ML17272A681

Annual Financial Rept for Year Ending 790630

ML17272A681
Person / Time
Site:	Columbia, Washington Public Power Supply System, Satsop
Issue date:	06/30/1979
From:	WASHINGTON PUBLIC POWER SUPPLY SYSTEM
To:
References
NUDOCS 7910160509
Download: ML17272A681 (52)

Text

l REGULATORY INFORN*TION DISTR IgUTIQN BYBTEN < R IDB)

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ACCEBBIOPI, NB/:.7910160009 +OC. DATE: 79/~P51 NOT*R+0: NO DOCKET I FACIL: 50-39> WPPSB Nuclear Progecti Unit 27 Washington Public Pore 05000397 50-460 WPPSB Nuclear Progecti Unit iI Washington Public Pope 05000460 STN-50-508 WPPSS Nuclear Pro Ject> Unit 3i Washington Public 05000508 AUTH. MANE AUTHOR AFFILIATION Washington Public Poeer Supply System RECIP. MANE RECIPIENT AFFILIATION

SUBJECT:

Annual Financial Rep t i979.

DISTRIBUTlON CODE: N004S COP IEB RECEIVED: LTR H ENCL l ~ SIZE:

TITLE: Annual Financial Reports NOTES:

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,, Annual Report THE ATTACHED FILES ARE OFFICIAL RECORDS OF THE DIVISION OF DOCUMENT CONTROL. THEY HAVE BEEN CHARGED TO YOU FOR A LIMITED TIME PERIOD AND MUST BE RETURNED TO THE RECORDS FACILITY BRANCH 016. PLEASE DO NOT SEND DOCUMENTS CHARGED OUT THROUGH THE MAIL. REMOVAL OF ANY PAGEts) FROM DOCUMENT FOR REPRODUCTION MUST BE REFERRED TO FILE PERSONNEL.

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8 RECORDS FACILITYBRANCH

7%e Suplily Systeni'at a Glance Pacific Nortlavcsc Loads and-Resources Pi% UCC KVcsr Group h>recast (IrfnrclI'79)

The Washington Public Power Supply (In Klloiv0rrs of IjlccrriciryX000,000)

System was creaced to supply poiver co 25

.publicly-oined ucilicics in che XVNP-5 Pacifir Northwest. The Supply System WNP I xvivp3 lv;is established as an agency throiIgh WiVP-I 20 whirh members could jointly finance, WN P-2 build and operate'electriral generating facilities co meet their energy nccds-filcilicies that would otherwise be beyond the financial capability of any single utility.

The Supply System, by law, is a municipal corponlcion IO a statewide joint openacing agency.

'n realicy, che Supply System is much morc chan this, and much nlore hunlan chan che lifeless ccrc of che lalvbooks nlIght Inlply.

Thc Stlpply Systcnl Is:

Its menlbcrs l9 Public UtilityDis-0 79 80 8I 82 81 8I 85 8'7 88 89 tricts (PUDS) and four municipalities in Nonhwrwr IlirrorjrOrr>wrh Piojmicd Ehciirr Loud WashIngton.

Its parcicipancs I l5 utilit'ies, boch Qr her 'Ihemrrl Rcrrrvrrrw I Irrj rex 1m i!'c Rerrrri rn I publicly and investor-olvned, in seven states, who have contf'lctcd to purchase i "electricity produced by the Supply System.

Its cnlployccs apf)foxlnlaccly 1,500-men and women along wich a con-tract conscriIction force, 8,500 strong.

Together, the Supply System staff, nlenlbcfs alltl pafclrlpants afc lvofklng to complete five nuclear generating projects chat in future years lvillbenefit all che people of che Northwest. Ac the same time, they are providing elcctricty Covei; from che I.lanfor<l Generating projccc Thisis the vi euj fioui and the Packwoocl Like Hydroelectric Project. i nsiile the contai nment structure of 1P'NP-4, one offive nucleat plants being built by the 1Pcuhi ngton Publi c Potver Supply System.

1P'henall five ofthe Su/iply Systenirs geneI ati itg/irjoects aI ein operiition in the liite1980s the eneI;Uri they/n Oiliiee uri ll

/novi ile mo> e than20 peI cent ofiillthe eneI;g~

i geneI iiteil n the Paii fic Noi thuet.

Financial Highlights of 1979

($ in millions)

Construction Projects WNP-I WNP-2 WNP -3 WNP-4/5 Total Revenue Bond Sales Parvalueofsales .... $ 180 $ 360 $ 200 $ 345 g1,085 Number of issues ... 1 2 1 2 6 Borrowing cost 6.61%%uo 6.60%%uo 6.27%%uo 6.99% 6.66%

Total Revenue Bonds Outstanding Outstanding at June 30, 1979 ....... $ 895 $ 1, 147 8 680 $ 1,063 $ 3,785, Annualized interest expense ....,..... 59 75 44 69 247 Borrowing cost 6. 64%%uo 6. 52% 6.46% 6. 52% 6. 54%%uo Interest Earned 1979 Interest on investments $ 26 $ 19 $ 29 30 8 104 Annual rate of return ... 7.44% 7.23% 6.76%%uo 7. 58% 7. 20%

Bond ratings Afoody's/

Standard 6 Poor's ........,......,. Aaa/AAA Aaa/AAA Aaa/AAA A-1/A+

Ed Fischer Chairman Executive Committee Commissioner, Clark County PUD Board ofDi reetorslExeeati ve Comntittee RePort When the Washington Public Power I Supply System was chartered by the state in 1957, the joint operating concept was <(~j/

unique.

hlr. Fischcr has been involved in the Today, this idea ofa single agency, electric industry for 50 years, while governed by its members, working to- directing a successful business for 40 of gether to meet the needs of all has be- those years. A Public UtilityDistrict commissioner since 1964, hlr. Fischer come widespread. There are more than has served as the chairman of the Su p-100 similar organizations in the nation ply System executive committee since and more are in the process of 1970. He is an executive comminec member of thc Public Power Council organizing. and a former president of the IVashing-Our own membership in Washington 'on PUD Association.

grew to 23 in Fiscal Year 1979, with the admission of the City of Ellensburg.

Each member utilityhas one representa-tive on the Board of Directors who in As the Supply System construction In addition to the usual budget re-turn represents the, local consumers. and financing programs gain in size and view, a special Board committee was The Board meets quarterly. The Execu- impetus, Board members have become appointed to review project construction tive Committee, which is composed of increasingly active in directing man- budgets before adoption and a nationally seven representatives from the Board, agement and setting policy for the Sup- recognized consulting firm was retained administers thc business of the Supply ply System. to make an independent assessment of System at meetings held twice each One ofour most significant Board im- the budgets.

month. provements has been the formation of a As Board members, we are meeting number of Board committees to study the challenges ofa large construction and give direction in such areas as pro- program and we believe we willmeet the ject budgets, legislation, and public challenges of the future.

policy. Officers of the Board of Directors In addition, a management audit serve two-year terms which expired in identified some areas for performance Fiscal 1979. Successors were elected at improvement and the Board has taken the quarterly meeting in April. Elected actions with regard to the audit as President was Glenn C. Walkley. Mr.

recommendations. Walkley, a Franklin County PUD The Board retained an independent Commissioner, has represented the PUD consultant skilled in public administra- on the Board since it was organized in tion and management to assist in profes- 1957 and has served as President in two sional management analysis. previous terms.

Other officers elected were Arnold James, Lewis County PUD Commis-sioner, Vice President; Marion Babb, Klickitat County PUD Commissioner, Secretary; and Howard Prey, Douglas

County PUD Commissioner, Assistant Secretary.

New representatives to the Board ap-pointed by the member utilities during the year are Councilman Thomas Lineham, City of Ellensburg; William Kuehne, Ferry County PUD Commis-sioner; Hal Norman, Pacific County PUD Commissioner; Robert H. Murray, Seattle City Light Superintendent; and Paul J. Nolan, Tacoma Director, Department of Public Utilities.

Ed Fiseher Chairman Glenn C. Walkley Presidenr

Neil 0 Strand Managing Director Managing Di rector's RePort Although economists see a recession in the national economy, the economic activity in the Pacific Northwest con-tinues at a high level. In fact, in discus-sions of the region's economy, the word "boom" tends to be used frequently. N.O. Strand, an executive of the Supply System since 1971, was Here are some examples. named Managing Director in 1977.

Washington State's population is ex- He holds a degree in mechanical engineering and has more than 27 pected to increase by 1. 5 million by the year 2000 years ofexperience in nuclear energy, 200 new residents a day for including design and construction the next 2 1 years. Oregon's is expected management.

to grow by 600,000.

In the past three years, Seattle gained 124,600 new jobs a rate that ranked it eighth out of 202 metropolitan areas.

Portland gained 91,900 new jobs, rank-ing it 13th. With the region's hydroelectric sys- the safe and efficient operation of This kind ofgrowth means increasing tem at capacity, there is substantial im- facilities at Hanford and Packwood.

demand for energy. Despite aggressive portance in the construction of the In addition, four new components, utilityprograms to encourage conserva- Washington Public Power Supply Sys- termed "Operations" were created in the tion, demand for energy is increasing by tem thermal generating plants. areas of Organization Performance, Ad-about 3.9 percent a year. The total capacity of the completed ministration, Materials Management plants willbe 6 million kilowatts. This and Relations.

generation capacity willcontribute 20 Managers of these ncw components percent of the region's energy by 1988. report directly to the Managing Direc-A number ofsignificant changes have tor. The realignmenr allows comprehen-been made within the past year to pro- sive reporting on key Supply System videgreaterdepth toseniorstaff, im- support activities and augments internal prove management controls and assure management controls.

appropriate checks and balances. In the Finance Group, a special assis-A new management position, Man- tant was appointed to the Assistant ager of Projects, was established to Director with a staffofestimators and focus attention directly on meeting the specialists in cost control and cost and scheduled dates for commercial opera- schedule modeling.

tions ofour projects. Our entire program ofconstruction, A new Generation Group at the Assis- generation and supporting technology tant Director level was created. This new requires talented and dedicated man-group is responsible for the safe and agement and staff, with backgrounds in cost-effective start-up and operation of scientific, engineering, construction and the five plants being built, as well as for administrative disciplines. At the end of the fiscal year, we had 1,500 Supply System employees. Our 700 person technical staff has a total of more than 4,000 man-years ofexperience in the nuclear field.

In Piscal 1979, the Supply System services; and additional generating plant nuclear power, they must be accom-continued its extensive activity in the operations staffing. panied by actions to severely limitelec-municipal revenue bond market, with With the cost increases, schedule ex- tricity requirements or programs to ex-six separate issues totaling $ 1.085 bil- tensions of up to 12 months also were pand coal supply or other non-nuclear lion. Bond issues maintained ratings of announced. fuels. Otherwise, serious shortfalls of "Triple A" for the net-billed Projects 1, Our cost and schedule projections are electricity are likely to occur within the 2 and 3 and "A-1" and "A+"for Projects realistic, but there still are factors which next 5 to 10 years.

4 and 5 which are financed as a single may cause further problems. I believe the people of this nation will system. We do not know, for instance, what recognize that it is not in their best The success of the sales and the effect the Three Mile Island-2 accident interests to permit this situation to de-continued high ratings are indicators of March willhave on design or operat- velop and'will not accept a low-growth, of the confidence of the investment ing requirements. low-productivity society.

community in the Supply System. I continue to believe the outlook for Similarly, I believe the people of the The "Triple-A"bonds are secured by the Supply System is very good. We have Pacific Northwest willsupport the Sup-net-billing agreements with the Bon- an excellent organization. ply System as it continues to perform the neville Power Administration which While we have experienced schedule vital services for which it was established willmarket the electricity. Bonds for delays and cost increases, they have been ...to build and operate those gener-Projects 4 and 5 are secured by contracts within the range common in the ating facilities necessary to meet the with participating utilities. industry. regional needs.

While our financing program con- I continue to be optimistic about the tinued with marked success, a number ofconcerns still required close manage-mentattention. Closeanalysisofproject construction budgets indicated that in-creases would have to be made because of future of nuclear power. The Three Mile Island accident was serious and a setback for the nuclear industry. Recovery may be slow, but it willtake place.

The fact is that there are really only

.d Neil 0. Srrand Managing Direeror several major factors: The increases are two options presently open for central the result of more complete assessments station generating plants: coal or of the costs of increased manhour re- nuclear.

quirements and changes to plant struc- The U.S. General Accounting Office tures, systems and equipment; the reported to Congress that, ifactions are effects of inflation; additional architect- taken to limitor halt the growth of engineer and construction management

he tide of the Pacific The metals industry principally Northwest economy con- aluminum, magnesium and nickel tinues to rise faster than that of continues to play a strong economic role.

the United States as a whole. So Manufacturing is becoming even does the growth in population. more important in the economic tapestry Groiuittg Together The public of the Northwest. The aircraft industry utilities of the Northwest, working has always had a prominent role and the together through the Supply System, are principal supplier, The Boeing Co., has, responding to that growth. Without an in the past year, announced significant expanding supply ofenergy, sustained plans for expansion. This affects not only growth would not be possible. the direct employment by Boeing, but it Financing this needed energy capabil- also involves numerous subcontractors ity extends the presence of the Supply throughout the Northwest.

System far beyond its members and par-ticipating utilities to the entire United States. Investors throughout the nation look to the Pacific Northwest to measure the soundness of their investments in the Supply System.

They look at what has happened; they look at what is anticipated in the next 20 to 30 years. What they see is encourag ing... a broad-based and diversified economy.

They see that the traditional heart of that economy continues to be agricul-ture. Thousands of acres produce mil-lions of bushels of wheat and other grains for domestic use and for export to help our balance of trade. Tree fruits from the Pacific Northwest have a strong identifi-cation throughout the nation. Row crops are an important source of other food products. These are the traditional crops and they continued to have a strong and growing impact on the Northwest economy.

Another vital factor in the Northwest is the vigorous timber industry, which has a whole range of products including exported logs, lumber, plywood and paper products. Again, exports to other parts of the country and to the world are important to the economy.

John A. Goldsbury Robert O. Keiser Commissioner Commissioner Benton County PUD Chelan County PUD Supply System Board Supply System Board Highlights ofAfe>>)bors'perati o>>s The Supply System's 23 member util-ities range in size from metropolitan Seaccle, with its 270,000 consumers, to Kictitas Councy PUD whirh serves 1,400 consumers in rentral Washington.

Be>>to>> County PUD 11 percent growch in 1978, attributed chiefly to growth in residential and industrial rustomer de-mand. Thousands of acres have been brought under irrigation in recent years.

Chela>> Cou>>ty PUD 13 percent in-crease in kilowatc hour sales with a 5 percent increase in total customers in 1978. Fruit production is the main agri-cultural activity, with an aluminum com-pany, fruit processing and lumber mills as major induscrial activities. Construr-tion of the new Rock Island second power house, a new hospital and numer-ous fruic scorage warehouses added con-siderable generating rapacity and load to the Discrict's system.

There's a tendency for many to think ofthe Supply Systemin ter)ns ofits most obvious activity the construc-tion ofmassive and co))lpiex strtlcttl) es. But bui ldi ngis merely the mission: The objectiveis serving bun)an needs.

The Supply System's suork touches the daily lives ofall 6.5 t))i llion peoplei n the Pacific Northtuest tuhose homes and communities are served by electric utilities.

nother important factor in publicly owned and dedicated to provid-di versifying the economy is ing power for the people they represent.

shipping which provides Formation of the Washington Public outlets for many of the Power Supply System in 1957 extended foodstuffs and products their ability by permitting cooperative grown and manufactured action to build and operate generating in the Northwest. The Ports of Portland, plants.

Tacoma, Seattleand Everettcontinue to Today, almost all farms are served expand this role. The new trade relations with electricity.

with China are expected to play an The initial purpose of the Supply Sys-important part in the commerce of the tem was to serve its member utilities-Northwest. the State's public utilitydistricts and Not to be overlooked is the opening of municipal systems.

navigation from Idaho to the Pacific However, the Supply System, at the Ocean a few years ago. With the advent direction of the Board of Directors, has ofcontainerized cargo, it is now possible opened participation in these projects to to barge agricultural products from other public utilities in the Northwest.

Lewiston, Idaho to Portland, Oregon for These include PUDs in Oregon; trans-shipment to foreign ports. municipalities in Washington, Oregon Above all, there is more room for and Idaho and cooperatives in Washing-growth. In timber, a high percentage of ton, Oregon, Idaho and Montana, the forest lands are under sustained and one each in the bordering states growth programs and research has re- of Wyoming, Nevada and California.

sulted in ever increasing yields. In all, some 110 publicly owned In agriculture, hundreds of thousands utilities have a part in the various proj-ofacres are being opened to irrigation ects which the Supply System has in and new methods of irrigation permit operation or under construction. The additional hundreds of thousands of arrangement between the Supply acres of what was formerly marginal but System and its participants is two-way.

fertile land under dry-land farming, to be put into more productive uses.

These new methods, however, require extensive use of electric power to provide.

the pumping energy necessary to deliver water to these fertile acres.

The importance of labor cannot be overemphasized and the Northwest has an abundant pool. Both the population growth and the in-migration continue to provide a resource which is essential to every facet of the economy.

The Northwest has abundant land, water, raw materials and people all re-sources necessary to maintain a healthy economy. The other vital ingredient in the recipe for economic well being is the supply of electric power. The Supply System, its members, and other utilities willprovide that with the generating plants now being built.

1 gorki <<g Together At the close of the 1920s, only one in four farms in the State of Washington enjoyed electric service.

Acceleration of rural electrification was an overwhelming desire of farmers across the state.

Legislation to permit the formation of public utilitydistricts was passed by the initiative process in 1930 and, within a few years, 32 PUDs were formed

A.E. Fletcher D.E. Hughes Commissioner Manager of Engineering b: Planning Clallam County PUD Cowlitz County PUD Supply System Board Supply System Board

'ia!lain growth and Courtty P UD 8 percent 1,239 new customers in 1978. Sales to residential accounts ex-ceed sale to all other accounts. The scenic Olympic National Park covers much of the county.

Clark County PUD 4.9 percent in-crease in kilowatt hour sales and 6.6 percent in customers, with 4,683 new customers, for a total of 75,378. Clark County PUD is one of the largest that has no generation of its own. In 1978, the PUD observed its 40th anniversary, keyed to rapid growth in the county.

ss

'A Cotolitz County PUD 3.4 percent

~ growth in 1978, with 1, 153 new cus-tomers, bringing the total to almost 35,000. Electric space heating is used by most residential customers. Local in-dustrial sales constitute a major cus-tomer classification.

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'le el jj tionn r,-,'564 The cotntnttni ties ofthe Pacific Northruest are enjoying a peri od of robust good health, wi th a growi 1ig popula-and a strong cont-merci al base to support it. But more people means more power de-ttland. 1P'ashi ngton Stateis gaining 200 wctu residents every aay 1.5 million<<tore people by the year 2000. Oregonis ex-pected to gai n 600,000 people over those same years.

he Supply System will Gwernti orr A realignment of manage-provide an increasing share of ment functions created a new Generation the Region's energy. In turn, the Group to focus on the tasks associated utilities provide the security with operation of the two existing plants which allows the Supply System and with bringing the five plants under to finance projects. construction into operation.

Each of the participating utilities agrees to take a share of the output of Test arrrlStnrtrrp These functions include the Supply System projects and agrees to inspecting, testing and accepting sub-pay that share of the annual budget of systems, systems and eventually the those projects whether they are operable entire generating facility from the con-or not. This promise is backed by agree- tractors. The test and startup staff will ments with participants to pay their test the operation and bring it up to share of the budget from revenues which rated capability while phasing in the they obtain from the operation of their operating staff.

own utilities. They agree to raise rates to whatever level necessary to make good Geeerutiorr Ter'rrirrg With thestartupof on this promise. WNP-2 drawing near, special emphasis Each of these utilities has a strong was placed on the thorough and adequate financial posture of its own. The security training of generation personnel. The pledge is strengthened with the agree- training activities cover many plant ment ofeach utilityto increase its own operation disciplines, including health liability by as much as 25 percent ifany physics, chemistry and radiography.

encounters difficulties in meeting obli-gations.

In this way, the utilities are combin-ing thei r i ndi vid ual strengths to provide financial security for Supply System projects. Further, the Bonneville Power Administration has agreed to purchase 100 percent of the output of WNP-1 and WNP-2, and 70 percent of the output of WNP-3, which, in effect, adds the financial security of the federal hydro system.

The Supply System's projects also benefit the customers of investor-owned utilities. In the Supply System's Han-ford Generating Project, one half of the output goes to five investor-owned utilities in the Northwest. They are:

Puget Sound Power Bc Light, the Washington Water Power Co., Montana Power Co., Portland General Electric Co. and Pacific Power and Light Co.

In addition, investor-owned utilities own 30 percent of WNP-3 and 10 per-cent of WNP-5.

In this way, al16.5 million people who live in the Northwest and are served by electric utilities are also served in one way or another by the Supply System.

The impactoftheSupplySystem onthe lives and for tunes of these people continues to grow. Wlien all five projects now under construction are in operation in the late 1980s, the energy they gen-erate will represent more than 20 percent of the energy generation in the Northwest.

Howard Prey Thomas Lineham Commissioner Counrilman Douglas County PUD City of Ellensburg Supply System Board Supply System Board Douglas County PUD 11 percent in-crease, with 405 new customers. Sales to a single mining company constituted 43 percent of the total sales during the year.

City of Ellwsburg Relatively stable sales over the past two years, with 5,000 customers. Sixteen percent of the total sales are to Central Washington Univer-sity with its more than 5,000 students.

PerryCotnrtyPUD 6 percent growth in the service area in the northern county.

Sales to commercial accounts exceed those to residential accounts. The Col-ville National Forest covers much of the county. William G. Kuehne, Commissioner and Supply System Board Member, is not pictured.

WNP3 and5 are dupli cate generating plants being builtin Grays Harbor County, 1Pashi ttgton. The 212-foot-hi gh concrete wallfor 1P'NP 3 was placedin a continuous, 21-day pour a ntas-terpiece ofcoordination.

The work went on around the clockfor the fitllthree weeks.

se of a nuclear plant Technology The Technology Group is re-simulator to train reactor sponsible for a wide spectrum ofac-operators is a requirement tivities, including engineering, quality of the Nuclear Regulatory assurance, technical and environmental Commission to promote studies, and fuel procurement and safe, reliable and efficient management.

operation of nuclear power plants. The Each of these is subdivided into a Supply System has purchased a simulator series of projects which take Supply Sys-for the Babcock and Wilcox units tem people into such diverse activities as WNP- I and 4. exploring for uranium; environmental Operators for WNP-2, the General monitoring at project sites and studies of Electric Co. boiling water reactor, have alternate energy sources.

completed their training at G.E.'s Mor- In addition to its primary mission of ris, II.. training center. performing the engineering on the five Arrangements are being made to train Supply System nuclear plants, the en-future operators for our Projects 3 and 5 gineering staff is participating with at an existing simulator in Arizona. other utilities and government agencies in the design and construction of a Prc'seni ni Exnufi vari ou As WNP-2 moves geothermal electric generating station; nearer to completion, preservice inspec- design and construction of a fish hatch-tions have begun. Visual inspection of ery, using an advanced concept that the pressure-retaining, internal surfaces promises a higher survival rate for sal-on 90 percent of the WNP-2 valves was mon fry; and design and construction of a completed. multi-purpose building which includes At the same time, work commenced a simulator for training reactor on the pre-operational baseline inspec- operators.

tion of the WNP-2 coolant system's major components and weld seams, Nuclear Purl With the dates approaching using ultrasonic scanning, liquid pene- for loading of nuclear fuel into reactors, trant coatings and magnetic particle fuel supply activities have increased.

checks. Uranium for the WNP-2 initial reactor The records from these examinations core has been delivered and enriched for willbe analyzed and the results approved fabrication into fuel elements.

before the coolant system is released for Uranium for the initial cores of startup activities. The records also be- WNP- I and WNP-3 also has been come a permanent part of the plant files delivered to a processor. The first uran-for comparison purposes when examina- ium from Washington State for use in tions are repeated in the future. Supply System projects was delivered.

The uranium was mined and milled at the new Sherwood facility on the Spo-kane Indian Reservation, operated by Western Nuclear under an arrangement with Tribal Council.

C.K. Jolly John J. Welch Commissioner Commissioner Grnnt County PUD Gntys Harbor County PUD Supply System Board Supply System Board PranklinCounty PUD 50percent growth since 1973, with industrial and residential growth leading. Large con-sumers are irrigation farms, food pro-cessing and food storage.

Grant County PUD Stable growth of kilowatt hour sales, with 1,224 new customers. The PUD provides about 80 percent of its own energy from its reserve generation at Priest Rapids and Wana-pum dams which it owns and operates on the Columbia River. Agriculture and related activities are the chief industries.

Grays Harbor Couuty PUD 2.5 percent grow th, down from 1977 primarily be-cause of reduced activity among paper industries. The number of customers increased by 1, 135. The PUD provides construction power to the Supply Sys-tem's WNP-3 and -5 sites.

At 1P'NP 1, theskele-ton ofthe containment bui lcli ng aquas being completed the rei n-forcing bar for the concrete structureis threei nchesi n di anteter and weighs about 13 pounds per foot. Four layers ofbar can beseen here: duo layers placed

~(i agonally, onehori-zontally, one verti cally.

The completed wall willbe 4 Y< feet thick.

lthough the Supply System has Alterrsate Sources In addition to the near-contracced for uranium co fuel cerm possibilicies ofcoal and nuclear its five nuclear projects into fired generacing plants, the Supply Sys-the 1990s, several million tem continued its study of other energy additional pounds willbe sources.

needed before the One potential source is geothermal year 2000. energy from deep within the earth. The Because of this, the Supply Systein Supply System rontinued its partiripa-considered it prudent to have its own tion in the Raft River Geothermal Elec-exploration program. tric Project in Idaho, through funding Exploratory work is being conducted from the Public Power Council and a in Wyoming, Washington, Idaho, Departmenc of Energy contract.

Colorado and Nevada. Seven wells, some as deep as one mile, were drilled at the site while work began Health, Safety andSerurity The federal on the facilities to generate elercricity.

Nuclear Regulatory Commission re-The 5,000 kilowatt project is expected quires a high level of securicy ac nuclear to be in operation in mid- 1980. Its projects in operation. The Supply Sys-cem is preparing to meet these require-purpose is to study the feasibility of using moderate temperature geothermal ments with its own security force of fluid to generace electricity through a carefully screened and highly trained binary system which uses isobutane as persons. The training course consiscs of the heat transfer medium.

more than 240 hours0.00278 days <br />0.0667 hours <br />3.968254e-4 weeks <br />9.132e-5 months <br /> of classroom and practical instruction.

During Fisral year 1979, an earlier comparison of nuclear and coal-fired During Fiscal 1979, the security force was built up to 147 officers who were electricity generation costs was brought trained in first aid, fire fighting, safety, up to date. The report concludes that both coal and nuclear plants are viable security procedures, law, rommunica-alternatives for a plant starting up in tions and industrial sabotage. This ena-bled the Supply System to provide its 1989 with the rost of these alternatives being similar.

own security at all construrtion sites during the fiscal year.

Additional emphasis was placed on induscrial safecy and fire proceccion wich Supply System personnel at each site to monitor the safety performance.

One major rontrarcor with 1,700 workers recorded one million man hours of work without a disabling injury.

Awards were made in recognition of this rare, outstanding achievement.

The Safety Program is fulfilling ics mocco: "Quality Work in a Safe Manner."

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tudies also continued on A Supply System designed fish rear-solar energy, wind, ing facility near Priest Rapids Dam was biomass, fuel cells, coal placed in service in the fall of 1979 and gasification, advanced the first young salmon from the nuclear reactors, and facilities more than 800,000 of conservation. them were released to the Columbia River.

Pre-Operasi on En@i roismeistal Afosiisori iq> The water supply in the rearing facil-Pre-operational monitoring of the envi- ity is designed to mix water from under-ronment at the WNP-2 site continued, ground sources with colder Columbia establishing a data base to be used in the River water to maintain optimal pond fucure. temperatures which results in rapid Informacion is being gathered on fish growth. The hatchery reared fish, at aquatic and terrestrial organisms, and release, were about twice as large as fish the productivity of plane species. Anal- hatched in the river at the same time.

yses are being made of edible vegetation and Columbia River fish and sediment Proj ec'tsi 0 Operntiou Fiscal 1979 proved to and the existing background direct be a remarkable year for the Hanford radiation. Generating Project (HGP) which produced a total of almost four billion Eig~i nteriiq; anrl Li it issitq; The application kilowatt hours. Total generation since for an Operating License for WNP-2, HGP began operacing in 1966 went past which includes a 21-volume Final Safety 43 billion kilowatt hours before ic was Analysis Reporc, is under review by the shut down on May 4, 1979 for the Nuclear Regulatory Commission. En- annual 10-week maintenance program.

gineering personnel are accively working The record for 24-hour net generation with che NRC in this review. for HGP kept rising throughout che As a result of the March 28, 1979 year, with a peak of 20,747,000 kilowatt accident at the Three Mile Island, Unit 2 hours generated on April 3, for an aver-(TMI-2)reactor, an "Engineering age gross hourly rate of 878,750 Stracegic Planning" committee was es- kilowatt hours.

tablished to review information obtained from TMI-2. In addition, the Supply System is parcicipating with an indus-try group in reviewing information from TMI-2, in search of items which would indicate thac changes in design or opera-tion should be recommended.

Arnold J. James Edwin XV. Taylor Stanton H. Cain

~ Commissioner Commissioner Commissioner Lewis County PUD ihlason County PUD NO. 3 Okanopan County PUD Supply System Board Supply System Board Supply System Board Letvts County PUD 5.3 percent growth, primarily in residencial usage, with 632 new cuscomers added in 1978. The rouncy is largely rural, wich small towns and logging as a principal activity.

Mason County PUD No. 3 6 percenc growth in 1978, wich 833 customers added. Primary uses ofelectricicy are residential, recreational and in the wood produces industry.

Okanogan County PUD 3.6 percent power sales increase and a cuscomer growth of 530 in 1978. Power use was 53 percenc residential, 35 percent commercial-industrial, 10 percent irri-gation. The county is one of the largesc in che nacion and contains large areas of wilderness and foresc in Norch Central Washington. The economy is based on fruit, cattle, lumber and recreation.

1t was anothet excellent year for the Hanforci Generati ng project-a plant that uses steam front a nuclear re~ctor to power turbines. Since it<vent on linein 1966, the plant has generatecl ntotethan 43 billion kilowatt hours. Last yearit provi cleclfttll generation 99. 97 percent ofi tspossi hie

$P, operating tinte.

either snow nor subzero The project is operated in harmony temperature could keep with the mountain environment, and HGP offthe line. In early facilities built at Packwood Lake by the February, during a pro- Supply System enhance the recreational longed period ofabnormal value of the area.

cold, ice formed on the Water from Packwood Lake, which is circulating water intake screens. used to run the turbine-generator, is Despite the bit ter cold, HGP workers carried via an underground system of kept the plant in operation by chipping pi pes and tunnels to the powerhouse and melting the ice from the screens. which is at an elevation 1,800 feet below Prompt action by operations personnel the lake.

in reducing load and stabilizing conditions avoided a complete shut- ~ Prjoects Under Construction In the 1960s, a down of the plant and enabled them to nuclear generating project could be in maintain fullgeneration 99.97 percent operation about six years after the deci-of the time when steam was available sion was made to build. Today, it takes from N-Reactor. This extra effort made 12 to 15 years.

it possible for HGP to keep on generat- In this context, progress is more easily ing electricity and thereby play a major discerned by statistics than by visual role in meeting the record demand for examination. We can report significant electricity in the Northwest during the progress on the five Supply System proj-cold winter months. ects under construction using either The Packwood Hydroelectric Project, method.

a small Supply System project nestled in the Gifford Pinchot National Forest in the Cascade Mountains of Washing-ton State, continued to demonstrate its reliability and versatility during Fiscal Year 1979.

Though small in comparison to the projects on the larger rivers, the net generation at Packwood since it started in 1964 went over 1. 5 billion kilowatt hours.

In August, the total amount of water which had flowed through the turbine surpassed one million acre feet, enough to cover the entire state of Rhode Island with more than a foot of water.

Its versatility is demonstrated in its ability to go into "isolated operation."

This term is applied to times when the project is disconnected from the Bon-neville Power Administration system and serves the surrounding area only, enabling BPA, or Lewis County, which owns the 50-mile-long connecting line, to work on the transmission system.

Hal Norman Thomas hl. Logston hfanager hlayor Pacilic County PUD City of Richland Supply System Board Supply System Board Pacific Cou>ity PUD ¹. 2 4.8 percent growth in kilowatt hour sales, with an increaseof831customers, bringing the total to more than 13,000. Principal usage was residential. Pacific County is on the Pacific Ocean coast, where the Columbia River enters the ocean.

Richland City Light 7. 7 percent growth in 1978, with 1,380 new cus-tomers, for a total of 14,000. Growth is principally in residential. Richland City I.ight serves the Supply System head-quarters buildings. Industrial users in-clude a nuclear fuels fabrication plant, a food processing plant, an irrigation pumping station and scientific laboratories.

The coastal cities ofthe Northruest are gateways to the tradi ng rrati orts of the Pacific Ri rn and the ruorM beyond. That' one reasorr Seattle has provt'ded 124,600 nerv j obsi rr the last three it years, ranking eighth i n the nation. Portland is 13th ruith 91,900 newjobs.

hree of the projects, forcing steel were installed, or what the WNP-2 and WNP-1 and work force size is at a given time.

WNP-4, are being built on the The turbine generator, containment federally owned Hanford Res- and general services buildings at ervation near Richland, in east- WNP-1 are well along in construction ern Washington. Two are and the three large cooling towers are being built in Grays Harbor County almost complete. Piping and electrical in western Washington, near the town work has started.

of Satsop. The installation of the 150,000 With the completion of the WNP-2 pound stainless steel refueling canal liner Reactor Building in November 1978, was a milestone in WNP-1 construc-the skyline on the WNP-2 site changed tion. The unit arrived at the site in seven dramatically. The end of the major civil subassemblies which were assembled on construction work at the site also marked the ground and lifted into place as a the end of the forest of crane booms. single unit. This is expected to save two Attention is focused now on the proj- to three months on the work schedule.

ect interior where about 2,000 workers In 1977, the "Hanford Giant," a are installing piping, cable and mechan- one-of-a-kind, heavy duty luffing rig ical equipment. was used to set the 966-ton reactor pres-The project was approximately 73 sure vessel at WNP-2 by lifting it over percent complete at the end of the fiscal the top and into the containment. Be-year. cause of the success of this method, and The work force reached its peak the development of more versatile lifting of 4,000 during the fiscal year and rigs, plans were developed for similar began a gradual decline toward project "over-the-top" setting of the WNP-1 completion. and WNP-4 nuclear steam Supply Sys-In recognition of the approaching tem components weighing hundreds of star tup date, and the completion of some tons. The method used at most other systems within the project, the Supply similar projects involves leaving a large System moved its Test and Startup force opening in the containment building to the site. and moving the components in horizon-When commercial operation begins, tally. The high liftand vertical place-WNP-2 willgenerate 1. 1 million ment permits earlier completion of the kilowatts for the 94 participating pub- containment building and saves time on licly owned utilities who serve nearly a the construction schedule.

million customers in the Northwest.

WNP-1 and WNP-4 are duplicate generating projects which were still in the civil construction phase during the fiscal year. In the original construction schedule, WNP-4 was deliberately scheduled about 18 months behind WNP-1. This scheduling provided for maximum efficiency of the construction work force who would complete a seg-ment of WNP-1 and then move to WNP-4.

Progress can be measured statistically in reporting how many tons ofconcrete were placed or how many tons of rein-

t WNP-4, there was signific- the WNP-3 containment in a continu-antly visible and measurable ous 21-day placement. It was described progress. The 380-ton reac- as a "masterpiece of coordination" as tor pressure vessel and its ironworkers placed 3,000 tons of rein-100-ton closure head ar- forcing steel while the concrete workers rived at the site in Feb- followed closely behind to place 11,000 ruary 1979 and the steam generators cubic yards ofconcrete. The work pro-arrived in May from the fabrication ceeded 24 hours2.777778e-4 days <br />0.00667 hours <br />3.968254e-5 weeks <br />9.132e-6 months <br /> a day, seven days a plant in Indiana. The reactor pressure week, for 21 days. The 3-foot-thick wall vessel was shipped by barge to New went up at the rate ofabout 10 feet a day.

Orleans, then by ship through the Gulf With the benefit of this experience, ofMexico and the Panama Canal to an identical shield wall for WNP-5 was Longview, and, finally, by barge up the erected even more rapidly in a continu-Columbia River to Richland. The steam ous 15-day concrete placement.

generators were shipped on a special Immediately after the completion of 15-car train with reinforced cars carrying the WNP-3 shield wall, work began on the heaviest components. the welded steel, free-standing contain-The components willbe stored at the ment structure which willbe 150 feet in site until they are set in place in 1981. diameter and willrise 27 1 feet above the At the end of the fiscal year, construc- reactor auxiliary building base slab.

tion completion was approximately 26 The first concrete for the 500-foot-percent for WNP-1 and 9 percent for high natural draft cooling tower of WNP-4. Total manpower at the con- WNP-3 was placed in June 1979.

struction site was 4, 100 and increasing At the end of the fiscal year, construc-toward the peak which is expected to be tion completion was approximately 14 reached in 1981. percent for WNP-3 and 3 percent for WNP-1 willgenerate 1,250,000 WNP-5. Total manpower at the con-kilowatts for its 104 publicly owned struction site was 2, 100.

participants when it goes into commer- WNP-3 willgenerate 1,240,000 cial operation in late 1983. Five kilowatts for its 103 publicly owned investor-owned utilities have contractual utilityparticipants and the four rights to purchase 32. 5 percent of the investor-owned utilities which have output until 1996. purchased ownership shares equaling 30 WNP-4 also willgenerate 1,250,000 percent of the project.

kilowatts for 88 publicly owned par- WNP-5 willgenerate 1,240,000 ticipating utilities in the Northwest kilowatts for its 88 publicly owned util-when it begins commercial operation in ity participants and the one investor mid-1985. owned utilitywhich has purchased own-WNP-3 and WNP-5 also are dupli- ership shares equaling 10 percent of the cate generating plants being built in project. Commercial operation begins in Grays Harbor County, near the town of 1986.

Satsop, and are in the early stages of civil construction.

As with WNP-1and WNP-4, the construction schedules establish comple-tion dates 18 months apart.

A significant change in construc-tion emphasis occurred during the fiscal year when earthwork was completed and construction of major plant structures began.

An outstanding achievement was the erection of the 212-foot-high, 165-foot-diameter, concrete shield wall for

Paul Nolan Director Deparrment of Public Uriliries Tacoma Ciry Lighr Supply System Board Taco)))a City Light 5 percentgrowth in 1978, with 5,710 customers added in 1978. Unpreredented growth in the ser-vice area rcflcrts a booming housing market. Estimates indirate that without an active conservation program, Tacoma City Light would have exceeded the 1977 load by more than 12 percent.

Energy conservation willcontinue to play an important role in Taroma City Light activities, while alternate energy resources are examined. The utilityowns and operates six hydroelectric projects.

Diversified industries arrounted for the largest portion of the power sold.

1Pahkiaku))t County PUO Energy usage and thc number of customers re-mained at a stable level in thc small and remote PUD scrvire area on the Colum-bia River in thc southwestern part of the state. Almost all sales are to residential customers. Charles Emerick, Commissioner and Supply System Board Member, is not pictured.

Over much ofthe arirl west, wateris the li<<titi))gfactor to ag)i-culture. Hu)tdreds of thousa))ds ofacres are being ope)ted'toiniga-tlo)l <<otu, pe) <<11tt1)lg 1lse of la)td that once was co<<si dered <<)argi))al.

The lo))g ter<<t challe)tge is to provic(efooclfor a grotui <<g ))ati o)t a<<da hu)tg)y wo) ld. Water makes the la<<cl bloo<<t; electri cal e)zergy moves the quater.

he Finance Staffhas the Of the $ 1. 085 billion, four issues essential task ofplanning, totaling $ 740 million were sold for the controlling and reporting the net billed projects (WNP Nos. 1, 2 and Supply System's financial ac- 3) bringing our financing program for tivities. With one of the most these projects to approximately 58 per-ambitious nuclear power con- cent complete on June 30, 1979. Two struction programs in the country, issues totaling $ 345 million were sold the Finance Group's primary respons- for WNP Nos. 4 and 5 bringing the ibilityis acquiring and managing financing program for these projects to the funds needed to finance construc- approximately 20 percent complete as tion ofour five projects. indicated in Table I.

Fiscal Year 1979 was another success- Additional information on annual ful year for the Supply System's financ- debt service requirements, issue dates, ing program. A total of $ 1.085 billion maturity dates, and the security for the of long-term revenue bonds were sold in bonds is included in the Financial Sec-six separate trips to the municipal bond tion of this report.

market. These sales increased the Supply With such a large financing program, System's outstanding revenue bonds to a sophisticated investment program has approximately $ 3.8 billion at an average been developed. During Fiscal Year weighted borrowing cost of 6.54 1979, the Supply System maintained an percent. average daily investment balance of

$ 1.45 billion at an average rate of return of 7.20 percent.

Equally important as the acquisition of funds is the management and control of expenditures. This control includes the annual preparation or updating of detailed construction, operating, ad-ministrative and special program budgets based on established goals and action plans. Periodic financial mea-surement reports are also issued.

With the growth and magnitude of chasing the basic computer hardware the Supply System programs, emphasis ourselves. This approach has resulted in is being placed on increasing the finan- lower computer costs and reduced lead-cial overview function. The establish- time necessary to implement and main-ment of project controller positions at tain systems.

each project site was one of the first steps The risk management function in-in strengthening the financial check and volves the assessmerit of the maximum balance function. probable loss of Supply System proper-In addition to traditional financial ties, the determination of self-insurance responsibilities, Finance personnel are levels and purchase of insurance. With also responsible for the data systems nuclear fuel coming on the project site in and risk management functions. the near future, the Supply System is The design, financing, construction currently developing its nuclear insur-and operation of nuclear power plants are ance program.

extremely complex. Sophisticated and diverse computer systems are in use to support the technical, operating, con- Supply System struction and financial systems. Funding Requirements The Corporate Information Systems ($ in Millions) June 30, 1979 function involves the development, im-WNP-l plementation and maintenance of $ r,922 mechanized information and control sys- WNP-2 $ 1, l60 tems. The basic operating philosophy $ 1,440 Itas been to contract with outside com- WNP-3 panies providing computer hardware $ !,378 and software services rather than pur- WN ~5 $ l,0 l0 Q Pineneing Complete Q Supply syttem lunding Requitementt

ashington Public Power Supply System is an organization whose activities touch the lives of millions of individuals in seven states.

A total of 115 utilities participate in the Supply System's projects. Com- a Public Agencies bined, they represent about 6. 5 million rs Private Utilities ts Publicand PrivateCombined consumers.

~ Municipalities The average energy growth rate ex- a WPPSS Nuclear Projects pected over the next 10 years for the 110 ~ Packwood Lake Hydroelectric Project publicly owned utilities participating in Supply System projects is 330,000 kilo-watts a year, requiring an annual addi-tion of470,000 kilowatts ofcapacity.

In all, the five new generating facil- u bta ities, when complete, willprovide about 4 Hanford one fifth ofall the electrical energy in Gen. Projec the Pacific Northwest. nford Reservation WNP-No.4 WNP-No.2 J i

VP-No, i x

. *, Yakim Riv la

-j".oQ Project Participants Pnbli e 6 Peoples UtilityDistrirts Cooperati rvs Oregon California Central Lincoln Peoples UtilityDistrict Surprise Valley Electrification Corp.

Clatskanie Peoples UtilityDistrict Northern Wasco County Peoples UtilityDistrict Iriaho Tillamook Peoples UtilityDistrict Clearwater Power Co.

East End hfutual Electric Co., Ltd.

jjrashi ngton Fall River Rural Electric Cooperative, Inc.

Benton County PUD Farmers Electric Co. Ltd.

Chelan County PUD Idaho County Light & Power Cooperative Ass n., Inc.

Clallam County PUD Kootenai Electric Cooperative, Inc.

Clark County PUD Lost River Electric Cooperative, Inc.

Cowlitz County PUD Northern Lights, Inc.

Douglas County PUD Prairie Power Cooperative, Inc.

Ferry County PUD Raft River Rural Electric Cooperative, Inc.

Franklin County PUD Riverside Electric Co., Ltd.

Grant County PUD No. 2 Rural Electric Co.

Grays Harbor County PUD Salmon River Electric Cooperative, Inc.

Kittitas County PUD South Side Electric Lines, Inc.

KlickitatCounty PUD Unity Light & Power Company Lewis County PUD Mason County PUD No. I it fontana Mason County PUD No. 3 Flathead Electric Cooperative, Inc.

Okanogan County PUD Glacier Electric Cooperative, Inc.

Pacific County PUD No. 2 Lincoln Electric Cooperative, Inc.

Pend Oreille County PUD Missoula Electric Cooperative, Inc.

Skamania County PUD Ravalli County Electric Cooperative, Inc.

Snohomish County PUD Vigilante Electric Cooperative, Inc.

Wahkiakum County PUD Net ada Whatcom County PUD Wells Rural Electric Cooperative, Inc.

Oregon IPyonsi ssg Irrigation Ds'stri rts Blachly-Lane County Cooperative Electric Assn. Lower Valley Power & Light, Inc. Consolidated Irrigation District 19 Columbia Basin Electric Cooperative, Inc. Vera Irrigation District 15 Central Electric Cooperative, Inc.

Afuniripalilsts Columbia Power Cooperative Assn., Inc. Invostor Osontd Uti litsts Consumers Power, Inc. Montana Power Company Idaho Coos-Curry Electric Cooperative, Inc. Pacific Power & Light Company Douglas Electric Cooperative, Inc.

Albion Heyburn Bonners Ferry Idaho Falls Portland General Electric Company Harney Electric Cooperative, Inc. Puget Sound Power & Light Company Hood River Electric Cooperative, Inc. Burley Minidoka Declo The Washington Water Power Company Lane County Electric Cooperative, Inc. Rupert Midstate Electric Cooperative, Inc. Total Parti ripants by rlassijiration Ortgon Salem Electric Cooperatives: 52 Bandon Forest Grove Umatilla Electric Cooperative Assn. Municipalities: 32 Wasco Electric Cooperative, Inc.

Canby McMinnville Cascade Locks Milton-Freewater Public UtilityDistricts: 26 West Oregon Electric Cooperative, Inc. Investor Owned Utilities: 5 Drain Monmouth 1Pashissgton Eugene Springfield UtilityBoard Total 115 Alder Mutual Light Company Benton Rural Electric Assn., Inc. 1Fashi ssgton Big Bend Electric Cooperative, Inc. Blaine Port Angeles Columbia Rural Electric Assn., Inc. Centralia Richland Elmhurst Mutual Power & Light Cheney Seattle Inland Power & Light Co. Coulee Dam Steilacoom Lincoln Electric Cooperative, Inc. Ellensburg Sumas Nespelem Valley Elec. Cooperative, Inc. McCleary Tacoma Ohop Mutual Light Okanogen County Electric Cooperative, Inc.

Orcas Power & Light Company Parkland Light & Water Company Tanner Electric

n many respects, the Washington Public Power Supply System is a unique organization. Certainly its creation marked an innovative de-parture in the history of electrical energy generation in America.

Yet, the Supply System rests on a concept that is as old, and as reliable, as the very first social contract: individuals can do some things bet ter by working together than they can by going it alone.

That's really what the Supply System is all about. The challenges ofenergy supply in the future are simply too great for any ofour individual members to meet successfully alone.

But those challenges are not too big for all of us, when we work in concert to achieve agreed-upon goals.

Washington Public Power Supply System Annual Report-Financial Section June 30, 7979 Contents Financial Statements: Page Balance sheets 2 Statements ofoperations-Hanford and Packwood Projects . 4 Statements of changes in financial position-Hanford and Packwood Projects 5 Statements ofsource and use of funds-Nuclear Projects Nos. 1 through 5 6 Notes to financial statements . 7 Report of independent accountants . 16 Statement of the state auditor ,17 Statement of debt service requirements ...., 18 Construction projects expenditures 20

Balance Sheets June 30, 1979 Packwood Nuclear Nuclear Lake Nuclear Nuclear Project Projects Hanford . Hydroelectric Project Project No. 3 NOS. 41 &5 General (S in thousands) Project Project No. 1 No. 2 Note A Note A Fund Combined Assess UtilityPlants and Equipment Note'B:

In service ....................... S67,013 S12,205 S 2,646 S2,325 S 84,189 Modifications and additions to facilities owned by the U.S.

Government ............... 14,411 14,411 Less allowances for depre-ciation and amortization (41,582) (3,846) (325) (1,977) (47,730) 39,842 8,359 2,321 348 50,870 Construction work in progress.................. S580,683 913,843 S390,009 S 734, 108 2,618,643 Nuclear fuel ......,............ 43,018 32,733 11,696 3, 179 90,626 Prepayments for nuclear fuel enrichment services .. .........,......... 5,336 5,040 10,980 21,356 Less amount charged to joint owners................ (115,506) (28,952) (144,458) 39,842 8,359 629,037 948,897 291,239 719,315 348 2 637.037 Special Funds Note C:

Cash and investment securities Note B ...... 3,203 317 226,702 254,902 273,365 258,523 1,017,012 Receivable from joint owners and other assets i ~ < ~ ~ ~ ~ ~ 4,920 252 10,899 3,349 19,420 Due from other Projects and General Fund Note D ........,.......,..... 975 367 1,394 Net amount due from other funds ...,.....,....... 4,162 6 457 8,565 19, 184 3,203 317 '36,759 255 154 291,088 271 831 1,055,616 Sinking Funds Note C:

Cash and investment securities Note B ....., 6,903 697 102,329 38,448 165, 167 179,867 493,411 Current Assets:

Cash and investment securities,................... 5,973 158 12,881 7,875 26,887 Accounts receivable ......... 183 106 29 159 477 Prepaid insurance and other current assets....... 348 10 1,132 1,490 Due from General Fund .... 171 8 Due from other funds ....... 995 59 1,340 2,394 Cash deposit matured interest and principal.... 162 55,443 1,045 20,384 77,041 7,674 344 162 69 693 1,045 20,384 9, 166 108,289 Other Asset Unbilled reimbursable costs ...... 2,131 2,946 5,077 Deferred Charges:

Costs associated with abandoned plant site Note B ....................... 4,290 4,290 Preliminary survey and investigation costs ....... 7,503 7,503 Unamortized debt expense ...................... 176 32 1,410 1 443 987 2,654 6,702 176 32 5 700 1,443 987 10,157 18,495 S59,929 S12,695 8973 987 81,313,635 8749,526 81,201,554 89,514 S4,317,925 See notes to financial statements.

Packwood Nuclear Nuclear Lake Nuclear Nuclear Project Projects Hanford Hydroelectric Project Project No. 5 Nos.4& 5 General Project Project No. l No. 2 Note A Note A Fund Combined Liabilities Revenue Bonds Note C:

~ Principal amount ............ $ 51,565 $ 12,228 $ 895,000 ve 1, 147,000 $ 680,000 $ 1,063, 140 $ 3,848,933 Unamortized debt discount....,.....,.......... (969) (1 19) (5,893) (5,046) (4,295) (8,213) ~24 535) 50 596 12 109 889, 107 1 141;954 675;705 1 054,927 3,824,398 Special Funds Note C:

Accounts payable and accrued expenses... ..... 26 29,883 23, 177 31,639 59,588 144, 313 Amounts withheld from contractors ............., ... 20,544 24,247 13,021 22,684 80,496 Amounts due to other Projects and General Fund ............., 196 17 960 Net amount due to otherfunds ...,............. 702 140 853 702 37 50,427 47,760 44,677 83 232 225,662 Sinking Funds Note C:

Accrued interest ondebt .................. 545 149 30,129 21,642 34,446 86,911 Nec amount due to other funds ............. 292 47 4,162 1,200 6,457 s,565 20,723 837 196 34,291 1,200 28,099 43 011 1o7,634 Current Liabilities:

Accounts payable and accrued expenses...... 4,67o 226 11,250 $ 7,475 23,621 Due to other Projects.... 1,742 Matured interest on debt .................. 162 48,943 1,045 3,014 53, 171 Matured long-term debt ....,.................

Ocher Liability 4,674 229 162 '6 6 500 693 1,045 17,370 20,384 9,217 23 870 100,662 Unearned revenue........,... 12,780 12,780 Deferred Credits and Advances:

Defeired gain on revenue bonds .......,. 2,220 124 2,344 Advances from members and participants .........,...... 900 43,248 297 44 445 3,120 124 43,24s 297 46,7s9 Commitments and Contingencies Note D

$ 59,929 $ 12 695 $ 973 987 $ 1 313,635 $ 749,526 $ 1,201,554 $ 9 514 $ 4,317 925 The interproject due to and from balances have been eliininated from the combined column.

Statements of Operations Hanford and Packwood Projects Year Ended June 30, 1979 (S in thousands) Hanford Project Pack50ood Project Combined Operating Revenues $ 35,820 S830 $ 36,650 Operating Expenses: /

Reactor availability,. 29,695 29,695 Power production and transmission, 1,094 171 1,265 Maintenance,..................., ..,...,...,...,..........., ......,.

~ 843 40 883 Administrative and general 904 59 963 32 536 270 32 806 3,284 560 3,844 Interest and Other Income 976 154 1,130 4,260 714 4 974 Other Expenses:

Depreciationandamortization.........., ....... 1,703 257 1,960 inrererr and debr diaronnr amorrizarion ........................... 2 557 457 3 014 4 260 714 4 074 Net Revenue . cI See notes to financial statements.

Statements of Changes in Financial Position Hanford and Packwood Projects Year Ended June 30, 1979 (S in thousands) Hanford Project Packwood P oject Combined Source of Funds:

Operations Net Revenue S S Items not affecting working capital:

Depreciation and amortization ...,...................,.....,. 2,613 260 2,873 Decrease (increase) in costs reimbursable from power purchasers . 214 (67) 147 Less gain on redemption of revenue bonds ........,...... (129) (64) (193)

Total from operations ...,... 2,698 129 2,827 Contributions for improvements and additions .......,.....,., 4,209 5 4,214 Advances from participants for working capital .........,.... 618 618 Decrease in unbilled reimbursable costs .........,...,............, 434 434

$ 7 959 8>S4 $ 8 093 Application of Funds:

Net improvements and additions 84,209 $ 4,214 Cost of revenue bonds purchased and retired ..................... 2,635 139 2,774 Net increase in Special Funds 434 434 Net increase (decrease) in Sinking Funds...,...,...,.....,...., .. 63 ~10) 53 7 341 134 7 475 Changes in Working Capital:

Cash and investment securities. (1,686) 43 (1,643)

Receivables and other current assets .............,........,........ 306 18 324 Cash deposit matured interest and principal .......,.......... 6 6 Payables and other current liabilities, ...........,,......... 1,998 (6 1) 1,937 Matured interest on debt .........,.,.....,......,.....,..........,

Net Change in Working Capital .........

~65 (6>

618 618

$ 7 959 $ i84 88,093 See notes to financial statements.

Stafements of'Source and Use of Funds Nuclear Projects Nos. 1 through 5 Year Ended June 30, 1979 Nuclear Nuclear Nuclear Nuclear Pro jen Projecr Projecc Projens (S in thousands) No. I No. 2 No. 3 Nos. 4& 5 Combined Source of Funds:

Collected under net billing ....,...'.... $ 81,377 $ 81,377 Bonds proceeds ., $ 178,457 356,468 $ 200,272 $ 343,774 1,078,971 Interest income ...,, 26,411 19,156 28,952 30,054 104,573 Chargedtojointowners .......~....., 56,571 11,844 68,415 Decrease in Special Funds .............. 50,728 50,728 Decrease in Sinking Funds...,....,... 33,966 33,966 Revaluation of investment securities ....,..... 233 722 955

'19,091 S

Other '3 439 3,439

$ 293 001 $ 457 234 $ 285 795 $ 386 394 $ 1422 424 Use of Funds:

Construction costs ..., .................... $ 226,633 $ 227,662 $ 189, 145 $ 275,651 Interest Nuclear fuel....

expense,...,......

Financing expense..............,..........

52,823 13,047 498 65,006 96 517 40,265 5

298 59 744 3, 149 852 217,838 16,297 2, 165 Bonds redeemed ............., ....,...,... 6,500 24, 170 30,670 Increase in Special Funds ............... 142,130 47,294 9,341 198,765 Increase in Sinking Funds .........,.... 11,553 8,788 10,254 30,595 Increase in amounts due participants 3,689 3,689 Preliminary survey and investigation costs (Energy and Uranium Programs) .....,...... 3 233 3 233 Other 81 81

$ 293 001 $ 457 234 $ 285 795 $ 386 394 $ 1,422 424 See nores ro financial sraremenrs.

Notes to Financial Statements Note A Organization Nuclear Projects Nos. 3 and 5 are being The Washington Public Power Supply System constructed and willbe operated by the Supply was organized in 1957 as a municipal corporation System pursuant to terms of Ownership Agree-and joint operating agency of the State of ments between the Supply System and investor-Washington. Its membership consists of 19 pub- owned utilities. Nuclear Project No. 3 willbe lic utilitydistricts and 4 municipalities that own 70% owned by the Supply System and 30% by and operate electric systems within the State of four investor-owned utilities: Pacific Power 8c Washington. It is empowered to acquire, con- Light Company-10%, Portland General Electric struct and operate facilities for the generation Company- 10%, Puget Sound Power Bc Light Com-and transmission of electric power and energy. pany-5% and The Washington Water Power The Supply System has constructed and is now Company-5%. Nuclear Project No. 5 willbe operating the Packwood Lake Hydroelectric 90% owned by the Supply System and 10% by Project (Packwood) and the Hanford Project and Pacific Power &Light Company. Each of the has five nuclear electric generating plants under joint owners is responsible for its own financing construction (Nuclear Projects 1, 2, 3, 4 and 5). costs, providing its share of the costs of construc-In addition, the Supply System has a General tion and operation and willbe entitled to i ts Fund. The Hanford Project and Nuclear Projects ownership share of the projects'apability. The Nos. 1, 2 and 4 are situated on land leased from parties to the Ownership Agreements have des-the United States Department of Energy (DOE). ignated the Supply System to act as their agent Rental for each project's property is a nominal to construct, operate and maintain the projects.

amount each year plus any taxes or assessments Allprojects heretofore undertaken by the that may be imposed upon the leasehold. Supply System have been separately financed Nuclear Projects Nos. 3 and 5 are being con- except for Nuclear Projects Nos. 4 and 5.

structed on land owned by the projects. Nuclear Project No. 4 and the Supply System's Because of Bonneville Power Administration's ownership share ofNuclear Project No. 5 are (BPA an agency of the United States Govern- being financed together as one utilitysystem.

ment) obligations under the Net Billingand Proceeds from the Generating Facilities Revenue Exchange Agreements, as described in Note C, Bonds (Nuclear Projects Nos. 4 and 5) may also the Supply System and BPA have entered into be used for paying the cost of certain work in Project Agreements with respect to Nuclear connection with the acquisition and develop-Projects Nos. 1, 2 and 3, and Exchange Agree- ment ofuranium-bearing lands and with the ments wi th respect to the Hanford Project. development ofadditional energy resources, These agreements provide, among other things, shown as Preliminary Survey and Investigation standards for the design, licensing, financing, Costs on the accompanying balance sheets. The construction, fueling, operation and mainte- obligations issued with respect to each project are nance ofeach of the aforementioned projects. The payable solely from the revenues of that project.

agreements also provide for the approval ofcer-tain replacements, repairs or capital additions thereto.

Note B Su>n>>>ary ofSignificant A ccounting balance sheet as deferred credits less the annual Policies straight-line accretion to income over the terms The Supply System has adopted accounting of the respective bonds. Gains occurring after policies and practices that are in accordance with January 1, 1973 are recorded as income in the generally accepted accounting principles appli- fiscal year the debt is redeemed.

cable to the utilityindustry. Separate books of Current Assetsa>rdCurrent Liabilities account are maintained for each project except for Assets and liabilities shown as current in the Nuclear Projects Nos. 4 and 5, which are ac- accompanying balance sheets exclude current counted for as one entity. maturities on revenue bonds and accrued interest Capitalization ofCosts and Overhead Expenses thereon because sinking funds are provided for During the construction phase ofa project, their payment.

the Supply System willcapitalize all costs of the Investment Secicri ties project including general, administrative, in- Investment securities include time certificates terest, certain depreciation and other overhead ofdeposit, repurchase agreements (secured by expenses. Payments received under the Nuclear U.S. Government securities) and United States Project No. 2 Net BillingAgreements for in- Government and Government agencies secu-terest on revenue bonds, as described in Note C, rities. Investment securities are stated at cost or are recorded as a reduction in construction costs amortized cost as appropriate and include ac-during the construction period. Alloverhead crued interest.

expenses of the Supply System are allocated from Investment securities owned by the Hanford the General Fund to the various projects primar- and Packwood Projects and Nuclear Projects ily on the basis ofdirect labor cost. Nos. 2, 4 and 5 Bond Fund Reserve Accounts Debt Discount, Pren>i u>n and Lxpenses (included in Sinking Funds) and Reserve and Debt discount or premium and expenses relat- Contingency Funds (included in Special Funds) ing to the issuance of revenue bonds are amor- are stated at the lower ofamortized cost or tized by the straight-line method over the terms market as provided by their respective bond ofthe respective issues. Such provisions for amor- resolutions. Because these funds are to be main-tization, net ofaccretion ofpremiums, are tained at specific levels, any required revaluation capitalized as costs of utilityplant until net of the carrying amount of the investment securi-billing begins at which time the net amortiza- ties is charged or credited to the participants of tion is accounted for as further described under Hanford, Packwood and Nuclear Project No. 2.

Revenues. Revaluations in the carrying value of these funds Gains on Rede>npti on ofRevenue Bonds Pack>vood in Nuclear Projects Nos. 4 and 5 are charged or and Hanford Prjoects credited to the cost ofconstruction.

Gains from the early extinguishment of debt The market values of investment securities occurring prior to 1973 have been recorded in the held in Sinking and Special Funds and in Current Assets approximate amortized cost as ofJune 30, 1979.

Income Earnedon InvestmentSecurities Provisions for amortization of modifications Income earned on securities includes gains and and additions to facilities owned by the U.S.

losses from the sale of securities. Income earned Government are being amortized over the period on securities held in Nuclear Projects Nos. 1, 3, covered by the contract for dual-purpose opera-4 and 5 Special and Sinking Funds is recorded as a tion of the New Production Reactor.

reduction in construction costs during the period Costs associated with the abandoned plant site ofconstruction. Income earned on securities held have been recorded as deferred charges. These in the Nuclear Project No. 2 Construction Fund costs willbe charged to income over the life of (included in Special Funds) is recorded as a the new facilities beginning with the com-reduction ofconstruction costs during the con- mencement of commercial operations, to the struction period and all income earned on secu- extent they have not been recovered from certain rities held in other funds accrues to the Revenue private utilities and BPA industrial customers Fund. benefiting from the continued operation ofthe UtilityPlants and Ecpapment At Cost Hanford Project. During the year ended June 30, The Hanford and Packwood Projects'rovi- 1979 $ 3 439 000 was recovered from the sions for depreciation of utilityplant are com- industrial customers puted by the straight-line method based on the The administrative office building and estimated useful lives ofthe projects, which warehouse facilities that are accounted for on the approximate the term ofthe related revenue records of Nuclear Project No. 2 and the office bonds. The final redemption ofeach project's equipment and vehicles that are accounted for on revenue bonds occurs in 1996 and 2012, ~ the records of the General Fund are being depre-respectively. ciated by the straight-line method based on their Ifthe Hanford Project ceases operations after estimated useful lives.

June 1983, as discussed in Note D, the carrying Contributions Usedfor Purrhaseof Lcluipment-value of the plant willcontinue to be depreciated Packwood and Hanford Prjoects over the remaining term of the outstanding Monies provided by participants to acquire revenue bonds. Regardless of continued opera- equipment since completion of the Projects are tions, the purchasers ofpower from the Project recorded and accounted for as a reduction of the willcontinue to be obligated to pay the principal carrying value ofsuch equipment included in amount of bonded debt, among other costs, until UtilityPlant.

July 1, 1980 when participants in Nuclear Proj-ect No. 1 assume this obligation.

Revenues Note C Revenue Bonds Member purchasers ofpower are contractually Outstanding revenue bonds of the various obligated to pay project annual costs including projects as ofJune 30, 1979 are presented on debt service. The Supply System records these Pages 14 and 15.

reimbursable annual coscs as operating revenues Security Agreements and Contracts for the Hanford and Packwood Projects. In addi- The United States ofAmerica, Department tion to recovery ofproject annual costs the Sup- of Energy (DOE), acting by and through the ply System records as revenue each year an Bonneville Power Administration (BPA) has amount equal to the provisions for depreciation purchased the entire capability of the Hanford and amortization, less the recorded gains on Projecc and the Supply System's ownership share bond redemption. This accounting policy is used ofthe projects'apability in Nuclear Projects Nos.

in order to spread such revenues equally over the 1, 2 and 3 from its statutory preference customers full term ofthe bonds. and, in addition, with respect to Project No. 1, Cumulative reimbursable annual costs less five of its private utilitycustomers. Each of these payments by member purchasers for future bond customers has, in turn, purchased such capabil-redemption are reflected as Unbilled Reimburs- ity from the Supply System, all under the Net able Costs in the accompanying balance sheets. Billingand Exchange Agreements. BPA is obli-For Project No. 2, payments received from gated to pay theparticipants, and the partici-member purchasers for bond redemption less the pants are obligated to pay the Supply System annual amortization ofdebt discount are shown its pro rata share of the total annual costs ofthe as Unearned Revenue in the accompanying bal- projects including debt service on the bonds, ance sheets. whether or not the projects are completed, oper-Retiretnent Plan able or operating and notwithstanding the sus-The Supply System parcicipates in the pension, reduction or curtailment of the projects'utput.

Washington State Public Employees'etirement System that provides retirement benefits to eli- The Supply System's Packwood Project Rev-gible employees. Cost of the plan to the Supply enue Bonds are secured by Power Sales Con-System is determined by the Retirement Sys- tracts between the Supply System and each of its tem's Board. The actuarially computed value of 12 member purchasers. Pursuant to these agree-pension benefits exceeds the fund assets for the ments, each member purchases and pays the Retirement Syscem. However, because the Re- percentage allocation ofpower specified therein tirement System is a multi-employer system, the at rates sufficient to operate and maintain the if amount ofsuch excess, any, that relates to the Projecc, including debt service on the bonds.

Supply System is not available. Such payments willcontinue until the bonds are paid or provision is made for their payment or retirement.

The contracts also provide that ifany of the 12 Security Creation ofFunds members, because of insolvency or bankruptcy, ~

As other security, the Supply System has been fails to pay its respective share ofproject annual required to establish trustee-administered sink-costs, 8 of the 12 members, which account for ing funds for the sole purpose ofpaying principal

94. 75 percent of the Project's power output, are and interest on the bonds.

liable for an automatic pro rata increase of the With respect to the projects under construc-shares not so paid. The remaining four member tion, proceeds of revenue bonds not specifically purchasers are, limited in their liabilityfor a pro required to meet principal and interest payments rata increase to an aggregate amount equal to have been placed in Special Funds. Except for the double their original percentages. Reserve and Contingency Fund discussed below, As security for the Generating Facilities Rev- the Special Funds are to be used for construction enue Bonds for Nuclear Projects Nos. 4 and 5, purposes. The Special Funds may also be used, if the Supply System has entered into necessary, to make required interest and princi-with 88 utilities operating princi-Participants'greements pal payments.

pally in the western United States. Pursuant to Hanford, Packwood and Nuclear Projects the Participants'greements, the participants Nos. 2, 4 and 5 have each established a Reserve are obligated to pay their respective share of and Contingency Fund. As provided in the bond project annual costs, including debt service. The resolutions, these funds are to be used, among agreements stipulate the percentages of project other things, to make up any deficiencies in the output allocated to such utilities. Billings to the Sinking Funds and to pay for extraordinary oper-participants for Nuclear Projects Nos. 4 and 5 ation and maintenance costs, replacements and willbegin on July 1, 1988, or the date of contingencies.

commercial operation for the respective projects, On September 1, 1977, the participants in whichever is earlier. Nuclear Project No. 2 began funding debt ser-Ifthe Supply System is unable to issue and sell vice, working capital and reserve requirements as bonds to obtain funds to pay the principal of the provided in the Net BillingAgreements. In revenue bonds when due, or is unable to proceed addition to payments for debt service, with the financing ofNuclear Projects Nos. 4 $ 3,000,000 was deposited in the Revenue Fund and 5 because of such matters as inability to to provide working capital; $ 3,000,000 was obtain necessary licenses, each of the deposited to the Reserve and Contingency Fund; participants willpay its proportionate share of and $ 37,247,865 was deposited in the Bond the principal due on the revenue bonds together Fund to satisfy reserve requirements. These ad-with any other costs associated with the termina- vances, totaling $ 43,247,865, willreduce future tion of the projects. amounts otherwise payable by participants for operating costs and debt service.

Note D Connni tntents and Contingencies The amended agreements provide for the Contracts payment by Nuclear Project No. 1 participants The Supply System has entered into substan- ofdeactivation costs (contractually limited to tial contracts covering a portion of total estimated $ 6,286,000) and all debt service costs of the costs for certain major equipment and material, Hanford Project, commencing July 1, 1980, and for services relating to financing, design and regardless ofcontinued operation of the reactor.

the supply of nuclear fuel for the projects under Outstanding revenue bonds willthen aggregate construction. approximately $ 48,000,000. Ifthe plant ceases HanIord Project audits Relationship to Nuclear revenues arising from the aforemen- 'perations, Project No. 1 tioned payments willnevertheless be recorded The Department of Energy owns and operates each year thereafter in amounts that willresult in a nuclear reactor, the New Production Reactor. full realization of the carrying value of the plant.

This reactor provides the steam to the Hanford The U.S.Government has an option to acquire Project. The Supply System has an agreement ownership of the Hanford Project upon obtain-with DOE to continue dual-purpose operation of ing Congressional approval. Ifthe Government the reactor through June 1983. exercises its option, it must assume all rights and It was initiallyintended that Nuclear Project obligations of the Project, including the obliga-No. 1 would be constructed adjacent to the tion to pay all revenue bonds.

Hanford Project and would provide the energy Litt'gati on Nuclear Project No. 2 source to operate the Project when DOE In January 1976, the Supply System termi-ceased operation of the New Production Reactor. nated its contract with the contractor responsible It was necessary that the Hanford Project for the civilconstruction work on Nuclear Pro-be shutdown on October 31, 1977 to allow for ject No. 2 for breach ofcontract. In February construction of Nuclear Project No. 1. Because 1976, the contractor filed a lawsuit against the studies indicated that generating resources in the Supply System. In its complaint, the contractor Pacific Northwest would be inadequate in the is asking for damages of not less than late 1970's and early 1980's, the Supply System S24;500,000 together with interest thereon, determined that the Hanford Project should be attorney fees, and other undetermined amounts kept available for power production after Octo- ofdamages. The Supply System filed its answer ber 1977. Therefore, the Nuclear Project No. 1 and counterclaim against the contractor and its Net Billing, Exchange and Project Agreements surety denying liabilityand seeking damages of were amended to provide for the separation of $ 13,970,000 plus substantial consequential Nuclear Project No. 1 from the Hanford Project. damages. Legal counsel for the Supply System Such amendments provide that Hanford Project have confidence as to the merits of the Supply costs, to the extent not otherwise provided for, System's position, but decline to assign probabil-willbe treated as Nuclear Project No. 1 costs ity as to the amounts that might be recovered, if having a first claim on the revenues of that any, by the Supply System or the contractor in Project. this case. In two related matters, subcontractors of the aforementioned contractor have filed suit

-.against the contractor for alleged breach ofcon- projects involved are Nuclear Projects Nos. 1, 2 tract and against the Supply System for alleged and 3. The complaint seeks, among other interference. In one complaint, the subcontrac- things, ( 1) a declaratory judgment declaring the tor seeks recovery ofalleged damages ofapprox- Net BillingAgreements null and void; (2) an irnatcly $ 31,900,000 and punitive damages of order enjoining the performance of the Nct

$ 20,000,000. The Supply System's legal counsel Billing Agreements; and (3) an order requiring are of the opinion that the claim for punitive the defendants to prepare, publicly circulate, file damages is without any merit. Counsel believe and consider a final and adequate environmental that the Supply System should not be held liable impact statement for each such Net Billing on any of the remaining claims but cannot assign Agreement.

probabilities or values to the claims. Legal counsel for the Supply System have A local plumbers and steamfitters union and advised that there is a possibility that the court others have filed actions in Federal District might find non-compliance with NEPA in some Court against the Supply System and several respect and that in such event the court might other companies and individuals. These actions enter an order designed to enforce compliance.

are based upon alleged violations of the Federal However, counsel are of the opinion that even if antitrust laws in connection with a 1976 strike at the court should decide that Bonneville has not Nuclear Project No. 2 by plumbers and steamfit- fully complied with the provisions of NEPA, ters. The relief requested includes, among other under applicable legal principles the Net Billing things, treble damages in an unspecified amount. Agreements willnot be declared null and void The Supply System has filed an answer denying nor willperformance of the obligations thereun-liabilityand the litigation is in the discovery der of the Participants to make payments and stages. Counsel are confident of the Supply Sys- Bonneville to make credits or make payments be tem's position but cannot assign probabilities or enjoined. Accordingly, legal counsel are of the values to the claims. opinion that the lawsuit is without substantial Net Billing Agreements merit insofar as it deals with the Net Billing On'November 14, 1977, the City of Portland, Agreements.

Oregon and five residents of the City commenced Other a lawsuit against Bonneville and the Secretary of In addition, there are other litigation matters the Department of Energy. The Supply System pending against the Supply System that man-and the Participants have been added as defen- agement and counsel believe are either without dants in this lawsuit. The action is brought merit or ifdecided adversely would not have a under the National Environmental Policy Act of material effect on the financial statements of the 1969 (NEPA) and alleges, among other things, projects.

that Bonneville did not prepare, publish, circu- The estimated cost of the Projects may either late and file detailed environmental impact be increased or decrea'sed as a i'esult of the out-statements concerning each of its Net Billing come of the above litigation.

Agreements entered into after NEPA became effective on January 1, 1970. The Supply System

Revenue Bonds Outstanding Revenue Bonds of che various projects as ofJune 30, 1979 consist of che following:

EfFective Serial Amount Interest OfFering Coupon or Term Outstanding Rate Prices Rate Maturities (in $ 000's)

Hanford Project Reveriue Bonds ($ 2,7 10,000 due within one year) .................. , 1963 05-08-63 3.26% (A) 2.90-3. 10% 9-1-79/1986 23,980 98 3.25 9-1-1996 27,585 51,565 Parkruood Lake Hydrorlcrtri r Prjortt

($ 101,250 due within one year)

Revenue Bonds. ................ 1962 03-20-62 3.66 99.425 3.625 3-1-2012 9,278 Revenue Bonds ..............................,.. 1965 11-04-65 3.76 100.5 3. 75 3-1-2012 2,950 12,228 WPPSS Nudrar Proj rtt No. 1 Revenue Bonds .. 1975 09-18-75 7.73 (A) 5.75-7.40 7-1-81/2000 42,000 100 7.70 7-1-2010 58,300 100 7.75 7-1-2017 74,700 175,000 Revenue Bonds . ,...,. 1976A 02-04-76 6.84 (A) 6.00-6.25 7-1-81/1998 37,020 100 6.90 7-1-2010 66,485

. 100 7.00 7-1-2017 76,495

/ 180,000 Revenue Bonds , ... 1976B 08-31-76 6.37 (A) 5.00-5.90 7-1-81/1998 41,825 100 6. 50 7-1-2010 66,94o 99.50 6. 50 7-1-2017 71,235 180,000 Revenue Bonds ... '1978A 03-21-78 5.69 (A) 5 00-5.50 7-1-84/2002 64,270 100- 5.80 7-1-2010 50,920 100 5.875 7-1-2017 64,810 180,000 Revenue Bonds .....,. 1978B 12-05-78 6.61 (A) 5.50-6.00 7-1-84/1998 38,355 100 6.35 7-1-2003 22,305 100 6.6o 7-1-2009 38, 190 99.50 6.8o 7-1-2017 81,150 180,000 WPPSS Nudrar Proj'rtt No. 2 895,000 Revenue Bonds ($ 3,000,000 due July 1, 1979).........,..............,....... 1973 06-26-73 5.66 (A) 5.00-5. 10 7-1-80/2010 19,600 100 5.70 7-1-2012 124,4oo Revenue Bonds ($ 2,500,000 due 144,000 July 1, 1979). 1974 07-23-74 7.21 (A) 6. 50-6.90 7-1-80/1994 23,000 100 7.00 7-1-1999 15,000 100 7.375 7-1-2012 37,000 Revenue Bonds ($ 1,000,000 due 75,000 July 1, 1979),...., ........., 1974A 11-26-74 7.67 (A) 7.20 7-1-80/1994 30,000 100 7.40 7-1-1999 15,000 100 7.75 7-1-2012 78 000 123,000 Revenue Bonds. 1975A 03-06-75 6.71 (A) 6.60 7-1-82/1994 32,000 100 6.6o 7-1-1999 15,000 100 6.875 7-1-2012 78,000 125,000 Revenue Bonds. 1976 06-03-76 6.63 (A) 5.40-6.25 7-1-82/1998 27,840 99 25 6.625 7-1-2006 42,300 100 6.75 7-1-2012 49,860 120,000 Revenue Bonds ....., 1976A 11-18-76 5.87 (A) 5.50-5.875 7-1-82/2002 94, 195 100 6.00 7-1-2007 44,815 99.50 6.00 7-1-2012 60,990 200,000

Effective Serial Amount Date Interest Offering Coupon or Term Outstanding Project Series of Sale Race Prices Rate Maturities (in $ 000's)

WPPSS Nuclear Proj eet No. 2 (Continued)

Revenue Bonds 1978 07-11-78 6.71 (A) 5.50-6.60 7-1-82/2000 68,250 100 6.80 7-1-2006 45,520 100 6.875 7-1-2012 66,230 180,000 Revenue Bonds. 1979 03-13-79 6.49 (A) 5. 50-6.00 7-1-82/1999 62,905 100 6.40 7-1-2004 33,490 100 6.75 7-1-2012 83,605 180,000

$ 1 147 000 WPPSS Nurlear Project No. 3 Revenue Bonds . . 1975 12-03-75 7.87 (A) 5. 40-7. 25 7-1-83/1998 $ 26, 145 100 7.875 7-1-2010 52,695 100 7.875 7-1-2018 71, 160 150,000 Revenue Bonds,. .....,..... 1976 04-13-76 6.48 (A) 5. 50-6.00 7-1-83/1998 19,605 99.625 6.50 7-1-2010 35, 100 100 6.60 7-1-2018 45,295

.100,000 Revenue Bonds. 1977 09-12-77 5.71 (A) 5.00-5.30 7-1-85/2000 59,305 99.50 5.70 7-1-2009 63,535 99.50 5.80 7-1-2018 107, 160 230,000 Revenue Bonds. ... 1978 09-12-78 6.27 (A) 5. 90-6.00 7-1-85/2004 66,385 100 6.375 7-1-2010 42,985 99 6.40 7-1-2018 90,630 200,000 Nuclear Prjoeett Not. 4 and5 6 680 000 Revenue Bonds ($ 25,740,000 due within one year) ...................... 1975 07-24-75 7.04 (A) 6.75-6.90 6-1-80/1981 S. 53,140 Revenue Bonds. 1977A 02-03-77 5 93 (A) 5. 50-5.75 7-1-89/2001 42,105 100 5.90 7-1-2008 40,605 100 6.00 7-1-2015 62,290 145,000 Revenue Bonds....................... 1977B 05-24-77 6. 32 (A) 6. 00-6. 20 7-1-89/2001 33,485 100 6.40 7-1-2012 56,515 90,000 Revenue Bonds 1977C 09-13-77 5.96 (A) 5. 20-5. 70 7-1-89/2001 20,480 100 6.00 7-1-2018 109,520 130,000 Revenue Bonds... 1978A 01-31-78 6.07 (A) 5. 50-5.75 7-1-89/2000 27,700 99.75 6.00 7-1-2010 43,900 100 6.125 7-1-2018 78,400 150,000 Revenue Bonds 1978B 05-23-78 6.86 (A) 6.00-6.60 7-1-89/2003 37,785 100 6.80 7-1-2010 32,960 100 6.90 7-1-2018 79,255 150,000 Revenue Bonds 1978C 10-12-78 6.81 (A) 6.00-6.50 7-1-89/2003 45,225

99. 50 6.75 7-1-2010 42,970 100 7.00 7-1-2018 81,805 170,000 Revenue Bonds 1979A 02-14-79 7. 16 (A) 6. 30-6.90 7-1-89/2003 47,515 100 7. 125 7-1-2010 43,140 100 7.25 7-1-2018 84,345 175,000

$ 1,063, 140 (A) Various prices

Report of Independent Accountants t

Board of Directors Washington Public Power Supply System Richland, Washington We have examined the individual and combined financial statements, as listed in the financial statements section of the table ofcontents, of Washington Public Power Supply System's Hanford Project, Packwood Lake Hydroelectric Project, Nuclear Project No. 1, Nuclear Project No. 2, Nuclear Project No. 3, Nuclear Projects Nos. 4 and 5 and the General Fund for the year ended June 30, 1979.

Our examination was made in accordance with generally accepted auditing standards and, accordingly, included such tests of the accounting records and such other auditing procedures as we considered necessary in the circumstances.

~ In our opinion, the financial statements listed in the aforementioned table ofcontents present fairly the respective individual and combined financial positions of Washington Public Power Supply System's Hanford Project, Packwood Lake Hydroelectric Project, Nuclear Project No. 1, Nuclear Project No. 2, Nuclear Project No. 3, Nuclear Projects Nos. 4 and 5 and the General Fund at June 30, 1979 and the respective individual and combined results of operations and changes in financial position of the operating projects and sources and uses offunds of the construction Projects Nos. 1, 2, 3 and 4 and 5 for the year then ended, in conformity with generally accepted accounting principles applied on a consistent basis.

Seattle, Washington August 31, 1979

Statement of the State Auditor To Whom it May Concern:

The Washington State Auditor's Division of Municipal Corporations conducts a continuous exami-nation ofall of the operations of the Washington Public Power Supply System, including each and every project. Reports are issued covering each fiscal year and are public documents.

On every such examination, state law requires that inquiry shall be made as to the financial condition and resources of the Supply System, whether the Constitution and laws of the state, the resolutions and orders of the Supply System, and the requirements of the Division of Municipal Corporations have been properly complied with; and into the methods and accuracy of the accounts and reports.

Very truly yours, Robert V. Graham, State Auditor Richard L. Husk Chief Examiner Division ofhfunicipal Corporations

Statement of Debt Service Requirements June 30, 1979($ in thousands)

Hanford Parkwood 1P'NP-I Annual Annual Annual Debt Debt Debt Year Principal Interest Requirements Principal Interest Requirements Principal Interest Requirements 1980 $ 2,710 8 1,567 $ 4,277 101 446 547 58,318 58,318 1981 2,810 1,4s3 4,293 140 441 581 3,695 58,318 62,013 1982 2,915 1,393 4,308 145 436 581 3,815 58,114 61,929 1983 2,915 1,303 4,218 155 431 586 4,o45 57,903 61,948 1984 3,010 1,210 4,22o -160 425 585 8,075 57,679 65,754 1985 3,125 1, 114 4,239 170 419 589 8,530 57,244 65,774 1986 3,240 1,014 4,254 175 413 588 9,020 56,782 65,802 1987 3,255 913 4,16s 180 4o6 586 9,535. 56,290 65,825 1988 3,360 806 4,166 190 4oo 590 10,085 55,768 65,853 1989 3,485 693 4,178 195 393 588, 10,670 55,214 65,884 1990 3,455 580 4,035 265 385 650 11,290 54,621 65,911 1991 ',o65 425 5,490 275 375 65o 11,960 53,987 65,947 1992 5,585 246 5,831 290 364 654 12,665 53,310 65,975 1993 5,835 58 5,893 300 354 654 13,425 52,587 66,012 1994 800 4 804 315 343 658 14,235 51,811 66,o46 1995 330 331 661 15,100 50,974 66,o74 1996 34o 319 659 ~ 16,030 50,078 66, 108 1997 360 3o6 666 17,025 49,114. 66,139 1998 380 293 673 18,095 48,082 66, 1-77 1999 4oo 279 679 19,225 46,980 66,2O5 2000 465 263 728 20,490 45,741 66,231 2001 490 246. 736 21,835 44,417 66,252 2002 515 228 743 23,285 42,991 66,276 2003 540 209 749 24,830 41,465 66,295 2004 565 189 754 26,505 39,818 66,323 2005 590 168 758 28,290 38,047 66,337 2006 615 146 761 30,200 36, 155 66,355 2007 64o 123 763 32,235 34,135 66,370 2008 665 99 764 34,415 31,976 66,391 2009 690 75 765 36,74O 29,671 66,411 2010 715 49 764 39,220 27,2o6 66,426 2011 676 24 700 41,875 24,559 66,434 2012 196 5 201 44,73o 21,712 66,442 2013 47,780 18,669 66,449 2014 51,040 15,417 66,457 2015 54,525 11,939 66,464 2016 58,250 8,221 66,471 2017 62,235 4,248 66,4s3 2018 851 565 812 809 864,374 812 228 S9 383 821 611 8895 000 Sl 599 561 S2 494 561

1FNP-2 1P'NP-3 1P'NPP&5 Annual Annual Annual Debt Debt Debt Principal Interest Requirements Principal Interest Requirements Principal Interest Requirements 6,5oo S 73,726 80,226 43,2s4 43,2s4 $ 25,740 68,251 93,991 6,5oo 73,342 79,842 43,284 43,2s4 27,400 66,513 93,913 12,590 72,958 85,548 43,285 43,285 64,623 64,623 13,385 72, 193 85,578 5 1,680 43,285 44,965 64,623 64,623 14,230 71,380 85,610 1,785 43,193 44,978 64,623 64,623 15,125 70,517 85,642 6,175 43,094 49,269 64,623 64,623 16,075 69,601 S5,676 6,530 42,759 49,289 64,623 64,623 17,085 68,628 85,713 6,900 42,4o3 49,303 64,623 64,623 18,110 67,642 85,752 7,300 42,o24 49,324 64,623 64,623 19,195 66,596 85,791 7,725 41,620 49,345 12,315 64,623 76,938 20,355 65,483 85,838 8, 175 41, 191 49,366 13,050 63,905 76,955 21,590 64,292 85,882 8,655 4o,734 49,389 13,830 63, 145 76,975 22,910 63,021 85,931 9, 165 40,247 49,412 14,655 62,34o 76,995 24,33o 61,644 85,974 9,710 39,727 49,437 15,530 61,4s7 77,017 25,850 60, 173 86,023 10,295 39,170 49,465 16,455 60,582 77,037 27,475 58,597 86,072 10,925 38,571 49,496 17,435 59,623 77,058 29,215 56,903 86, 118 11,600 37,929 49,529 18,485 58,601 77,086 31,075 55,090 86, 165 12,315 37,239 49,554 19,600 57,505 77,105 33,065 53,144 86,209 13,090 36,501 49,591 20,795 56,335 77,130 35,190 51,064 86,254 13,910 35,711 49,621 22,065 55,081 77,146 37,470 48,834 86,304 14,815 34,s43 49,658 23,43o 53,734 77,164 39,930 46,404 86,334 15,785 33,912 49,697 24,880 52,297 77,177 42,570 43,793 86,363 16,830 32,908 49,738 26,44o 50,750 77,190 45,385 41,009 s6,394 17,945 31,837 49,782 28, 120 49,079 77,199 48,4o5 38,028 86,433 19,135 30,695 49,830 29,915 47,295 77,210 51,620 34,849 86,469 20,405 29,475 49,880 31,850 45,364 77,214 55,055 31,428 s6,4s3 21,755 28,152 49,907 33,905 43,308 77,213 58,715 27,778 86,493 23,200 26,74o 49,940 36,095 41, 119 77,214 62,64o 23,868 86,508 24,745 25,233 49,978 38,430 38,788 77,218 66,s3o 19,695 86,525 26,390 23,625 50,015 40,915 36,3o6 77,221

.71,300 15,241 86,541 28, 140 21,909 50,049 43,565 33,655 77,220 76,070 10,488 86,558 30,025 20,068 50,093 46,39o 30,831 77,221 81, 160 5,414 s6,574 32,040 18,096 50, 136 49,435 27,781 77,216 34, 190 15,991 50, 181 52,680 24,528 77,208 36,485 13,744 50,229 56, 110 21,088 77, 198 38,940 11,343 50,283 59,765 17,423 77, 188 41,555 8,780 50,335 63,655 13,519 77,174 44 350 6,o44 50,394 67,s6o 9,307 77,167 47 335 3 121 50,456 72 345 4 807 77,152 Sl 147 000 SI 682 823 82 829 823 8680 000 Sl 231,767 Sl 911,767 81,063 140 Sl 891 331 82 954 471

Construction Projects Expenditures Cumulative 1980 Costs Thru 'onstruction Percent

($ in thousands) June 30, 1979 Budget Expended Nuclear Project No. I Construction and Fuel 491,829 $ 1,539,465 31.9 Engineering & Construction Management ............,...........,., 64,i27 108,092 593 Owner's Cost. 26,426 136;959 19 3 Net Interest, Financing & Reserves 46,655 556,884 8.4 Total Funding Requirements .. 629,037 2,341,400 26.9 Less: Interest, Financing & Reserves Funded by BPA ............ 419,400 Total WPPSS Funding Requirements 629,037 $ 1,922,000 32 7 Nuclear Project No. 2 Construction and Fuel. 725,790 $ 1,101,689 65.9 Engineering & Construction Management 124,110 150,148 82.7 Owner's Cost 66,883 149,835 44.6 Net Interest, Financing & Reserves ... 201,162 420,064 47.9 Total Funding Requirements. 1, 117,945 1,821,736 6i.4 Less: Interest, Financing & Reserves Funded by BPA....,....., 169,048 381,736 44. 3 Total WPPSS Funding Requirements .. 948,897 $ 1,440,000 65.9 Nuclear Project No. 3 Construction and Fuel. 311,071 S1,440,310 2i.6 Engineering & Construction Management 57,516 104,999 54.8 Owner's Cost 18,759 156,582 12.0 Net Interest, Financing &Reserves*. 27,716 554,299 5.0 Total Funding Requirements. 415,062 2,256, 190 iS.4 Less: Interest, Financing & Reserves Funded by BPA...,........ 217,200 Private Utilities'unded Ownership*,.....................,. 162,623 660,990 24.6 Total WPPSS Funding Requirements .... s 252 439 s1,378,000 18.3 Nuclear Project No. 4 Construction and Fuel. 314,817 $ 1,491,205 21.1 Engineering & Construction Management. 64,i27 108,092 593 Owner's Cost. 26,426 136,959 193 Net Interest, Financing & Reserves ....,.... 52,685 775,718 6.8 Other Authorized Cost. 3,751 67,962 5.5 Total WPPSS Funding Requirements 461,806 S2,579,936 17.9 I

Nuclear Prjoect No. 5 Construction and Fuel. 214,805 $ 1,566,635 13.7 Engineering & Construction Management. 57,516 105,000 54.8 Owner's Cost. 18,742 156,582 12.0 Net Interest, Financing & Reserves*. 43,7i7 852,307 5.1 Other Authorized Cost. 3,751 72,469 5.2 Total I'unding Requirements. 338,531 2,752,993 12.3 Less: Private Utility's Funded Ownership* ................. 31,208 257,929 12.1 Total WPPSS Funding Requirements . 307,323 s2,49s,oss 12.3 Assumes thac nec financing costs applicable to t he privace ut i lie shares are proporcionacely che same as che Supply System's. ies'wnership

($ in hfillions)

Pro jea No. 1 Pro jea No. 2

$ 629

$ 1,118

~t l,822 Pmjea No. 3 '413 Project $ 2,$ 80 No. 4 $ 462 Pro jea $ 2,733 No. f $ 339 0 300 1,000 h $ 00 2,000 2,$ 00 3,000

+ 4'sshingtonPubllepowerSupplySystem ~

1980 Consuuetion Butlget

~ Piivste Utilities'Ownenhip ~ Cumulstlveeosts through June 30, 1979 20 Bonneville Power hshninlst tet ion