ML17272A681

Annual Financial Rept for Year Ending 790630

ML17272A681
Person / Time
Site:	Columbia, Washington Public Power Supply System, Satsop
Issue date:	06/30/1979
From:	WASHINGTON PUBLIC POWER SUPPLY SYSTEM
To:
References
NUDOCS 7910160509
Download: ML17272A681 (52)

Text

l REGULATORY INFORN*TION DISTR IgUTIQN BYBTEN<R IDB)+I tO L~ACCEBBIOPI, NB/:.7910160009

+OC.DATE: 79/~P51 NOT*R+0: NO DOCKET I FACIL: 50-39>WPPSB Nuclear Progecti Unit 27 Washington Public Pore 05000397 50-460 WPPSB Nuclear Progecti Unit iI Washington Public Pope 05000460 STN-50-508 WPPSS Nuclear Pro Ject>Unit 3i Washington Public 05000508 AUTH.MANE AUTHOR AFFILIATION Washington Public Poeer Supply System RECIP.MANE RECIPIENT AFFILIATION

SUBJECT:

Annual Financial Rep t i979.DISTRIBUTlON CODE: N004S COP IEB RECEIVED: LTR H ENCL l~SIZE: TITLE: Annual Financial Reports NOTES: RECIPIENT I ID CODE/NANE ACTION.05 LA w amp PN N c-roc.tA INTERNAL: 0 RElFIJ E 8 iJ.EXTERNAL: 03 LPDR COP IEB LTTR ENCL i i RECIPIENT ID CODE/NANE BC IL,wg,~~LWg,~g 02 NRC PDR AD FOR GA&0 SALTZNAN COP IEB LTTR ENCL pe"D TOTAL NUMBER OF COP IEB REQUIRED: LTTR~ENCL P 8yL(

>'." h 4>h It>i tlt~<<: 4 Il.", F c~f.4 lh>4't'.4><<I,, jt jt 4 II 4~~]I I P P f~I h I 4<<~I." 4<<4 4'4>ll, t I I II th 1l I t Was'hington i Public Power'Supply System ,, Annual Report THE ATTACHED FILES ARE OFFICIAL RECORDS OF THE DIVISION OF DOCUMENT CONTROL.THEY HAVE BEEN CHARGED TO YOU FOR A LIMITED TIME PERIOD AND MUST BE RETURNED TO THE RECORDS FACILITY BRANCH 016.PLEASE DO NOT SEND DOCUMENTS CHARGED OUT THROUGH THE MAIL.REMOVAL OF ANY PAGEts)FROM DOCUMENT FOR REPRODUCTION MUST BE REFERRED TO FILE PERSONNEL.

DEADLINE RETURN DATE.,.,~-~%coo CO'lif4>Oat of Ooc menb d/sw/7$8 RECORDS FACILITY BRANCH 7%e Suplily Systeni'at a Glance The Washington Public Power Supply System was creaced to supply poiver co.publicly-oined ucilicics in che Pacifir Northwest.

The Supply System lv;is established as an agency throiIgh whirh members could jointly finance, build and operate'electriral generating facilities co meet their energy nccds-filcilicies that would otherwise be beyond the financial capability of any single utility.The Supply System, by law, is a municipal corponlcion

-a statewide joint openacing agency.'n realicy, che Supply System is much morc chan this, and much nlore hunlan chan che lifeless ccrc of che lalvbooks nlIght Inlply.Thc Stlpply Systcnl Is: Its menlbcrs-l9 Public Utility Dis-tricts (PUDS)and four municipalities in WashIngton.

Its parcicipancs

-I l5 utilit'ies, boch publicly and investor-olvned, in seven states, who have contf'lctcd to purchase i"electricity produced by the Supply System.Its cnlployccs

-apf)foxlnlaccly 1,500-men and women along wich a con-tract conscriIction force, 8,500 strong.Together, the Supply System staff, nlenlbcfs alltl pafclrlpants afc lvofklng to complete five nuclear generating projects chat in future years lvill benefit all che people of che Northwest.

Ac the same time, they are providing elcctricty from che I.lanfor<l Generating projccc and the Packwoocl Like Hydroelectric Project.20 XVNP-5 WNP I xvivp3 WiVP-I WN P-2 IO 0 79 80 8 I 82 81 8I 85 8'7 88 89 Nonhwrwr Ilirrorjr Orr>wrh Piojmicd Ehciirr Loud Qr her'Ihemrrl Rcrrrvrrrw I Irrj rex 1m i!'c Rerrrri rn I Pacific Nortlavcsc Loads and-Resources Pi%UCC KVcsr Group h>recast (IrfnrclI'79)(In Klloiv0rrs of Ijlccrriciry X000,000)25 Covei;Thisis the vi euj fi oui i nsiile the contai nment structure of 1P'NP-4, one of five nucleat plants being built by the 1Pcuhi ngton Publi c Potver Supply System.1P'henall five of the Su/iply Systenirs geneI ati itg/irj oects aI ein operiition

-in the liite1980s

-the eneI;Uri they/n Oiliiee uri ll/novi ile mo>e than20 peI cent ofiill the eneI;g~geneI iiteil i n the Paii fic Noi thuet.

Financial Highlights of 1979 ($in millions)Construction Projects WNP-I WNP-2 WNP-3 WNP-4/5 Total Revenue Bond Sales Parvalueofsales

....Number of issues...Borrowing cost$180$360$200$345 g1,085 1 2 1 2 6 6.61%%uo 6.60%%uo 6.27%%uo 6.99%6.66%Total Revenue Bonds Outstanding Outstanding at June 30, 1979.......Annualized interest expense....,.....

Borrowing cost$895$1, 147 8 680$1,063$3,785, 59 75 44 69 247 6.64%%uo 6.52%6.46%6.52%6.54%%uo Interest Earned-1979 Interest on investments Annual rate of return...$26$19$29 7.44%7.23%6.76%%uo 30 8 104 7.58%7.20%Bond ratings-Af oody's/Standard 6 Poor's........,......,.

Aaa/AAA Aaa/AAA Aaa/AAA A-1/A+

Board of Di reetorslExeeati ve Comntittee RePort When the Washington Public Power Supply System was chartered by the state in 1957, the joint operating concept was unique.Today, this idea of a single agency, governed by its members, working to-gether to meet the needs of all has be-come widespread.

There are more than 100 similar organizations in the nation and more are in the process of organizing.

Our own membership in Washington grew to 23 in Fiscal Year 1979, with the admission of the City of Ellensburg.

Each member utility has one representa-tive on the Board of Directors who in turn represents the, local consumers.

The Board meets quarterly.

The Execu-tive Committee, which is composed of seven representatives from the Board, administers thc business of the Supply System at meetings held twice each month.Ed Fischer Chairman Executive Committee Commissioner, Clark County PUD I<(~j/hlr.Fischcr has been involved in the electric industry for 50 years, while directing a successful business for 40 of those years.A Public Utility District commissioner since 1964, hlr.Fischer has served as the chairman of the Su p-ply System executive committee since 1970.He is an executive comminec member of thc Public Power Council and a former president of the IVashing-'on PUD Association.

In addition to the usual budget re-view, a special Board committee was appointed to review project construction budgets before adoption and a nationally recognized consulting firm was retained to make an independent assessment of the budgets.As Board members, we are meeting the challenges ofa large construction program and we believe we will meet the challenges of the future.Officers of the Board of Directors serve two-year terms which expired in Fiscal 1979.Successors were elected at the quarterly meeting in April.Elected as President was Glenn C.Walkley.Mr.Walkley, a Franklin County PUD Commissioner, has represented the PUD on the Board since it was organized in 1957 and has served as President in two previous terms.Other officers elected were Arnold James, Lewis County PUD Commis-sioner, Vice President; Marion Babb, Klickitat County PUD Commissioner, Secretary; and Howard Prey, Douglas As the Supply System construction and financing programs gain in size and impetus, Board members have become increasingly active in directing man-agement and setting policy for the Sup-ply System.One ofour most significant Board im-provements has been the formation of a number of Board committees to study and give direction in such areas as pro-ject budgets, legislation, and public policy.In addition, a management audit identified some areas for performance improvement and the Board has taken actions with regard to the audit recommendations.

The Board retained an independent consultant skilled in public administra-tion and management to assist in profes-sional management analysis.

County PUD Commissioner, Assistant Secretary.

New representatives to the Board ap-pointed by the member utilities during the year are Councilman Thomas Lineham, City of Ellensburg; William Kuehne, Ferry County PUD Commis-sioner;Hal Norman, Pacific County PUD Commissioner; Robert H.Murray, Seattle City Light Superintendent; and Paul J.Nolan, Tacoma Director, Department of Public Utilities.

Ed Fiseher Chairman Glenn C.Walkley Presidenr Managing Di rector's RePort Although economists see a recession in the national economy, the economic activity in the Pacific Northwest con-tinues at a high level.In fact, in discus-sions of the region's economy, the word"boom" tends to be used frequently.

Here are some examples.Washington State's population is ex-pected to increase by 1.5 million by the year 2000-200 new residents a day for the next 2 1 years.Oregon's is expected to grow by 600,000.In the past three years, Seattle gained 124,600 new jobs-a rate that ranked it eighth out of 202 metropolitan areas.Portland gained 91,900 new jobs, rank-ing it 13th.This kind of growth means increasing demand for energy.Despite aggressive utility programs to encourage conserva-tion, demand for energy is increasing by about 3.9 percent a year.Neil 0 Strand Managing Director N.O.Strand, an executive of the Supply System since 1971, was named Managing Director in 1977.He holds a degree in mechanical engineering and has more than 27 years of experience in nuclear energy, including design and construction management.

the safe and efficient operation of facilities at Hanford and Packwood.In addition, four new components, termed"Operations" were created in the areas of Organization Performance, Ad-ministration, Materials Management and Relations.

Managers of these ncw components report directly to the Managing Direc-tor.The realignmenr allows comprehen-sive reporting on key Supply System support activities and augments internal management controls.In the Finance Group, a special assis-tant was appointed to the Assistant Director with a staffofestimators and specialists in cost control and cost and schedule modeling.Our entire program of construction, generation and supporting technology requires talented and dedicated man-agement and staff, with backgrounds in scientific, engineering, construction and administrative disciplines.

At the end of the fiscal year, we had 1,500 Supply System employees.

Our 700 person technical staff has a total of more than 4,000 man-years of experience in the nuclear field.With the region's hydroelectric sys-tem at capacity, there is substantial im-portance in the construction of the Washington Public Power Supply Sys-tem thermal generating plants.The total capacity of the completed plants will be 6 million kilowatts.

This generation capacity will contribute 20 percent of the region's energy by 1988.A number of significant changes have been made within the past year to pro-videgreaterdepth toseniorstaff, im-prove management controls and assure appropriate checks and balances.A new management position, Man-ager of Projects, was established to focus attention directly on meeting the scheduled dates for commercial opera-tions of our projects.A new Generation Group at the Assis-tant Director level was created.This new group is responsible for the safe and cost-effective start-up and operation of the five plants being built, as well as for In Piscal 1979, the Supply System continued its extensive activity in the municipal revenue bond market, with six separate issues totaling$1.085 bil-lion.Bond issues maintained ratings of"Triple A" for the net-billed Projects 1, 2 and 3 and"A-1" and"A+" for Projects 4 and 5 which are financed as a single system.The success of the sales and the continued high ratings are indicators of the confidence of the investment community in the Supply System.The"Triple-A" bonds are secured by net-billing agreements with the Bon-neville Power Administration which will market the electricity.

Bonds for Projects 4 and 5 are secured by contracts with participating utilities.

While our financing program con-tinued with marked success, a number of concerns still required close manage-mentattention.

Closeanalysisofproject construction budgets indicated that in-creases would have to be made because of several major factors: The increases are the result of more complete assessments of the costs of increased manhour re-quirements and changes to plant struc-tures, systems and equipment; the effects of inflation; additional architect-engineer and construction management services;and additional generating plant operations staffing.With the cost increases, schedule ex-tensions of up to 12 months also were announced.

Our cost and schedule projections are realistic, but there still are factors which may cause further problems.We do not know, for instance, what effect the Three Mile Island-2 accident of March will have on design or operat-ing requirements.

I continue to believe the outlook for the Supply System is very good.We have an excellent organization.

While we have experienced schedule delays and cost increases, they have been within the range common in the industry.I continue to be optimistic about the future of nuclear power.The Three Mile Island accident was serious and a setback for the nuclear industry.Recovery may be slow, but it will take place.The fact is that there are really only two options presently open for central station generating plants: coal or nuclear.The U.S.General Accounting Office reported to Congress that, if actions are taken to limit or halt the growth of nuclear power, they must be accom-panied by actions to severely limit elec-tricity requirements or programs to ex-pand coal supply or other non-nuclear fuels.Otherwise, serious shortfalls of electricity are likely to occur within the next 5 to 10 years.I believe the people of this nation will recognize that it is not in their best interests to permit this situation to de-velop and'will not accept a low-growth, low-productivity society.Similarly, I believe the people of the Pacific Northwest will support the Sup-ply System as it continues to perform the vital services for which it was established

...to build and operate those gener-ating facilities necessary to meet the regional needs..d Neil 0.Srrand Managing Direeror he tide of the Pacific Northwest economy con-tinues to rise faster than that of the United States as a whole.So does the growth in population.

Groiuittg Together The public utilities of the Northwest, working together through the Supply System, are responding to that growth.Without an expanding supply ofenergy, sustained growth would not be possible.Financing this needed energy capabil-ity extends the presence of the Supply System far beyond its members and par-ticipating utilities to the entire United States.Investors throughout the nation look to the Pacific Northwest to measure the soundness of their investments in the Supply System.They look at what has happened;they look at what is anticipated in the next 20 to 30 years.What they see is encourag ing...a broad-based and diversified economy.They see that the traditional heart of that economy continues to be agricul-ture.Thousands of acres produce mil-lions of bushels of wheat and other grains for domestic use and for export to help our balance of trade.Tree fruits from the Pacific Northwest have a strong identifi-cation throughout the nation.Row crops are an important source of other food products.These are the traditional crops and they continued to have a strong and growing impact on the Northwest economy.Another vital factor in the Northwest is the vigorous timber industry, which has a whole range of products including exported logs, lumber, plywood and paper products.Again, exports to other parts of the country and to the world are important to the economy.The metals industry-principally aluminum, magnesium and nickel-continues to play a strong economic role.Manufacturing is becoming even more important in the economic tapestry of the Northwest.

The aircraft industry has always had a prominent role and the principal supplier, The Boeing Co., has, in the past year, announced significant plans for expansion.

This affects not only the direct employment by Boeing, but it also involves numerous subcontractors throughout the Northwest.

John A.Goldsbury Commissioner Benton County PUD Supply System Board Robert O.Keiser Commissioner Chelan County PUD Supply System Board Highlights of Af e>>)bors'perati o>>s The Supply System's 23 member util-ities range in size from metropolitan Seaccle, with its 270,000 consumers, to Kictitas Councy PUD whirh serves 1,400 consumers in rentral Washington.

Be>>to>>County PUD-11 percent growch in 1978, attributed chiefly to growth in residential and industrial rustomer de-mand.Thousands of acres have been brought under irrigation in recent years.Chela>>Cou>>ty PUD-13 percent in-crease in kilowatc hour sales with a 5 percent increase in total customers in 1978.Fruit production is the main agri-cultural activity, with an aluminum com-pany, fruit processing and lumber mills as major induscrial activities.

Construr-tion of the new Rock Island second power house, a new hospital and numer-ous fruic scorage warehouses added con-siderable generating rapacity and load to the Discrict's system.There's a tendency for many to think of the Supply Systemin ter)ns ofits most obvious activity-the construc-tion of massive and co))lpiex strtlcttl) es.But bui ldi ngis merely the mission: The objectiveis serving bun)an needs.The Supply System's suork touches the daily li ves ofall 6.5 t))i lli on peoplei n the Pacific Northtuest tuhose homes and communities are served by electric utilities.

nother important factor in di versifying the economy is shipping which provides outlets for many of the foodstuffs and products grown and manufactured in the Northwest.

The Ports of Portland, Tacoma, Seattleand Everettcontinue to expand this role.The new trade relations with China are expected to play an important part in the commerce of the Northwest.

Not to be overlooked is the opening of navigation from Idaho to the Pacific Ocean a few years ago.With the advent ofcontainerized cargo, it is now possible to barge agricultural products from Lewiston, Idaho to Portland, Oregon for trans-shipment to foreign ports.Above all, there is more room for growth.In timber, a high percentage of the forest lands are under sustained growth programs and research has re-sulted in ever increasing yields.In agriculture, hundreds of thousands of acres are being opened to irrigation and new methods of irrigation permit additional hundreds of thousands of acres of what was formerly marginal but fertile land under dry-land farming, to be put into more productive uses.These new methods, however, require extensive use of electric power to provide.the pumping energy necessary to deliver water to these fertile acres.The importance of labor cannot be overemphasized and the Northwest has an abundant pool.Both the population growth and the in-migration continue to provide a resource which is essential to every facet of the economy.The Northwest has abundant land, water, raw materials and people-all re-sources necessary to maintain a healthy economy.The other vital ingredient in the recipe for economic well being is the supply of electric power.The Supply System, its members, and other utilities will provide that with the generating plants now being built.1 gorki<<g Together At the close of the 1920s, only one in four farms in the State of Washington enjoyed electric service.Acceleration of rural electrification was an overwhelming desire of farmers across the state.Legislation to permit the formation of public utility districts was passed by the initiative process in 1930 and, within a few years, 32 PUDs were formed-publicly owned and dedicated to provid-ing power for the people they represent.

Formation of the Washington Public Power Supply System in 1957 extended their ability by permitting cooperative action to build and operate generating plants.Today, almost all farms are served with electricity.

The initial purpose of the Supply Sys-tem was to serve its member utilities-the State's public utility districts and municipal systems.However, the Supply System, at the direction of the Board of Directors, has opened participation in these projects to other public utilities in the Northwest.

These include PUDs in Oregon;municipalities in Washington, Oregon and Idaho and cooperatives in Washing-ton, Oregon, Idaho and Montana, and one each in the bordering states of Wyoming, Nevada and California.

In all, some 110 publicly owned utilities have a part in the various proj-ects which the Supply System has in operation or under construction.

The arrangement between the Supply System and its participants is two-way.

A.E.Fletcher Commissioner Clallam County PUD Supply System Board D.E.Hughes Manager of Engineering b: Planning Cowlitz County PUD Supply System Board ss'A~'ia!lain Courtty P UD-8 percent growth and 1,239 new customers in 1978.Sales to residential accounts ex-ceed sale to all other accounts.The scenic Olympic National Park covers much of the county.Clark County PUD-4.9 percent in-crease in kilowatt hour sales and 6.6 percent in customers, with 4,683 new customers, for a total of 75,378.Clark County PUD is one of the largest that has no generation of its own.In 1978, the PUD observed its 40th anniversary, keyed to rapid growth in the county.Cotolitz County PUD-3.4 percent growth in 1978, with 1, 153 new cus-tomers, bringing the total to almost 35,000.Electric space heating is used by most residential customers.

Local in-dustrial sales constitute a major cus-tomer classification.

N%s!~>I t I;, les'n ss ltei s Is'g I It s~~lw~jj r,-,'564'le el The cotntnttni ties of the Pacific Northruest are enjoying a peri od of robust good health, wi th a growi 1ig popula-tionn and a strong cont-merci al base to support it.But more people means more power de-ttland.1P'ashi ngton Stateis gaining 200 wctu residents every aay-1.5 million<<tore people by the year 2000.Oregonis ex-pected to gai n 600,000 people over those same years.

he Supply System will provide an increasing share of the Region's energy.In turn, the utilities provide the security which allows the Supply System to finance projects.Each of the participating utilities agrees to take a share of the output of the Supply System projects and agrees to pay that share of the annual budget of those projects whether they are operable or not.This promise is backed by agree-ments with participants to pay their share of the budget from revenues which they obtain from the operation of their own utilities.

They agree to raise rates to whatever level necessary to make good on this promise.Each of these utilities has a strong financial posture of its own.The security pledge is strengthened with the agree-ment of each utility to increase its own liability by as much as 25 percent ifany encounters difficulties in meeting obli-gations.In this way, the utilities are combin-ing thei r i ndi vid ual strengths to provide financial security for Supply System projects.Further, the Bonneville Power Administration has agreed to purchase 100 percent of the output of WNP-1 and WNP-2, and 70 percent of the output of WNP-3, which, in effect, adds the financial security of the federal hydro system.The Supply System's projects also benefit the customers of investor-owned utilities.

In the Supply System's Han-ford Generating Project, one half of the output goes to five investor-owned utilities in the Northwest.

They are: Puget Sound Power Bc Light, the Washington Water Power Co., Montana Power Co., Portland General Electric Co.and Pacific Power and Light Co.In addition, investor-owned utilities own 30 percent of WNP-3 and 10 per-cent of WNP-5.In this way, al16.5 million people who live in the Northwest and are served by electric utilities are also served in one way or another by the Supply System.The impactoftheSupplySystem onthe lives and for tunes of these people continues to grow.Wlien all five projects now under construction are in operation in the late 1980s, the energy they gen-erate will represent more than 20 percent of the energy generation in the Northwest.

Gwernti orr A realignment of manage-ment functions created a new Generation Group to focus on the tasks associated with operation of the two existing plants and with bringing the five plants under construction into operation.

Test arrrlStnrtrrp These functions include inspecting, testing and accepting sub-systems, systems and eventually the entire generating facility from the con-tractors.The test and startup staff will test the operation and bring it up to rated capability while phasing in the operating staff.Geeerutiorr Ter'rrirrg With thestartupof WNP-2 drawing near, special emphasis was placed on the thorough and adequate training of generation personnel.

The training activities cover many plant operation disciplines, including health physics, chemistry and radiography.

Howard Prey Commissioner Douglas County PUD Supply System Board Thomas Lineham Counrilman City of Ellensburg Supply System Board Douglas County PUD-11 percent in-crease, with 405 new customers.

Sales to a single mining company constituted 43 percent of the total sales during the year.City of Ellwsburg-Relatively stable sales over the past two years, with 5,000 customers.

Sixteen percent of the total sales are to Central Washington Univer-sity with its more than 5,000 students.PerryCotnrtyPUD

-6 percent growth in the service area in the northern county.Sales to commercial accounts exceed those to residential accounts.The Col-ville National Forest covers much of the county.William G.Kuehne, Commissioner and Supply System Board Member, is not pictured.WNP3 and5 are dupli cate generating plants being builti n Grays Harbor County, 1Pashi ttgton.The 212-foot-hi gh concrete wall for 1P'NP 3 was placedin a continuous, 21-day pour-a ntas-terpiece of coordination.

The work went on around the clock for the fitll three weeks.

se of a nuclear plant simulator to train reactor operators is a requirement of the Nuclear Regulatory Commission to promote safe, reliable and efficient operation of nuclear power plants.The Supply System has purchased a simulator for the Babcock and Wilcox units WNP-I and 4.Operators for WNP-2, the General Electric Co.boiling water reactor, have completed their training at G.E.'s Mor-ris, II..training center.Arrangements are being made to train future operators for our Projects 3 and 5 at an existing simulator in Arizona.Prc'seni ni Exnufi vari ou As WNP-2 moves nearer to completion, preservice inspec-tions have begun.Visual inspection of the pressure-retaining, internal surfaces on 90 percent of the WNP-2 valves was completed.

At the same time, work commenced on the pre-operational baseline inspec-tion of the WNP-2 coolant system's major components and weld seams, using ultrasonic scanning, liquid pene-trant coatings and magnetic particle checks.The records from these examinations will be analyzed and the results approved before the coolant system is released for startup activities.

The records also be-come a permanent part of the plant files for comparison purposes when examina-tions are repeated in the future.Technology The Technology Group is re-sponsible for a wide spectrum ofac-tivities, including engineering, quality assurance, technical and environmental studies, and fuel procurement and management.

Each of these is subdivided into a series of projects which take Supply Sys-tem people into such diverse activities as exploring for uranium;environmental monitoring at project sites and studies of alternate energy sources.In addition to its primary mission of performing the engineering on the five Supply System nuclear plants, the en-gineering staff is participating with other utilities and government agencies in the design and construction of a geothermal electric generating station;design and construction of a fish hatch-ery, using an advanced concept that promises a higher survival rate for sal-mon fry;and design and construction of a multi-purpose building which includes a simulator for training reactor operators.

Nuclear Purl With the dates approaching for loading of nuclear fuel into reactors, fuel supply activities have increased.

Uranium for the WNP-2 initial reactor core has been delivered and enriched for fabrication into fuel elements.Uranium for the initial cores of WNP-I and WNP-3 also has been delivered to a processor.

The first uran-ium from Washington State for use in Supply System projects was delivered.

The uranium was mined and milled at the new Sherwood facility on the Spo-kane Indian Reservation, operated by Western Nuclear under an arrangement with Tribal Council.

C.K.Jolly Commissioner Grnnt County PUD Supply System Board John J.Welch Commissioner Gntys Harbor County PUD Supply System Board PranklinCounty PUD-50percent growth since 1973, with industrial and residential growth leading.Large con-sumers are irrigation farms, food pro-cessing and food storage.Grant County PUD-Stable growth of kilowatt hour sales, with 1,224 new customers.

The PUD provides about 80 percent of its own energy from its reserve generation at Priest Rapids and Wana-pum dams which it owns and operates on the Columbia River.Agriculture and related activities are the chief industries.

Grays Harbor Couuty PUD-2.5 percent grow th, down from 1977 primarily be-cause of reduced activity among paper industries.

The number of customers increased by 1, 135.The PUD provides construction power to the Supply Sys-tem's WNP-3 and-5 sites.At 1P'NP 1, theskele-ton of the containment bui lcli ng aquas being completed-the rei n-forcing bar for the concrete structureis threei nchesi n di anteter and weighs about 13 pounds per foot.Four layers ofbar can beseen here: duo layers placed~(i agonally, onehori-zontally, one verti cally.The completed wall will be 4 Y<feet thick.

lthough the Supply System has contracced for uranium co fuel its five nuclear projects into the 1990s, several million additional pounds will be needed before the year 2000.Because of this, the Supply Systein considered it prudent to have its own exploration program.Exploratory work is being conducted in Wyoming, Washington, Idaho, Colorado and Nevada.Health, Safety andSerurity The federal Nuclear Regulatory Commission re-quires a high level of securicy ac nuclear projects in operation.

The Supply Sys-cem is preparing to meet these require-ments with its own security force of carefully screened and highly trained persons.The training course consiscs of more than 240 hours0.00278 days <br />0.0667 hours <br />3.968254e-4 weeks <br />9.132e-5 months <br /> of classroom and practical instruction.

During Fiscal 1979, the security force was built up to 147 officers who were trained in first aid, fire fighting, safety, security procedures, law, rommunica-tions and industrial sabotage.This ena-bled the Supply System to provide its own security at all construrtion sites during the fiscal year.Additional emphasis was placed on induscrial safecy and fire proceccion wich Supply System personnel at each site to monitor the safety performance.

One major rontrarcor with 1,700 workers recorded one million man hours of work without a disabling injury.Awards were made in recognition of this rare, outstanding achievement.

The Safety Program is fulfilling ics mocco: "Quality Work in a Safe Manner." Alterrsate Sources In addition to the near-cerm possibilicies ofcoal and nuclear fired generacing plants, the Supply Sys-tem continued its study of other energy sources.One potential source is geothermal energy from deep within the earth.The Supply System rontinued its partiripa-tion in the Raft River Geothermal Elec-tric Project in Idaho, through funding from the Public Power Council and a Departmenc of Energy contract.Seven wells, some as deep as one mile, were drilled at the site while work began on the facilities to generate elercricity.

The 5,000 kilowatt project is expected to be in operation in mid-1980.Its purpose is to study the feasibility of using moderate temperature geothermal fluid to generace electricity through a binary system which uses isobutane as the heat transfer medium.During Fisral year 1979, an earlier comparison of nuclear and coal-fired electricity generation costs was brought up to date.The report concludes that both coal and nuclear plants are viable alternatives for a plant starting up in 1989 with the rost of these alternatives being similar.

~~J I>>~~~~~

tudies also continued on solar energy, wind, biomass, fuel cells, coal gasification, advanced nuclear reactors, and conservation.

Pre-Operasi on En@i roismeistal Afosii sori iq>Pre-operational monitoring of the envi-ronment at the WNP-2 site continued, establishing a data base to be used in the fucure.Informacion is being gathered on aquatic and terrestrial organisms, and the productivity of plane species.Anal-yses are being made of edible vegetation and Columbia River fish and sediment and the existing background direct radiation.

Eig~i nteriiq;anrl Li it issitq;The application for an Operating License for WNP-2, which includes a 21-volume Final Safety Analysis Reporc, is under review by the Nuclear Regulatory Commission.

En-gineering personnel are accively working with che NRC in this review.As a result of the March 28, 1979 accident at the Three Mile Island, Unit 2 (TMI-2)reactor, an"Engineering Stracegic Planning" committee was es-tablished to review information obtained from TMI-2.In addition, the Supply System is parcicipating with an indus-try group in reviewing information from TMI-2, in search of items which would indicate thac changes in design or opera-tion should be recommended.

A Supply System designed fish rear-ing facility near Priest Rapids Dam was placed in service in the fall of 1979 and the first young salmon from the facilities

-more than 800,000 of them-were released to the Columbia River.The water supply in the rearing facil-ity is designed to mix water from under-ground sources with colder Columbia River water to maintain optimal pond temperatures which results in rapid fish growth.The hatchery reared fish, at release, were about twice as large as fish hatched in the river at the same time.Proj ec'tsi 0 Operntiou Fiscal 1979 proved to be a remarkable year for the Hanford Generating Project (HGP)which produced a total of almost four billion kilowatt hours.Total generation since HGP began operacing in 1966 went past 43 billion kilowatt hours before ic was shut down on May 4, 1979 for the annual 10-week maintenance program.The record for 24-hour net generation for HGP kept rising throughout che year, with a peak of 20,747,000 kilowatt hours generated on April 3, for an aver-age gross hourly rate of 878,750 kilowat t hours.

Arnold J.James~Commissioner Lewis County PUD Supply System Board Edwin XV.Taylor Commissioner ihlason County PUD NO.3 Supply System Board Stanton H.Cain Commissioner Okanopan County PUD Supply System Board Letvts County PUD-5.3 percent growth, primarily in residencial usage, with 632 new cuscomers added in 1978.The rouncy is largely rural, wich small towns and logging as a principal activity.Mason County PUD No.3-6 percenc growth in 1978, wich 833 customers added.Primary uses ofelectricicy are residential, recreational and in the wood produces industry.Okanogan County PUD-3.6 percent power sales increase and a cuscomer growth of 530 in 1978.Power use was 53 percenc residential, 35 percent commercial-industrial, 10 percent irri-gation.The county is one of the largesc in che nacion and contains large areas of wilderness and foresc in Norch Central Washington.

The economy is based on fruit, cattle, lumber and recreation.

$P, 1t was anothet excellent year for the Hanforci Generati ng project-a plant that uses steam front a nuclear re~ctor to power turbines.Since it<vent on linein 1966, the plant has generatecl ntotethan 43 billion kilowatt hours.Last yearit provi cleclfttll generation 99.97 percent ofi tspossi hie operating tinte.

either snow nor subzero temperature could keep HGP off the line.In early February, during a pro-longed period of abnormal cold, ice formed on the circulating water intake screens.Despite the bit ter cold, HGP workers kept the plant in operation by chipping and melting the ice from the screens.Prompt action by operations personnel in reducing load and stabilizing conditions avoided a complete shut-~down of the plant and enabled them to maintain full generation 99.97 percent of the time when steam was available from N-Reactor.

This extra effort made it possible for HGP to keep on generat-ing electricity and thereby play a major role in meeting the record demand for electricity in the Northwest during the cold winter months.The Packwood Hydroelectric Project, a small Supply System project nestled in the Gifford Pinchot National Forest in the Cascade Mountains of Washing-ton State, continued to demonstrate its reliability and versatility during Fiscal Year 1979.Though small in comparison to the projects on the larger rivers, the net generation at Packwood since it started in 1964 went over 1.5 billion kilowatt hours.In August, the total amount of water which had flowed through the turbine surpassed one million acre feet, enough to cover the entire state of Rhode Island with more than a foot of water.Its versatility is demonstrated in its ability to go into"isolated operation." This term is applied to times when the project is disconnected from the Bon-neville Power Administration system and serves the surrounding area only, enabling BPA, or Lewis County, which owns the 50-mile-long connecting line, to work on the transmission system.The project is operated in harmony with the mountain environment, and facilities built at Packwood Lake by the Supply System enhance the recreational value of the area.Water from Packwood Lake, which is used to run the turbine-generator, is carried via an underground system of pi pes and tunnels to the powerhouse which is at an elevation 1,800 feet below the lake.Prjoects Under Construction In the 1960s, a nuclear generating project could be in operation about six years after the deci-sion was made to build.Today, it takes 12 to 15 years.In this context, progress is more easily discerned by statistics than by visual examination.

We can report significant progress on the five Supply System proj-ects under construction using either method.

Hal Norman hfanager Pacilic County PUD Supply System Board Thomas hl.Logston hlayor City of Richland Supply System Board Pacific Cou>ity PUD¹.2-4.8 percent growth in kilowatt hour sales, with an increaseof831customers, bringing the total to more than 13,000.Principal usage was residential.

Pacific County is on the Pacific Ocean coast, where the Columbia River enters the ocean.Richland City Light-7.7 percent growth in 1978, with 1,380 new cus-tomers, for a total of 14,000.Growth is principally in residential.

Richland City I.ight serves the Supply System head-quarters buildings.

Industrial users in-clude a nuclear fuels fabrication plant, a food processing plant, an irrigation pumping station and scientific laboratories.

The coastal cities of the Northruest are gateways to the tradi ng rrati orts of the Pacific Ri rn and the ruorM beyond.That'one reasorr Seattle has provt'ded 124,600 nerv j obsi rr the last three years, ranking it eighth i n the nation.Portland is 13th ruith 91,900 newjobs.

hree of the projects, WNP-2 and WNP-1 and WNP-4, are being built on the federally owned Hanford Res-ervation near Richland, in east-ern Washington.

Two are being built in Grays Harbor County in western Washington, near the town of Satsop.With the completion of the WNP-2 Reactor Building in November 1978, the skyline on the WNP-2 site changed dramatically.

The end of the major civil construction work at the site also marked the end of the forest of crane booms.Attention is focused now on the proj-ect interior where about 2,000 workers are installing piping, cable and mechan-ical equipment.

The project was approximately 73 percent complete at the end of the fiscal year.The work force reached its peak of 4,000 during the fiscal year and began a gradual decline toward project completion.

In recognition of the approaching star tup date, and the completion of some systems within the project, the Supply System moved its Test and Startup force to the site.When commercial operation begins, WNP-2 will generate 1.1 million kilowatts for the 94 participating pub-licly owned utilities who serve nearly a million customers in the Northwest.

WNP-1 and WNP-4 are duplicate generating projects which were still in the civil construction phase during the fiscal year.In the original construction schedule, WNP-4 was deliberately scheduled about 18 months behind WNP-1.This scheduling provided for maximum efficiency of the construction work force who would complete a seg-ment of WNP-1 and then move to WNP-4.Progress can be measured statistically in reporting how many tons of concrete were placed or how many tons of rein-forcing steel were installed, or what the work force size is at a given time.The turbine generator, containment and general services buildings at WNP-1 are well along in construction and the three large cooling towers are almost complete.Piping and electrical work has started.The installation of the 150,000 pound stainless steel refueling canal liner was a milestone in WNP-1 construc-tion.The unit arrived at the site in seven subassemblies which were assembled on the ground and lifted into place as a single unit.This is expected to save two to three months on the work schedule.In 1977, the"Hanford Giant," a one-of-a-kind, heavy duty luffing rig was used to set the 966-ton reactor pres-sure vessel at WNP-2 by lifting it over the top and into the containment.

Be-cause of the success of this method, and the development of more versatile lifting rigs, plans were developed for similar"over-the-top" setting of the WNP-1 and WNP-4 nuclear steam Supply Sys-tem components weighing hundreds of tons.The method used at most other similar projects involves leaving a large opening in the containment building and moving the components in horizon-tally.The high lift and vertical place-ment permits earlier completion of the containment building and saves time on the construction schedule.

t WNP-4, there was signific-antly visible and measurable progress.The 380-ton reac-tor pressure vessel and its 100-ton closure head ar-rived at the site in Feb-ruary 1979 and the steam generators arrived in May from the fabrication plant in Indiana.The reactor pressure vessel was shipped by barge to New Orleans, then by ship through the Gulf of Mexico and the Panama Canal to Longview, and, finally, by barge up the Columbia River to Richland.The steam generators were shipped on a special 15-car train with reinforced cars carrying the heaviest components.

The components will be stored at the site until they are set in place in 1981.At the end of the fiscal year, construc-tion completion was approximately 26 percent for WNP-1 and 9 percent for WNP-4.Total manpower at the con-struction site was 4, 100 and increasing toward the peak which is expected to be reached in 1981.WNP-1 will generate 1,250,000 kilowatts for its 104 publicly owned participants when it goes into commer-cial operation in late 1983.Five investor-owned utilities have contractual rights to purchase 32.5 percent of the output until 1996.WNP-4 also will generate 1,250,000 kilowatts for 88 publicly owned par-ticipating utilities in the Northwest when it begins commercial operation in mid-1985.WNP-3 and WNP-5 also are dupli-cate generating plants being built in Grays Harbor County, near the town of Satsop, and are in the early stages of civil construction.

As with WNP-1and WNP-4, the construction schedules establish comple-tion dates 18 months apart.A significant change in construc-tion emphasis occurred during the fiscal year when earthwork was completed and construction of major plant structures began.An outstanding achievement was the erection of the 212-foot-high, 165-foot-diameter, concrete shield wall for the WNP-3 containment in a continu-ous 21-day placement.

It was described as a"masterpiece of coordination" as ironworkers placed 3,000 tons of rein-forcing steel while the concrete workers followed closely behind to place 11,000 cubic yards of concrete.The work pro-ceeded 24 hours2.777778e-4 days <br />0.00667 hours <br />3.968254e-5 weeks <br />9.132e-6 months <br /> a day, seven days a week, for 21 days.The 3-foot-thick wall went up at the rate ofabout 10 feet a day.With the benefit of this experience, an identical shield wall for WNP-5 was erected even more rapidly in a continu-ous 15-day concrete placement.

Immediately after the completion of the WNP-3 shield wall, work began on the welded steel, free-standing contain-ment structure which will be 150 feet in diameter and will rise 27 1 feet above the reactor auxiliary building base slab.The first concrete for the 500-foot-high natural draft cooling tower of WNP-3 was placed in June 1979.At the end of the fiscal year, construc-tion completion was approximately 14 percent for WNP-3 and 3 percent for WNP-5.Total manpower at the con-struction site was 2, 100.WNP-3 will generate 1,240,000 kilowatts for its 103 publicly owned utility participants and the four investor-owned utilities which have purchased ownership shares equaling 30 percent of the project.WNP-5 will generate 1,240,000 kilowatts for its 88 publicly owned util-ity participants and the one investor owned utility which has purchased own-ership shares equaling 10 percent of the project.Commercial operation begins in 1986.

Paul Nolan Director Deparrment of Public Uriliries Tacoma Ciry Lighr Supply System Board Taco)))a City Light-5 percentgrowth in 1978, with 5,710 customers added in 1978.Unpreredented growth in the ser-vice area rcflcrts a booming housing market.Estimates indirate that without an active conservation program, Tacoma City Light would have exceeded the 1977 load by more than 12 percent.Energy conservation will continue to play an important role in Taroma City Light activities, while alternate energy resources are examined.The utility owns and operates six hydroelectric projects.Diversified industries arrounted for the largest portion of the power sold.1Pahkiaku))t County PUO-Energy usage and thc number of customers re-mained at a stable level in thc small and remote PUD scrvire area on the Colum-bia River in thc southwestern part of the state.Almost all sales are to residential customers.

Charles Emerick, Commissioner and Supply System Board Member, is not pictured.Over much of the arirl west, wateris the li<<titi))g factor to ag)i-culture.Hu)tdreds of thousa))ds of acres are being ope)ted'toiniga-tlo)l<<otu, pe)<<11tt1)lg 1lse of la)td that once was co<<si dered<<)argi))al.

The lo))g ter<<t challe)tge is to provic(efoocl for a grotui<<g))ati o)t a<<da hu)tg)y wo)ld.Water makes the la<<cl bloo<<t;electri cal e)zergy moves the quater.

he Finance Staffhas the essential task ofplanning, controlling and reporting the Supply System's financial ac-tivities.With one of the most ambitious nuclear power con-struction programs in the country, the Finance Group's primary respons-ibility is acquiring and managing the funds needed to finance construc-tion of our five projects.Fiscal Year 1979 was another success-ful year for the Supply System's financ-ing program.A total of$1.085 billion of long-term revenue bonds were sold in six separate trips to the municipal bond market.These sales increased the Supply System's outstanding revenue bonds to approximately

$3.8 billion at an average weighted borrowing cost of 6.54 percent.Of the$1.085 billion, four issues totaling$740 million were sold for the net billed projects (WNP Nos.1, 2 and 3)bringing our financing program for these projects to approximately 58 per-cent complete on June 30, 1979.Two issues totaling$345 million were sold for WNP Nos.4 and 5 bringing the financing program for these projects to approximately 20 percent complete as indicated in Table I.Additional information on annual debt service requirements, issue dates, maturity dates, and the security for the bonds is included in the Financial Sec-tion of this report.With such a large financing program, a sophisticated investment program has been developed.

During Fiscal Year 1979, the Supply System maintained an average daily investment balance of$1.45 billion at an average rate of return of 7.20 percent.Equally important as the acquisition of funds is the management and control of expenditures.

This control includes the annual preparation or updating of detailed construction, operating, ad-ministrative and special program budgets based on established goals and action plans.Periodic financial mea-surement reports are also issued.

With the growth and magnitude of the Supply System programs, emphasis is being placed on increasing the finan-cial overview function.The establish-ment of project controller positions at each project site was one of the first steps in strengthening the financial check and balance function.In addition to traditional financial responsibilities, Finance personnel are also responsible for the data systems and risk management functions.

The design, financing, construction and operation of nuclear power plants are extremely complex.Sophisticated and diverse computer systems are in use to support the technical, operating, con-struction and financial systems.The Corporate Information Systems function involves the development, im-plementation and maintenance of mechanized information and control sys-tems.The basic operating philosophy Itas been to contract with outside com-panies providing computer hardware and software services rather than pur-Supply System Funding Requirements

($in Millions)June 30, 1979 WNP-l WNP-2$1, l60$1,440$r,922 WNP-3 WN~5$!,378$l,0 l0 chasing the basic computer hardware ourselves.

This approach has resulted in lower computer costs and reduced lead-time necessary to implement and main-tain systems.The risk management function in-volves the assessmerit of the maximum probable loss of Supply System proper-ties, the determination of self-insurance levels and purchase of insurance.

With nuclear fuel coming on the project site in the near future, the Supply System is currently developing its nuclear insur-ance program.Q Pineneing Complete Q Supply syttem lunding Requitementt ashington Public Power Supply System is an organization whose activities touch the lives of millions of individuals in seven states.A total of 115 utilities participate in the Supply System's projects.Com-bined, they represent about 6.5 million consumers.

The average energy growth rate ex-pected over the next 10 years for the 110 publicly owned utilities participating in Supply System projects is 330,000 kilo-watts a year, requiring an annual addi-tion of 470,000 kilowatts of capacity.In all, the five new generating facil-ities, when complete, will provide about one fifth ofall the electrical energy in the Pacific Northwest.

a Public Agencies rs Private Utilities ts Publicand PrivateCombined

~Municipalities a WPPSS Nuclear Projects~Packwood Lake Hydroelectric Project u bta'4 Hanford Gen.Projec nford Reservation WNP-No.4 i WNP-No.2 J VP-No, i x.*, Yakim Riv la-j".oQ Project Participants Pnbli e 6 Peoples Utility Distrirts Oregon Central Lincoln Peoples Utility District Clatskanie Peoples Utility District Northern Wasco County Peoples Utility District Tillamook Peoples Utility District jjrashi ngton Benton County PUD Chelan County PUD Clallam County PUD Clark County PUD Cowlitz County PUD Douglas County PUD Ferry County PUD Franklin County PUD Grant County PUD No.2 Grays Harbor County PUD Kittitas County PUD Klickitat County PUD Lewis County PUD Mason County PUD No.I Mason County PUD No.3 Okanogan County PUD Pacific County PUD No.2 Pend Oreille County PUD Skamania County PUD Snohomish County PUD Wahkiakum County PUD Whatcom County PUD Cooperati rvs California Surprise Valley Electrification Corp.Iriaho Clearwater Power Co.East End hfutual Electric Co., Ltd.Fall River Rural Electric Cooperative, Inc.Farmers Electric Co.Ltd.Idaho County Light&Power Cooperative Ass Kootenai Electric Cooperative, Inc.Lost River Electric Cooperative, Inc.Northern Lights, Inc.Prairie Power Cooperative, Inc.Raft River Rural Electric Cooperative, Inc.Riverside Electric Co., Ltd.Rural Electric Co.Salmon River Electric Cooperative, Inc.South Side Electric Lines, Inc.Unity Light&Power Company it fontana Flathead Electric Cooperative, Inc.Glacier Electric Cooperative, Inc.Lincoln Electric Cooperative, Inc.Missoula Electric Cooperative, Inc.Ravalli County Electric Cooperative, Inc.Vigilante Electric Cooperative, Inc.Net ada Wells Rural Electric Cooperative, Inc.n., Inc.

Oregon Blachly-Lane County Cooperative Electric Assn.Columbia Basin Electric Cooperative, Inc.Central Electric Cooperative, Inc.Columbia Power Cooperative Assn., Inc.Consumers Power, Inc.Coos-Curry Electric Cooperative, Inc.Douglas Electric Cooperative, Inc.Harney Electric Cooperative, Inc.Hood River Electric Cooperative, Inc.Lane County Electric Cooperative, Inc.Midstate Electric Cooperative, Inc.Salem Electric Umatilla Electric Cooperative Assn.Wasco Electric Cooperative, Inc.West Oregon Electric Cooperative, Inc.1Pashissgton Alder Mutual Light Company Benton Rural Electric Assn., Inc.Big Bend Electric Cooperative, Inc.Columbia Rural Electric Assn., Inc.Elmhurst Mutual Power&Light Inland Power&Light Co.Lincoln Electric Cooperative, Inc.Nespelem Valley Elec.Cooperative, Inc.Ohop Mutual Light Okanogen County Electric Cooperative, Inc.Orcas Power&Light Company Parkland Light&Water Company Tanner Electric Afuniripali lsts Idaho Albion Bonners Ferry Burley Declo Heyburn Idaho Falls Minidoka Rupert Ortgon Bandon Canby Cascade Locks Drain Eugene Forest Grove McMinnville Milton-Freewater Monmouth Springfield Utility Board 1Fashi ssgton Blaine Centralia Cheney Coulee Dam Ellensburg McCleary Port Angeles Richland Seattle Steilacoom Sumas Tacoma IPyonsi ssg Lower Valley Power&Light, Inc.Irrigation Ds'stri rts Consolidated Irrigation District 19 Vera Irrigation District 15 Total Parti ri pants by rlassi jirati on Cooperatives:

Municipalities:

Public Utility Districts:

Investor Owned Utilities:

52 32 26 5 Total 115 Invostor Osontd Uti li tsts Montana Power Company Pacific Power&Light Company Portland General Electric Company Puget Sound Power&Light Company The Washington Water Power Company n many respects, the Washington Public Power Supply System is a unique organization.

Certainly its creation marked an innovative de-parture in the history of electrical energy generation in America.Yet, the Supply System rests on a concept that is as old, and as reliable, as the very first social contract: individuals can do some things bet ter by working together than they can by going it alone.That's really what the Supply System is all about.The challenges of energy supply in the future are simply too great for any of our individual members to meet successfully alone.But those challenges are not too big for all of us, when we work in concert to achieve agreed-upon goals.

Washington Public Power Supply System Annual Report-Financial Section June 30, 7979 Contents Financial Statements:

Balance sheets Statements of operations-Hanford and Packwood Projects.Statements of changes in financial position-Hanford and Packwood Projects Statements of source and use of funds-Nuclear Projects Nos.1 through 5 Notes to financial statements

.Report of independent accountants

.Statement of the state auditor Statement of debt service requirements

...., Construction projects expenditures Page 2 4 5 6 7 16 ,17 18 20 Balance Sheets June 30, 1979 (S in thousands)

Assess Utility Plants and Equipment-Note'B: In service.......................

Modifications and additions to facilities owned by the U.S.Government

...............

Less allowances for depre-ciation and amortization S67,013 S12,205 14,411 (41,582)(3,846)39,842 8,359 Packwood Lake Hanford.Hydroelectric Project" Project Nuclear Project No.1 Nuclear Project No.2 S 2,646 (325)2,321 Nuclear Project No.3 Note A Nuclear Projects NOS.41&5 General Note A Fund S2,325 (1,977)348 Combined S 84,189 14,411 (47,730)50,870 Construction work in progress..................

Nuclear fuel......,............

Prepayments for nuclear fuel enrichment services...........,.........

Less amount charged to joint owners................

S580,683 43,018 913,843 S390,009 S 734, 108 32,733 11,696 3, 179 5,336 5,040 10,980 (115,506)(28,952)39,842 8,359 629,037 948,897 291,239 719,315 348 2,618,643 90,626 21,356 (144,458)2 637.037 Special Funds-Note C: Cash and investment securities

-Note B......Receivable from joint owners and other assets i~<~~~~~Due from other Projects and General Fund-Note D........,.......,.....

Net amount due from other funds...,.....,.......

3,203 3,203 4,920 252 10,899 3,349 975 367 1,394 4,162 6 457 8,565 317'36,759 255 154 291,088 271 831 317 226,702 254,902 273,365 258,523 1,017,012 19,420 19, 184 1,055,616 Sinking Funds-Note C: Cash and investment securities

-Note B....., 6,903 697 102,329 38,448 165, 167 179,867 493,411 Current Assets: Cash and investment securities,...................

Accounts receivable

.........Prepaid insurance and other current assets.......

Due from General Fund....Due from other funds.......Cash deposit-matured interest and principal....

5,973 183 348 171 995 7,674 158 106 10 8 59 344 12,881 29 1,340 162 55,443 1,045 162 69 693 1,045 7,875 159 1,132 20,384 20,384 9, 166 26,887 477 1,490 2,394 77,041 108,289 Other Asset-Unbilled reimbursable costs......2,131 2,946 5,077 Deferred Charges: Costs associated with abandoned plant site-Note B.......................

Preliminary survey and investigation costs.......Unamortized debt expense......................

See notes to financial statements.

176 176 32 32 S59,929 S12,695 4,290 7,503 1,410 1 443 987 2,654 5 700 1,443 987 10,157 8973 987 81,313,635 8749,526 81,201,554 89,514 4,290 7,503 6,702 18,495 S4,317,925 Hanford Project Packwood Lake Hydroelectric Project Nuclear Project No.l Nuclear Project No.2 Nuclear Project No.5 Note A Nuclear Projects Nos.4&5 Note A General Fund Combined (5,893)(5,046)(4,295)(8,213)889, 107 1 141;954 675;705 1 054,927 Liabilities Revenue Bonds-Note C:~Principal amount............

$51,565$12,228$895,000 ve 1, 147,000$680,000$1,063, 140 Unamortized debt discount....,.....,..........

(969)(1 19)50 596 12 109$3,848,933~24 535)3,824,398 Special Funds-Note C: Accounts payable and accrued expenses...

.....Amounts withheld from contractors

.............,...Amounts due to other Projects and General Fund............., Net amount due to otherfunds

...,.............

702 702 37 50,427 26 29,883 20,544 23, 177 31,639 24,247 13,021 59,588 22,684 196 17 960 140 47,760 44,677 83 232 144, 313 80,496 853 225,662 Sinking Funds-Note C: Accrued interest ondebt..................

Nec amount due to other funds.............

545 292 837 149 47 196 30,129 4,162 34,291 1,200 1,200 21,642 34,446 6,457 s,565 28,099 43 011 86,911 20,723 1o7,634 Current Liabilities:

Accounts payable and accrued expenses......

Due to other Projects....

Matured interest on debt..................

Matured long-term debt....,.................

4,67o 4,674 226 229 11,250 162 48,943 6 500 162'6 693 1,045 1,045$7,475 1,742 3,014 17,370 20,384 9,217 23,621 53, 171 23 870 100,662 Ocher Liability-Unearned revenue........,...

Deferred Credits and Advances: Defeired gain on revenue bonds.......,.Advances from members and participants

.........,......

2,220 900 3,120 124 124 12,780 43,248 43,24s 297 297 12,780 2,344 44 445 46,7s9 Commitments and Contingencies-Note D$59,929$12 695$973 987$1 313,635$749,526$1,201,554$9 514$4,317 925 The interproject due to and from balances have been eliininated from the combined column.

Statements of Operations Hanford and Packwood Projects Year Ended June 30, 1979 (S in thousands)

Hanford Project Pack50ood Project Combined Operating Revenues Operating Expenses:/Reactor availability,.

Power production and transmission, Maintenance,...................,~..,...,...,...,...........,......,.Administrative and general 29,695 1,094 843 904 32 536 3,284 171 40 59 270 560$35,820 S830$36,650 29,695 1,265 883 963 32 806 3,844 Interest and Other Income 976 4,260 154 714 1,130 4 974 Net Revenue.-0-Other Expenses: Depreciationandamortization..........,.......1,703 inrererr and debr diaronnr amorrizarion

...........................

2 557 4 260 257 457 714 cI-0-1,960 3 014 4 074-0-See notes to financial statements.

Statements of Changes in Financial Position Hanford and Packwood Projects Year Ended June 30, 1979 (S in thousands)

Hanford Project Packwood P oject Combined Source of Funds: Operations Net Revenue Items not affecting working capital: Depreciation and amortization

...,...................,.....,.

Decrease (increase) in costs reimbursable from power purchasers

.Less gain on redemption of revenue bonds........,......

Total from operations

...,...Contributions for improvements and additions.......,.....,., Advances from participants for working capital.........,....

Decrease in unbilled reimbursable costs.........,...,............, S-0-2,613 214 (129)2,698 4,209 618 434$7 959 S-0-260 (67)(64)129 5 8>S4-0-2,873 147 (193)2,827 4,214 618 434$8 093 Application of Funds: Net improvements and additions Cost of revenue bonds purchased and retired.....................

Net increase in Special Funds Net increase (decrease) in Sinking Funds...,...,...,.....,....,..84,209 2,635 434 63 7 341 139~10)134$4,214 2,774 434 53 7 475 Changes in Working Capital: Cash and investment securities.

Receivables and other current assets.............,........,........

Cash deposit-matured interest and principal.......,..........

Payables and other current liabilities,...........,,.........

Matured interest on debt.........,.,.....,......,.....,.........., Net Change in Working Capital.........(1,686)306 6 1,998~65 618$7 959 43 18 (6 1)-0-$i84 (1,643)324 6 1,937 (6>618 88,093 See notes to financial statements.

Stafements of'Source and Use of Funds Nuclear Projects Nos.1 through 5 Year Ended June 30, 1979 (S in thousands)

Nuclear Pro jen No.I Nuclear Projecr No.2 Nuclear Projecc No.3 Nuclear Projens Nos.4&5 Combined Source of Funds: Collected under net billing....,...'....

Bonds proceeds., Interest income...,, Chargedtojointowners

.......~....., Decrease in Special Funds..............

Decrease in Sinking Funds...,....,...

Revaluation of investment securities

....,.....

Other$81,377$178,457 356,468$200,272$343,774 26,411 19,156 28,952 30,054 56,571 11,844 50,728 33,966 S'3 439 233 722$293 001$457 234$285 795$386 394$81,377 1,078,971 104,573 68,415 50,728 33,966 955 3,439$1422 424$275,651 59 744 3, 149 852 24, 170 9,341 10,254$189, 145 40,265 5 298$227,662 65,006 96 517 6,500 142,130 11,553 47,294 8,788 3,689 3 233 81$293 001$457 234$285 795$386 394 Use of Funds: Construction costs...,....................

$226,633 Interest expense,...,......

52,823 Nuclear fuel....13,047 Financing expense..............,..........

498 Bonds redeemed.............,....,...,...

Increase in Special Funds...............

Increase in Sinking Funds.........,....

Increase in amounts due participants Preliminary survey and investigation costs (Energy and Uranium Programs).....,......

Other'19,091 217,838 16,297 2, 165 30,670 198,765 30,595 3,689 3 233 81$1,422 424 See nores ro financial sraremenrs.

Notes to Financial Statements Note A-Organization The Washington Public Power Supply System was organized in 1957 as a municipal corporation and joint operating agency of the State of Washington.

Its membership consists of 19 pub-lic utility districts and 4 municipalities that own and operate electric systems within the State of Washington.

It is empowered to acquire, con-struct and operate facilities for the generation and transmission of electric power and energy.The Supply System has constructed and is now operating the Packwood Lake Hydroelectric Project (Packwood) and the Hanford Project and has five nuclear electric generating plants under construction (Nuclear Projects 1, 2, 3, 4 and 5).In addition, the Supply System has a General Fund.The Hanford Project and Nuclear Projects Nos.1, 2 and 4 are situated on land leased from the United States Department of Energy (DOE).Rental for each project's property is a nominal amount each year plus any taxes or assessments that may be imposed upon the leasehold.

Nuclear Projects Nos.3 and 5 are being con-structed on land owned by the projects.Because of Bonneville Power Administration's (BPA-an agency of the United States Govern-ment)obligations under the Net Billing and Exchange Agreements, as described in Note C, the Supply System and BPA have entered into Project Agreements with respect to Nuclear Projects Nos.1, 2 and 3, and Exchange Agree-ments wi th respect to the Hanford Project.These agreements provide, among other things, standards for the design, licensing, financing, construction, fueling, operation and mainte-nance of each of the aforementioned projects.The agreements also provide for the approval of cer-tain replacements, repairs or capital additions thereto.Nuclear Projects Nos.3 and 5 are being constructed and will be operated by the Supply System pursuant to terms of Ownership Agree-ments between the Supply System and investor-owned utilities.

Nuclear Project No.3 will be 70%owned by the Supply System and 30%by four investor-owned utilities:

Pacific Power 8c Light Company-10%, Portland General Electric Company-10%, Puget Sound Power Bc Light Com-pany-5%and The Washington Water Power Company-5%.

Nuclear Project No.5 will be 90%owned by the Supply System and 10%by Pacific Power&Light Company.Each of the joint owners is responsible for its own financing costs, providing its share of the costs of construc-tion and operation and will be entitled to i ts ownership share of the projects'apability.

The parties to the Ownership Agreements have des-ignated the Supply System to act as their agent to construct, operate and maintain the projects.All projects heretofore undertaken by the Supply System have been separately financed except for Nuclear Projects Nos.4 and 5.Nuclear Project No.4 and the Supply System's ownership share of Nuclear Project No.5 are being financed together as one utility system.Proceeds from the Generating Facilities Revenue Bonds (Nuclear Projects Nos.4 and 5)may also be used for paying the cost of certain work in connection with the acquisition and develop-ment of uranium-bearing lands and with the development ofadditional energy resources, shown as Preliminary Survey and Investigation Costs on the accompanying balance sheets.The obligations issued with respect to each project are payable solely from the revenues of that project.

Note B-Su>n>>>ary of Significant A ccounting Policies The Supply System has adopted accounting policies and practices that are in accordance with generally accepted accounting principles appli-cable to the utility industry.Separate books of account are maintained for each project except for Nuclear Projects Nos.4 and 5, which are ac-counted for as one entity.Capitalization of Costs and Overhead Expenses During the construction phase of a project, the Supply System will capitalize all costs of the project including general, administrative, in-terest, certain depreciation and other overhead expenses.Payments received under the Nuclear Project No.2 Net Billing Agreements for in-terest on revenue bonds, as described in Note C, are recorded as a reduction in construction costs during the construction period.All overhead expenses of the Supply System are allocated from the General Fund to the various projects primar-ily on the basis of direct labor cost.Debt Discount, Pren>i u>n and Lxpenses Debt discount or premium and expenses relat-ing to the issuance of revenue bonds are amor-tized by the straight-line method over the terms of the respective issues.Such provisions for amor-tization, net of accretion of premiums, are capitalized as costs of utility plant until net billing begins at which time the net amortiza-tion is accounted for as further described under Revenues.Gains on Rede>npti on of Revenue Bonds-Pack>vood and Hanford Prj oects Gains from the early extinguishment of debt occurring prior to 1973 have been recorded in the balance sheet as deferred credits less the annual straight-line accretion to income over the terms of the respective bonds.Gains occurring after January 1, 1973 are recorded as income in the fiscal year the debt is redeemed.Current Assetsa>rdCurrent Liabilities Assets and liabilities shown as current in the accompanying balance sheets exclude current maturities on revenue bonds and accrued interest thereon because sinking funds are provided for their payment.Investment Secicri ties Investment securities include time certificates of deposit, repurchase agreements (secured by U.S.Government securities) and United States Government and Government agencies secu-rities.Investment securities are stated at cost or amortized cost as appropriate and include ac-crued interest.Investment securities owned by the Hanford and Packwood Projects and Nuclear Projects Nos.2, 4 and 5 Bond Fund Reserve Accounts (included in Sinking Funds)and Reserve and Contingency Funds (included in Special Funds)are stated at the lower of amortized cost or market as provided by their respective bond resolutions.

Because these funds are to be main-tained at specific levels, any required revaluation of the carrying amount of the investment securi-ties is charged or credited to the participants of Hanford, Packwood and Nuclear Project No.2.Revaluations in the carrying value of these funds in Nuclear Projects Nos.4 and 5 are charged or credited to the cost ofconstruction.

The market values of investment securities held in Sinking and Special Funds and in Current Assets approximate amortized cost as of June 30, 1979.

Income Earnedon InvestmentSecurities Income earned on securities includes gains and losses from the sale of securities.

Income earned on securities held in Nuclear Projects Nos.1, 3, 4 and 5 Special and Sinking Funds is recorded as a reduction in construction costs during the period of construction.

Income earned on securities held in the Nuclear Project No.2 Construction Fund (included in Special Funds)is recorded as a reduction ofconstruction costs during the con-struction period and all income earned on secu-rities held in other funds accrues to the Revenue Fund.Utility Plants and Ecpapment-At Cost The Hanford and Packwood Projects'rovi-sions for depreciation of utility plant are com-puted by the straight-line method based on the estimated useful lives of the projects, which approximate the term of the related revenue bonds.The final redemption of each project's revenue bonds occurs in 1996 and 2012, respectively.

If the Hanford Project ceases operations after June 1983, as discussed in Note D, the carrying value of the plant will continue to be depreciated over the remaining term of the outstanding revenue bonds.Regardless of continued opera-tions, the purchasers of power from the Project will continue to be obligated to pay the principal amount of bonded debt, among other costs, until July 1, 1980 when participants in Nuclear Proj-ect No.1 assume this obligation.

Provisions for amortization of modifications and additions to facilities owned by the U.S.Government are being amortized over the period covered by the contract for dual-purpose opera-tion of the New Production Reactor.Costs associated with the abandoned plant site have been recorded as deferred charges.These costs will be charged to income over the life of the new facilities beginning with the com-mencement of commercial operations, to the extent they have not been recovered from certain private utilities and BPA industrial customers benefiting from the continued operation of the Hanford Project.During the year ended June 30, 1979$3 439 000 was recovered from the industrial customers The administrative office building and warehouse facilities that are accounted for on the records of Nuclear Project No.2 and the office equipment and vehicles that are accounted for on~the records of the General Fund are being depre-ciated by the straight-line method based on their estimated useful lives.Contributions Usedfor Purrhaseof Lcluipment-Packwood and Hanford Prjoects Monies provided by participants to acquire equipment since completion of the Projects are recorded and accounted for as a reduction of the carrying value of such equipment included in Utility Plant.

Revenues Member purchasers of power are contractually obligated to pay project annual costs including debt service.The Supply System records these reimbursable annual coscs as operating revenues for the Hanford and Packwood Projects.In addi-tion to recovery of project annual costs the Sup-ply System records as revenue each year an amount equal to the provisions for depreciation and amortization, less the recorded gains on bond redemption.

This accounting policy is used in order to spread such revenues equally over the full term ofthe bonds.Cumulative reimbursable annual costs less payments by member purchasers for future bond redemption are reflected as Unbilled Reimburs-able Costs in the accompanying balance sheets.For Project No.2, payments received from member purchasers for bond redemption less the annual amortization of debt discount are shown as Unearned Revenue in the accompanying bal-ance sheets.Retiretnent Plan The Supply System parcicipates in the Washington State Public Employees'etirement System that provides retirement benefits to eli-gible employees.

Cost of the plan to the Supply System is determined by the Retirement Sys-tem's Board.The actuarially computed value of pension benefits exceeds the fund assets for the Retirement Syscem.However, because the Re-tirement System is a multi-employer system, the amount of such excess, if any, that relates to the Supply System is not available.

Note C-Revenue Bonds Outstanding revenue bonds of the various projects as of June 30, 1979 are presented on Pages 14 and 15.Security-Agreements and Contracts The United States of America, Department of Energy (DOE), acting by and through the Bonneville Power Administration (BPA)has purchased the entire capability of the Hanford Projecc and the Supply System's ownership share of the projects'apability in Nuclear Projects Nos.1, 2 and 3 from its statutory preference customers and, in addition, with respect to Project No.1, five of its private utility customers.

Each of these customers has, in turn, purchased such capabil-ity from the Supply System, all under the Net Billing and Exchange Agreements.

BPA is obli-gated to pay theparticipants, and the partici-pants are obligated to pay the Supply System its pro rata share of the total annual costs of the projects including debt service on the bonds, whether or not the projects are completed, oper-able or operating and notwithstanding the sus-pension, reduction or curtailment of the projects'utput.

The Supply System's Packwood Project Rev-enue Bonds are secured by Power Sales Con-tracts between the Supply System and each of its 12 member purchasers.

Pursuant to these agree-ments, each member purchases and pays the percentage allocation ofpower specified therein at rates sufficient to operate and maintain the Projecc, including debt service on the bonds.Such payments will continue until the bonds are paid or provision is made for their payment or retirement.

The contracts also provide that if any of the 12 members, because of insolvency or bankruptcy, fails to pay its respective share of project annual costs, 8 of the 12 members, which account for 94.75 percent of the Project's power output, are liable for an automatic pro rata increase of the shares not so paid.The remaining four member purchasers are, limited in their liability for a pro rata increase to an aggregate amount equal to double their original percentages.

As security for the Generating Facilities Rev-enue Bonds for Nuclear Projects Nos.4 and 5, the Supply System has entered into Participants'greements with 88 utilities operating princi-pally in the western United States.Pursuant to the Participants'greements, the participants are obligated to pay their respective share of project annual costs, including debt service.The agreements stipulate the percentages of project output allocated to such utilities.

Billings to the participants for Nuclear Projects Nos.4 and 5 will begin on July 1, 1988, or the date of commercial operation for the respective projects, whichever is earlier.If the Supply System is unable to issue and sell bonds to obtain funds to pay the principal of the revenue bonds when due, or is unable to proceed with the financing of Nuclear Projects Nos.4 and 5 because of such matters as inability to obtain necessary licenses, each of the participants will pay its proportionate share of the principal due on the revenue bonds together with any other costs associated with the termina-tion of the projects.Security-Creation of Funds~As other security, the Supply System has been required to establish trustee-administered sink-ing funds for the sole purpose of paying principal and interest on the bonds.With respect to the projects under construc-tion, proceeds of revenue bonds not specifically required to meet principal and interest payments have been placed in Special Funds.Except for the Reserve and Contingency Fund discussed below, the Special Funds are to be used for construction purposes.The Special Funds may also be used, if necessary, to make required interest and princi-pal payments.Hanford, Packwood and Nuclear Projects Nos.2, 4 and 5 have each established a Reserve and Contingency Fund.As provided in the bond resolutions, these funds are to be used, among other things, to make up any deficiencies in the Sinking Funds and to pay for extraordinary oper-ation and maintenance costs, replacements and contingencies.

On September 1, 1977, the participants in Nuclear Project No.2 began funding debt ser-vice, working capital and reserve requirements as provided in the Net Billing Agreements.

In addition to payments for debt service,$3,000,000 was deposited in the Revenue Fund to provide working capital;$3,000,000 was deposited to the Reserve and Contingency Fund;and$37,247,865 was deposited in the Bond Fund to satisfy reserve requirements.

These ad-vances, totaling$43,247,865, will reduce future amounts otherwise payable by participants for operating costs and debt service.

Note D-Connni tntents and Contingencies Contracts The Supply System has entered into substan-tial contracts covering a portion of total estimated costs for certain major equipment and material, and for services relating to financing, design and the supply of nuclear fuel for the projects under construction.

HanIord Project audits Relationship to Nuclear Project No.1 The Department of Energy owns and operates a nuclear reactor, the New Production Reactor.This reactor provides the steam to the Hanford Project.The Supply System has an agreement with DOE to continue dual-purpose operation of the reactor through June 1983.It was initially intended that Nuclear Project No.1 would be constructed adjacent to the Hanford Project and would provide the energy source to operate the Project when DOE ceased operation of the New Production Reactor.It was necessary that the Hanford Project be shutdown on October 31, 1977 to allow for construction of Nuclear Project No.1.Because studies indicated that generating resources in the Pacific Northwest would be inadequate in the late 1970's and early 1980's, the Supply System determined that the Hanford Project should be kept available for power production after Octo-ber 1977.Therefore, the Nuclear Project No.1 Net Billing, Exchange and Project Agreements were amended to provide for the separation of Nuclear Project No.1 from the Hanford Project.Such amendments provide that Hanford Project costs, to the extent not otherwise provided for, will be treated as Nuclear Project No.1 costs having a first claim on the revenues of that Project.The amended agreements provide for the payment by Nuclear Project No.1 participants of deactivation costs (contractually limited to$6,286,000) and all debt service costs of the Hanford Project, commencing July 1, 1980, regardless ofcontinued operation of the reactor.Outstanding revenue bonds will then aggregate approximately

$48,000,000.

If the plant ceases'perations, revenues arising from the aforemen-tioned payments will nevertheless be recorded each year thereafter in amounts that will result in full realization of the carrying value of the plant.The U.S.Government has an option to acquire ownership of the Hanford Project upon obtain-ing Congressional approval.If the Government exercises its option, it must assume all rights and obligations of the Project, including the obliga-tion to pay all revenue bonds.Li tt'gati on-Nuclear Project No.2 In January 1976, the Supply System termi-nated its contract with the contractor responsible for the civil construction work on Nuclear Pro-ject No.2 for breach of contract.In February 1976, the contractor filed a lawsuit against the Supply System.In its complaint, the contractor is asking for damages of not less than S24;500,000 together with interest thereon, attorney fees, and other undetermined amounts ofdamages.

The Supply System filed its answer and counterclaim against the contractor and its surety denying liability and seeking damages of$13,970,000 plus substantial consequential damages.Legal counsel for the Supply System have confidence as to the merits of the Supply System's position, but decline to assign probabil-ity as to the amounts that might be recovered, if any, by the Supply System or the contractor in this case.In two related matters, subcontractors of the aforementioned contractor have filed suit

-.against the contractor for alleged breach ofcon-tract and against the Supply System for alleged interference.

In one complaint, the subcontrac-tor seeks recovery of alleged damages of approx-irnatcly$31,900,000 and punitive damages of$20,000,000.

The Supply System's legal counsel are of the opinion that the claim for punitive damages is without any merit.Counsel believe that the Supply System should not be held liable on any of the remaining claims but cannot assign probabilities or values to the claims.A local plumbers and steamfitters union and others have filed actions in Federal District Court against the Supply System and several other companies and individuals.

These actions are based upon alleged violations of the Federal antitrust laws in connection with a 1976 strike at Nuclear Project No.2 by plumbers and steamfit-ters.The relief requested includes, among other things, treble damages in an unspecified amount.The Supply System has filed an answer denying liability and the litigation is in the discovery stages.Counsel are confident of the Supply Sys-tem's position but cannot assign probabilities or values to the claims.Net Billi ng Agreements On'November 14, 1977, the City of Portland, Oregon and five residents of the City commenced a lawsuit against Bonneville and the Secretary of the Department of Energy.The Supply System and the Participants have been added as defen-dants in this lawsuit.The action is brought under the National Environmental Policy Act of 1969 (NEPA)and alleges, among other things, that Bonneville did not prepare, publish, circu-late and file detailed environmental impact statements concerning each of its Net Billing Agreements entered into after NEPA became effective on January 1, 1970.The Supply System projects involved are Nuclear Projects Nos.1, 2 and 3.The complaint seeks, among other things, (1)a declaratory judgment declaring the Net Billing Agreements null and void;(2)an order enjoining the performance of the Nct Billing Agreements; and (3)an order requiring the defendants to prepare, publicly circulate, file and consider a final and adequate environmental impact statement for each such Net Billing Agreement.

Legal counsel for the Supply System have advised that there is a possibility that the court might find non-compliance with NEPA in some respect and that in such event the court might enter an order designed to enforce compliance.

However, counsel are of the opinion that even if the court should decide that Bonneville has not fully complied with the provisions of NEPA, under applicable legal principles the Net Billing Agreements will not be declared null and void nor will performance of the obligations thereun-der of the Participants to make payments and Bonneville to make credits or make payments be enjoined.Accordingly, legal counsel are of the opinion that the lawsuit is without substantial merit insofar as it deals with the Net Billing Agreements.

Other In addition, there are other litigation matters pending against the Supply System that man-agement and counsel believe are either without merit or if decided adversely would not have a material effect on the financial statements of the projects.The estimated cost of the Projects may either be increased or decrea'sed as a i'esult of the out-come of the above litigation.

Revenue Bonds OfFering Prices Outstanding Revenue Bonds of che various projects as of June 30, 1979 consist of che following:

EfFective Interest Rate Coupon Rate Serial or Term Maturities Amount Outstanding (in$000's)Hanford Project Reveriue Bonds ($2,7 10,000 due within one year)..................

, 1963 05-08-63 3.26%03-20-62 3.66 11-04-65 3.76 Parkruood Lake Hydrorlcrtri r Prj ortt ($101,250 due within one year)Revenue Bonds.................

1962 Revenue Bonds..............................,..

1965 (A)98 99.425 100.5 2.90-3.10%9-1-79/1986 3.25 9-1-1996 3.625 3-1-2012 3.75 3-1-2012 23,980 27,585 51,565 9,278 2,950 12,228 WPPSS Nudrar Proj rtt No.1 Revenue Bonds..1975 09-18-75 7.73 (A)100 100 5.75-7.40 7.70 7.75 7-1-81/2000 7-1-2010 7-1-2017 42,000 58,300 74,700 175,000 Revenue Bonds.Revenue Bonds ,...,.1976A 02-04-76 6.84/,...1976B 08-31-76 6.37 (A)100.100 (A)100 99.50 6.00-6.25 7-1-81/1998 6.90 7-1-2010 7.00 7-1-2017 5.00-5.90 7-1-81/1998 6.50 7-1-2010 6.50 7-1-2017 37,020 66,485 76,495 180,000 41,825 66,94o 71,235 180,000 Revenue Bonds Revenue Bonds...'1978A 03-21-78 5.69.....,.1978B 12-05-78 6.61 (A)100-100 (A)100 100 99.50 5 00-5.50 5.80 5.875 5.50-6.00 6.35 6.6o 6.8o 7-1-84/2002 7-1-2010 7-1-2017 7-1-84/1998 7-1-2003 7-1-2009 7-1-2017 64,270 50,920 64,810 180,000 38,355 22,305 38, 190 81,150 WPPSS Nudrar Proj'rtt No.2 Revenue Bonds ($3,000,000 due July 1, 1979).........,..............,.......

1973 06-26-73 5.66 (A)100 5.00-5.10 7-1-80/2010 5.70 7-1-2012 180,000 895,000 19,600 124,4oo Revenue Bonds ($2,500,000 due July 1, 1979).1974 07-23-74 7.21 (A)100 100 6.50-6.90 7-1-80/1994 7.00 7-1-1999 7.3757-1-2012 144,000 23,000 15,000 37,000 Revenue Bonds ($1,000,000 due July 1, 1979),....,........., 1974A 11-26-74 7.67 (A)100 100 7.20 7.40 7.75 7-1-80/1994 7-1-1999 7-1-2012 75,000 30,000 15,000 78 000 123,000 Revenue Bonds.Revenue Bonds.Revenue Bonds 1975A 03-06-75 6.71 1976 06-03-76 6.63....., 1976A 11-18-76 5.87 (A)100 100 (A)99 25 100 (A)100 99.50 6.60 7-1-82/1994 6.6o 7-1-1999 6.875 7-1-2012 5.40-6.25 7-1-82/1998 6.625 7-1-2006 6.75 7-1-2012 5.50-5.875 7-1-82/2002 6.00 7-1-2007 6.00 7-1-2012 32,000 15,000 78,000 125,000 27,840 42,300 49,860 120,000 94, 195 44,815 60,990 200,000 Project WPPSS Nuclear Proj eet No.2 (Continued)

Revenue Bonds Revenue Bonds.WPPSS Nurlear Project No.3 Revenue Bonds.Series Date of Sale Effective Interest Race 1978 07-11-78 6.71 1979 03-13-79 6.49.1975 12-03-75 7.87 Offering Prices (A)100 100 (A)100 100 (A)100 100 Coupon Rate 5.50-6.60 6.80 6.875 5.50-6.00 6.40 6.75 5.40-7.25 7.875 7.875 Serial or Term Maturities 7-1-82/2000 7-1-2006 7-1-2012 7-1-82/1999 7-1-2004 7-1-2012 7-1-83/1998 7-1-2010 7-1-2018 Amount Outstanding (in$000's)68,250 45,520 66,230 180,000 62,905 33,490 83,605 180,000$1 147 000$26, 145 52,695 71, 160 150,000 Revenue Bonds,.Revenue Bonds.Revenue Bonds......,.....

1976 04-13-76 6.48 1977 09-12-77 5.71...1978 09-12-78 6.27 (A)99.625 100 (A)99.50 99.50 (A)100 99 5.50-6.00 6.50 6.60 5.00-5.30 5.70 5.80 5.90-6.00 6.375 6.40 7-1-83/1998 7-1-2010 7-1-2018 7-1-85/2000 7-1-2009 7-1-2018 7-1-85/2004 7-1-2010 7-1-2018 19,605 35, 100 45,295.100,000 59,305 63,535 107, 160 230,000 66,385 42,985 90,630 07-24-75 02-03-77 7.04 5 93 Revenue Bonds.......................

1977B 05-24-77 6.32 Nuclear Prj oeett Not.4 and5 Revenue Bonds ($25,740,000 due within one year)......................

1975 Revenue Bonds.1977A (A)(A)100 100 (A)100 6.75-6.90 5.50-5.75 5.90 6.00 6.00-6.20 6.40 6-1-80/1981 7-1-89/2001 7-1-2008 7-1-2015 7-1-89/2001 7-1-2012 200,000 6 680 000 S.53,140 42,105 40,605 62,290 145,000 33,485 56,515 90,000 Revenue Bonds Revenue Bonds...Revenue Bonds Revenue Bonds Revenue Bonds (A)Various prices 1977C 09-13-77 5.96 1978A 01-31-78 6.07 1978B 05-23-78 6.86 1978C 10-12-78 6.81 1979A 02-14-79 7.16 (A)100 (A)99.75 100 (A)100 100 (A)99.50 100 (A)100 100 5.20-5.70 6.00 5.50-5.75 6.00 6.125 6.00-6.60 6.80 6.90 6.00-6.50 6.75 7.00 6.30-6.90 7.125 7.25 7-1-89/2001 7-1-2018 7-1-89/2000 7-1-2010 7-1-2018 7-1-89/2003 7-1-2010 7-1-2018 7-1-89/2003 7-1-2010 7-1-2018 7-1-89/2003 7-1-2010 7-1-2018 20,480 109,520 130,000 27,700 43,900 78,400 150,000 37,785 32,960 79,255 150,000 45,225 42,970 81,805 170,000 47,515 43,140 84,345 175,000$1,063, 140 Report of Independent Accountants t Board of Directors Washington Public Power Supply System Richland, Washington We have examined the individual and combined financial statements, as listed in the financial statements section of the table ofcontents, of Washington Public Power Supply System's Hanford Project, Packwood Lake Hydroelectric Project, Nuclear Project No.1, Nuclear Project No.2, Nuclear Project No.3, Nuclear Projects Nos.4 and 5 and the General Fund for the year ended June 30, 1979.Our examination was made in accordance with generally accepted auditing standards and, accordingly, included such tests of the accounting records and such other auditing procedures as we considered necessary in the circumstances.

~In our opinion, the financial statements listed in the aforementioned table ofcontents present fairly the respective individual and combined financial positions of Washington Public Power Supply System's Hanford Project, Packwood Lake Hydroelectric Project, Nuclear Project No.1, Nuclear Project No.2, Nuclear Project No.3, Nuclear Projects Nos.4 and 5 and the General Fund at June 30, 1979 and the respective individual and combined results of operations and changes in financial position of the operating projects and sources and uses of funds of the construction Projects Nos.1, 2, 3 and 4 and 5 for the year then ended, in conformity with generally accepted accounting principles applied on a consistent basis.Seattle, Washington August 31, 1979 Statement of the State Auditor To Whom it May Concern: The Washington State Auditor's Division of Municipal Corporations conducts a continuous exami-nation of all of the operations of the Washington Public Power Supply System, including each and every project.Reports are issued covering each fiscal year and are public documents.

On every such examination, state law requires that inquiry shall be made as to the financial condition and resources of the Supply System, whether the Constitution and laws of the state, the resolutions and orders of the Supply System, and the requirements of the Division of Municipal Corporations have been properly complied with;and into the methods and accuracy of the accounts and reports.Very truly yours, Robert V.Graham, State Auditor Richard L.Husk Chief Examiner Division ofhfunicipal Corporations Statement of Debt Service Requirements June 30, 1979($in thousands)

Hanford Parkwood 1P'NP-I Year 1980 1981 1982 1983 1984 1985 1986 1987 1988 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 Principal$2,710 2,810 2,915 2,915 3,010 3,125 3,240 3,255 3,360 3,485 3,455',o65 5,585 5,835 800 Interest 8 1,567 1,4s3 1,393 1,303 1,210 1, 114 1,014 913 806 693 580 425 246 58 4 Annual Debt Requirements

$4,277 4,293 4,308-4,218 4,22o 4,239 4,254 4,16s 4,166 4,178 4,035 5,490 5,831 5,893 804 Principal 101 140 145 155-160 170 175 180 190 195 265 275 290 300 315 330 34o 360 380 4oo 465 490 515 540 565 590 615 64o 665 690 715 676 196 Interest 446 441 436 431 425 419 413 4o6 4oo 393 385 375 364 354 343 331 319 3o6 293 279 263 246.228 209 189 168 146 123 99 75 49 24 5 Annual Debt Requirements 547 581 581 586 585 589 588 586 590 588, 650 65o 654 654 658 661 659 666 673 679 728 736 743 749 754 758 761 763 764 765 764 700 201 Principal 3,695 3,815 4,o45 8,075 8,530 9,020 9,535.10,085 10,670 11,290 11,960 12,665 13,425 14,235 15,100~16,030 17,025 18,095 19,225 20,490 21,835 23,285 24,830 26,505 28,290 30,200 32,235 34,415 36,74O 39,220 41,875 44,73o 47,780 51,040 54,525 58,250 62,235 Interest 58,318 58,318 58,114 57,903 57,679 57,244 56,782 56,290 55,768 55,214 54,621 53,987 53,310 52,587 51,811 50,974 50,078 49,114.48,082 46,980 45,741 44,417 42,991 41,465 39,818 38,047 36, 155 34,135 31,976 29,671 27,2o6 24,559 21,712 18,669 15,417 11,939 8,221 4,248 Annual Debt Requirements 58,318 62,013 61,929 61,948 65,754 65,774 65,802 65,825 65,853 65,884 65,911 65,947 65,975 66,012 66,o46 66,o74 66, 108 66,139 66, 1-77 66,2O5 66,231 66,252 66,276 66,295 66,323 66,337 66,355 66,370 66,391 66,411 66,426 66,434 66,442 66,449 66,457 66,464 66,471 66,4s3 851 565 812 809 864,374 812 228 S9 383 821 611 8895 000 Sl 599 561 S2 494 561 1FNP-2 Principal 6,5oo S 6,5oo 12,590 13,385 14,230 15,125 16,075 17,085 18,110 19,195 20,355 21,590 22,910 24,33o 25,850 27,475 29,215 31,075 33,065 35,190 37,470 39,930 42,570 45,385 48,4o5 51,620 55,055 58,715 62,64o 66,s3o.71,300 76,070 81, 160 Interest 73,726 73,342 72,958 72, 193 71,380 70,517 69,601 68,628 67,642 66,596 65,483 64,292 63,021 61,644 60, 173 58,597 56,903 55,090 53,144 51,064 48,834 46,404 43,793 41,009 38,028 34,849 31,428 27,778 23,868 19,695 15,241 10,488 5,414 Annual Debt Requirements 80,226 79,842 85,548 85,578 85,610 85,642 S5,676 85,713 85,752 85,791 85,838 85,882 85,931 85,974 86,023 86,072 86, 118 86, 165 86,209 86,254 86,304 86,334 86,363 s6,394 86,433 86,469 s6,4s3 86,493 86,508 86,525 86,541 86,558 s6,574 Sl 147 000 SI 682 823 82 829 823 1P'NPP&5 1P'NP-3 Annual Debt Requirements Annual Debt Requirements Principal Interest Principal$25,740 27,400 Interest 93,991 93,913 64,623 64,623 64,623 64,623 64,623 64,623 64,623 76,938 76,955 76,975 76,995 77,017 77,037 77,058 77,086 77,105 77,130 77,146 77,164 77,177 77,190 77,199 77,210 77,214 77,213 77,214 77,218 77,221 77,220 77,221 77,216 77,208 77, 198 77, 188 77,174 77,167 77,152 43,2s4 43,2s4 43,2s4 43,284 43,285 43,285 43,193 43,094 42,759 42,4o3 42,o24 41,620 41, 191 4o,734 40,247 39,727 39,170 38,571 37,929 37,239 36,501 35,711 34,s43 33,912 32,908 31,837 30,695 29,475 28,152 26,74o 25,233 23,625 21,909 20,068 18,096 15,991 13,744 11,343 8,780 6,o44 68,251 66,513 64,623 64,623 64,623 64,623 64,623 64,623 64,623 64,623 63,905 63, 145 62,34o 61,4s7 60,582 59,623 58,601 57,505 56,335 55,081 53,734 52,297 50,750 49,079 47,295 45,364 43,308 41, 119 38,788 36,3o6 33,655 30,831 27,781 24,528 21,088 17,423 13,519 9,307 43,285 44,965 44,978 49,269 5 1,680 1,785 6,175 6,530 6,900 7,300 7,725 8, 175 8,655 9, 165 9,710 10,295 10,925 49,289 49,303 49,324 49,345 49,366 12,315 13,050 13,830 14,655 15,530 16,455 17,435 18,485 19,600 20,795 22,065 23,43o 24,880 26,44o 28, 120 29,915 31,850 33,905 36,095 38,430 40,915 43,565 46,39o 49,435 52,680 56, 110 59,765 63,655 67,s6o 49,389 49,412 49,437 49,465 49,496 49,529 49,554 49,591 11,600 12,315 13,090 13,910 14,815 15,785 16,830 17,945 49,621 49,658 49,697 49,738 49,782 49,830 19,135 20,405 21,755 49,880 49,907 49,940 23,200 24,745 26,390 28, 140 30,025 49,978 50,015 50,049 50,093 50, 136 50, 181 50,229 50,283 50,335 50,394 32,040 34, 190 36,485 38,940 41,555 44 350 47 335 3 121 50,456 72 345 4 807 8680 000 Sl 231,767 Sl 911,767 81,063 140 Sl 891 331 82 954 471 Construction Projects Expenditures

($in thousands)

Nuclear Project No.I Construction and Fuel Engineering

&Construction Management

............,...........,., Owner's Cost.Net Interest, Financing&Reserves Total Funding Requirements

..Less: Interest, Financing&Reserves Funded by BPA............

Total WPPSS Funding Requirements Nuclear Project No.2 Construction and Fuel.Engineering

&Construction Management Owner's Cost Net Interest, Financing&Reserves...Total Funding Requirements.

Less: Interest, Financing&Reserves Funded by BPA....,.....,

Total WPPSS Funding Requirements

..Cumulative Costs Thru June 30, 1979 491,829 64,i27 26,426 46,655 629,037 629,037 725,790 124,110 66,883 201,162 1, 117,945 169,048 948,897 1980'onstruction Budget$1,539,465 108,092 136;959 556,884 2,341,400 419,400$1,922,000$1,101,689 150,148 149,835 420,064 1,821,736 381,736$1,440,000 Percent Expended 31.9 593 19 3 8.4 26.9 32 7 65.9 82.7 44.6 47.9 6i.4 44.3 65.9 Nuclear Project No.3 Construction and Fuel.Engineering

&Construction Management Owner's Cost Net Interest, Financing&Reserves*.

Total Funding Requirements.

Less: Interest, Financing&Reserves Funded by BPA...,........

Private Utilities'unded Ownership*,.....................,.

Total WPPSS Funding Requirements

....311,071 57,516 18,759 27,716 415,062 162,623 S1,440,310 104,999 156,582 554,299 2,256, 190 217,200 660,990 s 252 439 s1,378,000 2i.6 54.8 12.0 5.0 iS.4 24.6 18.3 Nuclear Project No.4 Construction and Fuel.Engineering

&Construction Management.

Owner's Cost.Net Interest, Financing&Reserves....,....Other Authorized Cost.Total WPPSS Funding Requirements I Nuclear Prj oect No.5 Construction and Fuel.Engineering

&Construction Management.

Owner's Cost.Net Interest, Financing&Reserves*.

Other Authorized Cost.Total I'unding Requirements.

Less: Private Utility's Funded Ownership*

.................

Total WPPSS Funding Requirements

.Assumes thac nec financing costs applicable to t he privace ut i lie ies'wnership shares are proporcionacely che same as che Supply System's.314,817 64,i27 26,426 52,685 3,751 461,806 214,805 57,516 18,742 43,7i7 3,751 338,531 31,208 307,323$1,491,205 108,092 136,959 775,718 67,962 S2,579,936

$1,566,635 105,000 156,582 852,307 72,469 2,752,993 257,929 s2,49s,oss 21.1 593 193 6.8 5.5 17.9 13.7 54.8 12.0 5.1 5.2 12.3 12.1 12.3 ($in hfillions)

Pro jea No.1$629 Pro jea No.2 Pmjea No.3'413~t l,822$1,118 Project No.4 Pro jea No.f 0$462$339 300 1,000 h$00 2,000 2,$00$2,$80$2,733 3,000 20+4'sshingtonPubllepowerSupplySystem

~1980 Cumulstlveeosts Consuuetion

~Piivste Utilities'Ownenhip

~through Butlget June 30, 1979 Bonneville Power hshninlst tet ion