ML20211G863
| ML20211G863 | |
| Person / Time | |
|---|---|
| Site: | Comanche Peak  |
| Issue date: | 12/31/1985 |
| From: | BRAZOS ELECTRIC POWER COOPERATIVE, INC. |
| To: | |
| Shared Package | |
| ML20211G817 | List: |
| References | |
| NUDOCS 8611040263 | |
| Download: ML20211G863 (54) | |
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mn - w-.y, anniversaryoftheRural 43 '
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g . ElectnficationAdministradon: ayearofcelebra00nanda p gl ' ' *. * ' yearofreflection.
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ItWasayeartopaytubute i totheruralpeople wholaid ; i down theirlanternsandplows ! tojointogetherforthe Common goalofrural i electrification. C This cooperative spint-the driveforabetterQualityoflife M w w snkr todayand(Crthe future-is eW *WetmWe vgkro "aliVeand well"among the
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u.ms wmc mo m g y<< 4 . them;theirspint, their sewkwpe wgM g + w- w-nw 3Chlevements, andtheir dreamsanddedicateour1985 AnnualReporttothepeopleof TheBrazosSystem. M I
FinancialandOperatingHighlights 1985 1984 1983 Tota 10perating Revenues (000's) $200,430 $186,164 $174,860 i TotalOperating Expenses (000's) $185,243 $180,394 8172,479 I l Operating 51argins(Loss)(000's) $ 15,187 3 5,770 $ 2,381 Total Assets (000's) $444,515 $400,826 $351,987 TotalEquity(000's) $ 47,253 $ 29,949 $ 23,497 TimesInterest Earned Ratio (TIER) 1.51 1.22 1.10 Debt Sen' ice Coverage (DSC) 1.54 1.27 1.15 Energy Sales (5fegawatt hours) 5fember Cooperatives 3,033,643 2,846,999 2,498,886 51unicipal Customers 386,707 341,058 303,299 Economy Sales 523,226 370,149 461,793 Total 3,943,576 3,558,206 3,263,978 Peak Demand (5fegawatts) 721 650 624 Revenues & Expenses (in Imillions) Net UtilityPlant(in1 millions) EnergySales [) (in millionsofmegau'attbours) M[
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'81 '82 m Revenues EC:;lExpenses
'83 '84 '85 '81 '82
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'81 '82 '83 M siemberCooperatives
'84 Ci2 siunicipalInterchange Customers
'85 NaturalGas Cost ($perMCF) Peak Demand (megauatts) EconomyEnergySales (awrage, includi transportation) (in millionsofmegauattbours) is 4 61 650 41 52 5N gg 541 .
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'81 '82 '83 '81 '85 '81 '82 '83 '81 '85 '81 '82 '83 '84 '85 b
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2 + ]j j crq c , ReporttoMembers a 7 We are pleased to report that the average cost of wholesale power to our members decreased again this year. The change was small, but it was in the right direction. Several factors contributed to this accomplishment. The San y - Aliguel Plant, which provides approximately 60 percent of our power, again
.( q operated at a high capacity factor for Brazos,78 percent. Furthermore, the m.wmmem ;1 San Aliguel Electric Cooperative was able to return to Brazos approximately
-en.m. ,mem. =
- S3.1 million due to efficient operations and fuel cost savings in 1984.
% amane j Also contributing to the reduction in power cost was the decline in
, , mmmmm m. natural gas costs which we were able to realize. In our last report, we spoke
; m .n n n a. a rn y enthusiastically about our new, natural gas pipeline. This year we are even mec.a.msn.wmr q more enthusiastic. Even by conservative estimates, the pipeline paid for itself swamanancone w j in 13 months through fuel cost savings! At year end, our purchases on the
? ,n munin. i spot market were at a unit cost which had declined 46 percent in 16 months. m.p n.mn rm j We recognize that the gas glut, with its low prices, will not last forever. p me nwrwas = j Consequently, we are looking for additional reserves for our long-term L iam .twa: j supply. R ' nm.nem a,nen, amammaman,mwm
] During 1985, we dealt with one of the more crucial challenges in the history of the Cooperative: ending our exposure to further price escalation of
. owneemuammeme j] the Comanche Peak Nuclear Plant. Acquiring our 3.8 percent share in 1979
- m coa nm 1 was a sound business decision. Since that time, the project has experienced
- o ,msm o en. ] delays and substantial cost increases. Now it is in the best interest of our
, ,,wama i consumers for us to limit our financial exposure to the project.
meen.annesecan j Consequently, we have withheld construction payments and have been mono comy, n. j negotiating with Texas Utilities Electric Company to limit our investment in momem.nunn q the project. nan ne w , ,mu j Another issue continues to challenge the entire rural electrification program. As rural electric consumers throughout the nation celebrated the
~ : own.sammmena . :]
i .cen.in. wrc j fiftieth anniversary of rural electrification, people who do not understand mens . .,m, 1 this very successful program and its contribution to the nation and the m .m arnen.n , w national economy were trying to dissolve the Rural Electrification manyw wo,cono w j{ Administration and its loan programs. They are persistent. Every time our
;.ans.wiesen ; broad constituency defeats them, they try again. Removal of this financing maanonmen m -
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ma-a. .? I3) l
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L j. I haaksofGemsaddeeen f CE."#" F source could create considerable hardship for our members and their ! consumers. We do believe that Brazos could obtain other financing. Last year we reported that we would need new generation plant capacity [ in 1992. For the past two years, the growth of our peak demand has been so - i strong that the date may have to be advanced to 1991. Our pooling of capacity through our membership in the Texas Municipal Power Pool will , still allow us to delay this plant from 1986 to that time with a resulting l savings of approximately S40 million per year. The reduction in natural gas prices and the availability of cogeneration power give us considerable flexibility in choosing the most economical source for our next capacity j addition. L Our municipal customers have been managing their systems with i-increased professionalism and sophistication. Seymour recently consolidated : the electric systems within its city limits by purchasing the facilities of another utility to end 50 years of dual service. Hearne has decided to purchase all of its power from Brazos. Previously, it used its own generation l 4 facilities to meet its peak load. Each of these cities is responding to its own c specific needs and we support them in that effort. 7 A change in our membership resulted from the merger of Robertson i-Electric and Limestone County Electric this past spring. The unified cooperative is Navasota Valley Electric Cooperative with headquarters in , Franklin, Texas. i; Our report would be incomplete without special recognition of three ; rneer snests - friends and directors who retired from our board: F.C.Luedtke, Horace [ tmsensscounty.rnx o LeNoir, and MelvinJordan. We thank them for their many years of semce to ; en . 5,nus a mtn , i Brazos, The Brazos System, and rural electrification. And, we wish them well 7
. roestnx,xnerno.n.
in their retirement and future pursuits. unsmos aroc.,ystore,wm i ru.acaren tos.,vngen.m.-
%k dd$bh ouw nus
"'"""*'"*5"*
I William G. Parker Richard E. McCaskill l President Executive VicePresident ekctricitytotneirrarmsV l andGenerid31anager uttlestortanestpnasa M 1 -
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q' w y } Yearin Review
? Salesand Groteth
( Growth in our peak demand has accelerated during the past two years. Our peak demand this summer was 721 megawatts, a 10.9 percent increase 7 d over 1984. Energy sales to our cooperative and municipal mistomers { increased 7.3 percent to 3,420,350 megawatt hours. Aluch of this growth e ' comes from the unabated, suburban development in the Dallas-Fort Worth $i area. { -
, PlansforFuture Gron'th Circumstances present us with an uncommon variety of opportunities g
W for meeting our growth. From now through approximately 1991, we will take advantage of our membership in the Texas Alunicipal Power Pool and (RL' , - -
]E more economical alternatives, when available, to meet our load. In the p, ~q
~
meantime we will be taking measures to control demand. Alanagement of consumer demand has gained increased attention in the Q %{ y electric utility industry. With the ultimate objective ofimproving consumer b@samenanian ' relations, it has a more immediate goal of slowing the growth 6f rates. By using demand side management techniques to delay plant construction and operate our existing facilities at a higher average usage, we should be able to
^
^
'.' achieve that goal, assuming fuel costs remain reasonable. Our board of
, assedimier 4 directors has taken the initial step of appointing a Alarketing and Load i
'C Afanagement Committee. We are very enthusiastic about moving in this
]
^
direction. We see only opportunities ahead. Aside from gaining more control sienswaammm of rates, we believe that the programs we develop with our member cooperatives will improve our understanding of their needs and will bring all of us closer to our consumers. Alorever, we feel that the effort will provide some of our employees with new leadership, management, and professional
~~
challenges which will allow them to grow. O d When new capacity is required, we have several choices. If natural gas
, , prices remain low, construction of gas turbines to meet our growing peak f emannosaw g will be beneficial. Alternatives for meeting our base load include power i saammmemunese j from cogeneration or small power production sources, purchases from W- ] other utilities, and a second unit at the San Aliguel plant site.
megwasism;
===m- = _ , . . *
]
i a3
.Jad h<haE.t a a. _ ..
SystemReliability ' We are pleased with the reduction in outage time we have achieved this ( past year. We decreased the average outage time per substation to 48.0 minutes from 60.4 in 1984. The increase in reliability stems in part from our t transmission pole inspection and treatment program begun in 1981 and from an infrared monitoring program begun last year. Viewing transmission and ; substation facilities through a device that makes infrared light visible has enabled us to detect overheated components that are candidates for failure. They then can be replaced or repaired before they cause an outage. Our training also has had a positive effect on reliability. The increased i awareness of operating personnel has led to early identification and elimination of various equipment problems. Another long-term process that contributes to our system reliability is intensive planning to evaluate where and when new or upgraded transmission facilities will be needed. Our planning division determines where weaknesse's will occur under selected conditions as our load o increases. They then determine the most economical way to prevent failures ( by upgrading the system-adding new transmission lines, increasing the voltage and capacity of existing lines, and using other methods. At the' appropriate time, our engineers begin design and procurement to upgrade the facility. Right-of-way alternatives are selected and evaluated.
]
Easements are obtained and construction follows. This year we built 37 miles of 138KV transmission line. W dso added five new substations to support our members' growth. We expanded our micro va e a. ounications to six stations primarily in the northwest area of our system. Substation remote control and monitoring was extended to eight additional locations. These improvements will increase our reliability, enabling us to shorten outage times in these areas. , Transmission LineRight-of-Way One of the difficultles we have encountered in building new facilities is obtaining right-of-way. We need to strengthen our system primarily in 4 0
suburban areas where most of our growth is occurring.
"The average [ consumer] oftoday is not as close to the cooperative (many are ofa newgeneration) and they measure our success by the quality andprice ofservice to themselves."
. . . it u as necessary to condemnfifty out ofeighty-eight
. . . landowners in order to obtain the easements needed to serve the same [ consumers]from whom we were attempting to obtain the easements."
The preceding quotations are from our 1955 annual report so one cannot say that ourproblems are new. However, obtaining right-of-way has again become more difficult. Understandably, everyone would prefer to have electricity come from a plug instead of through transmission and distribution lines along rights-of-way on
# or near their property. Nevertheless, such lines are an integral part of our service obligation; and they must be timely built. Recently, the Public Utility Commission of Texas (PUC) has intensified its scrutiny of the location of proposed transmission lines in its certification process. We do not oppose those efforts of the PUC that are consistent with its own rules and the law.
We pride ourselves on our care in selecting routes that minimize the impact on landowners and the environment, and we studiously adhere to federal and PUC regulations regarding transmission line route selection and construction. We accept the obligation and challenge _of proving to our regulators and to the public that our actions, including our transmission line route selections, are in the public interest. NaturalGasSupply We are delighted with the results of our fuel operations this year. In our Report to Members, we related the savings resulting from our pipeline. We have been studying to what extent a pipeline to our North Texas Plant might improve the reliability of the plant's gas supply as well as making its gas
, purchases more competitive.
[9j
- _ - - - - _ - _ - - _ - _ _ _ - _ - _ - - _ - - _ _ _ _ _- l
While we have been able to take advantage of the gas market for current savings, we recognize the need to develop long-term supplies that will rcflect at least some of the current improvements in pricing. At present,
-"long-term" appears to be no better than one year with options for renewal with price redetermination. We will keep close to the market to benefit from opportunities when they occur.
EconomicDispatch Operations During 1985, Brazos, as a member of the Texas Municipal Power Pool, saved approximately $ 1.2 million for our members and municipal customers through economic dispatch of the Pool's generating facilities. Since 1982, these savings have been approximately S9.5 million. The other Pool members, the cities of Bryan, Denton, Garland and Greenville, have 1 achieved proportionate savings. Economic dispatch operations consist of choosing the best combination of generating units to meet the Pool's load
- and reserve requirements and then loading the units in relation to their fuel costs per KWH to minimize the cost of electricity. n MemberPrepaymentPlan _
The Member Prepayment Plan, initiated in 1982, has proved extremely , , _ beneficial to Brazos and its membership. Through this plan, our members ,,_
. have an investment alternative that yields a return greater than might ,,,,,,,,
otherwise be available. At the same time, their prepayments provide a , , , , , , , source of short term financing for Brazos at a cost that is lower than what , , , , , , , , we might find elsewhere. For example, prepayments in December 1985 ,,,,,,,, amounted to approximately S 14.2 million. Participating members earned a ,,,,,,,, return based on an annual rate of 81/8 percent and Brazos was able to save , , t one percentage point ofinterest cost. _ , , , , , , , , , , , MeritCompensation Plan wunewuscitycomeuve, This year we developed and instituted a compensation plan that gives moecowananorefamnv more opportunity to reward exceptional performance. sericeammaememv It provides supervisors with more flexibility to choose the level of usesuccessitistoaar.smin compensation as well as the timing ofincreases. Implementation has been tneirownw,v,,re,iasung neuteton,eauee 4 fcoowingyourareamt 10
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, a Coincidentally with the merit compensation program, we revised our f employee evaluation system to make it more effective and a better communications tool. To date, we are very pleased with the results. We are
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'))ij Insurance As many businessmen and public administrators well know, liability di insurance has become scarce and its cost, exorbitant. We have also I""""***"* ' 3 experienced unexpected changes in our fire and extended coverage
( ""*" *""""" ""* "" ] insurance. Consequently, early in 1985 we retained an insurance consultant
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i i Management Executin Vice Presidentand GeneralManager Manager-finance and Administration Richar i E. McCaskill, age 49, joined Brazos in Clarence W. Carpenter, age 53, joined Brazos in 1979. Ile is also the General Manager of San Miguel 1%7 as Manager-Accounting Department. Ile was Electric Cooperative, Inc. inJourdanton, Texas. promoted to his current position in 1977. McCaskillis a graduate of Texas Tech University, Carpenter received a Bachelor of Business where he earned a Bachelor of Science Degree in Administration Degree from Baylor University and Electrical Engineering. lie has worked in the electric became a Certified Public Accountant in 1%3. Prior to utility industry for 20 years, including positions as coming to Brazos, Carpenter worked for the Internal Assistant Division Manager, Safety Engineer, Training Revenue Service for seven years. Director and Division Manager for Central Power and Carpenter is Director of the Texas Society of Certified Light Company in Corpus Christi. Upon coming to Public Accountants and Past President of the Central Brazos in 1979, McCaskill assumed the duties of Manager Texas Chapter of Certified Public Accountants. lie is Past
-Engineering, Power Supply and Construction. lie was President of the National G&T Accountants Association.
elected to his current position inJanuary,1981. McCaskill is a registered Professional Engineer in the ### F - U #"""# Dan B.Swenke, age 47,j. .oined Brazos m. 1966 as 2 state of Texas and a member of the Texas Tech Electrical Juni r Engineer. lie has served in numerous positions Engineering industrial Advisory Committee. fle is a including Design Engineer, Chief System Operator and director ofInterfirst Bank in Waco. Manager-Transmission Department. Assistant GeneralManager Prior to coming to Brazos, Swenke had construction J.D. Copeland,Jr., age 41, joined Brazos in 1971 as experience as an officerin the United States Army Corps an accountant, became Man 2ger of the Accounting of Engineers. Ile earned a Bachelor of Science Degree in Department in 1977 and was promoted to his current Civil Engineering in 1%3 from Texas Tech University, position in 1981. lie also is Assistant to the General and is a registered Professional Engineer in Texas. Manager of San Miguel Electric Cooperative, Inc. in Jourdanton, Texas. Manager-Project Construction and Engineering Copeland received a Bachelor of Business Billy Dyess, age 55, joined Brazos in 1974 as Administration Degree in 1970 and a Masters of Business Construction Supervisor and was promoted to his Administration Degree in 1977, both from Baylor present position in 1981. University. lie became a Certified Public Accountant in Prior to coming to Brazos, Dyess w as enployed by 1972. Ile is also a member of the American Institute of Ilicks and Ragland Consulting Engineering Corr.pany. lie Certified Public Accountants and the Texas Society of advanced in the company to serve as Vice President-Certified Public Accountants. Director of Field Operations from 1968-1974. In this
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Executin Assistant and Man #8er-Public Relations management, regulatory processes and public relations. Francis M. BushnellJr., age 42, joined Brazos in Dyess served Iwo terms in the United States Army in 1979 as Executive Assistant and was given the added 1917-1948 and 1950-1951, where he continued his responsibility of Manager-Public Relations in 1980. education through various correspondence courses. Bushnell received his Bachelor of Science Degree in Engineering and Business Administration from Princeton Manager-Corporate Planning University in 1%5. Ile spent nine years as a submarine William B. TownsendJr., age 46, joined Brazos in officer in the U.S. Navy Nuclear Power Program. Ile was 1961 as aJuniar Engineer. lie was appointed Chief employed by Stone & Webster Engineering Corporation System Operator in 1967, Manager of Engineering for four years, where he administrated a nuclear power (including construction)in 1970 and Administrative project and was a Marketing Engineer. Assistant in 1980. Ile was appointed to his current lie is a certified instructor for the Dale Carnegie position in 1981. Course and is also President Elect of the Central Texas lie received a Bachelor of Arts Degree in Math from Chapter of the Public Relations Society of America. Texas A&M University in 1%3 and a Bachelor of Science Degree in Electrical Engineering in 1966. Manager-fueI0perations Tow nsend is a registered Professional Engineer in Clifford L Sartin, age 56, joined Brazos Fuel Texas and the Brazos representative on the Electric Company in 1974. Reliability Council of Texas iERCOT)- Technical Sartin graduated from Texas Tec h University in 1951 Advisory committee. Ile has held the positions of with a Bachelor of Science Degree in Petroleum Geoh>gy Secretary, Vice President and President of the Central and minor in Chemistry. Before joining Brazos Fuel, he Texas Chapter of the Texas Society of Professional had extensive experience as an oil and gas exploration Engineers. " geoh> gist and spent three years primarily exploring for lignite reserves. lie worked for Cities Service Petroleum & Company for seven and one-half years. lie also served as ... Senior Geoh> gist for National Soil Services, Inc. from .~ .. 1966-1974. -r
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b Treasurer'sReport The Consolidated Statement of Revenue and Patronage Capital and Other g Equities of the Cooperative and its wholly owned subsidiary, the Brazos Fuel Company, Inc., reflects that operations produced net margms of { gggp senwooner l [ $ 17,304,142 for the calendar year 1985. Margins improved significantly p'- compared to the net margins of $6,451,275 reported in 1984. The margins L %, ' from 1985 resulted in a Times Interest Earned Ratio (TIER) of 1.51 and a Debt Service Coverage (DSC) of 1.54. The TIER and DSC ratios are key [ ., l financial indicators used by the Rural Electrification Administration in [. . .~.. assessing the ability of the Cooperative to meet its mortgage requirements. [ -.,,,..,,,,,. ,, g Operating margins from the Cooperative's operations for 1985 were [4 _ _ . . 515,162,802. These margins and patronage capital allocations received have been allocated to customers on a patronage basis. Total patronage capital [Q ((
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allocated was $16,449,819. L ====e=== w ?* l ' This year, total assets exceeded S440 million. Total revenues were $200 h ,,,,,~,,, C~ 4 3 ,, ' million. The distribution of revenues indicates that purchased power j
; r continues to be the major cost item. We present at the right the distribution of both the 1984 and the 1985 revenue dollars. [ ,ld C E Z h p The Cooperative received Rural Electrification Administration and Federal Financing Bank loan fund advances of S27,709,000 during 1985
[" ~ W These funds were REA guaranteed. These advances were used to finance the og,,rieurfo op 9 ,4 construction of transmission facilities and to finance the cost of our 3.8%
![ - sanwooner interest in the Comanche Peak Nuclear Plant. Long-term debt at year-end g; I ;-
was just under $372 million. The Cooperative's total margins and equities of $47.3 million represent 7 10.6% of the S444.5 million total assets. . , L, ' { ,,MWierCests ,1D '
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1985 FinancialStatement L The financial strength and resilience of the Brazos System stems from its member g cooperatives and customers. They serve consumers in rural, suburban, and urban areas t . totaling nearly 20% of Texas. This vast service area provides diversity for income . h sources of residential, agricultural and industrial loads. It also provides strong growth - in energy sales. Comparative Summary ofElectrical Operations 1981-1985
- 1985 1984 1983 1982 1991 (Mills per KWil)-
Tota 10perating Revenue (l) 50.8 52.3 53.3 46.8 40.1
.. Operating Costs Productionexpenses(2) 39.1 12.3 43.4 39.5 34.1 Transmission expenses 2.0 2.3 2.5 2.2 1.6 l
Administrative and general expenses .6 .6 .6 .8 1.0 I
? Depreciation, taxes. insurance. interest 5.3 5.5 6.0 4.1 3.4 TotalOperating Costs 47.0 50.7 52.5 46.6 40.1
. Net Operating Margin (Loss) 3.8 1.6 .8 .2 (-)
(1) Average sales priceby class 4 Firm powersales Member Cooperatives 53.5 53.7 55.6 49.9 40.1 Cities 52.3 53.9 56.4 50.8 42.4 Surplus powersales Cities 33.3 39.3 38.0 37.9 33.9 (2)Further analyzed by source Generated power Costoffuel 33.5 39.6 40.9 39.1 34.1 Wages and othercosts I.4 1.5 1.7 - 1.2 1.0 Purchased power For system 36.1 38.7 38.6 36.3 24.9 Atisolated meterpoints 48.5 45.5 43.8 41.6 35.6
'Lttludes operations ofBra:os Fuel Company, Inc.
b
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t I , a Comparative Summary ofElectrical Operations 1981-1985
- 1985 1984 1983 1982 1981 Electricity Generated and purchased-in Slegau att fleurs Generated at W.R. " Bob" Poage Plant - - - - -
Generated at North Texas Plant 100,473 5,131 8,814 22,890 71,897 Generated at Randle W. Miller Plant 1,570,418 1,291,634 1,118,547 1,499,573 1,494,217 g Pu chased for system c A. From San Miguel Electric Cooperative 1,558,827 1,707,432 1,668,411 1,654,877 366,661 B. From other utilities 355,562 206,859 229,462 170,161 295,685 Purchasedatisolated meterpoints $48,418 509.537 460.553 458.434 412.529 4,133,698 3,720,593 3.485,787 3,805,935 2,640,992 Electric S11es-In 3Iegatrattilours A. Firm Member Cooperatives 3,033,643 2,846.999 2,498,886 2,389,141 2,226,904 MunicipalCustomers 386,707 341,058 303.299 272.603 218.95(i 3,420,350 3,188,057 2,802,185 2,661,744- 2,445,860 B. Economy Sales $23,226 370.149 461.793 1.003.469 83.595 3,943,576 3,558.206 3,263,9 8 3,665.213 2,529,455 Electric Sales to Member Cooperatives-In 3legatratt flours Bartlett Electric Cooperative, Inc. 57,341 53,251 47,297 47,221 43,646 Belfalls Electric Cooperative, Inc. 44,270 42,152 39,125 42,317 46.837 B-K Electric Cooperative,Inc. 65,057 68,565 61,230 61,530 62,194 Comanche County Electric Cooperative Assn. 152,581 150,106 141,177 136,675 123,059 Cooke County Electric Cooperative Assn. 266,709 257,327 244,152 234,601 220,337 Denton County Electric Cooperative,Inc. 336,826 292,555 2(2,089 218.286 195,937 Erath County Electric Cooperative Assn. 169,997 167,911 153.396 116,638 137,763 Fort Belknap Electric Cooperative Inc. I17,100 113.499 105.013 94,726 84,994 Il2 milton County Electric Cooperative Assn. 86,380 82,260 75,894 75.602 69,983 11i11 County Electric Cooperative, Inc. I43,945 133,026 115,100 111,916 103.032 J-A{ Electric Cooperative,Inc. 98,332 97,748 87,038 82,017 '3.085 Johnson County Electric Cooperative Assn. 382,877 345,719 299,957 286,371 259,155 McLennan County Electric Cooperative Inc. 94,132 87.206 77,712 77,009 75.815 Mid-South Electric Cooperative Assn. 192,991 179.825 155.889 156.657 141.801 Navarro County Electric Cooperative, Inc. 130,092 139,314 91,528 86.211 95.233 Navasota Valley Electric Cooperative, Inc."- 137,990 122,106 108,079 109.827 100,309 Tri-County Electric Cooperative,inc. 406,035 372,215 323.536 301.061 283,580 Wisc Electric Cooperative,Inc. 150,988 142.186 130.6 6 120.443 110.141 k 3,033,643 2,866.999 2,498,886 2,389,141 2.226.904
*Luludes operations of Bra:os fuel Company, Inc.
' Formed by the merger ofIimestone County Electric Cooperatire, Inc. and Robertson Electric Cooperatitr, Inc. in April I981 & des in precedingyearsbatt been restated.
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-1985 1984 1983 1982 1981' Maximum Kilowatt Demand At MemberDeliveryPoints 759,495 683,450 612.297 568,681 556,837 .
t AnnualLoad Factor Percent j . Member Cooperatives 46 ~47 : 47 48 :46 Electric Energy Sales
- Member Cooperatives $162,216,740 $152,868,791 $138,873,457 $119,214,939 $ 89.373,467 Municipaland Economy 37,662,417 32.956.026 34,699.138 51,976.783 11.830,747
$199,879,157 $185,824,817 $173,572,595 $171,191,722 $101,204,214 Other Electric Revenue 584,387 371,785 233,616 184,241 245,027 '
Tota 10perating Revenues ' - $200,463,544 $186,196,602 $173.806,211 $171,375.963 $101,449,241 Operating Expenses
- p. Production Expense-
[ Generated Power $ 58,382,299 8 53,333,538 5 48,018,505 5 59,530,029 8 54,979,207 Production Expense-Purchased Power 95,769,789 97,200,643 93,506,213 85,265,221 31,174,730 Transmission Expense - 7,920,251 8.036,110 8,266,545 8.121,976 4,092,502
> Insurance and Welf. ire Expense 1.304,137 1,459,113 1,344,556 1,200,410 954,435
[ : Other Administrative & General Expenses 2,421,413 2.274,458 1,955,285 1,783,918 1,635,066 Depreciation and Amortization 6,434,379 6,018,486 5,631,674 5,126,312 3,826,420 Taxes 1,393,705 1,279,700 1,016,208 1,082,667 1,014,270 Interest on Long Term Debt 33,798,340 29,081,630 26.620,960 22,403.479 15,530,709 Otherinterest 280,301 487,041 972,492 1,047,359 583,981 LessInteres' Charged to Construction (22,403,872) (18,820,116) (17,466,851) (14,735,721) (12,438,836) Otheroperating Deductions - - 1.566,127 146.739 179,555 TotalCost of ElectricService $185,300,742 $ l80,380 603 $171,(59,714 $170,970,369 $101,532,039 Gain (Loss)in Operatir.g Margins $ 15,162,802 $ 5,815.999 8 2,346,497 $ 405.591 8 (82.798) Non-Operating Margins 2,121,009 701,313 366,651 337,760 92,624 Gain (Loss)in Total Margins $ 17,283,811 8 6,517.312 8 2,713,148 8 743,354 $ 9.82(> r 1 i
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e ConsolidatedBalanceSheet December 31. I981andI981 1985 1984 ASSETS (Note 2) Utility Plant (Notes 1,3 and 12):
$212,365,725 $201.032,449 Electric plant in service, at cost Completed construction not classified 4,306,888 4.380.007 ;
Construction workin progress 225,153,717 195.096,121 Nuclear fuel in process of refinement and enrichment 9,758,886 8.747.213 451,585,216 409.255.790 Less accumulated provision for depreciation and amorti zation 55,998,607 50.893,788 t'tility plant, net 395,586,609 358,362.002 Otherpropertyandinvestments: Investments in associated organizations: Capital term certificates (NRt'CFC) 7,070,764 7.070,764 Patronage capital (Note 1) 2,137,204 1.114.614 Other 5,819 6.036 Restricted assets and other investments: Certificates ofdeposit 4,855 13.859 9,218,642 8.205,303 Current assets: Cash-general 714,795 2.0i0,418 115,954 47,156 Cash-loan funds Specialdeposits 72,675 6i.675 Temporary cash investments 7,900,000 1,415.600 Accounts receivabic 18,425,788 18.445.153 Fuelinventory, at average cost 3,242,11I 3.341,797 Material and supplies, at average cost 6,477,767 5.953.419 Prepayments 14,159 81 320 Totalcurrent assets 36,963,249 31,425.838 Deferred charges:(Note 1): l'orecovered purchased fuel costs, los allo'itance for unrecoverable gas of
$ 225.03 i and i160.880 (Notes I and 12) 382,698 513.759 Fixed transmission costs, los amortization of 31,699.592 and i1,2'4.691 378,267 803.165 Other 1,985,693 1,486.017 j 2,746,658 2.832.91i su4,5iS1iS8 i m 826o8.
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-1985 1984
' LIABILITIES Equity and margins:
Memberships - $ 90 3 95 . Patronage capital and other equities (Note 5) 47,252,772 29,948,630 - fL 47,252,862 29,968,725 Long-term debt:(Notes 5 and 6) REA mortgage notes -81,454,784 84,728,820 NRUCFC mortgage notes 15,626,848 10,545.349 FIB mortgagenotes - 274,616,000 252.629,000
'371,697,632 - 347,903,159 i Currentliabilities:.
Current maturities oflong-term debt 3,817,800 -3.520,000
' Accountspayable 20,413,612 '15,250,203 Notespayable-NRCCFC(Note 8) - 2.900,000 i- Other accruedliabdities 1,222,104 -1,142.027 Totalcurrentliabilities 25,453,516 - 22,812,230
' Deferred credits (Note 7) 111,148 161,970 l 8444,515,158 5100.826,084 k . .
The anompanying n<tes are an inn gralpart of tbestfinandalstatements l 1 I l k k ..
1 i i Consolidated Statement of Revenue and Patronage Capital and Other Equities Years Ended December 31,198 S and 198-1 1985 1984 ,; Operating revenues: Sales of electric energy (Notes I and 10) $199,879,157 8185,824,817 Other 550,637 338,823 200,429,794 186,163,640 Operatingcosts and expenses: Operatingexpense: Operation expense: 55,712,307 51,129,695 Production-fuel (Note 1) 1,222,445 1,614,299 Production-other Purchased power 95,769,790 97,200,643 Transmission 5,891,140 5,883,761 Distribution 289,243 287.857 Administrative andgeneral 3,808,866 3,801.710 Maintenance cxpense: Production 1,120,766 %1,584 Transmission 1,142,007 1,098,378 , Distribution 597,861 766,114 Generalplant 6,436,805 181,513 160,223 6,050,623
)
Depreciation and amortization (Note 1) Taxes 1,404,227 1,290,384 - Interest onlong term debt 33,798,340 29,081.630 Otherinterest 271,740 487,041 Interest charged to construction (Note l) (22,403,872) (18,820,116) Totaloperating costs and expenses 185,243,178 I80,393,826 Operating margins '15,186,616 5,769,814 G A TCapitalCredits 1,151,928 281,750 Other capital credits and patronage dividends 121,905 131,979 Non+perating margins: Interest income 842,565 261.443 Other 1,128 i60 Margins before Federalincome tax 17,304,142 6,445,526
- (5,749)
Federal income tax (benefit)(Note i I) Net margins 17,304,142 6,451,275 Patronage capital and other equities, beginning of year 29,948,630 23,197,355 Patronage capital and other equitics, end of ycar 8 47,252,772 8 29,968.630 Ibr antunpanying notn art an integralpart t>f thestfinancstal s! sole,nents I1 L_J
I -' Consolidated Statement of Changes in FinancialPosition 1 ears Endedikcember 31, I985 and I984 1985 1984
- Corkingcapitalprovided from:
4 Net margins $ 17,304,142 5 6,451,275 i Depreciation and 2:aortization 6,436,805 6.050.623 i Patron 2ge capitalallocations (1,273,833) (413,729) Working capital provided from operations 22,467,114 12.088,169 Advances from REA _-- 3.603,000 Advances from FFB 22 061,000 49.142,000 Advances from CFC 5,648,000 1,264,400 Salvage valueof retirements 1,003,864 786.055 Contributions for line removal and relocation 15,328 345,569 Decrease in unrecovered purchased fuel costs 161,061 161,135 Decrease in other property and investments-net of capital credits and patronage capital allocations 260,494 - Totalworking capitalprovided 51,616,86I 67,3N,328 Corking capital used for:- Additions to utility plant 43,794,346 50,417,528 Reduction oflong-term debt to REA 3,274,036 2.925.651 Reduction oflong-term debt to CFC 566,491 521,501 Reduction oflong-term debt to FFB 74,000 - Plant removalcosts 461,361 374,900 Decreasein deferred credits 50,821 58.050 Increasein orherdeferred debits 499,676 I5,6X Increase in other property and investments-net of capital credits and patronage capitai allocations - 1,130,780
' Decreasein membenhips 5 -
Totalworkingcapital used 48,720,736 55,447,065 increasein workingcapital $ 2,896,125 511,913,263 Changesin working capital: Increase (decrease)in current assets: Cash $(1,256,825) $ 326,162 Temporary cashinvestments 6,454,400 1,445,600 special Depmits 8,000 (62,960) Accounts rcretvable (19,665) 223.441 M2terialand supplies 421,662 1.897,045 Prep 2)ments (70,161) 230 Increase (decrease)in current liabilities: Current maturities oflong term dcht 297,800 (178,000) Accounts payable 5,163,409 61,747,531) Notes payable (2,900,000) (1,917,500) Other accrued liabilities 80,077 ( 6,270,4 I I) 2,641,286 (8,I I 3,i(2) Increasein working capital $ 2,896,125 $ II,9 63,263 Tk anenfranynng notes art an integralp,srt enfINso[nnark tal statentents l Ii5l
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Notes to ConsolidatedFinancialStatements 1-Summary of Significant construction are credited to the applicable plant Accounting Policies accounts. PrinciplesofConsolidation Interest Charged to Construction The consolidated financial statements include The Cooperative has capitalized as a part of the accounts of the Cooperative and its wholly- electric plant the cost of borrowed funds used owned subsidiary, Brazos Fuel Company. All for such purposes, net of interest earned on intercompany items have been eliminated in " idle" advances of the borrowings. This consolidation. procedure is in accordance with that prescribed by REA. System ofilccounts The accounting records of the Cooperative Patronage CapitalCertificates conform to the Uniform System of Accounts Patronage capitalfrom associated prescribed by the Federal Energy Regulatory organizations is recorded at the stated amount Commission for Class A and B clectric utilities of the certificates. modified for electric borrowers of the Rural UnrecoveredPurchasedFuelCosts Electrification Administration (REA). Natural gas purchased under the take or pay ElectricRevenuesandFuelCosts terms of contracts with various individual Electric revenues are recorded monthly as of producers is recorded at contract cost, which the date meters are read and accounts are billed. includes production taxes and royalties. The Fuel costs are charged to production expense amount of gas paid for in advance is classified as as fuelis consumed. a deferred debit. Unpaid production taxes and r yalties, related to the above contracts, are Plantelddith,nsand#ctirements included in deferred credits until such time that The cost of additions to electric plant in the gas purchased and not taken will actually be service represents the original cost of the recovered by the Cooperative. contracted services, direct labor and material, An allowance for unrecoverable gas is interest on constrtiction loans, and indirect pr vided for by charges toincome.The charges for engineering, supervision and similar aHow nce is based upon a determination by the overhead items. Maintenance and repairs of Cooperative's consulting engineers as to the property and replacements and renewals of mlume ofgaslossesin each well. items determined to be less than units of property are charged to operations. For property 2 - ASSflSElfdSCd replaced or renewed, the original cost plus All assets are pledged as security for the long- { removal cost less salvage is charged to term debt to REA, National Rural Utilities accumulated provision for depreciation. The cost of related replacements and renewals is Cooperative Finance Corporation (CFC)and added to electric plant. Contributions in aid of FederalFinancing Bank (FFB).
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I3-UtilityPlant 4-DeferredCharges ( Listed below are the major classes of utility plant as of December 31,1985 and 1984: Following is a summary of amounts recorded as deferred charges at December 31,' 1985 and oceember si, 1984. q-' l 1985 1981 , 1985 1984 Intangible plant ' 8 2,170 s 2,170 Unrecovered purchaseof fuel Production plant 60,395,163 59,953,744 c ses,lessallowancefor. Transmissionplant 108,876,114 - 103,028.281 unrecoverablegas 8 '382,698 s 543,759 Distribution plant 36,897,188 33,663,622 rixed transmission costs, GeneralPiant 6,195,090 ' 4,384,632 less amortization 8 378,267 s 803,165 Completedconstruction ec tin service 21676 205,4 ' Comtruction workin progress 225,153,717 195,096,121 345KV transmission line from the San Miguel lucic2rfuctinPmcc550f Electric Cooperative, Inc. generating plant reflnement and enrichment 9 an ther utility. Power is transmitted from the Ihpreciation Pl ant to the point ofinterconnection and is Provision has been made for depreciation on a . wheeled by other utilities into the Brazos ( straight-line basis at annual composite rates as transmission system. Certain fixed costs gg;;g,3, l ' Production plant 3.10% Transmission plant 2.75 % utilities for wheeling services, were deferred nistribution piant 2.88 % pending commercial operation of the Plant
'NtuIes"andimprovements 2.50 % which occurred in early 1982. The deferred Transportation 15.50 % Costs are being amortized to expense on 2
$hege Ip nt straight-line basis over a period of 5 years.
EDP equipment 16.00 % Deferred (harges-other: 1985 1984 included in construction work in progress at Preliminary survey and investigation charges si,754,946 $1,306,174 December 31,1985, are costs of $201,625,464 .siisccitaneous deferred charges 77,765 102,405 for the purchase of 3.8% ownership of the work done forothers 152,982 79,438 si,985,693 s1386,oi7 Comanche Peak Nuclear Generating Station. l k.. .
l Notes to Consolidated FinancialStatements (continued) 5-Patronage CapitalandOther 6-Long-Tenn Debt Equities Long-term debt consisted of the following at , Detailof patronage capital: December 31,1985 and 1984. December 31, 1985 1984 , 198i REA-Installment mortgage notes: 1985
$ 6,2i2.912 2%, various m2turity dates to Assignable $16,449,819 November 28,2014 $ 55,860,848 $58,660,696 Awigned 26,246,393 20.016.66s 5%, various maturity dates to 42,696,212 26,2s9,s,', 29,063,126 september 12,2018 28,768,936 84,629J84 87J23,820 Detailofother etluities.' Less: Current maturities 3,175,000 2,995,000 C2pitalgains andlowes 9,383 9.383 81,454,784 81,728,820 Nonoper2 ting margins 4,318,468 3,471,29:
Retained earnings ofsubsidiary 228,709 208.3'9 crc-Installment mortgage notes: 4,556,560 3f89,0s3 7%, matures November 30. 2007 6,350,619 6,468,790 7%, matures May 31,1989 1,649,178 2,051,348 Totalpatronage capital
$ 47,25 2,772 $29,918.630 14%. matures November 30,2016 1,283,451 1,285.hol and other equitics 11%, matures August 31,2018 6,912,400 1,261,400 16,195,648 11,070,339 Under provisions of the long-term debt 568,800 s2spxi
": Cunem maturines agreements, until the total of ecIuities and 15,626,848 10.545.339 j margins equals or exceeds 40% of the total assets of the Cooperative, the return ta patrons of Fra-Meg 2ge notes:
capital contributed by them is limited generally **'j"i3j"37$'*,'o'$'g"f* to 25% of the patronage capital or margins various dates from i.27 86 io i2 3im 274,690,000 2s2,62w received bI the CooEerative in the next Lew: Current maturities 74,000 - preceding year. 274,6:6,000 252.629so On February 26,1986, the Board of Directors $ 371,697,6] $ 3 r,903,Is9 authorized payment of capital credits in 1986 for Unadvanced loan funds of S 11,565,000 at 5% the years 1961 through 1966 in the amount of and S 1,775,600 at 11 % are available to the 54,264,593, subject to REA approval and the Cooperative on commitments from REA and I availability of funds- CFC, resptctively. The by-laws of the Cooperative do not Principal and interest installments on the provide for the assignment of nonoperating above REA and CFC notes are due quarterly in margins or earnings of subsidiaries. The by-laws equal amounts of approximatelv S 1,952,000. , permit the offsetting of current year operating 1.ong term debt to FFB consists of 9.15% to margins against operating deficits of prior years. 13.081%,2 to 32 year notes payable with principalandinterest payments of O
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U r m 1 approximately 57,677,000 due quarterly. The Deferred production taxes and royalties are
; Cooperative has an option to extend the due costs incurred ih obtaining gas under the take or
- . dates, of the 2 year notes, for a period not less _ pay obligation of the Cooperative's contracts .
than two years nor greater than seven years after with various producers. These costs are deferred the date of the advance; or to extend the ; ' until such time that the gas will be taken by the maturity date to thirty-four years after the end of Cooperative. the calendar year in which the advance was Deferredcost of fuelpaidin advance made. At December 31,1985, the Cooperative represents the net obligation due to gas -
? had $ 134,561,647 of advances with short-term producers under the take or pay provisions of -
maturity dates which they intend to refinance the fuel contracts, but of which a clear title of under the above options. These advances have ownership has not been established by the been classified as long-term debt for financial producer. When clear title is established, the
- statement purposes. Unadvanced loan funds of producer will be paid for the gas. If a clear title is
$28,371,000 are available to the Cooperative on not established, the producer is released from loan commitments from FFB. ,,
contract and the Cooperative has no obligation
- At December 31,1985, estimated annual . for the fuel.
( maturities of long-term debt outstanding for the 8-Lineofcreditagreement next five years arcas follows: ,b 'REA Total CFC FFB The Cooperative has established a line of j N 1988
$$(N ' I3$ $ ' ss" 8] $'8 3,450,000 681,000 799,000 4,930,000 credit, for short-term financing, with CFC for:
$40,000,000. At December 31,1985, no funds
$ lb$ b$ '
ijy yy wereowedundersuchagreement.Inaddition, , si7,is1,000 .s2yiono, s1,025,000 s23,742,000 the Cooperative has established a line of credit, for short term financing, with a bank for s20,M0,0% at the prime interest rate Prior 7-DeferredCredits appr valfr mCFCisrequiredifthecombined Deferred credits consisted of the following at borrowing under the lines of credit will exceed
. December 31,1985 and 1984:
g,,
$40,000,000. The Cooperative has not iwerred productioniaxes s 43,965 s s2,896 borro'.ved any funds under the agreement l Dcferred royalties 64,105 76,369 with the bank. :
Dcferred cost of fuelpaid in advance - 29.M9 ' Eccliancous - 3,078 3.0*8 s t il,148 sl61,970 l i
I Notes to Consolidated Financial Statements (continued) 9-RetirenientPlan Internal Revenue Code and is entitled to The Cooperative has a contributory exemption from Federalincome tax. retirement plan covering substantially all ofits The tax benefit of $5,749 in the year ended employees. Total retirement costs charged to December 31,1984, represents a refund due operations for 1985 and 1984, were 5388,084 from Internal Revenue Service resulting from a and $333,251, respectively, and include charges net operatingloss of the subsidiary in 1984. for current and prior service costs. The Cooperative's policy is to fund retirement cost 12-ConunitmentsunaContingencies - annually asitis accrued- Joint Ou'nership Agreement The actuarially computed value of vested The Cooperative, pursuant toaJoint benefits at December 31,1984 (date oflatest Ownership Agreement with Texas Utilities information available) was $6,683,002. The Electric Company (TUEC) and affiliates thereof, book value of the retirement fund assets at executed onJune 1,1979, has an undivided December 31,1984 was $9,093,406. 3.8% ownership interest in the Comanche Peak Nuclear Generating Station (Project). 10-Transactions tvithMeinher During 1985, the Cooperative and TUEC Cooperatives began negotiations intended to limit the The Cooperative has contracts with 17 ofits Cooperative's financial obligation with regard to 18 member distribution cooperatives, through the Project. Also, during 1985, the Cooperative June 30, 2020, for the sale of wholesale electric notified TUEC of the existence of a dispute energy. The contract with the other member regarding the Project and began withholding construction progress payments. A proposed cooperative 5 through the periodJune 30,2010. settlement agreement has been prepared by the Sales of electric cergy to the 18 members were 5162,216,740 and S 1$?.,868,791 for 1985 and Cooperative and TUEC and forwarded to the 1984, respectively. Rural Electrification Administration (REA)for their approval. As of December 31,1985, the Cooperative ll-FederalInconic Taxes has invested $ 211,385,350 in the Project as Federal income taxes are paid on taxable c nstmrtion payments, nuclear fuel, associated income of the subsidiary only. No provision has , transnussion facilities, and interest during been made for Federal income taxes for the , Cooperative in reliance on a determination constmcuan ang other indirect costs; exclusive of 513,577,235 in withheld progress payments. Ictter, dated March 12,1969, issued by internal Loans from the Federal Financing llank, Revenue Service, which states that in the guaranteed by REA, totalling S 193 million were opinion of the Service the Cooperative meets the av il ble for the Project. requirements of Section 501(c)(12)of the 1 m L!
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LWben theProlect begins commercial UnrecoveredPurchasedFuelCosts operation, a rate increase will be necessary to - 1 The Cooperative has contracted to purchase :
= recover construction costs of the Project. As part : gas from various individual producers, in of the anticipated rate proceeding, it is expected : addition to other suppliers. The remaining term -
1 that the Public Utility Commission of Texas will of the majority _of these contracts is
' inquire into the prudency of Brazos'. investment . fapproximately 8 years.-Under the terms of the :
, in_ Comanche Peak. Brazos expects to justify fully contract agreements, the Cooperative has agreed.
lxfore the Commission that the investment in : to purchase and receive, or pay for if available.
- Comanche Peak is in the public interest and will . and not taken, a quantity ofgas as set forth in the . -
he used and useful in rendering utility service. contracts. The contracts provide for the - R
- Should the Commission find that some portion - recovery of gas paid for, but not taken. It is the .
; of the Project is to be disallowed for rate making opinion of management, that with proper . ,
purposes, the Cooperative may be required to - monitoring of reservoir performance and field write off that portion of the cost of the Project surveillance of operating conditions, failure to which is disallowed. The Cooperative is unable. - recover gas paid for but not taken above the . to determine whether or not some portion'of the allowance for unrecoverable gas, will be - Project cost will be disallowed; additionally, the minimal; and that such failures, should they. Cooperative is unable to determine the occur, are a proper increment of the cost of : L materialty of any disallowance should it occur actual gas delivered and therefore recoverable, and its effect on Brazos' rates and earnings, under the Cooperative's rate structure, from its inasmuch as Brazos' return on invested capital customers. has been treated historically by the Commission as a function of Brazos' cash requirements and not determined independently thereof.
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Mvain -urcmen
' Certified Public Accountants Central Texas Tower - Telephone: (817) 776-4190 PO. Box 7616 Waco, TX 76714-7616 The Board of Directors Brazos Electric Power Cooperative, Inc.
We have examined the consolidated balance sheet of Brazos Electric Power Cooperative, Inc. and subsidiary as of December 31,1985 and 1984, and the related consolidated statements of revenue and patronage capital and other equities and changes in financial position for tile years then ended. Our examinations were made in accordance with generally accepted auditing standards and, accordingly, included such tests of the accounting records and such other auditing procedures as we considered necessary in the circumstances. As discussed in Note 12, the recovery of certain construction costs associated with the 3.8% joint ownership of the Comanche Peak Nuclear Generating Station is dependent upon future events, the outcome of which cannot presently be determined. In our opinion, subject to the effects on the financial statements of such adjustments, if any, as might have been required had the outcome of the uncertainty referred to in the preceding paragraph been known, such financial statements present fairly the financial position of Brazos Electric Power Cooperative, Inc. and subsidiary at December 31,1985 and 1984, and the results of thcir operations and the changes in their financial position for the years then ended, in conformity with generally I accepted accounting principles applied on a consistent basis. Y d st & ? "-
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February 28,1986(except as to Note 12 - Commitments and Contingencies -Joint Otenership Agreement ichich is as ofApril 18,1986) 7 y'g-h y'D L[}(MR.- ) Member of Klynveld Main Goerdeler O I
l k-TheSpiritof theBrazosSystem asSeeninSix BrazosFriends. l i i
l EugeneJansing's Grocery, celebration of Gene's 59th birthday. Everyone restphalia, rexas pitched in to throw the 8ala event; and they plan I *E "" ext yean To the casual observer, it could seem like just On Friday m.g hts, a smattering of country and another slow-paced community, with an unusual westem songs fight for time with the latest rock'n name, on one of Texas' back roads. The tall white mil hit on the jukebox m the back room. Video steeples of the local church, which is the pride of games as en le nun taNes-endence the settlement, seem to be the only things worthy that young and old alike still enjoy gathering at of notice. 0ther than the blinking yellow light in themiddleof F51320 tliere esn't seem to be T st of the week is sort of quiet, but there's
- ways a steady stream okustomers coming in to Except for that old store. It really looks more .
pick up that sack of feed or select a loaf of fresh like a barn than anyth.mg else. There's nothm.g bread from the sagging shelves. Or maybe they'll outstanding about the weathered wooden just sit and have a soda; the same way they've building hosting a tm roof and faded Big Red sign. been doing since 1907. Either way, they'll be glad But that store is much more than just a pit stop theystoppe@ about 20 miles southwest of Marlin. One step inside its crooked, screened door and the vi3itor feels the warmth of a community. Willard Hou'le 's Mountain Road Dairy, A group oflocals lounge in the retired green Stephenville, Texas and blue theater chairs clustered around the glowing heater; their murmuring is a continuous WhenJohn flowle rodeinto Texas from Alabama back in 1904, our great state was full of hum in the peaceful country store. A neighbor strolls in, helps himself to a soda from the cooler cactus, wide open spaces and cheap land-you could buy it fo. 37 or $8 an acre out in southwest and deposits his change in the gold King Edwards cigarbox behind the counter. Erath County. You probably wouldn't even Further down, sitting on a low stool beneath a recognize the area in those days; after all, the bare bulb, is Gent. Since 1943, Gene has been the Comanche Indians had ruled there not too long manager and sole proprietor of EugencJansing's ago and the deer probably still outnumbered the settlers. But it was a land full of promise; and Grocery in Westphalia. Ile's also somewhat of a whenJohn grew up,he became a farmer. local celebrity in this German farming community Today, there are more Decre tractors to be seen of about 100 families. But the store that has been than deer of the furry variety (although they say i the hub of Westphalia since it opened in 1907 attracts " neighbors" from many miles away. the himting isn't bad,) and the only Comanche Gene's here every morning at about 7:30or around is the Comanche Peak Nuclear Power ; so, and sometimes doesn't go home until 10:30 Plant that dominates the horizon about 17 miles away. Ilut at least one thing has not changed or 11:00 at night. Rest assured that thos e long for the flowle family: a promising future in hours are appreciated.Just about 500 r cople . gathered at the store last August for a barbeque agnculture.
,1 LJ
h Willard ilowle, John's son, stands at the edge of Wadecouan's nokanef fi nearts his dairy barn on the hill and looks contentedly at Foundry, Dublin, Texas the green pastures and the lumbering black and Not often do people have the courage to give white beasts climbing the hill toward him for their up their careers and follow their dreams, to give afternoon mdking. up a steady paycheck to pursue a craft, to risk "You know, there's not much other place I'd stability to reap fulfillment. When they do, not rather be. It's a healthy kind of life out here," often is the story as successful as it is at Hoka lley.
- he says. Willard admits there are days when he In 1976, while the rest of the country was considers selling the dairy and retinng at the ripe immersed in its mammoth bicentennial old age of 42, but they are few and far between.
celebration of history, Wade Cowan abandoned But Willard wasn't always that fond of his past and looked to the future. Wade sat at a dairying. When he graduated from Texas AMI table with internationally-known Western artist in 1961, a U.S. Soil Conservation service job in Randy Steffen, a descendent of Sioux war chief Abilene seemed much more appealing than Crazy llorse, and accepted his challenge to
. deahng with dairy cows 365 days a year.
establish a fine arts bronze foundrv dedicated to "lle wouldn't have had the dairy if you gave nothing less than the best lie gave up his job as a it to him," 82-year-oldJohn says with a shake 15-mile-a-daI Eostal carrier, retired his hay of his head' equipment and sold his registered Angus herd. In 1973, Willard and his wife IIelen returned t "I was very muchin awe of Randy," Wade Erath County, built one of the most up-to-date recalls. lle said the artist provided the spark he dairy barns and set a goal to make a million dollars needed to pursue preserving western art with off those cows by the time he was 35. And they did. bronze The herd is trimmed down to a manageable 250 Almost 10 years later, nestled unobtrusively on head now-one of the smaller ones here in " Dairy Hi$way 377 between Stephenville and Dublin in Country. The afternoon milking proceeds Erath County, lloka lley Fine Arts Foundry smoothly with the automatic machines chugging remains true to the perfectionist ideas that away. The machines that made dairying an conceived it. Today, it is the main bronze foundry industry seem coarse in comparison to the new for 54 professional Western sculptors. technology his children, Raady and Ginger, will lloka lley is an Oglala Sioux term meaning use. They both anticipate a career in dairying-
,,have a good day." And crery day is looked on as but after college.
a good day at the foundry, where Wade and his They've grown up in agriculture, but I want wife Pat, son Richard and his wifeJalea and about them to know the business end of it. You handle 15 other employees manicure wax and silicon to a lot of money m this business, but you can be create impeccable bronze reproductions. broke before you know it," Willard says Although Wade grew up around his father's knowingly, machine shop and studied industrial arts in college, he and his wife are the first to admit they often learned things the hard way. X
s "There are a lot of tears on this ground," Pat are unaware that Texas A&M is one of Smos' says with a laugh. The 5,000 square foot foundry customers. But Becky and Beth became a part of was designed and built solely by Wade and the Brazos System long before they left their home Richard. outside of Waco to become loyal Aggies. In fact, But iloka licy is much more than wax, silicon Brazos was proud to have both girls represent molds and farnaces. The employees, many of us on the National Rural Electric Cooperative whom have been there almost since the foundry's Association Government-In-Action Youth Tour inception, are what make it unique. Pat to Washington, D.C. emphasizes the family atmosphere among the The girls have fond, if not different, memories group. The Cowans prefer that their employees of the 10-day trip awarded yearly to high school have no formal artistic training, allowing them to students. When Beth went in 1984, she was one of start out with the lloka lley golden rule in mind: two selected to place a wreath on the Tomb of the Thou shalt not change the work in any way. Unknown Solider in Arlington National Cemetery.
"You've got to have good eyes, steady hands Becky recalls wearing borrowed clothes when she and the patience ofJob to work here," Pat met her Congressman on the 1982 trip. Ilers had explains. beenleftbehindin Tennessee!
"We have a special group here," Wade says. "A It has been about 10 years since Vernon and lot of people can't take the perfectionist ideas we Joyce Aldridge, Becky and Beth's parents.
have, but when you have perfection to begin founded the Bellmead 411 Club and started their with, it cannot he changed. There is no grey area girls and countless other lucky kids on the road to in this business . . . it's either right or it's wrong." success. The Aldridge girls did it all in 4-11; all the way up to each receiving the 4-II Gold Star Award, one of the highest 4-11 honors. BeckyandBethAldridge, Now they are college students; and raising Texas AGM University calves has taken a bach seat to studies, part-time The future for Texas looks bright. And it's jobs and supporting the Aggies on to the Cotton Bowl. But they haven't abandoned their roots: reflected in Becky and Beth Aldridge: two of I both girls are members of Texas A&M's Collegiate tomorrow's leaders. Raised on a healthy blend of Future Fanners of America. Becky's job at the caring parents and solid schooling, with a big dose State 4-11 Office is a natural extension of her of 411 thrown in, the Aldridge sisters are a good upbringing, and she also is a member of Alpha example of what's very right about our youth Zeta, an agriculture honor society. today. Becky is a senior a t Texas A&M University, For the Aldridge sisters, what, besides success, majoring in agricultural education. Roommate does the future hold? Each anticipates staying in and younger sister Beth is a freshman anticipating Texas, preferably in a smaller town. They also say a teaching career. As they stroll through the that neither would mind following in the foot-bustling College Station campus, pointing out steps of Wanda llargrove, the 4-11 Coordinator facts about their school, their cathusiasm who gave them so much encouragement. But brightens the overcast day. Becky is Icaving her options open, recognizing Caught up in their college life, they probably that many forksliein the road ahead. M
Magdaleno Trujillo'sBootShop, " Twenty five years ago I was a celebrity,"
, Meridian, Texas he said with a chuckle. "But I never let it go to 31agdaleno Trujillo was an artist. Though his my head."
79 year-old frame was weak and slightened by 51agdaleno shod the famous feet of Roy Rogers, a rccent bout with pneumonia, his remained the Gene Autry, Tex Ritter, John Wayne and a host strong hands of an artist. Bolts of lifeless hide f other stars who caught wind of this Texan's of all shapes and colors were piled around his reputation. For five years, he traveled back and cluttered shop on 51 organ Street in afcridian. f rth to IIollywood to fit his elaborate original Ancient stitching machines and shoe forms sat designs on the stars. But the temperamental silent, all waiting for "El Alaestro" to transform nature of the actors' agent did not suit this artist's the skinsinto amasterpiece. gentledisposition. 31agdaleno was a bootmaker of the finest sort. Alagdaleno said he told the agent he didn't need the business, and he abandoned his contract for a lie could make or repair just about any shoes you wished, but when he handmade boots-he was m repersonallifestyle. an artist. S f rthelastMyears, Alagdalenoworkedout for almost 71 years, he worked his magic with f the little shop ia Aferidian that is adjacent to his
. leather. Each pair-whether it be for a Central home. IIe allowed his loyal customers to come to
[ Texas farmer or the star of a Western movie- him from all over the country, even though his received the same dedication and attention as the quality did not comecheap. last. 51agdaleno said it was for that reason that he Stagdaleno said he had been trying to retire for built a reputation for being the best bootmaker in years, but each time someone pleaded that he Texas. They called him " El Staestro"-the master. craft just one more pair forthem. Ilis secretis simple. "They just won't let me quit," he said "I do everything with my hands," he said, as resignedly. But he didn't seem to mind. Ilis love he proudly displayed his two wrinkled tools. for the craft was evident as he proudly displayed "Nobody could ever compete with me " the intricate decorative stitching on the upper lie was born into a family rich in the tradition of a boot."You see, I still do pretty good for 79 of the handiwork. Ilis father taught him the craft years old." I known by his grandfather and countless uncles grP"m when he was a child in 51exico. At the age of nine, =
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he began his life's work. And at the age of 79, he showed few signs of slowing down. DalJiromon'bsaBer' bis r )' As a youth,31agdaleno had dreams of being a f"$l'."(,"'[n""ag g tailor, but obedience and respect for his father's bybisacarb, butinou thatthe wishes drew him'toleatherinstead. #l,#f"f$",#"#""#'"73]!"*"'
,f , y, f "It was the least I could do for him," he himsel/uilibeumcmberraby explained. "This is hard work but a pretty good jb,r 3f nsu,, j<,,po atobim way to make a living . . . at least it's honest."
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e c_ r 7 TheBrazosSystem - r ? MemberCooperatives .. Bartlett Electric Cooperative, Inc. , B-K Electric Cooperative,Inc. E Belfalls Electric Cooperative, Inc. Comanche County Electric Ceoperative Assn. {. < Cooke County Electric Cooperative Assn. -- [ Denton County Electric Cooperative, Inc. g,,y7,f go, t Eratli County Electric Cooperative Assn.' ElectricPouwGeneration Plant - Fort Belknap Electric Cooperative, Inc. h - E llamilton County Electric Cooperative Assn. I 11i11 County Electric Cooperative, Inc. f J-A C Electric Cooperative,Inc. [ Johnson County Electric Cooperative Assn.
, 51cLennan County Electric Cooperative, Inc.
L Slid-South Electric Cooperative Assn.
; Navarro County Electric Coopcrative, Inc. , Navasota Valley Electric Cooperative, Inc. . , , Tri-County Electric Cooperative, Inc. -
j Wise Electric Cooperative,Inc. _
; MunicipalCustomers t Bartlett h Granbury l Ilearne -
y Sanger - 5 Seymour . F Weatherford fa Whitesboro
? Other -
Texas A & 51 University
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, N. Gas 75.5 MT:
E W.R mob) rosy ~ E- . Plant- . N. Gas - 25 MT
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~afoterosaur.- .- 7003 M T 740.0 MT - .
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i RoardofDirectors E.
- William G. Parker Luther L. Parks Joe Forman President \^tce President \ecretars
( omam be ( ounty Het truc \l use Het tric 3 Helfalls Hectric ( <xoperatit e .4ss<n'tation ( <xoperattre. Incorporated ( <xoperatti e. Inv>rporated i Don Gregg Lawrence Karl M. E. Ilolley Fred Parker Robert T. Lewis.Jr. H K Ilectric Hartlett Het tru ( <aske ( ounts Ilectric Denton ( ounty Het tric I rath ( ount) Het tric , i cu>peralit e. Incorporated i <xoperain e. Inc,)rporated ( noperatut 4ssin'tation ( cusperattre .45soctation ( rn>peratur iss<n tation r Phillip E. Slater Sam llouston Bernard Ililbers BillyJ. Poland M Jack Elam l' ort Helknap Het tru llamdton ( ot< nty Het tru lidl( ount) Het trtc J.4-( Hectric Johnnn ( ounty Hectric ( <xoperatur. Incorporated ( cu operalu e .4ssm tatu rn ( <x>peratu e. Inuorporated Guiperatur incorporated Guiperatut 4ssmtation s g ^
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l I i i 4 TEX-LA ELECTRIC COOPERATIVE OF TEXAS, INC. , FINANCIAL STATEMENTS December 31, 1985 and 1984 and ACCOUNTANTS' REPORT . h l
+
I AXLEY & RooE , CERTIFIED PUBLIC ACCOUNTANTS LUFKIN N ACOGDOCHES
- CROCKETT LIVINGSTON ;
TEXAS
I I I I TEX-LA ELECTRIC COOPERATIVE OF TEXAS, INC. FINANCIAL STATEMENTS December 31, 1985 and 1984 and ACCOUNTANTS' REPORT , 1 lI i AXLEY& RODE CERTIFIED PueLIC ACCOUNTANTS
l l C0NTENTS I Accountants' Report -------------------------------------------------------------- 1 Financial Statements: Balance Sheets ---------------------------------------------------------------- 2
' S ta temen t s o f Revenue and Expens e s -------------------------------------------- 3 Statements of Patronage Capital and Other Equities ---------------------------- 4 Statements of Changes in Financial Position ----------------------------------- 5 Notes to Financial Statements ---------------------------------------------------- 6
- I
- I lI i
l 9 AXLEY & RODE CERTIFIED PUBLIC ACCOUNTANTS
AXLEY & RODE CERTIFIED PUBLIC ACCOUNTANTS LUFMIN N ACOGDOCHES CROCKETT LIVINGSTON TEXAS March 25, 1986 The Board of Directors Tex-La Electric Cooperative of Texas, Inc. We have examined the balance sheets of Tex-La Electric Cooperative of Texas, Inc. as of December 31, 1985 and 1984, and the related statements of revenue and expenses, patronage capital, and other equities, and changes in
. financial position for the years then ended. Our examinations were made in accordance with generally accepted auditing standards and, accordingly, included such tests of the accounting records and such other auditing procedures as we considered necessary in the circumstances. -
l In our opinion, the financial statements referred to above present fairly lg the financial position of Tex-La Electric Cooperative of Texas, Inc. as of g December 31,1985 and 1984, and the results of its operations and changes in its financial position for the years then ended in conformity with generally accepted accounting principles applied on a consistent basis. Ok CERTIFI-s04_ PUBLIC ACCOUNTANTS lI
o il TEX-LA ELECTRIC COOPERATIVE OF TEXAS, INC. l BALANCE SIIEETS December 31, 1985 and 1984 1985 1984 ASSETS Electric Plant, At Cost: I Furniture and fixtures Less accumulated depreciation
$ 16 251 $
3 912 12 339 15 844 2 781 13 063 Construction work in progress (Notes 2 and 6) 120 788 035 I 147 431 3_83 147 443 722 120 801 098 Other Assets and Investments: Nonutility property - 12 887 Investments in associated organizations (Note 3) 2 838 157 2 838 157 2 838 157 -2 851 044 Current Assets: Cash, including temporary cash investments of
$610,546 in 1985 and $271,174 in 1984-General funds 635 283 309 186 Cash, including temporary cash investments of
$1,571,540 in 1985 and $206,605 in 1984-Construction funds 1 573 186 207 766 Accounts receivable (includes receivables from member cooperatives of $2,372,807 in 1985 and
$2,437,991 in 1984) 2 459 005 2 723 669 Prepaid expenses 7 136 441 Accrued interest ~ -
'789
_ 4 674 610 3 241 851
$154 956 4&g $126 893 993 EQUITIES AND LIABILITIES Patronage Capital and Other Equities (Note 10):
Memberships $ 700 $ 700 Patronage capital (Note 4) 258 101 76 348 Other equities (Note 5) 97 075 68 015 __ 355 876 145 063 Long-term debt (Note 6) 151 778 000 121 027 000 Current Liabilities: Accounts payable 2 817 652 2 599 995 Accrued interest 4 961 3 121 935 2 822 613 5 721 930
$154 956 4&R $126 893 993 I
The accompanying notes are an integral part of these financial statements. AXLEY & RODE CERTIFICD PUBLIC ACCOUNTANTS
TEX-LA ELECTRIC COOPERATIVE OF TEXAS, INC. I STATEMENTS OF REVENUE AND EXPENSES For The Years Ended December 31, 1985 and 1984 Operating Revenue: Power sales (Note 7) $30 537 181 $29 573 607 Operating Expenses: Cost of purchased power 29 638 267 28 710 170 Administrative and general (Notes 8 and 9) 741 996 1 033 343 Depreciation 1 131 992 30 381 394 29 744 505 Operating margin (deficit) before interest expense 155 787 (170 898) I Interest Expense: Interest on long-term debt Allowance for borrowed funds used 14 522 125 11 806 897 I during construction '(14 522 125) (11 806 897) Operating margin (deficit) 155 787- (170 898) Nonoperating Margin: Interest income 55 026 29 060 Net margin (deficit) $ -210 813 $ (141_83H) I The accompanying notes are an integral part of these financial statements. AXLEY aRODE CERTIFIED PUBLIC ACCOUNTANTS
TEX-LA ELECTRIC COOPERATIVE OF TEXAS, INC. I STATEMENTS OF PATRONAGE CAPITAL AND OTHER EQUITIES For The Years Ended December 31, 1985 and 1984
' PATRONAGE OTHER MEMBERSHIPS CAPITAL EQUITIES TOTAL Balance, December 31, 1983 $700 $218 186 $68 015 $286 901 Net deficit -
(141 838) - (141 838) Balance, December 31, 1984 700 76 348 68 015 145 063 Net margin - 210 813 - 210 813 Transfer to appropriated margins - (29 060) 29 060 - Balance, December 31, 1985 $7_QQ $258 101 $97 075 $355 876 I I l I l I l .i l l 'I The accompanying notes are an integral part of these financial statements. l AXLEY aRODE CERTIFIED PUBLIC ACCOUNTANTS
TEX-LA ELECTRIC COOPERATIVE OF TEXAS, INC. I STATEMENTSOFCf!ANGESINFINANCIALPOSITION For The Years Ended December 31, 1985 and 1984 1985 1984 Funds Were Provided By: Net margin (deficit) $ 210 813 $ (141 838) Add Items Not Requiring Funds: Depreciation 1 131 992 TOTAL FUNDS PROVIDED (USED) FROM OPERATIONS 211 944 (140 846) Advances from CFC - 2 800 000 Advances from REA 30 751 000 17 079 000 Sale of furniture and fixtures - 15 844 Decrease in nonutility property 12 887 - Decrease in working capital - 3 549 701
$30 975 831 $23 303 699 Funds Were Used For:
Additions to construction work in progress $26 643 348 $20 490 926 Additions to furniture and fixtures 407 12 535 Additions to nonutility property - 238 Payments on debt to CFC - 2 800 000 Increase in working capital . 4 332 076 -
$3D 975 831 $23 303 699 Increase (Decrease) In Working Capital By Components:
Cash - General $ 326 097 $ 12 477 Cash - Construction 1 365 420 (3 370 519) I Accounts receivable Prepaid expenses (264 664) 6 695 959 868 441 Accrued interest (789) (461). Accounts payable (217 657) (767 846) Accrued interest 3 116 974 (383 661)
$ 4 332 076 $13_5M_10_1) lIl l
The accompanying notes are an integral part of these financial statements. AXLEY & RODE CERTIF:ED PUBLfC ACCOUNTANTS
TEX-LA ELECTRIC COOPERATIVE OF TEXAS, INC. NOTES TO FINANCIAL STATEMENTS NOTE 1 -
SUMMARY
OF SIGNIFICANT ACCOUNTING POLICIES Organization and Operation: Tex-La Electric Cooperative of Texas, Inc. (the Cooperative) is an electric generating and transmission cooperative formed pursuant to the Texas Electric Cooperative Corporation Act. The Cooperative provides wholesale electric service to the distribution cooperatives of Cherokee County Electric Cooperative Association, Deep East Texas Electric Cooperative, Inc., Jasper-Newton Electric Cooperative, Inc., Houston County Electric Cooperative, Inc., Rusk County Electric Cooperative, Inc., Sam Ifouston Electric Cooperative, Inc. and Wood County Electric Cooperative, Inc. (Members). The Cooperative was formed principally to provide dependable power and energy to its members at the lowest cost possible. In doing so, the Cooperative works closely with its members in determining their power requirements and in contracting with its respective bulk power suppliers to satisfy such requirements. Chart of Accounts: The Cooperative maintains its accounting records in accordance with the Federal Energy Regulatory Commission's Uniform System of Accounts as adopted by the Rural Electrification Administration. The more significant accounting policies are described below. Electric Plant: Furniture and fixtures are stated at the historical cost. Deprecia-tion of these assets is computed at a straight-line composite rate of 7%. Construction work in progress represents the Cooperative's share of the project costs for the construction of the Comanche Peak Steam Electric Station not yet in production. Allowance for Borrowed Funds Used During Construction: The Cooperative has capitalized to electric plant the cost of bor-rowed funds used for the construction of the Comanche Peak Steam Electric Station net of the related interest income from invested construction funds. Income Taxes: The Cooperative is exempt from Federal income tax under the provi-sions of Section 501(c)(12) of the Internal Revenue Code. AxLEY aRODE CERTIFIED PUBLIC ACCOUNT ANT 5
TEX-LA ELECTRIC COOPERATIVE OF TEXAS, INC. NOTES TO FINANCIAL STATEMENTS - CONTINUED NOTE 2 - JOINTLY-0WNED FACILITIES On December 9, 1980, the Cooperative executed a Joint Ownership Agreement with Texas Power & Light Company to acquire a 41/3% undivided ownership interest in the Commanche Peak Steam Electric Station, a two unit 1150 megawatts each nuclear fueled electric generating station, located near Glen Rose, Texas in Hood and Somervell Counties, Texas, being constructed by Texas Utilities Generating Company. On February 12, 1982, following the announcement of a substantial increase in the cost of the project and delay in the projected commercial operation date, the Cooperative sold 21/6% of its interest in the project back to Texas Power & Light Company. The ' proceeds from the sale represented the Cooperative's cost of con-struction and capitalized interest. In 1982 the Cooperative, based on Texas Utilities Electrfc Company's (TUEC) estimates, expected that Comanche Peak Units 1 and 2 would be licensed by the Nuclear Regulatory Commission (NRC) and commence commercial operation in 1984 and 1985, respectively, and that the Cooperative's share of the project would cost a total of $120 million. The Cooperative planned to fund its participation in the project by means of a loan from the Federal Financing Bank of up to $180 million, guaranteed by the Rural Electrification Administration (REA). As a result of difficulties which TUEC has encountered in the NRC licensing process, primarily in convincing the NRC that Comanche Peak has been properly constructed, the NRC to date has not issued an operating license for either Unit 1 or 2. Based on TUEC's present estimate, the Cooperative does not expect commercial operation of the project to commence prior to 1988. As of February 28, 1986, the Coopera tive's total expenditure for its 2-1/6 percent share of the proj ect is approximately $153 million. Based en current estimates for the completion and licensing of the proj ect , the Cooperative's share of Comanche Peak is expected ultimately to cost approximately $218 million. This figure could increase further in the event of added delays or other dif ficulties with the project beyond those currently anticipated. The Cocperative has not yet determined how it will fund the portion of the proj ect cost which is in excess of the current REA loan guarantee limit of $180 million. Among the options it is considering is to apply to the REA for a deficiency loan and/or to seek authorization from the Public Utility Commission of Texas for an increase in the Cooperative's electric rates. .I Construction of Unit 1 of Comanche Peak is virtually complete, but because of numerous uncertainties in the licensing process no assurance can be given that the estimated commercial operation dates of these units can be met or that the current estimated completion costs thereof will not be exceeded. Failure to secure timely and favorable regulatory approvals or any further delay occasioned by reinspections or possible rework resulting therefrom will increase the cost of the plant. I AXLEY & RODE C ERTIFI E D PtiBLIC ACCOUNTANTS
TEX-LA ELECTRIC COOPERATIVE OF TEXAS, INC. NOTES TO FINANCIAL STATEMENTS - CONTINUED NOTE 3 - INVESTMENTS IN ASSOCIATED ORGANIZATIONS Investments in associated organizations at December 31, 1985 and 1984 consisted of the following: 1985 1984 Patronage capital from the National Rural Utilities Cooperative Finance Corporation (CFC) $2 837 157 $2 837 157 I Memberships 1 000 1 000
$2 838 157 $2 838 157 The investment in the CFC represents patronage capital credits allocated to the Cooperative. Realization of cash from this investment is within the control of CFC.
NOTE 4 - PATRONAGE CAPITAL The details of patronage capital at December 31, 1985 and 1984 are as follows: 1985 1984 Assignable $258 101 $76 348 Assigned - - I Less: Retired 258 101
$258 10).
76 348
$76 348 NOTE 5 - OTHER EQUITIES The details of other equities at December 31, 1985 and 1984 are as follows:
1985 1984 Appropriated margins $2] 075 $68 015 l The by-laws of the Cooperative provide that nonoperating margins be used initially to offset any losses incurred during the current or any prior fiscal year. l Upon recovery of any losses, a fund in the amount of $400,000 shall be accumulated l from these remaining nonoperating margins and funded each year, if necessary, to l maintain the $400,000 balance. 1 I NOTE 6 - LONG-TERM DEBT Long-term debt at December 31, 1985 and 1984 consisted of the following: 1985 1984 i Mortgage notes payable to the Federal Finan-l cing Bank at interest rates from 9.072% to 13.091% with the Rural Electrification Administration (REA) as administrator $151 778 00Q $121 D17 000 In July, 1981, the Cooperative entered into a loan agreement not to exceed
$180,000,000 to finance the construction and operation of generating facilities, electric transmission, distribution and service lines by the Cooperative payable to the Federal Financing Bank (FFB) pursuant to an agreement between the FFB and the REA.
AXLEY & RODE CERTIFIED PUBLIC ACCOUNTANTS
I TEX-LA ELECTRIC COOPERATIVE OF TEXAS, INC. NOTES TO FINANCIAL STATEMENTS - CONTINUED NOTE 6 - LONG-TERM DEBT - CONTINUED The maturity date of each amount advanced under the loan agreement shall not be less than two years nor more than seven years after the date of the advance and I shall be designated in writing at the time of request by the borrower subject to REA approval. Under the terms of the agreement the Cooperative may designate a maturity date of thirty-four years after the end of the calendar year in which such advance was made. The interest rate applicable to each advance is the respective rate established by the FFB at the time of the advance. The Cooperative has designated a long-term maturity of thirty-four years for a portion of the FFB advances. It is anticipated that the amounts due in 1986 and 1987, together with future additional borrowings from FFB, will be extended. Substantially all of the Cooperative's assets are pledged as security for the long-term debt owed FFB. The Cooperative has available a $12,000,000 line of credit which expires in 1986 with the CFC under which there were no borrowings outstanding at December 31, 1985. NOTE 7 - POWER CONTRACTS The Cooperative is obligated to supply power to its Members under the power sales contracts which exist with the Cooperative's Members for the sale of all electric power which the Members will require for the operations of their respective systems. The contracts extend to December 30, 2026 and thereafter, as permitted by law until the expiration of six months after notice of cancellation by either the Cooperative or the Members. The Cooperative purchased all of its power at wholesale from Texas Utilities Electric Company and from the Scuthwestern Power Administration (SWPA), an agency of the Department of Energy. NOTE 8 - PENSION PLAN The employees of the Cooperative participate in the National Rural Electric Cooperative Association (NRECA) Retirement and Security Program. The Cooperative makes annual contributions to the plan equal to the amounts accrued for pension expense. In this master multiple-employer plan, which is available to all member cooperatives of NRECA, the accumulated benefits and plan assets are not determined or allocated separately by individual employer. Pension expense for this plan for the years ended December 31, 1985 and 1984 was $11,020 and $11,843, respectively. NOTE 9 - RELATED PARTY TRANSACTIONS The Cooperative . and Sam Rayburn G & T, Inc. (SRG&T), an electric generating and transmission cooperative, share facilities and personnel. SRG&T reimburses the Cooperative for its proportionate share of the related expenses. The total reimbursement for the years ended December 31, 1985 and 1984 was $116,274 and
$97,688, respectively. Certain members of the Cooperative are members of SRG&T.
AXLEY & RODE CERTtrtED PUBLIC ACCOUNTANTS s
TEX-LA ELECTRIC COOPERATIVE OF TEXAS, INC. I NOTES TO FINANCIAL STATEMENTS - CONTINUED NOTE 10 - LITIGATION
~I The Cooperative has been advised by legal counsel that litigation has been brought against the Southwestern Power Administration (SWPA) by Brazos Electric I Power Cooperative, Inc. (Brazos), concerning a power contract between the Coopera-tive and the SWPA. Brazos has challenged the power contract as well as SWPA's power allocations as to the power the Cooperative receives from the Denison Dam.
Furthermore, by the terms of the Scheduling Agent Agreement dated October 30, 1984 I between the Cooperative and Texas Utilities Electric Company (TUEC), the Cooperative has agreed to hold harmless TUEC from any monetary damages and attorney fees that might result from any claim brought by Brazos against TUEC as a result of the Scheduling Agent Agreement. In a letter agreement signed by the Cooperative, it was agreed that if TUEC intervenes in this action, the Cooperative will not be obligated to indemnify TUEC for any attorney fees it incurs as a result of TUEC intervening in this action. On January 23, 1985 TUEC filed a motion to intervene in the case of Brazos v. SWPA. On December 30, 1985, the District Court granted the defendants' and intervenors' motions -for summary judgment against Brazos, and dismissed the entire action. Brazos has appealed the District Court's ruling. If necessary, the I Cooperative intends to vigorously pursue the litigation. However, it is not possible at present for the Cooperative and its counsel to predict the outcome which might result from the actions of Brazos. Accordingly, no provision for any liability that might result therefrom has been recorded in the accompanying
-I financial statements.
l l l l AXLEY & RODE CERTIFIED PUBLIC ACCOUNTANTS}}