ML20098C683
Text
i .J t
" Washington Public Power Supply System l A JOINT OPERATING AGENCY l
P. O. Box 968 3000 Gro WASHINGTON WAY RICHLAND. WASHINGTON 99 9) 946 1611 Docket Nos. STN 50-508 July 12, 1977 /~ L and 50-509 G03-77-744 /
M 14 kJ
- 6- '
Director of Nuclear Reactor Regulation ; .i ATTN: Olan D. Parr, Chief D #.Y f b/
Light Water Reactors Branch No. 3 .qf U. S. Nuclear Regulatory Commission ,
N^
Washington D.C. 20555 *I o, j
Subject:
WPPSS NUCLEAR PROJECTS NOS. 3 & 5 FINANCIAL INFORMATION UPDATE
Dear Mr. Parr:
In response to a request to update certain financial information concern-ing WNP-3/5, directed to WPPSS by your Mr. Daniel T. Swanson, the re-quested information is provided in the below listed attachments.
Attachment I - Official Statement, $90,000,000 Washington Public Power Supply System Generating Facilities Revenue Bonds, Series 1977B (Nuclear Projects Nos. 4 and 5).
Attachment II - Proposed Official Statement, $230,000,000 Washington Public Power Supply System Nuclear Project No. 3 Revenue Bonds, Series 1977.
Attachment III - Discussion of WNP-5 cost increases and a discussion of cost differences between WNP-3 and WNP-5.
Attachment IV - Source of Funds for System - Wide Construction Expenditure during Period of Construction of WNP-3 and WNP-5, Applicable to Pacific Power and Light Company.
While preparing the Plant Capital Investment Summary for WNP-3 (Attachment III), we determined that the total project cost for WNP-3 was misc.lculated in the Testimon; of Ames D. Perko regarding Financial Qualifica+ .ons which was submitted at the evidentiary hearing on May 24 - 25,1977 (Transcript following page 598). In Mr. Perko's testimony, the total estimated cost for WPPSS' 70% share of WNP-3 was accurately stated to be $970 million.
However, the tatal project cost for WNP-3 was erroneously stated to be ;
$1,281,657,000. This will advise that the correct total estimated cost '
for the entire project is $1,385,716,000. Mr. Perko's testimony will be corrected on the record by affidavit when the Applicant submits its reply proposed findings of fact later this week.
8409270121 840824 PDR FOIA COHEN 84-603 PDR
- t. s Olan D. Parr Page two We trust the attached information satisfies your request, and. assume the Staff will submit an affidavit updating its financial qualifications conclusions by July 21, 1977, in order to promptly close the hearing record.
Very truly yours, 0$
D. L. Renberger Assistant Director -
Generation and Technology DLR/ RCD:gs Attachments l
l l
Docket Nos. STN 50-508 and 50-509 l Letter DL Renberger to 00 Parr, !
Financial Information Update l l
STATE OF WASHINGTON ss
. COUNTY OF BENTON )
D. L.'RENBERGER, Being first duly sworn, deposes and says: That he is the Assistant Director, Generation and Technology, for the WASHINGTON PUBLIC POWER SUPPLY SYSTEM, the applicant herein; that he is authorized to submit the foregoing on behalf of said applicant; that he has read the foregoing and knows the contents thereof; and believes the same to be true to the best of his knowledge.
DATED U~U/V /2- , 1977 bd D. L. RENBERGER "
On this day personally appeared before me D. L. RENBERGER to me known to be the individual who executed the foregoing instrument and acknowledged that he signed the same as his free act and deed for the uses and purposes therein men tioned.
GIVEN under my hand and seal this /M day of ,1977.
/ /
lA A Notary Public in and for thb State of es g at O >I_
s -
ATTACHM$NT JII Page 9 ...
COMPARIS0N OF WNP-3 AND WNP-5 .-
CAPITAL COST ESTIMATES OF MAY, 1977 DIRECT COSTS, ACCOUNT TITLE WNP-3 WNP-5 VARIANCE 20 Land and land rights .................... $ 2,076 $ 2,076 $ PHYSICAL PLANT 21 Structures and site facilities . . . . . . . . . . 165,416 165,416 22 Reactor pl ant equi pment . . . . . . . . . . . . . . . . . 166,958 176,807 9,849 23 Turbine pl ant equi pment . . . . . . . . . . . . . . . . . 131,240 133,285 2,045 24 Electric plant equipment ................ 49,153 49,153 25 Misc. plant equipment ................... 29,122 29,122 Subtotal ........................ 543,965 555,859 11,894 Spare parts allowance .................... 3,435 3,435 Contingency allowance ................... 74,033 74,743 710 Subtotal ........................ $ 621,433 $ 634,037 $12,604 INDIRECT COSTS 91 Construction facilities, equipment, and services ............................. $ 14,894 $ 14,895 $ 1 92 Engineering and const. mg't. services ... 72,246 74,430 2,184 93 Other costs ............................. 207,109 410,147 203,038 94 Interest during construction ............ 270,714 500,346 229,632 Subtotal ........................ 564,963 999,818 434,855 Start of construc tion cost . . . . . . . . . . . . . . 3,266 9,018 5,752 Escalation during construction .......... 196,338 266,753 70,415 TOTAL PLANT CAPITAL INVESTMENT .. $1,386,000 $1,909,626 $523,626
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ATTACHMENT III a .
Page 10 9
WNP-3 vs. WNP-5
SUMMARY
VARIANCE EXPLANATION (May,1977 Estimates)
(Thousands)
VARIANCE
- 1. WNP-5 construction will follow WNP-3 by approximately 18 months. As a result, escalation will be greater on WNP-5 than WNP-3. 90,000
- 2. Nuclear Fuel costs for the initial core are much higher for WNP-5 than WNP-3 as a result of a) con-tractual uranium prices being nearly five times higher for WNP-5 (contract for WNP-3 ore was placed in late 1973; WNP-5 contracts placed in mid-1975 and late 1976) and b) additional escalation will be incurred by WNP-5 due to the 18 month schedule separation. 40,000
- 3. The reload uranium contracts for WNP-5 require pay-ments prior to Commercial 0peration and, therefore, are included in the capital cost estimate. The re-load uranium contract for WNP-3 requires r.o such payment. 70,000 E WNP-3 is a " net-billed" 2/ plant as described in Attach-4.
ment II. WNP-5 is financed jointly with WNP-4 and all obligations are the sole responsibility of the
" Participants" as described in Attachment I. Due to the different financial arrangements for WNP-3 and WNP-5 and pursuant to " Resolution No. 890", certain "other" costs (reference Attachment III, Page 5, Item i IV.c) are authorized to be included in the capital i cost of WNP-5 (and WNP-4). Such costs are defined as l
annual operating costs for WNP-3 as opposed to cost of construction for WNP-5. 90,000 1/ Includes sufficient uranium for approximately four I
reloads.
2/ " Net-billed" arrangements provide security for financing WNP-3. This security has the ultimate guarantee of the Bonneville Power Administration. However, the same security arrangements were not available for WNP-4 and WNP-5.
l: Sunnary: Variance Explanation - continu;d ATTACHMENT III I
Page 11
. s
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(Thousands)
VARIANCE
- 5. Estimated cost of Capitalized Interest During Con-struction is substantially higher on WNP-5 than WNP-3 as a result of a) higher total construction and fuel costs D) interest on "other" capitalized costs on WNP-5 that are not defined as cost of construction for WNP-3 c) assumed interest rate for WNP-5 (7.75%)
is higher than that assumed for the " net-billed",
WNP-3, plant (7.25%) and d) WNP-5 interest is capitalized through the current Commercial Operation date and beyond (a portion of the interest is capi-talized during the " ramp-up" period up to July 1, 1988). WNP-3 interest is only capitalized to Septem-ber 1,1982. 230,000 TOTAL VARIANCE BETWEEN WNP-3 AND WNP-5 (5 vs. 3) 520,000 1
L
, AlfACHMENT IV s Applicant PACIFIC POWER & LIGHT COMPANY Nuclear Plant WNP Nos. 3 & 5 -
Source of Funds for System-Wide Construction Expenditures During Period of Construction of Subject Nuclear Power Plant (millions of dollars)
Construction Years of Subject Nuclear Power Plant 1976 1977 1978 1979 1980 1981 1982 1983 1984 1985 eu[ffffssuesand g
Connon stock -
$ 120 $ 140 $ 80 $ 70 $ 100 $ 140 $ 205 $ 250 $ 260 Preferred stock $ 40 -
50 40 20 30 40 50 65 70 Long-term debt 95 140 200 180 160 155 207 299 396 397 Notes payable (17) 17 (7) -
(18) - - - - -
Contribucions from parent-net - - - - - - - - - -
Other funds 119 8 - - - - - -
67 10 Total 237 285 383 300 232 285 387 554 778 737 Internal funds Net income 82 97 123 145 162 174 188 224 252 277 Less:
Preferred dividends 13 16 19 23 26 29 32 36 42 48 Common dividends 51 57 68 80 89 95 110 125 140 150 Retained earnings 18 24 36 42 47 50 52 63 70 79 Deferred taxes 3 2 2 2 3 3 3 13 15 18 Investment tax credit (deferred) 2 9 1 3 10 12 15 20 27 26 Depreciation & amortization 40 46 48 52 62 70 85 105 140 160 Less: AFDC 23 22 43 55 53 65 80 95 120 145 Total 40 59 44 44 69 70 75 106 132 138 TOTAL FUNDS $ 277 $ 344 $ 427 $ 344 $ 301 $ 355 $ 462 $ 660 $ 910 $ 875 Construction Expenaitures
- Nuclear power plants $ 54 $ 166 $ 171 $ 178 $ 185 $ 175 $ 190 $ 375 $ 473 $ 473 Other 223 156 265 188 126 183 293 290 435 399 Total Construction Exp's $ 277 $ 322 5 436 $ 366 3 3TT 5 358 5 483 $ 665 $ 908 5 872 Subject nuclear plants $ 11.5 $ 15.4 $ 22.4 $ 28.8 $ 43.7 $ 44.9 $ 36.7 $ 19.7 $ 8,8 $_ .5
- Exclusive of AFDC (allowance for funds used during construction)
,r s .
. ATTACHMENT III DISCUSSIONS OF WNP-5 COST INCREASES AND WNP-3 AND WNP-5 COST DIFFERENCES.
Page 1 - February, 1976 " Plant Capital Investment Summary" (PCIS) for WNP-5 (previcusly submitted to the NRC).
Page 2 - May,1977 PCIS for WNP-5.
Page 3- - A summary account comparison of the WNP-5 estimate of Feb-ruary,1976 with the WNP-5 estimate of May,1977.
Page 4 & 5 - Compare the major assumptions used as the basis for prepa-ration of the WNP-5 February,1976 and May,1977 estimates.
Page 6 - Compares the various cost elements included in four sum-mary accounts in the February,1976 WNP-5 PCIS with the cost elements included in the same accounts in the May, 1977 PCIS.
Page 7 - A summary explanation of the total cost variance between the WNP-5 February,1976 and May,1977 estimates.
Page 8 -
May,1977 PCIS for WNP-3.
Page 9 - A summary account comparison of the WNP-3 and WNP-5 esti-mates of May,1977.
Page 10 & 11 - A summary explanation of the total cost variance between the WNP-3 and WNP-5 estimates of May, 1977.
- tbKUAKY A AiiALhMedi 111 Page 1
. PLANiCAPITALINVESTMENT
SUMMARY
BASIC DdTA Name of plant k'NP-5 Cost basis at start of construction Net capacity 1.240 MW(e)
Location satson. Washington Type of Cooling Design & construction period 'y"tural p aft Month, year NSSS order placed 7-74 cooling towers X Month, year of commercial operation 9-83 Mechanical draft Length of work week 40 hours cooling towers Interest rate, interest Other (describe) during construction 7.5 simpleixaxxsampsundi COST
SUMMARY
Account Number Account Title Total Cost (thousand dollars)
DIRECT COSTS 20 Land and land rights.................... $ PHYSICAL PLANT 21 Structures and site facilities.......... 153,572 22 Reacto r plant equipmen t. . . . . . . . . . . . . . . . . 140,151 23 Turbine plant equipment. . . . . . . . . . . . . . . . . 129,762 24 El ectric pl an t equipment. . . . . . . . . . . . . . . . 42,516 25 Misc. plant equipment................... 21,220 Subtotal........................ 5 487,221 Spare parts allowance................... 2.c12 Contingency allowance................... 51.831 Subtotal........................ $ 541,464 INDIRECT COSTS 91 Construction facilities, equipment, and services.............................. $ 5,898 92 Engineering and const. mg't. services... 31,450 93 Other costs............................. 79.481 (1) 94 Interest during constrection............ 299,948 Subtotal........................ $ 416.777 S tart of cons truction cos t. . . . . . . . . . . . . . $ 197B Escalation during construction ( % yr.) 227.600 (2)
Total plant capital investment ($ /KW)$ 1.188.719 Excludes all Nuclear Fuel cos .
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(2) Labor escalation @ 8%, compounded; material escalation @ 6%, compounded.
my, ,;j> a . .m.natn e 443 j
- Page 2 ,
PLANT CAh i AL INVESTMENT '
SUMMARY
BASIC DATA h 7ph,3*8SF)*4,k Name of plant WNP-5 Cost basis at start of construction Net capacity 1.240 MW(e)
Location satsop, Washington Type of Cooling Design &' construction period ' "
tu al aft Month, year NSSS order placed 7-74 cooling towers X Montn, year of commercial operation 3-85 Mechanical draft length of work week 40 hours cooling towers Interest rate, interest Other (describe) during construction 7.75 simpleixarxzampasadfx COST
SUMMARY
Account Number Account Title Total Cost (thousand dollars)
DIRECT COSTS 20 Land and land rights.................... $ 2,076 PHYSICAL PLANT 21 Structures and site facilities.......... 165,416 22 Reactor plant equipment. . . . . . . . . . . . . . . . . 176,807 23' Turbine plant equipment. . . . . . . . . . . . . . . . . 133.285 _
24 Electric plant equipment. . . . . . . . . . . . . . . . 49,153 25 Misc. plant equipment................... 29,122 S u b to t a l . . . . . . . . . . . . . . . . . . . . . . . . $ 555.859 Spare parts allowance................... - t as Contingency allowance................... 74_743 ,
Subtotal........................ $ 634,037 INDIRECT COSTS 91 Construction facilities, equipment, and services.............................. $ 14,895 92 Engineering and const. mg't. services... 74,430 93 Other costs............................. 410,147 (1) 94 Interest during construc tion. . . . . . . . . . . . 500,346 Subtotal........ ............... $ 999,818 Start of construction cos t. . . . . . . . . . . . . . $- 9.018 Escalation during construction ( % yr.) 266.7s3 (2)
Total plant capital investment (5 /KW)$ 1.909.626 (1) Includ 105.831 and $72,1 initial core and reload nuclear fuel requirements, respectisely.
(2) Labor escalation @ 8%, compounded; material escalation @ 6%, compounded.
1
ATTACl#ENT 1II
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WASHINGTON PUBLIC F0WER SUPPLY SYSTEM
. UNIT NO. 5 t*
TOTAL ESTIMATED COST COMPARIS0N-(Thousands)
ESTIMATE OF ESTIMATE OF ACCOUNT NUMBER ACCOUNT TITLE . FEBRUARY 1976 MAY 1977 VARIANCE j DIRECT COSTS 20 Land and land rights ....................... $' $ 2,076 $ 2,076 PHYSICAL PLANT -
21 Structures and site facilities ............. 153,572 165,416 11,844
?2 Reactor pl ant equi pment . . . . . . . . . . . . . . . . . . . . 140,151 176,807 36,656 23 Turbine plant equipment .................... 129,762 133,285 3,523 24 Electric plant. equipment ................... 42,516 49,153 6,637 25 Misc. plant equipment ...................... 21,220 29,122 7,902 Subtotal ............................. 487,221 555,859 68,638 l
Spare parts allowance ...................... 2,412 3,435 1,023 Contingency allowance ...................... 51 ,831 74,743 22,912 Subtotal ............................. 541,464 634,037 92,573 INDIRECT COSTS 91 Construction facilities, equipment, and
! services ................................ $ 5,898 $ 14,895 $ 8,997 '
i 92 Engineering and const. mg't. services ...... 31,450 74,430 42,980 ,
! 93 Other costs ................................ 79,481 410,147 330,666 1 94 Interest during cons truction . . . . . . . . . . . . . . . 299,948 500,346- 200,398 Subtotal ............................. 416,777 999,818 583,041
! Start of construction cost . . . . . . . . . . . . . . . . . 2,878 9,018 6,140 Escalation during construction ............. 227,600 266,753 39,153-l
' $1,188,719 $1,909,626 TOTAL PLANT CAPITAL INVESTMENT ............. $720,907
ATTACHMENT III
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Page 4 .,
BASIS FOR WNP-5 COST ESTIMATES FEBRUARY, 1976 vs. MAY, 1977 I. PROJECT SCHEDULE:
ESTIMATE OF ESTIMATE OF MILESTONES FEB., 1976 MAY, 1977 VARIANCE Limited Work Authorization Issued 12/75 4/77 16 mos.
Construction Permit Issued 3/76 15 9/77 18 nos.
Fuel Load 3/83 9/84 18 mos.
Commercial Operation 9/83 llE*3/85 18 mos.
Note: Both cost estimates assumed major construction on WNP-5 would follow WNP-3 by 18 months.
II. EQUITABLE COST SHARING:
f The 1976 and be built; cost WNP-5 estimates were based assumed onlyonthe WNP-3 assumino costs
" incremental" all common costs, required as if itWNP-5 to add to the were total not (dual- to unit) project.
The 1977 cost estimates were developed on an " equitable" cost sharing basis whic.h takes into
[f f7. consideration that both WNP-3 and WNP-5 benefit from the economies of dual-unit construction and, therefore, share certain costs on the basis of the proportion of respective benefit.
III. BASE DATES FOR PREPARATION OF THE ESTIMATES:
ESTIMATE OF ESTIMATEOF FEB., 1976 MAY, 1977 JUNE,1975 JUNE,1976 i
ATTACHMENT III-
- 9' Basis fcr WNP-5 C:st Estimat:s - continued .
IV. SPECIAL FINANCING CONSIDERATIONSi a) When the Feb.,1976 estimate was developed, Participants', Ownership, Assignment and Short Term Sales Agreements and the Bond Resolution were not finalized and approved.
b) Changes in assumed interest and reinvestment rates:
ESTIMATE OF ESTIMATE OF FEB., 1976 MAY, 1977 Interest 7.50 7.75 Reinvestment 7.00 5.75 c) Other capitalized costs as defined 'in Board of Directors Resolution No. 890, adopted February 23, 1977, a portion of which were allocated to WNP-5 in the May,1977 estimate but not in-cluded in the February,1976 estimate are as follows:
a) Reserve & Contingency Fund b) Revenue Fund Working Capital c) Bond Fund Reserve Account d) Ramp Up Costs
't e) Energy and Uranium Bearing Lands Acquisition Programs
ATTACHMENT III '
Page 6 COMPARIS0N OF ASSUMED ACCOUNT DEFINITIONS ,
0F ..
WPPSS UNIT NO. 5 FEBRUARY,1976 AND MAY,1977 " PLANT CAPITAL INVESTMENT SUP9MRY" (Thousands)
FEBRUARY, 1976 MAY, 1977 I
ACCT. N0./ TITLE ITEM (S) INCLUDED COST ITEM (S) INCLUDED COST
- Contingency Allowance. Direct Cost Contingency 51,831 Direct Cost Contingency 39,743 Total Project Contingency 35,000 TOTAL 51,831 TOTAL 74,743 93 Other Costs Owners Cost 49,710 Owners Cost 79,199 )
Sales Tax (Incl. Fuel Tax) 28,771 Sales Tax (Excl. Fuel Tax) 47,259 l' Performance Bonds 1,000 Performance Bonds 1,000 Nuclear Fuel (Incl. Sales Tax) 177,981 Reserve & Contingency Fund 5,556 Working Capital 3,333 Reserve Account 72,815 Bond Discount & Financing Cost 19,670
' Energy & Uranium Programs 3,334 TOTAL 79,481 TOTAL 410,147 l '
94 Interest During Construction Net IDC (Including Net IDC (Including Nuclear Interest on Fuel) 277,035 Fuel & Start-Up Interest) 500,346 Financing Cost P2,913 TOTAL 299,948 TOTAL 500,346 Start of Construction Cost Start-Up Costs 2,878 Start-Up Costs 3,266 Ramp-Up Costs 5,752 TOTAL 2,878 TOTAL 9,018
ATTACHMENT III
- Page 7 WNP-5
SUMMARY
VARIANCE EXPLANATION (From Feb., 1976 Estimate to May, 1977 Estimate)
(Thousands)
VARIANCE _
- l. Cumulative Project Schedule Delay of 18 months (ex-cluding Fuel and IDC increases). 90,000
- 2. Change in estimating basis from " incremental" to .
" equitable" cost sharing. 70,000
- 3. Physical Plant, Construction Plant, Sales Tax, AE/CM Services and Owners estimated costs increased as a result of design changes and/or additions, correcting previous. estimating errors / omissions, availability of additional information for better definition of work and actual prices escalated at a higher rate than projected. 55,000
- 4. Addition of a total project " Potential Exposure" allowance for contingencies not quantified by Ebasco, i.e., contractor claims, schedule accelera-tion, etc. 35,000
- 5. Certain costs included in the May, 1977 estimate
^
but previously not included in the Feb.,1976 Estimate, i.e. , Nuclear Fuel, Reserve and Contin-gency Fund, Working Capital, Reserve Account, Energy and Uranium Programs and Ramp-Up Costs. 270,000 ,
- 6. Interest During Construction increased as a result I of the 18 month schedule delay, substantial increases I in the estimated direct and indirect costs, inclusion of interest during the " Ramp-Up" period and a change to more conservative assumed interest and reinvest-ment rates. 200,000 TOTAL VARIANCE FROM FEB. ,1976 TO MAY,1977 720,000 l
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I MAY, 19h /
ATTACHMENT III PLANT CAPITAL INVESTMENT Page 8
SUMMARY
BASIC DATA kcl CJ M 3%)3 3lOM j Nf d'!
Name of plant WNP-3 Cost basis at start of construction Net capacity 1.240 MW(e)
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Location __satsop, Washington Type of Cooling Design & construction period Ru e V" 9ral aft Month, year NSSS order placed cooling towers X Month, year of commercial operation 9-83 Mechanical draft length of work week 40 hours cooling towers Interest rate, interest Other (describe) during construction 7.25 simpletxs pssmpsundt COST
SUMMARY
Account Number Account Title Total Cost (thousand dollars) ~
DIRECT COSTS 20 Land and land rights.................... $ 2,076 PHYSICAL PLANT 21 Structures and si te facil ities . . . . . . . . . . 165,416 22 Reactor plart equipment.,............... 166.958 23 Turbine plant equipment................. 131.240 24 Electric plant equipment................ 49.153 25 Misc. plant equipment................... 29.122 Subtota1........................ $ 543.965 Spare parts allowance................... 3. 4 n Contingency allowance................... 74.033 Subtotal........................ $ 621.433 INDIRECT COSTS 91 Construction facilities, equipment, and services.............................. $ 14,894 92 Engineering and const. mg't. services... 72,246 93 Other costs............................. 207,109 (1) 94 Interest during construction............ 270,714 Subtotal........................ $ 564,963 Start of construction cost. . . . . . . . . . . . . . $ 3.266 Escalation during construction ( % yr.) 196,338 (2)
Total plant capital investment (5 /KW)$ 1,386,000 (1) Includes $63,537 for initial core nuclear fuel require (2) Labor escalation @ 8%, compounded; material escalation @ 6%, compounded.
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ATTACHMENT II PROPOSED OITICIAL STATEMENT DATED JUNE 30, 1977 Ratingu f3Ioody's: . . . . . *
(Standard & Poor's: . .
(See
- Ratings" bercin)
$230,000,000 WASHINGTON PUBLIc POWER SUPPLY SYSTEM jui Nuclear Project No. 3 Revenue Honds, Series 1977 g Dated: July 1,1977 Due: July 1, as shown below g* Interest is payable Januar) I and July 1, commencing January 1,1978. Seattle.First Ntional Bank, v.("" Seattle, Washington, is Bond Fund Trustee.
3 M
j :t The 1977 Donds maturing on July 1, 2009, and on July 1, 2018, are subject to redemption by operatica of the G
d 7 5 Bond Retirement Account at 100% plus accrued interest to satisfy sinLing fund installments, on any interest pa3 ment i"
j h .iR dateTheon1977 orBonds aftermayJanuary be redeemed 1,2001, andatJanuary prior to maturity, '
1,2010, the option of the respectively.
Supply System, on or after July 1,1987, y
- 5 % 5gdate, as aatwholepricesatranging any time, fromor in part 103% in inverse for the order period July cf fnaturities 1; 1987, and by June to and including lot within a maturity 30,1990, to 100%on any interest payment after E E j June 30,2000, plus accrued interest to the date fixed for redemption in each case, as further descr*ed herein. The g j :r. 1977 Bonds may also be redeemed under special circumstances as further described herein.
.eli Et $ Interest exernpt, in the opinion of Bond Counsel, from federal income taxation under existing laws, k [6 regulations and rulings issued by the internal Revenue Service.
ear -
The 1977 Bonds and the interest thereon are pa3able solely from the revenues derised by the Supply System through g
{ *} j, tLe ownership acd operation by it of the Supply $3 stem's Ownership Share of the Project, including all pa3m g E, ~~4 made to the Supply S3 stem pursuant to the Net Billing Agreements and Power Sales Agreement, and Bond proceeds.
- "i The United States of America. Department of the Interior, acting by and through the Bonneville Power Adminis.
In E i trator ("Ilonnesille"), has purchased the Supply S3 stem's Onn'ership Share of the capability of the Project from 103 E 3 .: of its statutory preference customers (the " Participants"), less that portion of the Supply System's Ownership Share i 5 '0' cf the Project output whkh will be sold to certain industrial customers of Bonnesille from the date of commercial b O E operation through June 30,1984, pursuant to the Power Sales Agreement. Such Participants, in turn, base purchased UT3 such cap.ibility from the Supply 53 stem, pursuant to the Net Billing Agreements. Bonnesille is obligated to pay the 2
I (i ParticipJats and the ParticipJnts are obligated to pJ3of the the Supply including53 debtstem. Inthe the manner arid from j'ji "
i erein, the total annual costs of the Supply System's Ownership Share Project, sersiee on whet!er or not the Project is completed, operable or operating and notwithstanding the suspension, reduction or Bonds, i5 j curtailment of the Project output.
e
!ol [. A310UNTS, SIATURITIES, COUPONS AND YIELDS OR PRICES I $ '#
%no Price oc Price or A mount Due Coupoa Yleid Amount pue Coupon Yleid 3:3. ::
y .I E $ 2A 20.tMO 1985 $3.655.000 1993 o
-s j ,
" f. 2,725.000 1986 3.830.000 4,030.000 1994 1995 2.825 J00 1987 it " 2 2.945.000 1958 4.240.000 1996 3.065.000 1989 4,460.000 1997 E
o.:
? .)' 3,200,oiso g990 4,700.000 199S 1 r- 5 $ 3.3 3.v000 1991 4,950.000 1999
$jQ 3.490.000 1992 5,235,000 2000
! 563,535.000 . . "c Term Bonds Due July 1. 2009, Price . . . . ."c 3
- 1. 5 "! ~2 5107,160.000 . . . c Term Bonds Due July 1,2018, Price . . . fc SEALED BIDS MILI. BE RECEIVED AT TIIE SUPPI.Y SYSTr31'S OFFICE AT SUITE 415, SEA. TAC OFFICE CENTER,18000 PACIFIC IllGilWAY SOL 711, SEATTLE, WASlllNGTON, UNTIL 8:30 A.51., SEATTLE T131E, JULY 12,1977.
The 1977 Bonds are offered when, as and if issued and received by us and are subject to the approval of legality by wood Dawson Lose & O'Brien. New York, Bond Counsel to the Supply Sgtem, and Ifoughton Cluck Coughlin &
R3e), Seattle, Washington Special Counsel to the Supply System. It is expected that the 1977 Bonds in definitive form will be ready for delisery on or about July 23, 1977.
July . .,1977
WASillNGTON PUBLIC POWI'R SUPPLY SYSTE31 .
Principal Office-Richland, Washington !
Representatives to the Board of Members Directors Public Utility District No.1 of Benton County ................ ... John Goldsbury Public Utility District No.1 of Chelan County .................... Robert O. Keiser Public Utility District No.1 of Clallam County . . . . . . . . . . . . . . . . . . . . Alvin E. Fletcher
- Public Utility District No.1 of Clark County ..................... Ed Fischer*
Public Utility District No.1 of Cowlitz County . . . . . . . . . . . . . . . . . . . . D. E. Hughes*
Public Utility District No.1 of Douglas County . . . . . . . . . . . . . . . . . . . . Howard Prey Public Utility District No.1 of Ferry County . . . . . . . . . . . . . . . . . . . . . Clair R. Hilderbrandt Public Utility District No.1 of Franklin County . . . . . . . . . . . . . . . . . . Glenn C. Walkley*
Public Utility District No. 2 of Grant County ..................... C. K. Jolly Ptblic Utility District No.1 of Grays Harbor County . . . . . . . . . . . . . . John J. Welch Public Utility District No. I of Kittitas County . . . . . . . . . . . . . . . . . Harold W. Jenkins Public Ut.lity District No.1 of Klickitat County. . . . . . . . . . . . . . . . . . . Gerald C. Fenton Public Utility District No.1 of Lewis County . . . . . . . . . . . . . . . . , . . . . T. R. Teitzel Public Utility District No. 3 of Mason County .... ..... .. ..... Edwin W. Taylor Public Utility District No.1 of Okanogan County . . . . . . . . . . . . . . . . . Stanton Cain Public Utility District No. 2 of Pacific County ........ .......... John Dunsmoor City of Richland ......................................... . Lane Bray City of Seattle .................... ................... .. . Gordon Vickery*
Public Utility District No.1 of Skamania County ..... .. . ... . Rolf E. Jemtegaard Public Utility District No.1 of Sachemish County . . . . . . . . . . . . . . . W. G. Hulben, Jr.*
City of Tacoma . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ... .. . J. D. Cockrell*
Public Utility District No.1 of Wahkiakum County . . . . . . . . . . . . . Charles F. Emerick
- Executive Committee Member.
OFFICERS John Goldsbury President John J. Welch Vice President Edwin W. Taylor -
Secretary ADMINISTRATIVE STAFF Managing Director . . . . . . . . . . . . . . . . . . . N. O. Strand Executive Assistant . . .................. P. C. Otness Asst. Director-Projects . . . . . . . . . . . . . . . . . F. D. McElwee Asst. Director-Generation & Technology . . . D. L. Renberger
- Asst. Director-Finance and Administration
-Trea su re r . . . . . . . . . . . . . . . . . . . . . . . . . J. D. Perko Manage , Planning and Analysis . . . . . . . . . . . H. R. Kosmata Audito r . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . C. W. Godfrey L hief Counsel . . . . . . . . . . . . . . . . . . . . . . . . R. Q. Quigley FINANCIAI. CONSULTANT CONSUI. TING ENGINEER B!yth Eastman Dillon & Co. Inccrporated R. W. Beck and Associates BOND COUNSEL CONSTRt*CTION ENGINEER Wood Dawson Love & O'Brien Ebasco Services Incorporated SPECIAL COUNSEL NUCLEAR FUEL CoNSUI. TANT Houghton Cluck Coughlin & Riley
- Die S. M. Stoller Corporation
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The information contained in this Official Statement has been obtained from the Supply System and other sources deemed reliable. No representation or warranty is made, however, as to the accuracy or ,
completeness of such information, and nothing contained herein is, or shall be, reli.J upon as a promise i or representation of the Underwriters. This Ollicial Statement, which includes the cover page and exhibits, does not constitute an offer to sell the 1977 Bonds in any state to any person to whom it is unlawful to make such olier in such state. No dealer, salesman or other person has been authorized to.give any information or to make any representations, other than those contained in this Official Statement in connection with the o!Tering of the 1977 Bonds, and if given or made, such information or representation must not be relied upon.
TABLE OF CONTENTS PAGE SU 515t A RY STAT E S! ENT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5 MAP................................................. Centerfold S EC URI T Y F OR TI{I BON DS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7 TII E S U P P LY SYS T E 51 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10 Til E PR OJ E CT . . . . . . . . . . . . . . . . . . . . . . ,. . . . . . . . . . .............. 10 Ownership Agreement and Project Agreement .................
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11 Location of the Project . . . . . . . . . . . . . . . . . . . . . .............. 11 Description of the Project . . . . . . . . . . .- ...... ............. 11 Project Permits, Licenses, Contracts and Schedule . . . . . . . . . . . . . . . 11 Nuc!c a r Fu el . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12 Project Financing Requirements . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12 Estimated Project Annual Costs . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14 Tile SUPPLY SYSTE51'S OritLR GENERATING
- PROJECTS . . . . . . . . . . .... 15 FINANCING PROGRAh! ......................................... 16 NUCLEAR REGULATORY CO51 MISSION RECENT DEVELOPa!ENTS . ...... 17 NUCLEAR INSURANCE ... .. ......,.. .I..* . .................. 17 BONNEVILLE POWER AD5tiNISTRATroN . . . ...... . ............... 18 Acquisition of Project Capability and Power Supply . . . . . . . . . . . . . 18 Bonnes ille's Authority . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19 Proposed Transfer of Bonneville to Department of Energy . . . . . . . . . 19 Bonnesille Contracts . . . . . . . . . . . . . . . . .................... 20 Bonnesille Revenues and Expenses . . . . . . . . . . . . . . . . . . . . . . . . . 21' Pacific Northwest Drought . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22 Bonnes ille Rates . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23 Bonneville Loads and Resources . . . . . . . . . . . . . . . . ........... 23 POWER SUPPLY IN TIIE PACIFlc NORTliWEST AND Tile flYDRO TiiERMAL pow E R P R OG R A M . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25 Proposed Regional Power Prog am . . . . . . . . . . . . . . . . . . . . . . . . . . . 28 Regional Power Requirements and Resources . . . . . . . . . . . . . . . . . . 28 THE PARTICIPANTS AND TiiE COh!PANIES ...................'...... 29
- Tile NET BlU !NG AGREE 5t ENTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .. 30 l
Term.................................................. 30 Ownership and Operation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30 Sale, Purchase and Assignment . . . ......................... 30 Te rmin a tion . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31 Mcdification of Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31 Applicability of Other Instruments . . . . . . . . ................. 31 Provisions Required by Statute or Executive Order . . . . . . . . . . . . . . . 32 3
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Tl!E PROJ ECT AGREE ht EN T . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32 1 Term.................................................. 32 l Design, Construction, Operation and Maintenance of the Project . . . . 32 Fin a ncin g . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32 Representation by Bonneville on the Committec Established Pursuant to the Ownership Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32 Budgets................................................ 33 Bonds for Replacements, Repairs and Capital Additions . . . . . . . . . . . 33 Applicability of Other Instruments . . . . . . . . . . . . . . . . . . . . . . . . . . . 33 Provisions Required by Statute or Executive Order . . . . . . . . . . . . . . . 33 Ti!E OWNE RSHlr AGREEh!ENT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34 Ownership of the Project . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34 Co m mi tt e e . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34 Construction, Licensing, Operation and Maintenance . . . . . . . . . . . . . 35 Construction and Operating Payments . . . . . . . . . . . . . . . . . . . . . . . . 36 Fuel and Sched uling . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36 Insurance ............'.................................. 37 Liabilities; Waiver of Subrogati~on . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37 Uncontrollable Forces . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37 Damage to the Project . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37 Default ................................................ 38 A ssign ment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38 En d c f Pr oject . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38 DESCRIPTION OF 1977 BONOS AND CERTAIN PRov1SIONS OF THE RESOLUTION AND SUPPLEhlENTAL RESOLUTION . . . . . . . . .......... 39 The Bonds and the 1977 Bonds . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39 Subsequent Series of Bonds . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40 Additional Obligations Other Than Bonds . . . . . . . . . . . . . . . . . . . . . . 41 Construction Fund; Applic ttion of Bond Proceeds . . . . . . . . . . . . . . 42 Other Ftuds Estallished by the Resalution; Flow of Revenues . . . . . . 42 Certain Covenants . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 45 Events of Default; Remedies . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 47 Amendments; Supplemental Resolutions . . . . . . . . . . . . . . . . . . . . 48 Supplemental Resolutic:t No. 804 . . . . . . . . . . . . . . . . . . . . . . .., 48 Defeas ance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 49 LITIGATION ........................ ...... ................. 49 Supply System . . . . . . . . . . . . . : . . . . . . . . . . . . . . . . . . . . ........ 49 Equal Emplo.ement Opportunity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 49 G rays Harbor County . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 49 Comptroller of the Currency Ruling . . . . . . . . . . . . . . . . . . . . . . . . . 50 REGISTRATION OF T'aE 1977 BONDS BY STATE At;orTon . . . . . . . . . . . . . 50 PRO POS E D LEGISL ATION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
. 50 APPROVAL OF LEGAL PROCEEDINGS . . . . . ....................... 50
, tax ExE ht PTION . . . . . . . . . . . . . . . . . . . . . . . . . . .................. 50 CERTIFICATION AS To OFFICIAL STATEh!ENT . . . . . . . . . . . . . . . . . . .... 50 RATINGS ............................................ .. ... 51 MISCELLANEOUS .............. .......................... ... 51
- ExiustT I-The Participants and Companies . . . . . . . . . . . . . . . . . . . . 52 Exulati ll-Letter of R. W. Beck and Associates . . . . . . . . . . . . . . . . 55 Exiusi . III-Letter of Ebasco Ser ices Incorporated . . . . . . . . . . . . . . . . 64 Exu181T IV-O;inions of Counsel . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 70 EXHIBIT V-Supply System Net Bi!!ed Projects-Annual Costs . . . . . 74 )
ExiustT VI-Bonneville Power Administration Projected Revenues . . . . . 75 l 4
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SU3131ARY STATE 31ENT (Subject in All Respects to Store Complete Information Contained in Thb Official Statement) l Purpose of Iss a l The purpose of the $230,000,000 Washington Public Power Supply System Nuclear Project No. 3 Reveiue Bonds, Series 1977, is to finance a portion of the Supply System's share of the cost of constructing and acquiring the Project. The Supply System has issued $250,000,000 of permanent financing for the Project. ' Die Supply System has entered into an agreement with four investor-owned utilities which provides that the Project will be owned 70Pc by the Supply System aid 309c by the utilities. It is estimated that the additional permanent fiaancing required for the Supply System's share of the Project will be $464,000,000.
The Supply System's share of the Project will be financed and accounted for as a system separate from all other current or planned Supply System projects. The_ Project is located about three miles south of the community of Satsop in Grays Harbor County, Washington, approximately 16 miles east of the City of Aberdeen and 66 miles southwest,of the Cit'y of Seattle, and will consist of a pressurized water nuclear electric generating plant with a net. generating capability of approximately 1,240,000 kilowatts, together with the necessanj facilities to deliver the output to the 500 kV transmission facilities of the Federal Columbia River Power System located in the vicinity of the Project.
The Supyly System .
The Supply System, organized in 1957, is a municipal corporation and a joint operating agency of the State of Washington. Its members are 19 ope, rating public utility districts and the Cities of Rich-land, Seattle and Tacoma, all located in the State of Washington. ~1he Supply System has the authority, among other things, to acquire, construct and operate plants, works and facilities for the generation and transmission of electric power and energy. The Sup' ply System is operating generating facilities of approximately 888,000 kilowatts capacity and has under construction nuclear projects of approximately 6,00J,000 kilowatts capacity.
Security le r the P,onds The :977 Bonds and the interest thereon are payable solely from the revenues derived by the Supply System through the ownership and operation of its share of the Project. including all payments to be made to the Supply System pursuant to the Net Billing Agreements and Power Sales Agreement, and Bond proce. Js. Interest on the 1977 Bonds will be capitalized from Bond proceeds until September 1,1982.
The United States of America, Department of the Interior, acting by and through the Bonneville Power Administrator ("Bonaeville"), has purchased the Supply System's Ownership Share of the Project capability from 103 of its <tatutory preference customers (the " Participants"), less a portion of the Supply System's share of the Project output which will be sold to 15 industrial customers of Bonneville frem the date of commercial operation through June 30,1984 pursuant to a Power Sales Agreement.
Such Participants, in turn, have purchased such capability from the Supply System, pursuant to the Net Billing Agreements. ,B,onneville is cblicated to_ pay the Participants.,and .the Participants.are_ obligated to, pay the Supply Sy tem,in the m_an,ner and from the sources desenbed herem, the, total annual. costs.of thi, ;
' Supply System's,0wn rship Share of the Proje~ct'(including debt.senice. ort.the Bonds), Jess any amounts, gupble pursuant to the Power Sales Agreement,_whether or not the Prpject_is. completed. operable _or, cpegating and netwithstanding;thqsuspension, reduction or curtailment of the Projec_t output, ;
The Net Billing Agreements provide that payments are to commence on the date when the Project i is ready to be operated on a commercial basis, or January 1,19S1, w hichever is earlier; provided, that such payments prior to the earlier of the date the Project is ready to be operated on a commercial basis or Sep.
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teml er 1,1981, are limited to such amounts as Bonneville and the Supply System agree may be included in the Annual Budgets.
No Participant will be required to make payments to the Supply System except from revenues derived from the ownership and operation of its electric utility properties. Each Participant has cove.
nanted that it will establish, maintain and collect rates or charges for power and energy and other services furnish <l through its electric utility. properties which shall be adequate to provide revenues sufficient to make required payments to the Supply System.
Contracts, Schedule, Permits and Licenses The Supply System has employed Ebasco Services Incorporated as Construction Engineer for the
'roject. The Supply System has entered into 74 equipment and construction contracts as of June 1, 1977, including contracts for the nuclear steam supply system with Combustion Engineering, Inc., and for the tu-bine-generator and accessories with the Westinghouse Electric Corporation. The total contract amount (f all these contracts was $267,954,000 as of that date. The present schedule contemplates com nercial operation in September 19S3 based on receipt of a construction permit in August 1977.
The Supply System has obtained all'of its uranium requirements for the initial nuclear fuel core under present ERDA regulations. The Supply System
- has under contract 14 years of uranium require-ments for fuel reloads based on annual refueling.
The State of Washington has entered into a site certification agreement with the Supply System approving the site, which agreement includes the National Pollutant Discharge Elimination System Permit, cad on April 8,1977 the NRC issued a limited work authorization. In addition, the Supply Sywm has applied for a construction permit from the NRC and expects a decision in late summer or early fall of 1977. The Atomic Safety and' Licensing Board held final safety hearings relating to the issuance of the construction permit in May of this year.
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i i OFFICIAL STATEMENT.
1 l OF WASIIINGTON PUBLIC POWER SUPPLY SYSTEM f A Municipal Corporation and a Joint Operating Agency of the State of Washingto .
y relating to its 4
$230,000,000 1
+
- Washington Public Power Supply System Nuclear Project No. 3 Revenue, Bonds, Series 1977 i .
July . .,1977 The purpose of this Official Statement, which includes the cover page hereof and the exh is to set forth information concerning Washingto'n Public Power Supply System (th i:s Washington Public Power Supply System Nuclear Project No. 3 (the " Project") and ,
Washington Public Power Supply S stem Nu'elear ' Project No.1 Revenue Bcnds S 3
e "1977 Bonds"),in connection with the sale by the Supply System of such Bonds and for of a!! who Revised may Ccde of become holders of such Bonds. The 1977 Bonds are to be issued purs Washir.gten
" Resolution") adopted December 3,1975, by the Board of Directors tien supplemental to the Resolution, Resolution No.
July . .,1977. .
. . (the " Supplemental Resolution") adopted The Supply System has heretofore issued, pursuant to the Resolutiori, $250,000,00 principal amount of bonds for the Project, which bonds together with the 1977 Bonds an tional series of bonds which may be hereafter issued pursuant to theupply Resolution to pay System's ownership collectively the " Bonds". share of the cost of acquiring and constructing the Project are herei The Project will be 70fc owned by the Supply System, such share being hereinafter refe as the Supply System's " Ownership Share" of the Project, by The Washington Water Power Company (the " Companies").
SECURITY FOR TIIE BONDS The principal of and interest on the Bonds are payable solely from the Bond F md crea Resolution. The moneys pledged to such Fund are limited to the income, revenues, re derived by the Supply System through the ownership and operation by it of its Ownership Sha Project, including the resenues derived by the Supply System from the Net Billing Agreements from Bond proceeds to September 1,1982. Power Sales Agreement described belo 7
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> The United States of America, Department of the Interior, acting by and through the Bonneville . l Power Administrator ("Bonneville"), has purchased the Supply System's Ownership Share of the Project e capability from the Participants who, in turn, have purchased such capatil'.ty frora the Supply System,
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l all under the Net Billing Agreements. Bonneville is obligated to giay the Participants, end the Partici.
',' pants the totalare obligated annual ents of theto pay System's Supply the Supply System, Onaership Share of inthe the manner Project, anddebt including from the sources de service 3 on the Bonds, whethm or not the Project is completed, operable or operating and notwithstanding the 7 suspension, reductio.. or curtailment of the Project output.
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The Supply System and Bonneville have also entered into a Power Sales Agreement with 15 industrial customers of Bonneville for the sale of a portion of the energy from the Supply System's Ownership Share of the Project, if such energy is not required to meet Bonneville's contractual obliga-tions to supply firm power, from the date of commercial operation through June 30, 1984.
The Participants are 103 municipal corporations and electtic cooperatives, all of whom are statutory preference customers of Bonneville and purchase all or a portion of their power supply directly from Bonneville under power sales contracts with Bonneville. For a discussion of these contracts and their terms see "Bonneville Contracts" under the caption 'Tonneville Power' Administration". These power sales contracts provide for monthly billings'and_ payments. 1*nder the Net Billing Agreements,in payment for the share of Project capability purchased by each Participant, such Participant will pay the Supply .
System its pro rata share of the Supply System's Ownership Share of th: costs for the Project less amounts payable by the 15 industrial customers of Bonneville under the Power Sales Agrc: ment. Bonneville will pay for the Project capability sold by the Participants to Bonneville under the Net Billing Agreements by giving the Participants credits against the amounts the Participants owe Bonneville under the afore-said power sales contracts. This crediting procedure is called " net billing.
Prior to each Contract Year the Supply. System will adopt an Annual Budget covering all the Supply System's Ownership Share of the costs for the Project, in:luding debt service on the Bonds. Thereafter a Billing Statement will be prepared for each Participant which will show the Participant's pro rata share of the Annual Budget less amounts payable by the 15 industrial customers of Bonnailte under the Power Sales Agreement and from other sources. The Annual Budget and Billing Statements may be amended during a Contract Year if necessarp. Payments by the 15 industrial customers of Bonneville will vary with the amount of energy delivered pursuint to the Power Sales Agreement, and amounts payable by the Participants pursuant to the Net Billing Agreemen will be increased to the extent that payments are not made by industrial customers under the Power Sales Agreement.
Each Participant is a party to at least one other agreement with Bonnevil'le providing for net billing, such as the net billing agreements relating to the Supply System's Nue! ear Projects Nos. I and 2.
In the month preceding the beginning of eacit Contract Year, the Bonneville bill to each Participant for power supply and other services under the Participant's power sales contracts with Bonneville will show an offsetting credit equal to the Participant's obligations to the Supply System as shown on its Billing Statement and billing statements under its other net billing agreements, up to the full cmount of such bills if necessary. In each month thereafter such crediting will continue until credits equal to the amount shown on the Participant's Billing Statement hate been magfe to the Participant. The cedits
- received by the Participant from Bonnesille in each month under all net billing agreements will be allocated pro rata. In each month of the Contract Year, and within 30 days of receiving the credit. the Participant must pay the Supply System an _ mount equal to the credit it received frera Bonneville in the preceding month. The elleet of this payment procedure will b: that monies due Bonneville from the Participants, up to the Participants' total obligations to the Surply Sptem as shown en their billing statements for all net billed projects, will be paid to the Sapply sprem and will not become available to pay other Bonneville obligations.
If Bonneville estimates that a Participant's obligation to Bonneville urder its rower sa!cs contracts will not equal or exceed the Participant's obligation to the Supply System under its Net Billing Agreemer.
and its other net billing agreements, thus resulting in a net billing deficiency, the Net Billing Agreement <
provide that Bonneville shall use its best efforts to make assignments of such Participant's share of Project it L -.
U pI a t capability to other Participants and other customers of Bonneville to the extent necessary to climinate such' Participant's net billing deficiency and, if such assignments are not sufficient to climinate such deficiency, -
the Net Billing Agicements provide for mandatory assignments to the other Participants. Such mandatory '
assignments to any Participant ruay not exceed 25% of that Participant's share of Project capability or be such as to cause its ob'igation to the St pply System to exceed the credits available to it from Bonneville.
If a Participant defauhs under the Net Bi!!ing Agreement, (ach other Participant's share cf the Project capability will be automatically incuased for the remaining term of the Net Billing Agreements pro rata with that.cf other nondefaulting Participants up to an additional accumulated maximum of 25"c of its' original share of Project capability; provided, that such increase shall not cause the estimate of the
- payments to he made by such Participant to the Supply System to exceed the estimate of Bonneville's billings to the Participant for power and certain services. 1 -
The Net Billing Agreemen:s provide that if assignments cannot be made in amounts sufficient to y~,
bring into balance the respective dollar obligations of Bonneville and the Participant and an accumulated balance in favor of the Participant from a previous Contrac'. Year is expected by Bonnesille to be carried
- for an additional Contract Year, such balance and any subsequent monthly net balances that cannot be net bi!!cd will be paid in cash to the Participant by Bonneville, " subject to the availab& 'appro- ,
priations for such purposes", At the time the Nr Billing Agreement < e re entered into,6 #f Bonne-sille's reven.:es were paid into the United States Treasury, and Don <ille was requireo to obtain appropriations from Congress for all its cash needs. Since that time, the Federal Columbia River Transmission System Act (the " Transmission Act") was' enacted (see "Bonneville Power Administra-tion") . 'lhe Trammission Act erablishes the Bonneville Power Administration Fund (the " Fund")
into which all revenues received by Bonneville are to be deposited. Bonneville msy make expendi- -e tures from its revenues in the Fund without- further appropriation by Congress for 'any purpose necessary or appropriate to carry out the duties imposed upon Bonneville pursuant to law, including .
making any c: .h payments Oqtired under the Net Billing Agreements. Although Bonneville is still required to submit an annual budget in !uding such expenditures to Congress for resiew, Bonneville's expenditures from its reven ;es in the Fund do not require formal approval by Congress except that Congress may take action to impose specitic directives or? limitations on such expenditures.
Subject to the power of Congress to take such action. Bonneville is obligated to pay from its revenues in the Fund any cash payments required under the Net Billing Agreements prior to any payments by llonneville to the Treasury for repayment of (i) the Federal investment in the Federal Cclumbia River Powe System. (ii) Corps of Engineers and Bureau of Reclamation costs connected with such system and (iii) bonds issued pursuant to the Transmission Act.
t Bonnesille has stated to the Supply System and each Participant that, in accordance with the provi-sions of the Transmission Act,it will pay in cash from the Fund wy costs biffed to the Participants not paid threugh net billing credits on a parity with other Bonnesille operating expenses. Bonneville is obligated by law to charge rates for electric power and transmission of electric power which will recover the cost of prode:ing and transmitting electric power, including all payments under the Nn Billing Agreements.
For a discussion of Bonneville revenues ava!!able for net billing and cash payments, as described
-bove, ne "Donnev"le Revenues and Expenses" under the caption "Bonneville Power Administration" -
and Exhibit VI. Bonneville currently estimates that after all net billed projects begin commercial opera-tion, the net billing obligations of Bor.ncville to the participants in such projects will exceed Bonneville .
N revenue frem such participants which is subject to net billing. For example, current projections indicate
'I that in the year ending September 30,1984 the net billing obligations of Bonneville to the participants s s
in net billed projects will exceed estin ated net billing credits by $37.4 million. If necessary, Benneville is obligated to pay such deficits under the assignment and net billing procedure or by cash payments from the Fund in the mane.er de>cribed above.
Each Participant is obligatid to pay the Supply System the amount set forth in its Billing Statement by the end of eech Contra,t Year, whether or not it has recched equivalent net billing credits from l Beanesille. No Participant will be required to make payments to the Supply System except from A
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e revenues derived from the ownership and operation of its electric utility properties.
Each Participant has covenanted that it will establish, maintain and collect rates or charges for power and energy an services furnished through its electric utility properties which shall be adequate to provide rev sufficier,t'to make required payments to the Supply System.
3 JIhc Net Billing Agreements proside that payments will commence on the date when tn ready to be operated on a commercial basis, or January 1,1981,%hichever is earlier; provided payments prior to the date the Project is ready to be operated on a commercial basis or Sept
.included whiche'.er is earlier, in the Annual are limited to such amounts as Bon.ieville and the Supply Syste Budgets.
The Resolution prosides for a Reserve Account in the Bond Fund equal to one-half of the max annualinterest on each series of Bonds. Bonneville and the Supply System have agreed that the a required for the Reserse Account plus $3,000,000 for working capital will be provided throug under the Net Billing Agreements prior to September 1,1982 If for any reason these amounts are n so provided, they will be provided from Bond proceeds.
The revenues of the Suppl 3 System derived or to be derived from the Supply System's Nuclear Projects Nos.1,2,4 and 5, Hanford Project, Packwood Lake Hydroelectric Project and an which may hereafter be undertaken by the Supply System are not pledged to the payment of ine THE SUPPLY SYSTE31 The Supply System, a municipal corporatiori a'nd a joint operating agency of the State of W was organized in January 1957, pursuant to the Act.
Its membership is made up of 19 operating public utility districts and the Cities of Richland, Ser.ti:e and Tacoma, all located in the State of W The Supply System has the authority, among other things, to acquire, construct and oper works and facilities for the generation and transmission of electric power and energy, as well as suncys, plans, investigations or studies relating thereto',' The Supply System has the power of emi domain, but it is specifically precluded from the condemnation of any plants, works or facilities and operated by any city, public utility district or privately-owned electric utility.
The Supnly System has its principal oHice in Richland, Washington. The management and co the Suppiy System is sested in a Board of Directors (the " Board") composed of represematives of its members. The Executise Committee,' consisting of seven (7) membets of the Board, adm the business of the Supply System between regular quarterly meetings of the Board. The Exec mittee meets twice each month.
The Supply System presently employs approximately 660 persons, including 265 perso finance and administrative functions,157 persons in plant operations and 238 in the technical technical stati, with electrical, mechanical, civil, nuc! car engineering and other technical di ,
over 3,S00 man-years of technical experience and over 2,800 man-years of nuclear experience.
'Ite Supply System has been experiencing, in varying degrees, certain problems which are co among electric utilities including (a) increasing costs of fuel, wages, materials, equipment a requirements, (b) substantially increased capital outlays and longer construction periods fo and at re complex new generating units, (c) fuel availability, (d) compliance with changing en mental, safety and licensing requirements. (e) litigation and proposed legislation designed to de vent construction of nuclear generating and other facilities, (f) increased financing requirements resu frgm the foregoing and (g) uncertainties associated with the development of a national energy 1
Tile PROJECT '
s The following is a general description of the Project; for additional information, reference is n'ade to the reports of R. W. Beck and Associates (the " Consulting Engineer") and Ebasco Senices Incor-ported (the " Construction Engineer"), appended hereto as Exhibits II and III, respectively.
10 w _
1-i i
4 s
Ownership Agreement and Project Agreement Pursuant to the Revised Code of Washington, Chapter 54.44, the Supply System and the Companies i 1 - have entered in an agreement (the " Ownership Agreement") under which each farty will be respon-1 sible for prosiding its ownership share of the costs of construction and operation and will be entitled [
L to its own:rship share of the Project's capability. Under the Ownership Agreement, the Companies havs designated the Supply System to act as their agent to construct, operate and maintain the Project.
The Supply System and Bonneville have entered into an agreement (the " Project Agreement") with respect to the Project censtruction, operation, maintenance and budgets.
Tbc Ownership Agreement provides that if any party is unable to proceed due to inability to finance or obtain-necessary legal authorizations, all_ or any of the other parties may, under certrin conditions, proceed with the Project without the disabled party by making appropriate adjustments in their ownership L shares (see "End of Project" under the caption "The Ownership Agreement"). Under the Project .
Agreenxnt any election by the Supply System to proceed is subject to the prior concurrence of Bonneville, and under the Net Billing Agreetaents the capability of any additional ownership share so acquired by the Sapply System would be purchased by the Participants and assigned to Bonneville. The failure of the Supply System to elect to proceed, or Bonneville's disapprovel of any election to proceed, will not affect Bonnevilfe's or any Participant's obligations to make' payments and credits under the Net Billing Agree-ments. The Supply System and the Companies h:ive made all payments to date required under the O2nership Agreement. .
Location of the Project
+
The Project is located in southeastern Grays Harbor County, Washington. along the south bank
- of the Chehalis River approximately I mile southeast of its confluence with the Satsop River. The site is approximately sixteen miles east of the City of Aberdeen, Washington and approximately 66 miles southwest of Seattle.
The site is to consist of approximately 2.,300 acres of which approximately S00 acres will be devoted to the core area upon which the Project,and Su'pply System's Nuclear Project No. 5 are to be lxated. The land in the core area has been acquired. Surre :nding the core area Jere is to be approxi-mately 1,500 acres of land subject to an exclus:on zone casement. Easement agreements havc been obtained for approximately 75G of this area and casement agreements for the balance are being sought.
In addition the Supply System has acquired the necessary land for railway and road access to the Project and is acquiring areas for a barge slip and water intake facilities and a lease of a portion of the bed of the Chehalis River for the water discharge facilities.
- Description of the Project .
The Project will consist of a pressurized water nuclear steam supply system, turbine generator, assceiated auxiliary equipment and facilities together with the necessary transformation, switching and transmissien facilities to interconnect the Project with the facilities of the Federal Columbia River Pcwer Sys: m. The nuclear steam supply system, the turbine generator and all associated equipment are sized to give the Project a net generating capability of 1,240,000 kilowatts.
The main plant :trictures include the reactor containment and shield structure, the reactor auxiliary but. ding.,the fuel handling building, the control room area. the turbine-generator building and a 500 feet high natural draft hyperbolic cooling tower. A groundwater intake system will provide the makeitp wa cr to replenish the evaporative losses in the cooling tower. Emergency power will be supplied to the Project from diesel generators, sized to sustain all essential plant loads without the need for outside power sources.
Project Permits, Licenses, Contracts and Schedule The State of Washington has entered into a site certification agreement with the Supply System approsing the site and has issued the National Pollutant Discharge Elimination System Permit. On April 11 7
4
.- . ,, w_, -, y. , - - - - - . , - - - - - ,,. - , - -
l 8,1977 a limited work au:horization was issued by the Nuclear Regulatory Commission ("NRC"). In -
addition, the Supply System has applied for a construction permit from the NRC and expects a decision in late summer or early fall of 1977. The Atemic Safety and Licensing Board held final safety hearings relating to the issuance of the construction permit in May of this year.
The Supply System les entered into 74 equipment and construction contracts as of June 1,1977, including contracts' for the nuclear ' steam supply system with Combustion Engine: ring, Inc. and for the turbine-generator and accessories with the Westinghouse Electric Corporation. The total contract amount of all these contra:ts vias $167,954,000 as of that date. Commercial operation is presently
- scheduled for September 1983 based on receipt of a construction permit by August 1977. Preliminary site work began in April 1977 after receipt of the limited work authorization; however, oa-site construction and installation of nuclear components cannot proceed without a construction permit issued by the NRC.
Any significant delay in obtaining the construction permit will delay the Project schedule and increase the Project cost.
Nuclear Fuel ,
The nuclear fuel cycle comists of four' basic e!cments prior to insertion of the fuel assemblics in a nuclear reactor. These elements include acquisition of the uranium concentra:es, con ersion of the uranium concentrates to uranium hexafloride, enrichment of the uranium hexafloride and fabrication of the entiched uranium into fuel assemblies.
For the initial fuel core, the Supply System has contracts with Allied Chemical Corporation for uranium bexafloride (eliminating the need for acquisition of uranium concentratesh with the United States Energy Research and Development Administration ("ERDA") for enrichmcnt services, and with Combus-tion Engineering, Inc. for fabrication services.
For reload fuel the Supply System tas contracts with Exxon Nuclear Compar.y. Jacorpcrated, for uranium concentrates estimated to be sufEcient for 14 years of operation, bas d on annual refueling, with ERDA for c irichment services through 2010, and with Exxon Nuclear Company, Incorporated.
for fuel fabrication services estimated to be sufficient for 14 years of eperation, based on annual refueling.
The Supply System has contracted for all conversion services required for op: ration of the Project through 19SS with the Kerr McGee Corporation and anticipates no difficulty in obtain'ng such ser ices thercafter.
At the present time, t.o cperating facilities fer the reprocessing of spent fuel are available and none -
are expected to be available in the near future. In the absence of such facilities, the Supply System is providing on-site spent fuel storage capacity for the Project sufficient to accommodate storage of the discharges of all spent fuel until some time after'1990. By then it is expected that definitive guidelines will be available to determine whether fuel would be reprocessed, consigned to an o!Isite storage facility or disposed of in some other manner.
The Supply System has employed The S. M. Stoller Corporation as nuclear fuel consultant.
Project Financing Requirements ihe total financing requirements for the Supply System's Ownership Share of the Project are presently estimated to be $944,000,000 and are shown in the fo!!owing tabulation. Based on present estimates of actual needs by the Construction Eng'neer and the Supply System. the proceeds from the 1977 Bonds will be suflicient to continue construction of the Project until February,1980. In addition to the 1977 Bonds and the S210,000,000 principal amount of Bonds previously issued, additional Bonds necessary to complete the financing of the Supply fostem's Ownership Share of the Project in the ;
estimated aggregate principal amount of $464,000.000 are planned to be issued during construction of the Project. It is expected that the next series of Bonds will be issued in 197S. The amount of financing has been estimated on the basis of actual interest rates for previoos financings, an annual 6.00Pc in: crest rate for the 1977 Bonds and an annual 7.5fc interest rate for the balance of the Bonds.
12
m ..
ESTDIATED PROJECT FINANCING REQUIRED
($000) $
Supply Sptem Total 70'~c Share of Project Costs Projett Costs
- Land and 1.and Rights ( l ) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . S 2,422 S 1,696 Structures and improvements (2) . . . . . . . . . . . . . . . . . . . . . . . . . . . . 165,416 115,791 React < r Plant Equipment (2) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 166,958 116,871-Turbogenerator Units (2) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 131,240 91,868
- Accessory Electric Equipment (2) . . . . . . . . . . . . . . . . . . . . . . . . . . . 42,634 29,844 lliscellaneous Power Plant Equipment (2) . . . . . . . . . . . . . . . . . . . . 29,122 20,385 St atio n Equipme nt ( 2 ) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6,519 4,563 Other Tangible Property (2) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14,594 10,426 Project Construction Costs . . . . . . . . . . . . . . . . . . . . . . . . . S 559,205 S 391,444 196,338 137,437 Escalation (2 ) . . . . . . . . . . . . . . . . . . . . . . .... ,... ...........
Contingencies (2) ....................... ..l........... 39,033 27,323
'42,759 29,932 S al e s Tax ( t ) ( 3 ) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
65,810 46,067 N uclea r Fu el( 1 ) (4 ) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
0 4 ner's Contingencies ( 1 ) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35,000 24,500 Archi:e~. Engineer (2) .................................... 41,278 28,S94 Construction bla nager (2) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30,968 21,677 0.vner's Direct Cost (!) . . . . . . ............ ...... ..... .. .
83,500 58,450 Perfor> 1ance Ilonds(1) . . . . . . . . . . . . . ...... ..... .. 1,000 700 Total Construction and Nuclear Fuel Costs '.' ... . 51,094,891 S 766,424 Bond Discount and Other Financing Expenses (5) .1. . . . . . .
. ... . ........ 10,815 Capita!ized Interest During Construction (6) . ...... ................... . 255,983 G ross Requirements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .. .. 51,033,222 Less: Estimated Income from Temporary investments (7) .. . . . . . . . . . . . . . . . . . ,
(S9,222)
Ne t Re qui re m e nts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . S 944,000 (1 )-Estimated by 5 :pply System.
(2)-Estimated by Ebasco. Takes into consideration that the Project and Nuclear Project No. 5 will benefit from the economy of dual-unit construction.
(3}-Excludes sales tax on nuclear fuel.
(4)-Includes sales tax. .
(5)-Includes actual expense of previous financi.ig and estimated costs of issuance of th: 1977 Bonds l
an& additional Bonds.
(6)-Baced on actual interest rates for presious financings, an assumed 6. Orc for tha 1977 Ronds, and an essumed 7.5Cc for additional Bonds capitalized to Sep::mber 1,1982. Does not in&de interest for the period from September 1,19S2 to September 1,1983 (see the caption " Financing !
Program").
(7)-Includes actual income to June 1.1977 from temporary investment of preceeds from previous tinaneines and esti.nated future ineeme from temporary imestment of proceeds from additional i Bonds at an annual rate of 5.75fc. ]
1 Construction cost estimates are based on a scheduled date of commercial operatien of September, )
19S3. o
" i 13 i
t -
. ~ c*
. In addition to the foregoing amounts obtained through issuance of Bonds, funds to make the
{
payments required by the Re;olution to the Reserve Account in the Bond Fund, !o provide working' !
capitt.1 and to prodde an initial Reserve and Contingency Fund are expected to be obtained under the Net Billing Agreements during the period beginning January 1,.1981 and extending to the date of commercial opea.ica, as follows:
Reserve Account in Bond Fund . . . . . . . . . . . . . . . . . . . . S33,236,000 Working Capital . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3,000,000*
Reserve and Contingency Fund . . . . . . . . . . . . . . . . . . . . . . 3,000,000 Tot al . . . . . . . . . . . . . . . . . . . . . . . . . . . . ....... 539,236,000
- The amount of working capital may be increased by agreement between the Supply System and Bonneville.
If for any reason the amounts for the Reserve Account and working capital are not provided by September 1,1982 ar,d for the Reserve and Contingency Fund are not provided by the date of com-mercial operation under the Net Billing Agreements, the Resolution provides that such amounts shall be provided through the issuance of additional Bonds.
Estimatrel Project Annual Costs i Es'" nates of the annual costs of the Supply. System's Ownership Share of the Project's operations are gis n in the following table. The net annual. costs shown below are estima:ed to be approximately S121,637,000 for the generation of 5.7 billion kilowatt. hours ancually as the Supply System's share of Project outp it, or 21.3 mills per kilowatt-hour.
Item Expense Interest and Amortization (l) . . . . . . . . .......... .................. S 72,823,000 1 iyments to Reserve and Contingency Fund . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7,282,000 Insurance (2) .......... .... . ....'.... . .... .... .... ... .. 2,038,000 Administrative and General (2) . . . .. . ..,.. ...... . ............ 3,918,000 Operation and .\laintenance(2) . '. ...'............. ...... .... .. . 7,954,000 Fuel (3) ..... ................ ..... ... ............. .......... 34,656,000 Taxes (4) .. .. ..... ............... .. ..................... 1,140.000 S abtotal . . . . ...... . .. .. .... .. ...... .. ... .. ... S129,811,000 Less: Surplus from Prior Years' Payment to Reserve and Contingency Fund (5) . . . . (5,638,000)
Less: Interest Earnings (6) . . . . . . . . . . . . . . . . ................. ........ . (2,536,000)
Total Annual Cost . . . . . . . . .
....... ........ ... ...... ... $121,637,000 Cost per Kilowatt-hour (5.7 bi!! ion kWh)(7) . . . . . . . . . . . . . . . . . . . . . . 21.3 Mills (1)-Based cn level debt service, 36-year arnortization, and the following interesc rates: Outstanding Bonds at actual interest rates,1977 Bonds at 6.09, and additional Bonds at 7.5%. Maturities of the Bonds may not be scheduled to yield level debt service throughout the period and variations in annual costs will result to the extent actual debt senice varies from assumed level debt service.
(2)-Based on 1976-1977 costs of labor, materials and insurance escalated at 6.0% per year to 1985-1936 lesels. These costs are characteristic of a mature plant; costs during initial years of operation are expected to be higher. Excludes potentialinsurance assessments described under the caption
' Nuclear Insurance".
(h-Based on five-year, escalated. levelized fuel costs including contingencies, beginning in 1983.
(4)-Taxes are calculated at 0.2 mills per kilowatt-hour.
(5)-.-Computed as follows:
Payments to Reserve and Contingency Fund . . . . . . . ...... .. . $7.282.000 Less: Estimated amount required for renewals, replacements and additions . . 1.644.000 Net Surplus . . .. ............ ........ . ..... .. . 55,63b,000 The S:t Surplus may be used for purposes other than reduction in power costs in accordance vith the Resolution.
l (6)-Computed on the basis of 7G annual interest earnings on the balance of funds in the Resene l Account in the Bend Fund and the Resene and Contingency Fund.
(7)-Does not reflect certain Project cows and the cost of interest on the Bonds from September 1,19S2 to Se; tember 1,19S3 (see the caption " Financing Program").
14
THE SUPPLY SYSTD1'S OTilER GENERATING PROJECTS The Supply System is operating a hydro-electric project and a steam electric generating project and, i
in addition to the Project, has under constru: tion four nuclear electric generating projects.
The Supply System owns and operates the Packwood Lake Hydroelectric Project with a nameplate ratiag of 27,500 kVA.
The Supply System sold $13,700,000 Packwood Lake Hydroelectric Project Revenue Bonds, of which $12,605,000 were outstanding as of June 1,1977.
The Supply System owns and operates an 860,000 kilowatt c!cctric generating plant and associated facilities located on the Hanford Reservation of the Energy Research and Development Administration
("ERDA"). This project, known as the Hanford Project, was constructed pursuant to agreements between the Supply System, Bonneville,76 Pacific Northwest utility part!cipants, arid the Atomic Energy Commission.
Under these agreements, Bonneville acquired the capability of the Hanford Project in exchange for power from the Bonneville system. In 1963, the Supply System issued 5122,000,000 Hanford Project Electric Revenue Bonds, of which S56,710,000 were outstanding as of June 1,1977.
By-producc steam is provided for the Hanford Project from the New Production Reactor ("NPR") owned and operated by ERDA for national defense purposes. On March 26,1977, the Supply System and ERDA cntered into agreements to provide for the operation of the Hanford Project in conjunction with the NPR through June 30,1983.
The Supply System has under construction a 1,'250,000 kilowatt nucicar generating plant, known
' as Washmgton Public Power Supply System Nuclear Project No.1, and has issued an aggregate of 5535.000,000 principal amount of revenue bonds in order to pay a porti->n of the costs of acquiring and constructing this project.
This project is located on the Hanford Reservation, is presently scheduled to begin commercial operation in September 1981 and is in the initial stages of construction. A plumbers and steamfitters strike settled in November 19'76 has delayed certain construction on Project No. I by at least four months.
Actions have been taken to, improve construction progress; however, unless these are successful, the commercial operation date will be' delayed by approximately four months. Based on the Supply System's approved budget, the estimated additional financing requirements for the project are approximately $671,000,000 for a total of S1,206,000,000. The Supply System has identified on a preliminary basis additional project costs of approximately 576,000,000, including the costs of a possible four month delay, which would increase future financing requirercents. The present commercial opera-tien date of September 1,1981 is optimistic in that it assumes that certain piping and electrical operations will be completed more quickly than industry averages would indicate. Use of ind'ustry averages for scheduling purposes would require a further schedule delay of up to eight months with additional increases in the project's cost. .
The Supply System has under construction a 1,100,000 kilowatt nuclear generating plant, known as Washington Public Power Supply System Nuclear Project No. 2, and has issued an aggregate of
$ $00,000,000 principal amount of revenue bonds in order to pay a portion of the costs of acquiring and censtructing this project. This project is located on the Hanford Reservation. The scheduled commercial operation date of June 19S0 has been extended to September 1980 because of the effect of i the plumbers and steamfitters strike. This project was approximately 42fc complete as of June 10,1977. l The Supply System's estimated additional financing requirements for this project are approximately S165,000,000 for a total of $965,000,000. However, the Supply System has identified on a preliminary basis additional project costs of approximately $60,000,000, including the costs of the three month schedule delay mentioned above, which would increase future financin; requirements.
The capability of the Supply System's Nuclear Projects Nos. I and 2, in addition to the Supply System's share of the Project, have been acquired by Bonneville under net billing agreements and exchange agreements with respect to each such project.
{ The Supply System has also begun construction on Nucicar Projects Nos. 4 arri 5. The NRC has issued limited work authorizations for both projects. Nuclear Project No. 4 will be a duplicate of the 15 i
)
4 J
Supply System's Nuclear Project No. I located on the Hanford Reservation and is schedul mercial operation in March 1983. The potential delays discussed bove with respect to No. I could have a corresponding effect on Nuc! car Project No. 4.
Nuclear Project No. 5 will bi a duplicate of the Project located at the Satsop site near Aberdeen in Grays Harbor Cou ,
and is scheduled for commercial operation in March 1985. Nuclear Project No. 5 is jointly the Supply System owning a 90% share and th: Pacific Power & Light Company owring a The Supply System has issued $235,000,000 of long term revenue bonds to pay a portio of constructing these projects.
These bonds are secured by agreements with 88 public agencies and ciectric cooperatives. Bonneville is not purchasing any capability from Nuclear Projects Nos. 4 a Fifteen labor agreements with crafts working on the Supply System's projects, includin will expire within the next few months. It is premature for the Supply System to predict the outco negotiations for new contracts.
All projects, including the Project, heretofore undertaken by the Supply System, except Nucle Projects Nos. 4 and 5, have been or are being financed as separate syst:ms. The obligations issue respect to each such project are payable solely from the revenues of that project. The ownership sha of the Supply System in Nuclear Projects Nos. 4 and 5 is being finan:ed as one system.
FINANCING PROGRAM After the isst'anc: of the 1977 Bonds, the Project will require additional financing of app S464,000,000. The Supply System has preuously obtained $250,000,000 of long-term firan its ownership share of the Project. The Supply System has previously obtain:d S535,000,0 term financing for Project No. I and SS00,000,000 of long-term financing for Project No. 2. On the basis of the estimated cost to the Supply System for Nuclear Projects Nos. I and 2, it is estimate that the Supply SS36,000,000. System will require additional long-term financing for these projects of cpp The Supply System's ownership share of Nuclear Projects Nos. 4 and 5 will require additional long-term hnancing of approximately S3,199,000.000 including car.i'alized nuelcar fuel. The Supply System has previously obtained 5235,000,000 of long-term financing for these projects.
After the sale of the 1977 Bonds, the Supply System expects that its next bond sale will be in th la:e summer of 1977 to obtain additional financing for Nuclear Projects Nos. 4 and 5, and that th financing for Nuclear Projects Nos.1,2 or 3 will occur in the fall of 1977.
In calendar year 1977 the remaining mat financing for Nuclear Projects Nos 1.through 5, excluding the 1977 Bonds, wil iy S400,000,000.
The foregoing financing program could be affected by the following circumstances. As a result of the drought in the Pacific Northwest and delays in the commercial operation dates for net bi!!
Bennesille's revenues are being adversely affected. .
Furthe:more, increased costs of the construction of such projects have increased Bonnesille's expenditure requirements. ' As a result, Bonneville is with the Supply System various alternatives which will assure the availability of adequate revenues )
nwt Bonneville's debt service requirements on the net billed projects prior to their dates of cornmercial cperation and have suflicient funds remaining to pay its other obligations. These alternatives inch'de defer:ing payments to the Federal Treasury to repay its investment in the Federal Columbia River Power Sptem, increasing the amount of projected borrowings from the Federal Treasury pursuant to the Feder Ce'umbia River Transmission System Act, obtaining additional legislation to expand Bonneville's autnority with reference to the purposes for which Bonnesille may borrow from the Treasury, impos a surcharge on Bonnesille's existing rates, seeking additional appropriations frem Congress and f 16 L .- o
by the Supply' System of debt service on net billed projects payalie under net billing agreements prior to the dates of commercial operation. The need to implement any one or a combination of the foregoing -
-will be allected by_ Bonneville's revenues, which in turn are directly relate.1 to hydro conditions in the '
Pacific Northwest, the Tonneville rate level,'and the costs and feasibility of the various alternatives. The ultimate determination will be based upon the lowest cost to the Boru;cville customers.
In ti e event the Supply System determines to expand its financing program to include all or a portion of the debt ser ice payable urder the net billing agreements prior to the dates of commercial operation, such financing s.ould be accomplished through the issuance of subordinated bonds; however, Benneville's obligations under the net billing agreements to pay debt service on such bonds would be on a parity with its obligation under such agreements to pay other annual project costs, including debt service on the senior lien bonds. It is currently estimated that the total amount of such debt service requirements to currently projected corranercial operation for each of the net billed projects is S89,353,000 for Projcet No.1, $203,554,000 for Prcject No. 2 and $73,574,000 for the Project.
NUCLEAR REGULATORY COhl3IISSION RECENT DEVELOPSIENTS The U.S. GeoSgical Survey ("USGS") has prepared a report dated April 1,1977, relating to
- ,eismology in the State of Washington and an earthquake which occurred in the North Cascades region of the Pacific Northwest in 1872. After receipt of this report the NRC requested the Supply System to evaluate the USGS report as well as other information with regard to the seismic design for Nuclear Projects Nos.1,2 and 4. The Supply System has expanded the scope of ongoing investigations and plans to submit the requested evaluations over a 1.riol of several months. It is possible that further developments in this regard could affect the schedule or coste. or both, for Projects Nos.1, 2 and 4.
This seismology matter wr.s reviewed in the NRC licensinggroceedings involving the limited work authorization for the Project and Nuclear Project No. 5 and h.< been resolved so that it is r:ot expected to further afTect the 1: censing proceedings for such projects.
~
On July 21,1976, the United States Court of Appeals for th District of Columbia Circuit held that a rule adopted by the NRC to account in indisidual NRC licensing paccedings for the environmentalimpacts of spent fuel reprocessing and radioactive waste manacement was defective under the National Environmen-tal Policy Act. This decision has been appealed to the United States Supreme Court and Certiorari has
- Feen granted. On Starch 14,1977, the NCR adopted an interim rule as a substitute for the rule held de-fective, and it has resumed the i:suance of licenses and permits, subject to the outcome of the Supreme Court appeal and rulemaking proceedings. All licenses, permits and authorizations issued under the interim rule will be conditioned upon compliance with the revised permanent rule. The resolution of the inues in these proceedings is not currently affecting the schedule for NRC action on pending requests for cc astruction permits for Projects Nos. 3,4 and 5.
NUCLEAR INSURANCE The Supply System will be required to obtain liability insurance and a Government indemnity agreement for each of its projects prior to the time NRC operating licenses are issued to insure against its maximum liability under the Price-Anderson Act (currently $560,000,000) for any public liability l claims arising from a nuclear incident. Reccat amendments to such Act provide that licensees of cperating reactors may, commencing August 1,1977, be assessed $5,000,000 per reactor per nuclear incident at any commercial power reactor in the United States as a retrospective premium with a limit of l
$10,000,000 per reactor per year. Any such assessments allocable to the Supply System's Ownership Share of the Project, once it became subject to this retrospective premium system, would be billable under the Net Billing Agreements. The Supply System's maimum exposure with respec' to all its nuclear projects wou!d be $46,000,000 per year under this legislation, 57,000,000 of which would be allocable to the Supply System's Ownership Share of the Project.
17
>[
- (
l t-
" Ca March 31,1977 held unconstitutional the provisions of the Price-Andersor3 r arolina Act plants, That decision is being appealed to the United States Supreme rs of Court.
nu'elear and if additional insurance or other means for sharing liabilitypply ,
wereSystem not established could be exposed to its pro rata share (based on its ownership intere>0 of unin
- i. 3560,000,000 with respect to an incident involving any unit in which excess of est.
it has an Nuclear Energy Liability-Property Insurance nce pools, rance Pool.
Association Combincd policy limits of the NEI-PIA and MAERP policies of S220,000,000. are available curre
.f a maximum !
[ the standard nuclear exclusion which appears in conventional prop t
j ' he general pc! icy and practice of both the insurance pools pohcies. andIt has the been utilit
.g
.' discount for the second and following units). units are covered s some under a s coverage for the Project and Project No. 5 will be underora single polic
! Projects Nos. I and 4, and it is possible that the same policy . 1,may 2 andcover
- 4. Projects No t
far adjacent nuclear unit construaion site,s from the tim e available on any one of :he sites for storage (such usually occurs many months priorr to inidal fuel lo i
insurance purposes, then a single nuclear m would be property insur applicable to all three sites from the time fuel is to be brought orage.
upon the Project N BONNEVILLE POWER ADMINISTRATION established by the Bonneville20,1937. Project Act of'AugustThe erior, wasBcnneville Po the Federal Columbia River Transmission System Act enacted in 1974 (the "TraUnder the Bo nsmissica Act"), Bonne-projects in the Pacific Northwest12,475,000 with an,insta!!ed capacity ofville y roelectric y
to existing projects will have the potential ey ,13,000 kilowatts.
cf an onsinstalled cap Bonneville's transmission facilities include over 12,100 miles cf 115 kV to 500 kV ac and 800 kV d: transmission lines. These transmission facilities, together entioned with hydroelectric above and the resources System (the " Federal System"). acquired from non-Federal sources, comprise r ower the Federa in the Pacific Northwest is owned by Bonneville.More than 80 percent of the 500 kV and 23 and public utilitics in the Pacific Northwest.over the Federal System th the States of Washington, Oregen, Idaho, plusand Montana west of small adjacent either all or the major share of the electric load of 115 pub industrial customers.
requirements.
and Canada. In addition Bonneville sells surplus power under contract 7
- Acquhition of Project Capability and Power Supply i installed capacity, the firm energy capability s of the hydro system s antially increase.
As part , f the liydro Thermal Power Program, Bonneville has purchased through net billi IS
l l
I and exc!Iange agreements the Supply System's Ownership Share of the capability of the Project, as well
- c. the capability of its Nuc! car Projects Nos. I and 2 and the City of Eugene, Oregon's 30 percent ,
o vnership share of the Trojan Project (the " net billed projects") and may purchase 10 percent of the ,
t* $ ability of the first unit of Portland General Electric Company's Pebble Springs nuclear generating project. Bonneville -lans to blend the energy from the Project and the ether net billed projects with
~t he resources of the Federal System for sale at wholesale to its customers. The net billed projects are
( ;pected to represent 24.7% of the estimated energy capability of the Federal System in the year ending June 30,1986, the first year the net billed projects are expected to reach their full forecasted generating capbility. However, the City of Eugene, Oregon, has notified Bonneville that, pursuant to the net billing ag :en ent between Bonneville and Eugene, after July 1,1984, Eugene will withdraw from Bonneville for usc in its system increasing increments of the crability of its ownership share of the Trojan Project.
Bonneville has acquired the capability of the Supp( System's Hanford Project in exchange for Frm power from its system. Bonneville has also entered into certain arrangements to increase the capacity of the Fed al hydroelectric projects. Acting jointly with the U. S. Army Corps of Engineers as the United States Entity, pursuant to a treaty between the United States and Canada, it has entered into certain agree-ments under which the Federal System obtained certain rights to 15,500,000 acre-feet ot hydro storage on the Columbia River and its tributaries in Canada, which, together with the Libby Project authorized by treaty, has enabled the Federal Government and Northwest utilities to install 2.8 million kW of adJit.onal capacity at hydroelectric projects on the m'in a stem of the Columbia River downstream from such storage. .
donnesille's Author;.y Under the Bonneville Project Act and the Transmission Act Bonneville markets at wholesale the electric energy from Federal hydroelectric projects and the net billed projects, constructs, operates, and maintains transmission lines and substations, interconnects the Federal hydroelectric projects and non-Federally owned power systems and projects, and is. directed to set rates to recover its costs of producing and transmitting electric energy. .
Under the provisions of the Transmission Act, Bonneville's receipts from the sa!e and transmission cf electric power are deposited in the Bonneville Power Administration Fund (" Fund"), established in the Feden! Treasury. Such receipts are to be used,to pay Bonneville's expenses, including the cost of power purchased from the Project and other net billed projects, operation and maintenance of the Federal System, and repayment to the Federal Treasury for the investment in multipurpose Federal projects. In addition, the Transmission Act provides that Bonneville may sell up to St.25 billion in revenue bonds to the Treasury, at an interest rate comparab;e to the rates prevailing in the market for similar bonds for the purpose of providing funds for construct;on of transmission facilities. Bonneville and the Treasury have taken the initial steps necessary to obtain $250,000.000 under this authority.
Although Bonneville is still required to submit an annual budget to Congress for review, Bonnedlie's spenditures from its revenues in the Fund do not require formal approval by Congress, except that Congress may take action to impose specific directives or limitations on such expenditures.
Bonnesille's purchase of the Supply System's share of the Project's capability and the capability cf the other net billed projects was authorized and approved by Congress in the Public Works Appropria-tions Acts of 1970 and 1971. -
Proposed Transfer of Bonnesille to Department of Energy Under the proposed Department of Energy Organization Act now pending before Congress, Bonne-sille would be transferred from the Department of the Interior to the proposed Department of Energy.
This transfer would not atiect the validity or the force of the Net Billing Agreements or the arrangement described under the caption " Security for the Bonds" for payment of the Supply System's Ownership ;
Share of the Project's annual costs. 1 The transfer of Bonneville to the Department of Energy would include all Bonneville facilities, fune-tions, obligations, and authorities, including the authority contained in the Bonneville Project Act of 1937 as amended and the Transmission Act. The proposed legislation provides that Bonneville and other 19 l l
~
m Federal power marketing agencies shall be preserved a; separate and distinct organizational entities within the Department and shall each be headed by an Administrator appointed by the Secretary of the .
Department. The funct! .a and authorities transferred to the Department shall be exercised by the i Secretary acting by and tarough such Administrators.
' Bonneville Contracts Each of the Participants is a preference customer of Bonneville and has, with other public bodies and cooperatives, a statutory preference and priority upon power from the Federal System. Each Participant
-is a party to at least one power sales contract requiring payment to Bonneville for the purchase or ex-change of power. Such contracts, which expire between 1983 and 1994, are usually for a term of 20 years, the maximum permitted by law, and generally provide for the sale and delivery of firm power to the Participant in the amount of its requirements over and above the generating resources, if any, that the Participant has available to serve its own load. Bonneville's obligation to meet a preference cus-tomer's requirements is effective for the term of the contract, unless Bonneville gives the preference customer at least 7 years' prior notice of insufficiency of supply. Bonneville has given its preference customers notice that an insufficiency in power supply will occur after July 1,1983. The power sales
. contracts provide that after the date of insufficiency Bonneville will be obligated to make available to each preference customer an allocation of firm energy.
In the past Bonneville has executed new preference customer power sales contracts prior to the termination of existing preference customer power' sales contracts. However, Bonneville does not expect to execute new preference customer power sales contracts until after it has completed an environmental impact statement entitled "Thc Role of BPA in the Pacific Nonhwest Power Supply System, including its Participation in the Hydro-Thermal Power Program: A Pro; ram Environmental Statement and Planniag P.: port" (" Role EIS") and has given consideration to the material presented in the final Role EIS and its other legal obligations. In addition, from, time to time, Bonneville receives applications for purchase of power from agencies which may also have a statutory preference and priority on power frcm the Federal System These applications for power; and resultant power sales contracts, and the terms of preference customers' future power sales contracts, could allect future allocations of power from the Federal System. If Bonneville does not execute new power sales contracts with the Participants or if the Participants' new power sales contracts' provide for a limited or reduced level of power sales, a reduction in the net billing credits available to such Participant for use in offsetting its payments to the Supply System may occur. Any deficits in net billing credits would be satisfied in the manner described under the caption " Security for the Bonds". For further information with respect to the Role EIS and litigation relating thereto see the caption " Power Supply in the Pacific Northwest and the Hydro Thermal Power Program".
Bonnevil!e delivers power to 15 industrial customers, most of which use large amounts of electric power to produce metals or chemicals, pursuant to power sales contracts for 20-year terms. Such power sales centracts provide for the delivery of power subject to greater inttrruptien than the firm power furnished preference customers. These contracts terminate between 19S1 and 1991. As indicated above',
Bonneville has notified its preference customers that its resources will be insufficient to meet such cus-temers' requirements for firm energy after July 1,19S3. Bonneville anticipates that the preference rights of public agencies and cooperative utilitics to its power resources will preclude execution of new power s:ges contracts with industrial customers with provisions similar to those in existing contracts.
On January 26,1977, the City Council of Portland, Oregon passed a resolution authorizing the City Attorney to take legal action to challenge Bonneville's method of marketing electric power to Bonneville's existing customers. While no action has been filed to date, the objectise of such action would be to acquire for the citizens of Portland a portion of the low-cost Bonned% researces. The resolution further provides that in the event the authorized suit does not accomplish its objective of cha!!enging the preference and prio hy of preference customers to Bonneville's resources under the Bonneville Project Act, but does sucreed in setting aside Banneville's existing power sales corcracts, the City of Portland would create a municipal utility system to serse the residents of the City of Portland. It is not known when such a suit 20
will be fi!cd, or,if filed and Portla,d did prevail, whether the power supply of the Bonneville preference customers would be affected. Bonneville's revenues woald not be affected if Portland prevailed in its suit.
In addition to sales to preference customers and industries, Bonneville deliveis smaller emounts of .
i power to investor-owned utilities and federal and state agencies in the Pacific Northwest, and any sur-
- pluses to entities outside the Northwest. A large portion of this surplus power is sold to entities in Calibrnia.
Bonnesille Revenues and Expenses Bonneville's revenues for the year ended June 30,1976 totaled more than $292 million, about 558 million, or almost 12 per ent, more than the preceding year's revenues. The principal factors in the increase were: (1) the average 27 percent wholesale power rate increase which became effective Decern-ber 20,1974 and (2) increased firm power sales to preference customers and availability of nonfirm energy for sale as the result of greater than average streamflows on the Columbia River and its tributarie!
The fo!!owing table sets forth a summary of certain Bonneville revenues ?nd expenses for the years ending June 30: 1974 197s 1976 1972 _ 1973 Ratst1s:(1)
Preference Customers . .
S 69,391 748, S 74.669,546 5 53,034,059 5 99,126,685(2) 5126,772,146(2) 4;4,014,159 46,161,233 62,708,155(1) 78,903,039(2) 45,733,067 f .dus: rial Customers . . . 65,370,024(5) 42,420,037 40,230,234 32,078,941 51,081,347(5)
Other Power Resenues(4) . ..
Transmission Sersice and Other 15,405.121 15.579,527 20,779.097 21,501,446 21,176.65 t Resenues . . ,. ..
174,493,466 182,053,330 234,417,633 292,221,860 Total (6) . . 172,949,973 Esrtssts:(1)
Operation and Staintenance Ex- 33,927,636 38,513,323 46,669,527 50,439,514
. .. 31,328.206
, rensest 7 ) .
Cost of Purchase and Exchange 43.254,905 19,347,378(8) 7.691,582(9) 12,794,242 45.243.408 Pow er .
82,182,541 83,756,731 06,016,905 55,131,096 Total . . 64,122,443 -
5234,090,764 Balar' e of Bonnesille Resenues(10) . 5108,827,525 5 92,31'0.925 5 93,296,599 5168,400,723 (1) Resenues and expenses for years 1972 through 1976 summarized from financial data audited by the General Accocating 0: lice ana certified by the Comptroller General.
(2) Revenues reflect a wholesale power rate increase of approximately 27Cc eficctive December 20, 1974.
(3) Increase due to operatien of aluminum potlines previously shut down, increased availability of interruptible power, and a wholesale power rate increase of approximately 27Cc etlective December 20, 1974.
(4) includes revenues from privately owned utiliti:s and Federal agencies.
(5) Increase primarily due to high availability of power in excess of the needs of preference customers and a wholesale power rate increase of approximately 27Pc effective December 20,1974.
(6) Dees not include approximately S3,594,000 annual revenues received by the Bureau of Reclama-tion and the U.S. Corps of Engineers used to repay costs of their generating projects.
(7) Such expenses represent only those of the transraission system.
l (S) Retlects reduced costs to the Federal System for the Hanford Project and expiration of the agreement to purchase capacity of the coal-fired Centralia thermal project.
(9) Retkets reduced costs to the Federal System for the Hanford Project.
(10) llalance of revenues were applied as payn:ents to the Treasury for Corps of Engineers and Bureau of Reclamation operation and maintenance costs, annualinterest expenses of the Federal System and amortization of the power facilities financed from appropriatea funds, and, in 1976, costs of Bonneville's transmission construction program.
d 21
-essmer
_W
Bonneville's projected revenues through September 30,1995 are shown in Exhibit VI. The table in .
Exhibit VI ref!:ets two projected rate increases before 1984 which are estimated to increase Bonneville's i revenues 1 y 92 percent above revenues forecast at current rates. Larger rate increases to recover additior .! cost escalatica since Se] tember 1976 for he Supply System's Ownership Share of the capability of the Project, and the capability of the Supply System's Nuclear Projects Nos.1 and 2, would be made in amounts sufficient to satisfy Bonneville's revenue requirements. Exhibit VI includes the enimates of the annual co ts of the Supply System's Ownership Share of the Project and Nuclear Projects Nos. I and 2 prepared by the Supply System and shown on Exhibit V. These projections could be affected by the possible purchase by Banneville of additional power from non-Federal sources, as discussed under the caption " Pro; osed Regional Power Program" under the caption " Power Supply in the Pacific Northwest and the Hydro Thermal Power Program." A program for Bonneville to purchase additional power from non-Federal sources would not atiect the arrangement for payment of the Supply System's Ownership Share of the Project's annual costs described under the caption " Security for the Bonds". Such Bonneville r ower purchases would increase Lonneville's power costs, require rate increases above current estimates and increase Bonn:ville's revenues available for net billing. The impact of such purchases on the foregoing prcjections must await the analysis of the proposed regional power program.
Curem proje:tions, based upon the rate increases referred to above and load forecasts made in 1976, indicate that in the year ending September 30, 1984 Bonneville's revenue from the participants in the net billed projects which is subject to net billing ivill be S362 million. Carrent estimates indicate that the annual cost in such year of Bonneville's share of the output of such net billed projects will be 5401 mi!! ion resulting in a net billing deficiency of $39 mil. ion. Any difference between the portion of such participants' payments to Bonneville subject to net billing and the annual costs for such partici-pants
- shares of such projects will be raid either (i) tl ,u;h assignments of portions of such participants' shares to other Bonneville custor ers, thereby etilizing their net billing capatility or (ii) by Bonneville, in c;sh, frcm the Bonneville Pcxer Administration Fund. The total amount Bonneville estimates will be avail.ible in the year ending September 30,1984 for net billing or cash payment is 5839.3 million.
In accordance nith the Transmission Act, r.ny pyments from the Fund for annual costs of such projects are treated as eperation and maintenance expenses of Bonneville and take priority over Bonneville's obligation to pay amortization and interest on the invest nent in the Federal System and related operation r :d maintenance expenses of the Corps of Engir.eers and the Bureau of Reclamation.
The totalinvestment in F deral hydroelectric projects and the Bonneville transmission system was 57.2 billion as of June 30,1976, of which 75 percent, or 55.3 billion, was allocated to electric power.
The entire cost of Bonneville's transmission system is included in this sum. The investment in multi-purpose Corps of Enginects and Bureau of Reclamation projects is divided among the purposes served by the projects, which include flood control, navigation, irrigation, municipal and industrial water supply, water quality, recreation, and the enhancement and propagation of fish and wildlife, in addition to the generation of power.
Pacific Northwest Drought Unusually low precipitation during the winar and spring of 1977'has resulted in the lowest stream-flowhn the Columbia River and its tributari:s ever recorded. As a consequence of these low streamflows, nonfirm energy has not been available for sale by Bonnesille. In addition, Bonneville has exercised l l
conuactual rights to reduce deliveries of power to its direct-service industrial customers by 25% to assure its ability to meet its firm pov cr obligations in the region. As a result, Bonneville estimates its revenues from nonfirm encrgy sales and the delivery of firm energy to its direct s:rvice industrial cus-tomers during the fiscal year ending September 30, 1977 may be as much as SS9 mi!! ion below the forecast made in advance of the fiscal year.
Current studies, based on historical records of river flows in the Columbia River basin, indicate that Federal re>enoirs on the Columbia Ri.cr and its tributaries will contain adequate hydro storage at the August 1,1977 start of the 1977-78 operating year to enable Bonneville to meet its estimated 22
firm obligations with a 99% operating confidence. If conditions similar to those encountered this yeareroccur firm next argy oblig year
- tions. Bonneville would have to purchase power from non Fed ral sources to serve its Bonnesille Rates I 1
Bonneville's rates are developed by Bonneville, submitted to the Department of the Interior for review approval. and approval, and then submitted to the Federal Power Commission for confirmation a The rates must be designed to be consistent with sound business principles and recover the cost to Bonneville of producing and transmitting electrical energy to customers, which includes ment the pr( of capital investment in the Federal System with interest within a reasonable period of years.
, osed Departmentof Energy Organization Act the functions and duties of the Federal Power Commission would be transferred to the Department of Energy.
27 percent to be tlective for the 5-year20,1979. period ending DecemberOn Decem The existing power sales conti tcts contain provisions for a rate review once, each 5 years. Bonneville has proposed that this rate review period be shortened after the rate review on December 20,1979, to provide annual rate review periods beginning Jr v 1,1981. Bonneville has stated that its current projection indicates that a whol power Decemberrate increase which would increase revenues by approximately 60 percent will be neces 20,1979.
In addition, Bonneville estimates that a wholesale power rate increase which would increase revenues by approximately 20 percent will be necessary on July 1,1981. Such rate inc due in substantial part to the added costs of thermal power acquired from net billed projects b September 1976 estimates of annual costs of such projects. Larger rate increases to recover ad cost escalation sir ce Sep: ember 1976 for the SupplySystem's Ownership Share of the capab Bonneville's revenue re.luirements. Project, and the capa sility of Nucle'ar Projects N In addition to.the wholesale power rate increases, Bonneville has ree.ived from the Federal Power Commission interim approval of its proposed transmission rate in Such rate increa f , c!Tective June 13, 1977, and miscellaneous revenu:s of about 22 percent.is
- expected to produce an increase in annual trans powerInwas 1976.375 the cents.average cost per kWh paid to Bonneville by its preferene, utility customers for firm Bonneville has alculated that the a';erage cost per kWh in 1976 paid by all The arcage Bonneville rate rer kWh for Bonneville preference cus ic egoing rate increases. is estimated to be between .6 an,d .8 cents per kWh.
Ic55 than comparabic wholesale power costs in other areas of the nation and the average of these customers are expected to remain well be'ow average rates paid in other areas of the na I onneville Loads and Resources hs eWmated requirements and resources.Bonneville annually submits to the Pacific Nor These loads and resources are then combined with the loads ard resources of other utilities to develop long range planning studies. The most recent analy P.;UCC en:i: led "LonLo:ds and Resources Subcommittee of the West Group Area of power loads and resource Ra ige Projection of Loads and Resources for Thermal Planning" (" Blue Book"), dated Apnl 20.19 7, was made for the years 1977-1978 through 1996-1997. This analysis was prep plants could b.;bleassenat!y energy date"be concept expected for determining to be in the dates on which continous new thermal generati operation.using the "p The " probable energy dates" are the laterofof' 'ilestones.
cation the schedu;ed eperation dates established by the plant sponsor or the dates dete a thernal p; iject to the time it is placed in commercial operation. Each iaed time interval from its occurrence to the most proba*>le date that the project will provide :
23
_I
p-- ,
l level of capacity and energy. Each plant sponsor will continue to maintain its own scheduled commercial i operation date, which may not be the same as the probable energy date schedule used for area resource ;
planning. The area studies are used to determine area resource needs, including reserve margins. The estimated resources of the Federal System are adjusted to reflect the reserve requirements, which is t:_e basis for calculating a surplus or deficit.
An analysis of the most recent. forecast of the Federal System's loads and resources is shown in the following tables:
Federal System Loads and Resources (1)
Peak Capability-Kilowatts (000)(2)
Year Ending Estimated Estimated Percent June 30 Requirements (3) Resources (4) Surplus (5) Surplus (5) 1978 ....... 15,794 15,023 (771) (4.S8) 1979 ....... 16,808 17,508 700 4.16 1980 ....... 17,718 17,913 195 1.10 1981 ....... 18,237 18,794- 507 2.77 19S2"....... 18,613 - '
19,661 1048 5.63 1983 ....... 19,269 -
19,552 283 1.47 1984 ....... 18,625 19,965 1340 7.19 1985 ....... 18,994 20,713- 1719 9.05 19S6 ....... 19,023 20,562 1539 8.09 1987 ....... 19,133 20,721 1588 8.30 1983 ....... 18,820 20,631 1811 9.62 Energy Capabitity-Average Kilowatts (000)(2)
Year Ending Estimated Estimated Percent J une .20 Requirements (3)(6) . .Resourcest 41 Surplus (5) Surplus (!)
' 8,594 1978 ....... 9,407 (813) (8.64) 1979 ....... 9,771 , 8,668 (1103) (l1.29) 1930 ....... 10,322 8,717 (1605) (15.55) 1981 ....... 10,941 9,291 (1650) (15.08) 1982 ....... 11,083 9,85S (1225) (11.05) 1983 ....... 11,219 10,058 (1161) .
(10.35) 1984 ....... 10,980 9,792 (1188) (10.82) 1985 ....... 11,092 ,
- 10,202 (890) (S.02) 19S6 ....... 11,210 10,262 (94S) (8.46) 1987 ....... 11,318 10,083 (1235) (10.91) 1988 ....... 11,441 9,845 (1596) (13.95) ,
(1) From the Blue Book dated April 20,1977.
(2) Computed under PNUCC planning guidelines. .
(3) Estimated requirements include current levels of service to industries and does not take into acccunt expiration of 12 industries' power sales contracts between 1981 and 198S.
(4) After deducting resen-s under PNUCC planning guidelines.
(5) Parentheses denote negative values.
(6) Because Benneville has given preference customers notice that after June 30. 1983, it will have insullicient firm energy resources to meet such customers' firm energy requirements, Bonneville's obligation to such customers after that date will be limited to an allocation. Increases in the Federal System's energy requirements after that date include increases in preference customers' system energy requirements served by their forecasted allocations, not such customers' total system energy requirements.
24
l l
i Net Federal System resources noted on the preceding table reflect the installation schedules for hydro projects as determined by the constructing agencies-the Bureau of Reclamation and the Corps -
of Engineers-and probable energy dates for the capability of net billed projects. Total estimated require.
ments consist of direct service loads, exports, line losses, and contractual obligations to public agencies and private utilities.
The most recent PNUCC forecast, using estimates jointly deve!oped by Bonneville and its preference customers in the fall of 1976, projects an average compounded energy load growth rate for Donneville's preference customers of 4.79% for the years ending June 30,1978 through 198S. This compares to a historical rate for st.ch customers of 4.39% for the ten-year period between 1966 and 1976. Bonneville's preference customers' energy load growth rate was 10.5% in the year ended June 30, 1973, 1.3 %
in the year ended June 30, 1974,.89 % in the year ended June 30,1975 and 7.1% in the year ended June 30,1976. The actual energy consumption for these customers for the 11 months beginning July 1, 1976 was 4.4% greater than consumption in the comparable period of 1975-1976. The decreased rate of energy loadtrowth in the years ended June 30,1974 and 1975 can be attributed to two factors. First, because of an extremely dry summer and fallin 1973, Federal reservoirs were far below normal operation levek, and Bonneville and the region's utilities and states immediately implemented a voluntary conser-vation program, which has been credited with an oWrail reduction in the rate of regicnal energy load growth. ' Second, regional economic conditions, which reflect national economic conditions, caused a substantial reduction in the electric loads of the region's industries, primarily forest products, metals and acrospace. With the improvement in the national and regional economy, these industry electric loads increased during late 1975 and early 1976 and resulted in an energy load growth rate of 7.1% in the year ending June 30,1976 oser the previous year.
POWER SUPPLY IN TIIE PACIFIC NORTIIWEST AND TIIE IIYDRO Tl!ER.41AL 1 OWER PROGILUI The power supply facilities in the Pacific Northwest have been operated with a high degree of cooperation for many years. The Northwest Power Pool, a voluntary organization of public, private and Federal power suppliers, was established in 1942 to coordinate power operations in the Pacific Northwest and is still functiening on an effective basis.
As the complexities of the coordination of power supply planning and operation increased, other groups were formed. The Pacitic Northwest Utilities Conferene- Committee ("PSUCC"), consisting of essentially all electrical power generating interests in the region, was formcl in the late 1940's to extend the functions established in the Northwest Power Poolinto other areas including the advanced planning of power resources on a coordina:ed basis. The Public Power Council, representing over 100 publicly owned utilities and cooperative;, was formed in the late 1960's to further the coordination of the publicly owned t..ilities in their effort 3 and contributions to improving the region's electrical powcr supply.
Until the late 1960's, nearly all the power supply in the Pacific Northwest was obtained from the hydro-electric resources of the region. By that time, most of the potential hydro-electric resources remain-ing to be developed were peaking resources with only limited base load energy generating capabilities.
Since thestectricalloads in the region were continuing to increase, base load thermal generating resources were necessary to supply the increasing energy needs. ,
1
. In Octeber 196S, a Ten-year Hydro Thermal Power Program, commonly called Phase 1 of the Hydro !
Thermal Power Program, was adopted. This program was a plan for the constructicn of hydro and thermal generating resources to meet the region's power requirements and to guide the region in its transition from a hydro-electric power supply base to a mixed base of hydro and thermal generating resources.
, This program included eight large thermal plants scheduled for commercial operation at various times through the early 19S0's. These thermal plants are expected to have a generating capability of approxi.
mately 8,400,000 kilowatts and they include the Supply System's Nuclear Projects Nos.1,2 and 3. Under 25
Phase 1 Bonneville undertook to provide for additional power supply to its preference customers and '
industrialloads by acquiring the output of certain publicly owned generating facilities by purchase under '
the " net billing" concept. The large thermal generating plants included in Phase 1 of the Hydro IL-tmal Power Program, including the Project and the Supply System's Nuclear Projects Nos. I and 2, r.re tab tlated below. ~
Principal . Rated Probable Sponsor Capacity Energy
' Project I4 cation T3 pe
_ DIML Date(l)
Pacific Power & Licht Co.
and The Washington Water Power Company Centralia Centralia, Wa. Coal-fired 1,400 In operation.
Portland General E!:ctric Company . . . . . . . . . . . Trojan St. Helens, Ore. Nuc!:ar 1,130 In operation.
Pacific Power & Light Co. Jim Bridger Rock Springs, Wy. Coal-fired 500 In operation.
No. 2 Jim Bridger Rock Springs, Wy. - Coal-fired 500 in operation.
No. 3 , .
Washineton Public Power WPPSS Supply System . . . . . . . No. 2 Hanford, Wa. Nuc! car 1,100 Sept.1980 Washington Public Power WPPSS Supply System . . . . . . . No.1 Hanford, Wa. N. ciear 1,250 Oct.181 Washincton Public Power WPPSS Supply System . . . . . . . No. 3 Satsop, Wa.
Nuclear 1,240 hiay 1984 Portland General E!:ctric Pebble Springs Company . . . . . . . . . . . No.1 . Arlington, Ore. Nuclear 1,260 July 1985 (1) The probab!e energy dates are the later of the scheduled operation dates established by the plant sponsor or the dates determined by application of hiilestones. The hiilestones are significant events
- in the critical path from the conception of a thermalTroject to the time it is placed in commercial opera-tien.
Each Slitestone is assigned a standardized time interval from its occurrence to the most probable date th:.t the project will provide the planned level of capacity and energy. ,
Early in the 1970's it became apparent that Phase 1 of the Ten-year Hydro Thermal Power Program would not provide adequate generating resources to supp:y the region's growing demand for electrical power beyen'd the early 1980's. The cooperation that was established during the development of the Ten year Ilydro Thermal Power Program was contint ed and additional generating projects were identified.
Thi; cooperative planning and scheduling of resources has resulted in construction and planning of generating facilities by individual utilities and utility groups on a coordinated basis to meet the growing loads of the Pacific Northwest. As part of this power supply program the preference customers are undertaking to provide their orn additional generating resources directly. This cooperative planning and yheduling has been identified as Phase 2 of the Hydro Thermal Power Program. {
l 1
26
~
The present schedule of new thermal generating plants is shown below:
Principal Rated Probable .
Sponsor Project Capacity Encrey Location Type OlW) ,
Date(O Montana Power Company . Colstrip bo. I Colstrip, Montana Coal-fired 165(2) In operation.
Sfontana Power Company . Colstrip No. 2 Colstrip, Montana Coal-fired 165(2) In operation.
Pacific Power & Light Co. Jim 1;ridger Rock Sprmss, Wy. Coal-fired No. 4 500(2) Dec. 1979 Portlan ! General Electric Com p; ny . . . . . . . . . . . . . Carty Coal No.1 Boardman, Ore. Coal-fired 477(2) Nov. 1980 Montana Power Company . Colstrip No. 3 Colstrip, Montana Coal-fired 490(2) Feb. 1981 Mcnnna Power Company . Colstrip No. 4 Co! strip, Montana Coal-fired 490(2) Dec. 1981 Washington Public Power Supply System . . . . . . . . . WPPSS No. 4 Hanford, Wa. Nuclear 1,250 April 1983 Puget Sound Power & Light Ccmpan . ........ .. Skagit No.1 Sedro Woolley, Wa. Nuclear 1,288 Aug. 1984 Washington Public Power .:
Supply System . ....... WPPSS No. 5 Satsop, )Va. Nuclear 1,240 Nov. 1985 Pu2et Soun ! P(wer (: Light Company . .......... Skagit No. 2 Sedro Woolley, Wa. Nucicar 1,288 Aug. 1986 Portland General Electr Company . . . . . . . . . . . .icPebbleNo.2 Springs Arlington, Ore. Nuclear 1,260 My 1988 er the dates dcteimined by application of Milestones. The Milestones a the conception of a thermal project to the time it is placed in ecmmercial operation. Each Milestone is assigned Iml of capacity and ener;y.a s andardiud time interval from its occurrence to the most probable date t (2) Ra:ed capacity of unit available for use in West Group area of the Pacific Northwest.
"I te specific contractual role of each of the major segments of the utility industry has changed in part from 1 hase 1 of the Hydro Thermal Power Program.
Under Phase 1 Bonneville has undertaken to provide for additional power supply to its preferecce customers and industrial loads by acquiring the cutput of certain publicly owned ger.erating facilities under the " net billing" concept. Under Phase 2, (i) llonnesille's preference customers are planning to supply directly their own increasing needs in excess cf power supplied ty Bonneville through the development of additional large-scale generating projects and (ii) Bonneville had expected to sign new power sales contracts with its industrial customers to proviJa continued sales of power until December 31, 1994 However, as indicated in "Bonnesille Cor : cts" under the caption "Bonneville Power Administration", Bonneville anticipates that the prefer-ence rights of public agencies and cooperative utilities to its power resources will preclude execution of new in lustrial power saks contracts. These develorments have created uncertainties in the power supp arrangenJents for Bonneville's industrial customers at the expiration of their existing contracts. ;
The region's u;ilities, Bonneville and its industrial customers are currently discussing possible arrang mcnts necessary to assure II e region's power supply. See the caption, " Proposed Regional Power Program".
Boraesille's alternatius with respect to the sale of power and sersices to its customers are being considered i; its Role EIS, which syill also review the services Bonneville may perform for preference customers in the planning, acquisition and disposition of power and energy from large scale generating plants. Bear.:ville expects that its Role EIS will be completed in the spring of 1978.
27
Bonneville's participation in regional power planning and operations. its participation in Phase 2 of the Hydro Thermal Power Program and the adequacy of its environmental impact statements insofar as they relate to Phase 2 are the subject of two lawsuits, both in the United States District Court for the District of Oregon. On August 27,1975, the District Court rendered a decision adverse to Bonneville in one of the lawsuits. The decision has beca appealed to the U.S. Court of Appeals for the Ninth Circuit. Bonneville is preparing the Role EIS so that it will be sufIicient to enable Bonneville to proceed with its program regardless of the result of the current appeal. In the opinion of Bond Counsel and Special Counsel to the Supply System and General Counsel to Bonneville, the relief prayed for in the one suit and the judgment entered in the other will not affect the validity of, or Bonneville's obligations under, the Net Billing Agreements and the Project Agreement.
Prorosed Regional Power Program The region's utilities, states and Bonneville's irWstrial customers are currently developing a pro-gram to provide a continuing power supply to the ::rion. The proposed program presently includes cractment of federallegislation providing for a method of allocating Bonneville power; the creation of a rqional organization for load forecasting and the designation of energy resources to be acquired by Bonneville to meet the loads of the region; the purchase of power from such resources by Bonneville; a conservation program; and pooling and sale of power by Bonneville to the region's utilities aad Bonneville's indt.strial customers. Bonneville would offer, under the proposal, new power sales contracts with terms of 35 years to all preference customers, Bonneville's direct-senice industrial customers, and the region's investor-owned utilities. The PNUCC is currently considering requesting that the legislation be introduced in the United States Congress this year.
There is no assurance that the legirlation will be passed by Congress or that the program as currently constituted will remain as drafted.through the legislative process. An explicit assessment of the impact of this proposed program on Bonneville and the Participants is not available at this time and cannot be completed until the program is (inalized. The analyses of Bonneville's revenues, cost ,
and resources contained herein do not consider the concepts described above.
Regional Power Requirements and Resource's .
The lead-resources analysis for the West Group area of the Pacific Northwest is developed by the PSUCC on an area-wide basis from composite data submitted fer all regional utilities. An analysis of the most recent forecast dated April 20, 1977, of the West Group area's loads and resources is shown in the following tables:
LOADS AND RESOURCES (1)
West Group Area Peak Capability-Kilowatts (000)
Percent Year Ending Estimated Estimated Surplus or Surplus or June N Requirements Resourcest2) Deficits (3) Deficitst3)
~
i 1978 ....... 26,157 27,441 1,284 4.9
, 1979 ....... 27,350 30,460 3,110 11.4 1980 ....... 28,832 31,013 2,181 7.6 1981 ....... 30,071 32,493 2.422 S.1
< 1982 ....... 30,938 34,357 3.419 11.1 1983 .... .. 32,272 33,977 1,705 5.3 1984....... 33,378 35,161 1,783 5.3 1985 ....... 34,750 37,113 2,368 6.8 1986....... 36,198 38,814 2,616 7.2 1987....... 37,117 39,952 2,835 7.6 1988....... 37,960 39,512 1,552 4.1 28
)
c;
']
1/ -
Energy Capability-Ascrage Kilowatts (000)
~ Year Ending Estimated Percent June 30 Evimated Surplus or Surplus or Requirements . Pesourec421
,. _ Deficitsf 3p Dcticits(3)
? 1978 ....... 16,286 15,419 d (867) (5.3) 1979 ....... 16,972 15,756- (1216)
Mi (7.2) 1980 ....... 17,960 15,929 (2031) (11.3) 1981 ....... 18,820 - 16,936 (1884) (10.0) 1982 ....... 19,440 18,175 -(1265) (6.5) 1983 ....... 20,105 18,837
' (1268) (6.3) 1984 ....... '20,762 19,110 (1652) (8.0) 1985....... 21,600 20,485 (1115) (5.2) 1986 ....... 22,482 22,051 (431). (1.9) 1987....... 23,386 23,091 (295) (1.3) 1988 ....... 24,333 23.135 (1198) (4.9)
.l (1) From the Blue Book dated April 20, l'977.
l (2) After deducting reserves under PNUCC planning guidelines.
j- Reserves in each year include allow-
-j ance for load growth reserves equal to one half of the area load growth for utility type loads dur that year. Assumes critical water conditions. Substantial secondary energy is expected to be 4-available under most stream flow conditions. Resources forecast under these guidelines include the Supply System's Nuclear Projects Nos. 3,4 and 5, Portland General Electric Compaay's Peb Springs No.1, and Puget Sound Power & Light Company's Skagit Nuclear Units Nos. I and 2, which are not yet licensed for construction. .. ,
k (3) After supplying all area interruptible loads (including Bonnoi!!c's industrial interruptible loads) which range from 1,006 to 1,195 megawatts on peak and 975 to 1,159 average megawatts o including associated line losses. Parentheses denote negatise values.
If current drought conditions continue, the deficits of energy sitown in the foregoing table will hav to be made up from purchases from outside the region, operation of high cost thermal plants within t region, or from curtailment of electric loads within tiie region. Accordingly, both short range a range conservation efforts are under way. The governors of the Pacitic Northwest st..tes together with Donnesillebyand consumption 10%.other utilities in the region have asked all citizens to soluntarily reduce elec The proposed regional power program described above includes a strong censervation element designed to conserve energy in the long term. The etiect of these efforts on electri energy requirements, however, cannot be foreseen at this time, as the shift from other forms of e to electric energy may a:Tect the results of electric energy conservation.
Tile PARTICIPANTS AND Tile CO31 PANES Of the 110 preference customers of Bonneville,103 are Participants, of which 28 are muni 28 are districts and 47 are cooperatives.
The Participants have contracted to purchase 100Fe of the Supply S) stem's Ownership Share of the Project's capability,less any amounts of energy sold to c industries pursuant to the Power Sales Agreement.
The Companies (Pacific Power & Light Company, Portland General Electric Company, Puget Sound Power & Light Company and The Washington Power Cotupany) own 30% of the Project pursuant to the Ownership Agreements.
29 i
m _
n-The net billing errangements between the Supply System, the Participants and Bonneville for the Supply System's Ownership Share of the Project and the other net billed projects will increase the amount of capacity and energy available te_ the Federal System by the amount of their output. This, in turn, L w::1 make more capacity and energy available frc n Br nneville to all of its customers, including the
' Participants. Each of the Participants is a statutorf preference customer of Bonneville and, as such,
' has a priority over non-preference customers on power sold by Bonneville frem the Federal System.
In 1976, the Participants served approximately 1,108,000 power customers with total sales of energy of approximately 39.6 billion kilowatt. hours.- Operating revenues of the Participants totaled S406,312,026. Of that amount, districts', retenues were S176,813,363, municipals' revenues were
$160,687,450 and the cooperatives' revenues were S68,793,213. The centerfold map shows the areas served by the Participants.
Exhibit I attached shows the number of customers and gross revenues in 1976 for each Participant Table I and Company and indicates its' Participant's or ownership share of the Project capability.
attached to Exhibit II hereto is a summary of financial and statistical data by class of utility.
THE NET BikLING AGREEMENTS Each of the Participants has executed a Net Billing Agreemer.t with the Supply System and Bonne-ville. Many of the provisions of the Net Billing Agreements have been summarized under the caption
" Security for the Bonds" above. A summary of certain additional provisions of the Net Billing Agree-ments follows. - The full text of the ic.m of Agreements may be obtained from the Supply System.
'The capitalization of any word or words which is not conventionally capitalized (e.g. Project, Participants) indicates that such words are defined in the Net Billing Agreements. (The same practice is followed in the summaries of the Project Agreement, Ownership Agreement and Resolution which follow.)
s Term Each Agreement became effective upon execution and delivery and will continue in effect until terminated by the Supply System (see the subcaption " Termination").
Although the Net Billing Agreements may be terminated prior to the maturity of the Bonds, the obligation of each of the Participar.ts there.mder.to pay its proportionate share of debt service on the I:onds shall centinue until the Bonds have beeri t'etired, and Bonneville will continue to be obligated to cfiset or credit these payments against the bills rendered pursuant to the Participant's Bonneville Contracts.
Cwac ,hl,i and Operation
, The Supply System will perform its duties, exercise its rights under the Ownership Agreement and
.use its best efforts to construct, operate and maintain the Project and finance its interest therein, in '
accordance with Prudent Utility Practice.
Sale, Purchase v'id Assi;,nment The Supply System sells and each Participant purchases its Participant's Share and in turn assigns its Participant's Share to Bonneville.
' In each Contract Year, the Participant's Share is the percentage of the Supply System's Ownership Share of Project Capability specified for such year in Exhibit A to the Net Billing Agreements. Such l
30 I
_ _ - . - - . _ . - - - . -. , .- , . - - .X
Shares for the Contract Year beginning July 1,1982, are shown in Exhibit I attached hereto. During the period through June 30,1984, the amount of power made available to each Participant from the Supply '
System's Ownership Share of Project Capability is reduced by sales of output under the Power Sales Agreement. Two or more Participants may agree to a reallocation of their Participant's Shares so long as, among other requirements, the aggregate of the increases is equal to the aggregate of the decreases and the real'ocation does not cause Bonneville's estimate of the payments to be made by a Participant to the Supply System to exceed 86.95% of Bonneville's estimate cf its billings to the Participant.
The prov! ions of the Net Billing Agreements with respect to payments are summarized under the caption " Security for the Bonds" above.
If Bonneville is unable to satisfy its obligation to an affected Participant by net bi!!ing, assignment or cash payment and determines that this will continue for a significant period, the affected Participant may direct that all or a portion of the energy associated with its Participant's Share be delivered by the Supply System for the Participant's account at a specified point of delivery either for the expected period of such inabi:ity or the remainder of the term of the Net Billing Agreement, whichever is specified by the Participant s.h a it elects to have such power and energy delivered to it. The amount of such delivery will be limited to the amount of the Participa'at's Share for which payment by Bonneville c nnot be made. The Participant's obligation to assign its Participant's Share to Bonneville and Bonneville's obligation to make payments to the Participan.t wdl then be appropriately modified.
Termination if the Supply System is unable to participate in ownership, construction, or operation of the Project due to li ensing, financing, construction or operating conditions which are beyond its control, or if the Supply System is in default under the Ownership Agreement and has been requested by Bonneville to give notice of termination, or if the owners of the Project invoke the procedure to end the Project set forth in the Ownership Agreement, the Supply System shall give notice cf termination of the Net Billing Agreements effective on the date of such notice.. The Supply System shall then terminate its activities relating to construction and operation of the Project and sha!! undertake the salvage, discontinuance, decommissioning and disposition or sale of its ownership interest in the Project, all in accordaace with the Ownership Agreement. After such termination, the Supply System will make monthly accounting statements to Bonneville and each Participant of all costs associated with such termination, including debt scnice. The monthly accounting statements will credit against such costs all amounts received by the S pp' System frc.n the disposition of the Supply System's Ownership Share of the Project assets.
Such mo: ily accounting statements will continue at least until all Bonds have been paid or funds are set aside for their payment. If the monthly accounting statements show that such costs exceed such credits, the 1 articipant will pay its portion of such excess costs to the Supply System. The payments will be made at times and in amounts sufficient to discharge on a current basis the Participant's Share of the amount which the Supply System is rcquired to pay into the various funds provided in the Bond Ilesolu-tioa for delt service and all other purposes.
Stodificatica (f A;r ement Th: Net Billing Agreements shall not be amended, modified or otherwise changed by agreement of the p trties in an. nanner that will impair or adverse!y atiect the security atTorded by its provisions for the paymcat of the principal, interest and premium, if any, on the Project Boads.
Applicability of CtherInstruments The Net Billing Agreements are made subject to the terms and provisions of the Ownership Agree-ment, the Bond R: solution and a!! licenses, permits and regulatory approvals necessary for the ownership, construction and operation of the Project.
31
r hovisions Required by Statute or Executive Order The Net Billing Agreements contain certain provisions required by Statute or Executive Order and ;
relating to contrset work hours and safety standards, convict labor, equal opportunity employment and the interest of a member of Congress. Under the provisions of Executive Orver 11246 of September 24, 1965 and the Rules and Regulations and relevant Orders of the Secretary cf Labor thereunder, the Supply _ System has been granted a liroited exemption from the provisions permitting cancellation, ter-mination, and suspension of the Net Billing-Agreements in the event of non-compliance with the L ual 4
Opportunity Clause contained in the Net Billing Agreements, by the Director, Odice of Federal Contract Compliance, U. S. Department of Labor.
THE PROJECT AGREEMENT
- The Supply System and Bonneville have entered into the Project Agreement. That Agreement, am og other things, contains provisions with respect to J. financing, construction, operation and mamtenance of the Project, and the making of any replacements, repairs or capital additions thereto, and budgeting under the Net Billing Agreements. A summary of some of the provisions of the Project Agreernent follows.
A copy of the Project Agreement may be obtained from the Supply System.
Tcrm The Agreement became effective upon its excet$ tion and delivery and will terminate when the Net Billing Agreements terminate.
Design, Construction, Operation and Maintenance of the Project The Supply System agrees among other things (i) to perform its duties and exercise its rights under the Ownership Agreement and the Project Agreement in acccrdance with Prudent Utility Practice; and (ii) to keep Bonneville infermed of all signific;mt m9tters wi:h respect to construction or operation of the Project, where practicable in time for Bonneville to comment thereon before decisions are made, and (iii) to confer with Bonneville during the development of the Supply System's proposals for such matters when practical to do so.
- Bonnevi!!e will me its best efforts to construct. operate and maintain necessary faciities to inter-connect the Project with the Federal System so as to be ready to receive Project generatioa on or before the initial test and operation of the Project.
- Financing ,
The Supply System shall use i:s best efforts to issue and se!! Bonds to finance its share of the Project costs and the completion thereof, as such costs are defined in the Bond Resolution, and to finance its I share of the cost of any capital additions, renewals, repairs, replacements or modifications to the Project; provided. however, dat such Bonds may then be legally issued and sold.
A!! Project Bond Resolutions are subject to approval by Bonneville, and Bonneville has approved the Resolution and the Supplemental Resolution.
Representation by Bonnesille on the Committee Established Pursuant to the Ownership Agreement The Supply System will appoint a member designated by Bonneville to the Committee established pursuant to the Ownership Agreement, who shall have the right to vote the lesser of 50cc of the Supply System's Ownership Share or the sum of the Participant's Shares asugned to Bonneville under the Net Billing Agreements at the beginning of the Contract Year.
The Supply System will nat proceed with the fo!!owing elective items under the Ownership Agree- :l ment without the concurrence of Bonneville's representative on the Committee: (i) notice to repair the ,
32 '
l l
4 4
Project if the cost of repair is in excess of 207c o ' f the depreciated value of the Preject, (ii) renewals
- and replacements not necessary to assure design capability and additions not required by governmental agencies, (iii) construction of the Project if any other party to the Ownership Agreement does not participate for the reasons set forth in the Ownership Agreement.
1 Budgets Bo mesille has reviewed the Sup' ply System's Construction Budget. Promptly after the approval of any revised construction budget pursuant to the Ownership Agreement, the Supply System shall submit
. to Bonneville a revised Construction Budg:t. The budget shall include the Supply System's share of construction costs pursuant to the Ownership Agreement end all of the Supply System's other costs related to construction and financing of the Project. The updated Construction Budget for the succ calendar year and revised Construction Budgets for the current calendar year shall become effective unless disapproved by Bonneville within 30 days, and 7 days, respectively.
Prior to the Date of Commercial Operation and the beginning of each succeeding Contract Year, the Supply System shall submit an Annual Budget showing the Supply System's Ownership Share o operating costs under the operating budget adopted pursuan: to the Ownership Agreement, its cost of fuel and all its other costs related to its Ownership Share of the Project. The Annual Budget shall be revised during the Contract Year if necessary.
The. Annual Budget and any revised Annual Budget i shall become effective unless disapproved by Bonneville within 30 days and 7 days, respectively.
Bonds for Replacements, Repairs and Capital Additions
If in any Contract Year the amounts in the Annual Budget for renewa's, repairs, replacements and
' betterments and for capital additions necessary to achieve design capability or required by govern mental agencies (" Amounts for Extraordinag Csts"). whether or not such amounts are costs of cperation or costs of construction, exceed the amount of reserves, if any, maintained for such pu pursuant to the Bond Resolution plus the proceeds of insurance, if any, available by reason of loss or damag: to the Project, by the lesser of:
(1) $3,000,000 or (2) an amount by which the amount of Bonnesille's estimate of the total of the net billing credits available in such Contract Year to the Participants and the amounts of.such reserves and insurance proceeds, if any, exceeds the Annual Budget for such Contract Year, exclusive of Arno for Extraordinary Costs; the Supply System will, in good faith, use its best efforts to issue and sell Bonds to pay such ex .
Applicability of Other Instruments .
The Project Agreement is made subject to the ter.ns and provisions of the Bond Resolution an licenses, the Project. permits and regulatory approvals necessary for the ownership, construction and o Prosi3 ions Required by Statute or Executive Order Th: Project Agreement contains certain provisions required by Statute or Executive Under Order.
the prosisions of Executive Order 11246 of September 24, 1965 and the Rules and Regulations and r,:!evant Orders of the Secretary of Labor thereunder, the Supply System has been granted a lim exemption frv tH provisions permitting cancellation, termination, and suspension of the Pro Agreement in the event of non-compliance with the Equal Opportunity Clause contained in s meat by the Director, Odice of Federal Contract Compliance, U. S. Department of Labor.
33 s _
r>
TIIE OWNERSIIIP AGREEMENT The following is a summary of certain provisions of the Ownership Agreement and does not purport to be complete. A copy of the Ownership Agreement may be obtained from the Supply System.
Onnership of the Project The Project shall be owned by the Parties as tenants in common. The Supply System has an undivided interest of 70% and Pacifie Power & Light Company, Portland General Electric Company, Puget Sound Power & Light Company and The Washington Water Power Company have undivided interests of 10%,10%,5% and 5% respectively. A Party's Ownership Share may be adjusted upon the occurrence of certain events, as described below.
Each Party promptly and with due diligence shall take all necessary actions and seek all regulatory approvals, licenses and permits to carry out its obligations under the Ownership Agreement.
The Parties waive the right to partition of the Project.
The duties, obligations and liabilities of the Parties are several and not joint or co!!ective, and none of the Parties shall be jointly or severally' liable for the acts, omissions, or obligations of any of the other Parties.
The Supply System shall construct, operate and maintain the Project and shall have possession and control of the Project for all the Parties.
Committee .
There shall be a Committee composed of seven members, three to be appointed by Supply System (one of whom will be designated by Bonneville pursuant to the Project Agreement), and one member to be appointed by each other Party. Each Committee member shall have the right to vote that part of the Ownership Share of the Party appointing him'as designated in the notice of appointment, and the member appointed by Bonneville shall have the right to vote the portion of the Supply System's Owner-ship Share provided in the Project Agreement.' The total voting rights of the members of the Committee appointed by each Party shall be equal to such Party's Ownership Share.
The Supply System shall keep all members of the Committee informed of all :Ignificant matters with respect to planning. construction, operation or mainte.,ance of the Project, and when practicable, in time for members to comment thereon befcce decisions are made, and shall confer with the Committee, or separately with members thereof, during the development of the Supply System's proposals regarding such matter; when practicable to do so. Uran request of any Committee member, the Supply System shall furnish or make available to all members of the Committee, with reasonable promptness and at reasonable times, any and all other in!ctrration relating to the planning, canstruction, operation or maintenance of the Project.
The Supply System shall submit each of the matters listed below to the Committee for approval, which approval must be by a vote of Committee members having combined Owners!4ip Share voting rights of more thn 80%t Determir..uot. of the Mmimum Capability of the Project Any proposal made by Committee members, appointed by Parties other than Supply System, hadng Ownershipshare voting rights of 20% or more, or by the Committee member designated by Bonneville Constru: tion budgets and budgets of Annual Costs and changes therein Any increase in the working fund in the Construction Trust Account or the Operating Trust Account describtd below 34 l
l 1
.+ 1
Award of any contract or approval of any change order,in either case in excess of $500,000 Fuel Plan, changes therein and determinations relating thereto $
Scheduled outages .
Insurance coverage, including limits and choice of insurers Estimate of cost of repair or damage to the Project if in excess of S1,000,000, and estimate of the value of the Project without repair Sales of salvage materials in excess of such minimum amount as is established by the Committee.
If any of the above matters cannot be resolved by the required vote of the Committee, procedures have been established to resolve the issue in accordance with Prudent Utility Practice.
" Prudent Utility Practice" means any of the practices, methods and acts, which,in the exercise of reasonable judgment in the light of the facts (including practices, methods and acts engaged in or ap-proved by a significant portion of the electrical utility industry prior thereto) known at the time the decision was made, would have been expected to accomplish the desired result at the lowest reasonable cost consatent with : .iability, s fety and expelition. P;udent Utility Practice is not limited to the opti-mum practice, method or act, but rather a spectrum of possible practices, methods or acts. In evaluating whether any matter conforms to Prudent Utility Practice there shall be taken into account (i) the fact that Sepply System is a mur' -1 corporation and operating agency under the laws of the State of Wash-ington; and (ii) the object!. to integrate the Project Capability with the generating resources of the Federal Columbia River Power System and the generating resources of other systems operated by the Parties to nchieve optimum utilization of the resources of such systems.
Supply System shall submit the following additional matters to the Committee and shall proceed on such ma'tcrs only upon unanimous approval of the Committee:
(i) Selection of the site of the Project (ii) Selection of the type of nuclear steam supply system (iii) Selection of the methcd of heat disposition (iv) Award of contracts for nuclear steam supply system and turbine generators (v) Selection. of an arch'tect engineer (vi) Extension of insurance to any additional unit or generating project (vil) Capital additions to the Prciect after the Date of Commercial Operation which are not necessary to assure design capability, or are not required by governmental agencies.
If the Committee is unable to reach unanimous agreement within sixty days after submission by Supply System of any of the matters (i) through (v) lis'ed above, then unless the Committee unanimously agrees cuerwise, Supply System shall notify the Parties in writing and they shall then terminate the Project, or one or more of the Parties may elect to proceed with the Project upon reimbursing the non-electir g Parties for their Costs of Ccastruction and Fuel. l*pon such reimbursement, the interest of the nen-electing Parties in the Project shall vest in the electing Parties. Each of the Parties has agreed to the Sepply System's determinatien of the matters lis:ed in (i) thrcugh (v) above.
C2nstruction, Licenst g, Operation and Ma'ntenance ne Supply Sys: m shall (a) take wl:atever action is necessary or appropriate to seek and obtain all licenses, permits and other rights and regulatory approvals necessary for the construction, operation 35 I
and msintenance of the Project; (b) prosecute construction of the Project in accordance with Prudent Utility Practice, NRC licensing requirements, any applicable Federal or State laws and regulations there-under, and plans red specifications for the Project pnpared or recommended by the Project architect-
- engi.:eer, and sc as to schedule the Date of Co n nercial Operation as near as may be to September 1, 1981; (c) operate and maintain the Project in accordance with Prudent Utility Practice, giving due consideration to the recommendations of the Committee and the manufacturer's warranty requirements and in such a manner as to meet the requirements of the NRC and other government agencies having jurisdiction, to safeguard the health and safety of persons and safety of property, and, as necessary in the normal course of business, to assure the continued operation and maintenance of the Project.
Construction and Operating Payments Construction Budgets and budgets of Annual Costs, except Fuel costs, and revisions thereof shall be submitted to the Committee for approval at the times specified in the Ownership Agreement.
Costs of Construction and Annual Costs, including Fuel costs, shall be paid from the Construction Trust Account and Operating Trust Account, respectively, which the Supply System is required to estab-lish and ma:ntain as separate accounts in a bank located in Washington meeting all requirements imposed -
upon depo itories for any of the Parties. All moneys received by the Supply System under the Owner-ship A;reement shall be deposited in the appropriate Trust Account. Payments by the Parties shall be made at the times specified in the O'vuership Agreement.
The Supply System shall keep up-to-date books and records of all financial transactions and other ar. nreme:.ts in carrying out the terms of the Ownership Agreement. All accounts shall be so kept as to per..
co: version to the system of accounts prescribed for electric utilities by the Federal Power Cem-mission.
The Supply System shall cause*all books and records to be audited by independent certified public accountants of national reputation acceptable to all the Parties at approximately annual intervals and when accounts are dosed. Copies
- of stich audits shall be supplied to each Party. Each Party shall have the right to examine and copy all plans, specifications, bids and contracts relating to the Project.
Fu.I and Scheduling The Supply System shall arrange for Fuel in amounts so that each Party may utilize its Ownership Share of th Project la a manner which such Party estimates is best suited to its individual system needs. .
Each year the Supply System will prepare and submit to the Committee for approval a ten-year fuel nanagement plan, which shall be revised as reasonably required to reflect changes in conditions. Each Party shall furnish to the Supply System forecasts cf its generation requirements from the Project to be used in preparing each Fuel Plan.
At the time of each fueling, the Supply System shall submit to the Committee for approval its determination of the next fueling date (the " Forecast Refueling Date"), the kilowatt-hours of net energy asailable to each Party to such Date (the " Energy Entitlement") and the cost per kilowatt-hour of its E ergy Entitlement. Each Party's Energy Entitlement shall equal'as nearly as practicable such Party's forecasted generation requirements.
Generally each Party shall be entitled to receive, as scheduled by it, its Ownership Share of the Project Capability, and each Party shall schedule energy from the Project in such a manner that its Energy Entitlement is adequate to maintain such Party's Ownership Share of Minimum Capability until the next Forecast Refueling Date.
Each Party shall order at least its Ownership Share of the Fuel necessary to insure operation at Minimum Capability to the Forecast Refueling Date.
Any Party may (i) order less than its Ownership Share of the Fuel necessary to insure operation at Minimum Capability to the Forecast Refueling Date, (ii) require that such Date be advanced or delay 36
i
-(iii) use the Energy Entitlement of other Parties, or (iv) require that the Project not be operated, upon arranging for equivalent alternate capacity and energy for the other Parties, but any such action shall not '
adversely afIect the availability of capacity and energy to which any other Party is entitled from the -
Project or any other Party's costs for such capacity and energy. ' l The Supply System shall schedule Project outages, other than fueling outages, and submit them to the Committee for approval as far in advance as practicable, but may shut down the Project to meet governmental requirements or to avoid hazard to the Project or any person or property.
Insurance Supply System shall procure at the earliest practicable time and tiJrcafter maintain in force for the benefit of the Parties such insurance coverage for the construction, operation, maiatenance and repair of the Project as the Committee may determine, but not less than shall be required under the contract to be executed with the Project Architect Engineer, and not less than will satisfy the require-raents of the NRC, and conform to Prudent Utility Practice.
Liabilities; Waiver of Subrogation Each of the Parties releases each of the other. Parties from any claim for loss or damage, including consequential loss or damage, arising out of the construction, operation, maintenance, reconstruction, and repair of the Project due to negligence, including gross negligence, but not any claim for loss or damage resulting from breach of any contract relating to the Project, including the Ownership Agree-ment, or for willful or wanton misconduct. Any loss or expense to the Parties or any Party, other than damages to any Party resulting from loss of use and occupancy of the Project or any part thereof, result-ing from the Project and based upon injury to or death of persons or damage to or loss of Project property and property of other parties, to the extent not covered by collectible insurance, shall be charged to Costs of Construction or Annual Costs, whichever may be appropriate.
Each Party shall cause its insurers to waive any rights of subrogation against each of the other Par:ies, its agents and employees, for losses, costs. damages'or exrenses arising out of the construction, operation, maintenance, reconstruction or repair of the Project.
Uncontrollable Forces No Party shall be considered to be in default in the performance of any of the obligations under the Ownership Agreement other than the obligation to pay its Ownership Share of costs and cxpenses,if failure of performance shall be due to uncentrollable forces, defined in the Ownership Agreement as any cause beyond the control of the Party atTected and which, by the exercise of reasonable diligence, the Party is anable to overcome. Any Party rendered unab!c to fulfil! any obligation by reason of uncon-trcilable forces shall exercise due diligence to remove such inability with all reasonable dispatch.
Damage to the Project If the Preject sutTers damage resuidng from causes other than ordinary wear, tear or deterioration to the extent t'"t Supply System's estimate of the cost of repair is less than 20"4 of the then depreciated value of the
- oject, and if the Parties do not unanimously agree that the Project shall be ended (see the caption "End of Project" below), Supply System shall promptly submit a revised Construction Budget or budget of Annual Costs, as appropriate, and shall proceed to repair the Project, and each Party shall pay its Ouership Share of the cost of such repair.
If the Project suffers damage to the extent that Supply System's estimate of the cost of repair ex::eds 20c c of the then depreciated value of the Project, computed according to the Ownership Agree-ment, Supply System shall determine the estimated fair market value of the Project if it is then terminated witnout repair. Thereafter, each Party which gives notice in writing to each of the other Parties of its 37
desire that the Project be repaired, shall pay a part of the total cost of repair in the proportion that its Ownership Share bears to the total of the Ownership Shares of all Parties giving such notice. If any Party has given such notice, the Ownership Share of each Party which has not given notice shall be reduced at the end of each month to an Ownership Share deteenined by multiplying such Party's Owr.er-ship Share prior to such loss by a fraction the numerator of which is the estimated fair market value of the Project if it is terminated without repair, and the denominator of which is said fair market value plus the actual expenditures for repair. The amount of such reduction shall be proportionately added to the Ownership Share of each Party giving such notice.
. If the Project suffers damage to the extent that Supply System's estimated cost of repair exceeds 20% of the then depreciated value of the Project and no Party gives the notice referred to above, the Project shall be ended.
Default Upon failure of a Party to make any payment when due, or to perform any obligation herein, any other Party may make written demand upon said Party, and if said failure is not cured within 10 days from the date of such demand, it shall constitute a default at the expiration of such period. Any nondefaulting Party may take any action,in law or c.luity, including an action for specific performance, to enforce the Ownership Agreement and to recover for any loss, damage or payment advances incurred by reason of such default.
Assignment The Ownership A'greement shall be binding upon and shall inure to the benefit of successors and assigns of the Parties; provided, however, that no transfer or assignment of other than all of a Party's interest in the Project to a single entity shall operate to give the assignee or transferee the status or rights of a Party under the Ownership Agreement, and no transfer or assignment thereunder shall operate to incease the number of members on the Committee. Transfer or assignment shall not relieve a Party of any obligation under the Ownership Agreement except to the extent agreed to in writing by the other Parties.
End of Project When the Project can no longer be made cap'able of producing electricity consistent with Prudent Utility Practice or the requirements of governmmtal agencies having jarisdiction or is no longer licensed by the NRC, or when the Project is ended as a reult of damage thereto as described above, Supply System shall sell for removal all saleable parts of the Project, exclusive of Fuel, to the highest bidders. After deducting all costs of ending the Project, Supply System shall close the appropriate Trust Account and, if there are net proceeds, distribute to each Party its Ownership Share of such proceeds. Supply System shall liquidate the Fuel, and after making all required payments and receiving all due receipts, shall disburse the proceeds to the owners as their interests appear. In the event the costs of ending the Project exceed available funds, each Party shall pay its Ownership Share of such excess as incurred.
. If one or more of the Parties is rendered incapable of proceeding with its obligations under the Ownership Agreement by reason of (i) inability to finance or (ii) failure to obtain necessary legal c.uthorizations, including regulatory approvals, which condition is beyond the ability of such Party to remedy by reasonable means within a reasonable time, one or more of the other Parties may, within 90 days after r.otice by a Party of the occurrence of the condition, elect to proceed with the Project without the disabled Party; provided, however, that if the disabled Party is proceeding with all due diligence to remove such disability, the election sha:1 not be made until 90 days after final order er other final dis-position of the matter; provided further, that if delay would cause substantial additional cos's to be incurred if the election were so postponed, the electing Parties may proceed as necessary to avoid or muunuze delay, preserving the rights of the disabled Party until final order or other find disposition.
38
i The Parties so electing shall promptly reimburse each non-electing Party for its Costs of Construction and costs of Fuel, if any, incurred under the Ownership Agreement. Upon such reimbursement, the non-electing Parties' interest in the Project shall forthwith vest in the electing Parties in such proportion as the electiug Parties may agree.
DESCRIPTION OF 1977 BONDS AND CERTAiN PROVISIONS OF TIIE RESOLUTION AND SUPPLE 3IENTAL RESOLUTION The following summary is a brief outline of certain provisions contained in the Resolution and the Supplemental Resohtion and is not to be considered as a full statement thereof. The summary is qualified by reference to and is subject to the Resolution and the Supplemental Resolution, copies cf which may be examined at the principal offices of the Supply System, the Bond Fund Trustee and the Paying Agents for the 1977 Bonds.
The Bonds and the 1977 Bonds The Resolution creates and establishes alt issue of Bonds of the Supply System which may be issued frc:n time to time to pay the Supply System's Cost of Construction of the Project and to establish reserves. The 1977 Bonds are a part of such issue.
The 1977 Bonds will be dated July 1,1977, and will be issued in coupon form in the denom-ination of 55,000, registrable as t principal only, and in fully registered form in denominations of
$5,000 and any multiples thereof. Principal and semi-annual interest (January 1 and July 1, beginning January 1,1978) on coupon 1977 Bonds and principal on registered 1977 Bonds will be payable at the option of the holder at Rainier National Baak, Seattle, Washington, Harris Trust and Savings Bank, Chicago, Illinois, and Chemical Bank, New York, New York. Payment of interest on fu!!y registered 1977 Bonds will be made by Seattle-First Natiodal Bank, Seattle, Washington. which has been appointed the Bond Fund Trustee. Coupon 1977 Bonds and fully registered 1977 Bonds are interchangeable at the oflice of the Bond Fund Trustee.
The 1977 Bonds will mature in the years and amounts and bear interest at the rates per annum shown on the cover page hereof. The 1977 Bonds maturing on July 1,2009, and July 1,2018, will have the benefit of a Bond Retirement Account to operate at the times and in the amounts set forth below.
(Res. Sees. 4.5, 4.7; Supp. Res. Sec. 2).
Redemption: The 1977 Bonds will be subject, to redemption prior to maturity at the option of the Supply System on and after July 1,1987, in whole at any time, or in part on any interest payment date in inverse order of their maturities and by lot within a maturity, at the respective redemption prices (expressed as percentages of the principal amount) set forth below, together with accrued interest to the date fixed for redemption:
Period Durine which Redeemed Redemption iBoth Dates inclusi e)
Prices July 1,1987 to June 30,1990 ................ 103 %
July 1,1990 to June 30,1995 ......... ... .. 102 July 1,1995 to June 30,2000 ................ 101 July 1, 2000 and thereafter . . . . . . . . . . . . . . . . . . 100 The Supply System further reserves the right to redeem prior to maturity (a) the 1977 Bonds maturing on July 1,2009 and on July 1,2018 in part on any interest payment date on and after January 1, 2001, and on and after January 1,2010, respectively, upon payment of the principal amount thereof from sinking fund installments as described below and (b) the 1977 Bonds maturing on July 1,2018,
. in part on any interest payment date on and after January 1,1986, upon payment of 101% of the 39
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principal a,ount thereof from excess construction fund proceeds, in each case together with accrued interest to the date fixed for redemption. ;
1 The Supply System also reserves the right to redeem the 1977 Bonds at any time prior to maturity, in whole at any time, or in part on any interest payment date in inverse order of their maturities and by lot within a maturity, from proceeds received by the Supply System from the sale or disposition of properties of the Project or in the event the Net Billing Agreements are terminated as prcrided therein, upon payment of the principal amount thereof together with accrued interest to the date fixed for redemption.
Notice of redemption of 1977 Bonds is to be given by publication of a notice at least once on any business day of the week in a daily financial paper or in a daily newspaper of general circulation printed in the English language, published in each of the cities of Seattle, Washington, Chicago, Illinois, and New York. New York. the date of publication in each case to be not less than 30 nor more than 60 days prior to the date fixed for redemption. The Bond Fund Trustec may approve substitute publication if a required publication cannot be made. Notice of redemption of 1977 Bonds is also to be mailed not less than 25 days nor more than 60 days before the redemption date to the registered owners of 1977 Bonds which are to be redeemed, but such mailing shall not be a condition precedent to redemption and failure to mail or receise any such notice shall not affect the validity of the redemption proceedings.
(Res. Secs. 5.2,5.3; Supp. Res. Sec. 3). .
Sinking Frmd Installments: The 1977 Bonds due July 1, 2009 are to be retired by mandatory sinking fund installments accumulated in the Bond Retirernent Account in the Bond Fund in amounts sutlicient to redeem on July 1 of each year, at the principal amount thereof, the principal amount of such Bonds specified for'each of the years shown below:
Year Amount
- Year Amount 2001 . ....... ... .. 55,545,0.00 .
2006 . ..... . .. .... $7,395,000 2002 ...... . . .... 5,S70.000
- 2007 ....... ......... 7,S35,000 2003 ..... ..... ..... 6,220,000, 2003 ....... .... 8,300.000 2004 ...... ........... 6,590,000 2009 ............ .... 8,800,000 2005 . ........ ... ... 6,9SO,000 The 1977 Bonds due July 1, 2018 are to be retired by mandatory sinking fund installments cecumulated in the Bond Retirement Account in the Bond Fund in amounts sufficient to redeem on July 1 of each > car, at the principal amount thereof, the principal amount of such Bonds specified for each of the years shown below:
Year Amount Year Amount 2010 . . . . . . . . . . . . . . . . S 9,3 25,000 2015 . . . . . . . . . . . . . . . . $ 12,475,000 2011 ... .... ......... 9,S SO,000 2016 ................. 13,235,000 2012 .................. 10,475,000 2017 .... ........ ... 14,025,000 2018 ..... ............ 14,870,000 J013.................. 11,105,000 2014 .................. 11,770,000 The sinking fund installments for the 1977 Donds due July 1, 2009, and due July 1, 2018, may be applied to the redemption of such Bonds on July 1 of each of the above years or on the imme-diately preceding January 1. (Supp. Res. Sec. 2).
Subsequent Series of Bonds The Supply System covenants to issue additional series of Bonds to the extent required to pay the Supply System's Cost of Construction of the Project and to establish the reserves required by the Reso-40 m
~ . ._
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Ll'ution to the extent such reserves are not funded from other sources. Such Bonds may be issued upeq compliance with the following pri; cipal conditions:
(1)-There shall have been delivered to the Supply System a certificate of the Bond Fund Trustee that no default exists in the payment of principal of and interest on any outstanding Bond, and there has been delivered to the Bond Fund Trustee a certificate of the Secretary of the Board of Directors of the Supply System that the Net Billing Agreements and Project Agreement are in full force and effect and have not been amended in any manner adversely affecting the Supply System and the holders of the Bonds.
.(2) Such Bonds shall be either serial or term bonds or a combination thereof, with the final maturity date to be no later than July 1,2018.
(3) The Construction Engineer shall certify as to the amount expended for, and the amount remaining available to pay, the Supply System's Cost of Construction and the times funds will be required to pay such Cost, and, if such Cost of Construction has increased, give a statement of the reasons for such increase. (Res. Sec. 3.4).
Additi:nal Obligations Other Than Bor.ds ,
The Supply System may also issue additional bonds. ranking on a parity with the Bonds and
- secured by an equal charge and lien on the revenues of the Supply System's Ownership Share of the ~
Project (" additional bonds") for the following purposes:
(1) to comply with an order of any governmental agency with authority to issue, make or
- enforce an order or decision requiring the installation of additional facilities or modifications at or in the Project; -
- (2) to comply with requirements of the Project Agreement for the issuance of additional bonds t to pay for renewals, replacements and betterments and for capital additions and betterments necessary to achieve design capability, or required by any governmental agency or authorityt (3) to provide funds for capital additions and betterments to the Project which in the opinion of the Consul
- ing Engineer are necessary or desirable to improve operating reliability or to reduce
- unit power costs;
[ (4) to provide funds for the purchase of Fuel for the Projectt and (5) to refund at any time any Bonds or additional Bonds. .
The Supply System may not issue any additional bonds,unless prior to or simultaneously with the issuance cf such bonds the Supply System has in effect valid written contracts for the sale of its Ownership Share of the power and energy, including capability, of the Project which, in the opinion of the Supply
- System and of the Consulting Engineer, will produce revenues at least sufficient to enable the Supply System to meet all of its obligations under the Resolution. Such contracts (1) must be for terms extend-ing at least to the final maturity date of the Bonds, (2) unless such contracts are with the parties to the Net Billing Agreements, must in the opinion of the Consulting Engineer provide a sound basis for the issuance of such additional bonds and (3) must contain terms with respect to payment for the Supply
. System's Ownership Share of the Project power and energy, including capability, and the items of annual power costs to be included in the price f ar such power and energy which are no less favorable to the Supply System than the terms of the Net 11illing Agreements.
Additional bonds may be either serial or term bonds or a combination theicof, with the final maturity date (i) in the case of refunding bonds, to be not later than the final maturity of the Bonds or
- i. additional bonds to be refunded, and (ii) in the case of all other additional bonds, to be a date which is not later thr.a the expiration of the service life of the facilitics or Fuel, as the case may be, being i
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financed. A separate bond fund is to be created and payments into such bond fund for the retirement of ."
such additional bonds are to commence within 5 yeart from the date thereof or, in the case of refunding . i bonds, at the time when payments with respect to the retirement of the refunded Bonds or additional bonds would be required if such Bonds or additional bonds were not refunded. From the proceeds of sale of additional bonds or revenues of the Supply System availab'e at the time of issuance, an amount equal to the maximum amount c' interest to become due on such bonds in any six-month period is to be deposited in the reserve account in such bond fund, and such account is to be maintained at such amount; provided that such amount, in the case of refunding bonds, may be so deposited at the time when the refunded Bonds or additional bonds are no longer d:emed outstanding and may be accomplished at that
~
time from transfers from the Reserve Account for the Bonds or the reserve account for the add.4nal bonds being refunded. (Res. Sec. 9.6).
Construction Fund; Application of Bond Proceeds The Resolution establishes a Washington Public Power Supply System Nuclear Project No. 3 Construction Fund (the " Construction Fund") to be held by the Supply System.
The proceeds of sa:e of the 1977 Bonds and subjequent Series of Bonds will be applied as follows:
- (a) An cmount equal to the interest on such Bonds from their date to September 1,1982, willi e credited to the Interest Account in the Bond Fund.
(b) The balance of the Bond proceeds will be deposited in the Construction Fund. 4 The Resolution provides.that if working capital and the Reserve Account requirements are not provided for by September 1,1982, or the Date of Commercial Operation, whichever is earlier, or if the Reserve and Contingency Fund requirements are not provided for by the Date of Cornmercial Opera-tion, thr ugh revenues received pursuant to the Net Billing Agreements, such amounts will be provided from Bond proceeds.
- 7, ,. '
Moneys in th: Constru: tion Fund are to be tised to pay the Supply System's Cost of Construction of the Project, which includes the Spply System's. Ownership Share of the costs of constructing and t.cquiring the Project, obtainine permits and licenses and acquiring property and Fuel, trustee's and paying a;ents' fees, taxes and inshtr. nee premiums, the cost of engineering services and administrative and overhead expenses of the Supply System a!!ocable to the acquisition and construction of the Project.
Tae Resciution prescrib:s certain procedures designed to safeguard payments or transfers from the Construction Fund, including, among others, certificates by the Construction Engineer itemizing the 4
amounts to be paid for certain items and the purposes thereof.
! Moneys remaining in the Construction Fund after providing for the payment of the Supply Sys-tem's Cost of Construction and after required payments, if any, to the laterest Account and Reserve Account in the Bond Fund and to the Reserve and Contingency Fund are to be transferred to the Bond Reth ment . .ccount. (Res. Sees. 6.8-6.12).
Other Funds 1'stablished by the Resolution; Flow of Revenues The kc>olution also establishes a Washington Public Power Supply System Nuclear Project No. 3 Resenue Fund, Bond Fund (including an Interest Account, a Principal Account, a Bond Retirement Account and a Reserve Account), Fuel Fund and Reserve and Contingency Fund. All such Funds are ta be held by the Supply Sptem, except for the Bond Fund, which is to be held by the Bond Fund Trustee.
, Reverue Fmid: The gross revenues derived by the Supply System from its ownership and operation l of the Supply System's Ownership Share of the Project are to be paid into the Revenue Fund. S3,000,000 l cf wor'ing capital for the Supply S) stem's Ownership Share of the Project will be provided prior to
!;ptember 1,1982, or the Date of Commercial Operation, whichever is earlier, either through revenues i 42
. - . . - - _ _ . .- ~ _ . .- - . _ , . - - , - , - -
I l l
l of the Supply System's Ownership Share of the Project or Bond proceeds. Additional working capital .
may be provided by mutual agreement between the Supply System and Bonneville. Afoneys in the '
i Revenue Fund are to be used for the purpose of making required payments into the Bond Fund and '
any special funds for additional bonds, paying for the Supply System's Ownership Share of the costs of operating and maltaining the Praject, making required payments into the Fuel Fund and the Reserve and Contingency Fund, paying the Supply System's Ownership Sharc of the costs of repairs, renewals, i' placements, rJditiens, betterments and improvements to, and extensions of, the Project, and paying ell other charges or obligations against such revenues. (Res. Secs. 6.1, 6.6).
Bond Fund:sFrem the gross revenues theretofore paid into the Revenue Fund, the Supply System is to pay monthly into the Bond Fund, for the credit cf the Interest Account and the Principal Account, respectively, fixed amounts sufficient in the aggregate to pay the principal of and interest on the Bonds as the same become due and payable. Interest on the Bonds will be capitalized to September 1,1982; monthly payments to the Interest Account will commence on September 25, 1982.
Mor L.ly payments to the Principal Account are to comtnence on September 25,1982, and be sufficic it to pay outstanding serial Bonds as they mature.
Beginning July 25,2000, the Supply System is also obligated to pay monthly into the Bond Retire-ment Account amounts sufficient in the aggregate to redeem the 1977 Bonds maturing July 1,2009, and July 1,2018, in the ,rin.ipal amounts and at the times specified under the subcaption " Sinking Fund
' Installments" under "The Bonds and the 1977 Bonds". Such amounts are in addition to any amounts to be required to be paid :ato the Bond Retirement Account to redeem the term bonds of other series of Bonds in the principal amounts and at the times speciSed in the resolutions authorizing such Bonds.
I ane>s in the Bond netirement Account are to be applied by the Bond Fund Trustee to the purchase or redemption of outstanding Bonds.
There is required to be paid into and maintained in the Reserve Account for each series of Bonds outstanding, an amount equal to the largest amount of interest on such Bonds during any six month 4, 1982, or the l period item tiie date of such Bonds to the final maturity date thereof. By September Date of Commercial Operation, whichever is earlier, the Supply System will deposit the required amount l
! in the Reserve Account either from Bond proceeds or amounts received under the Net Billing Agree-ments and deposited in the Revenue Fund. The Supply System is required to maintain the required amount in the lieserve Account at all times thereafter by additional papuents frem the Revenue Fund.
If any Bonds are issued after September 1,1982, or the Date of Commercial Operation, whichever is l
carl :r, thc add; lonal amount required to be deposited in the Reserve Acccunt shall be deposited I therein from Bond proceeds or revenues available therefor at the time of issuance of the Bonds. (Res.
Sec. 6.2).
Fu.I Fund: Beginning on the Date of Cotumercial Operation, all payments for Fuel will be made from the Fuel Fund. After the Date of Commercial Operation, after making the required payments into the Bond Fund and into any separate bond fund fc,r additional bonds and after paying or making pro-visica for payment of the Supply System's Ownership Share of the reasonable and necessary costs of operating and maintaining the Project, including taxes or payments in lieu thereof, the Supply System will transfer to the Fuel Fund the following amounts:
(1) the amount included in the Annual Budget for Fuel adopted pursuant to the Project Agreement, (2) all amounts received by the System from Fuel credits, including the proceeds of the sale of Fuel, and
, (3) any additional amounts necessary to avoid a deficiency in the Fuel Fund. (Res. Sec. 6.4).
Reserve and Contingency Fund: Beginning on September 25,1982, the Supply System is required to pay monthly out of the Revenue Fund into the Reserve and Contingency Fund, after making the 43
i l
l required payments into the Bond Fund, any separate bond fund established for additional bonds and the Fuel Fund, and after paying or making provision for payment of the Supply System's Ownership Share ,
cf the reasonable and necessary costs of operating and maintaining the Project, an amcunt equal to 10%
of the aggregate of the amounts required to be paid during such month from the Revenue Fund into the Interest, Principal and Bond Retirement Accounts in the Bond Fund and into any special funds for imerest, principal and bond retirements in respect of additional bonds. In any event, by the Date of Commercial Operation, the Supply System will deposit in the Reserve and Contingency Fund the sum of $3,000,000 cither through the aforesaid payments into said Fund or revenues otherwise available therefor in the Revenue Fund or, to the extent rach moneys are not available, from Dond proceeds.
hioneys in the Reserve and Contingency Fund are required to be used to make up deficiencies in the interest, principal and bond retirement accounts in the Bond Fund or in any bond funds established for additional bonds for which funds are not available, respectively, in the Construction Fund or Reserve Account or in the construction fund or reserve account in respect of additior}al bonds. To the extent not required for any such deficiency, moneys in the Reserve and Contingency Fund may be used after the Date of Commercial Operation for any one or more of the following purposes:
(i) to pay the Supply System's Ownership Share of the cost of renewals, replacerr:nts and normal additions to and extensions of the Project; and (ii) to pay the Supply System's share of extra 6rdinary operation and maintenance costs, including extraordinary costs of Fuel and the cost of preventing or correcting nny unususi loss or damag: (including major repairs), to the Project. (Res. Sec. 6.5 ).
Investment of Fundsr The term " Government Obligations" means (i) direct obligations of, cr cbligations the principal of and interest on which are unconditionally guaranteed by, the United Ftates of America; (ii) bonds, debentures, notes or participation certificates issued by the Bank for Cooperatives, the Federal Intermediate Credit Bank, the Feder:tl Home Loan Bank System, the Export Import Bank cf the United States, the Federal Land Banks. the Federal National hfortgage Association or any other apney cf or ccrperation whcIly owned by the United States of America; (iii) New Hoasing Authority Bonds or Project Notes issued by public agencies or' municipalities and fully secured as to the payment of both principal and interest by a pledge of annual contributions to be paid by the United States of America or any agency thereof; and (iv) general obligation bonds of any state of the United States of Ameri:a rated by any nationally recognized bond rating agency in either of the two highes,t rating cate-ge-ics assicned by such ratirig agency. The term " Investment Securities" means (i) Government Obliga-tiens; (ii) bank time deposits evidenced by certificates of deposit, and bankers' acceptances, issued by any bank, trust company or nat onal banking association authorized to do business in the State of Wash-ington, which is a member of the Federal Reserve System, provided that the aggregate of such bank time deposits and bankers' acceptances issued by any bank, trust company or banking association do not exceed at r.ny time fifty per centum (50%) of the aggregate of the capital stock, surplus and undivided profits of such bank, trust company or banking association; and (iii) bank time deposits evidenced by certificates of deposit, and bankers' acceptances, issued by any bank, trust company or national banking association authorized to do business in any state of the United States of America other than the State of Wastn; ton, which is a member of the Federal Reserve System, provided that the aggregate of such bank time deposits and bankers' acceptances issued by any bank, trust company or banking association do not exceed at any one time twenty-five per centum (25%) of the aggregate of the capital stock, surplus and undi5ided profits of such bank, trust company or banking association and provided further that such capital stock, surplus and undivided profits shall not be less than Fifty hiillion Dollars ($50,000,000).
hioneys in the Revenue Fund not required for immediate disbursement are to be invested in In-vestment Securities maturing or redeemable at or prior to the estimated time for the disbursement of su:h money:. hioneys in the Interest Account, Principal A count and Bond Retirement Account are i
to be invested in Government Obligations maturing on or before 30 days after the respective dates when such moneys will be required for the purposes intended, provid:d that any such investment of moneys in 44
the Interest Account representing i aerest capitalized from the pro.ceds of Honds may be in Investment Securitics. h!oneys in the Reserw mcount not required for immediate disbursement are to be invested in Government Obligations maturing or redeemable within 7 years from the date of investment. bioneys l in the Fuel Fund and Reserve and Contingency Fund not required for immediate disbursement are to be invested in Investment Securities maturing or redeemable within 7 years from the date of investment.
Afoncys in the Construction Fund are to be invested in Investment Securities maturing or redeemable within 7 years of the date of investment. (Res. Secs. 1.1, 6.1, 6.7, 6.9 ) .
Excess Moneys hioneys and the value of Government Obligations in the Reserve Account in excess of the amounts required to be maintained in the Reserve Account constitute " excess moneys" in respect of such Account; moneys and the value of Investment Securities in excess of S3,000,000 plus the com-mitments or obligations incurred by or the requirements of the Supply System for any of the purposes for which the Reserve and Contingency Fund may be used constitute " excess moneys" in respect of such Fund.
If as of any June 30 excess moneys exist in the Reserve and Contingency Fund, such monep shall be paid proportionately into the Reserve Account and the reserve accou:'t for any series of additional bonds to the extent of any deficiency therein, and the balance of such excess moneys shall be paid into the Revenue Fund; and Prior to September 1,1982, or the Date of Commercial Operation, whichever is earlier, excess monc3s in the Reserve Account shall be paid into the Construction Furd. If as of any June 30 following September 1,19S2, or the Date of Commercial Operation, whichever is earlier, excess moneys exist in the Reserve Account, such moneys shall be paid proportionately into the reserve account for any series of additional bonds to the extent of any deficiency therein, and the balance of such excess moneys shall be paid into the Revenue Fund. .
If as of any June 30 following Septe nber 1,1982, or the Date of Commercial Operation, whichever is earlier, there shall exist in the Revem.e Fund, after giving effect to any transfer of excess moneys from the Reserve Account and the Reserve and Contingency, Fund to such Fund, an amount which exceeds
~
the Supply System's required amount of working capital..the amount of such excess is to be applied to redue: annual power costs u . der the Net Billing Agreements. The " required amount of working capital" shall be S3,000,000 cr such greater amount as may be decided upon by the Supply System and lionne-sille with the approval of the Consulting Engineer. In addition, if the Supply System and Bonneville agree, all er any part of such excess over required working capital may ' e applied to paying the System's O Anership Share of making repairs, renewals, replacements, additions, betterments and improvements to, and extensicas of, the Project, the purchase or redemption of Bonds and additional bondst or for other purposes in connection with the Supply System's Ownership Share of the Project. (Res. Secs. 6.2, 6.5, 6.6). .
Certain Covenants Certain covenants of the Supply System with the holders of the Bonds and the holders of addihional bonds are summarized as follows:
The Project: The Supply System will, subject to the Ownership Agreement and the Project Agree-ment, complete construction of the Project at the earliest practicable time, operate the Project and the business in connection therewith in an efficient manner and at reasonable cost, maintain the Project in good conditio t and make all necessary and proper repairs, renewals, replacement, additions, extensions and bettermer ;s to the Project. (Res. Sec. 9.1).
Rares: The Supply System will dispose of all capability of and power and energy from the Supply System's Ownership Share of the Project solely for the benefit and account of the Supply System's Owner-ship Share of the Project and pursuant to the provisions of the Net Billing Agreements and the Power Sales Agreement; and the Supply System will maintain and collect rates and charges for power and energy, includin; capability, and other services, facilities and commodities sold, furnished or supplied through the Project, which will be adequate, whether or not the genetation or transmission of power by 45
1 the Project is suspended, interrupted or re.lucc ! for any reason whatever, to provide revenues sufficient, among other things, (i) to pay the Supply System's Ownership Share of the expenses of operating and .
i maintaining the Project, (ii) to make the required payments into the Bond Fund and any special funds
- for additional bonds, and (iii) to make the required payments into the Fuel Fund and Reserve and Con-tingency Fund. (Res. Secs. 9.2, 9.3).
Net Billing Agreements, Project Agreement and Ownership Agrecment: The Supply System will not voluntarily consent to any amendment or permit any rescission of or take any action under or in connection with the Net Billing Agreements, Project Agreement or Ownership Agreement which will in any manner impair or adversely affect the rights of the Supply System or of the Bondholders; or take any action under or in connection with the Net Billing Agreements which will reduce the payments provided for therein. (Res. Sec. 9,4).
Disposillan of Properties: The Supply System will not sell, mortgage, lease or othenvise dispose of i:s Ownership Share of any properties of the Project unless (a) simultaneous provision is made for the retirement in full of the Bonds and any additional bonds or (b) the properties to be disposed of are unserviceable, inadequate, obsolete or no longer recuired for use in connection with the Project, in which case S100.000 of the moneys received therefor are to be transferred to the Reserve and Contingency Fund r nd the balance is to be paid proportionately into the Bond Retirement Account and bond retirement accounts created for a'fditional bonds, unless such disposition is in connection with the rcplacement of such properties or the disposition of Fuel, in which case all moneys received from such disposition are ta be transferred to the Reserve and Contingency Fund or th'e Fuel Fund, respectively, or (c) the transfer of such properties in whole or in part is by operation of law, in which case moneys received therefor are to be paid proportionately into the Bond Retirement Account and bond retirement accounts for additional bonds. Notwithstanding clauses (b) and (c) above, moneys received by the Supply System prior to the Date of Commercial Operation as a result of any sale, lease, transfer or other disposition of properties specified in :,uch clauses shall be transferred to the' Construction Fund. (Res. Sec. 9.7).
Insurance: The Supply System will keep its Ownership Share of the Project insured, to the extent
?
such insurance is available at reasonable cost: against tisks of direct physical loss or damage to or destruction of the Project, accidents. casualties, or negligence, including liahdity insurance and employer's 1: ability, at least to the extent that similar insurance is usually carried by private utility corporations operating like properties.
In th: esent that any loss or damage to the properties of the Project covered by such insurance occurs during the Period of Construction the Supply System is to transfer the insurance pr,oceeds, if any, in respect of such loss or dxnage to the Construction Fund: any insurance proceeds received by the Supply System in respect of such loss or damage occurring thereafter are to be transferred into the Reserve and Contingency Fund or, in the case of insurance covering loss or damage to Fuel, to the Fuel Fund.
t (Res. Sec. 9.8),
Boo'.r of Account: The Sapply System will keep proper books of account, showing its Ownership Share of the Project as a separate utility system,in accordance with the rules and regulations of the Divi.
sion of Stunicipal Corpor:.tions of the State Auditor's office of the State of Washington and in accordance with the Uniform System of Accounts prescribed by the Federal Power Commission. Such books of account are to be audited annually by a firm of independent certified public accountants of national reputation. Bondholders may obtain copies of the annual fmancial statements showing the financial condition ef the Supply System's Ownership Share of the Project and the annual audit report by sending a wri un request therefor to the Supply System. (Res. Sec. 9.9).
Cen. airing Engineer: The Supply System will retain a nationally recognized independent consulting engineer er engineering firm to render continuous engineering counsel in the operation of the Project.
In adJition to his other duties, the Consulting Engineer shall prepare, not later than 18 months after the Date of Commercial Operation and each 3 years thereafter, a report based upon a suncy of the Project and the operation and maintenance thereof. Each report is to show, among other things, whether the S.pply System has sati,factonly performed and complw with certain covenants in the Resolution. The 46
l Consuhing Engineer is also required to report to the Bond Fund Trustee and the Supply System upon the economic soundness and feasibility of all contemplated renewals, replacements, additions, better-ments and ir. prove. ents to, and extensior.s of, the Project involving the expenditure of $500,000 or -
i more. The Consulting Engineer is also required to file annually a certificate with the Bond Fund Trustee describing the insurance then in efIect and stating whether or not such insurance complies with the requirements of the Resolution. In the event of any less or damage in excess of $500,000, whether or not covered by 11surat ce, the Consuhing Engineer is to ascertain the amount of such loss or damage and deliver to the Supply System a certificate setting forth the amount and nature of such loss or damage, together with recommendations as to whether or not such loss or damage should be replaced or repaired.
Copies of any such triennial report, annual certificate as to insurance, or certificate in respect of any such loss or damage will be sent to Bondholders filing with the Supply System written requests therefor.
(Res. Sees. 9.8, 9.9, 9.10).
Esents of Default; Remedbs Under the Resolution, the happening of one or more of the following events constitutes an Event of Default: (i) default in the performance of any obligation with respect to payments into the Revenue Fund: (ii) default in the payment of the principal of or default for 30 days in the payment of interest on any Bonds; (iii) default iir 90 days after written t.o'tice,to the Supply System in the observance and penormance of any other of the covenants, conditions and agreements of the Supply System in the Resolution; (ir) the sale or conveyance cf the Supply System's Ownership Shr t of any properties of the Project except as permitted by the Resolution or the forfeiture through fault et the Supply System of any license, franchise, permit or other privilege necessary or desirable in the operation of the Project; and (v) certain events in connecti m with the bankruptcy, insolvency or reorganization of the Supply System.
(Res. Sec. I1.1).
In case an Event of Default has occurred which has not been cured, the Bond Fund Trustee is required to exercise such of the rightc and powers vested in it by the Resolution and use the same degree et care and skillin the exercise thereof as a prudent m'an would exercise or use under the circumstances in the conduct of his own affairs. (I;es. Sec. 7.5).
If an Event of Default shall have occurred, and shall not have been remedied, the Bond Fund Trustee or the holders of 20G in principal an.ount of the Bonds and additional bonds then outstanding may declare the principal of all Bonds and additional bonds and the interest accrued thereon to be immec"ately due and payable, but such declaration may be annulled under certain circumstances. (Res.
Sec. I1.1).
After the t ccurrence of an Event of Default and prior to the curing of such Event of Default, the Dond Fund Trustee may, to the extent permitted by law, take possession and control cf the Supply
$fste:is O cnership Share of the Project and operate and maintain the same, prescribe rates for capa.
b!!ity cr pewer sold or supplied through the facilities of the Supply System's Ownership Share of the Project, collect the gross revenues resulting from such operation and perform all of the agreements and covenants contained in any contract which the Supply System is then obligated to perform. Such gross revenues, :fter payment of operating expenses, shall be applied to the payment of principal of and interest on the, Bonds and additional bonds. After all sums then due in respect of the Bonds and addi-tit nal bonds have be(n paid, and after all Events of Default have been cured or secured to the satis-faction of the Bond Fund Trustee, the Bond Fund Trustee is required to relinquish possession and con-trol cf tl e Supply System's Ownerddp Share of the Project to the Supply System. (Res. Sees.11.3, !!.4).
The Resol : ion e upowers the Bond Fund Trustee to file proofs of claims for the benefit of the holders of the 1.3nds and additional bonds in bankruptcy, insolvency, or reorganization proceedings and to institute st it for the collection of sums due and unpaid in connection with the Bonds, to enforce specific performance of covenants contained in the Resolution or to obtain injunctive or other appro-priate relief for the protection of the holders of the Bonds and additional bonds. (Res. Sec. I1.4).
47
r--
}
t
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The holders of a majority in principal amount of the Bonds and additional bonds at the time out-v0n.; have the right to direct the time, method and place of conducting any proceeding for any .
remedy available to the Bond Fund Trustee, or exercising any trust or power conferred upon the Bond '
~
Fund Trustee, but the Bond Fund Trustee must be provided with reasonable security and indemnity and also may decline to follow any such direction if it shall be advised by counsel that the action or proceeding so directed may not lawfully be taken or if it in good faith determines that the action or proceeding so directed would involve it in personal liability or that the action or proceeding so directed would Se unjustly prejudicial to the holders of Bonds or additional bonds not parties to such direction.
No holder of Bonds or additional bonds has any right to institute suit to enforce any provision of the Resolution or the execution of any trust thereunder (except to enforce the payment of principal or interest installnents as they mature), unless the Bond Fund Trustee has been requested by the holders of not less than 20G in principal amount of the Bonds and additional bonds then outstanding to exercise the powers granted it by the Resolution or to institute such suit and unless the Bond Fund Trustee has refused or failed, within 60 days after the receipt of such request and after having been offered adequate security and indemnity, to comply with such request. In the event the Bond Fund Trustee has failed or refused to comply with the aforesaid request, the Resolution provides for the creation of a " Bondholders' Com-rrJttee". (Res. Sees. I1.4,11.5). ,
The enforceability of rights under the Resolution may be subject to judicial discretion and to valid bankruptcy, insolvency, rcorganization, moratorium and other laws for the relief of debtors.
Amemtmentst Supplemental Resolutions Any amendment to the Resolution may be made by the Supply System with the consent of the ho!ders of 66H% in principal amount of the Bonds and additional bonds then outstandir.g and with
'he consent of the holders of 664 G in principal amount of the outstanding Bonds and additional bonds
%h are adversely aficcted by an amendment which does not equally affect all such outstanding Bonds art additional bonds, provided that no such amendment shall permit a change in the date of payment of principal of cr tny installment of interest on, any Bond or additional bond or a reduction in the principal or redemption price thereof or the rate of interest thereon without the consent of each holder cf Bonds er additional bonds so atfected. (Res. Article XII).
Without the consent of any holder of Bonds o'r additional bonds, the Supply System may adopt supplemental resolutions: to authorize the issuance of subsequent series of Bonds or additional bonds; to add ta the covenants of the Supply System contained in, or to surrender any rights reserved to or conferred upon it by, the Rese!ution: to add to the restrictions contained in the Resolut, ion upon the issuance of additional indebtedness; to confirm as further assurance any pledge under the Resolution cf the revenues of the Supply System's Ownership Share of the Project or other moneys; otherwise to red.fy any of the provisions of the Resolution (but no such modification may be effective while any of tie Bonds or additional bonds theretofore issued are outstanding); or to cure any ambiguity or defect er inconsicency in the Resolution or to insert such provisions clarifying matters or questions arising under the Resolution as are necessary or desirable and either not adverse to the rights and interests of the Bondhelders or not contrary to or inconsistent with the Resolution, provided that the Bond Fund i Trustee shall consent thereto. (Res. Article X). -
Supplemegral Resolution No. 804 Under the provisions of Supplemental Resolution No. 804 adopted April 13, 1976, the Supply System has resuved the right to convert the Project from a nuclear thermal generating plant to a fossil fuel generating plant consisting of one or more units of a maximum rated capacity not to substantially eteeed the rated capacity of the Project. This change would be subject to the approval of Bonneville and each Participant and Company as well as the consent of 66H G of the holders of the $150,000,000 Series 1975 Bonds heretofere issued for the ?toject. and resiew by the appropriate committees of Congress. The Supply System has covenanted that it will not authorize the change if it would affect the tax exempt status of the Bonds. The holders of the 1977 Bonds, the Series 1976 Bonds and subsequent Bonds wou!d not be required to approve such change in the Project.
48
Defeasance The obligations of the Supply System under the Resolution shall be fully discharged and satisfied l
. cs ta any Bond and such Bond shall no longer be deemed to be outstanding thereunder when payment cf the principal of and the applicable redemption premium, if any, on such Bond plus interest to the due dite thereof (a) shall have been made or cau>ed to be made in accordance with the terms thereof, or (b) shall have been provided by irrevocably depositing with the Bond Fund Trustee or the Paying Agents therIfor in trust solely for such payment (i) moneys sufficient to make such payments or (ii) Government Obligations maturing as to principal and interest in such amoents and at such times as will insure the availa-bility of sufficient moneys to make such payment, and, except for the purposes of such payment, such Bond*
shall no lenger be secured by or entitled to the benefits of the Resolution; provided that, with respect to Bonds whid.by their terms may be redeemed or otherwise prepaid prior to tne stated maturities thereof but are not then redeemable, no deposit under (b) above shall constitute such discharge and satisfactsn unless
- such Bond shall have been irresocably called or designated for redemption on the first date thereaiter such Bond may be redeemed in accordance with the provisions thereof and notice of such redemption shall have been given or irrevocable provision shall have been made for the giving of such notice. (Res.
l Sec.14.2). ,
LITIGATION ,,
i Supply S) stem
! There is no litigation pending or, to the knowledge of th'e Supply System, threatened, question-
- ing the corporate existence of the Supply System, or the title of the omeets of the Supply System to their respective offices, or the validity of the 1977 Bonds, or the power and authority of the Supply System to issue the 1977 Bonds, or the validity of the Net Billing Agreements, the Power Sales Agreement, the Project Agreement or the Ownership Agreement, or the power and authority of the Supply System to fix, charge and collect rates for the sale of power, energy, and capability from the Supply System's
, O.vnership Share of the Project as provided in the Resolution 1
l Equal Emplo) ment Opportunity Feur claims against the Supply System have bean filed with the Federal Equal Employment Oppor-tunity Commission alleging sex or race discrimination in its hiring and promotion practices. One of the claims has been administratively dismissed. The claimant whose claim was dismissed has also filed a similar charge with the United States General Services Administration ("GSA") which has co~menced l
an investigation of the Supply System's compliance with the provisions of Executive Order 11246 of l
f September 24, 1965. The same claimant has a!so commenced a lawsuit against the Supply System l
based on such claim in the Federal Court for the Eastern District of Washington. '
l The Supply System has been granted by the Director, Omce of Contract Compliance, U. S. Depart-
! ment of Labor, a limited exemption from the cancellation, termination and suspension provisions con-tained in the Net Billing Agreements and the Project Agreement. In the opinion of Bond Counsel and Special Ccunsel to the Supply System and General Counsel to B 3nneville, the obligations of Bonnevil!e, the Participants and the Supply System under the Net Billing Agreements and the Project Agreement would remain in fu'l force and eficet regardless of any action by GSA.
( Grass liarbor County f On October 10,1975, alaw suit was filed by three individual residents and taxpayers of Grays Harbor County against Grays Harbor County, Washington, and its Commissioners ("Gra>s Harbar") la the Superior Court of the State of Washington for Grays Harbor County in which plaintitis prayed that the court declare Grays Harbor's actions in connection with its sale of certain real estate to the Supply System wholly void on seseral grounds. In early 1976, the court entered an order dismissing a portion l 49
of plaintiffs' claim and no further action has been taken in this matter by the plaintifIs although the ,
matter is still pending. ,
The land' acquired from Grays Harbor is not part of the Project site; however, the Supply System has exchanged it for certain land within the Project site area. The Supply System also has the power to acquire land needed for the Project site by purchase or condemnation.
Special Counsel to the Supply System is of the opinion that the said litigation is without substantial merit.
Comptroller of the Currency Ruling
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On August 27,1975, the Comptroller of the Currency issued a ruling that the S175,000,000 Wash-ington Public Power Supply System Nuclear Project No.1 Revenue Bonds, Series 1975, are eligible for purchase, dealing in, underwriting and unlimited ho: Jing by national banks. It is expected that certain national banks will participate in bidding for the 1977 Bonds based upon that ruling. In 1975 the Supply S> stem was adsised that certain firms of investment bankers, acting independently or jointly, were considering whether or not to institute litigation to contest such ruling.
REGISTRATION OF TIIE II77 BONDS BY ST..TE AUDITOR The 1977 Bonds will be re,cistered by the State Auditor of the State of Washington, and a certificate of such registration signed by the State Auditor or a Deputy Sta.: Auditor will be endorsed upon each Bond in accordance with the prc isions of Section 54.24.070 of the Revised Coda of Washington, made applicable to the Supply System by the Revised Code of Washington, Sation 43.52.3411. Such Section 54.24.070 provides, in part, that any revenue obligations after having been so registered and bearing such certificate, shall be held in every action, suit or, proceeding in which their validity is or may be brought into question prima facie valid and binding o'iigations in accordance with their terms.
PROPOSED LEGISLATION k.egislation has been introduced in the. Unitcil States Congress implementing portions of the President's announced energy consenation program. This program would include preposals to restructure c!cetric rate schedules; require stricter safety measures at nuc! car generating units; impose taxes relating to utilization of oil and gas for electric generation; raise the prices for certain oil and natural gas supplies; increase the utilization et coal by electric utilities; defer developm.nt of breeder reactors and commercial reprocessing and recycling of spent nuclear fuel; re-c.aluate nuclear waste storage methods; reduce the time periods required for licensing light-water nuc! car reactors; require utilities to assist customers in the installation and financing of home insul tion; and set higher etliciency standards for home appliances using cicetricity and gas. An analysis of the impact of this program must await the final adoption cf any legislation and implementing regulations.
APPROVAL OF LEGAL PROCEEDINGS Wood Dawson Love and O'Brien, New York, New York, Bond Counsel to the Supply System, and Houghton Cluck Coughlin & Riley, Seattle, Washington, Special Counsel to the Supply System, will render opinions with respect to the validity of the 1977 Bonds, the Net Billing Agreements, the Project .
Agreement and the Ownership Agreement. Copies of the opinions they propose to render are appended hereto as Exhibit IV.
TAN EXE31PTION In the opinion of the above named Counsel, the interest on the 1977 Bonds will be exempt from federal income taxation under existing laws, regulations and rulings issued by the Internal Revenue Senice.
CERTIFICATION AS TO OFFICIAL STATE 3fENT The System will confirm to the successful bidder for the 1977 Bonds, by a certificate signed on its behalf by the Managing Director of the System and dated an.! delivered on the date of delivery of and 50
l l
payment for the 1977 Bonds, that on the date of this Official Statement and on the date of such certificate I (i) the descriptions and statements of or pertaining to the Supply Syst:m contained in this O$cial Statement were and are true and correct in all material respects; (ii) insofar as the Supply System and its affairs, including its fbancial affairs, are concerned, this Official Statement did not and does not contain an untrue statement of a material fact or omit any statement or information which is necessary to make the stntements therein, in the light of the circumstances under which they were made, not misleadmg;
. and (iii) insofar as the descriptions and statements, includin; fiaancial data, of or pertaining to Bonneville and other governmental bodies, and non-governmental bodies, and their activities contained in this Official Statement are concemed, such descriptions, statements and data have been obtained from sources which the Supply System believes to be reliable and the Supply System has no reason to believe that they are untrue in any material respect. There will al<o be delivered to such bidder on the date of delivery of the 1977 Bonds a certificate of the Bonneville Po,ver Adm:nistrator, dated such date, that on the date of this OSicial Statement and on the date of such certificate the descriptions and statements, including fi ancial statements, of or pertaining to Bonneville contained in this OSicial Statement were and are true and correct in all material respects and that insofar as Bonneville and its affairs, including its financial a:Inirs, are concerned. this Oflicial Statement did not and do'es not contain an untrue statement of a material fact or emit any statement or information which is necessary to make the statements therein, in the light of the circumstances under which they were made, not misleading.
RATINGS As noted on the cover page of this Omcial Statement, hioody's Investors Service, Inc. and Standard &
- Peor's Corperation have given the 1977 Bonds ratings of and . .. respectisely. Ratings were applied
. for by the Supply System and certain information was supplied,by the Supply System to sucn rating ag:ncies to be considered in es aluating the 1977 Bonds. Such ratings retlect only the respective views of such rating
' apncies. and an explanation of the significance of such ratings may be obtained only from the rating ag:ncy i furnishing th: same. There is no assurance that either or both of such ratings will be retained for any given period of time or that the same will not be revised downward or withdrawn entirely by the rating agency furn' hing the same if,in their judgm:nt, circumstances so warrant. Any such downward revision or with-
! drawal of such ratings, or either of them, may have an adverse effect on the market price of the 1977 Bonds.
3115CELLANEOUS The references, excerpts, and summaries contained herein of the Net Billing Agreements, the Project Agreement, the Ownership Agreement and the Resolution do not purport to be complete statements of
- the prosisions of such documents and reference should be made to such documents for a full and com-
- p::te statement of all matters relating to the 1977 Bonds, the basic agreements securing the 1977 Bonds
. and the rights and obligations of the holders thereof. Copies of the forms of Net Billing Agreements,
' Project Agreement and Ownership Agreement are available upon request at the office of the Supply
' Syst?m in Richland, Washington.
The authorizations, agreements and covenants of the Supply System are set forth.in the Resolution, and neither this Official Statement nor any advertisement of the 1977 Donds are to be construed as a contract with the holders of the 1977 Bonds. Any statements made in this Official Statement invohing matters of opinion or of estimates, whether or not expressly so identified, are intended merely as such and
' not as repi'esentations of fact.
Boanesille has furnished the information contained under the caption "Bonneville Power Adminis-tration" and the information T:rtaining to Bonneville under the captica " Power Supply in the Pacifie
' Northwest and the H3 dro Thermal Power Program" and in Exhibit VL The Consulting Engineer has furnished the balance of the information centained under the lattu caption. ,
The delivery of this Official Statement has been duly authorized by the Supply System.
WAsmNGTON Pustte POWER SUPPLY SYsTut By /s/ Eows W. TAYLOR Secretary 51
4 .
EXHIBIT I .
i WASHINGTON PUBLIC POWER SUPPLY SYSTE31 NUCLEAR PROJECT NO. 3 1
'Ihe Participants, the Companies, their customers and gross revenues, and Shares of the Project capability. '
i 1976 Statistks Partkipants' Participant W res Customers Revenues 19821983(A)
City of Albion, Idaho . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 148 5 32,664 .00003
. City of Ba ndon, Oregon . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,829 543,327 .00066 Public Utility District No. I of Benton County, Washington . . . . 20,930 S,177,175 .02523 Benton Rural Electric Association . . . . . . . . . . . . . . . . . . . . . . . . 6,258 2,166,046 .00524 Big Bend Electric Cooperative, Inc. . . . . . . . . . . . . . . . . . . . . . . . 5,0S7 3,368,671 .00052 Blachly-Lane Electric Cooperative Association . . . . . . . . . . . . . . 2,165 1,131,749 .00272 City of Blaine, Washington . . . . . . . . . . . . . . . . . . . .,. . . ... . . . . . 1,415 384,184 .00064 City of Bonners Ferry, Idaho . . . . . . . . . . . . . . . . . . . . . (. . . . . . 1,659 516,045 .00059 City of Burley, Idaho . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4,145 1,251.62S *
.00057 City of Canby, Oregon . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . *. . . 2,4S9 843,691 .00097 City cf Cascade Locks, Oregon . . . . . . . . . . . . . . . . . . . . . . . . . . 727 293,424 .00029 Central Electric Cooperative, Inc. . . . . . . . . . . . . . . . . . . . . . . . . 7,031 2,412.870 .00S70 Ci:y of Centralia, Washington . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6,813 1,613,772 .00104 Central Lincoln People's Utility District . . . . . . . . . . . . . . . . . . . 19,826 8,305,122 .01934 Pubhc Utility District No. I of Chelan County, Washington . . . . 20,991 7,343,637 .00335 Ci:y of Cheney, Washington . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2,726 835,170 .00302 Public Utility District No. I of Clallam County, Washingten . . . 12,7SS 4,683.093 .00517 Public Utility District No. I of Clark County, Washington . . . . . 64,475 21,585.663 .09635 Clatskanie Peop!c's Utility District . . . . . . . . . . . . . . . . . . . . . . . . 2,653 2,540,350 .00344 Clearwater Pow er Company . . . . . . . . . . . . . . . . . . . . . . : . . . . . . 6,162 2,022.558 .00423 Columbia Basin Electric Cooperative, Inc. . . . . . . . . . . . . . . . . . 3,404 1,447,988 .00152 Columbia Power Ccoperative Association . . . . . . . . . . . . . . . . 1,377 479.467 .00055 Columbia Rural Electric Association, Inc. . . . . . . . . . . . . . . . . . . 2,140 1,462,943 .00931 Ccasolidated Irrigation District No.19, Washington . . . . . . . . . . I 12.7S0' .00006 Consume rs Power, Inc. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . I1,084 4,227,570 j .01226 Cocs. Curry Electric Cooperative, Inc. . . . . . . . . . . . . . . . .s . . . . 9,191 3,344,845 .00337 Ci:y of Coulee Dam, Washington . . . . . . . . . . . . . . . . . . . . . . . . . 555 200,731 .00022 I Public Utility District No. I of Cowlitz County, Washin 32,262 17,501,700 City of Decto, Idaho . . . . . . . . . . . . . . . . . . . . . . ......... . . . gton . . . . .02959 78 28,SS9 .00009 Public Utility District No. I of Douglas County, Washington . . . 8,638 4,222.009 .00068 1
Deu;las Electric Cooperative, Inc. . . . . . . . . . . . . . . . . . . . . . . . 6,188 1,843,162
, .00447 City of Drain, Oregon . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 581 255,941 .00036 East End 5futual Electric Co., Ltd. . . . . . . . . . . . . . . . . . . . . . . . 385 125,120 .00020 Ci:y cf Ellens5urg. Washington . . . . . . . . . . . . . . . . . . . . . . . . . . 4,914 1,444,930
.00409 :
Fa'.1 River Rural Electric Cooperative, Inc. . . . . . . . . . . . . . . . . . 4,999 1,806,037 .00069 ;
Farmers Electric Co., Ltd. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 237 49,428 i .00010 '
Publie Utility District No. I of Ferry County, Washington . . . . . 1,715 743.355 .00070 Flathead Electric Cooperative, Inc. . . . . . . . . . . . . . . . . . . . . . . . 4,939 1,362,597 .00229 ,
City of Forest Grove, Oregon . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4,714 1,300,871 .00000(n) i Public Utility District No. I of Franklin County, Washington . . . 11,876 4,890,988 .00629 Public Utility District No. 2 of Grant County, Washington . . . .. 23,170 12.540,752 .00325 Public Utility District No. I of Grays Harbor County, Washington 30,066 13,239,350 .02163 52
l ENiilBIT I-(Continued) .
i WASIIINGTON PUBLIC POWER SUPPLY SYSTE.\1 NUCLEAR PROJECT NO. 3 The Participants, the Companics, their customers am! gross resenues, and Shares et the Project capability.
1976 Statistics Participants' Shares Participant Custo.ners Resenues 19821983(A)
Harney Electric Cooperative, Inc. . . . . . . . . . . . . . . . . . . . . . . . 2,062 $ I,363,700 .00039
. City of Heybu rn, Idaho . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . S63 619,479 .00063
~ Hood Ris er Electric Cooperative, Oregon . . . . . . . . . . . . . . . . . . 2.341 890.462 .0023S Idaho Ccunty Light & Power Cooperative Association, Inc. . . . . 1,857 514,330 .00047 City of Idaho Falls, Idaho . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14,325 4,775,861 .00254 Inland Pewer & Light Company . . . . . . . . . . . . . . . . . . . . . . . . . . 15.177 5,351,403 .01453 Public Utility District No.1 of Kittitas County, Washington . . . . 1,335 510,043 .00126 Public Utility District No. I of Klickitat County, Washington . 6.356 2,478.021 .00309
' Kootenai Electric Cooperative, Inc. . . . . . . . . . . . . . . . . . . . . . . 5,736 1,63S.836 .00351 Lane Ccunty Elcetric Cooperative, Inc. . . . . . . . . . . . . . . . . . . . . 8,143 2,835,S96 .00582 Public Utility District No. I of Lewis County, Washington . . . . 17,078 5,787.433 .00661 Lincoln Electric Cooperative, Inc. (hfontana) . . . . . . . . . . . . . . 1,734 704,533 .00134 Lincoln Elcetric Cooperative (Washington) . . . . . . . . . . . . . . . . 1.661 1,130,404 .00100 Lost River Electric Cooperative, Inc. . . '. . . . . . . . . . . . . . . . . . . . 1.550 661.170 .00048 Lower Vaticy Power & Light, Inc. . . . . . . . . . . . . . . . . . . . . . . . . 8.149 2,74S,991 .00379 Public Utility District No. I of Stasen County, Washington . . . . 3,039 672,477 .00101 Public Utihty Dis:rict No. 3 of >!ason County, Washington.. . . . . - 14.026 3,913,665 .00928 Tow n of SicCleary, Washington . . . . . . . . . . . . . . . . . . . . . . . . . 679 267,839 .00025 City of %!chlinnville, Oregon . . . . . . . . . . . . . . . . . . . . . . . .... 6.374 2,375.489 .00276 Slidstate Electric Cooperative, Inc. . . . . . . . . . . . . . . . . . . . . .'. . 5,183 1,553,715 .00367 City of Stil:en.Freewa:er, Oregon . . . . . . . . . . . . . . . . . . . . . . . 3,539 591,304 .00000(c)
Ci:y of Stinidoka. Idaho . . . . . . . . . . . . . . . . ............. 65 11.597 .00001 Sfissoula Electric Cooperative, Inc. . . . . . . . . . . . . . . . . . . . . . . . 4,605 1,348.856 .00288 City of hienmouth, Oregon . . . . . . . . . . . . . . . . . . . . . . . . . . . 2.285 547,921 .00204 Nespelem Valley Electric Cooperative, Inc. . . . . . . . . . . . . . . . . 1,0S.1 405.412 .00090 Nerthern Ligh:s, Inc. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . : 6,784 2,072,633 .00358 Nerthern Wasco County People's Utility District . . . . . . . . . . . . 7.670 1,467.510 .00103 Okanogan County Efectric Cooperative, Inc. . . . . . . . . . . . . . . . 1,177 278,286 .00023 Public Ut!!ity District No.1 of Okanogan County, Washington . . 12.SS4 3,814,144 .00177 Orcas Pow er and Light Company . . . . . . . . . . . . . . . . . . . . . . . . 4.295 1,463,663 .00423 Public C:llity District No. 2 of Pacific County, Washington . . . . I1,599 2.933,987 .00522 Public Utility District No.1 of Pend Orcille County, Washington 2,992 l'245,218 .00036 Ci:y of Pert Angela, Washington . . . . . . . . . . . . . . . . . . . . . . . . 7,495 3.229,766 .00256 Prairie Pow er Cooperative., Inc. . . . . . . . . . . . . . . . . . . . . . . . . . . 396 153.0:7 .00020 Raft River Rural Electric Cooperative, Inc. . . . . . . . . . . . . . . . . . 2,061 1,541.465 .00239 Ravalli County Electric Cooperative, Inc. . . . . . . . . . . . . . . . . . . 2.674 900,136 .00319 Ci:y of R:ehland. Washington . . . . . . . . . . . . . . . . . . . . . . . . . . . 11.568 4,183.S44 .00704 Ris erside Electric Company, Ltd. . . . . . . . . . . . . . . . . . . . . . . . . 227 62.621 .00019 City of Ru pe rt, Idaho . . . . . . s . . . . . . . . . . . . . . . . . . . . . . . . . . . 2.299 637,681 .00043 Rural Eteetric Company . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2.149 720.436 .00309 S ale m Ele c tric . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7,961 2,007.410 .00692 Salmon River Electric Cooperative, Inc. . . . . . . . . . . . . . . . . . . . 1,411 495,788 .00044 53
l EXIIIBIT I-(Continued)
WASITINGTON PUBLIC POWER SUPPLY SYSTDI NUCLEAR PROJECT NO. 3 He Participants, the Companies, their customers and gross revenues, and Shares of the Project capability.
1976 Statistics Participants' Participant Shares Customers Resenues 19821983(A)
City of Seaille, Washington . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 273,483 5 79.193,926 .08218 Public Utility District No. I of Skamania County, Washington . . 3,382 1,167,963 .00145 Public Utility District No. I of Snohomish County, Washington . 114,083 41,123,926 .16846 South Side Electric Lines, Inc. . . . . . . . . . . . . . . . . . . . . . . . . . . . 456 249,037 .00057 City of Springfield, Oreg a . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16,286 6,090,507 .00028 City of Sumas, Washington . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 333 94,025 .00007 Surprise Valley Electrification Corporation . . . . . . . . . . . . . . . . . 3,126 1,076,066 .00068 City of Tacoma, Washington . . . . . . . . . . . . . . . .,. . . . . . . . . . . . 90,858 48.222,894 .02131 Tanne r Electric . . . . . . . . . . . . . . . . . . . . . . . . . . . . . : . . . . . . . . 866 321,434 .00059 Tillamwk People's Utility District, Oregon . . . . . . . . . . . . . . . . . 13,347 3,904,726 .00325 Umatilla E!:ctric Cooperative Association . . . . . . . . . . . . . . . . . . 6,014 4,629.247 .01027 Unity Light and Power Company . . . . . . . . . . . . . . . . . . . . . . . . . 1.354 481,964 .00193 Vera irrigation District No.15, Washington . . . . . . . . . . . . . . . . 3,700 979.359 .00181 Vigilante Electric Cooperative, Inc. . . . . . . . . . . . . . . . . . . . . . . . 3,658 1,098,737 .00046 Public Utility District No. I of Wahkiakum County, Washington 1,663 557,317 .00109 Wasco Electric Cooperative. Inc. . . . . . . . . . . . . . . .~. . . . . . . . . . 2.813 1,028,105 .00158 Wells Rural Electric Company . . . . . . . . . . . . . ., . . . . . . . . . . . 1,579 888,387 .00172 West Oregon Electric Cooperative. Inc. . . ....... ....... 2,999 920.001 .00160 Public Utility 'Jistrict No. I of Whatcom County, Wash.ngton . . I JS9.530 .00337 Total Participants (103) . . . . . . . . . . . . . . '. . . . . . . . . 1,107,560 5460,312,026 .70000 1976 Statistics Company Ownership Customers Reienues. Shares Pacific Power & Light Company . . . . . . . . . . . . . . . . . . . . . . . . . . 607,394 S316,197,678 .10000 Pertland General Electric Company . . . . . . . . . . . . . . f . . . . . . . 412,556 217,786.708 .10000 Puget Saund Power & Ught Company . . . . . . . . . . . . . . . . . . . . . 424.439 191,088,435 .05000 The Washingtc a Water Power Company . . . . . . . . . . . . . . . . . . 197.742 92.1S8.559 .05000 l Total Companies (4) . . . . . . . . . . . . . . . . . . . . . . . . . . 1,642,131 5817,261,380 .30000 (A) Participants' Shares of the Supply System's 70Fc Ownership Share of the Project capability.
Participants' Shares vary from year to year prior to July 1,1986.
(B) Tias .00000 Participant's Share until July 1,1986 and .00091 Participant's Share thereafter.
(C) Has .00000 Participant's Share until July 1,1986 and .00002 Participant's Share thereafter.
54
ENHIBIT 11 j
R.W. BECK' AND AssocixrES ENGINEERS AND CONSULTANTS SEATTLE, WASHINGTON y;
OENstR.ColoRAoo PHotNIX. ARIZONA 200 TOWER SUILDING ORLANDO, FLORIDA I stATTLE,w AsHtNGTON 96101 COLUMBU$, hEBRAsKA TEttPHONE 206 4 22 s000 wtLttsLEY.MAssACHUstTTs INotANAPCus. INDIAN A July . .,1977 Board of Directors Washington Public Power Supply System ,
Post Omce Box 968 #
Richland, Watington 99352 Gent! men:
Subject:
Consulting Engineer's Report Washington Public Power Supply System Nuclear Project No. 3 P esented herewith is a summary of our analyses, investigations and studies with respect to the Proposal by t: e Washington Public Power Supply System (the " Supply System") to issue 5230.000.000 of its Washingon Public Power Supply 5 3stem Nuclear. Project No. 3 Resence Bonds, Series 1977 (the "1977 Bonds") in accordance with its Resciution No. 775 'and supplemental resolutions (" Bond Resolution"). for the purpose of pa>ing a portion of the Supply System's Ownership Share of the costs of acquiring and constructing a nuclear-fueled electric' generating plant of approximately 1,210.000 kilowatts and related facilities known as Washington Public Power Supply System Nuclear Project No. 3 (the " Project"). The Supply System has presiously issued $250.0Ca000 of its Nuclear Project No. 3 Revenue Bonds in two series: Series 1975 and Series 1976. The Supply System's present rinancing program provi fes that additional bonds (which together with the 1977 Bonds and previcusly issued bonds are hereinafter referred to as the." Bonds") will be issued at later dates and in amounts necessary to pay the Supply System's share of the cost of completing the Project and placing it into operation.
The SurPl y 5) stem has entered into an apeement (the " Ownership Agreement") with Pacific Po.scr & Li; t Company, Portland General Electric Company, Puget Sound Power & Light Company and The Wa3hington Water Power Company (the " Companies") which provides for th: acquisition, construction, operation and ownership, as tenants in common, of the Project. Under the Ownership Agreement caeh party will be responsible for prosiding for its ownership share.of the costs of con-structica and operation of the Project and wi!! be entitled to its ownership share of the Project's capability.
The parties to tire Ownership Agreement have designated the Supply 3S stem to act as their agent to con-struct, crerate and maintain the Project. Under the Ownership Agreement the parties will have owner-s!:!p shares as fellows:
Percentage Ownership Share S u pply Syste m . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 70 %
Pacific Power & Light Company . . . . . . . . . . . . . . . . . . . . . . . . . . 10 %
Portland General Electric Company . . . . . . . . . . . . . . . . . . . . . . . 10 %
Pueet Sound Power & Light Company . . . . . . . . . . . . . . . . . . . 5%
The Washington Water Power Company . . . . . . . . . . . . . . . . . . 5%
)
u_-----__--- --- - - . - - .- -- - - a
The Supply System The Supply System is a municipal corporation and a joint operating agency organized under the '
laws of the State of Washington and has, as members,19 public utility districts and 3 municipalities all lo(ated within the State of Washington. The Supply System has the authority to acquire, construct an 1 operate plants, works and facilities for the generation and transmission of electric power and energy, as well as to make surveys, plans, investigations or studies in connection therewith.
The Supply System is operating a 27,500 kilowatt hydroelectric project and a 860,000 kilowatt steam-electric generating project and, including the Project, has under construction five large nuclear projects.
The following table shows the status, schedule and estimated financing for the Supply System's projects:
Estimated .
Bonds Additit,nal Total Initial Issued Financing Financing Operating Size (1) to Date Required Required Project I.ocation Date(t) ADV (000) (000) (000)(1)
Packwood Packwood June 1964 27.5 S 13,700 $ -
$ 13,700 Hanford(2) Hanford November 1966 860.0 122.000 - 122,000 WPPSS No.1(3) Hanford September 1981(4) 1,250.0 535,000 671,000(5) 1,206,000 iPPSS No. 2(3) Hanford September 1980 1,100.0 800,000 165,000(5) 965,000
\"PPSS No. 3(6)(7) Satsop September 1983 863.0 4$0,000(S) 464,000 944,000 7 PPSS No. 4(6) Hanford hlarch 1983(4) 1,250.0)
WPPSS No. 5(6)(9) Satsop hlarch 1985 1,116.0[(10) 235,000(11) 3,199,000(5) 3,434,000 6,471.5 52,185,700 $4,499,000 $6,684,700 (1) Hanford and Packwood projects actual, other projects estirnated.
(2) Turbine-generator facility using ste2m from a' nuclear reactor owned and operated by the Energy Research and Dnelopment Administration ("ERDA").
(3) Under construction-Nuclear Regulatory Commis'sion ("NRC") construction permit and Washing-ton State site approval receised.
(4) Does not include potential delays discussed in the Official Stat: ment to which this report is attached
(" Official Statement") under the caption "The Supply System's Other Generating Projects".
(5) Does not include potential cost increases discussed in the Official Statement under the caption "The Supply System's Other Generating Projects".
(6) Under construction-NRC limited work authorization and Washington State site approval received.
(7) St.pply System's 70ro owTiership share. Four investor-owned utilities own 30% of WPPSS No. 3.
(8) Includes this issue. , ;
(9) Supply System's 90% ownership share. Pacific Power and Light Company owns 10rc of WPPSS No. 5. l (10) The Packwood, Hanford, WPPSS No.1, and WPPSS No. 2 projects, and the Supply System Ownership Share of the Project are each financed as separate systems. WPPSS No. 4 and the Supply System ownership share of WPPSS No. 5 are together being financed as a separate system.
(11) Excludes $100,000,000 of Development Bonds. .
He Projec"i ne Project is located about three miles south of the community of Satsap in Grays Harbor County, Washington, approximately 16 miles cast from the City of Aberdeen, and 66 miles southwest from the City of Seattle. The Supply System is also constructing its Nuclear Project No. 5 ("WPPSS No. 5") on t':e same site. WPPSS No. 5 is being designed and constructed as a twin to the Project and will share some common facilities with the Project.
i The Project's nuclear steam supply system, to be supplied by Combustion Engineering, Inc., is '
rated at 3,817 megawatts thermal and includes reactor control systems, steam generators, and other I 56
+
auxiliary systems. He waste heat from the turbine condenser will be dissipated in a closed cycle condenser cooling system that will utilize 'a natural draft cooling tower. The turbine-generator unit, to ;
be supplied by Westinghouse Electric Company, will have a net electrical generating capability of ipproximately.1,240,000 kilowatts. The Project's output will be delisered into the Federal Columbia River System transmission grid in the sicinity of the Project..
Permits and Licenses '
The Supply System has received site certification from the State of Washington and on April 8, 1977 reccised a limited work authorization from NRC for both the Project and WPPSS No. 5. llearings in connection with issuance of a construction permit were held on htay 24 and 2:i,1977 before the Atomic
-Safety and Licensing Board and the Supply System expects a decision on the issuance of the construction permits for both projects by late summer or early fall this year.
Construction Program The Supply System has employed the fir.n of Ebasco Services Incerporated ("Ebasco") as Con.
struction Engineer to design and supervise the construction of the Troject.
Limited construction at the site has begun with the receipt of the limited work authorization: Nwever, on-site construction and installation of nuclear componehts cannot proceed without a construction permit issued by the NRC. Any significant delay in obtaining the" construction permit will delay the Project schedule and increase the Project cost. The initial fuelloading is currently scheduled for hlarch 1983 and commercial operation for September 1983.
The Supply System has entered into equipraent, material and construction contracts for the Project with a total estimated value of $267,954,000. As of Stay 31,1977, actual expenditures for the Supply i
System's 70% share of the Project totalled S94,564,000, as summarized in the following tabh:
Total Ccnstruction Cost . . . . . . . . . . , . . . . . . . . 575.318,000 Nucle ar Fu el . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10.566.000 Bond Discount Financing Cost . . . . . . . . . . . . . 3.575.000 Interest During Construction . . . . /. . . . : . i . . . 4.S05.000 Total .................'......... 594,564.000 Nuclear Fuct Nuclear fuel services hase been contracted for in the following quantities as a percentage of total requirements for operation for the y ears shown:
Contract Status Ior Nuclear 31aterials and Senices (%) .
Uranium concen. Con. Enrich. Fabel. Reproc.
Year _ tratesti) s ersion(2). ment:31 cationf41 Shipping essingt5) 1933 .................... 100 100 100 100 0 0 1984 ..................... 100 100 100 100 0 0 1935 ...................... 100 100 100 100 0 0 1956 ..................... 100 100 100 100 0 0 1957 ..................... 100 100 100 100 0 0 19S$ ..................... 100 100 100 100 0 0 1989 1993 ................ 100 0 100 100' 0 0 (1)-Sutlicient eranium concentrates for the initial core have been obtained from Allied Chemical Cor-potation. liranium requirements for 14 years of reload fuel are under contract with Exxon Nuclear ,
Company, Inc. !
(2)-Centersation service sufficient for operation through 1983 has been contracted with Kerr hicGee Corporation.
(3)-Enriehment sersices meeting operating requirements for 30 years are under contract with ERDA.
'(4)-Fabrication services for the initial core have been contracted for with Combustion Engineering, Inc. ;
Reload fabrication services sutlicient to meet operating needs through 1998 are under contract with Exxon Nuclear Company, Inc.
(5)-Initial facilities for spent fuel storage will be constructed at the Project site to provide storage requirements until about 1990.
57
Long. Term Financin7, Program The long term financing program contemplates the issuance of Bonds in several series to finance ;
the construcuon of the Supply System's Ownership Share of the Project. The present estimates of ,
actual needs by the Construction Engineer and the Supply System show the proceeds from the 1977 Bonds will be sufficient to continue construction of the Project until February 1980 prior to which time additional Bonds are planned to be issued. Construction cost estimates are btsed on a scheduled com-mercial operating date of September 1983.
Based on .the foregoing, the es'imatcJ total financing requirements for the Supply System's Ownership Share of the Project are shownin the following tabulation.
Estimated Project Financing Required
($000)
Supply 5ptem's Total 70% $ hare of Project Costs Project Costs Land and Land Rights ( l ) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 2,422 $ 1,696 Structures and improvements (2) . . . . . . . . . . . . . . . . . . . . . . . . . .... .. 165,416 115,791 Reactor Plant Equipment (2) . . . . . . . . . . . . . . . . . . . . . 166,958 116,871 Turbogenerator Umts(2 ) . . . . . . . . . . . . . . . .'. . . . . . . . . ....... ........ 131.240 91,863 Accessory Electric Equipment (2) . . . . . . . . . . . . : . . . . . . . . . . . .... 42,(34 29,844 hiiscellaneous Power Plant E 20,385
. .quipment(2) . . . . . . . . . . . . . . . . . . .29.122 Station Equipment (2) . . ............................ .6,519 Other Tangible Property (2) . . . . . . . . . . . . . . . . . . . . . . . . . . . ..... ... 4.563 14,894 10,426 Project Construction Costs . . . . . . . . . . S 559,205 Escala t bn ( 2 ) . . . . . . . . . . . . . . . . . . . . . . . . . . . . ................
S 391.444 196,333 137,437 Contingncies(2) ........................................ 39,033 27,323 Sales Tatti)(3) ........................................ 42.759 Nuclear Fuel (1)(4) ........................... 29.932 65.810 46,067 .
Ow ner's Contingeneit s( l ) . . . . . . . . . . . . . . . . . . . . . . . .......... ........ 35,000 24,500 Architect. Engineer (2) ...................
Construction blanager( 2) . . . . . . . . . . . . . . . . . ............................ 41.278 28,S94 30,96S 21,677 O .vcer's Direct Cost ( 1 ) . . . . . . . . . . . . . . . . . . . . , . . . . . . . . . . . . . . 53,450 S3.500 Per formance Bonds ( l ) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ...... .... 1.000 700 Total Ccnstruction and Nuclear Fuel Costs . . . . . . . . . . . . 51,094,891 $ 766.424 Bond Discount and Other Financing Expenses (5) . . . . . . . . . . . . . . . . . . . . . . . . . . 10.S15 Capitalized Interest During Construction (6) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 255,983 G ross Req uirem ents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
. S t.033.222 1.ess: Estimated Income from Temporary investments (7) . . . . . . . . . . . . . . . . . .
(59.222)
Ne t Re quire m e n t s . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . S 944,000 (1)-Estimated by Supply System.
(23-Estimated by Ebasco. Takes into consideration that the Project and WPPSS No. 5 will benefit from the economy of dual. unit construction.
(31-Excludes sales tax on nuclear fuel.
(4)-Includes sales tax.
(5)-.Inelades actual expense of previous financing and estimated costs of the 1977 Bonds and addi.
tional Bends.
(6)-D wd on actual interest rates for previous financings, an assumed 6.0% for the 1977 Donds, r d an assumed 7.5% for addition.J Bonds. Interest is capitalized to September 1.1982. Does t 't include interest for the perhxl f,om September 1,1982 to September 1,1983 (see the caption
'Sinancing Program" in the Oilicial Statement).
(7)-Ireludes actual inecme to June 1.1977 from temporary investment of proceeds from pretious 6naaemgs and estimated future income from temporary investment of proceeds from additional ;
Bends at an annual interest rate of 5.75G.
58 h
l A summary of the total fnancing actually accomplished and contemplated for the future by the Supply System for its Ownership Share of the Project costs is shown in the following table: .
Estimated Financing Required (000) i Prestoms Additlosal Fijyuicing 1977 Bonds Bonds _ Total Total Construction Costs . . . . . . . . . . . . . $154,896 $185,979 $379,482 5 720,357 Nuclear Fuel . . . . . . . . . . . . . . . . . . . . . . 10,026 0 36,041 46,067 Bond Di count and Financing Costs . .. . 3,875 2,300 4,640 10,815 Interest During Construction . . . . . . . . . . 120,814 71,300 63,869 255,983 Gross Requirement < . . . . . . . . . . . . . 5289,611 $259,579 $484,032 $1,033,222 Less: Investment inco .e . . . . . . . . . . . . . (39,(11) . '(29,579) (20,032) (89,222)
Net Requirements . . . . . . . . . . . . . . . $250,000 " $230,000 $464,000 $ 944,000 in addition to the forecoing amounts to be obtained through issuance of BonJs, present planning anticipates the following wiil b: paid from revenues of the Supply System's Ownership Share of the Pri ject wider the Net Bi!!ing Agreements.
Reserve Account in Bond Fund . . . . . . . . . . . . . . $33,236,000 Working Capital . . . . . . . . . . . . . . . . . . . . .'. . . . ; 3,000,000*
Reserve and Contingency Fund . . . . . . . . .,. . . . , , . 3,000,000 Total . . . . . . . . . . . . . . . . . . . . . . . . . .' . . . .'.' 5 3 9,2J 6,000
- The amount of working capital may be increased by agreement between the Supply S> stem and The Uni.ed Sutes of America, Department of the Interior, Acting by and through The Bonnesille Power Administrator ("Bonneville"). .
If for any reason st. h amounts are not provided under the Net Billing Agreements, the Bond
- lesolution provides that they will be obtained through thp issuance of additional Bonds.
I rcjeet Output t
The Project is expe ted to have a net generating capability of 1,240,000 kilowatts. Although there is not >ct sufficient 1:istorical operating information availab!a on large nuclear plants to establish an expected plant factor for the Project from orerational experierice, the regional planning guidelines assume a 75fc plant factor for the Project. A 75'*e plant factor would result in the production of about 8.1 bilhon kitc xatt. hours anm' ally. 'The Supply System's Ownership Share would be 5.7 billion kilowatt.
i hours annually. During certain periods there will be times when surph.4 water will be available to generate 1ower et eMsting hydroelectric projects thereby permiting a reduction in the total amount of energy '
g roduccJ at thermal. electric projects in the region, including the Project, i Csst of Powee Estimates of t!e annual ecsts of the Supply System's portion of the Project's operations are given in the following table. Tl:e cost per kilowatt hour of 21.3 mi!!s is based on 5.7 billion kilowatts. hours 59
..s_ _ - - _ _ _ . -___--._-____.__m__________.___._______m_ . _ _ _ _ - - - -
e The Supply System, Bonneville and 15 industrial companies that purchase electrical energy,from Bo:nnille hase entered into a Power Sa!cs Agreement under which such companies will purchase a
- portion of the energy from the Supply System's Ownership Share of the Project during the period from '
the date of commercial operation to June 30,1984, if such energy is not needed by ikanesille to meet its contractualobligations to supply firm power. The payments made to the Supply System for such safe of rower to the industrial companies will serve to reduce the Participants' and 13onneville's payments under the Net Billing Agreements. The Power Sales Agreement provides that the energy sold to and the pay.
ments made by the industrial customers will be up to 750,000,000 kilowatt hours in Contract Year 1933484 at a price of 55,625,000 assuming a commercial operation date of September 1933.
Agreements The Net Billing Agreements proside that each Participant pay the Supply System its share of the annual costs the Supply System incurs for its Ownership Share of the Project less amounts payable to Su System under the Power Sales Agreement. The Participants, in tum, assign their shares cf thr ect capability to Bonneville. Bonneville pays each Participant, in the form of credits on its power bi!!s frem Bonnesille or through cash payments,in the manner described in the OMcial Statement, in amounts equal to the Participant's payments to the Supply System.
The Supply $ 3stem and Bonneville have entered into a Project Agreement which, amoag other things, presides stendards for the design, construction and operation of the Project.
Summaries of the Ownership Agreement, the Net Billing Agreements, and the Project Agreement are includtd in the Omcial Statement. ,
Participants' Allocations of !!onnesille Resources
- The Participants' current power sa!cs agreements with Bonnhil!c proside a formula for n'locatien cf Bennnille's available energy rescurces to cach Participant as well as its ether preference customers
! after the date that Bonnoille is unable to supply such customers' full requirements. Bonnesi!!c has notif.ed all Participants that Bonneulle will be unable to meet a11 of the energy requirements of its
! preference customers after June 30,1983.
l tlnder the current power sales agreements allocation formula, the actual allocation of Ilonnesille energy ta caeh Psttieipant will not be determinable until June 30,19S3 because a portion of the a!!o.
catien depends en load growth from July 1,1976 to June 30,1933, and certain features of the formula perm:t some changes to be made at Bonnesille's discretion. In slew of the foregoing uncertainties, 11enn:vi!L: has ind:cated that it is unable to determine at this time what LSe rdlocation of power will be after June 30,1983.
The Participants' power sales agreements with Bonneville expire between 1983 and 1994. In the rast Banneu!!c his executed new preference customer power sales agreements prior to the termination of exlit.ng preference customer power sales agreements, liowever, Bonneville does not expect to execute rew preference customer power sales agreements until after it has completed an environmental impact statement entltted "The Role cf BPA in the Pacific Northwest Power Supply Sptem. Including its Partic:patien in the flydro Thermal Power Program: A Program Ensirenmental Statement and Planning Reper:' and has gisen consideration to the material presented in the fin >l impact statement and its other lept ebli;atiens. In additien, from time to tims Donnesille recelses applications for purchase of power frera apneies which may also hase a statutory preference and priority on power from the Ilonnesille sprem. 'these applications for power and resultant power sales agreements and the terms cf preferenee eustomers' future power sales agreements, could affect future allocations of power from the llennesille spt:m A!so, we are adsised that the City of Portland, Oregon, is considering lit!gation questioning the ulidity cf the existing power sales a5reements. The outcome of these matters and a preposal being 61
I developed by the utilities in the Pacific Northwest cou'd also substantially alter the amount of Bonneville energy which will be availab!c to the Participants. For a description of the proposal see ** Proposed Regional Power Program" herein.
I Proposed Regional Power Program The region's utilities, states and Donneville's industrial customers are currently developing a program to proside a continuing power supply to the region. The proposed program presently includes the enactment of federallegislation providing for a method of a!!ocating Donnesille power; the creation of a regional organization for load forecasting and the designation of energy resources to be available for acquisition by Donneville to meet the loads of the region; the purchase of power from such resources by Donnesille; a consenation program; and pooling and sale of power by Donneville to the region's t.tilitics and Bonnesille's industrial customers. There is no assurance that the legislation will be passed by Congress or that the program as currently constituted will remain as drafted through the legislative process if the legislation passes.
Conclusions .
Dated on our studies and analyses of the Supply $3 stem's pro; osal to construct the Project, we are of the opinion that:
- 1. The output of the Project is required to meet the load growth of the utility systems of the Pacific Noahwest and can be readily absorbed by Donnesille and the industrial companies that are parties to the Power Sales Agreement when the Project is scheduled for initial operation.
- 2. 'Itc Ownership Agreement, the Net Ililling Agreements, the Power Sales Agreement and the Project Agreement proside a sound foundation for proceeding with the Project.
- 3. The estimated costs of the output of the Project are reasonable and comparable to costs expceted from similar projects being deseloped within the same time frame.
We hase furnished )cu the information in the Offleial Statement under .he headings entitled " Project rinancing Require nents"," Estimated Project Annual Costs", Power Supply in the Pacifle Northwest and the ll>dro Therma! Power Program ', and in Exhibits I and V. In our opinion, the information contained therein is correct.
Respectfully submitted,
/s/ R. W. UtCK AND ASSOCIATES
~
62
l l
I l
TABLE 1
. WASIIINGTON PUBLIC POWER SUPPLY SYSTEM ,
NUCLEAR PROJECT NO, 3 PARTICIPANTS i SIDDIARY OF FINANCIAL AND STATISTICAL DATA FOR 1976 1976 19?5 Dhtricts Munidpa!!tles Cooreratives Cer panies eb ATisTICS:
Tustomers:
Residential . . . . . . . . . . . . . . . 401.171 4:0,934 150,646 1,405,907 2,368,658 2281.221
. To t al . . . . . . . . . . . . . . . . . . . . . 462,246 463,325 181,959 1,642.131 2,749,691 2,646.607 1r.ergy Sales: kWh (000) . ... .. 19.137,814 15,499,268 4,935,327 53,777.266 93,399,675 86,609,709 Er.cr;y Purchases: kWh (000)
Denneville - (Hanford Project Exchan2e) . ... ... ..... 267,117 69,160 71,116 662.484 1,069,877 3,472,156 Bonneville . ............... 17,578,616 6,021,549 5,400,296 5,220.052 34,220.513 27,525,505 Other ........ .......... l.469.376 (235.184) 2.370 27.106.799 28,343.361 23.662.633 Total Energy Purchases LWh (000) . . . . . . . . . . . 19,315,109 5,855,525 5.473,782 32,989,335 63,633,751 59.660.294 Incrgy Generated: kb h (000) . 775.019 10.854.475 9,404 25.3 S t .392 37.020.290 33.528.501 Total Energy 1 cquirements LWh (000) .. ..... 20.090.128 16,710,000 ' 5,413,186 53,370,727 100,654.041 93,188.795 hak Demands: kW . . . . . . . . . . . 3,877,465 2,888,599 1,734,100 9,425.826 17.925,930 16,854,942
'rMTIoNS:
income:
Total Operating Revenues . . $176,831,363 !!60,687,450 $ 63.793,213 $ 817,261.380 $ 1223,573,406 $ 1.063,038.734 Other Income (Non Operating) 4.4S6.836 4.447.478 1.0t t.193 79.280.506 89.279.313 85.160.930 Total Income . . . . . . . $181,318,19,9 $ 165,134,928 $ 69,857,406 $ 8H 542,136 $ 1,312,852,719 61.143,199,564
$PERATING EXPENSES:
Purchased Power: ,
Bonnesille (Hanford Project Exchange) ... 5 974.279 5 247,916 5 . 276,$27 $ 1.912.256 5 3,411.2?S $ 12.097.409 Nnnesille . . 66.832.109 22,383,096 21,154.075 32,654,895 143,024,175 108,872.173 0:her . . . . 4.954.674 (1.201.787) 12.997 75.132.362 78.893.246 108.884.599 Total Purchased Power Ex. .
rense . . . ... $ 72.761,062 $ 21,429,225 $ 21,443,S99 5 109.599.513 $ 225,333,699 $ 229.854.181 Generating Expense . . . . . . . 7.654.806 17.555.194 30558 103.!!7.414 128.357.972 94.991.020 Total Power Supply Ex.
rense ..... ....... $ 60,415,868 $ 38,984,419 $ 21,474,457 $ 212.816,927 $ 353,691,671 $ 324,846,101 Depreciation . . .. .. 16,752,732 23,124,593 9,105.547 82.123,295 131.106,167 , 107,057,406 Other Expense (including Tases) . .... 49.995.572 70.034.992 25.513.693 253.340.256 398.884.513 342.540.437 Total Operating Expenses. $147,164,172 5132,144,004 $ 56,093,697 5 545,230,478 $ 883,682.351 5 774,443,944
.otNsEn Buw 5. S'.sEr:*
\ssets:
Na Utility Plant . .. .... $451.826,456 $707,555,703 $270,774,252 $4,094,451.801 $5,524.608.212 $4,951,694,105 0;her Pre;erty and Investments 102,261,300 48,032,841 11,.508.681 133,623.049 295,325.371 243,941,004 Current Asse:t . . ...... 79,455,383 83,642,758 28,028,302 233.820,595 429.947,043 341.359,941 Deferred Debits . . . . . . . . . . 14.110.283 14.825.227 1.702.277 58f18,4R 89.456.199 76.749.263 Total Assets . . . . . . . . $647,653,427 $854,056,529 $311.913,512 $4,525,717,857 $6.3 39,337,325 $5,618,744,318
.iabilities: '
Leng Term Debt . .. .. $263.936,058 $443,573,583 $227,257,652 $2,269,546,971 $3,204,316,264 $2,683.500,706 Curre it Liabilities . 40,503,507 35,307,668 14,175,549 346.257,478 436.544,202 568,714,845 Deferred Credits . . . . . . . . . . . 9.001,953 1,508,370 2,103,4SS 94.271,375 106,885,186 103,517.732 Resenes . . . .. 813,529 7,986,105 335,160 6,944.495 16,079,289 16,971,239 Centributions 1 Aid of Con.
stn etion . . . .. .. 17,013,436 20,871,597 231,4;4 0 38.116,447 31.794.045 Retamed Earnings . . .... 316.034,944 344,80?,206 67,810,249 1.808.693.538 2.537.395.937 2.214,245.751 Total Liabilities . . . . . . . . $647,653,427 $854,056,529 $311.913,512 $4,525,713.857 $6,339,337,325 $5,618,744,318
- Ec5 cf year.
63
s-EXIHBIT IH EBASCO SERVICES INCORPORATED UTILITY CONSULTANTS - ENGINEERS - CONSTRUCTORS Two RECTOR STREET NEw YORK, N. Y.10006 CABLE ADDRESS"EBAscoE" Bc ard of Directors Washington Public Power Supply System 30 )0 George Washington Way Post O!! ice Box 963 Richland, Washington 99352 July . .,1977 c
Gentlernen:
Re: Washington Public Power Supply System WPPSS Nuclear Project No. 3 Project Status Resiew and Analysis The purpose of this letter is to review the current' status of the Washington Public Power Supply System Nuclear Project No. 3 (the " Project") which is being constructed on a site near Satsop in south-eastett Grays Harbor County, Washington, and to analyze the important objectives necessary for its successful completion. .
In January 1973. Ebasco Senices Incorporated ("Ebasco") was selected and retained by the
'VasHngton Public Power Supply System ("WPPSS") to provide engineering, construction managem and related services for the Project. As Construction Engineer for the Project, Ebasco is responsible f the engineering, design, quality assurance, cost estimating and reporting and construction managem the Project.
In addition Ebasco is providing related services including expediting / materials application ,
en; neering, vender quality assurance, site quality assurance, applied physics and nuclear engineer licensing, plant operations and betterment, and, assistance in procurement and contract administration for contracts placed by the Supply System. Ebasco is also Construction Engineer for WPPSS Nuclear P No. 5 (WNP.5) cf similar design and located adjacent to the Project.
The Project The Project consists of a single unit,1.30. MWe class pressu-ized light-water reactor, nuclear power stat:an, together with all necessary plant facilitics including transmission facilities to interconnect ;
with the proposed 500 kV switchyard to be constructed by the Bonneville Power Adn2inistration
("BPA"). The Project shares certain common facilities with WNP-5.
The Project is located in the southeastern portion of Grays Harbor County, approximately 16 miles east of Aberdeen and I mile southeast of the confluence of the Chehalis and Satsop Rivers. The site is conseniently located with respect to the main railroad line shared by the Chicago, Milwaukee, St. Paul and Pacific Railroad and the Union Pacific Railroad; Highway 12; the Chehalis River, which is nasigab:e to ocean-going barges to a point within 5 miles of the site; and an existing BPA transmission corridor which is part of the Federal Columbia River Power System.
64
ne nuclear st:am supply system ("NSSS"), including the fabrication of the initial nuclear fuel core, for the Project will be supplied by Combustion Engineering, Inc. and will include the System 80 .
pressurized water reae:or design together with two U-tube steam generators. He NSSS has a thermal '
rating of 3,817 hlWt, and will supply approximately 18,000,000 pounds per hcur of steam at 1,000 psO and 550 degrees F. !
The turbine generator will be supplied by Westinghouse Electric Corporation, and will consist of a 6-flow tandem compound steam turbine with a gross electrical output of 1,316 SIWE at three and one-half inches Hg backpressure and a net electrical output of approximately 1,240 hlWe. Steam exhausting from the three low-pressure sections of the turbine will be condensed by circulating water whose heat will be dissipated in a natural draft cooling tower. A groundwater intake system will proside the make-up water to replenish the evaporative losses in the cooling tower. The generator consists of a three-phase, 60 Hertz,1,800 rpm unit rated at 1,460.5 51VA at 0.95 power factor and generates at 25 KV.
The main plant structures include the reactor containment and shield structure the reactor auxiliary building, the fuel handling building and the control room area-all supported on a common foundation mat and referred to collectively as the Combination Structure-and the turbine-generator building. The Combinauon Structure will be fannded on fresh sandstone rock and is designed to withstand a horizontal seismic ground acceleration of 0.32g. A natural draft hyperbolic cooling tower, 500 feet high with a base diameter of 400 feet, is the largest structure in the plant. In addition, there is an administration and service building.
De Project is being designed to comply with applicable existing codes, laws, standards and regulations of local, state and federal agencies; includes components and equipment of proven design er :easonable extensions of proven design concepts; and is compatible with the comprehensive land-use pisas and zoning requirements of the proposed site region.
Current Estimated Project Costs and Construction Contracts, ,.
The current capital cost estimate of the items within Ebasco's scope of responsibility is SS64,400,000 and is shown in detail in Attachment A. This cost estimate is based on a cost estimate of SS48,400,000 prepared in September 1976, which was predicated upon receipt of a limited work authorization
("LWA") fro:n the Nuclear Regulatory Commission ("NRC") in Dccember 1976 and commencement of preliminary site work in January 1977, to which has been added S16,000,000 attributable to a four-month delay until April 1977 in receipt of the LWA and commencement of preliminary site work.
The current capital cost estimate was developed on an equitable cost basis which takes into con-sideration that both the Project and WNP-5 benefit fro:s the economies of dual unit construction and therefore share certain costs on the basis of the proportions of respective benefit. The estimate of Project cost of 5farch 1976 (used when bonds were last issued by WPPSS for the Project) was SS51,600,000 and was developed using the costs which would have been incurred if WNP-5 was not to be built. The reduction in Project costs attnbutable to sharing of costs between the Project and WNP-5 has been offset by a change in the commer;ial operation date for the Project from October 1982 to September 19S3.
The bas"es for escalation and contingency, which are identified separately in the estimate, are as follows:
Escalation Labor and material escalation is computed in accordance with the terms of current labor agreernents and existing material contracts. For labor and material not presently covered by labor 2
agreements or material contracts, escalation :s computed at 8% and 6%, respectively, per year compounded from Alay 1,1976.
6f
~
A total of S196,33S,000 is included to' cover anticipated escalation for the period Afay 1976 through completion of the Project. A change of 1% in the annual escalation rates would result -
in an increase or decrease of approximately $25,000,000 in the estimate. '
Contingency A total of $39,033,000 in hfay 1976 dollars is included as contingency to cover the impact of design uncertainties, quantity refinements, and departures from assumed productivity rates.
As of June 1,1977, seventy-four equipment and construction contracts totaling S267,954,000 or approximately 45 percent of the expected total value of all equipment and construction contracts for the Project have been placed. A listing of the contracts placed is shown in Attachment B. The majority of the remaining equipment contracts are expected to be awarded during the next twelve months.
- These contracts were awarded by WPPSS by means of a competitive bidding process pursuant to the statutory requirements with which WPPSS raust conform as a joint operating agency of the State of Washington. Factors considered by WPPSS include price and the responsiveness of the bid to bidding requirements._ WPPSS is also authorized to consider the bidder's experience, qualifications, available personnel and facilities. In our opinion, the, vendors a'nd contractors who have been awarded contracts by WPPSS are qualified for the particular type of work to be performed by them.
Project Status and Schedule
- The final Environmental Statement was issued by the NRC in June 1975. The Preliminary Safety Evaluation Report was issued by the NRC in February 1976. A site certification agreement was issued by the State of Washington in October 1976. The LWA was issued by the NRC on April 8,1977 and Notices to Proceed were issued immediately on five construction contracts. The Atomic Safety and Licensing Board's final safety hearings related to issuance of a construction permit by the NRC were held on Stay 24 and 25. The hearings were uncontested and a decision on issuance of a construction permit is expected in late summer or early fallt ,.
As of June 1,1977, engineering activities were 62 percent complete and procurement activities 43 percent complete. Construction activities were 0.1 percent complete, preliminary site work having commenced in mid-April.
The current capital cost estimate set forth in Attachment A is based en the following assumptions made with regard to schedule:
- a. Limited work authorization from NRC-April 1977
- b. Commencement of preliminary site work-April 1977
- c. Start of major excavation activities-August 1977
- d. Receipt of a construction permit from NRC-August 1977
- c. Initial concrete placement-February 1978
- f. Fuelloading-blarch 1983 -
, g. Commercial operation-September 1983 Based upon the present construction schedule for the Project, a construction labor force peak of approximately 1500 is anticipated in the fall of 1981.
Conclusions
! We have reviewed in depth those aspects of the Project which are within Ebasco's scope of ,
responsibility. Based upon presently known regulatory criteria and the schedular and economic assump- l tions set forth herein, it is our considered opinion, with respect to the Project that:
l l 66 i
a
- .--- =~ ' '
c.
r
- 1. The Satscp site is a suitable location for the Project. .
- 2. All aspects of the Project are of presently proven engineering design or application, or 8 Orc reasonable extensions thereof.
- 3. The Project is being designed to comply with existing licensing requirements at local,
. state and federallevels.
- 4. The program for construction is consistent with those for other installations of similar size and complexity, and is realistic. The completion of the Project in accordance with the schedu is reasonably anticipated.
- 5. The work within Ebasco's scope of responsibility is expected to be completed within the current capital cost estimate.
- 6. Following an initial period of testing and preliminary operation, the Project is expected to operate in a reliable manner with normal maintenance.
The Project description and statements and summaries of our estimates contained in this letter i h his letter is attached are correct.
'which are set forth in the Official Statement to wh c t Very truly yours, R J SHERMAN President
. 6 b
J e
e 4
67
, .% , , . . . , . . .p _ _ - p,, -p-, , - ,. , - +y 3-- . - - -em. , - - . -y e-
r l
. l ATTACIDIENT A i
WASIIINGTON PUIILIC POWER SUPPLY SYSTDI WPPSS NUCLEAR PRO.;ECT NO. 3 CAPITAL COST ESTULATE Estimate of Estimate of Starch 1976* A pril 1977'*
Land and Land Rights . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . NotIncluded Notincluded Structure and Improvements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 1S2,268,000 S165,416,000 Reactor Plant Equipment . . . . . . .......................... S132.92S,000 S166,958,000 Turbogenerator Units . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5128,272,000 $131,240,000 Accessory Electric Equipment . . . . ..... ....... .. ....... 5 3S,920.000 $ 42.634,000 Miscc!!aneous Power Plant Equi; ment . . . .' . . . .............. S 24,7S9,000 $ 29,122,000 Station Equipment . . . . . . . . . . . . . ..........
. 3..
...... S 7,278,000 $ 6,519,000 0:hcr Tang ! ale Property . . . . . . . . . . . . . . . . . . . . . . . . . . . . . S 17.280.000 5 14.S94.000 Subtotal Direct Construction Cost . . . . . . . . . . . . . . . . . . S531,735,000 5556,783,000 Esc al acon . . . . . . . . . .,. . . . . . . . . . . . . . . . . . . . . . .. .. $1S4,746,030 S196.338,000 Contingency . .... . ..................... ...... .. S 52.1S1.000 $ 39.033.000 Total Direct Construction Cost . . . .'. . . . . .... $768,662,000 5792,154,000 Sales Tax . . . . . . . . . . . . . . . . . . ...... ......... .... NotIncluded NotIncluded Architect-Engineer . . ........... .......... .. ...... S 51,576,000 S 41,27S,000 Cons:raction h!anager . . . . . . . . . . . . . . . . . . . ... ... .... S 31,632,000 $ 30,968,000 Pe rforrnance B onds . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . NctIncluded NotIncluded Nu cl ear Fu el . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . NotIncluded NotIncluded Owner's Cost . . . . . . . . . . . . . . ...... ......... ... ..... No. included
- NotIncluded Interest During Construction . ..... . .... .... . ...... NotInchtded NotIncluded Total Estirr. ate . ....... ... ... ........ ..... SS51,600,000 S864,400,000
- Eased en commercial operation date of October 1,1982. Estimate was developed using the ecsts
'.hich wculd have been incurred if WNP-5 were not to be built.
" Eased on commercial operation date of September 1983. Estimate was developed on an equitable ost basis which takes into consideration that both WNP-5 and the Project benefit frem the economics of tiual unit constr:ction and, therefore, share certain costs on the basis of the proportien of respective ber. cst.
68 L
ATTACIDIENT B AWARDED PROJECT EQUIP 31ENT AND CONSTRI'CTION CONTRACTS FOR WPPSS NUCLEAR PROJECT NO. 3 (As of June 1,1977) .
Present' Contract Contract Award Date Amount Contractor item -
7/25/73 5 56,951,000 Nuclear Steam Supply System . . . . Combustion Engineering, Inc.
8/31/73 39,342,000 Turbine Generator and Accessor:es ~ Westinghouse Electric Corp.
10/ 9/74_ 28,351,000 Steel Containment Vessel . . . . . . . . Chicago Bridge and Iron Co.
11/20/74 5,070,000 Surface Condenser . . . . . . . . . . . . . Ing:rsoll. Rand Company 1/ 2/76 3,714,000-Clearing and Grubbing . . . . . . . . . . J J Welcome Constiuction Co. 2,054,000 HPD Incorporated 2/20/76 Radwaste Evaporators . . . . . . . . . . 8,320,000 Associated Sand & Gravel Co. Inc. 4/13/76 Supply and Delivery of Concrete . . 3,551,000 Southwestern Engineering Company 4/20/76 Feedwater IIcaters . . . . . . . . . . . . . 5,586,000 4/22/76 Transformers . . . . . . . . . . . . . . . .". General Electric Company 4/26/76 3,384,000 Condenser Tubes . . . . . . . . . . . . . . Carpenter Technology '
6/ 2/76 12,553,000 Concrete Reinforcing Steel . . . . . . . Bethlehem SteelCorporation S J Groves and Sons Co'mpany 6/29/76 23,313,000 E xcavation . . . . . . . . . . . . . . . . . . 12,557,000 9/17/76 Na: ural Draft Cooling Tower . . . . Zurn Industries, Incorporated 11/29/76 4,309,000 Colt Industries Diesel Generators . . . . . . . . . . . . . 19,656,000 Associated Piping & Engr. Corp. 3/ 2/77 Piping and Piping Supports . .. . . . 4,235,000 5/13/77 Field Erected Tanks . . . . . . . . . . . . Chicago Bridge and Iron Co. ,
Fifty Eight (58) Equipment and Construction Contracts, each with ,,
35,003,000 Value Less than 52,000,000 . . . .
5267,954,000
- Includes executed change orders.
S 69
EXHIBIT IV .
i OPLNIONS OF COUNSEL
[LE'ITERHEAD OF WCOD DAWSON LOVE & O'BRIEN]
, (LETTERHEAD OF HOUGHTON CLUCK COUGHLIN & RILEY)
Board of Directors Washington Public Power Supply System Richland, Washington
Dear Sirs:
Washington Public Power Supply Syst'em Nuclear Project No. 3 Revenue Bonds, Series 1977, $230,000,000 At your request we have examined into the validity of an issue of $230,000,000 Washington Public Power Supply System Nuclear Project No. 3 Revenue Bonds, Series 1977, of Washington Public Power Supply System (the " System"), a municipal corporation of the State of Washington. Said bonds are issuable in coupon form, registrable as to principal only, in the denomination of $5,000 each, and in fully registered ferm, without coupons, in denominations of $5,000 and any multiples thereof. The ceupon bonds are numbered from 1 upwards and are dated July 1,1977. The fully registered bonds are numbered from R-1 upwards and, except fully registered bonds initially issued, which are dated Ju'y 1,1977, shall be dated so that no gain or loss of interest shall result from exchanges or transfers therecf as provided therein and in the Bond Resolution hereinafter mentioned. Said bonds mature on July 1 in each of the years and in the amounts and bear interest, payable January 1,1978, and semi-annually thereaf ter on January 1 and July 1, as follows:
Interest Int: rest Year Amount _ Rate . Year Amount ,
Rate _ .
19S5........ 52,620,000 ...% 1994. .... S 3,830,000 ...%
19S5....... 2,725,000 ... . 1995...... 4,030,000 ...
1957. ...... 2,825,000 ... 1996...... 4,240,000 ...
19SS...... . 2,945,000 ... 1997...... 4,460,000 ...
19S9...... . 3,065,000 ... 1993...... 4,700,000 ...
, 1990..... . 3,200,000 .. 1999...... 4,950,000 ...
1991........ 3,335,000 ... 2000......
5,235,000 ...
1,9 9 2 . . . . . . . . 3,490,000 ... 2009...... 63,535,000 ...
3,655,000 2018...... 107,160,000 ' ...
1993........ ...
Said bonds are subject to redemption prior to maturity upon the terms and conditions set forth therein, and recite that they are issued under and pursuant to Resolution No. 775, adopted by the Board of Directors of the System on the third day of December,1975, and a resolution supplemental thereto, Resolution No. . . . . adopted by said Board on . . . . . . . . . .,1977 (hereinafter referred to collectively as the " Bond Resolution"), and under the authority of and in full compliance with the Constitution and statutes cf the State of Washington, including Titles 43 and 54 of the Revised Code of Washington, for the purpose of constructing, and acquiring as a separate utility system of the System an undivided 70
d ownership interest in,' a nuclear electric generating plant and associated facilities constit ,
t) be known as the Washington Public Power Supply System Nuclear Project No. 3. i We have examined the Constitution and statutes of the State of Washington, and certified of proceedings of the Board of Directors of the System authorizing bond the issuance of sa the B_ond Resolution, other proofs relating to the issuance of said bonds and an executed ti sa!J series. Washington, duly created
. In our opinion, the System is a municipal corporation of the State of and validly existing; the Bond Resolution has been duly adopted and ih the provisions th and binding upon the System; and said bonds have been duly binding authorized obliga- and issued in accor the Constitution and statutes of the State of Washington f and constitute valid and legallyh and pr
. tions of the System payabic solely from the funds and revenues as set o Nuclear Project No. 3 Revenue Bonds, Series 1975 and Series 1976, and any bonds hereaft parity therewith pursuant to the Bond Resolution.
It is to be understood that the rights of the holders of said bonds under the same and unde Bond Reolution and the enforecability thereof under the same may be subject to judicial d and to valid bankruptcy, insolvency, reorganization, moratorium and other laws for the relief o it is also our opinion that the interest on said bonds is exempt from taxation by the United St of America under existing laws, regulations and rulings issued by the Internal Revenue Senice.
Very truly yours, 9
9 6
E e
D 71 3
r
[LETIERHEAD OF WOOD DAWSON LOVE & O'BRIEN]
[ LETTERHEAD OF HOUGHTON CLUCK COUGHLIN & RILEY]
Board of Directors Washington Public Power Supply System Richland, Washington Dear Sirst Washington Public Power Supply System Nuclear Project No. 3 Revenue Bonds, Series.1977, $230,000,000 Under date of . . . . . . . . . . .,1977, we rendered an opinion approving the validity of the bonds referred to above (the " Bonds") issued pursuant to resolutions adopted by the Board of Directors of the Washington Public Power Supply System (the " System") on December 3,1975 and . . . . . . . . . . . .,
1977 (collectively, the " Bond Resolution").
We have examined i,nto the validity of eighty-eight of the Net E!!!ing Agreements referred to in the Oflicial Statement of the Sysnm dated . . . . . . .,1977 relating to the Bonds, among the United States of America, Department of the. Interior, acting by and through the Bonceville Power Adninistrater, the System and certain of the Participants referred to in Exhibit I of siid Otlicial Statement, which eighty-eight agreements proside.for the purchase and assignment of an aggregate of not less than 95.525cc of the System's Ownership Share of the Project Capability (as defined in the
< Net Billing Agreements and reduced in the period prior to June 30,1984 by certain short-term sales of output) of the WPPSS No. 3 Project (as defined in the Bond Resolution) in any Contract Year (as Ofined in the Net Billing Agreements). With respect to the authorization, execution and delivery of said eighty-eight Net lli:iing Agreements, we have examined certified copies of proceedings of the System and of the Participants which are parties thereto authorizing the execution aod delivery of said eighty-eight Net Billing Agreements, and such other documents, proceedings and niatters relating to the authorization, execution and delivery of said eighty-eight Net Billing Agreements by each of the parties thereto as we deemed relevant. In our epinion, each of said eighty-eight Net Billing Agreements has luen duly authorized, executed and delivered by each of the parties thereto and constitutes a valid and binding agreunent enforceable in accordance with its terms.
We have also examined into the validity of the Ownership Agreement referred to in said Official Statement, among the System and Pacific Power & Light Company, Portland General Electric Con pany, Puget Sound Power & Light Company and The Washington Water Power Company. With respect to the authorization, execution and delivery of said Ownership Agreement, we have examined certitEed copies of proceedings of the System and of the Companies which are parties thereto authorizing i
the execution and delivery of said Ownership Agreement, and such other documents, proceedings and ma:ters relating to the authorization, execution and delivery of said Ownership Agreement by each of the parties thereto as we deemed relevan: In our opinion, said Ownership Agreement has been duly authorized, executed and delivered by each of the parties thereto and constitutes a valid and binding ,
agreement enforceable in accordance with its terms. j We have also examined into the validity of the Project Agreement (Contract No. 14-03-39100) referred to in said Otlicial Statement, between tl'c United States of America, Department of the Interior, acting by and thraugh the Bonneville Power Administrator, and the System. With respect to the autherization, execution and delivery of said Project Agreement, we have examined certified 72 m
f-['.
I ii h ecution and delivery Tapies of proceedings of the Board of Directors of the System author z ng t e exd m ti s thereto as we of said Project Agreement . and. such other documents, fh proceedings an auSorization, execution and delivery of said Project Agreement by each o t e par :
In our opinion, said Project Agreement has been duly a i
dc med. relevant.
. delivered by each of the parties thereto an accordance withits terms. Agreements, It is to be understood that the' obligations of each hof the parties to the Net Bilmay be Ownership Agreemert and Project Agreement and tbci enforceability m and other thereof un i
subject to judicial discretion and to valid bankruptcy, insolvency, reorganizatio ii ts laws for the relid cf debtors.
In rendering this opinion, we have relied hiupon the opinion of counsel for eac .
and aforesaid Companies that the Net Billing Agreement or Owners ii tpr Company default under, Participant or Company is a party has been duly executed i and delivered by sa end is not in conflict with, or in violation of, and will not be a breach of, or const tute a the terms and conditions of any other agreement or commitment l
'is bound.
- Ver'y truly yours, I .
f . .
l .
'I f
- l O
73 i
EXIIIBIT V ,
i SUPPLY SYSTEM NET BILLED PROJECTS (1)
Annual Costs ($000)
Estimated Amounts Estimated Net Billed Debt Senice Debt Service Estimated Estimated WPPSS No. 3 Financing Issued Additional Operation to fund Debt Senicef4) Expenses (5) Resen es(6) Total
- Yest 1977 Honds(2) to Date(3)
$ 49,326 $ 10,313 $ 5,964(7) $12,858 $ 78,461 1978... ... $ 0 57,508 12,376 1,025(7) 0 70,909 1979....... 0 57,124 12,376 0 37,096 106,596 1980.... .. 0 90,933 54,314 38,909 24,137 208,293 1981....... 0 98,824 67,711 83,703 23,542 273,780 1982....... 0 331,279 11,500 115,333 96,711 103,757 3,923 1953....... 377,142 13,800 118,388 102,511 142,443 1984....... 158,353 398,521 16,008 118,394 105,766 1985....... '
407,037 16,003 118,405 105,766 166,85S 1986....... 415,790 16,008 118,423 105,766 175,593 1987....... 422,353 16,00S 118,418 105,766 182,161 1983....... 428,672 16,008 118,445 105,766' 188,453 1989....... 435,236 16,008 118,547 105,766 194,915 1990. ..... 394,190 16,003 118,551 105,766 153,865 1991....... 398,029 16.003 . 118,548 105,766 157,707 1992....... 402,508 16,003 118,649 105,766 152,085 1993..... .
408,741 16,008 118,734 .105,766 168,233 1994... ...
105,766 176,140 416,718 1995. ..... 16,008 118,804 (1) lactudes WPPSS Nuclear Project No.1,',WPPSS Nuclear Project No. 2 and the Supply System's Ownership Share of the Project.
(2) Based on an assumed interest rate of 6.0% for the 19'7 Bonds, and level debt service with principal payments beginningin 1985.
(3) Actual debt service on WPPSS Nuclear Project No.1 Series 1975,1976A and 1976B Bonds, WPPSS Nuclear Project No. 2 Series 1973,1974,1974A,1975A,1976 and 1976A Bonds, and on the Project Series 1975 and 1976 Bonds.
(4) B: sed on most recent estimates of project costs and computed as level debt service assuming a 7.5% interest rate on bonds to be issued.
(5) Estimated operating costs by year includes taxes and net payments to Reserve and Contingency Fund.
Assumptions used in the calculation are:
- a. 1977 cost levels escalated to the year of expenditure at 6.0% per year.
, c. Plants are assumed to operate at a plant factor of 60% the first year and 75% thereafter PNUCC guidelines.
- d. For the period 1991 through 1996, payments to be made by the Cornpanies pursuant to the Exchange Agreements will reduce the total annual costs for WPPSS Nuclear Project No. 1.
- e. Includes taxes calculated at 0.2 mills per kwh. Legislation passed by the state legislature and now on the Governor's desk may increase taxes.
(6) Includes funding of Working Capital, Reserve and Contingency Fund, and Reserve Account in Bond Fund.
(7) Excess amount of payment to Reserve and Contingency Fund over surplus from prior year's payment ;
to the Reserve and Contingency Fund.
74 f l
l
EXHIBIT VI BONNEVILLE POWER ADMLNISTRATION PROJECTED REVENUES
($ millions)
(5)
(4) Remaining (3) BPA (1) BPA (1) Cost of Power Acquisition O&M Ites enues_
Expense _
BPA WPPSS Other Fiscal Revenues _ 179.3 h 32.7 54.0 50.6 54.5 159.6 316.6 31.5 1977........... 76.6 57.8 164.9 322.2 36.8 1978........... 79.8 60.3 296.0 339.3 1979 ........... 517.2 132.0 28.9 61.7 290.5 1950........... 224.7 37.8 340.9 614.7 41.8 62.8 19S1........... 288.2 64.5 318.0 733.7 51.2 1982 ........... 342.8 65.7 413.2 776.5 '
1953........... 382.5 .' 31.9 66.1 341.0 839.3 '
30.9 1954. ......... 400.7 3 15.5 838.7 31.7 66.2 19S5... ....... 409.2 347.7 852.6 32.3 66.3 19S6..... ..... 417.4 349.5 863.7 67.3 1987 ........... 873.1 423.9 32.3 68.3 343.3 1988........... 430.3 32.2 354.5 874.1 33.9 68.3 1989........... '
425.0 380.8 881.7 34.3 68.3 1990........... 395.2 374.8 878.6 '
34.4 68.3 1991........... 399.2 63.3 373.2 876.7 28.5 1992.. .. .....
874.1 404.1 ~ 68.3 365.0 1993. .. ...... 410.7
- 27.4 353.0 871.4 27.4 68.3 1994.. .....
420.0 06S.7 1995. ... .... .
NOTES ding, and Column (1)-Fiscal Year
- 1. Fisd Year 1977 and subsequent Fiscal Years begin on October 1 of the y -
terminate 12 months later.
Column (2)-BPA Revenues Bonnedile's below
- 1. Revenues from the sale loff nonfirm energy and from the estimate made in advance of the fiscal year as the i resu (See t" o unusNorthwest Pacific the winter and spring of 1977 on the Columbia d iit tion".)River and its tributar es.
l . Drought" under the caption "Bonneville Power A m n s ra fh ithdrawal l h f the
- 2. Estimates of revenues and cost of power acquis Trejan Project. f ted for
- 3. A rate increase which will increase revenue by approximately 60 pe h September December 20,1979 (three. fourths of Fiscal Year 19S0), and is based u bility of the Supply d since 1976 forecast of additional costs to Bonneville for the acquisition cf the capal System's Nuclear Project No.1, plus (b) the overall cost escalation h t scalation Bonneville ellectuated its last rate increase as of December 20,1974, i 75
as of September 1976 for the Supply System's Nucacar Project No. 2, the cost of which was '
included in the December 20, 1974 rate increase. Because the Bonneville rates, by virtue of existing power sales contract provisions, cannot be increased until December 20,1979, the increase estimated to be required as of that date will have to provide for a significant amount of
- catch-up to cover the cost escalation. This estimate of future revenue increase requirements is believed to be conservative in that it makes no provision for additional cost escalation which has
. occurred since September 1976 and which may occur between the present and December 1979; J i .e., if costs continue to escalate during that time, a larger increase could be necessary.
4.~ A rate increase which will increase revenues by approximately 20 percent is forecasted for July 1,1981'(one-fourth of Fiscal Year 1981) to cover additional costs, principally for the acquisition of the capability of.the Supp!y System's Ownership Share of the Project com-mencing in 1981.
S. .If costs increase, a rate increase could be effected on July I of each year, subject to new or revised power sales contract terms providing for annual rate review after 1981.
Column (3)-Cost of Power Acquisition .
- 1. The column "WPPSS" includes the Supply System's Hanford Project, Nuclear Projects Nos. I and 2 and its Ownership Share of the Project.
- 2. T1.e column "O:her" includes the City of Eugene's 30 percent share of the Trojan Project and s
the purchase of 'econdary energy.. The estimate as to' :he purchase of secondary energy is obtained from load forecasts and is also used in computir.; revenue estimates.
- 3. The figures in the column "WPPSS" for Fiscal Year 1977 is estimated by Bonneville, and for subsequent Fiscal Years the figures are 'from cost estimates developed by the Supply System and indicated in Exhibit V, adjusted to Fiscal Years commencing October 1.
Column (4)-BPA Operation and hfaintenance Expense The estimates for Bonneville's operation and maintenance expenses are based on budgeted figures for Fiscal Year 1977.
Commencing in Fiscal Year 1978, the estimates are computed using -
the Fiscal Year 1977 figure as a base and increasing that number by a percentage of annual plant-in-service additions. This percentage is based on a study of historical data.
Column (5)-Remaining BPA Revenues Remaining Bonneville revenues are available for Snancing Bonneville construction and for pay-ments to the Treasury for Corps of Engineers and Bureau of Reclamation operation and maintenance costs, annual interest e.xpenses of the Federal System and amortization of the power iacilities financed from appropriated funds. '
Provided by Bonneville Power Admin-istration, Divisions of Power hianage-ment and hfanagement Services, June 28, 1977.
76
m ,
g .
, 9 7 d pLA. , f'.
m:, 3 -
- r.
UNITED STATES CF' AMERICA
't'
!!tJCLEAR REGULATORY COM'!!SSION
)
In-the Me.t " ofx )
Docket Nos. STM 50-509 50-503
)
POWER-is SHINGTON PUBLIC )
SUPPLY SYSTEM, et al. ~
)
) 5
@PPCS Uuclear Projects r
)
tio . 3 and No. 5) , jfb '
((( \
b P.'J f0*O TESTDTdiY OF JAM 3S D. <
e
[
REGA?DI'iG FIUANCIAL OUALIFICATIO.'!S P a rkc . My businesu addrcsc is My nroe in James D.
3000 Ge.orge Uartitincton
~
Da.shington Fublic Fowcr Supply Cycte.n, Ridland, Waahington. I am the Ansictan: Director -
-Say,
?inance and ?_dminist-ation, and Troc.nurer.
The purpcco of my testir cny in to sur marine and ugaz te i arding the the inforn tion in our licanre applicat on reg f the Snpply System's fi..cncial coalification.;, in terms o and Appendix C to 10 Nnc regulations (10 C.F.n. 530.33 (f)
- to demencerate that WPPSS possocses, or C . F . rt. Part 50), i hac renbonable assurance of cbtaining, the funds necessary t fuel cycle to cover estimated construction costs and related \,
3 ("WUP-3") and W?PSS costs for WPPSS Muclear Project No. .
Nuclear Project No. 5 ("tGIP- 5") .
I. EACKGROLMD l
)
Washington Pthile Pcwcr Supply System is a municipa I f
ccrporat.icn and joi.nt ope; J.ing Petericy of the State o
~ ~
.,.-7 F* .
i.
.u;g::on, organized in January.1957 pursuant to the laws The Supply System is coraposed of 19 utility .
j)- :. c.hingto n.
A
.,2: -;). cts and three cities, each of which operates an elec-
. - n. ' distribution system within the State of Unshington.
':gply System is empowered to acquire, conchruct and operan facilitics for the generation and t.ransmi.snion of i.c power and enargy, but does not engw e in the
. .aution of electric energy at retail.
s c:'.c s urcds of construccion fundE for Washington Public Supply System a e typical of those for a public tgency, adrancus or guarcutoo: fro:a perchasero or proupactive ~
lh oirs of the cutput of the projects as-an in';crin - nuanurn ver initial exwndituras (often followed by the issuance _
m
. .i>rt- term debt securities) , and, for perannont financing, j
. ace of iong-term debt ser" ities. There is no couit"z
.t 3
ts no invested capital) iniolved in public agency
uing.
Siace the Supply Systcm itself does not hava
Jes from n variety of wholesale and retail sales, but
! -" from sales of generation, and since revenues do not
- d costs ' but rather are limited to rein.bursement ofe _
-W -
.*3, there are no internally generated funds in the sense
' " hined earnings which night 6:e looked to as sources of
'metion funds. Thus, in the absence of equity cro
~ 'ullygenernhedfunds,debtsecuritiesarethefunda-i
.:rource of construction r.:.nanc.;ng.
h o
"" ' ,r --r ~n, . - , - - - - , , . , _ _ _ , _ __
y,,_._ _ _
. i.
-+ ,
1-i i
ei ;
^
l form of debt ,
+
Revenue bonds or notesingare of the norma activitics such.
1 i
z ycerity .for. public agency f nanc ramsy and Supply ,
l
. j;.s electric genera'tica construction. prog ~~
f the revenue bond or revenue i
l, ized
- s estem debt securities are o h ,
i Specifically, the supply System is aut or 1
J. ;. l
- i. n. ote z type. - warrants e to " issue. revenue bonds or jby RCW 43'.52.3411 tility properties- .
t-payable from the revenues of the u
..sperated by it".
t
. ly Sycten on a The issuanca of securitics by the Supp The Supply i htforwa3:d.
' project-financinc; basic is stra g I,5ystem'sEcardofCirectorsadoptsresolutionsdes
- i g forth the ectimated
'the proposed systen or plan and cctt n ities. Thene resc-co.t c just prior to the issuance of secur of the i
lutions serve as the indenturcs - to the buyers h 4
i which certain covenants arebeen ' made to suc adopted
} accurities inSuch plan and system tesciutions have j buyers. addition to specific resolutions in for WNP-3.and_UNP-5, these Projects.
,n -
for the issuance of revenue bonds for re negotiable l The bonds or notes of the Supply System a its of public f.
instruments and legal securities for depos tees and other i monies, and are legal investments for trus k I
t i
fiduciaries, and for savings and loan associations, ban
! 5 i1d insurance CoDpanies. .
i
- ~
. _4_ . .-. - ,
. 3
' I the following
- m to .the source of construction funds,
, ::urnarize and provide background regarding, and explain i
.,cifference in some respects between, the plans for t
.nc..cing the cost of WNP-3 and E!P-5. i
+
t i.
II. h_7. 77-3 FIN;.NCRIG 1
- he underlying security for the bonds or notes for
, . : arts with contracts with utilities who have under-Thus, the insuance c 1:o purchase the outptit of UMP--3.
2e revenue bonda for WNP-3 is based upon the contractual
- C: cents of 103 public and cooperative utilities (the g .
- i.c ipants" ) to purchase the ent. ire electrical capabiliM.
p the Supply System's 702 share of WNP-3. The remaining canership share of WMP--3 has been pucchased by four
- . Itor-owned utilities (the "Ccmpanies"),_as discussed in dutail below. The contracts with the pt'blic agency and
' gerative participants are called " Net Billing Agreements" .
norm of Not Billing Agreement is set forth in Exhibit A to the Supply System's formal Application (Applicant's ! -
l 1 F::hibit 1) . The agreements with investor-owned utilities -
-- i
~ _ . _ t 3 reements". The Ownership Agreement .
are called "Ownersha. I I
31so is set forth in Exhibit A to the Application. The t
[
a.,
S Fply System's ownership share of the capability of WIN-3
'MGE has-been sold by the Supply System to those 103 hU :ly and cooperatively ovned utilities, all of whom o
i s.
h Ls.-.
. . ~ . . . . _ _ _.
~ , .,
l0. ? ,
, ;e 1 r .
.are statutory preference customers of-the-Bonneville Power In addition, a Administration - ("BPA" or "Bonnevillo") .
I I portion of the Supply System's shcrc of Project output
- j-will'he sol'd to'15 industrial customers of Bonneville from the.date of'cotmercial operation through June 30,
.l The remainder 1984, pursuant to a Power Sale Agreement.
of the Project (30%) has been purchased by the following e
1 Co.r. panics, each of s .so2 customers of DPh in the Pacific Power a,nd Light following individual portions:
Corapany (" PP &L" ) (101), Portland General Electric Company
_ . . _ _ _ _ _(100) , The Washingten -Water
("PGE") ~ - ~ - -Power Company ("Ed?")
(5%), anc' Pugat Sound Power and Light Cor.:pany - (" PSP &L") ,
i (5's) .
J Uni'er both Net Billing Agreements and Ownership Agree-ments, the Supply System rec 6ives a premise to pay a portien i.
of the costs of acquiring, constructing and operating WNP- 3.
The agerogate of these purchaser's n obligations equals the - g total costs of the facility, Each Participants' portion u
of'such costs includes the amount required each year to pay
- tpe interest and a portion of the principal on the bonds out-share of the annual operating standing, plus the Participants' costs.
The Companics are financing their 30% ownership sharc the Companies also promise of W:iP-3 individually, Howeverf to pay the Supply System for their ownership share of annucl operating costs. The Supply System covenants '. tith the as bond holders to. pay this principal and interest,
'3 .
6-r ,
y,M 'in the bond recolution, from the revenues received
.- . 1
.;Mich are pledged to payment of.the bonds. The' Supply 5fgrees to: set aside,-in sinking funds, amounts
)prL.:icnt to-p 1 each year's accrued Lintercct and principal' '
6 deposit'all revenues ~of the Project into a Project p ur Fund. .The Supply' System further promises not to .
go any. modification of the contracts with Participarits iri, -or ac.tendment of the bond rasolution which would
'y affnet the rightc of th9 bond holders.
. Nc b Billing Agreamcat are cY.ecuted by each Par-
. . , the Gupply Sy: :c.m and Eennaville. The 1:et Billing y - 9a prc M de that. the Gupply Sy. stem's ownership shdre
... 2 -3 capchili.ty (onecpt as noted earlier with respect O inductrial custo.nars) will be so'.d by the Supply sy,fr to the Participants as statutory preference duston' ors
.: /illo . The Net Billing Agrecanta als.; provide that iticipant vill aesign i.ts share of Project capability
- eville. In turn, Bonneville '..'ill credit t.he paymonts
- a the Supply Syster.by cach Participant for the Par-4 "t's proportionate sharc of the Project's annual costs I. includes debt ser; ice) agr. inst billinga made by 4
$W7ille to the Participant for power and certain services
'Jed under other contrcces.
The Not Billing Agreements.
i
'? that the Participants are obligated to pay the Sunpl.y 1
~~
. whether or not Wr-3 is ccmpleted, operable or operating, 2
a< ,-, , r , ,, r- ,m , +m.en, . ,- , , , ,,,- -n, .-- , , - .,, - - ,. e , - -
.-._g .
[t t
i, I --
l t
interrupti'on, inter-3:notwithstanding the suspension, j
?rence with, reduction .cr' curtailment of the Project !
- .utput . -Significantly, the
- Met Dilling Agreements also
~
L .
- rovide.tha't Bonnoville will credit,the Participants for j ,
cayments mado. to the. Supply System irrespective of energy i actually received. Thus, there is asnurance that tho ,
i l
carticipants.will havn funds to bear their share of c.sta t irrespective of cparation.
-s it In case of def ault o'f a Company, _the non-daf aulting_ ..
the total requirement ec :m. an i.es ma y n a't i s f y _
-~~-
In the event of a default of
< ) of the def aulting Company. -
h -
j a Participant, othe):. Participan ts are obligated to auho --
x
- aatic step-ups of their billing (by as much as 25 perccc.t)
' t --
i to satisfy the total Participant obligations to WPPSS.
'4 i: ! -
h
~
The first level of security for repayment of Project
.. i
)
1 Londs is the revenues to be derived froa opccati.cn oC Mie t ;
. j_ Froject. The recond level of security is the lich Dilling ,
Agreements executed by the Parti.cipants and tha ownership i
.i Agreements executed by the Companies. Since the Partici- ,
I t ;
i M pants and the Companies are obligated by those Itgreements !
i j '
to make payments whether or not miP-3 is completed, operable f
j ; i i I
, : or operating, and notwithshanding intcrruption or curteil- , i
- .%nt of output, the source of funds forg.;tygen
'roject L costs is not .dopend7nt on actual project -- levennas.
.o tather, payment of Pcoject costs is "ir.nured" on a broad a f
4 4
,, ,. _ _ , , . , , . , _.,..y_ ,.%,_ ,,,..__.-,.,-y_...., ..r_,.,--. _.-_,,,..,_,,,,v,.._,, ._,,m,,.3, _ _ _ , , - , . , ,.._.%,,y...,..___-._ _ , < _ , . , - - , _ _
V .
.c
~.:
i' t-l' isc through. the obligation of ~ the 103 public and coopera- I the .[;
.t.
. iee entities and, to the extent;o'f their-interest, j The1 aggregate of these .
gur investor-owned' Companies.
The ebligations equals the total cost of the ' Project.;
- tird level of security is the obligation of the United
,t-tates Government, through Bonneville, to provide power
. \,. f the opera-i al credits to the Participas.tu irrespect ive o ion cf the Project.
These arrangments c".sure the.
ec.ilability of revenues to the Participac.ts sufficient c cover payments to the Supply System.
This mothed of financing large elcet2:ic generating rejecta and electric systems-has been successfully It
.:tilized in the Pacific Ucrthwest for many years.
d as proven to be a sound economic means of financing an u particularly well adapted to the needs of the Gupply i fystem in undertaking the financing o'f large nuclear ganerating projects. Again, the promise to pa'y contained in the Net Bi11ing Agreements is not dopondant upon success-ful operation of WMP-3. Each Particip' ant is obligated tp raise rates to whatever level necessary to meet its share -
of costs, and there is no legal restriction or mandatory
~
4 k
4
~ :
1
_g- .
... :: by other agencies to prevent this fren occurring.
cdits and power are available irrespective of Project i
f g .n. t . In summary, there are three levels of security for
-[
.. ung-3 obligations, which ultimately are backed by the
.;. Government.
. Tach of the Comp:nica will finance their cwnership as of UN2-3.in the r.ar.e manner es the balancc of their rchive constructi0n programs, v i.2 . , shcr.t-tarm borrowing,
- 1. of equity accurinica proceeds froa first mortgage bonds,
... ;nally generated :'unds , leases or other executory c.rrange-f .2 and other secured and uncecured tranac.ctions or con-
- c. action financing.
The Supply Systen has a. record of successful fincncing 1
. <;anerating projects. In 1962, the Supply Systen began
~ 53truction and -is new operating the Packwoca Lake Hydro--
cetric Project (27,000 kW). Conctruction costs of this
~Mcct were financed by the sale of revenue bonds in the
- unt of $13,700,000. All costs, including debt service,
, Scre been paid on a current basis and, excess construction .
'unds have been applied to retire 5519,0'00 par .value of
[
1 1 hr.de ahead of schedule.
S In addition, S415,000 bonds have Sen retired according to the original retirement schedule.
30 Project output is sold to 12 public utility districts.
' rating revenuca for ficcal year 1976 totaled $702,259.
7 , -,. -,,,---,-.-.,-.,.w- .,,v,_.,~,.e- n . . . , --..g , , - , , , , . . - . . - .,me--,,, -ww+-., ,
7 ,
.c .
l ,
i !
1
-i, l
. .~l l' i.
1 the ' Supply System also h'as finan~ced, constructed and .
g jg., . operating the Hanford Generating Project, which is l i f.iicd steam by ERDA's N-Rcactor. Construction costs i g
iinanced by the sale of revenue bonds in 1963 in the 3
1 i
7.i.11 amount of '$122,000,000. All costs, including debt ico, have been paid on'a current basis and, in addition, t ma construction funds have been appliad to retiro
,:25,000. par value of bonds ahead.of. schedule. In
- . '. o n , $23,265,000 bonda hava been retired according
- no original debt-retirement schedule. The Project
.e is sold to 76 power purchasers, including public t.
if y districts, :..u.licipalitics , rural. electric coop- 1
.:?.vec and invest or-ouned utilities in the Ucrthwes t
. ion. . operating revannes for fiscal year 1975 totaled jhy,590,579.
Ihe Supply Systen is constructing a 1250 ner nuclear
. rating plant designetad i1995S Nucle?.r Project Mo. 1 41P-1" located on ZRDA's Hanford Reservation near
'-!and, yashington. In September of 1975, the Supply i 4:en issued the first long-term revenue bond.9 to finance
.- plant.- To date, a total of $535,000,b00 in long-term [1- l i
-ts has. been issued. These securities were rated Aan by
~27 's Investor. Service, Inc. and AAA by Standard and d' Corporation.
E NNP-1 ilill have an installed capacity.
12.5 mcgavatta and will coct an entir.:ated $1,206,000,000.
..m.ial operation is schedulad for January 1982.
l a
~ s, ...
4
.-11_ ,
I 1
The Supply System is also constructing HPPSS Nuclear '
.7.aject No. 2_or "WMP-2"'(formerly Hanford No. 2) uhich is
.lco located on the Hanford Roservation. WNP-2 is being
~ i.
! financed in' the same manner as UNP-1 uith the entiro capa-Mlity being sold to public and cooperative bodies under
.;inilar Not Billing Agreements. In July of 1973, the Supply
- tem issued the first long-tarti revenua bonds to financo J 2. - _'"o date , a to tal of $ E0 0,000,00 0 in long--term debt
. hacn issued. These securities were rated Ana by Mccdy's
/stor Service, Inc. and U.T by Standard and Poor's C::poration. N'i?-2 will have ..a installed capacity of
. l'0 megawatts and vill ecst an antimated $955,000,000.
g ,
Jr.Sercial operation is echsdalad for September 1930.
The Supply Systzu has also bacun work cn two other
- 01 car electric generating plcuts.
t!nclear Project
- ' . 4, a duplicate of Nuclear Project No. 1, is located 4
J
.. ':he Hanford Reservation and is schcduled for cc:nercial
~^ cation in July 1933. %NP-4willcostanestimktcd C '- , 715 , 3 3 9 , 0 0 0 . Nuclear Project No. 5 (in which the
' (v -
Su.0 ply System has a 907s ownership intercat) , a duplicate
~
cf Muclear Project No. 3, is located at the Satsop site,
/,] ,
wy nJar Aberdeen, in Grays Harbor County, Washington, and is 7.'
"':hcduled for commercial. operation in Garch 1985. USP-S o m' - O O/M[2, 11 cu t an estimated ;1,718,Gf'1,000. )T*i.e UEC has issued g/
, W. ': .. . .
.--p 1 {
Od work authorizati.ons for both Prsjects and .rork is
/
gj
'77 Ossing.
1444 ; ,
, _ . r. .
- g. . .i . e. ,-
..t.
1, F,s '* .
- 3. d, ';j $ ([; ,s t . . ; ' /g ' '
1
'v.n
.y .
,,- _ y p ,. '
, %c, 1>-
V 1-t as
/ ci a r.
v g.,.I p,o-.c;. .
.c
, ;c fincnce WMP 3,: revenue cotes in the anntu . of .
- p. . , _. 0,000 -varc sold in Novcte.bar 1973 for prc .minary
.'.ng and initial ~ cons.truction costn and rogresa pay- -
The.3e notes :naturcd and ,are retir d en Juno 15,
[
The supply Syster. has alt;o i,c,uod $250 m*.1) ion of
- eena .:cvenue bonda fo r th.1 2raj ' t. These long-t.cra
. ..:ics tare rated Ana by :- ccdy ' ; J:nvoctor Sc' vica , Inc.
M. hv E 2. ndarr'. at. d Pocr ' u Cep/ :crat.;on.
- . ;n.;.c ,re.d au , WJOQdent i' ::
US UVO E rJ:T.S t ed US h0ing , g,#<
. :W- 3 Mid proc =edn of th.' wz-h o f seccritica . m ha
- *V i
L
- .dadfarthat.Projrd.citI[r. O ,rre.i;' adin.f ,r , revo wms A (M
/
cis.t sd '<.'i th ec. . . .t.c ts f ,r ':h e calci nd purchc.co o." thu '
y,4., '
- ut of . 3{'
- i?-3 raay be apiflica enly to X'.i?-3 coats , in- n' ling' de'at sac / lee. /
A. g aa.ted cal:im te of tha toLal ts o f W:1?- 3 (cu,:rc.' as o f Ap t i.1 .0 0, 11,*7) is:
D
,! D U m s - 70", Ter.n Pro be r. c% t.'y' '
('
N Total nuc1 car prcdue:lon pleut CO3t3
$910,536,000 L $1,196,70 7,000 / /
J Transnissien " d generci platt COST 3
$ 14,939,000 $ 21,413,000 0 Nuclear fue' in6 ntery cost
~/
2
$ 44,475,000 for firs core $ 63,537,000 Total Estimated Cost $970,000,000
, $1. ,231,657,000 i'xelu dve of Compa .!<>.s fla. acio7, ergeascu.
!;uclear fuc1 t:111 be purchased rathar chan lear.ed.
- i. .
' l x.
J _
_j I Siting, fuel cyclo " cats, payments o vendorn, and[
preliminary construction expenditures fer MIP-3 throu, I
- ,oril.30,
- 1977, exclusive of Co.mpanies financing e: conse, d.e.ount to $124,737,000. The Supply Systo:t ownersaip charo I x .
is $89,779,000. i Current estimates for miP-3 o enditures / ;
(including fucl and owners' coct) through th year 1904*are cc follows:
Year Total Excluding MPPSE -703 Pr,iya t e _ Fi.nanci.ng Thru 1975 $ 74,724,000 / $303,691,000 -
1977 $ 60,.tl3,000 $ 80,405,000 1978 $124,735,00Q / $167,726,000 '
/
1979 $147,G52,000 $195,756,000
/
1980 $202,2?U,,000 $269,32G,000 1981 $234,2G' ,000 . $307,741,000 1932 $107,247,000 $130,355,000 1983 $ 12 468,000 S.17,313,000 1934 $ ,161,000 $ 3,004,000 To continue financi .g alp-3, in addii: ion to tho $250 ,
million revenue bonds a ready sold, the Supply System will f
issue approximately $7 0 million dol'lars of its tax cxempt !
i I
i revenue bonds in ser 's from time to time during the period
+ :
l f
of c,onstruction. T e Supply System plans ~to issue thace
- onda in the follo ing approximato amoc.n'
- s and on tho following schedu a:
a
c-- .
-14_
.g '
.Date of Incue Amount 1977- S200,000,000 1978 0 1979 $150,000,000
[
. 1980 $150,000,000 1981 $150,000,000 l 't 1982 i S 70,000,000 Each serien of bondo incued will be on c ' parity with other l
L honds issued. r I III. $C;P-3 71MM;CI::G i
The Supply Syston's ownership chare of WMP-4 (100%) and :
f *in? S (90%) will bo financr.d in the scoe manner os imp-1, '
j NNP-2, and NNP-3, i.e., through the issuance of revenue bonda.
l +
l ;
All projects heretofore undartaken by the Supply System, except 1
EMP-4 and WMP-5, have been financed as separato systems. Tho
, Supply Syctem's cunerahip intorests in WMP-4 and im?-5 vill l
he financed together as one system, and the project financing
[ approach used for WNP-1, WNP-2 and WNP-3 uill not be altered, l
although there are some differences in the underlying con- l j
tractual arrangeq.ents, as I will explain later. Undor that approach, the Supply Systom's Board of Directors adopts l a resolution describing the proposed plan and system which cots forth the ostimated cost just prior to the inuuanco of f securition. Theco resolutionc, adopted by the Supply Systcm's Roard, sarvo as the indentures to the buyers of the necurities
-in tihich ccstain covenants are made to the buyern. 'Such
^ ' -
- ,.,,,m-~- ,--,-,--,,_,v,,m v .w - n r-,
.,_ p ;;73'.- .,
L. - .
.l-i a
- l' 1 1
d for UNP-4 and
,n and: system : resolutions have been adopte ;
i.y-5, infaddition to spacific resolutions for the issuance : e c
invenueIbonds'for the Projects. ned utility, ;
t Pacific'P50er and Light Company, an investor-ow 'i rship Agreement" to pur-s a; contractually committed in an "Oune
~
A copy 1of the f_UNP-5. t
[
_ . . . --:sei10% of the electrical capability o _ . -
ly System is set acrchip Agrecment between PP&L and the Supp i futh- in Exhibit H to the Supply Systeta's formal Applicat on E::hibit H uas added to the formal
!:ppl.icant's Exhibit 1) . 1977.
splication in PSAR Ancadment 39 filed on April h 22, ame ,
~?&L uill finance its ostnership share of WNP-5 in t e s
~
l';$ muer as the balance c? its respective construction.progrann ,
i i
s;1e of equity securitics, proceeds '
.j;.E. , short-term borrow ng, d leases [
f rom first mortgago bonds , internally generated fun s, I ured a'nd unsecured i
-cr other executory arrangements and other sec i 4
transactions or construction financing. _
d by con-The securities for WNP-4 and WUP-5 are secure System and 88 public l -
tractual commitments between the Supp y _3/
to purchase (the " Participants")
and cooperative utilities ty percent i, i .
the entire electrical, capability of WMP-4 and n ne j
These contracts are called of the capability of WNP-5.
t (903) w& ;
s i
Tiese 33 Participants consist of 21 monicipalit des,
-;b/
2 districts and 43.clectricOregon, cooperativesIdaho and locate
- !cntana.
.p;incipally in Washington,
,, l
, _ v
- c. -
A
. lr o a i ., .
o, 5- wa
~ ,
"*t F u@1
-t '
i:
t:
a A form of Participants'- Agrec-k, Erticipants Agreements" .
i .
k nt isj set 'forth in Exhibit H to the Supply System's formal .
Under.the Participants' cplication- (Applicant's . Exhibit 1) ..
1-rcoment's, the . Supply System receives a promise fron the -
c..rtici.pahts that each willLpay a portion of the costs of. .
The
.l ;..;ti:ing, constructing and operating the. Projects. -
a'
-c jregate of the-Earticipants' obligations equals the r!-tal costs cf the Projects.: Each~ Participants' partion i
I y: unch costs.includos the amount required each year to i
.h y the interest and a portion of the principal on the bonds atstanding, plus the Participants' share of the annual The Supply System covenants with the lcporatingcosts.
- nd holders in the. bond resolution to pay this principal
- and interest , from the revenues derived from tl)e operation
}
The Supply System agrees to set aside, 4
~
cf the facilitics.
.c, n.y. ,
-.. sin'<ing funds , ctpounts suf ficient to pay cach year's l accrued interest and principal and to deposit all r,cVenues l
Of the Project (h'NP-4 and TGiP-5) into a Project Revenue
!Pund. The Supply System further promises not to agree to i
2ny modification of'the contracts with Participants or 4
others, or amendment of the bond resolution which would adversely affect the rights of the bond holders.
The'first loval.of, security for repayment of bonds is the revenues to be derived from operatio'n of the Project.
'"no second level of security is that the Participants are i j
. ~ i
+ .
- .. 17_ .
.I
- l-
'l t the Project is cobligated to make payments whether or no and notwithstanding completed', operable or operating, The source of interruption or. curtailment of output. .
is'not dependent-
-funds for.the payment of Project cost onfactual' project revenues, but is " insured" on a broad base through the obligation of the public and c'coperative Assurance that such obligations can be mot is
! entities.
tho Participants covenant to increase L provided in'thc:
_f their. obligations to
-l, rates to the level necessary to meet These rates are not subject to review the Supply Systen.
f In the case of default I
or app.roval by cay State agency. ,
I by a ' Participant, 'cach other Participant in its class
~
l i
(i.e., cooperative or public agencic: ) promines to step ~up
.,i i
i their respective obliga.tions by as much as 25 ' percent.
Prior to the execution of the Participantu' Agreements, initial financing of-WNP-4 and UNP-5 was supported to a
, The maximum lovel of $100 million by Option Agreements.
l (93 Option Participants, l
Option. Agreements gave each signer consisting of 25 municipalities, 24 districts and 44 i clectric cooperatives located principally'in Washington, an option to obtain a share of Oregon, Idaho and Montana)
' Agreement the Project's , output by executing a Participants
], Under-the Option at least equal to his Final Option Share. '
l bligations
. Agreements each utility had the same abso uto o p
l L
0
.t"
., , ,. . ~ , - ..,-n, . . , - ,r.-- , ,-..--.n .r-m,n, .-.- , . . - . . , - - -- - -
C'
- I
- . 1
! -)
- 1 i
q
- 4 j to repay the $100 million-authorired as he would in the I' participants' Agreements. However, that utility was not 1
.i I. .
Based l f' cbligated to execute a Participants' Agreement. l i
upon the Option Agreements, short-term revenue bcnds in .
- -Par- i l
the amount of;$100,000,000 were sold in July 1975. :
'I , ticipants'. Agreements are fully'enecuted for 100% of the
' cutput of~WNP-4 and 90% of the output _of WMP-5, and the-being cbligation of the parties to the Option Agreements-in j- . !'hased out by the parties to the Participants' Agree-nont. .
.I i To finance WNP-4 and imp-5, revenue notes in the i
amount of $15,000,000 were sold in August of 1974 for the preliminary planning and progress payments. These notes natured and were retired on June 15, 1976. In addi. tion to the $100 million sb. ort-terh revenue bonds sold in July of 1975, the Supply Systen has also sold $145 million in - ,
I long-term revenue bonds in February of 1977. These bonds i i f
l Were rated A by Moody's and A+ by Standard and Poor's. !
i t l
'li l
- An updated estimate of the total cost of NNP-5 ,
i i I current as of' April 30, 1977) is:
O- I
- m. _-
P
- -1g_
l %
' / -s r
UPPSS 90% Jo al Prot ect Cen_t.
,',! /
$1,539,207,000 / $1,710,233,000 -
.[5- 4)' LTotal: nuclear production -
plant costs 5/ , ./
k '
Transaission anc6 general- $ 19,271,00 $ SQil2,000 '
., . )
plant. costs -
..t
$- 160,18 00 $ 177,981,000 h) . !!uclear' fuel ' inventory
. cost 6_/
/ $1,909,626,000-n' r
- Total Estimated Cost $1,71 ,661,000 I
Siting, fuel cycle contn, pay .:ents to v:'ndors and prc~
.inery construction expenditur s'for WMP-5 through April 30, 4 '77, exclusive of PPLL financ'ng expense, amount to $14,202,000.
~m Supply System's ownershi_ share is $12,323,000. Current-
- timates for KG-5 expendi.ures (including fuel and owners' ut through tha yaar 1983 arc as follcus:
Total Excluding WPPSS-90?,
Private Financing Year
$ 10,261,000 $ 11,339,000
".'hru 19 7 6
$131,228,000 $148,277,000 1977 1978 $106,537,000 $119,894,000 1979 $142,902,000 $159_,438,000
.$254,777,000 $282,229,000 1980 4l' $298,019,000 1981 $251,677,000 1982 $363,885,000 $398,740,000 1983 $282,080,000 $304,953,000
$175,314,000 $186,737,000 1984 Exclusive of Pacific Pcwcr and Light's financing expensen. i Includin, net interest during construction, owners' costs, and all wance for escalacion and contingencies.
- uclear fuel will bc pttrchascd rather than leased; inventory
'm.; t . i n c l u d e n c ap i. t a li::e d first core and reload fuel.
_ .. - y m- - - , ,. ..ye-- 1-m.--,, . - - . - - - - - , - - +- -, - , . - , . - - - +
y .
c* y e
In vicu of execution of the Participants' Agreements,.
h issuance 7.,3nsing.of WMP-4 and WNP-5 will:be continued:by t e of' tax. exempt revenue bonds-in
. approximately ' $3,199,000,000
. .. ries from time 'to . time during - the period. of construction.
. i
..ic Supply Systen plans to issue: these bonds in the follow ng-
~
- f: ;dules :
Amount Date of. Issue 1977
$255,000,000 1978
$535,000,000 '
1979 S550,000,000 1980
$550,000,000 1981 $529,000,000 ,
- i
' $541,000,000 1982
$229,000,000 1983 Each seriou of bonds issued vill be on a parity with
.her bonds issued. A schedule summarizing WPPSS construc-1977 u:n projects financing activities through April 30, b attached hereto. WUP-4 and WNP-5 financing activities I
s
' re net forth in this schedule under the heading " Generating
~
b Pteilities".
, h. .
9
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O Mr. Pc3 c, on .hpril 22nd. 1977 the Appliceut- l l_
That h cub.a.!tted t:-: tM 'ac st:.i ! .tundn ent .W to th2 P S P.u .
ii 1 '.
imndc?nt provided updated informction on :b formal application irid the financial que.lificabians aspect of the s S g, .
I C th a:pplication.
1
! :1 1 Have you zcVic.wed Amer.daent 3S?
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.7
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Genorelly tnoy c :nsider sce:, ;,y., c:gwn- grcce t,.
- N 0 . ratings. AT.t. is the high: at rabing th at M.s.;/. gi.vo, and La i
i the highest typa of.cocurity with no 1:nsrtorr.bl. JacLors i 5 .
that could effect a d_ccm rating.
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21 A It'o the Bonncvi'.lc Power Mdnictration ac tM -
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in ultini:.2 guarentc;; hht.c. ic the diffor2re:. iii thc )://. Inc.l, _
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pz.rticip.mtc ther.. +.lm.s have used ttp cl1 tha racnds. tory -
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- I ticipants.
f i _
.in the ccre c.f h'd?-5, tto particiocab them- --
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E i nelves are cbligated imd rc.unt pick up each othe:e's defsult - -
l c i _.up to a cartttin shcr.., but the ultia.ste. guare.ntee of ~
canncv.,1.le scac not crc. nc :or h...ce ae.
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j; U W At nc.w ur find. t.hr e there n:c rer.y pu'.sli.: po'.m r u':i! ) '; '.c:.
c..us i:. ;a).nt finrncinJ p ectfreus ur. .
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- o p *'u:t hr.v: ber;n operad ny for : c.n:r, ic.cr.y yet..: r , euch nt, ji1 cs.r.ua, n;e rai.cd AT, - 0.r.hc. Public Pc..ar - nra cated : i., ,
3h i 6
1, O At uhri. rating icver.1 do you r.:s.n t to h we
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It . Tcrko, eh!.ch of tir i???P n;niccts vi.11 be the
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first or.o. i.o aci:ieve ccurreint eparauica under your prosr:t-t l
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Are you referring just to 3 and 5, or nll five '
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/ . !, o. .. All five.
i N:9'-2 l' sche:mic,2 for con,e ecial operation in v.
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.-earls; 1985.
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l 1 j 0 I sec. Imd your cur. cra certtracL o cton 1:; .hrbuch 1933? l o (0 i Through that flacal yt:cr endilyt .Tuno , '03. 1 r ; I h. Very well. Thank tcu, contle-e 4 3; C!lAITIAN LTdO: t c ; m2n. Applicants, do you have redi. rect? 7 f .
.13. PT.Y1TALDE;:
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E P Washington Public Power Supply System I A JOINT OPERATING AGENCY 6 1 P. O. 80s 968 3000 Gao WAsMipeGTON WAY RICHLAND. WASHINGTON 99 352 PHONc(D09) 946 18 t l Docket Nos. STN 50-508 July 12, 1977 and 50-509 G03-77-744 - Director of Nuclear Reactor Regulation ATTN: Olan D. Parr, Chief Light Water Reactors Branch No. 3 - U. S. Nuclear Regulatory Commission .....,' O.g)) "
. .. s Washington D.C. 20555 u
4 s e* &# f
Subject:
WPPSS NUCLEAR PROJECTS NOS. 3 & 5 a FINANCIAL INFORMATION UPDATE , _. ,,';/s
Dear Mr. Parr:
\ ____ .
In response to a request to update certain financial information concern-ing WNP-3/5, directed to WPPSS by your Mr. Daniel T. Swanson, the re-quested information is provided in the below listed attachments. Attachment I - Official Statement, $90,000,000 Washington Public Power Supply System Generating Facilities Revenue Bonds, Series 1977B (Nuclear Projects Nos. 4 and 5). Attachment II - Proposed Official Statement, $230,000,000 Washi gton Public Power Supply System Nuclear Project No. 3 Revenue Bonds, Series 1977. Attachment III - Discussion of WNP-5 cost increases and a discussion of cost differences between WNP-3 and WNP-5. Attachment IV - Source of Funds for System - Wide Construction Expenditure during Period of Construction of WNP-3 and WNP-5, Applicable to Pacific Power and Light Company. While preparing the Plant Capital Investment Summary for WNP-3 (Attachment III), we determined that the total project cost for WNP-3 was miscalculated in the Testimony of James D. Perko regarding Financial Qualifications which was submitted at the evidentiary hearing on May 24 - 25, 1977 (Transcript following page 598). In Mr. Perko's testimony, the total estimated cost for WPPSS' 70% share of WNP-3 was accurately stated to be $970 million. However, the total project cost for WNP-3 was erroneously stated to be
$1,281,657,000. This will advise that the correct total estimated cost for the entire project is $1,385,716,000. Mr. Perko's testimony will be corrected on the record by affidavit when the Applicant submits its reply proposed findings of fact later this week.
l= 771990120 -
3 . Olan D. Parr Page two We trust the attached information satisfies your request, and assume the Staff will submit an affidavit updating its financial qualifications conclusions by July 21, 1977, in order to promptly close the hearing record. Very truly yours,
,O M Mo l+
D. L. Renberger Assistant Director - Generation and Technology DLR/ RCD:gs Attachments e l 4 l
1
+
Docket Nos. STN 50-508 and 50-509 ! c. Letter DL Renberger to OD Parr, ! Financial Infonnation Update STATE OF WASHINGTON ss
. COUNTY OF BENTON D. L. RENBERGER, Seing first duly sworn, deposes and says: That he is the Assistant Director, Generation and Technology, for the WASHINGTON PUBLIC POWER SUPPLY SYSTEM, the applicant herein; that he is authorized to submit the foregoing on behalf of said applicant; that he has read the foregoing and knows the contents thereof; and believes the same to be true to the best of his knowledge.
DATED Y /A , 1977 cD$0u0nry D. L. RENBERGER On this day personally appeared before me D. L. RENBERGER to me known to be the individual who executed the foregoing instrument and acknowledged that he signed the same as his free act and deed for the uses and purposes therein mentioned. GIVEN under my hand and seal this bl/, day of _
,1977.
f f
$4J A&
Notary Public in and for the State of Washington Residing at e Ad
- U.S. NUCLEAR CCiULATORY COMMIS$10N DOCKET NUMSED j
# NRCPonM 195 ta.m ST A) ro- SO 8/fc4
'. NRC DISTRIBUTION pon PART 50 DOCKET MATERIAL T.. Olan D. Parr NPPSS 0$-12Y7 Richland, Washington 99352 D. L. Renberger ^M "l'[Y7' IBNoTonizgG PROP iNPUTPORM NUMSER OF COPIES RECEIVED jlCsTTEn E!6atoiNAL J5eNCLAasipiso CCory assCnietioN sNCLosums Ltr. Notorized 07-12-77...Trans The Furnishing update financial informatio n Following: concerning WNP-3/5 consisiting of Attachments I, II, III,7C IV 3 pages 3/8" PLUIT NAME: WPPSS UNCLEAR FROJ # 3 C 5 Jcm 07-18-77 tireif FOR ACTION /INFORMATION ENVIRENMENTAL attTcNED ADt ASSIGNED ADt V. MOORE (LTR) anANcM MTTF, BRANCH CHIEFt
/ PRO.fECT MANAGERt /600 e n'i lL < PROJECT MANAGER '
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