SNRC-2160, Forwards Financial Info Required by 10CFR50.71(b)

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Forwards Financial Info Required by 10CFR50.71(b)
ML20065A525
Person / Time
Site: Shoreham File:Long Island Lighting Company icon.png
Issue date: 03/30/1994
From: Bortz A
LONG ISLAND POWER AUTHORITY
To:
NRC OFFICE OF INFORMATION RESOURCES MANAGEMENT (IRM)
References
LSNRC-2160, NUDOCS 9403310210
Download: ML20065A525 (16)


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Long Shoreham Nuclear Power Station Island P.O. Box 628 I Power North Country Road Authonty Wading River, N.Y.11792 I

MAR 3 01994 l l

LSNRC-2160 i

U._S. Nuclear Regulatory Commission ATTN: Document Control Desk Washington, D.C. 2055!i Annual Financial Report Shorehar. Nuclear Pc"er Station - Unit No. 1 Docket No. 50-322 Ladies and Gentlemen:

This letter transmits the financial information required by 10CFR50.71(b). Attached please find a copy of the Long Island Power Authority's 1993 Annual Financial Report.

If there are any questions concerning this information, please contact this office, very truly yours, c

A. . ortz Resident Manager DYF/kc Attachment cc: L. Bell C. L. Pittiglio T. T. Martin R. Nimitz AS! \

310054 pyP i i 9003310210 940330 PDR ADOCK 05000322 I PDR m i

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Attachment to LSNRC-2160 l

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LONG ISLAND POWER AUTHORITY FINANCIAL STATEMENTS MARCH 31,1993 a

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CONTENTS Pace INDEPENDENT AUDITOR'S REPORT ON THE FINANCIAL STATEMENTS 1 Statement of financial position 2 Statement of revenues, expenses, and changes in accumulated deficit 3 Statement of cash flows 4 Notes to financial statements 5-10 INDEPENDENT AUDITOR'S REPORT ON THE SUPPLEMENTARY INFORMATION 11 SUPPLEMENTARY INFORMATION ,

Statement of revenues, expenses and changes in accumulated deficit information:

Schedule of unrestricted expenses and cost reimbursements 12

UK Urbach Kahn &Werlin ec

.blW CERTIFIED PUBLIC ACCOUNTANTS INDEPENDENT AUDITOR'S REPORT To the Board of Trustees Long Island Power Authority We have audited the accompanying statement of financial position of Long Island Power Authority as of March 31,1993, and the related statements of revenues, expenses, and changes in accumulated deficit and cash flows for the year then ended. These financial statements are the responsibility of the Authority's management. Our responsibility is to express an opinion on these financial statements based on our audit.

We conducted our audit in accordance with generally accepted auditing standards. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinion.

1 In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of Long Island Power Authority as of March 31,1993, and results of its operations and its cash flows for the year then ended in conformity with generally accepted accounting principles.

As described in Note 1 to the financial statements, the continuing operations of the Long Island Power Authority are dependent upon receiving funded appropriations from the State of New York, Although -

amounts have been appropriated commencing April 1,1993 the Authority has not yet received these appropriations.

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1 New York, New York j May 28,1993 )

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LONG ISLAND POWER AUTHORITY

- STATEMENT OF FINANCIAL POSITION March 31,1993 (With Comparative Totals For 1992)

Total Unrestricted Restricted 1993 1992 ASSETS Cash 5 129,163 S ~ 3,827,947 S '3,957,110 5 2,395,988 investments 244,772 11,711,942 11,956,714 18,283,562 Due to/from other funds 122.118 (122,118) - -

Office equipment 50,460 - 50,460 56,911 Other assets 1.263 397 1.660 2,172 S 547,776 S 15.418.168 S 15 965 944 S 20.738.633 LIABILITIES AND ACCUMULATED DEFICIT Advances from LILCO $ - S 6,413.596 5 6,413,596 5 11,969,268 Due to NYPA and LIPA Third-party Suppliers - 8,830,561 8,830,561 6,886,910 Accrued expenses 548,202 174,011 722,213 671,766 Due to the State of New York,its agencies and authorities - - - 228,620 State of New York allocations payable 14.455.936 _

14.455.936 14.203.300 15,004,138 15,410.168 30,422,306 33,959,864 ACCUMULATED DEFICIT (14.456.362) -

(14.456.362) (13 221.231)

$ 547,776 $ 15.418.168 $ 15 965.944 S 20.738 633 See Notes to Financial Statements.

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'LONG ISLAND POWER AUTHORITY

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STATEMENT OF REVENUES, EXPENSES, AND CHANGES IN ACCUMULATED DEFICIT Year Ended March 31,1993 l (With Comparative Totals For 1992)

I Tota! I Unrestricted Restricted 1993 1992 l

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Revenues:

Contractual revenues $ - $ 157,999,844 $ 157,999,844 $ 25,439,388 Cost reimbursements 653.701 - 653.701 370.446 .

653.701 157,999.844 158.653.545 25,809.834 Expenses:

Salaries and benefits 971,848 2,750,629 3,722,477 2,935,576 General and administrative 285,089 1,574,939 1,860,028 1,727,506 Consutting 631,895 15,284,018 15,915,913 8,123,280 Legal - 536,541 536,541 842,914 LIPA Third-party Suppliers - 56,070,698 56,070,698 6,696,264 Payments in lieu of taxes - 81.783,019 81.783.019 6,815.252 1.888 832 157,999.844 159 888.676 27.140,792 Excess of expenses over revenues (1,235,131) - (1,235,131) (1,330,958)

Accumulated deficit:

Beginning (13.221.231) - (13.221.231) (11 890,273)

Ending S (14 456 362) $ -

5 (14 456.362) 1 $ (13 221.231)

See Notes to Financial Statements.

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l Total Unrestricted Restricted 1993 1992 RECONCILIATION OF EXCESS OF EXPENSES OVER REVENUES TO NET CASH USED IN OPERATING ACTIVITIES Excess of expenses over revenues S(1,235,131) 5 -

5(1,235,131) 5 (1,330,958)

Adjustments to reconcile excess of expenses over revenues to net cash used in operating activities:

Depreciation 19,490 - 19,490 25,603-Reimbursement of office equipment acquisitions 7,581 - 7,581 22,859 Repayment of interest - - - (16,160)

Changes in:

Other assets 909 (397) 512 (55,319)

Due to/from other funds (40,672) 40,672 - -

Advances from LILCO -

(6,443,321) (6,443,321). 9,693,333 Due to NYPA and LIPA Third-party 6,513,458 Suppliers - 1,943,651 1,943,651 Accrued expenses 358.156 (307.709) 50.447 (587.781)

Net cash provided by (used in) operating activities . 5 (889 667) 5(4.767.104) $ (5 656,771) S(14 265.035)

SUPPLEMENTAL SCHEDULE OF NON-CASH FINANCING ACTIVITIES Transfer of 1. ability from Due to the State of New York to State of New York Allocations payable S 252 636 5 - S 252 636 5 -

See Notes to Financial Statements.

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.. LONG ISLAND POWER AUTHORITY NOTES TO FINANCIAL STATEMENTS Note 1. Organization and Nature of Operations

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The Long Island Power Authority ('LIPA*) was established on January 15,1987. LIPA is a l corporate municipal instrumentality of the State of New York (the ' State *), constituting a body corporate and politic and a political subdivision of the State, created by Chapter 517 of the Laws of 1986 (the 'UPA Act*). ,

i Under the LlPA Act, LIPA is authorized to acquire, through negotiated purchase, tender offer, .!

or exercise of the power of eminent domain, all or any part of the securities or assets of the Long Island Lighting Company ('llLCO'), provided UPA first determines that such acquisition would result in rates that would not be higher than the rates that would be charged by ULCO if such acquisition did not occur.

Under the UPA Act, LIPA is further authorized to undertake the following activities, among other things, within its service area: to assist in the development and implementation of conservation and load management programs; to facilitate the development of cogeneration and a! ternate energy production facilities; and to serve as an advocate for utility ratepayers. In addition, UPA is mandated to close and decommission The Shoreham Nuclear Power Station ('Shoreham Plant') and to investigate and develop afternative uses, if any, for the Shoreham Plant. LIPA's service area is comprised of Nassau and Suffolk Counties and the portion of Queens constituting LILCO's franchise area.

LIPA is dependent upon the State for appropriations to meet its funding requirements. State appropriations are subject to approval each session of the State Legislature and do not constitute a legally enforceable obligation of the State; accordingly, LIPA has no assurance that ,

required appropriations will be made beyond the current State appropriations for LIPA's operating expenses. 51,140,700 was appropriated by the State to LIPA in the State budget for operating expenses commencing April 1,1992 in furtherance of its statutory purposes.

However, the funds were not allocated to UPA, and therefore, no remittances were received.

For the year commencing April 1,1993,5600,000 has been appropriated by the State to LIPA in the State budget for operating expenses in furtherance of its statutory purposes. This amount is considered by LIPA to be sufficient to cover its operating expense, contracts and liabilities through fiscal year ended March 31,1994. During 1993, the Division of the Budget of the State of New York instructed LIPA to use interest earned and cc!!ected as c,f March 31, 1993 in the same manner, and for the same purpose as appropriated funds of the State.

Cumulative interest earned and credited to New York State allocations through March 31,1993 amounted to $655,953.

UPA's operations are funded solely by allocations of LIPA's State appropriations, except that LIPA's Costs Attributable to the transfer of the Shoreham Plant to UPA and to its ownership, possession, maintenance,- decommissioning or dismantling of the Shoreham Plant will be reimbursed by LILCO, under the Amended and Restated Asset Transfer Agreement between ULCO and LIPA, which provides for the transfer of the Shoreham Plant to LIPA (see Note 2).

Such allocations of LIPA's State appropriations represent advances from the State paid from the Long Island Power Authority creation and contingency fund in the miscellaneous special revenue fund - 339CS (the ' Fund *). The Fund consists of payments made by LILCO to the State pursuant to ULCO's gross receipts tax obligations.

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NOTES TO FINANCIAL STATEMENTS

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Note 1. Organization and Nature of Operations, (Continued) '

In accordance with a Repayment Agreement be' ween UPA and the Director of the Budget of the State of New York (' Repayment Agreement *), LIPA is required to repay to the State the total original principal amount disbursed by the State to UPA, without interest, pursuant to the LIPA Act. This amount must be repaid by UPA: a) first, from the proceeds of the first issuance of UPA Bonds, b) second, from any " excess revenues' (as defined in the Repayment Agreement) derived from UPA operations and/or investments, and c) third, if sufficient Bond proceeds or excess revenues are not available, then by the deltvery to the State of non-interest bearing Bonds which are duly authorized, issued and executed by UPA (* Repayment Bonds"). LIPA Repayment Bonds are without recourse to the assets of UPA except to the extent that UPA has sources of funds available from the proceeds of the first issuance of UPA Bonds or from any excess revenues derived from UPA operations and/or investments.

On July 9,1992, UPA submitted a Repayment Bond to the Director of the Budget of the State of New York. The Repayment Bond represents the total original principal, in the amount of

$13,799,983 disbursed by the State to LIPA and investment interest in the amount of $631,937, eamed on the amounts advanced to LIPA which are considered funds of the State. The above amounts reflect the principal and interest due as of March 31,1992.

Note 2. Settlement Between the State of New York and LILCO and Transfer of Shoreham to LIPA On February 28,1989, LILCO and the State of New York, entered into a Settlement Agreement to resolve the controversy over the Shoreham Plant and power supply issues affecting ULCO and its customers. The Settlement Agreement contemplated, among other things, the transfer of the Shoreham Plant from LILCO to LlPA for $1.00; the payment by LILCO of all Costs Attributable to UPA's ownership, possession, maintenance, decommissioning or dismantling of the Shoreham Plant, including any of UPA's administrative and general costs directly related -

to the Shoreham Plant and the determination by the New York State Public Service Commission

('PSC') of just and reasonable rates for LILCO. On February 29,1992, the United States Nuclear Regulatory Commission (*NRC*) approved the transfer of the Shoreham Plant and NRC license for the Shoreham Plant from ULCO to LIPA. Title to the Shoreham Plant and NRC license for the Shoreham Plant was transferred from ULCO to UPA on that date for $1.00.

On December 29,1990, LIPA submitted to the NRC, its plan to decommission the Shoreham .

Plant. LIPA's decommissioning plan was approved by the NRC on June 11,1992. The cost to decommission the Shoreham Plant, as estimated by LIPA, will approximate $186,000,000 (in 1991 dollars),

On April 14,1989, ULCO and LIPA entered into the Amended and Restated Asset Transfer Agreement (' Asset Transfer Agreement') under which ULCO reiterated its agreement never to operate the Shoreham Plant and to transfer the Plant to LIPA. Both the Settlement Agreement and the Asset Transfer Agreement have been approved by UPA'S Board of Trustees and LILCO's Board of Directors. The Agreements became effective on June 28,1989,~when LILCO's shareholders voted to approve them, in accordance with the Asset Transfer Agreement, UPA and ULCO have also entered into a Site Cooperation and Reimbursement Agreement (' Site Agreement') on January 24,1990. Among other things, the Site Agreement establishes the specific mechanism for LILCO to provide payment for all Costs Attributable to Shoreham (as defined in the Site Agreement), including such costs incurred prior to January 24,1990. UPA has also entered into a Management Services Agreement with the New York Power Authority ('NYPA') dated January 24,1990, which specifies the management and icchnical services NYPA will provide to UPA in connection with the license transfer, maintenance and decommissioning of Shoreham. Both the Site Agreement and the Management Services Agreement are in effect.

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NOTES TO FINANCIAL STATEMENTS Note 2. Settlement Between the State of New York and LILCO and Transfer of Shoreham to LIPA, (Continued)

As required by the Site Agreement, UPA has established two reimbursement funds, one for Costs Attributable to Shoreham incurred or to be incurred by UPA and one for Costs Attributable to Shoreham incurred or to be incurred by NYPA and by UPA Third-party Suppliers.

ULCO is required to advance to UPA, for deposit into the reimbursement funds, amounts equal to three months' projected costs. UPA has sole authority to invest and to make disbursements from the reimbursement funds.

Note 3. Summary of Significant Accounting Policies Accounting basis:

The financial statements have been prepared on the accrual basis of accounting.

Fund accounting:

In order to ensure observance of reservations or restrictions placed on the use of available resources, UPA's accounts are reported in accordance with fund accounting principles, whereby separate sets of self-balancing accounts are maintained for resources with similar characteristics as follows:

Unrestricted Fund - Accounts for NYS appropriations and expenditures unrelated to Shoreham.

Restricted Funds - Account for costs related to Shoreham and LILCO reimbursements recorded in the two reimbursement funds required by the Site Agreement as described above.

Investments in U.S. Treasury Bills:

LIPA invests available State appropriations and Shoreham-related funds in U.S. Treasury Bills which are carried at amortized cost which approximates market value. Under an agreement between LIPA and the State, allinvestment income earned by UPA on its State appropriated funds, (except as disclosed in Note 1), is payable to the State. As a result, discount earned is recorded as a liability to the State, and no income or expense is recorded in the financial statements. Under the Site Agreement and the Management Services Agreement, all investment income earned on Shoreham-related funds is credited against LILCO's future remittance and deposit obligations, and no income or expense is recorded in the financial statements.

Reimbursement for Costs Attributable to Shoreham and advances from LILCO:

Costs Attributable to Shoreham incurred by UPA are reimbursed by LILCO. ULCO provides .'

for these costs in advance based upon estimates of expenditures. The related funds received from LILCO are classified as advances from LILCO. Costs Attributable to Shoreham are charged against these advances and are recognized in the statement of revenues, expenses, and changes in accumulated deficit.

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- l NOTES TO FINANCIAL STATEMENTS h ote 3, Summary of Significant Accounting Policles, (Continued) l State of New York Allocations:

Allocations received from the State are recorded as liabilities. These amounts are required to be repaid to the State in accordance with the provisions of the Re; ayment Agreement.

Depreciation:

1 Dep,'eciation of office equipment and furniture is calculated on a straight-line basis over the I estimated usefullives of the assets.

Taxes: ,

LIPA is a political subdivision of the State of New York and, therefore,is exempt from federal and state income taxes.

Retirement plan:

The pension plan for UPA employees is part of the New York State Employees Retirement System. The plan benefits are provided under the provisions of the New York State Retirement and Social Security law and are guaranteed by the State Constitution. The Authority's election to participate in the plan is irrevocable.

Note 4. Investments and Deposits with )inancial Institutions LIPA is authorized under investment guidelines adopted by its Board of Trustees to invest excess funds in U.S. government securities having maturities not greater than 120 days and in certificates of deposit from banks or trust ccmpanies authorized to do business in the State.

LlPA's investments at March 31,1993, which were held in LIPA's name by its authorized bank, were as follows:

Maturity Par Arnortized Dates Value Cost Unrestricted investments (non-Shoreham-related funds): ,

U.S. Treasury Bills April 1,1993- $ 245,000 $ 244,182 Accrued interest April 29,1993 -

590 Restricted investments (Shoreham-related funds):

U.S. Treasury Bills April 8,1993- 11,740,000 11,697,575 Accrued interest May 27,1993' -

14.367-

$ 11,985.000 $ 11956,714 8-

NOTES TO FINANCIAL STATEMENTS Note 5. Office Equipment and Furniture Office equipment and fumiture consists of the following at March 31,1993.

Office equipment $ 124,800 Office furniture 65,019 Less reimbursements f74.689) 115,130 Less accumulated depreciation _ _ _ (64.670)

$ 50 460' Note 6. Commitments Payments in Lieu of Taxes On December 31, 1991, ULCO remitted approximately forty one million dollars

($41,000,000) to the Town of Brookhaven as a property tax payment for the Shoreham Plant and certain surrounding property for the tax period December 1,1991 through May 31,1992. On February 29,1992, the Shoreham Plant was transferred from ULCO to ! IPA.

The LlPA Act requires the Authority to make payments in lieu of taxes (PILOTS) on the Shoreham Plant to municipalities and school districts in which the Shoreham Plant is located in the first year after LIPA's acquisition of the Shoreham Plant in amounts equal to the taxes and assessments which would have been received by such taxing authorities, if the Shoreham Plant had not been transferred to LIPA. Accordingly, such ULCO payment of approximately twenty million five hundred thousand dollars ($20,500,000) for the period March 1,1992 through May 31,1992 is considered by UPA to be a PILOT on LIPA's behalf to such taxing jurisdictions. In each succeeding year, such in lieu of tax payments are to be decreased by ten percent until such time as such payments equal taxes and assessments which would have been levied on the Shoreham Plant in a non-  ;

operative state. On June 1,1992, UPA reached an interim agreement with the taxing i jurisdictions pursuant to which UPA paid approximately forty one million dollars -j

($41,000,000) on May 31,1992, approximately forty one million dollars ($41,000,000) on 1 January 8,1993 and will pay approximately thirty seven million dollars ($37,000,000) on May 28,1993. All parties reserved their rights in the agreement to maintain their position as to whether these payments constitute PILOTS and/or taxes, the correct amount of the payments and any and all other issues regarding the parties' rights and obligations under the Act.-

On June 25,1992, UPA commenced a declaratory judgment action in Nassau County  ;

Supreme Court seeking a judicial declaration of UPA's obligations under the LIPA Act to  :)

make PILOTS to the Shoreham taxing jurisdictions. The main issues included whether i payments to the taxing jurisdictions constitute PILOTS or taxes, the amounts to be paid 1 and the schedule of payments. On March 29,1993, the Court issued an order generally favorable to UPA's position on the issues. It is anticipated that this order will be appeated I by the Shoreham taxing jurisdictions'and possibly by UPA as well. In the interim, LIPA intends to continue making PILOT payments to the taxing jurisdictions consistent with the court's decision. Ultimately, there will be no financial effect on LIPA because whatever i is determined to be due and owing will be borne by ULCO.

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l NOTES TO FINANCIAL STATEMENTS Lease in February 1990, LIPA entered into a lease to rent office space through April 30,1995. i The annual minimum rental per the terms of the lease is as follows:  !

Year Endino March 31,1994 5 166,646 March 31,1995 171,800 March 31,1996 14.750

$ 353,196 Rental expense for UPA's office space prior to reimbursement amounted to approximately

$151,000 for the year ended March 31,1993.

LIPA Third-party Suppliers Ownership of the Shoreham fuel was transferred from ULCO to LIPA on February 29, 1992 as part of the transfer of the Shoreham license from LILCO to UPA. Although fuel disposal is not considered as a decommissioning activity by the NRC, selection and implementation of a fuel disposal alternative is a major element of the Shoreham decommissioning project. The disposition of the fuel is in itself, a large undertaking complicated by numerous business risks and uncertainties. At this time, all 560 bundles of fuel remain safely stored in the spent fuel storage pool in the Shoreham reactor building.

On December 1,1992, the UPA Board of Trustees approved the award of a Shoreham Fuel Transfer Agreement to COGEMA, Inc. for approximately $76 million. The COGEMA contract called for removal of the Shoreham fuel from the site for reprocessing by COGEMA in France. Major regulatory obstacles forced.LIPA to terminate the Fuel Transfer Agreement with COGEMA on March 3,1993. UPA is currently negotiating with COGEMA, Inc. to settle amounts due under the terminated Fuel Transfer Agreement.

COGEMA has estimated that payments ranging up to $3 million may be required in order to resolve outstanding matters under this contract. LIPA is currently evaluating COGEMA's proposals.

On March 3,1993, LIPA entered into a Fuel Disposition Agreement _with Philadelphia Electric Company (PECO) and General Electric (GE), for $65 million. This Agreement called for the removal of the Shoreham fuel from Shoreham to PECO's Limerick plant by rail. UPA is in the process of seeking to amend this Agreement to reflect anticipated changes in the mode of transporting the Shoreham fuel from Shoreham to Limerick. This change in transportation mode, and the resulting delay in start-up of the fuel shipment campaign, will require modification of contractual terms regarding the services to be performed, schedule for completion and anticipated payments.

As of March 31,1993, UPA's commitments for contracts to UPA Third party Suppliers totaled apptcximately seventy-eight million dollars ($78,000,000).

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I SUPPLEMENTARY INFORMATION l

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U K. +,Urbach Kahn &Werlin ec bl 7

CERTIFIED l'UBLIC ACCOUNTANTS INDEPENDENT AUDITOR'S REPORT ON THE SUPPLEMENTARY INFORMATION To the Board of Trustees Long Island Power Authority Our audit was made for the purpose of forming an opinion on the basic financial statements taken as a whole. The supplementary information for the year ended March 31,1993 is presented for purposes of additional analysis and is not a required part of the basic financial statements. Such information has been subjected to the auditing procedures applied in the audit of the basic financial statements and, in our opinion, is fairly stated in all material respects in relation to the basic financial statements taken as a whole.

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New York, New York May 28,1993 J

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,, ' LONG ISLAND POWER AUTHORITY -

, SCHEDULE OF UNRESTRICTED EXPENSES AND COST REIMBURSEMENTS Year Ended March 31,1993 Net i Costs Reimbursement Costs i

Salaries and benefits $ 971.848 $ 510.875 $ 460.973 General and administrative expenses:

Rent 151,405 79,866 71,539 Telephone 18,255 9,549 8,706 Insurance 10.237 3,028 7,209 Office expenses 24,903 15,645 9,258 Postage and messengers 7,874 4,708 3,166 Equipment rental 12,597 6,607 5,990 Repairs and maintenance 8,128 4,218 3,910 Dues and subscriptions 11,268 4,850 6,418 Travel and entertainment 6,965 4,626 2,339 Vehicle expenses 6,717 2,204 4,513 Advertising and promotion . 4.470 2,237 2,233 Board meetings and trustee expenses 4,473 3,047 1,426 Court reporting services 3,187 - 3,187 Interest and bank charges (4,880) (6,500) 1,620

' Depreciation expense 19.490 - 19,490 285.089 134.085 151.004 Consulting expense:

Engineering 501,897 - 501,897 Energy conservation 58,300 - 58,300 Accounting and financial services 71.698 8.741 62.957 631.895 8.741 .623.154

$ 1,888 832 $ 653,701 $ 1.235.131