ML17312B562

Southern California Public Power Authority 1995-96 Annual Rept. W/Financial Statements

ML17312B562
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Site:	Palo Verde
Issue date:	12/31/1996
From:	Waters D SOUTHERN CALIFORNIA PUBLIC POWER AUTHORITY
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TABLE OF CONTENTS SCPPA by Definition Executive Director's Letter Prcsidcnt's Letter The Retail Revolution Operations and Financiais Palo Verde Nuclear Generating Station... 9 San Juan Gcncrating Station Mead-Phoenix/Mead-Adclanto Transmission Projects l2 Hoover Uprating Project l2 Southern Transmission System l3 Legislative Advocacy l3 Report of Independent Accountants l7 Combined Balance Sheet IS Combined Statement of Operations l9 Combined Statement of Cash Flows l9 Notes to Financial Statements 2I Supplemental Financial Information 3I Palo Verde Nuclear Generating Station... 32 Southern Transmission System 36 Hoover Uprating Project 40 Mead-Phoenix Transmission Project 43 Mead-Adclanto Transmission Project 47 Multiple Project 5I San Juan Generating Station 53

SCPPA BY DEFINITION The Southern California Public Power Authority (SCPPA) is a joint powers authority formed in 1980 to acquire reliable, cost-efficient electrical generation facilities and transmission systems for its members. The membership includes ten municipal utilities and one irrigation district that deliver electricity to nearly two million customers from northern Los Angeles County to the Mexican border.

Backed by its members'fifnancial strength, SCPPA has issued $ 8.2 billion in bonds, notes and refunding bonds since its inception, of which $ 3.6 billion in principal remains outstanding. With these proceeds the SCPPA members have jointly purchased or refinanced interests in generating and transmission facilities throughout the southwestern United States.

SCPPA's primary role has been to secure financing for these projects, but in light of pending electric industry restructuring, SCPPA has increasingly helped its members become more competitive and provided legislative and regulatory advocacy at the state and federal. levels. This advocacy ensures that legislators and regulators will consider the needs of public power providers in this region as they propose sweeping changes in laws and regulations affecting the electric industry.

Today's radically shifting economic and political climates pose major challenges for public power providers. SCPPA's sound financial basis and cooperative approach to industry problem-solving will help its members weather the storm and deliver new benefits to their customers.

SCPPA MEMBERS City of Anaheim NEVAOA -Q.>Ml

~ Southern Transmission System

~ Mead-Phoenix City of Azusa Transmission Project ll City of Banning

+c ID TATSS INTTAM cxAN Yt Sl Aot ~ Mead-Adelanto City of Burbank STATI Transmission Project UTAH 7 Q Palo Verde Nuclear City of Colton SOVI IIIAN VSSII TTAhlklssloU Generating Station City of Glendale sv Dc Q Hoover Uprating

~SANNANIINTT l ADttANTO, Imperial Irrigation District CONYTATIA MCADADIIANTO Project Los Angeles Department S I TANTO TATI(AN+co

+

STATION rtoilctl MSSY AC I tn sa nt m A

t AIIIZONA

> Ftnsintttk Q San juan Generating of Water And Power IAMSIIAP Station City of Pasadena tes ttts 0 ~ Ivrttsot + tl ~ Member Agencies SS ~

~ ANAAtlu NEW MEXICO City of Riverside rtottct IITSTIIINO IO svssTATIDN City of Vernon ININAIkANAIIOS

~

TAIO YTADS rtoktt

EXECUTIVE DIRECTOR'S LETTER In last year's message I predicted that this fiscal year would be a watershed period for the nation's public utilities and the events that unfolded proved my penchant for understatement. Debate about electric utility restructuring and competition was highly visible on the U.S. congressional agenda, and legislation that would direct states to begin retail customer access choice by the end of the year 2000 was proposed. The Federal Energy Regulatory Commission continued their move to ensure that the nation's transmission system is open to all in a fair, nondiscriminatory fashion.

In Californi, discussion intensified and the realities of market transformation began to unfold.

In a landmark decision in December, the California Public Utilities Commission issued a policy decision setting January 1, 1998 as the beginning of direct access for retail customers of the state' investor-owned utilities. The Deregulation Countdown on page 7 further illustrates the timing of the new market scenario.

During this year SCPPA's staff and its member agencies infused their own considerable energy into representing and protecting public power agencies and their customers in the deregulation continuum. I caned these themes to the U.S. Senate when I testified before its Energy and Natural Resources Committee at a restructuring hearing in March. As SCPPA representatives and I visited with Members of Congress and staff, we provided them a consumer-owned utilityperspective on the CPUC decision and its impacts, and on proposed federal legislation. These views took on reality for congressional staff members as they toured several SCPPA facilities in April.

Back at home the SCPPA staff worked to reduce project and overhead costs, and to restructure project debt including a move to increased variable rate debt, thereby lowering project costs.

SCPPA members spent this year in high gear, delivering reliable power and quality energy services to their customers, while retooling to meet the demands of the coming open market envi-ronment. The following pages further describe their strategies to reduce costs, increase efficiency, develop new revenue sources, and communicate with their customers, city administrators, and elected officials. SCPPA has served as a catalyst and resource for these efforts.

p 0

0 Eldon A. Cotton Bill D. Carnahan Bernard Y. Palk SECRETARY PRESIDENT VICE PRESIDENT Daniel W.Waters Thomas H. MOGuinness EXECVTIYE DIRECTOR ASSISTANT SECRETARY Despite the current maelstrom of changing times and markets, SCPPA's mission is becoming progressively clearer. We will continue to support our member utilities'conomic strength and marketing presence as we enter the new millennium.

Daniel W. Waters Ezcunva DiREcroR

PRESIDENT'S LETTER In this era of profound change, SCPPA's benefit is its ability to influence the develop-ment of a new industry structure, ensuring that its member utilities can compete effectively. Two years ago we set a goal of making SCPPA the voice of the Southern California municipal utilities in national forums, and we have made great progress in this regard.

In the past year, SCPPA continued to become more prominent in its spheres of influence at the federal and state levels.

SCPPA projects are critical to its member utilities'ability to compete. Over the past year we member utilities have worked to critically analyze our own operations, with efficiencies and cost reduction as our prime objectives. Our participation in SCPPA-funded projects provides us some of these efficiencies, such as expanding our access to low-cost power sources.

In addition to its advocacy and financial benefits, SCPPA helps member agencies develop common strategies, including how to establish Competition Transition Charges. SCPPA serves as a forum for identifying interacfive issues and ferreting out solutions.

Aided by our SCPPA membership, our customers will continue to reap the benefits of local control of public utilities. We know our customers, operate our own generation and transmission system, and can provide more opportunities for value-added energy services. These attributes will make the crucial difference as we head into the coming market environment.

Bill D. Camahan PREsroHNr

THE RETAIL REVOLUTION In March 1896, an enterprising businessman bought a franchise from the City of Los Angeles for

$ 100, permitting the operation of a power system within the city. He and his partners had built a small generating plant outside the city limits the previous December that would supply the proposed system. Since this franchise was to expire within two weeks, he and his three partners, along with their four employees, put on their overalls and feverishly strung wire through the streets and over rooftops of the city. At 4:55 p.m. on April 14, 1896, the first electric lights lit up the City Hall tower.

This tiny company owned the exclusive right to sell power to its customers, along THE COMPETITION with the exclusive responsibility to maintain near-perfect service and develop new TRANSITION CHARGE (CTC) power supplies to support the explosive growth to come. Reeonnfing the Past toith the Future This scenario was repeated in burgeoning cities throughout Southern California in Under tho proposed CTC, consumers who choose to change electricity suppliers the 1890s. Small companies built and operated generation resources and transmission would pay a monthly surcharge on their electricity bill.The purpose of this surcharge ls to infrastructure, and kept up with the insatiable thirst for power of a population fresh off ensure that the cost of retiring the debt on exisdng power, infrastructure does not shift to the new trains from the east. the customers who remain with their uuhty. In many cases, Some of these cities later bought the electrical systems within their boundaries, the remaining customers are likely to be residential and small business customers, while acquiring the same exclusive rights and responsibilities to their customers. To purchase the ones who change suppliers will be the large commercial/

industrial customers.

the new generation and transmission systems they needed, they would subsequently pool their financial resources in the Southern California Public Power Authority.

In March 1996, descendants of private companies like that first private partnership filed to divest themselves of their generating plants voluntarily. This followed on the decision the previous December by the California Public Utilities Commission to open market access to the power infra-structure initiated 100 years ago. A few weeks later, in April1996, these private power companies filed to create a Power Exchange, into which they would sell their generation, and an Independent System Operator to operate and manage the state's transmission system.

clTY OF ANAHEIM As the City's sole power provider for more that l00 years, tho Anaheim Public Utilities Department has The municipal power companies, although not directly regulated by the now positioned Itself for dereguladon and competition. In I4arch 1996, cominerclal CPUC, willparticipate and compete in this market-based environment... a whole and industrial customers saw a rato decrease of up to five percent. Reslden.

tlal rates remained stable, already set new world.

approximately 25 percent lower than thoso In neighboring communities. Taking advantage of a unique opportunity, the Department entered into a landmark wHv nEREaumTE7 Historically, the regulatory compact provided exclusive publicfprivate partnership to utilize Its fiber optic cable This partnership will pro-vide the community with access to a service territories and rates sufficient to cover utilities'costs. In the 1970s, utilities VnlversalTelecommunications System In I 997.

were facing demand growth of seven percent per year, and were forbidden by Custome Served:.......... I 04,805 Power Generated and Purchased (In Hegawatt.Hours) federal law from burning natural gas in utility boilers. This led to investments in Self-generated 880,7 I 5 Purchased............. l,973, I I 0 Total ...............

Transmhslon (In mlles) 2,853,825 I>417 nuclear and coal fueled generating plants.

Total Revenues (000's)

Operating Costs (000's)

....... $ 246,479

$ I 97,895 In recent years the California government mandated investment in renewable energy sources and promotion of energy efficiency. In this era the utilities provided a complete electric system. They also had the obligation to plan and develop facilities to cover future electric needs and were accountable for near-perfect service to all customers. As a result of the move to protect the environment and promote renewable resources, investor-owned utility gOU) rates in California were 50 percent higher than the national average. The rates of consumer-owned utilities like the SCPPA member agencies were generally 15 to 30 percent lower than those of the IOUs.

These high rates are driving the move to deregulation in Californi.

New technology enables new projects to generate electricity at lower cost using relatively inex-pensive natural gas. At the same time, global economic forces are pressuring California's industries to become more competitive. These customers want the immediate benefit of the new generation technology and lower electricity bills.

In the new world of deregulated power supply, industrial customers will have access to an open market in which they can buy electricity from the lowest bidder.

9dEh5aaR AaEPgciES IN ACTloN The eleven SCPPA member agencies have been planning for the new market transformation for the last few years. This past fiscal year has seen the most active

PASSWORDS TO A NEW ERA AGGREGATORS - Brokers who seek to bring together

, customers to create a "load" so that they can buy power in bulk, DEREGULATION COUNTDOWN making a profit on the sale.

COMPETITION TRANSITION CHARGE (CTC) A non--

bypassable fec paid by retail customers to their former power supplier when taking service from an alternative Direct retail access for supplier. This fee reflects the all customers begins.

difference between a stranded IOUs no longer must asset's market price and its cost.

bid generation into The purpose Is to avoid cost the Powci Exchange. shifting, and to enable utilities to CTC ends. retire debt and compete fairly.

OVARY Ii Five. year phase-In iirect retail access for IOUs ins: Largo customers may ose alternate generation 2003 COST BASED RATEMAKING Regulated rates based on costs expended.

pliers. IOUs must bid all National Energy COST SHIFTING Moving-eratlon into Power Exchange cost Increases or decreases to Policy Act gives FERC satisfy customers'nergy classes of customers, a.g. to authority to order ds by buying from the Power residential from industrial or to open transmission hange. Customers choosing commercial from residential.

access.

mate suppliers pay CTC.

DIRECT ACCESS - Abilityof a power producer to sell directly to thc retail customer.

INDEPENDENT SYSTEM OPERATOR (ISO)-

CPUC Issues Independent manager of trans-y li + draft rulemaklng mission lines which assures safe p envisioning futuro where customers choose among competing generation pioviders, and performance-and fair transfer of electricity from generators to distribution companies INTEGRATED UTILITY 0 based ratcmaking replaces traditional castoff-service A company that provides a ructurlnglfunctlonal complete electric system, ndling. IOUs to file ratcmaklng. generation transmission and icatlons to transfer distribution services, for Its

e. CPUC to ensure customers.

al consumer protection PERFORMANCE BASED ores are in place. RATEMAKING(PBR)

X995 MARCH: FERC issues Notice of Proposed Regula(ed rates based on performance objectives, not on actual costs.

Rulemaklng (NOPR) proposing significant -A POWER EXCHANGE (PX) changes in transmission scrvicc regulation.

MARCH: IOUs apply for spot prico market for electricity Goal: to deny transmission facility owners voluntary divestiture of into which power generators unfair advantage over competitors. could sell their electricity and 50 percent of fossil generation.

from which retail and wholesale MAY: CPUC issues proposal that electric customers could buy.

gcncrators should sell power to independent APRIL Draft of ISO/Power system operator (ISO), which would distributo RESTRUCTURING Exchange filing availablo power to Californians at lower price than Reconliguring tha market to stakcholders. IOUs file currently paying. A new Power Exchange structure by eliminating tha proposals to establish ISO would create a wholesale power pool where monopoly on the essential func-and Power Exchange. all suppliers could sell electricity according to tions of an electric company.

established competitive bidding procedures. RETAIL WHEELING Tile JULY: IOUs apply for performance-based ability of generation companies DECEMBERi CPUC adopts final policy or brokers to sell directly to ratemaklng. which Includes the following: Creates a Power retail customers, utilizing regu-Exchange starting Jan. I, I 998. Initiates direct lated transmission lines and the access for retail customers with five-year distribution services of existing phase-In and proposes competition transition utility companies.

charge (CTC). Creates ISO for the trans-mission grid. Develops performance-bascd STRANDED INVESTMENT OR STRANDED ASSETS ratemaking for IOUs. Requires real-time rate Gcncration facilities, owned by and time-of.usc rate options. existing utility companies, that produce electricity at above-markct marginal prices.

UNBUNDLED RATES Separate itcmlzcd charges for generation, transmission, distrib-ution, and other services.

UNBUNDLED SERVICES Customer can select which services they want and which company provides them WHOLESALE WHEELING Selling electricity to wholesale buyers for resale to retail customers

fulfillment of their transformation plans to date. The agencies have put significant time and effort into many of these activities:

~ Communicating with city councils, utility boards, and major customers about the deregulation process, its implications, and the member agencies'preparation for it.

JOSEPH FI HSV

~ Downsizing and reorganizing staff.

~ Transforming from engineering-based to customer-focused corporate culture.

~ Becoming more familiar with customer needs and planning new products and clTY oF AzvsA Tho city's electric I was established ln I 898, and for most services. history Azusa purchased electricity w sale from Southern California Ed Since tho mid.l980s, through succr

~ Aggressively cutting costs while maintaining service reliability. litigation against Edison on transmi access, Azusa began to obtain short

~ Preparing new unbundled and time-of-use rate structures. long. term contracts with other utiliti well as from SCPPA, by particlpath Palo Verde Nuclear Generadng Se

~ Working on reducing transfers to their cities'general funds. Hoover Hydroelectric Plant, and San Generating Station Unit ¹3. By havln,

~ Renegotiating power contracts to cut costs. ability to diversify its power supply ol tlons, Azusa has maintained its retail i

~ Meeting off-balance sheet debt obligations. at tho l983 level.These compedtivo i w/II help tho city make a less stressful sltlon toward tho deregulated

~ Pursuing revenue enhancement opportunities, such as leasing poles and m'nvironment.

conduit for fiber optics and other telecommunications activities. Customers Served:......... i4 Power Generated and Purchased (in H egawatt. Hours)

~ Adopting a Competition Transition Charge. Self.genensted: ..........

Purchased:............. 422 Sales

~ Reducing project operating and maintenance costs. Recall: 220 Wholesale: 202

~ Renegotiating fuel contracts. Total Revenues (000s):....... $ 23 Operating Costs (000s): ...... $ 20 rVrued lted

~ Reducing debt service by refinancing at lower interest rates.

~ Moving to more variable rate debt.

~ Pursuing aggressive legislative advocacy.

set PA JN AcTJON The last three items above are the particular expertise and benefit that SCPPA brought its member agencies during this fiscal year. Moreover, SCPPA staff members have adopted the new streamlined business atmosphere of the member agencies by"doing more with less" in all aspects of operations. It has been a year of unprecedented energy and accomplishment.

PAUL TOOR OPERATIONS AND FINANCIALS CITY OF OAHHIHG Established ln I 9 I 3,the Banning electrical system now serves an area of approxi-As of Oetober 31, 1996 Iveighted Average Bond Ratings mately 2I square miles. The city owns a SCPPA BONDS Hoover Uprating Project Cost

~)of Capitatt 6.11 hfood~slnvestor Standard Ibor's

& pordon of San Juan Unit 3 and a portion of Mead Adelanto and Mead-Phoenix transmission lines. In addition, the city Southern Transmission System Project 432 owns a distribution system and four sub-Seruor Uen Bonds Aa AA- statlons to serve the customers. Being a Subordinate Uen Aaa/VMG1 AAA/A-1+ full service city, Banning's load mix is Verde Project Bonds'alo strengthened by Industrial customers, Senior Uen Bonds A1 AA- with more Industrial projects on the way.

Project'stimated 1992 Subordinate Uen Uen Bonds'ubordinate Aaa Aaa/VMIG1 AAA AAA/A-1+

Major distribution system improvements are also ln progress.

Transmission Project Bonds'ead-Adelanto SAO Customers Served:......... 9,0$ 0 Insured Refunding Power Generated and Purchased Bonds'onrefunded (In Megawatt-Hours)

Self~en eratedt 0 SA8 Purchased:.............

Bonds'ead-Phoenix TransmLsion Project I I 7,879 Insured Refunding Bonds'onrefunded Aaa A

AAA A

Total ...............

Transmission (in miles)

I I 7,87 I l22 A Total Revenues (000s):....... $ I3,230 A

Bonds'ultiple 6.21 Operating Costs (000s)I $ I2,7$ 0 Project'an Juan Unit 3 5.12 Aaa AAA

'nsured; 1991 Suhndinate Van'able Rate Bonds QMBAC)t 1996 Subordinate Snies A Bonds (MBIA)/1996Subordinate van'able Rate genes B Bonds (ESA).

I Insund: 1992 Senior Ifm Bonds QMBAC); 1993 Subordinate Bonds (IGIC); 1996 Suhndinate Snies A Bonds QAIBAC),'996 Subordfnate Vanabie Rate Senes B and C Bonds QI(IBAC).

I Insund: 1994 Sen'es A Bonds (AMBAC),

Unmmmittof bond promds eecund by a guarantmi rate Investment contract.

I Insund: 1993 genes A Bonds (MBIA).

IAilgenemtion bonds: 466%; ali transmissum bonds: 512%; eomhned gennntion and transmission: 500%

During the fiscal year, SCPPA continued to monitor the financial markets and address opportu-nities to reduce its fixed interest costs.

SCPPA refunded $ 222.2 million in PaloVerde Project bonds which were originally issued in 1986 and 1987. The 1996 refunding bonds consisted of sales of $ 152.9 million in Series A fixed rate bonds in February, and $58.9 million in Series B variable rate obligations in April. These insured revenue bonds will produce estimated present value savings of $ 29.5 million, or 14 percent of the refunding bonds.

As the fiscal year ended, SCPPA was working on a similar two-part refunding for the Southern Transmission System, and an additional variable rate issue for Palo Verde.

Following is a status report on SCPPA's generating and transmission projects.

PALO VERDE OPERATIONS PALO VERDE NUCLEAR GENERATING 199$ 90 OPERATIONS Generation Ca(tacity (Millionsof Utiiuation MIVHs) (%)

sTATIDN (PvNGS) Ten SCPPA members (all but the City of Unit 1 9.8 Unit 2 9.2 Anaheim) share a 5.91 percent interest in the three units of PVNGS, Unit 3 entitling them to 225 megawatts of power. SCPPA continues to Agg"ga<<

Industry average 69.9

work with the operating agent, Arizona Public Service (APS), to increase output and lower costs in order to make Palo Verde a competitive and dependable resource.

Palo Verde began a reengineering of work processes and organization in September 1993. Thus far, the reengineering effort has yielded lower costs, higher output, higher PRODUCTION COST I >>>dhkiswmcr N>>ch>>cr>>ce Ckieadhr ratings by the Nuclear Regulatory Commission (NRC) and the Institute of Year per klVh 1993 2.02 1994 1.93 Nuclear Power Operations (INPO), shorter refueling outages, and better 1995 1.61 teamwork and morale.

~ >

v. l.- ~ >

I I

c PaloVerdo's Spring l 996 refueling outage for Unit 2 was completed in a record 49 days.

INPO conducted a two-week evaluation of PVNGS in October 1995 and issued its first "1" rating, indicating that PVNGS achieved the highest level of exceHence in nuclear plant operation. The AOIIAIOY SYASSI high rating is expected to reduce PVNGS'insurance costs by nearly $ 1 million per year.

t>>I ') r, i);.,Ikj >

The NRC's latest Systematic Assessment of Licensee Performance (SALP) report clTY oF nunaatex Burbank's Public gave PVNGS ratings of"1"in Operations, Maintenance, and Engineering, and"2>vin Service f3epartment began serving cus-tomers In I 9 I 3,and installed onwlte gen-eration ln response to a surge in industri- Plant Support. "1" is the highest rating, and represents superior safety performance al and residential growth In tho 1940's and I 950's.Today the city receives power from which exceeds NRC standards. In the previous assessment period, PVNGS received three SCPPA projects, the Bonneville Power Admlnhtratlon, as well as firm and Interruptible supplies from other utilities "2" ratings in all four categories. The NRC noted that APS has established new and government agencies.

Customers Served:......... programs and processes necessary to achieve and sustain superior performance.

Power Generated and pe>chased (ln Hegawatt-I4ours)

Self.generated I 0 I,078 Purchased Total

............. 928,0 I I I,029,098 Transmission (In Miles)....... 398 Total Revenues (000'I)

Operating Costs (000's)

....... 8 94,430 8 93>744

THOMAS K CtARKE Corrective measures implemented following a tube rupture in one of crrv os cotTDH The Colton munidpal electric utility was established in I 895, Unit 2's steam generators in 1993 have allowed operation at full capacity, eight years after city incorporation. Since I 986,the electric utilityhas changed from being solely dependent on Southern but the operating agent has recommended replacement of unit 2's two steam California Edison for its purchased power to being actively engaged in purchasing generators, perhaps within the next ten years, due to safety and economy power from several different sources, achieving significant cost savings in the process.

reasons. If the co-owners of PVNGS decide to replace the steam generators, Customers Served:......... 15,932 Power Generated and Purchased (in ldegawatt.Hours)

SCPPA's share of the cost is estimated at approximately $9 million and would be Sclf~ncratcd 0 Purchased .............

Total .............. ~ ~

241,582 24 I,582 expended over approximately six years. Transmission (ln miles) 23 Total Revenues (000's)

Operating Costs (000's)

....... $ 26,072e

$ 24,60 I e One owner of PVNGS, El Paso Electric Company, has been under e unaudited bankruptcy protection since 1992, and filed its Fourth Amended Stand Alone Plan in September 1995. The Bankruptcy Court approved the plan, and El Paso emerged from Chapter 11 bankruptcy on February 12, 1996. All of El Paso's obligations regarding PVNGS during the bank-ruptcy period have been met.

sAN JUAN oPERATIQNs San Juan Unit 3 continued to be a dependable resource for the five SCPPA members (Azusa, Banning, Colton, Glendale, and Imperial Irrigation District) who own a 41.8 per-cent share of the unit through SCPPA.

A second Interim Invoicing Agreement further encouraged high capacity IARD Ya PAtK factors and lower per unit fuel costs. Despite the major scheduled maintenance outage in the spring, SCPPA members received nearly 1.5 million MWH from os otsHDAta Incorporated In l 906, idalo purchased Its electric utility In San Juan in FY 1995-96.

', obtaining power from outside sup-

s. It received Its first power frotn ver Dam ln I 937 and inaugurated thc Installation of a new limestone scrubber system for the removal of sulfur unit of its own steam generating t In l94I. Now called the Grayson cr Plant, this facility today has eight ~

dioxide was approved late in the fiscal year. Besides improving emissions control, iratlng units. Glendale continues to hase 85 percent of Its power from ilde sources. the three-year project will save SCPPA $ 3 million per year in operating and main-omen Served:......... 82,57 I ir Gencratcd and Purchased tenance costs.

legawatt.Hours)

If.generated I d3,499 rchased ............. 939,096 I, I 02,595 Both the operating agent (Public Service Company of New Mexico) and the smhslon (in miles) d9 IR cvenues (000's) ....... $ 98,020 rating Costs (000's) $ 85,026

coal supplier are actively exploring other ways to reduce costs and make San Juan Generating Station a competitive resource for its owners MEAD-PHQENIx/MEAD-ADELANToTRANsMIssloN PRDJEcTs After more than a decade of plan-ning and two and a half years of construction the Mead-Phoenix and Mead-Adelanto Transmission Lines went into commercial operation in April 1996. These two 500-kV AC transmission lines will cany power between the Phoenix area, the Las Vegas area, and Southern California. Nine San Juan Gonaratlng Station SCPPA members own roughly one-fifth of Mead-Phoenix and one-third of Mead-Adelanto through SCPPA.

HoovER UPRATING PRoJEcT The Hoover Uprating Project, which increased the rated capacity at Hoover Power Plant by 35 percent, was declared complete this year. Nine SCPPA members (Anaheim, Azusa, Banning, Burbank, Colton, Glendale, Pasadena, Riverside, and Vernon) participated in the uprating and have obtained entitlements totaling 127 MW of capacity and approximately 143,000 MWH per year in allocated energy. The cities of Anaheim, Riverside, Burbank, Azusa, Banning, and Colton financed their participation through SCPPA.

Two issues which may affect operations at Hoover are the proposed sale of the Federal Power

KENNETH S MOILER Marketing Administrations (PMAs) and possible required mitigation of effects on endangered species in the lower Colorado River area. These issues are discussed IMPERIAL IRRIGATION DISTRICT under Legislative Advocacy. IID entered the power Industry In l936 and today serves a peak load of 640 NW with 790 NW of generating resources.

Among IID~ned resources are 24 NW souTHERN TRANshIissloN SYSTEM As usual, the Southern Transmission System of low head hydro units along the All American Canal, 307 NW of gas-fired steam and combined cyde units, and l62 (STS) continued to operate at or above design parameters, transmitting 11.3 mil- NW of peaking gas turbines. In addition to IID's share of SCPPA resources com-lion MWH of power over its 488 miles, compared with 12 million MWH in fiscal prislng l04 NW at San Juan and l4 NW at Palo Verde, IID has 179 NW of other resources under long-tenn purchase con-year 1994-95. The line operated at 70.5 percent of capability, with 99.53 percent tracts.

Customers Serve>h........ 86,870 Power Generated and Purchased availability. STS, a a 500-kV DC transmission line and associated converter (In N egawatt-Hours)

Self-Generated Purchased

........... 774,587 I,893,599 stations, moves power between the Intermountain Converter Station in Utah to Total ...............

Transmission Facilities (in Miles) 2,668,I86 l,637 Total Revenues (000's) ..... I 97,9 I 7 the Adelanto Converter Station in Southern California. Operating Costs (000's) .... $$ I 77,624 LEGISLATIVEADVOCACY In the past year, SCPPA played its most crucial role to date in representing public power issues in Washington, D.C. By year end it had also made plans to maintain a continuous presence in the California legislature. The following examples underscore the value of SCPPA's advocacy in Congress.

ELEcTRlc UTILITY INDUsTRY REsTRUcTURING Discussions about electric utility restructuring 4 A> COTTON and ways to increase competition in the industry were prominent on the congres-li'NCEIXS sional agenda in 1996. SCPPA was actively involved in this federal restructuring DEPARTMENT OF WATER AND In 19I6, the City of Los Angeles debate. During visits with Members of Congress and staff in Washington, D.C., and I distributing electric power pur-id from the Pasadena Municipal

r Plant, and the following year an April congressional staff tour of several SCPPA facilities, SCPPA representatives

Orated its first generating capacity at Francisqulto Power Plant No. I.

discussed the effects of the California restructuring on municipal utilities, and 22 the city purchased thc remaining butlon system of Southern California

>n Company within the city limits. It SCPPA's view that federal legislation would be premature at this'time. In addition, Ir thc largest Inunlcipally owned elec-itilityIn the nation. During l 995-96 It rwcnt a major business restructuring Executive Director Dan Waters testified for SCPPA and the American Public Power Iss to prepare for upcoming dcrcgu-I Association on March 29 at a restructuring hearing held by the Senate Energy and

>mers Servcdi........ I,350,807 rG eneratcd and Purchased egawatt.Hours) Natural Resources Committee.

I'-generated .........

chased............

2I,848,8I6 7,079,3 I 3 al ...............

,mhslon (ln miles) .....

28>928,I29 3,743 Revenues (000's) ...... $ l,946,850 sting Costs(000's) ..... $ I,625,753

Rusus HICHTOWER clTY DF FAsADEHA Established In 1906, Utilityrestructuring and consumer choice issues are likely to be at the top of tho city built its first electric generating steam plant In I 907 and took over opera-tion of its municipal street lighting from the energy agenda in the 105th Congress. SCPPA willcontinue to play a role in the Edison Electric. In 1909, Pasadena began the extension of its operations to com-mercial and residential customers that development of legislation as the restructuring debate moves forward next year.

resulted In the replacement of all Edison electric service In tho city by l920. In I 995.96, Pasadena purchased approxi-mately 85 percent of its power needs. THE NUcLEAR wAsTE PQLIGY AcT With a 5.91 percent interest in the PaloVerde Customers Scrvcd:......... 58,732 Power Generated and Purchased Nuclear Generating Facility, SCPPA has a keen interest in pending legislation to (ln Megawatt. Hours)

Sell-generated I 85,289 Purchased 984,0$ 7 reauthorize the Nuclear Waste Policy Act of 1982, with amendments. Passage Total I ~ I 69,346 Transmission Facilidcs (in Miles) . $7 Total Revenues (000's)

Operating Costs (000's)

....... $ I I 0,975 of these proposed amendments would provide solutions for waste generated at

$ 9$ ,654 the station at an interim nuclear waste disposal facility by 1998 and later at a permanent disposal site atYucca Mountain, Nevada. The Senate bill was eventually approved, but a veto threat from President Clinton and strong opposition from the Nevada delegation stopped efforts to pass the legislation this year.

PowER 9dARKETINa AotdiNISTRATIoNS In its early years the Clinton administration attempted to auction federally owned power marketing administrations (PMAs) for a one-time reduction in the federal deficit. One PMA earmarked for sale was the Western Area Power Administration (WAPA),

which provides power to most SCPPA members. This proposed sale would privatize the Hoover hydroelectric project, the Parker and Davis power plants, and their related transmission facilities. Sale of the PMAs would negatively affect public power operations unless the sales are BILL Do CARHAHAH l

made to existing contractors. Although no serious PMA auction effort surfaced in . ~

1996, the federal power program was carefully scrutinized, and many legislators clTY oF RlvfnsIDE Rlversldo Pl Utilities is posltlonlng Itself to offer t remain staunch advocates of privatization. petltive rates ln the new dercgul environment. Power and transmh costs constitute the bulk of cha passed on to our customers thrI ENI3ANaEREI3 SPEciES ACT REAUTHoRIXATIoN Republican leaders named rates. Cost reduction and rcstructII efforts at SCPPA have had slgnlfi impact on Riverside Public Utlli reauthorization of the Endangered Species Act as a top legislative priority, but their efforts in meeting our lower ope .

cost targets. Additional efforts, espc at Palo Verde Iqucicar Gener.

legislation immediately met opposition from environmental groups, Democrats, Station, will be required for Riversid compete ln future years.

and many Republicans. Fearing anti-environmental sentiment for the GOP, its Customers Served:

Power Generated and Purchased (In Megawatt. Hours)

Self~ncratcd 29 Purchased.............

Total Transmhsion (In miles)

Total Revenues (000's)

Operating Costs (000's)

....... $ I7 5 I6

leadership kept the legislation from being brought to the House floor for a vote this year. SCPPA continues to support ongoing voluntary efforts by California, Arizona, Nevada, and the Department of the Interior to protect endangered species in the Lower Colorado River region. These agencies are proceeding on the assumption that there willbe no significant changes to the Endangered Species Act in the future.

TAx-ExEIuiPT FUNDING Concentrated efforts by SCPPA members and the public power community

~ '

I; er Dam KENNETH Je DE DARIO to educate Members of Congress and staff of the value of tax-exempt financing provided a needed advantage in 1996. Investor-owned utilities gOUs) have oF YERNQN Vernon's Light and opposed tax-exemption for public power entities, claiming that this status would Power Department began serving indus-trial'customers in !933, with completion of its diesel generating plant. In addition give public power an unfair advantage under deregulation. Despite IOU attempts to its own power from diesel units plus recently Installed gas turbines, Vernon to restrict tax-exempt financing in 1996 budget reconciliation legislation, no such now receives power from Palo Verde, Hoover, and various utilities, including APS, CDWR, SRP, BPA and Edison.

proposals were approved. Customers Served:......... 2,04062t'lTY Power Generated and Purchased (in Megawatt-Hours)

Selpgenerated 676 RENEwABLE ENERGY PRDDUcTIDN INcENTIYE The Department of Energy's Purchased ........,..., l,077,823 Total l,078,499 Transmission (in miles) 2.4 Renewable Energy Production Incentive (REPg provides incentive payments to Total Revenues (000's) $ 50, I 99e Operadng Costs (000's) $ 37, I

~ Unaudited

energy providers who generate energy from such sources as wind, geothermal sources, and landfill gas. SCPPA and other REPI supporters obtained last-minute funding for the program during the fiscal year 1996 appropriations process. SCPPA member City of Glendale received the largest single payment of $ 946,921 for more than 60 million kilowatt-hours of power generated during 1995 at its Grayson landfill gas-fired facility. Intense efforts by SCPPA and other REPI supporters established fiscal year 1997 incentives as a major bipartisan platform during the appropriations debate.

N A)e; 'js g>C"

! A(lj 4 Br'delanto Converter Station is the western terminus of tho Southern Tranmission System.

PERCENTAGE OF SCPPA MEMBER PARTICIPATION IN SCPPA'S INTEREST PALO VERDE HOOVER VPRATIHO HEAD ADELAHIO HNA~ SOUTHERH NAH JVAH PROJECT PROJECT PROJECT PRO/ECI TRAHIHUNIOH PROJECT NVNTEH PROJECT (OX (0%

u( NP(LNN LllQ LNQ(5 ND(ONL NINON(

OX(NN( ((LNR I

LN(((5 Nmx NNNUN 1L(L((NL LNINBN LML QBDIL(

(1X BDO NYBM( LINENS NN(5D( N(DDN QNJNQ (11(X QLNN QBO(lf 0 NINNNN ts(X JL(ONL BO0 (LIX MNJ

REPORT OF INDEPENDENT ACCOUNTANTS September 10, 1996 To the Board of Directors of the Southern California Public Power Authority In our opinion, the accompanying combined balance sheet and the related combined statements of operations and of cash flows present fairly, in all material respects, the financial position of the Southern California Public Power Authority (Authority) at June 30, 1996 and 1995, and the results of its opemtions and its cash flows for the years then ended in conformity with generally accepted accounting principles. These financial statements are the responsibility of the Authority's management; our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits of these statements in accordance with generally accep'ted auditing standards which require that we plan and perform the audit to obtain reasonable assumnce about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, and evaluating the overall financial statement presentation. We believe that our audits provide a reason-able basis for the opinion expressed above.

In our opinion, the accompanying separate balance sheets and the related sepamte statements of cash flows of the Authority's Palo Verde Project, Southern Transmission System Project, Hoover Uprating Project, Mead-Phoenix Project, Mead-Adelanto Project, Multiple Project Fund and San Juan Project and the separate statements of operations of the Authority's Mo Verde Project, Southern Transmission System Project, Hoover Uprating Project, Mead-Phoenix Project, Mead-Adelanto Project, and San Juan Project present fairly, in all material respects, the financial position of each of the Projects at June 30, 1996, and their cash flows, and the results of opemtions of the Authority's PaloVerde Project, Southern Transmission System Project, Hoover Uprating Project, Mead-Phoenix Project, Mead-Adelanto Project and San Juan Project for the year then ended in conformity with generaHy accepted accounting principles. These financial statements are the responsibility of the Authority's management; our responsibility is to express an opinion on these financial state-ments based on our audits. We conducted our audits of these statements in accordance with generally accepted auditing standards which require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, and evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for the opinion expressed above.

Our audits were conducted for the purpose of forming an opinion on the basic financial statements taken as a whole.

The supplemental financial information, as listed on the accompanying index, is presented for purposes of additional analysis and is not a required part of the basic financial statements. This information is the responsibility of the Authority's management. Such information has been subjected to the auditing procedures applied in the audits of the basic financial statements and, in our opinion, is fairly stated in all material respects in relation to the basic financial statements taken as a whole.

Price Waterhouse LLP Los Angeles, California

SOUTHERN CALIFORNIA PUBLIC POWER AUTHORITY COMBINED BALANCE SHEET tin thousands)

June 30, 1996 Mo Itansn2issu7n Hoooer Mead- Mead- Mutt2)7tc San June 30, Verde System I!puting Phoenix BMttanto Project juan 1995 project ptoj62t pn7jeet project project F~ Projnt Thtal Xta!

ASSETS Utilityplant:

Production . S 613,608 S 171,068 $ 183@09 S 967985 $ 795080 Transmission 14,146 $ 674,606 $ 48,307 164 737,223 689,447 General ~569 18 893 1 971 8 613 ~3046 29155 630+23 693,499 S0,278 171,232 191,922 1,737,254 1513,682 Less - Accumulated depreciation . 250 021 194 127 846 1 255 36622 ~48 871 418688 380+02 499,372 49,432 169,977 155,300 1,254$ 83 1,094,994 Construction work in progress 9+03 3,116 3,501 16,120 206/73 Nudear fuel, at amortized cost 13 225 13225 ~1716 Net utilityplant ~5'48 169977 158 801 1,283 728 ~114.283 Spedal funds:

Available for sale at fair value (Note 2):

Decommissioning fund........ 33,474 33,474 24~

Investmcnts 11S,746 102,842 $ 9,628 21/91 6~62 $ 250,888 34,170 597,427 682,442 Escrow account - Came series 343,898 343,898 343,921 Advance to Intennountain Power Agency . 19~ 19/50 19~0 Advances for capacity and energy, net 10,119 10,119 11,903 Interest receivable 16~1 Cash and cash cquivalcnts 1,512 67879 2,169 90324 1997 6

~18 ~4N 841 2,285 9,220 7546 67 16,100 173 798 120 610 218 611 558 718 21 750 23 980 ~69 1 260108 41 783 1 '194 366 1 219470 Accounts receivable 738 2,687 19 '1,750 4,741 (6,402) 945 4,478 S,272 Materials and supplies 9,240 3569 12,809 13,297 Costs recoverable from future billings to participants.................. 204,945 203,787 7~ Ir394 4+83 31,780 453,827 411,031 Unrealized loss on investments in funds available for sale 3 9 28 4 3,365 2+35 Prepaid construction costs 5~

Prepaid cxpcnses................ 26 66 92 Unamortized debt expenses, less accumulated amortization of $ 132,265 and $ 127,197 in1996and1995 . 201 693 164 247 ~37 9 888 28 225 3090 413348 ~429 08 S 1,011,713 $ 1,431,741 S 32.617 $ 89,59S $ 276,669 S 253,706 $ 239,972 $ 3,366,013 $ 3,400,732 LIABILITIES Long-tenn debt $ 981,155 $ 1,034,757 S 30,981 S 86,417 $ 268,05 S 242,786 $ 222,444 S 2,866~5 $ 2,894,471 Subordinate Refunding Crossover Series 347/88 347,782 Arbitmgc rebate payable 77 Defcrrcd aedits 2,664 1,141 Current liabilities:

Long-tenn debt due within one year Acaucd interest Accounts payable and accrued expenses 25,690 24~

10 333 10,845 38,436 315 1,085 489 62

~ S90 7,884 780 8,256 6,035 S,994 5499 43,655 88,182 17579 38,790 95,288 73185 Total cunent liabilities ~60 8 ~49 96 1636 3178 8664 8256 ~17 28 149416 157261 Commitments and contingencies.....

$ 1,041,713 $ 1,431,741 $ 32,617 $ 89595 $ 276,669 $ 253,706 $ 239,972 $ 3,366,013 $ 3,400,732 7he turornpanying notes an an integ7u! Part of thesefinaneiat statrrnenh.

SOUTHERN CALIFORNIA PUBLIC POWER AUTHORITY COMBINED STATEMENT OF OPERATIONS (in thousands)

Year Pe7ded j(ale SO, 1996 Southe7n T)nrn7nission Hoootr San 7172r Bukd Sltste7n trprating juan june 30, p7ofeet profert ptojeet 7t)tat 199S Operating revenues:

Sales of electric enetm7 . $ 135,464 $ 3+49 $ 50,117 $ 188,930 $ 183,603 Sales of transmission services . $ 85 297 $ 226 $ 172 85 695 91,250 Total operating revenues 155 464 85 297 ~39 226 172 50'117 274 625 274.853 Opera tmg expenses:

Amortization of nudear fuel 7,949 7,949 8,150 Other operations .. 25,815 10,192 213 145 314 38,879 39,873 50,834 Maintenance . 6,317 5,236 13 27 35,760 47@53 Depreciation . 18,425 20329 342 1.132 9,095 49/23 47,975 Decommissioning 12,497 3 113 15 610 ~16 13 Total operating expenses 7I 024 35 757 568 ~101 48,282 159114 ~163 5 Operating income (loss) 64,461 49+40 1,149 (342) (1,132) 1,835 115+11 111~

Investment income '10 886 28 993 874 410 2174 ~062 ~44 99 23 884 Income before debt expense 42 3,897 159,910 Debt expense ~8777 99 166 ~262 1 462 4,425 ~1614 2D2 706 174 140 Costs recoverable from future billings to participants ($ 7.43D) (8 20.633) ($ 239) (5 )S94) 54083)

(5 ($ 8.71)l (8 42.796) ($ 38.748) 7he ~ng notes are an integral part of these finantia stalnntnts.

SOUTHERN CALIFORNIA PUBLIC POWER AUTHORITY COMBINED STATEMENT OF CASH FLOWS

(/n tticnnands) year Ended June 3tt, 1996 itib 1hmsmission Hoover Mead- /44/ead- Ma/tip/e San Jime 30, Verde System Upn ting Pttoenir Adetanto Pnojnt Juan 1995 hoject hoject hiojcct hojoct hijiect Fimd hofect 7bta/ 7tita!

Cash flows from operating activities:

Costs recoverable from future billings to participants ($ 7,430) ($ 20,633) ($ 239) (S 1494) ($ 4~) ($ 8,717) (S 42,796) ($ 38,748)

Adjustments to amve at net cash provided by (used for) operating activities-Depredation 18,425 20,329 342 1,132 9,095 49,323 47,975 Decommissioning 12,497 3,113 15,610 16+13 Amortization of nuclear fuel 7,949 7,949 8,150 Amortization of debt costs 24,428 11,739 294 167 482 626 37,736 29,050 Write-offof construction work in progress costs ~.........

Changes in assets and liabilities:

~ 1+13 1+13 Decommissioning fund........... (8,971) (8,971) (1,297)

Interest receivable (289) (362) 20 405 691 2 467 437 Accounts reccivablc 174 (218) (19) 213 (72) 946 1,024 1,402 Materials and supplies 378 110 488 2069 Other assets 55 1,977 3,467 56 5,555 117 Accrued interest (6,150) (943) (I) (7,105) 10,036 Accounts payable and accrued expenses ~643 ~1943 745 ~1482 ~604 3090 Net cash provided by operating activities..... 34,629 ~9282 ~061 ~6713 ~989 78 794 Cash flows from investing activities:

Interest received on investments $ 18@80 18380 34,037 Arbitrage payment...............

~

(3,757)

Payments for construction of facilities...... (10,892) (13,208) (15,652) (1,938) (41,690) (104,088)

Purchases of investments............ (154,685) ( 154,904) (22,665) (3,264) (9,184) (1,868) (14+70) (360,940) (230,693) from sale/maturity of investments... 18~ 195+93 20,705 14,474 23,000 8,867 444,948 299,265 Advances for capacity and energy, net 1,784 1,784 1,415 Reimbursement from WAPA 111 Net cash provided by (used for) investing activities 16 732 40.689 ~17 ~2998 ~1,836 ~16 12 ~441 62,482 3 710 Cash flows from capital and related financing activities:

Payments of interest on long-term debt.... (16+12) (16412) (37,092)

Proceeds from sale of bonds 229,483 229,483 Payment for defeasance of revenue bonds... (233,632) (233,632) (5,798)

Repayment of principal on long-term debt (23,855) (14+25) (610) (38,790) (36,900)

Payment for bond issue costs......... ~4832 ~4,832 ~40 Nct cash used for capital and related financing activities ~3836 ~14325 610 16 12 Nct increase (decrease) in cash and cash equivalents 18/25 35,646 (748) (728) 53,188 (4,746)

Cash and cash equivalents at beginning of year .. ~49 4 54,678 ~745 ~1280 4,279 ~8274 ~120 610 56

'1 Cash and cash equivalents at cnd of year..... $ 67,879 S 90324 $ 1,997 $ 1&8 $ 4304 $ 7&6 $ 173,798 $ 120.610 Supplemental disclosure of cash flow information:

Cash paid during the year for interest (net of amount capitalized).......... S 64.499 $ 88370 S 1,978 $ - S - $ 16512 S 11,988 $ 183,347 $ 188,700 The accointicuping notes are an intern! part of ttiese financial statements.

SOUTHERN CALIFORNIA PUSLIC POWER AUTHORITY NOTES TO FINANCIALSTATEMENTS Note I Ot1fanlzatfon and

Purpose:

Southern California Public Power Authority (Authority), a public Station in Utah to Southern California. The Authority entered entity organized under the laws of the State of California, was into an agreement also dated as of May 1, 1983 with six of its formed by a Joint Powers Agreement dated as of November 1, 1980 participants pursuant to which each member assigned its entitle-pursuant to the Joint Exercise of Powers Act of the State of ment to capacity of FIS to the Authority in return for the California. The Authority's participant membership consists of ten Authority's agreement to make payments-in-aid of construction to Southern California cities and one public district of the State of IPA. STS commenced commercial operations in July 1986. The California. The Authority was formed for the purpose of planning, Department of Water and Power of the City of Los Angeles financing, developing, acquiring, constructing, operating and (LADWP), a member of the Authority, serves as project manager maintaining projects for the generation and transmission of elec- and operating agent of the Intermountain Power Project (IPP).

tric energy for sale to its participants. The Joint Powers Agreement has a term of fiftyyears. Hoover Uprating Project The Authority and six participants The members have the following participation percentages entered into an agreement dated as of March 1, 1986, pursuant to in the Authority's interest in the projects at June 30, 1996 and 1995: which each participant assigned its entitlement to capacity and Southern associated firm energy to the Authority in return for the Authority's Palo Tranunisslon em Hocwer U ting Plead-Phoenhc Mead.

Adetauto San Juan agreement to make advance payments to the United States Bureau Participants Verde S of Reclamation (USBR) on behalf of such participants. The USBR I

Gty of Los Ansclcs 67.0% 595 o% 24.8% 35.7%

has declared that the Project was substantially complete as of Gty of Anaheim 17.6 42.6% 24.2 135 135 September 30, 1995 with minor work scheduled to be completed Gty of Riverside 5.4 10.2 31.9 4.0 in the spring of 1997. The Authority has an 18.68/o interest in the Imperial Iimsation District 65 51.0% contingent capacity of the Hoover Uprating Project (HU). All Gty of Vernon 4.9 seventeen"uprated" generators of the HU have commenced com-GtyofAzusa 1.0 4.2 1.0 2.2 14.7 mercial operations.

Gty of Bannins 1.0 2.1 1.0 13 98 Gty of Colton 1.0 3.2 1.0 2.6 14.7 Mead-Phoenix Project The Authority entered into an agreement Gty of Burbank 4.4 45 16.0 15.4 115 dated as of December 17, 1991 to acquire an interest in the Mead-Gty of Glendale 4.4 23 14.8 11.1 9.8 Phoenix Project (MP), a transmission line extending between, the Gty of Pasadena 4A 5.9 13.8 8.6 Westwing substation in Arizona and the Marketplace substation 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% in Nevada. The agreement provides the Authority with an 18.31'/o interest in the Westwing-Mead project component, a

'lhe mernhcrs do nct cunently pantdpate in the Multiple project BmL 17.76'/o interest in the Mead Substation project component and a Mead phocntc partidpattonrcQccts thee ownership cocnponcnts (sce below).

22.41'/o interest in the Mead-Marketplace project component. The Authority has entered into transmission service contracts for the Palo Verde Project The Authority, pursuant to an assignment entire capability of its interest with nine members of the Authority agreement dated as of August 14, 1981 with the Salt River Project on a "take or pay" basis. In addition, the Authority has admini-(Salt River), purchased a 5.91'/o interest in the Mo Verde Nuclear strative responsibility for accounting for the separate ownership Generating Station (PVNGS), a 3,810 megawatt nuclear-fueled interest in the project by Western Area Power Administration generating station near Phoenix, Arizona, and a 6.55'/o share of the (WAPA), who is providing separate funding ($ 72,874,000 and right to use certain portions of the Arizona Nuclear Power Project $ 58,676,000 at June 30, 1996 and 1995, respectively) for its interest.

Valley Transmission System (collectively, the Palo Verde Project). Commercial operations of MP commenced in April 1996. Funding As of July1, 1981, ten participants had entered into power sales was provided by a transfer of funds from the Multiple Project Fund contracts with the Authority to purchase the Authority's share of (Note 4).

PVNGS capacity and energy. Units 1, 2 and 3 of the Palo Verde Project began commercial operations in January 1986, Septembei Mead-Adelanto Project -The Authority entered into an agteement 1986, and Januaty 1988, respectively. dated as of December 17, 1991 to acquire a 67.92/o interest in the Mead-Adelanto Project (MA), a transmission line extending Soffthern TJIIJJsnnssioJJ Systnn Project The Authority, pursuant to between the Adelanto substation in Southern California and the an agreement dated as of May 1, 1983 with the Intermountain Marketplace substation in Nevada. The Authority has entered into Power Agency (IPA), has made payments-in-aid of construction to transmission service contracts for the entire capability of its inter-IPA to defray all the costs of acquisition and construction of the est with nine members of the Authority on a"take or pay" basis. In Southern Transmission System Project (STS), which provides for addition, the Authority has administrative responsibility for the transmission of energy from the Intermountain Generating

accounting for the sepamte ownership interest in the project by plant construction work in progress until a facility commences WAPA, who is providing sepamte funding ($ 17,088,000 and commercial operation.

$ 16,282,000 at June 30, 1996 and 1995, respectively) for its interest. The Authority's share of construction and betterment costs Funding was provided by a transfer of funds from the Multiple associated with PVNGS is included as utility plant. Depreciation Project Fund (Note 4). Commercial operations commenced in expense is computed using the straight-line method based on the April 1996. LADWP serves as both construction manager and estimated service life of thirty-five years. Nuclear fuel is amortized operations manager. and charged to expense on the basis of actual thermal energy pro-duced relative to total thermal energy expected to be produced MultipieProject Fund During fiscal year 1990, the Authority issued over the life of the fuel. Under the provisions of the Nuclear Waste Multiple Project Revenue Bonds for net proceeds of approxi- Policy Act of 1982, the Authority is charged one mill per kilowatt-mately $ 600 million to provide funds to finance costs of construc- hour, by the federal governmen, on its share of electricity pro-tion and acquisition of ownership interests or capacity rights in one duced by PVNGS, and such funds willeventually be utilized by the or more then unspecified projects for the generation or trans- fedeml government to provide for PVNGS'nuclear waste disposal.

mission of electric energy. The Authority records this charge as a current year expense.

In August 1992, the Authority's Board of Directors approved a The Authority's share of construction and betterment costs resolution authorizing the use of certain proceeds of Multiple associated with STS, MP, MA and SJGS are included as utility Project Revenue Bonds to finance the Authority's ownership inter- plant. Depreciation expense is computed using the stmight-line ests in the Mead-Phoenix and Mead-Adelanto projects. Tmnsfers method based on the estimated service lives, principally thirty-five made from the Multiple Project Fund are sufficient to provide years for STS, MAand MP and twenty-one years for SJGS.

for the Authority's share of the estimated costs of acquisition and Interest costs incurred by the MP and MAprojects through the construction of these two projects, including reimbursement of date commercial operations commenced (April 1996) are capital-planning, development and other related costs. ized in utilityplant. Total interest costs capitalized were $ 11,827,000 and $ 15,769,000 in fiscal 1996 and 1995, respectively, for the MA San Juan Project Effective July 1, 1993, the Authority purchased project and $ 3,881,000 and $ 5,175,000 in fiscal 1996 and 1995, a 41.80/o interest in Unit 3, a 488 megawatt unit and related respectively, for the MP project.

common facilities, of the San Juan Generating Station (SJGS) from Century Power Corpomtion. Unit 3 is one unit of a four-unit Arlvnnces for Capacity and Enegp -Advance payments to USBR for coal-fired power genemting station in New Mexico. The Authority the upmting of the 17 genemtors at the Hoover Power Plant are allocated the $ 193 million purchase price to the estimated fair included in advances for capacity and energy. These advances are value of the utility plant ($ 190 million) and to materials and being reduced by credits on billings to participants for energy and supplies ($3 million).The purchase has been financed through the capacity.

issuance of approximately $ 237 million (par value) of San Juan Project Revenue Bonds. The Authority has entered into power sales Nuclear Decommissioning Decommissioning of PVNGS is contracts for the entire capability of its interest with five members projected to commence subsequent to the year 2022. Based upon of the Authority on a"take or pay" basis. an updated study performed by an independent engineering firm, the Authority's share of the estimated decommissioning costs is

$ 85.5 million in 1995 dollars ($ 390 miHion in 2022 dollars assum-Nota 2 Summary of Significant Accounting Pollclcs: ing a 6'/0 estimated annual inflation mte). The Authority is provid-The financial statements of the Authority are presented in confor- ing for its share of the estimated future decommissioning costs mity with generally accepted accounting principles, and substan- over the remaining life of the nuclear power plant (25 to 27 years) tiaHy in conformity with accounting principles prescribed by the through annual charges to expense which amounted to $ 12.5 mil-Federal Energy Regulatory Commission and the California Public lion and $ 13.4 million in fiscal 1996 and 1995, respectively.

Utilities Commission. The Authority is not subject to regulation by The decommissioning liabilityis included as a component of accu-either of these regulatory bodies. mulated depreciation and was $ 88.1 million and $ 75.6 million at The financial statements represent the Authority's share in each June 30, 1996 and 1995, respectively.

jointly-owned project. The Authority's share of direct expenses of A Decommissioning Fund has been established and partiaHy jointly-owned projects are included in the corresponding operat- funded at $ 33.9 million at June 30, 1996. The Decommissioning ing expense of the statement of opemtions. Each owner of the Fund earned interest income of $ 700,000 during fiscal 1996.

jointly-owned projects is required to provide their own financing.

Dnnvlifion nnd Site Reclamation Demolition and site reclamation UtilityPlant The Authority's share of aH expenditures, including of SJGS, which involves restoring the site to a "green" condition geneml administmtive and other overhead expenses, payments- which existed prior to SJGS construction, is projected to commence in-aid of construction, interest net of related investment income, subsequent to the year 2014. Based upon a study performed by an deferred cost amortization and the fair value of test power gener- independent engineering firm, the Authority's share of the esti-ated and delivered to the participants are capitalized as utility mated demolition and site reclamation costs is $ 18.7 million in

1992 dollars ($ 65.3 million in 2014 dollars using a 6% estimated ing and each consecutive five years thereafter. The Authority made annual inflation rate). The Authority is providing for its share of its first rebate payment of $ 3.8 million during fiscal year 1995. The the estimated future demolition costs over the remaining life of next rebate payment to the IRS is due in fiscal year 2000.

the power plant (18 years) through annual charges to expense of

$ 3.1 million.lIiedemolition liabilityis included as a component of ReclassrJicafious Certain reclassifications have been made in the accumulated depreciation and was $ 9.3 million and $ 6.2 million at fiscal year 1995 financial statements to conform to the fiscal year June 30, 1996 and 1995, respectively. 1996 presentation.

As of June 30, 1996, the Authority has not billed participants for the cost of demolition nor has it established a demolition fund.

Use of Estimntes The preparation of financial statements in con-formity with generally accepted accounting principles requires Unamortized Debt Expenses Unamortized debt issue costs, management to make estimates and assumptions that affect the including the loss on refundings, are being amortized over the reported amounts of assets and liabilities and disclosure of contin-terms of the respective issues and are reported net of accumulated gent assets and liabilities at the date of the financial statements and amortization. Total deferred loss on refundings, net of accumulated the reported amounts of revenues and expenses during the report-amortization, was $ 378,070,000 and $ 393,440,000 at June 30, 1996 ing period. Actual results could differ from those estimates.

and 1995, respectively.

Inveshunlts Investments include United States Government and Note 3 Special Funds:

governmental agency securities and repurchase agreements which The Bond Indentures for the six projects and the Multiple Project are collateralized by such securities. Additionally, the Mead- Fund require the following special funds to be established to Phoenix Project, the Mead-Adelanto Project and the Multiple account for the Authority's receipts and disbursements. The Project Fund's investments are comprised of an investment agree- moneys and investments held in these funds are restricted in use ment with a financial institution earning a guaranteed rate of to the purposes stipulated in the Bond Indentures. A summary of return. The Southern Transmission System Project has debt service these funds follows:

reserve funds associated with the 1991 and 1992 Subordinate Fund Pu Refunding Series Bonds invested with a financial institution under Construction 'Ib disburse funds for the acquisition and mnstruction of the a specific investment agreement allowed under the Bond Project.

Indenture earning a guaranteed rate of return.

Debt Service To pay interest and pdncipal related to the Revenue Bonds.

Investments available for sale are carried at aggregate fair value and changes in unrealized net gains or losses are recorded sepa- Rcvcnuc To initMlyreceive all revenues and disburse them to other funds.

rately. Investments are reduced to estimated net realizable value when necessary for declines in value considered to be other than To pay operating expenses

'emporary. Gains and losses realized on the sale of investments are Reset,u and Ib pay capital Improlvments and make up defidcndcs in generally determined using the specific identification method. Contingency other funds.

As discussed in Note 3, all of the investments are restricted as to Geneml Rcservc To make up any defidencies in other funds.

their use. Advance Ibymcnts lb disburse funds for thc mst of acquisition of capadty.

Cash ruid Cash Equivalents Cash and cash equivalents include Proceeds Acmunt To initiallyreceive the proceeds of the sale of the hiultiple Project Revenue Bonds.

cash and all investments with original maturities less than 90 days.

Earnings Account Tb reccivc immtment earnings on the Multiple Prelect Revenue Bonds.

Revenues- Revenues consist of billings to participants for the sales of electric energy and of transmission service in accordance with Revolving Fund To pay the Authority's operating expenses.

the participation agreements. Generally, revenues are fixed at Decommissioning Fund To accumulate funds rcLued to the future decommissioning a level to recover all operating and debt service costs over the of PVNGS, commercial life of the property (see Note 6). Issue Fund 'Ib initiallyreceive pledged revenues associated with the applicable subordinated refunding series'Indenture of Thrst Debt Experrse Debt expense includes interest on debt and the and pay the related interest and principaL amortization of bond discounts, debt issuance expense and loss on

~

Escrow account- To initiallyrecrive pledged revenues assodated with refunding costs. Subordinate Component 3 of the 1993 Subordinate Refunding Refunding of Trust and pay the rekt ted interest Cross'eries'Indenture Series and principal.

Arbitrage Rebate- A rebate payable to the Internal Revenue Service Acquisition Acmunt To disburse funds for the acquisition and constmction of the (IRS) results from the investment of the proceeds from the Multiple Mead-Phoenix, Mead-Adeianto and San juan pmjects.

Project Revenue Bond offering in a taxable financial instrument that yields a higher rate of interest income than the cost of the associated funds. The excess of interest income over costs is Allof the funds listed above, except for the Revolving Fund, are payable to the IRS within five years of the date of the bond offer-held by the respective trustees.

Palo Verde Project- The balances of the funds required by the Bond Hoover Uprrfting Project-The balances in the special funds required Indenture are as follows, in thousands: by the Bond Indenture are as follows, in thousands:

1995 1995 Debt Service Fund- Advance payments Fund $ 2,437 $ 2,437 Dcbt Senrice Acmunt $ 51~ $ 51394 $ 57 457 $ 52,467 Operating-irking Capital Fund 563 563 Debt Senrice Reserve Account 74,420 74,160 81,497 81,077 Debt Scnrice Fund-Revenue Fund 5 5 1 1 Debt Service Account W90 2390 1,440 1,429 Operating Fund 20,130 20.134 31,141 31,026 Debt Service Reserve Account 3,122 3,121 3,078 3,068 Reserve and Contingency Fund 25,924 26,107 16,776 17,075 General Reserve Fund 5+18 5316 2,911 2,914 Demnunissioning Trust Fund Issue Fund 34,131 13,026 33,740 13,026 24503 12,486 2~

14486 Revolving Fund 13 13

$ 11,634 $ 11,631 $ 10,442 $ 10,424 Revolving Fund 45 45 45 45

$ 219,067 $ 218,611 $ 218,906 $ 218,680 Contractual maturitics:

Within one year Contractual maturities: After one >ear through Within one >sea $ 69,781 $ 69+91 6ve >eas 9,631 9 628 After one year through $ 11,634 $ 11,631 6ve )'eas 136,279 136,148 After 6ve >eas thmugh ten yeas 3,187 3,252 In addition, at June 30, 1996 and 1995, the Authority had After tcn yeas 9,820 9~ advances to USBR of $ 10,119,000 and $ 11,903,000, respectively.

$ 219,067 $ 218,611 Mead-Phoenix Project The balances in the special funds required Soufheni Transmission Sysfern Project The balances in the special by the Bond Indenture are as foHows, in thousands:

funds required by the Bond Indenture are as follows, in thousands:

Fair Value Amati'ail Cost Value Acquisition Acmunt $ 12571 $ 1%71 $ 19,830 $ 19,830 Debt Service Fund-Construction fund-Debt Savice Account 4,976 4,967 4,444 4444 Initial Facilities Amount $ 235 $ 235 $ 223 $ 223 Debt Service Reserve Account 6,133 6,133 6,132 6,132 Debt Service Fund-Debt Service Account Issue Fund 4,924 M73 21,921 21,896 31,480 31/91 Revenue Fund 64 64 Debt Service Reserve Account 86,220 86,189 66,672 66,857 Operating Fund 239 239 Operating Fund 6,015 6,007 5,987 5,987 Revolving Fund General Reserve Fund 4,194 4,194 9~ 9~2 6 6 35~

6 6

~

Issue Fund 77,024 76,794 77,768 77P79 $ 23,989 $ 23,980 $ $ 35,285 Escmsv Account-Subordinatc Refunding Contractual maturities:

Series 346,474 343,903 355,101 353,188 Within one )ea $ ~9 $ 2+89 Revolving Fund 15 15 15 15 After one >sea through 6ve >seas 1,242 1,233

$ 542,098 $ 539,233 $ 546,779 $ 544,882 After ten years 20,358 20&8 Contractual maturities: $ 23,989 $ 23,980 Within one >ear $ 102,008 $ 101,975 After one year thmugtt Mead-Arlelnnfo Project -The balances in the special funds required 6ve )'Mls 80,852 80g03 After five yeas through by the Bond Indenture are as follows, in thousands:

ten )'eas 36,972 34,189 After ten )seas 322,266 322,266

$ 542.098 $ 539,233 Fair moonized Fair Value Cost Value In addition, at June 30, 1996 and 1995, the Authority had non- Acquisition Account $ 36,979 $ 36,979 $ 37,745 $ 37,745 Debt Savice Fund-interest bearing advances outstanding to IPA of $ 19,550,000. Dcbt Service Account 15,194 15,166 1'4353 12m Debt Service Rcserm Acmunt 16,865 16,865 17,040 17,010 Issue Fund 16/17 16+46 Revenue Fund 71 71 Operating Fund 264 264 Revolving Fund 6 6 6 6

$ 69379 $ 69&1 $ 83,661 $ 83A90 Contractual maturities:

Within one year $ 6,794 $ 6,789 After one year thmugh 6ve yeas 4,161 4,138 After ten >ears 58,424 58,424

$ 69379 $ 69,351

Multiple Project Fund The balances in the special funds required interest on all moneys or securities (other than in the Construction by the Bond Indenture are as follows, in thousands: Fund) held pursuant to the Bond Indenture and (3) all funds estab-lished by the Bond Indenture.

At the option of the Authority, all outstanding Power Project Revenue Bonds and Subordinate Refunding Term Bonds are subject to redemption prior to maturity, except for the 1996 Proceeds Account $ 256,830 $ 256,830 $ 256/30 $ 256,830 3,278 3,278 1~ 1~ Subordinate Refunding Series A which is not redeemable.

Earnings Account

$ 260,108 $ 260,108 $ 258.214 $ 258,214 The Bond Indenture requires mandatory sinking fund install-ments to be made beginning in fiscal year 2003 (1986 Series A Contractual maturities:

Within one year $ 9,220 $ 9,220 Bonds and 1987 Series A Bonds), 2005 (1989 Series A Bonds), 2010 After ten years 250,888 250g88 (1993 Series A Bonds), and 2008 (1996 Subordinate Refunding

$ 260,108 $ 260,10S Series B). Scheduled principal maturities for the Palo Verde Project during the five fiscal years followingJune 30, 1996 are $ 25,690,000 San Juan Project The balances in the special funds required by the in 1997, $ 22,220,000 in 1998, $ 23,580,000 in 1999, $ 25,145,000 in Bond Indenture are as follows, in thousands: 2000, and $ 12,860,000 in 2001. The average interest rate on out-standing debt during fiscal year 1996 and 1995 was 5.8% and 6.0%,

1995 respectively.

Fair Fair Value Cost Vatue Operating Account Operating Reserve Account

$ 1,238 7

$ 1,23S 7

$ 1,618 2

$ 1,618 2 Southern Transnnssion Systmn Project - To finance payments-in-aid Acquisition Account 527 527 112 112 of construction to IPA for construction of the FIS, the Authority Debt Service Fund-Dcbt Service Account 8,607 8597 6,017 6,017 issued Transmission Project Revenue Bonds pursuant to the Debt Service Reserve Account 18,031 18,031 18,026 18,026 Authority's Indenture of Trust dated as of May 1, 1983 (Senior Rcscrve and Contingency Fund 13077 13~ 11,224 11,252 Indenture), as amended and supplemented. The Authority also has Revolving Fund 15 15 issued and has outstanding Tmnsmission Project'Revenue Bonds

$ 41,787 $ 41,783 $ 37.014 $ 37,012 1991 and 1992 Subordinate Refunding Series issued under Contractual matunties: Indentures of Trust dated as of March 'I, 1991 and June 1, 1992, Within one year $ 7,613 $ 7,613 After one year tluough respectively. The 1991 and 1992 subordinated bonds were issued to five )'eius 16,149 ~ 16,145 advance refund certain bonds previously issued under the Senior After ten years 18,025 18,025 Indenture.

$ 41,787 $ 41,783 The bond indentures provide that the Revenue Bonds and the Subordinate Refunding Series Bonds shall be special, limited oblig-Project Investnfent Sales There were no proceeds from sales of ations of the Authority payable solely from and secured solely by investments during fiscal 1996 or 1995.

(1) proceeds from the sale of bonds, (2) all revenues, incomes, rents and receipts attributable to STS (see Note 6) and interest on all moneys or securities (other than in the Construction Fund) held Note 4 Long-tcrnt Debt:

pursuant to the Bond Indenture and (3) all funds established by the Reference is made below to the Combined Schedule of Long-term Bond Indenture.

Debt at June 30, 1996 for details related to all of the Authority's out-All outstanding Tmnsmission Project Revenue and Refunding standing bonds.

Bonds, at the option of the Authority, are subject to redemption

-To finance the purchase and construction of the prior to maturity.

Palo Verde Project The Bond Indenture requires mandatory sinking fund install-Authority's share of the Palo Verde Project, the Authority issued ments to be made beginning in fiscal year 2003 (for the 1986 Series Power Project Revenue Bonds pursuant to the Authority's A Bonds), 2002 (1986 Series B Bonds) and 2007 (1988 Series A Indenture of Trust dated as of July 1, 1981 (Senior Indenture), as Bonds). Scheduled principal maturities for FIS during the five fis-amended and supplemented. The Authority also has issued and cal years following June 30, 1996 are $ 10,845,000 in 1997, has outstanding Power Project Subordinate Refunding Series

$ 21,565,000 in 1998, $ 22,790,000 in 1999, $ 10,200,000 in 2000, and Bonds issued under an Indenture of Trust dated as of January 1,

$ 10,115,000 in 2001. The average interest mte on outstanding debt 1993 (Subordinate Indenture). The Subordinate Refunding Bonds during fiscal year 1996 and 1995 was 8.3%.

were issued to advance refund certain bonds previously issued under the Senior Indenture. -

Hoover Uprating Project To finance advance payments to USBR for The bond indentures provide that the Revenue Bonds and Project, the application to the costs of the Hoover Upmting Subordinate Refunding Bonds shall be special, limited obligations Bonds pur-Authority issued Hydroelectric Power Project Revenue of the Authority payable solely from and secured solely by (1) pro- suant to the Authority's Indenture of Trust dated as of March 1, ceeds from the sale of bonds, (2) all revenues, incomes, rents and 1986 (Bond Indenture).

receipts attributable to the Palo Verde Project (see Note 6) and

The Bond Indenture provides that the Revenue Bonds shall be Indenture). The proceeds from the Revenue Bonds, together with special, limited obligations of the Authority payable solely from dmwdowns from the Debt Service Fund and Project Acquisition and secured solely by (1) the proceeds from the sale of the bonds, Fund, were used to advance refund $ 64,840,000 of the Multiple (2) all revenues I'rom sales of energy to participants (see Note 6), Project Revenue Bonds previously transferred to the Mead-(3) interest or other receipts derived from any moneys or securities Phoenix Project.

held pursuant to the Bond Indenture and (4) all funds established The Bond Indenture provides that the Revenue Bonds shall be by the Bond Indenture (except for the Interim Advance Payments special, limited obligations of the Authority payable solely from, Account in the Advance Payments Fund). and secured solely by, (1) proceeds from the sale of bonds, (2) all At the option of the Authority, all outstanding Hydroelectric revenues, incomes, rents and receipts attributable to Mead-Power Project Revenue Bonds are subject to redemption prior to Phoenix (see Note 6) and interest on all moneys or securities and maturity. (3) all funds established by the Bond Indenture.

The Bond Indenture requires mandatory sinking fund install- At the option of the Authority, all outstanding Mead-Phoenix ments to be made beginning in fiscal year 2007 for the 1991 Series Revenue Bonds are subject to redemption prior to maturity.

A Bonds maturing on October 1, 2010 and fiscal year 2011 for The Bond Indenture requires mandatory sinking fund install-the 1991 Series A Bonds maturing on October 1, 2017. Scheduled ments to be made beginning in fiscal year 2018 for the 1994 Series principal maturities for the Hoover Upmting Project during the five Bonds. The first scheduled principal maturity for the Mead-fiscal years following June 30, 1996 are $ 1,085,000 in 1997, Phoenix Revenue Bonds is $ 1,295,000 in fiscal year 2000. The aver-

$ 1,'130,000 in 1998, $ 1,230,000 in 1999, $ 1,285,000 in 2000, and age interest rate on outstanding debt during fiscal year 1996 and

$ 1,400,000 in 2001. The avemge interest mte on outstanding debt 1995 was 6.00/.

during fiscal year 1996 and 1995 was 5.8'/0 and 6.1'/0, respectively.

During fiscal 1995, the Authority repurchased $ 340,000 of out- Mead-Adelanto Proj ect-To finance the Authority's ownership inter-standing Hydroelectric Power Project Revenue Bonds with excess est in the estimated cost of the project, $ 285,010,000 of the Multiple funds in the Advance Payments Fund. Project Revenue Bonds were tmnsferred to the Mead-Adelanto Project in October 1992. In March 1994, the Authority issued and Multiple Proj ect Fund To finance costs of construction and acqui- has outstanding $ 173,955,000 of Mead-Adelanto Revenue Bonds sition of ownership interests or capacity rights in one or more under an Indenture of Trust dated as of January 1, 1994 (Bond projects expected to be undertaken within five years after issuance, Indenture). The proceeds of the Revenue Bonds, together with the Authority issued Multiple Project Revenue Bonds pursuant to dmwdowns from the Debt Service Fund and Project Acquisition the Authority's Indenture ofTrust dated as of August 1, 1989 (Bond Fund, were used to advance refund $ 178,310,000 of the Multiple Indenture), as amended and supplemented. Project Revenue Bonds previously transferred to the Mead-The Bond Indenture provides that the Revenue Bonds shall be Adelanto Project.

special, limited obligations of the Authority payable solely from, The Bond Indenture provides that the Revenue Bonds shall be and secured solely by, (1) proceeds from the sale of bonds, (2) with special, limited obligations of the Authority payable solely from, respect to each authorized project, the revenues of such authorized and secured solely by, 1) proceeds from the sale of bonds, (2) all project, and (3) all funds established by the Bond Indenture. revenues, incomes, rents and receipts attributable to Mead-In October 1992, $ 103,640,000 and $ 285,010,000 of the Multiple Adelanto (see Note 6) and interest on all moneys or securities and Project Revenue Bonds were transferred to the Mead-Phoenix (3) all funds established by the Bond Indenture.

Project and the Mead-Adelanto Project, respectively, to finance the At the option of the Authority, all outstanding Mead-Adelanto estimated costs of acquisition and construction of the projects. Revenue Bonds are subject to redemption prior to maturity.

A total of $ 153,500,000 of the outstanding Multiple Project The Bond Indenture requires mandatory sinking fund install-Revenue Bonds are not subject to redemption prior to maturity. At ments to be made beginning in fiscal year 2018 for the 1995 Series the option of the Authority, the balance of the outstanding bonds Bonds. The first scheduled principal maturity for the Mead-are subject to redemption prior to maturity. Adelanto Revenue Bonds is $ 3,560,000 in fiscal year 2000. The The Bond Indenture requires mandatory sinking fund install- avemge interest rate on outstanding debt during fiscal year 1996 ments to be made beginning in fiscal year 2006 for the 1989 Series and 1995 was 5.9'/0 and 6.0'/0, respectively.

Bonds. The first scheduled principal maturity for the Multiple Project Revenue Bonds is $ 8,645,000 in fiscal year 2000. The aver- San juan Project To finance the costs of acquisition of an owner-age interest rate on outstanding debt during fiscal year 1996 and ship interest in Unit 3 of the SJGS, the Authority issued San Juan 1995 was 6.8'/0. Project Revenue Bonds pursuant to the Authority's Indenture of Trust dated as of January 1, 1993 (Bond Indenture).

Mead-Phoenix Project To finance the Authority's ownership inter- The Bond Indenture provides that the Revenue Bonds shall be est in the estimated cost of the project, $ 103,640,000 of the Multiple special, limited obligations of the Authority payable solely from, Project Revenue Bonds were tmnsferred to the Mead-Phoenix and secured solely by, (1) proceeds from the sale of bonds, (2) all Project in October '1992. In March 1994, the Authority issued and revenues, incomes, rents and receipts attributable to San Juan (see has outstanding $ 51,835,000 of Mead-Phoenix Revenue Bonds Note 6) and interest on all moneys or securities and (3) all funds under an Indenture of Trust dated as of January '1, 1994 (Bond established by the Bond Indenture.

At the option of the Authority, all outstanding San Juan Project interest on the bonds is payable from interest earned on invest-Revenue Bonds are subject to redemption prior to maturity. ments with a financial institution under a specific investment

'Ihe Bond Indenture requires mandatory sinking Eund install- agreement purchased out of the proceeds of the sales and held in ments to be made beginning in fiscal year 2012 for the 1993 Series bank escrow accounts. After the monies in the escrow accounts are A Bonds. The scheduled principal maturities for the San Juan applied to redeem the bonds to be called, primarily through fiscal Project Revenue Bonds during the five fiscal years following June 1997, interest on the bonds willbe payable from revenues. The trust 30, 1996 are $ 6,035,000 in 1998, $ 6,275,000 in 1999, $ 6,540,000 in account assets ($343,898,000 in escrow accounts and $ 2,410,000 in 2000 and $ 6,825,000 in 2001. The average interest rate on out- unamortized debt expense at June 30, 1996) and liabilities standing debt during fiscal year 1996 and 1995 was 5.3'lo. ($ 347,388,000, net of bond discounts, at June 30, 1996) for Component 3 are included in the Authority's financial statement.

ReJiaiding Bonds In April 1996, the Authority issued $ 152,905,000 The revenue bonds to be refunded are also included in the finan-of Palo Verde 1996 Subordinate Refunding Series A Bonds to cial statements until the scheduled call date, at which time the refund $ 163,355,000 of previously issued Palo Verde 1987 refunded bonds and related trust account assets will be removed Refunding Series A Bonds and issued $ 58,870,000 of Palo Verde from the balance sheet and the cost of refunding the debt will be 1996 Subordinate Refunding Series B Bonds to refund $ 18,555,000 included in unamortized debt expenses.

and $ 40,315,000 of previously issued Iblo Verde 1986 Refunding In January 1992, $ 70,680,000 of Mo Verde Special Obligation Series B and 1987 Refunding Series A Bonds, respectively. The Crossover Series Bonds were issued, the proceeds of which were refunding is expected to reduce total debt service payments over placed in an irrevocable trust and will be used to redeem the next 13 years by approximately $ 50,967,000 (the difference $ 69,125,000 of bonds currently included within long term debt at between the debt service payments on the old and new debt) scheduled call dates.

and is expected to result in a net present value savings of approxi- Until the bonds to be reEunded by the Mo Verde Special mately $ 29,537,000. Obligation Crossover Series Bonds are called, interest on the Mo In March 1994, the Authority issued $ 51,835,000 of Mead- Verde Special Obligation Crossover Series Bonds is payable f'rom Phoenix Project Revenue Bonds and $ 173,955,000 of Mead- interest earned on securities of the United States Government pur-Adelanto Project Revenue Bonds to refund $ 243,150,000 of chased out of the proceeds of the sales and held in bank escrow previously issued Multiple Project Revenue Bonds which were accounts. After the monies in the escrow accounts are applied to transferred to the Mead-Phoenix and Mead-Adelanto projects redeem the bonds to be called, primarily through 1996, interest on during fiscal year 1993. The partial refunding of the original issue the Iblo Verde Special Obligation Crossover Series Bonds will be within five years of its issuance triggered a recalculation of the arbi- payable from revenues. The trust account assets and the liabilityfor trage yield. The recalculation resulted in a higher arbitrage yield the Palo Verde Special Obligation Crossover Series Bonds are not which reduced the rebate liability of the Authority. At June 30, included in the Authority's financial statements. At June 30, 1996 1996, cumulative savings due to the rebate calculation amounted to and 1995, $ 63,849,000 and $ 70,959,000, respectively, of these trust

$ 6,401,924. This amount was allocated $ 1,707,180 and $ 4,694,744 assets have been offset against the Palo Verde Special Obligation to the Mead-Phoenix and Mead-Adelanto Projects, respectively. Crossover Series Bonds.

In July 1992, the Authority issued $ 475,000,000 of Southern On July 1, 1995, the crossover date for the Mo Verde Special Tmnsmission Project Revenue Bonds to refund $ 385,385,000 of Obligation Bonds Series A, trust assets in escrow of $ 7,131,000 previously issued bonds. Principal and interest with respect to the were used to advance reEund $ 7,125,000 of previously issued 1992 bonds are allocated into four separate components. Each of bonds.

components 1, 2 and 3 is secured by, and payable from, invest- At June 30, 1996 and 1995, the aggregate amount of debt in all ments in its escrow fund until scheduled crossover dates. projects considered to be defeased was $ 3,535,075,000 and Component 4 proceeds of $ 14,100,000 were used to advance $ 3,305,725,000, respectively.

retund approximately $ 9,000,000 of bonds in fiscal year 1993. On the Component 1 Crossover date (January 1, 1994), Component 1 Iuterest Rate Swap In fiscal year 1991, the Authority entered into proceeds of $ 13,959,000 were used in fiscal 1994 to advance reEund an Interest Rate Swap agreement with a third party for the purpose

$ 13,455,000 of previously issued bonds. On the Component 2 of hedging against interest mte fluctuations arising from the Crossover date (January 1, 1995), Component 2 proceeds of issuance of the Transmission Project Revenue Bonds, 1991

$ 5,519,000 were used in fiscal 1995 to advance refund $ 5,335,000 Subordinate Refunding Series as variable mte obligations. The of previously issued bonds. Proceeds from Component 3 of notional amount of the Swap Agreement is equal to the par value

$ 343,921,000 were placed in an irrevocable trust and will be used of the bond ($291,700,000 and $ 292,000,000 at June 30, 1996 and to redeem $ 313,050,000 of bonds currently included within long- 1995, respectively). The Swap Agreement provides for the term debt at scheduled call dates. The combined refunding is Authority to make payments to the third party on a fixed mte basis expected to reduce total debt service payments over the next at 6.38'lo, and for the third party to make reciprocal payments 25 years by approximately $ 52,585,000 and is expected to result in based on a variable rate basis (3.1'/o and 3.9'lo at June 30, 1996 and an ovemll net present value savings of approximately $ 25,060,000. 1995, respectively). The bonds mature in 2019.

Until the bonds to be refunded by Component 3 are called,

COMBINED SCHEDULE OF LONG-TERM DEBT AT JUNE 303 1996 fin th7outanA)

I/ate Effntloe Maturity on oJ Sate Interest Rate July I Total Principal:

Palo Verde Project Revenue and Refunding Bonds 1985A 05/22/85 9.7% 1996 to 1999 $ 1,070 1985B 07/02/85 9.1% 1996 to 2000 5,610 1986A 03/13/86 8.2% 1996 to 2006 71,220 1986B 12/16/86 7.2% 1996 to 2017 96,450 1987A 02/11/87 6.9% 1996 to 2017 43,720 1989A 02/1S/89 7.2% 1996 to 2015 287,705 1992A 01/01/92 6.0% 1996 to 2010 7,265 1992C 01/01/92 6.0% '1996 to 2010 15,620 1993Sub 03/01/93 55% 1996 to 2017 98,200 1993A 03/01/93 55% 1996 to 2017 270,035 1996A 02/13/96 4.4% 1996 to 2017 152,905 1996B 02/29/96 44% 1996 to 2017 58 870 1,108,670 Southern I?ansmission System Project Revenue and Refunding Bonds 1986A 03/18/86 8.0% 1996 to 2021 107@00 1986B 04/29/86 75% 1996 to 2023 401570 1988A 11/22/88 7.2% 1996 to 2015 154,085 1991A IN/17/91 6.4% 2019 291,700 1992 Comp 1,2,4 07/20/92 6.1% 1996 to 2021 40,639 1992 Comp 3 07/20/92 6.1% 1996 to 2021 431,766 1993A 07/01/93 S.4% 1996 to 2023 125 865 Hoover Uprating Project Revenue and Refunding Bonds . 1986A '8/13/86 8.1% 1996 to 2017 4,160 1991 08/01/91 6.2% 1996 to 2017 31695

'ultiple Project Revenue Bonds Mead-Phoenix Project 1989 01/01/90 7.1% 1999 to 2020 38,800 Mead-Adeianto Project 1989 01/IN/90 7.1% 1999 to 2020 106,700 Multiple Project . 1989 01/04/90 7.1% 1999 to 2020 259 100 Mead-Phoenix Project Revenue Bonds 03/01/94 53% 2006 to 2015 51 835 Mead-Adelanto Projed Revenue Bonds 03/01/94 53% 2006 to 2015 173 955 San Juan Project Revenue Bonds 1993 06/01/93 5.6% 1997 to 2020 ~257 75 Total principal amount ~365 015 Unamortized bond discount:

MoVerde Project (101,823)

Southcmltansmission System Project (1S9,935)

Hoover Uprating Project (3~9)

Mead-Phoenix Project Mead-Adelanto Project Multiple Projed Fund

........ (4,218)

(12,650)

(16313)

San Juan Project ~8899 Total unamortized bond discount 30742 Long-tenn debt due within one year 43 655

'lbtal long-term debt, net (including Subordinate Refunding Crom'eries) $ 3.213.933

Note S Disclosures about Fair Value of Financial Instrumcntsr for their proportionate share of operating and maintenance The following methods and assumptions were used to estimate the expenses and debt service on Tmnsmission Project Revenue Bonds fair value of each class of financial instruments for which it is pmc- and other debt. The contmcts expire in 2027 and, as long as any ticable to estimate that value: Transmission Project Revenue Bonds are outstanding, cannot be terminated or amended in any manner which will impair or Cnsh and cash equivalents -The carrying value approximates fair adversely affect the rights of the bondholders.

value because of the short maturity of those instruments. In March 1986, the Authority entered into power sales contmcts with six participants of the Hoover Upmting Project (see Note 1).

Investnlents/Decouunissioning fiui/Escroto account Subordinate Under the terms of the contmcts, the participants are entitled to Refiutding Crossover Series/Crossover escrow accounts- The fair values capacity and associated firm energy of the Hoover Uprating Project of investments are estimated based on quoted market prices for the and are obligated to make payments on a "take or pay" basis for same or similar investments.

their proportionate share of opemting and maintenance expenses Long-tenn debt/Special Obligation Crossover Series Bonds/Subordinate and debt service whether or not the Hoover Upmting Project or Refiutding Crossover Series-The fair value of the Authority's debt is any part thereof has been completed, is operating or is operable, or estimated based on the quoted market prices for the same or sim- its service is suspended, interfered with, reduced or curtailed or ter-ilar issues or on the current avemge rates offered to the Authority minated in whole or in part. The contracts expire in 2018, and as for debt of approximately the same remaining maturities, net'of the long as any Hydroelectric Power Project Revenue Bonds are out-effect of a related interest rate swap agreement. standing, cannot be terminated or amended in any manner which The fair values of the Authority's financial instruments are as win impair or adversely affect the rights of the bondholders.

follows (in thousands): In August 1992, the Authority entered into transmission service contracts with nine participants of the Mead-Phoenix Project (see Note 1). Under the terms of the contracts, the participants are enti-Fait Fatr tled to transmission service utilizing the Mead-Phoenix Project and Vitue Cost Wue are obligated to make payments on a "take or pay" basis for their Abets:

$ 120,610 $ '120,610 proportionate share of operating and maintenance expenses and Cash and cash equivalents $ 173,798 $ 173,798 Escrow account debt service on the Multiple Project and Mead-Phoenix Revenue Subordinate Refunding Bonds and other debt, whether or not the Mead-Phoenix Project Crom'eries 346,468 343,898 345,782 343,921 or any part thereof has been completed, is operating and operable, Decommissioning fund 33,865 33,474 24503 24~

Investments 597,831 597,427 682,916 682,442 or its service is suspended, interfered with, reduced or curtailed or terminated in whole or in part. The contracts expire in 2030 and, as

~

Liabilities:

Debt 2,910,200 3,210,790 2,933,261 3,198~ long as any Multiple Project and Mead-Phoenix Revenue Bonds Suboniinate Refunding are outstanding, cannot be terminated or amended in any manner Series 347@88 385,516 347,782 377,700 which willimpair or adversely affect the rights of the bondholders.

OJIBalarree Shert Ffrtanrfal In August 1992, the Authority entered into transmission service

~ contracts with nine participants of the Mead-Adelanto Project Iastrurrrents:

Spedal Obligation Crammer Series Bonds 63,415 67,739 70,680 75+00 (see Note 1). Under the terms of the contmcts, the participants are escrow accounts 63,849 63,849 70,959 70,959 entitled to transmission service utilizing the Mead-Adelanto Project and are obligated to make payments on a"take or pay"basis for their proportionate share of operating and maintenance Noto 5 Power Sales and Transmission Scrvlco Contracts: expenses and debt service on the Multiple Project and Mead-The Authority has power sales contmcts with ten participants of Adelanto Revenue Bonds and other debt, whether or not the the Palo Verde Project (see Note 1). Under the terms of the con- Mead-Adelanto Project or any part thereof has been completed, is tracts, the participants are entitled to power output from the operating and operable, or its service is suspended, interfered with, PVNGS and are obligated to make payments on a "take or pay" reduced or curtailed or terminated in whole or in part. The con-basis for their proportionate share of operating and maintenance tracts expire in 2030 and, as long as any Multiple Project expenses and debt service on Power Project Revenue Bonds and and Mead-Adelanto Revenue Bonds are outstanding, cannot be other debt. The contracts expire in 2030 and, as long as any Power terminated or amended in any manner which will impair or Project Revenue Bonds are outstanding, cannot be terminated or adversely affect the rights of the bondholders.

amended in any manner which will impair or adversely affect the In January 1993, the Authority entered into power sales rights of the bondholders. contracts with five participants of Unit 3 of the San Juan Project The Authority has tmnsmission service contmcts with six partic- (see Note 1). Under the terms of the contmcts, the participants are ipants of the Southern Transmission System Project (see Note 1). entitled to their proportionate share of the power output of the Under the terms of the contracts, the participants are entitled to San Juan Project and are obligated to make payments on a"take or tmnsmission service utilizing the Southern Tmnsmission System pay" basis for their proportionate share of operating and mainte-Project and are obligated to make payments on a"take or pay"basis nance expenses and debt service on the San Juan Revenue Bonds,

whether or not Unit 3 of the San Juan Project or any part thereof is system established by the legislation. The Bill also mandates the operating or operable, or its senrice is suspended, interfered with, collection of a public benefit charge from all electric utility reduced or curtailed or terminated in whole or in part. The con- customers in the state. Although these funds (currently estimated tracts expire in 2030 and, as long as any San Juan Revenue Bonds at 2.5'/o of gross revenues) must be spent on renewable resources, are outstanding, cannot be terminated or amended in any manner conservation, research and development, or low income rate which willimpair or adversely affect the rights of the bondholders. subsidies, the governing authority of each consumer-owned utility willcontrol actual expenditures.

As a participant in the PVNGS, the Authority could be subject Note 7 Costs Rccoverablc from Future Billings to

Participants:

to assessment of retroactive insumnce premium adjustments in the Billings to participants are designed to recover "costs" as defined event of a nuclear incident at the PVNGS or at any other licensed by the power sales and transmission service agreements. 'Ihe reactor in the United States.

billings are structured to systematically provide for debt senrice The Authority is involved in various legal actions. In the requirements, opemting funds and reserves in accordance with opinion of management, the outcome of such litigation or claims these agreements. Those expenses, according to generally accepted will not have a material effect on the financial position of the accounting principles (GAAP), which are not included as Authority or the respective separate projects.

"costs" are deferred to such periods when it is intended that they be recovered through billings for the repayment of principal on related debt. Note 9 subsequent Events:

Costs recoverable from future billings to participants are On July 1, 1996, the crossover date for the Palo Verde Special comprised of the following: Obligation Bonds Series B, trust assets held in escrow of

$ 63,415,000 were used to advance refund $ 62,000,000 of previously l4Luue Bseat Mance tune30, 1996 tune 30, issued bonds.

Aetnt 1995 1996 In August 1996, the Authority issued $ 89,570,000 of Mo Verde GAAP items not induded in 1996 Subordinate Refunding Series C bonds to refund $ 95,015,000 billings to partidpants:

Depreciation of plant $ 348328 $ 49323 $ 397,651 of 1986 Refunding Series B bonds. The refunding is expected to Amortization of bond discount, reduce total debt service payments over the next 20 years debt issue costs, and mst of refunding 206,470 37,745 by approximately $ 24,713,000 (the difference between the debt 244,215 Nudear fuel amortization 18,650 898 19W8 service payments on the old and new debt) and is expected to Decommissioning expense 75.233 7,610 82,843 result in a net present value savings of approximately $ 16,955,000.

Interest cxpcnse 23,165 22,798 45,963 In September 1996, the Authority issued $ 42,245,000 of Bond requirements induded in billings Transmission Project Revenue Bonds, 1996 Subordinate Refunding to participants:

Series A and $ 121,065,000 of Transmission Project Revenue Bonds, Operations and maintenance, net of investment inmrnc (67,253) (21,062) (88315) 1996 Subordinate Refunding Series B to refund $ 68,720,000 and Costs of acquisition of capacity - SIS (18/50) (18~) $ 127,100,000 of the STS 1986 Refunding Series A and B, respec-Reduction in debt service billings duc to transfer of excess funds tively. The refunding is expected to reduce total debt service 78,658 (11,099) 67W9 prind pal repayments (222,130) (39N9) (261,689) payments over the next 10 years by approximately $ 6,029,000 Other ~31 740 ~3858 ~35598 (the difference between the debt senrice payments on the old and

$ 411,031 $ 42,796 $ 453W7 new debt) and is expected to result in a net present value savings of approximately $ 3,372,000.

Note 8 Commltmcnts and Contlngenclest On August 31, 1996, the California State Legislature approved Bill AB 1890 (Bill) which provides for broad deregulation of the power generation industry in California. The Bill, which is pending approval by the Governo, requires the participation of the state' three investor-owned utilities. Consumer-owned utilities can participate on a voluntary basis but must hold public hearings as part of its decision making process. The Bill, which was supported by the Authority, authorizes the collection of a transition charge for generation when a consumer-owned utility opens its service area to competition and participates in the independent transmission

SOUTHERN CALIFORNIA PUBLIC POWER AUTHORITY SUPPLEMENTAL FINANCIALINFORMATION INDEX Palo Verde Pro ect Supplemental Balance Sheet at June 30, 1996 and 1995 Supplemental Statement of Opemtions for the Years Ended June 30, 1996 and 1995 Supplemental Statement of Cash Flows for the Years Ended June 30, 1996 and 1995 Supplemental Schedule of Receipts and Disbursements in Funds Required by the Bond Indenture for the Year Ended June 30, 1996 Southern Transmission S tern Project Supplemental Balance Sheet at June 30, 1996 and 1995 Supplemental Statement of Opemtions for the Years Ended June 30, 1996 and 1995 Supplemental Statement of Cash Flows for the Years Ended June 30, 1996 and 1995 Supplemental Schedule of Receipts and Disbursements in Funds Required by the Bond Indenture for the Year Ended June 30, 1996 Hoover Upratlng Pro ect Supplemental Balance Sheet at June 30, 1996 and 1995 Supplemental Statement of Opemtions for the Years Ended June 30, 1996 and 1995 Supplemental Statement of Cash Flows for the Years Ended June 30, 1996 and 1995 Supplemental Schedule of Receipts and Disbursements in Funds Required by the Bond Indenture for the Year Ended June 30, 1996 Mead. Phoenix Project Supplemental Balance Sheet at June 30, 1996 and 1995 Supplemental Statement of Opemtions for the Three Months Ended June 30, 1996 Supplemental Statement of Cash Flows for the Years Ended June 30, 1996 and '1995 Supplemental Schedule of Receipts and Disbursements in Funds Required by the Bond Indenture for the Year Ended June 30, 1996 Mead-Adelanto Project Supplemental Balance Sheet at June 30, 1996 and 1995 Supplemental Statement of Operations for the Three Months Ended June 30, 1996 Supplemental Statement of Cash Flows for the Years Ended June 30, 1996 and 1995 Supplemental Schedule of Receipts and Disbursements in Funds Required by the Bond Indenture for the Year Ended June 30, 1996 Multi lo Pro ect Fund Supplemental Balance Sheet at June 30, 1996 and 1995 Supplemental Statement of Cash Flows for the Years Ended June 30, 1996 and 1995 Supplemental Schedule of Receipts and Disbursements in Funds Required by the Bond Indenture for the Year Ended June 30, 1996 San Juan Project Supplemental Balance Sheet at June 30, 1996 and 1995 Supplemental Statement of Operations for the Years Ended June 30, 1996 and 1995 Supplemental Statement of Cash Flows for the Years Ended June 30, 1996 and 1995 Supplemental Schedule of Receipts and Disbursements in Funds Required by the Bond Indenture for the Year Ended June 30, 1996

SOUTHERN CALIFORNIA PUBLIC POWER AUTHORITY PALO VERDE PROJECT SUPPLEMENTAL BALANCE SHEET fin uh7uuranh) junc 50, 1995 ASSETS Utilityplant:

Production . $ 613,608 $ 611,771 Tlallsnusslon 14,146 14,146 General 4569 M74 628,491 Less - Acaunulatal depreciation 219 881 380@02 408,610 Construction work in progress 9~ 9,683 Nudcar fueL at amortized cost 13 223 12716 Net utilityplant . 403 030 431,009 Special funds:

Available for sale at fair value:

Decommissioning fund . 33,474 24~

lnvcstmcnts 115,746 143,600 Interest receivable 1,512 1 223 Cash and cash equivalents 67 879 ~49 354 218 611 218 680 Accounts receivable . 912 Materials and supplies 9,240 9,618 Costs recoverable from future billings to participants 204,945 197/15 Unrealized loss on investments in funds available for sale Unamortized debt expenses, less accumulated amortization of $ 65,795 and $ 71+25 204,693 209 740

'Ibtal assets . $ 1,041,713 $ '1.067,700 LIABILITIES Long-tenn debt $ 981,155 Current liabilities:

Long-term debt due within one year 25,690 23,855 Acaued interest 24~ 30,685 Accounts payablc and acaued expenses 10~ '16 770 Total aurcnt liabilities 71310 Commitments and contingencies Total liabilities $ 1,041,713 $ 1.067,700

SOUTHERN CALIFORNIA PUBLIC POWER AUTHORITY PALO VERDE PROJECT SUPPLEMENTAL STATEMENT OF OPERATIONS t176 tl74744547ndS)

Y674r Enhd june 30, 1996 1995 Operating revenue:

SaIes of electric energy . $ 135464 5 129,180 Opetatmg expenses:

Nudear fuel . 7,949 8,150 Other operations 25,815 25+07 Maintenance 6317 7,825 Depreciation . 18,425 19,145 Deconunissioning ~1497 13 401 Total operating expenses Operating income . 64,461 Investment income 10,886 9963 Income before debt expense 65@20 Debt expense 77 976 Costs recoverable from future billings to participants ($ 7,430) (3 176567 5te tx7tts t474i7x3Ã471 tt44tr777677ts.

SOUTHERN CALIFORNIA PUBLIC POWER AUTHORITY PALO VERDE PROJECT SUPPLEMENTAL STATEMENT OF CASH FLOWS fin thttsanat&s)

Year Enkd tuna 30, 1996 Cash flows from operating activities:

Costs recoverable from future billings to partidpants . ($ 7rI30) ($ 12,656)

Adjustments to amve at net cash provided by (used for) operating activitics-Depreciation .. 18,425 19,145 Decommissioning . 17497 13,401 Amortization of nudear fuel . 7,949 8,150 Amortization of debt costs 24,428 16,607 Changes in assets and liabilities:

Decommissioning fund (8,971) (1,297)

Interest receivable (289) 127 Accounts receivable 174 131 Materials and supplies . 378 729 Other assets . 55 (2)

Accrued interest . (6,150) (719)

Accounts payable and accrued expenses .. ~643 3 241 Net cash provided by operating activities 34 629 46 837 Cash flows from investing activities:

Payments for construction of faciTity . (10,892) (9/69)

Purchases of investments Proceeds frotn sale/maturity of investments 1~

(154,685) (97,108) 68,891 Nct cash provided by (used for) investing activities 16 732 37 786 Cash flows from capital and related financing activities:

Payment of pnndpal on long-term debt (23,855) lbyment of bond issue costs .. (4,832)

Payment for defeasance of rcvcnue bonds (233,632)

Proceeds from issuance of refunding bonds 229 483 Net cash used for capital and related financing activities (32,836) (22425)

Net increase (decease) in cash and cash equivalents 18/25 (13/54)

Cash and cash equivalents at beginning of period ~49 ~6708 Cash and cash equivalents at end of year $ 67,879 8 49384 Supplemental disdosure of cash flow information:

Cash paid during the year for interest (net of amount capitalized) $ 64,499 $ 62.089 Se notes tofinant7a! staten3tne.

SOUTHERN CALIFORNIA PUBLIC POWER AUTHORITY PALO VERDE PROJECT SUPPLEMENTAL SCHEDULE OF RECEIPTS AND DISBURSEMENTS IN FUNDS REQUIRED BY THE BOND INDENTURE FOR THE YEAR ENDED JUNE 30$ 1996 fin hurusandsi 9 22rrantis-Detrt RSserre & surtNtg gemue Rettenue Operating Gintingeruy issue Funds Fund Fimd Fund Fund Fimd I &11 7tttal Mance at June 30, 1995 3 137,133 5 - $ 30 948 3 16$ 74 S 12,4S2 $ 24.490 $ 216 627 Additions:

Investment earnings 4,409 31 834 1,100 616 749 7,739 Distribution of investment camings . (5,734) 8,604 (1,213) (1,000) (657)

Discount on investment purchases 1,971 3 513 336 41 3,287 Revenue from power sales 49 129,180 37 6 129,272 Distribution of rcvenucs 81,922 (138,843) 39,603 3,989 5325 8,004 Transfers to csaow for refundings .. (10,413) 78 (93) (2,886) 4,046 (9,268)

Transfer from escrow for prinopal and interest payments 379 634 951 ~11 06 ~10 81 380 099 Total 451 838 4 28 614 ~1126 ~972 9176 S11129 Deductions:

Construction expenditures 3,060 3,060 Operating cxpcnditures .. 31,041 5 31,046 Fuel costs..... 8,457 8,457 Bond issue costs 3.173 3.173 Ibyment of principal 23,855 23,855 Intcrcst paid 55,130 60,793 Premium and interest paid on investments 202 115 58 131 506 Payment of principal and interest on esaow bonds 3SO 099 380 099 459 236 39 613 3118 8 836 186 510 989 Mance at Junc 30, 1996 $ 124,685 $ 4 $ 19,949 $ 25582 $ 13,017 $ 33,530 $ 216,767 1his schedule sununarizes the rccdpts and disbursements in funds requited under thc Bond Indenture and has been prepared from the trust statements.'Ihe balances in thc funds consist of cash and investments at original cost. These balances do not indudc aeaued interest receivable of $ 1,245 and $ 1,223 and Decommissioning Fund acaued intaest receivable of respectively.'Ihese

$ 267 and $ 138 at june 30, 1996 and 1995, respectively, nor do they include total amortized net investmcnt discounts of $ 788 and $ 918 at june 30, 1996 and 1995, balances also do not indude utuealizcd loss on investments in funds available for sale of $ 456 and $ 226 at Junc 30, 1996 and 1995, ~ly.

SOUTHERN CALIFORNIA PUBLIC POWER AUTHORITY SOUTHERN TRANSMISSION SYSTEM PROJECT

~)

SUPPLEMENTAL BALANCE SHEET f172 199S ASSETS Utihty plant:

Transnusslon $ 674,606 $ 675+01 General 18 893 18,893 693,499 694,194 Less - Accumulated depreciation 194 127 ~174 92 519,802 Construction work in progress 1 212 Nct utiTity plant 499 372 321034 Special funds:

Available for sale at fair value:

Investments 102,842 144,476 Escrow account - Subordinate Refunding Crosamr Series 343,898 343,921 Advance to Intennountain power Agency . 19/50 19~

Interest receivable 2,169 1,807 Cash and cash equivalents ~90 24 54 678 558 7S3 564 432 Accounts receivable 2,469 Costs recoverable hum future billings to participants 203,787 183,154 Unrealized loss on investments in funds available for sale 1,897 Unamortized debt expenses, less accumulated amortization of $ 59,752 and $ 51,415 164 247 Total assets $ 1.431,741 $ 1.445.746 LIABILITIES Long-tenn debt $ 1 034 757 $ 1,042,002 Subordinate Refunding Crossover Series 347 782 Current liabilities:

Long-tenn debt due within one year 10,845 14325 Accrued interest 38,436 39/79 Accounts payable and acaued expenses 315 2,258 Total cunent liabilities . 49 596 Commitments and contingcndes Total liabilities $ 1,431,741 $ 1,445.746

SOUTHERN CALIFORNIA PUBLIC POWER AUTHORITY SOUTHERN TRANSMISSION SYSTEM PROJECT SUPPLEMENTAL STATEMENT OF OPERATIONS iin huus(tnds)

Yav Erukd June 30, 1995 Opemting revenue:

Sales of tmnsmission services $ $ 5297 Operating expenses:

Other opemtions 10,192 11,839 Maintenance 5,236 4,498 Depreciation . 20 329 19 735 Total opcmting expenses 36072 Opcmting income 49~0 Investment income Income before debt expense 85,263 Debt expense Costs rccovemblc from fuhue billings to participants ($ 20.633) ($ 160(0)

&e notts t()fi)u(ntt((ltt()tt)ntnls.

SOUTHERN CALIFORNIA PUBLIC POWER AUTHORITY SOUTHERN TRANSMISSION SYSTEM PROJECT SUPPLEMENTAl STATEMENT OF CASH FLOWS (bi thou54uur51 Year Enkd June 30, 1995 Cash flows from operating activities:

Costs remvcrable from future billings to participants . ($ 20,633) ($ 1~)

Adjustments to anivc at net cash provided by (used for) operating activities-Depreciation 20329 19,735 Amortization of debt msts 11,739 Write-offof construction work in progress msts 1313 11'15 Changes in assets and liabilities:

Interest receivable . (362)

Accounts receivable (218) 1,940 Other assets . 17 Accrued interest .. (943) 10,773 Accounts payable and accrued expenses ~7943 ~))

Net cash provided by operating activities 9282 29 497 Cash flows from investing activities:

~

Payments for construction of facility .

Purchases of investments from sale/maturity of investments Net cash provided by (used for) investing activities (154,904)

~395 93 40 689 (315)

(94,425) 90 462

~4,278 Cash flows from capital and related financing activities:

Payment for defeasance of revenue bonds (5,479)

Repayment of principal on long-term debt 14,3 ~13 615 Net cash used for capital and related flnancing activities ~243 19 094 Nct increase in cash and cash equivalents 35,646 6,125 Cash and cash cqirivalents at beginning of year Cash and cash equivalents at end of >ear $ 90324 5 54.678 Supplemental disdosure of cash flow information:

Cash paid during thc year for interest (nct of amount capi~ $ 88370

SOUTHERN CALIFORNIAPUBLIC POWER AUTHORITY SOUTHERN TRANSMISSION SYSTEM PROJECT SUPPLEMENTAL SCHEDULE OF RECEIPTS AND DISBURSEMENTS IN FUNDS REQUIRED BY THE BOND INDENTURE FOR THE YEAR ENDED JUNE 30$ I 996 ffn t 67usands)

GSnstnution Fund. Initial Dtt7t Cc7urul F8uititus Se727ite Ot7entting teese727e Issue Ament Fund Fund Fund Fund Balance at June 30, 1995 $ 222 3 115959 8 6822 8 94N $ 77128 $ 343S69 ~54

$ 6N Additions:

Investment earnings 12 6,485 463 635 3,102 18~7 29,264 Distribution of investment earnings (5,710) 9,408 (596) 6,182 (9,284)

Revenue from transmission sales 83,953 83,953 Distribution of revenue .. 42,530 (78,891) (5@03) 50,942 (9,278)

Transfer from escrow for principal and interest payments ~1911 Total 12 56,216 14 933 ~264 N 226 5 126128 Deductions:

Operating expenses . 14,904 Payment of principal 14+25 14/25 Intcrcst paid 41/76 19,286 60,862 Payment of principal and interest on esaow bonds 1/921 26575 39,496 Premium and interest paid on investment purchases 1,267 39 1/06 Other 949 949 Total 55 764 14 9N 39 61 135 131 842 Balance at Junc 30, 1996 $ 234 $ 106,411 $ 6.051 $ 4,157 $ 76,219 $ 343,874 $ 536,946 This schedule sununarizes the receipts and disbursements in funds ettuited under the Bond Indenture and has been prepared from thc tmst statements. The bahnces in the funds consist of cash and investments at original cost.These balances do not indude acaucd interest receivable of $2,169 and $ 1,807 at June 30, 1996 and 1995, respectively, nor do they indude total amortized net investment discounts of $ 2,983 and f4312 at June 30, 1996 and 1995, respectably.112ese bahnccs do not indude ueaeat'zcd loss on investmcnts in funds avaihble for sale of $ 2 865 and $ 1 897 at June 30, 1996 and 1995, respectively.

SOUTHERN CALIFORNIA PUBLIC POWER AUTHORITY HOOVER UPRATING PROJECT SUPPLEMENTAL BALANCE SHEET tin thousanh) 1995 ASSETS Special funds:

Investments available for saic at fair value . $ 9,628 $ 7,653 Advances for capacity and energy, nct 10,119 11,903 Interest receivable 6 26 Cash and cash equivalents 1 997 2,745 31 750 ~327 Accounts receivable 19 Costs rcawcrable fiom future billings to partlcipants 7,538 7,299 Unrealized loss on investments in funds availablc for sale .. 3 18 Unamortize debt expenses, Total assets .

less accumulated amortization of $ 937 and $ 795 ~37

$ 32,617 5 3 12 33.156 LIABILITIES Long-tenn debt 3 30 931 $ 31,977 Current liabilities:

Long-term debt due within one year 1,085 . 610 Accrued interest 489 500 Accounts payablc and accrued expenses 62 69 Total current liabilities 1,636 1.179 Commitments and contingencies .

Total liabilities $ 32,617 $ 33,156 SOUTHERN CALIFORNIA PUBLIC POWER AUTHORITY HOOVER UPRATING PROJECT SUPPLEMENTAL STATEMENT OF OPERATIONS tin uhousan61$ )

Yrar &cbtfuno30, 1996 1995 Operating revenue:

Sales of electri energy . $ 3349 $ 3W9 Operating expenses:

Capacity charges .. 1,011 1,207 Energy charges 844 832 Other operations 342 360 Reimbursement of advances for capacity and energy Total operating Operating income .

~............ 3 2,411 12

'1,158 1,149 Investment income 874 514 Income before debt cxpcnse 1,672 Debt expense MIO Costs rmwerablc from future billings to participants ($ 239) ($ 693)

SOUTHERN CALIFORNIA PUBLIC POWER AUTHORITY HOOVER UPRATING PROJECT SUPPLEMENTAL STATEMENT OF CASH FLOWS f178 rru7us457ds)

Yi44r Eekd fuze 30, 1996 1999 Cash flows from operating activities:

Costs recoverable from future billings to partidpants .. ($ 239) ($ 638)

Adjustments to anivc at net cash used for operating activities:

Amortization of debt costs 294 Changes in assets and liabilities:

interest receivable 20 Accounts receivable (19)

Other assets 21 Accrued interest Accounts payablc and accrued expenses . ~94 (18)

Net cash provided by (used) for operating activities

~

Cash fiows from investing activities:

Purchases of investments from salelmaturity of investments Advances for capacity and energy, net (22,665) 20,705 1,784 (11~6) 9,491 1 415 Nct cash used for investing activities ~640 Cash Qows from capital and related financing activities:

Payment for defeasance of revenue bonds (319)

Repayment of principal on long-term debt .. 610 ~860 Net cash used for capital and related financing activities 610 1 179 Net decrease in cash and cash equivalents (748)

Cash and cash equivalents at bcy'nning of year 2,745 5451 Cash and cash equivalents at cnd of year $ 1,997 5 0,745 Supplemental disdosurc of cash Row information:

Cash paid during ycar for interest (net of amount capitalized) 5 1.978 $ 2059

SOUTHERN CALIFORNIA PUBLIC POWER AUTHORITY HOOVER UPRATING PROJECT SUPPLEMENTAL SCHEDULE OF RECEIPTS AND DISBURSEMENTS IN FUNDS REQUIRED BY THE BOND INDENTURE FOR THE YEAR ENDED JUNE 30$ I 996 (tn thousanA)

Dtbt Wortdng Debt Stroke G$ 7ural S$ 7$ 7irc Rtsrrre Rts$ 7225 Fund Am7unt Ament Ament Tbtal Balance at June 30, 1995 ~410

$ $ - $ - 3 u0 $ 1435 $ 3018 ~$ 876 ~10

$ 64 Additions:

Investment earnings 16 2 2 33 1S2 3 Distribution of investment earnings 193 (2) 256 (29) (90) (11S) (213)

Discount on investment purchases 85 43 289 211 628 Revenue from paver sales ..... .

3,330 3,330 Distribution of revenues 165 (3,342) 3.177 Thnsfer from escrow for principal and interest payments ~2393 147 ~751 ~433 ~382 ~318 Total ~099 355 5 842 37 ~383 ~613 Deductions:

Advances for capacity and energy 75 75 Payment of principal 610 610 Administrative expenditures 117 348 Interest paid Premium on investment p~........

Payment of principal and interest on escrow bonds 1,978 24418 37 1,978 37 70418 Total 311 117 4 906 37 Balance at June 30, 1996 $ - $ 560 $ &71 $ 3,083 $ 5,259 $ 11511 net investment discount of $ 117 and $ 52 at June 30, 1996 and 1995, respectively.'Ihese bahnces aho do not indude at June 30, 1996 and 1995, respectively.

~

This schedule summarizes the receipts and disbursements in funds required under the Bond Indenture and has been prepared from the trust statements.'Ihe bahnces in the funds consist of cash and innstmcnts at orighai cost These balances do not indude accrued interest rcccivablc of $ 6 and $26 at June 30, 'l996 and 1995, respectively, nor do they indude total amortized loss on investments in funds avaihble for sale of $ 3 and $ 18

SOUTHERN CALIFORNIA PUBLIC POWER AUTHORITY MEAD-PHOENIX PROJECT

~)

SUPPLEMENTAL BALANCE SHEET 119$

1995 ASSETS Utilityplant:

Transmission $ 48/07 Geneml 1 921 50,278 Less: Accumulated depreciation 846 49,432 Construction work in progress 3 116 $ 39119 Net utilityplant .. 5~8 39,179 Special funds:

Investments available for sale at fair value . 21591 32,759 Interest receivable 841 1,246 Cash and cash equivalents 1~8 1 280 35 285 Accounts rcccivable 1,750 1,963 Costs recoverable from future billings to participants 1+94 Unrealized loss on investments in funds available for saIc 9 51 Prepaid expense 26 2,003 Unamortized debt expenses, less accumulated amortization of $ 1,257 and $ 736 . 10 608

$ 89595 $ 88.889 LIABIUTIES Long-term debt $ 86,417 $ 86,267 Current liabiTitics:

Acaucd interest 2,588 Accounts payable 590 Total current liabilities . 3,178 Commitments and contingencies Total liabiTities $ 89395 $ 88.889

SOUTHERN CALIFORNIA PUBLIC POWER AUTHORITY MEAD PHOENIX PROJECT SUPPLEMENTAL STATEMENT OF OPERATIONS THREE MONTHS ENDED JUNE 30$ 1996*

fin housan4ts)

Operating revenue:

Sales of tmnsmission services Operating expenses:

Other operations . 213 Maintenance . 13 Depredation 342 Total operating expenses (342)

Investment income 410 Income before debt expense Debt expense 1462 Costs recoverable from future billings to participants ($ 1264)

See notes lofinancid stalen$ ents

'Operations commenced April 1996.

SOUTHERN CALIFORNIA PUBLIC POWER AUTHORITY MEAD-PHOENIX PROJECT SUPPLEMENTAL STATEMENT OF CASH FLOWS f/2$ 6$ 6uSa226b) 1995 Cash flows from operating activities:

Cost recoverable from future billings to participants $ 1 94 Adjustments to amve at net cash provided by (used for) operating activities:

Depreciation . 342 Amortizafion of debt costs .. 167 Changes in assets and liabilities:

Intcrcst receivable .. 405 Accounts receivable 213 Other assets 1,977 Accounts payable 556 Net cash provided by operating activities .

Cash flows from investing activities:

Interest received on investmcnts 4,251 Payments for construction of facility (13,208) (21410)

Purchases of investments (3,264) (2,725)

Proceeds from sale/maturity of investments 16L474 26,078 Reimbursement from WAPA .. 83 Nct cash (used for) provided by investing activities 6 312 Cash flmvs from capital and related financing activities:

Payment of interest on long-term debt Payment for bond issue costs Net cash used for capital and related finandng activities

~8 (5,093) 5 102 Net Increase in cash and cash equivalents 1,275 Cash and cash equivalents at beginning of year 1 280 Cash and cash equivalents at end of year $ 2668 $ 1.2M Supplemental disdosure of cash flow information:

Cash paid during the period for interest (net of amount capitalized)

SOUTHERN CALIFORNIA PUBLIC POWER AUTHORITY MEAD PHOENIX PROJECT SUPPLEMENTAL SCHEDULE OF RECEIPTS AND DISBURSEMENTS IN FUNDS REQUIRED BY THE BOND INDENTURE FORTHE YEAR ENDED JUNE 30$ 1996 tin thus427uh)

Dd7t

$ $ 727ue Sc777k>> R2s$ 727s It7n7rnus issue Otscnt ting Aaount 6tc727unt Fund Fund Fund Tbt6d Balance at June 30, 1995 $ 18972 $ 4288 $ 8916 $ $ 4994 $ $ 34,170 Additions:

Investment earnings 435 2,441

'itansfer of investments (435)

Reimbursement from WAPA 80

'iiansmission revenue... 360 Transfer of monthly transmission costs ~2!t7t 297 Total 1 644 297 ~881 Deductions:

Construction <<xpendihues 8~

Interest paid 5,176 Premium and interest paid on investment purchases 89 89 Operating expenses .. 60 8,536 2,642 ~629 60 '13,861 Nance at June 30, 1996 $ 12,080 $ 2367 $ 5,916 $ 65 $ Z525 $ 237 $ 23,190 1Ius schedule sununarizcs the receipts and isbursemcnts in funds ~ under the Bond Indenture and has been prepared from the trust statements.1hc balances in the funds consist of cash and investments at orighal cost.'Ihese balances do not indude accrued intent receivable of $841 and $ 1,246 at June 30, 1996 and 1995, respectively, nor do they indude total amortized net investment premiums of $ 42 and $ 80 at June 30, 1996 and 1995, respecuvely. 1hese balances do not indude unrealized loss on investments in funds available for sale of

$ 9 and $ 51 at June 30, 1996 and 1995, espectimly.

SOUTHERN CALIFORNIA PUBLIC POWER AUTHORITY MEAD ADELANTO PROJECT SUPPLEMENTAL BALANCE SHEET fin thousands) jun@ 30 1996 1995 ASSETS UtiTityplant:

Transmission $ 171,068 General 164 171 232 Less: Accumulated depreciation 1 255 Construction work in progress $ 154 011 Net utilityplant .. '169 977 154 011 Special funds:

Investments available for sale at fair value 62,562 76,235 Interest receivable 2,285 2,976 Cash and cash equivalents 4,279 69 1 Accounts receivable 4,741 4,669 Costs recoverable from future billings to participants Unrealized loss on investments in funds available for saic Prepaid expense Unamortized debt expenses, less accumulated amortization of $ 3582 and $2,098 28125 29 607 Total assets $ 276,669 $ 275.481 LIABILITIES Long-term debt ~$ 267 61 Current liabilities:

Accrued interest 7,884 7,885 Accounts payable 780 35 Total current liabilities . 8,664 Commitments and contingencies Total liabilities $ 276,669 $ 278,481

SOUTHERN CALIFORNIAPUBLIC POWER AUTHORITY MEAD-ADELANTOPROJECT SUPPLEMENTAL STATEMENT OF OPERATIONS THREE MONTHS ENDED JUNE 30s 1996*

tIn t7asananh)

Operating revenue Sales of transmission services $ 172 Opcratlng expenses:

Other operations . 145 Maintenance 27 Depredation 1 132 Total operating expenses Operating loss 1 132 Investment income . 1 174 Income before debt expense 42 Debt expense . 4,425 Costs recoverable from future billings to participants (3 3233)

See notes to financia statements.

'Operations commenced April 1996.

SOUTHERN CALIFORNIA PUIILIC POWER AUTHORITY MEAD-ADELANTOPROJECT SUPPLEMENTAL STATEMENT OF CASH FLOWS tin thousands) 1996 1995 Cash flows from opemting activities:

Cost recoverable &om future billings to participants ($ 4+83)

Adjustments to anive at net cash provided by (used for) operating activities:

Depreciation 1.132 Amortization of debt costs....... 482 Changes in assets and liabilities:

Interest receivable .. 691 Accounts receivable (72)

Prepaid expense 3,467 Acaued interest (I)

Accounts payable 745 Net cash provided by operating adivities .

Cash flows from investing activities:

Interest received on investments .. 11+16 Payments for construction of facility (15,652) (71,033)

Purchases of investments (9,184) (4,627)

Proceeds horn sale/maturity of investments 23,000 84,113 Rcimburscment from WAPA........

Nct cash (used for) provided by investing adivities 19797 Cash flows from capital and related financing activities:

Payments of interest on long-term debt Payment for bond issue costs ~$ (15,487) 15 18 7

Net cash used for capital and related Gnancing activities Net increase in cash and cash cquivalcnts 4,279 Cash and cash equivalents at beginning of year 4 279 Cash and cash equivalents at cnd of year $ 4~ $ 4.279 Supplemental disdosure of cash flow information:

Cash paid during the period for interest (net of amount capitalized)

SOUTHERN CALIFORNIA PUBLIC POWER AUTHORITY MEAD-ADELANTOPROJECT SUPPLEMENTAL SCHEDULE OF RECEIPTS AND DISBURSEMENTS IN FUNDS REQUIRED BY THE BOND INDENTURE FOR THE YEAR ENDED JUNE 300 I 996 fin thousands)

Debt Debt $ 7727ioe Acquisition Shia Reseirle Operating Issue Reoenue Aemunl Aimunt Aemunt Fund Fund Fund Tbta!

Balance at June 30, 1995 3 36,134 S 11793 S 16267 3 S 16,760 S Additions:

Investment camings 3,217 772 1,196 517 1 S,704 Transfer of investment earnings 1,196 (1,196)

Reimbursement from WAPA . 13 13 Transfers to opemting fund 451 (451)

Tmnsmission revenue 521 521 Total 3 230 '1,968 452 517 Deductions:

Construction expenditures 3,697 3,697 Interest paid 7,264 8,505 15,769 Premium and interest paid on investment purchases 298 298 Operatmg expenses . 2 189 191 Total 3 699 7 264 189 0840 - 19 93S Mance at June 30, 1996 3 6497 3 16.267 S 263 $ 8,474 $ 71 3 67.237 1Ms schedule summarizes the receipts and d'sbursements in funds requital under the Bond Indenture and has been prepared from the trust statements. The bahnces in thc funds consist of cash and investments at origlnal cost. These balances do not indude acctucd interest receivable of $ 2285 and $ 2,976 at June 30, 1996 and 1995, rcspomvcly, nor do they indude total amortized nct investment premiums of $ 143 and $269 at June 30, 1996 and 1995, ~vcly. These balances do not indude unrealized loss on investments in funds available for sale of

$ 28 and $ 171 at June 30, 1996 and 1995, respectively.

SOUTHERN CALIFORNIA PUBLIC POWER AUTHORITY MULTIPLE PROJECT FUND SUPPLEMENTAL BALANCE SHEET tin thousands)

June 30, 1996 1995 ASSETS Special funds:

Investments available for saic at fair va! ue $ 250,888 $ 249,020 Interest receivable 9220 9 194 Total assets $ 260,108 $ 258.214 LIABILITIES Long-term debt ~24

$ 786 $ 242,107 Arbitrage rebate payablc Accounts payable to Mead-Phoenix Project and Mead-Adelanto Project 6 402 6,632 Deferred credits 1,141 Current liabilities:

Accrued interest 8,256 8 257 Commitments and contingcncics

'otal liabilities 5 u0,108 $ 258.214 SOUTHERN CALIFORNIA PUBLIC POWER AUTHORITY MULTIPLE PROJECT FUND SUPPLEMENTAL STATEMENT OF CASH FLOWS fln thousands)

Year Ended June 30, 1995 Cash flows from operating activities Cash flows from investing activities:

Interest received on investments 18+80 18,470

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Arbitrage payment Purchases of investmcnts from sale/maturity of investmcnts Net cash provided by investing activities ~I6 (1,868) 12 (3,757)

(1,958) 3 757 16/12 Cash flows from capital and related financing activities:

16 12 16 12 Payments of interest on long-term debt 16512 16 12 Nct cash used for capital and financing activities Net increase in cash and cash equivalents Cash and cash equivalents at beginning of year Cash and cash cquivalcnts at cnd of year Sre notre tofina7dal ttaten7enls.

SOUTHERN CALIFORNIAPUBLIC POWER AUTHORITY MULTIPLE PROJECT FUND SUPPLEMENTAL SCHEDULE OF RECEIPTS AND DISBURSEMENTS IN FUNDS

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REQUIRED BY THE BOND INDENTURE FOR THE YEAR ENDED JUNE 3031996 ff72 842772ingS 44274472t Mance at June 30, 1995 $ 247 727 $ 1 293 $ 249020 Additions:

investment earnings...... 18,208 172 18,380 Transfer to earnings account (16512) 16412 Transfer to debt service account 16 12 ~16 512 Total ~16 12 172 ~13 Deductions:

interest paid ~16 12 16 512 Total 16 512 ~16 12 Balance at June 30, 1996 $ 249,423 S 1,465 This schedule summarizes the receipts and disbursements in funds required under the Bond indenture and has been prepared from the trust statements.1he Mances in the funds consist of investments at original cost.'Ihese balances do not indude accrued interest receivable of $ 9,220 and $ 9,19I at June 30, 1996 and 1995, espectbely.

SOUTHERN CALIFORNIA PUBLIC POWER AUTHORITY SAN jUAN PROIECT SUPPLEMENTAL BALANCE SHEET t17$ 4$ 627nids) 1995 ASSETS Utilityphut:

Production $ 183,309 $ 183~

General 8613 7 688 191,922 190,997 Less - Accumulated depreciation 36 622 24,415 Construction work in process ~31 155+00 166/82 2,488 Net utilityplant . 158 Ml 169 070 Special funds:

Investments available for sale at fair value 34,170 28,699 Interest receivable 67 69 Cash and cash equivalents 7 546 8 274 41,783 37,042 Accounts receivable .. 1,891 Materials and supplies 3~9 3,679 Costs recoverable from future billings to participants 31,780 Unrealized loss (gain) on investments in funds availablc for sale (28)

Unamortized debt expenses, less accumulated amortization of $ 942 and $ 628 3,461 Total assets $ 239,972 $ 238,178 LIABILITIES Long-term debt $ 222,444 S 228,167 Current liabilities:

Long-tenn debt due within one year 6,035 Accrued interest 5,994 5,994 Accounts payable 5,499 4,017 Total current liabiTitics . 17528 10,011 Commitments and contingencies Total liabilities $ 239.972 $ 238.178

SOLITHERN CALIFORNIA PUBLIC POWER AUTHORITY SAN JUAN PROJECT SUPPLEMENTAL STATEMENT OF OPERATIONS fin Ohuusan)ts) year Ended june A, 1996 1995 Operating revenue:

Sales of electric energy . $ 50 117 Operating expenses:

Other operations 314 316 Maintenance 35,760 38511 Depreciation . 9,095 9,095 Decommissioning 3 113 3 112 Total operating expenses 48 282 51 534 Operating income (loss) 1,835 (180)

Investment income Income before debt expense 3,897 1/70I Debt cxpcnsc 1 614 ~1595 Costs recoverable statemaine.

from future billings to participants (S 8,717) ($ 13894)

Sa notes tofinane2a!

SOUTHERN CALIFORNIA PUBLIC POWER AUTHORITY SAN JUAN PROJECT

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'SUPPLEMENTAL STATEMENT OF CASH FLOWS fin Yem Ended June 30, 1995 Cash flows from operating activities:

Costs recoverable from future billings to participants ($ 8,717) ($ 10,894)

Adjustments to arrive at net cash provided by (used for) operating activitics-Depreciation . 9,095 9,095 Decommissioning costs 3113 3112 Amortization of debt costs .. 626 610 Changes in assets and liabilities:

Interest receivable 2 (59)

Accounts receivable 946 (669)

Materials and supplies 110 1/40 Other assets 56 81 Accounts payable 1482 711 Net cash provided by operating activities 6 713 ~327 Cash flows from inv4csting activities:

Payments for construction of facility (1,938) (1,861)

Purchases of investments (14370) (12749)

Proceeds from sale/maturity of investments 8 S67 19 918 Net cash used for investing activities . 441 3 692 Nct decrease in cash and cash equivalents... (728) (365)

Cash and cash equivalents at beginning of year 8 274 8639 Cash and cash equivalents at cnd of year $ 7~6 8 8.274 Supplemental disclosure of cash flow information:

Cash paid during the year for interest (net of amount capitaliizcd) $ 11,988 3 11.988

SOUTHERN CALIFORNIA PUBLIC POWER AUTHORITY SAN JUAN PROJECT SUPPLEMENTAL SCHEDULE OF RECEIPTS AND DISBURSEMENTS IN FUNDS

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REQUIRED BY THE BOND INDENTURE FOR THE YEAR ENDED JUNE 300 1996 f178 Debt Drt7t $ 57$ 48te Stroke Rsme 44$ 27477r 44828477r Mance at June 30, 1995 $ - $ 1 &93 $ - $ 112 $ 5,994 $ 18,025 $ 11 179 $ 36943 Additions:

Investment earnings 32 54 12 54 1,061 537 1,750 Distribution of investment earnings 1,945 (64) (168) (1,061) (652)

Discount on investment purchases... 4 10 114 112 242 Revenue from power sales S2933 S2,933 Distribution of revenues (54,914) 38,249 14+15 2,145 Refund from Cenhuy Ibwcr Corporation 400 Total 38 249 414 ~14 15 ~142 ~55 25 Deductions:

Payment for construction .. 1,938 1,938 Administmtive <<xpcnditures 36,691 36,691 Interest paid . 11 988 11 983 Total 38 629 11 988 50617 Mance at June 30, 1996 $ 1,253 $ 5 $ 526 $ 8621 $ 18025 $ 13021 $ 41651 1hts schedule surnmarizcs the receipts and ~cuts in funds rc4luired under the Bond Indenture and has been prepared from the trust statements.lhe balances in the funds consist of cash and investments at original cost. 1hese balances do not indudc accrued intent receivable of $ 67 and $ 69 at June 30, 1996 and 1995, respectively, nor do they indude total amortized net investment discount of $ 69 and $ 2 at June 30, 1996 and 1995, respectively. These balances do not indude unrealized loss (gain) on Investments in funds available for sale of

$ 4 and ($28) at June 30, 1996 and 1995, respectively.

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SOUTHERN CALIF<ORNIA PUBLIC POWER AUTHORITY REPORT AND FINANCIALSTATEMENTS AND SUPPLE<MENTAL FINANCIALINFORMATION JUNE 80, 1996 AND 1998

I 400 South Hope Street Telephone 213 236 3000 Los Angetes, CA 90071.2889 Price Paterhouse Lsz REPORT OF INDEPENDENT ACCOUNTANTS September 10, 1996 To the Board of Directors of the Southern California Public Power Authority In our opinion, the accompanying combined balance sheet and the related combined statements of operations and of cash flows present fairly, in all material respects, the financial position of the Southern California Public Power Authority (Authority) at June 30, 1996 and 1995, and the results of its operations and its cash flows for the years then ended in conformity with generally accepted accounting principles. These financial statements are the responsibility of the Authority's management; our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits of these statements in accordance with generally accepted auditing standards which require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, and evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for the opinion expressed above.

In our opinion, the accompanying separate balance sheets and the related separate statements of cash flows of the Authority's Palo Verde Project, Southern Transmission System Project, Hoover Uprating Project, Mead-Phoenix Project, Mead-Adelanto Project, Multiple Project Fund and San Juan Project and the separate statements of operations of the Authority's Palo Verde Project, Southern Transmission System Project, Hoover Uprating Project, Mead-Phoenix Project, Mead-Adelanto Project, and San Juan Project present fairly, in all material respects, the financial position of each of the Projects at June 30, 1996, and their cash flows, and the results of operations of the Authority's Palo Verde Project, Southern Transmission System Project, Hoover Uprating Project, Mead-Phoenix Project, Mead-Adelanto Project and San Juan Project for the year then ended in conformity with generally accepted accounting principles. These'inancial statements are the responsibility of the Authority's management; our responsibility is to express an opinion on these financial statements based on our audits. We, conducted our audits of these statements in accordance with generally accepted auditing standards which require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, An audit includes examining, on a test basis, evidence

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The Board of Directors September 10, 1996 Page 2 supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, and evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for the opinion expressed above.

Our audits were conducted for the purpose of forming an opinion on the basic financial statements taken as a whole. The supplemental financial information, as listed on the accompanying index, is presented for purposes of additional analysis and is not a required part of the basic financial statements. This information is the responsibility of the Authority's management. Such information has been subjected to the auditing procedures applied in the audits of the basic financial statements and, in our opinion, is fairly stated in all material respects in relation to the basic financial statements taken as a whole.

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SOIyfHERN CALIFORNIA PUBLIC POWER AUTHORITY CotfBI DB A (in thousands) une 30 Em'outhern Palo Transmission Hoover hfead- hfead- hfultiple San June 30, Verde System Uprating Phoenix Adelanto Project Juan 1995

~&oaf Emmy JMaL ~id ~t~a Utility plant:

Production $ 613,608 $ 171,068 S 183,309 $ 967,985 $ 795,080 Transmission Ceileral ~~5 14,146 S

~88 674,606

~7

$ 48/07 164 8~ ~228't

'?37,223

~2 1K689,447 Less - Accumulated depreciation 630,323

~9dhU, 380@02

~ 693,499 JRI 499,372 50,278 49,432

~u171,232 169,977 191,922

~KfbIR 155,300 1,737,254

~2JUl 1,254,383 1,513,682 1,09f,994 Construction work in progress

'Nuclear fuel, at amortized cost ~225 9/03 3,116 3,501

~iu 16,120 206,573

'Net utility plant 403 030 ~92~37 ~880 ~uz773 ~34 83 Special funds:

Available for sale at fair value (Note 2):

Decommissioning fund 33,474 33,474 24403

'Investments 115,746 102,842 S 9,628 21491 62462 S 250,888 34,170 597,427 682,442 Escrow account - Crossover series 343,898 343,898 343,921 Advance to Intemountaln Power Agency 19+50 19+50 19,550

<<Advances for capacity and energy, net 10,119 10,119 11,903 Interest receivable 1,512 2,169 6 811 2485 9/20 67 16,100 16~1 Cash and cash equivalents ~7879 90 374 I 2u ~725 ~73 XK ~9hlQ

~53u 438783 21730 73980 ~2a4<< MOtu25 ~LJ>u ~7~3! ~26u Accounts receivable 738 2,687 19 1,750 4,741 (6,402) 9IS 4,478 5,272 hlaterials and supplies 9,240 3/69 12,809 13,297 Costs receive from future billings. to participants 20I,9IS 203,787 7+38 1@9h 313780 453,827 411,031

'Unrealized loss on investments in funds available for sale 456 2,865 28 3,365 2@35

,Prepaid construction costs 59536 Prepaid expenses 26 Unamortized debt expenses, less accumulated amortization of $ 132,265 and $ 127,197 in 1996 and 1995 ~07 ~888 ~28 2 3 090 ~4348 ~42 508 t J 01~73 ~1431 741 ~32 617 ~89 595 aata~660 ~253 706 ~23 7g ~3366 0 3 t 3 ~00 73 Long-turn debt $ 981,155 5 1,034,757 $ 30,981 $ 86,417 $ 268,005 S 242,786 3 222,444 5 2,866,545 $ 2,894,471 Subordinate Refunding Crossover Series 347@88 347,388 347,782 Ariiitrage rebate payable 77 Defencd credits 2,664 2,664 1,141 Cuncnt liabilities:

Long. tenn debt due within one year

'Accrued interest Accounts payable and accrued expenses Total cuncnt liabilities

~333

~suit 25,690 24435

~3

~49 10,845 38,436 06

~ 1,085 489 I &16

~90 2,588

~78 ~l~

7,884 7110 8,256

~852 ~728 6,035 5,994

~22 ~'~7

~4~

43,655 88,182

~z22!2 38,790 95,288 23 183 Comiuitmcnts and contingencies

~II'~13 ~43~74 ~32 6 7 ~IIO 505 ~276 669 ~25 706 ~23 ~07 ~~3~03 ~!I 400 73 The accompanying notes arc an inteyal part of these {inancial statements.

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SOUTHERN CALIFORNIA PUBLIC POWER AUTHORITY COMBINED STATEMENT OF OPFRATIONS (In thousands)

Year Ended une 30 1996 Southern Palo Transmission Hoover Mead- Mead- Year Ended Verde System Uprating Phoenix Adelanto San Juan June 30,

~Pro'ect ~Pro'ect ~Pro eat ~Pro'act ~Pro'ect ~Pro ect Total 1995 Operating revenues:

Sales of electric energy S 135,464 S 3,349 S 50,117 S 188,930 S 183,603 Sales of transmission services 85 297 226 g 172 85 695 91 250 Total operating revenues 135 464 85 297 3 349 226 172 50 117 274 625 274 853 Operating cxpcnses:

Amortization of nuclear fuel 7,949 7,949 8,150 Other operations 25,815 10,192 2,200 213 145 314 38,879 39,873 Maintenance 6,317 5,236 13 27 35,760 47,353 50,834 Depreciation 18,425 20,329 342 1,132 9,095 49,323 47,975 Decommissioning 12 497 3 113 15 610 16 513 Total operating expenses 71 003 35 757 2 200 568 1 304 48 282 159 114 163 345 Operating income (loss) 64,461 49,540 1,149 (342) (1,132) 1,835 115,511 111,508 Investment income 10 886 28 993 874 410 1 174 2 062 44 399 23 884 Income before debt expense 75,347 78,533 2,023 68 3,897 159,910 135,392 Debt expense 82 777 99 166 2 262 1 462 4 425 12 614 202 706 174 140 Costs recoverable from future billings to participants ~7430 ~20 633 ~239 ~1394 ~4383 ~8717 ~42 796 ~38 748 The accompanying notes are an integral part of these financial statements.

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SOUTHERN CALIFORNIA PUBLIC POWER AUTHORITY 8 M W (In thousands)

Year Ended Palo Southern Hoover hfead- hfead- hfultiplc San June 30, Verde Transmission Uprating Phoenix Adelanto Project Juan 1995 205991 2252052272991 &0555> U22j2a U4225a Total Cash flows from operating activities:

Costs recoverable from I'uture billings to participants (S 7,430) (S 20,633) (S 239) (S 1,394) (S 4,383) (S 8,717) (S 42,796) (S 38,748)

Adjustments to arrive at net cash provided by (used for) operating activities-Depreciation 18,425 20/29 342 1,132 9,095 49,323 47,975 Decommissioning 12,497 3,113 15,610 16,513 Amortization of nuclear fuel 7,949 7,949 8,150 Amortization of debt costs 24,428 11,739 294 167 482 626 379736 29,050 Write-off of construction work in progress costs 1,313 1,313 Changes in assets and liabilities:

Decommissioning I'und (8,971) (8,971) (1,297)

Interest receivable (289) (362) 20 405 691 2 467 437 Accounts receivable 174 (218) (19) 213 (72) 946 1,024 1,402

~ ~jd hlaterials and supplies 378 110 488 2,069

'Other assets 55 1,977 3,467 56 5,555 117 Accrued interest (6,150) (943) (11) (I) (7,105) 10,036 Accounts payablc and accrued expenses ~6823 ~2653 ~56OQ ~QK Net cash provided by operating activities ~2IZ 9S ~266 ~06 Cash flows from investing activiticst Interest received on investments S 18,380 18@80 34,037 Arbitrage payment (3,757)

Pa>ments for construction of facilities (10,892) (13,208) (15,652) (1,938) (41,690) (104,088)

Purchases of investments (154,685) (154,904) (22,665) (3,264) (9,184) (1,868) (14@70) (360,940) (230,693)

Proceeds from sale/maturity of investments 182,309 195,593 20,705 14,474 23,000 8,867 444,948 299,265 Advances for capacity and energy, net Reimbursement from WAPA 19784 1,784

~1 1,415 Net cash provided by (used for) investing activities ~473 40 659 Qyyjj ~zjjy ~22j ~hjz ~yddjj ~62 0 ~37 0 Cash flows from capital and related financing activities:

Payments of interest on long-term debt (16512) (16,512) (37,092)

Proceeds from sale of bonds 229,483 229,483 Papncnt for defeasance of revenue bonds (233,632) (233,632) (5,798)

Repapnent of principal on long. term debt (14325)

'Pa>ment for bond issue costs ~403 (23,855) (610)

~484 (38,790)

~40j (36,900)

Net cash used for capital and related financing activities M2R) - UkhRS ~7dQS Net increase (decrease) in cash and cash equivalents 18,525 35,646 (748) 268 225 (728) 53,188 (4,746)

Cash and cash equivalents at beginning of year ~K@II ~~ ~K ~12 - ~I~ ~ME ~~3k C h d h~141 I 0 d fy ~67II7 hZ0~%S j~t7 ~540 ~4507 t . ~7546 5 173 798 ~120 610 Supplemental disclosure oi'ash flow inforrnationt Cash paid during the year for interest (net of amount capitalized) jy 64 49z ~00 37II ~ja70 t, s, ~6us ~II 903 ~87 347 ~00 700 The accompanying notes arc an Integral part of these flnancial statements.

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SOUTHERN CALIFORNIA PUBLIC POWER AUTHORITY NOTES TO I INANCIALSTATEMENTS NOTE 1 - ORGANIZATION AND PURPOSE:

Southern California Public Power Authority (Authority), a public entity organized under the laws of the State of California, was formed by a Joint Powers Agreement dated as of November 1, 1980 pursuant to the Joint Exercise of Powers Act of the State of California. The Authority's participant membership consists of ten Southern California cities and one public district of the State of California. The Authority was formed for the purpose of planning, financing, developing, acquiring, constructing, operating and maintaining projects for the generation and transmission of electric energy for sale to its participants. The Joint Powers Agreement has a term of fifty years.

The members have the following participation percentages in the Authority's interest in the projects at June 30, 1996 and 1995:

Southern Palo Transmission Hoover Mead- Mead- San

~Partici ants V s s II i h i Ad]

City of Los Angeles 67.0% 59.5% 24.8% 35.7%

City of Anaheim 17.6 42.6% 24.2 13.5 City of Riverside 5.4 10.2 31.9 4.0 13.5 Imperial Irrigation District 6.5 51.0%

City of Vernon 4.9 City of Azusa 1.0 4.2 1.0 2.2 14.7 City of Banning 1.0 2.1 1.0 1.3 9.8 City of Colton 1.0 3.2 1.0 2.6 14.7 City of Burbank 4.4 4.5 16.0 15.4 11.5 City of Glendale 4,,4, 2.3 14.8 11.1 9.8 City of Pasadena 4,.4. 5.9 13.8 8.6

~l.  % ~1,  % ~1 The members do not currently participate in the Multiple Project Fund.

Mead-Phoenix participation reflects three ownership components (see below).

Palo Verde Pro'ect The Authority, pursuant to an assignment agreement dated as of August 14, 1981 with the Salt River Project (Salt River), purchased a 5.91% interest in the Palo Verde Nuclear Generating Station (PVNGS), a 3,810 megawatt nuclear-fueled generating station near Phoenix, Arizona, and a 6.55% share of the right to use certain portions of the Arizona Nuclear Power Project Valley Transmission System (collectively, the Palo Verde Project).

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NOTE 1: (Continued)

As of July 1, 1981, ten participants had entered into power sales contracts with the Authority to purchase the Authority's share of PVNGS capacity and energy. Units 1, 2 and 3 of the Palo Verde Project began commercial operations in January 1986, September 1986, and January 1988, respectively.

Southern Transmission S stem Pro'ect The Authority, pursuant to an agreement dated as of May 1, 1983 with the Intermountain Power Agency (IPA), has made payments-in-aid of construction to IPA to defray all the costs of acquisition and construction of the Southern Transmission System Project (STS), which provides for the transmission of energy from the Intermountain Generating Station in Utah to Southern California. The Authority entered into an agreement also dated as of May 1, 1983 with six of its participants pursuant to which each member assigned its entitlement to capacity of STS to the Authority in return for the Authority's agreement to make payments-in-aid of construction to IPA.

STS commenced commercial operations in July 1986. The Department of Water and Power of the City of Los Angeles (LADWP), a member of the Authority, serves as project manager and operating agent of the Intermountain Power Project (IPP).

Hoover U ratin Pro'ect The Authority and six participants entered into an agreement dated as of March 1, 1986, pursuant to which each participant assigned its entitlement to capacity and associated firm energy to the Authority in return for the Authority's agreement to make advance payments to the United States Bureau of Reclamation (USBR) on behalf of such participants. The USBR has declared that the Project was substantially complete as of September 30, 1995 with minor work scheduled to be completed in the spring of 1997. The Authority has an 18.68% interest in the contingent capacity of the Hoover Uprating Project (HU). All seventeen "uprated" generators of the HU have commenced commercial operations.

Mead-Phoenix Pro'ect The Authority entered into an agreement dated as of December 17, 1991 to acquire an interest in the Mead-Phoenix Project (MP), a transmission line extending between the Westwing substation in Arizona and the Marketplace substation in Nevada. The agreement provides the Authority with an 18.31% interest in the Westwing-Mead project component, a 17.76% interest in the Mead Substation project component and a 22.41% interest in the Mead-Marketplace project component.

The Authority has entered into transmission service contracts for the entire capability of its interest with nine members of the Authority on a "take or pay" basis. In addition, the Authority has administrative responsibility for accounting for the separate ownership interest in the project by Western Area Power Administration (WAPA), who is providing separate funding (872,874,000 and 858,676,000 at June 30, 1996 and 1995, respectively) for its interest. Commercial operations of MP commenced in April 1996. Funding was provided by a transfer of funds from the Multiple Project Fund (Note 4).

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NOTE 1: (Continued)

Mead-Adelanto Pro'ect The Authority entered into an agreement dated as of December 17, 1991 to acquire a 67.92%

interest in the Mead-Adelanto Project (MA), a transmission linc extending between the Adelanto substation in Southern California and the Marketplace substation in Nevada. The Authority has entered into transmission service contracts for thc entire capability of its interest with nine members of the Authority on a "take or pay" basis. In addition, thc Authority has administrative responsibility for accounting for the separate ownership interest in the project by WAPA, who is providing separate funding (817,088,000 and 816,282,000 at June 30, 1996 and 1995, respectively) for its interest. Funding was provided by a transfer of funds from the Multiple Project Fund (Note 4). Commercial operations commenced in April 1996. LADWP serves as both construction manager and operations manager.

Multi le Pro'ect Fund During fiscal year 1990, the Authority issued Multiple Project Revenue Bonds for net proceeds of approximately 8600 million to provide funds to finance costs of construction and acquisition of ownership interests or capacity rights in one or more then unspecified projects for the generation or transmission of electric energy.

In August 1992, the Authority's Board of Directors approved a resolution authorizing the use of certain proceeds of Multiple Project Revenue Bonds to finance t)ie Authority's ownership interests in the Mead-Phoenix and Mead-Adelanto projects. Transfers made from the Multiple Project Fund are sufficient to provide for the Authority's sharc of the estimated costs of acquisition and construction of these two projects, including reimbursement of planning, development and other related costs.

Effective July 1, 1993, the Authority purchased a 41.80% interest in Unit 3, a 488 megawatt unit and related common facilities, of the San Juan Generating Station (SJGS) from Century Power Corporation. Unit 3 is one unit of a four-unit coal-fired power generating station in New Mexico.

The Authority allocated the $ 193 million purchase price to the estimated fair value of the utility plant (8190 million) and to materials and supplies (83 million). The purchase has been financed through the issuance of approximately $ 237 million (par value) of San Juan Project Revenue Bonds. The Authority has entered into power sales contracts for thc entire capability of its interest with five members of the Authority on a "take or pay" basis.

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NOTE 2 -

SUMMARY

Ol SIGNIFICANT ACCOUNTING POLICIES:

The financial statements of the Authority are presented in conformity with generally accepted accounting principles, and substantially in conformity with accounting principles prescribed by the Federal Energy Regulatory Commission and the California Public Utilities Commission. The Authority is not subject to regulation by either of these regulatory bodies.

The financial statements represent the Authority's share in each jointly-owned project. The Authority's share of direct expenses of jointly-owned projects are included in the corresponding operating expense of the statement of operations. E<ach owner of the jointly-owned projects is required to provide their own financing.

~Utilit Plant The Authority's share of all expenditures, including general administrative and other overhead expenses, payments-in-aid of construction, interest net of related investment income, deferred cost amortization and the fair value of test power generated and delivered to the participants are capitalized as utility plant construction work in progress until a facility commences commercial operation.

The Authority's sharc of construction and betterment costs associated with PVNGS is included as utility plant. Depreciation expense is computed using the straight-line method based on the estimated service life of thirty-five years. Nuclear fuel is amortized and charged to expense on the basis of actual thermal energy produced relative to total thermal energy expected to be produced over the life of the fuel. Under the provisions of the Nuclear Waste Policy Act of 1982, the Authority is charged one mill per kilowatt-hour, by the federal government, on its share of electricity produced by PVNGS, and such funds will eventually be utilized by the federal government to provide for PVNGS'uclear waste disposal. The Authority records this charge as a current year expense, The Authority's share of construction and betterment costs associated with STS, MP, MA and SJGS are included as utility plant. Depreciation expense is computed using the straight-line method based on the estimated service lives, principally thirty-five years for STS, MA and MP and twenty-one years for SJGS.

Interest costs incurred by the MP and MA projects through the date commercial operations commenced (April 1996) are capitalized in utility plant. Total interest costs capitalized were 811,827,000 and 315,769,000 in fiscal 1996 and 1995, respectively, for the MA project and 83,881,000 and 85,175,000 in fiscal 1996 and 1995, respectively, for the MP project.

Advances for Ca acit and Ener Advance payments to USBR for the uprating of the 17 generators at the Hoover Power Plant are included in advances for capacity and energy. These advances are being reduced by credits on billings to participants for energy and capacity.

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NOTE 2: (Continued)

Nuclear Decommissionin Decommissioning of PVNGS is projected to commence subsequent to the year 2022. Based upon an updated study performed by an independent engineering firm, the Authority's share of the estimated decommissioning costs is $ 85.5 million in 1995 dollars (8390 million in 2022 dollars assuming a 6% estimated annual inflation rate). The Authority is providing for its share of the estimated future decommissioning costs over the remaining life of the nuclear power plant (25 to 27 years) through annual charges to expense which amounted to 812.5 million and 813.4 million in fiscal 1996 and 1995, respectively. The decommissioning liability is included as a component of accumulated depreciation and was 888.1 million and $ 75.6 million at June 30, 1996 and 1995, respectively.

A Decommissioning Fund has been established and partially funded at $ 33.9 million at June 30, 1996. The Decommissioning Fund earned interest income of 5700,000 during fiscal 1996.

Demolition and Site Reclamation Demolition and site reclamation of SJGS, which involves restoring the site to a "green" condition which existed prior to SJGS construction, is projected to commence subsequent to the year 2014.

Based upon a study performed by an independent engineering firm, the Authority's share of the estimated demolition and site reclamation costs is $ 18.7 million in 1992 dollars (865.3 million in 2014 dollars using a 6% estimated annual inflation rate). The Authority is providing for its share of the estimated future demolition costs over the remaining life of the power plant (18 years) through annual charges to expense of $ 3.1 million. The demolition liability is included as a component of accumulated depreciation and was 89.3 million and 86.2 million at June 30, 1996 and 1995, respectively.

As of June 30, 1996, the Authority has not billed participants for the cost of demolition nor has it established a demolition fund.

Unamortized Debt Ex enses Unamortized debt issue costs, including the loss on refundings, are being amortized over the terms of the respective issues and arc reported net of accumulated amortization. Total deferred loss on refundings, net of accumulated amortization, was $ 378,070,000 and $ 393,440,000 at June 30, 1996 and 1995, respectively.

Investments Investments include United States Government and governmental agency securities and repurchase agreements which are collateralized by such securities. Additionally, the Mead-Phoenix Project, the Mead-Adelanto Project and the Multiple Project Fund's investments are comprised of an investment agreement with a financial institution earning a guaranteed rate of l

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NOTE 2: (Continued) return. The Southern Transmission System Project has debt service reserve funds associated with the 1991 and 1992 Subordinate Refunding Series Bonds invested with a financial institution under a specific investment agreement allowed under the Bond Indenture earning a guaranteed rate of return.

Investments available for sale are carried at aggregate fair value and changes in unrealized net gains or losses are recorded separately. Investments are reduced to estimated net realizable value when necessary for declines in value considered to be other than temporary. Gains and losses realized on the sale of investments are generally determined using the specific identification method. As discussed in Note 3, all of the investments are restricted as to their use.

Cash and Cash E uivalents Cash and cash equivalents include cash and all investments with original maturities less than 90 days.

Revenues Revenues consist of billings to participants for the sales of electric energy and of transmission service in accordance with the participation agreements. Generally, revenues are fixed at a level to recover all operating and debt service costs over the commercial life of the property (see Note 6).

Debt Ex ense Debt expense includes interest on debt and the amortization of bond discounts, debt issuance expense and loss on refunding costs.

Arbitra e Rebate A rebate payable to the Internal Revenue Service (IRS) results from the investment of the proceeds from the Multiple Project Revenue Bond offering in a taxable financial instrument that yields a higher rate of interest income than the cost of the associated funds. The excess of interest income over costs is payable to the IRS within five years of the date of the bond offering and each consecutive five years thereafter. The Authority made its first rebate payment of $ 3.8 million during fiscal year 1995. The next rebate payment to the IRS is due in fiscal year 2000.

Reclassi fications Certain reclassifications have been made in the fiscal year 1995 financial statements to conform to the fiscal year 1996 presentation.

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NOTE 2: (Continued)

Use of Estimates The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.

NOTE 3 - SPECIAL FUNDS:

The Bond Indentures for the six projects and the Multiple Project Fund require the following special funds to be established to account for the Authority's receipts and disbursements. The moneys and investments held in these funds are restricted in use to the purposes stipulated in the Bond Indentures. A summary of these funds follows:

I'und ~Pur ose Construction To disburse funds for the acquisition and construction of the project.

Debt Service To pay interest and principal related to the Revenue Bonds.

Revenue To initially receive all revenues and disburse them to other funds.

Operating To pay operating expenses.

Reserve and Contingency To pay capital improvements and make up deficiencies in other funds.

General Reserve To make up any deficiencies in other funds.

Advance Payments To disburse funds for the cost of acquisition of capacity.

Proceeds Account To initially receive the proceeds of the sale of the Multiple Project Revenue Bonds.

Earnings Account To receive investment earnings on the Multiple Project Revenue Bonds.

Revolving Fund To pay the Authority's operating expenses.

Decommissioning Fund To accumulate funds related to the future decommissioning of PVNGS.

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NOTE 3: (Continued)

Issue Fund To initially receive pledged revenues associated with the applicable subordinated refunding series'ndenture of Trust and pay the related interest and principal.

Escrow account - Subordinate To initially receive pledged revenues associated with Refunding Crossover Series Component 3 of the 1993 Subordinate Refunding Crossover Series'ndenture of Trust and pay the related interest and principal.

Acquisition Account To disburse funds for the acquisition and construction of the Mead-Phoenix, Mead-Adelanto and San Juan projects.

All of the funds listed above, except for the Revolving Fund, are held by the respective trustees.

Palo Verde Pro'ect The balances of the funds required by the Bond Indenture are as follows, in thousands:

une 30 1996 1995 Amortized Fair Amortized Fair Cost Value Cost Value Debt Service Fund-Debt Service Account 8 51,386 8 51,394 8 52,457 S 52,467 Debt Service Reserve Account 74,420 74,160 81,497 81,077 Revenue Fund 5 5 1 1 Operating Fund 20,130 20,134 31,141 31,026 Reserve and Contingency Fund 25,924 26,107 16,776 17,075 Decommissioning Trust Fund 34,131 33,740 24,503 24,503 Issue Fund 13,026 13,026 12,486 12,486 Revolving Fund 45 45 45 45 Contractual maturities:

~2~~7 ~2~ ~21 ~Q ~211~

Within one year 3 69,781 8 69,391 After one year through five years 136,279 136,148 After five years through ten years 3,187 3,252 After ten years 9 820 9 820

~2] 067 $ 218~11 NOTE 3: (Continued)

Southern Transmission S stem Pro'ect The balances in the special funds required by the Bond Indenture are as follows, in thousands:

une 30 1996 1995 Amortized Fair Amortized Fair Cost Value Cost Value Construction fund - Initial Facilities Account S 235 8 235 8 223 8 223 Debt Service Fund-Debt Service Account 21,921 21,896 31,480 31,491 Debt Service Reserve Account 86,220 86,189 66,672 66,857 Operating Fund 6,015 6,007 5,987 5,987 General Reserve Fund 4,194 4,194 9,533 9,542 Issue Fund 77,024 76,794 77,768 77,579 Escrow Account - Subordinate Refunding Crossover Series 346,474 343,903 355,101 353,188 Revolving Fund 15 15 15 15 f~42 Z  %~2 ~4~77 Contractual maturities:

Within one year 8102,008 8101,975 After one year through five years 80,852 80,803 After five years through ten years 36,972 34,189 After ten years 322 266 322 266

~42 098 ~63')~2. 3 In addition, at June 30, 1996 and 1995, the Authority had non-interest bearing advances outstanding to IPA of 819,550,000.

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NOTE 3: (Continued)

Ifoover U ratin Pro ect The balances in the special funds required by the Bond Indenture are as follows, in thousands:

une 30 1996 1995 Amortized I'air Amortized Fair Cost Value Cost Value Advance Payments Fund 3 8 2,437 8 2,437 Operating-Working Capital Fund 804 804 563 563 Debt Service Fund-Debt Service Account 2,390 2,390 1,440 1,429 Debt Service Reserve Account 3,122 3,121 3,078 3,068 General Reserve Fund 5,318 5,316 2,911 2,914 Revolving Fund 13 13 5 1 1~4 ]~ll +1 ~1~442 ~1(~424 Contractual maturities:

Within one year 8 2,003 8 2,003 After one year through five years 9 681 9 628

)~ll 34 ~1~1+1 In addition, at June 30, 1996 and 1995, the Authority had advances to USBR of 810,119,000 and 811,903,000, respectively.

Mead-Phoenix Pro'ect The balances in the special funds required by the Bond Indenture are as follows, in thousands:

une 30 1996 1995 Amortized Fair Amortized Fair Cost Value Cost Value Acquisition Account 8 12,571 8 12,571 8 19,830 8 19,830 Debt Service Fund-Debt Service Account 4,976 4,967 4,444 4,444 Debt Service Reserve Account 6,133 6,133 6,132 6,132 Issue Fund 4,924 4,873 Revenue Fund 64 64 Operating Fund 239 239 Revolving Fund 6 6

~23 982 M2'h~R

NOTE 3: (Continued)

Contractual maturities:

Within one year 2,389 8 2,389 After one year through five years 1,242 1,233 After ten years 20 858 20 358 5 2'>MR ~22K Mead-Adelanto Pro'ect The balances in the special funds required by the Bond Indenture are as follows, in thousands:

une 30 1996 1995 Amortized Fair Amortized Fair Cost Value Cost Value Acquisition Account 8 36,979 8 36,979 8 37,745 8 37,745 Debt Service Fund-Debt Service Account 15,194 15,166 12,353 12,353 Debt Service Reserve Account 16,865 16,865 17,040 17,040 Issue Fund 16,517 16,346 Revenue Fund 71 71 Operating Fund 264 264 Revolving Fund 6 6 Contractual maturities:

Within one year 8 6,794 8 6,789 After one year through five years 4,161 4,138 After ten years 58 424 58 424 I

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NOTE 3: (Continued)

Multi le Pro'ect Fund The balances in the special funds required by the Bond Indenture are as follows, in thousands:

une 30 1996 1995 Amortized Fair Amortized Fair Cost Value Cost Value Proceeds Account 8256,830 8256,830 8256,830 8 256,830 Earnings Account 3 278 3 278 1 384 1 384

~20~10 [~2(~1$ ~2~214 ~2~214 Contractual maturities:

Within one year 9,220 8 9,220 After ten years 250 888 250 888

~2() 10/f $ 2{~01 The balances in the special funds required by the Bond Indenture are as follows, in thousands:

une 30 1996 1995 Amortized Fair Amortized Fair Cost Value Cost Value Operating Reserve 8 1,238 8 1,238 8 1,618 8 1,618 Operating Revenue Fund 7 7 2 2 Acquisition Account 527 527 112 112 Debt Service Fund-Debt Service Account 8,607 8,597 6,017 6,017 Debt Service Reserve Account 18,031 18,031 18,026 18,026 Reserve and Contingency 13,377 13,383 11,224 11,252 Revolving 15 15 JL44~77 g 41~73 ~7~4 ~~~7L422 Contractual maturities:

Within one year 5 7,613 8 7,613 After one year through five years 16,149 16,145 After ten years 18 025 18 025 fj 41~77 j~4~7$

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NOTE 3: (Continued Pro'ect Investment Sales There were no proceeds from sales of investments during fiscal 1996 or 1995.

NOTE 4 - LONG-TERM DEBT:

Reference is made below to the Combined Schedule of Long-term Debt at June 30, 1996 for details related to all of the Authority's outstanding bonds.

Palo Verde Pro'ect To finance the purchase and construction of the Authority's share of the Palo Verde Project, the Authority issued Power Project Revenue Bonds pursuant to the Authority's Indenture of Trust dated as of July 1, 1981 (Senior Indenture), as amended and supplemented. The Authority also has issued and has outstanding Power Project Subordinate Refunding Series Bonds issued under an Indenture of Trust dated as of January 1, 1993 (Subordinate Indenture). The Subordinate Refunding Bonds were issued to advance refund certain bonds previously issued under the Senior Indenture.

The bond indenturcs provide that the Revenue Bonds and Subordinate Refunding Bonds shall be special, limited obligations of the Authority payable solely from and secured solely by (1) proceeds from the sale of bonds, (2) all revenues, incomes, rents and receipts attributable to the Palo Verde Project (see Note 6) and interest on all moneys or securities (other than in the Construction Fund) held pursuant to the Bond Indenture and (3) all funds established by the Bond Indenture.

At the option of the Authority, all outstanding Power Project Revenue Bonds and Subordinate Refunding Term Bonds are subject to redemption prior to maturity, except for the 1996 Subordinate Refunding Series A which is not redeemable.

The Bond Indenture requires mandatory 'sinking fund installments to be made beginning in fiscal year 2003 (1986 Series A Bonds and 1987 Series A Bonds), 2005 (1989 Series A Bonds), 2010 (1993 Series A Bonds), and 2008 (1996 Subordinate Refunding Series B). Scheduled principal maturities for the Palo Verde Project during the five fiscal years following June 30, 1996 are

$ 25,690,000 in 1997, 822,220,000 in 1998, $ 23,580,000 in 1999, 825,145,000 in 2000, and 512,860,000 in 2001. The average interest rate on outstanding debt during fiscal year 1996 and 1995 was 5.8% and 6.0%, respectively.

NOTE 4: (Continued)

Southern Transmission S stem Pro'ect To finance payments-in-aid of construction to IPA for construction of the STS, the Authority issued Transmission Project Revenue Bonds pursuant to the Authority's Indenture of Trust dated as of May 1, 1983 (Senior Indenture), as amended and supplemented. The Authority also has issued and has outstanding Transmission Project Revenue Bonds 1991 and 1992 Subordinate Refunding Series issued under Indentures of Trust dated as of March 1, 1991 and June 1, 1992, respectively. The 1991 and 1992 subordinated bonds were issued to advance refund certain bonds previously issued under the Senior Indenture.

The bond indentures provide that the Revenue Bonds and the Subordinate Refunding Series Bonds shall be special, limited obligations of the Authority payable solely from and secured solely by (1) proceeds from the sale of bonds, (2) all revenues, incomes, rents and receipts attributable to STS (see Note 6) and interest on all moneys or securities (other than in the Construction Fund) held pursuant to the Bond Indenture and (3) all funds established by the Bond Indenture.

All outstanding Transmission Project Revenue and Refunding Bonds, at the option of the Authority, are subject to redemption prior to maturity.

The Bond Indenture requires mandatory sinking fund installments to be made beginning in fiscal year 2003 (for the 1986 Series A Bonds), 2002 (1986 Series B Bonds) and 2007 (1988 Series A Bonds). Scheduled principal maturities for STS during the five fiscal years following June 30, 1996 are $ 10,845,000 in 1997, 821,565,000 in 1998, 822,790,000 in 1999, 810,200,000 in 2000, and

$ 10,115,000 in 2001. The average interest rate on outstanding debt during fiscal year 1996 and 1995 was 8.3%.

I.loover U ratin Pro ect To finance advance payments to USBR for application to the costs of the Hoover Uprating Project, the Authority issued Hydroelectric Power Project Revenue Bonds pursuant to the Authority's Indenture of Trust dated as of March 1, 1986 (Bond Indenture).

The Bond Indenture provides that the Revenue Bonds shall be special, limited obligations of the Authority payable solely from and secured solely by (1) the proceeds from the sale of the bonds, (2) all revenues from sales of energy to participants (see Note 6), (3) interest or other receipts derived from any moneys or securities held pursuant to the Bond Indenture and (4) all funds established by the Bond Indenture (except for the Interim Advance Payments Account in the Advance Payments Fund).

At the option of the Authority, all outstanding Hydroelectric Power Project Revenue Bonds are subject to redemption prior to maturity.

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NOTE 4: (Continued)

The Bond Indenture requires mandatory sinking fund installments to be made beginning in fiscal year 2007 for the 1991 Series A Bonds maturing on October 1, 2010 and fiscal year 2011 for the 1991 Series A Bonds maturing on October 1, 2017. Scheduled principal maturities for the Hoover Uprating Project during the five fiscal years following June 30, 1996 are 81,085,000 in 1997, 81,130,000 in 1998, 81,230,000 in 1999, $ 1,285,000 in 2000, and 81,400,000 in 2001. The average interest rate on outstanding debt during fiscal year 1996 and 1995 was 5.8% and 6.1%,

respectively.

During fiscal 1995, the Authority repurchased 8340,000 of outstanding Hydroelectric Power Project Revenue Bonds with excess funds in the Advance Payments I und.

Multi le Pro'ect Fund To finance costs of construction and acquisition of ownership interests or capacity rights in one or more projects expected to be undertaken within five years after issuance, the Authority issued Multiple Project Revenue Bonds pursuant to the Authority's Indenture of Trust dated as of August 1, 1989 (Bond Indenture), as amended and supplemented.

The Bond Indenture provides that the Revenue Bonds shall be special, limited obligations of the Authority payable solely from, and secured solely by, (1) proceeds from the sale of bonds, (2) with respect to each authorized project, the revenues of such authorized project, and (3) all funds established by the Bond Indenture.

In October 1992, 8103,640,000 and 8285,010,000 of the Multiple Project Revenue Bonds were transferred to the Mead-Phoenix Project and the Mead-Adelanto Project, respectively, to finance the estimated costs of acquisition and construction of the projects.

A total of $ 153,500,000 of the outstanding Multiple Project Revenue Bonds are not subject to redemption prior to maturity. At the option of the Authority, the balance of the outstanding bonds are subject to redemption prior to maturity.

The Bond Indenture requires mandatory sinking fund installments to be made beginning in fiscal year 2006 for the 1989 Series Bonds. The first scheduled principal maturity for the Multiple Project Revenue Bonds is 88,645,000 in fiscal year 2000. The average interest rate on outstanding debt during fiscal year 1996 and 1995 was 6.8%.

Mead-Phoenix Pro'ect To finance the Authority's ownership interest in the estimated cost of the project, 8103,640,000 of the Multiple Project Revenue Bonds were transferred to the Mead-Phoenix Project in October 1992.

In March 1994, the Authority issued and has outstanding 851,835,000 of Mead-Phoenix Revenue Bonds under an Indenture of Trust dated as of January 1, 1994 (Bond Indenture). The proceeds from the Revenue Bonds, together with drawdowns from the Debt Service Fund and Project I

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NOTE 4: (Continued)

Acquisition Fund, werc used to advance refund 864,840,000 of the Multiple Project Revenue Bonds previously transferred to the Mead-Phoenix Project.

The Bond Indenture provides that the Revenue Bonds shall be special, limited obligations of the Authority payable solely from, and secured solely by, (1) proceeds from the sale of bonds, (2) all revenues, incomes, rents and receipts attributable to Mead-Phoenix (see Note 6) and interest on all moneys or securities and (3) all funds established by the Bond Indenture.

At the option of the Authority, all outstanding Mead-Phoenix Revenue Bonds are subject to redemption prior to maturity.

The Bond Indenture requires mandatory sinking fund installments to be made beginning in fiscal year 2018 for the 1994 Series Bonds. The first scheduled principal maturity for the Mead-Phoenix Revenue Bonds is $ 1,295,000 in fiscal year 2000. The average interest rate on outstanding debt during fiscal year 1996 and 1995 was 6.0%.

Mead-Adelanto Pro'ect To finance the Authority's ownership interest in the estimated cost of the project, S285,010,000 of the Multiple Project Revenue Bonds were transferred to the Mead-Adelanto Project in October 1992.

In March 1994, the Authority issued and has outstanding 8173,955,000 of Mead-Adelanto Revenue Bonds under an Indenture of Trust dated as of January 1, 1994 (Bond Indenture). The proceeds of the Revenue Bonds, together with drawdowns from the Debt Service Fund and Project Acquisition Fund, were used to advance refund 8178,310,000 of the Multiple Project Revenue Bonds previously transferred to the Mead-Adelanto Project.

The Bond Indenture provides that the Revenue Bonds shall be special, limited obligations of the Authority payable solely from, and secured solely by, 1) proceeds from the sale of bonds, (2) all revenues, incomes, rents and receipts attributable to Mead-Adelanto (see Note 6) and interest on all moneys or securities and (3) all funds established by the Bond Indenture.

At the option of the Authority, all outstanding Mead-Adelanto Revenue Bonds are subject to redemption prior to maturity.

The Bond Indenture requires mandatory sinking fund installments to be made beginning in fiscal year 2018 for the 1995 Series Bonds, The first scheduled principal maturity for the Mead-Adelanto Revenue Bonds is 83,560,000 in fiscal year 2000. The average interest rate on outstanding debt during fiscal year 1996 and 1995 was 5.9% and 6.0%, respectively.

S~P To finance the costs of acquisition of an ownership interest in Unit 3 of the SJGS, the Authority issued San Juan Project Revenue Bonds pursuant to the Authority's Indenture of Trust dated as of January 1, 1993 (Bond Indenture).

NOTE 4: (Continued)

The Bond Indenture provides that the Revenue Bonds shall be special, limited obligations of the Authority payable solely from, and secured solely by, (1) proceeds from the sale of bonds, (2) all revenues, incomes, rents and receipts attributable to San Juan (see Note 6) and interest on all moneys or securities and (3) all funds established by the Bond Indenture.

At the option of the Authority, all outstanding San Juan Project Revenue Bonds are subject to redemption prior to maturity.

The Bond Indenture requires mandatory sinking fund installments to be made beginning in fiscal year 2012 for the 1993 Series A Bonds. The scheduled principal maturities for the San Juan Project Revenue Bonds during the five fiscal years following June 30, 1996 are 86,035,000 in 1998, 86,275,000 in 1999, 86,540,000 in 2000 and 86,825,000 in 2001. The average interest rate on outstanding debt during fiscal year 1996 and 1995 was 5.3%.

Refundin Bonds In April 1996, the Authority issued 8152,905,000 of Palo Verde 1996 Subordinate Refunding Series A Bonds to refund 8163,355,000 of previously issued Palo Verde 1987 Refunding Series A Bonds and issued 858,870,000 of Palo Verde 1996 Subordinate Refunding Series B Bonds to refund 818,555,000 and 840,315,000 of previously issued Palo Verde 1986 Refunding Series B and 1987 Refunding Series A Bonds, respectively. The refunding is expected to reduce total debt service payments over the next 13 years by approximately 850,967,000 (the difference between the debt service payments on the old and new debt) and is expected to result in a net present value savings of approximately 829,537,000.

In March 1994, the Authority issued 851,835,000 of Mead-Phoenix Project Revenue Bonds and 8173,955,000 of Mead-Adelanto Project Revenue Bonds to refund 8243,150,000 of previously issued Multiple Project Revenue Bonds which were transferred to the Mead-Phoenix and Mead-Adelanto projects during fiscal year 1993. The partial refunding of the original issue within five years of its issuance triggered a recalculation of the arbitrage yield. The recalculation resulted in a higher arbitrage yield which reduced the rebate liability of the Authority. At June 30, 1996, cumulative savings due to the rebate calculation amounted to 86,401,924. This amount was allocated 81,707,180 and 84,694,744 to the Mead-Phoenix and Mead-Adelanto Projects, respectively.

In July 1992, the Authority issued 8475,000,000 of Southern Transmission Project Revenue Bonds to refund 8385,385,000 of previously issued bonds. Principal and interest with respect to the 1992 bonds are allocated into four separate components. Each of components 1, 2 and 3 is secured by, and payable from, investments in its escrow fund until scheduled crossover dates. Component 4 proceeds of 814,100,000 were used to advance refund approximately 89,000,000 of bonds in fiscal year 1993. On the Component 1 Crossover date (January 1, 1994), Component 1 proceeds of 813,959,000 were used in fiscal 1994 to advance refund 813,455,000 of previously issued bonds.

On the Component 2 Crossover date (January 1, 1995), Component 2 proceeds of 85,519,000 were used in fiscal 1995 to advance refund 85,335,000 of previously issued bonds. Proceeds from Component 3 of 8343,921,000 werc placed in an irrevocable trust and will be used to redeem 8313,050,000 of bonds currently included within long-term debt at scheduled call dates. The I

NOTE 4: (Continued) combined refunding is expected to reduce total debt service payments over the next 25 years by approximately 852,585,000 and is expected to result in an overall net present value savings of approximately 825,060,000.

Until the bonds to be refunded by Component 3 are called, interest on the bonds is payable from interest earned on investments with a financial institution under a specific investment agreement purchased out of the proceeds of the sales and held in bank escrow accounts. After the monies in the escrow accounts are applied to redeem the bonds to be called, primarily through fiscal 1997, interest on the bonds will be payable from revenues. The trust account assets (8343,898,000 in escrow accounts and 82,410,000 in unamortized debt expense at June 30, 1996) and liabilities (8347,388,000, net of bond discounts, at June 30, 1996) for Component 3 are included in the Authority's financial statements. The revenue bonds to be refunded are also included in the financial statements until the scheduled call date, at which time the refunded bonds and related trust account assets will be removed from the balance sheet and the cost of refunding the debt will be included in unamortized debt expenses.

In January 1992, $ 70,680,000 of Palo Verde Special Obligation Crossover Series Bonds were issued, the proceeds of which were placed in an irrevocable trust and will be used to redeem 869,125,000 of bonds currently included within long term debt at scheduled call dates.

Until the bonds to be refunded by the Palo Verde Special Obligation Crossover Series Bonds are called, interest on the Palo Verde Special Obligation Crossover Series Bonds is payable from interest earned on securities of the United States Government purchased out of the proceeds of the sales and held in bank escrow accounts. After the monies in the escrow accounts are applied to redeem the bonds to be called, primarily through 1996, interest on the Palo Verde Special Obligation Crossover Series Bonds will be payable from revenues. The trust account assets and the liability for the Palo Verde Special Obligation Crossover Series Bonds are not included in the Authority's financial statements. At June 30, 1996 and 1995, $ 63,849,000 and $ 70,959,000, respectively, of these trust assets have been offset against the Palo Verde Special Obligation Crossover Series Bonds.

On July 1, 1995, the crossover date for the Palo Verde Special Obligation Bonds Series A, trust assets in escrow of 87,131,000 were used to advance refund 87,125,000 of previously issued bonds.

At June 30, 1996 and 1995, the aggregate amount of debt in all projects considered to be defeased was $ 3,535,075,000 and 83,305,725,000, respectively.

Interest Rate Swa In fiscal year 1991, the Authority entered into an Interest Rate Swap agreement with a third party for the purpose of hedging against interest rate fluctuations arising from the issuance of the Transmission Project Revenue Bonds, 1991 Subordinate Refunding Series as variable rate obligations. The notional amount of the Swap Agreement is equal to the par value of the bond ($ 291,700,000 and

$ 292,000,000 at June 30, 1996 and 1995, respectively). The Swap Agreement provides for the Authority to make payments to the third party on a fixed rate basis at 6.38%, and for the third party to make reciprocal payments based on a variable rate basis (3.1% and 3.9% at June 30, 1996 and 1995, respectively). The bonds mature in 2019.

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COMBiNED SCHEDULE OF LONG-TERhf DEBT (ln thousands)

Date Effcctivc Maturity on

~o tu33, Principal:

Palo Verde Project Revenue and Refunding Bonds 1985A 05/22/85 9.7% 1996 to 1999 8 1,070 1985B 07/02/85 9.1% 1996 to 2000 5,610 1986A 03/13/86 8.2% 1996 to 2006 71,220 1986B 12/16/86 7.2% 1996 to 2017 96,450 1987A 02/11/87 6.9% 1996 to 2017 43,720 1989A 02/15/89 Z.2% 1996 to 2015 287,705 1992A 01/01/92 6.0% 1996 to 2010 7465 1992C 01/01/92 6.0% 1996 to 2010 15,620 1993Sub 03/01/93 5.5% 1996 to 2017 98,200 1993A 03/01/93 5.5% 1996 to 2017 270,035 1996A 02/13/96 4.4% 1996 to 2017 152,905 1996B 02/29/96 4.4% 1996 to 201Z 1,108,670 Southern Transmission System Project Revenue and Refunding Bonds 1986A 03/18/86 8.0% 1996 to 2021 107,300 1986B 04/29/86 7.5% 1996 to 2023 401,570 1988A 11/22/88 7.2% 1996 to 2015 154,085 1991A 4/17/91 6.4% 2019 291,700 1992 Comp 1, 2,4 7/20/92 6.1% 1996 to 2021 40,639 1992 Comp 3 7/20/92 6.1% 1996 to 2021 431,766 1993A 7/01/93 5.4% 1996 to 2023

~5925 Hoover Uprating Project Revenue and Refunding Bonds 1986A 08/13/86 8.1% 1996 to 2017 4,160 1991 08/01/91 6.2% 1996 to 2017

~5655 multiple Project Revenue Bonds Mead-Phoenix Project 1989 01/04/90 7.1% 1999 to 2020 38,800 Mead-Adelanto Project 1989 01/0$ /90 7.1% 1999 to 2020 106,ZOO hfultiple Project 1989 01/0$ /90 7.1% 1999 to 2020 ~259 99 Mead-Phoenix Project Revenue Bonds 1994A 03/01/94 5.3% 2006 to 2015 5 835 hfead.Addanto Project Revenue Bonds 1994A 03/01/94 5.3% 2006 to 2015 7 955 San Juan Project Revenue Bonds 1993 06/01/93 5.6% 1997 to 2020 237 37 Total principal amount Unamortized bond discount:

Palo Verde Project (101,823)

Southern Transmission System Project (159,935)

Hoover Uprating Project (3+89)

Mead-Phoenix Project (4,218) hfead-Adelanto Project (12,650) hfultiple Project Fund (16813)

San Juan Project ~L92$

Total unamortized bond discount ~3974 7 Long. tenn debt due within one year ~4~5 Total long-term debt, net (including Subordinate Refunding Crossover Series) ~32 3933 Note - bonds which have been refunded arc excluded from this schedule

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NOTE 5 - DISCLOSURES ABOUT FAIR VALUE 01 FINANCIALINSTRUMENTS:

The following methods and assumptions were used to estimate the fair value of each class of financial instruments for which it is practicable to estimate that value:

Cash and cash e uivalents The carrying value approximates fair value because of the short maturity of those instruments.

Investments Decommissionin fund Escrow account - Subordinate Refundin Crossover Series Crossover escrow accounts The fair values of investments are estimated based on quoted market prices for the same or similar investments.

Lon -term deb S ecial Obli ation Crossover Series Bonds Subordinate Refundin Crossover Series The fair value of the Authority's debt is estimated based on the quoted market prices for the same or similar issues or on the current average rates offered to the Authority for debt of approximately the same remaining maturities, net of the effect of a related interest rate swap agreement.

The fair values of the Authority's financial instruments are as follows (in thousands):

une 30 1996 1995 Amortized Fair Amortized Fair Cost Value Cost Value Assets:

Cash and cash equivalents 173,798 8 173,798 8 120,610 8 120,610 Escrow account - Subordinate Refunding Crossover Series 346,468 343,898 345,782 343,921 Decommissioning fund 33,865 33,474 24,503 24,503 Investments 597,831 597,427 682,916 682,442 Liabilities:

Debt 2,910,200 3,210,790 2,933,261 3,198,500 Subordinate Refunding Crossover Series 347,388 385,516 347,782 377,700 Off Balance Sheet Financial Instruments:

Special Obligation Crossover Series Bonds 63,415 - 67,739 70,680 75,800 Crossover escrow accounts 63,849 63,849 70,959 70,959 I

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NOTE 6 - POWER SALES AND TRANSMISSION SERVICE CONTRACTS:

The Authority has power sales contracts with ten participants of the Palo Verde Project (see Note 1).

Under the terms of the contracts, the participants are entitled to popover output from the PVNGS and are obligated to make payments on a "take or pay" basis for their proportionate share of operating and maintenance expenses and debt service on Power Project Revenue Bonds and other debt. The contracts expire in 2030 and, as long as any Power Project Revenue Bonds are outstanding, cannot be terminated or amended in any manner which will impair or adversely affect the rights of the bondholders.

The Authority has transmission service contracts with six participants of the Southern Transmission System Project (see Note 1). Under the terms of the contracts, the participants are entitled to transmission service utilizing the Southern Transmission System Project and are obligated to make payments on a "take or pay" basis for their proportionate share of operating and maintenance expenses and debt service on Transmission Project Revenue Bonds and other debt. The contracts expire in 2027 and, as long as any Transmission Project Revenue Bonds are outstanding, cannot be terminated or amended in any manner which will impair or adversely affect the rights of the bondholders.

In March 1986, the Authority entered into power sales contracts with six participants of the Hoover Uprating Project (see Note 1). Under the terms of the contracts, the participants are entitled to capacity and associated firm energy of the Hoover Uprating Project and are obligated to make payments on a "take or pay" basis for their proportionate share of operating and maintenance expenses and debt service whether or not the Hoover Uprating Project or any part thereof has been completed, is operating or is operable, or its service is suspended, interfered with, reduced or curtailed or terminated in whole or in part. The contracts expire in 2018, and as long as any Hydroelectric Power Project Revenue Bonds are outstanding, cannot be terminated or amended in any manner which will impair or adversely affect the rights of the bondholders.

In August 1992, the Authority entered into transmission service contracts with nine participants of the Mead-Phoenix Project (see Note 1). Under the terms of the contracts, the participants are entitled to transmission service utilizing the Mead-Phoenix Project and are obligated to make payments on a "take or pay" basis for their proportionate share of operating and maintenance expenses and debt service on the Multiple Project and Mead-Phoenix Revenue Bonds and other debt, whether or not the Mead-Phoenix Project or any part thereof has been completed, is operating and operable, or its service is suspended, interfered with, reduced or curtailed or terminated in whole or in part. The contracts expire in 2030 and, as long as any Multiple Project and Mead-Phoenix Revenue Bonds are outstanding, cannot be terminated or amended in any manner which will impair or adversely affect the rights of the bondholders.

In August 1992, the Authority entered into transmission service contracts with nine participants of the Mead-Adelanto Project (see Note 1). Under the terms of the contracts, the participants are entitled to transmission service utilizing the Mead-Adelanto Project and are obligated to make payments on a "take or pay" basis for their proportionate share of operating and maintenance expenses and debt service on the Multiple Project and Mead-Adelanto Revenue Bonds and other debt, whether or not the Mead-Adelanto Project or any part thereof has been completed, is operating and operable, or its service is suspended, interfered with, reduced or curtailed or terminated in whole or in part. The contracts expire l

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NOTE 6: (Continued) in 2030 and, as long as any Multiple Project and Mead-Adelanto Revenue Bonds are outstanding, cannot be terminated or amended in any manner which will impair or adversely affect the rights of the bond holders.

In January 1993, the Authority entered into power sales contracts with five participants of Unit 3 of the San Juan Project (see Note 1). Under the terms of the contracts, the participants are entitled to their proportionate share of the power output of the San Juan Project and are obligated to make payments on a "take or pay" basis for their proportionate share of operating and maintenance expenses and debt service on the San Juan Revenue Bonds, whether or not Unit 3 of the San Juan Project or any part thereof is operating or operable, or its service is suspended, interfered with, reduced or curtailed or terminated in whole or in part. The contracts expire in 2030 and, as long as any San Juan Revenue Bonds are

'outstanding, cannot be terminated or amended in any manner which will impair or adversely affect the rights of the bondholders.

NOTE 7 - COSTS RECOVERABLE I ROM I'UTURE BILLINGS TO PARTICIPANTS:

Billings to participants are designed to recover "costs" as defined by the power sales and transmission service agreements. The billings are structured to systematically provide for debt service requirements, operating funds and reserves in accordance with these agreements. Those expenses, according to generally accepted accounting principles (GAAP), which are not included as "costs" are deferred to such periods when it is intended that they be recovered through billings for the repayment of principal on related debt.

Costs recoverable from future billings to participants are comprised of the following:

Balance Fiscal Balance June 30, 1996 June 30, 1995 ~Activit 1996 GAAP items not included in billings to participants:

Depreciation of plant 8348,328 8 49,323 N97,651 Amortization of bond discount, debt issue costs, and cost of refunding 206,470 37,745 244,215 Nuclear fuel amortization 18,650 898 19,548 Decommissioning expense 75,233 7,610 82,843 Interest expense 23,165 22,798 45,963 Bond requirements included in billings to participants:

Operations and maintenance, net of investment income (67,253) (21,062) (88,315)

Costs of acquisition of capacity - STS (18,350) (18,350)

Reduction in debt service billings due to transfer of excess funds 78,658 (11,099) 67,559 Principal repayments (222,130) (39,559) (261,689)

Other ~31 740 ~3858 ~85 598

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NOTE 8 - COMMITMENTS AND CONTINGENCIES:

On August 31, 1996, the California State Legislature approved Bill AB 1890 (Bill) which provides for broad deregulation of the power generation industry in California. The Bill, which is pending approval by the Governor, requires the participation of the state's three investor-owned utilities. Consumer-owned utilities can participate on a voluntary basis but must hold public hearings as part of its decision making process. The Bill, which was supported by the Authority, authorizes the collection of a transition charge for generation when a consumer-owned utility opens its service area to competition and participates in the independent transmission system established by the legislation. The Bill also mandates the collection of a public benefit charge from all electric utility customers in the state. Although these funds (currently estimated at 2.5% of gross revenues) must be spent on renewable resources, conservation, research and development, or low income rate subsidies, the governing authority of each consumer-owned utility will control actual expenditures.

As a participant in the PVNGS, the Authority could be subject to assessment of retroactive insurance premium adjustments in the event of a nuclear incident at the PVNGS or at any other licensed reactor in the United States.

The Authority is involved in various legal actions. In the opinion of management, the outcome of such litigation or claims will not have a material effect on the financial position of the Authority or the respective separate projects.

NOTE 9: SUBSE UENT EVENTS:

On July 1, 1996, the crossover date for t)ie Palo Verde Special Obligation Bonds Series B, trust assets held in escrow of 863,415,000 were used to advance refund 862,000,000 of previously issued bonds.

In August 1996, the Authority issued $ 89,570,000 of Palo Verde 1996 Subordinate Refunding Series C bonds to refund $ 95,015,000 of 1986 Refunding Series B bonds. The refunding is expected to reduce total debt service payments over the next 20 years by approximately 824,713,000 (the difference between the debt service payments on the old and new debt) and is expected to result in a net present value savings of approximately $ 16,955,000.

In September 1996, the Authority issued 842,245,000 of Transmission Project Revenue Bonds, 1996 Subordinate Refunding Series A and 8121,065,000 of Transmission Project Revenue Bonds, 1996 Subordinate Refunding Series B to refund 868,720,000 and 8127,100,000 of the STS 1986 Refunding Series A and B, respectively. The refunding is expected to reduce total debt service payments over the next 10 years by approximately $ 6,029,000 (the difference between the debt service payments on the old and new debt) and is expected to result in a net present value savings of approximately N,372,000.

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SOUTHERN CALIFORNIA PUBLIC POWER AUTHORITY SUPPLEMFNTAL FINANCIALINFORitfATION INDF.X Palo Verde Pro'ect Supplemental Balance Sheet at Junc 30, 1996 and 1995 Supplemental Statement of Operations for thc Years Ended June 30, 1996 and 1995 Supplcmcntal Statement of Cash Flows for thc Years Ended Junc 30, 1996 and 1995 Supplemental Schcdulc of Receipts and Disbursements in Funds Required by the Bond Indenture for the Year Ended Junc 30, 1996 Southern Transmission S stem Pro ect Supplemental Balance Sheet at June 30, 1996 and 1995 Supplemental Statcmcnt of Operations for the Years Ended June 30, 1996 and 1995 Supplcmcntal Statcmcnt of Cash Flows for the Years Ended June 30, 1996 and 1995 Supplemental Schedule of Receipts and Disbursements in Funds Required by thc Bond Indcnturc for thc Year Ended June 30, 1996 Hoover U ratin Pro'ect Supplcmcntal Balance Sheet at Junc 30, 1996 and 1995 Supplemental Statement of Operations for the Years Ended Junc 30, 1996 and 1995 Supplemental Statement of Cash Flows for the Years Ended June 30, 1996 and 1995 Supplemental Schedule of Receipts and Disbursements in Funds Required by the Bond Indenture for thc Year Ended June 30, 1996 hfead-Phoenix Pro'ect Supplemental Balance Sheet at June 30, 1996 and 1995 Supplemental Statement of Operations for the Three Months Ended June 30, 1996 Supplemental Statement of Cash Flows for the Years Ended June 30, 1996 and 1995 Supplemental Schcdulc of Receipts and Disbursements in Funds Rcquircd by the Bond indenture for thc Year Ended Junc 30, 1996 Mead-Adelanto Pie'ect Supplemental Balance Sheet at June 30, 1996 and 1995 Supplemental Statcmcnt of Operations for the Three Months Ended June 30, 1996 Supplcmcntal Statcmcnt of Cash Flows for the Years Ended Junc 30, 1996 and 1995 Supplcmcntal Schedule of Receipts and Disbursements in Funds Required by the Bond Indenture for the Year Ended June 30, 1996 Multi lc Pro'cct Fund Supplemental Balance Sheet at June 30, 1996 and 1995 Supplemental Statement of Cash Flows for the Years Ended June 30, 1996 and 1995 Supplemental Schedule of Receipts and Disbursements in Funds Rcquircd by the Bond Indenture for the Year Ended June 30, 1996 San uan Pro'ect Supplcmcntal Balance Sheet at June 30, 1996 and 1995 Supplemental Statement of Operations for the Years Ended June 30, 1996 meed 1995 Supplemental Statement of Cash Flows for thc Years Ended Junc 30, 1996 and 1995 Supplemental Schedule of Receipts and Disburscmcnts in Funds Required by the Bond Indenture for thc Year Ended June 30, 1996 5

SOUTIIERN CALIFORNIA PVBLIC POWER AUTIIORITY PALO VERDE PROJECT SUPPI.F.ltIF.NTAI. BAIANCE SHF.FT (In thousands) une 30 1995 Vtility plant:

Production $ 613,608 $ 611,771 Transmission 14,146 14,146 General 2 569 2 674 630,323 628,491 Less - Accumulated depreciation 250 021 219 881 380,302 408,610 Construction work in progress 9,503 9,683 Nuclear fuel, at amortized cost 13 225 12716 Net utility plant 403 030 431 009 Special funds:

Availablc for sale at fair value:

Decommissioning fund 33,474 24,503 Invcstmcnts 115,746 143,600 Interest receivable 1,512 1,223 Cash and cash cquivalcnts 67 879 49 354 218 61 218 680 Accounts rcceivablc 738 912 Materials and supplies 9,240 9,618 Costs recoverable front future billings to participants 204,945 197,515 Unrcalizcd loss on invcstmcnts in funds available for sale 456 226 Vnamortizcd debt expenses, less accumulated antortization of $ 65,795 and $ 71,525 204 093 209 740 Total assets f~~73 ~067 700 I.IABII,ITIFS Long-term debt 5 9S1 155 ~996 390 Current liabilities:

Long-term debt duc within onc year 25,690 23,855 Accrued interest 24,535 30,685 Accounts payable and accrued cxpcnscs 10 333 16 770 Total current liabilities 60 558 71 310 Commitments and contingencies Total liabilities ~0~7 ~067 700 See notes to financial statements.

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SOUTHERN CALIFORNIA PUBLIC POWER AUTHORITY PALO VERDE PROJECT SUPPLEMENTAL STATEMENT OF OPERATIONS (In thousands)

Year Ended une 30 1996 1995 Operating revenue:

Sales of electric energy ~185 464 ~129 180 Operating expenses:

Nuclear fuel 7,949 8,150 Other operations 25,815 25,307 Maintenance 6,317 7,825 Depreciation 18,425 19,145 Decommissioning 12 497 15 401 Total operating expenses 71.003 73.828 Operating income 64,461 55,352 Investment income 10 886 9.968 Income before debt expense 75,347 65,320 Debt expense 82 777 77 976 Costs recoverable from future billings to participants See notes to financial statements.

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SOUTHERN CALIFORNIA PUBLIC POWER AUTHORITY PALO VERDE PROJECT SUPPLEMFNTAL STATEMENT OF CASH FLOWS (In thousands)

Year Fndcd unc 30 1996 1995 Cash flows from operating activities:

Costs recoverable from future billings to participants (S 7,430) (S 12,656)

Adjustments to arrive at net cash provided by (used for) operating activitics-Depreciation 18,425 19,145 Decommissioning 12,497 13,401 Amortization of nuclear fuel 7,949 8,150 Amortization of debt costs 24,428 16,607 Changes in assets and liabilities:

Decommissioning fund (8,971) (1,297)

Interest receivable (289) 127 Accounts receivable 174 131 Materials and supplies 378 729 Other assets 55 (2)

Accrued interest (6,150) (719)

Accounts payable and accrued expenses ~6437 3 241 Net cash provided by operating activities 34 629 46 857 Cash flows from investing activities:

Payments for construction of facility (10,892) (9,569)

Purchases of investmcnts (154,685) (97,108)

Proceeds from sale/maturity of invcstmcnts 182 309 68 891 Net cash provided by (used for) investing activities 16 732 ~37 786 Cash flows from capital and related financing activities:

Payment of principal on long-term debt (231855) (22,425)

Payment of bond issue costs (4,832)

Payment for defcasancc of revenue bonds (233,632)

Proceeds from issuance of refunding bonds 229 483 Nct cash used for capital and rclatcd financing activities (32,836) (22,425)

Nct increase (decrease) in cash and cash cquivalcnts 18,525 (13,354)

Cash and cash cquivalcnts at beginning of period 49 354 62 708 Cash and cash equivalents at end of year ~67 87 ~9~35 Supplemental disclosure of cash flow infortnation:

Cash paid during the year for interest (nct of amount capitalized) ~644 9 ~62089 Scc notes to financial statements.

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SOUTHERN CALIFORNIA PUBLIC POWER AUTHORITY PALO VERDE PROJECT SUPPLEMENTAL SCHEDULE OF RECEIPIS AND DISBURSEMEKIS IN FUNDS REQUIRED BY THE BOND INDENTURE FOR THE YEAR ENDFD UNF. 30 1996 (In thousands)

Debt Reserve & Decommissioning Service Revenue Operating Contingency Issue Funds Fund Fund Fund Fund Fund I & II Total Balance at June 30, 1995 132 133 8 30948 8 16574 8 12482 8 24490 8 216627 Additions:

Investment earnings 4,409 31 834 1,100 616 749 7,739 Distribution of investment earnings (5,734) 8,604 (1,213) (1,000) (657)

Discount on investment purchases 1,971 3 513 336 41 423 3,287 Revenue from power sales 49 129,180 37 6 129,272 Distribution of revenues 81,922 (138,843) 39,603 3,989 5,325 8,004 Transfers to escrow for rcfundings (10,413) 78 (93) (2,886) 4,046 (9,268)

Transfer from escrow for principal and interest payments 379 634 951 11 067 10 581 380 099 Total 451 838 28 614 12 126 9 371 9 176 511 129 Deductions:

Construction expenditures 3,060 3,060 Operating expenditures 31,041 31,046 Fuel costs 8,45? 8,457 Bond issue costs 3,173 3,173 Payment of principal 23,855 23,855 Interest paid 55,130 5,663 60,793 Premium and interest paid on investments 202 115 58 131 506 Payment of principal and interest on escrow bonds 380 099 380 099 Total 459 286 39 613 3 118 8 836 136 510 989 Balance at June 30, 1996 ~124 684 S 4 ~19 949 ~24 582 ~I~07 3 33 530 ~26 767 This schedule summarizes the receipts and disbursements in funds required under thc Bond Indenture and has been prepared from thc trust statements. The balances in the funds consist of cash and investments at original cost. These balances do not include accrued interest receivable of $ 1,245 and $ 1,223 and Decommissioning Fund accrued interest receivable of $ 267 and $ 138 at June 30, 1996 and 1995, respectively, nor do they include total amortized net investment discounts of $ 788 and $ 918 at June 30, 1996 and 1995, respectively. These balances also do not include unrealized loss on investments in funds available for sale of $ 456 and $ 226 at June 30, 1996 and 1995, respectively.

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SOUTHERN CALIFORNIA PUBLIC POWER AUTHORITY SOUTHERN TRANSMISSION SYSTEM PROJECT SUPPLFBIENTAL BALANCE SHEET (In thousands) unc 30 1996 1995 55527S Utility plant:

Transmission S 674,606 8 675,301 General 18 893 18 893 693,499 694,194 Less - Accumulated depreciation 194 127 174 392 499,372 519,802 Construction work in progress 1 212 Nct utility plant 499 372 521 014 Special funds:

Available for sale at fair value:

Investmcnts 102,842 144,476 Escrow account - Subordinate Refunding Crossover Series 343,898 343,921 Advance to Intermountain Power Agency 19,550 19,550 Interest rcccivablc 2,169 1,807 Cash and cash equivalents 90 324 54 678 558 783 564 432 Accounts receivable 2,687 2,469 Costs recoverable from future billings to participants 203,787 183,154 Unrealized loss on investments in funds available for sale 2,865 1,89?

Unamortized debt expenses, less accumulated amortization of S59,752 and S51,415 164 247 172 780 Total assets aL 43~741 1 445 746 I.IABILITIES Long-term debt 1 034 757 5 1 042002 Subordinate Refunding Crossover Series 347 388 347 782 Current liabilities:

Long-term debt duc within one year 10,845 14,325 Accrued interest 38,436 39,379 Accounts payable and accrued expenses 315 2 258 Total current liabilities 49 596 55 962 Commitmcnts and contingencies Total liabilities ~13 ~741 1 445 746 Scc notes to financial statements.

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SOUTHERN CALIFORNIA PUBLIC POWER AUTHORITY SOUTHERN TRANSMISSION SYSTEM PROJECT SUPPLEMENTAL STATEMENT OF OPERATIONS (In thousands)

Year Ended une 30 1996 1995 Operating revenue:

Sales of transmission services 85 297 91 250 Operating expenses:

Other operations 10,192 11,839 Maintenance 5,236 4,498 Depreciation 20 329 19 735 Total operating expenses 35 757 36 072 Operating income 49,540 55,178 Investment income 28.993 30 085 Income before debt expense 78,533 85,263 Debt expense 99 166 99 823 Costs recoverable from future billings to participants OL22 KB (~4~

See notes to financial statements.

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SOUTIIERN CALIFORNIA PUBLIC POWER AUTHORITY SOUTHERN TRANSMISSION SYSTEM PROJECT SUPPI.FMENT I. STATEMENT OF CASH FLOWS (In thousands)

Year Ended une 30 1996 1995 Cash flows from operating activities:

Costs recoverable from future billings to participants (8 20,633) (8 14,560)

Adjustments to arrive at nct cash provided by (used for) operating activitics-Dcpreciation 20,329 19,735 Amortization of debt costs 11,739 11,545 Write-off of construction work in progress costs 1,313 Changes in assets and liabilities:

Interest reccivablc (362) 315 Accounts rcccivablc (218) 1,940 Other assets 17 Accrued interest (943) 10,773 Accounts payablc and accrued expenses ~1943 ~268 Net cash provided by operating activities 9 282 29 497 Cash flows from investing activities:

Payments for construction of facility (315)

Purchases of investments (154,904) (94,425)

Proceeds from sale/maturity of invcstmcnts 195 593 90 462 Net cash provided by (used for) investing activities 40 689 4 278 Cash flows from capital and rclatcd financing activities:

Payment for defeasance of revenue bonds (5,479)

Repayment of principal on long-term debt 14 325 ~13 615 Nct cash used for capital and related financing activities 14 325 19 094 Net increase in cash and cash equivalents 35,646 6,125 Cash and cash equivalents at beginning of year 54 678 48 553 Cash and cash equivalents at cnd of year ~5~78 Supplemental disclosure of cash flow information:

Cash paid during the year for interest (nct of amount capitalized) 8 370 96 072 Sce notes to financial statcmcnts.

SOUTHERN CALIFORNIA PUBLIC POWER AUTHORITY SOUTHERN TRANSh! ISSION SYSTEM PROJECT SUPPLEMENTAL SCHEDULE OF RECEIPIS AND DISBURSEhf ERIS IN FUNDS REQUIRED BY TIIE BOND INDENTURE YFA D D F30 1996 (In thousands)

Construction Fund-Initial

~t Debt General Facilities Service Operating Reserve Issue Escrow

~utci Fund ~un Fund Balance at June 30, 1995 222 602 ~~4 2 77 ull 5 3M4222 2 542 660 Additions:

Investmcnt earnings 12 6,485 463 635 39102 18,567 29,264 Distribution of investment earnings (5,710) 9,408 (596) 6,182 (9,284)

Revenue from transmission sales 83,953 83,953 Distribution of revenue 42@30 (78,891) (5303) 50,942 (9,278)

Transfer from escrow for principal and Interest payments ~29 ~29 Total ~au ~a33 ~5264 ~2~2 ~26 28 Deductions:

Operating expenses 14,904 14,904 Payment of principal 149325 14/25 Interest paid 41476 19/86 60,862 Payment of principal and interest on escrow bonds 12,921 26@75 39,496 Premium and interest paid on investment purchases 1,267 39 I/06 Other Total 55 764 39 ~61 35 ~13 t~4 Balance at June 30, 1996 z 234 ~106 411 ~605 ~4757 ~76 219 ~343 874 536 946 This schedule summarizes the receipts and disbursements in funds required under the Bond Indenture and has been prepared from the trust staterncnts. The balances in the funds consist of cash and Investments at original cost. These balances do not include accrued interest receivable of $ 2,169 and $ 1,807 at June 30, 1996 and 1995, respectively, nor do they include total amortized net investment discounts of $ 2,983 and $ 2@12 at June 30, 1996 and 1995, respectively. 'Ihese balances do not include unrealized loss on investments in funds available for sale of $ 2,865 and $ 1,897 at June 30, 1996 and 1995, respectively.

I SOUTHERN CALIFORNIA PUBLIC POWER AUTHORITY HOOVER UPRATING PROJECT SUPPLEMENTAL BALANCE SHEET (In thousands) une 30 1996 1995 ASSETS Special funds:

Investments available for sale at fair value 8 9,628 7,653 Advances for capacity and energy, net 10,119 11,903 Interest receivable 6 26 Cash and cash equivalents 1 997 2 745 21 750 22 327 Accounts receivable 19 Costs recoverable from future billings to participants 7,538 7,299 Unrealized loss on investments in funds available for sale 18 Unamortized debt expenses, less accumulated amortization of $ 937 and $ 795 3 307 3 512 Total assets R&2&i f~l'g LIABILITIES Long-term debt 30 981 31 977 Current liabilities:

Long-term debt due within one year 1,085 610 Accrued interest 489 500 Accounts payable and accrued expenses 62 69 Total current liabilities 1 636 1 179

.Commitments and contingencies Total liabilities ~2~17 See notes to financial statements.

SOUTHERN CALIFORNIA PUBLIC POWER AUTHORITY HOOVER UPRATING PROJECT SUPPLEMENTAL STATEMENT OF OPERATIONS (In thousands)

Year Ended une 30 1996 1995 Operating revenue:

Sales of electric energy 3 349 3 569 Operating expenses:

Capacity charges 1,011 1,207 Energy charges 844 832 Other operations 342 360 Reimbursement of advances for capacity and energy 3 12 Total operating expenses 2 200 2 411 Operating income 1,149 1,158 Investment income 874 514 Income before debt expense 2,023 1,672 Debt expense 2 262 2 810 Costs recoverable from future billings to participants (l~K)

See notes to financial statements.

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SOUTHERN CALIFORNIA PUBLIC POWER AUTHORITY HOOVER UPRATING PROJECT SUPPLEMENTAL STATEMENT OF CASH FLOWS (In thousands)

Year Ended une 30 1996 1995 Cash flows from operating activities:

Costs recoverable from future billings to participants (8 239) (8 638)

Adjustments to arrive at net cash used for operating activities:

Amortization of debt costs 294 288 Changes in assets and liabilities:

Interest receivable 20 Accounts receivable (19) 54 Other assets 21 Accrued interest (18)

Accounts payable and accrued expenses ~594 Net cash provided by (used) for operating activities 38 887 Cash flows from investing activities:

Purchases of investments (22,665) (11,546)

Proceeds from sale/maturity of investments 20,705 9,491 Advances for capacity and energy, net 1 784 1 415 Net cash used for investing activities ~176 ~640 Cash flows from capital and related financing activities:

Payment for defeasance of revenue bonds (319)

Repayment of principal on long-term debt ~610 ~860 Net cash used for capital and related financing activities ~610 ~1179 Net decrease in cash and cash equivalents (748) (2,706)

Cash and cash equivalents at beginning of year 2 745 5 451 Cash and cash equivalents at end of year ~lr)7 j~27~4 Supplemental disclosure of cash flow information:

Cash paid during year for interest (net of amount capitalized)

See notes to financial statements.

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SOUTHERN CALIFORNIA PUBLIC POWER AUTHORITY HOOVER UPRATING PROJECT SUPPLEMENTAL SCHEDULE OF RECEIPTS AND DISBURSEMENTS IN FUNDS REQUIRED BY THE BOND INDENTURE YEAR ENDED UNE 30 1996 (In thousands)

Operating Debt Advance Working Debt Service General Payments Operating Revenue Capital Service Reserve Reserve Funds Fund Fund Fund Account Account Account Total Balance at June 30, 1995 S 2410 560 S I 435 S 3 083 S 2876 S 10364 Additions:

Investment earnings 16 2 2 29 33 152 3 237 Distribution of investment earnings 193 (2) 256 (29) (90) (115) (213)

Discount on investment purchases 85 43 289 211 628 Revenue from power sales 3,330 3,330 Distribution of revenues 165 (3,342) 3,177 Transfer from escrow for principal and interest payments 2 393 147 251 2 433 2 382 2 318 Total 2 099 355 5 842 37 2 383 6 513 Deductions:

Advances for capacity and energy 75 75 Payment of principal 610 610 Administrative expenditures 236 117 (5) 348 Interest paid 1,978 1,978 Premium on investment purchases 37 37 Payment of principal and interest on escrow bonds 2 318 2 318 Total 311 117 ~5 4 906 37 5 366 Balance at June 30, 1996 238 560 ~2;177 ~3083 ~52 S S 11 511 This schedule summarizes the receipts and disbursements in funds required under the Bond Indenture and has been prepared from the trust statements. The balances in the funds consist of cash and investments at original cost. 'Ihese balances do not include accrued interest receivable of $ 6 and $26 at June 30, 1996 and 1995, respectively, nor do they include total amortized net investment discount of $ 11Z and $ 52 at June 30, 1996 and 1995, respectivdy. These balances abo do not include unrealized loss on investments in funds available for sale of $ 3 and $ 18 at June 30, 1996 and 1995, respectively.

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SOUTHERN CALIFORNIA PUBLIC POWER AUTHORITY MEAD-PHOENIX PROJECT SUPPLEMENTAL BALANCE SHEET (In thousands) une 30 1996 1995 ASSETS Utility plant:

Transmission S 48,307 General I 971 50,278 Less: Accumulated depreciation 846 49,432 Construction work in progress 3 116 39 179 Nct utility plant 52,548 39,179 Special funds:

Investmcnts available for sale at fair value 21,591 32,759 Interest receivable 841 1,246 Cash and cash equivalents 1 548 I 280 23 980 35285 Accounts receivable 1,750 1,963 Costs recoverable from future billings to participants 1,3.94 Unrealized loss on invcstmcnts in funds availablc for sale 51 Prepaid expense 2,003 Unamortized debt expenses, less accumulated amortization of $ 1,257 and 8736 9 8II8 10 408 Total assets ~895 5 ~88 889 LIABILITIES Long-term debt 86 417 86 267 Current liabilities:

Accrued interest 2,588 2,588 Accounts payable 590 34 Total current liabilities 3 178 2 622 Commitments and contingencies Total liabilities ~895 5 88 889 Sce notes to financial statcmcnts.

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SOUTHERN CALIFORNIA PUBLIC POWER AUTHORITY MEAD-PHOENIX PROJECT SUPPLEMENTAL STATEMENT OF OPERATIONS THREE MONTHS ENDED UNE 30 1996*

(In thousands)

Operating revenue:

Sales of transmission services 226 Operating expenses:

Other operation 213 Maintenance 13 Depreciation 342 Total operating expenses 568 Operating loss (342)

Investment income 410 Income before debt expense 68 Debt expense 1 462 Costs recoverable from future billings to participants 0~%~3 See notes to financial statements.

• Operations commenced April 1996.

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SOUTHERN CALIFORNIA PUBLIC POWER AUTHORITY MEAD-PHOENIX PROJECT SUPPLEMENTAL STATEMENT OF CASH FLOWS (In thousands)

Year Ended une 30 1996 1995 Cash flows from operating activities:

Cost recoverable from future billings to participants ~1394 Adjustments to arrive at net cash provided by (used for) operating activities:

Depreciation 342 Amortization of debt costs 167 Changes in assets and liabilities:

Interest receivable 405 Accounts receivable 213 Other assets 1,977 Accounts payable 556 Net cash provided by operating activities 2 266 Cash flows from investing activities:

Interest received on investments 4,251 Payments for construction of facility (13,208) (21,310)

Purchases of investments (3,264) (2,725)

Proceeds from sale/maturity of investments 14,474 26,078 Reimbursement from WAPA 83 Net cash (used for) provided by investing activities ~1998 6 377 Cash flows from capital and related financing activities:

Payment of interest on long-term debt Payment for bond issue costs ~9 (5,093)

Net cash used for capital and related financing activities 5 102 Net increase in cash and cash equivalents 268 1,275 Cash and cash equivalents at beginning of year 1 280 5 Cash and cash equivalents at end of year ~1~4 ~1280 Supplemental disclosure of cash flow information:

Cash paid during the period for interest (net of amount capitalized)

See notes to financial statements.

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SOUTHERN CALIFORNIA PUBLIC POWER AUTHORITY MEAD-PHOENIX PROJECT SUPPLEMENTAL SCHEDULE OF RECEIPTS AND DISBURSEMENTS IN FUNDS REQUIRED BY THE BOND INDENTURE FOR THE YEAR FNDFD UNE 30 1996 (In thousands)

Debt Debt Service Acquisition Service Reserve Revenue Issue Operating Total 3,

Account Account Account Fund Fund Fund Balance at Junc 30, 1995 $ 18972 l 4288 $ 5916 3, $ 4994 $ 34170 Additions:

Investment earnings 1,564 286 435 154 2,441 Transfer of invcstmcnts 435 (435)

Rcimburscmcnt from WAPA 80 80 Transmission rcvcnuc 360 360 Transfer of monthly tfansnllsslon costs 297 297 Total 1 644 721 65 154 297 2 881 Deductions:

Construction expcnditurcs 8,536 8,536 Intcrcst paid 2,642 2,534 5,176 Premium and intcrcst paid on invcstmcnt purchases 89 Operating cxpenscs 60 60 Total 8 536 2 642 2 623 60 13 861 Balance at Junc 30, 1996 teuJ 2~00 ~2867 ~5916 s 65 ~2525 ~287 tc 23~0 This schcdulc summarizes the receipts and disbursements in funds required under thc Bond Indenture and has been prepared from the trust statements. Thc balances in the funds consist of cash and investmcnts at original cost. Thcsc balances do not include accrued intcrcst rcccivable of S841 and S1,246 at June 30, 1996 and 1995, rcspcctively, nor do they include total amortized nct invcstmcnt prcmiunls of $ 42 and $ 80 at Junc 30, 1996 and 1995, respectively. These balances do not include unrealized loss on invcstmcnts in funds availablc for sale of S9 and $ 51 at Junc 30, 1996 and 1995, rcspcctivcly.

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SOUTHERN CALIFORNIA PUBLIC POWER AUTHORITY MEAD-ADELANTOPROJECT SUPPLEMENTAL BALANCE SHFFT (In thousands) une 30 1996 1995

~SFTS Utility plant:

Transmission 8 171,068 General 164 171,232 Less: Accumulated depreciation 1 255 Construction work in progress ~154 011 Nct utility plant 169 977 154 011 Special funds:

Investments availablc for sale at fair value 62,562 76,235 Interest receivable 2,285 2,976 Cash and cash equivalents 4 504 4 279 69 351 83 490 Accounts rcccivable 4,741 4,669 Costs rccovcrablc from future billings to participants 4,383 Unrcalizcd loss on invcstmcnts in funds available for sale 28 171 Prepaid cxpcnsc 3,533 Unamortized debt cxpcnscs, less accumulated amortization of 83,582 and $ 2,098 28 123 29 607 Total assets 75 481 I.IABILITIFS Long-term debt 268 005 267 561 Current liabilities:

Accrued intcrcst 7,884 7,885 Accounts payable 780 35 Total current liabilities 8 664 7 920 Commitments and contingcncics Total liabilities ~27t~66 275 481 Sce notes to financial statcmcnts.

I SOUTHERN CALIFORNIA PUBLIC POWER AUTHORITY MEAD-ADELANTOPROJECT SUPPLEMENTAL STATEMENT OF OPERATIONS THREE MONTHS ENDED UNE 30 1996*

(In thousands)

Operating revenue:

Sales of transmission services 172 Operating expenses:

Other operation 145 Maintenance 27 Depreciation 1 182 Total operating expenses 1 504 Operating loss 1 132 Investment income 1 174 Income before debt expense Debt expense 4 425 Costs recoverable from future billings to participants C~E)

See notes to financial statements.

Operations commenced April 1996.

l SOUTHERN CALIFORNIA PUBLIC POVYER AUTHORITY MEAD-ADELANTOPROJECT SUPPLEMFNTAL STATEMFNT OF CASH FI.OWS (In thousands) une 30 1996 1995 Cash flows from operating activities:

Cost recoverable from future billings to participants (3 4,383) 3 Adjustments to arrive at nct cash provided by (used for) operating activities:

Dc preciation 1,132 Amortization of debt costs 482 Changes in assets and liabilities:

Interest receivable 691 Accounts receivable (72)

Prepaid expense 3,467 Accrued interest (I)

Accounts payable 745 Nct cash provided by operating activities 2 981 Cash flows from investing activities:

Intcrcst rcceivcd on investments 11,316 Payments for construction of facility (15,652) (71,033)

Purchases of invcstmcnts (9,184) (4,627)

Procccds from sale/maturity of investments 23,000 84,113 Reimbursement from O'APA 28 Nct cash (used for) provided by investing activities ~1838 19 797 Cash flows from capital and related financing activities:

Payments of interest on long-term debt Payment for bond issue costs ~31(15,487)

Nct cash used for capital and related financing activities 15 518 Nct increase in cash and cash equivalents 225 4,279 Cash and cash cquivalcnts at beginning of year 4 279 Cash and cash equivalents at cnd of year ~449k S 4 279 Supplemental disclosure of cash flow information:

Cash paid during the period for interest (net of amount capitalized)

Sec notes to financial statements.

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SOUTHERN CALIFORNIA PUBLIC POWER AUTHORITY hIEAD-ADELANTO PROJECT SUPPLEMENTAL SCHEDULE OF RECEIPTS AND DISBURSEhIENTS IN FUNDS REQUIRED BY THE BOND INDENTURE FOR THE YEAR ENDED UNE 30 1996 (In thousands)

Debt Debt Service Acquisition Service Reserve Operating Issue Rcvenuc Account Account Account Fund Fund Fund Total Balance at June 30, 1995 $ 36 134 $ 11 793 $ 16 267 $ $ 16 760 $ $ 80 954 Additions:

Investment earnings 3,217 772 1,196 517 1 5,704 Transfer of invcstmcnt earnings 1,196 (1,196)

Reimbursement from WAPA 13 13 Transfers to operating fund 451 (451)

Transmission revenue 521 521 Total 3 230 1 968 452 517 71 6 238 Deductions:

Construction expenditures 3,697 3,697 Intcrcst paid 7,264 8,505 15,769 Premium and interest paid on invcstmcnt purchases 298 298 Operating cxpcnscs 189 191 Total 3 699 7 264 189 8 803 19 955 Balance at June 30, 1996 ~85 663 ~64~7 ~16 267 $ 263 ~8474 ~71 ~67 237 This schcdulc summarizes the receipts and disburscmcnts in funds required under the Bond Indenture and has been prcparcd from thc trust statements. Thc balances in the funds consist of cash and investmcnts at original cost. These balances do not include accrued interest receivable of S2,285 and S2,976 at June 30, 1996 and 1995, respectively, nor do they include total amortized nct invcstmcnt premiums of S143 and S269 at June 30, 1996 and 1995, respectively. Thcsc balances do not include unrcalizcd loss on investments in funds available for sale of S28 and S171 at Junc 30, 1996 and 1995, respectively.

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SOUTHERN CALIFORNIA PUBLIC POWER AUTHORITY MULTIPLE PROJECT FUND SUPPLEMENTAL BALANCE SHEET (In thousands) une 30 1996 1995 ASSETS Special funds:

Investments available for sale at fair value 8 250,888 8 249,020 Interest receivable 9220 9194.

Total assets ~2~1 $ 2~214 LIABILITIES Long-term debt $ 242 786 $ 242.107 Arbitrage rebate payable 77 Accounts payable to Mead-Phoenix Project and Mead-Adelanto Project 6 402 6.632 Deferred credits 2 664 1.141 Current liabilities:

Accrued interest 8 256 8.257 Commitments and contingencies Total liabilities ~2)Jgg ~2M 214 See notes to financial statements.

SOUTHERN CALIFORNIA PUBLIC POWER AUTHORITY MULTIPLE PROJECT FUND SUPPLEMENTAL STATEMENT OF CASH FLOWS (In thousands)

Year Ended une 30 1996 1995 Cash flows from operating activities Cash flows from investing activities:

Interest received on investments 18,380 18,470 Arbitrage payment (3,757)

Purchases of investments (1,868) (1,958)

Proceeds from sale/maturity of investments 5 757 Net cash provided by investing activities 16 512 16.512 Cash flows from capital and related financing activities:

Payments of interest on long-term debt 16 512 16 512 Net cash used for capital and financing activities ~16 512 ~16 512 Net increase in cash and cash equivalents Cash and cash equivalents at beginning of year Cash and cash equivalents at end of year See notes to financial statements.

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SOUTHERN CALIFORNIA PUBLIC POWER AUTHORITY MULTIPLE PROJECT FUND SUPPLEMENTAL SCHEDULE OF RECEIPTS AND DISBURSEMENTS IN FUNDS REQUIRED BY THE BOND INDENTURE FOR THE YEAR ENDED UNE 30 1996 (In thousands)

Debt Proceeds Service Earnings Account Account Account Total Balance at June 30, 1995 247 727 ~1295 249 020 Additions:

Investment earnings 18,208 172 18,380 Transfer to earnings account (16,512) 16,512 Transfer to debt service account 16 512 ~16 512 Total 1 696 16.512 172 18 580 Deductions:

Interest paid 16 512 16 512 Total 16 512 16 512 Balance at June 30, 1996 ~249 42'f ~2%Un g This schedule summarizes the receipts and disbursements in funds required under the Bond Indenture and has been prepared from the trust statements. The balances in the funds consist of investments at original cost. These balances do not include accrued interest receivable of 59,220 and $ 9,194 at June 30, 1996 and 1995, respectively.

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SOUTHERN CALIFORNIA PUBLIC POWER AUTHORITY SAN JUAN PROJECT SUPPLFMFNTAL BAI.ANCE SHFET (In thousands) une 30 1996 1995 ASSETS Utility plant:

Production S 183,309 8 183,309 General 8 613 7 688 191,922 190,997 Less - Accumulated depreciation 36 622 24 415 155,300 166,582 Construction work in process 3 501 2 488 Nct utility plant 158 801 169 070 Special funds:

Investmcnts available for sale at fair value 34,170 28,699 Intcrcst rcccivablc 67 69 Cash and cash equivalents 7 546 8 274 41 783 37 042 Accounts receivable 945 1,891 Materials and supplies 3,569 3,679 Costs rccovcrablc ftxun future billings to participants 31,780 23,063 Unrcalizcd loss (gain) on investments in funds availablc for sale (28)

Unamortized debt expenses, less accumulated amortization of $ 942 and $ 628 3 090 3 461 Total assets ~2~72 238 78 LIABILITIFS Long-term debt 222 444 228 167 Current liabilities:

Long-term debt due within one year 6,035 Accrued interest 5,994 5,994 Accounts payable 5 499 4 017 Total current liabilities 17 528 10 011 Commitntcnts and contingcncics Total liabilities ~23 ~7 238 178 See notes to financial statements.

l SOUTHERN CALIFORNIA PUBLIC POWER AUTHORITY SAN JUAN PROJECT SUPPLEMENTAL STATEMENT OF OPERATIONS (In thousands)

Year Ended une 30 1996 1995 Operating revenue:

Sales of electric energy 50 117 50 854 Operating expenses:

Other operations 314 316 Maintenance 35,760 38,511 Depreciation 9,095 9,095 Decommissioning 3 113 3 112 Total operating expenses 48 282 51 034 Operating income (loss) 1,835 (180)

Investment income 2 062 1.884 Income before debt expense 3,897 1,704 Debt expense 12.614 12 598 Costs recoverable from future billings to participants 5 8717 See notes to financial statements.

SOUTHERN CALIFORNIA PUBLIC POWER AUTHORITY SAN JUAN PROJECT SUPPLEMENTAL STATEMENT OF CASH FLOWS (In thousands)

Year Ended une 30 1996 1995 Cash flows from operating activities:

Costs recoverable from future billings to participants (S 8,717) (S 10,894)

Adjustments to arrive at net cash provided by (used for) operating activities-Depreciation 9,095 9,095 Decommissioning costs 3,113 3,112 Amortization of debt costs 626 610 Changes in assets and liabilities:

Interest receivable 2 (59)

Accounts receivable 946 (669)

Materials and supplies 110 1,340 Other assets 56 81 Accounts payable 1 482 711 Net cash provided by operating activities 6 713 3 327 Cash flows from investing activities:

Payments for construction of facility (1,938) (1,861)

Purchases of investments (14,370) (12,749)

Proceeds from sale/maturity of investments 8 867 10 918 Net cash used for investing activities 7 441 3 692 Net decrease in cash and cash equivalents (728) (365)

Cash and cash equivalents at beginning of year 8 274 8 639 Cash and cash equivalents at end of year ~Kk M~>>4 Supplemental disclosure of cash flow information:

Cash paid during the year for interest (net of amount capitalized) i~12K ~>I 'K See notes to financial statements.

SOUTHERN CALIFORNIA PUBLIC POWER AUTHORITY SAN JUAN PROJECT SUPPLEMENTAL SCHEDULE OF RECEIPTS AND DISBURSEMENTS IN FUNDS REQUIRED BY THE BOND INDENTURE FOR THE YEAR ENDED UNE 30 1996 (In thousands)

Reserve &

Revenue Operating Operating Project Debt Debt Service Revenue Fund Fund Reserve Fund Service Reserve ~Contin ene Total Balance at June 30, 1995 $ 1 633 112 $ 5 994 ~18 025 rt 11 179 ~36 943 Additions:

Investment earnings 32 12 1,061 537 1,750 Distribution of investment earnings 1,945 (64) (168) (1,061) (652)

Discount on investment purchases 4 10 114 112 242 Revenue from power sales 52,933 52,933 Distribution of revenues (54,914) 38,249 14,515 2,145 Refund from Century Power Corporation 400 400 Total 38 249 414 14 515 2 142 55 325 Deductions:

Payment for construction 1,938 1,938 Administrative expenditures 36,691 36,691 Interest paid 11 988 11 988 Total 38 629 11 988 50 617 Balance at June 30, 1996 ~253 g 5 g 526 3 8 621 ~18 026 ~3 321 r~4~65 This schedule summarizes the receipts and disbursements in funds required under the Bond Indenture and has been prepared from the trust statements. The balances in the funds consist of cash and investments at original cost. These balances do not include accrued interest receivable of S67 and S69 at June 30, 1996 and 1995, respectively, nor do they include total amortized net investment discount of $ 69 and S2 at Junc 30, 1996 and 1995, respectively. These balances do not include unrealized loss (gain) on investments in funds available for sale of S4 and ($ 28) at June 30, 1996 and 1995, respectively.

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