ML19318D180
| ML19318D180 | |
| Person / Time | |
|---|---|
| Site: | Seabrook  |
| Issue date: | 03/03/1980 |
| From: | MASSACHUSETTS MUNICIPAL WHOLESALE ELECTRIC CO. |
| To: | |
| Shared Package | |
| ML19318D157 | List: |
| References | |
| NUDOCS 8007080037 | |
| Download: ML19318D180 (16) | |
Text
{{#Wiki_filter:_ -- - - - _ - - -_--_-_---_- -___ -- - -_---_ - ---- - -_ _ _ - - - - - - - - - _ - - - - - - _ _ - _ - _ - - _ _ MMWEC 1979
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, ;',.e ANNUAL REPORT I
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l Planningforfuture electric supply: economic baseload ! power is essential. In 1979, member managers and commissioners inspected jointly-owned nuclear power plants under construction in New England. On the coverk a temporary geodesic dome _
, covering the Seabrook nuclear containment building cffered winter protection for constructan activity in 1979.
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.1979: Challenge'and accomplishment
Dear members,
. A decade ago MMWEC was established as . Regulatory approval of energy forecast a bulk power supply agency intended to' MMWECs 1978 Annual Supplement to serve Massachusetts municipal electric the Long-Range Forecast was approved in systems. During its ten-yar history. January 1979. The decision was conditioned MMWEC has changed from a struggling upon an expanded staff effort to produce a ,
infant agency to a rapidly advancing power significantly improved data gathering system ! supply agency, and from a non-profit hybrid and methodology for forecasting the load ' electric company to a public corporation. growth of MMWECs 31 varied member
~ MMWECs goals are simple and direct: To systems. During 7979, MMWECs staff provide an adequate power supply for endeavored to develop accurate forecasts of Massachusetts municipal electric systems at - future electric demand for each town. A the lowest possible cost, consistent with decision on the 1979 supplement is sound public policy. anticipated in 1980.
MMWEC has realized success _in meeting Alternate energy resource development
. its goals. It is now well on its way toward . As energy costs increased, hydroelectric )
furnishing its members with adequate bulk power and resource recovery (refuse- ; power supplies and, by the end of 1979, burning) plants became increasingly attractive MMWEC member systems realized savings and possibly cost effective. In September, the totaling $11,800,000. Board of Directors approved a $5 million The Stony Brook Project "rer.ewable resources" fund, a portion of Construction of the S?ony Brook Project which is intended to develop potential hydro wts suspended for the first five months of . sites in the region. MMWEC has received
!!79. On June 1, the Department of Energy proposals from interested developers of determined that the Intermediate unit was resource recovery plants in 1979, and extmpt from certain fuel use restrictions, and ownership interest in wood-burning plants is I construction resumed immediately. At year also being studied. !
end, the project was on schedule and increased membership
. within budget. On October 19,1979, the Merrimac The $150,000,0001979 Series A Bonds, Municipal Light Department formally joined MMWECs first long-term financing for the MMWEC as the 31st member community Stony Brook Intermediate unit, issued in and will continue to receive staff support in August, received a favorable net interest rate 1980 to evaluate power supply requirements
- of 7.0069%. In late 1979, MMWEC issued and power supply alternatives. MMWECs
$35 million in short-term notes to finance membership now accounts for approximately construction of the Stony Brook Peaking unit. 75% of the peak load of all the municipal Baseload power supply progrees . electric systems in Massachusetts.-
Twenty MMWEC member systems and With the cooperation of the membership, ten non-member systems executed Power MMWEC looks forward to meeting future
' Sales Agreements with MMWEC in challenges with continued success. Through September,1979, for participation in pwer the development of an economic and supply from the Seabrook nuclear power dependable power supply program, the project. The recent participant comrritment annual savings in power costs will continue of 138 megawatts represents an added 6% of to increase as the advantages of MMWECs the project, bringing MMWECs total program are realized.
commitment to 11.59% of the project. y ' , MMWEC is currently involved in final M. I negotiations with the New Brunswick Power Francis H. King, President Commissic,a for 100 MW of contract power
- from its Point lepreau nuclear power plant.
'Thr term of the contract will be six to nine N f_ ,
ye:rs beginning in 1981. James E. Baker, Chairman
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Trernendous unanpower and rnaterials are needed to build projects the scale of the 1,150 AfW Afillstone 3 nuclear power plant. The project will provide rnernber 1 participants with 35 A1W of baseload power. 1 l l l 2
l i The power of cooperation ( Economic electricity is essential to throughout the booming '60's. Nuclear ! municipal development. Since its inception, power, once viewed as the solution to ! MMWEC's primary goa has been to develop economical, clean and safe power supply, i an economic power supply mix for each has lost its original public favor. A lack of individual member system. In order to cc,ordinated government decisions has realire that goal, several objectives were resulted in nuclear waste disposal and j originally set: to peticipate fully in the New nuclear plant siting problems, while federal England Power Pool (NEPOOL); to minimize and state red tape continue to increase the power costs through long-term contracts and cost and delay the construction of nuclear 1 joint ownership interests in regionally power plants. The cost of building nuclear planned generating units; and to arrange the power plants has increased seven-fold while orderly replacement of expensive wholesale planning and construction time has doubled power purchases with electric power in the past twelve years. Financing nuclear resources financed by MMWEC. These power plants has become more difficult, and objectives have successfully been met delays in on-line dates add to the difficulty through the cooperation and dedication of of planning optimum power supply mixes i the membership and MMWEC staff. for MMMC members. Individually, Massachusetts municipals are The federal government has urged the limited in what they can accomplish. electric utility industry to shift to coal as a Collectively, they have proven the effective- prime fuel source. In the industrial northeast, ness of joint action and cooperation. the conversion to coal will require consider-The 1979 climate able expense for pollution equipment and
! Uncertain energy resources, rising energy transportation of fuel Efficient oil-fired power I
costs, public reaction to higher electric bills Pl ants will contribute to electric energy and new emphasis on conservation and load supplies in the northeast for many years. l management have significantly changed the The purpose of Stony Brook i focus of the electric power industry. located in Ludlow, Massachusetts on a Dramatic shifts in national energy policy 470 acre former military weapons storage in the past two decades highlight the site, the Stony Brook power plant is the challenges to power supply planning cornerstone of the MMWEC power MMWEC now faces. The use of" cheap and supply program. inexhaustible" oil and natural gas was urged The oil-fired intermediate and peaking
.- - - - -- ' - .- g -- units are now under construction. The iraer-mediate unit will produce 30-40% more
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;v ', ; cycle unit, the power plant has been D . ' designed to utilize natural gas or synthetic
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.( Stony Brook is intended t? fulfill a specific
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Brook will produce,341,000 kilowatts is
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. i , termed " intermediate" power - power normally used on weekdays when demand
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. (- .< high demand. Stony Brook will replace p k 'p . wholesale power which has been traditionally
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. . - . _ . g an investor-owned utility.
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l i g..g f 1 - q~ ~. , a-;p,- At the Stony Brook Project, foundation construction began in early \ June,1979. Steel circulating water pipes were encased in rebar during the suminer. Approxirnately 38% of the project's 18,000 cubic yards of concrete were poured by year end. l l I I 1 1 1 l I ! 4 l l l l 1 i
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, _e 1- py Stony Brook: dramatic progress On December 21,1978, the MMWEC
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- p .; Energy. On June ?,1979, the DOE f " ' * . , . . ." announced its decision to classify Stony Brook as an " existing" power plant. The
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favorable decision was the welcome culmina-tion of seven long months of intensive staff
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ment the crucial role Stony Brook plays in MMWEC power supply development. j '< ' '
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After the five month construction delay,
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construction activity resumed at a dramatic pace. 'lhe current status of the Stony Brook I
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. Project is a source of pride to MMWEC and 3 ^ .
a credit to the construction workforce. The overall construction progress of the { -
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, Intermediate and Peaking project was esti-
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,* mated at 14% at year end. Despite the construction delay, Stony Brook will meet its
> projected commercial on-line dates. Out of
,. ; r ' 89 contracts necessa:y to complete the e
project, thirteen remain to be awarded
',' J'-.. in 1980.
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%g i jb L *. .%1 Construction at Stony Brook was dramatic as the structural steel skeleton of the power plant took shape.
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- By mid-year, all of the major licenses for? facilities in Ludlow, Massachusetts. liW. Beck i he t construction of Stony Brook were : and Associates is estimated to be 65%
received. The Massachusetts Department .off - complete on engineering for the Environmental Quality Engineering construc ; transmission line.
. tion permit was received 'on January 31,1979. Construction activity vigorous .
' On April 18, the U S. Enviwnmental ~
~ There were approximately 120 construe.
Protection Agency determined that the units tion workers on site in 1979. Progress was i i met the Federal Clean Air Act requirements rapid and highly visible.. (nd issued a Prevention of Significant Following the site preparation work of (Deterioration permit which acknowledged 1978, construction focused on the foundation Lthat the air quality in the vicinity of the , of the powerblock area, the water storage
- power plant will meet federal standards. On tanks, fuel oil tanks and fuel o:1 day tank.
. July 25, the Massachuset's Department of The foundation for the powerblock area was
' Public Utilities granted authority to MMWEC virtually complete and 38% of the project's to construct and use the 345 kV transmission 18,000 cubic yards of concrete had been line planned to interconnect the project with poured by the end of the year, the New England transmission network. - The structural ste s that provides the ! l Further licenses and permits will be applied skeleton for the power plant was 35% for as construction activity progresses. . complete on December 31,1979. Complete
- Project engineering in final stages steel erection in the area of the major
- Bechtel Power Corporation is the architect- generating equipment was finished in early engineer for the. Stony Brook uni.ts. At year December. The Intermediate unit gas !
- end, Bechtel estimated power plant engi- ~ turbines, generators and related accessories
. neering to be 87% complete. All major- were placed on their respective foundations.
, purchase orders had been placed and - The steam turbine pedestal, peaking unit gas 4
. mechanical and civil drawings were 95% turbine foundations and major tank j complete by December 31;1979.- foundations were also complete in 1979. j RW. Beck and Associates is architect- A railroad line planned to bring major ;
1 engineer for the switchyard and transmission generating equipment on site and serve as line at Stony Brook, The 115/345 kV - l
. . backup for fu.'l delivery was completed in
; switchyard will be located knmediately east , late November. Repeated (quipment deliver-y~ 'of the plant'on approxirr.ately eight acres. ' es i were made by rail, including three gas
"' + RW. Beck and Associates is estimated to = turbines, associated generator
- and the three be 65% complete on engineering for ; heat recovery steam generators.
' 1 the switchyard. ( . ..
-The planned transmissk. . line route will y connect the Stony Brook switchyard to the '
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ga- , Cornplete steel erection in the area of inajor generating equipinent allowed for the placernent of gas turbines and generators. I l 8 1 l l
I ( l l l 1 l Fuel supply under negotiation Long-term sources of No. 2 fuel oil were l investigated extensively in 1979. Invitations I to bid were mailed to potential oil suppliers in September. Responses from several finns l have been positive and contract negotiations ( are proceeding. MMWEC's primary objective is to have more than one oil supplier with a secure source of crude oil and refinery I capability. A principal concern is that any source of fuei be independent from existing supply in New England. Supplyi ng MMWEC's oil requirements will l depend r pon market conditions and govern-ment regalations; because of the uncertainty of oil supply, MMWEC is strengthening its commitment to study alternate fu I sources,
, , including surplus natural gs and synthetic e .I
- fuels. A preliminary study of alternate fuels was completed in 1979.
MMWEC is negotiating for the transport of fuel oil through two common carrier l pipelines. The location of the Stony Brook ! Project allows inexpensive celivery since ! . . . both pipelines are in the plant vicinity. One pipeline originates in the post of New Hasen, I Connecticut and another pipeline extends from the port of East Providence, Rhode Island. Dedicated storage capacity and terminalling services are anticipated in New Haven, with alternate capacity in East Providence. The offsite storage capacity will (g be in addition to the 400,000 barrels of
; storage at Stony Brook.
,+ y M Si l'P "" - "fis Overleaf. In early Decernber, the three snarntnoth heat recovery clearn generators which will utilize exhaust heat, producing 30-40% rnore power, were carefully assernbled l within the structural steel skeleton.
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a a, s% f A Financing the Stony Brook Project cost of the 1979 Series A bond issue was
. Bechtel Power Corporation estimates the 7.0069%. Viewed as favorable when first
! project to cost $155.7 million. The Intermedi- iasued, the Series A interest rate appeared ate unit is expected to cost $109,008,000 and much more favorable when the market later the Peaking unit is expected to cost deteriorated substantially. A portion of the
$46,692,000. RW. Beck and Associates proceeds was used to pay $64 million of estimates the transmission line and switch- notes issued for the Intermediate project.
yard to cost $8.5 millica. The total estimated On December 4, MMWEC issued $35 financing required for the project is $2513 million in short-term notes to finance i m41 ion including interest during construction of the Peaking project. The new construction, allowances for contingencies, loan was issued at 60% of the prime rate reserve fund requirements, financing costs and matures January 2,1981. Five million and administrative expenses. Contracts or dollars in notes were repaid from the purchase orders for equipmen'. construction proceeds. Iong-term financing of the Peaking and site work through 1979 totaled project is anticipated during 1980. ! $130,540,000 or 80% of the total cost of the units. In August 1979, MMWFC closed a bond I issue of $150 million to finance a substantial portion of the construction of the Stony Brook Intermediate unit. The net interest 11 l l l
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delay, Stony Brook was on schedule l l and within budget. The oil-fired + L-- - L- - _ , cornbined-cycle power plant will provide rnernbers and the region with a r-_. secure source of electric energy to rneet ' Iheir needs efficiently and econornically ; t_-____. ' I during a tirne when unany units have ' faced substantial delays. l A i 7 l 1 ,# I
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Electric power supply embargo, the average annual demand growth MMWEC offers its members centralized ra'e has been 3.7%. Events following the and coordinated planning, and provides oil embargo have radically affected forecasting professional services at low cost with atten. . methods, however. tion to diverse local requirements. In 1979, The forecast proposed in 1979 is based on MMWEC planning engineers helped a significantly improved data gathering
, members to improve agreements with their . system and methodology. With the projected cxisting suppliers and make short-term effects of greater energy conservation purchases where appropriate. measures on electric demand, the forecast Savings to membert averages 2.2% growth after W5. Approval E Through careful monitoring of each . f MMWEC's forecast is Ltticipated in 1980.
. member system's seasonal power require . Baseload power acquisitions ments, and analysis of capacity offerings MMWEC power planning engineers study throughout NFPOOI, MMWEC was able to the long-term requirements of the members
. recommend several short-term unit power and the resources in the region available to contracts which produced substantial power . meet those requirements. Joint action is cost savings to the members. . the most effective and mutually beneficial During 1979, MMWEC initiated short-term way to plan for, acquire and finance
' contracts for capacity from Vermont Yankee, generating capacity.
Cenal 2, Middletown 4 and Montville 6, as On September 27,1979, twenty MMWEC well as surplus capacity within the MMWEC mer.sbers signed Power Sales Agreements
- systems. These contracts, combined with for additional output from Public Service of
- existing long-term contracts and service New Hampshire's Seabrook nuclear power contracts with each system's major supplier, Project. This purchase, known as Project 6, produced approximately $1.500,000 in power includes 28 MW for ten non-member partici-cost savings in 1979. Pants and 110 MW for member pasticipants.
. The Vermont Yankee purchase of 28 With the addition of Project 6, MMWEC's megawatts for the summer periods of 1979,. wnership share in Seabrook will be 11.6%
1980 and 1981 resulted in nearly $100,000 in r 267 MW. The additional Seabrook interest energy savings in 1979. mcluded an agreement between MMWEC Capacity exchanges between members and PSNH which will permit members, at effectively balanced the surpluses and their option, to sell capacity which is surplus deficiencies in power requirements within t their needs to PSNH during a specified MMWEC. An average of 23 megawatts of Period of time. This agreement will increase czpacity was exchanged in 1979, resulting in member flexibility in planning future power
- rpproximately $340,000 in savings supply by allowing members to tailor their Total savings to MMWEC members since mix of resources to their best advantage.
entering into the Power Supply Program are The Massachusetts Department of Public approximately $11,800,000. Utilities hearings will begin in mid-March n C's petition to finance Forecasting future electric demand Project 6. When this approval is obtamed, j
. ' Accurate forecasting of members' energy requirements is fundamental to MMWEC's MMWEC will finance and acquire ownerslu,p ,
f the Project. i power supply development. The task of projecting the future electric demand of Interim Power supply .j
~'
diverse member systems located across the MMWEC has been searching for interim state is complex. In 1979, special emphasis Power supplies to offset the delayed
;
was placed on forecasting the effects of schedules of New England baseload units. potential conservation and load manage- The New Brunswick Electric Power ment programs, . . Commissien has entered into final negotia-Historically, MMWEC ' members' growth tions that are expected to lead to a contract has been somewhat higher than other. m early '980 for the purchase of 100 MW of regional utilities. Since 1974 and the Arab oil Power to be supplied between 1981 and 15
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The power supply program - ' '
% of Total Proposed Operation Date/
. Ownership Interest ' Unit Capacity - Status Fossil-fueled resources W.F. Wyman Unit 4 l 3.67 22.0 MW on-line (oil)
Stony Brook Peaking Units - s ~ 100.00 ' 170.0 MW 1982 (cil) Stony Brook Intermediate Units - 90.76 309.1 MW 1981 (ont) Sears Island Unit 1 '13.90 78.9 MW 1987
- (coal)
'. TOTAL 580.0 MW l Nuclear resources
' Se brook Units 1 & 2 11.59' 266.6 MW' 1983/85 Mill 3 tone Unit 3 : 4.80 . 55.0 MW 11986 Pilgrim Unit 2 ~ 13.24 152.3 MW 1985
. Montague Units 1 Ac 2 ' 1.45 33.3 MW indefinite TOTAL 507.2 MW Total resources 1087.2 MW
*im% lee 28 MW contrented for by ten mne-member partwipants 138 MW or 6.0091% of Srebsma is penstmg regulatory appreval and financing.
~
1989 from the Point Lepreau Unit I nuclear In 1979, MMWEC performed a siting power plant.~ study to identify potential sites for hydro
' Additional analyses are also underway at - development. Thirty-one sites were identi-the New England Power Pool (NEPOOL) for fled and proposals for feasibility study work obtammg additional Canadian power, . were solicited. Five categories were including surplus hydro from Quebec.1 described in the invitation to bid announced MMWEC would have the opportunity to - in November.The categories range from participate in any NEPOOL purchase. .. . small hydro projects of one-half to five MW Activities also proceeded on MMWEC's . each to a major joirit ownership development application for an allocation of the Power . of 30 MW.
Authority of the State of New York's Niagara MMWEC has also been negotiating for up hydro power project. This baseload hydro . to 15 MW of the Imell hydro project power would be purchased under a long- planned for development on the t:rm contract. Merrimac River. Tras i wood and wind were studied as ' Alternative energy sources . fuel sources in 1979. Several refuse buming As fuel costs e.calated in 1979, the powe plant proposals were analyzed and economic viability of alternate fuel sources consultants with expertise in state-of-the-art
. increased. Significant progress was made in - technology were retained to provide -
the analyses of hydro, resource recovery and technical guidance. Action is expected in wood-fired power resources.1 1980 on one or more of the trash proposals in July of 1979, the Board of Directors ' . currently under analysis.
~ - (nnounced its commitment to spend up to : . The possibility of joint ownership or a
- $50 million for the development of hydro-- . long-term purchase from a 50 MW wood-
~e lectric power. Subsequently, MMWEC burning power plant proposed in Burlington,
- authorized funding for a $5 million renew- Vern ont is under investigation.
tble, energy resources development program ~
. MMWEC also began planning wind data as part o' f Project 6.
~
' collection studies for members in 1979.
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. . lIn order to finance construction or owner. Department, Communications Department
' Jehip interests in joint electric generating - . ; and Staff legal Counsel were also ' organized MMWEC issues electric revenue > , to improve functional accomplishments, s The authority to issue revenue y By the end of 1980,114 employees, '
,- bonds is granted by Chapter 775 of the- . including nine positions for plant operators, Massachusetts Acts of 1975. A _ total of $595.5 ^ are; expected to be on the staff. The Board of '
~
' million in outstanding revenue bonds and ' L Directors authorized MMWEC to build a , ;
' i notes have been issued to provide capital for; new, energy efficier:t and economical office .
- the purchase of generating resources. Ths. building to accommodate the expanded staff.
' estimated Ananced cost of 1,060 MW of ? The build!ng is scheduled for completion in
.; generating capacity in the power supply ' late,1980. . .. ,
, ' system is in excess of $1.5 billion ' The 1980 goals , -
. After take-or-psy power sales agreements - The following represent key goals whi h
._have been signed by interested participants, we expect to achieve _ during the coming } tar: -
1 the Massachusetts Department of Public ; 1. Receive regulatory approvals and finance Utilities must approve financings. To date, Project 6, the Stony Brook Peaking .
' $1,085 billion in revenue bonds have been p.oject and other possible power 1 approved by the DPU.; . _ . . .
. projects. :
Because of the successful electric depart-2 ment operations and excellent credit of the 2.& quire power resources as needed to 1 members, MMWEC has one of the best joint meet member needs in the most economic
, . nunner possible.
-: action nation:."A+* municipal by Standard system&bond Poorsratings and "A"in the j : 3.Make definitive progress in hydro, resource t by Moody's. recovery, and other alternatives,
. it is anticipe[ed that the 1980' financing - - where economic.
program will include funds to complete the 4. Assist members in establishing an active
. financing of the Stony Brook Project and conservation program. '
the initial fmancing for Proj,ect 6. In addition, 5. Contract for secure fuel sources for the l funds may be obtained for other possible Steny Brook Project. nuclear ownership interests'ano alternative 6. Acquire the necessary permits for project
,c,3y;,;,,,
- 4 energy resource development programs such as hydro, resource recovery and wood- 7.Begin a siting study for a coal plant r
. burning power plants. - prepare an overall siting program.
' 8. Complete the new administ ative buh > .
. Adadnistrative accomplishaients
' I would hke to' express my appreciation to iln order to achieve the substantial . the members, the Board of Directors and the
.;. accomplishments of 1979.:consid2rable staff employees for their support during this past
; expertise was required. Since December 31, .
t 1978, the MMWEC staff more than doubled ~ year. I look forward to continued challenges !~ and accomplishments in 1980. The goals set
' : from thirty-five employees to eighty.by the . for the coming year will require considerable c end of 1979. The staff additim J are primarily . effort; I am confident that the challenges
; professional, including engineering, will be met.
accounting and management personnet
. -The increased staff and expanded respon L '
d.
, isibilities of MMWEC called for a rearrange' Phillip Otness, Cencrat Manager i ment Lf functions to improve efficiency and j
-management effectlyeness.1. Ice, three key ;
.?' , division manager positions were crated:' y t Finance and Treasury; Pov er Manageraent, c LC( 9 _-[-- f ' 4 Y e m - -.
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cu-) MarbWeif . g i. M Mweim T empkton W Boylston Boylgon mm A bumham The diversity of the MMWEC rnernbership is apparent in a cornparison of 1979 peak dernand. 20
4-i The MMWEC membership The Massachusetts Municipal Wholesale - ~ electric utilities in the nation. Electric Company is a political subdivision of Any Massachusetts inunicipal electric depart-the Coremonwealth of Massachusetts ment may become a member of MMWEC
- Inaugurated May 27,1976 as a public following authorization by a town meetin, nr: .i
- corporation. .
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city governing body. . . l The MMWEC member municipals were At the close of 1979, the thirty-one member j established between 1889 and 1915. They are cit ies and towns provided electric power to ' unong the oldest, most experienced public ' ' well over half a million people. ( 1) Ashburnham Munidpal Light Plant (17) Merrimac Municipal Light Department
. Robert Gould, Manager Theodore Van Nahl Manager -
( 2) Boylston Municipal Light Department (18) Middleborough Gas er Electric Department Edward Kimball, Manager Clifford Engstrom, Manager ( 3) Braintree Electric Light Department
~
(19) Middleton Municipal Light Department Donald Newton, Manager Mark Kelly, Manager :l ( 4) Chicopee Municipal Lighting Plant (20) North Attleborough Electric Department flerve Plasse, Manager flarold Payne, Manager ( 5) Danvers Electric Department ; (21) Paxton Municipal Light Department John Finocchio, Superintendent. Harold Smith, Manager ( 6) Georgetown Municipal Light Department ' (22) Peabody Municipal Light Plant James llazen, Manager Edward McCarthy, Manager I ( 7) Groton Electric Light Department (23) Princeton Electric Light Department Roger Beeltje, Manger -. Richard Wheeler, Manager ( 8) Hingham Munidpal Light Plant (24) Reading Municipal Light Department Clyde Curtis, Manager Norbert Rhinerson, Manager
. ( 9) Holden Municipal Light Department (25) Shrewsbury Electric Light Department Neil Murray, Manager - James Baker, Manager 1 (10) Holyoke Gas & Electric Department (26) South Hadicy Electric Light Department George Leary, Manager - Wardman Brooksbank, Manager
' (11) lfudson Light & Power Department (27) Sterling Municipal Electric Light Department florst lluehmer, Manager Frederick Gurney, Manager (12) Hull Munidpal Lighting Plant (28) Templeton Munidpal Lighting Plant
' Everett Lutzy, Manager - Gerald Skelton, Manager
- (13) Ipswich Municipal Light Department (29) Wakefield Municipal Light Department Robert O'Meara, Manager William Wallace, Manager
' (14) Littleton Electric Light & Water Department (30) West Boylston Municipal Lighting Plant Curtis lanciani, Manager Charles Coughlin, Manager (15) Mansfield Municipal Light Department (31) Westfield Gas & Electric Light Department James Hall Director Don Duperrault, Manager
, (16) Marblehead Municipal Light Department -
Richard Bailey, Manager 21 l L o
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., Manager, Marblehead James E. Baker
./ Manager, Shrewsbury 4' 7-
'. 3 James F. Hall Director, Mansfield g
1 Horst Huehmer s, - . Manager,18udson
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'; Holyoke
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- Neil E. Murray
.. . Manager, Holden
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. Manager, North Attleborough
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- ~ ; / - :: Officers
' James E. Baker
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; Chairman of the Board 8 Francis H. King
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<'- President 4; 3
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. George E. Leary l 4 ,' - *
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;. Treasurer I i- f jt '
.:4 "r' Maurice J. Ferriter
' - - 1 4 \a ..- * . General Counsel / Assistant Secretary
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, ?' .4% ' , ' ;,. Walter Gaebler II
- . .. .. ., Assistant Treasurer i
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- Appointed by the Garnor of the Commonwealth
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.I 1 i The Treasurer's statement l MMWEC continued the financing r.,f the j projects in its Power Supply Program during i 1979 through issuance of bonds and notes. On January 1,1979 MMWEC had notes outstanding, primarily issued to finance the i Stony Brook Projects amc,cnting to approxi-mately $70 millior On August 16,1979, 3 ) MMWEC vold $150,000,0001979 Series A h i Bonds for the Stony Brook hitermediate , Project. Primarily tnrough the application of a portion of the bond proceeds, notes outstanding were reduced to $5,000,000 issued for the Stony Brook Peaking Project , Notes outstanding at December 31,1979 amounted to $35,000,000, all of which were ! issued for the Peaking Project. u .rv L' ) l The 1979 Series A Bonds were MMWECs .? ' p".' .'..- ~- . $ . fifth bond issue. Total revenue bonds issued ~g, . * ,7 . and outstanding at December 31,1979 , amounted to $560,870,000. MMWECs bonds : 3 . - " ', are rated "A" by Moody's and "A+" by . 1 ,
'I L Standard & Poor's. ' ~
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As a result of MMWECs conservative
' - i..
financing practices with respect to permanent * . .. financing for projects under construction, in . . , most cases estimated construction cash flow -
. ;
requirements and the interest requirements . . . . on long-term debt issued for such projects ~. have been funded through 1981 or longer. , J - i. This policy provides flexibility with respect : : n - .. to future financings which is advantageous, particularly in light of money market
)
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- ,' g, conditions in the latter part of 1979 and continuing into 1980. Band' 355=ed i i
The Board of Directors continued the ,,,,, 7l','l',' ,,,,o,, y,,,,,,,,,, appointment of Arthur Andersen & Co.as <000, Caes a. independent certified public accountants for y;* *"",' ^ ',"j',j [2 7. , 7 2,34 the corporation. The Auditor's opinion and ion sme. s n500 in.7.n e i27 MMWECs financial statements for the years ended December 31,1979 and 1978 are []Sma^ ,
,y' gy ;8:',
included as a separate section of this Annual Report. Project Financing Status
= Bonds fatimated Interest 4
w[/ Proint lemmed r0DO# Cemeeredien Caeh How Requirements Outstanding
"",['"
George leary, Treasurer m,, y,, , Nalear Mas 2
,,,co, 10.0h0 ft)
[ 1-1-82 Nwlear Proicd 3 52.690 7141 1-1 82 Nialear Proved 4 118.500 7143 7 1-83 Nurirar Pnited 5 M500 7-143 7-143 ! Wyman Pecqwt 9.420 (21 (2) I l sear. Island 9,900 4-144 7-142 I sec sy prook tret. 1'0 000 10181 1-1-82 5%ee,8*0 l
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(1) Project is in early developenent stage and presently inactive. (2) le commerdal operation. 24 I 1
3 8 i MMWEC 1979 I i 1 l l l l l 1 I I i , l l l 1 l l J
;
i l I 1 l l l FINANCIAL STATEMENTS 1
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,. 1 I - Table of Csntents' Consultants and I Financial Advisors _2
' Auditor's Report 3
. Balance Sheets' 4 Statements of Operations - 5 i
-1 Statements of Changes -i in Financial Position 6 ;j 1
Statements of Changes.. l
- in Special Funds 7-l J
Statements of Long-Term l Debt and Notes Payable - 9 Notes To Financial I
' Statements - 10 a
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, Consultants'and . . .
' ' LFinancial Advisors
- Bond Fund Trustee
{ Continental Illinois National Bank' land ;
; Trust Company of Chicago, Illinois -
' P;ying Agents' -
' Continental filinois National Bank'and
. Trust Company of Chicago, Illinois
~ 1976 Senes A Bonds -
' 1977 Series A Bonds . <
1977 Series B Bonds - - 1978 Series A Bonds 1 c1979 Series A Bonds 1 Citibank,'N.A., New York
,1976 Series A Bonds l1977 Series A Bonds ~
- 1977 Series B Bonds
- 1978 Series A Bonds .
1979 Series A Bonds '
- Ne'w England Merchants National Bank,
^ Boston, Massachusetts .
1976 Series A Donds 1977 Series A Bonds' 21977 Series B Bonds 1 Shawmut Bank of Boston, N.A., Boston, Massachusetts' 1978 Series A' Bonds > 1979 Scries A' Bonds' i.
- Ccnstruction Fund Trustees 1
. Continental filinois National Bank '
. and Trust Company of Chicago, Illinois LNuclear Mix No.1
. Nuclear Mix No. 2
. Nuclear Project No. 4 :
Skxwmut Ban _k of Boston, N.A., s Boston, Massachusetts 1 Nuclear Project No. 3:
' ThirdNationalBank ofHampden County,
. Springfield, Massachusetts -
Wyman hoject ' 1 Nuclear Project No. 5 :
' Sears Island Project 1 - -
1 Stony Brook Intermediate Project! 0$'Inancial Advisor = . .
- Lazard Freres & Co., New York':
* , Bond Counsel .
L Wood and Dawson, New York
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...g c' ~ K ' Auditor's' report u % To the Board of Directors of.
c 3 MASSACHUSETTS MUNICIPAL t WHOLESALE ELECTRIC COMPANY: <
, t 1 We have examined the balance she-ts and
' % 7 statements'of long-term debt and notes
- ( payable of MASSACliUSETTS MUNICIPAL-.
- WIIOLESALE ELECTRIC COMPANY (a .
- Massachusetts public corporation) as of ;
. December 31,1979 and 1978, and the related statements of operations, changes in financial' position and changes in special funds for thef
. years then ended. Our examinations were -
r made in accordance with generally accepted auditing standards and, accordingly, included f.' .. such tests of the accounting records and 7
. such 'other auditing procedures as we :
- considered necessary in the circumstances.
In our opinion, the financial statements
. referred to above present fairly the fmancial -
position of Massachusetts Municipal.' Wholesale Electric Company as of December - 31,1979 2nd 1978, and its results of Joperations and changes in its financial, position for the years then ended, in 1 conformity with generally accepted accounting principles applied on a consistent basis. - f$
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' ARTHUR ANDERSEN & CO.
. Boston, Massachusetts }
' March 3.1980
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r 't , fBalance' Sheets ~; s December 31J 1979 and 1978 ' 1979 1978
. (DvHars in Thousands) . 8 Propnts
^
Ik. -. Under ' Wyman .
- p. Total
' ASSETS- ' service : Construction Protect Total
- Electric Plant :
In Service ' . _ s $ - $'. - $ 7,045 $ 7,045 $ 6,462 1sse Accumulated Depreciation (%te3) '-. - (227) (227) (16)
- - 6,818 6,818 6.446
, Under Construction (%tes 2 and 7) .- '
{ 130.634 ' 130,634 70,869 Jomtly4wned - 62,9:1 26,667
- MMWEC Projecu 1 - 62,941 -
- 193,575 - 193,575- 97,536
- 193,575 6,818 200,393 103,982
. Total Electric Plant :
1,25s . 1,727 1,589 Other Property and Equipment 469 -
;14ss Accumulated Depreciation (%fe 3) (156) (60) -
(216) - (131) 313 1,198 - 1,511 1,458
. Total Property, Plant and Equipment 313 194,773 6,818 201,904 , 105.440
- 374,502 2,033 376,535 351,666 Special Funds (Sre separate statement > '
Current Assets - ~
' Cash. 351 - - 351 122 Accounts Receivable : 440 228 203 871 101 Unbilled Receivables (%te 2) . 208 - - 208 15
, inventories principally fuel oil .- - 368 368 186 Advances to or (from) Projects 248 (244) (4) - -
16
~ Prepaid Expenses __ 31 183 - 214 1,278 167 567 2,012 440
~ Deferred Charges . .. .
Unamortised Debt Discount and Expenses (%te 4) - 16,698 196 16,894 9,739
' Costs Recoverable in the Future Under Terms of *he ~
. Power :iales Agreements (%#es 2 and 6) . - 2,703 490 3,193 64
!r '
1,636- 177 Other - 1,639 - 21,037 , 686 21,723 9,980
$ 1,591 $590.479 $ 10,104 $602,174 $467,526 S LIABILITIES .
Isng-Term Debt (Sre separate stafrment) ~$ - $551,450 $ 9,420 $560,870 $410,870 131 - - 131 128 _ Advances from Members (Note 1) Cdtrent Liabilities -
' Working Capital Advences . . 750 (723) (27) -
- 35,000 - 35,000 54,250 Notes Payable (See separate statement) .
- Accounts Payable - 543 3,859 638 5,040- 639 167 240 20 427 1,571
' Accrued Expenses Contractors' Retention - 4: - 653 - 653 65 1,460 39,029 631 41,120 56,525 1 Deferred Revenues ' - .
53 53 3. Commitments and Contingencies (Note 7)
- S. 1,591 - 5590,479 $ .10,104 $602,174 $467,526
.}t QCCONtynNying N0tts art AN integral part Of tlstSt firsancial StettMtNts.
4 .
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IStatements ef OperationE
- ' For the years ended December 31,1979'and 1978.
-{
L: g ; (Dollars in Thousands) : " :1979 1978'- ~ d0/ ' _.4 - .
~
Projects
, . Under 'Wyman .
'% Service - Construction Project Total Total -
, ~c Revenues:
} Electric Sales For Resale (MWe 2) - , ,$387 $ - $1,007 - 5 1,394 $ . ' 88 ;
~
. E ServEe Revenues ,- , 594 - - 594 455 ;
- 1 Interest Income - 27,362 221 27,583 _22,996 ' i
~
? Total Revenues and Interest income 5981 $27.362 ' $1,228 529,571 $23,539
' > . -'; .: Operating and Service Expenses:
.' Fuel Used in Electric Generation : 1$ - $ -
5 385 5 -385 5 72
- Purchaw4. Power (Mve 2) 387 J. - 387 -
Other Operations and Maintenance - l Payron and Related i 296 - 30 326 197
. Other - #
271 - 384 655 253
- Depreciation (MW 3) t 25 2 211 236 37
- Taxes Other Than income -- 2 -
78 so 6 981 - 1,088 - 2,069 565-
. I'nterest Expense:
J Intered Charges (_ .
- 32,891 - 575 33,466 25.948
~ Interest Charged to Projects thring ..
f Construction (MW 2) - (5,529) - (5,529) (2,910)
- 27,362 575 27,937 23,038
'I4ss on Cancelled Units (M* 6) ; - 2,703 -
2.703 - Total Expenses - _ 981 30,065 1,663 32,709 23,e03 Less . Costs Recoverable in the Future . Under Terms of the Power Sales Agreements - - (2.703) (435) (3, tis) (64). J (Notes 2 and 6) $981 527,362 $1,228 $29,571 523,539
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notes are an integral part of. these financial statements.
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- /S6tements of Changes in Financial Position
; For the years ended December 31,1979 and 1978
'(Dollars in Thousands)' 1979 . 1978 Projects .
Under Wyman Service Construction Project Total Total i
' SOURCES OF FUNDS:
' : Operations and Services- - . .
. - Revenues and incomd $ 981 $ - $ 1,223 $ 2,209 $- 549
- Expenses .
(981) -- - (1,663) - (2,644) _ (613) - . c Charges Not Involving Funds: - t Depreciaten and Amortistion (Notes 3 and 4) . 25 - 216' 241 37
; increase in Deferred Revenue - /. - ' 50 50 ,3 Interest Expense Pretiously Funded ' -' - 285 285 47 From Operations and Service f. 25 ^ - '116 141 23 Financing and investments .
Bond Proceeds - 150,000 - 150,000 75,000 Interest Irmme - 27,362 - 27,362 22,990
. Interest Expense. 7
- (32,891) - (32,891) (25,900)
Charges Not involving Funds: Depreciation and Amortincia .. .
- 444 - 444 382 Interest charged to Projects During Construction -. - 5,529 ' - 5,529 2,910 loss on CanceDed Units (Note 61 - 2,703 - 2,703 -
' From Financing and Investments - 153,147 - - 153,147 75,382
- Total Sources of Funds ~ $ 25 $153.147 $ 116- $153,288 $ 75,405 USE OF FUNDS:
Additions to Electric Plant $ - $ 98,743 $ 570 $ 99,313 $ 54,654
- 1. Additions to Other Property and Equipment 4 134 - 138 73
- Additions to Debt Discount and Expenses (Note 4) - 7,544 - 7,544 2,281 Increase m Coats Recoverible in the Future Lnder Terms of the Power Sales Agreements (Notes 2 and 6) - 2,703 435 3,138 64 Increase in Other Deferred Charges - 1,459 - 1,459 148 Other (3) - '
(147) (150) (20)
$ 1 $110,583 $ 858 ' $111,442 $ 57,200
. CHANGE IN WORKING CAPITAL, INCLUDING NOTES PAYABLE AND
" SPECIAL FUNDS - $ 24 $ 42.564 $ (742) s 41,s46 $18,205 CHANGE IN WORKING CAPITAL CONSISTS OF:
. Increase (Decrease) in Special runds. .$ - $ 25,393 $ (524) $ 24,869 $62,215
- Increase (Dect ase) in Current Assets -
~ Cash 229 - -
229 67 Accmutts Receivable 363 228 179 770 75 Unbilled Receivables 193 .- - 193~ (35)
- . Inventories ~ - - 182 182 186
' Prepaid Expenses 22 183 (7) 198 (28)
Advances to Projects . 221 _ (221) - -- - 1,028 25,583 (170) 26,441 62.480 (Increase) Decreale in Notes Payable : - 19,250 - 19,250 (44,300)
- (Increase) Decrease in Current 11abihties -
. Working Capital Advances.-- (350) . 340 to ,- -
Accounts Payable (517) (3,322) (562) (4,401) 966
' Accrued Fxpenses _.. (137) 1,301 - (20) 1,144 (876)
Contractorf Retention' - (588) . (588) (65) (1,004) 16,981 (572) 15,405 ' (44.275) l
-$ 24 $ 42,564 $ (742) $ 41,846 $18,205
\ ' ne accoinpanying notes are an integral part of these financial statements. 6 y
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i Statements of' Changes in Special Funds - 4
, . For the two years ended December 31,1979
'1 (Ddidrs les Thousands)
- Construction an'd Construction Interest Funds I
' Nuclear Nuclear Nuclear : Nuclear - Nuclear Sears $ tony Brook
;a ;b Mix -- . Mix , - Project . Project . Project Island Intermediate ... Wyn
~
No.1 ' No.2 - No 3 No.4 No.5 Project Project Proj Balances, January 1,1978 ' $133,859
$6,597 $42,239 . $ 77,459
$ .- ' $3,
-Add:
Bond proceeds . ~ '-;
.- :- 32,008 27,893 - 8,686 -
Note prcereds 'I - .- .-J - 10,000 2,000 - Llnterest income _ _ ~8,348 - 444 2,344 . 6,410 966 231- - a~. Electric sales for resale . i-- . - .- - - -
'. inter fund transfers ' -: - - - - - -
142,207 7,041 44,583 115,877 38,859 :- 10,917
- Deduct:
Construction expe Stures 14.098 354 13,459 57 8 1,169 - R Debt issue costs -- - 1 768 225 79 -
. Other property acquisihons '
Operating purchase and expenses . - - - - - - - 3
- -Note retirements , - - - - -. 10,000 2,000- -
c Interest payments - notes " -- - - - 232 57 - _ interest payments - bonds 11,818 ' "692 3,276 . 6,230 681 213 -
. Working capital advances 2' 29 10 23 36 46 -
25,918 1,0. 5 16,746 7,078 11,182 3,564 - _T Balances, December 31,1978,:
- consisting of:
Construction fund ' 1 $ 80.834 - $3,890 $18,009 $ 75,621 $18,488 5 5,121 $ - $
, Construction interest ' 35,455 2,076 9,828 33,178 9,189 2,232 -
^^
$116,289 ' $5,966 $27.837 $108,799 - $27,677 -$ 7,353 $ - il
'; Add:
Bond proceeds . - - - - - - 139,871
. Note proceeds 1- - - - - - -
Interest income 8,783 ' 511 2,143 6.697 ' 1,769 607 2,673
' Electric sales for resale - -- - - - - -
' Inter-fund transfers 1,061 49 2"'S 377 95 30 15,500
- Other receipts ' - - - - - - 408 126,133 6,526 - 30,255 115,873 29,541 7,990 158,452
. Deduct: -
Construction expenditures 7,914' 245 3,288 37,709 9,5401 139 6,774 Debt issue costs ' '1 - - 3 3 1 7,284
- Operating purchases and expenses - - - - - - - -
Note retirements ..1,250 - - - - - 64,000
. !nterest peyments- notes e - - - - - -
429 Interest payments- bonds 11,818 .692 . 3.276 7,373 2,042 638 4,137 ' Working capital advances 46 - 34 12 25 (19) ~ (15) 257 Other'- -7 ~-1 - 1,300 ' 329 - - 21,036 - 971 6,576 ' 46,410 11,895 763 82,881
. ; Balances, December 31,1979,
- consisting of:
- Construchon fund . .$ 81,460 - . $4.171 $17,127 $ 43,658 $10,499 $ 5,633 $ 55,714 23,637- Q
' Construction interest 1,384' 6,552 '25,805 7,147
~ ~
1,594 19,857 y _ $ '5,097 . $5.555
- $23,679 $ 69,463 $17,646 5 7,227 $ 75,571 O!
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, ; ne accompanying notes are an integral part of these financial statements.
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[ Bond . ' . J Tesal . Reserve and . Nudear . , ' Total - Total Reserve - Trusteed .i Contin 8ency _. Peakir.g Intermediate , Mix No.1 - Revenue Non-Truseerd : Special 2
. Fund Funds. Fund- ~ - Proico - Proret ' (Seabrook) Fund -
- Funds Funde'
- $ 4,061 $289,451 1
- . $21,777.? , $285,390 l , '.$ 102'._'$ /350- : $ ' 3,609 ~ -$;-- $ -
73,610 -
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- 5,023 -
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..- -12,000 - 4,800 - 48,200 - - 1,250 - - : 54,250 66,250 s [-l 4
..f 1,747 - f 20,673 ; r7 . 239 : - 2,063 12 2 2,323 - 22,996 i- .-; 3. 3 ':- ..
, 91. 91 91
- -- (774) '- .-' -s - '774 774 -
' 28,547- - 390,899 - 109 l 5,389 7 53,872 ~ -
1,262 . 867 61,499 452,398 52,233
- J 30,271' -1 . 1,129 - '20,173 660 - 21,%2 -
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-. 1,073 --
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- - . . .-- - - - - 295 J-- 12,000 - - -. 1,230-- 8,720 - - 9,950 21,950 289 - > 133 1,240 - - 1,373 1,662
..-- - 23,480 ; 2
- 23,480
?
1- J 69 - -1 (70) ~ - -
- (69) -
'- ' 67,182 : - 2,217 30,372 666 295 33,550 100,732 s
.526,547 . ' 5323,717 :$ 109 $ 3,172 . $ 23,500 $ 5% $ 572 $ 27,949' $351,666 '
9,029 .- - 149,800'. - 1,000 .
-- .- - 1,000 150,800 64,000. 104,000 104,000
-. , .' - - 40,000 -- -
15471 :25,817- ' 45
.493 1,124 28 76 .1,766 27,583
.. ;- -. J -
.- - -1,007 1,007 ' 1,007
'. (1,612) .16,069 . 28 - (15,500) (307) (290) (16,069) . -
408.- -' - -' 4,540 - 471 5,011 5,419 39,411 - - $15,811 1,182 - 43,665 77,664 317 1,836 124,664 640,475
-i 66,219 .- 12,939 . 25,772 ! 246 - 18,957 95,176
- 7,492
- 7,292- -.- ' 17 .
182 1 - 200
. - - - , - . - '- --- 1,035 1,035 1,035 f ,800 48,200 58,000 .123,250 b -- 65,250- - 9 3,469 '
4,026 4,455 A. 429. - - - 487 70 -
~
30,546 ' -- - - - .
- 30,546 r- '330 -- w- - - 20 - 20 350
' -: 1,636 . -- - - - - - 1,636 263,940
.' ._ / 13,243 77,623 1,055 92,238
' -- 171,702.:. '- " 317 4
$ 32,426
- $39,411 - ' $344,109 $1,182 $30,422 , _$' 41 $- - $ 781 ' $376,535 s -4 .
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f Statements of Long-term Debt and' Notes' Payable December 31,1979 and 1978 - J'(Dollars in Thousands) . '1979 1978 E Redeem- Projects ' able - Under ..Wyman
^
- J Power Surply System ;
Revenue Bonds (Nwe 5)-
- 1976 Series A .
1 Serial Bonds 5.60% - 6.75% $840 du'e: o ' in 1985 increasing to $1,635 in 1996 . $ 14.240 $ - 5 14,240 $ 14,240 '
" Term B,onds,7.25% due 2014, sinkhg fund requirement of $1,745 in 1997 : ' ~ 1986
. Increasing to $5,735 in 2014 - ~ at 103% 60,760 - - 60,760 60,760
_ 75,000 -- 75,000 75,000 1977 Series A Serial Bonds, 4.20% - 6.10% $130 due
- in 1981 increasing to $4.500 in 1998 ' . -
' 38,540 3,680 - - 42,220 42,220 Term Bonds 6.375% due 2015, sinking fund .
requirement of $4,760 in 1999 . ' 1987 increasing to $11,925 in 2015 at 103% 129,410 ' 5,740 135,150 135,150 167,950 - 9,420 177,370 177,370
- 1977 Series B _
. Serial Bonde.5.10% - 5.80% $1,090 due in 1988 increasing to $1.870 in 1998 - 15,855 - 15,855 15,855 Term Bonds,6.125%; due 2017, sinking fund requirement of $1,980 in 1999 - 1987
. increasing to $5,770 in 2017 at 103% 67,645 - 67,645 67,645 83,500 -
83,500 83,500 1978 Series A - Serial Bonds 5.80% - 6.60%' $765 due - in 1988 increasing to $1.795 in 2000 16,400 - 16,400 16,400
]
Term BonJs,6.125% due 2018, sinking fund
- requirement of $1,915 in 2001 increasing ~ 1988 to $5,475 in 2017 nd $703 in 2018 at 103% 58,600 - 58,600 58,600
_ 75,000 - 75,000 75,000
- 1979 Series 'A .
Sertal Bonds 6.00% - 6.70% $2.660 due ] In 1984 increasing to $4,855 in 1994 - 40,035 - -40,035 - l Term Bonds 5 00% - 7.20% $10,620 due !
; in 1996 increasing to $67,360 in 2008,'
l
' sinking fund requirement of $5,180 in 1989'
.1995 increasing to $11,740 in 2008 . at 103% . 109,965 - 109,965 -
1 150,000 - 150,000 -
;
551,450 9,420 560,870 410,870 1 Notes Payable (wee 3) ..
. Nuclear Mix No.1 - Seabrook ' - - - 1,250 1 Stony Brook Peakirig Project ( . 35,000 - 35,000 4,800 Stony Brook Intermediate Project ~ - - 48,200 4 35,00) - 35,000 54,250
, $586,450 - $9,420 $595,870 $465,120 N .
De acccwpenying notes are an integral part of these financial statements.
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u . - m t. k Notes to Financial Statements December 31,1979 and 1978-
-(1) Massachusette Municipal Wholesale - advances had been drawn from individual -
Electric Compar.y (MMWEC) project funds based on the ratio of estimated
. MMWEC is a political subdivision of the admi-istrative expenditures for each project Commonwealth of Massachusetts, authorized ' foi .L period to the total of estimated project t) issue revenue bonds secured.by power . administrative expenditures for the period.
. L sales agreement: with its members and other At December 31,1979 and 1978 the amounts clectric systems to finance the construction - of the advances were $750,000 and $400,000, i rnd ownership of electric power faelities. . respe -tively. -
Any Massachusetts city or town which has 1a municipal electric department and which is
.'""'I."'^#'""'.'""
I'. .' tuthorized by majority vote of sud c' y cr interest Charred to
' Proints During Construction town may become a member by ap;,1ying for'
- admission to MMWEC and agreeing to MMWEC capitalizes interest as an element comply with such reasonable terms and - of the cost of constructed electric plant. A
( conditions of membership as the By-taws of corresponding amount is reflected as a
- MMWEC may fix from time to time. As of reduction of interest expense. The amount of December 31,1979, thirty-one Massachusetts interest capitalized is based on the cost of
. municipalities had received votes of their debt, including amortization of debt discount respect _ive city councils or town mv ?'qs and expenses related to each project, net of authorizing membership by their .espective investment income derived from project municipal electric systems. : funds not yet expended for construction.
' Power Supply System Special runu MMWEC is obtaining power supply Proceeds from the sales of Revenue Bonds capacity by acquiring interests in various
~
are deposited with Trustees to be invested
- generating units from certain investor-owned until they are required for construction or utilities and by constructing its own electric ' debt service payments. Note proceeds are power facilities. See Note 7 far information Pl aced with Depositories and are similarly with resped ;o MMWEC's construction invested by MMWEC. Investment securities program and commitments. In addition, . consist of U.S. Government securities,-
MMWEC negotiates power purchases on Federal agency obligations, and bank certificates of deposit in accordance with the behalf of its members. Advances from Members Provisions of the Bond Resolution. The MMWEC is authorized to assess each investments are carried at cost, adjusted for
~
- member to provide working capital amortization of premium or discount.
Advances may be retumed to the, members
~ upon approval by MMWEC's Board of Directors or the dissolution of MMWEC.
Advances from Projects The Board of Directors has authorized working capital advances of up to $750,000 l : from Project Construction Funds. Such I-
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Notes to Financial Statements-December 31,1979 and 1978 J(2) Sinnitcaat Accounting Policies. cont'd : plant in service amounted to $211,000 using
- Revenue and Costs Recoverable in Future a compsite rate of Depreciation of other property and equipment aggregated
- Under Terms of the Power Sales Arreements . $85,000, of which $60,000 was allocated to Dectric Sales for Pesale - projects under construction and represents a Under the terms of the Poweretles composite rate of 16% Depreciation of -
' Agreements with Project participants, . electric plant in service in 1978 was $16,000 revenues include billings to participants for and other property was $78,000, of which -
- debt principal and interest p*yments in the $57,000 was allocated to prc,jects
; period in which they are due. Ilowever, for under construction.
financial reporting purposes, MMWEC (4) Unamortized Debt Discount and Expenses recognizes currently the depreciation and
- Debt discount and expenses are amortized amortization expense of assets financed by to interest expense over the life of the related bond pnncipal The excess of current outstanding debt. Additions to and amortiza-expenses over amounts billed currently -
t on of discount and expenses are under terms of the Power Sales Agreements summarized below: is deferred to the future periods m which g3,g .p,g,;
- these amoim will be recovered through ' Balance Amorti- Balance revenues.- la" 1 Addi'ia"5 **' ion Dec 31
" Electric Sales for Resale and Purchased I'7s s(
Power reflected in the column headed %A[ Service, represent power purchases made by 1977 h w .
$2 3
1,823 s 44 (47)
)
5 1,820
~ MMWEC for resale to contracting participants $ 1978 A B u 9 - 2,135 (15) 2.120
- In addition to these arrangements, MMWEC 1977 ^ Nees 22 -
(22) - 1978 A Ndu - 95 (80) 15 serves as an agent for certain participants, I"**"#" -
' "I' '
whereby MMWEC is billed for the costs of
power purchased or received by the
"'* **'D 'U*N **
participants under other contracts and agreements. Such costs are . expenses of the y' , , , , , 1977 A Bonds 3.711 - 0 02) 3.609
- participants and, ccordingly, are not reflected 1977 B Bonds 1,820 -
(47) 1,773 in the accompanying statements 1978 A Bonds 2.120 3 (54) 2.069 1979 A Bonds 7,496 (85) 7,411
- of operations.. -
^ " " ~
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' Service Revenues 1978 8 Notes 5 1 (6) -
Under terms of the Service Agreement, 1979 A Notes - 20 (20) - MMWEC bills its members for costs incurred 1979 B Notes - 24 (2) 22
. in providing services on their behall Service s9,739 57,s44 s(2s,) si6,s94 revenues are recorded in the accounts as the corresponding expenses are incurred.
Amounts which are not yet billed are included in Unbilled Receivables in the acco'mpanying balance sheets. (3) Depreciatjgn _ Property, plant and equipment in service
; is depreciated using the straight-line method
- ~over the estimated useful lives of the
- respective assets. Depreciation of electric u
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La-Notes to Financial Statements -
- December'31,.1979 and 1978 .
1
' (5) Debt . _ _ (6) NEP Units 1 and 2 Cancellation Power Surrly System Revenue Bonds MMWEC's Nuclear Mix No. 2 was origin-In or' der to finance construction or; ' ally comprised of the New England Power ownership interests in joint electric - 7 Company nuclear units NEP 1 and 2 and g nerating projects MMWEC issues, . : Northeast Utilities Montague units
' pursuant to its Bond Resolution and Chapter : 1 ard 2 (See Note 7).
- 775 of the General laws, Power Supply The New England Power Company efforts
- System Revenue Bonds. The Bonds are - ' to locate the NEP units in Charlestown,
. secured by a pledge of the revenues derived ' Rhode Island were unsuccessful and the
. by MMWEC, under terms'of power sales units were cancelled on December 17,1979.
Jagreements, from the ownership and At December 31,1979 MMWEC recorded its
. operation of its power supply systemf investment of $2,703,000, including interest
' Pursuant to the power sales agreements with charged during construction, as a charge to the participants, each participant is obligated 1 expense and deferral of that loss was
. to pay it* share of the actual costs relating to recorded as " Costs Recoverable in the the generating units under construction or future under terms of the Power Sales for planned construction. The parti:ipants' Agreements". In accordance with the terms obligations are not contingent upon the of these power sales agreements, the loss completion or operational status of the units. Pl us all costs associated with the Montague Notes PayaNe facility will be recoverable from the Under terms of the resolution covering this participants in Nuclear Mix No. 2 over the borrowing, the notes are issued in anticipa-: Period in which the related debt principal and interest are due.
tion of MMWEC's intended issuance of revenue bonds in 1980 to provide long-term (7) Construction and Financing Construction Program financing of the project. The notes, which
. mature on January 2,1981, bear interest at a MMWEC's plans for construction and r;te equal to sixty percent of the bank's acquisition of ownership ir.terests in prime rate, payable semi-annually. The notes additional generating capacity are under tre subject ,to redemption and prepayment continuing review and revision. Currently,
. prior to maturity and, in the event that the forecasted expenditures for the ger.erating notes are no'. repaid at the maturity date, the facilities as shown below, amount to approxi-nta of interest incr eases to eighty percent of mately $1.1 billion, including estimates for the bank's prime rate. contingenciea, interest, and MMWEC costs line of Credit charged to projects during construction, MMWEC has a $2,000,000 revolving line including approximately $107 million
'of credit which is used to temporarily finance. for 1980J cert:in power purchases for itself and certain of its members. Borrowings under this line --
tre at an interest rate approximating 50%
. of the prime rate and are secured by the ~
' rectivables corresponding to the amounts
' taken-down?
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( ' , SNotes' to Finanbal Statementsi e" J December 31,1979 Land 1978' f' (7) Construction and Financina, cont'd y D*
~ - Construction Pmeram : - -
. .'z ' (udtars in %mnds)
' Proposed . Total
, , _ . . , .~. ? MMWEC ' .- .. Estimated
; Unit (Imad Participant) - Evimated Capability - l Expended To December 31,. MMWEC
;Completwn Date* I . (MW) . 1978 '979 - Expenditures .
.1 ~
{ Nudear Mis No.1 3 i
'. Pilgrim Unit No. 2 e-
- j (Boston Edison)-1986 r 152.3 $37,795 $' 45,032 $392.370 i Mdistone Unit Na 3
; (Northeast Utilities)-1986 -
r -
' 14.4 8,927' 11,025 '47,642 i
' Seabsuok Units Nos. I and 2
' (Pubhc Service Ca NH) 1984-1986 - -37 833 1,795 9.438 -
, 174 4 $47,555 $ 57,852 $449,450 'j
.{. -Nudear Mis No. 2 ;
< NEPCO Units Not 1 and 2 ; .
. > (New England Power ) See Note 6 ' - ' - $ 2,368 $ -
' Montagu e Uruts Nos. I and 2 '
(Northeast Utihties)- tirarertain" " 33.3 645 688 Indetermmable j p_ 3* 3 $ 3,013 $ 688 r Nudear Project No. 3 - Millstone (l nit Na 3 4
^!
! (No theast Utihties)-1986 . 36.8 $20,199 $ 24,409 $ 81,505
- Nuclear Project No. 41 I Seabrook 11 nits No.1 'and 2 -
' (Public Service Co. Nil)-1984 - 1986 99 6 $ 36.888 $168,931
$ (913)
. Nedear Project No. 5- . . ,
Seabrook Uruts Nos. I and 2 ' . (Public Service Ca Nif)-1984-1986 25.3 $ (164) $ 9,494 5 46,355 il i' i Total Nudear Units '369.4 - 569,690 $129,331
- Sears ! stand Project ,
. Sears ! stand Coal Unit No.1 1 (Central Maine Power)-1988 : 78.9 $ 1,179 $ 1,303 5127,136 l Stony Brook Peaking Project c '
l 1 Phase i Peaking Units . l
- (MMWEC) - 1982 170.0 $ 1,836- $ 5,123 $ 63,964
- Stony Brook Intermediate Project .
- Phase 1 Intermedste Units -
~ (MMWEC)
- 1981 309.1 $24,831 $ 57,818 $150,463 f Total Fossil-Fueled Units '- 5550 $27,846 $ 64.244
. Total : $97,536 $ 193,5'< 5
' Completion dates are estimates for MMWEC's planning purposes and may vary from those 1
Indicated by the lead participant . , .. .
. Commercial operation dates are urcertain and the lead participant has not made a current cost estimate.--
..hThe' estimate of total expenditures was T : each unit (th'e" lead participant") and on -
~ '
1 made by MMWEC and its Consulting- =other available data. .
- Engineer based on information available; ' The complex process of obtaining the :
during the second half of 1979. Estimates for numerous regulatory approvals and permits
~
q jointly-owned facilities are made by - i to construct the Seabrook units has been -
- MMWEC's Consulting Engineer based on . J lengthy and has resulted in considerable miose;of the electric utility company having' increase in their cost. Public Service - ~
primary responsibility for the constructioh of Company of New Hampshire ("PSNH") is . _ _ 13- < s N s
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- 3 Notes ta Financial Statements -
F December 31l 1979 and 1978 7 (7) Construction and Finanting, cont'd . -: he electric utility industry has experienced i Construction Program : and may continue to experience a nu'mber of, presently experiencing _ difficulties in obtaining : problems including financing large construc-Jtxternal financing for its construction c tion programs during an inflationary period, , iprogramt a' major portion of which is its 50% obtaining sufficient capital, compliance with ownership in Seabrook, and maintaining environmenial regulations, delays in p 1 adequate cash flow to fund that program : . f constructing new facilities, delays in licensing,
~
" - ' and current operations. PSNH has proposed particularly nuclear facilities since the Three to reduce its ownership in Seabrook by Mile Island incident, high fossil fuel costs
. rpproximately 15% and other utilities, . and obtaining adequate rate relief.
- including MMWEC to the extent of approxi. Financing Program .
~
nutely 6%, have committed to a like amount- To finance its ownership share of the costs t subject to.certain conditions, primarily . _ of these projects, MMWEC intends to issue
~*' regulatory approvals which could involve an radditional saries of revenue bonds, the
; extended period of time to obtain. PSNH has timing and size of which w91 be based upon -
l indicated that. adequate. permanent rates, constmetion cash flow requirements and
- timely regulatory approvals allowing a . = bond market conditions prevailing at
- reduction in its Seabrook ownership by not 'the time.
7 _ significantly less than 15%. the continued . (8) Retirement Plan availability to it of exterr inancing and the ~ Retirement benefits are provided to tbility of other Seabrook owners to obtain MMWEC's eligible employees through its necessary and timely financing are all essential to avoid suspension of construction . participation Program sponsored in the by the National i<etirement Rural and
. or other measures which might' adversely.. Electric Cooperative Association. Pension affekt the completion and cost of Seabrook. costs were 548,082 for 1979 an'd
- In December 1979, the New Hampshire $33,942 for 1978.
. Public Utilities Commission ("NHPUC")
L gt:nted PSNH emergency rate relief, under
-. bond, which' represents a portion of a :
permanent retail rate increase presently . pending before the NHPUC. MMWEC cannot predic" what effect the foregoing financing
^cnd regulatory problems may have on the
^ completion or cost of the Seabrook units.--
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9 . 4 * ! e A1A11\TC's annual report is available icithout charge upon teritten request to the aduninistrative offices: PO Box 426, Ludlow, l Alassachusetts 01056 Attention: Stary Alice Cullers, Records Afanager l The SISt\\TC annual report was produced by the l Corninunications Departrnent and printed cornonercially. l editorial: Kathrun Afilillo design: Kathryn Afilillo Stepiren B,!!nrau photography: Afichael Gallant senyn s.a..wa, Wicy Blint typography: R. Lorraine Fickett graphics: Nata.'ie Bal'ine Banack printer: Thornas Tald Company
. - - - . . . _ . . w-.-- ._ _.
l s-4 l l i 1 I I 1 l l Massachusetts Municipo! Wholescle Electric Company
. Stony Brook Energy Center, Ludlow, MA 01056 l 2-
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