- P"V'* *"' IN'"Pi"8"I
Phillips Coal Compane aprroximately $25.3 milhon in As discussed in Notes A and O to the financial statements, damages relating to the rropmed Oxtuw and Chicot lienite the ability of Gulf States Utilities Company (GSU) to generating units. The two propmed projects w ere cancelled continue making payments to the Qvrerative under an in the early 1980's at the insistence of the REA when it agreement for the output of the neclear generating facility became apparent that the der-and for electrical enerev m is uncertain. Aho, GSU los asserted significant claim the Geperative's service territory would not reach fore- against the Cooperative for alleged overpayments related
; casted ievels. Management of the Generative is consider- to this agreement and for certain transmission charges.
ine pmt judeeraent relief and, if necenary an arreal to The Ovperative disputes these claims and is involved in
; the Fifth Circuit Court of Appeals. proceedings and negotiation with GSU to resolve these
- - _ - _ H
matters. Further, as discusseo in Notes A, P and Q, the come of the uncertainties and the recoverability and ultimate outcome of the bankruytcy Proceedings of one of classification of recorded asset amounts and the amounts the Cmperative's members as to the collection of amounts and classification of liabilities discussed in the second and receivable from the member of arrroximately $9 million third paracrarhs been known, and excert for the effects and continued sales to such member is uncertain; t'.;e on the 1987 financial statements of not classifying long-ultimate effects of regulation by the Louisiana Public Ser- term debt in default as a current liability and of not ex-vice Commission and the ultimate resolution of certain pensing and amorti:ing certain costs as discussed in the litigation cannot be Presently determined. Failure of the fourth and fifth paragraphs, the financial statements re. Cooperative to satisfactorily resolve these uncertainties ferred to above present fairly the financial position of could have a material effect on its financial position and Cajun Electric Power Cooperative, Inc. at December 31, could further imrair the Cooperative's ability to continue 1987 and 1986, and the results of its operations and its as a going concern. cash flows for the years the, ended, in conformity with gener liy accepted accounting Principles applied on a As discussed in Note F to the financial statements and consistent basis. referred to in the second paragrarh of this remrt, the Cooperative is in default on substantially all of its long-term debt agreements. In our opinion, generally accerted accountine principles require long term debt in default f c 'rMJ-4
/aj-and payable on demand to be classified as a current lia- [' (4/ rMMtAv bility in the balance sheet. The Cmperative has not g reclassified its long term debt in default as a current lia.
hitity rending further Progress on its debt restructure ne-gotiations. Baton Rouge, Louisiana hiarch 4,1988, except as to in 1982, the Cooperative adopted the aaounting methods Note Q, the date of which prescribed in Statement of Financial Accountine Stan. is hi rch 24,1988. dards (SFAS) No. 71 which Provided under arpropriae circumstances for certain accounting piinciples unique to regulated enterprises. In out opinion, SFAS No. 71 is not apphcable to the Cooperative for 1987 inasmuch as the required relationship between its revenues from ratc; charged to its taembers and non members and its costs did not exist. The outcome of the debt restructure negotia-tions could result in the Cooperative beine able to adort the accounting princirles of SFAS No. 71 in the future. llowever, certain 1987 transactions were accounted for as though SFAS No. 71 did arrly, namely, the deferral of
$10 million of interest expense on its exceu coal notes payaNe anJ the cessation of amorti:ation of 515 milhon of deferred excess coal charges. In our opinion, under een-erally accerted accountine rnnciples, these amounts should have been charged to orerations which would have increased the net deficit for the sear by arrroximately $25 million.
Our report on the 1986 6nancial statemerus was qualified as to the Cooperative's abihty to recover its recorded assets and liquidate its habihties in the ordmary course of business as related to the abihty of GSU to continue payments to the Cooperative fer the output of the nuclear generatine facihty and as to the imrlementation of other elements of its business rians. In our erinion, subject to the effects on the 1956 financial statements of such aJiustments, if ans, as might have been required had the outcome of the uncertr inties referred to in the Precedine paractarh been kno ,n, and subject to the effects on the 1987 financial state.nents of such adjust-ments, if any, as might have beer. required had the out-U _ _ _ _ _ _ _ _ _
OFFICIRS & DIRECTORS P President Directors General Counsci M. U. Scentan . Gloria Granger Scheab & Walter Sourksess lomuuu Electre Memberap BeauregarJ Elecenc Catvarne, lu. Baron Rouge. Loumana ygg p,,,y,,, Charici L. Os erman Corporare Auditor. A.C. Rou, B<auregard Electric Cmperarne, lu. Ernie & Whinney thiw Elecinc MemberAp C.wporar** '"" "#" ""' Gerald R. Rohnette Secret:rg / Treasurer information Elmer J. Psas C. A. Rodgers. Jr. Requests for reneralinformarion Cf.nhwn, Electric Catcain e, lac. Bonic RuralEluttw MemberAs ahme Cajun Elecenc should O F.Thoma. be JirecrcJ ro Eirernal Aff m Depanment. Esece ahe Yke PreslJent and General Manar,, David Lee Mohre Cbkne Electrw Catcarne. lac- Equal Emrloyment Om>rtuniry Emrloger M F Ann Barron Se ior Vke Prendent Financ' ConcorJu Electre Cmperanie, iv. ' D. Jac L liarpile, Jr. W D. Hacknev Yke Pres.Jent anJ Corporate Controller Conc <mJa Ekmv % tearn e, ln. . Gary F.11411 Ron Maggio Yks PresiJent and Corporate Treasurer Thiw Ekctrw Memhc As Corporatum W. Leo Pasne J.fl. Je CorJova Vice Pre:ident AJministration hffemm Daus Flurrw C*pearne, fac. GeralJ W. Pellar Charles M. Davn Jeffenon Dans Elc.rm Caterarne, lac. Vice President Operations Philhp G. liarrn John E. Randall Nacheast Lounuu Poun Cotcanse. Iw. Vice President Production James T. Ware John C. Tucker Nor:A<ast Lounuu Power Catearne. lac. Ric harl S. Gh nn P.=nte Couper Elecew MemhrnAp Ced-armm
).M. Ilolloway Pants Couge E!urtw MemActA t Connon BuforJ Aumin Sour 4 Lounuu Elc.tm Catearne Assocuo.m BnanRnet Sourk L>unuu Ekstrw Catearne As%unim Leon J. Mmek S.=tAun Lausuu Ekstrw MemMApCo-an.m liarelJ J Junca Tes At Electrw Co fearne. Inc.
Anhur L. Verret Tr. Ae El<6 trw Cailvrainv. lu. Ortutewing VaUcy Eleitw MemAcA t Co.rar,* Charkil'nder ad Vancy Elurrw Membokp Co,p-azum Kerry liar ell WaAnti m.5: Tammany Elc.rrw C+tcarne. 'v EJ arj C. Sauce WaAnstm.Sc Tamey Elecrw Ca pearne. Inc
- FIN AM F 4t Drf er e47F(T AsvrT718 Af WT! 4 Y!W, t W4W71I (f5447A)Nin wiuTTTEE h "A I R tit Pt) 9 7 L t ! t 0 4vv'MF f $itT)t% F( f Lt 4W n'!4Th a
_ _ _ _ _ _ _ _ . _ _ _ _ . D
Cajun Electric Power Cooperative 10719 Airline liighwav Baton Rouge, t.ouisiana 70816 (504)291 3060
. ' g
.p g' & '
- O g . .
av I
..w g e
p
- . pg
'n.
s
. .% .
- g -
t
.,,..M.***
y . s*
, . , , 'Qg *
-" g eg .
. O. *
[ * , . . . .' .
,- .' . ...'e .
m . ,.. .% < - . ..-
; ;...g.,.- :..
. . ~. .
. = ..- . -
~ '* *
~~
._ e,i*.. i . f.. ,. / :..Q ., ..'
c, _ J. ; ' . l:_ . L
. _( , t .; , : . s -
U
.i .V . '. :- _
- e. * , eg , . .w. - -
. . b
~
- 4. u . .. . .
- ' i . . ^ .
- q. : . ,.
e.?' . .: . . . - . .r'~ . .
- ~.^. ..
. . ?. - -
~ . s . ?. , ., *g 4
. * .. . 'e ;./ j.#$w
- q. . , ,
.~ , , ,
O s. ' ' * * .* ;
~ ' ** - .'
- e. ,. , . ,,
A , 4 ,, C;y .
* =
- 6 e,' ~
. . . - . qq . . 'R . 9.
. . e . -. l *. *.. .
=. - 6. ,~ O
;, . s.
' e , g, .
y . . . . . fre:# -
-+ qa . ' . . a.
' -s s# - 4* . ;'n
. . ,) - g, e ,. . * '
- 9. , ,. ,/ n* .
s- ' . er . . .% ;. . - 4 . a y ,, *+ ,,-
. . _ . . 3 W . , - .. .,
..II.' '. .' ' . . , ,h
. . . 6 ..
1..f '..
~
- h. .' -; . q* i e,
'.i: :e * ,,
,: .. . e , :. . . . ;
m.
,. . . ., * { .
.e..
4 s e , -
..' e.,,
p .
* , . - . - #8 .
- f:
. gi., .p=
*
- O* *
'E. .
' . . , , ~ .= -
. g . .
. 9 . .. ... . .
.e-. , . ,. _ :.
. ,l -
,, h *. .- .'
l.
' f, ; . , , .
'=*g,,',. l.'.
.e e ..
* +
g , '
- t .
. .- s. ,.. r - ..
.- *., g"
- 9. re, *. " -
. . .1 ...
*4 . , _ , ' ,, - ..
e g,,.. .. . . . .tt-
.%'- . ' , ; ' g, f9.g .
,t ,./ - .. . . , - .' : ,, ,,,;% ,e. -
,* .f g*
y
' %":.t' . _ , ' ' , . .
*, , -a'
. - _ 'g>
. . , ". : 4
.. z., ':
_ [l . ..' s, - ~
. y: * . . - *
* , . *-* * \l l *
*~
.y ' '
, A. ., . . em ., . ; - :
'Q . - . * ...
.* t.
, s. . .. ;.,.. y , !. a ., : .:.
v., - .. ,. ..
- s. .; * = .
* # . ,e
. . , ,.4
.*,. ; , ,, . . ,s'. ,,
. , I s. . '
'W .;
g* - * * *
- s!' . .. i
..* ....,4 * - ' '
, ' e, '
g 8".
'..% r;.c. .'.:. . . ,.. . s?: *p a'
t > - -
.'. .f: e.
; . . . .- ?
. . . - .e *: .
. .. .- ... - 1 . ,
. = ,
c'e
,'...,,.g.-
G r
- 9' . . ' ' . . . * . *
.. ;, * ',,O "$ ' - ' $- . . . :. .. ..
d *.A *
,4 . .' . ., , . .
,. . I. .
, , . - ^ q: ' . . :.
. ' .;. - %. ~* \\s .
,' \q . d.* e j , .# .;. #* .J -. .-I ', f .s, , ,. - - ; ' * ,, 3.. _p : -.j ' , ..
* . s' . .
' " *. *. * *i,
..g'. #-
., ' * .g * '. '*. .,
.g .'.,.
,I . t f,, -'l.w.4.'
*g ,,,,, d - , s . . . .
. . ;. . . . ,] .
*l - ' T ,.. ' ' ' ',9i, n -
-e
... *g [e * ..'e' O~ ', ' ' .
- q. ,.,
. A
. e . . . . Ge . '; * * ^ ' .s ,.' . ' \ '.' Vy l,_ '., Pr**T~'?'~~?* l '. .*, " 'r ~ L ~' - " ' *
-:'"~~~X.
p .~.qp? '. Y~ T A ;.
< ee -;o, .,, 4 : , *
.' . '. ..g .<- s. 1.. -.
,p - ., ,, . ~.
/:.- . _
7*k * '
,4* .
. , . . . . . .e . -
- , '*/g
./
s Y I,,.
.. .i
. g,
.,1-p,...
..g'.
- y... .
..r, .
. * , . - ?
- 3... .
; ny
.. : a. . . . .
_.0.- [ _
.. * . .. ..): _, [ .
y,**: ,, - 9 ; , . .' .- ..
* ~ *- - * * -
e t r . . y* s .. 'e! y _(
. - ..R .
. e - - ?
_ T. .. n - , a . . g.
$. s ,
'y y .
.. y _', .
.. , _ t.r. ,
'q
.' , , ,/ .'l 0
- l .' . .' ; '
'.4 _ f
_ . s - g :
* .y = % '
p.,:g*,;a' .-. , ,c O . _. g'* e,. - .. ' .. * '. .% _ S
,.. w ..
. .. - -, - v
, - . - ga
__ 8,.. I, g. y". y
, 4 ,
s . %- '.. - . . ' . .e ,.' .. e -
,'g* ;,. . -
... ', '>g'.. .F h ' . Es ,*
f,
.r- .. .
y, .
, . h . , ', g ... *,. . <
- h. '%, a %,.. t . ..).
- . * - - ' .? .c ; . . . . , - , S ;$ 4g*
- k>. + j. "
- s. Me *,> - A
'. ' ~
,6- 5
.- t
(" .- S.. + h I. 4 L
;. g. .y cc . .a . , g . s. , , y . . . . . - 1 't - . 808 ' ' J' 5 . 4*
*yv. a' , , ' ' ' . .' o , '. Y; ? . . d. . u s t; r>'e # f r . .'. q
.s :sk . ' [:
A+' 'A
. . . ?
' .g \ . ',,
.' <..w. a. .* ' '., q. :
*.,,5 s s'e- : ..< ' . i. f.-. P, J $.s . .d
. . ~. . p o.'
4 * , . .
- a. -
$ '. 3 A . .'
h .Ms jeM.%:;! ,. ,-r 0;
, ?;..
- j. J '
.a '
;. o 4 i . ' f NJ -
tc i; .x W d ,; hs%.;f a u%O g.&?. . h v,rp. e%t .e y e.M.pd? p.W h,'. i W g.,5
.f w. r.' e
- 4. .
u.
.g ..N.M. .,
- .Q :q..
,y r :W,. .,,; ~ t. e' &
x Myf[./G ... 4 g. w%.s pm 40b 4 xy@4in' 44:a..
*' p hm.. dg. W
g, z &~q JM J? mg_Mw,N&. ntm WW -y ., - .. .. s e / v e f; ..'3 ' :. 9 ep:. ew v.,:4. 4p .! .O - . " . g O o;;pp y N(m f:+.% 7 m. a.,9. ;.; Am w .M y jw A.Qt&wy st.a g e
- 2. .
%. "! . , ( , W ,%. 9n.1g% $, Mggigy
- _ y p p y sgy p a g. p y . j y $mMQiQ
.'1. 7 ff ffff( f}}