ML19309C881
| ML19309C881 | |
| Person / Time | |
|---|---|
| Site: | Grand Gulf  |
| Issue date: | 12/31/1978 |
| From: | SOUTH MISSISSIPPI ELECTRIC POWER ASSOCIATION |
| To: | |
| Shared Package | |
| ML19309C873 | List: |
| References | |
| NUDOCS 8004090350 | |
| Download: ML19309C881 (150) | |
Text
{{#Wiki_filter:I EnhI3I O O annual report 1978 0 ' O pours Mississieei etecTsic powes fss"oc1ATioN
t l t i CONTENTS Page President's Message 2 Iloard of Directors. 3 Manager's Report 4 Italanc e Sheet . 7 l Statement of Revenue 8 Statement of Change 9 Notes to financial Statements . .10 Ac countant's t etter. .13 i spenw Chart .14 Comparative 5ummary. .15 Comparatise Operating Report . .16 Organization . .17 Morrow Dedication. .18 Service Area. .20 h
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f/h h As we look bac k at another year, it is clear to me that We f ac e tremendous problems. As in the past, we the job of prosidmg the power for a growing area n get- must hand together to let our voices he heard We must ting to be a larger one. (ontinue to work through our elet ted representatives to Inflation, the regulatory prot eu, (omplex environ- make sure that the countryside continues to have mental laws, a growmg dntrust of the utihty industry high lesel of productivity and the high standard of li and conf h< ting stones of where we have been and where that has helped make this country great we are going make it very dif f mult for all of us in our ef- We would not have achieved the measure of success forts to provide serva e to our members. that we have without the help of our fine senators and the euth n gettmg more rhlfn ult to determine, but congressmen, the Administrator and staff of REA and on ttnng is evident. the need for low ( ost ele (tric power the staf fs of NRL CA and CF C. We must continue to work m the rural areas of our country is real This need will together along with those leaders and with the consul-contmue to be a major concern of those of us with the tants and supphers who have also helped us so much in respimuinlity of providmg that service the past As the many problems were confronted dunng the it is the day of problems Where does that leave us? It past year, I (ould not help but th;nk that only 40 years leaves us where we have always been We are in the ago almost 'O per (ent of the peopic in the countryside middle . trying to supply the needs of a g*owing rural had no reliable electric power. They went without com- America as we meet the demands placed upon us. We forts and <onveniences which even then city residents cannot give up We will provide the service needed We took for granted it took the rural electnfication pro- must gram, and the determined people within the program. to make that "imixwuhle dream" come true. It was dif tit ult in those years. The problems that were I faced at that time were considered to be as large, if perhaps not as < omplex, as the ones we f ace today. We [ { were suc c ewful Our sunen has made it ponible for the people of rural Ameo(a to enioy a standard of livmg that was unheard of or esen dreamed of. In addition to R D Morrow, Sr. proudmg the comforts, it has provah d for the feeding President and (lothing of the world Modern agriculture today is the eighth wonder of the world. Electric power has en-abled the American f armer to produce fo<xl and fiber for a deman<hng world, and has also freed people to pursue other avenues that have bettered mankind 2 O h Nhhhhhb s s 1
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The untertainty that surrounds the electric utility With the expansion of the board of directors, existing industry throughout the United States was certainly no c mmittees,were expanded and new committees we stranger to this Anociation during 1978 The uncertain- app inted Committees of the board now include: ties of load growth, regulatory processes, environmental (1) Operations Review Committee prote(tion and public sentiment were very mut h with us (2) Iludget ,=nd Finance Committee throughout the year. In spite of the uncertainties that O) Wage and Salary Committee plagued us, however,1978 was an eventful year and will (4) F uel Committee he remembered for the challenge and opportunity it af. (5) Ilylaws Committee forded those of us who have rtNiornibility of power N M Gmmhe supply. (7) Power Supply Committee lhe tx>ard of directors ac(epted Coast Ilectric Power Association % application for membership dunng 1978 and thereby increased the membership from six to seven Coast exetuted a long term wholesale power con ~ l. LOAD GROWTH tract with the Association, and an amendment to the Power Cost lqualitation Agreement was executed by all load growth during 1978, as reflected by KWH sales seven members, making Coast a party to that agreement to SME PA's members, was down from 1977. It appears and putting all seven members on an equal footing for that the general appeal for conservation and the power msts increased cost of electric service have begun to have The by-laws of the Aworiation were amended to some effect on load growth. Percentage load growth as { allow for: a function of kilowatt hour sales for the last several 1 (1) I at h member moperative to have two representa. years is indicated in the following table: tives on the board of directors, and (1) The managers of the member cooperatives to serve on the board of directors if selected by their 1972 - 18 80 % (ooperative for that service. 1973 - 9h2% 1he board of directors therefore inc reased from six 1974 - 4 70 % members to twelse members in De(ember, including the 1975 - 9.55 % managers of hve of the six member woperatives. (Coast 1976 - 7 85 %
- t. P A became active in January 1979, making fourteen 1977 - 9 24 %
members of the board, int ludmg six managers ) 1978 - 6 59 % 4 O ( ~.
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f II, COST OF POWER t As the load growth slowed during the year, costs f tenued to increase. The total electric revenue per
/ lH sold by the Association to its members is reflected M.ie following table:
Revenue in Mills % increase Over YEAR per KWH Previous Year C. Other Construction Other projects completed or under construction 1970 7.22 during 1978 included: 1971 7 64 58 1.161 KV line, Magee Homewood 1972 9 05 18 5 2. Homewood 161/69 KV sub*tation 1973 11 61 28 3 3.161 KV line, Plant Morrow P ant Moselle 1974 16 83 45 0 4. Magee interconnection with MP&L Company 1975 20 47 21 6 1976 2397 17.1 1977 27.29 139 1978 31 49 154 IV. FUEL AND POWER PURCHASES Activities in fuel and power sales and purchases A complete breakdown of costs is given on page 13 of probably have a greater impact upon the well being of this report. the Association than any other group of activities. The 3149 mills lKWH in 1978 reflects the addition of During 1978, activities in this area included: the new generating capacity to the system for only a A. Completion of the unit train loading facihty in Ken-part of the year (from Apnl 16 for Unit #1 and from Dec- tucky. This gives Sandy fork Mining Company the ember 1 for Unit #2) Comparable cost figures for 1979 capabihty of loading a 70 car train in less than four will reflect that addition for the entire year and will be hours and reduces the freight rate to Plant Morrow mnuderably higher for that reason by approximately 55 00 per ton 11 A shift in mining on SMLPA land from 100 percent surface mming to 98 per cent underground mining, with 81 per cent of the coal mined there during 1978 being from underground mines. The shif t, of (ourse, was caused by rules promulgated under the Surface Mining Act of 1977. CONSTRUCTION C. An amendment to the Coal Supply Agreement with Sandy fork Mining Company. The original Plant Morrow agreement with Sandy tork was written pnor to lhe dedic ation of the R D Morrow, Sr. Generatin4 Sandy tork's going into commercial operation, and Plant, hehl on O(tober 27, was a highhght for the year the escalation factors proved to be laden with am-Perfe< t weather and a gexxl < rowd of people provided biguities and were very dif ficult to use. T he revised the setting for a special inbute to Mr. Morrow and his agreement is based primarily upon published indi-family on that day. ces of prices and will be much easier to use, while lhe first unit at Plant Morrow went into commercial protecting both Sandy fork and SME PA. operation April 16,1978, and the sewnd unit on Dee D. An extension of the gas contract with Flornia Cas emher 1 1978 A multitude of problenn, ranging from Company through 1983, subject to cancellation boiler tube leaks to a mdl fire to a near buildinM upon the giving of notice. milapse, greatly de(reased the planti reliabihty dunng L. An amendment to the interconnection contract the year It is hoheved. however, that most of the pro- with Mississippi Power Company, providing for a hienn base been solved now and that the plant will be change in the use of protective capacity by the available for years of rehable servic"- Association F. A shif t from purchasing firm power from Minissip-Il Coal Preparation Plant (in Kentucky) pi Power Company to selling firm power to that the mal preparation plant, onginally scheduled to be company.
< ompleted m 1978, is now expe(ted to be in operation C. An option to liig Rivers Ilectric Corporation of by the fall of 1979 Original plans anticipated four en- Henderson, Kentucky for the sale of surplus capa-vironmental permitt New laws, rules and regulations, city.
however, base required 23 thfierent permits thus far, H The continuation of negotiations with Mississippi and no one can be (ertam that some agency of govern- Power & Light Company for the purchase of a por-ment won't require still more. tion of the Grand Gulf Nuclear Plant and related When the facihty is mmplete, coal wdl be of better services, including the transmission of power quahty as it mmes to SMlPA. It wdl weigh less, have through its system for SME PA. len sulfur and more heat (per pound) and will burn 1. The short-term lease of 55 coal cars to Mississippi c leaner in the bmfers Power Company. 5
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V. FINANCES Vll. MISCELLANEOUS Financing played a major role in the life of the As- Two new delivery points were approved during the I sociation during 1978. The items and actions listed be- year: 1 low summarire the financial activities for the year: Oak Grove - Pearl River Valley E.P.A. A. Advances received from the Federal Financing Wade - Singing River E.P.A. Bank during the year totaled 512,561,000, at an average interest rate of 8.566%. in addition, changes were authorized at two B. FFH notes maturing and " rolled over" totaled additional de;ivery points: 572,543,000. The average interest rate on these North Petal - Dixie E.P.A. notes increased from 6 673% before " roll over" to Brookhaven - Southwest Mississippi E.P.A. C. ota f advances through 1978 amount to Sixteen (16) contracts were completed and closed out.
$145,938,000 at an average interest rate of 7.721% Contracts for 328 miles of rightof-way clearing were as of Dec. ember 31,1978 completed.
D- The Association participated in the sale of Pollu- Cround-line inspection and treatment was completed tion Control Bonds by Lamar County in the a- for 151 miles of line. mount of $3,825,000 at an average effective rate of interest of 6.460%. This brings the total of such The Association employed NUS Corporation to make bonds to 543,825,000 at an average effective rate a heat rate study of Plant Moselle. The study was com-pleted and a report'was issued which included the state-of interest of 6 298%- E. Arrangements were completed during 1978 to trans' ment that "It is to be concluded, therefore, that a signifi-fer the general funds of the Association to the De- cant increase in the efficiency of operation of the posit Guaranty National Bank in Hattiesburg and Moselle Generating Station is not possible. The power plant is being operated at, or near, the highest levels of to provido for the automatic investment of surplus efficiency possible." general funds on a daily basis-The position of Job Training and Safety Director was F. The Association continues to maintain an open line established, and enlarged training, testing and safety of credit with CFC in the amount of 512,000,000 programs were undertaken. C. CFC was designated as the paying agent for the As- Average oil prices increased from 51.78 per million sociation in the matter of making payments both BTU in 1977 to 51.85 in 1978; average gas prices in-to CFC and to REA. This helps insure prompt pay- creased from 51.76 to 51.86 but, because of the injection ment on those accounts. of coal into the fuel supply, the average total cost of H. fuel decreased from $1.77 to 51.76 per million BTU. The Board of Directors authorized a new policy for the repayment of capital credits on a current basis- An election for representation of certain employees by the IBEW was held on August 17,1978 and was fhe new policy, still awaiting approval by REA is by the union by a vote of 61 to 42. Certification by ' tied to the maintenance of revenues at levels suf- NLRB is presently under review and, as a result, recogr - ficient to cover expenses and provide an adequate debt service coverage. tion has not been extended to the union. Employee life and medical insurance coverages were increased and improved, in cooperation with NRECA, at no additional cost to the employees. Wage and salary increases of 3.55% in May and 5 0% in November were given, in accordance with the policies of the Association, to reflect the increase in the cost of living. ' The number of employees of the Association increased from 172 to 186 during the year. t in conclusion, I would like to personally thank the ( Board of Directors for its outstanding leadership and di-rection and each employee for his (or her) faithfulness and dedication to the job which we face together. VI. PLANNING Although uncertainty still surrounds us, we have confid-ence that in working together, we can provide our mem-Southern Engineering Company continued power sup- bers with an adequate source of power at the lowest ply studies for the Association through 1978. The studies possible cost. center primarily around the purchase of a portion of Crrnd Gulf Nuclear Plant, but also include the possibili-ty of other electric power associations joining SMEPA l for power supply. The Association has retained Dames & Moore, { another engineering firm, for the purpose of making a plint site study and fuel and transportation study for the [g next increment of generation, now planned for the late George B. Taylor 1980's. These studies are now in progress. General Manager 8 O l h 4
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s BALANCE DECEMBER 31st SHEET 19 1978 ll!Y PLAN T (Note 2) Assels lNore 1) (Vilet tric Plant in Servne - at (mt 5 71,959,317 5253,027,210 Construc tnn Work in Progress 163,uA,898 14,852,799 5235,624,215 5267,880,(xn Icu At i omulated Prov win for Deprer utson 10,219,917 13A65,2fA Net Utahty Plant 5225,404.298 5254,014,745 Oilli R PROPI R T Y ANI)lNVl SIMI NTS Investments in Awa aated Organsrations (Note 9) 5 3,249,343 5 3,892,931 Othe r Insestments. Ini luding Temp,rary Inmtments 101,4m 3m,331 l
$pe< ial I)epout s 32,580 425,532 l 5 3,583,183 5 4.618,796 CORRINT ASSIIS -1 Cash - General f unds 5 65,128 5 71,870 f
Cash - Rt A IIilloan f unds - {g[ \ .3 40,797 144,188 Depouts - Pollution Control . p flond Prot eeds (Note .l) g 20,416,185 3,94(.148 Au oonts Ret eisable - Memtwr Consumers \ 4,529,414 5,612,897 At counts Ret ewable - Otl,crs D 119,830 312.021 i nel Stod, Matenals and Supphes 3,5tN,158 4,752,019 Other Current and Ac c rued Awets 464,192 559,354 5 29,164,704 5 15,418,717 l RRi l)( il ARGl 5 l Note h) 5 1,071,537 5 3,S11,116 TOT AL A551IS 5259,223,922 5277,563,374 LQUlill S AND MARGINS Memberships 5 30 $ .R) Patronage Capital (Note 4 } 1,149,533 2,439,917 Other i quit ses (Note 5) 535,416 535,436 5 1,684,9'n 5 2.975,401 L ONG.Il RM Di ll! (Note b) RI A Mortgage Notes 5 64.880,476 5 (A,774.401 Other iong term Debt 175,237,512 193.567,699 5240,117,988 5258,342.1(X) CURRlNI AND ACCRUE DllAllillill S Notes Pas able - ti C line of ( redit (Note 7) 5 2,400.tXX) $ 2.865,000 Au ounts Payable - General 5.118,036 5.160,714 Act ounts Payable - Retainage 8,902,846 7,240,468 Aurued lam 43,391 70,095 Au rued interest 814,413 N12,495 Other Current and Au rued liabihties 81,752 101,428 5 17,3W,458 5 16,122,200 DIi l R Rt D CRE DilS (Note 8) 5 60,477 5 123,671 IOI Al l1 A11ll11115 AND OilllR CRIOliS 5259,223,922 5277,563.374
\ T he ac companying notes are an integral part
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REYENUE ao PATRONAGE CAPlTAL FOR THE YEAR ENDED DECEMBER 31 1977 1978 OPl RAilNG RI VI NUE. AN!) PAT RONACI CAPli Al Ilettrit I nergy Revenues 5 57,127,699 5 70,655,998 in< orne f rom l eased Progwrty - Net 272,888 289.147 5 57,400,587 5 70,945,145 OPI RAllNG I)I I)UCilONS Operation I x pen ,e Production - Steam ' S 16.551,716 5 26,534,084 Other Power Generation .- l'; g 677,356 828,474 Cost of l'un based Power c$ S'N 0v 34,158,430 27,721,339 T ransminion ,e > 382,677 487,997 Consumer Aucunts 'N 9 12,342 10,679 Administrative and General Operation l xpense Total ,. Q U hc[ 818,011 1,180.852 5 52.f410,5 32 5 56,763,425 Maintenanc e I xpense Produc tion [;)D w 5 494,113 5 004,850 Iransminion 4' 488,335 637,655 General Plant 37,110 43,j Maintenanc e I xpense lotal 5 1,019,558 5 1,286,2. 1)epreciation I mpense 5 1,648,309 5 4,224,653 lax lipeme 5 %,883 5 161,134 lotal Operating ()educ tions 5 55,365,282 5 62,435,509 Interest I mpenw 10.891,567 14,331,944 Interest Charged to Comtruction - Credit (8,996,367) (6,974,404) I 5 57,260,482 5 69,793,049 N1 I OPI R AllNG MARGINS (Notes 6 and 8) 5 140,105 5 1,152,096 NON OPl RA IING MARGINS 82.130 138,308 NI I PA1RONACI CAPil Al OR MARGINS (Note 4) $ 222.235 5 1,29(),404 (Note 10) T he accompanying notes are an integral part 8 of this statement.
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C4ANGE m FINANCIAL POSITION IOR THf Yi AR E NDED DECEMillR 31 1977 1978 I UND5 WI RI PROVil)I D llY Net Margms 5 222,215 5 1,290,405 Add I spenses not Reqtnong an Outlay of Worbog Capitalin Current Penod Depre< eation, Depictuin and Amorts/ation 1,772,574 4,444,248 (.harge Ior Addihon to insuram e 1 oss Dedu< table Reserse 17,500 U),(XM) In( rease in i ong lerin Debt -- Ri A Advanc es 2,592.00l) 1,177,(M N) Int rease in inog lerm Debt - R1 A - Other 1 % ,4 11 & In< rease in l ong lerm Debt - Other Advant es - lill 21,984,0l M) 12,561.tX K) Grow Pror ceds f rom Pollution Control Revenue liond twue 40,(X M1,001) 3,ll25,(M M) Salsage Credits lew Retirement Costs (i u en Costs) 459,092 (25,41 l) Det reaw in Working Capital 0 12,507,728 Det team in Other investments 961),140 1,127 Det tease in Deterrrd Op dits
, n 3,194 1)e( rease in Sgn < ial Deposits a v. s --
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l stenuon and Replat ement of Plant 0 $ 45,257,284 $ !!,021,611 f ramtmwinn I at ihtses Acquired f rom :ctb@
)h Dist ribut son Cooperat n e (Note 6) s[U 407,647 o Payments on i nog Term Debt - Rl A 1,285,449 1,470,515 C'a>ments on I one Ierm Debt - RI A - Other 12,028 12,561 Q*asments on Iong lerm Debt - Other 2%.8% 255,475 In< ream in Insestments - Awo< iated Organizations 2,155.019 641,588 In( reaw m Spet tal Deposits G 192,952 in( ecaw m Deferred Charges 1559,911 245,5fl7 Int reaw in Workmg Capital 18,029,714 O NI i Cll ANGl S IN WORKING CAPil Al i [ _
int ream (Det reaw)m Current Awets Cash - General f unds and loan f unds 5 (411, Mil) $ 110,111 Unadvan( ed I unds - Pollution Control Res enue liond Prot ceds 20,416,185 (16,489,817) Au ounts Rec enable - Comumers 496,144 1,081,481 At < ounts Ret en able - Other (10,157) 212,191 Material, Supplies and I uel Oil (512,764) 1,242,881 Prepasments and Other Current Awets (118,109) 95.162
$ 19,879,996 $ (13,745,987) cu reaw (Dec reaw)in f urrent liabihties Notes Payable - CI C $ 2,4(XI,tMM) $ 465,000 Arounts Payable - General and Ret.unage (1,O V),717) (IA19,7(x1) l A( < ruet! I aws 14,481 26,704 l
A( < rued Interest 415,429 (111,918) Other Current and Au rued Ilabihties 31.087 21,676 5 1,850,262 5 (1,238,258) INCRI A51 IN WORKING CAPil Al.(DICRI A51) $ 18,029,734 5 (12,507,729) 1he an ompanying notes are an integral part , of this statement M5 :Wi khb. k h h ' b NN$NNNNN O N O .1 - h
NOTES TO FINANCIAL STATEMENTf DECEMBER 31,1978 O
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(1) A%f f 5 PtIDGID s s ( y All aswti are pledged as we urity frw long term debt ' (1) I L i CIRfC Pt AN1,l>l PRI Cf AIM)N ANT; DI P1I IlON PROCl DURI $ iollowing are the mapw a lasu s of r.ihty plant, as of Dec emtwr 31,1977 and 1978 1977 1978 f rant hnes and Conwnts la) S 459.285 5 459,285 lles tru 11 ant Purt hawsl - Iranwntuonn 407.f,48 407.648 (lesInc 11 ant Icaust to Others 1/107.598 1.981.922 1aruf and I and Rightr. 5.9r 4.172 6J95fal Gerwratuin P! ants 26.275f,51 29 471.616 iranunmum System 30 119.972 31.985.4Ni Gerwral Plant 1.846 910 3.124.061 5 66.981,246 5 75,925.626 Cornpleted Comtrue tum - Not Clasuf wd o 172.123.513 Kentut b y Coal Property - t arul and Minerals 4.799.071 4.799.071 K entui k y Coal Property - Deptre sable Plant and ( quipment 179 (u n) 1793Mk) Iles ten Plant in $ctsu e S 71,959,117 $251.027.210 Comtrue tunn Work in Progress 161 664.898 14.852.749 5215 624 215 5267.88UU9 (a) Comnts prirnanly, of preoperating espenw allcw ated to this aucunt m 1972 ()cgwet satum n t omputemi nuinthly tus staalght hne i onigwnste ratt's for Gl Plant at tr>unts as fo!!ows Annual Rate f t rammmion Iines 2 75 % f rammmnin 5tatiom 2 75 % Mnelle and Murow Steam Plants 3 10 % Cas f ortunes and Other Pnnlut tuwi l quipment 3 (n)% No deprtw satHm has luvn Iaken in the a urtent or prsor vcars on Laruj arw]larul Rights. l Gerwral Plant aucts are dho degwet sattwi monthly, on gravly straight hnc tonynnite rates as follows
$true tures and improvement 5 4 (U%
Of f u e f urruture. Intures and I quynwnt 6 25*6 - 8 iWi% 1ranywwtat nin i quipenent 1000% 25(U% i ah ! qui;wnent. T ools. Shop and Work E quqwnent 8 (U% Conwnunn at ums ! qugwnent Stores t quipnwnt 6 00 % General Plant I quywnent 10 tm)% Power Operates! I quynnent 12 00 % to O M4 , ............:........ .v . y on w.:::;:.:::::::::::::::7.d..s: gkw:g.ntattttt.::nst:c.nnon;g;.;.;.q:g:g: g:3;;g;;;.;. .;.;g.g ,.
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Depletwin of ernt of Aentucky coal rewrses is tomputed on a " tonnage sold" baus calculated to fully amortue su , Nnated dep%ts have beeri re(resern! This property is presently leaseri to an mdep.riderit i oal pnxitr< sna < orripany for a rovatty bawd on sclhng once per ton
/ (1) DIPO5tf 5 - POLLUTION CONTROL DONI)PROCfIDS f I This ac c ount include > th unadvan(ed gx>rtwin of pro < enis and ac t rued interest from Pollutw>n Control Resenue !bar.d issues sold by Natwmal Rural Utihties Coogeratne Iinanc e Corporation (CICHn 1977 Aqd 1978 Ove f ootnote 6 for details reganhng these bond mues) These f unds are on depout in varusus trust at remnts of Morgan Guaranty Trust Ceanpany of New York and Depout Guaranty Natwxial flank (Minswippil mvested m slunt term CD s bearing enternt at tales rangm' g betweers 8 75% to 9 9% at Dere mher 11, 1978 Advan< n are requiutsoned from thne funds as equired (4) Di Tall Of NII PAT RONACI C APlI AL OR MARGINS 1977 1978 Net Patronage Capital - lleginning of iear S 927,298 $ 1,149,511 Net Marum 222.235 1,290,404 Net Patronage ( apital - E rwf of Year 5 1,149 511 5 2.419,917 Ilv laws of the Aww nation prosuje for allos atum of all margins to patrons All rnargms earned subwquent tr> hegmnmg of operation r#f plant leave been anagned to patrons cet ept the tri.argiri her the gear 1978 (M OlitlR (QUltfl5 T he hal.ine e in thn at < ount at the date inder ated reinnevils (ontidmtu.ms inade by present arid f ormer patrorn during preoperatmg g ean and n ( artmed in the general ledger as Donated Capital N (ONG-l!RM Dilli Rural!lccfnfit aturri Admirustration(RI A)
Unadvant avl turids on notes executel to RI A not refic< ted m long term debt totalled $2,352JNU at Det emtwr 11.1978 Rural f in tnh< atum Admenntration - Other Iknmg 1977, South Mewswpps ilet tru Power Amu sation(5MI PA)agren! to purchaw. sub ett l to RL A approval. certam transmewson iaulat-ws penumsly leawd f rom 5:ngmg Riser Ein tric Power Awociatunil5RI PA), Mnsissippe Jac kuni, tarned by SRI PA in its accounts at a net lxuA salue of $407A47 on whi(h progerty 11%410 was own! to RI A by SRI PA at the date of agreement to purchase I ntnes have been made m the an ounts of %tt PA wttmg up thne awets at SRI P A 5 net brwA value and an awumpton of notn with balan(n outstanding at December 11, 197H of $ 171,842 O
/ i f nieral I manong llank (Il 11) \j Not refle< ted m long term debt n unadvant ed Imrtum ($ 61,9753XM))of ru tes totallmg $ 209,913 Jut) at De< ember 31,1978, ewt uted smt e 1974 to If fl t he pros eeds were or are bemg uwd for complet on of R D Morrow, Sr generatmg plant at Purv s. Mnuwppe and pasment of ri tamage AWM lated therewith. purt haw of railroad (ars uwil to trarisguxt t o.d frorti its Kefitut ky progwrtsm to its Puryn plant and to fmanc e the tost of (oal preparatwin f aohtws prewntly under t on truc ton on ats land in Kentu(ky ClC f ollutum Control llorid luue ihn ac umnt repiments pnm spal balanc e due on hmul nsues of ClC Guaranten! Pollution Conteof Revenue llondt 5enes 1977,1978 A ar'd 1978 A 1 inuni by I amar Countv. Mnuwppi Details of $ctws 1977 inue of $40JD tijX)0 were wt forth in our prevmus (1977) audit report Dunng 19?8.ukhtional tweds totalmg $ 1.82UNN) were sold Js Wupon honds twJung interest at ratn of from 410% to 6 25% (if mternt n rmt timely paul. rate will be one gwr< entage gment higher than that stated on suc h overdue payments) to awist 5MI PA in f attarwing ad4tional pollutuni owitrol f.tolitees whu h quahtied for thn Icwor cost mnhum of iman< ing SMI PA n required to pay all pnnopol and intere st mstallments on thew tends as they twe ome due, and CIC has unumditumally guaranteed these pasments as due. both as to pnnopal and mterest SMIPA3 obbgation to make sut h pa)ments is cvident est by a Pollution Control Note suurd to CIC and sn ured by a Supplemental Mortgage and Secunty agreement, among suc h omperatne, ClC and the Umted Stain of Amenca at tmg through the Admmntrator of RI A T hn mortgage will also seture other debt of %tf PA to RI A and, m < ertas i(aws. to ClC. Internt n due wnn annually on eat h of the innd swucs internt and praticipal will tw temlernt to CI C for transamttal to the trustees for the fundhohlen, Morgan Guaranty Trust Company and Depout Guarant) National (kmit I
Senal bunis of the $2.8251n n)inue (1978A Senn) mature semi annualiy twgmomg Marc h 1,1980 thn> ugh september 1.1998 Term bonds of the 197MA 5cnes and the 1978 % 1 %-on (SI.tuMHnU) mature Mart h 1,21:18 Mandatory wmrannual smkang fund paiments required m wnnet tion with thne ackbtional inue begm m I'm for the $2.829xx)iwue and m 19M0 for the 51,0tXHut) nsue None of the bonds of either seres reprewnt a general obhgatum of the twuer, iamar County, Mnuwppi, nor of the State of Minnsippa, nor are they a (harge against the ( redit or tasin*g power of sut h (ounty or state Under the terms of the abmc referrni to ad4tional fmanong pac kage. SMIPA was required to purchase CIC unsecured subordmated
< apital term c ertif g atedC 1C3) equal to 5% of the $ 182Un t) bond inun handled thn> ugh C F C, in ad4 tion to its obbgation referrnt to m Note (9) lhe underwiders spread was dedut ted from grow pro (ceds of thew adhtsonal iwucs and wt up. Jlong with other (ests incurred to Dec ember 31, 1978 by SMI PA as deferted c hargn to tw amortued mer the hfe of the obhgatson Counwl for the anoperative adsnn that .ill finan(mg doc urtwnts relatese to all br> rid inues unluding (m adation to thow riamed abwe)
(cetain guarantv. asugnment and ageno agen ments twtween ClC and the trustees base betn properly nes uted Aentuc ky Coal Pnverty (1974 Purc haw) gy Other long term debt also int liules 7% notes totalling S1.071,82ti pasable eri < ontwc tuni with Aentucky coal properten purchased m 1974
) 1 hew notes are pay aNe m er a ten (101 g car penod from 1974 and are w( ured by mortgages on real property pur( hased 5 /
%)
11 s &b ;i3!$s:05:Os:Os: : b hh b b NNNiN ' ' hE
(Wr ' Aho re-flev ted as lorig te rm drbt at 1)ct erriber 11. l'878 are adw am es irr ern triernter < oope ratswes f under pre mvneons of pr#wer r*Juahration or wpply agrectnentd for e omtruc tion of transrenweon tat ihtirs led wd tra publit ly ow ned utsht ses11191 W31) an arnount WI PA agreed to pay liarder Reds for Corporatton (flRI l Di R) for its pro rata pe,rt.on of estimated < vnt of rewan.h to develop add tuinal or wbster u te fuel to prodar e efe(fnt c r ict gy1514)2611and a e ritif t.u tual agreeinent f an amerwinient t. ( rul Sosig>ls Agreen rit betwern 5VI PA and its (oal produt erJ to pay a f ee for loadng its(WI PA's)r o.d h er shepment to %U PA. of $26f 02 per nuinth for sew enr 7) years (total 52 23.,168 the < ontra entry of whnh n m Def ened Dehet s) Regardmg flRI II)I R ref erred is: ahose, in 197 7 IIRIll)t R ungwnded retrairernents that yearly pasments of part:(ipants in this poigram te made when the t Insted St4tes of Amern a halted ets f man < aal partir spation m thn program ( harges agamst mc ome of 5/ t177 in var h of the gears 1977 aruf 19?M f and e ont unent r.redas to f). f erred ( hargm. the a (nont in whw h the < ontra entry of the ont.gatu n was wt up) were ret orded although no pannents were m,nte m either gear to llRll!)l N luture pasments to ItRI! D1 R will be degwndent ugusn the govemment's eswntial inst.lseroent m the program 11 and when the proiev t goem forward (the G AO recently moed a report wpportmg (ontinuation of the ( hn(h Rnce Po9e4 f)th+ < unently def erred irnta!!rnents will be < afled for as acil as ott.er mstallments as they her ome due (7) M )fl % P AV Altli - ( f( llNI ()f ( Hl Dl!
%ti PA had an evabledwd d. ort tr trn ime of < redit of $12,(NN)(N ul with ( IC agamst whn h had twen wittwirawn $2 HMtNE) at De(ember 11, 1978 I hn hne ni e redit matures mvh mf erest to maturity at not m eu eu of prune phn f % Augmt 9.1979 (8) t)1 f l RRl D( Hi!>lls '
ihe balani e m thn ai e ount reprewnts ros altms ein degwmt ($4L977)in an eu row bank duount ret ened from saic of coal on < crtam larx{ title to wM h n in dapute ithe liank at < ount balaru e a int luded m deferred a harges) and an msurante rewrve totalhng $77,540 at December 11 l'#7M Ihn amuranc e re%erse n being mc reawd at the rate of 500inut per year until sut h rewrse teat hes approumately 5 500 0tO lt was estabbdied to pomarily < ompemale for the large imurant e low dedue tibles on generatmg plant a overages ihn rewrwe was estabinhed m duordam e with generally av e eptable mdustry in e ountmg prar tw n ( hargn to an< ome f and < rests to the rewrse) of $17,510 and $60luld were made m 1977 and 197M,regnerinciv (91 t ()NilNGI NI f l Altilllli % t he . nun eation entered nto a bmdmg agotenent to wbu obe to Cf C unwt ured whordmated (1( 's r omment mg m 1971 through 1981 Puo haws are made annualls m amounts approumating 0 9% of operatmg enenun t he balam e of the subu nption obhgation at De(ember 11, ICM n stunated at Vi 4 0 ans) At ter reuew mg a orreywindem e reganhng all awerted < laom and penang htigation m whu h the ( orywratne n a defendent. and dar usung all su, h a f aims and I,tiganon with General t nunwl and management of the Amn eatmn we air of the opmu.n at tha time that the pempet t of an un taso#able ooti rime n remote (10) Hi $1 ail MI Ni ()f 1977 ll NAN ( l At 51 AIl Ml NIS T he 19?/ Statement of Revenue and Patronage Capital has been rmtated for c omparatise purguntw with 19M As ongmally diown m our 1977 ataht report. eler f ra energs tevenun sold to Mmnuppi Power ( ompany (MPfo) totalled $271,5th and base been of f w-t m thm rmtated 1977 vaerment agaemt pun hawd powrr f rom MPt o' l!ct trn energy enenum totalhng $ t 106.179 m 1978 were of f wt m the 1978 statements m a hhe fHantler 01111 R NOll 5 i im ome Ias Statm More than Hi% of the Anot satwini m< ome n e ollet ted from its members I wmption from federal m< ome tai has been obtamed and Internal Nmenne Iornn 'rsu hase been timely filed
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- m. ...o ~ . m .~, ,u..,.. . . . . . . . . . . . ... / l Itoard of Directors South Mississippi Electric Power Association liighway 49-North Hattiesburg. Misslasippt 39401 Gantlemen:
We have examined the balance sheet of South Mississtppi Electric Power Asanciation as of December 31. 1978, and the related statements of revenue and patronage capital and changea in financial position for the year then ended. Our examination was made in accordance with generally accerpted f~4 auditing standards and included tests of the accounting records and such eM3 other auditing procedures as we considered necessary in the cir:umstances. Mh We have previously examined and reported on the financial statements for the
% ,J preceding year.
L'Z.T3 C _~.~~n In our opinion. the financial statements referred to above present
$1 ff-- fairly the financial position of South Mississippi Electric Power Associ-k:~ T ;. .:] atton on December 31, 1978 and the results of its operations and changes CC r2 gn financial position for the calendar year then ended, in conformity with generally accepted acurunung principles apptled on a basis consistent with f ;n'; /3 that of the preceding year,
& .;) .
Yours very truly, gg -/ ad Horace A. Bradley p;:D-C.3 Certified Pub!1c Accountant C Yr?; Prepared: May 15,1979 ( Lucedale. Misatssippi 9 HAD/rmb o/
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v ELEMENTS OF COST
- 1. SME PNs Own Generation and Transmission System 1973 1974 1975 1976 1977 1978 Cost of I uel fiumed in SMI PNs Plants -( / MMillU 67 66 118 99 131.15 160 32 177 03 175 30 Production Cost 5 and Purchased Power / Interchanged Power - mills /KWlO 9 66 15 51 16 60 20 29 22 42 22.15 Transmission O & M - mills / KWil .37 .47 .48 49 .74 .89 A & G I spemes - mills / KWil .48 .54 .59 .61 .75 1 00 Deprec iation & Amort -mill 6KWH 1.39 1.38 1.37 1.40 1.41 3.40 l Interest-mills,KWH 1.14 1.03 1.12 1 25 1 08 5 57 '
lases and Other-mills lKWH 04 09 .11 09 .35 .27 l 13 08 1902 20 27 24 13 26 75 33 28
- 11. Borderline System 1973 1974 1975 1976 1977 1978 Purchased Powerilnterchanged Power milNKWH 10 00 1382 20 55 23 39 27.39 28 09 Transminion O & M mills /KWil -
01 .01 01 02 .01 Depreciation & Amort millNKWH .01 03 04 04 .05 .05 Interest-millsKWil 04 .04 01 .03 06 06 []/ s_. TOT AlcmilitKWil 10 07 13 9) 20 63 23 47 27 52 28 23 m ::% S$$$ NhbbbhbbbNbMkkb!U0NM T5 - hE
lhese two pie (harts show the ac tual 19711 expenses These two pie (harts show the actual 19711 expenses of the generation and transmission systern operated by of the generation and transtnission system operated by Mil PA (without the"llorderline" Transactions) Chart A $MI PA (including the "florderline" Transactions) Chart shows these espenses broken down by major C shows these espenses broken down by major a( t ounting ( at egories Chart Il show s the same acc ounting c ategories. Chart D shows the same espenses broken down differently in order to (learly expenses broken down differently in order to clearly show the ty pes of espenies show the tspes of expenses
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j ) l COMPARATNE SUMM/RY (3 (Nf RGY SOURCIS-MWH 1973 1974 1975 1976 1977 1978 Cenerated Steam (A1,716 (R),216 514,545 479,771 779,572 1,228,110 Other Generation 146,401 23,954 6,501 5,846 20,117 23,930 828,117 (44,170 521,046 485,617 7L689 1,252,040 Purc hawd. Firm, Protective & Unintentional 50,772 242,253 508,090 619,932 395,125 74,270A llorderkne 713,063 739,114 793,124 860,756 960,978 43,927A 763.835 981,367 1,301,214 1,480,688 1,356,103 118,197 Interchanged Power - - - - - 924.939A Total 1,591.952 1,f/>5.5 37 1,822,260 1,966,305 2,155,792 2.295,176 SAll 5 - MWH I Southwest Mississippi l PA 151,824 153,355 165,478 185,646 241,433 254,388 DaicIPA 210,719 215,398 236,925 254,539 283,556 325,892 Pearl River Valley E PA 1 % ,217 205,497 216,602 229.617 244,581 2f/>292 Singing River I.PA 412.214 415,192 466,085 501,061 545,442 562,480 Southern Pine l'PA 433,609 467,731 536,285 578,605 611,838 642,224 Magnoha f PA 153,252 153,916 165,431 177,535 178,2(A 192,592 Mississippi Pow er Company 294 4,537 2 15 175 8,372 - g lotal 1,558,129 1,635,626 1,787,041 1,927,178 2,113.490 2,243,868 d 10i At. SYSTI M DE MAND - KW 371,841 3 %.094 417,139 445,817 473,251 520.432 (A) Accounting Methodchangentin 1978. 1 SOUlll MIS 515SIPPl[lECTRIC POWER ASSOCIATION ALLOCATION AND PROPOSED ALLOCATION OF CAPITAL CREDITS
; 1970-1978 Ai),,N,,
c-u.a,., l PATRON 1972 1974 1976 1977 1978 TOTALS Dme!PA $ 53,948 50 $ 43,281.15 5 29,412.16 5 30.387.56 5 188,540.90 $ 345.570 27 Magnoha l PA 37,476 83 30.748 08 20,381.28 18,916 67 110,914 08 218,436 94 Pearl Rner Valley i PA 48,958 01 41,016 79 26,351.18 25,97.52 152,897.37 295,200 89 Singing River i PA 97.860 13 87,366 55 57,765.74 57,800 50 328,129 04 628,921.% Southern Pine i PA 104,936 81 93,352.78 65,736 94 64,476 45 3(A,406 42 6 %,909.40 Southwest Miss i PA 37,306 75 30,370 42 21.027.19 24,676 56 141,516 00 254.8 % 92
$ 380,487.05 $ 326,135 77 $ 220,674.49 $ 222,235.26 $1,290,403 81(A) $2,439,936 38 J Reflects inflocation of Capital Credits in 1973 15 Y
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COMPARATNE OPERATING REPORT e Rt VI NUE 1973 1974 1975 1976 1977 1978 Sales of inergy $18.087,65 3 527,529.928 36,581,399 546,195,188 557,399,015 570,655,998 Other 35,704 334,935 140,631 172,778 272,888 289,147 Total Revenue 18,123,357 27,864,fW 3 36,722.03G 46,367, % 6 57,671,903 70,945,145 iXPIN5f Operation i spenw: Produc tion-l uel Cost 7,100,467 9,980,152 ti,370,7M 9,571,057 16,770,261 26,160,937 Other Production L spenses 304,395 351,219 411,795 452f>45 458,811 1,201,621 Purc hawd Power 7,677.641 13.551,289 21,806,259 31,492,395 34,429,746 27,721.339 Iransminion 120,618 141,932 172,436 207,643 382,677 487,997 Consumer Ac c ounts 8,367 9,031 10,243 9.504 12,342 10,679 Administrative & General 381,226 453,375 557,429 611.472 818.011 1,175,735 Total Operation E spenw 15.592.714 24,489,000 31,328,950 42,344,716 52,871,848 56,758,308 i Maintenan( e I spense. Produc tion 213.028 235.6111 208,428 192,450 494.113 604.850 f ransminion 211,912 297,829 335,781 342,217 488,315 637,655 General Plant 12,811 25,620 13,901 26.619 37,110 43,792 Total Maintenan(e bpense 417,773 559,067 558.112 561,286 1.019,558 1,286,297 f 1)epreciation 1,179,598 1,242,904 1,371,296 1,504,568 1,648,309 4,224,653 laws 10,968 51.799 64,411 71,491 96 M3 161.134 l Interest i xpenw(Nett 916,948 1,222,515 1,495,090 1,b76,134 1,895,200 7,362,657 Total hpenw 18,178,001 27,565,105 36,817,M1 46,158,197 57,531,798 69,793,049 NI T OPl RAlING MARGINS (lowlla) (54.644) 299,558 (95,851) 209,769 140,105 1,152,0 % NON OPE R ATING MARGIN 5 130,591 95,211 53,961 52,795 82,130 138,308 ) N11 MARCINS(low) 5 75,949 $ 394.769 5(41.890) 5 262,564 5 222,235 5 1,290,404 (a) [hffers from margins reported on RE A Form 12a (" Operating Report linancial") for 1973 due to netting of credit for interest on funds uwd during construction against " Interest on Long-lcrm Debt" e
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mOcB.E.E.........E.........EEEE.E.E.EE.E.EEEE9 0 E a m u MORROW PLANT DEDICATION E D E O Dedication ceremonies for the R.D. Morrow, Sr. Generating Plant were held Friday, October 27, E 1978. Over 500 people attended the ceremony. This coupled with the beautiful weather made for a ' delightful day. g O O E L g \ The highlight of the day's activities was the presentation of a plaque to R.D. Morrow, Sr., E ga President of SMEPA, in recognition of his many accomplishments in the rural electrification E O ' program and more specifically South Mississippi Electric Power Association. The presentation was E E made by lilaine Eaton, Manager of Southern Pine Electric Power Association, Taylorsville, 5 O Mississippi. 5 O E D E g Senator John C. Stennis was the keynote speaker and told the crowd, "We have got to make g arrangements s meway, somehow, to keep from paying out $45 billion per year for imported oil 3 O 0 when just a few years ago, we paid only 55 billion for that purpose." Stennis said Mississippians E O have reason to be optimistic as a result of strides in electric power generation such as the construc- E D tion of the 2-umt coal-fired R.D. Morrow, Sr. Generating Plant. E O O Dave llamil made his last public appearance as Administrator of the Rural Electrification Administration at the dedication ceremony. Mr. Flamil praised the work done to put the Morrow g O PI ""' " ' i""' E O E [q lloth Stennis and flamil praised R.D. Morrow, Sr. of Brandon, for whom the generating plant is 3 [] named, as a pioneer in securing adequate electric power supplies for Mississippi. E D E D The board of directors of SMEPA presented Mrs. Morrow with a dozen long stemmed red roses E O for her support of Mr. Morrow's work and her contributions to his accomplishments. E U E The day included a demonstration of the coal unloading facility, tours of the generating plant, g refreshments and a luncheon for invited guests. g U E\ O Ceorge B. Taylor, general manager, said that the day was a total success. Taylor stated, "It is 5 0 gratifying to have seen 500 people assembled for the dedication of the Morrow plant. Everything E U was well planned and executed, and we were honored by so many distinguished guests. The E llattiesburg community has been supportive of our efforts, and the success of this dedication is E E [i another example of the support that has helped to make South Mississippi Electric Power d Association the viable electric utility it is." ll C E 00... 5555555E5E5555555E5555555EEEEiiilEEEEEEEEEEE 18 O
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I i f THE COblR: The comptes energy situarnwiis oftm wert as a simple procen This contrast is graphically devnonstraraf by 1 R One.
i EXHIBIT E - l t h SMEPA ADDITIONAL FINANCIAL INFORMATION : i l (Items 1-9) i l 4
- s I-l l i
i [ l l I l B 4 l ! l L I r l 1 l i
ITEM 1 Indicate the-percentage ownership in the facility , and any difference between this and the cooperative's percentage , entitlement to the electrical capacity and output'of the units. Explain the reason for the difference, if any.
RESPONSE
SMEPA will have a ten percent (10%) undivided ; interest in Grand Gulf Nuclear Units 1 and 2 and will be , i entitled to ten percent (10%) of the electrical capacity and l l output of the units. See Article II of the Ownership Agree-ment (Exhibit A) and Article IV of the Operating Agreement - (Exhibit B). 4 i h L
-- .-p--- - 5 7 y
4 1 1 o f i ITEM 2 i - Provide a copy of the executed Ownership Agreement 1 I between-MSE and SMEPA. i i ' RESPONSE- . 1 { The ownership' Agreement will-be. executed by MSE ! and SMEPA in substantially the form attached.as Exhibit A. I ~ i h }' i ' l0 I i 1 {. . l r k V 4 i i 4 1 i i v.~l i-.as.- - ,..lv,,,,,,,+. _ ,-r. , , . + . - - , - - . , . , , . , - - ~ - , . , . - . . - - - - - , - - - , - . . - - _ . . - - . - - :- - , . . ..
2 t O ITEM 3 V Indicate the amounts of the respective dollar payments to be made to the power company by cooperative , system participants upon the execution of the ownership Agreement. Provide estimates of the total additional pay-ments to be made subsequent to the execution of the agree-ment and through completion of the units.
RESPONSE
There will be no payments by SMEPA to MSE upon the execution of the Ownership Agreement. As outlined in Section 2.02 of the Ownership Agreement (Exhibit A), SMEPA will acquire an undivided ownership in Grand Gulf by assuming responsibility for all costs of construction of Grand Gulf until such time as the amount of the costs of construction borne by SMEPA equals ten percent (10%) of the total costs of Construction of the facility. On the Final Adjustment Date, as such term is i defined in Section 1.11 of the Ownership Agreement (Exhibit-A), SMEPA will have acquired a ten percent (10%) undivided ownership interest in Grand Gulf at an estimated cost of i
$304.9 million. Thereafter, SMEPA will pay monthly ten percent (10%) of the monthly cost of_ construction of Grand Gulf. until its completion. The total estimated construction 1
[ cost of Grand Gulf is $3.049-billion. , f3 V
Section 2.C3 of the Ownership Agreement (Exhibit A) provides that on the Final Adjustment Date, SMEPA will pay MSE $1,500,000, which amount represents all' costs in-curred, past, present and future, relating to Grand Gulf, which were not capitalized in calculating the. cost of Con-struction of Grand Gulf. All payments made by SMEPA, subsequent to the' execution of the Agreements and through completion of the Units, will be made with funds borrowed from the Rural Electrification Administration. O O t i O' ITEM 4 l If financing is to be provided through REA guaranteed sources, the applicant must provide copies of favorable Letters of Intent from REA regarding the proposed REA loans. These must be provided prior to issuance of the amendment to
- the construction permit. Indicate whether the REA has provided loans to the applicant in the past.
RESPONSE
The Letter of Intent of REA to make or guarantee the proposed loan will be provided at a later date. REA has i provided loans to the applicant in the past. O h I i s [ t t t r O 4
i ITEM S Explain the contractual arrangements between the , cooperative and its members that will provide ' funds for i interest payments on the. loan (s) and its eventual retirement. l Provide representative copies of such contracts. i
RESPONSE
SMEPA has entered into a wholesale power contract ; with each of its members whereby SMEPA agrees to furnish and the members agree to purchase all of their power requirements at the rate approved by SMEPA's board of directors and REA. A copy of such a contract is attached. () O
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. RURAL ELEC"TRIFICATIoN ADMINicTm'sTicW
. REA PROJECT Mis s4 *.ua a-t'o Jonas
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k'nolesale Fever Contract dth South THMITHIN .. .
, , I'.ssissirci t Electric Power Ascociation.
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(IEcs. 53 Covington) (All Points) .
; , .. . .. SUCMITTED CY THE DORROWER PURSUAh*T TO THE TERMS OF THE .
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LOAN CONTRACT FOR THE ABOVE.CESIGNATED PROJECT,15 HEREEY . g y .. -' . ., . , APPROYED SOLC Y FOR THE ,PURPorES OF SUCH LOAH CONTRACT.
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V WlIOLESA LE POWElt CONTil ACT_ AGIlEEMENT made as of the /p _ day of M/ m ( / , , 1950, between South Mississippi Electric Power Associ ion (hereinafter called the " Seller"), a corporation organized and existing under the laws of the State of Mississippi, and Dixie Electric Power Association
, (hereinafter callqd the
" Consumer"), a corporation organized and existing under the laws of the State of Mississippi.
WilEllEAS, the Seller proposes to construct an electric generating plant and transmission system and may purchase or otherwise obtain electric power and energy for the purpose, among others, of supplying electric power and energy to borrowers from the llural Electrification b , Administration which are or may become members of the Seller; and WilEllEAS, the Seller has heretofore entered into or presently will enter into agreements for the sale of electric power and energy identical in form with this agreement with all said borrowers which are members of the Seller, and may enter into similar contracts with other such borrowers who may become members; and WilEllEAS, the Consumer desires to purchase electric power and energy from the Seller on the terms and conditions herein set forth; NOW TilEltEFOllE, in consideration of the mutual undertakings herein contained the parties hereto agree as follows:
- 1. General. The Seller shall sell and deliver to the Consumer and the Consumer shall purchase and receive from the Seller all electric n
v
O power and energy which the Consumer shall require to the extent that the Seller shall have such power and energy available, provided, how-ever that the Consumer shall have the right to continue to purebase electric power and energy under any existing contract or contracts with a supplier other than the Seller durmg the remainder of the term thereof. The Consumer shall terminate, if the Seller sball, with the approval or at the direction of the Administrator of the Rural Electrification Admini-stratton (hereinafter called the " Administrator"), so request, any such existing contract or contracts with a supplier other than the Seller at such times as it may legally do so, provided the Seller shall have suf-ficient electric power and energy available for the Consumer.
- 2. Electric Characteristics and,, Delivery Point @). Electric power
( and energy to be furnished hereunder shall be alternating current, three V phase, sixty cycle. The Seller shall make and pay for all final connections between the systems of the Seller and the Consumer at the point (s) of delivery. The point (s) of delivery and delivery voltage sball be: __ Waynesboro-West 69x0_0,0 volts
,_}Layne sboro-South ___ 6 92 ,0_0,0, volt _s Battles 69,000 volta _
Clep 6g,,qqqyp.lt_s Maeedonla ____692 ,Q0,_Q volts _. M0.3All.-We91
- ElkQQQ.yolts Laurel 69,000 volts and such point or points as may be agreed upon by the Seller and the Cons um er.
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- 3. Substation. The Consumer bhall install, own, and maintain the necessary substation equipment at the point (s) of connection. The Seller shall own and maintain switching and protective equipment which may be reasonably necessary to enable the Consumer to take and use the electric power and energy hereunder and to protect the system of the Seller. Meters and metering equipment shall be furnished, maintained and read by the Seller and shall be located at the point o'. delivery on the Consumer's side of such transforming equipment.
- 4. Rate. (a) The Consumer shall pay the Seller for all electric power and energy furnished hereunder at the rates and on the terms and conditions set forth in Rate Schedule A, attached hereto and made a part hereof.
(b) The Board of Directors of the Seller at such intervals as it shall deem appropriate, but in any event not less frequently than once in each calendar year, shall review the rate for electric power and energy furnished hereunder and under similar agreements with other member associations and, if necessary, shall revise such rate so that it shall pr;oduce revenues which shall be sufficient, but only sufficient, with the revenues of the Seller from all other sources, to meet the cost of the operation and maintenance of the generating plant, .
- transmission system and related facilities of the Seller, the cost of any power and energy purchased for resale hereunder by the Seller, pay taxes, make payments on account of principal of and interest on all indebtedness of the Seller, and to. provide for the establishment and
/, s maintenance of reasonable reserves. The Seller shall cause a nottce (v)
O in writing to be given to the Consumer and other members of the Seller and the Administrator which shall set out all the proposed revisions of the rate with the effective date thereof, which shall be not less than thirty (30) nor more than forty-five (45) days after the date of the notice, and shall set forth the basis upon which the rate is proposed to be adjusted ' and establ'ished. The Consumer agrees that the rate from time to time established by the Board of Directors of the Seller shall be deemed to be substituted for the rate herein provided and agrees to pay for electric power and energy furnished by the Seller to it hereunder after the effective date of any such revisions at such revised rates; provided, however, , that no such revision shall be effective unless approved in writing by the Administrator. Ov
- 5. Meter lleadings and Payment of Bills. The Seller shall read meters monthly. Electric power and energy furnished hereunder shall be paid for at the office of the Seller in Laurel, Mississippi,- monthly within fifteen (15) days after the bill therefor is mailed to the Consumer.
If the Consumer shall fail to pay any such bill within such fifteen-day period, the Seller may discontinue delivery of electric power and energy hereunder upon fifteen (15) days' written notice to the Consumer of its intention so to do.
-G. Meter Testing and Billing Adiustment. The Seller shall test and calibrate meters by comparison with accurate standards at intervals ,
of twelve (12) months. The Seller shall also make special meter tests l at any time at the Consumer's request. The costs of all tests shall be-borne by the Seller, provided, however, that if any special meter test o l
l A V made at the Consumer's request shall disclose that the meters are recording accurately, the Consumer shall reimburse the Seller for the cost of such test. Meters registering not more than two per cent (2%) above or below normal'shall be deemed to be accurate. The readings of any meter which shall have been disclosed by test to be inaccurate shall be corrected for the ninety (90) days previous to such test in accordance with the percentage of inaccuracy found by such test. If any meter shall fail to register for any period, the Consumer and the Seller shall agree as to the amount of energy fur-nished during such period and the Seller shall render a bill therefor.
- 7. Notice of Meter lleading or Test. The Seller shall notify the Consumer in advance of the time of any meter reading or test so that O)
( the Consumer's representative may be present at such meter reading or test.
- 8. Ilight of Access. Duty authorized representatives of either party hereto shall be permitted to enter the premises of the other party hereto at all reasonable times in order to carry out the pro-visions hereof.
D. Continuity of Service. The Seller shall use reasonable dili-gence to provide a constant and uninterrupted supply of electric power and energy hereunder. If the supply of electric power and energy shall fail or be interrupted, or become defective through act of God or of the public enemy, or because of accident, labor troubles, or any other cause beyond the control of the Seller, the Seller shall not be liable therefor
,- or for damages caused thereby.
l
. o
Or 10. Term. This Agreement shall become effective only upon approval in writing by the Administrator and sha,11 remain in effect until August 11, 1998,, and thereafter until terminated by either party's giving to the other not less than six months' written notice of its inten-I tion to terminate. Subject to the provisions of Article 1 hereof, service hereunder and the obligation of the Consumer to pay therefor shall commence upon completion of the facilities necessary to provide service. EXECUTED TIIE day and year first above mentioned. SOUTIl MISSISSIPPI ELECTRIC POWER ASSOClATION ar 1 By // f! f{!.Z V' / P "Vf esidetit 4 ( b A test: l') yocle R :x u.r.eM Secrptary Dixto Electric Power Association Consumer , l / Uy / .ON (49/ , pet. d m... - 1 estdent Attest: -, sj ,l! Secreta
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-G-
O gd SOUTII MISSISSIPPI ELEC'lIllU POWFR ASSOCIATION ' SCllEDULE "5" Availability: Available to all cooperative associations which are or shall be members of the Seller. The electric power and energy furnished hereunder shall be separately metered and billed for each delivery point. . Monthly Itate: 4 Demand Charge:
$1.00 per kw of maximum demand, plus Energy Charge:
I
.50Q per kwh for the first 300 kwh used per month per kw of billing demand.
. 20Q per kwh for all remaining kwh used per month.
Minimum Monthly Charge: The minimum monthly charge under the above rate shall be $1. 50 per kw of billing demand. Determination of Billing Demand: The billing demand shall be the highest average demand measured over a thirty minute period during the month. Power Factor: The power factor' shall be maintained at as near 100 pe r cent as is reasonably possible. Ilowever, should the power factor at any time during maximum loading be below 85 per cent, the kw for billing pur-poses should be adjusted by multiplying the kw registered by 85 per 4 cent and dividing the product by the actual power factor. Fuel Adjustment: The net bill for energy furnished to the cooperative shall be in-creased or decreased by .00125Q per kwh for each one-tenth of a cent increase or decrease per million BTU in fuel cost from the base of
- 13. 5Q per million BTU.
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J.' - 1 A
- (,,) ITEM 6 Provide copies _ of excerpts from State Statutes on which the_ cooperative is relying as authority to incur debt and to take other actions necessary to acquire partial ownership of the subject facility.
i~
RESPONSE
The following statutes of the State of Mississippi, upon which SMEPA relies, as its authority to incur the debt and to take other actions necessary to acquire an ownership i interest in the Grand Gulf Nuclear Plant, are attached: . 1. Miss. Code Ann. S 77-5-231(a)-(h) (1972).
- 2. Miss. Code Ann. S 77-5-237 (1972).
- 3. Miss. Code Ann. S 77-5-203(b)-(f) (1972).
, 4. Miss. Code Ann. S 77-5-223(b)-(d) (1972). ,
- 5. Miss. Code Ann. S 77-5-229 (1972).
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b 2 ik Q.) { 77-5--231 I Et.r.cTurc POWER f. u
" 77-5-227. certificate or membership; voting.
y
' A corporation may issue to its members certificates of member- 9 " ship in such form as the bylaws may prescribe. Each member shall " be entitled to only one vote on each matter submitted to a vote at '
p the meetings of the members of the corporation, but voting by [
') proxy or by mail may be provided for in the by-laws.
y
,y SOUltCES: Codes, 1942, 5 5171; 1,aws,1936, ch.181; 1938, ch. 252.
ic
.1 77-5-229. ceneral powers or corporation.
4 P. Each corporation formed under this article is hereby vested with d
"I t *, "5 all power necessary or requisite for the accomplishment of its "' corporate purpose, and no enumeration of particular powers d "7 hereby granted in this article shall be construed to impair any t'i '5 general grant of power herein contained, or to limit any such @
ry grant to a power or powers of the same class or classes as those so Y
" enumerated. w i.y 3e SOUltCES: Codes, 1942,5 5173; 1.aws,1936, ch.18 8. .
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- n. w<<
77-5-231. specific powers of corporation. (. A corporation created under the provisions of this article shall [] g hase power to do any and all acts or thmgs necessary or conve- y
% nient for carrying out the purposes for which it was formed, including, but not limited to: $r (a) To sue and be sued.
W x on (b) To have a seal and alter the same at pleasure. y (c) To acquire, hold and dispose of property, real and personal, f I."[[, tangible and intangible, or interests therein and to pay therefor in g W cash or property or on credit, and to secure and procure payment
'U ! of all or any part of the purchase price thereof on such terms and f Z-ion i conditions as the board shall determine.
;$, I (d) To render service and to acquire, own, operate, maintain s'Q in j and improve a system or systems withm the state and m counues q hP
.v adjacent thereto. f.
. 7; (c) To pledge all or any part ofits revenues and to mortgage or re-e I otherwise incumber all or any part of its property for the purpose y of securing the payment of the principal of and interest on any of .y j'] l
- m. i its bonds or other obhganons. 7,3' th,e f (O To use any right of way, casement or other similar property
,.c4 l"/; g right necessary or convement in connection with the acqmsition, acr 1 improvement, operation or mamtenance of a system, granted by '
2d 6 the state or any political subdivision thereof, provided that the
! goseming body of such political subdivision shall consent to such 603 y l
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-p .I, Pt;nuc UTn.mEs Asn C.WRIERS b {77-5-231 sm use, and to have and exercise the power of eminent domain in the a .- manner provided by the condemnation laws of this state for '
; acquiring private property for public use, such right to be para-mount except as to the property of the state or of any political
/ [
? !. subdivision thereof.
, g. J (g) To accept gifts or ;; rants of money, property, real or
;. d, personal, from any person, municipality or federal agency and to accept voluntary and uncompensated services.
., 79 (h) To make any and all contracts necessary or convenient for T, the full exercise of the powers in this article granted, including,
, ,, t ,
- but not limited to, contracts with any person, federal agency or ,
1.7: 1 p' i municipality for the purchase or sale of energy and/or the acquisi- .3' .E tion of all or any part of any system, and in connection with any
~
such contract to stipulate and agree to such covenants, terms and L. '.' d conditions as the board may deem appropriate, including cove-
,;T , : !,',t j :
nants, terms and conditions with respect to the resale rates. financial and accounting methods, services, operation and mainte-
- j. J. ,j(; :: -
~
nance practices and the manner of disposing of the revenues of 4.y j' ; the system operated and maintained by the corporation.
;/4 (i) To sell, lease, or otherwise dispose of all or any part of its s}
property, subject however to the provisions of section 77-5-237.
!S],d,'l: i:
(j) To contract debts, borrow money and to issue, assume or i % {.l indorse the payment of bonds or other evidences ofindebtedness.
. . . ! :- (k) To fix, maintain and collect fees, rents, tolls and other yU charges for services rendered.
(1) To acquire and to sell, lease, distribute and generally to deal dy W - in electrical and phunbing applian .;s, apparatus, machinery and
. .f .
equipment for the purpose of and in connection with the promo-
..@fir ;
' tion of the sale of electric energy to its customers; to assist its i
customers to purchase or otherwise obtain such appliances, appa-ratus, machinery and equipment; to assist its customers to wire M}
;fV.
j their premises and to install therein such appliances, apparatus.
.r5 '
,' machinery and equipment; to acquire and to indorse, sell, pledge, hypothecate and dispose of notes, bonds and other obligations of
[.g , as customers m carrymg out the purposes expressed m, t!us
- p'.g. ,, ,
9 t pr.ragraph.
- 3..k W ;
(m) To perform any and all of the foregoing acts and to do any I I ?*- 'I
- and all of the foregoing things under, through or by means ofits . !M own officers, agents and employees, or by contracts with any msm + .,
person, federal agency or mumcipah.ty. -
, .u.f.,.f.,1 (n) To condemn any land, easements, or rights of way, either
- i. - -
p,N1.l on, under, or above the ground, as the association may deem
$ lt '. necessary for any purposes mentioned in this article, and such
- j property or inteiest in such property may be so acquired whether j'>g!>
t ~, .l 004 g,(
,r - .
DjY"'o *o~Ty3 A ou l ln h.s.,i i D 4 h &m B s,n.a n n u,d?;& m&M.%w'gg.# 2 n 5 S%
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7
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{ 77-5-233 Pt:nt.ic Urn.mts Asn Cann Ens y, elTective the powers conferred by this article, the corporation shall
'" hase power to accluire, own, operate, maintain, and/or improve a generating and/or transmission system or systems outside the State of Mississippi. .
SOURCES: Codes, 1942, } 5475; Laws,1936, ch.18 8. 4 77-5-235. nates. A corporation formed under the provisions of this article shall h have power to charge reasonable fees, rents, tolls, prices and other
.,,g .
g charges for service rendered which shall be sufTicient at all times i
.j : to pay all operating and maintenance expenses necessary or
, y f desirable for the prudent conduct and operation of its business,
. 5 and to pay the principal of and interest on such obligations as the f *:' ~'F. i corporation may have issued and/or assumed in the performance of the purpose for which it was formed. The revenues and receipts i, . . , j! of a corporation shall first be devoted to such operating and
[,, jl - maintenance expenses and to the payment of such principal and
.:- interest and thereafter to such reserves for improvement, new , ['
h.;. 1 construction, depreciation and contingencies as the board may d from time to time prescribe. Revenues and receipts not needed for
.; i-
; 'as ':I these purposes shall be returned to the members, by the reim- ,
[ 0, i- bursement of membership fees, or by way of general rate reduc-O . ;. ; l tions, as the board may decide.
%p, , , . , 4 J K ,; g* i. SOURCES: Codes,19 82, s 5481; Laws,1936, ch.184.
Q. .
,.t
'?, * ,'ij JUDICIAL DECISIONS d u ,. . * "' An amortization char;te collected by chnively for the payment of its lonp I .. C an electric cooperatise from its cus- term indebtedness, is income upon
' tomers as a condition of terciving ser- which a sales tax is collecuble. N!ona-L U' site, related to the amount of electric- ghan v Pontotoc Electric Power Asso.
i , , 7.' N ity tonsumed. but segregated from 237 51883.116 So 2d 827.
'W 3 ' ' '
other charges for service and used ev
....t j !.',[f'., 77-5-.237, nisposing of corporate property. ? D J;2,' . No corporation may, unless authorized so to do by the votes of f at least a majority of its members, sell, mortgage, lease or other-c.i$(j%.'y41: ;; wise encumber or dispose of any of its property other than (1)
PM { { f.f.;@l ld - property which, in the judgment of the board, is neither necessary nor useful in operating and maintaining the corporation's system A M.h"; ' and which in any one year shall not exceed ten percent (105) m, 0 4 +h., value of all of the property of the corporation, or (2) merchandise. I d C 'N liowever, notwithstanding anything herein contained, or any other
- ! 0.i:T
- provisions of law, the board of directors of the corporation.
- 1 if,,ll .
without authorization by the members thereof, shall have ftdl 9'C l 606 1 ' : C. L, .
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E1.ECUMC POWER
}77-5-239
?
j power and authority upon the affirmative vote of two-third , Il ihe members constituting the full board to deeds authorize of the executionl , a and delivery of a mortgage or mortgages or a deed ll of orthe l te trust upon, or the pledging or encumbering of, any or a j property, assets, rights, privileges, licenses, d franchises and of the corporation, whether acquired or to behacquired, an g from. f wherever situated, as well as the revenues and income t ere j all upon such terms and conditions asbtheconstituting board of directors upon ( "U the affirmative vote of two-thirds (%) of the mem li ersindebtednessI the full board shall determine, to secure any any instrumenta ty[ 'C'
'C5 corporation to the United States of America orid or agency thereof, or to a national fmancing institution, organ ze {
b ' C55 on a cooperative plan for the purpose of fmancing its mem ers the programs, projects and undertakings, in which the corporati holds membership. g "CC During the first year of the existence of a corporation its
- pts md pr perty shall not be sold or leased, whollyfits or in part, unless [t sale or lease shall be authorized not only by a majority o .p h
y,d. i i d [.1 mav members but also by a majority of all persons wh ,pg intention to become members of the corporation. i All f the such persons ,l l,n) }' shall be deemed to have a beneficial interest corporation insofar as the sale or lease of the property f the in the affa rs d are o corporation is concerned and the members of ,t L j .l thereto. p SOUllCES: Codes, 19 82,15476; laws,1936, ch.18 4; 1933, ch. 252; 1970, ch.
.l23, j 1, cif from and after passage (approved March 26,1970).
long-upon Issuance of bonds by corporation. ' lon.s. 77-5-239.
.u w. A corporhtion formed under the provisions of this article shalllj l have power and is hereby authorized, h from tim
- l h i
rized by resolution or resolutions of the board, a (c5 of other- ' years from their respective dates, bear interest at such r L m (1) within limitations set payable semiannually, be in such denominations, be be in suchj eisry either coupon or registered, carry.such registration tprivileges, ' iF5te!" executed in such manner, be payable in such medium of paymen , G) "i at such place or places, and be subjecth to such terms iesolution or of redemp md.ise. tion not exceeding par and accrued interest, as suc ;
*her resolutions may provide. Such bonds may be issued for money or anon, w fuH property at public or private sale, for such price C07 or prices as DYD *DF~ddb Mi
& vl M1 7; m4 . . . . .
M i;i '.. r9.*. hC+.) Q $.,. %- -','* . (e;-. G ' {h;.y7,, ; ,' , , g- -- s ~ s.,.. . ,;, ,.4 _ _ , _,
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- f. Punuc Ununts ao Cannitas
{ 77-5-201 clusively for the payment of its long. An amortization charge collected by indebtedness, is income upon an electnc cooperative from its cus. term which a sales tax is collectible. Afona.
~
comers as a condition of receiving ser- ghan v Pontotoc Electric Power Asso. ' sice, relateil to the amount of electric- 237 51883,116 So 2d 827. ity consumed, but segregated from other charges for sersice and used ex. 77-5-203. Definitions. The following terms whenever used or referred to in this article meaning
,- shall have the following meanings, unless a different
*>,'l clearly appears from the context:
(a) " Corporation" shall mean a corporation formed - under this article.
'f f (b) " Bonds" shall mean and include bonds, interim d certificates 5 or receipts, notes, debentures and all other evidences of indebte .
; .; i ness, either issued or the payment thereof assumed by the corpo-
*. j{
ration. g,., (c) " Person" shall mean and include natural persons, dies firms, ji ' 3 associations, corporations, business trusts, partnerships and bo
,'y politic.
,st :
(d) " Energy" shall mean and include any and all electric energy
': h j: no matter how or where generated or produced. 'y, M 'i (e) " Acquire" shall mean and include construct, acquire by
.( .j-purchase, lease, devise, gift, or other mode of acquisition. S (f) " System" shall mean and include any plant, works, system,
$ y[..
facilities, or properties, or parts thereof, together with i all appurte-m .S nances thereto, used or useful in connection with the generat on,
,'y ed;}
f;j production, transmission or distribution of ener
,p.]: ,
,,6
' of this state.
(b) " Federal agency" shall mean and include the United States
, :.,Y j of America, the President of the United States of America f Ten-j $4 ; ... . nessee Valley Authority, the Federal Etnergen
. M..i .-3 mimstracon, and any and all other authorities,
.1. '. N. b g.n
- t ;. . instrumentalities of the United States of America, heretofore or Q,' , ,
hercafter created.
% . .t.n!.
..- u.: , (i) " Improve" shall mean and include construct, i reconstruct,
.N. a. .p...J.. improve, replace, extend, enlarge, aher, better or repa r.
' (j) " Board" shall mean the board of directors of a corpor Jit ,'. %,'l:N" .;
' i
;, i. fonned under this article.shall mean and include i each natural pers d each
'4 ;." h, (L) " Member" signing the certificate of incorporation of a corporat on an j';,.3, 594 IQ p s.m . a , .. -
':)
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' Punuc UTn.mts Aso Canntnns
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{77-5-219
' " h Such corporation shall continue for the purpose of paying, satisfying and discharging any existing liabilities or obligations and ,
collecting or liquidating its assets, and doing a!! other acts re-4 quired to adjust and wind up its business and affairs, and may sue
* - and be sued in its corporate name. Any assets remaining after all
- liabilities or obligations of the corporatien have been satisfied or
," discharged shall be ratably distributed to the members thereof.
i
", N SOllRCES: Codes,1942, j 5482; Laws,1936, ch.184.
. h, 77-5-221, noard of directors.
y';t.]h
- Each corporation formed under the provisions of this article '
J *i 5 shall have a board of directors, and the powers of the corporation shall be vested in and exercised by such board of directors. The
.I ! . :.I ' 5 4 2 t. directors of the corporation elected to succeed those named in its ~j/k: ;i certificate of incorporation, as well as the directors elected to
- succeed those presently serving as directors of corporations previ-
.l.. q ously formed under the provisions of this article, shall be elected 1..y
". (
annually by the members entitled to vote as follows: one third to
.- .ji 1 - be elected for a term of one year, one-third for a term of two
"', M
, y !: years, and one-third for a term of three years. Thereafter, all
.a ji directors shall be elected for a term of three years. The directors l
;y'j ,' .;
must be members and shall not be entitled to compensation for their sen> ices as directors but shall be entitled to reimbursement Ag pi (i H il for expenses incurred by them in the performance of their duties. The board shall elect annually from its 'own number a president M.j ij i and a vice-president. ci.. . ' j .,1, jl SOURCES: Codes,1942, j 54G9; Laws,1936, ch.184; 1966 Ex Sess, ch. 34,
?;, p.i d } 1, eft from and after passage (approved December 28,19ti6).
r;, y 4<J t JUDICIAL DECISIONS T. . . ,* .I , j When a corporate emplo>cr knew creases in salary to em loyees. health
,.jG,..
that some of its directors were ineligi- policies, retirement po icies, expense
,% . d
- i
' ble to hold ollice and took no action to allowances, and a deferred compensa-remme them. 6he actions of a majority tion agreement were concemed. Capi-
{.d.%
, %'9 of de facto directors were binding tal Electric Power Asso. v Phillips. 240 I upon the corporation insofar as in. So 2d 133,
.. I ".l..h 3 M,',
- n. .!.
+
.;.yM
?
i Q 77-5-223. Powers of board of directors. fj'l , The boaid shall have- power to do all things necessary or convenient in conducting the business of a corporation, including,
.y'TM.) ?N . ' .
but not limited to: j, .hfi$ . (a) The power to adopt and amend by. laws for the management
.; QN and regulation of the affairs of the corporation. The by-laws of a 0.1' M corporation may make provisions, not inconsistent with law or its yl" M certificate of incorporation, regulating the admission, withdrawal,.
' 600 O
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.e 4 w&.mv.u. .iM v WtA ?. .
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w .-S m?~9.p. >+ m,,,g.s-Q.:
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8) g V EttcTate PowEn { 77-5-225 suspension or expulsion of members; the transfer of membership; E^18"3' the fees and dues of members and the termination -of member- - lons and ships on nonpayment of dues or otherwise; the numbers, times C ' and manner of choosing, qualifications, terms of omce, omcial
'."g['] designations, powers, duties and compensation of its o5cers; defining a vacancy in the board or in any omce and the manner of. ;isfied or. filing it; the number of members to constitute a quorum at reof' meetings the date of the annual meeting and the giving of notice thereof and the holding of special meetings and the giving of notice thereof; the terms and conditions upon which the corpora.
tion is to render service to its members, the disposition of the is article revenues and receipts of the corporation; regular and special rporation meetings of the board and the giving of notice thereof; and such
- ors. The other matters as the board may deem appropriate or desirable, aed in its (b) To appoint agents and employees and to fix their compensa.
lected - to tion and the compensation of the officers of the corporation.
>ns previ. (c) To execute all instruments.
c elected (d) To delegate to one or more of the directors or to the
.ddrd to gers, agents and employees of a corporation such powers and .n of two dunes as i ,t may deem proper.
- after, all (e) To make its own rules and regulations as to its procedure.
directors sation for (0 To select an executive committee the members of which shal!
/ be users of energy supplied by the corporation, and a majority of
)ent which shall be members of the board of directors, and to delegate dt % tics. to said committee any or all of the powers granted to the board'of president directors in this article other than its powers to adopt and amend e,s, ch. 31, by. laws for the -management and regulation of the affairs of the corporanon.
SOUllCES: Codes, 1982,9 5470; Laws,1936, ch. IS4. pes, health
- 3U.DICIAL DECISIONS ,
c'. e* Pen $e Ihe right of members of a nonprofit through the adoption of bylaws. and I electric p6wer association to vote by may hot be impaired by action of the
""".PCap'"
ined N 2' ' prow derives directly from the charter,' board of directors. Dixie Electric
. Phillips. 240 g does not require implementation Power Asso, v Ilosey. 208 So 2d 751.
s77-5-225. Membership in corporation.
- Except as hereinafter provided, the corporate purpose of each Jessary or
. corporation formed under the provisions of this article shall be to including, render service to its members only. Any person may become and remam a member if such person shall use energy supplied by such magement ,
c rporation and shall comply with the terms and conditions in
- f. laws of a respect to membership contained in the by-laws of such corpora.
law or its h n, which terms and conditions shall be nondiscriminatory. Any vithdrawal, 601 AA' 'W T} f"N g
- _ . L) . .
' nv - . . . . - . . . . ... . ._._ , . ^
.f. q!.'2 w.4. $..y &
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6 Er.rcruic PoWEn { 77-5-231 i 77-5-227. certificate of membership; voting. jd A c rporation may issue to its members certificates of member-admit. ship in such form as the bylaws may prescribe. Each member shall upon be entitled to only one vote on each matter submitted to a vote at ect to the meetings of the members of the corporation, but voting by in the proxy or by mail may be provided for in the by. laws. <cd by SOURCES: Codes,1942, Q 5171; Laws,1936, ch. IS4; 1933, ch. 252. lectric ay, for cdship, Q 77-5-229. cencral powers of corporation. ities at Each corporation formed under this article is hereby vested with '"""5 all power necessary or requisite for the accomplishment of its , corporate purpose, and no enumeration of particular powers Mer of hereby granted in this article shall be construed to impair any ' *C'5 general grant of power herein contained, or to limit any sucli nyatory grant to a power or powers of the same class or classes as those so us and enumerated. may be SOURCES: Codes,1942, f 5473; Laws,1936, ch.181. .nmem. 77-5-231. Specific powers of corporation. A corporation created under the provisions of this article shall have power to do any and all acts or things necessary or conve. ,(p.rishi nient for carrying out the purposes for which it was formed,
' including, but not limited to:
~
(a) To sue and be sued. 4 poration (b) To have a seal and alter the same at pleasure.
- nns and (c) To acquire, hold and dispose of property, real and personal, rubership 1h corpo- tangible and intangible, or interests therein and to pay therefor in cash or property or on credit, and to secure and procure payment y,',"('d adiniue of all or any part of the purchase price thereof on such terms and iporation conditions as the board shall determine.
hing with (d) To render service and to acquire, own, operate, maintain n,ns ,,;o, .iained in and improve a system or systems within the state and in counties n and by- adjacent thereto. r Asso. v (e) To pledge all or any part of its revenues and to mortgage or a had re- otherwise incumber all or any part of its property for the purpose
' P'"P#"Y of securing the payment of the principal of and interest on any of tu nethe .
its bonds or other obb. ganons. ..,,nso<;3 ut of the '
. (f) To use any right of way, casement or other similar property her, puni. nght necessary or convenient in connection with the acquisinon, marded to improvement, operation or maintenance of a system, granted by nic Power 92 So 2d the state or any political subdivision thereof, provided that the governing body of such political subdivision shall consent to such 603 OE cMN*
2
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, , f
rs V ITEM 7 Describe the rate-setting authority and rate covenants of the Cooperative and how that authority will be used to insure the satisfaction of financial obligations in relation to the design and construction of Grand Gulf Units 1 and 2. *
RESPONSE
The statutory rate setting authority of SMEPA is set forth in Section 77-5-235 of the Mississippi Code of 1972, Annotated, a copy of which is attached hereto. Further, the Wholesale Power Contracts between SMEPA and four of its p member cooperatives, provide that the Board of Directors of SMEPA shall have the right to set such rates as shall " meet the cost of the operation and maintenance of the generating plant, transmission system and related facilities of the seller, the cost of any power and energy purchased for resale hereunder by the seller, pay taxes, make payments on account of principal of and interest on all indebtedness of the seller, and to provide for the establishment and main-tenance of reasonable reserves." A copy of Section 4 (a)' and (b) of said Wholesale Power Contracts is attached hereto. Further, the covenants of SMEPA under its Supplemental Mortgage to the REA, which.is attached hereto, requires that
'the cooperative design its rates so as to be able to meet
!o l L) _9_
r i l its financial obligations as the same become due (Section 15 i-
- . l t
thereof). Therefore, under the provisions of the document [ r ! referred to, the Board of Directors of the Cooperative is .! i required to adopt such~ rates as shall enable SMEPA to meet
- its financial obligations as the same become due. f I !
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- _ lf f AI U l-x Q 77-5-233 Punuc UTruTits no CARRIERS effective the powers conferred by this article, the corporation shall m . .. _. c have power to acquire, own, operate, maintain, and/or improve a
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generating and/or transmission system or systems outside the State of Mississippi. SO URCES: Codes, 1912, { 5475; Laws,1936, ch.184. {77-5-235. Rates. A corporation formed under the provisions of this article shall have power to charge reasonable fees, rents, tolls, prices and other charges for service rendered which shall be sufficient at all times 3 to pay all operating and maintenance expenses necessary or desirable for the prudent conduct and operation of its business and to pay the pnncipal of and interest on such obligations as the corporation may have issued and/or assumed in the performance of the purpose for which it was formed. The revenues and receipts of a corporation shall first be devoted to such operating and maintenance expenses and to the payment of such principal and interest and thereafter to such reserves for improvement, new construction, depreciation and contingencies as the board may from time to time prescribe. Revenues and receipts not needed for these purposes shall be returned to the members, by the reim-bursement of membership fees, or by way of general rate reduc- ~~ ~' ~~ (,.s) tions, as the board may decide. .- SOURCES: Codes, 1912, { 548 t; Laws,1936, ch.184. JUDICI AL DECISIONS An amortization charge collected by
- clusively for the payment of its long-an elecmc cooperatise from its cus- tenn indebtedness. is income upon somers as :. con iition of receiving ser- which a sales tax is collectible. Mona-sicc, related to the amount of electric- ghan v Pontotoc Electric Power Asso.
icy consumed. but segregated from 237 M 883,116 So 2d 827. other charges for service and used ex-77-5-237. Disposing of corporaic property. No cornoration may, unless authorized so to do by the votes of at least a majority of :*.s members, sell, mortgage, lease or other-wise encumber or dispose of any of its property other than (1) property which, in thejudgment of the board, is neither necessary - nor useful in operating and maintaining the corporation's system and which in any one year shall not exceed ten percent (10To) in . . - - - value of all of the property of the corporation, or (2) merchandise. However, notwithstanding anything herein contained, or any other ' provisions of law, the board of directors of the corporation, without authori:ation by the members thereof, shall have full COS
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4 5 l \_/ 4. Rate. (a) The Consumer shall pay the Seller for all electric power and energy furnished hereunder at the rates and on the terms and conditions set forth in Rate Schedule A, attached hereto and made a part hereof. (b) The Board of Directors of the Seller at such intervals as it shall deem appropriate, but in any event not less frequently than once in each calender year, shall review the rate for electric power and energy furnished hereunder and under similar agreements with other member asscciations and, if necessary, shall revise such rate so that it shall produce rev-cnues which shall be sufficient, but only sufficient, with the revenues of the Seller from all other sources, to meet the cos: O k 3 of the operation and maintenance of the generating plant, trans-O mission system and related facilities of the Seller: the cosr of any power and energy purchased for resale hereunder by the Seller, pay taxes, make payments on account of principal of and interest on all indebtedness of the Seller, and to provide for the estab-lishment and maintenance of reasonable reserves. The Seller shall cause a notice in writing to be given to the Consumer and other members of the Seller and the Administrator which shall set out all the proposed revisions of the rate with the effective date thereof, which shall be not less than thirty (30) nor :i. ore than forty-five (45) days after the date of the notice, and shall set
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forth the basis upon which the rate is proposed to be adjusted and established. The Consumer agrees that the rate from time to time established by the Board of Directors of the Seller shall be deemed to be substituted for the rate herein provided and agrees to pay for electric power and energy furnished by the Seller to it hereunder after the effective date of any such revisions at such a revised rates; provided, however, that no such revision shall be effective unless approved in writing by the Administratcr.
- 5. Meter Readings and Payment of Bills. The Seller shall read meters monthly. Electric power and energy furnished hereunder shall be paid for at the office of the Seller in Hattiesburg, Mississippi, monthly within fifteen (15) days after
(,_
\s, )x the bill therefor is mailed to the Consumer. If the Consumer shall fr.il tc pay any such bill within such fifteen-day period, the Sc11er may discontinue delivery of electric power and energy nare-under upon fifteen (15) days' written notice to the Consumer of its intention so to do. -
- 6. Meter Testing and Billino Adjustment. The Se:.ler shall test and calibrate meters by comparison with accurate standards at intervals of twelve (12) months. The Seller snall also make special meter tests at any time at the Consumer's re-quest. The costs of all tests shall be borne by the Selles, provided, however, that if any special meter test made at *..he D
i/c-bar1,1977
. . . . .-.. ...... , - ..... ,,......,_.....o
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, made by and amon SOUTl! !!IESICSIPPI FrnTRIC IU,2:R ASSO'IATIC:! ~
(hereinafter called the "hfortga;or"), a corpo. ration existing under the laws of the State cf Mississippi . Usnto STATts or AuuocA (hereinafter called the " Government"), acting through the Administratorof the Rural E!cetri5 cation Administration (hereinafter called "REA"), and NATio.NAt. Ruart. UTtuTtts COOPERATIVE FtNANCE CoaroaATios (hereinafter called "CFC"), a corporation existing under the laws of the District of Columbia (the Government and CFC being hereinafter sometimes co!!ectively called the "hfort. V; ga:ces"). WntRt As, the blongagor, for value received, has heretofore duly authorized and executed, and has delivered to the Government, or has assumed the payment of, certain mongage notes a!! payable in installments to the order of, or obligating the hfortgagor otherwise to, the Govemment, of which the mon; age notes (hereinafter collecdvely called the " Outstanding REA Notes") identified in the twelfth "Whereas" clause hereof (hereinafter called the" Instruments Recital") are now outstanding and held by the Government, r.ll of which Outstanding REA Notes evidence loans made by the Government either to the hion;a;or or to third panies to Scance electric plants, lines and related facilides, and assumed by the h!on;agor; and WatarAs, the loans made by the Government to the hfortgagor were also made pursuant to a !can contract or amending loan contract, made by and between the hfortgagor and the Government, acting through the Administrator of REA (said loan contract or amending loan contract, as it may have been amended or supplernented heretofore or may hereafter from time to time be amended or supplemented, being idend6ed in the Instruments Recital as, and hereinafter called, the "REA Loan Agreement"), and the loan or loans made by one or more legally organised lending agencies and guaranteed by the Govemment were guaranteed p'ursuant to the Rural Electrincation Act of 1936, as amended, including, without limitation, the arnendment thereof of h!ay 11,1973 by P.L. 93 32 (such Act, as so amended, being hereinafter called the "Act") and pursuant to that certain agreement,identi6ed in the Instruments Recital as, and hereinafter called, the " Contract of Guarantee", among the hiongagor, the Governmer:t, acting through the Administrator of REA and the pany identi5ed in the Instruments Recital under the heading of
" Contract of Guarantee", and pursuant to the REA Loan Agreement; and WatatAs, the Outstanding REA Notes and the notes evidencing such guaranteed loans (identined in the Instruments Recital as the " Guaranteed Notes") are hereinafter collectively called the "Outrtanding
( s
) Notes"; and WHERtAs, the Outstanding Notes are secured by the security instruments (hereinafter collredvely called the "REA h!c~; age") made by thc htortgagor to the Government and identif.ed in the Instruments Recital; and WuratAs, with the consent of REA, the htortgagor has entered, or is about to enter, into a Financing Agreement, an Agreement of Sale or a Lease (hereinafter, whetherin the form of a Financing Agreement, Agreement of Sale or Lease, called the " Financing Agreement") with a political subdivision, mur cipality, or instrumentality (hereinafter called the " Issuer") of the State of Micsissippi und:r which the hjort;a;;or will supply the funds to pay all amounts becoming due on account of a series of bonds (hereinafter called the "Do'nds") issued, or to be issued, by the Issuer to fmance the acquisition, construction or installation of pollution control equipment in an electric generating plant owned, or ta be owned, in whole or in part, by the hfortgagor, and the Bonds are, or will be, issued pursuant to and secured by an indenture (hereinafter called the " Indenture") made, or to be made, by and between the issuer and Aforgan Guaranty Trust Company of New York (hereinafter called the " Trustee") and the bionga;:or has also executed, and delivered..or will execute and deliver,its note payable to the order of CFC,identined in the Instruments Recital and hereinafter called the " Pollution Control Note", to evidence the Afonganor's obligation to make payments under the Financing Agreement; and WHIRt As, CFC bas CXCCutCd and delivered to the Trustee its contract orguaranty dsed as of the date hereof (hereinafter called the " Guaranty Agreement") by which CFC guarantees payment of the principal of, premium, if any, and interest on the Bonds and assigns the Pollution Comrol Note, and its rights under this .'.fonnage relating thereto, to the Trustee; and the hiongagor, pursuant to an agreement, dated as of Octcbai 15, 1977 between CFC and the hicngacor (hereinarier called the "CFC Cooperative Uhis inst::nra2nt was preparcd by Gerald R. Tarrani, Esquixe, 111,5 ,30th Street, CN; L'achinyon, D. C. 20007.
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Agreement") has cxecuted and delivered, or wi!! execute and deliver, to CFC its note id:ndfied in the Instruments Recital as, and hereinafter called, the"CFC Guaranty Note", evidencing the obli;;adon of the hiong) or to reimburse CFC for all payments made by CFC pursuant to the Guaranty Agreement; and
/
Wntatrs, under the provisions of the Act and other applicable law, the Administrator of REA is authorised to amend, suppl: ment and consolidate the REA Afongage as herein provided; and
^ l Wntatrs, the changes in the REA hfortgage which the panies thereto and hereto desire now to effect i make advisable the consolidating and restadng of each of the instruments consthudng the REA hiongage in its en rety. !
Now, Tntittront, this Supplemental hiongage and Security Agreernent ! W t T N E S S E T Ht i i , That each of the instruments constitudng the REA hiongage is hereby amended, supp!:rnented :nd 4 consolidated to read in its entirety from and after the date of execudon of this Supplemental biongage and Security Agreement (the REA hfongage, as amended, supplernented and consolidated hereby, b:ing herein called "this hiongage") as follows: t
' WHEREAs, th: hjortgagor now owns electric : nerating facilities and related electric transtnission lines and other faci!! ties identified in Schedule I attached hereto and made a part hereof (hereinafter called the ,
i
" Existing Electric Facilides"); and
, WntntAs, th: hiongagor has determined to ent:r into the Financing Agreement and, pursuant thereto ] to undenske to supply the issue ivith funds for repayment of all amounts to becorne du: on acecunt of th: Bonds, and to obtain CFC's guaranty of the performance of the Bonds; and 4
- WutatAs, it is intended that (1) the Outstanding Notes, as well as addidenal notes executed :nd delivered by the hiongagor to evidence loans made or guaranteed by REA, and notes executed and <
delivered by the hiongagor from dme to time to refund,in renewal of, orin substitution for any su:h not:s (such additional, renewal and substitute notes being hereinafter co!!cctively called the "REA Addidonal Notes"), and (2) the Pollution Control Note, the CFC Guaranty Note, any note executed and delivered b) the hiongager to CFC pursuant to the terms of secdon 24(b) of article !! hereof (hereinafter ca!!:d a "s:cdon 24(b) net "), as we!! as any notes executed and delivered to CFC in connection with addidonal polludon control facility projects, and notes executed and delivered by the hfortgagor from time to dme to refund, in renewal of, or in subsdtution for the Po!!ution Control Note, the CFC Guaranty Note, any section 24(b) note and any notes issued to CFC for additional polludon control facility projects (the Po!!udon Control Note and the CFC Guaranty Note being hereinafter collectively called the "CFC Notes", and such refunding, renewal and substitute notes, any such section 24(b) note, and any such , addidonal notes issued to CFC for additional pollution control facility projects being hereinafter called the '
"CFC Addidonal Notes"; and the REA Notes, the REA Additional Notes, the CFC Not:s ari3 the CFC .
Additional Note: being hereinafter collecdvely called the " notes") shall be secured hereby as hereinafter provided; and '
' WntRtAs, the Instruments referred to in the recitals hereof and the hiaximum Debt Limit rererred to in article I secdon I hereof are hereby identified at follows: ,
INSTRUMENTS RECITAL "REA Loan Agreement"(exclusive of amendments), dated as of July 2 S,195S
" Outstanding REA Notes": . .
....... ...;18...... . censin montage notes in an aggregate principal amount of $70,120,101.06 ,
all of which will finally mature on or before - Onc.bar 22, 2011. Go ., . ,.
. . . . . . . +
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" Contract of Guaran:ee"; ,
Namt of Guarnemi14pJ., Dsted as str Federal Financing Bank August 14,1974, as heretofore amended. f') " Guaranteed Notes": \d P,incipal Interese P.ai, Final Pa > rner Dased Arnount (per annun,) Date July 20, 1977 S44,176,000.00 Datcrrined kten 34 yrs frcm yer advances n'.de of advarce Cetab2r 11,1974 $5,000,000.00 Datermined when 34 yrs from yer advances inade of advance S pte.Thar 18, 1974 S160,737,000.00 Determined t. ten 34 yrs from yer advarces rude of advance "REA Mon;; age": Inst rument D_J t e Tru .te et. ir a n* Indenture July 29,1959 Deposit Guaranty Ban % and Trust Cc 9.:ppler.enu.1 Irdenture . July 21,1961 De,:ccit Curanty Ear 2 a 11 T: act Co Supple e=al Indentu o July 12,1966 Dep3 sit Guaranty Ibtional IhrA (fc=erly Deposit Gurc=y hh na Trust Cc.pany) Supple. mental Indenture I'.ay 26, 1971 Deresit Guaranty Ih icn21 Eark Supple ental Indenture Septcdec - 19, 1973 De,ccit Guaranty Ihticri EcrA Ibrtgage Septeter 18, 1974
" Pollution Control Note":
Principal Finat [O/ \
) Date Amount Ps, mens Date U D :c=bar 1,1977 $40,000,000.00 333 rus from date "CFC Guaranty Note":
Principal Fin al Dale Amount Ps) ment Date Drcrh2r 1, 1977 Determined -hen advances rnade On demand
" Max.imum Debt Limit" for the purposes of anicle I, section I hereof shall be S500,000,000.00; ard WHtRF A5, the Government, CFC, and the Mon;agor are authorized to enter into this Mortgage; and Wutatn, to the extent that any of the propeny described or referred to in this Mortgage is :;overn:d by the provkions of the Uniform Commercial Code of any state (hereinafter called the " Uniform Commercial Code"), the parties hereto desire that this Mortg.:;e be regarded as a "secuiity a;reement" and as a " financing statement" for said security agreement under the Uniform Commercial Code:
Now, Titt astent. Tuis Monc Act Wirstssmi that,in order to secure the payment cf the principal and interes: on the notes, according to their terms and effect. snd further to secute the due performanca of the covenants, anteements and provisions contained in this Mortga;c and to declare th: terms and conditions on which the notes are to be secured, the Mon;; ;or, in consideration of the premises, has p . G _,) . 3 M * ]D TDYMM
&M d ONdo 4 .
executed and delivered this h!onnage, and has granted, bargained, sold, conveyed, warranted, assigned, transferred, mengaged, pledged and set over, and by these presents does hereby grant, bargain, self, convey, warrant, assign, transfer, mongage, pledge and set over, unto the hiongagees and their respectise assigns all and singular the following de>cribed property (hereinafter sometimes called the "hfongaged Property"): V All right, title and interest of the hiongagor in and to the Existing Electric Facilities referred to in Schedule I attached hereto and electric plants, lines or oth.rr facilities hereafter constructed or acquired by the hiongagor, wherever located, and in and to all extension: and improvernents thereof and addidons thereto, including all substadons, service and connecting lines (both overhead and underground), poles, towers, posts, crossarms, wires, cables, conduits, mains, pipes, tubes, transformers, insulators, meters, electrical connections, lamps, fuses, junction boxes, fixtures, appliances, generators, dynamos, water turbines, water wheels, boilers, steam turbines, nuclear fuel assemblies, motors, switch boards, switch racks, pipelines, machinery, too!s, supplies, switching and other equipment, and any and all proper:y of every nature and descripdon, used or acquired for use by the hiongagor in connection therewith, and including, without limitadon, the property described in the property schedule attached hereto as Schedule I and included herein by reference; i II All right, dtie and interest of the h!ortgagor in, to and under any and all grants, privileges, rights of way and casements now owned, held, leased, enjoyed or exercised, or which may hereafter be owned, held, leased, acquired, enjoyed or exercised, by the hiongagor for the purposes of, or in connecdon wi:h, the construedan or operation by or on behalf of the biortgagor of electric transmission or dis:ribution lines, or systems, whether underground or overhead or otherwise, or of any electric generating plant, wherever located; III All right, dtle and interest of the hiongagor in, to and under any and all licenses, franchises, o ordinances, privileges and permits heretofore granted, issued or executed, to it or to its assignors by the k l United S:ates of America, or by any state, or by any county, township, muncipality, village or other political subdivision thereof, or by any agency, board, commission or acquisition, or operation of electric generating plant or plants, insofar as the same may by law i,e assigned, granted, bargained, sold, conveyed, transferred, mortgaged, or pledged; IV All right, title and interest of the h!ortgagor in, to and under any and all contracts heretofore or hereafter executed by and between the hionnagor and any person, firm, or corporation providing for the purchase, sale or exchange of electric power or energy by the Afongsgor together with any and511 other accounts, contract rights and peneral intangibles (as such terms'are defined in the applicable Uniform Commercial Code) heretofore or hereafter acquired by the hiongsgor; e Also, all right, title and interest of the htortgagor in and to all other propeny, real or personal, tangible or intangible, of every Lind, nature and description, and wheresoever situated, now owned or hereafter acquired by the htortgagor,it being the intention hereof that all such property now owned but not specifically described herein or acquired or held by the hfortgagor after the date hereof shall be as fully embraced within and subjected to the lien hereof as if the same were now owned by the hSngagor and were speci'ically described herein to the extent only, however, that the subjection of such property to the lien hereof shall not be contrary to law; To; ether with all rents, income, revenues, profits and benefits at any time derised, received or had frotn any and all of the above described property of the h ortrator.
/7 4 d ) ' '
O m n p O O t . k
Provided, howeser, that except as provided in section 13(b) of artic!c it hereof, no automobiles, truds, trailers, tractors or other vehic!cs (including without limi:ation aircraft or ships,if any) owned or used by the Mortga;or shall be included in the Mon; aged Property. TO !! AVE AND TO IlOLD all and singular the Mongaged Property unto the Mongagees and their respective assi;ns forever, to secure equally and ratably the payment of the principal of and interest on the ( ) r.otes, all according to their tenor and effect without preference, priority or distinction as to interest on, or principal of the no:es (execpt as otherwise speci$cally provided herein or to the extent that any note provides for subordina:!on.thereof) or as to lien or otherwise of any no:e over any other of the notes by reason of the priority in time or maturity thereof or of the assignment or negotiation thereof, or otherwise, and to secure the due performance of the covenants, agreements aad orovisions herein contained, and for the uses and purposes and upon the conditions, provisions and agreements hereinafter expressed and declared. ARTICLE I AcotitosAt. NoTrs Srcitos 1. The Mortgagor, when authorined by resolution or resoludens ofits board of directors, may from tirne to time (I) execute and deliver one or rnere REA Addidonal Notes and (2) execute and dehrer to CFC one or more CFC Additional Notes. All such notes shall con:ain such provisions and shall be execu:ed and delivered upon such terms and condidons as the board of directors of the Mort;agor ir, the reso!ution or resolu: ions authoriaing the execudon and delisery thereof and the relevant lender sha:: presenbe; rec 6/ded, ho4crer, that the notes at any one time secured hereby shall no: exceed in the a;;;terate principal amount the amount idendSed in the Instruments Reci:al as the Maximum Debt Limi:, and no note shall mature rnore than fifty (50) years after the date hereof. No CFC Additional Notes shall be secured by this Mongage without the prior written approval thereof by the Government. Stcrtos 2. The Mangagor, when authorized by resolution or resoludons ofits board of directors. rnay from time to time, execute, acknowledge, deliver, record and file mcrtrages supplemental to this (v) Mon; age which thereaf:er shall form a pan hereof, for the purpose of formally confirming this Mon; age as secur:ty for the notes. Nothing herein contained shall require the execution and delivery by the Mon;a;or of a supplemental mangage in connecdon with the issuance hereunder or the securin; hereby of such notes except as hereinafter provided in secdon 13 of anicle !! hereof. ARTICLE II PA,nTicutAn COVEN ANTS OF THE MORTG AGOrt The Monnagor covenan:s with the Mongagees and the holders of no:es secured hereby (hereinafter sometimes collecdvely called the "noteholders") and each of them as follows: Stcrto 1. The Mortgagor is duly authorised ut. der its articles ofincorporation and bylaws and the laws of the State ofits incorporation and all other applicable provisions oflaw to execute and deliver the Outstanding Notes, the REA Additional Notes, the CFC Notes, the CFC Additional Notes and this Mor: gage; and all corporate action on its part for the execution and delivery of the Outstanding Notes, the CFC Notes, and this Mon;; age has been duly and effectively taken; and the notes, obligations of the Mor:rano., the REA Additional Notes, the CFC Additional No:es and this Mongage are, or when executed and delivered will be, the valid and enforceable obligations of the Mongapor in accordance with their respective terms. S t ci tos ,2. The Mongagor warrants that i: has good right and lawful au;hori:y to manga;c the property desenbed in the granting clauses of this Mon; age for the purposes herein expressed, and that the said propeny is free and clear of any deed of trust, mortgage, lien, charge or encumbrance thereon er
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afr ecting the title there:o, except (i) the lien of this Mortgage and taxes or assessments no: yet due; (ii) depasits or p! edges to secure payment of workmen's compensation, unemployment insurance, old age pensions or c:her social security; and (iii) deposits or pledges to secure perfortnance of bids, tenders, contracts (other than contracts for the payment of borrowed money), leases, public or statu:ory s obligadons. surety or appeal bonds, or other deposits or pledges for purposes oflike general nature in the i ; ordinary course of business. The Mongagor will, so long as any of the notes shall be ou: standing, maintain V and preserve the lien of this Mortgage superior to all other liens a!Tecting the Mongaged Property, and wi:I foreser warrant and defend the title to the propeny described as being mongaged hereby to the Mon:agees against any and all claims and demands whatsoever. The Mongsgor will promptly pay or dbcharge any and all obhgations for or on account of which any such lien or charge might exist or could be created and any and alllawfut taxes, ra:es, levies, assessrnents, liens, clairns or o:her charges imposed upon or accruing upon any of the Mongagor's propeny (whether taxed to the Monga;or or to any noteholder), or the franchises, carnings or business of the Mongsgor, as and when the sarne shall become due and pay:ble; and whenever called upon so to do the Mongagor will furnish to the Mon: agres or to any no:eholder adequate proof of such payment or discharge;provided, however, that this provision shall no: be deemed to require the payrnent or discharge of any tax, rate, levy, assessment or other governmental charge while the Mongagor is contasting the validi:y thereof by appropriate proceedings in good faith and so long as i: shall have set aside on i:s books adequate reserves with ;espect there:o. ' StcTros 3. Except to secure loans to the Mongager, or to a third party or par:ies the obligation of which is assumed by the Mongagor, made or guaranteed by the Govemment or loans evidenced by CFC So:es or by CFC Addidonal Notes,in each case in the manner specif.ed in section 1 of anic!e I hereof, the Mangagor s,ill r.ot, without the consent in wri ng of the Government, charge, assign, pledge, mon; age c o:her. vise encumber any of its propeny, real or personal, tangible or intan;;ible, wheresoever located, which at the time is, or at any time may become, subject to the lien of this Mongage, but in no even: contrary to the prosisions of section 2 of this article II, excep: that,in the event that the Mor:;agor sha:1 hne duly applied for a loan from another lender or lenders which the Government shall have in wridn; approved and determined to be f nancially feasible for the Mongapor, then the Mon;agor may ob:ain a commitment for such loan from such other lender or lenders and agree, if the Government consents there:o, ta so encumber its property by amending this Mongage to secure under this Mongage,in such G'V
} manner as the Government shall prescribe, the evidence of such loan from such other lender or lenders, and in such event CFC will unient to and execure and deliver, an amendment to this Mortgage, or such other instrument as may be appropriate, in order to secure such note or notes of such other lender or 1:nders under this Mor:g g;provided that, by such arnendment to tnis Mangage or otherwise, such other lender or lenders shall receive substandally the same, and in no event greater, rights or powers than those granted to CFC under this Mortgage; and provided,further that, any charge, assignment, pledge, rnongage or o:her encumbrance incurred pursuant to this section 3 shall comply with the indenture, dated as of December !,1972, between CFC and Manufacturers llanover Trust Company, as Trustee.
SicTtON 4 The Mortgagor will duly and punctually pay the principal of and interest on the rmtes a: the dates and places and in the manner provided therein, according to the true intent and meaning thereof, and all other sums becoming due thereunder and hereunder. Stcrtos 5. The Mortgagor will at all times, so long as any of the notes shall be outstanding, take or cause to he taken all such action as from time to time may be necessary to preserve its corporate existence and to preserve and renew all franchises, rights of way, casements, permits and licenses now or hereafter to it granted cr upon it conferred, and will comply with all valid laws, ordinances, regulations and re ;uiremen:s applicable to it or its property. The Mortgagor will not (1) without the approval in writing of the Government consolidate with or merge into any other corporadon or permit any other corporation to merge into the Mortgagor or acquire all or subs:antia!!y all of the business or asse:s of another corporation if such acquisition is analogous in purpose or cEect to a merger or consolidation, or so consolida:e or merge or permit any such merger or so acquire any such business or assets withcut the approval in writing of the holders of t'ot less than 66% in principal amo'unt of :he no:es at the time outs:anding, which holders shall include the Governmer,t so long as it is a holder of any no:es then oa::tanding (such holder or holders, including the Gosernment so lang as it is a holder of any no:es then outs:anding, t cing herein,ifter sometimes called the "two-thirds noteholders") unless the corporation i 6 pm 9
~9 (W M p h o Jd u :s
7 surviving such transaction shall have assumed the payment of the notes and the perfortnance of th: Mangagor's covenants,in this Mongage, or (2) without the approval in wridng of the two thirds I noteholders, sell, lease or transfer (or make any agreernent therefor) any capital asset, unless the fair i rnarket value of such ass:t is less then S50,000 and the aggregate value of assets so sold, Icased or ! transferred in any 12 month period is 1:ss than S200,000 and the proceeds of such sa!:, lease or transfer, I f less ordinary and reasonable expenses incident to such transaction, are immediately (i) applied as a prepayment of the no:es, pro rara according to the aggregate unpaid principal amount of the notes, to such i installments thereof as raay be designated by the respective noteholders at the time of any such prepayrnent, (ii) in the case of dispositions of equipment, materials or scrap, applied to the purchase of o:her prop:ny useful in the Mongagor's business, not necessarily of the same kind as the propeny 4 disposed of, which shall fonhwith become subject to the lien of this Mortgage or (iii) s:t aside as a d:posi: in the construction fund con:emplated by Account Number 132.1 of th: Uniform System of Accounts prescribed by REA for its Electric Borrowers (hereinafter, as in effect on the da:e h:reof, ca!!ed the "Uniforra Systern of Accounts"). Any reference in this Monga:;e to any Account Number of the Uniform i Syst:rn of Accounts shall apply to such Account Nurnber included in the Uniform Syst:m of Acccun:s as of March 1,1973, or to any other Account Number which may thereafter be prescribed with respe:t to the informadon contemplated by the Account Number herein specified; or,if no such Account Number sha!! be app!! cab!: after such date to the accounts of the Mongagor for such information, such referenc: shr.!! apply to the corresponding information otherwise det:rmined in an appropriate manner. StcrtM 6. (a) The Mongagor will at all times maintain and preserve the Mongaged Propeny and
; each and every part and parcel thereofin good repair, workin;; order and condi: ion and in compliance with all applicable laws, regulations and orders, and will from tirne to dme make all needful and prop:r ;
rep.drs, renewals, and replacements, and useful and proper alterations, additions, bettermen:s and , l improvements, and wi!!, subject to contingencies beyond its reasonable control, at all times keep its plant I j and propenies in necessary continuous operating condidon and use all reasonable diligence to furnish th: consumers served by it through the Mon; aged Property, or any part thereof, wi:h an adequate supply of l cl:ctric en:rgy and o:her services furnished by the Mongagor. If any substantial pan of th: Mon;; aged ] Prop:rty is leased by the Mongagor to any other party, the lease agre: ment between the Mortgagor and the lessee shall obligate the lessee to comply wi:h the provisions of subsections (a) and (b) of this secdon ( in resp:ct of the leased facilities and to permit the Mongagor to operate the leased faciliti:s in the event of any failure by the lessee to so comply. (b) The Mon;;agor .ill cause the sum of the amount used during cach period of five consecudve calendar years for maintenance, renewals, and replacements of the Mortgaged Property and any availabl: ; Maintenance Credit (as hereinbelow defined), to be at least equal to the lesser (hereinafter called the L
! "S:andard") of either (i) 107, of the result obtained by deducting from the amount of Operating l Revenues and Patronag: Capital (as shown on line 32 of REA Bulletin 1-1 for Power Supply Borrowers, a.s now in effect with respect to each calendar year) of the Mongagor for such five year period, the sum of operaung expenses as shown on li,nes 35,36 and 37 of said REA Bulletin and Fixed Costs on ProIucdon Plant ( Account Numbers 403.1,408,427,924,925 and 926, as shown on lines IS,19,20 and 21 of REA !
Form 12d, rev.12/70, and the corresponding Accounts of REA Forms 12e and 12f, rev.12/70, as i applicable) of the Mongsgor for such five year period, or (ii) 157, of the sum obtained by adding the
- amount chm
- d to Depreciation and Amortiaation Expense (as shown on line 47 of said REA Bulledn) t ' and Maintenance Expense-Total (as shown on line 42 of said REA Bulletin) of the Mongagor for such five year period.
- The term " Maintenance Credit" shall mean the sum of (1) the excess of the amount used in each p:riod of five consecudve calendar years for maint: nance, renewals 'and replacements over the Standard during such five. year period and (2) the amount of such excesses from prior years, less amounts thereof presiously utilized as permitted by this secdon. -
The term *l Maintenance Deficit"shal! mean the amount by which the Standard in each p:riod of the consecutive calendar years exceeds the sum of(1) the amount applied during such five-year period for rnain:enance, renewals and replacements and (2) th: amount of:ny available Maintenance Credit. - . l 3 . (
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* * *~ -
The amount used for maintenance in each year shat! be the amount shown for the Mongagor for such year on line 42 of said REA Bulletin 1-1, as now in effect, and the amounts used for renewals and replacements shall be based upon improvements and replacements of Utility Plant associated with retirements thereof, less net salvage value. '<> In furtherance of the covenant contained in this subsecdon (b), the Mortgagor will, within Eve rnonths after the close of the fifth complete calendar year after the year in which this Mortgage is executed, and within Sve months after the end of each five year period fo!!owing said fifth calendar year, furrish to the Mongagees an OiScer's Certificate, setdng fonh separately and in reasonable detail: (1) The amount of Operadng Revenues and Patronage Capital derived by the Mortgagor frorn the Mongaged Propeny during the five preceeding calendar years and the Mongsgor's Operadon Expense Total, Fixed Costs on Producdon Plant. Depreciadon and Amortinadon Expense, and Maintenance Expense-Total for such five-year period; (2) The amounts used during such five preceding calendar years for maintenance, renew Is and rep!acernents of the Mongaged Propeny: (3) Any Maintenance Credit not theretofore utiliaed as permitted by this secdon and the comput:. don thereof; and I (4) The resulting Maintenance Credit or Maintenance Deficit. In case any such Of5cer's Cerdficate shows a Maintenance De6 cit, the Mongagor shail cither (i) immediately apply an : mount equal to the largest integral muldple of SI,000 which equals or is less than the amount so determined to the prepayment of the Notes, pro rata according to the unpaid principal amounts thereof (such prepayments to be applied to such installments thereof as may be designated by the respeedve notcholders at the dme of any such prepayment), or (ii) immediately deposit the amount so deterrnined in a bank or banks satisfactory to the Government to be held by such bank or banks in a Restricted Maintenance Fund in trust for the benefit of the noteholders pursuant to a trust agreement satisfactory to the Govemment; provided, however, that at the direcdon or with the approval of the Government, the Mortragor may cause funds held in such Restricted Maintenance Fund to be applied to (v }' the making of expenditures for maintenance, renewals and replacements of the Mongaged Property; proWJed, further, ho. <rer, that in the event that there shall have been a balance in said Restricted Maintenance Fund at the end of each of two such consecutive reponing periods, the Government may thereafter cause the funce held therein to be applied as provided in clause (i) above; and provided,further, ho-crer, that in the event of such a Maintenance Deficit, the Mongagor rnay promptly cause to be made an inspecdon of the Mortgaged Property by a professional engineer satisfactory to the Government and may cause to be issued a report of such engineer, satisfactory in form and substance to the Government, stadng the minirnal aggregate amount which,in his judgment,is then needed for maintenance, renew 2!s, and replacement of the Mongaged Property in accordance with sound industry practices, and in the event such amount shall be less than such Maintenance De6 cit, the maximum amount which the Mort;Oor shall be required to apply to prepayment or to deposit in a Restricte'd Maintenance Fund pursuant to this paragraph shallin all events be the amount so stated by such professional engineer. In case any such certificate shows a Maintenance Credit, the Mortgagor may withdraw the amount of such Maintenance Credit from said Restricted Maintenance Fund to the extent that there is an accumulated balance therein, and the Government, as agent of the noteholders, shall in such esse cause such withdrawal to be permitted. The amount of any Maintenance Credit not utilized to reduce a Maintenance Deficit or so withdrawn from the Restricted Maintenance Fund shall be available until utilized for such purposes. The Mongapor agrees that it will, within five months after the close of cach calendar year after the year in which the first OfEcer's Cenifcate is required to be fumished pursuant to the fifth parar,raph of this subsecdon (b) (other than during years in which an Ofiicer's Cenificate is required to be furnished pursuant to said paragraph) furnish to the Mongagees an OfEceri Certificate, setting fonh separately and in reasonable detail the amounts descnbed in clauses (1) and (2) of said para;raph for the preceding n . (/ b D i
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calendar year; provided, however, that the foregoing requirements to furnish the 05cer's Certif ca:e pursuant to this para:;raph and the fifth paragraph of this subsection (b) shall not relieve the Mongsgor of the obligation to furnish any 05cer's Certificate with respect to maintenance, renewals and replacernents of the Mongaged Propeny previously required under the REA Mortgage. Stenos 7. Escept as specifically authori:ed in writing in advance by the Government and subject in all events to the provisions of section 2 of this anicle 11, the Mongagor will purchase all materia's, /~z equiprnent and replacements to be incorporated in or used in connection with the Mongaged Propeny ( ! outri:;ht, and not subject to any conditional sales agreement, chattel mongage, bailment lease, or other a;reernent reserving to the seller any ri:;ht, dile or lien. The Mortgagor will not, without the approval in wridn; of the Governtnent, become or be obligated under Long Term Leases for the rental from o:hers of Restricted Property if the aggregate amount of rentals thereunder accrued or which may accrue during any period of 12 calendar months shall exceed 2% of the Equity of the Mon;2 gor at the time any determinaden of such rental obligations is made hereunder. As used herein, the term " Equity" shall have the meanin; assigned to it in secdon 16 of this article IL "Long-Term Leases" shall mean leases having unexpired terms (taking into account terms of renewal at the opdon of the lessor, whether or not such
! cases have theretofore been renewed) of more than 12 months, and " Restricted Property"shall mean di properdes other than automobiles, trucks, trailers, tractors, other vehicles (including, without limitadon, aircraft and ships), o5ce, garage and warehouse space and c5ce equipment (including, withcut fir-itadon, computers).
SrcTros S. (a) The Mortgagor will take out, as the respective risks are incurred, and m:intain the fo!!owing classes and amounts ofinsurance: (1) f,delity bonds covering each officer and ernpioyee cf the Monga;or in not less than the following amounts, based on the esdmated annual gross revenues of the Mon; aged Property: Amount of Anmt Crow Revenue Coierne Less than S 200,000 S 10.000 S200,001 to 400,000 20,000 400,001 to 600,000 40,000 600,001 to 800,000 60,000 (V S00,001 to over 1,000,000 1,000,000 80,000 100,000 and each collecdon agent of the Monga;or shall be included in such fidelity bonds for not less than $2,500, or 10 percent of the highest amount co!!ected annually by any one collection agent, whichever is gren:er; (2) workmen's compensation insurance covering all emp'oyees of the Monga;or,in such amounts as may be required by law, or if the Mor:ga;or or any of its employees are not subject to the workmen's compensation laws of the State or States in which the Mortgagor conducts its operations, then its workmen's compensation policy shall provide voluntary compensation coserage to the same extent as though the Mon;agor and such employees were subject to such laws; and including occupatio7,a! disease liability coverage, and " additional medical" coverage of not less than S10,000 in States where full med cal coverage is not required by law; (3) public liability and property damage liability insurance, covenng ownersHp liabihty, and all operations of the Mortgagor, with limits for bodily injury or death of net less than SiGO,000 for one person and S300,000 for eah accident, and with limits for property damage of not less than S$0,000 for each accident and S100,000 aggregate for the policy period;(4) liability insurance on all mmor vehicles, trailers, semitrailers, and aircraft used in the conduct of the Mortgagor's business, whether owned, non-owned or hired by the Mortgagor, with bodily injury limits of not less than S100,000 for ene person and 5300,000 for each accident, and with propeny damage limits of 525,000 for each accident; in connecdon with aircraft liability, also passenger bodily injury limits of S100,000 per perron and 53CO,000 for each accident; (5) comprehensive, or separate fire, theft and windsterm insurance casering loss of or damage to all owned motor vehicles, trailers, and aircraft of the Mert:;ancr havin;; a unit value in excess of $1,000,in an arnount not less than the actual cash value of the preper:y insured;(6) fire and estended coserage insurance, designann; the Government and CFC as mortgagees in the pchey, 9 n s
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O { U
on each building and its contents, and on any other property of the Mortgagor, other than power lines and other distribution facilities, including without limitadon property situated at cach storage location of materials and supplies, poles and crassarms, owned by the Mon;agor, having a value at any one location in excess of $5,000, or in excess of one percent of the total plant value, whichever is larger, and in an amount not less than S0 percent of the current cost to replace the property new, less actual depreciatien: m and (7) boiler and machinery insurance,if the hlortgaged Propeny includes electric ;cnerating facilities, ( V) in an amount for ecch accident not less than the actual current cash value of the propeny of the htortga;or and of other adjacent property that could be damaged thereby. The Moncagor will also, from time to time, increase or supplement the classes and amounts of insurance specif:ed above to the extent requested by the Government or the ho! der or hotders of not less than a rnajority in principal amount of the notes at the time outstar. ding (hereinafter called the " majority noteholders") or required to conform to the accepted practice os companies of the siae and characterof the Mon;:;or. The Mon;agor wi!!, upon request of either of the Mongagees, submit to the Mongagees a s:hedule of its insurance in effect on the date specified in such request and copies of any policies or contracts relating thereto. The foregoing insurance coserage shall be obtained by means of band and policy forms approved by re;ulatory authonties, including standard REA endorsements and riders used by the insurance indystry to provide coverage for PdiA borrowers. Each policy or other contract for such insuran:e sha!! contain an agreement by the insurer that, notwithstanding any ri;ht of cancellation reserved to such insurer, such ro!!cy or contract shall continue in force for at least 10 days after written notice to the Monnagees cf c2ncellation. (b) In the event of damage to or the destruc ion or loss of any ponian of the Mon; aged Proper v which shall be covered by insurance, unless the Govemment shall otherwise agree, the Mon;agor sha!i rep! ace or restore such damaged, destroyed or lost ponian so that the Mort; aged Property shall be in substandally the same condition as it was in prior to such damage, destruction or loss, and rhall apply the proceeds of the insurance for that purpose: ;rovided, howewr, that in the event the Mortgagor, whh agreernent therefor by the Governtnent, shall not so replace or restore su:h damaged, destroyed or lost portion of the Mortgaged Property, the Mortgapor shall apply the proceeds of the insurance as c. ratable ( ' prepayment of or en account of the unpaid principal of the notes, to such installments thereof as may be designated by the respective noteholders at the time of any such payment. The Mon;agor shal! repla: the loss or shall commer,:: such restoration promptly after such damage, destruction or loss shall have c: curred and shall compicie such replacement or restoration as expeditiously as practicable, and shall pay cr c;.use to be paid cut of the proceeds of such insurance all costs and expenses in corne: don therewith so that su:S replacement or restoration shall be so completed that the ponion of the Monnaged Prepeny so rep! aced or restored shall be free and clear of all mechanics' liens and other claims. Sums recovered under any fidelity bond by the Montagor for a loss of funds advanced under the notes or recovered by a Mongagee for any loss under such bond shall, unless otherwise directe?. by the two thirds noteholders, be apphed to the prepayment of the notes, pro rota according to the unpaid principal amounts thereof (such prepayments to be applied to such installments thereof as may be designated by the respective noteholders at the time of any such prepayment), or to ecnstruct or acquire facilities approved by the Government, which will become part of the Mortgaged Property. Srcitos 9. In the event of the failure of the Mortgagor in any respect to comply with the covenants and conditions herein contained with respect to the procuring of insurance, the payment of taxes,
- ssessments and other charges, the heeping of the Montaged Property in repair and free ofliens and other claims or to comply with any other covenant contained in this Mortgage, either Mon;agee shat! have the ri;ht (without prejudice to any other rights arising by reason of such default) to advance or expend rnonep for the puipose of procuring such insurance, or for the payment of insurance premiums, taxes, assessments or other charges, or to save the Mongared Property from sa!c or forfeiture for any unpaid :n or assessrnent, or otherwise, or to redeem the same from any tn or other sale, or to purchase any tn title therean, or to remove or purchase any mechanic's liens or other encumbr mee thereon, or to make repa:rs thereon or to comply with any other covenant herein contained or to praecute or defend any suit in
/o s V 10 n- b1 D &p & f h' O '
rela: ion to the Mongaged Property or in any manner to protect the Mortgaged Propeny and the ti:!e thereto, and all sums so advanced for any of the aforesaid purpases with interest thereon at the highest legal rate but not in excess of ten per centum (10%) per annum shall be deemed a charge upon the Mert; aged Property in the same manner as the notes at the time outstanding are secured and shall be It shall not be for:hwith paid to the Mongagee making such advance or advances upon dernand. T obhgatory for any Montage: in raaling any such advances or expenditures to inquire into the validity cf f () any such tat title, or of any of such taxes or assessmems or sales therefor,or of any such mechanics
- liens o:h r encumbrance. A Mongagee acting hereunder shall not be liable to the Mangagor, the other Mertgagee or any noteholder except for losses resulting from gross negligence or wilful misfeasance.
SIcnos 10. The Mongagor will not, without the approval in wridng of the Government: (a) cons: rue:, make, lease, purchase or otherwise acquire any extensions or addidons to its system or enter into ar y contract therefor, except such extensions or additions as may be financed with loans evidenced by addidon21 no:es; (b) emer into any contract or contracts for the operadon or maintenance cf a!! or any part ofits propeny, for the purchase of electric power or energy, for the sale or resale, or for tne sale to utdraat: consumer, of elecuic power and energy in excess of 1,000 Li!awa:ts, for any transmission, imerconnecdoa or pooling arrangements, or for the use by others of any of its prop:ny: (c) incur any expenses for legal, engineering, supervisory, accoundng or other similar services, ex::pt such rea egens:s as are incurred in the roudne course of business; or (d) deposit any ofits funds, regardiess scurce thereof, in any bink or other deposi:ary whicn is not a mernber of the Federal Deposi: Insurance Corporadon, or :he suc:esscr thereof, or of a Federal Reserve Bank. StcTros 11. The Monragor wil! not pay its directors, as such, any salades for : heir 3: vices, excep: su:S as shall have been approved by the Government, provind that nothing herein cen:ained sha" prec ude any direc:or from serving the Mortgagor in any other capacity and receiving comp:nsr. de th:::for. Salades and wages paid ofiicers and employees shall be reasonable and in confor:mi:y with the usual prac:ic: of corporations of the size and nature of the Mor:gagor. SrcTras 12. The Moncagor will at all times keep, and safely preserve proper book.;, reecrds and accouna in which full and true entries will be made of all of th: dealings, business and affairs of the Mong2;or,in ac:ctdance with the methods and pdncip?es of accouming presenbed in the Uniform Syste of A:countt The Mongager will prepare and furnish each of the Mongagees not later than the 20:5 day cf each month, or r.: less frequent intervals when specified by such Mengag::, financial and stadsdcal V repara on in condidon and operations. Such repons shall be in such form r th:and include such infcrm Mongagor's rnay be speci5ed oy such Mortgagee, including, without limitation, an analysis e revenues, expemes and consumer accounts. The Mortgapor will cause to be prepared and furnished !c each of the Montage:s, at least once during each 12 month pedod during the term hereof, a full and ccmplete report ofin f.nancial condition as of a date (hereinafter cal!ed the " Fiscal Date") not more th 9') days prior to the date such tcport is furnished to the Mongagees hereunder, and ofits op: radons fo 12 rnanth period ended on the Fiscal Date,in form and substance satisfactory to the Government,aud and cer:ified by independent certified public accountants satisfactory to theEither Government Mongage:, and accor;pan by a repon of such audit in form and substance sadsfactory to the Government. through its representadves, shall at all times during reasonable business hours have access to, and to inspect and make copies of, any or all books, records and accounts, and any or a!! invoices, contra leases, payrolls, cancelled checks, statements and oth:r do:uments.and papers of every kind, b or ia the possession of the Mortgagor or in anywise pertaining to its prcpeny or business.
,sent or Stenos 13. (a) The Moncagor will from time to time upon written demand of the Gover CFC make, execute, acknowledge and deliver or cause to be made, executed, acknowledged and all such for:her and supplem:ntal indentures of mongage, deeds of tmst, mongages, financing statem continuation statements, security agreements, instruments and conveyances as may reasonr.bly requested by the Government or CFC, and take or cause to be taken all such funher acdon reason:,bly be requested by the Government or CFC to effec:cate the intemian of these pre prevMe for th: securing and payment of the principal of and interest on the notes equ ccco: ding to'the terms therecf and for the purpose of fully conveying, transferring and c.:ni i
Mortgagees the property hereby corneyed, morgaged and p' edged, or imended so to be, whe i ii o e
owned by the hfonna:;or or hereafter acquired by it and to reflect the assignment of the ti;; hts or interests of cither of the hfortgagees or of any noteholder hereunder or under any note. The h1ortgagor wil1 cause this hion;; age and any and all supplemental indentures of mortgage, mortgages and deeds of trust and every security a::reement, financing statemen:. continuation statement and cvery addi:ional instrument which shall be executed pursuant to the faregoing provisions forthwith tpon execution to be recorded ar.d fded and rerecorded .:nd refded as conseyances and rnortga;;es and deeds of trust of and security interests b) (V in real and personal property in such manner and in such places as may be required by law or reasonably requested by cither htongagee in order fu!!y to preserve the security for the notes and to perfect and snaintain the superior lien of this hton;; age and all supplemental indentures of mortga;;e, monga::es and deeds of trust and the rights and remedies of the Afongagees and the noteholders. (b) In the event that the hfortgagor suffers in the future a deficit in net income, as de: ermined in accordance wi:5 methods of accounting prescribed in section 12 of article II hereof, for any fiscal year while any of the notes are outstanding, the hiongagor will at any time or times upon written demand of the Government or CFC make, execute, acknowled;;e and deliver or cause to be made, executed, acknowled - ed and delivered all such funher and supplemental indentures of mortgage, mortga;;es, security agreements, fmancing s:a:cments, instruments and conveyances, and take or cause to be taken all such funher action, as rnay reasonably be requested by ei:her h!ortgagee in order to include in :his hiongage a.s hiongaged Property, and to subject to at: the terms and condi: ions of this hiortgage, all rightAitle and interest of the hiortgagor in and to, all and singular, the automobiles, trucks, trailers, tractors, aircraft, ships and other vehici: s then owned by the Ston;ngor, or which may thereafter be owned or acquired by the .',f onga;;o From and after the time of such wri::en demand of the Government er CFC, such schides shall be deemed to be part of the hiortgaged Prepeny for all purposes thereof. StcTics 1 :. Any noteholder may, at any time or times in succession without no:!ce to or the consent of:he hjortgapor or any other noteholder and upon such terms as such noteholder may prescribe, grant to any person, firm or corporation who shall hase become obliga:ed to pay all or any pan of the principal cf or in:erest on any no:e held by or indebtedness owed to such no:ehol der or who may be affected by the lien hereby created, an extension of the time for the payment of such principal or interest, and after such ex:ension the hiongagor will remain liable for the payment of such note orindebtedness to the same extent fm as though it had at the time of such extension consented thereto in writing. V) Stenos 15. The hiongagor, subject to applicable laws and rules and orders of regulatory bodies, will
\
design its ra:es for elec:ric energy and o:her services fumished by it with a view to paying and discharging all tases, maintenance expenses, cost of electric energy and other operating expenses of its elec:ri: transmission and distribution system and electric genera:ing facilities, if any, and also to making all payrnents in respect of principal of and interest on the notes when and as the same shall become due, to providing and main:aining reasonable working capital for the hiortgator and to maintaining a Times Interest Earned Ratio (herein called " TIER") of not less than 1.0 and a Debt Service Cover 2ge (herein calicd "DSC") of not less than 1.0, Where a change in design is proposed, the hiortgagor shall sq, redesign its rates to comply with the req,uitements of the preceding sentence, except that Net Patronage Capital or h!argins, as def,ned below, shall be determined as though the rates proposed by the hiongagor had been in eflect for each of the 3 calendar years immediately preceding the date of such determination. The h!oncagor shall give 90 days prior written notice to each of the h!ortgagees of any proposed chan;;e in its general rat,; structure. For purposes of this section, TIER of the Stortgagor shall mean the average of the two largest ratios wi:h respect to each of the three years (herein called the " test years") last preceding the da:e of the determination as to the adequacy of the design of rates, determined as fo!!ows: for each test year: add Net Patronage or Capital (as computed for purposes of Line B 29 on REA Form 12a) of the '-tortgager to Interest Expense (as computed for purposes of Line B20 on REA Form 12a) of the hiongager, and divide the total so ob: tned by Interest E3 pense (as so computed) of the hiottgagor.Fnidcd, henner, tha: in com putin a, interest Exp: nse, there shat! be added, to the extent not otherwise included, an amount equa! to 33%G of the escess of rentals of Restric:ed Prepeny (as def.ned in section 7 of anicie 11 hercef) under Long term Lc.ises (as definde in section 7 of artic!c !! hereof) of the hiortragor oser 2G of the wq wpyr {J k l l
Mort;;agor's Equities and Mar;; ins (as dermed in the Uniform System of Accounts). Any reference in this Mortgage to REA Form 122 shall apply to the i2/71 revision (or to the revision of any other dat: which may be speci6ed) of such REA Form 12a or to any later revision thereof which shall have been at the time prescribed for use by REA;if some other form containing the corresponding information shall at the time be prescribed by 1(EA, such reference shall apply to the corresponding item in such other form; or if r.o fm such forrn is appheable to the accounts of the Mongagor, such reference shall apply to the corresponding (V) information otherwise det:rmined in a comparable manner. For purposes of this secdon, DSC of the Mortgagor shall mean the average of the two largest ratios with respect to each of the test years, determined as follows: for each t:st year: add Net Patronage Capital or Margins (as computed in accordance with the principles set fonh in the preceding paragraph hereof) and Interest Expense (as computed in accordance with the principles set forth in the precedm; paragraph hereof) of the Mongagor to Depreciation and Amortization Expense (an amount as computed for purposes of Line ILIS on REA Form 12a) of the Mongagor, and divide the total so obtained by an amount equal to the sum of all payments of p:incipal and interest required to be rnade during each of the test years on account of Total Long-Term Debt (as computed for purposes of Line A.35 on REA Form 123, including interest computed in the same manner as Interest Expense, as provid:d above) of the Mongagor; provided, however, that in the es ent that any Long-Term D:bt (being any amount included in Total Lonn-Term Debt computed as provided above) has been rc5nanc:d during any test year th: payments of principal and interest required to be made during such year on account of such Long-Term Debt shall be baud (in lieu of actual payments required to be made on such re5nanced Debt) upon the larger of (i) an annuatintion of the payments required to be made with respect to the refmancing debt during the portion of such year such rc5nancing debt is outstanding or (ii) the payments cf principal and interest required to be made during the following year on account of such ref nancin;; debt. StcTroN 16. The Mongagor will not,in any one year, without the apprcval in writing of the two-thirds noteholders, declare or pay any dividends, or pay or determine to pay any patronage refunds, or retire any patronage capital or make any other cash distribudons (such divid:nds, refonos, redremenu and other distributions being hereinafter collecdvely called " distributions"), to its members, stockholders or consumers if after giving c!fect to any such distribution the total Equity of the Mongagor will not equ:d or gm exceed 40% of its total assets and other debits; provided, however, that the Mort;;agor may neverth:less (Vl make distributions in any year up to 25% of the patronage capital and margins received by the Mortgagor in the next preceding year where after giving effect to any such distribution the total Equity of the Mortgagor will equal or exceed 20% ofits total assets and othe debits; and pavide:',f, rther, however, that in no esent will the Mongagor make any distributions if there is unpaid when du: any installm:nt of principal of or interest on the notes, if the Mortgagor is othenvis: in default h:reunder or if, after giving ef ect to any such distribution, the Monga; sr's total current and accrued assets would be less than its tatal current and accrued liabilities. For the purpose of this section, a " cash distribution" shall be deemed to include t.ny general cancellation or abatement of charges for electric energy or services furnished by the Mortgager, but not the repayment of a memb:rship fee of not in excess of S100 upon termination of a membership. As use? or applied in this Mortga;c (1)" Equity" shall mean the aggregate of Equities and Margins (as such terms are defined in the Uniform System of Accounts) and Subordinated Indebtedness; and (2)" Subordinated Indebtedness" shall mean unsecured indebt-dness of the Mortgagor, payment of which shall be subordinated to the prior payment of the notes by subordination agreement in form and substance satisfactory to the Government. v StcTios 17. In the event that the Mortgaged Property, or any part thereof, shall be taken under the power of eminent domain, all proceeds and avails therefrom, except to the extent that both cf the Mortpagres shall consent to other use and application thereof by the Mortr,agor, shall fonhwith be applied by the Mong:qor: first, to the ratable payment of any indebtedness by this Mengage secured other than principal of or' interest on the notes; second, to the ratable payment ofinterest whi:h shall hase accrued on the notes and he unpaid; third, to the ratable payment of or on account of th: t,npaid ;1dncipal ci the notes, to such insta!!ments thereof as rnay be designated by the respectise noteholdcrs at the time cf any
- tlsb)
. V 13 Loef dMe .
a =. such payment, and, fourth, the balance shall be paid to whosoever shall be entitled thereto; provided, heerer, that any noteholder may cause funds to which it may be entitled under clause third hereof to be applied by the Mongagor to the making of a deposit in the construction fund contemp! ted by Account b 131 any.2 hoteof thebyUniform held Sys:cm of Accounts instead of causing such funds to be applied to the such noteholder. SEcTros 18. The Mortgagor will not at any time employ, or enter into any contract for the emp!oyment of, any general manager of the Mortgagor's system or any person exercising comparable - su:hority to such a manager, unless such employment or such contract shall Srs: have been approved by the Government. If, during such periods as the Mongagor shall be in default in the mr. king of payment or payments of principal of or interest on one or rnore of the notes or otherwise be in default hereunder, the Gosernment shall at any time give notice to the Mortgagor that in its opinion such system is not being ef3ciently operated and shall reques: the termination of the employment of any such manager or persoa c>.ercising comparable authority, or shall request the terminat20n of any operating contrac: in respect of any such system, the Mortgagor will terminate such employment or operating con:ract wi:hin thiny (30) days after the date of such notice. All con:racts in respect of the employment of any such manager or person exercising comparable authority, or for the operation of any such sys:em, shall con:ain provisicps :o permi: cornpliance with the foregoing covenants. SrcTros 19. The Mortgapor will well and :ruly observe and perform all of the ccvenants, agreements, terms and conditions contained in the REA Loan Agreement, as from time to :ime amended, on its pan :o be observed or performed. The Mortgagor wi'l promptly furnish each Mor:ga:;ee with wri::en no: ice of any amendment cr modi 6 cation of the REA Loan Agreemen:, this Mortgage, the Contract of Guaran:ce, the Guaran:y Agreement, the Financing Agreement or the Indenture and of the occurrence of any event of defau't thereunder. For purposes of this Mortgage,in the even: of any inconsis:ency between the terms of this Mor: gage and the terms of the REA Loan Agreement, as from time to time amended, the terms of this Mongage sball govern. SzcTros 20. The Mortgator will promp:ly notify the Mortgagees in wri:ing of any change in location (x ofi:s chief p! ace of business or the of6ce where its records concerning accounts and ccmract rights are kept. Y0 StcTios 21. The Mort;;agor will obtain all such righ:s of way, easements from landowners and releases from lienors as shall be necessary or advisable in the conduct ofits business, and,if requested 'cy either Mor: agee, deliver to such Mor: greet evidence satisfactory to such Mongagee of the obtaining cf such rights of way, casements or releases. SrcTros 22. The Mortgagor will not, without the written approval of the Government, hereafter rnate any loan or advance to, or make any investment in, or purchase or make any commi: ment to purchase any stock, bonds, notes or other securities of, or guarantee, assume or otherwise become obligated or hable wi:h respect to the obli;;ations of, any person, firm or corporation, excep: (i) se:Irities or deposi:s issued, guaranteed or Tully insured as to payment by th'e United States Government or any agency thereof, (ii) Capital Term Certi6 cates or other securities of CFC, (iii) capital credits resulting from the payment for power and energy purchased and actually received from a generating and transmission cooperative e r which the Mortgagor is a member, (iv) loans, deposits, advances, investments, securities and obhgations which the Mortgagor has, prior to the date hereof, committed itself to make, purchase or undcrtake, as the case may be, and as to which the Mortgagor has given the Mortgagees notice in writing prior to the date hereof, and (v) such other loans, deposits, advances, investments and obligations as may from time to time be made, purchased or undertaken by the Mort:;agor; provided, howeve, that the aggregate cost of investments, plus the total unpaid principal amount of loatts, deposits, advances cr.d obligations, p:rmit:ed undar this clause (v) shall not at any time exceed 3G of the total utility phn: (as such term is oc6ned in the Uniform System of Accounts) of the Mortgagor. SicTia.s 23. If all the notes issued to the Government have been paid and dischar;;cd whi9 :ny of the CFC No:o are still outstanding, all rights and powers of the Government and the ho1Jers of notes issu:d to the Government under this Mortgage shallimmediately vest in CFC and the ho! Jets of the CFC So:es, (v respectively, and, correspondingly,if all the CFC Sotes have been paid and dischar;ed while any of :he 14 D m t [] I b[2[J&[L, h[
- r.otes issued to the Government are still outstanding. all rights and powers of CFC and the holders of the CFC Notes under this hlortgage shall immediately vest in the Government and the holders of the notes ,
t . issued to the Government. respectively, CFC, the Government, the hjortgagor and the notcholders shall i execute!and deliver such instruments, assignments, releases or other documents as shall be reasonably regtdred to carry out the intention of this section.
,].
g SEcTios 24 (a) The h1ortgagor makes to each htortgagee the same representations made by it in subsecdons (g), (h), (i), (j), (k), (1) and (n) of secdon 2.2 of the Financing Agreer..ent and covenants i~ and agrees with each hiongagee that it will comply with the provisions of section 5.5 of the Financing , i Agreement. ' (b) In the event that any representation by the Afongagor contained in said subsections of section 2.2. of the Financing Agreement shall prove to be incorrect or untrue in'any material respect, or the hiortgagor shall fail to observe or perform any covenant or agreement contained in section 5.5 of the Financing Agreement and as a result the Bonds shall have been accelerated in accordance with the terms of the Indenture, the Stort:;agor will pay amounts thereupon due on account of the Bonds at the time specified in article III, section 2(b)(2) hereof. To the extent that lt has insufncient funds available for this purpose from o:her sources, the hiongagor will apply to CFC for a long-term loan, the proceeds of which will be - used to make such payments on the Bonds; and if the Government gives wri: ten approval to the CFC i Additional Note or Notes evidencing such CFC loan in accordance with article I, section I hereof, CFC agrees to make such loan, upon substantially the same terms and conditions as shr.Il be then genera!!y applicable to CFC long-term loani to its power supply members. , t 4 ARTICLE 111 l REMEDIES OF TIIE hf 0RTGAGEE.s AND NoTEsot.orns l SEcTtos 1. If one or more of the following events (hereinafter called " events of default") shall j happen, that is to say: p q (a) default shall be made in the payment of any installment of or on account of interest on, 4 prernium,if any, or principal of any note or notes when and as the same shall be required to be made whether by acceleration or otherwise; i (b) any representation or warranty made by the h{ortgager herein,in the REA Loan Agreement , or in any certificate delivered hereunder or thereunder shall prove to have been incorrect or untrue in any material respect: [ (c) default shall be made in the due observance or performance of any of the covenants, conditions or agreements on the part of the hiortgagor contained in sections 3,4,5,7,10,16,22 and i
! 24(a) of article 11 hereof; ,
$ (d) default shall be made in the due observance or performance of any other of the covenants, , conditions or agreements on the part of the hiongagor, in any of the notes or in this hiongage contained, and such default shall continue for a period of thirty (30) days after written notice
. specifying such default and requiring the same to tw remedied shall have been given to the hiortgagor '
by any noteholder: (c) the hicrtgagor shall file a petition in bankruptcy or be adjudicated a bankrupt or insolvent.or shall make an' assignment for the benefit ofits creditors, or shall consent to the appointment of a ' receiver ofitself or ofits property, or shall institute proceedings for its reorganizadon or proceedings instituted by others for its reorganization shall not be dismissed within thirty (30) days after the institution thereof;-
' (f) a receiver, trustee or liquidator of the htortgagor or of any substantial portion ofits propeny
. sha!! beippointed and the order appointing such receiver, trustee or liquidater shall not be vacated within thirty (30) days after the entry thereof; 15 T}Lf
~
D 'AD ]AD D 1 w,- - - + - - - - , %. ,, - , , - - m--- , ,. ,,- n y . . . - , . - - , - - .- , ,,i- -
r i (g) the Mongagor shall forfeit or otherwise be deprived ofits corporate charter or franthises, permits, casements or licenses required to carry on any material portion ofits business: (h) a final judgment shall be entered against the Mongagor and sha!! remain unsatisfied or
'% without a stay in respect thereof for a period of thiny (30) days; or (i) a violation of the terms of any subordination agreement delivered pursuant to section 16 of article 11 hereof shall have occurred; ,
then in each and every such case the Government, may, on behalf of all the noteholders, to the extent
+
< permitted by applicable state law, in its discretion (aa) without protest, presentment or demand, declare all unpaid principal of and accrued ' 3 interest on the notes to be due and payable immediately; and upon any such declaradon 211 such unpaid principal and accrued interest so declared to be due and payable, shall become and be due ; and paya,ble immediately, anything contained herein or in any note or notes to.the contrary notwithstanding; ; (bb) take immediate possession of the Mongaged Property, collect and receive all credits. l ' outstanding accounts and bills receivable of the Mortgagor and a!! rents, income, revenues And profits i penaining to or arising from the Mortgaged Property, or any part thereof, and issue binding receipts therefor; and manage, control and operate the Mongaged Propeny as fuliy as the Mongagor mi:;ht ' do if in possession thereof, including, without limitation, the making of all repairs or replacements ( deemed necessary or advisable; (cc) proceed to protec: and enforce the rights of the Mongsgees and the rights of the noteholder or noteholders under this Mongage by suits or actions in equity or at law in any court or courts of I competentjurisdicdon, whether for speci'ic performance of any covenant or any agreement contained , ' herein or in aid of the execution of any power herein granted or for the foreciosure hereof or hereunder or for the sale of the Mortgaged Property, or any part thereof, or to collect the debts hereby l secured or for the enforcement of such other or additional appropriate legal or equi:able remedies as
; may be deemed most effectual to protect and enforce the rights and remedies herein granted or conferred, and in the event of the institudon of any such action or suit, the Government shall have the right, irrespeedve of the adequacy of the security, to have appointed a receiver of the Monga:;ed
- Property and of all rents, income, revenues and profits pertaining thereto or arising therefrom derived.
I received or had from the time of the commencement of such suit or aedon, and such receiver shall ' j have all the usual powers and duties of receivers in like and similar cases, to the fullest enent permitted by law, and if applicadon is made hereunder for the appointment of a receiver the i j Mongagor hereby expressly consents that the court to which such applicadon shall be made may, irrespective of the adequacy of the security, make said appointment; and i (dd) sell or cause to be sold all and singular the Mortgaged Property or any part thereof, and all-(- J. r ght, title, interest, claim and demand of the Mon:;ago'r therein or thereto, at public nuction or 4 otherwise, as may be prescribed or permitted, and in the manner prescribed or permitted by applicable law, [ ! Srcatos 2,(a) Upon the expiration of 30 days after the happen!::n of an event er events of default, t any right or remedy herein or by law conferred which the Government shall not have proceeded to I exercise or enforce may, to the extent permitted by applicable state law, be exercised and enforced by the i - majonty noteholders on behalf of all the noteholders. 5 ' (b) Notwithstanding the remedial ri:; hts dthe Government provided for in section 1 of this anicle !!! and of the majority noteholders provided for in subsection (a) of this section 2: ; l (I) upon the occurrence of any event of default described in section 1(a) of this arde!c !!!in respect of any CFC Note or CFC Additional Note. (i) if such event of default, or any other event of , defielt under such section in res)_ect'of any CFC Note or' CFC additional Note (herein called "non- _ payment event of default") shall not have been cured after the expiration of 360 days from the initial occurrence of a non-payment event of default and (ii)if after the expiration of such 360 days CFC :
-(
~
T 16 D**]D ]D mom e m 11 m ,
- -- - - - , - +-,--y n -. . , ,hy ,b, -. _ , - - - - + ~ - , . -
shall,in writing. request the Government to exercise the remedy provided for in section 1(bb) of this article lit, then the Government sha!!. on or before the capiration of sixty (60) days from the date of such written request. cxercise such rernedy on behalf of all the notcholders if, and to the extent, permitted by applicable law. If the Government fails to exercise such remedy at such time, and if the non payment cent of default first occurring or any other such event of defauh, shall not have been cured. CFC may forthwith exercise the remedy provided in said section 1(bb) on behalf or all the (g) noteholders. If, upon the expiration of 720 days after the occurrence of the inidal non payment event V of default. such initial non payment event of default or any other subsequently occurring non. payment event of default shall not have been cured, CFC may esercise on behalf of all the noteholders any right or remedy described in section I of this article; and (2) if any representation by the Mongagor contained in section 24(a) of anicle !! hereof shall prove to be incorrect or untrue in any material respect, or the Mortgagor shall fail to observe or perform any covenant or agreement contained in said section 24(a), and a rulingis made ta the eEcct that as a result of such incorrect or untrue representation or failure by the Mongagor, the interest payab!c on the Bonds is includible in the gross ircome for Federal Income Tax purposes of the holder of holders thereof (other than a "substandal user" of the polludon control facilities as provided in section 103(b)(7) of the Internal Resenue Code or a "related person" as de5ned in secdon 103(b) (6) (c) thereof), such ruling being either by: (i) the Internal Revenue Service in a published or private rulin; or technical advice memorandum in which the Mongagor has been given the opportunity to panicipate directly or through any holder or holders of any of the Bonds and the eEect of which ruling or memorandum the Mortgagor,in its discretion, does not contest by any appropri:te legaljudicial preceeding directly or through any holder or holders of any of the Bonds, or (ii) a f.n:l determin:, don by any court of competent jurisdicdon in the United States in a proceeding in which tne Mongagor has been given an oppoaunity to pardcipate directly or through any holder or holders of any of the Bonds, and if the Bonds have been accelerated because of such ruling, and the Mongagar has not paid the amounts due on the Bonds as a result of such acceleration within 120 days after the Mongagor obtains knowledge of the ruling, CFC may exercise on behalf of all the noteholders ar.y right or remedy described in section I of this article Ill; and (3) if, in the opinion of counsel satisfactory to the Government, the Government may n:t (y lawfully act on behalf and for the benefit of all noteholders other than the Gosernment, CFC shal! ('# ) have the ti;;ht to exercise any right or remedy described in section 1 of this article III: (i) irnmediately upon the Gosernment's exercise of any right or remedy hereunder; or (ii) on a date 120 days or more after the occurrence of an event of default, which is then continuing,if the Government has failed, prior to such date, to exercise any right or remedy hereunder. (c) CFC may, at any time or times, by specific performance or injunctive action, obtain compliance by the Mortgagor with any covenant of the Mongager herein (other than covenants providing for payments on account of the notes) which expressly runs to CFC as such (whether referred to as "CFC" or as a "Mortga;'ee") and which expressly provides for or requires the consent of, approval of, notice to, er request or direction by, CFC as such (whether referred to as"CFC"or as a "Mongagee") contsned in the fifth and ninth paragraphs of*section 6(b), the second paragraph of section 8(b) sections 12,13,!$,17, 19,20 and 24(a), of article 11 hereof, section 3 of article 111 hereof and section S of anicle V hereof, a..d any covenants or agreements which run to CFC (whether referred to as "CFC" or as a "Mongagee") added by amendment of this Mortgage pursuant m the provisions of section 8 of article V hereof. (d) The holder of any CFC Note or CFC Additional Note may declare all unpaid principal of, premium, if any, and interest on all outstanding CFC Notes and CFC Additional Notes to be due and payable immediately,in the manner described in section 1(aa) of this anicle Ill,if. (i) the Government or any person other than such holder or the Trustee shall have duly caused neceleration on account of any of the notes; or (ii) any of the events of default specified in section 1(c) or (f) of this article 111 shall have occurred at the instance of any person (including the Government) other than such holder or the Trustee. (c) Nothing in this Mortgage contained shall affect or impair the right, which is absolute and unconditional, of any holder of any CFC Note or any other note which may be secured hereby, to enferee the payment of the principal of, premium,if any, or interest on such note on the date or dates any such v . o y sac w . o .u. m 8 t a
interest. premium or principal shall become due and payable, whether by acceleration or otherwise, in accordance with the terms of such note;prori.!<d, howewr, that no such acceleration by any holder of any CFC Note shall be crective unless pursuant to section 2(b) or section 2(d) of this article Ill. StcTms 3. The Morty.: gor covenants that it will give immediate written notice to both of the Mortgagees and to a!! of the notcho!ders of the occurrence of any event of default or in the event that an" [4V) right or remedy described in clauses (aa) through (dd) of section 1 of this artic!c !!! is crercised < - enforced, or any action is taken to exercise or enforce any such right or remedy. Each Mortga; cos enants th.:t it will give immediate written notice to the other Mortgagee and to all of the notcholders of the occurrence of any esent of default of which it has hnowledge or in the event that such Mortgagee exercises or enforces any right or remedy described in said c!auses (aa) through (dd ), or takes any action t'o exercise or enforce any such right or remedy. SEcTroN & At any sale hereunder any noteholder or noteholders shall have the right to bid for and purchase the Mon; aged Property, or such part thereof as shall be ofered for sale. SEcTros S. Any proceeds or funds arising from the exercise of any rights or the enforcement of any remedies herein provided after the payment or provision for the payment of any and all costs and expenses in connection with the exercise of such rights or the enfercement of such rernedies and any other sums received by the Mertgagees, the disposition of v hich is not othenvise herein speci5cally provided for, shall be applied (except to the extent that any note provides for subordination thereof) first, to the payment of indebtedness hereby secured other than the principal of or interest on the notes; second, to the ratable payment ofinterest which shall have accrued on the notes and which shall be unpaid; third, to the ratable pay tr'ent of or on account of the unpaid principal of the notes; and the balance, if any, shall be paid to whosoeser shall be entitled thereto. Any proceeds or funds co!!ected by the Government under this Mortgage for the account or benefit of, or which are distributable or attributable to, CFC or any holder of any note other than an outstanding REA Note or other note issued to the Gosernment are not payments of principal of or interest on the outstanding REA Note or other note issued to the Governrnent as contenp!ated by 7 United States Code Annotated Section 003(f) and shall be held by the Government in g trust for the benent of CFC or such holder, as the case may be, and in no event shall be deemed to be moneys receiud for the use of the United States of America as contemp:ated by 31 United States Code (v) Annotated. SrcTro.s 6. Every ri;h: or remedy herein conferred upon or rererved to the Monugees er to the notcholders sha!! be cumulative and shall, except as otherwise limited herein, be in addition to every other right and remedy given hereunder or now or hereafter existing at law, or in equity, or by statute. The pursuit of any right or remedy hereunder shall not be deemed to be an election and shall not preclude the pursuit of any other right or remedy. St cttos 7. The Mortga;or, for itself and all who may claim through or under it, covenants that t will not at any time insist upon or pleall, or in any manner whatever claim, or take the benefit or advantage of, ar,y appraisement, valuation, stay, extension or redemption laws now or hereinafter in force in any locahty where any of the Mortgaged Property may be situated and the Mortgagor, for itself and all who may claim through or under it, hereby waives the benefit of all such laws unless such waiver shall be fotbidden by law. SrcTios S. If at any time after an event of default and prior to the institution of foreclosure proceedings, all payments in respect of principal and interest which shall have become due and payable by the terms of the notes shall be paid to the respective noteholders, and all other defaults hereunder and under the cmes shall have been cured, together with reimbursement for any resuhing expense or damage, to the satisfaction of all the noteholders, together with interest at the highest !cral rate but not in exce:s cf ten percentum (103) per annum, then and in every such case, the Mangagee or Mortgages who sh:li have inn.tuted any of the foregoing remedies may, by written netice to the Morgagor, waive such default or defaults, but no such waiver shall extend to or affect any subwquent default or impair any ri;ht cc ruequent thereon. d IS
StcTtoN 9. For purposes of this a.ticle !!!, to the extent permi:ted by applicable state law, cach noteho!Jer appoints the Mortgagee or Mortgagees exercising any remedy as abose prosided as its attorney (s).in. fact for such purpose. StcTsos 10. Nothing berein contained shall be deemed to authoriae the Mongagees to authorize or 4s consent to or accept or adopt on behalf of any notcholder any plan of reorganization, arran;ement, adjustment or cornposition affecting the notes or the rights of any holder thereof, or to authorize the b) / Mon;agees to vote in respect of the claim of any notchulder in any such proceedirig. SECT!cN I1. Any rights of action and claims under this Mortgage or the notes may be prosecu:ed and enforced by the Mengagee or Mongarces prosecuting and enforcing the same without the possession of any of the no:es, or the produc on thereofin any proceeding relatir ; thereto, and, to the extent permit:ed by applicable state law, any such proceeding insti:uted by either Mert;agee shall be brought in its own name as attorney in. fact for the notehelders, and any recovery ofjudgment shall, after provisica for the payrnent of the reasonable compensation, expenses, disborsements and advances of the Mongagees, their agen:s and counsel, be for the ratable benefit of the no:eholders in respect of which such jud; ment has been recovered, ARTICLE IV Posstsstos UNTIL DEFAULT-DErEsSANCE CLAUSE Szcno , l. Until some one or more of the even:s of defau!r shall have happened, the Mor: agar shan be su.'fered and permi:ted to retain actual possession cf the Mortgaged Proper:y, and to mana;e, oper,::e ar,d use the same and cny part thereof wi:h the rights and franchises appertaining there:o, and :e ce!!:c:, receive, tale, use and enjoy the rents, revenues, issues, earnings, income, products znd profits thereof or therefrom, subject to the provisions of this Mort; age. SicTtoN 2. If the Mor:gagor shall well and truly pay er cause to be paid the whcle r.rr.oun: cf the principal of and interest on the notes at the times and in the manner therein provided, accordin; to the true in:ent ::nd meaning thereof, and sha!! also pay or cause to be paid all other sums payable under the REA n Loan Agreernent, as amended from time to tirne, and hereunder by the Mongapor and shall well and tru!y keep and perform, according to the true intent and meaning of this Mongage, all covenan:s hercin required to be Lept and performed by it, then and in that case, all property, rights and in: rests hereby conveyed or assigned er pledged shall revert to the Mongagor and the estate, righ:, title ad interest of the Mongagees and the no:eholders shall thereupon cease, determine and become soid and the Mengagees and the noteholders,in such case, on writ:en demand of the Mengagor but at the Mongapor's cost and esper.se, shall enter satisfaction of this Mongage upon the record. In any event, each no:cholder, upen payment in full to him by the Mortgagor of all principal of and interest on any note held by him and the payment and discharge by the Mongagor of all charges due to such noteholder hereunder, shall execute and deliver to tne Morgagor such instrument of satisfaction, discharge er release as shall be requirc.i by law in the circumstances. . ARTICLE V MtsCELLANEOUs SrcTtos 1. It is hereby declared to be the intention of each of the parties hereto that all electric generating plants and appunenar.ces thereto, transmission and distribution lines, or sys: ems, embraced in the Mortgaged Property, including, without limitation, all rights of way and casements granted or gisen to the Mongager or obtained by it to use real property in connection with the construction, opratien or rnaintenance of such plan:s, lines, or systems, and all service and connecting lines, poles, posts, crossarms, wires, cables, conduits, mains, pipes, tubes, transformers, insulators, mercrs, ciectrical connections, lamps,
~
fuses, junction boxes and fatures forming part of, or used in connection with, such plants, lines, or sys: cms, and all other property physically attached to any of the foregoing described property, sha!! be deemed to be rarl pronerty. (A) v 19 1
SecTros 2. All of the covenants, stipulations, promises, undertakings and agreements herein contained by or on behalf of the hfortga;or shall bind its successors and assi;ns, whether so speci6cd or not, and all titles, rights and remedies hereby granted to or conferred upon the hfortga;ces shall p::ss to and inure to the benef t of the successors and assigns of the Afortga;ces and shall he deemed to be granted or conferred for the ratable benent and security of all who shall from time to time be the holders of notes 4 cxecuted and delivered as herein provided. The hiongagor and each of the Afortgagees hereby a;rce to (v} cxecure and deliver such consents, adnowledgments and other instruments as may be reasonably requested by either of the hfortgagees or any noteho!Jerin connection with any assignment of the rights er interests of cither hfortgagee or any noteholder hereunder or under the notes. Notwithstanding the foregoing, no safe, assignment or transfer of any CFC Notes or any CFC Additional Notes and no assignment of any ri;ht or power of CFC hereunder, shall be ef"ective as against the Government or the Afon;agor, unless such sale, assignment or transfer shall have been previously approved in writin; by the Government,it being understood that no such approval shall be required for or in connection wi:h any assignment, transfer, mortgage, hypothecation or pledge (hereinafter called a " security interest"): (i) by CFC of any CFC Note, CFC Additional Notes or any right or power of CFC or the holder of any CFC Notes or CFC Additional Notes hereunder in connection with a borrowing by CFC, which security interest provides that the rights and powers of CFC and the holders of such notes under the terms of such notes and this hion; age shall be exercised by the holders thereof or CFC unless and until a defauh by CFC er.ists under the terrns governing such security interest and that the restrictions herein contained shall not apply to any sale, assignment, transfer or other disposition pursuant to the terms governing s'sch security interest ar.d shall not apply to any such disposition by any person other than CFC: or (ii) by CFC cf any CFC Note or CFC Additional Note pursuant to the Guaranty Agreement. SEcTtos 3. All demands, notices, repons, approvals, designations, or directions required or permitted to be given hereunder shall be in writin; and shall be deemed to be properly given if mailed by registered mail addressed to the proper party or parties at the fo!!owing addresses: As to the N1on;agor: South Mississippi Ele::tric Po..r Ass:rintica P.O. Bo:: 15S9 Pattiesharg, Kissicsippi 39401 (~] As to the h!ongagee: CFC: National Rural Utilities i Cooperative Finance Corporation lil5 30th Street N.W. Washington, D.C. 20007 The Government: Rural Electrification Administration Washington, D.C. ~ and as to any other person, firm, corporation, or governmental body or agency having an inteJest herein by reason of being the holder of any note or otherwise, at the last address designated by such person, Grm, corporation, governmentalhody or agency to the Alortgagor and the hlortgagees. The htortgagor or the hfortgagees may from time to time designate to each other a new address to which demands, notices, repons, approvals, designations or directions may be addressed and from and after any such designation the add ess designated shah be deemed to be the address of such partyin lieu of the address hereinabove ghen. Stcitos 4. The invalidity of any one or more phrases, clauses, sentences, paragraphs or provisions of this hiertgage shall not aficct the remaining portions hereof, nor shall any such invalidity as to one h!ortgagee or as to any holder of notes hereunder alrect the rights hereunder of the other Mortgagcc or any
, other holder of notes.
Srcreos 5. Accounting terms not referred to above ::re used in this hion; age in accordance with the meanings given them in the Uniform System of Accounts or, failing provision therefor in said System, the rneanin;i given them by generally accepted accounting pr.ictices. Any reference herein to " directors" or
" board of directors" shall be deemed to mean "tru> tee" or " board of trustees", as the case may be.
p , Qv ) , 20 ,
Stcrtos (s. To the extent that any of the propeny described or referred to in this hjortgage is governed by the provisions of the Uniform Commercial Code this hlortgage is hereby deemed a " security agreement" under the Uniform Commercial Code, and a " financing statement" under the Uniform Commercial Code for said security agreement. The mailing addresses of the Mortgagor as debtor, and of the Mortrances as recured panies, are as set fonh in section 3 of this article V. 8 (U ) Stcrtos 7. The Monga;:or agrees to indemnify and save harmless each of the Mort:;agees against any liability or dama;>es which either of them may incur or sustain in the exercise and performance of their powers and duties hereunder. For such reimbunement and indemnity, the Mon::agees shall be secured under this Mongage in the same manner as the notes and all such reimbursements for expense or damage shall be paid to the Mortga;:ees incurring or suffering the sarne with interest at the rate specif ed in secdon 9 of article II hereof. Stcrtos 8. Notwithstanding any other provisions of this Afortgage. the consent of CFC or any holder of any of the CFC Nmes or CFC Addidonal Notes shall not he required for any amendment of this Mongare for any one or more of the fo!!owing purposes: (a) to convey, transfer and assi::n to the Mongagees and to subject to the lien of this Mangage, with the same force and c6ect as though included in the granting clause hereof, additional proper y; (b) to add to the covenants cf the Mongagor further covenants, restricdons or condidons for the protecdon of the holders of the notes secured hereby, and to rnate the occurrence, or the occurrence and continuance, of a default in any of such additional covenants, restricsons or condidons a dernit or an event of default permitdng the enforcement of any or all of the several remedies provided in this Mortrage as herein set forth; provided, iw.mr. that in respect of any such additional covenant, restriction or condition such amendment may provide for a particular period of grace after default (which period may be shoner orlonger than that allowed in the case of other defaults, but in no esent longer than thirty days) or may provide for an immediate enforcement upon such default or may limit the remedies available to the Mort::agees upon such default; (c) to increase the amount cf the Maximum Deb: Limit speci6ed in the Instrumems Reci:al. Sa crios 9. At all times when any note is held by the Govemment, or in the event the Government
\v/ shall assign a note without having insered the payment of such note, this Mongage shall secure payment cf such note for the benefit of the Government or such uninsured holder thereof, as the case may be. When.
ever any note may be sold to an insured purchaser,it shall continue to be considered a " note" as defmed herein, but as to any such insured note the Government, and not such insured purchaser, shall be conddered to he, and shall have the rights of, the noteholder for purposes of this Mongage. Notice of:he rights of the Government under the preceding sentence shall be set fonh in all such insured notes. As to any note which m2y evidence a loan or luans ruaranteed pursuant to the Act, the Government, and not the guaranteed lender or lenders, shall be considered to be, and shall have the rights of, the noteholder for purposes of this Mongage. . Sicrtos 10. In the event that the Pollution Control Note and the CFC Guaranty Note shall not ha.e been executed and delivered on or before June I,1978, no CFC Notes or CFC Additional Notes sha!! be secuted by the Mortgage uniess otherwise provided by or in a supplement to this Mongage duly authorized, executed and delivered. Stcuos !!. Any refereng herein to the Administrator shall be deemed to mean the Administrator of the Rural Liectrincation Admudstration or his duly authorized representative or any other person or authority in whom may be sested the duties and funcdons which the Administrator is now or may hereafter be authorized by law to perform. Sictios 12. This Mort;; age may be simuhaneously executed in any number of counterpar s, and all said counterpar:s executed and delivered, each as an ori;inal, shall consutute but one and the same instrument.' c' i 21 . m , b e
SCl!!:Di!!.1: 1 Property Sched ule (a) '!h2 b:istin ; l'.ltetric l'.wilities are locato t in th? Countics of Ida .0, [' '7.-ite, Ccvington, Forrest, Franklin, George, Greene, Jasper, Jefferron-Davis, Jones, (,L1.1r, Lincoln, Inwrence, thricn, I.*ewton, Pearl River, Perry, Pike, Pankin, Scott, Si.=cen, m.ith, Stona, Wayne ard Wilkincen, in tha State of Idssissippi, and in tha Cc.:nties of Fr_ll, Clay, Inslie and Parlan in tha Con onwealth of F.entucky. (b) ';b? [vo;erty referrcd to in tJ'c Inct two linen of Iwajral.'h I of tho ( r.intin ; Claum i:clules the following:
. 1. A certain tract or parcel of land in Forrest County, !!ississippi, described in the following deeds:
t (a) A certain dc f., dated Septerber 14, 1973, by rannie G. Brown, a widew, et al, heirs at law of Louis 17 Brown, deceased, as grantors, to the ::crtgager, as grantee, and recorded in the Office of the Clerk qf the Chancery Court of Forrest County, in the State of 1:ississippi, in Deed Book 325, on page 191; (b) A certain deed dated October 6, 1973, by Doris L. Drcwn 2:artin Char. bliss, an heir at law of Louis U. Brown, deceased , as grantor, to the fiortgagor, as grantee, and recorded in the Office of the Clerk of the Chancery j] Court of Torrest Count}, in the State of IIIssissippi, s w j in Det-d Dook 385, on page 183; (c) A certain deed, dated Septe:.ber 20, 1972 by Joan L. Brown fof tin, an heir of Louis W. Brown, deceased, as grantor, to the 2ortgagor, as grantee, and recorded in the Office of the Clerk of the Chancery Court of Forrest County, in the State of 2:ississippi, in Deed Book 385, on page 179; (d) A c'ertain deed, dated October 16, 1973, by Ona Faye Brown Gunthrope, an heir at law of Louis U. Brown, deceased, as grantor, to 'the fiortgagor, as grantee, and recorded in the Office of the Clerk of the Chancery
- Court of Forrest County, 'in the State of Mississippi,
, in Deed Book 385, on page 187;
. 2. A certain tract of land described in a certain dee'd, dated 1: arch 5,1970, by thiter L. Beech, Sr. , and Dessic 11. Deech,
, hin Oife, as grantors, to the I:ortgagor, as grantee, and recorded in the Office of the Clerk of the Chancery Court
, of the First Judicial District of Jones County, in the State of I'isnissippi, in Deed Book 145, on pages 219-221; , _
A certain tract of land described in a certain deed, dated (j^') . 3. 1:ay 31,1%B, by Luke IIinton and 2:alissia Ilinton, his wife, as grantors, to the I:ortgagor, as grantee, and reccrded in
, the Office of the Clerk of the Chancery Court of Perry County, in the State of 1:ississippi, in Deed Eook LD-27, on pages 412-14; .. . .
h .* P [] 'fJ j W T /D ~ u Ad 'I ' 4
Ire Wir ,tss Wist at es,.SOHI! f1ISSISSITPI EIIERIC PG.W. ASSOCIATIO:! . as Mortga;or, has c.ius:d this Supp!ementa! Mor:g.t;c and Security Agreemerit to fr: signed in its name and its corporate seal to be hereunto .sfHsed and atic>ted by i:s omeers thereunto duly authorie.ed. N AT:os u. RuaAs. Utst itu s Cool rn Arws. F NA',CE Cortt Oa ATinN. as Monpagee, h.ts cau.cd this Supplemenu! . Mor:ra;e and Securi: Agreement ; to be signed in its name and its corporate seal to be hereunto aflixed /sC and attested by its ofii:cra thereunto duty au:horized, and Ur,iiro SraTLs or AsitarcA. as Monga;:e. has
) ,capsed this Supplemer.tal Mongage and Security Agreernent to be duly executed in i:s behair. all as of the
. s ,; day, a.nd year first abos e written.
SORil !*ISSISSIPPI ELCIC r'O.3 I SEZII,TICi:
. .t,..o.', .
~
i..l N'.kNUkr+
, . . t\ '
Secretary A)%=,4
- i. .
.'E.iec.:r/d by'the Mort;ago}r ia '$ e presence of:
..'" ' *; ; b? ', \u c i f a An p $., f Witnesses b NATIONAL RUPAL UTILITIES COOPEFATr/E FINANCE C RPO"ATiON
~
/ -// --
(Seal)
\
i 7, < by
/
', ..Qhwpj Gover. cr At:es:: O h-
.< 1::: Shecse:
\
Assistant Secretary f '_^',' Escre;ed by National Rural Utiti:!:s Cooperatise \ ,/ Finance Corporatien. Mon; gee in the presen:e of: l -urk WOA J Gn J, f %ua/ . Witnesses
. UNITED ST/,TES OF AMERICA
, by ,Y '*' " ~
thatLng Administrator of Rural Electrtfcation Admi tistration Executed by Uni:ed S:stes of America, Mon agee,in the pre,sence of: - Y)AFLba Y?[.c.m,A.,- dlnt'> / 'Ys] p Wi:nesses
-s . . .
Vv n ' li *DfFN{ fLM[[pJ15VTL SJ A b
- 4. A certain tract of land described in a certain deed,. dated August 16, 1971, by willie !!cDonald, and Sebell !!cDonald, his wife, as grantors, to the flortgagor, as grantee, and
.g recorded in the Office of the C1crk of the Chancery Court p -
of Perry County, in the State of 111csissippi, in Deed Book LD-38, on pages 87-S; , A certain tract or parcel of land in Perry County, !!ississippi,
~
5. described in the following deeds: (a) A certain deed dated July 19, 1971, by Luke !!inton, a, widower, et al, heirs at law of 1:alissia itinton, deceased, as grantors, to the !!ortgagor, as grantee, and recorded in the Office of the Clerk of the Chancery Court of . Perry County, in the State of !!ississippi, in Deed Dook . ..
, LD-30, on pages 55-59; *
- 3 (b) A certain deed dated July 30, 1971, by Ray Hinton, et al, heirs at law of 1:alissia !!inton, deceased, as grantors, to the !!crtgagor, as grantee, and recorded in the Office of the Clerk of the Chancery Court of Perry County, in the State of 1:ississippi, in Deed
, Book LD-38, on pages 60-65; '
G. A certain tract of land described in a certain deed, dated December 29, 1959, by E. !!. Windham, Jr. , as grantor, to
/
the 1:ortgagor, as grantee, and recorded in the Office of 5 the Cicrk of the Chancery Court of the First Judicial District of Jones County, in the , State of !!ississippi, in Deed Book 72, on page 424 .
- 7. A certain tract of land deceribed in a certain deed, dated -
Dece:.ber 29, 1959, by Charity Hindham, a widow, et al, heirs of E. !!. Windham, Sr., deceased, as grantors, to the flortgagor, as grantee, and recorded in the Office of the Clerk of the Chancery Court of the First Judicial District
- 4 of Jones County, in the State of Missi'scippi, in Deed Book 72, on page 426; -
D. A certain tract of land described in a certain deed, dated . January 29,.1968, by Charity Windham, a widow, et al,' heirs of U.11. Windham, Sr. , deceased, . as grantors, to ;the !!ortgagor, as grantee, and recroded in the Office of-the Clerk of the Chancery Court of the First Judicia' District of Jones County, in the State of }!ississippi, in D. ed Book 132, or pages 171-73; ) '
- 9. A certain tract of land described in.a certain deed, dated J,uly ' 2 6, 1973, - by T. J. Plint.of Juanitd C. Flynt, his wif e, as grantors, to the 1:ortgagor, as grantee, and recorded in the office of-the Clerk of the Chancery Court of the First Judicial District of Jones County, in the State of s
11ississippi, in Deed Book 170, en pages 575-76,.
- 10. A certain tracL of land described in a certain deed, dated August 9,1968, by A. P Rahaim and !!elen Rahaim, his wife, as grantors, to the I:ortgagor, as grantee, and recorded in L the Office of the Clerk of the Chancery Court of Perry County, in the State of !!ississippi, in Deed Book LD-23, on
, pages 258-9; ,
- 11. A certain tract of land described in a certain deed, dated- .
i October ^16, 1968, by Ruby Alma 1,'ooley, a widow, as grantor, j to the !!ortgagor, as grantee, and recorded in the Office of the Clerk of the Chancery Court of Jefferson Davis County,
- in the State of 111ssissippi, in Deed Book 87, on page 543;
- 12. A certain tract of land described in a certain deed, dated October 22, 1968, by B. O. Phillips and Vermell Phillips, i his wife, as grantors, to the !!ortgagor, as grantee, and recorded in the Office of the Clerk of the Chancery ~ Court of 'the First Judicial District of Jasper County, in the State.of !!ississippi, in Deed Book 53, on pages 115-16; 3
- 13. A certain tract of land described in a certain deed, dated j !! arch 15,1968, by Roy Cook, as grantor, to the 11ortgagor,
! as grantee, and recorded in the Office of the Clerk of the Chancery Court of 1:arion County, in the State of !:ississippi,
, in Deed Book 595, on page 521;
- 14. A certain tract of land described in a certain deed, dated 2:ay 13,1971, by !!. S. Gatlin, as grantor, to the llortgagor, as grantee, and recorded in the Office of the Clerk of the Chancery Court of Wayne County, in the State of 111ssissippi,
, in Deed Book 433, on pages 227-29;
- 15. - A certain tract or parcel of land in Amite County, Mississippi,
- described in the'following deeds: -
(a) A certain deed dated !! arch 3,1973, by Esau P.
, Steptoe, et al, heirs at law of Charles Steptoe, ,
deceased, as grantors, to the 11ortgagor, as grantee, and recorded in the Office of the Clerk of the Chancery Court of Amite County, in the State of Mississippi, in Deed Book 166, on pages 219-21; (b) A certain deed, dated !! arch 1, 1973, by R. J. Steptoe, an heir at law of. Charles Steptoe, deceased, as grantor, to the Mortgagor, as grantee, and recorded in the Office of the Clerk of the
. Chancery court of Amite County, in the State of Mississippi, in Deed Book 166, on pages 216-18;
, (c) A certain deed, dated ?! arch 10, 1973, by E. U.
Steptoe, et al, heirs at law of Charles Steptoe,
-deceased, as grantors, to the t ortgagor, as grantee, p '
and recorded in the Office of the Clerk of the l Chancery Court of Amite County, in the State of. Mississippi, in Deed Ecok 166, on pages 222'-24;- I h
' - (d)
- A certain deed, dated April 24, 1973, by Louis Steptoe and Albert Steptoe, heirs at law of Charles Steptoe, deccated, as grantors, to the S
Hortgagor, as grantee, and recorded in the Office of the Clerk of the Chancery Court of Amito County,
'in the' State of Mississippi, in Deed Book 166, on 7 ,
pages 449-51; (c) A certain deed, dated April 24, 1973, by Easter I:cClinton James and Flanders McClinton, Jr. , heirs , , _ at law of Charles Steptoe, deceased, as grantors, i. to the 1:ortgagor, as grantee, and recorded in the Office of the Clerk of the Chancery Court of Amite 4 County, in the State of Mississippi, in Deed Book
'166, on pages 446-48; r
'I
- 16. A certain tract o'f land described in a certain deed, dated i~
1: arch 7,1968, by Virginia Lou Lucas !:ilstead and J. J. Milstead, her husband, as grantors, to the nortgagor, as l grantee, and recorded in the Office of the Clerk of the Chancery Court of Greene County, in the State of Misniscippi,
, in Deed Book P-2, on page 333;
- 17. A certain tract of land described in a certain deed, dated f: arch 29, 1969, by Edward li. Garner, a's grantor, to the 1:ortgagor, as grantee, and reccrded in the Office of the i
Clerk of the Chancery Court of the First Judicial District of Jasper County, in the State of 1:ississippi, in Deed ;
- ,-~g -
Book 36, on pages 93-5;
~
i d
- 18. A certain tract of land described in a certain deed, dated July 1,1971, ny Walter A.- Cochran and !!rs. Katic Cow dan, ,
his wife, as grantors, to the I:ortgagor, as grantee, and , , recorded in the Office of the Clerk of the Chancery Court. of Wayne County, in the State of !!ississippi, in Deed Dock
, 43,3, on pages 451-53; -
l .19. A certain tract of land described in a gertain deed, dated March 26, 1968,'by Sim Clark, Jr., and Mary Virginia Clark, his wife, as grantors, to the 1:ortgagor, as grantee, and , recorded in the Office of the Chancery Clerk of the Chancery Court of George County, in tb4 State of 111ss
- csippi, in Deed
- Book 76, on pages 378-79;'
; 20. .A certain tract of land described in a certain deed, dated i
. May 3,1971, by !!asonite Corporation, a corporation in the laws in the State of Delaware, as' grantor,. to the 1:ortgagor,
, as grantce, and recorded -in the Office of the Clerk of the ~
i Chancery Court.of the.First Judicial District of "Jacper L County,'in the State of 1:ississippi in Deed Dook 39, on pages-205-99; e j [ - D"'6']D ]D ooM 1 A"D'T[A 4 o nL m -
l
^
- 21. A certain tract of land described in a certain deed, dated June 17, 1969, by C. I. Moore and Uilma Moore, his wifc, as grantors, to the Nortgagor, as grantee, and recorded in the
(; ,s Office of the Clerk of the Chancery Court of the Second Judicial District of Jones County, in the State of Mississippi, , in Deed Book 344, on page 172; , 22. A certain t'ract of land described in a certain deed, dated ! October 6,1959, by Edith Harris, et al, heirs at last of T. L. Harris, deceased, as grantors, to the Mortgagor, as grantee, and recorded in the Office of the Clerk of the Chancery Court of Newton County, in the State of Mississippi, in Deed Book 143, on page 272; T, . .
- 23. A certain tract or parcel of land in the First Judicial District of Jones County, Mississippi, described in the following deeds:
(a) A certain deed dated June 24, 1971, by Stewart F
. Gammill, III, as grantor,'to the Mortgegor, as grantce, and recorded in the Office of the Clerk ! of the Chancery Court of the First Judicial District of Jones County, in the State of Mississippi, in Deca Book 153, on pages 214-16; (b) A certain deed, dated September 8, 1972, by L. O.
Crosby, III, as grantor, to the Mortgagor, as grantee, and recorded in the Office of the Clerk of the Cha'ncery Court of the First Judicial District
. of Jones County, in the State of Mississippi, in
. Deed Book J A4, on pages 531-32;
- 24. A certain tract or parcel of land in Forrest County, Mississippi, described in the following deeds:
(a) A certain deed, dated September 30, 1971, by Ray E. Davis, Jr., and Doris Davis Sennett, as grantors, to the Mortgagor, as grantee, and recorded in 1 the Offied of the Clerk of the Chancery Court of 2 Forrest County, in the State of Mississippi, in
, Deed Book 353, on page 546; l .
(b) A certain deed, dated September 27, 1971,'by W. W. Hutto and Ray E. Davis, Jr. , as grantors, to the Hortgagor, as grantee, and recorded in the Office of the Clerk of the Chancery Court of Forrest County, ' in the State of Mississippi, in Deed Book 353, on , page 544; (c) A certain deed, dated October 12, 1971, by LeRoy Uheat and Alline Uheat, his wife, as grantors, .to the hortgagor, as grantee, and recorded in the Office je's of the Clerk of the Chancery Court of Forrect County, in the State of Mississippi, .in Deed cook 354, on
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(d) A certain deed, dated October 28, 1971, by Pannie Lou Uheat and nosemary u. f:atthews, as grantorn to the 1:ortgagor, as grantee, and recorded in the Office of the Clerk of the Chancery Court of Forrest County, in the State of I!ississippi, in Deed Book 354, on page 4D3: (c) A certain deed, dated October 28, 1971, by Fannie Lou Wheat and Rosemary W. !!a t th ews , as grantors, to the f:ortgagor, as grantee, and recorded in the Office of the Clerk of the Chancery Court of Forrest County, in the State of !!ississippi, in Deed Book 354, on page 495; (f) A certain deed, dated 1:ovember 5,1971, by . Jessic M. Hudson, ts grantor, to the I:ortgager, l as grantee, and recorded in the Office of the Clerk of the Chancery Court of Torrest County, in the State of Mississippi, in Deed Ecck 355, on page 36; ,
- 25. A certain tract of land described in a certain deed dated June 24, 1974, by W. S. Ta tum , et al, as granters, to the mortgagor as grantee, and recorded in the Office of the Clerk of the Chancery Court of Lamar County, in the State of Mississippi, in Deed Book 5-K, on page 142 ;
fr y I i
- 26. A certain tract of land described in a certain deed dated l'ay 3, 1974, by Charles Brincardner, et al, as grantors, to the nortgagor as grantee, and recorded in the Of fice of the Clerk of the County Court of liarlan, County, in the State of Kentucky, in Dced Book 211, on page 1, and recorded in the office of the Clerk of th'e County Court of Clay County, in the State of Kentucky, in Deed Book 146, on pages 141 through 382, and recorded
~
in the Office of the Clerk of the Coun.ty Court of Leslie County, in the State of Kentucky, in Deed Book 77, on pages 283 through 510, and recorded in the office of the Clerk of County Court of Bell County, in the State of Kentucky, in Deed Book 211, pages 762 through 928, in - Dr.ed Book 212,_on paq,es 1,through 61: subject,to the liens of certain purchase noney rortgages all executed and delivered by the Fortgagor as follcus: G::.n*re Date Eccordim Enta Ccnst:nce Dringardner Iby 3,1974 Office of Clerk of the County Ccurt of Icclic County, Kentucky [ litn. lioak 15 race 137 7" , Office of Clcrk of the County Cour: D b b - f Clay County, Kentucky
'D litg. Eook 51 page 42 g g% 1, i Of fice of Clcrk of the County Cour!
6 of Hell County, Kentucky
};tg. Book 6S pa'c; 155
Crantcc - 'Date _ Iteco rd in[;11,tii Office of Clerk of the County Court . of liarlan County. Kcntucky Htg. Book-112 page 400 Joan Bringardner liay 3, 1974 Office of the Clerk of the County Courf
'of Leslie County, Kentucky litg. Book 15 pa;;c 185
'O[fice of the Clerk of the County Cour(
of Clay County, Kentucky . Mtg. Book 51 page 35 Office of'the Clerk of the County"Cour! of Bell County,--Kintucky
, t*tg. Book 65 pa;.e 139 Office of the Clerk of the County Cours of Harlan . County, Kentucky Mtg. Book 112 page 392 Don Eringardner . liay3,1974 office of the Clerk of- the County Court of Leslie County, Kentucky Heg. Book 15 page 190 Office of the Clerk of- the County Courtl '
of Clay County,. Kentucky _ Htg. Book 51 page 49 Office of the Clerk of the County Court of Bell County, Acntucky Mtg. Book 6S page 163~
- Office of the C1crk of the-County' Court, of Harlan. County, Kentucky Htg. Book 112 page 408 . ,
Fred Bringardner t[a'y3,1974 Office of the Clerk of- the Cou sty Court of Leslie County, Kentucky Heg.: Book 15 page'178 Office of the!Clcrk of the County' Cour
~
~
of Clay County, Kentucky-
, , Mtg.. Book St pnge 21 fffice of the C)crk of L the County Court of Bell County, 1:entucky
, !!ts. Book ~ 66. page 131 4.
~
' Office.of t he Clerk of the County Cour:.
of !!arlan County,1:entucky
.- .Mtg.: Book 112 page 376 A(
ig 97 0 r M 7 D
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- 27. A certain tract of land described in a certain deed, dated June 24, 1974, by !!rs. Dinple Rutledge Gnumbl6c, as grantor, to the r:Lortgagor as grantee, and recorded in O the Of fice of the Clerk of the Chancery Court of Lamar l County, in the State of 111ssissippi, in Deed Book 5-K, on page 190; .
- 28. A certain tract of land described in a certain deed, dated December 3, 1974, by Roy Cook, as grantor, to the mortigagor as grantee, and recorded in the Office of.the Clerk of the Chancery Court of Marion Cc.unty, in the State of Mississippi, in Deed Book 688 on page 547;
- 29. A certain tract of, land described in a certain deed, dated October 23, 1974, by the State of Mississippi, e as grantor, to the mortgagor as grantee, and recorded in the Office of the Clerk of the Chancery Court of Sirpson County, in the State of Mississippi, in Deed Book G12., on page. 575; . , ,
- 30. A certain tract of land described in a certain deed, dated December 8, 1975, by John S. Catlin, et al, as grantors, to the mortgagor as grantee, and recorded in the office of the Clerk of the Chan: cry Court of
. L'ayne County, in the State of !!ississippi, in Deed Book 500, on pages 26 throUgh 29; V 31. A certain tract of land described in a certain deed, dated April 23, 1976, by llugh II. Young, as grantor, ,
i to the mortgagor as grantee, and recorded in the of fice of the Clerk of the Chancery Court of Lincoln - . Count'y, in the State of Mississippi, in Deed Book 665,
. on pages 73 through 75;
- 32. A certain tract of land described in a certain deed,- .
dated July 15, 1977, by James C. Barnes, et ux, as grantors, to the mortgagor as grantce, and recorded in the of fice of the Clerk of the Chancery Court' of Scott County, in the State of Mississippi, in Deed - Book 7-N, on pages 299-3,00; The lands herein referred to, in_the State of Mississippi, being subject to certain outstanding oil,. gas and raineral interests, which were e>:ceptc conveyed or reserved' prior to'or at the time-of the conveyance of said lands to Mort'gagor, all as reflected by the-deed records of the-various Chancery Clerks Of fices in'said State as herein referred te. Said lands and -:ninerals in the State of Kentucky above referred = to arc- {V subject to that ._ unrecorded Coal Lease e>:ecuted on October 16,'1974 Dy
, .Mortgago'r to_ Sandy Fork Mining Company, Inc., a Kentucky corporation.
. . k
SIATE C" MISSISSIPPI ) .
) SS CC'Jt:TY OF FO3 REST )
I, Peogy Diane Branton , a Ibtnrf Public in and for the h) ( " County and State aforesaid, do hereby certify th2t R. D. Morrow, Sr. p2rsonally kra.sn to na to b2 the Pmsident of South Mississippi Electric Powe s'sscc'.ation , a corporation of the State of :lississippi and to me knr.,n to b2 the identical p2rson t. hose name is as President of'said crporatien, sehrrib2d to the foregoing instrumnt, apoeared before :ne this day in parcon and produced tha forcscing instrtrent to me in the County aforeseid ad ac3==.dedged that as such President he signed the foregoing ins .r.r ent prcuant to authority given by the Board of Directors of said corporation as his free and mluntary act and deed and as the free a.M voluntary act and deed of nW corprati:.n for the uses and prposes therein set fod and that the seal affixed to the forcgoing i .strirent is the corporate seal of said corp ration.
. I 3 Given urder af hand and official seal t tis 1st day of Decerber ,,
19 77,
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J C btr' ' Seal) JA w
- Aa4 !(bu.Jo O uiy lbtary Paolic l-?/ cu...ission e <cires b %"Mw Erpiin :n. y, :3n (g) DISTRICT OF COLU!1BIA ) SS LJ I, EuTa 'St00EtCE , a lbtary Public in and for the Dir.rict of Coltrbia, do hereby certify that I E Smith ,
parrc.nlly }=r.m to me to b2 the Governor of Ittional Rural Utilities Cocprative Fin =ce Cc:7cration, a corporation of the District of Coltrbia, and to m2 known to b2 tha identical person whose nare is, as Governor of said corporation, sth. crib 2d to the foregoing instrument, appeared ba'. ore me this day in parsen and produccd the foregoing instrunant to m2 in the District aforesaid and a'cknc.dedged th2t as such Covernor he signed the foregoing instrt:mnt pursuant to authority given by the Poard of Directors of said corporation as his free and voluntary act ard deed and as the free and voluntary act and deed of said corporation for the uses and purposes therein set fod and that the seal affixed to the foregoing instriraant is the corporate seal of said corpration. Given under my hand a:d official seal this day of (& .Uu a 190') W7f . 4 E ~ .c x E: r D (thteri.21 Scal) Ibtr y Public s %j :-?/ oc mi::sion expires Mr ce= 'un tv;m .,;c n. m g D i @,la 1 d
- _.E o 2
DISTRICT OF COLU:!BIA ) SS I, Fcth i E.e hton a tbtary Public in and for the
; District of Coltrbia, c5'E3rcty certify that OSFSif VILLons , personally V 17.cm to =e to b2 the Acti.ig Adcinistrator of the Rural E'.ectrification Idrinistration of tha United States of ATerica, and to na known to be the identical prcon ttose n:re is, as 'W ti2:!; A ninistratcr of said Rural Electrification Idminirtration, rubscribed to the foregoing instrt: ent, appeared be'cre re this day in persen and produccd the feregoing inst:1mt to re in the District of Colt =bia, aferesaid, acknowlcdged that as such licinistrator he signed the foregoing instrt:nant pursuar.t to authority given to him as such officer as his free ard voluntay act and deed and as the free and voluntary act and deed of the United States of ate.rica for tha uses and purposes therein set forth.
,73 Given under cf hand and official seal this " [' day of , /M N, 19 / /. t 0/9 8 b jl b (I;ctar 'l i
Seal) Ibtanf PuDlic
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STATE OF I4ISSISSIPPI -)- .
) 'SS COUNTY CP FORREST- )
I, Peggy Diane Branton , a tbtary Public in and for said County in som State, hereby certify that on the 1st day of December , 19 77, personally aprearcd before me the within rurred R. D.Morroi, Sr. and D. R. Ware . President and Secretarf, respectively, of South' Mississi~ppj Electric Power Association
, a corporation, those nrres are signed to the foregoing instnrnent and who are known to tre, and sto acknowledged bafore rre on this day that,'being infonnd of tha contents of the instnrent, they, as such officers, and with full authority signed, executed and delivered the foregoing instrurent on the 1st day of December i 1977 , as of the day ard year therein mentioned, voluntarily for ard as the act of said corporation.
I
) Given u.cer my hand, this 1st day of December- , 19 77.
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lhA*V 'JA'.UJ t/)!L.$f// /
.,- i e/u tbm' Puolic
- 1:y' ca., .ission expires 4 ;"N"* W*' ~4 % no DISTRICT OF COLUMBIA ) SS I, Ruth Stockton , a Notary Public in and for the D' strict of Columbia, hereby certify that on the 7 day of
/$p,, u ,197[,personallyappearedbeforeme he within named J. K. S: .!!h and Irc S'n. esser Governor and f,331,3 t;;; Secretary, respectively, of National Rural Utilities Cooperative Finance Corporation, a corporation of the District of Colu;nbia, whose names are signed to the foregoing instrument, and who are known to me, and who acknowledged before me on this day that, being informed of the contents of the instrument, they, as such t cuted and deliver # the officers and with full author [i ' signed,as of the dayt and foregoing instrument on the day of /-9 >W>dw ,1 act and deed of said 6orporation.
Given under my hand, this day of' (P/@~t ,.19'/2. Jh50tarial. Seal) L
;\ 'V 1 ; . "* Notary Public
- My commission expires-Mr Co
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DISTRICT O!' COLUImIA- ): SS I, B:th Stockto:1 ,a ' ta' f Public in ard for the f District of Cole-bia, hereby certify that,og,.the,, /(p;dd, 19'/] , personally copaared before ec J0 ' " ' u W:E l ' ^day : l; of [Idairistrctor of the R:ral Elcctrification Administration of the United States of A erica, t.hase na:re is signed to the foregoing inctnrrent and t.ho is personally tiell krs.m to na , and ):ra.m to na to be such officer and t.ho acknowledged Ecfore ras en this day that, b2ing inforred of the contents of the instrirrent, he, as such officer and tith
, - full authority, signd, e>:ec"ted and delivered the foregoing instrtrent on the /V day of 4 d ,197 7, as of tha 6y and year cercin mnticM,
- volt =tarily for and as the act and deed of the United States of Awrica.
Given under ::rf hand, this day of , 197 2 kal .di % (!?.*3tari.al Seal) '
- Notary PdD11C
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' Df CO.~I" tis 5 ion e>~piras Mr Cc: slash Er;l:ts A;:C
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(. . COM n;xd in my cli:l$;ff.ni *j innrunv.*' emn c, . j CHANCER q' tag
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%J ITEM 8 Describe the nature and amount of the cooperative's most recent rate relief action (s) and its anticipated effect on net margins. In addition, indicate the nature and amount of any pending rate relief action (s).
RESPONSE
South Mississippi Electric Power Association's board of directors adopted Rate Schedule A-15 on February 14, 1979 to be effective on April 1, 1979. A copy of the rate schedule along with a letter of approval from REA is attached. Rate schedule A-15 was designed to return all i power costs under the 1979 operating budget plus sufficient () margins to establish a Times Interest Earned Ratio of 1.1. When the 1980 Operating Budget has been completed, ' a rate schedule will be designed and proposed that will ' return all power costs under that budget plus sufficient margins to establish a TIER of 1.1. e b x l 6 e t IJ.OFTED 2/14/70 l EFFECTIVE 4/1/79 EX HiB
~ 1" , SCUTl! !!ISSISSIFPI ELECTF.IC PO'.!ER isSSOCIATIC:;
Proposed SCHECtL: A-15
. i A'lisII.A3 ILITY '
Available to all electric pcwer asscciations which are or shall be mericrs cf the Seller. The electric pcwcr and energy furnished hereuncer shall be separately retered and billed for each delivery point. i 1
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i S500.00 Celivery Peint charge, plus 5 4.00 per 12: for all ~; required, plus 22.65 mills per ".: for all D:H.
......... ......:.a u . .: r..a Per the first 60 months of service for a new delivery point, the minier r.cathly charge snall be the grea:er of the fellowing: l j 1. 70'. of the maximum demand charge for the prericus 11 mcnths. [
- 2. 1/60 cf the total estir.ated investment required to serve the n e .. delivery point.
Tciloinc 60 nonths of service, the minimum monthlv. charc.e shall be ec.ual !, tc 7 3* of the : a:umum demand charge for the previous 11 months. i L.'nen a new delivery point is approved by the Ecard of Directors, the ': crier ; fer unen the delivery point is provided will be requested to give the date en ! wnich the new delivery point is desired. The niniman monthl*; charge, then will beg n 90 days af ter such date, or 90 days af ter the date on which Scuth ':ississippi no.ifies the Member that all required facilities provided by South dississippi have been built and are ready for service, which ever is later. ! DETEFl'I!'ATIC': CP EILLI!;G DEMA D The hilling demand shall be the highest averace demand measured over a fifteen ninute perled during the month. U % . . : .A .* ,.rG _ sC _:r T..o po cr facter chall be maintair.cd at as near l?O per ccn: ac is rccFCLably r:33 n.e. . :o,cVer, should the ratio of '!AF. tc e. : it tr; t ; r..: cf w?:'.e s t aver:ge 13-m:.nute demand Le grcater th'n 60 per cent, ne eill will a ifjurte.i as fellows: ,
All KVAR in excess of sixty per cent of billing demand will be billed at the rate of 20C per KVAR. DIECCUl:T FOR HIOH VOLTAGE DELIVERY Ihcre thc nerber association has constructed and owns facilities for 110 KV delivery and whare delivery is cade through such facilities at 110 .d, a discount of ISC per KW of billing demand will be allowed. TUEL CCST ADJUST"I!T The tctal charges for electric service shall be adjusted fcr variations in fuel ccst: by adding or subtracting an a cunt determined as folic.ts: (1) For fuel burned in South ississippi's generating plants, the base is El.25 per millica BTU. Increases or decreases in this fuel cost shall be determined by multiplying the algebraic difference between the actual cost cf such fuel per million E~U and $1.25 per millicn BTU by the tctal STU censumed in the Asscciatien's generating plants cach centh. The amcunt thus determined shall be taken as the increase or decrease in fuel ces: for fuel consumed in the Association's generating plants.
. . () For fuel adjustment paid either by South Mississippi er its nambers tc "ississippi Fewer Ccmpany and/or Mississippi Fewer
& Light Ccrpany, the base is zero mills per in:H. The amcunt actualli paid for fuel cost adjustnent or credit received shall be taken as the increase er decrease in fuel cost for purchases frc= Mississippi Power Ccmpany and Mississippi Pcwer & Light Cc=pany.
(3) The algebraic sum of the arcunts derived as indicated abcVe shall be takcn to be the total increase or decrcase in fuel cost for each nonth. The total sum shall then be divided by the total KWU sold by South Mississippi Electric Fower Association to its members for the see month and the adjustment in mills per 13:11 chall be thus dctermined. This adjustment will be applied, then, to KhH sold by South Mississippi to its members in the first subsequent month. l l
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UNITED STATES DEPARTMENT OC AGR! CULTURE RUR AL. ELCCT RIFtC ATICN ADMINISTR ATION WasmNo tow. D C. 20:50 f r. .c. c I.to. v o- . s, ..~ , . , wa rtcr in_.s_t e..4t.
. . .< e,> Cov4..g'on To l' . George 3. Taylcr, IIanager e w-mo...h .i.4., .. .. e-e _4 r,.,. c o. 4s .c rw.,.. .c ,. na c w., - a. .u. . s..c .
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e "his it to infer. ycu that the recuest fer a net: rate increase (cw. .e ,;,.-
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4 f ITEM 9 Provide copies of the latest annual and interim financial statements. Also provide copies of similar state-ments for the corresponding periods ended in the previous year. Continue to submit copies of the annual financial statements each year as required by 10.C.F.R. 50.71(b).
RESPONSE
4 A copy of the 1978 Annual Report of SMEPA which j contains a 12-month statement of operations is Exhibit "D" to the Application. Attached to this response is a copy of the 1978 Report on Examination of Financial Records, a copy of the December,1979 financial statement and a copy of the () January, 1980 financial statement. A copy of the 1979 Annual Report and of the 1979 Report on Examination of f Financial Records will be provided as soon as they become available. O i _ .. _
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'l EXH BIT 1*M9 i MISSISSIPPI - 53 SOUTH MISSISSIPPI ELECTRIC POWER ASSOCIATION HIGHWAY 49-NORTH HATTIESBURG. MISSISSIPPI REPORT ON EXAMINATION OF THE FINANCIAL RECORDS YEAR 1978 t 0 i t i O
. . . . . . . . . . _ . . _ . . . . . . . . . . . . . . . . . . . ~ . . . . _ . . . . . . . . . . . . _ . . . . . . . .
o HORACE A. BRADLEY "" ^ .7 '.".!.~",T."' "", '"i".? " "~ ",*, ",'$^, ".!".".'.! CERTIFIED PUBLIC ACCOUNTANT L U C E D A ,L E, MiSSSSSIPPB 3 9 4 5 2 9 Board of Directors South Mississippi Electric Power Association
!!attiesburg, Mississippi 39401 Gentlemen:
Enclosed are twenty (20) copies of our report covering examination of the financial statements of South Mississippi Electric Power Association (SMEPA), flattiesburg, Mississippi as of December 31, 1978. As reported in our auditor's opinion dated May 15, 1979, we performed our examination in accordance with generally accepted auditing standards. Our
) examination included the auditing procedures required by REA Bulletin 185-1; v 405-1; AUDIT OF REA BORROWERS' ACCOUNTING RECORDS, as amended. Two (2) copies of our audit adjusting journal entries are also included for transmittal ,
to REA. The following comments supplement the information included in the financial statements and notes: Internal Control - The cooperative has a generally effective and satisfactory system of internal control. The functional res.ponsibilities of the association personnel are generally appropriately segregated. The system of authorizations and recording procedures in effect to provide reasonable safeguards over associ-ation assets produces reliable accounting data. This association has only seven (7) members (Coast Electric Power Association, Bay St. Louis, Mississippi was accepted as a member in latter 1978), all which are electric distribution power cooperatives. All amounts billed to these member cooperatives are paid monthly by check. All sums received representing loan proceeds, advances of deposits from bond proceeds, maturing CD's, royalties from producing minerals, etc. , are by check or wired to the cooperative's depository. Few, if any funds are received in cash. An EDP system is not in use by SMEPA. Accounting and Records - Procedures used in accounting for material, labor and overhead costs provide an equitable distribution of these costs to the real and nominal accounts. The cooperative's other accounting procedures in effect during the year are considered to be adequate in all material respects. (See O O Note 1)
l Materials Control - Physical inventories of the materials and supplies were made quarterly by association personnel in 1978. the inventories at various dates during the year. We Weobserved the taking test checked of quantities and unit prices engineering to subsidiary records maintained and reviewed coal inventory data. It was determined after an analysis of the detailed differences in the subsidiary accounts that reconcillation to the general
- l. ledger balances (except for coal inventory) required only minor adjustments to the materials accounts with any offsetting differences being cleared through the appropriate accumulated provision for depreciation.
i
' Inventory of coal supplies totalled $2,257,192 at December 31, 1978. An '
- inventory 20, 1978 taken by association engineering personnel on October 19 and indicated a difference in association perpetual inventory records (78,390 tons) and actual inventory (71,014 tons) of 5,376 tons or 7% less j than book inventory. In view of the fact that the coal fired plant went on-line in mid-1978 and of the immateriality of the difference in book and actual inventories, no adjustment was made in 1978 to reconcile the difference.
Another method of inventorying coal, utilizing aerial photography or stereography, will be tried in June 1979 and the results thereof evaluated i after that time. i Compliance with Loan Documents - The association has complied with provisions of its loan contracts and mortgages .to REA with regards to retirement of capital credits during the audit period. No retirements have been made by > l the association. t , i Reports to REA - We examined on a test basis association copies of financial O r statements forwarded to REA during the year ended December 31, 1978. V These statements were compared with the books of account anti fcund to be in agreement therewith in all material respects. Financial statistical reports submitted to REA appear to be prepared in conformity with generally accepted accounting principles consistently followed. Detailed subsidiary schedules and analyses of various significant accounts are maintained by the Manager of Finance and Accounting and his staff, supporting information contained in the above referred to reports. ' Deposits - All amounts shown as cash on hand and on deposit with banks and i in savings and loan associations are in. institutions whose accounts are insured .' l by an agency of.the federal government. All general fund cash bank accounts were independently reconciled to book balances as of December 31, , s l 1978. All depository balances, including treasury securities, if any, held I by others for the association, were confirmed by us with the depositories.
' t, Insurance Certifications - Copies of bond and insurance certificates maintained !
by the association indicate.that REA was notified of coverages maintained by the cooperative. We reviewed the prepaid insurance account, examining on a / test basis invoices supporting charges to this account. Analyses maintained t by the association supporting illocations to the various accounts were also reviewed in conjunction with our review of the policies and appear to be ( proper, os , 4, mn ha r, :.. m n- v e .,~ - - 't f Hoener A. BanoLay. CamTtPsao PusLtc ACCOUNTANT f l
+ Service Contracts - The association is not a party to any management, ig) operations or billing service contracts. LJ , Litigation - See Note 10, Contingent Liabilities. Related Party Transactions - Power Pooling Agreement - South Mississippi is a party to an " Agreement. for Equalization of Power Costs" with its seven (7) members, Singing River, Southern Pine, Dixie, Pearl River Valley, Southwest Mississippi, Coast and Magnolla electric power associations. This agreement l provides, among other things, that South Mississtppt shall serve as agent for these cooperatives whereby members' power supply costs are paid for by i South Mississippi without regard to the sources of their wholesale power supply. South Mississippi, in turn, invoices the members monthly for power purchased by the members, regardless of source, based on it's (South Mississippi's) uniform rate schedule. Pension Costs - Pension and supplementary savings plan benefits for sub-stantially all~~ employees are provided through participation in the NRECA s Retirement and Security Plan. Costs to the Association were $187,019 in 1978 compared to $207,741 in 1977, which 1977 amount included approximately
$85,000 of past service costs due to upgrading of benefits. The plan is
, approved by the Internal Revenue Service.
I Depreciation, Depletion and Amortization - The depreciation, depletion and
. amortization rates maintained by the association were reviewed in detail. The p) g 'd rates used in 1978 are based on rates for each individual plant account which are, in all cases, within the range of rates recommended by REA. We tested the depreciation, depletion and amortization charges for the year for each plant account involved. Adjustments nece.asary to correct accruals, if any, were made by office personnel during the course of our audit before prepar-ation of yearend financial statements. Rates are reviewed annually with l responsible accounting personnel and appropriate steps are taken to revise i those which appear to be inadequate (See, also, Note 3).
Yours very truly,
; nro . En.
Horace A. Bradley Certified Public Acco Cant I 4 Prepared: May 15,1979 Lucedale, Mississippi i
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! l Mississippi-53 South Mississippi Electric Power Association !
Highway 49-North ' Hattiesburg, Mississippi . t g December 31, 1978 i l i. 4 CONTENTS Page f Accountants' Report 1
!; Financial Statements: f i -
- j. Balance Sheet 2 i i
l Statement of Revenue and Patronage Capital 1 l 1 = Statement of Changes in' Financial Position 5-
- 1 i
; Notes to Financial Statements 7 Officorn, Directors, Mana'ger and Miscellaneous 17 I
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O V *^ HORACE A. BRADLEY .,", c? '.".!.'".T."' "", ',".J,".! * "' ".^.".,.'^. ".'.".'.".! CERTIFIED PUSLIC ACCOUNTANT l. U C E D A L E, MiSSISSIPP$ 3 9 4 5 2 ACCOUNTANTS' REPORT ' Board of Directors South Mississippi Electric Power Association Highway 49-North Hattiesburg, Mississippi 39401 . Gentlemen: We have exan:ined the balance sheet of South Mississippi Electric Power Association as of December 31,1978,.and. the related statements of revenue v and patronage capital and changes in financial positon for the year then ended. Our examination was made in accordance with generally accepted auditing standards and included tests of the accounting records and such other auditing procedures as we considered necessary in the circumstances. We have previously. examined and. reported on the financial statements for the preceding year. In our opinion, the financial statements rewrred to above present fairly the financial; position of South Mississippi E:ectric Power Associ-ation on December 31, 1978, and the results of its operations and changes in financial position for the calendar year then ended, in conformity with generally accepted accounting principles applied on a basis consistent with that of the preceding year. Yours very truly, Slag.e) . n!. 10crace A. Bradley, Certified Public. Accountant Prepared: May 15,1979 Lucedale, Mississippi H AB :rmb O) L
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i 1' i Exhibit A ' Page 1 of 2 v I
; Mississippi-53 t South Mississippi Electric Power Association i Highway 49-North :
Hattiesburg, Mississippi Balance Sheet - 4
! December 31,1977 and 1978 i .
j Assets (Note 2) r 1977 1978 i Utility Plant (Note 3) j Electric Plant in Service - at cost $ 71,959,317 $ 253,027,210 Construction Work in Progress 163,664,898 14,852,799 ,
$ 235,624,215 $ 267,880,009 i Less: Accumulated Provision for Depreciation 10,219,917 13,865,264
! Net Utility Plant $ 225,404.298 $ 254,014,745 I l Other Property and Investments i l
investments in Associated Organizations (Note 11)$ 3,249,343 $ 3,892,931 Other Investments, including Temporary
/']
G f t Investments Special Deposits (Note 4) 301,460 32,580 300,333 425,532
$ 3,583.383 $ 4,618,796
' Current Assets Cash - General Funds $ 65,128 $ 71,870 i Cash - REA/FFB Loan Funds 40,797 144,188 Deposits - Pollution Control ,
Bond Proceeds (Note 5) 20,436,185 3,946,348 Accounts Receivable - Member Consumers 4,529,414 5,612,897 *
! Accounts Receivable - Other 119,830 332,021 '
, Fuel Stock, Materials and Supplies (Note 1) 3,509,158 4,752,039 l t Other Current and Accrued Assets 464,192 559,354 [
} $ 29,164,704 $ 15,418,717 ,
! Deferred Charges $ 1,071,537 $ 3,511,116 I f i
$ 259,223,922 $ 277,563,374 I i
i i The accompanying notes are an integral part i of this statement, j t
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i 1 ( n { Exhibit A : , d j Page 2 of 2 [ d Mississippi-53 ' . South Mississippi Electric Power Association !
,. Highway 49-North )
i Hattiesburg, Mississippi '- i i i Balance Sheet i December 31,1977 and 1978 , i I Liabilities and Other Credits (Notes 8, 9 and 11) {
; 1977 1978 f 1
I Equities and Margins . i Memberships $ 30 $ 30 Patronage Capital (Note 6) 1,149,533 2,439,937 ; Other Equities (Note 7) 535,436 535.436
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6
$ 1,084,999 $ 2,975,403 i i .
l Lon g-Term Debt (Note 1 and 8) i R3A Mortgage Notes $ 64,880,476 $ 64,774,401 ,
! Other Long Term Debt 175,237,512 193,567,699 i
$ 240,117,988 $ 258,342,100
}
, O {I
; Current and Accrued Liabilities
; Notes Payable - CFC Line of Credit i
/
f (Note 9) $ 2,400,000 $ 2,865,000 f Accounts Payable - General 5,118,036 5,160,714 : Accounts Payable - Retainage 8,902,846 7,240,468 j Accrued Taxes 43,391 70,095 t Accrued Interest ,814,433 682.495 l Other Current and Accrued Liabilities 81,752 103.428 i
. $ 17.360,458 $ 16,122,200 6 0
Deferred Credits (Note 10) $ 60,477 $ 123,671 ! f
$ 259,223,922 $ 277,563,374 i
./
t. The accompanying notes are an integral part i of this statement. c
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( I Mississippi-53 '
'd South Mississippi Electric Power Association f-Highway 49-North !
Hattiesburg, Mississippi y [ Statement of Revenue and Patronage Capital i; For the Year Ended December 31 , 1977 1978 f h Operating Revenue and Patronage Capital Electric Energy Revenues (Note 12) $ 57,127,699 $ 70,655,998
- Incomo from Leased Property - Not 289,147
$ 57,400,587272,888 $_ 70,945,145 f Operating Deductions
[ Operating Expense i: Production - Steam $ 16,551,716 $ 26,534,084 [ Other Power Generation 677,356 828,474 i' Cost of Purchased Power (Notes 1 and 12) 34,158,430 27,721,339
, Transmission 382,677 487,997 i Consumer Accounts 12,342 10,679 Administrative and General 818,011 1,180,852 f Operation Expense Total $ 52,600,532 $ 56,763,425 p)
( '-' l d b Maintenance Expense Production $ 494,113 $ 604,850 Transmission 488,335 637,655 l General Plant 37,110 43,792 Maintenanco Expense Total $ 1,019,558 $ 1,286,297 Depreciation Expense (Note 3) $ 1,648.309 $ 4,224,653 Tax Expenso $ 96,883 $ 161,134 i Total Operating Doductions $ 55,365,282 $ 62,435,509 Interest Expense 10,891,567 14,331,944 Interest Charged to Construction - Credit (Note 1) (8,996,367) (6,974,404)
$ 57,260,482 $ 69,793,049,
. Not Operating Margins $ 140,105 $ 1,152,096
, i Non-Operating Margins 82.130 138,308 Not Patronage Capital or Margins (Note 6) $ 222.235 $ 1,290,404 l
The accompanying notes are an integral part of this statement, I Q l' s, f - t e c. . . . , a e...... ...v e.. .. . . . . - - -e . , a , e e
.. . , 'l : Exhibit C Page 1 of 2 (#n) Mississippi-53 South Mississippi Electric Power Assoc:a*;on Highway 49-North - Hattiesburg, Mississippi
} Statement of Changes in Financial Po:it:on
[ For tho Year Ended December 31 1977 1978 r l Funds Were Provided By i Not Margins $ 222.235 $ ~1,200,405
, Add: Expenses not Requiring an Outlay of Working Capital in. Current Period:
Depreciation, Depletion and Amortization 1.772,574 4,444,248
, Charges For Addition to Insurance Loss Deductible Reserve 17,500 60,000 5
NRUCFC and Other Capital Credits (Non Cash) (l 745) (37,177) Increase in Long Term Debt - REA Advances 2,592,000 1,377,000 Increase in Long Term Debt - REA - Othet (Note 8) 396,431 - Increase in Long Term Debt - Other Advances - FFD 21,984,000 12,561,000 Gross Proceeds from Pollution Control Revenue Bond Issue (Note 8) 40,000,000 3,825,000 O" ' Salvage Credits Less Retirement Costs (Excess Costs) 459,092 Decrease in Working Capital (2.5.413) 12,507,728 Decrease in Other Investments 968,310 1,127
, Decrease in Deferred Credits 3,194 Decrease in Special Deposits 51.756 $ 68,462,183 $ 36,007,112 Funds Were Used For i
Extension and lleplacement of Plant $ 45,257,284 $ 33,023,611 g Transmission Facilitics Acquired from
, Distribution Cooperative (Note 8) 407,647 Payments on Long Term Debt - REA 1,285,419 1,470,515 l Payments on Long Term Debt - REA - Other 12,028 12,561 Payments on Long Term Debt - Other 256,856 255,475 l
Increase in Investments - Associated Organizations 2,353,274 606,411 Increase in Special Deposits . 392,952-
' Increase in Deferred Charges 859.911 245,587
. Increase in Worliing Capital (Schedule C-Page 2) 18.029.734 , $ 68.462.183 $ 36,007,112 p)
( i The accompanying notes are an integral part of this statement. a t l ,
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i Exhibit C hV ; l Page 2 of 2 ! i Mississippi-53 South Mississippi Electric Power Association h Highway 49-North h
, Hattiesburg, Mississippi l
l Statement of Changes in Financial Position l For the Year Ended December 31
, l
- l. 1977 1978 l I
Net Changes in Working Capital '
, Increase (Decrease) in Current Assets Cash - General Funds and Loan Funds $ (411,303) $ 110,133 i I
Unadvanced Funds-Pollution Control i Revenue Bond Proceeds 20,436,185 (16,489,837) Accounts Receivable - Consumers 496,144 1,083,483 f Accounts Receivable - Other (10,157) 212,191 I i Material, Supplies and Fuel Oil (512,764) 1,242,881 ( i Prepayments and Other Current Assets (118,109) 95,162
! $ 19,879,996 $ ( 13,745,987) l
, 4 i !
, Increase (Decrease) in Current Liabilities p.
, Notes Payable - CFC $ 2,400,000 $ 465,000 }
O' l Accounts Payable - General and Retainage Accrued Taxes (1,030,737) 14,483 (1,619,700) 26,704 1 ( Accrued Interest 435,429 (131,938) Other Current and Accrued Liabilities 31,087 21,676 f
$ 1,850,262 $ (1,238,258) f Net Increase in Working Capital (Decrease) i
$ 18,029.734 $ (12,507.729)
{r i . The accompanying notes are an integral part j-i ~ of this statement. - 't I ( i l i I8 I, I b
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! .(e) Revenue from energy sold to Mississippi Power Company, a public l
utility, is offset in the accounts against cost of energy purchased , from outside suppliers, including Mississippi Power Company. I (2) Assets Pledged All assets.are pledged as security for long term debt. I , I j I . I i l A l (v) I e
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U . Mississippi-53 South Mississippi Electric Power Association j Highway 49-North Ilattiesburg, Mississippi Notes to Financial Statements December 31, 1978 (3) Electric Plant, Depreciation and Depletion Procedures Following are the major classes of utility plant, as of December 31,1977 and 1978: ' l k 1977 1978 Franchises and Consents (a) $ 459,285 $ 459,285 a Electric Plant Purchased - Transmission 407,648 407,648 '
! Electric Plant Leased to Others 1,907,598 1,981,922 i Land and Land Rights .
- 5,964,172 6,295,608
; Generation Plants 26,275,651 29,471,616 i Transmission System 30,119,972 33,985,486
? General Plant 1,816,920 3,324,062 I
$ 66,981,246 $ 75,925,627 Completed Construction - Not i Classified (Morrow) 172,123,513 f
Kentucky Coal Property - Land and j Minerals 4,799,071 4,799,071
- j. Kentucky Coal Property - Depreciable
{ Plant and Equipment 170.000 179,000 Electric Plant in Service $ 71,959,317 $ 253,027,211 Construction Work In Progress (b) 163,664,898 14,852,799
$ 235,624,215 $ 267.880,010 (a) Consists, primarily, of pre-operating expense allocated l to this account in 1972. '
! (b) Consists of $157,343,886 at December 31, 1977 and $2,856,984 ;
.at December 31,.1978 associated with construction of R.- D.
Morrow, Sr. Generating Plant at Purvis. . I !. l ? f i .
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Notes to Pinancial Statements l December 31, 1978 i i [(3) Electric Plant, Depreciation and Depletion Procedures -(Cont'd) Depreciation is computed monthly on straight 11ne composite rates for GT Plant accounts as follows: Annual Rate l Transmission Lines 2.75% Transmission Stations 2.75% j Moselle Steam Plant 3.10% i Benndale Gas Turbine and Other
, Production Equipment 3.00%
< No depreciation has been taken in the current or prior years on Land
? and Land Rights.
A i General Plant assets are also depreciated monthly, on yearly straight V
, line composite rates as follows:
' Structures and Improvements 4,00%
Office Furniture, Fixtures and Equipment 6.25%-8.00%
! Transportation Equipment 10.00%-25.00%
Lab Equipment, Tools, Shop and Work Equipment 8.00% I Communications Equipment, Stores Equipment . G 00% g General Plant Equipment 10.00% Power Operated Equipment 12.00% [ ( Depletion of cost of Kentucky coal reserves is computed on a " tonnage I; sold" basis calculated to fully amortize such cost when estimated deposits have been recovered. .This property is presently leased to an independent f, coal producing company for a royalty based on sclhng price per ton. - j (4) Special Deposit
. SMEPA advanced to Kentucky Utilities Company 4411.098 during 1978 ,
e to cover the estimated cost to Kentucky Utilittes of construction facilities ; necessary to supply electric service to- SMEPA's coal preparation facility : i in Kentucky, Kentucky Utilities will apply this deposit toward electrical , l services furnished SMEPA at the rate of 20% of its electrical bill per year T
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. Highway 49-North IIattiesburg, Mississippi -
l Notes to Financial Statements December 31, 1978 ((4) Special Deposit (Cont'd) beginning January 1,1980. Electric energy furnished SMEPA will be billed at Kentucky Utilities' regular rate for like consumers except that total charges per calendar year will not be less than $163,500. The maximum period for which SMEPA receives credits against this deposit
'. for energy used is five (5) years, after which time any remaining I, unused deposit will be forfeited. '
I . j(5) Deposits - Pollution Control Bond Proceeds This account includes the unadvanced portion of proceeds and accrued I interest from Pollution Control Revenue Bond issues sold by National Rural Utilities Cooperative Finance Corporation (CFC) in 1977 and 1978. (See-Footnote 6 for details regarding these bond issues). These funds
- i. are on deposit in various trust accounts of Morgan Guaranty Trust Company of New York and Deposit Guaranty National Bank (Mississippi),
i invested in short term CD's bearing interest at rates ranging between O 'd I 8-3/4% to 9.9% at December 31, 1978. these funds as required. Advances are requisitioned from l
! (6) Detail of Not Patronage Capital or Margins t
1977 1978
. Net Patronage Capital-Beginning of Year $ 927,298 $ 1,149,533 Not Margin 222.235 1.200.404-I Net Patronage Capital-End of Year $ 1.149.533 $ 2.439.937 i l
By-laws of the Association provide for allocation of all margins to !,
! patrons. All margins earned subsequent to beginning of operation /
j of plant have been assigned to patrons except the margin for tho . p year 1978. [(7) Other Equities The balance in this account at the dates indicated represents contri- !*
! butions made by present and former patrons during pre-operating i j years and is carried in the general ledger as Donated Capital.
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I i Mississippi-53 V , South Mississippi Electric Power Association liighway 49-North Hattiesburg, Mississippi Notes to Financial Statements December 31, 1978 i (8) Long Term Debt I. , l Rural Electrification Administration (REA) J Unadvanced funds on notes executed to REA not reflected in long term 1 debt totalled $2,352,000 at December 31, 1978. Long term debt to REA
! is represented by 2% and 5% mortgage notes payable to the United States of America. The notes are for periods of 35 years each. Under the provisions of the loan agreements, principal payments are deferred for l three (3) or five (5) years from the date of execution of the notes.
I Principal repaid during the year totalled $1,470,515 and interest expense on these obligations amounted to $1,819,169 for the year 1978.
; It is estimated that payments of principal of $1,531,000 will be made to i
REA in 1979 together with interest totalling approximately $1,835,000. E p , Rural Electrification Administration - Other - Electric Plant Purchased l ' During 1977, SMEPA agreed to purchase, subject to REA approval, (d > certain transmission facilities previously leased from Singing River i Electric Power Association (SREPA), Mississippi Jackson, carried by SREPA in its accounts at a not book value of $407,647 on I which property $396,430 was owed to REA by SREPA at the date of agreement to purchase. Entries have been made in the accounts of
! SMEPA setting up these assets at SREPA's net book value and an assumption of notes with balances outstanding at December 31, 1978 of $371,842.
l I Federal Financing ' Bank (FFB) [ Not reflected in long term debt is unadvanced portion ($63,975,000) '
, of notes totalling $209,913,000 at December 31, 1978, executed since ll 1974 to FFB. The proceeds were or are being used for completion of
R. D. Morrow, Sr. generating plant at Purvis, Mississippi and payment
, of retainages associated therewith, purchase of railroad cars used to i transport coal from its Kentucky properties to its Purvis Plant and to ,
finance the cost of coal preparation facilities presently under construction f on its lands in Kentucky. ! l
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O I V , Mississippi-53 South Mississippi Electric Power Association Highway 49-North Ildttiesburg, Mississippi
- Notes to Financial Statements December 31, 1978
( 8) Long Term Debt (Cont'd) CFC Pollution Control Bond Issue This account represents principal balance due on bond issues of OFC Guaranteed Pollution Control Revenue Bonds, Series 1977, 1978A and 1978A-1 issued by Lamar County, hiississippi. Details of Series 1977 l, issue of $40,000,000 were set forth in our previous (1977) audit report. j' During 1978 additional bonds totalling $J,825,000 were sold as coupon
/ bonds bearing interest at rates of from 4.30% to G.25% (if interest is
! not timely paid, rate will be one percentage point higher than that l' stated on such overdue payments) to assist Sh1 EPA in financing e additional pollution control facilities which qualified for this lesser cost l medium of financing. SMEPA is required to pay all principal and interest installments on these bonds as they become due and CFC has p) s V
[ I unconditionally guaranteed these payments as due, both as to principal and interest. SMEPA's obligation to make such payments is evidenced I by a Pollution Control Note issued to CFC and secured by a Supplemental Mortgage and Security agreement among such cooperative, CFC and the United States of America acting through the Administrator of REA. This mortgage will also secure other debt of SMEPA to REA, and, in certain cases, to CFC. Interest is due semi-annually on each of the bond b issues. Interest and principal will be tendered to CFC for transmittal to the trustees for the bondholders, Morgan Guaranty Trust Company and Deposit Guaranty National B'ank. Serial bonds of $2,825,000 issue (1978A Series) mature semi-annually
, beginning March 1,1980 through September 1,1998. Term bonds of the 1978A Series and the 1978A-1 Series ($1,000,000) mature March 1, 2008. Mandatory semi-annual sinking fund payments required in connection with these additional issues begin in 1999 for the $2,825,000 .
l issue and in 1980 for the $1,000,000 issue. None of the bonds of either j series represent a general obligation of the issuer, Lamar County, i Mississippi, nor of the State of Mississippi, nor or they a charge against i l the credit or taxing power of such county or state. l i Under the terms of the above referred to additional financing package, SMEPA was required to purchase CFC unsecured subordinated capital e term certificates (CTC's) equal to 5% of the $3,825,000 bond issues , handled through CFC, in addition to its obligation referred to in Note 11. ', O) iv l 8. i s I r 1*~e, e a ra m m ,se r, e. e m e s e . * *s e o w. e .- . e r ose ss e.*~
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t Q i (V , Mississ1ppi-53 Scath Mississippi Electric Power Association Highway 49-North , Hattiesburg, Mississippt Notes to Financial Statements December 31, 1978 (8) Long Term Debt (Cont'd) CFC Pollution Control Bond Issue (Cont'd) The underwriters spread was deducted from gross proceeds of these additional issues and set up, along with other costs incurred to [l December 31, 1978, as deferred charges to be amortized over the ( lives of the obligations. ( Counsel for the cooperative advises that all financing documents, in T addition to those named above, relative to all bond issues including
> certain guaranty, assignment and agency agreements between CFC
! and the trustees have been properly executed, f6 Kentucky Coal Property (1974 Purchase)
! Other long term debt also includes 7% notes totalling $1,071,826 payable j in connection with Kentucky coal properties purchased in 1974. These notes are payable over a ten (10) year period from 1974 and are secured
[mb} [ by mortgages on real property purchased. t O ther i Also reflected as long-term debt at December 31, 1978 are advances from member cooperatives (under provisions of power equalization or supply agreements) for construction of transmission facilities leased to publicly owned utilities (392,951) , an amount SMEPA agreed to pay Breeder j Reactor Corporation (BREEDER) for its pro-rata portion of estimated cost of research .to develop additional or substitute fuels to produce electric energy ($140,261) and a contractual agreement (an amendment to Coal Supply Agreement between SMEPA and its coal producer) to pay
, a fee for loading its (SMdPA's) coal for shipment to SMEPA, of $26,502
, per month for seven (7) years (total $2,226,168, the contra entry of which is in Deferred Debits).
i Regarding BREEDER referred to above, in 1977 BREEDER suspended requirements that yearly payments of participants in this program be j made when the United States of America halted its financial participation I in this program. Charges against income of $23,377 in each of the years 1977 and 1978 (and concurrent credits to Deferred Charges, the account 4
, in which the contra entry of the obligation was set up) were recorded
- although no payments were made in either year to BREEDER. Future l l' payments to BREEDER will be dependent upon the government's essential <
involvement in the program. If and when the project goes forward (the ! hl V GAO recently issued a report supporting continuation of the Clinch River Project) the currently deferred installments will be called for as well as i l , other installments as they become due. f L l' , i
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Mississippi- 53 South Mississippi Electric Power Association i Highway 49-North i Ilattiesburg, Ithssissippt Notes to Financial Statements
- December 31, 1978 i (9)
Notes P'ayable - CFC Line of Credit . SMEPA had an established short term line of credit of $12,000,000 with CFC against which had been withdrawn $2,865,000 at December 31,, 1978. This line of credit matures with interest to maturity at not in excess of [ prime plus 1%, August 9,1979 (interest calculated at 11.75% at [ December 31, 1978). t j (10) Deferred Credits The balance in this account represents royalties on deposit ($42,977) I in an escrow bank account received from sale of coat on certain land,
;. title to which is in dispute (the bank account balance is included in
, deferred charges) and an insurance reserve totalling $77,500 at I December 31, 1978. This insurance reserve is being increased at the rate of $60,000 per year until such reserve reaches approximately
$300,000. It was established primarily to compensate for the large
(~' ' insurance loss deductibles on generation plant coverages. This [ reserve was established in accordance with generally acceptable
- industry accounting practices. Charges to income (and credits to the i reserve) of $17,500 and $60,000 were made in 1977 and 1978, respectively.
f(11) Contingent Liabilities [ The association entered into a binding agreement to subscribe to CFC ( unsecured subordinated CTC's commencing in 1973 through 1983. Purchases are made annually in amounts approximating 0.9% of operating l revenues. The balance of the subscription obligation at December 31, 1978 is estimated at $5,400,000. I' After reviewing correspondence regarding all asserted claims and pending litigation in which the cooperative is a defendant and discussing all such
~
claims and litigation with General Counsel and management of the associ-ation, we are of the opinion at this time that the prospect of an unfavorable-outcome to the association is remote. (12) Restatement of 1977 Financial Statements The 1977 Statement of Revenue and Patronage Capital has been restated l for comparative purposes with 1978. As originally shown in our 1977 j y audit report, electric energy revenues sold to Mississippi Power Company
; (MPCo) totalled $271,316 and have been offset in this restated 1977 statement against purchased power from MPCo. Electric energy revenues
' totalling $3,306,379 in 1978 were offset in the 1978 statements in a like q manner, bi .. ;
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! I d 1 Mississippi-53 I-South Mississippi Electric Power Association f Highway 49-North j Hattiesburg, Mississippi ,.
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' Notes to Financial Statements
} December 31, 1978 [
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; Other Notes t e
i Income Tax Status - More than 85% of the Association's income is collected i , j .- from.its members. . Exemption frcm federal income tax has been obtained. l
. . _ . and Internal Revenue Forms 990 have been timely filed. /
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l'h ("! Mississippi-53 l South Mississippi Electric Power Association liighway 49-North flattiesburg, Mississippi l Officers, Directors and Members i of the Association t December 31 1978 l - l l OFFICERS
- t 1 R. D. (Bob) Morrow, Sr. President
$ C. C. Clark Vice President l D. R. Ware Secretary-Treasurer
; L. G. Pierce Assistant Secretary George Taylor General Manager MEMBERS AND DIRECTORS Southern Pine Electric Power R. D. Morrow , Sr.
Association Blaine II. Eaton O) y Dixie Electric Power L. G. Pierce Association Robert L. Graham i
; Magnolia Electric Power C. C. Clark Association E. C. Parker i
i Pearl River Valley Electric Power Warren W. Bond Association W. T. Shows I
; Singing River Electric Power D. R. Ware Association J. T. Dudley, Sr.
p Southwest Mississippi Electric Power H. M. Little i Association Robert St. John i f 1 Coast Electric Power James R. Rester . l Association ' Henry L. Thomas t' I
; OTilER :
6 i l John K. Keyes, Esquire (
' Attorney at Law General Counsel i ,
l Horace A. Bradley ' l Certified Public Accountant Independent Auditor l l 3 ./ t3e,,, ,. t+ . . . . ,, e me .=4 . a en * .
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South *iississippi Electric Power Association l' OPER ATING REPORT - FINANCIAL " * * " * * " "
- Hississippi 53 u s er.....r n e es .c .cui.v u.s ar. ..sm.=c t o= o e av zse "o*'=(* '*'
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.i . ..a.o . n e i .- cu asstrs D OTMES Dite ts Lla 8.st Tit s a= 0 O f = E R CR E D.f t t.107.L ureLif 7.LaitT t Se.Vica .
Pol,333,081 a s. . ... .s . .s .. 35
- s. c o= s r auc tio .o.. n. ..oc.a ss 1L 9?o 409 a r. ..r.ow.c r c. . v .6
- r. . s. rov.t uteurv t.=t as n 77 9, pg l , r.7 9 .ss.c=s o ..so au.o . n s , 2.439.936
,. .. .c co.... oves.o. r o s c a..e ci. vie.. a ao.r.
' 21.305.614 A atvs. cot =.sve... 2.439 "30
- s. =c e u t.u v v t.= , i a as 266.955.960 e. t ' .. e o .. s o . v t . .s.. --
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_ , _ ._ e. sNvast. m Assoc. o.a..cTH(R. cgP(fUNos I _ O0 29 o.( . . Y. G m e .G.=s = c u. .e = r y g . . . 3.015,91'i
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e.s mvtsr. . Assoc. O.G. . oTHE R . Ne#N G.F. 4.291,922 Is. omo.g .. t .= c m . .G .= s . . 337,d29 e.ov-e..=vasv=ents 17 'N R o r-E. w..ci=s . E ove rit s.. 535 is. s*s ci.o runes -- 3,931, 4 436 d3
, ia. tov. s ..ee.e=5 e c o u. fit s.J. . m .a ass...
. .. v o , . t a v v . ..o.r a r v . . .ts, .m ,*.. so, 4.373.940 n. co= s.v e .= o n e r . .c. .. 63,836,640 is. c as . o s = ..t e u=c s .. 38R.267 s. to=o-v e.= oc ., . o r me . . 209,7C6,132
- y. w. : ,. s . --" .
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, ,_ c . . , c o =, , .uc ,,,, , o = o s . t .u s t r e 141,442 is.vot.c oc=o.tr.= oter n8+ m .. . . . . 273.5 7 U I
. . s .t c. . t ca.osir s . ?.497.601 w = o t s .. .. .t r . 592_230
.s.ve .o . . . . .. . e s , = = , s . 1,200,000 > > .c c o ; = r s .. . . .s c . . 12.134,415
... = ov e s tc e ..e t a ac t . 12.603 3. v..as .cc ueo. 63,965
... . c c ou=,s .i c e v.e t e - = e ' .. 8.944.?76 n. .=tr.rs, .cc ue o . . . . . . 631,125
. t s . oc . . 9.560 649 i .# o r=< cu..e , .c c .ui o u . ..u r.a s... 170,293
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.. .re...tsaso..ues-o*-a.. 2.715.431 .i ver.c c u..c r i .cc.uc o u...r i. ,w a 13.053,0TT
,.... .... ,i 435.048 . . c e n e..c o c.c o.e s.. 42,977
- n. o e c . co.. ., . .cc.u s e .sse ts 35,344 .s. o.s.. r.=o .e s a.v e s . . . _ . , 139.100
. n. v o..t c u..a . .c c.ue o .ssr e so +. zi, 25,630,809 .. .ccu= a.rtooc,c..c3,=co c ,.. s. ..
- n. u==o v . o c . v o.sc. . c . v . . o.o. ..o..t os 996,211 a v er.c u. .u r.u s . o,=c . c.c o.es
.. o, .. . e c e ..s o or .t s - 2,57 5,259d E
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. .... . .s....~,... ... 290,/1?.170s 79 ,737.172
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. . . Sec.d-Staterent at Ocerations M w Sales 2,24 3.M3 2.561.945 2.8o3 003 9 212,844 m u ,- - - --
V E.4 - TO - o.f r } 73 . L.s e v t . . j .4 at.. pg%g-i g =0.,,.
-s i. a u c v..c =<.s v av e =ue s 70,655,998i 95,338,934 103,611,E i 8,136,633
/ N r .=co=c e.o ts.sco ..o.<.,v . =er. 275,1611 1,059,652! 489,497i I 95,514
- 9 s.otae.o.g..,.=o.sve=ues = cows.. .... 17.U6 ' 5?.2 13 55. Wil 3. s N i .. t o r . c o.e r. .s v e u s s a .o r.o .c a c . J ,< i .... Ji. in .m .14 i ul y n,sigt 104 ,1 % u i i
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- s. o.c .. . .o a = e =s s ...oouc t.os.a .c o. e u s t.. 1.201.621 i 1.597.^ N 2.547.100 13) t23
- s. c .c . . . n a . .e =s e . ..co,,c , .o. . r u s t . 26 160.33'i 26.C32 75F 23,634.5238
. . o.s .. r.o= = .e .s s - o v at . .o. c su a.i. , 2.462.057
- v. o.c . . v .o e . .e s e . v . . =s-s s. o ..
27 721,33; 37.r32.6 4! 43.934.133 3.235 .M9 p7 co7 i 44 .124 17 o A U. : an.m9 e o.s .. ..o= a n a t =S e . o s v.'euv ro.e .. -. 6 -. I -- I --
- e. o.c a.r o t s er sc . co=w=t. .ccou='s . 10 , $ 7 9 1 13.1593 10.222! 1. 2 M el o.g.. r.o= r e et =se - c o=s ss .v. s i=,o.. . -- t .. -- i .-
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14,163,431 i 6.0 74 an11 17.503.73$ 1.122.649 . "*"'"D
.m ..[ 1.623.07S m,._,._,. - ,. . ro orac= mre csr rupervse 93.19?-
ID,317 i R ,774 30 4031 65
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- OPERATit4G REPORT - Fir 4 ANCIAL *aaao ta ces.c=. r.o. g4gs9sy3g, 53 u s e r e.e tang e, or .c o. cut,uer er. ..s-. 6Y o o c 202s0 " 3 * ' " a m o'*G da'1u a r V 31. UU
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- i. voeu uriu,y at.,, a= sovaca . . 261.539,226 , . , , , , , , , , . , , , , . . 35
' ,. co s ,.uc e.o. .... .. .aoc.i s s 16 Mia 71s n. e.1=o=.c c c. ..v . t
- s. f o r .t u t .u r , et a = , e r . n... .-
279.454.004 .suc=, o .= o .s s.c =.et c. _.. 5.853,758
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p1,q51.503 a au me o v=.s vr.... -- s.=ae utsir, %.=v e r n . ?S6.502.4G8
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- c. e c tier e ea ca vs .as . 2.4 33.9 3E
... .. 4. = c t e. v ao,.c c c. .., . 6.. . 3.413.827
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- 5 soc o*G."** o"ac t c a *s t at M.453 ze opt a.ve=c u.acias . en ca g.es . --
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c.1.00 /
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535 J 36
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s.**tci.s runos -. sa. to ra t w.= cms a acu.r.as..% 74,w ris... 3.fo3.148
- a. vor.t o,.a = ==o er e rv e . e:r.s. ew ici - 4.171_ g? n n. t o., s. v a .. oa ., . n o 63,410,343
- a. c.s . o s =:a.t ev= es .- 16 36 2.. L oac- ta a= c a e r - or =t a.. 219,317.7E2 M. ec.
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s' . _ . s. c .s- . c o=s v auctio= a u=os - taust a t . 91.919 n. vo..t to=c- r e a. os e e r n. m... ' 273.428,12f
'.; .. se c a t og,os.,s ! _oo 7g w.,,,,,.....,,,,, ..
- s. , c 3.175.000 n. .cc ov='s . es e ..
.o . . . .= . e s ,-i e s ..
13.921.%T
- e. = o v e s = e c e . . . e s c . = c t . !?.570 l w v.nas acc.veo . 66.233 v..ccoo=es. ice...ess.=tr. o 0 33 c70 I n mer.csr .cc veo.. 1.733.372
.. s e co . 10.077 771 .s. oraea cu .e , e .cc au c o t. . . . . , . e s... 63
. ,, . ... s s . sueeuts.o,-c. 2.793.693 . . vor t cu c =v . .ccasso ti eve rw an 13,._,.2 or. . T. d,5
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515.655 u. ocre aato ceroits.. 4T,77T
...o,ar.cu..e.,. .ccav e o .si e t s - ...- 48 M7 n. e er.. emo .a sc a e s.. 144,10]
.,. ,o, . t c u..e = r . .c c %t o .ss e r v ,."w '" 28.533.600 u accu.a vro certaato mce-c r..cs . --
a u = o. . . c c e t e 4 c. . . v..o o. ..o. tos . 991,959 n. voeu taeto es a ot-ea caro ts u.o,=e= er,e..ee ore.,s T M ?"O 2 . 5 86 .16.L _i'1'"**'."*"~ --
. . . . . . . - ,. . 20!, W ,154 Sec.'s-5*atement of Operat' ens w:n Sales 206.23) 249.552 222 303 ' e. L ' Mf "'Q.
Qg YE.a.To.o.YE ,,,4 s.s, v u. !
,.,,o. e m. r - -e .g .
p i. r t a c r a.c e =s a s < v e =ues .. 7.037 M20 ! 9.112.1031 8.261 M Q
/ \ a. mco e .o= t e.sc o ==oer.n . =n T . 12,609I 83,374i 114.011 0
s.ov-reoer..v. oanv n ut. mco .
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s opt .vio= a e =s e-eaoouc tio=-o ct. e ur s 127.729l 163.312' 129.IC9 s i cec a. eio= a m er sa . eaoouc tio= - r un.. 2.519,741 i 2.820.3101 2.237,727
- s. ope a.v.o= r u ce =se . ovat a powe a sueet, 9,936,03) i
- v. oet a.v.o= a n es =se - v == =suissiog .
3.5no_A001 3.633.754 2a cc7 ; lo_p71! ag _ ! n
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31.7531 72.676i 42.234 is. =es=.=cs snee=st.ostaisurio= . -- l -. i .- a .m't. .=c e p ensa - con t au= r . 5.063 I s .4M . ?!.cca n ,o..g ...=
- e .=c e e s pose (H h i. r an, ,i c 1. 231 ., i 3 : i a
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. , , . . . . . - . . . . . . - 23.700 ! 26.6MI 24.979 u.mveassio=toac-va = oser. 1.335.150!
"'""[h 1.651.557 n i m's aas' c-.ac to v o ro=s vauct.o=. care.t . " _4?? h 96.9M ao.a oista isicassT execus' 25,340
. . , , , . . . . - - - .~ 31 128 as, o v-e a er euc t io=, .. 4.901 4.09,31 3.00
- 6. $n
- . tov.s cost o, u scv..c sov ca rn . sr ew an... i .ol4.9 ii i I 4. Mu ? Ei 2 841 ?l'
- n. o pe a v mo .. =2. s o - ni..
I 22.052V I ( 4.0214 l. 314 2 M
- n. .= v a .e s ' mc o-r . 13.750? i 30.0091 53.037
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