ML20087B063
| ML20087B063 | |
| Person / Time | |
|---|---|
| Site: | Grand Gulf  |
| Issue date: | 12/31/1994 |
| From: | Mckamy W, Thomas H SOUTH MISSISSIPPI ELECTRIC POWER ASSOCIATION |
| To: | |
| Shared Package | |
| ML20087B039 | List: |
| References | |
| NUDOCS 9508070290 | |
| Download: ML20087B063 (34) | |
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Cover Photo:
Power poles snapped like toothpicks and ice-coated clectric lines draped roadsides after the devastating ice storrn which hit North Mississippiin Fcbruary 1994.
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MESS GE 1994 e
e e
The many challenges of the utility industry were successfully met by South Mississippi Electric Power Association .
and its employees during 1994. Internal
- analysis and goals created opportunities for improvement in each department which are reflected operationally and financially in this report. +-
4: ,a Externally, many factors required dedicated planning and execution in order to achieve maximum results for SMEPKs members. The refinancing of an additional part of SMEPNs debt resulted in rate reductions for its members twice within the year.
The greatest external factor to impact SMEPA members was the severe destruction caused by an early-year ice storm. The response for assistance was
- swift, well-planned, and carried out
- professionally throughout the
- restoration period. SMEPKs member .
$ g'" g V systems and employees proved that the g g T'$ , . .
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" spirit of cooperation"is more than -g philosophical- it is alive and well in the everyday operations of Mississippi's electric cooperatives, and easily ,u observed during such times of crisis. t%*h "LJ
- d #5 The true spirit of cooperation continues [* ~ 9 to enhance SMEPAs position as we $. s. i,p-m continue to meet our goal of being an at- d .. ,5 f .,
cost provider for the rural areas of #. M
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K. # uef Mississippi- as the Cooperative's Cooperative.
IIenry Thomas
- General Manager
- h b b'l D WC. McKamy, J r. o President ,
9 2
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k 1 Mem/xr L
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S S EMS i
h Magnolia EPA, McComb
{ Samuel Williams, Manager Date energized 9/19/39 4,660 miles of line j:
22,529 meters f h Pearl River Valley EPA, Columbia i
W.T. Shows, General Manager Date energized 5/19/39 i
! 4,947 miles ofline I l
29,732 meters i
h Singing River EPA, Lucedale j Jack Ware, General Manager
! Date energized 12/5/39 4,826 miles of line
- 49,070 meters l h Southern Pine EPA, Taylorsville
- l. Donald Jordan, General Manager '
l Date energized 5/13/39 l
9,228 miles of line j 50,706 meters i '
4
, h Southwest Mississippi EPA, Lorman O Coahoma EPA, Lyon Robert St. John, General Manager Giles Bounds, Manager Date energi cd 3/27/38 Date energized 1/18/38 3,874 miles of line <
! 1,500 miles of hne 21,504 meters I 6,200 meters l
- $ Twin County EPA,llollandale i
OCoastEra.nart.Loui, s vesner nesier. uanaaer ;
Robert Occhi, General Manager Date energized 12/24/38 ,
l Date energized 5/20/38 2,182 miles ofline 1 4,080 miles of line 11,879 meters 3
49,493 meters h Yazoo Valley EPA, Yazoo City
. O Delta EPA, Greenwood Charles Shelton, General Manager liarry 11. Bonner, General Manager Date energized 3/23/38 Date energized 1/30/39 2,635 miles of line j 5,158 miles of line 8,703 meters
- 21,610 meters
@ Dixie EPA, Laurel j James T. Dudley.Jr., General Manager Date energized 7/28/39 3,945 miles of line 1 28,398 meters 3
4
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e COA $T ELECTRIC I. kl Powra AssoctATioN Dixit EttcTaic Frank 1 ce PowTn ASSOCIATION Robert J. Occhi, LG. Pierte
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g-COAHOMA EttcTaic Magnolia Electric POWTR ASSOCIATION Power Association James llumber DILTA Ettc1Ric llollis Alford, Giles llounds, POWTR ASSOCIATION SCfiffdfy-Tirasurrr
^'#"#S" Ilenry Watcrer,Jr. Samuel Williams,
" E" liarry 11. Ilonner, Gfneral 51anager l
4
a o + o s s s e v , , a n n > s ~ v e
- 140 i
l'1 ARi Ri\ l R vat I t Y Eli C1RIC TWIN col'NTY EllCTRIC l'Owi R AssOct riiON liarlan Rogers, l'Owi R AssOciAllON Morris llow ell WC. McKaniy,Jr.,
W.1. Show s, """I""'-
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Gencidl Mdndgci und
(' #"#' "I """"X" Vesper llagley.
Acting Sccictaly -licastocr .\ldnagci
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4 e e e 3 a SIM.ING Ri\l R EllCIRIC '
YA/OO YAllii Ell CIRIC l'OW I R AssO( l4'ilON '
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lackgya,c, l'ii C1Ric l'OW L R AssOCl\llON Cliarlc5. Shelton, benridl .\ldildgci j'73g( }:gy belicidf .\Idildgci Robert St. _ John, bCncidl .\Idildgci 5
se MAi ~ GE JEET The management team guiding SMEPA's John Carley 3 gr,fy,'j(,[g$c , ,' - d , six separete but united departments is dnven by the cooperative spirit of excellence through leadership. ~
.x. .
Jack liarpole came on board as the new Manager of Finance on February 7, .J 1994. Ilarpole brought 22 years of 3 experience in the utility and banking , industries, which included 15 years of '- service with Cajua Electric Power Jack liarpole l Finance Dcpartment Association in Baton Rouge. lic received his undergraduate and MBA degrees from Mississippi State University and served four years in the U.S. Air Force. liarpole is a welcome addition to South ' Mississippi Electric Power Association's dedicated managerial staff.
~
Terry Lee Engineering Department 1 eeef .
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1 Benny Murray lluman Resources & Dcyclopment Department RidmdMontgnnayRains RicharJ Montgomery retiredfrom the position of Finance Departmcnt .. ( hlanager after 26 years of senke and as ShiEPA'sfirst 25-ycar veteran 4 As a kcy player in SMLPA's organizational structure, Montgomery's commitment translatcJ into a tightly run well.managedJmance Jerry Picice $ Jerartmcnt. . Transmission Department 1 hfontgomery became South Mmissippi Elettric Power Assa iation's Chic] . Accountant andJourth cmployee on November 1,1967, joining a general *J manager, secretary, and a right-of.way employce. Ile began when SMEPA h had no hncs, no plants, and ma vehicles, and was an integral part of the , >. :.' -- cvolvement cf the Associanon into the thriving GST that stands talay We wish Ruhard Montgomery the very twst Junng his ret rcment and hope %f he enjoys spendung tsme doing what he enjavs most - houtmg sasi on his :-
\
Gulfport moorcJ sai! boat. Marcus Ware l Pnnlmtion Department 6
0k1Til ENFORii eoeoeoeoeoeeoeeeeeoeo ION R.D. Morrow, Sr., Generating Station Commerrial Operation: 1978 Location: lamar County Capacity: 400 MW Fuel. Bituminous Coal Employees: 93 Moselle Generating Station Commercial Operation: 1970 Location: Moselle, Jones County Capacity: 177 MW Fuel: Natural Gas / Fuel Oil Employees: 28 SMEPAs two combustion turbines, Paulding and Benndale, are unmanned stations remotely operated by SMEPAs headquaners facdity Control Center. 1 Personnel from Plant Moselle maintain the two units. During 1944, the units were operated on occasion to support load demand. The units were also placed in service from
- SMEPA incadquarters Location:Itattiesburg Torrest County time to time for test purposes to assure continued availability and reliability.
Employees: 115 S Paulding Unit SMEPA is fortunate to have its Morrow Commercial Operation: 1972 and Moselle generating stations located Location: Jasper County approximately hfteen miles from Capacity: 20 MW headquarters. Energy from both stations Fuel: Diesel Fuel is dispatched from SMEPAs Control 1994 Production: 269 MWii Center in Itatticsburg. O Benndale Unit Grand Gulf Nuclear Station Commercial Operation: 1969 (10% Undivided Interest) Locanon: George County Commercial Operation: 1485 Capacity: 16 MW location: Port Gibson.Claiborne County Fuel: Natural Gas Capacity: 125 MW 1994 Production: 836 MWil Tucl: Nuclear Employees: 1 SMEPA counts one employee among I clergis 400+ w ho w otk at the nuclear i site. Joe Craika is the Association's nudcar specialist. Grand Guli Nuclear Station is located approxima:ely 145 miles from SMLPAs headquarters. 7
y, . y ~ I ES < R11 '94 : ; c > ; ooo.................. , n . ("a ! 1 Mother nature gave North Mississippi an . Y icy reception on February 8 and 9,1994 , f , 'j with the worst ice storm the area had , _ Y < {!p a experienced in more than a century. In , those two days, the state's delta region , , m , 7
. was transformed into a land of frozen X e )
destruction. Power poles were snapped
- like toothpicks for miles on end and t;- N -.,
1
- M hundreds of thousands of rural electric :
consumers were without power and other services. The distribution systems
- h ,'
~
I of several Mississippi Electric Power Associations had to be completely .~ .' .^{ reconstructed - systems which had
- originally taken years to build. e e
South Mississippi Electric Power . /N Association's transmission crews and , F T other employees set out on February 11 , tojoin in the massive restoration effort. , , g q Under the Emergency Work Plan, , g (y f ] Mississippi's Electric Power Associations , Q _ Q.i; 1 .I . work together to assist other EPAs in , ( (% - j Q7"
]
times of such system crisis to help w'M ; j M g @fe - liL;'[/ restore power to rural electric h [g,Y ZT l member / consumers as quickly as
* ;wNSb 4,
* ~
possible. SMEPAs crews spent one week rebuilding seven miles of 115 KV transmission line which sened Delta Efectric Power Association's substation in Shaw, Mississippi- all existing * ;
- i structures had been destroyed by the ice ' '
stortn. Although conditions were often
- cold and uncomfortable, the hours long, e f
and the work never-ending, SMEPA's e crews remained in North Mississippi five additional weeks to help rebuild Delta [fM sd . f '[W
' 7ecW .
'." i.2W% ' ih..i. S 5[9 i if ~"
7 :.: g EPA's entire distribution system. , 1 E fi
, 4 The cooperative spirit is the power :.p p %q :
, { .
behind people working together to , ,.
;% y {
g l achieve a common goal- and that spirit M " of unity and determination is alive and
,, ..+
well at South Mississippi Electric Power CW. - . fJ 5 Association. ~ e . 4 dr 4 . O e 8 e
.-, - -, e
- O' ;
- j. .O
. o w ,,z ;
i. REPORT 1994 ! i
- I
. Q g gy Net Moselle generation was 590,266
. MWH - 58% greater than 1993 o The year 1994 was relatively mild production and the highest recorded since ,
. weatherwise with the exception of the 1991. The increase in output can he
, severe ice storm experienced in areas of attributed to a number of factors, including 3
, Mississippiin February As a result of high availability of the Moselle units and
, the avavabihty of r.atural gas at l 7
- , , , , economically attractive price levels. During I .
~
July and August, all three Moselle units ! i
.yp operated simultaneously to meet demand.
/ h The net energy provided by Grand Gulf into SMEPAs system amounted to 961,500
. MWH - surpassing 1993 production by I 5
@{ri
-[dII A
Q. 4,
~~
22%. The absence of a refueling outage and consistently reliable operation contnbuted
-3 y'% %
E
%kM~ to the improvement.
./ - ?
u c- \ u* ' y f 4Way - gfgQgy8gy w .
.j Natural gas remained available in sufficient k~'t
,,,,,,-,q quannues to support operation throughout F"a 14
( "f" the year. Reasonable fuel costs boosted the [f i ,p _] , .p
- 1
{l ? E cconomics of operating the Moselle units. r .
;;.we During a spring outage, a schedulet five-
- i. -
% s - .
. . , year inspection ol the Unit I turbme-g h2 gggg ' generator was completed As part of the
, process, new retaining rings were installed on the generator rotor to address an ,
* '"" "*'CSPCC Y ""DR C industry-wide pmblem with the i
, thhanu at font witc. summer months, South Mississippi components. Also, a new mlet nonle was
- I.lectric Pow-r Association loads insgyas wmc q the a mnnm.,m c,nhwns installed in the turbine to enhance unit estabhshed a peak-hour demand of 881 rehability and performance. Repairs were
,N$t "
MW- 4 3% below the historic peak of made to a variety of turbine components
- 921 MW set in 1993. Kilowatt-hour sales, tow to mallanen er to restore design conditions.
e the p., however, were at an all-time high - 2.6%
. above 1943.
In order to comply with Clean Air Act Amendment regulations, continuous Annual net generation from Plant Morrow emissions monitoring equipment and an
, amounted to 1,829,003 MWil- 19%
associated data acquisition system
, below the near-record 1993 producuon. (CEMS) were installed on each of the
, The decline was a result of changes in three units. The CEMS eqmpment is used
, seasonal demand requirements, to momtor the emissions frorn the boiler purchased energy commitments, the
, stacks and the system records historical continued successful operanon of Grand data for reporting to the Environmental Gulf, and planned maintenance activines. Protection Agency Platforms were e 9
-__1t_______.-_ _ ____
e , e . e e , e + installed on each stack to provide access industry-wide problem with the materials to the monitoring equipment. used in the original components. A higher ,
- i The Unit 2 No. 5 and Unit 3 No. 4 grade material was used in the Icedwater heaters were replaced during manufacture of replacement rings to avoid the year. After approximately 24 years of the possible initiation of stress corrosion
- service, the frequency and quantity of cracking and potential catastrophic failure e faded tubes required that the heaters be of the generator. Similar modifications e replaced. The new heaters improved both were made on Unit 1 in 1993, e rehability and performance of the units. . ;
and decreased maintenance demand. . ! GmndGu[NudarStatim , Record production and high availability R D M M W SE were trademarks of operation at the e bfMM7t[HgStd/[ON Grand Gulf Station during 1994. Net generation exceeded the record which e Plant Moirow was primarily operated in , ynmm gyg,C g g.a I (o &qg..,H .i t.. an intermediate and base load mode , . ;., during the year. The number of units in cf g m Y, ' p m b> a < a service and unit loading was cycled as Jkf ; ^ @A$ [y Nk i necessary to meet system load demand cd/ k YtM[N(y["'[:)H'
/hir l. "
S/
, Ma'Mpy H' s:n, requirements.
New continuous emissions monitoring '~b ' and associated data acquisition systems were purchased and installed on each umt i -
~
'.M
~
to comply wah Clean Air Act legislation. d The new stack emissions measuring equipment was necessary since the existing momtonng system could not meet the g
~b .,
ga ~ 1aM
/ # P~
monitoring and repomng requirements of the revised regulations. As the year ended,
'%p",0.*. . NY progress was being made to complete i certification testing procedures on the -
i monitoring systems. . . The resuhs of a boder reliabihty study -. e i idenufied mochfications and irpair
~
guidehnes which were implemented in 1994 , to extend boiler hfe and improve reliabihty. had been estabhshed in 1988 and the gja 34y, , The modifications were completed on both plant avadabilny factor approached 95% 3s,suaon ocsign , , . uruts in the spring, which contnbuted to a The performance at Grand Gulf continues fngmur, has smalhn ' l successful year of operanon- to exceed industry averages and reflects "'*l'""*" "* W , ' - lory mobnc sukanon
- an improving trend. abusachcrch, ,
Plant personnel conducted an m.spechon SMUA Hrudeancn
- of the Unit 2 turbine valves as part of The plant staff had great success during mhne W planned maintenance procedures. The
- the year in regulatory and cost arras as ;
valves were disassembled, cleaned, and * ] well as in plant performance. For the first - , repaired as necessary inspections of the time, the plant staff received a "I'in all * , turbmc valves are conducted every three categones, the best possible rating. from the * ' years in order to restore design condaions Nuclear Regulatory Commission's
- and to enhance rehabihty and avadabihty Systematic Assessment of Licensee *
- of the units. Performance (sal.PL Additionally the NRC e put Grand Gulf on the " Good performer e ;
The retaining nngs were replaced on the 1.ist' for the third consecutive year. , ) i Umt 2 generator at the manufacturer's , recommendation as a resuh of an 1 * , 10 s
-- ,. a-
e i
.- e gg Qg SMEPA internal funds and supplemental sources, as opposed to borrowing the Activity continued throughout 1994 on money from RUS.
the Assmiation's eastern Kentucky coal propeny Clean coal recovery amounted An engineering firm was retained to assist to approximately 192,200 tons. Ikerd. SMEPA staff in obtaining emironmental
- permits, design of the combustion turbine, Bandy, an east Kentucky coal-mining firm,
- contract preparation, and construction continued to produce coal from both e- surface and underground mining oversight. SMEPAs environmental staff met
.e operations. Also, under an oil and gas with federal and state agencies involved in a lease arrangement, AKS Energy began a the permitting pmcess to identify
, well drilling program and made progress permitting requirements.
e in the development of the oil and gas e reserves on the property gngwnnuntajgfa; Environmental matters have become an area ofincreased national attemion and concern; therefore, an em>ironmental engineer was employed in 1994 to coordinate the Associations l emironmental efforts. The ' Title V' l program, which establishes an air operating permit program that quantifies and limits emissions of 189 pollutants,
.: consumed a significant amount of time
,- dunng the year. The Title V program covers all of SMEPAs facihties and consolidates state and federal guidehnes.
Mississippi's was the first state program approved by the Environmental Protection Agency The Clean Air Act of 1990 established guidelines that led to the continuous g emissions monitoring (CEMS) program. Prior to the advent of this program, the o emissions at SMEPAs generating plants a were monitored periodically by the state e nre insungn. to determine if the units were operating
, Norman.,n sn uaw, ggy Q g g7gjgg g ffgg within compliance. Under the new
, una tw sounsanac. program, SMEPA is required to install and e r r$rrir load forecasts and load patterns indicate maintain equipment that continuously e nindson rta,a the need for a firm source of peaking monitors emissions such that compliance Masd!<wna o m capacay in SMEPAs generating resource can be monitored after the fact, and M paJmude"'^ penalties may be assessed if certain mix. After surveying possible sources for
't , s w, this needed capacity, it was determined guidelines are not met. An engineering neaa pnym t that the most economical and reliable firm was retained to work with SMEPA
- Jonemann plan was for SMEPA to install and operate staff and the equipment supplier to its own peaking unit. Following meetings specify. install, calibrate and cerufy the with the Rural Utilities Service (RUS), a necessary equipment. The estimated cost program plan was implemented to brxe a of the CEMS program is $1.4 million. _
nominal 100 megawatt simple cycle
- combustion turbmc in service at Plant .
- Moselle by the first quarter of 1997. It has T ON e been determined that fmancmg for the SMEPA conunued its activities in 1994 e project in all hkehhood will come from promoting energy efficient homes. SMEPA e
- 11 e
e j e . , e e a .i was represented on the board of directors 3777y73fgjgy yfgggg
- for Energy Rated ilomes of Mississippi, an fu organization implementing and governing # IYI7dNU
- a home rating system required by the South Mississippi Electric Pow er
- t Energy Policy Act of 1992 for energy- k Association crews
- efficient mortgages. In addition, the completed Association was also active in the construction of 5.5 .
Southeastern Manufactured iIousing miles of a 115 KV line Alliance, a group of electric utihties and to serve Southern Pme . housing manufacturers whose aim is t EPA new South - I develop, evaluate, demonstrate, and Brandon substanon. , promote acceptance of energy related Construction was also IL I' L methods for constructing manufactured / completed on 6 43 " housing. This activity is especially timely, MI as 47% of all new housing in Mississippi m les of a 115 KV ' . l transmission line to . 1 i is manufactured housing' i- - l provide for loop feed to Magnolia EPAs Progress ._ !' . ! gpygfg*7gg7g7g substation by SMEPA 4 , l and contract personnel. - 3 ., ;
' '3 'e i
A substantial effort went into installation SMEPA personnel I and tesung of the new microwave hnk from Hattiesburg to South Colhns to replaced a three-way . L Magee, an effon that resuhed in swuch mounted on a - e, i successful completion of the project. The deteriorated wooden : instalianon and maintenance of personal pole with a three-way ' X d computers and peripherals grows in switch mounted on a L. id i 7 importance as more of the work force steel pole at Gwinville , depends on the power of the computer to Junction Linc ' ' accomplish their tasks. At the end of adjustments were made - - 1994. SMEPA employees were using 125 due to stream crosion, . ;, . 1 . 4 personal computers and 84 printers highway c. - maintained by SMEPAs electronics improvements, and to . . .j accommodate the '1 maintenance section. .. addition of a second c . j- 3 feed to Singing River 1 - i
.[j.
ll/llt7b# bHlN#1 HUM EPA substation at . qf - Ocean Springs. t - '. :s . l N~c' - ~~ - A reserve capacity agreement was i replaced with a new contract between The Transmission Department also began
"'" "* h "' """ i
- SMLPA and Mississippi Power e,r Light coordinating the surveying of proposed Company that resulted in lower costs and , G'our Orr'arrd ^u e
" ' # "** " "# 8*" "' h *^ 8 '
more flexible scheduhng. SMEPA , from Waynesboro to Missionary and ga ac,'c , huged our personnel worked very closely w1th the * , 115 KV lines to serve Magnolia EPS m l*hmn l
- Southeastern Power Administration proposed Arhngton and Pisgah substations. dd'"'"'"*8 "*' *
(ngho re wui Mo , l (SEPA)in the area of contract l negotiations, controlling the operating , and maintenance costs for SEPA power,
- and studymg the feasibihty of a SEPA N8NI N N control center. A new contract furmshing Na[1Y6/dll& e transmission wheehng for Alabama
- Thmughout the year. SMEPAs 1,426 miles Electric Cooperative provided an e of tr nsmission kne, rights of way, and addinonal source of revenue for South nmnemus sw,tches were maintamed by .
Missmippi Electric Power Association. SMEPAs line crews and contract e j personnel e l l' Climbing inspections were performed on , t e 12 s e
p
, a
- z' o 0
3,524 structures by the Association's line
- o' g crews. The crews completed 927 hne o
maintenance work orders which included All sections of the Association's o' changing or repairing broken crossarms. Engineering Departme't participated with
~o braces, insulators, guys, damaged SMEPAs transmission and land staff o conductors, and poles. The crews also members, as well as the erwironmental o ' installed ground rods on 381 structures to staffs of both RUS and SMEPA, to conduct
-o improve system grounding. SMEPA a Public Scoping Meeting on the proposed a personnel assisted members in hauling 230 KV line from our existing West g and transporting transformers, mobile Waynesboro substation to a new o Missionary substation. This is the critical y ,y - c7y, mqcym. .'r 7~! cady stage of the proposed multi-million
;/ 1 R '
l dollar project. Y~ ~ ' s PlanningedBotanon y The Planning and Protection Section
'. . N .
Y , y '
; participated with seven member
^
y cooperatives in the review of the member's Two Year Construction Work l [. Plan or Long Range System Study
.r
.b i-. j; The electronic metering project continued E J with the installation of 17 Quantum C '" ,'
p>; r f y meters using cellular phones. At the end 1 >
>^ c 0 of 1994, there were 159 remotely
! I 3; q , 1 ] accessible meters at 149 sites throughout P m g T< j SMEPA's system. One hundred forty-four
.g w Li; "i* ,
j of those sites use cellular phones, two p t ' ls ' s - sites use power line carrier, and two use g .. ol South Central 13cll land lines. Load flow ws. ,
.mawbaaw L , ad and short circuit equivalent data was developed on the SMEPA G&T area for o A ounc as th' "'" SERC and SPP reliabihty councils and in substations, and replacing poles in 8
$$ 7 she mogwm.
inaccessible areas. niicipation of a SMEPA long Range System Study. e ew m m nagu.
- The annual recleanng of approximately 8 "
[; 25% of the transmission system's right-of-way consisted of reclearing 4,100 hne g ggffgffg)gg 5 acres. A total of 3.006 danger trees were SMEPA relay technicians performed relay
- removed from critical transmission line acceptance,' calibration, and control e sections. Pole groundline inspection and circuit verification for the new relay e treatment were performed on 2,197 poles panels at West Hattiesburg. Maxie, and e in the transmission system. the mobile sub-station. In routine calibration checks at 13 SMEPA
, Seasonal vegetation control was performed substations, the relay technicians
- at 100 hne switch h, cations and stations, cabbrated 1,303 relays and transducers in
# and aerial patrol inspections of the entire 1994.
- transmission system were performed penodically and on an as-needed basis. The
- Meter technicians built and installed new scheduled annual hne maintenance not electronic meter boxes at 17 different completed due to work associated wnh the
- sites. Also, based on new load projections ice storm was rescheduled to be completed from mernher systems, the meter carly in 1995.
technicians increased current transformer
. (CT) capacities at three member dehvery
, 13 o .. _ _ _ _ _
o e e e . points. The technicians cabbrated meters locations were made. Contract personnel at all 165 SMEPA wholesale meter points. completed capacity tests on the 125v and 48v battery sets at Columbia and
- i . . Lumberton.
- DaiignBigmanng .
Infrared surveys were
- In substation design, highhghts during completed on Pm"!"
1994 included completion of new substation facihties er W P"~~* N 2r~"~~%"7 % U; r
' 'r %c
- ~ .
facdities, includmg transformer, circuit !- - belonging to South t u switcher, and rclay panel, for the West E . llattiesburg and Maxie substations. Mississippi, Dixie, 4 g;.4-< s Design E.ngineering began site design and Pearl River Valley, Twin *
.$1 ,
Prm-p 'm s ordered major substation equipment for - "* I' #S" "#'
~_
4 Deha, and Mern {[ _ the new Missiona,y 230/69 KV k.
, 4 Pine Electric Power s substation. Line design work was begun , s &
^"'I"". " * '
l on the new 230 IW line from West ' *
. lierbicide application Waynesboro to Missionary This work wdl for 110 GOAB, ..J include the use of a new cornputer f m - '" $4 program that will optimize structure
** "E#U""' b :< . ~ '$i locations and thereby help lower the total
"" ' "* ***[#' sE' h / M M line cost. and radio repeater sues pg were also completed.
4j
., w,;p ^
aI in communications, the 11attiesburg to 'F South Colhns to Magee 6Gliz microwave hk '1, h I< [ l hnk was 90% complete at the end of NN Il 7ntlhon 2h 5 1994. FCC station licenses were received g h for the upgrade of the 2Gilz microwave yfgyng (y ^ system to 6Gil: at Plant Moselle, Plant h>b M Morrow, and flattiesburg. Prehmmary A change in the p ~ 97 engmeenng continued on the extension of computer system 3 , n- - the 6Gliz microwave to Columbia, llomewood, and Missionary and the architecture began in 1994 with the mitial , e F} ' installation of 900 Mil: radios for the planning for a move to Katrel to State Line and Purvis Bulk to a client / server h Lumberton communication hnks. erwironment. Current applications will be migrated from the
"'*k"*' ' 'uc nc SuhtationMaintenanx system over the next ,
The substation mamtenance crew two years. Moving appheations off the , completed routine mamienance on mamframe will improve system gy,,,,nr rAmn . twenty-nine 69 KV od ciremt breakers performance and increase space for data wngrn ans ym,nen (OCBs) at six different substations. The storage. The client / server technology will the menenents main group also completed maintenance on also unprove companbihty of office eleven transformers and auto transfomiers aummation software packages, reduce ]'".g'] g gg g, at six sites, includmg the mobde teplacement/ upgrade costs, and allow more mnien,,umr. imu,ca ,n substation. Maintenance by contract flexibthty for expansion in years to come. Ac croatmnucnto at 8 personnel of all 16i KV oiI circuit ,J,$','"'$ "* breakers (46 breakers at eight snes) was 98% complete at the end of 1994. p g ,ang,c innunai (nwn
- whu h waunstancd on
- l' poln m thra d@crent e Employee efforts and support continued Nwns and um in Substation mamtenance personnel to pay dividends in the form of cost l wnm.: wh the on to
- perfomied 207 routine substanon savings to the Association's medical phn oroarc thmtan
- inspections at 37 thfferent h> cations in 1994. Addalonal dmounts were "~""'**
throughout SMEPAs system. As part of negotiated with preferred health care
- these routine inspections, 38 routine providers and employees responded
- battery set checks at nine ddlerent ,
e 14 , e
_ _ _~_ _. _ _ _ _ . _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ , e. ! t l e-l.. i o
, e
, e allowing the Association to complete its designed and printed in-house by section i
- fifth consecutive year without an increase - personnel for SMEPA and its member in funding requirements of the systems. Communications support for
- Association's self-insured medical plan. special projects was provided to member systems to enhance their kral public e relations efforts, and panicipation in e' -
statemde projects and activities were !
- c ntinued. The Information Services j SMEPA employees broke all safety records in 1994. SMEPA achieved its best safety secti n served as an official co-sponsor of !
- the 1994 Tri-State Member Services record in history with no lost-time
, meeting held in Natchez with Mississippi, j~ M Louisiana, and Arkansas electric l ~lj" t cooperatives. )
. I g. 4:1 : :-
E -h -
, g~- ,,
On a local level, employees participated
! ~l ';' 4
( . l in community-oriented projects,
'. . . . ' including campaigns for the United Way's y of Southeast Mississippi and the Pine Belt
....,, .- Region, and the American Cancer Society j
~
Employees also participated in blood ll g .
- bank donor programs, corporate athletic I
,, m. teams, and the annual Adopt-A-Family T
, holiday season campaign.
J
% 'b '
' WW Plant tours and educational presentations for schools, member systems, and civic organizations were conducted throughout i
the year, and the Adopt-A-School
\
$ partnership with North Forrest j
Elementar'j remained a positive feature of g
' ~
6 SMEPKs employec/ community endeavors.
~ szt
- s!uun c,nolowr, accidents and only four reportable
, twooparmg in <h,- accidents for the year. Employees
, UnacJ Way Cmporau achieved this record in a year that offered e t[m$p$cy many challenges including working
. , ram DJn hm, wuhout injury in the most severe ice h SanJm, du k storm in the state's history Several i pom icto charb wetions added another twelve months i
, la ma,J;,n, und naia
( during the year to their already impressive streaks of working wahout a lost-time . r, awn. accident. These included Corporate d
- Planning & Operations Department's
- electronics section at 91 months; Nant
- Mosel!c at 89 months; Engmeenng
- Department,73 months; and the
- Transmission Department at 67 months.
hbucandMenderRdations SMEPA continued to expand its internal, member, and pubhc relanons efforts dunng 1994. Quality publications
- including employee newsletters,
- brochures, and other requests were e
e 15 i * . -- .- . . . , - - -
a Enccial m 3EPOR 1994 z................. . The year 1994 was another year of million per year. Shortly after the solid financial performance for repricings were completed, market SMEPA. Cost reductions in fuel, rates began a dramatic climb in
. interest and other areas were response to actions by the Federal significant enough to allow a Reserve. To achieve the repricings, reduction in wholesale power rates to SMEPA was required to pay penalties SMEPKs eleven member cooperatives. of $33.8 million which will be For the year, the wholesale power rate amortized over the remaining life of averaged slightly less than 45 mills the long-term debt. Amortizing the per kilowatt hour, the lowest level repricing penalty effectively adds since 1984. The 1994 rate was a full about 0.3% to the cost rate of the debt 5% lower than that charged in 1993 outstanding.
and marks the seventh consecutive year of reductions in the non-fuel Total debt outstanding at year end components of the wholesale rate. 1994 was $672 million, down $19 million from the previous ycar. The Revenues from members amounted to average cost oflong-term debt
$267 million for 1994, down $7 decreased to 6.6% from the 8.0%
million from the previous year. Energy reflected at the end of 1993. For the sales to members were up 2.6% to first time in several years, no new 5,979,874 megawatt hours- the debt was added during the year. highest ever, but the rate reduction led to reduced revenues. Discretionary investments amounted to $55 million at year end compared Margins for 1994 were up to $51 million at the end of 1993. considerably to $13.8 million Due to market rates rising during the compared to $8.8 million last year. year, SMEPA lengthened the term of SMEPAs equity is now 7.5% of total much of the discretionary investments assets. and the funds were earning 6.3% at year end. In early 1994, SMEPA completed the repricing of $232 million of long-term debt to take advantage of lower market rates. The coupon rate was reduced to 6.4% from previous rates exceeding ten percent. First year interest savings amount to $10 million. When added to the $101 million of debt that was repriced over the years 1992 and 1993. SMEPA has reduced interest costs by about $15 I M
.~' $7.2 I
43.4 EquitiaandPanonageCtpital '" Mdlions ikflars .
'94 '93 '92 91 '90 3.8
$0N$ On oeee oe oe eoeo ee e eee eo e ee a eeeeo ee ,_,
2.9 MiUions of 8 7'
'94 '93 '92 '91 '90
- 6. 0
$.8 m M etn k '
s., y eee e eee ee e . . ee e eee oe e e e o e e e oe e Miuions
#I
'94 '93 '92 '91 90 48.74 4 7.02
\blaaleRatemManlm 4s.n
> e s, e ee e ee a o e oe e e e e oe o e o ee e e o ee e qu4 4L32 ., DJBJ
'94 '93 '92 '91 '90
}7
g ~ y: ' O# - w u n . . . . . . /.b ... +
' TOTAL 5YSTEM-MILLS /KWII OF SALES 1991 1923 1222 1921 1920 h Production Costs, Purchased Power, and 1merchanged Power - 28.03 27.90 26.24 26.14 27.72 Transmhsion O&M 1.70- 1.62' l.60- 1.70 1.81
, A&G Expense ' .80 - .79 ;76 .79 .83 Depreciation and Amortization 3.66 3.57 3.72 3.81 4.10 Interest (Nr0 6.78 8.66 9.37 10.34 11.56 -
Taxes and Other .41 .50 .21 .14 .16 TOTAL-MILLS /KWil OF SAL 515 41.38 43.04 42.91 46.18 - _41.90 _ - L e o M^".nW.ratite
?
Balance Sixes arulSelectedFinancialRatios
....................................... .......... ($. .in b L 1991 19.23' 192.1 129_1. L93 UTILITY PLANT in Service $ 751,518 $ 737,175 $ 733,882 $ 731,832 $ 726,048 Construction Work in Process 13.396 20.213 16,987 7,605 10.468 764,914 757,388 750,869 739,437 736,516 -
Depreciation 240,410 218,934 199,257 182,675 169.891 NET UTILITY PLANT $ 524,504 $ 538,454 $ 551,612 $ 556,762 5 566,625 OTilER ASSETS Unrecovered Plant Cost 78,036 80,789 83,489 86,096 87,984 Cash and Temporary Investments 27,591 51,42) 21,990 25,571 38,184 inventories 24,759 21,604 32,568- 28,234 22,349 Deferred Charges 35,228 12,809 7,696 1,932 1,549. j . Other 72.915 67,555 59.253 60,432 47,255- ; TOTAL OTilER 238,529 234,178 204,996 202,265 197.321. j TOTAL ASSETS. $ 763,033 $ 772,632 $ 756,608 $ 759,027 5 763,946
]
l' EQUITIES AND LIABILITIES Equities and Patronage Capital $ 57,221 $ 43,397 . $ 134,556 5 30,088 $ 27,050 : Long-term Debt 651,518 674,597 686,045 693,319 705,964 Other Liabilities 54,294 54.638 36.007 35,620 30,932 l
$ 763,033 $ 772.632 ~ $ 756,608 $ 759,027 $ 763,946 !
TOTAL EQUITIES AND LIABILITIES
-I l
RATIOS
' TIER 1.31 1.15 1.07 1.05 1.13 l DSC 1.27 1.24 1.17 1,17 1.25 !
Equity as % of Assets 7.50% 5.62% 4.57% 3.96% 3.54 % DEBT Long-term Debt $ 651,518 $ 674,597 $ 686,045 $ 693,319 $ 705,964. , Current Maturities 20,294 16,791 15.375 14,274 13,312-TOTAL DEBT $ 671,812 $ 691,388 $ 701,420 $ 707,593 $ 719,276 ' Average Rate 6.64 % 7.96% 8.41% 8.85% 8.97% ' WilOI.ESALE RATE TO MEMBERS : Mills /kWil 44.64 47.02 45.32- 46.12 48.74 l 18 '
~ ~
pp;, p': .pwloocoy. ..'.atite
. . . 7.".Matinf.Statemene(In
... Timusands) s g g g' :q .g o REVENUE' l Sales of Energy $ 283,345 $ 293,440 $ 267,898 - . $ 261,908 .$ 264,326 .i
~ Other : 1,735 (108) 22 232 (210)
-. TOTAL. REVENUE $ 285,080 $ 293,332 $ 267,920 S 262,140' $ 264,116 >
' EXPENSE .- ._
j i-
- Operation Expense: .
' Production-Fuel Cost . 59,904 64,674 ' 52,149 55,049 60,782 Other Production Expenses 12,034 15,338 14,000 12,278 13,202-L Purchased Power 106,704 99,571 93,881 86,614. .74,297.
P Transmission 9,391 9,243 8,587 8,764 8,459 ' Consumer Accounts ~ 64 66 55 52- 40 Sales Expense . 151 132 121 93 84 [:- Administrative & General 4,529 4,484 4,086 4,056 3,980 '
]
Total Operation Expense 192,777 193,508 172,879 166,906 160,844 - Maintenance Expense: Production 7,238 6,636 6,724 6,080 7,268 Transmission 1,880 1,546 1,593 1,629 1,697 General Plant 584 593 569 637 562-Total Maintenance Expense 9,702 8,775 8,886 8,346 9,527 : Depreciation and Amortization 24,293 23,822 23,614 23,330 - 22,985 Taxes' 1,039 1,121 1,031 791 836' Interest Expense (Net) and Other Deductions .46,623 58,501 59,880 63,603 65,183 TOTAL EXPENSE 274,434 285,727 266,290 262,976' 259,375 OPERATING MARGINS 10,646 7,605 1,630 .(836) 4,741, NON-OPERATING MARGINS AND NON-RECURRING ITEMS 3,178 1,236 2,838 3,874 3,961 NET MARGINS $ 13,824 $ 8,841 $ 4,468 . $ 3,038 $ 8,702-p i 19 m
g
~
F . Canparatite Summary /Enagy Sowra andSala . w.9ecoc..................................... c 1991 19M 1921 1991.- 1920
= ENE'RGY SOURCES-MWil-Generated:
k- Steam . 3,390,750 3,340,964 2,891,783. 3,070,210 3,168,406
. Other Generation 1,109 1,223 '266 1,643 3.584 3,391,859 - 3,342,187. 2,892,049 '3,071,853 .3,171,990-
. 74 g Purchased: .
L Direct Purchase . 1,463,633 1,768,526 1,854,658 '1,629,558 982,926 Borderline - (SEPA) 96.189 102,100 103,570 96,148 106,648 1.559,822 1,870,626 1,958,228 1,725,706 1,089,574.- Interchanged Power (Net) 1,795,851 1,579,136 1,597,162 1,434,367 . 1,457,712 TOTAL ENERGY AVAILAllLE FOR SALE-MWil 6,747,532 6,741,949 6,447,439 6,231,926 5,719,276 ENERGY SALES-MWil Members Coahoma EPA 101,366 100,573 89,130 90,591 88,763 Coast EPA 923,389 863,922. 823,751 743,020 731,342 Delta EPA 399,291 399,880 367,242 366,018 367,305 Dixic EPA 505,377 505,394 491,085 462,245 436,878 Magnolia EPA 428,158 420,146 380,878 ~ 375,319 378,111 Pearl River EPA 503,356 475,793 440,102 .445,467 440,644 Singing River EPA 911,066 880,723 847,965 808,434. 786,146'- Southern Pine EPA 1,389,295 1,374,206 1,267,927 1,215,764 :1,183,249
- Southwest Mississippi EPA 372,818 378,546 348,734 336,997 337,582 Twin County EPA 229,376 217,716 :204,507 217,231 215,478 Yazoo Valley EPA ~216,382 214.072 219.443 232,134- 201,657 TOTAL SALES TO MEMBERS 5,979,874 5,830,971 5,480,764 5,293,220 5,167,155 Non-Members 651,485 843,908 873,455 828,500 444,355 TOTAL SALES 6,631,354 6.674.8'79 6,354,719 6,121.720 .5,611,510 TOTAL SYSTEM DEMAND-kW (Billing Demand-Non-concurrent) 1,494,243 1,475,070 1.380,688 1,332,901 1,448,259 20L
n n
,+
- [
hdepcndentAtdkr's REPOR Board of Ditrctors South hiississippi Electric Power Association Hatticsburg, hfississippi We have audited the accompanying balance shects ofSouth hiississippi Electric Power Association as of December 31,1994 and 1993, and the related statements of net margins and patwnage capital and cashflowsfor the years then ended. Thesefinancial statements are the responsibility of the Associationk management. , Our ursponsibility is to express an opinion on thesefinancial statements based on } our audits. We conducted our audits in accordance with generally accepted auditing standards and the standardsforfinancial audits contained in Government Auditing Standards, issued by the Comptroller General of the United States. Those standards arquire that we plan and perform the audit to obtain trasonable assurance about whether thefinancial statements arefree of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in thefinancial staternents. An audit also includes assessing the accounting principles u>cd and significant estimates made by management, as well as evaluating the overallfinancial statement pursentation. We believe that our audits provide a reasonable basisfor our opinion. In our opinion, such financial statements presentfairly, in all material respects, thefinancial position ofSouth hiississippi Electric Power Association as of December 31,1994 and 1993, and the results ofits operations and its cashflows for theyears then ended in confonnity with generally accepted accounting principles. As discussed in Note 12 to Ihefinancial statements, the Association changed its methad of accountingfor postuctirement benefits other than pensions in 1993. l 2di W % da LLP February 9,1995 21
$Ij W g, f y i 1
' .,L
) -
-*?l L w
'C60000eeeeeeeeee, f w ' ;;b' 8 [ ASSETS : _ e[ ! L > December 31 -
' 1991 '1993. .;
(In Thousands) . !i
* " ELECTRIC UTILITY PLANT (Notes 1,2, and 3) . ;;
-I
~ In service - at cost - $ 751,518 $ 737,175 :?
Construction work in process
- 13,396 20,213' .l 764,914 757,388. .- ;i N Less allowance for depreciation' 240,410 . 218,934 : ;
.i 524,504 538,454. :j OTilER ASSETS AND INVESTMENTS - '!
l
- Unrecovered plant cost - at cost (Notes 1 and 3) 78,036 80,789 j Investments in associated organizations (Notes 1,4,5 and 11) - 10,714 '10,686 i Other investments (Notes 1,5 and 11) 15,444 Debt service reserve (Notes 1,5 and 11) . 8,502 - 9,284 - l Decommissioning trust - at cost (Notes 1,3,5 and 11) 3,474 2,798 R Other noncurrent assets 4 4 .j 116,174' J103,561 r
- CURRENT ASSETS - -l General fund cash and temporary cash equivalent .
- investments (Notes 1 and 11). - 27,591 51,421 , !
- Other invested funds (Notes 1,5 and 11) 11,002 18,002I 'l
.Accoimts receivable (including receivables from ,
members of approximately $20,366 [1994] - i and $23,789 [1993]) 22,180 -25,474_ !
' Inventories (Note 1):. ;
Coal and other fuel 10,989- 8,767. 3; Materials and supplies 13,770 12,837 l
.i
' 24,759 ~ 21,604- ,
Other 1,595 1,307' -i i 87,127 117,808 { v
- del' ERRED CllARGES (Notes 1,6, and 9) 35,228 12,809 7
1OTAL ASSETS : $ 763.033 ' $ 772,632 - .l See " Notes to Financial Statements f
.t b
.i
.22
}
7-. y,, -
, p. ,
h $~f' Mb EQUITIES)AND LIABILITIESj g +
- December 31.
"l l& , 1991 _
.;1991
.. .(In Thousands) '
Qq EQUITIES.(Notes l'and 7), i n: s a
,. ; Memberships and donated capital- ; $ -- 535 .$ L535' 7' i Patronage capital ; 56,686 '42,862 p.
'57,221 _43,397-4 Pl f LONG-TERM DEBT, excluding current maturities (Notes 9 and 11)' 651,518 674,597f e ACCRUED DECOMMISSIONING OBLIGATION (Notes 1 and 3) 3,474 ' 2,798.
DEFERRED CREDITS AND OTilER LONG-TERM LIABILITIES - 3,473 ' 3,890
= (Notes 10 and 12)-
n
'. CURRENT LIABILITIES ~
Accounts payable 14,703- 16,003
. Accrued interest 10,555 ~ 13,267 -
.Other accrued expenses 1,795 1,889 Current maturities of long-term debt 20,204 16,791 47,347 47,950
~
.. COMMITMENTS AND CONTINGENCIES (Notes 3 and 13)
, TOTAL EQUITIES AND LIABILITIES $g $g-1'
} \ _ _ _ _ 23
6& f 4E , - r y r w 7; 1 to b e o o o e e e o e e e e e e o e's e e e e e o e e e o e * * * * * * * * *
- e o e ' Years Ended December 31-I
- 122.i: ;1923 , ,
'(in Thousands) ;
i OPERATING REVENUE . Y- Electric energy revenue . S 283,345.. $ 2934 440 .[*
- Other- net - 1.735' (108):
285,080. 293,332 -l
.- OPERATING EXPENSES ,
Operation expenses' ; Fuel 59,904 64,674 Production - 12,034 15,338 Purchased power 106,704 99,571 , Transmission 9,391 9,243 I Administrative and general 4.744 4,682 193,508 l Maintenance expenses: 192,777
]
Production 7,238 6,636, :l Transmission 1,880 1,546 i [- General 584 503-
. I 9,702 . 8,775 i
' Depreciation and amortization (Note 1) 24,293 .23,822 1 Taxes 1,039' 1,121 227,811 227,226 i J
OPERATING hlARGINS IlEFORE INTEREST AND OTilER DEDUCTIONS 57,269 66,106- 1 1 INTEREST AND OTilER DEDUCTIONS interest 46,778 58,364- l Allowance for funds used during construction (Note 1) (224) (218) l Other deductions 69 355- l 46,623 58,501 :
' OPERATING MARGINS 10,646 7,605 l 1
NON-OPERATING M ARGINS - PRINCIPALLY INTEREST INCOME . 3,178 2,799 l TNET hl ARGINS BEFORE CUMULATIVE EITECT OF CllANGE ' IN ACCOUNTING PRINCIPLE 13,824 10,404
.. CUMULATIVE EFFECT OF CllANGE IN ACCOUNTING PRINCIPLE (Note 12) - (1,563) - [
i NET MARGINS 13,824 8,841 PATRONAGE CAPITAL AT 11EGINNING OF YEAR 42,862 34,021
. PATRONAGE CAPITAL AT END OF YEAR $ 56,686 5 42.862 .
< ~ I See " Notes to Financial Statements"
-24 l
./
9; M jin isii O 4.ooooeeeeeeeeeeeeee f. & & : Years Ended December 31 19.9.1 - . .
. 1093-(In Thousands)
CASH FLOWS FROM OPERATING ACTIVITIES p : Net margins' 5 13.824' $ : ; 8,841 6 c Adjustments necessary to reconcile net margins to net cash provided by operating activities:- Cumulative effect of change in accounting principle ' ~ 1,563 -
- Depreciation, amortization, and depletion 26,681 26,586 p- . (Increase) decirase in accounts receivable 3,294 (3,994)
~ (Increase) decrease in inventories (3,156) 10,964 h
increase in other assets .
-(280) - (2,767) .~
. Increase (decrease) in accounts payable and other liabilities (1,811). 2,462 Increase (decrease) in accrued interest payable (2,713) 12,623.-
Increase in accrued decommissioning payable 676 -568 Net Cash Provided by Operating Activities 36,515 56,846 CASil FLOWS FROM INVESTING ACTIVITIES Construction and acquisitions of electric utility plant (8,331) (8,665) Cost of retirements of electric utility plant (net) 213- 74 (Increase) decrease in debt service reserve 780 .(179)- Increase in decommissioning trust (676) (568)
. (Increase) decrease in other invested funds 7,000 (3,964) -
Proceeds from redemption of investment in associated organizations 2,000.
. Purchase ofinvestment in associated organizations (28) (1,362) '
Purchase of other investments (15,444) Other- (66). Net Cash Used iri investing Activities (16,486) (12,730) CASil FLOWS FROM FINANCING ACTIVITIES Payment of debt: Principal reductions - (19,566) -(12,214) Repricing (232,171)' !(82,824) Penalty associated with repricing (24,203) (4,653) Proceeds from debt: New indebtedness 2,842 Repricing ' 232.171 ~ 82.164
' Net Cash Used in Financing Activities (43.850) (14.685)
NET INCREASE (DECREASE)IN CASil AND CASil EQUIVALENTS (23,830) 29,431 lCASII AND CASil EQUIVALENTS AT llEGINNING OF YEAR 51.421 21.900
- CASil AND CASil EQUIVALENTS AT END OF YEAR SM CASil AND.CASil EQUIVALENTS AT END OF YEAR:
Crth .$ 186 $ 462 Commercial paper 27.405 50.050 5 27,501 5 51,421' See
- Notes to Financial Statements" 25
-1 NotatoFinancialStatements YeanEndedDecember31,1994and1993 -
3 .. .................................. NOTE 1 -
SUMMARY
OF SIGNIFICANT ACCOUNTING POLICIES South Mississippi Electne Power Association (SMEPA) is a rural electric cooperative established under the laws of the State of Mississippi. SMEPA is a generation and transmission cooperative which provides electnc power to eleven owner-members which are rural electric distnbution cooperanves providmg electric power to consumers in certain areas of Mississippi. Financing assistance is provided by the United States Department of Agncuhure, Rural Utihties Service (RUS). In addition to bemg subject to regulation by its own governing board of due; tors, 5;4 EPA is subject to cenain rules and regulanons promulgated for rural electnc borrowers by RUS. SMEPA maintains its accounting records in accordance with the Federal Energy Regulatory Commissions Chart of Accounts as modified and adopted by RUS. As a regulated utihty, the methods of alkicating costs and revenue to time periods may differ from those principles generally apphed by nonregulated compames. The more signif cant accounting pohcies are generally described as follows:
- a. Electric Utihty Plant and Depreciation Electric utility plant is stated at cost, which includes contract work, materials and direct labor, allowance for funds used during construction, and alkicable overhead costs. The cost of electric generatmg stauons and related facihties also includes costs of tiaining and production incurred,less revenue earned, prior to the date of commercial operation.
Depreciation is provided by the straight-hne method for utihty plant at the following annual composite rates. Nuclear generatton plant 2.85% Non-nuclear generation plant 3.00% to 310% Transmission plant 2.75% General plam and transponation equipment 2.00% to 25,00% At the ume umts of ciectnc utihty plant are retired, their original cost and cost of removal, less nei salvage value, are charged to the allowance for depreciation. Replacements of electric utihty plant involving less than a designated unit value of property are charged to maintenance expense. Coal reserves are stated at cost. Depletion is provided by the units mmed method
- b. Cost of Decommissioning Nuclear Plant and Amortization of Unrecovered Plant Costs SMEPA's ponion of the estimated decommissioning cost of Grand Gulf Nuclear Station (GGNS) Unit 1 is charged to operating expenses over the service hfe of Unit I of approximately 35 years.
SMEPA's portion of the unrecovered plant costs of GGNS Unit 11 which has been abandoned, of $78.03o,000 and $80,789,000 at December 31,1994 and 1993, respecovely, is being amortized over the remaming hfe of the related debt of approximately 27 years, and was $2,752,000 and $2.678 000 in 1994 and 1993, respectively
- c. Allowance for Funds Used Dunng Construction Allowance for funds used dunng construction represents the cost of directly related bort 0wed funds used for constructic,n of the electric plant, where apphcable, and an allowance based on the average cost of appropriate borrowmgs when general funds are used to fund construction.
The alkiwance is capuah:cd as a component of the cost of the electric plant while it is under construction. Capitah:ation ceases when the electric plant is placed in service, or in the case of electnc generaung stations and related facihties, at the date of commercial operation.
- d. Investment Secunties in May 1993 the Fmancial Accounting Standards Board ("FAStr) issued Statement of Fmancial Accounting Standards ("SFAS") No.115
*Actountmg for Certain Investments in Debt and Equay Securities " This statement requires that only debt securities that SMEPA has the posuive intent and abihty to hold are to be classified as held to maturity and reponed at amoni:cd cost; all other secunties are to be reported at fair value. This pronouncement is effective for hscal years beginnmg after December 15,1993. SMEPA adopted SFAS No.115 effective January 1,1904, in accordance wnh the provismns of the pronouncement, prior years' financial statements were not restated.
Investment secunties held to matunty are carried at cost, adjusted for the amoru:ation of premiums and accretion of discounts. Premiums and discounts are amont:ed and accreted to operations using the level yield method, adjusted for prepayments as apphcable. SMEPA has the intent and the abihty to hold these assets as investments until their estimated maturities. Under certain circumstances (including the signihcant deterioration of the issuerb credit worthmess or a significant change in statutory or regulatory requirements), securities held to maturuy may be sold. At December 31,1994, there were no investment secunues avmlable for s,de and SMEPA does not maintain tradmg account securities. 26
...___ __ - 1
,W 4
N 1 e, inventories
;, Inventones are stated at average costs,
- f. Deferred Charges Cost of prehminary surveys for development of possible methods to obtain and dehver energy to fulfdl members' future requirements,
- including feasibihty studies leadmg to financing necessary plant expenditures, are recorded as defened charges. If construction of a project l results from such surveys, the deferred charges are transferred to the cost of the facihties, if a prehnunary sarvey is abandoned, the costs Incurred are written off. ;
liond issue costs are being amortired by the straight-hne method, which does not ddfer materially from the interest method, over the term of - the related debt. The amortization dunng the period of construction is capitah:cd. DcIerred decontamination and decommissioning of past uranium enrichment operauons represents SMEPAs ten percent portion of the GGNS assessment pursuant to provisions of the Energypokey Act of 1992 (the Act) The Act assesses domestic nuclear utihtles fees which wdl be used to estabhsh a fund into which payments from unhties and the federal govemment will he placed. The Act requires that regulators treat these assessments as costs of Iuct when paid. SMEPA plans to expense these amounts as they are paid over hheen years. l l
- g. patronage Capital j The hylaws of SMEPA provide that any excess of revenue over expenses and accumulated prior year dehcits shall be treated as advances of j capnal by the member patrons and credited to them on the basis of their patronage. j
- h. Interchange Power SMEPA records the electrical power received or provided on an interchange basis at its cost as determmed under various contractual arrangements
- i. Employee lienehts Substantially all of SMEPAs employees panicipate in the National Rural Electric Cooperative Association (NRECA) retirement programs, which indude both a defined beneht pension plan and a defined contnbution pension plan. Iloth plans are quahhed under Section 401 and are tax-exempt under Section 501(a) of the Internal Revenue Code. SMEPA makes annual contnhuuons to the dehned beneht pension plan equal to .
the amounts paid to NRECA for pension expense except for the perkid since July 1,1987, when a moratorium on contributions was placed in eflect due to reaching full fundmg hmitauon. In this muhiemployer plan, which is as ailable m all member cooperatives of NRECA, the accumulated benehts and plan assets are not determined or allocated separately by individual employer. SMEPA paid $159.000 in pension expense for the dehned benefu pension plan in 1994 due to the hiting of the moratorium There was no pension expense in 1993. SMEPA makes monthly payments to NRECA for the beneht of those employees who voluntanly panicipate in the defmed contnbution pension plan. 1 SMEPA expenses the payrnents as they are accrued and such expense amounted to 5475,000 and $505,000 for 1994 and 1993, respectively ! I SMEPA also provides certain heahh benehts to irtired employees and their chgible dependents if the employee meets specihed age and service - trquirements. Generally, the rnedical plans pay a stated percentage of medical expenses reduced by deducubles and other coverages. SMEl% also provides hfe msurance benehts to a closed group of seven employees who retired prior toJanuary 1,1990 (see Note 12).
- j. Income Taxes ;
SMEPA is exempt from Uruled States income taxes pursuant to Section 501(c)(12) of the Internal Revenue Code, which requires that at least ) 85% of SMEPAs gross income he denved from its members l
- k. Cash and Cash Equivalents Eor purposes of reportmg cash flows all temporary investments with maturtues of three months or less when purchased are deemed to be cash equivalents.
NOTE 2 - ELECTRIC UTILITY PIANT Ilectnc uuhty plant consisted of the following: 192d J.293
-(In Thousands)
Nuclear generanon plant $ 396,060 $ 395,182 Non-nuclear generauon plant 213,128 212.282 Transmi>sion plant 91,258 78,366 Coal properties and preparation plant 23,235 24,093 bmd and land nghts 13,665 12,724 General plant and equipment 14.172 14.528 Ilertnc plant in service 751,518 737,175 l Construction work m process 13.396 20.213 5757,32 5 764N14 27
l
. .)
WOTE 3 -- COMMITMENTS REGARDING GRAND GULF NUCLEAR STATION O SMEPA owns a 10% undivided interest m a nuclear generaung station known as " Grand Gulf Nuclear Station' (GGNS), which was to consist of
. two 1250-megawatt generating units. Commercial operation for Unit 1 began onJuly 1,1985. In September 1985, the construction of Unit 11 was suspended by regulatory authorities.
- In September 1989, the majonty owner elected to abandon Unit 11. SMEPAs accumulated cost in Unit 11 was $104,000,000, including allowance for funds used dunng construction of $42 000,000. After transfers to GGNS Unit i ofinventones of $2,085.000 and propeny accounts of
$605,000, $91,180,000 was transferred to unrecovered plant cost on the balance sheet during 1989; and $10,130,000 was included as a loss in the statement oI net margins and patronage capital for 1989. This accounung for Unit !! has been reviewcd and approved by RUS (see Note 1).
In 1990, SMEPA submitted a formal plan to the Nuclear Regulatory Comnussion (NRC) that demonstrated assurt.nce that sufficient fmancial resources would be available at the time it becomes necessary to decommission Unit 1. In addition, SMEPA received approval from the Internal '
' Revenue Service to establish a " tax-free" grantor trust as a vehicle to fund the estimated decommissioning costs.
SMEPA has contnbuted to the trust amounts sufficient to fund the estimated accrued decommissioning obligation that existed at December 31, 1994 and 1993. SMEPA estimates, based on a revtsed calculation, that the fundmg requirement will approximate $571,000 annually through 2022, the expected date of decommissioning. The estimated fundmg requirement will continue to be recalculated and adjusted periodically. NOTE 4 -INVESTMENTS IN ASSOCIATED ORGANIZATIONS investments in associated organizations are stated at cost and consisted of the followmg: 12 i 1991 (in Thousands) National Rural Utihties Cooperative Finance Corporation (CFC): CFC membership subscription certificates $ 6.223 $ 6,223 CFC loan and guarantee certificates 4,089 4,089 Other 402 374 510.714 510.686 CFC membership subsenption certihcates hear interest at a 5,0% rate and mature in 2070 through 2080.The loan and guarantee certificates bear mterest at rates hetween 3.0% and 9.873% and mature in 2007 through 2015. NOTE S - INVESTMENT SECURITIES HELD TO MATURITY The amonized cost and related approximate fair values ofinvestment securities to be held to maturity were as follows: Gross . Gross Amorti:cd Unicali:cd Unrcah:ed Fair Cost Gains Losses udue December 31,1994 (In Thousands) Investments in associated organizations $ 10,714 $ $ (3,899) $ 6,815 Debt service reserve 8.502 283 8,785 Decommissiomng trust 3,474 18 (134) 3,358 Other long-term investments 15.444 70 (45) 15,469 Other invested funds 11.002 (1 51 10 S87 Total $ 49,136 $ 371 $ (4,093) 5 45,414 December 31,1993 investments m associated organizations $ 10,686 $ 139 $ (4,068) $ 6,757 - Debt service teserve 9,284 736 10,020 Decommissioning trust 2,798 189 (l1) 2.976 Other invested funds 18.002 25 18.027 Total 5 40 770 51089 5 (4 070) $ 37 780 2S
I-.. t .: 1 e
- 9. ' The cmorti:ed cost and approximate for value of investment securities held to matunty at December 31,1994, by contractual rnaturity, were as
- foUows:
Amorti cd Fair Cost Value (in Thousands) Due in one year or less 5 13,781 5 13.701 Due after one year through fne years 19,673 19.693 , Due after five years through ten years 497 451 } Due after ten years 15,185 11,569 5 49.136 5 45.414 l Actual matunties may differ from contranual maturities because of the borrowers' right to call or prepay obhgations.
' NOTE 6 - DEFERRED CllARGES The following is a summary of amounts recorded as deferred charges as of December 31,1994 and 1993:
1991 129.1 (in Thousands) Uoamorti:cd penalties on repriced debt 5 31,696 5 8,996 Unamortized debt discount and issuance cost 1,297 1,381 Past service retirement benefit cost 420 489 Nuclear fuel costs 27 63 Deferred decontamination and decommissionmg of past uramum enrichment operations 1,788 1,871 Other 9 5 35 228 5 12,809 NOTE 7- PATRONAGE CAPITAL At December 31,1994 and 1993, patronage capital consisted of. 1991 1991 (in Thousands) Current year margms $ 13,824 5 8,841 Prior years margins 48.715 39.874 62,539 48,715 less: Retirements to date ' 5.853 5.853 5 56,686 5 42,862
~ Under the provisions of the Mortgage Agreernent, until the patronage capital equals or exceeds forty percent of the total assets of SMEPA, the return to patrons of contnbuted capital is generally hmited to twenty-hve percent of the patronage capital or margins received by SMEPA in the pnor calendar year. The patronage capital of SMEPA represents 7.50% and 5 62% of the total assets at December 31,1994 and 1993, respectively NOTE 8 - SilORT-TERM ItORROWINGS SMEPA has a $25,000,000 shon-term hne of credit avadable with CFC which expires September 1995 and a $5,000,000 short-term hne of credit with a bank which expires July,1995. At December 31,1994 and 1993, SMEPA had no borrowings against these hnes of credit.
29
t;
' NOTE 9- LONG TERM DE13T o long tenn debt consisted of the following: ,
1923 1923 (In Thousands) Mongage notes payable to Federal Financing Bank (FFB) at interest rates varying from 4.035% to 10.985%, due in quarterly installments through 2020 5 542.545 5 557,086 .- 2% RUS mortgage notes payable, due m - quanerly installments through 2009 21,189 23,076
, 5% RUS mortgage notes payable, due in quarterly installments through 2015 18,010 18,708 5% RUS mortgage notes payable, due m monthly installments through 2019 10,732 10,903 Notes payable to National Bank for Cooperatives at interest rates varying
- from 5 05% to 7.25%, due in quarterly installments through 2019 2,810 2,924 -
t amar County, Mississippi, Polluuon Control Bonds-. 1978 A Senes,5,80% to 6.125%, due semi-annually through 2008 1,885 1,975 1978 A-1 Senes,6,25% due semi-annually through 2008 685 715 1993 S Senes,4.15% to 5.00%, due annually thnmgh 2007 25,825 27,245 Claiborne County, Mississippi, Pollution Control Bonds: 1985 G $cnes, variable interest rates (3.45% to 5.05% at December 31,1994) due annually through 2015 45.800 46,400 Notes payable to CI:C tranng interest at variable rates (5.60% to 6.20% at December 31,1994) due in quarterly installments through 2022 2,236 2,249 Unamoru:ed net premium on 1993 S Series bonds 95 105 671,812 691,388 less currcnt matunties 20.294 16.791 5 651.518 5 674.597 Substantia'ly all assets of SMEPA are pledged as collateral on long-term debt. Approximate annual matunties (scheduled periodic pnncipal payments) of long-term debt for the next five years are as follows: 1995 5 20,294,000 1996 5 21,754,000 1997 5 22,996,000 1908 S 24.651,000 1999 5 25,793,000 The unamortized net premmm on bonds issued is being amontnd over the remainmg hfe of the alfected bonds usmg a method which approximates the interest inethod 30
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*- . At December 31,1994, SMEPA had unadvanced loan commitments from RUS of $2,259,000.
g) SMEPA paid approumately $47,986,000 and $45,390,000 in 1994 and 1993, respectively. in interest on long-term debt. SMEPA is required by mortgage covenants to maintain certain Imancial ratios of interest coverage and annual debt service coverage. SMEPA was in compliance with such requirements at December 3 ,1904-In October 1993, SMEPA issued $27,245,000 of 1993 S Series pollution control bonds. The net proceeds, together with other available funds, were used to refund the $28.010,000 outstanding pnncipal of the 1977 Series pollution control bonds in order to permanently fix the interest rate at more favorabic rates. SMEPA has agreed with CFC, il B, and RUS to amend certam ITB promissory notes accomphshing a repncing of $232,171,000 (1994) and
$54,814,000 (1993). Penalties of $24,293,000 (1994) and $4,653,000 (1993) were paid upon execuuon and will be deferred and amortized over the remainmg hfe of the loans usmg the interest method. Amoruzation of the penalties was $1.577,000 in 1994 and $329,000 in 1993.
NOTE 10- DEFERRED CREDITS AND OTHER LONG-TERM LIABILITIES The following is a summary of deferred credas and other long term habihdes as of December 31,1994 and 1993: 122d 1993 (In Thousands) Postreurement benefit obhgation (other than pensions) $ 1,997 $ 1,770 Deferred decontannnation and decommissionmg of past uranium ennchment operations 1,435 1,604 Pnor sersice pension benefit cost 41 516
$ 3.473 $ 3 800 NOTE I1 - FAIR VALUES OF FINANCIAL INSTRUMENTS The following methods and assumptions were used by SMEPA in estimeung its fair value disclosures for Imancial instruments:
Cash and cash equivalents The carrying amount reponed in the balance sheet for cash and cash equivalents approumates fair value. Investment securines: The fair values for marketable debt and equity secunties are based on quoted market prices and the present value of future cash flows discounted at a commensurate market rate. (See Note 5 for addmonal infonnation ) long-term debt: The fair values of SMEPAs long-term debt are estimated using discounted cash flow analyses based on SMEPAs current incremental borrowing rates for similar types of borrowing arrangements and rates which would be charged by the apphcable issuer where appropriate. The carrymg amounts and approximate fair valu<s of SMEP\s financial instruments at December 31,1994 are as follows: l Carrying 6timated Amount Fair Mdue (in Thousands) Cash and cash equivalents % 2791 $ 27 541 long-icnn debt, mcluding current matunties: FTB $ 542,545 $ 495,841 RUS 49,931 41.441 Pollution Control Bonds 74,290 72,231 q Other 5 046 5045 t
$ 671.H12 $ 615.058 l
)
4 4 31
4 The carrying amounts and approximate fair values of SMEPAs fmancial instruments at December 31,1993, are as follows: . *4 Carrying Estimated y Amount Fair value (in Thousands) Cash and cash equiva!rrits 5 51.421 5 51,421 Long-term debt, includmg current maturities: ITB $ 557,088 $ 620,428 RUS 52,687 49,616 Pollution Control Bonds -76,440 76,323 Other 5.173 5,173 5 691.388 $ 751.540 There was no material difference between the contract or notional amount and the estimated fair value of k)an commitments. The aggugate esumated fair value amounts presented do not represent the underlying value of SMEPA and may not be indicative of amounts that might uhimately be reahzed upon disposinon or settlement of these asseis and habilities. NOTE 12- EMPI.OYEE BENEFITS SMEPA adopted the provisions of Statement of Financial Accounting Standards (SFAS) No.106 " Employers' Accounting for Postretirement Benefits Other Than Pensions? changing to the accrual inethod of accountmg for these benehts effective January 1,1993. This statement requires that the costs of these benehts be recogm:ed in the hnancial statements throughout the employees' service penod. Pnor to 1993, postreurement beneht expenses were recognized on a pay-as-you-go basis and were not matenal. As permined by SFAS 106, SMEPA clected to immediately recognize the cumulative effect of the change in accounung for postretirement benefits of approximatcly $1,563,000 which represents the accumulated postreurement benefit obhgation (APBO) existing at January 1,1993. SMEPA provides certain heahh benefits to rented employees and their chphie dependents and also provides hfe insurance benefits to a closed group of seven employees who retired pnor toJanuary 1,1990. The approximate periodic expense for postretirement benehts included the followmg components for 1994 and 1993. 1994 1993 (In Thousands) Service cost of benchts earned $ 85 $ 85 Interest cost on accumulated beneht obligation 141 123 Total current year expense $ 226 $ 20A T he APDO as of Decernber 31,1994 and 1993,is comprised of the following: 1994 L921 (in Thousands) Rctirees and dependents $ 319 $ 283 i ully elipble active plan parucipants 189 167-Active participants not yet cligible 1,489 1,320
$ 1,997 5 1,770 The weighted average discount rate used in determmmg the APBO was eight percent. The assumed heahh care cost trend rate of increase used in measuring the APito was 11.5 and 12 percent in 1994 and 1993, respectively, dechning to six percent by the year 2005 The heahh care cost trend rate of increase assumption has a signi6 cant effut on the APBO and periodic expense. A one percent increase in the trend rate for health care costs would have increased the APBO by approumately 23% and service and interest costs by approximately 25%
NOTE 13 - COMMITMENTS AND CONTINGENCIES SMEl% coal supply agreement provides for mimmum annual purchase requirements. SMEPA has construction commitments for various non-nuclear unhty projects totahng approximately $4,822,000 at December 31,1994. - SMEPA is a defendant m cenain htigation incurred in the normal course of busmess. Management, based on advice of legal counsel, is of the opinion that the ultimaic resolution of the hogation will not have a material adverse effect on SMElm hnancial condition. 32
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