GO2-15-017, 2014 Annual Financial Report
| ML15036A464 | |
| Person / Time | |
|---|---|
| Site: | Columbia  |
| Issue date: | 01/28/2015 |
| From: | Gregoire D Energy Northwest |
| To: | Document Control Desk, Office of Nuclear Reactor Regulation |
| References | |
| GO2-15-017 | |
| Download: ML15036A464 (61) | |
Text
DonaldW, Gmg~ok P.O. Box 968, PE20 AWRk4 WA O9M52-.O8 Jn Ph. 50o"..618 I F. 501177-4317 ,eWgraoIve January 28, 2018 G02-15-017 10 CFR 50.71(b)U.S. Nuclear Regulatory Commission ATTN: Document Control Desk Washington, D.C. 20555-0001
Subject:
COLUMSIA IENERATW4G STATION, DOCKET NO. 50-W;2014 ANNUAL FINANCIAL REPORT
Dear Sir or Madam:
In Scoord-n--
with Sue rquirmends d 10 CFR 50.71(b), fwoed lea cop of lie EnegyNorthwest Z4AnnualReportforthe ubjcfaciltY.
An elctronic copy o t reort is also being povided Via sepaate elecftroi trasmita to ftciltate uplodin Of the khfomelon kfo th ADAMS Dftbse.Ther we no cornmitntf contWined In tle letter or to eoncls .Should you ha0e any quelm/ tl plan call JR Traulvetr at (509) 377-4337.VpeýOW Gregoire Manage, Regulatory Affawrs Enxltwr: As etMed Co: NRC RIV Regional Admn*ar w/o NRC NRR Project M a wo NRC Sr. Resident npecr -9C *do MA Jones -SPNI 399 w/o C Sonode -BPAII 399 w/o JM Irvan -w/o WA Horin -Wineon & Strawn %o PO1O+
/SPAIN 2 jr ne Ad a 00,--Oslo a Energy Northwest 2014 Annual Report AARON ELSEY Technical Services Engineering F -ytr 24 A a{Rep ot 3 4 A Message to our Stakeholders 6 Executive Board 7 Board of Directors 8 Senior Leadership 9 Project Generation 10 Columbia Generating Station 12 Nine Canyon Wind Project 14 Packwood Lake Hydroelectric Project 14 White Bluffs Solar Station 15 Operations and Maintenance 16 Generation Project Development 18 Applied Process Engineering Laboratory 18 Calibration Services Laboratory 20 Environmental
& Analytical Services Laboratory 20 Industrial Development Complex 22 Environmental Stewardship 24 Community Service 26 CEO Recognition 27 FINANCIAL DATA & INFORMATION 28 Management Report on Responsibility for Financial Reporting 28 Audit, Legal and Finance Committee Chair's Letter 29 Independent Auditor's Report 30 Energy Northwest Management's Discussion and Analysis 39 Current Debt Ratings 40 Statement of Net Position 42 Statements of Revenues, Expenses and Changes in Net Position 43 Statements of Cash Flows 45 Notes to Financial Statements KAITLIN CARTER worked with a team to develop a high-risk work plan. The plan was implemented and resulted in improved reliability and predictability of the steam supply to the seal steam evaporator.
The main purpose of the seal steam evaporator is to provide sealing steam to the main turbine. A loss of steam would allow air to be pulled into the condenser creating high condenser pressure.JOHN PETERSON maintained high standards of quality in completing design, construction and testing of fire protection features in two new buildings on-site at Columbia.AARON ELSEY demonstrated initiative and ownership to develop a mockup of a motor control device for a high pressure core spray pump. In addition, he went to the vendor's test facility and provided oversight for the test.
4 Balancing a New Energy Horizon A MESSAGE Energy Northwest's projects soared above previous record Most importantly, our employees have reached these historic generation numbers to bring carbon-free electricity to the Pacific milestones safely.Northwest in fiscal year 2014. Our dedicated team of professionals Energy Northwest also earned the Association of Washington continues to focus on our Excellence Model and apply our agency's Business Workplace Safety Award. The association recognized Team vision to the region's future energy balance. Energy Northwest for acheiving a -remarkable" milestone of 10 We had a lot to celebrate this year, from safety and generation million hours without a lost-time injury. By the end of the fiscal records to operating milestones.
year the team surpassed 12 million work hours without a lost-time Packwood Lake Ilydroelectric project commemorated 50 accident.
Recognition by AWB coincided with Columbia breaking its years of operation and Columbia Generating Station will operational generation record. In fiscal 2014 Columbia generated 9.8 celebrate 30 years of commercial operation this December.
million megawatts of electricity
-a record for a non-refueling year.
Fnet ,j " t vs't Nil Ann ma[Pcpoit 5 ZERO: LostTime Accidents tCotumbia generated megawatts of electricitYC in tiscal 2014 -a new record operations
& Maintenance
& Capitat Expenditures In calendar year 2013, the facility generated 8.5 million MWh of electricity
-a record for a refueling year.We attribute the success of Energy Northwest to our employees.
They represent innovation, and they maintain our resources to the highest standards of excellence to provide safe, reliable, cost-effective, responsible power generation and energy solutions.
We ended the year by spending 99.64 percent of the approved Columbia operations
&maintenance and capital budgets of $304.9 million, thus underscoring our dedication to investing in Columbia, while maintaining fiscal discipline and our responsibility to Northwest ratepayers.
Finally, our sincere thanks to all Energy Northwest team members who volunteered their time and talents to support the needs of the community in which we live and work. Tlogether we are making progress on all our generation and regional energy initiatives, meeting our commitment to excellence to our industry, our peers, and our community.
Respectfully, Sid Morrison Chair, Executive Board Mark Reddemann Chief Executive Officer
[ORI SANDERS Secretary Ins ide Director Kennfewick, Wash.MARC DAUDON Assistant Secretary Gubernatorial Appointee Seattle, Wash.JAMES MOSS Gubernatorial Appointee'*Wood, Wash.WILL PURSER Inside Director Sequirn, Washý_6 The Energy Northwest Executive Board sets Policies that govern the operation of the It is made up of ii members: five elected from the oer the a p p o i n t e d b y t h e b o a r d of d i r e c t o r a r d Of d re t ions t e t he a e n b e r , 21OUtside members aPPOinted by Washington's goveror 7 LINDA GOTT TERRY BREWER President Vice President BILL GORDON Secretary JUDY RIDGE Assistant Secretary UUUU AUULK I IN NANCY BARNES BARNEY BURKE JACK JANDA ARIE CALLAGHAN ANN CONGDON BILL GAINES DAN GUNKEL BUU HAMMUNU b IlVt nUU..I..MIKE JONES BUZ KETCHAM CURT KNAPP CLYDE LEAGH VnIL LU7IN M.L. NORTON WILL PURSER SHAN ROWBOTHAM LORI SANDERS CHUCK 1 The Eniergy Northwest Board of Directors is comprised of representatives from each of its Washington state rmcenber utilities.
The board of directors has final authority on any decision to purchase, acquire, construct, terminate or decommission any plants and/or facilities of Energy Northwest.
ENPAS DIANA THUMPSUN KAIMY VAUUMN Board members represent utilities with strong histories of serving the public power needs of Washington ratepayers.
T[heir experience helps guide the agency as a continuing and effective source of powerful energy solutions.
8 Balancing a New Energy Horizon The senior leadership team manages day-to-day operations, executes developing programs and projects, establishes long-term strategies in direct support of the Energy Northwest vision, and provides essential hands-on leadership to foster continual process improvement and strengthen organizational core values in the workforce.
JIM GASTON General Manager, Energy Services& Development BRAD SAWATZKE Vice President, Nuclear Generation; Chief Nuclear Officer BRENT RIDGE Vice President, Corporate Services;Chief Financial Officer MARK REDDEMANN Chief Executive Officer GROVER HETTEL Vice President, Operations BOB DUTTON General Counsel;Chief Ethics Officer ALEX JAVORIK Vice President, Engineering ELiipe y Nothwet 2014 , -,-il ReporF t 9 Columbia's generating capacity is 1,170-megawatts, enough energy to power more than a million homes.COLUMBIA GENERATING STATION 2390391 MWh Packwood has produced 4,735,798 megawatt-hours of electricity since commercial operation began in 1964.41 .852 kwh PACKWOOD LAKE HYDROELECTRIC PROJECT 115040 MWh WHITE BLUFFS SOLAR STATION 10,136,395 MWh OWENS SMIT Mg C0lumbia / ,
Enei gy No it wiit 20141 Annuacl N'pof t 11 COLUMBIA GENERATING STATION Columbia Generating Station is a boiling water reactor, using nuclear fission to heat water into high pressure steam. The steam spins turbines that are connected to a generator, producing emissions-free electricity.
Columbia demonstrates Energy Northwest's commitment to operating safely and efficiently.
Electricity produced at Columbia is provided at-cost to the Bonneville Power Administration, which delivers the power to utilities throughout Washington and other western states.Nuclear power has proven itself safe for more than 40 years of operation at nuclear plants across the U.S. Working in a nuclear energy facility is far safer than working in the financial or insurance industries.
ne megppawinppatthurs of elctict toth pnIiiLJowIergi 10 10/0 CoLumbia produces approximately 10 percent of the energy generated in Washington state.CoLumbia was online every day during fiscaL year 2014 4.,1 C C rEr_0 RESIDUAL HEATREMOVAL PUMP-2B REPAIR TEAM Tim Allbee, Ryan Downing, Doc Owens, Jamey Rich, Richard Schultz and Kevin Smith successfully planned and completed, error-free, the replacement of a residual heat removal pump. During the performance of the work, they constantly looked ahead for potential barriers and worked with Engineering and Radiation Protection to remove barriers early on. As a result, the work on the pump replacement was completed with essentially no mechanical or assembly problems.12 0 0£ £Columbia continues to strive for excellence.
The teamwork and communication I witness on a daily basis keeps the station operating safely and reliably.-BRAD SAWATZKE Vice president, nuclear generation; chief nuclear officer I CoLumbia -Net Generation
-MWh NINE CANYON WIND PROJECT With a vision to be the region's leader in Power generation Energy Northwest partnered with Walla Walla Community College to host the state's first Wind energy technician training program at the conmmnunity college level, This increases the availability of locally skilled workforce entering the growig Wind ty job market.Nine Canyon is one of the largest Public-owned wind projects in the nation. With 63 wind turbines -14 rated at 2.3 megawatts and 49 rated at 1.3 megawatts
-Nine Canyon's total installed capacity is 95.9 megawatts of clean, renewable energy Reaching gee atd year of renewable energy production, Nine fiscal Year 2014, More than 239,00 ,,,Wh of electricity during Canyon genera~~~
more than 239,000 MWh of electricity during Nine Canyon is aligned on the hilltops southeast of Kennewick, Wash., and the turbines are positioned to take advantage of persistently strong winds along the Columbia River Gorge. The turbines convert those winds into electrical energy.Each turbine has its own miniature weather station that monitors wind direction and speed. Motors atop the turbines rotate the turbines into the wind and sophisticated control systems ensure the blades turn at the optimal speed to produce electricity.
The turbines are self-starting and begin generating electricity when wind speed reaches eight miles per hour. Generation increases as the wind speed increases, with full power achieved at about 35 mph. If winds exceed 55 mph on a sustained basis, the turbines shut down automatically by pitching the blades to a stopped position while engaging a large disk brake and restart when the winds fall below 45 mph. The pitch of the blades is automatically adjusted to maximize power generation from the available wind.Nine-Canyon 14 8,[ ticn my Ne-wErnom -yti .mzon PACKWOOD LAKE HYDROELECTRIC PROJECT The 27.5 megawatt Packwood Lake Hydroelectric Project has produced low-cost energy for Northwest ratepayers for 50 years.Generation totals for fiscal year 2014 were 115,040 megawatt-hours -up 10.93 percent from 2013 -primarily due to above average snowfall in the Cascade Mountains and a late spring runoff.The capacity factor for fiscal 2014 was 50.5 percent and the project attained 100 percent availability.
Packwood lake is located in Lewis County, Wash., in the Gifford Pinchot National Forest, approximately 20 miles south of Mt.Rainier. The facility was Energy Northwest's first electric power generation project.0a M 0 netmgwt-or during ~ ficlyer21 100 I lydro is a carbon-free resource, and fish screens protect migrating fish populations.
The water levels in Packwood Lake and Lake Creek are closely monitored to preclude environmental impacts.WHITE BLUFFS SOLAR STATION White Bluffs Solar Station, a 242-panel demonstration facility with a rating of 38.7 kilowatts direct current, is located at the Industrial Development Complex near Columbia Generating Station.The solar plant began operation in May 2002 and, at the time, was the region's largest photovoltaic solar facility.
The collaborative project is funded by Energy Northwest, the Bonneville Power Administration, the Bonneville Environmental Foundation and the UI.S. Department of Energy. For more than 12 years, the generation project has provided reliable and efficient clean energy.British Petroleum, the solar panel manufacturer, continues to support the 20-year warranty of the PV panels.The project generated 41,852 net kilowatt-hours of electricity during fiscal year 2014.Adjusted AvaiLability Factor ne kiowt-hus5 OPERATIONS
& MAINTENANCE Energy Northwest supports its members in the areas of Calif. to operate and maintain the Tieton ltydrelectric Project of operations and maintenance of generating facilities and electric Rimrock Lake in the Cascades.utility automation.
During fiscal 2014, Operations and Maintenance Energy Northwest provides operations and maintenance services Services engaged the agency's member utilities with solutions for to OlympicViewGeneratingStation, owned by Mason County Public supervisory control and data acquisition systems, power plant t Itility District 3. Olympic View is comprised of two 2.8 megawatt optimization and developed the technical specifications for a generating units powered by natural gas-fired reciprocating engines.demand response control network. The demand response program The plant may operate remotely, depending on load requirements.
targets residential, commercial and industrial electric customers.
Operations and Maintenance also provides project management, Energy Northwest recently added to its Operations and project engineering and craft labor support for the agency's Maintenance portfolio, signing a contract with the city of Burbank, members' power generation projects.
16 Balxineig a Nevi, EineircB Huriz2on GENERATION PROJECT DEVELOPMENT Advanced Nuclear Energy Northwest joined the Western Initiative for N a collaboration to study the demonstration and deploymer small modular reactor plant in the Western tUnited States by s teaming agreements with NuScale Power and Ultah Asso Municipal Power Systems. The Western Initiative for Nuclear goal to develop the first small modular nuclear reactor project United States, currently scheduled to come online in the mid-with a preferred location within the Idaho National Labo site. Uinder the proposed structure, tlAMPS will own the p NuScale will provide the SMR technology and Energy Nor will provide operations and maintenance services.
NuScale re grant matching funds from the Department of Energy to in the completion of NuScale's design certification process the Nuclear Regulatory Commission.
The NuScale SMR represents the next generation of commercial nuclear power and will deliver safe, reliable, affordable and carbon-free ener uclear, it of a igning ciated r has a in the-2020s ratory Battery Energy ESS Storage System roject, Energy Storage thwest Following six months of successful field testing at the Nine ceived Canyon Wind Project, the 500 kwh Battery Energy Storage System, assist developed by Powin Energy, was redeployed to the City of Richland's s with distribution system. The battery storage unit operations and testing design focused on several key distribution scale applications such as peak plants load shaving and distribution system support. The final phase of the gy. three planned field deployments is for the BESS to operate "behind the meter" within partner Pacific Northwest National Laboratory's Richland campus starting in July 2014. Concurrently, the BESS will be integrated into Energy Northwest's regional demand response pilot program. This will allow the BESS to leverage its storage capacity, and communication and control capabilities to the success of Energy Northwest's Demand Response Program. The BESS demonstration project provided significant technical innovation and operating SMR experience during the last year of testing for the participants which include Energy Northwest, Powin Energy, PNNL, City of Richland and the Bonneville Power Administration.
The ultimate goal of the energy storage project is to develop multiple value streams to enhance the overall cost effectiveness of energy storage for Pacific Northwest utilities and ultimately enable commercial deployment of energy storage in the region.Smal.l. ModuLar ReacG Utah Associated Municipat Power Systems ELýM'Fc~y Nortl\iweýt2?CB4 Afruýji[ E~po 17 Demand Response Energy Northwest's Energy Services and Development group, and five public power partners are working closely with BPA to develop structures and technical implementation methods for a first of a kind regional demand-side resource.
The Aggregated Demand Response Pilot Project provides up to 25 megawatts of fast-responding customer-side load reduction for BPA's use as a regional grid balancing asset. The expected online date is the first quarter of 2015. As a demand-side alternative to more conventional balancing services from thermal or hydroelectric generating facilities, the demand response network developed and managed by Energy Northwest coordinates numerous customer-side loads, such as major industrial centers, commercial and institutional facilities, and residential loads. These demand-side resources change their power use in an expedited and reliable manner through communications and control infrastructures, similar to demand response systems elsewhere in the nation. Beyond the project's 18-month pilot run, Energy Northwest intends to expand the portfolio of offered products, add additional utility partners and loads, and grow the network into a fully functional and competitive grid-scale regional balancing resource by public power and for public power.Renewable Resources Energy Northwest continues to identify and advance low-risk and least-cost renewable generation development opportunities, anticipating future requirements for regional utilities.
During 2013, Energy Northwest affiliated with neoen Renewables, an international developer of energy projects, to advance utility-scale photovoltaic solar projects in south-central Washington.
Development efforts are underway for three prospective sites in the Richland, Wash. area, including Energy Northwest's Industrial Development Complex, with potential commercial operation dates as early as 2019. Additionally, Energy Northwest maintains close ties with other developers in the region and tendered a variety of competitively-priced wind, biomass and solar generation resource opportunities to its member utilities.
IT 7ý T 1 Ii* AygvgaP'j1tC(I I)Cnan(l~
Re'sponise'P 101io l'qiej('ppIov~ides ul to 25 miegawvatts o~jjast-aise (is aI i-egional giritl blanc~ing~i asset upill ani t'xji~eetet online (late inl the fiirst qUar-telr of 2015.
18 Batancing a New Energy Horizon PNNL)APPLIED PROCESS ENGINEERING LABORATORY Energy Northwest offers the Applied Process Engineering Laboratory as a lease facility for laboratory-based research and development.
Pacific Northwest National Laboratory is an anchor tenant, occupying approximately 50 percent of APEL. This provides significant financial sustainability for the leasing operation.
Energy Northwest Environmental and Analytical Services utilizes six laboratory spaces for environmental and materials sample and test work in support of Columbia Generating Station and commercial customers IsoRay Medical, Environmental Assessment Services and Freestone Environmental.
Approximately 20 percent of the leasable space is available for business start-ups or as specialized testing labs for emerging technologies.
APEL is a key part of the regional commitment to technology innovation, especially in clean energy, environmental sustainability and biotechnology.
A participating member of the Tri-Cities Research District Innovation Partnership Zone, APEI. is a "launch pad" as regional technical expertise and patented research are leveraged into new ventures.
APEL provides an environment rich with resources, technical assistance and connections to potential partners and customers, which fosters collaborative innovation and technology commercialization.
Fiscal year 2014 mirrored the constrained federal and state economies.
The trend in technology innovation brought inquiries primarily from existing businesses in need of specialized test facilities within a controlled operating environment.
APEL's building-wide permitted air and water systems meet that intermittent need with less cost to the entrepreneur.
Unfortunately, no grassroots start-up ventures joined the APEL community this year.APEL's Advisory Board represents the major institutions that sponsor APEL and its mission including Energy Northwest, the Port of Benton, the Department of Energy, Washington State University-Tri-Cities, PNNL, the City of Richland and the Tri-Cities Industrial Development Council. APEL is self-funded through lease revenues.Regional technical expertise and patented research are leveraged into new ventures.CALIBRATION SERVICES LABORATORY The Energy Northwest Standards Laboratory, located adjacent to Columbia, is a multi-faceted applied physics laboratory performing calibrations in virtually every aspect of metrology, including torque, force, pressure, vacuum, mass, dimensional, electrical, electronic, temperature, humidity, flow, vibration, light and sound.In addition to providing services to its primary customer, Columbia, ENSL performs work in the commercial sector, which has expanded the laboratory's capabilities, increased the technical expertise of the staff and enhanced the quality program.ENSL is accredited to International Standard ANSI/ISO/IEC 17025 by the American Association for Laboratory Accreditation.
The laboratory was first accredited in January 2009 and has maintained laboratory accreditation.
The accreditation process is performance based and requires the laboratory, through on-site assessments, to demonstrate competence in meeting stringent technical and quality requirements.
ENSL's current accreditation is valid through Jan. 31, 2015. Preparations for the next accreditation renewal will take place in the first half of fiscal 2015.Maintaining accreditation, enhancing capabilities and continually making improvements to ENSL's technical and quality programs, are all factors in securing contracts with several major clients. Major laboratory clientele includes Bechtel, Washington
.... .Uo inf B u s in e s s W I t 1U S A~nat 19 Closure I lanford, Washington River Protection Solutions, Cl12M Hill, PNNI., AREVA, Columbia Energy & Environmental, Hligh-Line Engineering, Intermech, Energy Solutions and Mid-Columrbia Engineering.
ENSL has provided commercial calibration services for the last 16 years. In addition, ENSE has provided on-site outage support to Columbia and other nuclear facilities through the Utilities Service Alliance shared-personnel program, Packwood Lake H lydroelectric Project and H lermiston Generating Facility.Laboratory employees also provide support through on-site audits and surveillances of vendors for qualification and placement on the Energy Northwest E'valuated Suppliers List.The ENSI has also been involved with educational outreach in the Tri-Cities through participation in the annual Science Technology Engineering and Math Conference and the World Metrology Day.T his participation includes classroom instruction to students at local schools in hands-on applied physics, as well as hosting students at the ENSL laboratory facilities for work-based learning experiences.
Energy Northwest Standards Laboratory Utilities Service ALliance 20 Batancing a New Energy Horizon ENVIRONMENTAL
& ANALYTICAL SERVICES LABORATORY For more than 16 years, Energy Northwest's Environmental and Analytical Services Laboratory has provided chemical analysis and environmental monitoring expertise for utility, municipal and residential customers.
The laboratory continues to maintain accreditation for wastewater, drinking water, radiochemical analyses, and licensure as a clinical laboratory for drug screenings.
Services provided to Columbia Generating Station and outside clients include metals quantification, general chemistry, microbiological testing, radiological monitoring, lubricant condition monitoring, material verification, commercial-grade dedication of materials, and aquatic and terrestrial monitoring.
This includes working with the Washington Geological Survey as part of a Department of Energy geothermal grant. Energy Services and Development financially supported the project to participate in the chemical analysis of mineral springs samples collected throughout the state of Washington.
The Radiological Environmental Monitoring Program for Columbia is operated by the laboratory and independently assesses the radiological impact of Columbia operation.
The REMP lab collects and analyzes air, water and agricultural samples to ensure any environmental impact is known and quantified.
In support of Energy Northwest's ISO 14001 Environmental Management System commitment, the laboratory monitors noxious weed populations and controls these populations primarily through the use of species-specific insects. Additionally, as part of the Migratory Bird Habitat Enhancement Plan, artificial nest sites were installed during fiscal year 2012 for the burrowing owl, a "species of concern" listed by Washington state. Ongoing monitoring during subsequent fiscal years indicates that burrowing owls are using the artificial nest burrows.Laboratory employees continue to perform key environmental assessments at the Shepherds Flat Wind Farm located in north-central Oregon. Owned by Caithness Shepherds Flat, LLC, of Sacramento, Calif., the project's 909-megawatt capacity makes it the largest wind generation facility in the United States. Involvement with the project has been ongoing since 2002.The laboratory staff continues their involvement with educational outreach in the Tri-Cities, including presentations to Delta I ligh School students, serving as judges for local science and technology competitions and participating in the annual Science Technology Engineering and Math Conference.
With the laboratory's participation, students learn about analytical chemistry, laboratory testing methods, careers in environmental science and the importance of clean energy.$615A0 Revenue from the sales of metal scrap materiaLs from Nuclear Project 1 INDUSTRIAL DEVELOPMENT COMPLEX The Industrial Development Complex is located just east of Columbia Generating Station and is operated by Energy Northwest.
A leasing business line has successfully leveraged available outlying buildings by renting office and warehouse space, as well as former power facilities.
Tenants based at the IDC are primarily involved in the ongoing construction and restoration efforts at the Department of Energy's Hanford Site. Reduced federal funding continued through fiscal 2014, causing site support contractors to cut costs. While total leased space declined during fiscal 2014, total revenue generated through IDC leasing was $615,400.Energy Services and Development has a strategic plan for the IDC. The declining trend in leasing affords the opportunity to look at ways to efficiently remove unused infrastructure.
An asset sales project generated
$2.035M revenue from the sales of metal scrap materials beginning in fiscal 2014. This ongoing initiative reduces site short- and long-term maintenance costs to regional ratepayers.
ve" 22 Balancing a New Energy Ho izon ENVIRONMENTAL STEWARDSHIP Environmental Stewardship is the cornerstone of the Energy Northwest Environmental Management System and all employees are expected to consider the environment in everything they do. This, along with commitments to regulatory compliance and pollution prevention are keys to continuation of Energy Northwest's EMS registration to the International Organization for Standardization Excellent performance continued in hazardous material sp prevention in fiscal 2014 with one minor spill counted as bei 1 preventable across all facilities of Energy Northwest.
To support a strategic initiative to strengthen energy conservatic an environmental objective and target was established with initial target of 400 MWh of gained electrical efficiency across 14001:2004 standard.
Each year Energy Northwest is subjected to third-party oversight by NSF International Strategic Registrations, an accredited registrar, which ensures conformance with the rigorous requirements of the standard.During fiscal year 2014, Energy Northwest established aggressive environmental targets for ISO 14001 :2004 set ont Ihe i-(iterla for art envir-onnientcil iinaaiigenien't systein (IH(I can be cei-tifictI to. RI toes not state ireqniim'emenis for envi'ironniental p~ejrfiniianee, ba~t mnaps ont a f,'amneivork that a conii)(i) oi,01 organiizationt canfJoIloii, to se't iilaiiajfleinlt systeiii.Energy Northwest sites. Significant lightii enhancements at Columbia led the agen to achieving 745 MWh of gained electri(efficiency, achieved primarily throul conversion of exterior lighting to LE fixtures and more stringent operation control.Energy Northwest is committed taking care of the environment.
Ener, Northwest's commitment is formal certified by the International Organizati(hazardous-waste generation, mixed-waste generation, prevention of hazardous material spills and strengthening energy conservation.
After several years of successfully achieving aggressive reduction targets for hazardous-and mixed-waste generation, Energy Northwest did not achieve the fiscal 2014 targets. The largest contributor to these numbers within Energy Northwest is Columbia Generating Station, which performs among the best of like plants within the nuclear industry.
Consistent with the Energy Northwest EMS commitment to continual improvement, these objectives will receive on-going focus in fiscal 2015.A global independent public health and environmental organization that provides standards development, product certification, testing, auditing, education and risk management services I'll ,1,, Noii I 'M, I Armu;d P(ýImO 23 for Standardization, which underscores the agency's compliance to international environmental standards and provides third-party validation that Energy Northwest's environmental stewardship and management efforts are both effective and sustainable.
The Environmental and Regulatory Programs group continues to provide support to the organization in ensuring rigorous compliance with regulatory requirements and conformance with tile elements of the ISO 14001:2004 standard.To improve the quality of life to members in the Columbia Basin community, more than 40 employee volunteers from Energy Northwest and AREVA teamed up to help make the Tapteal Greenway Association Trail system cleaner and more user-friendly.
The two companies partnered with the association to celebrate Earth Day and involved a community clean-up project along the Yakima River. The team of volunteers filled two large roll-away dumpsters to capacity with littered debris."It was very gratifying to see the turnout of volunteers on a cold, wet afternoon," said Steve Vaughn, Environmental Management System coordinator.
The project consisted of developing a path on a currently unused dirt road along the old canal which parallels the Yakima River off of Twin Bridges Road between I lighway 240 and the river. Employee volunteers picked up debris and helped to convert the road to an easily accessible and "earth friendly" path that is free and open to the public.The clean-up activity reflects both organizations' commitment to the local community and the environment.
Through these efforts, environmental stewardship opportunities continue to he identified and supported.,Iloi'.' Millti 40 tcfltphoycet'.11It'JS/',l IFnii',-y Aforti-htw'sl o111iidARFI 1 1 tttiz('fIJC iiii to hellI),iii~k' the lpel(('tci/As.soU(k fiou I Tioi stjsteii t-l clatiei (111( IltOP(' is('--Jeiz'dhJ.
24 Balancing a New Energy Horizon COMMUNITY SERVICE One of the community and educational outreach opportunities Energy Northwest undertook this year was a series of public service announcements focusing on the value of nuclear energy and Columbia Generating Station, touting Columbia's new informational website: www.ColumbiaValue.com.
The PSAs remain available for viewing on the agency's social media sites.I Youb w wClmi aalu.co 1 Energy Northwest employees participated in several energy and environmental-related events throughout the year, such as Kids Engineering Day and Washington Energy Week.Agency employees also spoke to a wide range of audiences, including many civic and business organizations, through the Energy Northwest Speakers Bureau. Our speakers visited elementary schools, universities, neighborhood associations, international agencies, and other groups throughout the state to raise public awareness and understanding of the Energy Northwest mission, nuclear power generation and regional energy issues.As a major Washington employer and member of the local Tri-Cities business community for more than 50 years, Energy Northwest strongly believes in supporting the communities and non-profit agencies where its employees work and live.From agency long-time veterans to the iteivest employees, Energy Northwest ctires for our community through direct, hands-on int.ohemetnl.
Energy Northwest 2014 Annual Report 25 The agency officially sponsors three important community organizations:
United Way, I lead Start and March of Dimes.United Way Energy Northwest employees contributed more than $72,000 to the United Way of Benton and Franklin counties.
These pledges help provide hot meals to elderly neighbors, fund youth developmental programs, provide disaster relief planning for our community and build self-esteem in at-risk youth.United Way improves lives through their Community Solutions program. The goal is that everyone living in Benton and Franklin counties has a good education; access to healthcare; lives and works in a safe environment; and is a self-sufficient, active member of the community.
March of Dimes Team Energy Northwest raised more than $30,000 this year for the March of Dimes, exceeding its goal and once again demonstrating the philanthropy and generosity of its employees.
More than 60 Energy Northwest employees, along with their spouses, children and pets, participated in the 3.1-mile walk along the Columbia River during the 2014 Tri-Cities March for Babies event to support neonatal birth centers and local families in need. Energy Northwest was the top team contributor in the March of Dimes' Southeastern Washington region for 2014.Head Start Energy Northwest celebrated 33 years of support to the Benton Franklin [lead Start program and earned the Association of Washington Business' community service award for the agency's important and enduring service to others in the I lead Start Program.Energy Northwest commits to adopting every I lead Start child for the holiday season. During fiscal 2014, employees sponsored more than 400 children.Each child provided a wish list to Santa and received at least one toy and one clothing item. Energy Northwest employees, dressed as Santa and his elves, distributed the gifts during 11 Ilead Start parties.T"he Head Start program is the most successful, longest-running, national school readiness program in the tlnited States. It provides comprehensive education, health, nutrition and parent involvement services to low-income children and their families.More than 25 million pre-school aged children have benefited from I lead Start, and the number of children served in Benton and Franklin counties has more than doubled during the past two decades.~March of Dimes $30,000 Saving babies, together-26 Balancing a New Energy Horizon Congratulations to Energy Northivest emploijees who received (EO Lieadership Peiforinanee awards.Duringjiscal year 2014, these emnplotjees were honored for" exenmplifying excellence in performance through their achievements and worker pr ctices.Spain Abney Sabrina Absolon Kenneth Aldridge Robert Alexander Timothy Allbee Nykki Apodaca Jeremiah Atkins Kelly Baker Ruby Barajas Brian Berglin Keith Berrett Eddie Bickett John Blake Mark Blake Chadd Bliss PT Boler Jessica Braun Denise Brandon Daryl Breard David Briggs OJ Brooks Steven Brush Scott Burn James Burns Kevin Byers lames Cantrell Barry Carpenter Kaitlin Carter Karen Claussen Shane Combs Daniel Dale Stephen Dallas James Darling lames Daugherty Jason Davis Tanya Dion Amy Donaldson lames Dorwin Ryan Downing Zach Dunham Aaron Elsey Al Fahnestock Sandra Fardell Eric Fazzari John Fellman Marcus Fellows Cassy Fey John Fisher Jacque Fuller Rolly Fuller Richard Garcia Michael Gibson Mark Giomi Robert Green Don Gregoire Dwayne Gregory Frank Guendelsberger Bill Guldemond Robert Hammons Paul Hand Jessica [lansen lames Hardman Wayne Harper Judi Hastings Richard Hermann Grover tlettel Johnathan I licks David Hiller David Holick Michael ltolle Paul Hromer Jack Hoskins Jim I lysjulien Robert Inman Eli Jakeman William Jensen Darla Johnson Matthew Johnson Morgan Johnson Steve Kartchner Marian Kellett Mark Kendrick Daniel King Jennifer Knighten Jennifer Kuklinski John Lamendola Kristopher Lapp Jaron Lee Peter Lesperance Pattie Lilly Jeffrey Lippert Terry Loux Rob Lowe Jeremy Lundquist Bruce MacKissock Linda Mar Chris Maxwell Michael McLain Scott Metzger lason Modrell Cheri Monroe Chip Moon Kim Morris Abbas Mostala Zeny Myers Erik Noble Dwendell Oaks Kendal Orona Sundy Oltjenbruns Arnold Owens Craig Parker Jessica Parker Linda Parrella Jim Paul Alan Peterman Jocelyn Peterman John Peterson Danae Powell Tim Powell Lisa Poznanski Stacey Presnell Don Queen Angel Rains Garrett Rheaume Michael Rhodes Robert Rhodes Mark Rice lamey Rich William Richards Steve Richter William Robinson Darin Rodabaugh Diego Rolon Michael Rowe John Russ James Sauceda Don Schirm Geoffrey Schneider Richard Schultz Edward Schumacher David Schumann Jeff Schwartz Sherri Schwartz Charles Scott Jason Simmons John Slack Angela Smith Christopher Smith Clay Smith Kevin Smith Thomas Smith Kyle Sponholtz John Steigers Danny Stephens Ben Stewart Tim Stumetz Ben Sturges Gary Swarers Sam Szendre Andy Thome Raymond Thomson Keith Trappett Eddie Tubbs Kevin VanSpeybroeck Keg Wainwright Linda Walker Ron Walton Josh Watt Lisa Williams Tammy Wood Linda Woosley Enr lyNo twst 2014 Annua R f~ p't 27 II Financial Data & Information 28 Ba~ 1itctinýj Ne,ýiElef y Hoiizo~i MANAGEMENT REPORT ON RESPONSIBILITY FOR FINANCIAL REPORTING Energy Northwest management is responsible for preparing the accompanying financial statements and for their integrity.
They were prepared in accordance with Generally Accepted Accounting Principles (GAAP) (applied on a consistent basis, and include amounts that are based on management's best estimates and judgments).
The financial statements have been audited by PricewaterhouseCoopers LLP, Energy Northwest's independent auditors.
Management has made available to PricewaterhouseCoopers LLP all financial records and related data, and believes that all representations made to PricewaterhouseCoopers LLP during its audit were valid and appropriate.
Management has established and maintains internal control procedures that provide reasonable assurance as to the integrity and reliability of the financial statements, the protection of assets from unauthorized use or disposition, and the prevention and detection of fraudulent financial reporting.
These control procedures provide appropriate division of responsibility and are documented by written policies and procedures.
Energy Northwest maintains an ongoing internal auditing program that provides for independent assessment of the effectiveness of internal controls, and for recommendations of possible improvements thereto. In addition, PricewaterhouseCoopers LLP has considered the internal control structure in order to determine their auditing procedures for the purpose of expressing an opinion on the financial statements.
Management has considered recommendations made by the internal auditor and PricewaterhouseCoopers LLP concerning the control procedures and has taken appropriate action to respond to the recommendations.
Management believes that, as of June 30, 2014, internal control procedures are adequate.M.E. Reddemann B. Ridge Chief Executive Officer Vice President, Corporate Services and Chief Financial/Chief Risk Officer AUDIT, LEGAL AND FINANCE COMMITTEE CHAIR'S LETTER The executive board's Audit, Legal and Finance Committee (committee) is composed of 11 independent directors.
Members of the committee are Chair Kathy Vaughn, Marc Daudon, Dan Gunkel (July 2013-June 2014), Jack Janda, Jim Moss, Skip Orser, Will Purser, Dave Remington, Lori Sanders, Tim Sheldon, Linda Gott (June 2014, replacing Dan Gunkel) and Sid Morrison, ex-officio.
The committee held 10 meetings during the fiscal year ending June 30, 2014.The committee oversees Energy Northwest's financial reporting process on behalf of the executive board. In fulfilling its responsibilities, the committee discussed with the internal auditor and the independent auditors the overall scope and specific plans for their respective audits, and reviewed Energy Northwest's financial statements and the adequacy of Energy Northwest's internal controls.The committee met regularly with Energy Northwest's internal auditor and convened periodic meetings with the independent auditors to discuss the results of their audit, their evaluations of Energy Northwest's internal controls, and the overall quality of Energy Northwest's financial reporting.
The meetings were designed to facilitate any private communications with the committee desired by the internal auditor or independent auditors.Kathleen R. Vaughn Chair, Audit, Legal and Finance Committee
)01 Anmm[PRe 1 ,ci 29 INDEPENDENT AUDITOR'S REPORT To the Executive Board of Energy Northwest:
We have audited the statements of net position and the related statements of revenues, expenses and changes in net position and of cash flows of the Columbia Generating Station, Packwood Lake Hydroelectric Project, Nuclear Project No. 1, Nuclear Project No. 3, the Business Development Fund, the Nine Canyon Wind Project, and the Internal Service Fund as of and for the year ended June 30, 2014, and the related notes to the financial statements, which collectively comprise the business-type activities of Energy Northwest (the "Company").
Management's Responsibility for the Financial Statements Management is responsible for the preparation and fair presentation of the financial statements in accordance with accounting principles generally accepted in the United States of America; this includes the design, implementation, and maintenance of internal control relevant to the preparation and fair presentation of financial statements that are free from material misstatement, whether due to fraud or error.Auditor's Responsibility Our responsibility is to express opinions on the financial statements based on our audit. We conducted our audit in accordance with auditing standards generally accepted in the United States of America. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free from material misstatement.
An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements.
The procedures selected depend on our judgment, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, we consider internal control relevant to the Company's preparation and fair presentation of the financial statements in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Company's internal control. Accordingly, we express no such opinion. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of significant accounting estimates made by management, as well as evaluating the overall presentation of financial statements.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion.Opinions In our opinion, the financial statements referred to above present fairly, in all material respects, the respective financial position of the business-type activities of the Company at June 30, 2014, and the respective results of its operations and its cash flows for the year then ended in accordance with accounting principles generally accepted in the United States of America.Emphasis of Matter As discussed in Note 1 to the financial statements, the Company adopted the provisions of GASB Statement No. 65, Items Previously Reported as Assets and Liabilities, effective July 1, 2013. The financial statements of Columbia Generating Station, Nuclear Project No. 1, Nuclear Project No. 3, and the Nine Canyon Wind Project as of and for the year ended June 30, 2014 reflect the adoption of the provisions of GASB 65. Our opinion is not modified with respect to this matter.Portland, Oregon September 25, 2014 30 Batancing a New Energy Hu.rizon ENERGY NORTHWEST MANAGEMENT'S DISCUSSION AND ANALYSIS Energy Northwest is a municipal corporation and joint operating agency of the state of Washington.
Each Energy Northwest business unit is financed and accounted for separately from all other current or future business assets. The following discussion and analysis is organized by business unit.The management discussion and analysis of the financial performance and activity is provided as an introduction and to aid in comparing the basic financial statements for the fiscal year (FY) ended June 30, 2014, with the basic financial statements for the FY ended June 30, 2013.Energy Northwest has adopted accounting policies and principles that are in accordance with Generally Accepted Accounting Principles (GAAP) in the United States of America. Energy Northwest's records are maintained as prescribed by the Governmental Accounting Standards Board (GASB) and, when not in conflict with GASB pronouncements, accounting standards prescribed by the Financial Accounting Standards Board (FASB). (See Note 1 to the Financial Statements.)
Because each business unit is financed and accounted for separately, the following section on financial performance is discussed by business unit to aid in analysis of assessing the financial position of each individual business unit.For comparative purposes only, the table on the following page represents a memorandum total only for Energy Northwest, as a whole, for FY 2014 and FY 2013 in accordance with GASB No. 34, "Basic Financial Statements-and Management's Discussion and Analysis-for State and Local Governments." The financial statements for Energy Northwest include the Balance Sheets; Statements of Revenues, Expenses, and Changes in Net Position;and Statements of Cash Flows for each of the business units, and Notes to Financial Statements.
The Statements of Net Position present the financial position of each business unit on an accrual basis. The Statements of Net Position report financial information about construction work in progress, the amount of resources and obligations, restricted accounts and due to/from balances for each business unit. (See Note 1 to the Financial Statements.)
The Statements of Revenues, Expenses, and Changes in Net Position provide financial information relating to all expenses, revenues and equity that reflect the results of each business unit and its related activities over the course of the fiscal year. The financial information provided aids in benchmarking activities, conducting comparisons to evaluate progress, and determining whether the business unit has successfully recovered its costs.The Statements of Cash Flows reflect cash receipts and disbursements and net changes resulting from operating, financing and investing activities.
The Statements of Cash Flows provide insight into what generates cash, where the cash comes from, and purpose of cash activity.The Notes to Financial Statements present disclosures that contribute to the understanding of the material presented in the financial statements.
This includes, but is not limited to, Schedule of Outstanding Long-Term Debt and Debt Service Requirements (See Note 5 to the Financial Statements), accounting policies, significant balances and activities, material risks, commitments and obligations, and subsequent events, if applicable.
The basic financial statements of each business unit along with the notes to the financial statements and management discussion and analysis should be used to provide an overview of Energy Northwest's financial performance.
The following discussion provides comparative financial information for the years ended June 30, 2014 and 2013. The year of 2013 has been restated to reflect changes in accounting principles per GASB Statement No. 65.(See Note 1 to the Financial Statements.)
Questions concerning any of the information provided in this report should be addressed to Energy Northwest at PO Box 968, Richland, WA, 99352.
Ene gy Northwest 201,4 Annýiat Report 31 COMBINED FINANCIAL INFORMATION June 30, 2014 and 2013 (Dollars in thousands) 2013 2014 Change Assets Current Assets $ 199,122 $ 242,268 $ 43,146 Restricted Assets Special Funds 51,896 172,851 120,955 Debt Service Funds 672,455 662,673 (9,782)Net Plant 1,499,711 1,517,397 17,686 Nuclear Fuel 985,824 999,007 13,183 Other Charges 3,259,059 3,078,698 (180,361)TOTAL ASSETS 6,668,067 6,672,894 4,827 DEFERRED OUTFLOWS OF RESOURCES*
13,572 20,048 6,476 TOTAL ASSETS AND DEFERRED OUTFLOWS $ 6,681,639
$ 6,692,942
$ 11,303 Current Liabilities S 621,867 $ 983,794 $ 361,927 Restricted Liabilities Special Funds 147,047 153,250 6,203 Debt Service Funds 139,029 123,653 (15,376)Long-Term Debt 5,755,324 5,420,783 (334,541)Other Long-Term Liabitilies 18,115 11,254 (6,861)Other Credits 5,727 6,041 314 Net Position (12,968) (12,923) 45 TOTAL LIABILITIES AND NET POSITION 6,674,141 6,685,852 11,711 DEFERRED INFLOWS OF RESOURCES*
7,498 7,090 (408)TOTAL LIABILITIES, NET POSITION $ 6,681,639
$ 6,692,942 11,303 AND DEFERRED INFLOWS Operating Revenues $ 566,920 $ 470,779 $ (96,141)Operating Expenses 443,629 386,496 (57,133)Net Operating Revenues 123,291 84,283 (39,008)Other Income and Expenses (122,221)
(84,238).
37,983 (DISTRIBUTION)
& CONTRIBUTION BEGINNING NET POSITION*
(14,038) (12,968), 1,070 ENDING NET POSITION $ (12,968) $ (12,923):
$ 45 Energy Northwest's 2013 Statement of Net Position and Statements of Revenues and Expenses and Changes in Net Position were updated for the impacts of the required retroactive application of GASB Statement No. 65 "Items Previously Reported as Assets and Liabilities," which became effective for Energy Northwest in fiscal year 2014. See Note 1 for a summary of this change in accounting principle.
32 Baiancfnq i New Energy Horizon COLUMBIA GENERATING STATION Columbia Generating Station (Columbia) is wholly owned by Energy Northwest and its participants and operated by Energy Northwest.
The plant is a 1, 1 70-megawatt electric (MWe, Design Electric Rating, net) boiling water nuclear power plant located on the Department of Energy's (DOE) Hanford Site north of Richland, Washington.
Columbia produced 9,781 gigawatt-hours (GWh) of electricity in FY 2014, as compared to 8,479 GWh of electricity in FY 2013, which included economic dispatch of 62 and 51 GWh respectively.
The FY 2014 generation increase of 15.4 percent was due to record generation performance.
Additionally, FY 2014 generation was approximately 313 GWh higher than budgeted, reflecting the continuous and successful generation run.Columbia's cost performance is measured by the cost of power indicator.
The cost of power for FY 2014 was 3.70 cents per kilowatt-hour (kWh) as compared with 4.51 cents per kWh in FY 2013. The industry cost of power fluctuates year to year depending on various factors such as refueling outages and other planned activities.
The FY 2014 cost of power decrease of 18.0 percent was due to the record generation run for FY 2014 and continued successful cost control.Columbia Generating Station NET GENERATION
-GWhrs Net Position Analysis The net increase to Utility Plant (plant) and Construction Work In Progress (CWIP) from FY 2013 to FY 2014 (excluding nuclear fuel) was $25.3 million.The changes to plant and CWIP were comprised of additions to plant of$156.0 million with a decrease to CWIP of $47.3 million. Remaining changes was the period effect of depreciation of $83.4 million.The FY 2014 CWIP balance of $69.2 million consisted of 11 major projects of at least $1.2 million: Fukushima impacts, Plant Telephone Obsolescence, Cyber Security, Stack Monitor Performance, Service Water Pump and Motor Overhauls, Turbine Blades and Valves, ISFSI Pad Expansion, High Pressure Core Spray Refurbishments, Reactor Feed Water Overhauls, Condensate Pump Refurbishments, and Residual Heat Removal Systems. These projects resulted in 74 percent of the CWIP activity.
The remaining 26 percent was made up of 87 separate projects.Nuclear fuel, net of accumulated amortization, increased
$13.2 million from FY 2013 to $999.0 million for FY 2014. During FY 2014 Columbia incurred $49.1 million in capitalized fuel activity, $11.2 million of capitalized interest additions and $47.0 million of amortization.
Current assets increased
$52.4 million in FY 2014 to $218.7 million.Changes were increases to receivables of $23.8 million, increases to cash and investments of $9.2 million, due from other business units of $9.6 million and increases to materials and supplies and prepaid amounts of $9.8 million.Special funds increased
$120.5 million to $136.9 million in FY 2014 due to the FY 2014 bond activity and schedule of construction costs for these funds in FY 2014.Columbia Generating Station COST OF POWER -CENTS/kWh FY 2014 FY 2013 FY 2012 FY 2011 FY 2010 9,781 FY 2014 8,479 FY 2013 6,984 FY 2012 7,247 FY 2011 8,124 FY 2010 3.70 4.51 4.73 5.69 3.74 0 2,000 4,000 6,000 8,000 10,000 0 1 2 3 4 5 6 I f 33 The debt service funds decreased
$48.3 million in FY 2014 to $99.1 million. The decrease is due to the maturity of outstanding debt along with restructuring and funding activities and the requirement of making funds available for these maturities.
Other charges increased
$11.5 million in FY 2014 from $895.4 million to$907.0 million. The increase was change in Costs in Excess of Billings related to the net effect of payment of current maturities and refunding activity related to available debt of $11.5 million.Current liabilities increased
$0.9 million in FY 2014 to $140.0 million.Components of the change were a decrease to current maturities of debt of$28.8 million, increases due to timing of year end obligations of $8.6 million, and timing of due to participants that resulted in an increase of $21.1 million.Restricted liabilities increased
$2.0 million in FY 2014 to $200.7 million.The increase was due to bond activity and related decrease of $4.6 million and decommissioning increases of $6.6 million.Long-term debt (Bonds Payable) increased
$187.0 million in FY 2014 from$3,268.6 million to $3,455.7 million due to the debt associated with the planned and approved debt restructuring for the region.Other long-term liabilities decreased
$6.9 million in FY 2014 to $11.0 million related to nuclear fuel cask activity.Statement of Revenue and Expenses Analysis Columbia is a net-billed project. Energy Northwest recognizes revenues equal to expenses for each period on net-billed projects.
No net revenue or loss is recognized and no net position is accumulated.
Operating expenses decreased
$55.7 million from FY 2013 costs of $418.9 million to $363.2 million in FY 2014. The decreases in costs were due to FY 2013 being a planned refueling year as compared to FY 2014 and were mostly in the operations and maintenance areas amounting to $70.2 million. The decreased costs were offset by increased benefit costs in the administrative and general area of $1.2 million, and increases to fuel costs and generation tax of $11.8 million due to the FY 2014 record generation.
Other Income and Expenses decreased
$39.1 million from FY 2013 to$80.3 million net expenses in FY 2014. The spent fuel litigation settlement from the Department of Energy (DOE) of $23.6 million was the major factor in the decrease to overall expenses and is shown as gain on DOE settlement on the Statement of Revenues, Expenses, and Changes in Net Position. (See Note 13 to the financial statements.)
The remaining decrease of $1 5.5 million was due to decreased bond related expenses of $1 7.6 million, decrease in investment income of $0.6 million, decreases in miscellaneous non-utility leasing revenue of $2.3 million and completion of the TVA fuel lease revenue program in FY 2013 resulting in a $0.7 million reduction in costs.Columbia's total operating revenue decreased from $538.3 million in FY 2013 to $443.5 million in FY 2014. The decrease of $94.8 million was due to the off cycle year of the two year refueling and maintenance program and the related effect of the net billing agreement on total revenue. (See Note 6 to the Financial Statements for Net Billing discussion.
Columbia Generating Station TOTAL OPERATING COSTS (dollars in thousands)
FY 2014 FY 2013 FY 2012 FY 2011 FY 2010 443,484 539,779 397,881 522,156 448,075 0 100,000 200,000 300,000 400,000 500,000 Operating Expenses Other Income Expenses 34 Balancing -i New; Energy Hor~zur PACKWOOD LAKE HYDROELECTRIC PROJECT The Packwood Lake Hydroelectric Project (Packwood) is wholly owned and operated by Energy Northwest.
Packwood consists of a diversion structure at Packwood Lake and a powerhouse located near the town of Packwood, Washington.
The water is carried from the lake to the powerhouse through a five-mile long buried tunnel and drops nearly 1,800 feet in elevation.
Packwood produced 115.04 GWh of electricity in FY 2014 versus 103.70 GWh in FY 2013. The 10.9 percent increase in generation can be attributed to more favorable water availability compared to the previous year, and resulted in the fifth highest generation in the life of the plant. Generation results for FY 2014 did exceed the estimated amount of 84.64 GWh by 35.9 percent.Packwood's cost performance is measured by the cost of power indicator.
The cost of power for FY 2014 was $1.88 cents per kWh as compared to $2.07 cents per kWh in FY 2013. The cost of power fluctuates year-to-year depending on various factors such as outage, maintenance, generation, and other operating costs. The FY 2014 cost of power decrease of 9.2 percent was a result of increased generation due to water availability and a slight decrease of overall costs attributable to operations and maintenance charges.The Packwood Lake Hydroelectric Project NET GENERATION
-GWhrs The Packwood Lake Hydroelectric Project COST OF POWER -CENTS/kWh FY 2014 FY 2013 FY 2012 FY 2011 FY 2010 115.04 FY 2014 103.70 FY 2013 119.43 FY 2012 107.92 FY 2011 1.88 2.07 1.58 1.59 1.82 86.07 FY 2010 0 20 40 60 80 100 120 Net Position Analysis Total assets increased
$0.2 million from FY 2013, with the major driver being an increase of $0.2 million in capital activity for utility plant. The corresponding increase to total liabilities of $0.2 million was the increase in due to participants for the results of operations.
Packwood has incurred $3.7 million in relicensing costs through FY 2013 with no new costs incurred for FY 2014. These costs are shown as Other Charges on the Statement of Net Position.
Packwood has been operating under a 50-year license issued by the FERC, which expired on February 28, 2010. Energy Northwest submitted the Final License Application (FLA) for renewal of the operating license to FERC on February 22, 2008. On March 4, 2010, FERC issued a one-year extension to operate under the original license which is indefinitely extended for continued operations until formal decision is issued by FERC and a new operating license is granted. As of June 30, 2014, Packwood continues to be relicensed under this extended agreement.
0.0 0.5 1.0 1.5 2.0 2.50 Statement of Revenue and Expenses Analysis The agreement with Packwood participants obligates them to pay annual costs and to receive excess revenues. (See Note 1 to the Financial Statements.)
Accordingly, Energy Northwest recognizes revenues equal to expenses for each period. No net revenue or loss is recognized and no net position is accumulated.
Operating expenses decreased
$28 thousand to $2.15 million in FY 2014 from $2.18 million in FY 2013. Operations and maintenance and administrative and general costs decreased
$58 thousand offset by increased costs of $31 thousand for depreciation, amortization and generation tax.Other Income and Expense decreased from a net gain of $8 thousand in FY 2013 to a $4 thousand gain in FY 2014. The $4 thousand decrease in net gain was due to fewer property disposals and decreased investment income.
35 The Packwood Lake Hydroetectric Project TOTAL OPERATING COSTS (dollars in thousands)
Packwood participants are obligated to pay annual costs of the project (including any applicable debt service), whether or not the project is operable.The Packwood participants also share project revenue to the extent that the amounts exceed costs. These funds can be returned to the participants or kept within the project. As of June 30, 2014 there is $5.8 million recorded as deferred revenues in excess of costs that are being kept within the project.Packwood participants are currently taking 100 percent of the project generation; there are no additional agreements for power sales.FY 2014 FY 2013 FY 2012 FY 2011 FY 2010 2,150 2,166 1,872 1,742 1,535 500 1,000 1,500 2,000 2,500 Operating Expenses = Other Income/Expenses NUCLEAR PROJECT NO. 1 Energy Northwest wholly owns Nuclear Project No. 1, a 1,250-MWe plant, which was placed in extended construction delay status in 1982, when it was 65 percent complete.
On May 13, 1994, Energy Northwest's Board of Directors adopted a resolution terminating Nuclear Project No. 1. All funding requirements are net-billed obligations of Nuclear Project No. 1. Termination expenses and debt service costs comprise the activity of Nuclear Project No. 1 and are net-billed. (See Notes 6 and 13 to the Financial Statements.)
Net Position Analysis Restricted cash increased
$52.3 million in FY 2014 to $361.8 million. The increase was due to bond activities, investment activities and transactions between other units.Long-term debt decreased
$345.9 million from $1,084.2 million in FY 2013 to $738.8 million in FY 2014 as a result of $332.1 million being transferred to current debt to be paid on July 1, 2014 along with a decrease in bond related amortization of $13.3 million. Short term debt increased
$59.0 million per the debt maturity schedule.
There was a decrease to restricted liabilities of$8.6 million, represented by decreases to interest payable of $7.0 million and decommissioning estimate of $1.6 million.Statement of Revenue and Expenses Analysis Other Income and Expenses showed a net decrease to expenses of$10.9 million from $52.5 million in FY 2013 to $41.6 million in FY 2014.Investment revenue for FY 2014 decreased
$53 thousand; bond related expenses decreased
$9.9 million; other expenses decreased
$1.0 million, which included a restoration cost estimate decrease of $1.3 million as a result of accelerated restoration work completed, offset by a slight increase of $0.3 million in plant preservation costs.NUCLEAR PROJECT NO. 3 Nuclear Project No. 3, a 1,240-MWe plant, was placed in extended construction delay status in 1983, when it was 75 percent complete.
On May 13, 1994, Energy Northwest's Board of Directors adopted a resolution terminating Nuclear Project No. 3. Energy Northwest is no longer responsible for any site restoration costs as they were transferred with the assets to the Satsop Redevelopment Project. The debt service related activities remain the responsibility of Energy Northwest and are net-billed. (See Notes 6 and 13 to the Financial Statements.)
Net Position Analysis Long-term debt decreased
$166.9 million from $1,274.2 million in FY 2013 to $1,107.3 million in FY 2014, as a result of $157.3 million being transferred to current debt to be paid on July 1, 2014 along with a decrease in bond related amortization of $9.1 million; and the remaining change was due to the debt associated with the planned and approved debt restructuring.
Current debt per the debt maturity schedule decreased
$8.9 million from $166.2 million in FY 2013 to $157.3 million in FY 2014. The remaining changes in liabilities of $82.1 million were due to an increase in notes payable related to bond financing of $85.2 million, and an decrease in accrued interest payable of $3.1 million.Statement of Revenue and Expenses Analysis Overall expenses decreased
$6.5 million from FY 2013 related to bond activity (interest expense and amortization).
Investment income was lower by $22 thousand but was offset by decreased liquidation (plant preservation and termination) costs.
36 F~[L~aNv r H BUSINESS DEVELOPMENT FUND Energy Northwest was created to enable Washington public power utilities and municipalities to build and operate generation projects.
The Business Development Fund (BDF) was created by Executive Board Resolution No. 1006 in April 1997, for the purpose of holding, administering, disbursing, and accounting for Energy Northwest costs and revenues generated from engaging in new energy business opportunities.
The BDF is managed as an enterprise fund. Four business lines have been created within the fund: General Services and Facilities, Generation, Professional Services, and Business Unit Support. Each line may have one or more programs that are managed as a unique business activity.Net Position Analysis Total assets increased
$0.3 million from $10.1 million in FY 2013 to $10.4 million in FY 2014. Increases were due to cash and investments of $0.2 million, net plant increases of $0.2 million, increase to due from other business activity of $0.4 million and decreases to receivables and prepaid amounts of $0.5 million. Liabilities increased
$0.6 million from FY 2013 due to timing of year end outstanding items.Statement of Revenues and Expenses Analysis Operating Revenues in FY 2014 totaled $6.0 million as compared to FY 2013 revenues of $9.0 million, a decrease of $3.0 million (33.3 percent).
The decrease in revenues was driven by three major activity areas: Discontinued projects for Grant County, Seattle City Light and Kalama which amounted to a decrease of $1.8 million, lowered leasing rates for facilities resulting in a decrease of $0.3 million, and lower amounts of activity for Hanford calibration work of $0.9 million. Operating costs decreased
$1.8 million due to decreased business activity discussed above resulting in a net operating decrease of $1.2 million.Other Income and Expenses remained steady at $1.3 million, with decreases of $0.2 million in other expenses which was offset by decreases in miscellaneous income of $0.2 million. There were no other significant individual item variances.
The Business Development Fund receives contributions from the Internal Service Fund to cover cash needs during startup periods. Initial startup costs are not expected to be paid back and are shown as contributions.
As an operating business unit, requests can be made to fund incurred operating expenses.
In FY 2014 there were no contributions (transfers), which was also the case for FY 2013.
pot 37 NINE CANYON WIND PROJECT The Nine Canyon Wind Project (Nine Canyon) is wholly owned and operated by Energy Northwest.
Nine Canyon is located in the Horse Heaven Hills area southwest of Kennewick, Wash. Electricity generated by Nine Canyon is purchased by Pacific Northwest Public Utility Districts (purchasers).
Each of the purchasers of Phase I, Phase II, and Phase III have signed a power purchase agreement which are part of the 2nd Amended and Restated Nine Canyon Wind Project Power Purchase Agreement which now has an end date of 2030. Nine Canyon is connected to the Bonneville Power Administration transmission grid via a substation and transmission lines constructed by Benton County Public Utility District.Phase I of Nine Canyon, which began commercial operation in September 2002, consists of 37 wind turbines, each with a maximum generating capacity of approximately 1.3 MW, for an aggregate generating capacity of 48.1 MW.Phase II of Nine Canyon, which was declared operational in December 2003, includes 12 wind turbines, each with a maximum generating capacity of 1.3 MW, for an aggregate generating capacity of approximately 15.6 MW. Phase III of Nine Canyon, which was declared operational in May 2008, includes 14 wind turbines, each with a maximum generating capacity of 2.3 MW, for an aggregate generating capacity of 32.2 MW. The total Nine Canyon generating capability is 95.9 MW, enough energy for approximately 39,000 average homes.Nine Canyon produced 239.39 GWh of electricity in FY 2014 versus 228.23 GWh in FY 2013. The increase of 4.9 percent was due to more favorable wind conditions in FY 2014 as compared to FY 2013. FY 2014 was more in line with historical averages and ranked as the third highest generation in the project's history.Nine Canyon's cost performance is measured by the cost of power indicator.
The cost of power for FY 2014 was $7.83 cents per kWh as compared to $7.91 cents per kWh in FY 2013. The cost of power fluctuates year to year depending on various factors such as wind totals and unplanned maintenance.
The slight decrease of 1.0 percent in cost of power for FY 2014 was attributable to slightly higher operating costs ($367 thousand) due to GASB Statement No. 65 implementation for bond refinancing costs offset by the third highest generation year.Nine Canyon Wind Project NET GENERATION
-GWh FY 2014 239.39 FY 2013 228.23 FY 2012 261.63 FY 2011 264.74 FY 2010 226.73 Net Position Analysis Total assets decreased
$8.5 million from $113.4 million in FY 2013 to$104.9 million in FY 2014. The major driver for the change in assets was a decrease of $6.8 million in net plant due to accumulated depreciation.
The remaining changes consisted of decreases to restricted assets of $1.5 million and decreases in cash and investments of $0.7 million, and slight increases to receivables and prepaids of $0.5 million. There was an overall decrease to liabilities and net position of $8.5 million with a decrease to long term debt of $12.0 million, increases to current debt maturities of $0.4 million, increases to unamortized debt activity of $2.7 million, and decreases to accrued debt related interest of $0.7 million. The increase in net position was $0.4 million in FY 2014 as compared to a decrease of $0.2 million in FY 2013. There was an adjustment to beginning net position of $1.4 million due to the retrospective application of GASB Statement No. 65. The adjustment for the GASB application was offset by an increase in net position of $0.4 million reflecting the rate stabilization approach for Nine Canyon planning out through the 2030 period.In previous years Energy Northwest has accrued, as income (contribution) from the Department of Energy, Renewable Energy Production Incentive (REPI)payments that enable Nine Canyon to receive funds based on generation as it applies to the REPI legislation.
REPI was created to promote increases in the generation and utilization of electricity from renewable energy sources and to further the advances of renewable energy technologies.
This program, authorized under Section 1212 of the Energy Policy Act of 1992, provides financial incentive payments for electricity produced and sold by new qualifying renewable energy generation facilities.
The payment stream from Nine Canyon participants and the REPI receipts were projected to cover the total costs over the purchase agreement.
Continued shortfalls in REPI funding for the Nine Canyon project led to a revised rate plan to incorporate the impact of this shortfall over the life of the project. The billing rates for the Nine Canyon participants increased 69 percent and 80 percent for Phase I and Phase II participants respectively in FY 2008 in order to cover total project costs, projected out to the 2030 proposed project end date. The increases for Nine Canyon Wind Project COST OF POWER -CENTS/kWh FY 2014 FY 2013 FY 2012 FY 2011 FY 2010 7.83 7.91 6.69 6.56 7.88 0 1 2 3 4 5 6 7 8 9 0 50 100 150 200 250 300 38 £34 -irucngaNevj Lnerny Hon-zor FY 2008 were a change from the previous plan where a 3 percent increase each year over the life of the project was projected.
Going forward, the increase or decrease in rates will be based on cash requirements of debt repayment and the cost of operations.
Phase III started with an initial planning rate of $49.82 per MWh which increased at 3 percent per year for three years. In year six (FY 2013) the rate increased to a rate that is expected to be stabilized over the life of the project. Possible adjustments may be necessary to future rates depending on operating costs and REPI funding, similar to Phase I and II.Statement of Revenues and Expenses Analysis Operating revenues increased
$0.2 million from $19.0 million in FY 2013 to$19.2 million in FY 2014. The project received revenue from the billing of the purchasers at an average rate of $76.33 per MWh for FY 2014 as compared to $80.06 per MWh for FY 2013 which is reflective of the implementation of the revised rate plan in FY 2008 to account for REPI funding shortfalls and costs of operations.
The decrease in the average rate billed to purchasers was a direct result of increased generation above FY 2014 estimates.
Operating costs increased from $13.1 million in FY 2013 to $13.6 million in FY 2014.Increased operating costs of $0.5 million for FY 2014 were due to $0.4 million recognition of current period costs for refinancing due to implementation of GASB Statement No. 65 and a slight increase ($0.1 million) in overall operations and maintenance expenditures.
Other income and expenses decreased
$0.5 million from $5.7 million in net expenses FY 2013 to $5.2 million in FY 2014. Decreased interest costs of $0.3 million and decreases in amortized bond expenses of $0.3 million accounted for the change. Net gain or change in net position of $0.4 million for FY 2014 was a direct result of the planned average rate increase with lower than budgeted operating costs.The original plan anticipated operating at a loss in the early years and gradually increasing the rate charged to the purchasers to avoid a large rate increase after the REPI expires. The REPI incentive expires 10 years from the initial operation startup date for each phase. Reserves that were established are used to facilitate this plan. The rate plan in FY 2008 was revised to account for the shortfall experienced in the REPI funding and to provide a new rate scenario out to the 2030 project end date. Energy Northwest did not receive REPI funding in FY 2014 and is not anticipating receiving any future REPI incentives.
The results from FY 2014 reflect the revised rate plan scenario and gradual increase in the return of total net position.Nine Canyon Wind Project TOTAL OPERATING COSTS (dottars in thousands)
FY 2014 FY 2013 FY 2012 FY 2011 FY 2010 18,750 18,805 17,467 17,466 16,506 15,000 0 3,000 6,000 9,000 12,000= Operating Expenses M Other income/ Expenses
-nei av ý,ýortfiwc
-2014 A witi a[ Repwt 39 INTERNAL SERVICE FUND The Internal Service Fund (ISF) (formerly the General Fund) was established in May 1957. The ISF provides services to the other funds. This fund accounts for the central procurement of certain common goods and services for the business units on a cost reimbursement basis. (See Note 1 to Financial Statements.)
Net Position Analysis Total assets decreased
$16.3 million from $55.7 million in FY 2013 to$39.4 million in FY 2014. The majority of the change ($16.6 million) was a result of year end allocation to other business units. There were small increases to cash and investments of $1.4 million with a decrease of $1.1 million to net plant accounting for the remainder of the changes.The net increase in net position and liabilities is due to decreases in accounts payable and payroll related liabilities of $17.4 million due to year-end allocation of related expenses and an increase of $1.1 million due to change in unpaid bearer bond estimates.
Statement of Revenues and Expenses Analysis Net revenues for FY 2014 decreased
$28 thousand from FY 2013. The decrease was due to decreased amounts of other business expenses of$54 thousand, decrease in depreciation of $0.7 million offset by decreases in operating revenue due to operations of $0.8 million and interest of $4 thousand.CURRENT DEBT RATINGS (Unaudited)
Nine Canyon Rating Energy Northwest (Long-Term)
Net-Billed Rating Phase I & II Phase III Fitch, Inc.Moodys Investors Service, Inc. (Moodys)Standard and Poor's Ratings Services (S & P)AA Aal A-A2 A-A2 AA- A-A STATEMENT OF NET POSITION As of June 30, 2014 (Dollars in thousands)
Columbia Packwood Lake Nuclear Nuclear Business Nine Canyon Generating Hydroelectric Project Project Development Wind Station Project Number 1 Number 3" Fund Project Internal Service Fund Combined Total Subtotal ASSETS CURRENT ASSETS Cash Available-for-sale investments Accounts and other receivables Due from other business units Materials and supplies$ 39,791 $12,576 23,962 9,450 130,953 892 $ 3,391 500 -121 -131 327 3,251 $ 2,348 $5,434 118 13 743 8,965 $ 58,638 $-18,510 386 24,587 156 10,820-130,953 1,333 S 4,997 148 189 59,971 23,507 24,735 130,953 Prepayments and other 1,735 16 ---184 1,935 1,167 3,102 TOTAL CURRENT ASSETS 218,467 1,660 3,718 3,264 8,643 9,691 245,443 7,834 242,268 RESTRICTED ASSETS (NOTE 1)Special funds Cash 941 3,501 7,728 195 31 12,396 2,369 14,765 Available-for-sale investments 136,020 -1,557 137,577 20,491 158,068 Accounts and other receivables 18 -18 18 Debt service funds Cash 99,110 358,301 183,331 10,040 650,782 650,782 Available-for-sale investments
--2,108 -9,783 11,891 11,891 TOTAL RESTRICTED ASSETS 236,089 361,802 193,167 195 21,411 812,664 22,860 835,524 NON CURRENTASSETS UTILITY PLANT (Note 2)In service 3,969,575 14,635 --2,898 134,518 4,121,626 47,878 4,169,504 Not in service --29,415 -29,415 29,415 Construction work in progress 69,150 -69,150 69,150 Accumulated depreciation (2,606,854)
(12,892) (29,415) (1,335) (60,960) (2,711,456)
(39,216) (2,750,672)
Net Utility Plant 1,431,871 1,743 1,563 73,558 1,508,735 8,662 1,517,397 Nuclear fuel, net of accumulated depreciation 999,007 999,007 999,007 TOTAL NONCURRENT ASSETS 2,430,878 1,743 -1,563 73,558 2,507,742 8,662 2,516,404 OTHER CHARGES Cost in excess of billings 906,957 985,437 1,182,315
--3,074,709
-3,074,709 Prepaid bond insurance
---252 252 252 Other -3,737 --3,737 3,737 TOTAL OTHER CHARGES 906,957 3,737 985,437 1,182,315
-252 3,078,698
-3,078,698 TOTAL ASSETS 3,792,391 7,140 1,350,957 1,378,746 10,401 104,912 6,644,547 39,356 6,672,894 DEFERRED OUTFLOWS OF RESOURCES Deferred outflows-unamortized loss on bond refunding 18,183 900 965 20,048 20,048 TOTAL DEFERRED OUTFLOWS OF RESOURCES 18,183 900 965 --20,048 -20,048 TOTAL ASSETS AND DEFERRED OUTFLOWS $ 3,810,574
$ 7,140 $ 1,351,857 S 1,379,711
$ 10,401 $ 104,912 $ 6,664,595
$ 39,356 $ 6,692,942 Project recorded on a liquidation basis The accompanying notes are an integral part of these combined financial statements
- Energy Northwest's 2013 Statement of Net Position and Statements of Revenues and Expenses and Changes in Net Position were updated for the impacts of the required retroactive application of GASB Statement No. 65 "Items Previously Reported as Assets and Liabilities," which became effective for Energy Northwest in fiscal year 2014. See Note 1 for a summary of this change in accounting principle.
~I 41 STATEMENT OF NET POSITION As of June 30, 2014 (DoLLars in thousands)
Columbia Generating Packwood Lake Hydroelectric Nuclear Project Nuclear Project Business Development Nine Canyon Wind Internal Service Combined Station Project Number 1
- Number 3* Fund Project Subtotal Fund Total LIABILITIES AND NET POSITION CURRENT LIABILITIES Current maturities of long-term debt $ 32,205 $ -S$ 332,100 $ 157,300 $ -$ 7,265 $ 528,870 $ -$ 528,870 Current notes payable --235,445 85,180 --320,625 .320,625 Accounts payable and accrued expenses 62,214 294 338 58 1,635 556 65,095 22,166 87,261 Due to participants 46,009 1,029 ---47,038 -47,038 Due to other business units -- -----11,009 -TOTAL CURRENT LIABILITIES 140,428 1,323 567,883 242,538 1,6351 7,821 961,628 33,175 983,794 LIABILITIES-PAYABLE FROM RESTRICTED ASSETS (NOTE 1)Special funds Accounts payable and accrued expenses 133,797 -16,608 --1,341 151,746 1,504, 153,250 Debt service funds Accrued interest payable 66,905 26,201 28,139 -2,408 123,653 123,653 TOTAL RESTRICTED LIABILITIES 200,702 -42,809 28,139 3,749 275,399 1,504 276,903 LONG-TERM DEBT (NOTE 5)Revenue bonds payable 3,304,805
-715,905 1,071,400
.112,120 5,204,230
-5,204,230 Unamortized (discount)/
150,938 -22,919 35,894 -6,802 216,553 -216,553 premium on bonds -net TOTAL LONG-TERM DEBT 3,455,743
-738,824 1,107,294
-118,922 5,420,783
-5,420,783 OTHER LONG-TERM LIABILITIES 11,054 ---195 -11,249 5 11,254 OTHER CREDITS Advances from members 5,817 -..- 5,817 -5,817 and others Other .200 --24 224 224 TOTAL OTHER CREDITS -5,817 200 --24 6,041 -6,041 NET POSITION Invested in capital assets, -- 1,563 (45,675) (44,112), 8,662 (35,450)net of related debt Restricted, net --16,649 16,649 21,356 38,005 Unrestricted, net -7,008 2,860 9,868 (25,346) (15,478)NET POSITION ----8,571 (26,166) (17,595) 4,672 (12,923)TOTAL LIABILITIES 3,807,927 7,140 1,349,716 1,377,971 1,830 130,516 6,675,100 34,684 6,698,775 DEFERRED INFLOWS OF RESOURCES Deferred inflows -unamortized gain on bond refunding 2,647 -2,141 1,740 562 7,090 -7,090 TOTAL DEFERRED INFLOWS OF RESOURCES 2,647 -2,141 1,740 -562 7,090 -7,090 TOTAL LIABILITIES, NET POSITION, AND DEFERRED INFLOWS :$ 3,810,574
$ 7,140 :$ 1,351,857
$ 1,379,711
$ 10,401 $ 104,912 $ 6,664,595
$ 39,356 $ 6,692,942* Project recorded on a liquidation basis The accompanying notes are an integral part of these combined financial statements Energy Northwest's 2013 Statement of Net Position and Statements of Revenues and Expenses and Changes in Net Position were updated for the impacts of the required retroactive application of GASB Statement No. 65 "Items Previously Reported as Assets and Liabilities," which became effective for Energy Northwest in fiscal year 2014. See Note 1 for a summary of this change in accounting principle.
42 STAMncTrS, :OR NeV,, EnEPSgy A loCazon STATEMENTS OF REVENUES, EXPENSES, AND CHANGES IN NET POSITION As Of June 30, 2014 (Do~ars in thousands)
Packwood Columbia Lake Generating Hydroelectric Station Project Nuclear Project No.1 *Nuclear Project No.3 *Business Nine Canyon Development Wind Fund Project internal Service Subtotal Fund Combined Total OPERATING REVENUES$ 443,484 $ 2,150 S$ S 5,964 $19,181 $ 470,779 : $$ 470,779 OPERATING EXPENSES Services to other business units Nuclear fuel Spent fuel disposal fee Decommissioning Depreciation and amortization Operations and maintenance Administrative
& general Generation tax Total operating expenses 52,986 8,162 6,664 85,144 176,197 28,929 5,122 363,204 86 1,883 160 25 2,154 86 226 6,804 7,334 6,236-401.51 7,560 13,578 52,986 8,162 6,750 92,260 191,650.29,490 5,198 386,496 52,986 8,162 6,750 92,260 191,650 29,490 5,198 386,496 uJrcnnI~flu USOU vtlqt i I,3vO) J,OU3 04e03 0 % OZ03 OTHER INCOME & EXPENSE Other 3,259 1 41,592 47,879 1,236 -93,967 88,555 93,927 Gain on DOE settlement 23,575 ---23,575 -23,575 Investment income 63 3 15 28 14 44 167 6 167 Interest expense and debt amortization, net of (107,177)
-(39,505)'
(47,510) (5,216). (199,408):
-(199,408)capitalized interest Plant preservation and termination costs (1,517) (397) (1,914) -(1,914)Depreciation and amortization (5) -(5). 1,363 (5)Decommissioning (580) (580) (580)Services to other business units -(89,964)-TOTAL OTHER INCOME & EXPENSE (80,280) 4 1,250 (5,172): (84,198) (40): (84,238)INCOME (LOSS) (346) 431 85 (40) 45 TOTAL NET POSITION, BEGINNING OF YEAR *-- 8,917 (26,597) (17,680) 4,712 (12,968)TOTAL NET POSITION, ENDOFYEAR
$ $ $ -$ $ 8,571 $ (26,166) $ (17,595) $ 4,672 $ (12,923)* Project recorded on a liquidation basis The accompanying notes are an integral part of these combined financial statements
- Energy Northwest's 2013 Statement of Net Position and Statements of Revenues and Expenses and Changes in Net Position were updated for the impacts of the required retroactive application of GASB Statement No. 65 "items Previously Reported as Assets and Liabilities," which became effective for Energy Northwest in fiscal year 2014. See Note 1 for a summary of this change in accounting principle.
ti( v Iv'201 -4 Anm ial Repor t 43 STATEMENT OF CASH FLOWS As of June 30, 2014 (DoLLars in thousands)
Columbia Packwood Lake Nuclear Generating Hydroelectric Project Station Project No.1 *Nuclear Project No.3 *Business Nine Canyon Internal Development Wind Service Combined Total Fund Project Fund CASH FLOWS FROM OPERATING AND NONOPERATING ACTIVITIES Operating revenue receipts Cash payments for operating expenses Non-operating revenue receipts Cash payments for preservation, termination expense Cash payments for services net of cash received from other units Net cash provided by operating and nonoperating activities 457,865 $(239,026)100 2,290 $(2,174)$$ 2,813 $ 18,936 $(2,418) (6,135)-$ 481,904 (249,753)277,025 1,254 148,565 1,236 128,360 18 1,785 1,785 218,939 116 149,801 128,378 395 12,801 1,785 512,215 CASH FLOWS FROM CAPITAL AND RELATED FINANCING ACTIVITIES Proceeds from bond refundings Payment on refunded debt Principal paid on revenue bond maturities Payment for bond issuance and financing costs Proceeds from notes payable Payment for notes payable Interest paid on bonds Interest paid on notes Payment for capital items Nuclear fuel acquisitions Proceeds from sale of capital assets Net cash provided/(used) by capital 670,900 449,525)(61,020)(6,771)61,273 (61,273)141,548)(115)100,456)(49,106)37 (273,055)(288)235,445 26,702 (26,703)(166,160)(405)85,180 41 (42 (6 (6, ,392 738,994 ,776) (519,004),835) (507,070)(741) (8,205)--381,898-(61,273)032) (266,297)(115)(39) (259) (101,075)--(49,106)37 (59,386) (59,331)(125)(196)and related financing activities (137,604)
(125) (97,284) (140,717)
(196) (15,031) (259) (391,216)CASH FLOWS FROM NON-CAPITAL FINANCE ACTIVITIES
--CASH FLOWS FROM INVESTING ACTIVITIES Purchases of investment securities (188,296)
(6,038) (36,804) (6,945) (35,465) (41,395) (314,943)Sales of investment securities 77,617 500 219,488 184,391 4,021 38,034 42,507 566,558 Interest on investments 154 28 55 65 45 110 658 1,115 Net cash provided/(used) by investing activities (110,525) 528 213,505 147,652 (2,879) 2,679 1,770 252,730 NET INCREASE (DECREASE)
IN CASH (29,190) 519 266,022 135,313 (2,680) 449 3,296 373,729 CASH AT JUNE 30, 2013 169,032 373 99,171 58,997 5,223 18,587 406 351,789 CASH AT JUNE 30, 2014 (NOTE B) $ 139,842 $ 892 $ 365,193 $ 194,310 $ 2,543 $ 19,036 $ 3,702 $ 725,518* Project recorded on a liquidation basis The accompanying notes are an integral part of these combined financial statements
- Energy Northwest's 2013 Statement of Net Position and Statements of Revenues and Expenses and Changes in Net Position were updated for the impacts of the required retroactive application of GASB Statement No. 65 "Items Previously Reported as Assets and Liabilities," which became effective for Energy Northwest in fiscal year 2014. See Note 1 for a summary of this change in accounting principle.
44 B~ ~~NwBerj iz STATEMENT OF CASH FLOWS As of June 30, 2014 (DolLars in thousands)
Columbia Packwood Lake Nuclear Nuclear Business Nine Canyon Internal Generating Station RECONCILIATION OF NET OPERATING REVENUES TO NET CASH FLOWS Net income/loss from operations
$ 80,280 Adjustments to reconcile net operating revenues to cash provided by operating activities:
Depreciation and amortization 132,496 Decommissioning 6,664 Non-operating revenues Other (360)Change in operating assets and liabilities:
Deferred charges/costs in excess of billings 19,859 Accounts receivable (237)Materials and supplies (18,727)Prepaid and other assets (326)Due from/to other business units (26,067)Accounts payable 25,357 Hydroelectric Project Project No.1 *PROVIDED BY OPERATING AND NON$ (4)$ -$Project Development No.3
- Fund OPERATING ACTIVITIES Wind Project Service Combined Fund Total-$ 84,282$ (1,596) S 5,602 $80 97 185 6 41,593 47,879 109,745 80,504 1,078 ,793 1,364 140,918 33 6,697--89,472 770 (40) 1,545--210,089 (245) (30) (171)--(18,727)(108) 333 35 (19)(11)348 (4)(122)140 (400)(57)(23)(166) 26,835 99 (1,481) 15 640 122 (26,677) (1,925)Net cash provided by operating and nonoperating activities
$ 218,939 $ 116 $ 149,801 $ 128,378 $ 395 $ 12,801 $ 1,785 $ 512,215 Non-cash activities Capitalized interest 19,115 19,115* Project recorded on a liquidation basis The accompanying notes are an integral part of these combined financial statements Energy Northwest's 2013 Statement of Net Position and Statements of Revenues and Expenses and Changes in Net Position were updated for the impacts of the required retroactive application of GASB Statement No. 65 "Items Previously Reported as Assets and Liabilities," which became effective for Energy Northwest in fiscal year 2014. See Note 1 for a summary of this change in accounting principle.
LFaietqy No thwc-A 201l4 Annua ReL poi t 45 NOTES TO FINANCIAL STATEMENTS NOTE 1 -Summary of Operations and Significant Accounting Policies Energy Northwest, a municipal corporation and joint operating agency of the state of Washington, was organized in 1957 to finance, acquire, construct and operate facilities for the generation and transmission of electric power.Membership consists of 22 public utility districts and 5 municipalities.
All members own and operate electric systems within the state of Washington.
Energy Northwest is exempt from federal income tax and has no taxing authority.
Energy Northwest maintains seven business units. Each unit is financed and accounted for separately from all other current or future business units.All electrical energy produced by Energy Northwest's net-billed business units is ultimately delivered to electrical distribution facilities owned and operated by Bonneville Power Administration (BPA) as part of the Federal Columbia River Power System. BPA in turn distributes the electricity to electric utility systems throughout the Northwest, including participants in Energy Northwest's business units, for ultimate distribution to consumers.
Participants in Energy Northwest's net-billed business units consist of public utilities and rural electric cooperatives located in the western United States who have entered into net-billing agreements with Energy Northwest and BPA for participation in one or more of Energy Northwest's business units.BPA is obligated by law to establish rates for electric power which will recover the cost of electric energy acquired from Energy Northwest and other sources, as well as BPA's other costs (see Note 6).Energy Northwest operates the Columbia Generating Station (Columbia), a 1,170-MWe (Design Electric Rating, net) generating plant completed in 1984. Energy Northwest has obtained all permits and licenses required to operate Columbia.
Columbia was issued a standard 40-year operating license by the Nuclear Regulatory Commission (NRC) in 1983. On January 19, 2010 Energy Northwest submitted an application to the NRC to renew the license for an additional 20 years, thus continuing operations to 2043.A renewal license was granted by the NRC on May 22, 2012 for continued operation of Columbia to December 31, 2043.Energy Northwest also operates the Packwood Lake Hydroelectric Project (Packwood), a 27.5-MWe generating plant completed in 1964. Packwood has been operating under a 50-year license issued by the Federal Energy Regulatory Commission (FERC), which expired on February 28, 2010. Energy Northwest submitted the Final License Application (FLA) for renewal of the operating license to FERC on February 22, 2008. On March 4, 2010, FERC issued a one-year extension, or until the issuance of a new license for the project or other disposition under the Federal Power Act, whichever comes first. FERC is awaiting issuance of the National Oceanic and Atmospheric Administration's (NOAA) Biological Opinion, after which FERC will complete the final license renewal documentation for Packwood.
Costs incurred to date for relicensing are $3.7 million included in other charges.The electric power produced by Packwood is sold to 12 project participant utilities which pay the costs of Packwood.
The Packwood participants are obligated to pay annual costs of Packwood including debt service, whether or not Packwood is operable.
The participants also share Packwood revenue.(See Note 6).Nuclear Project No. 1, a 1,250-MWe plant, was placed in extended construction delay status in 1982, when it was 65 percent complete.
Nuclear Project No. 3, a 1,240-MWe plant, was placed in extended construction delay status in 1983, when it was 75 percent complete.
On May 13, 1994, Energy Northwest's Board of Directors adopted resolutions terminating Nuclear Projects Nos. 1 and 3. All funding requirements remain as net-billed obligations of Nuclear Projects Nos. 1 and 3. Energy Northwest wholly owns Nuclear Project No. 1. Energy Northwest is no longer responsible for site restoration costs for Nuclear Project No. 3. (See Note 13)The Business Development Fund was established in April 1997 to pursue and develop new energy related business opportunities.
There are four main business lines associated with this business unit: General Services and Facilities, Generation, Professional Services, and Business Unit Support.The Nine Canyon Wind Project (Nine Canyon) was established in January 2001 for the purpose of exploring and establishing a wind energy project.Phase I of the project was completed in FY 2003 and Phase I1 was completed in FY 2004. Phase I and II combined capacity is approximately 63.7 MWe.Phase III was completed in FY 2008 adding an additional 14 wind turbines to Nine Canyon and adding an aggregate capacity of 32.2 MWe. The total number of turbines at Nine Canyon is 63 and the total capacity is 95.9 MWe.The Internal Service Fund was established in May 1957. It is currently used to account for the central procurement of certain common goods and services for the business units on a cost reimbursement basis.Energy Northwest's fiscal year begins on July 1 and ends on June 30. In preparing these financial statements, the company has evaluated events and transactions for potential recognition or disclosure through September 25, 2014, the date of audit opinion issuance date.The following is a summary of the significant accounting policies: a) Basis of Accounting and Presentation:
The accounting policies of Energy Northwest conform to Generally Accepted Accounting Principles (GAAP) applicable to governmental units. The Governmental Accounting Standards Board (GASB) is the accepted standard-setting body for establishing governmental accounting and financial reporting principles.
Energy Northwest has applied all applicable GASB pronouncements and has applied Financial Accounting Standards Board (FASB) standards, as other accounting literature, in those areas not directly prescribed by GASB and to the extent that they do not conflict with or contradict GASB pronouncements.
The accounting and reporting policies of Energy Northwest are regulated by the Washington State Auditor's Office and are based on the Uniform System of Accounts prescribed for public utilities and licensees by FERC. Energy Northwest uses an accrual basis of accounting where revenues are recognized when earned and expenses are recognized when incurred.
Revenues and expenses related to Energy Northwest's operations are considered to be operating revenues and expenses; while revenues and expenses related to capital, financing and investing activities are considered to be other income and expenses.
Separate funds and books of accounts are maintained for each business unit. Payment of the obligations of one business unit with funds of another business unit is prohibited, and would constitute violation of bond resolution covenants (See Note 5).Energy Northwest maintains an Internal Service Fund for centralized control and accounting of certain capital assets such as data processing equipment, and for payment and accounting of internal services, payroll, benefits, administrative and general expenses, and certain contracted 46 Baiancinq a New Energqy Hoi izc services on a cost reimbursement basis. Certain assets in the Internal Service Fund are also owned by this Fund and operated for the benefit of other projects.
Depreciation relating to capital assets is charged to the appropriate business units based upon assets held by each project.Liabilities of the Internal Service Fund represent accrued payroll, vacation pay, employee benefits, and common accounts payable which have been charged directly or indirectly to business units and will be funded by the business units when paid. Net amounts owed to, or from, Energy Northwest business units are recorded as Current Liabilities-Due to other business units, or as Current Assets-Due from other business units on the Internal Service Fund Statement of Net Position.The combined total column on the financial statements is for presentation (unaudited) only as each Energy Northwest business unit is financed and accounted for separately from all other current and future business units. The FY 2014 Combined Total includes eliminations for transactions between business units as required in GASB Statement No. 34, Basic Financial Statements and Management's Discussion and Analysis for State and Local Governments.
In June 2012, GASB issued Statement No. 68, Accounting and Financial Reporting for Pensions -An Amendment of GASB Statement No.27. The primary objective of Statement No. 68 is to improve accounting and financial reporting by state and local governments for pensions.
This statement establishes standards for measuring and recognizing liabilities, deferred outflows and deferred inflows of resources and expenses.
For defined benefit pension plans, this statement identifies the methods and assumptions to project benefit payments, discount projected benefit payments to their actuarial present value and attribute present value to periods of employee service. Note disclosure and required supplementary information about pensions are also addressed.
Statement No. 68 is effective for Energy Northwest beginning in fiscal year 2015. Energy Northwest is currently evaluating the financial statement impact of adopting this statement.
Change in Accounting Principle In March 2012, GASB issued Statement No. 65, Items Previously Reported as Assets and Liabilities.
Energy Northwest was required to implement this pronouncement as of June 30, 2014. This statement establishes accounting and financial reporting standards reclassifying, as deferred outflows of resources or deferred inflows of resources, certain items previously reported as assets and liabilities and recognizes, as outflows of resources or inflows of resources, certain items previously reported as assets and liabilities.
GASB Statement No. 65 requires debt issuance costs withstanding insurance costs (if necessary) to be expensed when incurred, in prior years these expenses were amortized over the life of the bond. Gains and losses on refunded debt have been reclassified as deferred inflows of resources and deferred outflows of resources respectively.
These amounts have been restated due to the retroactive application requirement of GASB Statement No. 65.GASB 65 CHANGES (Dollars in thousands) 1 Cummulative impact as of July 1, 2013 Columbia Net Position Impact-Debt Expense-Amortization Of Unamortized Gain/(Loss)
On Bond Refundings Total Nuclear Project No.1 Net Position Impact Debt Expense-Amortization Of Unamortized Gain/(Loss)
On Bond Refundings Total Nuclear Project No.3 Net Position Impact-Debt Expense-Amortization Of Unamortized Gain/(Loss)
On Bond Refundings Total Nine Canyon Net Position Impact-Debt Expense-Amortization Of Unamortized Gain/(Loss)
On Bond Refundings Total 14,290 354 14,644 2,813 982 3,795 3,888 758 4,646 1,145 274 1,419 b) Utility Plant and Depreciation:
Utility plant is recorded at original cost which includes both direct costs of construction or acquisition and indirect costs.Property, plant, and equipment are depreciated using the straight-line method over the following estimated useful lives: Buildings and Improvements Generation Plant Transportation Equipment General Plant and Equipment 20 -60 years 40 years 6 -9 years 3 -15 years Group rates are used for assets and, accordingly, no gain or loss is recorded on the disposition of an asset unless it represents a major retirement.
When operating plant assets are retired, their original cost together with removal costs, less salvage, is charged to accumulated depreciation.
The utility plant and net position of Nuclear Projects Nos. 1 and 3 have been reduced to their estimated net realizable values due to termination.
A write-down of Nuclear Projects Nos. 1 and 3 was recorded in FY 1995 and included in Cost in Excess of Billings.
Interest expense, termination expenses and asset disposition costs for Nuclear Projects Nos. 1 and 3 have been charged to operations (see Note 11).C) Capitalized Interest:
Energy Northwest analyzes the gross interest expense relating to the cost of the bond sale, taking into account interest earnings and draws for purchase or construction reimbursements for the purpose of analyzing impact to the recording of capitalized interest.
If estimated costs are more than inconsequential, an adjustment is made to allocate capitalized interest to the appropriate plant account. Capitalized interest costs were $19.1 million. This amount includes an adjustment E Northvecf 2014 An nual Repot 47 for a correction of an error which relates to prior periods. The cumulative, net effect of the prior period correction recorded in the current year is$18.7 million, of which $11.7 million has been capitalized to Nuclear Fuel and $7 million to Utility Plant. Capitalized interest relating to fiscal year 2014 is $0.4 million. The correction of the error in the current period is not considered to have a material effect on the fiscal 2014 financial statements.
d) Nuclear Fuel: Energy Northwest has various agreements for uranium concentrates, conversion, and enrichment to provide for short-term enriched uranium product and long-term enrichment services.
All expenditures related to the initial purchase of nuclear fuel for Columbia, including interest, were capitalized and carried at cost.e) Asset Retirement Obligation:
Energy Northwest has adopted ASC 410, Asset Retirement and Environmental Obligations.
This standard requires Energy Northwest to recognize the fair value of a liability associated with the retirement of a long-lived asset, such as: Columbia Generating Station, Nuclear Project No. 1, and Nine Canyon, in the period in which it is incurred (see Note 11).f) Decommissioning and Site Restoration:
Energy Northwest established decommissioning and site restoration funds for Columbia and monies are being deposited each year in accordance with an established funding plan (see Note 12).g) Restricted Assets: In accordance with bond resolutions, related agreements and laws, separate restricted accounts have been established.
These assets are restricted for specific uses including debt service, construction, capital additions and fuel purchases, unplanned operation and maintenance costs, termination, decommissioning, operating reserves, financing, long-term disability, and workers'compensation claims. They are classified as current or non-current assets as appropriate.
h) Cash and Investments:
For purposes of the Statements of Cash Flows, cash includes unrestricted and restricted cash balances and each business unit maintains its cash and investments.
Short-term highly liquid investments are not considered to be cash equivalents, but are classified as available-for-sale investments and are stated at fair value with unrealized gains and losses reported in investment income (see Note 3). Energy Northwest resolutions and investment policies limit investment authority to obligations of the United States Treasury, Federal National Mortgage Association and Federal Home Loan Banks.Safe keeping agents, custodians, or trustees hold all investments for the benefit of the individual Energy Northwest business units.i) Accounts Receivable:
The percentage of sales method is used to estimate uncollectible accounts.
The reserve is then reviewed for adequacy against an aging schedule of accounts receivable.
Accounts deemed uncollectible are transferred to the provision for uncollectible accounts on a yearly basis. Accounts receivable specific to each business unit are recorded in the residing business unit.j) Other Receivables:
Other receivables include amounts related to the Internal Service Fund from miscellaneous outstanding receivables from other business units which have not yet been collected.
The amounts due to each business unit are reflected in Due To/From other business units. Other receivables specific to each business unit are recorded in the residing business unit.k) Materials and Supplies:
Materials and supplies are valued at cost using the weighted average cost method.I) Leases: Consist of separate operating lease agreements.
The total of these leases by business unit and their respective amounts paid per year are listed in the table below: PROJECTS OPERATING LEASE COSTS (Dollars in thousands) 2015 2016 2017 2018 1 2019+Columbia $ 635 $ 635 $ 635 $ 635 $ 15,240 Nuclear Project No. 1 35 35 35 35 840 Nine Canyon 704 704 704 704 16,896 Business Development Fund 81 81 81 81 1,944 Internal Service Fund 136 136 136 136 3,264 Packwood 110 110 110 110 2,640 Total $ 1,701 $ 1,701 $ 1,701 $ 1,701 $ 40,824 m) Long-Term Liabilities:
Consist of obligations related to bonds payable and the associated premiums/discounts and gains/losses.
Other noncurrent liabilities for Columbia relates to the dry storage cask activity.(see table on following page).n) Debt Premium, Discount and Expense: Original issue and reacquired bond premiums, discounts and expenses relating to the bonds are amortized over the terms of the respective bond issues using the bonds outstanding method which approximates the effective interest method.In accordance with GASB Statement No. 23, Accounting and Financial Reporting for Refundings of Debt Reported by Proprietary Activities, losses on debt refundings have been deferred and amortized as a component of interest expense over the shorter of the remaining life of the old or new debt.0) Revenue Recognition:
Energy Northwest accounts for expenses on an accrual basis, and recovers, through various agreements, actual cash requirements for operations and debt service for Columbia, Packwood, Nuclear Project No. 1 and Nuclear Project No. 3. For these business units, Energy Northwest recognizes revenues equal to expenses for each period.No net revenue or loss is recognized, and no net position is accumulated.
The difference between cumulative billings received and cumulative expenses is recorded as either billings in excess of costs (other credits)or as costs in excess of billings (other charges), as appropriate.
Such amounts will be settled during future operating periods (see Note 6).Energy Northwest accounts for revenues and expenses on an accrual basis for the remaining business units.The difference between cumulative revenues and cumulative expenses is recognized as net revenue or loss and included in Net Position for each period.
48 Bal , rc, Ne. Ei.erqy I torlz LONG-TERM LIABILITIES (Dollars in thousands)
Balance 6/30/2013 INCREASES DECREASES Balance 6/30/2014 Columbia Revenue bonds payable Unamortized (discount)/premium on bonds -net Other noncurrent liabilities Nuclear Project No.1 Revenue bonds payable Unamortized (discount)/premium on bonds -net Nuclear Project No.3 Revenue bonds payable Unamortized (discount)/premium on bonds -net Nine Canyon Revenue bonds payable Unamortized (discount)/premium on bonds -net$3,163,020
$105,591 17,914 608,240 $74,233 25 466,455 $28,886 6,885 3,304,805 150,938 11,054$ 3,286,525 S 682,498 S 502.226 S 3,466.797 S..1,048,005 3 ....332,100 $ 715,905 36,251 30 13,362 22,919$ 1,084,256
$ 30 $ 345,462 $ 738,824$ 1,229,245
$ 25,990 $ 183,835 $ 1,071,400 44,955 543 9,604 35,894$ 1,274,200
$ 26,533 $ 193,439 $ 1,107.294$ 124,120 $ 36,570 .. 48,570 s 112,120 4,138 4,320 1,656 6,802$ 128,258 $ 40,890 $ 50,226 $ 118,922 p) Capital Contribution:
Renewable Energy Performance Incentive (REPI)payments enable Nine Canyon to receive funds based on generation as it applies to the REPI bill. REPI was created as part of the Energy Policy Act of 1992 to promote increases in the generation and utilization of electricity from renewable energy sources and to further the advances of renewable energy technologies.
This program, authorized under section 1212 of the Energy Policy Act of 1992, provides financial incentive payments for electricity produced and sold by new qualifying renewable energy generation facilities.
Nine Canyon did not record a receivable for FY 2014 REPI funding as no funds are anticipated to be disbursed to Energy Northwest under this program. The payment stream from Nine Canyon participants and the anticipated REPI funding were projected to cover the total costs of the purchase agreement.
Permanent shortfalls in REPI funding for the Nine Canyon project led to a revised rate plan to incorporate the impact of this shortfall over the life of the project. The current rate schedule for the Nine Canyon participants covers total estimated project costs occurring in FY 2014 and estimated total cost recovery projections out to the 2030 proposed end date. During FY 2014 there was no cost recovery obtained from REPI.q) Compensated Absences:
Employees earn leave in accordance with length of service. Energy Northwest accrues the cost of personal leave in the year when earned. The liability for unpaid leave benefits and related payroll taxes was $20.4 million at June 30, 2014 and is recorded as a current liability.
r) Use of Estimates:
The preparation of Energy Northwest financial statements in conformity with GAAP requires management to make estimates and assumptions that directly affect the reported amounts of assets and liabilities, disclosures of contingent assets and liabilities at the date of the financial statements, and the reported amounts of revenue and expenses during the reporting period. Actual results could differ from these estimates.
Certain incurred expenses and revenues are allocated to the business units based on specific allocation methods that management considers to be reasonable.
s) Deferred Inflows and Outflows:
Consist of losses and gains on bond refundings as labeled on the Statement of Net Position.
1 49 t) Short-Term Debt: Columbia entered into a line of credit during fiscal year 2014 for up to $93.0 million. $61.3 million was drawn during fiscal year 2014 to fund capital expenses which was subsequently paid in full during fiscal year 2014. Unit 1 entered into a non-revolving loan facility for $235.4 million during fiscal year 2014 to pay a portion of bonds maturing on July 1, 2014. Unit 3 entered into a non-revolving loan facility for $85.2 million during fiscal year 2014 to pay a portion of bonds maturing on July 1, 2014.Nine Canyon did not receive short-term financing during fiscal year 2014.SHORT-TERM LIABILITIES (Dollars in thousands)
Balance as of 6/30/2013 INCREASES DECREASES Balance as of 6/30/2014 Columbia Line of Credit Nuclear Project No.1 Non-Revolving Loan Nuclear Project No.3 Non-Revolving Loan Nine Canyon Short-term debt S$$$$61,273 $61,273 $$ 235,445 ,$$235,445 85,180 S S 85,180 $-:$-$Packwood Short-term debt S-iS-S Business Development Short-term debt S S NOTE 2 -Utility Plant Utility plant activity for the year ended June 30, 2014 was as follows: UTILITY PLANT ACTIVITY(Dollars in thousands)
Balance 6/30/2013 Capital Acquisitions Sale or Other Dispositions Balance 6/30/2014 Columbia Generation 3,798,767
$ 156,466 S (427) $ 3,954,807 Decommissioning 14,768 14,768 Construction Work-in-Progress 116,483 104,493 (151,826) 69,150 Accumulated Depreciation and Decommissioning (2,523,438)
(83,843)*
427 (2,606,854)
Utility Plant, net* $ 1,406,581
$ 177,116 $ (151,826)::
$ 1,431,871 Packwood Generation
$ 14,437 $ 198 $ -$ 14,635 Construction Work-in-Progress
-198 (198) i Accumulated Depreciation (12,812) (80): (12,892)Utility Plant, net $ 1,625 $ 316 $ (198) $ 1,743 Business Development General $ 2,543 $ 355 $ -$ 2,898 Construction Work-in-Progress
-355 (355)Accumulated Depreciation (1,150) (185)- (1,335)Utility Plant, net $ 1,393 $ 524 $ (355) $ 1,563 Nine Canyon Generation
$ 133,649 $ 42 $ (35) $ 133,657 Decommissioning 861 -861 Construction Work-in-Progress
-42 (42)Accumulated Depreciation and Decommissioning (54,166) (6,826) 32 (60,960)Utility Plant, net* $ 80,345 $ (6,741) $ (45) $ 73,558 Internal Service Fund General $ 47,969 $ 259 $ (350) $ 47,878 Construction Work-in-Progress
-259 (259)Accumulated Depreciation (38,203) (1,363) 350 (39,216)Utility Plant, net $ 9,766 $ (846) $ (259) S 8,662* Does not include Nuclear Fuel amount of $999 million, net of amortization 50 Balancinq a New Ener gy Horizon NOTE 3 AVAILABLE-FOR-SALE INVESTMENTS (Dollars in thousands)
Amortized Cost Unrealized Gains Unrealized Losses Fair Value (1) (2)Columbia Packwood Nuclear Project No. 1 Nuclear Project No. 3 Business Development Fund Internal Service Fund Nine Canyon$148,627 $500 3:$(34)' $2,108 5,435 25,439 11,338 148,596 500 2,108 5,435 25,441 11,339 (1): (1): (1) All investments are in U.S. Government backed securities including U.S. Government Agencies and Treasury Bills.(2) No investments shown have a maturity greater than one year.Interest rate risk: In accordance with its investment policy, Energy Northwest manages its exposure to declines in fair values by limiting investments to those with maturities designated in specific bond resolutions.
Credit risk: Energy Northwest's investment policy restricts investments to debt securities and obligations of the U.S. Treasury, U.S. government agencies Federal National Mortgage Association and the Federal Home Loan Banks, certificates of deposit and other evidences of deposit at financial institutions qualified by the Washington Public Deposit Protection Commission (PDPC), and general obligation debt of state and local governments and public authorities recognized with one of the three highest credit ratings (AAA, AA+, AA, or equivalent).
This investment policy is more restrictive than the state law.Concentration of credit risk: Energy Northwest's investment policy does not specifically address concentration of credit risk. An individual authorized security or obligation can receive up to 100 percent of the authorized investment amount; there are no individual concentration limits.NOTE 4 -Other Charges and Credits for Resources Other charges of $3.7 million relate to the Packwood relicensing effort.Other credits of $24 thousand for Nine Canyon consist of cost of issuance related to the bond refunding in FY 2014. The $200 thousand in other credits for Unit 1 consist of performance deposits related to asset sales.NOTE 5 -Long-Term Debt Each Energy Northwest business unit is financed separately.The resolutions of Energy Northwest authorizing issuance of revenue bonds for each business unit provide that such bonds are payable from the revenues of that business unit. All bonds issued under resolutions Nos. 769, 775 and 640 for Nuclear Projects Nos. 1, 3 and Columbia, respectively, have the same priority of payment within the business unit (the "prior lien bonds"). No prior lien bonds remain outstanding related to Columbia authorized under resolution No. 640.All bonds issued under resolutions Nos. 835, 838 and 1042 (the "electric revenue bonds") for Nuclear Projects Nos. 1, 3 and Columbia, respectively, are subordinate to the prior lien bonds and have the same subordinated priority of payment within the business unit. Nine Canyon's bonds were authorized by the following resolutions:
Resolution No. 1214 (2001 Bonds), Resolution No.Custodial credit risk, deposits:
For a deposit, this is the risk that in the event of bank failure, Energy Northwest's deposits may not be returned to it. Energy Northwest's demand deposit interest bearing accounts and certificates of deposits are covered up to $250,000 by Federal Depository Insurance (FDIC) while time and savings deposit non-interest bearing accounts are covered up to an additional
$250,000 by FDIC. All interest and non-interest bearing deposits are covered by collateral held in a multiple financial institution collateral pool administered by the Washington state Treasurer's Local Government Investment Pool (PDPC). Under state law, public depositories under the PDPC may be assessed on a prorated basis if the pool's collateral is insufficient to cover a loss. All deposits are insured by collateral held in the multiple financial institution collateral pool. State law requires deposits may only be made with institutions that are approved by the PDPC.1299 (2003 Bonds), Resolution No. 1376 (2005 Bonds), Resolution No.1482 (2006 Bonds), Resolution No. 1722 (2012 Bonds), and Resolution No. 1789 (2014 Bonds). No 2001 or 2003 Nine Canyon bonds remained outstanding as of June 30, 2014 under Resolution Nos. 1214 and 1299 respectively.
During the year ended June 30, 2014, Energy Northwest issued, for Columbia and Project 3, the Series 2014-A bonds. For Columbia, 2014-B fixed rate bonds were also issued. The Columbia and Project 3 bonds were issued with a coupon interest rate ranging from 0.315 percent to 5.0 percent.The Series 2014-A bonds issued for Columbia and Project 3 are tax-exempt fixed-rate bonds. Series 2014-B bonds issued for Columbia are taxable fixed rate bonds. These bonds were issued in majority to refund prior Columbia and Project 3 bonds (See Note 1). These transactions resulted in a net loss for accounting purposes of $11.23 million. The 2014-A and 2014-B refunding bonds resulted in a combined economic gain of $26.1 million and $1.2 million for Columbia and Project 3, respectively.
The economic gain was recorded according to GASB 7.During fiscal year 2014, Nine Canyon issued the 2014 Series bonds that refunded prior Nine Canyon bonds. The 2014 Series tax-exempt fixed rate bonds were issued with a coupon interest rate ranging from 4.0 percent to Eiýcýqv ý014 Amuýi I Reporf 51 5.0 percent. This transaction resulted in a net gain for accounting purposes of$0.5 million. The 2014 series refunding bonds resulted in an economic gain of$3.6 million. The economic gain was recorded according to GASB 7.The Bond Proceeds, Weighted Average Coupon Interest Rates, Net Accounting Loss, and Total Defeased Bonds for Columbia and Project 3 2014-A, Columbia 2014-B and 2014 Series for Nine Canyon are presented in the following tables: BOND PROCEEDS (Dollars in millions)2014A Columbia 591.93 Project 3 26.53 2014B 90.52 2014 TOTAL 682.45 26.53 40.89 749.87 2014 REFUNDING RESULTS (Dollars in thousands)
CASH FLOW DIFFERENCE 2014-A (Tax-Exempt)
Transaction
...I -.....Nine Canyon Total-[ -I 40.89$ 618.46 S 90.52 $ 40.89 $WEIGHTED AVERAGE COUPON INTEREST RATE FOR REFUNDED BONDS 2014A 20148 2014 Columbia 5.05% 4.94%Project 3 5.25%Columbia Prior Debt Service EN Interest Contribution Refunding Debt Service Net Cash Flow Savings (Dissavings)
Project 3 Prior Debt Service Refunding Debt Service Net Cash Flow Savings (Dissavings)
$ 488,911 (4,190)(479,202).$ 5,519$ 27,928 (26,578)$ 1,350 Nine Canyon Total 4.69%4.69%5.06%4.94%WEIGHTED AVERAGE COUPON INTEREST RATE FOR NEW BONDS Columbia Project 3 Nine Canyon Total 2014A 4.83%2.00%4.68%20148 2,46%2.46%2014 4.90%4.90%2014-B (Taxable)
Transaction Columbia Prior Debt Service $ 62,301 Refunding Debt Service (64,867)Net Cash Flow Savings (Dissavings)
$ (2,566)Nine Canyon 2014 Transaction NET ACCOUNTING LOSS (Dollars in millions)Columbia Project 3 Nine Canyon Total 2014A 9.50 (0.17)$ 9.33 $2014B 2014 TOTAL 1.90 -11.40 (0.17)(0.51)1 (0.S5)1.90 $ (0.51) $ 10.72 Nine Canyon Prior Debt Service Refunding Debt Service Net Cash Flow Savings (Dissavings)
S$ 52,758 (46,725)$ 6,033 TOTAL DEFEASED (Dollars in millions)Columbia Project 3 Nine Canyon Total 2014A 2014B 2014 TOTAL 379.94 54.31 -434.25 26.54 -26.54-41.31 41.31$ 406.48 $ 54.31 $ 41.31 $ 502.10 52 Baltanuinq
.ý NewiEnei qy i h i~zou Energy Northwest did not issue or refund any bonds associated with Project No. 1 during fiscal year 2014.Outstanding principal on revenue and refunding bonds for the various business units as of June 30, 2014, and future debt service requirements for these bonds are presented in the following tables: COLUMBIA GENERATING REVENUE AND REFUNDING BONDS (Dollars in thousands)
Serial or Term Series Coupon Rate (%) Maturities Amount 2003A 2004A 2004C 2005A 2005C 2006A 2006C 2006D 2007A 20078 2007D 2008A 20088 2008C 2009A 2009B 2009C 2010B 2010C 2010D 2011A 20118 2011C 2012A 2012D 2012E 2014A 2014B 5.50 5.25 5.25 5.00 4.72-4.74 5.00 5.00 5.80 5.00 5.33 5.00 5.00-5.25* 5.95 5.00-5.25 3.00-5.00 4.59-6.8 4.25-5.00 3.75-4.25 4.52-5.12 5.61-5.71 4.00-5.00 4.19-5.19 3.55 5.00 4.00-5.00 1.06-4.14 3.00-5.00 0.315-4.052 7-1 -2015 7-1-17/2018 7-1-17/2018 7-1-15/2018 7-1-14/2015 7-1 -20/2024 7-1 -20/2024 7-1 -2023 7-1-14/2018 7-1-20/2021 7-1 -21/2024 7-1-14/2018 7-1 -20/2021 7-1-21/2024 7-1-14/2018 7-1 -23/2024 7-1 -20/2024 7-1 -20/2024 7-1 -20/2024 7-1 -23/2024 7-1 -14/2023 7-1-19/2024 7-1-2019 7-1-18/2021 7-1 -25/2044 7-1-15/2037 7-1-16/2040 7-1-15/2030
!$ 81,090 20,375 5,510 16,035 29,235 313,980 9,095 3,425 66,295 9,935 35,080 89,295 12,025 37,240 113,570 10,095 69,170* 16,005 75,770 155,805 301,325* 29,920 4,600* 441,240 34,140* 748,515 517,720 90,520: $ 3,337,010!$ 3,708,117 NUCLEAR PROJECT NO. 1 REFUNDING REVENUE BONDS (Dollars in thousands)
Serial or Term Series Coupon Rate (%) Maturities Amount 19898 7.125 7-1-2016 $ 41,070 2003A 5.50 7-1-2014 128,650 2005A 5.00 7-1-1412015 51,365 2006A 5.00 7-1-1412017 83,965 2007A 5.00 7-1-14/2017 49,280 2007C 5.00 7-1-14/2017 174,955 2008A 5.00-5.25 7-1-14/2017 209,695 2008D 5.00 7-1-14/2017 21,985 2009A 3.25-5.00 7-1-14/2015 48,905 2009B 4.59 7-1-2014 515 2010A 3.00-5.00 7-1-14/2017 45,680 2012A 5.00 7-1-14/2017 126,555 2012B 5.00 7-1-2017 41,285 2012C 1.264 7-1-2015 24,100 Revenue bonds payable $ 1,048,005 Estimated fair value at June 30, 2014 $ 1,116,735 NUCLEAR PROJECT NO. 3 REFUNDING REVENUE BONDS (Dollars in thousands)
Serial or Term Series Coupon Rate (%) Maturities Amount 1989A (A) 7-1-2014 $ 1,357 1989B 1993C 2004A 2005A 2006A 2007A 2007C 2008A 2008D 2009A 2009B 2010A 2010B 2011A 2012A 2012B 2012C 2014A 7.25 7.125 7-1 -2014 7-1-2016 5.70-5.75 5.25 5.00 5.00 4.50-5.00 5.00 5.25 5.00 5.00-5.25 4.59 5.00 5.00 4.00-5.00 5.00 3.00-5.00 1,26-1.74 2.00 7-1-14/2018 7-1-14/2016 7-1-14/2015 7-1-16/2018 7-1-14/2018 7-1-14/2018 7-1-2018 7-1-14/2017 7-1-14/2018 7-1-2014 7-1-16/2018 7-1-2016 7-1 -2018 7-1-2018 7-1-16/2017 7-1-15/2016 7-1-2015 3,618 76,145 79,763 20,321 57,300 78,790 39,445 80,475 46,880 13,790 28,535 116,055 970 279,980 29,865 92,285 67,885 30,330 61,635 25,990 77,049$ 1,228,700$ 1,349,792 Revenue bonds payable Estimated fair value at June 30, 2014 Compound interest bonds accretion Revenue bonds payable Estimated fair value at June 30, 2014 (A) Compound Interest Bonds A I .um [ p, [)oit 53 NINE CANYON WIND PROJECT REVENUE AND REFUNDING BONDS (Dollars in thousands)
Serial or Term Series Coupon Rate (%) Maturities Amount 2005 2006 2012 2014 4.50-5.00 4.50-5.00 2.50-5.00 4.00-5.00 7-1 -14/2023 7-1-14/2030 7-1-14/2023 7-1-15/2023 3,620 66,385 12,810 36,570$ 119,385$ 130,276$ 5,733,100$ 6,304,920 Revenue bond payable Estimated fair value at June 30, 2014 Total bonds payable Estimated fair value at June 30, 2014 DEBT SERVICE REQUIREMENTS As of June 30, 2014 (Dollars in thousands)
COLUMBIA GENERATING STATION FISCAL YEAR* PRINCIPAL:
6/30/2014 Balance: $ 32,205 !$2015 2016 2017 2018 2019 2020-2024 2025-2029 2030-2034 2035-2039 2040-2044 244,995 78,645 93,930 423,885 414,000 1,714,115 55,695 209,675 47,815 22,050 INTEREST: 66,905 $143,971 132,729 129,939 125,921 110,487 320,528 71,341 36,200 11,975 2,132 TOTAL 99,110 NUCLEAR PROJECT NO. I FISCAL YEAR*6/30/2014 Balance:**
$PRINCIPAL 332,100 $191,430 239,385 285,090 INTEREST 26,201 $35,443 27,026 14,118 TOTAL 358,301 226,873 266,411 299,208 388,966 211,374 223,869 549,806 524,487 2,034,643 127,036 245,875 59,790 24,182 2015 2016 2017$ 3,337,010
.$ 1,152,126
.$ 4,489,136* Fiscal year for this report indicates the cash funding requirement year.** Principal and Interest due July 1, 2014.$ 1,048,005
$ 102,788 $ 1,150,793 Fiscal year for this report indicates the cash funding requirement year.Principal and Interest due July 1, 2014.NUCLEAR PROJECT NO. 3 FISCAL YEAR*6/30/2014 Balance:-
$2015 2016 =2017 2018 PRINCIPAL i 124,7045 129,250 247,499 177,617 472,581 INTEREST.60,735 $59,614 56,838 45,124 32,625 TOTAL 185,439 188,864 304,337 222,741 505,206 NINE CANYON WIND PROJECT FISCAL YEAR* PRINCIPAL 6130/2014 Balance: $ 7,265 $2015 2016 2017 2018 2019 2020-2024 2025-2029 2030 7,130 7,440 7,805 8,185 8,605 43,155 24,260 5,540 INTEREST 2,408 $5,398 5,091 4,730 4,356 3,947 12,942 4,691 249 TOTAL 9,673 12,528 12,531 12,535 12.541 12,552 56,097 28,951 5,789 Adjustment
- 77,049 (77,049):$ 1,228,700
$ 177,887 $ 1,406,587 Fiscal year for this report indicates the cash funding requirement year.Principal and Interest due July 1, 2014.*** Adjustment for Compound Interest Bonds accretion; Compound Interest Bonds are reflected at their face amount less discount on the balance sheet.$ 119,385 $ 43,812 .$ 163,197 Fiscal year for this report indicates the cash funding requirement year.Principal and Interest due July 1, 2014.
54 Bata ncing ai New Energy Hot zon NOTE 6 -Net Billing Security -Nuclear Projects Nos. 1 and 3 and Columbia The participants have purchased all of the capability of Nuclear Projects Nos. 1 and 3 and Columbia.
BPA has in turn acquired the entire capability from the participants under contracts referred to as net-billing agreements.
Under the net-billing agreements for each of the business units, participants are obligated to pay Energy Northwest a pro-rata share of the total annual costs of the respective projects, including debt service on bonds relating to each business unit. BPA is then obligated to reduce amounts from participants under BPA power sales agreements by the same amount. The net-billing agreements provide that participants and BPA are obligated to make such payments whether or not the projects are completed, operable or operating and notwithstanding the suspension, interruption, interference, reduction or curtailment of the projects' output.On May 13, 1994, Energy Northwest's Board of Directors adopted resolutions terminating Nuclear Projects Nos. 1 and 3. The Nuclear Projects Nos. 1 and 3 project agreements and the net-billing agreements, except for certain sections which relate only to billing processes and accrued liabilities and obligations under the net-billing agreements, ended upon termination of the projects.
Energy Northwest previously entered into an agreement with BPA to provide for continuation of the present budget approval, billing and payment processes.
With respect to Nuclear Project No. 3, the ownership agreement among Energy Northwest and private companies was terminated in FY 1999. (See Note 13)Security -Packwood Lake Hydroelectric Project Power produced by Packwood is provided to the 12 member utilities.
The member utilities pay the annual costs, including any debt service, of Packwood and are obligated to pay these annual costs whether or not Packwood is operational.
The Packwood participants also share project revenue to the extent that the amounts exceed project costs.NOTE 7 -Pension Plans Substantially all Energy Northwest full-time and qualifying part-time employees participate in one of the following statewide retirement systems administered by the Washington State Department of Retirement Systems, under cost-sharing multiple-employer public employee defined benefit retirement plans. The Department of Retirement Systems (DRS), a department within the primary government of the State of Washington, issues a publicly available comprehensive annual financial report (CAFR)that includes financial statements and required supplementary information for each plan. The DRS CAFR may be obtained by writing to: Department of Retirement Systems, Communications Unit, P.O. Box 48380, Olympia, WA 98504-8380; or it may be downloaded from the DRS website at www.drs.wa.gov. The following disclosures are made pursuant to GASB Statements No. 27, Accounting for Pensions by State and Local Government Employers and No. 50, Pension Disclosures, an Amendment of GASB Statements No. 25 and No. 27.Any information obtained from the DRS is the responsibility of the state of Washington.
PricewaterhouseCoopers LLP (PwC), independent auditors for Energy Northwest, has not audited or examined any of the information available from the DRS; accordingly, PwC does not express an opinion or any other form of assurance with respect thereto.The Legislature established PERS in 1947. Membership in the system includes:
elected officials; state employees; employees of the Supreme, Appeals, and Superior courts; employees of legislative committees; employees of district and municipal courts; and employees of local governments.
Membership also includes higher education employees not participating in higher education retirement programs.
Approximately 49% of PERS salaries are accounted for by state employment.
PERS retirement benefit provisions are established in chapters 41.34 and 41.40 RCW and may be amended only by the State Legislature.
PERS is a cost-sharing multiple-employer retirement system comprised of three separate plans for membership purposes:
Plans 1 and 2 are defined benefit plans and Plan 3 is a defined benefit plan with a defined contribution component.
PERS members who joined the system by September 30, 1977 are Plan 1 members. Those who joined on or after October 1, 1977 and by either, February 28, 2002 for state and higher education employees, or August 31, 2002 for local government employees, are Plan 2 members unless they exercised an option to transfer their membership to Plan 3. PERS members joining the system on or after March 1, 2002 for state and higher education employees, or September 1, 2002 for local government employees have the irrevocable option of choosing membership in either PERS Plan 2 or Plan 3.The option must be exercised within 90 days of employment.
Employees who fail to choose within 90 days default to Plan 3.PERS is comprised of and reported as three separate plans for accounting purposes:
Plan 1, Plan 2/3, and Plan 3. Plan 1 accounts for the defined benefits of Plan 1 members. Plan 2/3 accounts for the defined benefits of Plan 2 members, and the defined benefit portion of benefits for Plan 3 members.Plan 3 accounts for the defined contribution portion of benefits for Plan 3 members. Although members can only be a member of either Plan 2 or Plan 3, the defined benefit portions of Plan 2 and Plan 3 are accounted for in the same pension trust fund. All assets of this Plan 2/3 may legally be used to pay the defined benefits of any of the Plan 2 or Plan 3 members or beneficiaries, as defined by the terms of the plan. Therefore, Plan 2/3 is considered to be a single plan for accounting purposes.PERS Plan 1 and Plan 2 retirement benefits are financed from a combination of investment earnings and employer and employee contributions.
Employee contributions to the PERS Plan 1 and Plan 2 defined benefit plans accrue interest at a rate specified by the Director of DRS. During DRS' Fiscal Year 2013, the rate was five and one-half percent compounded quarterly.
Members in PERS Plan 1 and Plan 2 can elect to withdraw total employee contributions and interest thereon, in lieu of any retirement benefit, upon separation from PERS-covered employment.
PERS Plan 1 members are vested after the completion of five years of eligible service.PERS Plan 1 members are eligible for retirement from active status at any age with at least 30 years of service, at age 55 with 25 years of service, or at age 60 with at least 5 years of service. Plan 1 members retiring from inactive status prior to the age of 65 may receive actuarially reduced benefits.The monthly benefit is 2% of the average final compensation (AFC) per year of service, but the benefit may not exceed 6 0% of the AFC. The AFC is the monthly average of the 24 consecutive highest-paid service credit months.PERS Plan 1 retirement benefits are actuarially reduced to reflect the choice, if made, of a survivor option.Plan 1 members may elect to receive an optional COLA that provides an automatic annual adjustment based on the Consumer Price Index. The adjustment is capped at 3% annually.
To offset the cost of this annual adjustment, the benefit is reduced.PERS Plan 2 members are vested after the completion of five years of eligible service. Plan 2 members are eligible for normal retirement at the age of 65 with five years of service. The monthly benefit is 2% of the AFC per year of service. The AFC is the monthly average of the 60 consecutive highest-paid service months. There is no cap on years of service credit; and a cost-of-living allowance is granted (based on the Consumer Price Index), capped at 3%annually.PERS Plan 2 members who have at least 20 years of service credit, and are 55 years of age or older, are eligible for early retirement with a reduced benefit. The benefit is reduced by an early retirement factor (ERF) that varies according to age, for each year before age 65.PERS Plan 3 has a dual benefit structure.
Employer contributions finance a defined benefit component and member contributions finance a defined contribution component.
As established by chapter 41.34 RCW, employee contribution rates to the defined contribution component range from 5% to 15% of salaries, based on member choice. Members who do not choose a contribution rate default to a 5% rate. There are currently no requirements for employer contributions to the defined contribution component of PERS Plan 3.PERS Plan 3 defined contribution retirement benefits are dependent upon the results of investment activities.
Members may elect to self-direct the investment of their contributions.
Any expenses incurred in conjunction with self-directed investments are paid by members. Absent a member's self-direction, PERS Plan 3 contributions are invested in the Retirement Strategy Fund that assumes the member will retire at age 65.There are 1,176 participating employers in PERS. Membership in PERS consisted of the following as of the latest actuarial valuation date for the plans of June 30, 2012 : Fnui gy N th t 2 , ]4 -.I- rl R \it 55 to fund, along with investment earnings, the increased retirement benefits of those justices and judges that participate in the program.The methods used to determine the contribution requirements are established under state statute in accordance with chapters 41.40 and 41.45 RCW.The required contribution rates expressed as a percentage of current-year covered payroll, as of December 31, 2013, are as follows: Members Not Participating in JBM: PERS Plan 1 PERS Plan 2 PERS Plan 3 Employer*Employee 9.21%*6.000/o****
9.21 %*4.92%-...9.21/**** The employer rates include the employer administrative expense fee currently set at 0.18%.** The employer rate for state elected officials is 13.73% for Plan 1 and 9.21% for Plan 2 and Plan 3.* *
- Plan 3 defined benefit portion only.*** The employee rate for state elected officials is 7.50% for Plan 1 and 4.92% for Plan 2.* Variable from 5.0% minimum to 15.0% maximum based on rate selected by the PERS 3 member.Both Energy Northwest and the employees made the required contributions.
Energy Northwest's required contributions for the years ending June 30 were as follows: 2014 2013 2012 PERS Plan 1 PERS Plan 2 PERS Plan 3$ 75,202 $ 13,095,190
$ 5,919,781$ 106,514 $ 10,630,935
$ 5,075,823$ 124,071 $ 9,773,209
$ 4,710,819 Retirees and Beneficiaries Receiving Benefits Terminated Plan Members Entitled to But Not Yet Receiving Benefits Active Plan Members Vested Active Plan Members Non-vested Total 82,282 30,515 106,317 44,273 263,347 Funding Policy Each biennium, the state Pension Funding Council adopts PERS Plan 1 employer contribution rates, PERS Plan 2 employer and employee contribution rates, and PERS Plan 3 employer contribution rates. Employee contribution rates for Plan 1 are established by statute at 6% for state agencies and local government unit employees, and at 7.5 % for state government elected officials.
The employer and employee contribution rates for Plan 2 and the employer contribution rate for Plan 3 are developed by the Office of the State Actuary to fully fund Plan 2 and the defined benefit portion of Plan 3. Under PERS Plan 3, employer contributions finance the defined benefit portion of the plan and member contributions finance the defined contribution portion. The Plan 3 employee contribution rates range from 5% to 15%.As a result of the implementation of the Judicial Benefit Multiplier Program in January 2007, a second tier of employer and employee rates was developed NOTE 8 -Deferred Compensation Plans Energy Northwest provides a 401(k) deferred compensation plan (401(k)plan), and a 457 deferred compensation plan. Both plans are defined contribution plans that were established to provide a means for investing savings by employees for retirement purposes.
All permanent, full-time employees are eligible to enroll in the plans. Participants are immediately vested in their contributions and direct the investment of their contribution.
Each participant may elect to contribute pre-tax annual compensation, subject to current Internal Revenue Service limitations.
For the 401(k) plan, Energy Northwest may elect to make an employer matching contribution for each of its employees who is a participant during the plan year. The amount of such an employer match shall be 50 percent of the maximum salary deferral percentage.
During FY 2014 Energy Northwest contributed
$3.2 million in employer matching funds while employees contributed
$10.8 million for FY 2014.NOTE 9 -Other Employment Benefits -Post-Employment In addition to the pension benefits available through PERS, Energy Northwest offers post-employment life insurance benefits to retirees who are eligible to receive pensions under PERS Plan 1, Plan 2, and Plan 3. There are 57 retirees who remain participants in the insurance program. In 1994, Energy Northwest's Executive Board approved provisions which continued the life insurance benefit to retirees at 25 percent of the premium for employees who 56 Balancing y New Dietgy ý ot zon retire prior to January 1, 1995, and charged the full 100 percent premium to employees who retired after December 31, 1994. The life insurance benefit is equal to the employee's annual rate of salary at retirement for non-bargaining employees retiring prior to January 1, 1995. The life insurance benefit has a maximum limit of $10,000 for retirees after December 31, 1994. The cost of coverage for retirees remained unchanged for FY 2014 and was $2.82 per $1,000 of coverage.
Employees who retired prior to January 1, 1995, contribute
$.58 cents per $1,000 of coverage while Energy Northwest pays the remainder; retirees after December 31, 1994, pay 100 percent of the cost coverage.
Premiums are paid to the insurer on a current period basis. At the time each employee retired, Energy Northwest accrued an estimated liability for the actuarial value of the future premium. Energy Northwest revises the liability for the actuarial value of estimated future premiums, net of retiree contributions.
The total liability recorded at June 30, 2014, was $0.5 million for these benefits.During FY 2014, pension costs for Energy Northwest employees and post-employment life insurance benefit costs for retirees were calculated and allocated to each business unit based on direct labor dollars. This allocation basis resulted in the following percentages by business unit for FY 2014 for this and other allocated costs; Columbia at 94 percent; Business Development at 4 percent; and Project 1, Nine Canyon, Packwood and Project 3 receiving the residual amount of 2 percent.NOTE 10 -Nuclear Licensing and Insurance Nuclear Licensing Energy Northwest is a licensee of the Nuclear Regulatory Commission
("NRC") and is subject to routine licensing and user fees. Additionally, Energy Northwest may be subject to license modification, suspension, revocation, or civil penalties in the event regulatory or license requirements are violated.Nuclear Insurance Nuclear insurance includes liability coverage, property damage, decontamination and premature decommissioning coverage and accidental outage and/or extra expense coverage.
The liability coverage is governed by the Price-Anderson Act (Act), while the property damage, decontamination and premature decommissioning coverage are defined by the Code of Federal Regulations.
Energy Northwest continues to maintain all regulatory required limits as defined by the NRC, Code of Federal Regulations and the Act. The NRC requires Energy Northwest to certify nuclear insurance limits on an annual basis. Energy Northwest intends to maintain insurance against nuclear risks to the extent such insurance is available on reasonable terms and in an amount and form consistent with customary practice.
Energy Northwest is self-insured to the extent that losses (i) are within the policy deductibles, (ii) are not covered per policy exclusions, terms and limitations, (iii) exceed the amount of insurance maintained, or (iv) are not covered due to lack of insurance availability.
Such losses could have an effect on Energy Northwest's results of operations and cash flows. All dollar figures noted below are as of June 30, 2014.American Nuclear Insurance (ANI) Coverage:
The Act provides financial protection for the public in the event of a significant nuclear generation plant incident.
The Act sets the statutory limit of public liability for a single nuclear incident at $13.2 billion. Energy Northwest addresses this requirement through a combination of private insurance and an industry-wide retrospective payment program called Secondary Financial Protection
("SFP"). Energy Northwest has $375 million of liability insurance as the first layer of protection.
If any US nuclear generation plant has a significant event which exceeds the plant's first layer of protection, every operating licensed reactor in the US is subject to an assessment up to $127.3 million not including state insurance premium tax. Assessments are limited to $18.96 million per reactor, per year, per incident, excluding tax. The SFP is adjusted at least every 5 years to account for inflation and any changes in the number of operating plants. The SFP and liability coverage are not subject to any deductibles.
NEIL Coverage:
The Code of Federal Regulations requires nuclear generation plant license-holders to maintain at least $1.06 billion nuclear decontamination and property damage insurance and requires the proceeds thereof to be used to place a plant in a safe and stable condition, to decontaminate it pursuant to a plan submitted to and approved by the NRC before the proceeds can be used for plant repair or restoration or to provide for premature decommissioning.
Energy Northwest has aggregate coverage in the amount of $2.75 billion which is subject to a $5 million deductible per accident.NOTE 11 -Asset Retirement Obligation (ARO)Energy Northwest adopted ASC 410 on July 1, 2002. This standard requires an entity to recognize the fair value of a liability of an ARO for legal obligations related to the dismantlement and restoration costs associated with the retirement of tangible long-lived assets, such as nuclear decommissioning and site restoration liabilities, in the period in which it is incurred.
Upon initial recognition of the AROs that are measurable, the probability weighted future cash flows for the associated retirement costs are discounted using a credit-adjusted-risk-free rate, and are recognized as both a liability and as an increase in the capitalized carrying amount of the related long-lived assets.Capitalized asset retirement costs are depreciated over the life of the related asset with accretion of the ARO liability classified as an operating expense on the statement of revenues, expenses, and changes in net position each period. Upon settlement of the liability, an entity either settles the obligation for its recorded amount or incurs a gain or loss if the actual costs differ from the recorded amount. However, with regard to the net-billed projects, BPA is obligated to provide for the entire cost of decommissioning and site restoration; therefore, any gain or loss recognized upon settlement of the ARO results in an adjustment to either the billings in excess of costs (liability) or costs in excess of billings (asset), as appropriate, as no net revenue or loss is recognized, and no net position is accumulated for the net-billed projects.Energy Northwest has identified legal obligations to retire generating plant assets at the following business units: Columbia, Nuclear Project No.1 and Nine Canyon. Decommissioning and site restoration requirements for Columbia and Nuclear Project No. 1 are governed by the NRC regulations and site certification agreements between Energy Northwest and the state of Washington and regulations adopted by the Washington Energy Facility Site Evaluation Council (EFSEC) and a lease agreement with the Department of Energy ("DOE"). (See Notes 1 and 13)As of June 30, 2014, Columbia has a capital decommissioning net asset value of zero and an accumulated liability of $131.4 million for the generating plant, and for the ISFSI a net asset value of $1.1 million and an accumulated liability of $2.3 million. The adjustment to ISFSI was associated with new NRC (Nuclear Regulatory Commission) spent fuel decommissioning requirements.
Nuclear Project No. 1 in FY 2014 current year accretion of $.6 million and
! 57 downward revision in future restoration estimates of $2.2 million resu the decrease to the ARO liability of $1.6 million. Nuclear Project No.capital decommissioning net asset value of zero and an accumulated I of $16.6 million.Under the current agreement, Nine Canyon has the obligation to the generation facilities upon expiration of the lease agreement if req by the lessors. The Nine Canyon Wind Project recorded the related ARO in FY 2003 for Phase I and I1. Phase III began commercial opera FY 2008 and the original ARO was adjusted to reflect the change in sc for the retirement obligation, with current lease agreements ref a 2030 expiration date. As of June 30, 2014, Nine Canyon has a decommissioning net asset value of $0.5 million and an accumulated I of $1.3 million.Packwood's obligation has not been calculated because the time and extent of the obligation was considered under this statem indeterminate.
As a result, no reasonable estimate of the ARO obligati be made. An ARO will be required to be recorded if circumstances c Management believes that these assets will be used in utility operati the foreseeable future.The following table describes the changes to Energy Northwest liabilities for the year ended June 30, 2014 the balance is included accounts payable and accrued expense balances for each unit. I included in Columbia's balance: Asset Retirement Obligation (Dollars in millions)Ilted in I has a iability emove iuested original tion in cenaro lecting capital liability frame ent as on can NOTE 12 -Decommissioning and Site Restoration The NRC has issued rules to provide guidance to licensees of operating nuclear plants on providing financial assurance for decommissioning plants at the end of each plant's operating life (See Note 11 for Columbia ARO). In September 1998, the NRC approved and published its "Final Rule on Financial Assurance Requirements for Decommissioning Power Reactors." As provided in this rule, each power reactor licensee is required to report to the NRC the status of its decommissioning funding for each reactor or share of a reactor it owns. This reporting requirement began March 31, 1999, and reports are required every two years thereafter.
Energy Northwest submitted its most recent report to the NRC in March 2013.Energy Northwest's estimate of Columbia's decommissioning costs in FY 2013 dollars is $459.0 million (Columbia
-$454.6 million and ISFSI -$4.4 million).
This estimate, which is updated biannually with the last update in fiscal year 2013 is based on the NRC minimum amount required to demonstrate reasonable financial assurance for a boiling water reactor with Columbia Generating Station Balance At June 30, 2013 Current year accretion expense ARO at June 30, 2014 lSFSI Balance At June 30, 2013 Current year accretion expense ARO at June 30,2014 Nuclear Project No. 1 Balance At June 30, 2013 Current year accretion expense Revision in future restoration estimates ARO at June 30, 2014 Nine Canyon Wind Project Balance At June 30, 2013 Current year accretion expense ARO at June 30, 2014!$:hange. the power level of Columbia.ons for Site restoration requirements for Columbia are governed by the site certification agreements between Energy Northwest and the state of's ARO Washington and by regulations adopted by the EFSEC. Energy Northwest in the submitted a site restoration plan for Columbia that was approved by the SFSI is EFSEC on June 12, 1995. Energy Northwest's current estimate of Columbia's site restoration costs is $109.0 million in constant dollars (based on the 2013 study) and is updated biannually along with the decommissioning estimate.Both decommissioning and site restoration estimates (based on 2013 study)are used as the basis for establishing a funding plan that includes escalation and interest earnings until decommissioning activities occur. Payments to the 124.91 decommissioning and site restoration funds have been made since January 6.53 1985. The fair value of cash and investment securities in the decommissioning 131.44 and site restoration funds as of June 30, 2014, totaled approximately
$214.3 million and $35.9 million, respectively.
Since September 1996, these amounts have been held in an irrevocable trust that recognizes asset retirement 2.16 obligations according to the fair value of the dismantlement and restoration 0.10 costs of certain Energy Northwest assets. The trustee is a domestic U.S. bank 2.26 that certifies the funds for use when needed to retire the asset. The trust is funded by BPA ratepayers and managed by BPA in accordance with NRC requirements and site certification agreements; the balances in these external trust funds are not reflected on Energy Northwest's balance sheet.18.24 0.58 Energy Northwest established a decommissioning and site restoration plan for the ISFSI in 1997. Beginning in FY 2003, an annual contribution is made (2.21)to the Energy Northwest Decommissioning Fund. These contributions are held by Energy Northwest and not held in trust by BPA. The fair market value of cash and investments as of June 30, 2014, is $1 .2 million. These contributions will occur through FY 2044; cash payments will begin for decommissioning and site restoration in FY 2045 with equal installments for five years totaling 0.05$10.6 million in constant dollars based on the study.1.34 58 B~alr~c' riqNe.,. Ený7rqy Hoenzun NOTE 13 -Commitments And Contingencies Nuclear Project No. 1 Termination Since the Nuclear Project No.1 termination, Energy Northwest has been planning for the demolition of Nuclear Project No. 1 and restoration of the site, recognizing the fact that there is no market for the sale of the project in its entirety, and no viable alternative use has been found to-date. The final level of demolition and restoration will be in accordance with agreements discussed below under "Nuclear Project No. 1 Site Restoration." Nuclear Project No. 3 Termination In June 1994, the Nuclear Project No. 3 Owners Committee voted unanimously to terminate the project, In 1995, a group from Grays Harbor County, Washington, formed the Satsop Redevelopment Project (SRP). The SRP introduced legislation with the state of Washington under Senate Bill No. 6427, which passed and was signed by the governor of the state of Washington on March 7, 1996. The legislation enables local governments and Energy Northwest to negotiate an arrangement allowing such local governments to assume an interest in the site on which Nuclear Project No. 3 exists for economic development by transferring ownership of all or a portion of the site to local government entities.
This legislation also provides for the local government entities to assume regulatory responsibilities for site restoration requirements and control of water rights. In February 1999, Energy Northwest entered into a transfer agreement with the SRP to transfer the real and personal property at the site of Nuclear Project No. 3. The SRP also agreed to assume regulatory responsibility for site restoration.
Therefore, Energy Northwest is no longer responsible to the state of Washington and EFSEC for any site restoration costs.Nuclear Project No. 1 Site Restoration Site restoration requirements for Nuclear Project No. 1 are governed by site certification agreements between Energy Northwest and the state of Washington and regulations adopted by EFSEC, and a lease agreement with DOE. Energy Northwest submitted a site restoration plan for Nuclear Project No. 1 to EFSEC on March 8, 1995, which complied with EFSEC requirements to remove the assets and restore the sites by demolition, burial, entombment, or other techniques such that the sites pose minimal hazard to the public.EFSEC approved Energy Northwest's site restoration plan on June 12, 1995.In its approval, EFSEC recognized that there is uncertainty associated with Energy Northwest's proposed plan. Accordingly, EFSEC's conditional approval provides for additional reviews once the details of the plan are finalized.
A new plan with additional details was submitted in FY 2003. This submittal was used to calculate the ARO discussed in Note 11.Business Development Fund Interest in Northwest Open Access Network The Business Development Fund is a member of the Northwest Open Access Network (NoaNet).
Members formed NoaNet pursuant to an Interlocal Cooperation Agreement for the development and efficient use by the members and others of a communication network in conjunction with BPA.The Business Development Fund has a 7.38 percent interest in NoaNet with a potential mandate of an additional 25 percent step-up possible for a maximum 9.23 percent. NoaNet has $9.3 million in network revenue bonds and note payables outstanding, based on their December 30, 2013 audited financial statements.
The $5.5 million of the network revenue bonds will be paid in full in December of 2016, and the $3.8 million in note payables will be paid in full in December 2017. The members are obligated to pay the principal and interest on the bonds when due in the event and to the extent that NoaNet's Gross Revenue (after payment of costs of Maintenance and Operation) is insufficient for this purpose. The maximum principal share (based on step-up potential) that the Business Development Fund could be required to pay is $.9 million. The Business Development Fund is not obligated to reimburse losses of NoaNet unless an assessment is made to NoaNet's members based on a two-thirds vote of the membership.
In FY 2014 the Business Development Fund was not required to contribute to NoaNet.Financial statements for NoaNet may be obtained by writing to: Northwest Open Access Network, NoaNet Headquarters, 5802 Overlook Ave. NE, Tacoma, WA 98422. Any information obtained from NoaNet is the responsibility of NoaNet. PwC has not audited or examined any information available from NoaNet; accordingly, PwC does not express an opinion or any other form of assurance with respect thereto.Other Litigation and Commitments Energy Northwest
- v. SPX Heat Transfer Inc. (CV13-5151-RMP).
Energy Northwest filed suit against SPX Heat Transfer Inc. (SPX) on December 24, 2013 seeking the recovery of damages relating to SPX's breach of contract.In February, 2009, SPX's predecessor in interest Yuba Heat Transfer LLC and Energy Northwest entered into a contract for the design, engineering, fabrication and delivery of the condenser modules and related components for Energy Northwest's Columbia Generating Station. In the lawsuit, Energy Northwest contends that SPX breached the contract (1) by failing to meet contract specifications for condenser backpressure and sub-cooling; (2) by failing to provide work that was free from defect in design and fabrication; and (3) by failing to meet the express warranties contained in the contract.No specific amount of damages has been demanded in the complaint.
SPX has responded to the lawsuit and has included a counterclaim for damages. In its counterclaim, SPX seeks the balance of the contract amount, which is $2,070,334 plus accumulated interest.
Additionally, SPX seeks recovery of some or all of a portion of the incentive fee contained in the contract as determined by the formula in the contract with no specific amount demanded.
Energy Northwest has denied that it owes SPX the contract balance or any amount of the performance incentive.
On July 22, 2014, Energy Northwest made an offer of settlement to SPX in accordance with RCW 39.04.240, RCW 4.84.260 and the Federal Rules of Civil Procedure, Rule 68. In the offer of settlement, Energy Northwest agreed to accept a judgment from SPX for all claims including but not limited to SPX's counterclaims, for $0.00. Should SPX decline this offer of settlement and Energy Northwest prevails at trial with a jury verdict greater than the offer of settlement, in addition to the jury verdict SPX would be obligated to pay Energy Northwest its legal costs and attorneys' fees from the date of the offer of settlement.
The outcome of this matter cannot be predicted at this time.Energy Northwest
- v. United States of America, (No. 11-447C), EN-SNF2.Energy Northwest filed a second action against the United States of America (the "Government")
in the U.S. Court of Federal Claims in July 2011 for its continuing breach of contract for the Government's failure to dispose of spent nuclear fuel and high-level radioactive waste and the additional damages Energy Northwest incurred or will incur between September 1, 2006, and June 30, 2012. On March 11, 2014, the court awarded Energy Northwest Energy Northwest 2014 Annual Report 59 summary judgment for costs incurred to continue to operate and maintain its dry storage program. This favorable decision ultimately led to the approval by the Executive Board of a settlement agreement with the Government in the amount of $23.6 million to dispose of the second action. This amount has been recorded within Non-Operating Revenues on the Statement of Revenues, Expenses, and Changes in Net Position.
The settlement agreement also provides for a claims process to obtain payment for continuing damages between July 1, 2012, through December 31, 2016, which obviates the need for litigation to recover damages for this time period. The settlement agreement is expected to be fully executed by the parties by fall 2014. Energy Northwest received $48.7 million in 2011 under the first action that resulted in a Stipulation for Entry of Final Judgment in Favor of Plaintiff Energy Northwest.
Energy Northwest is involved in other various claims, legal actions and contractual commitments and in certain claims and contracts arising in the normal course of business.
Although some suits, claims and commitments are significant in amount, final disposition is not determinable.
In the opinion of management, the outcome of such litigation, claims or commitments will not have a material adverse effect on the financial positions of the business units or Energy Northwest as a whole. The future annual cost of the business units, however, may either be increased or decreased as a result of the outcome of these matters.NOTE 14 -Nuclear Fuels In May 2012, Energy Northwest entered into agreements with three other parties for processing high assay uranium tails. The Program consists of several agreements between the parties involved, entered into as a joint effort between the DOE, Tennessee Valley Authority (TVA), United States Enrichment Corporation (USEC) and Energy Northwest to enrich approximately 9,082 metric tons (MTU) of Depleted Uranium Hexafluoride (DUF6) with an average assay of 0.44 weight percent U235 (wt%) that will yield approximately 482 MTU of enriched uranium product (EUP) with an average assay of 4.4 wt%.DOE and Energy Northwest have entered into an agreement for the transfer of the DUF6 to Energy Northwest.
The agreement addresses delivery and transfer of title of the DUF6, return of residual DUF6 after enrichment, storage of the EUP, and payment of DOE's costs. The costs for the handling of the DUF6 and storage of the EUP are anticipated to be $5 million or less. As of June 30, 2014, Energy Northwest had recorded $0.5 million in charges to the DOE for delivery of the DUF6 and storage of the EUP, which is capitalized as cost of the fuel being purchased.
Under the Depleted Uranium Enrichment Program (DUEP), Energy Northwest purchased from USEC all of the Separative Work Units (SWU)contained in the EUR Upon finalization of the program, Energy Northwest had purchased a total of 481.6 MTU of EUP from USEC at a cost of $687.2 million, which is recorded in nuclear fuel, net of accumulated amortization, as of June 30, 2013. There have been no additional purchases in fiscal year 2014.Energy Northwest and TVA have entered into an agreement for the sale and purchase of a portion of the SWU and Feed Component of the EUP. The sales under the agreement are expected to total approximately
$731 million.The sales under this agreement are scheduled to take place between 2015 and 2022.Energy Northwest has a contract with DOE that requires DOE to accept title and dispose of spent nuclear fuel. Although the courts have ruled that DOE had the obligation to accept title to spent nuclear fuel by January 31, 1998, currently, there is no known date established when DOE will fulfill this legal obligation and begin accepting spent nuclear fuel. On November 19, 2013, the D.C. Circuit Court ordered the DOE to submit to Congress a proposal to reduce the current waste disposal fee to zero, unless and until there is a viable disposal program. On January 3, 2014, the DOE filed a petition for rehearing which was denied by the D.C. Circuit Court on March 18, 2014. Also, on January 3, 2014, the DOE submitted a proposal to Congress to reduce the current waste disposal fee to zero. On May 9, 2014, the DOE notified Energy Northwest that the waste disposal fee will remain in effect through May 15, 2014, after which time the fee will be set to zero. For the year ended June 30, 2014, Energy Northwest incurred expense of $8.16 million in waste disposal fees, recorded in fuel disposal within Columbia's Statement of Revenues, Expenses, and Changes in Net Position.
Until such time as a new fee structure is in effect, Energy Northwest will not accrue any further costs related to waste disposal fees. When the fuel is placed in the reactor the fuel cost is amortized to operating expense on the basis of quantity of heat produced for generation of electric energy. The amount moved to spent fuel for cooling decreased
$55.3 million. Fees for disposal of fuel in the reactor are expensed as part of the fuel cost.The current period operating expense for Columbia includes an $8.2 million charge from DOE for future spent fuel storage and disposal in accordance with the Nuclear Waste Policy Act of 1982 and $47.0 million for amortization of fuel used in the reactor.Energy Northwest has completed the Independent Spent Fuel Storage Installation (ISFSI) project, which is a temporary dry cask storage facility to be used until DOE completes its plan for a national repository.
ISFSI will store the spent fuel in commercially available dry storage casks on a concrete pad at the Columbia site. Nine casks were issued from the cask inventory account in FY 2014 totaling $9.2 million. Spent fuel is transferred from the spent fuel pool to the ISFSI periodically to allow for future refueling.
Current period costs were $2.3 million for dry cask storage costs which are recorded in nuclear fuel expense.Designer:
Ben Stewart Editor: Anna Markham Sm YOU LEARN MORE About Energy Northwest people and projects on the Web at www.energy-northwest.com Facebook.com/energynorthwest Twitter.com/energynorthwest youtube~com/energynorthwest2011 ENERGY NORTH WEST