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0 0 NCMPA 1 Annruald Report Table." "-t~t

About NCMPA 1 ...........

ElectriCities Duke Power Company

The Participants

NCMPA 1 Message ........

From the Chairman

NCMPA 1 Highlights for 1993 . .

NCMPA 1 and Duke Power NCMPA 1 and Strategic Load Growth

Rebates and Customers Load Management and Participants

NCMPA 1 and Trade Allies NCMPA 1 and Legislators

NCMPA 1 and the Rate Committee NCMPA 1 and Communications

NCMPA l and Savings

Plants .

Catawba Nuclear Station McGuire Nuclear Station - 0 - 0,

Finarnce ......

Portfolio Statistics Debt Statistics

Bond Reconciliation

0 Board of Commirrissioneirs and Man-agemnt Staff ....

Participait Revenues ...

Report of IrdependenitAuLditors ....

Financial Statements ..... D

Statistical Highlights ....

9408150142 940808 PDR ADOCK 05000269

I PDR

Abou-t NCMPA 1

The view is global from

the roof of Catawba

Unit L's turbine building

looking toward the reactor.

CMPA I is the wholesale power supplier to 19 Under the agency's contract with Duke, the 0municipalitics in the Piedmont area of North Carolina. investor-owned utility is responsible for fueling, operation Priof'1I983. win NCMPA 1 became the power and capital additions. Duke is also contractually required

supplir Plrticipants were wholesale customers of Duke to provide NCMPA 1 with any additional power require

o oom pany. . ments.

Throughftheir representatives on the Board of The power agency has two reliability exchange \ 1issionesth'e municipalities control their power agreements with Duke to ensure that participants have

1'ai Iisal r sufficient power to meet their needs. q P 1as important relationships with these The exchange agreements allow the agency's

ups: Pownership entitlement for power to be provided in equal amounts from four units - two each at Catawba and

E 16 it riCit es McGuire nuclear stations. The agreements eliminate the

i7 At ElectriCitisof North Carolina, Inc., a non-profit risk of dependence on a single unit.

serv iassocatioh based in Raleigh, provides managemi~iisaf tid eices to the power agency. The staff The Participants

ics~ott theagency's daily operations, which include Each of the 19 participants executed a Project Power

-fina -,a ting lnaccounting, contract administration, rate Sales Agreement with the agency. These "take or pay" K:ctitinet .glingK planning and budgeting. It closely agreements require payment to be made whether or not

itors ke wer Company's performance in they receive project power. The agreements are the

Sfi 'j bligations. security for the agency's bonds.

Hj wir agency, through ElectriCities, also assists Each participant also signed a Supplemental Power

partfciants with lad management recommendations, Sales Agreement with the agency. These agreements are

If:r .r ril rate d esignr-ommunications, marketing, safety, "take and pay," requiring payment to be made only for

ain negatidn and regulatory matters. supplemental power actually received in excess of project power. Under these agreements, a participant agrees to

AlCe Poer Company purchase all of its electric power from the agency, over

NGMPA Owns 75 percent of Unit 2 and 37.5 and above its ownership entitlement. It excludes any percentof support facilities at Catawba Nuclear Station. power made available by the Southeastern Power Admin

Sowers areiDuke Power Company, N.C. Electric istration (SEPA). SEPA is the regional federal marketing

-Meiibership Corporation, Piedmont Municipal Power agency for hydroelectric power. SEPA allotments now

i a River Electric Cooperative, Inc. provide about 4 percent of the participants' needs.

T 0~ /l~5~~ n ,

Chairman George W. Clay, Jr.

N

When Robert Frost wrote The Road Not Taken, he The engine that guides us t tirlfuture ibuilt could hardly have imagined its application to public with successes from the past. In 1993, tWU I cler power, much less an electric utility. the first to accept NCMPA I's e

Yet the famous poem has profound meaning to what rate. Another 12 are considering it. Eigten participants NCMPA I did in 1993 and to the shape it will take by the awarded nearly $360,000 in appliance rebates toCiStom1> turn of the century. Our Board of Commissioners saw ers, adding valuable load to our system. "two roads diverged in a wood... and took the one less Pathways to trade allies were c eared'-W, vith traveled." The choices were clear: stay on the main road contractor groups and visited with more tha I Io j' until it dead ends, or forge newer territory where the heating and air conditioning and h'<'dr 85 1 future holds promise. tions important constituents that have ben ov d

In August, NCMPA 1 formed a reassessment until now. committee - power agency leaders who are taking a Our need to make more efficient use~fo long, hard look at the destination of our 19 participants. In generation spurred serious talks with Duke P 6 ", April 1994, the committee completed its strategic plan, address cost allocation methodologies thatkmithaew ending the first phase of a nine-month journey into the significant impact on participant costs after I9967AWe-e heart and soul of the power agency. Committee members also actively seeking to market some of,,thbaseload identified five areas for study including education, power to other buyers. organization, research, marketing and planning. By the The road to our goal offers curves and t I I end of 1994, NCMPA I will be well on the way towards expect the unexpected. The decision to take th l meeting its goal of being an innovative competitor and traveled is one of unity and conviction. An that exploring new and exciting territory. all the difference.

rgar lan

ar naa r e t

,0

0

stAgentcy Higldights for, 1993

ne e1's chie oes in 1993e was toadsd rgas drs h oe

co nuel addres-infg power supply issues.Thyicue o taifg~in 196, 85 to 90 percent of NCMPA I's

a otl load willejupplied by baseload generation from its C P I d

75 percent ownership interest in Catawba Unit 2 or tr egcLodG wh

tough zexchaligogreements with other baseload plants CP Icotneisefrstonraepriiat onZth D Fower Company system. i

ne 'sa'using b aseload generation for supplying thatTwcutmraceedNMAIsnwco mi umc of te agency's load is not economical, NCMPA l's dvlpeticniert n 2ohr r osdrn t

pjpply;side- n addmand-side staffs are looking for ways Tert ead iiswoadlrecsoest hi

0 Z

to bridgothe generation gap.s

The-poweragpncy began talks with Duke to resolve 412ya eid h iyte eun tlat8 ecn

cist allocation ifiethodologies that could have a significant oftseavnsothcuomr

j~ibng he G nertion Gapis also actively looking at marketing some baseload power

it~~B~ ~to other buyers. impat n Dwer Pt er A number of demand-side programs address the power

supply change, as well as add value to participant services. ~ontddts~iAgpoer sppl isses.They include:

loyg n* NCMPA 1 aid

~ 7 prcnt wnr~ip ntret i Ctaba ni 2orStrategic Load Growth

'~'"z~ hrog~echai~ grement wih oherbasloa plntsNCMPA 1 continued its efforts to increase participant

load in anticipation of the 1996 power supply environment. I~l~Sineusng aselad eneatin fo suplyng hatTwo customers accepted NCMPA 1's new economic

~~rnl~hof he~enc's oadis nt eonoica, NMPAl's development incentive rate and 12 others are considering it. &man-sie saffsarelooing or ays The rate rewards cities who add large customers to their j~3~ gap.systems by reducing the city's wholesale power costs over a

4 1/2-year period. The city then returns at least 80 percent

of those savings to the customer.

ANCMPA 1 published three industrial park brochures

4 From left: .M'ark Oterseni,

0 NCMPA 1 supervisor,

demand-s ide operations;

Norman Schronce, Davidson County manager; Dennis

Roberts, Lexington director of

public utilities.

When the Davidson County Courthouse in Lexington was built in 1868, there were no electric lights until the next century. In 1993, 125 years later, NCMPA 1's Mark Otersen recommended energy efficient lighting for the

Take building after he conducted energy

audits for all county buildings, including o the old courthouse. The county, a retail

customer of the City of Lexington, could save $11,000 a year in electric costs if the efficient lighting was installed and other small changes were made. Now, all 17,000 customers on the city's system will benefit in some way from lower

operating costs for county facilities.

LIN

00

Agenicy Highlights for, 1L993

Joe TrouttmanL, right,

NCMPA 1 associate

engineer, and Dennis

Cameron, NCMPA 1

project engineer, with

Don Bradley, left, Duke

Power Company shift

operations nianager.

NCMPA l's Dennis Cameron and Joe Troutman report , 72

to work every day at Catawba Nuclear Station.

Their longstanding association with Duke Power Company

employees - the two have 24 years of combined power

agency tenure- helps ensure good relations between the

power agency and the utility.

for regional and state developers, helping to increase the 12 monthly peaks. Total estimated savi0rom awareness of power agency capabilities in the economic management efforts were $7.5 million, mi development community. It also hosted an event for the more than in 1992. N.C. Economic Developers Association. A new pager system enables municixdster to ge

load management recommendations instantlyreducingy Rebates aid Cutstomers the risk of missed telephone messages and-mo impor

Eighteen participants awarded nearly $360,000 in tantly, assuring reduced demand. At year end;,eight murebates to customers who installed energy efficient water nicipalities were using the pagers. L) heaters and heat pumps. The NCMPA 1 incentive pro- Huntersville began offering residen I'alq nmnagegram aims to increase power agency load growth. ment to customers. Now, 18 of the 19 particpants~have

Monroe set a record in February for NCMPA 1 re- residential load management. L bates awarded in a single month. A local apartment owner A pilot program in Newton and Staresvillfoered got a $40,000 check from the city for installing 120 energy customers big savings if they agreed to dllow 1%con efficient water heaters and 60 heat pumps. The customer trol of their air conditioners during peaPeid could have chosen the city's natural gas service, but instead selected electric. NCMPA 1 arid Trade Alli

Bostic, NCMPA l's smallest participant with 173 NCMPA 1 hosted three statewide tradeally)hvs 0 customers, awarded one water heater and two heat pump increase awareness of power agency prgramsaPthe nc(t@300, rebates.benefits of public power. Power agency

with contractor groups and visited with more-than 10local * Load Maniagemeit aid Participants HVAC and homebuilders' associations. - JJW

NCMPA 1 recommended load management for 1m of rdean iO

tinn

tanty, ssurng educd dmand Atyearen t m

nicpaitis ereusng hepagrs Huntersille bean offring reide ma

M77~

AgerIc lighlights for, 1993

Standing, from left: Mark Hodge,

financial analyst and Benny Bowers,

senior financial analyst, both of the

North Carolina Local Government

Commission. Al Conyers, ElectriCities

treasury manager. Seated, from left:

Janice Burke, director of bond

authorizations/negotiated sales, and

Bob High, secretary of N.C. LGC.

When the N.C Local Government Commission speaks, the investment community listens. With the backing of the nation's strongest oversight

board, NCMPA I has the benefit of the LGC's

-F good standing each time it goes to market. Al Conyers, treasury manager, a 15-year ElectriCities employee, has worked with the LGC during many NCMPA 1 bond issues and keeps the Commission up to date on power

agency operations.

NCML1A and Legislators ply ownership and operations, including debt service, fuel, The(,y s cceeded in getting a provision added to supplemental power needs, administrative and general

1to anendthe N.C. Open Meetings Law that allows expenses, and any taxes levied by state and local governoa rds to consider proposed or existing ments.

W'16 tracts-in coIsd :sessions. House and Senate conference NCMPA l's rate committee began considering some tchimitt n lers considering the still-pending bill changes in the way that participants are charged for

a hveraId to th6power agency provision, all-requirements power. Some of the ideas include a mini

M i t u 250 guests attended a legislative reception mum demand charge and an excess demand charge for

'at Eltniities offices in the spring. only the summer months. These changes are still in the

NMP 1 continued to participate in the national concept stage, will be refined further and are proposed to

a smisA Access Policy Group (TAPS) with the be implemented no sooner than January 1, 1996. mGmernnient Affairs Director serving as a member of the

ecutivecommittee. TAPS has succeeded in getting the * NCMPA 1 aid Communicatioris

ar)En Rulator Commission to adopt lan- Lexington was recognized for the second consecutive

cguage favorable to transmission dependent utilities such year with a Hometown Communicator Award, presented

s I y. at the ElectriCities Annual Meeting in August. The city earned honors for its outstanding external communication

CI 2 1 aid the Rate Committee program. Bc on recommendations from NCMPA l's rate High Point celebrated its electric system's century of

committee the Board of Commissioners approved a 5 service in 1993 with a proclamation and hats and T-shirts

percent increase effective July 1. for employees. Wholesa rates cover the cost of project power sup- Participants celebrated Public Power Week with festi

0 -0

0'

vals, giveaways for customers and contests. million bond issue and a $200.6 million xexempt-cornMaiden held an open house with Loue the Lightning mercial paper issue.

Bug face painting, a pole-climbing demonstration and an -Maintained an "A" rating from eachofth Fircej energy conservation display. rating agencies for its financing activitie

-Reached an agreement in principUlofn settlement of) NCMPA 1 and Savirigs a property tax refund sought by NCMPA!,from South f

Signed an agreement with Duke and the other Carolina, with the power agency receiving the full refund Catawba owners that allows Duke to act as the engineer of $1.2 million over three years. and contractor for the replacement of Catawba Unit I's Resolved 21 challenge issues witt 0ake steam generators. This agreement is expected to result in settlement agreement that resulted in of,$.'2_ni1savings to the power agency since Duke is performing the lion. NCMPA 1 will realize additional savihn, the fuwork, versus an outside contractor. ture from this settlement.

Obtained present value savings totaling $94 million Completed retail rate studies and in debt service payments through the issuance of a $616.3 participants.o

Big service in a small community gives

Newton customers more reason to smile.

Paige Wadford, NCMPA 1 marketing

specialist, guided municipal employees

through strategy t e c v e f sessions to promote2r

such customer services as rebates, load management and security

lighting. Through a pilot program in the

fall, the city increased security lighting t

signups - a source of off-peak revenue

by 39 percent. The city continues to work with

large customers and - , 131 .ri I trade allies to foster strong relationships. Standing, PaigeWadfor, NCMPA 1 mareting specialist. Ciy

employees, front row frorn left: Glenn Pattishall, assistant city~ Ag director; information off1 m

tenergy rvces specialist; second row, Dot Bugudgare ed "nc K Q director;

Cecile Waile such ssm serxices

pablic utilities; tairddrw, RalfordThomas, citymaager. a

pilot pg i-

0-0

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(qfNCMPA 1 Plani-ts

0o2 TT

OX

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1,

on *Wylie, SC

C(Ib

SStatic'171 McG-ire N-clear S tatic>]a

< fi.)l Uid2 -Uxxits 1 arid 2

N U Locatio ik~~yiS Location: Lake Norman, north of Charlotte, NC V IN $VT'i 8-,,r'suthlwest of Charlotte, NC Fuel Type. Nuclear

* F . FdT -12cir MNDC*. 1129 mW per unit**

oC'-mN -cz 1m296W per unit Commercial Operation:

- Cni ,r1W;peration:- Unit 1 -December 1981 une 1985 Unit 2-March1984 L.1

t 2 ugust 1986

0 w a units completed their scheduled 68-day *MNDC is maximum net dependable capability, the maxi

e ead of schedule. mum output that can be depended onfrom a generating unit

;, I xcudig* these outages, the station averaged 96 when it is operating atfidl power. perce output in 1993.

**Duke changed the MNDC rating of each Catawba and

McGuire unit to 1129 mW effective January 1, 1988. The

power agency is challenging this change, and negotiations are continuing.

w of **uecageAhVNCraigo ah aab n

'uO

- Nua

NCMPA 1 took advantage of market conditions in Debt Statistics March 1993 with a bond refunding of $616.3 million. This refunding had present value savings of $52 million.

Also, the power agency issued commercial paper in the amount of $200.6 million in May 1993. This issuance refunded $217 million in bonds with an assumed present value savings of $42 million.

The Local Government Commission, a Department of the State Treasurer division, is involved in all phases of Tx epCm riPp the agency's debt financings, monitors the financial $06 .C condition of the agency and participants, and has statutory authority to require power agency-served cities to set 4 2391 electric rates sufficient to meet their contractual obliga- FeReos9L tions to the agency.

* Portfolio Statistics

Earnings* BcrndRecooaciliatio-a

Income Rate of Return Income Rate of ReturnBonds Outstanding 1 2/31/92 t~ 2-9;3;0~ 1993 $49,666,000 7.06%

Q 1993$49,66,00 706%Issued Series 1993 f6W6275,0002!

1992 56,490,000 7.62%

Matured 1/93 2481 00 Market Value as of 12/31R

Value Average Maturity Vau vrg auiy Bonds Outstanding 1 2/31/93 581~33~ 000 1993 $810,229,151 4.1 years 1992 816,757,538 3.8 years

Transactions NumerAmontSeries 1992 ~122J5 5006~jjJ Number Amount Series 1990 17,l_520,000_j 1993 522 $3,882,671,662

1992 539 4,341,769,917

Series 1985B -1463, 25000 *For Earnings and Market Value, amounts include income from and market value of securities held in the

SeriNCMP 198 1- ia 4000 n

decommissioning trust.s

(Thouands Intres Cos5t 00

1/19

'1T

Fixd at Bnd

$2,39,582 373

' 0

0

0 Boa,.rd o~f Comm-"-rissionecrs anid Ma a e e tStaff

COMMISSIONERS"2 Radford L. Thomas * Kimberley L. Phillips 1993 OFFICERS City Manager Commissioner

0* R98 Raymond I. Allen Newton Huntersville - Chairman City Manager George W. Clay, Jr. Albemarle *Mary Ann Creech * Ed Humphries Mayor, Shelby

. Town Administrator Town Manager * Janice L. Hovis Pineville Huntersville * Vice Chairman

6 1 1 City Manager A. W. Huffman, Jr. //Cherryville * George W. Clay, Jr. * A. B. Patterson, Jr. Mayor, Granite Falls

o 59. Mayor Public Works Director * James L. Dorton Shelby Landis * Secretary-Treasurer

Alderman R. Duke Whisenant o Concord * Arthur E. Peterson John T. Walser, Jr. City Manager

Council Member Council Member Lexington * Winton Poole Statesville Lexington

Commissioner AT-LARGE o Cornelius ALTERNATE *R. Duke Whisenant EXECUTIVE

COMMISSIONERS"3 City Manager COMMITTEE - 1 Morris Baker Lexington MEMBERS

e-~f 4Town Manager o Tidus Stanback Li Drexel Council Member * Jerry L. Campbell * Morris Baker o Albemarle Mayor Town Manager

o* Franz F. Holscher Lincolnton Drexel Council Member * Jack F. Neel Gastonia Council Member * Kevin C. Sanders * Janice L. Hovis

0 Albemarle Administrative City Manager 0 a A. W. Huffman, Jr. Assistant Cherryville

Mayor * S. Kyle Beam. Maiden Granite Falls Council Member * Arthur E. Peterson

Cherryville * Donald D. Mitchell Council Member * J. William McGuinn Electrical Director Statesville

High Point * Roberta Bales Monroe Commissioner MANAGEMENT

Myra Skinner Cornelius * John N. Parker STAFF Commissioner Electric System Huntersville *-Alan Washam Manager * James T. Bobo

a 0untrs0lleCommissioner Morganton General Manager NO Alan Bobby O. Wood Cornelius

Town Clerk * T. Jack Matthews * William H. Batt Landis * Benny J. Orders City Engineer Director

Alderman Newton Finance and L. Klynt Ripple Drexel Administration Utilities Commission * J. K. Mills Member * Dale Becker Council Member * Jack S. Childs Lexington Electric Director Pineville Director

Gastonia Communications *Stephen H. Peeler * Smith D. Lingerfelt

Director of Public * Danny Crew Electrical * Alice D. Garland Works and Utilities City Manager Superintendent Director

0 Lincolnton Gastonia Shelby Government Affairs

a Marcus C. Midgett * Linda K. Story * John E. Marshall * Arthur L. Hubert Jr. o 0 Council Member Town Manager Council Member Director

Maiden Granite Falls Statesville Operations and Services

00 0 Jerry E. Cox * H. Lewis Price Larry M. Cranford 'As of December 31, 1993. - * City Manager City Manager Electrical Utility Th Co ssione'sseat

~~ Monroe High Point DirectorTeomssoessa NL~ Statesville in Bostic was vacant as Of

* Michael C. Cronk *Lloyd D. Shank, Jr. December 31, 1993. City Manager Director of Electric 3The Alternate CommisMorganton Utilities sioners' seats in Bostic

0 M t High Point and Concord were vacant as of December 31, 1993.

0O 7 a 0 3~ = *T

0 D

Boa-trd o~f Comm--r-issioneirs an-d Manaeme t Staf

George Clay, Shelby (left), and Jim Bobo, ElectriCities.

Franz Holscher, Gastonia, and Smith Lingerfelt, Elaine Bagley, ElectriCities and Duke Shelby. Whisenant, Lexington.

John Walser, Lexington. Don Mitchell and Jerry Cox, Monroe. Dennis Roberts, Lexington, and'Mary Ann Creech andkenny"fills Pinevill.

J

Bob Race, Cornelius Duke Whisenant, Lexington. L1

Bobbie Ross and Ed Humphries, Huntersville >4

0

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illi

Bert Htfnan, Granite Falls. Lloyd Shank, High Point. Marcus Midgett, Maiden. Mike 0ri' Irgan u

- 0 o

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To:

Nartipatrl n uesm ia agrn Granite FaIls statesville ,High Point Raleigh

ogno rNetnA McGulro Le ington

M.A n *Lndia

Lo~ iC ncointon e

Bolaby a Chr~i sto [F rsv m~brade

Catawba A * n e.

0No~rth Carolinia Municipal Power Agency Number 1

A Power Plant

40 0

0 D

Gross Revenues

City Customers From Sales*

P )(d@Q 0 u - Albemarle...................... 10,840 .... ...................... $ 16,875,919

B ostic ................................. 173 ................................... 142,4 17

> 0 Cherryville ........................... 2,373 ................................. 4,060,954 C ornelius ............................. 1,179 ................................. 1,633,623

D rexel............................... 1,136 ................................. 1,198,585

G astonia ............................ 23,310 ................................ 44,545,453

o G ranite Falls..........................1,843 ................................. 3,000,567 H igh Point...........................31,390 ................................ 58,834,000 H untersville ........................... 1,250 ................................. 1,861,027 L andis ............................... 2,482 ................................. 2,623,020

Lexington ........................... 2,54.........................31,162,259 Lxincolnton.....................12,544.................................34,078,111 M aiden ................................ 968 ................................. 3,9 13,223

M onroe .............................. 8,399 ................................ 25,024,755

M organton ............................ 7,355 ................................ 17,177,920

N ew ton .............................. 3,569 ................................. 5,545,464

Pineville ............................. 2,064 ................................. 5,168,999

Shelby................................7,758................................ 12,23 1,437

Statesville ........................... 11,230 ................................ 23,706,679

o Total 136,658 $262,784,412

*Based on information from participant questionnaires, June 30, 1993

0 ~ K

Reporxt of Idepenaden-t Anitt

SBoard of Commissioners

URI

North Carolina Municipal Power Agency Number 1

We have audited ihe balance sheets of Nokh Carolina Municipal Power Agency Number 1 as of December 31, 1993, and- 1992 and the related statements of revenues and expenses and changes in retained earnings, anld cash flows for the yeais then ended. These'financial statements are the responsibility of the agency's maiagement. Our responsibility is-to express an opinion on these financial statements based on our audits.

We conducted our audits in accordance with generally accepted auditing standards. Those standards requife that we planand perform the audit to obtain reasonable-assurance about whether the financial statements arefree of material misstatement. An audit includes examining, on-a test basis, evidence suppoiking the amourits and disclosures in'the financial statements. Aii audit also includes assessing the accountmg principles used and significant estimates made by inanagement, as well as evalifating the overall financial statement pre'ientation. We believe that , ouraudits provide a reasonable basis-for-otir opinion. ou anur .

In our opinion, the financial statements referred to above present fairly, in all material' respects, the financial position of North Carolina Municipal Power Agency Number 1 at December 31, 1993 and,1992, and the results of its operations and its cash flows for the years then ended in coiformity with generally accepted accounting principles.

Our -audits were conducted for the purpose of forming n opinion on the bsicfinancial' statements takenas a whole. The Schedules of Revenues aid Expenses per Bond Resolution and'Other Agreements and Changes in Assets of Funds Invested are presented for purposes of a So additional analysis'and are not a requiredp-art ofthe basic financial statements of-North Caro- 4C lina Municipal Power Agency Number 1. Such information has been subjectedto the auditing

procedures applied-in-our audits 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.

ih, North Carolin

March 31, 1994

2O

0

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N Raeigh Noth Croli'a0

Baliace Sheets (80OOO

December 31,

993 1992

L(Note B):

'I"1 I plant in-service, net of accumulated depciaion of $294,784 and $275,239 $1,107,603 $ 1138,277

v1in orkin'progress " 9,008 -7,049 N a fnet of accumulated

amoi zation of $218,467 and $195,068, 70,609 60,166

1,187,220 1,205,492

N1 Ii i1,i'tPety and Equipment, net 2,062 2,151

eIn Iested (Notes B, C,'Iand-E): 279,939 291)196

ontinge i-y fund 18,427 21,925

p e fund 1,077 1,11:3

299,443 314,234

rust foCissiong osts (Note B) 37,034 31,409

- -,"'IF 1undjiivted (Notes B, C, and E): fund 321,853 341,400

* IOperat;ih fund ' 98;060 102,999 upe'ntal fund N 25,0I7 2,374

444,930 446,773

i n counts receivable 16,590 15,469 counts receivable 11,443

Sses -- 36,742 42,200

R, 509,705 504,442

1 Ds Note'B): bt issuance costs 35,974845

n advance refundings of debt 371,718 319;874 e recovered from future

n to participants(Note D) 93,962 89,642

$2,537,118 $2,508,089\

ial statements.

Q/ N

Balanc Sheet ($000

Liabdities ind Re-tain d Earning

Long-Term Iebt: Bon, net of unamortized discout

'(Notes'B and'E E21129 1

Speciail Funds-Liabilities:Current maturities of bonds (Note E) '7-7 '80 Z

ccruedintereston bonds 6

Tx-exempt conmercial paper (Note F)2

Accrued interest on cominercial paper80

Liability for Decominissiorng Costs (No'te B)'3j3 j 01

Operating Liabilities: Accounts payabyq 980< Accrued taxes 37

A -

K~15 'r-

7

' E27}8

.7 77

6257,123$258,8

~. NK A 7 N - ~. ~ 200 ,600

' 806

980

80

CmimnsadConinecile(Note).N.

Retained rinterst oncmeca7ae 806 279____

$25718$,0 8

-~296,44 7741

Stteivrisof evenuLes allc Expen3cses and Ckanges in Retained Uarnings ($000)

December \31,

1993 1992

23-2

Oper'al ng:ever es:

Sal4of eicity to participants $204,557 $ f83,609

Sdiles of ectricity to utihties 238,954 _3,2

N '443,511 418,234

Operating E Aees./

Q npeit Edid miaintenance 79,294 76,013

o lptcsel -28,601 32,972 Inter onnecityn s tervices:

43,5 115,660 ' 4125,058 Transmn sion and distribution 12,195 11 649,

her (5,095 (2,509)

122,760 -134,198

Addn g trative and.general 22,418 22,978 ro? iectits ani excisteB) 9,112 8,585

,1T6p~rt4 (eol e B) 12,084 11,1472k

Derceon 44213 43,701 318,482 -3'9,594 '

tN& Oprans nrnde 125,029 - 88,640

-A ,i'erest/Charge Credits):

n tre x127se60- 146,842176,51

a - oritizati n of debterefunding costs, 2,4 11,216

IZAn iti jof-debt discount ai

ssuic costs t,5,91-8'3,2 et- co- ;(_46,832))

126,228 137,496

-Net, Costs tob Reco-vered from Future Billings

tost ricipts d(Note D) N 4,320 _43,057

Ext ss (Deficickcyv) Of Rev enues Over Expenses 3,121 (5,799)

et md Earunt, beginning of yeal 4,279- 17

rn ,end of year

S e re ancial statements.7 N

~~ II~I~ ee-te lbinan'criastsatemeAnts.

E 4,4 7-1

iv Lj-Aotzto'fetrfnigcss I 030. ' 1,1

Statemnei ts of Cash Flo>w ($000) 7- 7

DecembrJ 1993

Cash Flows from Operating Activities: Receipts from sales of electricity $ 424,887 Payments of operating expenses (240,642)

Net cash provided by perating activities 184,245

Cash Flows from Capiial and Related Financing Activities: Bonds issued 616,275 1 8 5-5 Commercial paper issued 200,600 Bonds refunded (788,915) '214 ) Interest paid . (115,166) % t77496) Refunding Trust Fund requirement (46,315) 66 Additions to electric utility plant and

non-utility property and'equipment (54,304) Bonds retired (24,810) (4,600) Debt discount and issuance costs paid (32,363) ( 05 9@i)

Net cash used for-capital and related financing activities 2 9 ( 12 Net cashused focapital~** . -(244,998) f2286)

Cash Flows from Investing Activities: Sales of investment securities ,857,592- 4,2 2 Purchases of investment securities (3,842,520) 165,317) Investment earnings receipts from

non-construction funds 45,732

Net cash provided by investing activities- 60,804

Net Increase (decrease) in Cash and Cash Equivalents 51

Operating Cash, beginning of year 8

Operating Cash, end of year(Note C) $ 59

St n a

7 V, 4 See hates to financial statements. 4

Decmbe 31,I

C. 111 r

T NF' ">vde by"' ' '

tiite-

o - j / , " -7 0 1

cras) eraein ghomeaf 7 i(iv:5~

erecocl ntoeren incm aconspybe /,4)(01

t provided' by operating activities : -. $1425$7,7

-Sc -iiis4 sttei

~~~~iaca oprtnnccutt6sevbe.,- , 114~)1,0 TiBQ~p~'nrp~i rpiiK ,5 370

co Le s- Lt) 00 ~ aL r s C seiicIe :cc ea 1 93aii

A. Genaeral 4atters The Operation and Fuel Agreemen provides fr ' Duke. to operate, maintain, and-fuel the station

North Carolina Municipal'Power Agency Number 1 renewals, replaCements, and capital additions-as approv (agency) is a joint agency organized and existing pursuant by the agency; and for the ultimate decon 'o to Chapter 159B of the General Statutes ofNorth Carolina the station at the end of its useful life. to enablesmunicipalities oWning'electric distribution sys- The agency's acquidition of its ownership interestms tems, through the organization of the agency, to finnbe,. being financed by the issuanceof electric rev enue bonds construct, own, operate,) and maintain electric generation pursuant to1Resplution No. R-16-78, asathenibded(resoluand transmission facilities. The agency has twenty mem- tion) of the Boardof Commissioners of tage cy? >

bers, ineteen (participants) which receiv~power from the resolution established special funds to hold pro e eds fror agency and one which receiyes;power from Duke Power debt issuance, such proceeds to be used f 6sts-of acqui Compaily (Duke). - sition and construction of the project, a stabish

D The agency has entred-into several agreements with certain-reserves. The resolution also established specidl Duike which govern-the purchase, 6wnership, conistruc-. funds-in which-project revenues are deposited tion, operation, and maintenance of the project: which project operating costs, debt service,dthe t;

The Purchase, Construction, and Own&rship Agree- specified payments relating'to the project:'ar iade. o ment provides, among other things, for the agency to pur- The/agency has entered into a ProjectePowd Sales chs a undivided ownerihip interest in Unit 2 of the Agreement and a Supplemental Catawba Nuclear Station (station) and a 37.5% undivided- with each participant. These agreements provi each', ownership interest in certain-support facilities of the sta- -participant to purchase from the ageicy ifsr1Dir tion. However, by virtue of various provisions in the Inter- ments bulk power supply, in excess of poweiQat s connection Agreement and the Operation and Fuel\Agree-- from the Southeastern Power AdministrationrkEI," meit, the agency (1) bears-the costs of acquisition, con- which includes its total share of project output (as e ine% 0 struction, operation, and maintinance of 37.5% of Unit 1 by the Project Power Sales Agreement). Th cyis and 37.5% of Unit 2, and (2) -has-thesame proportionate obligated to provide all electric powerr right to the output of and begfs the risks associated with ,participant at the respective delivery poi the lack of operation of such units. I - pant is obligated to pay'its share of the operatig 'anddebt 40

-The Interconnection Agr'ement provides forthe in- service costs qf the project. terconnection between Duke's electric power system and 'The agency's participants receive eir tal the agency's project and for the exchange of power be'- 'power, exclusive of po'wer allotments from SEP%-mrom tweenQUnit 1 ad Unit'2 of the station and between the the agency. Such power is provided by project outut Catawba units and Duke's McGuire Nuclear -tations The together with supplemental purchases ofdpower from agreement also provides fof the purchase and sale of ca- Duke. Pursuant to two "Reliability Exchanges" con ned pacity and energy, and the transmission of energyifo the in the Interconnection Agreement, projectoutput-l Ipro

-.1 1 - Ki) M agency's participants. , - - vided-in essentially equal amounts from [atal ba-UmtAs part of the Interconnection Agreement,he n and thr othe atawba U Gure

agrees to sell back to-Duke, on'a "take-or-pay" basis, ca- Unit 1, and McGuire Uhiit,2) in'operatioj on the Iue ,paci' from each Catawba unit-in decreasing amounts. In system all of similar size and capacity. Therliabiity, calendr year 1993 and,1992; the agency retained approxi exchanges are intended to liake more reliable the supply mately 25 percent arid 22 p the of capacity and energy to te agency in eamount agency's share of the station's aggregate availaible capac- 1vhich the agency is entitled pursuant toits- ers ity-,andwill/retain increasing amounts -hereafter-through interest in Catawba Unit 2, and to mitigate potential-adDecember 31, 2000. Thereafter, the agency retainsf100 verse ecolnomic effects on the agency and tants percentof its-share and the sell-back arrangement termi- from-unscheduled outages of Catawba UnR#_&r~rfe! nates. nue

/~ -

0 60

- K

nscheduled ( es ofany atawbaor McGuire Unit. All expenditures -related to the purchase and construc, Inc. (ElletriCities),

let,0fe Q NrhCrln - - s -to

0. I tion of nuclear fuel cores, including interest expense ne

amze ajont uniipalassstace genc ungr he' investment income on funds not yet-expended, are,capitalGeneral Statutes of North Carolina, is a public body and izdutlsctmeathcosarpaedinheecor

orat andpoliic ceate forthe urpoe ofAt that time, they are amortized and charged t<Ful x Ip i o pense o therits of production method.Amortization of

ton with their electric systems and to joint agencies, such nulafelcssildsetmtddspalotsf

agreent with ElectriCities. Under the current manage- -31, 1993 and 1992, respectively.

ment agreemgentElectriCities is required to provideNalF

prsonnehn ope nnel. services necessary for the agency, N1UiiyPoet n qimn oconc s businessn an economic and efficient,

nhed All expenditures related to purchasing and installing can'in-hose coinpter, jointly owned iih North Carolina

o . a tsfic tAccointingPolicbaies Eastern Municipal Power-Agency (NCEMPA), have been b p tecapitalized and ate fully depreciated. Also included are the

psroA eougid, nmtin m land and administrative office building'jointly wex NCEMPA and used byboth agencies and ElectriCities.

cti~ciu ~~\~1e ae nts T he agyhent red mintoad <$,22,0 anthe100 o h er eddDcme

, ac tdftheagecy ae mintanedin te Te administrative office building is being depreciated agent sihj acrdce with the Unmayse of over 37 1/2 years on a straight-line basis.

ecount f the Federal Energy Regulatory Comiission,

a p r olinprsiformity with generally accepted accounting & 7 .--- to coX ui bInvestmentsci

. E rIn .rcs. icut m n Investments a re at amortized c sti n er -c 1 and premiums, if any,are amortized over the rof the

Ojrelated minvestments in a manner which yields a constant O e ao tdres associated rat of return. In those intahceswhere arket values are

) ~ ~~~~~~ cooif gec' weshpitrs inesth ,/ below amortized cost, no provision for loss has been pro1C atwb-,sttin, icluding interest expense net of inet ied since it is the agency's-intentio'to hold the securi

ment nome-o flunds not yet expended, have been re- tie to matuity ed < nal costhe aare being depreciated on a

ftrual basiiaver the-aherage composite life of each yarssonin Cos t

Fcuto tU.S. Nuclear Regulatory Commission (NRCJ regula

Coniucdfin rko in Progress / ' tions require that each licensee-of a commercial nuclear -power reactor furnish to the NRC certification of its fin an

VI exediue reae to moiiain InetmnsentcifeitemrdzdzotDscut

. . ll e os elatd t moifictios idntiied cial capability to meet the costs of nilclear decommissionomm~~A-~,4c...c ercper n a ainrgat the end, of the useful life of the icetem's facility.

Sn o Asa co-licensee of Catawba Unit 2, the agency is subject l ex e d ed acapitlie de opetr to these requirements and therefore has furnished certifi

n s es tere t cation of its financialcapability to fund its share of the -anserre lectric Plant in Service. Depreciation oof decommissioning the Catala ao n p

Caaw)Pta1on~nln A cost Sttin

v ih To satisfy the NRCc's financial capabilityregulations, t3fe agency established an external trust fund (the "Decom

th~a~'rag~ omposte lie ofAh-N 0rA N s~i~e ' ot

_z ii~sast. ~ / '~U ~ ~ . ~tojs' ula Rgltr Cm iso 0TC eua

V4 0

0

m-issioning) Trust") pursuant to a-trust agreement with a privilege taxes. In lieu of North Carolina pp taxes bank. The agency's certification of financial capalbility the agency pays an amount which wolild o

-~ I

require~s that the ageticy make annual deposits to the De- assessed on the non-tiility-propefty and rqipment- o_

\\K - "

comnussioming-Trlist which, to'gether with the investment agency. In lieu of a franchise or privilege tax t ageney

I 1I .7 / . 1

earnings and amounts previously on deposit in the tru st pays to NonrthCoarolina an amount equartoy3.22% oft are anficipated to result in sufficient furlds being lheld in- gross receipts from sales of electricity toparicipailts.-l tan Decomiissioning Trustat the expiration of the cufnent tric utility opertyIs located in South Caroliaan ie operating licensesor the CatawbaUnits to meet the to South Carolina-property -tax.y An electqupme- texcise agency's share of the decommissioning cost figu e of tax equal to6.05% (5/10 mill) for each-kilWttlur of a $105 -million per unit (1986 dollars) set forth in'the NRC electric power'sold for resale within Sot aroliai l regulations. The Decommigsioning.Trust is irrevocable, paid. an ands may be withdraw i from the trust solely for the p purpose of paying the agency's share of the costs of Statements of Cash Flows nuclear decommissioming.

Utnder the NRC regulations, the ecommissnof the agency has adoted cash flow repoha-acignas reTrust is requifed to be segregated'from the agency assets quired by Governmental Accounting Stgdard@Board and outside the agency's adinistrative control. Thet Sth Nolina prpes An s

agency isdeemed to have incurred and paid decommis- flows, operating cash onsists of unrestri)fr h ttcuasn de sioningncosts as annual withdrawalsare made from th e the n eli poer ondthe balance Wheets "ouratialnsetas Decommissioning Fnaddeosie tote Decommis- -funds invested".

ion sioning Trust. ' Q. InIviestmienrits 0

Deferred Costs O g The resolutionauthorys the agen fotinvest in 1n

Unamortized debt issuance costs shown net of accudirect obligations 6f, or obligationsdof whie eipn mulatedamortizatio , are being amortized on the interest T a h d s- , o and interest are mconditionally guaranteeding S rboand ted method ove the term' of the related deltt. Excess costs on States (U.S.), 2) obligations-of any agency o h U o~r advance refundings of debt are deferred and p amortized -, f ori .o

-scorporation wholly owned-by the U.S., 3, ifetadg over-the term of the delt issued on refunding. Net costs to i eral obligations of the State of North C-funds inested".HE be recovered from futre billings to participa5ts are not

amortized but will be recovered through future rates (See resoltion ath-ri-es aenytest in 1) NotemD).tbetter, 4) repurchase agreements with th and Fuin

Trustee, Construction Fund Trustee, or an Ueriime

Dicon o onsbond dialer reporting to the, Federal Resev ovkbWOd

methodn onerte terms ofterltddb.EcsWot n Sae US) )olgtoso n gn fte*~rav~

avncerfundi od aYork which matureewithin nine months from i Discountn bonds is amortized over the tern's of the wr N i ere wol ond y thalized fvirctpr nde

related bomnds in a fumef which yields acostant rate of' scribed'obligations, and 5) bank time detesoidrnte amterest wt by certificates of deposit and bankers'-es are tan

Bank'time deposits may only be in banks withn i Taxes -stock, surplus,Fan undivided profits of ;0 0

- Income "of the agency is excludable from federal in- $50,000,000 for North, Carolina ba'ks afd out- f-stttU

baks -Cstuctioyad h n cy's -gnvetuent r

cone tax under Section 115of the Internal Rervenue Code. epti the F s

-~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~~~~i~ iente bsnds inan~ne hc ilsaiatrt P- srb bains cando 5)ee bank time %j

Chapter 159B-of the General Statbtes of NorthoCarolina i banks t ecd 50%an % s

Tae - <~ tockl, ofsuchluans/cp-tlsok sndipided profits o

exempts/the agency from property and franchise or other tively, of such banks' capital stpck, s ndi profits.

Nku e

00

o

oe res ton permits-the- agency to establish official D. Neat Costs T6 Pe R-eco3velaed Firom, pitories y bank or-trust company qualified 'Future Billings To Paticip n

Edrdela/) of North Carolinia,,to receive'depositsof - * publi -oney'Wild having capital stock, surplus, and undi- Rates for power-billiigs to'paiicipants are designed,

V. //' it I -- - r I

ovided0olits ihrexcess of $20,000,000) At December 31, to cdver the agency's "costs" as defined by (1) the

1993 ad'192, the agency had $79,000 and $11,000, 1 resolbtion, (2)-therdject Power SalestAgreements, and a spectively, so deposited. ' 3) the Supplemental Power Sales Agreemnts. The

The agency's investments are categorized in tledol- agency'es rate6 are structured to systemnatically prvide for lo ir~t gle ve an indiLtioni of the leve ofrs s h etrqi'mniprtng funds, and reserves as

sumled-b te agenc at year-end.-All ageiicy investments specified by the resolution anid power sales agreements. areme gory I whc includes investments that are insured- Recognition of "expenses" (defined according to GAAP)

r registered dff which the s ec'ufities are held by the which are not included-as "costs," is doferred to such' agerfn bitsdent in the agency's name. (In,thousands of )period lis it isimtended that stuch "expenses"- be covered

dolPlease see chart below. ,by rates. Recognition of those "revenues," which -under

/olal fi I,~ -N, , - -<

'In accordance with the provisions-of the resolution, the resolution and the power sales agreements are 0 e collateral u der the repurchase agreements is segre collected to cover "costs",that are not "expenses," is

0 ..

Repurchase agreements $108,965 ,$108,965 $ 77,328 $ 77,328 U.S. government securities 159,181 165,908 186;V793 195,104) U.S. goverent agencie 303,713 325,318 4,0426,732

Municipals 21,294 -21,771 '4,094 - 4,30 rommercial Pateed 346 346

Collaterized mortgage obliations 141,389 140,785 77,667 77,031

734,88ep8t $76o093 749,922 $780,496

0 Operating cash 59 8 oRestricted cash, 20 /3

Accrued interest -9,406- 1s1,074

Totalfunds invested $7,44,373 $761a007rr

ans~m) o oinsisting oftSpecial~funds invested $299,443 $314,234 Operating assets 444,930 t o sbp i , e

* -$744,373 $161,007

V "' k

suoerb~h agny atyaen.Alagicinetet 5eiedbtereouinadporslsaremts N I ')

-Z:catg22 1Ehc3 nldsi~smns'htaeisrd eogiioio epne"(eie codn oGA)

fl K

0

- 0

"'revenues" cover "expenses." Future refundings mayiresultin the,issuance of additional i All rates must be approved by-the Boad of bonds.,

Commissioners. Rates are designed on an aimual basis -,As of December 31,,1992, the agen and are reviewed quarterly. If they are determined to be outstanding $2,591,032,000 of bonds.O anuary 1 inadequate, ratesinay be revised., - , 7 the agency made principal'payments'of $2 l000 or

Net 'costs to be recovered from future billings to maturing bonds. In March 1993, an additionaL> participants includes the following (in thousands of $616,275,000 of Bond-were issued (Sei 4993 dollars).,Please chrt below. Proceeds of this issue were used to establis a trst

advance refunding portions of Seriesf1978,1985l98 E. Bonds ' 1985B,K1986, and 1990 Bonds totaling $571,860 000In

May1993,$2 0000,000 of tax-exenicomieeiri 7 The agency has-been authorized to issue Catawba (TECP) was issued to establish a trust forrefundi o

Electric Revenue Bonds (bonds) in accordance with-the remaining potion-of Series 1979, 1981,982- 9 terms, conditions, and limitations of the resolution. The Bonds totalling $217,055,000, bringing thetotal total to be issued is to be sufficient to pty the costs of outstaiding bondsat December 31, 1993 i acquisitioi4nd construction of the-project, as defined, $2,393,582,000,as follo' s (in th6uads ollars: and/or for other purposes set, forthin the resolution. ued

Yea2 Ende Inception to

December 31, ) Deceiber 31, 1993< 1992, 1993 - 1992

GAAP Items Not Included in

Billings to Participants:

Interest expense not capitalizable $148,993, $180,240, -$1,422,917 $1,273,924 Depreciation 61,800- 52,384 387706 325,906 Training costs 6,696- - 6,696,

210,793 232,624 1,817,319 1,606,526

Bond Resolution Requirements0

Included in Billingsto Participants:

'Special funds deposits (witlidrawals) '17,120 (25,883) 298;972 281,852 Debt service t 174,069 206,405 1,357,769 ,183,700 Investment incomenot available

foroperating purposes -/21,086, 24,195 166,072 144,986 Special funds excess Valuations- )5,802', 15,150' (99,456) (93,654)

-206,473 189,567- 1,723,357 1,516,884,

Net costs to.be recovered

fr m future billings a 4d

to participants $ 4,320 $ 43,057, $ 93,962 $ '89,6

-7 / ~ -, -'NC'

7 - - " 0

7 J ) - - N/ ' ~ -'

December 31, 199 -1992

-/o to 5v m uiganaly from 1993 to 2000 $ $49,605

L'N

6% -t nn003 with annual sinking fund

coiits begmnning in 2001 25,870 a/, , - a- n00 ihan ual/ sinking/fund

a reg uiremients beginning in 2004- 55,935, m1 tu V in 200wth annual smnking fund'

nts beginning in 200923,9 367,600

1,%66.% :Calittrig annually from 1993 to 20007,5 m\.l(1 natuhlng in (1604 with annual sinking fund

7qu iiints/beginning in 2001 ''1,0

40 ' ,2

.590 maturiff 00wt aninual sinking fumd

0 7 J08,350

u'ieginng in 2005D108e350 138,780

eN1993res 1989

9.75%to %10%maturing annually from 1993 to 1995 3,115

8.5% 1 m n n017 with annual sinking fund

, T, -- , 25,80

requirebens beginniing in 2001 _

27,800

er ,92 I

. 5% matunng i 2018 with annual sinking fund

a i en eginn in 2009

*series 1983

9 5% ring-annually from 1993 to 1996 4,625

rn i 202 18-with annual sinking fund

a req ments beginn in 2009

6.5% .75% otrigannually from 1994 to 1996 _9,575 17,5

m iI

0

* Sedies 1985

8.0% to 8.5% maturing annually from 1994,th' 1996$1480$J,5 7%(maturing in 2020with annual sinking fund

-- 4 , 2

requirements -beginning in2019

6154 - N -85

* Sedes 1985A

8.2% to 9.0O% maturing'annually/from 1994 to.19,98 ;1- 9 7% maturing in 20202,053,4

* Sefies 1985B-

8.0% to 8.4% maturing annually from 1994 to 199720,f0 6% maturing in 2020 with annual sinking fund

e bDecem r , A 1993

-~~4,2 11 ---19 V24ji925 0~ _

*&ries, 19856- N

6.70% to 8.5% maturing annually from~ t1996 $14,820 / S 19,085 o

7% maturing in 2020 with ai~nual sinking fund~ -

46,720 r 5,O7o n

I - ~61,540 ~ 69,085

7 Seriesl1988A 0 >

%tmatu gann ually ' m 1994h tot 2003 1-4315 l 2990

775% maturing in "2 010 sink2 ,0 39,545

requiremens beginnin in 20020,7108-1, I=

requirements beginning i2018 12,151 6

146,30

* eis1986B

6.0% to 8.4% maturing annually from 1994 to 1998 7% maturing in 201 with annual sinking fund

requirements beginning in 201 7l61 * Seriesu1988

6.7%tur.ng annually from 19940tto9810031 7.%maturing in201withannual sinking fund N-0

requirements beginning in 2007 / <j40 0j~~

7.5% maturing i annually frm ud,052 2

% maturing i1201 with annual sinking fund requirements beginning in 200914 -' ~ i830 K~~3l

76% ma~uring in 201 with annal sinking fund

requirements beginning in 2015, , - 600

14 20 84

11 0

11 5

/K- 6,0

7.%mtuigi 201 25,000

15,4 © ,4

N -,oD

0 ) _ '

December 31, _1993 1992

*.. e 91

couponpriced to yield'6.75% maturing'in 2004 3670 $ 3670

oto 6.9% ,matuuring annually from 1994 to 12003 12,025 5,7

6 to 35970

: 5%-maturnin-2010 with annual sinking fund requireents eginning in,2007 91,600 91,600"

0requirenents beginning in014 10,225- 23,135

117,520Q5437

eries

Sere S199O

toyi%5maturing ani-ally fron 194 to-011 523,200 /523,200

I I

Zer coupon pniced to yield 6.55% to 6.7% maturng annually from 2008 to 2012 100,000 100,000

5.75 aturing i2015 with-annual sinking

fun0equire0ments b n i91,030 191,030

0 _6.5% athii g i 2017-vith annual inking * fund requirements beginnngin 2016 -135,495 135,495

.2 n 018 ,-83,540 83,540

% mat ng im 2020 with annualsinking

reu dre ments beginning in 2019- ' 123,990 '123,9

6"/& Bonds mauigin21 65,300 65,300

CIO: N 1,222,555 1,222,555

ees 993z'

L Latuinng annually from 1994to 2010 10,05

75%fatuing 2012 with annual' siiking fund

ue tbeginning in 2011 and with an initial rate' f 2.6% 27,400 rin in'2012 with anual sinking fund

\~qirfin b'ginning in 20H1 and with an initial rate of 8.12% 27,400' 517,a iif 2015 wit annual sinkiing fnd

reqiemed begiinnin g i 2 0 013 103,390

m 2018 with annualsinki fund

tirei sbegininng in 2016 91,680

S5$7'maturin 2020 with annual sinking fund

E n beginninge 2018 and with an iitial rate of 2.6% 35,000

bi eginin ingi209/N

IN~l9OSmatuniA 2020 with atnnual sinking fund Srema ns gininig in 2018 and withan initial rate of 8.32% 351000

too 616,275-

0 7 - <' 122,55 2,53

02,393,582 259,3 n t ob 27,875 4,8 10

PARS~matuiuhg i e 01 ' fud

a r z ddiscount 184,438 , 195,307

O-1 $2,181,269 $2,370,915

(85 0.

N in20 n iha nta rt f&2 ~ - 2,0

ibegnnn

0 o

00

-~ 0

-

Thefar mrkt alue 6df the agency's long-term debt, See 1984 Janu m was estimated using a yield curve derived from December Seris 1985

31, 1993 market prices for similar'securities Using these _ Series 1985A, 1985B, yield curves, market prices were estimated to call date, to and 1986 Janu ,09 par call-date:Thid to maturity. The lowest of the threeI Series 1988 Januar 1198 o Priices was used as the-estimated market price for each Series 1990 JanuaryI 2000 individual maturity and the individual maturities were Series 1992 and 1993 Jnu summed to arrive at a fair maket valueof $2,445,a404,000 ' and 2,549,42 000 at December 31, 1993 and 1992, - 5Th bonds are-speciatobligatioils o payrespectively-., atble solely from and secured solely by (d1) projectle

-Certain proceeds of the Series 1984, 1985A, 1985B, enues (as def1fied5by the resolution) afterpaym t o9 c988, 1990, 1992,d a i nad d the TECP were project operating expenses (as dfied bieso0

used to establish trusts for advance refunding of and (2) other monies-and securities pledg1d 3pymen $3,450,900,000 of previously issu3d bondsAt December threof bythe resolution. 31, 1993, $1,,229,8'00,000 of these bonds-have been re- \The resolution requires the agency sit int deemed. Under these Refunding Trust Agreements, obli- s d

- rep~ctvel~speci-ablsl froms alndreed o lby is l)n project

ationof,or guaranteed by, the Uited State have lbcen revenues (as defined by the resolution) g en placed in9irrevocalend ingbToust Funds maintained result of the Project Power Sales Agreem dn In by thesBond FundTrustee. The government -obligations in o her mendecur o

31 93 12980,0 fteebnshv enr- /- cocioni byAIresolut,1n. todpos it in to

the respective Refunding Trust-Funds along with the inter- funds all proceed in e plce in Pre al ReudnfuutFnsminand rvnus (9eias f defined y- the resolui fl ebytheBnd Fnjrse.Tegvret-biations, nl be ureementt>IThIe I "I -estearnings on such obligations, willbe sufficient to pay Maturities and redenptions'of outsndig all interest on the refunded bonds when due and to redeem, th2rough 1998 and thereafter are as fllos in thosad all refunded bonds at various dates prior to their original of dollars) matunties, in amounts ranging froin par to a maximum redemption price-of 103%. The monies on deposit-in' each 1994 Refunding Trust Fund, including -the interest earnings 1995 - 385 thereon, arepledged slely for the befit of the holders of199

1996- 00 the refunded bonds. Since the establishment of each Re1997 9240 funding Trust Fund, the refunded bonds are nioionger 1998

considered outstanding obligations of ihe-agency. -- ) -, As a result of the refunding by the Series 1993 T e $ 2398;T4'

Bonds, the. agency increased excess costs on advanced $23 9,58 refuindings 6f debt by $47,002,000. However, the agency will benefit fr'om reduced'debt 'service costs of On February 16,1994, th agency e fa $156,486,000 over the life of the Series 1993 Bonds ward swap on portions of the Series1985 and

As a-result of the refunding by the' CP, the agency Bonds totaling $41,935,000. The agencywil e un 'will increaseexcess costs on advanced refundings of debt derwriter 5.75% semi-annually and vaiablerte by $25,143,000 Based upon current interest rates, the with-a final maturity of January 1, 2020wilbe issuedto

1., cal th euddb~d nJnayi1996Au agencywill benefit-from reduced debt service costs over l t r d o y

the life-of the TECP. Howe'er, the'savirigs caiinot be -' quanItified due'to the variable interest-rate of the TECP. F. Taix-Exempt Commerci P

Interest on the bonds ,is payable semi-annually. The bonds are 'subject to redemptioi prior to maturity at the 1 y 1993, the agency authorize theiss option of the agency, on or after the following dates at a $275,000,000 of tax-exempt-coninerci aper;(TECP .o o

maximum of 103% of the respective principal amounts Continue

K~ - (

'~ N - )(K ~~y

o a

,0

0 0

p vid frte ref 6nding of certain outstanding bonds and Property damage insurance coverage presentl avail

M . N I-_

fothe financing ofthe replacement of, the steam-genera-r able for the station,has-a maximum benefit limiit6d to

0 N

torst Unit -ofthe Catawba Nuclear Stati6n. The ageticy $2,700,000,000. Such available coverage lias been ob

issued $206:600000 of TECP to accomplish the refunding tained.

o of$27,055 001 boids. As of December 31, 1993, the The steam generators at the Catawba Station-have

e nc hd2$200,600,000 of TECP outstanding with an. experienced stress corrosion cracking insthe steam genera

o O\ 0 average matur ty?,of 82 days'and an average interest rate of tor tubes. Duke has signed an agreement to purchase re

3.1%. The agenc maintains a line 'ofcredit with a consor' placement steam generators for Catawba Unit 1. Catawba

~i ffl'ifbank which the agency may draw for the Unit 2's steam generators have not shown the degree of paymedit of maturing principal and interest oi the TECR corrosion stress cracking which has occurred-in Catawb'a

iagency cutrently pays'approximately $552,000 pet, Unit 1 and the Unit 2 steam generators have not been I year in fees fo ee line of credit which currently expires / scheduled for replacement. The Catawba Unit I steam

(Ma!62-5 There were no borrowings uider the line of geierator replacement is scheduled for 1996 and is, ex

crei agreement at- December 31, 1993. The ageicy may <pected to take approximately four months and cost ap

issue additional TECP up to a total outstanding amount-of proximately $200 million, excluding the cost of replace

$275,000,0 such additional amount may be used to ment power.-The agency's share of the anticipated costs of

financethe t tff the steam-generators. replacing the steam generators at CatawbaUnit 1,(exclud

ifhg the cost of replacement power) is approximately $70 G. C i ents and Contingencies million.'

I In_1990, Duke, purporting to act on behalfof all\

The ag as a contractual agreement with co-owners of thii Catawba Nuclear Station, filed suit in

ElectriCitie whereby ElectriCities provides, at cost, gen- U.S. District Court in Charleston, S.C. against the

managemnt services to the agency. This agreement Westinghouse Electric Corporation. The suit alleged that

* cfntues throughDecember 31, 1995, and is autoati- when Westinghouse sold the Catawba and McGuire steam

c~yrenewed orsuccessive three-year periods unless generators to Duke, it represented that the generators

n ear's notice by either party prior to'the wouldlast for the 40:year life of the staions. Italsoal

-en* eiid o? otrftterm. leged that the steam generators are defective and will have

/ years ended December 31, 1993 and 1992, the to be replaced-well short of their design life. In November

ctrCities.$2,400,000 and $2,472,000, re- 1990, the agency became a plaintiff in the suit. In March

spec . 1994, a settlement was reached and the lawsuit was dis

The Price-Anderson Act limits the public liability for a missed. The settlement results in the agency receiving

clear incident ata nuclear generating unit to' - future cash payments, discounts on futuire services and

,$9 400:000,000,-which amount is to be covered by private equipment, and additional wawranties and services for tl e

insurance and agements of indemnity with the Nuclear, steam generators at Catawba Unit 2.

S Regulator ssion. Such private insurance and agree- "

men mm are carried by Duke on behalf of all '

co-ow d'eOfiihe, station. The terms of this coverage require

e ownerofolITeenied facilities to provide up to-

S $7p9000,j r.year per uit owned (adjusted annually for

inflatio 1 -vent of any nuclear incident iiivolving'anyt

ui" k j license cily i the nation, with an annual maximum

n 1,assessmT'of$. 10,000,000 per unit owned. If 'ny suchpayments are-required, the agency would b liable f6r

o thos -ment p t

-l f hs~ mnsapplicable to the station. -'- I--N-i

~flr

Decmbe 31N93Dcme 11

CA 0

7-0:

/ Year Ended Year Endd 2-December 31, 1993 ) DecemberJ31,1092

Project Supplemental Total Project SuppieI

Revenues:

Sales of electricity to participants $ 73,261 $131,296 , $204;557 $ 55,081 $1282 $8

Sales of electricity to utilities 238,954 238,954 234;625

Rate stabilization fund- withdrawal 3,113 3,113 46,115 Funds valuations- 5,802 5,802 15,150

Investment-evenie available

for operations 25,117 629 25,746 29,061 :704

346,247 131,925 478,172 380,032 12923 5

Expenses:D

Operation and maintenance 79,294 79,294 76,013

Nuclear Fuel 28,601 -28,601 32,972

Interconnection services:

Purchased power 5,934 109,726- 115,660 5,596 119462

Transmission afid distribution- 12,195 12,195 ' - 1'

Other (5,209) 114 (5,095) - 0

725 122,035 122,760 5,596 128 6

Administrative and general-Duke - 18,216 18,216 19,132

Administrative and general-agency 1,679 1,846 3,525 1,720 1-382

Miscellaneous agency expense) 677, 677

Gross receipts aiidexcise taxes 4,951 4,161 '9,112 4,512, 407T38 Property-tax 12,084 - '12,084 11,147

Debt service - 1-7,751 85 177,836 206,175 230

Special funds deposits:

Iecdmmissioning fund 2,713 2,713 2,533 7

Reserve and contingency fund 20,233'! 20,233 20,232

22,946 22,946' 22,765

346,247 128,804 475;051 380,032 135 031

Excess (deficiency) of Revenues

over Expenses $ 0 $ 3,121 $ -3,121 $ 0 $ (5(5799

1 '- ID

N ~/ MLT

Fundsi

Invested; Bond-and Power

January 1, Note Billing Investment

1992 Proceeds Receipts Income, Disbursements Transfers'

aci ut' $ 91,494- $ 1, 78, $,33 $(220O,688) $ '179,246

s eryelecount 212,490 683 18,738 (18,659)

o Pic accont 23,748 40 ,(23,150) 23,903

- .7. ' . :- , I V , \N\II 1 ,

R nent account/ __50\5 _19450 347,272 2,261 20,556 /(263,288), - ,184,395

Resevan oninency fund 21,602 2,975- (5,152) -2,500

ect rese- 1 47 (53)

Revenue fund:

evn acut29,822 9,655 45,6 823 110,810 (146,590J40F e c > - 50

R hAt on account 313,242 24,193 (46, 115)

343,064\ 9,655' 45,560 25,016/ 110,810 - (192,705)

Januaryg 1, NtfuBlinnesmn

Bnund:- A'

0, ngeIacoun account 37631 4,7()8 (139,936) 148,113

t ue coun,4732 5,071 85, , 708 (139,936) 153,84

u 1en 18,476 136,763 658 (6,202) (147,321)

$816,576 $11,916 $182,323 $53,960 7 $ 0

85 O

o4 Rsr a: o2

O_ _ r -

Sched-Liles of Clianges in Assets o~f.Funds Invested ($000)

FundsFu

Invested JBondPoe7_s

Dec. 31, and Note Bli~' Ivsmn , 92Proceeds Cfr

$ 53,003 $(14,723)$1,5$(1,9)14 -232

-213,2527 '(28,35 1) 1,2-(6431

24,941 (3,034)40(2-803,61813

291,196 (46,108)1729(180) 5. 1U

NA -

21,925 (2,835)

1, 113,3(71

50,080 12,487669962-8,9 (170

291,320-2,8581

341,400 12,487 6,8 ,0 819(0,9'R

50,6164,4(19991308

- -.. Invesed J ond ~Power / ,nvse

De. 1, -> an Nt~Billing' InvestmentDem

40 (

-2,314 136';093'2,673 (15,494)1 164

$7653,003 $(3645620308 $41,050 $(230,092) $1229 .0 7,2

344

(16,463 . 184,262 24,94 xN 3,034 405 -A (2810)30,651 - 8,1543

27

1,113(70 1,@3

50,08 £2,87 ~ 66,89 > 622 8,16, .. (214,780) #

341,00 1,48766,989 21,707 2 88,169 (208,899) 3Q 3 85

N 50,616 - 1- / N 4,546 (159,939) 134,084 293'P. -52,383 _______1____16,370

102,999 -4,546 , - (159,939) 150,4543 , o

__2,374 136__ _ 093_ 593 N.(3,429)' (110,614)25 j 4

$761,007 - $345) $203,082 '. ( $46,832 $(3,9) $ 0$7Ai3

Toluc

2Belwood

alito

N -awndae

NCMPA. 1 Statistical Hig liIt

j 0 1993 '1992 1991, 1990 1989

3,976,104 3,757,1-l2 3,722,099 3,585,461 3,702

M'Oh' (OV)788,060 740,8147 742,108 721,247 689,304

sa $4 3,1,00 $18,234,00' $438,810,00( $432,64,0 $429,098,000

/e .43,1,00 $4 64,00

enses $3,121,000 ($5,799,000) 2, , 19,167,000

enues $238,954,000 $234,625,0(1 $262,456,000' $266,086,000 $263,034,00

771

s (~h)331,342 313,098 31075 298,78829,6

'ides.2 N (M h - 29,6

T, J $17,046,'000 -$1 ,301,000 $14,696,000 $13,880,000, $13,839,000

1988 1987 -1986 1985 1984

3,473,529 -3,58,447 3,190,842 3,020,916 2,894,769

nah1723,078 3666,802 653,210 610,358 597,979

ream es $425,772,000 $430,546,000 $331,907,000 $206,15000 $110,003,000

ene enses '($6,034,000) $8,1972,000 $6,075,000 $4,497,Q00 $2,399,000

Sae t ke (Revenues) $69,443,000 $280,810,000 $194,986,000* $83,175,000* $33,000

,A-ower

Pucae b iis(MWh) > 3134 N 33982,7883 297,668

"I C.te 289,461 )279,871 265,904 251,74 2,3

/I'

Aveag y g Vj "I'y . ~ I

$13,047,000 $12,478,000 $11,410,000 $10,852,000 $9,1,000

0 1,- - / < -- J

a uUnu I gan commercial operation in June 1985. 1

CrtabW u 2 gan commercial operation in August 1986. -att hUrs

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I~~~~o 1 60'7~~ 9 1r

NCMIPA 1 Report Table of Contents

Ab ut NCPI- . .1.......2. 2

ElectriCities Duke Power Company

The Participants

NCIMPA 1.. Mcssa-f. .............. 3

From the Chairman

NCMPA I 1- i-hlihtS - 993..............4

NCMPA 1 and Duke Power NCMPA 1 and Strategic Load Growth

Rebates and Customers Load Management and Participants

NCMPA 1 and Trade Allies NCMPA 1 and Legislators

NCMPA I and the Rate Committee NCMPA I and Communications

NCMPA 1 and Savings

Catawba Nuclear Station McGuire Nuclear Station

F in n ....c........9

Portfolio Statistics Debt Statistics

Bond Reconciliation

-...............

.-. ;-.. . . . . . . . . .

-, .............

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

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

9408150142 940808 PDR ADOCK 05000269

PDR

'"I d"~

N CMPA 1 is the wholesale power supplier to 19 Under the agency's contract with Duke, the municipalities in the Piedmont area of North Carolina. investor-owned utility is responsible for fueling, operation Prior to 1983, when NCMPA 1 became the power and capital additions. Duke is also contractually required supplier, participants were wholesale customers of Duke to provide NCMPA 1 with any additional power requirePower Company. ments.

Through their representatives on the Board of The power agency has two reliability exchange Commissioners, the municipalities control their power agreements with Duke to ensure that participants have supply and wholesale rates. sufficient power to meet their needs.

NCMPA 1 has important relationships with these The exchange agreements allow the agency's groups: ownership entitlement for power to be provided in equal

amounts from four units - two each at Catawba and McGuire nuclear stations. The agreements eliminate the

ElectriCities of North Carolina, Inc., a non-profit risk of dependence on a single unit. service association based in Raleigh, provides management staff and services to the power agency. The staff * Thc Partlcipa II t

carries out the agency's daily operations, which include Each of the 19 participants executed a Project Power financing and accounting, contract administration, rate Sales Agreement with the agency. These "take or pay" setting, billing, planning and budgeting. It closely agreements require payment to be made whether or not monitors Duke Power Company's performance in they receive project power. The agreements are the fulfilling project obligations. security for the agency's bonds.

The power agency, through ElectriCities, also assists Each participant also signed a Supplemental Power participants with load management recommendations, Sales Agreement with the agency. These agreements are retail rate design, communications, marketing, safety, "take and pay," requiring payment to be made only for training, legislation and regulatory matters. supplemental power actually received in excess of project

power. Under these agreements, a participant agrees to * purchase all of its electric power from the agency, over

NCMPA I owns 75 percent of Unit 2 and 37.5 and above its ownership entitlement. It excludes any percent of support facilities at Catawba Nuclear Station. power made available by the Southeastern Power AdminOther owners are Duke Power Company, N.C. Electric istration (SEPA). SEPA is the regional federal marketing Membership Corporation, Piedmont Municipal Power agency for hydroelectric power. SEPA allotments now Agency and Saluda River Electric Cooperative, Inc. provide about 4 percent of the participants' needs.

topoieNMA1wt0n diinlpwrrqie

NCMPA I essage

Cl fI G.c'rj W'. C..lI\, jI-.

W hen Robert Frost wrote The Road Not Taken, he The engine that guides us toward our future is built could hardly have imagined its application to public with successes from the past. In 1993, two customers were power, much less an electric utility. the first to accept NCMPA l's economic development

Yet the famous poem has profound meaning to what rate. Another 12 are considering it. Eighteen participants NCMPA I did in 1993 and to the shape it will take by the awarded nearly $360,000 in appliance rebates to customturn of the century. Our Board of Commissioners saw ers, adding valuable load to our system. "two roads diverged in a wood... and took the one less Pathways to trade allies were cleared. We met with traveled." The choices were clear: stay on the main road contractor groups and visited with more than 10 local until it dead ends, or forge newer territory where the heating and air conditioning and homebuilders' associafuture holds promise. tions - important constituents that have been overlooked,

In August, NCMPA I formed a reassessment until now. committee - power agency leaders who are taking a Our need to make more efficient use of our baseload long, hard look at the destination of our 19 participants. In generation spurred serious talks with Duke Power to April 1994, the committee completed its strategic plan, address cost allocation methodologies that might have a ending the first phase of a nine-month journey into the significant impact on participant costs after 1996. We are heart and soul of the power agency. Committee members also actively seeking to market some of the baseload identified five areas for study including education, power to other buyers. organization, research, marketing and planning. By the The road to our goal offers curves and twists, and we end of 1994, NCMPA I will be well on the way towards expect the unexpected. The decision to take the path less meeting its goal of being an innovative competitor and traveled is one of unity and conviction. And that has made exploring new and exciting territory, all the difference.

Chairman

wih ucess ro hepst I 99,tw csomr wr

-'enicy Highlights ocr * 99

Bridging the Generation Gap is also actively looking at marketing some baseload power to other buyers.

NCMP)A. 1 and--k i a )1.Duhe PoJwer A number of demand-side programs address the power

One of NCMPA l's chief focuses in 1993 was to supply change, as well as add value to participant services.

continue addressing power supply issues. They include: Starting in 1996, 85 to 90 percent of NCMPA l's

total load will be supplied by baseload generation from its N C".PA -1

75 percent ownership interest in Catawba Unit 2 or 5 L-a tcic t ac G roNx I

through exchange agreements with other baseload plants NCMPA 1 continued its efforts to increase participant

on the Duke Power Company system. load in anticipation of the 1996 power supply environment.

Since using baseload generation for supplying that Two customers accepted NCMPA I's new economic

much of the agency's load is not economical, NCMPA l's development incentive rate and 12 others are considering it.

supply-side and demand-side staffs are looking for ways The rate rewards cities who add large customers to their

to bridge the generation gap. systems by reducing the city's wholesale power costs over a

The power agency began talks with Duke to resolve 4 1/2-year period. The city then returs at least 80 percent

cost allocation methodologies that could have a significant of those savings to the customer. inoexigtohwsrbiltin186rs.er

Anumberofeano-stide progams untils the ne supply ot6chag pubieaw rsad vaue 19 t pars ateres

NCMMPP1Ad sMr tesnrcm

NCMPA 1contined energ effttoicease lightiipat

Two customersiaccepter CMP conced ecngy devlomendice ts frat all1 thr counybidnsincluingt

When the Davidson County Courthouse c m in Lexington was built in 1868, there were no electric lights until the next century. In 1993, 125 years later, NCMPA lI's Mark Otersen recommended energy efficient lighting for the building after he conducted energy audits for all county buildings, including the old courthouse. The county, a retail customer of the City of Lexington, could save $11, 000 a 'year in electric costs if the efficient lighting was installed and other small changes were made. Now, all 17,000 customers on the city's system

will benefit in some way from lower

operating costs for county facilities.

0

Agenacy - igidig ts or] *993

NCM1 PA -I associjite

eng ineer, and Denn111iS camIiieron i, N CMN PA -1

NCMPA 1 's Dennis Cameron and Joe Troutman report

to work every day at Catawba Nuclear Station.

Their longstanding association with Duke Power Company

employees - the two have 24 years of combined power

agency tenure - helps ensure good relations between the

power agency and the utility.

for regional and state developers, helping to increase the 12 monthly peaks. Total estimated savings from load awareness of power agency capabilities in the economic management efforts were $7.5 million, about $1 million development community. It also hosted an event for the more than in 1992. N.C. Economic Developers Association. A new pager system enables municipal staffers to get

load management recommendations instantly, reducing 1XV1 J1 11i ~ ()11C~~-the risk of missed telephone messages and more impor

Eighteen participants awarded nearly $360,000 in tantly, assuring reduced demand. At year end, eight murebates to customers who installed energy efficient water nicipalities were using the pagers. heaters and heat pumps. The NCMPA 1 incentive pro- Huntersville began offering residential load managegram aims to increase power agency load growth. ment to customers. Now, 18 of the 19 participants have

Monroe set a record in February for NCMPA 1 re- residential load management. bates awarded in a single month. A local apartment owner A pilot program in Newton and Statesville offered got a $40,000 check from the city for installing 120 energy customers big savings if they agreed to allow 100% conefficient water heaters and 60 heat pumps. The customer trol of their air conditioners during peak periods. could have chosen the city's natural gas service, but instead selected electric.

Bostic, NCMPA l's smallest participant with 173 NCMPA 1 hosted three statewide trade ally shows to customers, awarded one water heater and two heat pump increase awareness of power agency programs and the rebates. benefits of public power. Power agency staff also met

with contractor groups and visited with more than 10 local HVAC and homebuilders' associations.

NCMPA I recommended load management for 1 r of Continued

th rs o msedteehoe esaesad or mpr

gency Hig xglts -r IL993

ai I I,~ i iiiii n flC I4: ' I:J a 1

ki ccIia cJcA~'I i

sc-iiorIiii aci ic al-ii i sl -aI<-I ai t1 Q

I L l I i,)ia ci.l i x 4 .i I Q L- oii

When the N.C. Local Government Commission speaks, the investment community listens. With

the backing of the nation's strongest oversight board, NCMPA I has the benefit of the LGC's

good standing each time it goes to market. Al Conyers, treasury manager, a 15-year ElectriCities employee, has worked with the LGC during many NCMPA 1 bond issues and keeps the Commission up to date on power agency operations.

J> l I I C, I~ a tc- r ply ownership and operations, including debt service, fuel, The agency succeeded in getting a provision added to supplemental power needs, administrative and general

a bill to amend the N.C. Open Meetings Law that allows expenses, and any taxes levied by state and local goverthe power agency boards to consider proposed or existing ments. contracts in closed sessions. House and Senate conference NCMPA I's rate committee began considering some committee members considering the still-pending bill changes in the way that participants are charged for

have agreed to the power agency provision. all-requirements power. Some of the ideas include a miniMore than 250 guests attended a legislative reception mum demand charge and an excess demand charge for

at ElectriCities offices in the spring. only the summer months. These changes are still in the NCMPA 1 continued to participate in the national concept stage, will be refined further and are proposed to

Transmission Access Policy Group (TAPS) with the be implemented no sooner than January 1,1996. Government Affairs Director serving as a member of the

executive committee. TAPS has succeeded in getting the

Federal Energy Regulatory Commission to adopt lan- Lexington was recognized for the second consecutive

guage favorable to transmission dependent utilities such year with a Hometown Communicator Award, presented

as the power agency. at the ElectriCities Annual Meeting in August. The city earned honors for its outstanding external communication program.

Based on recommendations from NCMPA 1's rate High Point celebrated its electric system's century of

committee, the Board of Commissioners approved a 5 service in 1993 with a proclamation and hats and T-shirts

percent increase effective July 1. for employees. cWholesale rates cover the cost of project power sup- Participants celebrated Public Power Week with festi

al-eurmnspwr0oeo h da nld ii

A-ncy tig ghig ts for *L 99

vals, giveaways for customers and contests. million bond issue and a $200.6 million tax-exempt comMaiden held an open house with Louie the Lightning mercial paper issue.

Bug face painting, a pole-climbing demonstration and an - Maintained an "A" rating from each of the three energy conservation display. rating agencies for its financing activities.

-Reached an agreement in principle on settlement of *N CM PA 1 a id v 1- aproperty tax refund sought by NCMPA 1 from South

* Signed an agreement with Duke and the other Carolina, with the power agency receiving the full refund Catawba owners that allows Duke to act as the engineer of $1.2 million over three years. and contractor for the replacement of Catawba Unit I's - Resolved 21 challenge issues with Duke through a steam generators. This agreement is expected to result in settlement agreement that resulted in refunds of $5.2 milsavings to the power agency since Duke is performing the lion. NCMPA 1 will realize additional savings in the fuwork, versus an outside contractor. ture from this settlement.

* Obtained present value savings totaling $94 million Completed retail rate studies and updates for six in debt service payments through the issuance of a $616.3 participants.

Big service in a smalli community givesa f n c

Newton customers 70 - ~ more reason to smileae eipiien tmno

Paige Wadford , NCMPA 1 marketing

specialist, guidedw tp an e it u f municipal employees

through strategys c e wt sessions to promote1n

such customer services as rebates, load management and security

lighting. Through a pilot program in the

fall, the city increased security lighting

signups - a source of off-peak revenue

by 39 percent. The city continues to work with

large customers and trade allies to foster

strong relationships.

agemnt ad seurit

NCMPA 1 Pla-ts

Location: Lake Wylie, SC Location: Lake Norman, north of Charlotte, NC 17 miles southwest of Charlotte, NC Fuel Type: Nuclear

Fuel Type: Nuclear MNDC*: 1129 mW per unit**

MNDC*: 1129 mW per unit** Commercial Operation:

Commercial Operation: Unit 1 - December 1981

Unit 1 -June 1985 Unit 2 - March 1984

Unit 2 - August 1986

Both Catawba units completed their scheduled 68-day *MNDC is maximum net dependable capability, the maxi

refueling outages ahead of schedule. mum output that can be depended onfrom a generating uit

Excluding these outages, the station averaged 96 when it is operating atfll power.

percent of its rated output in 1993. **Duke changed the MNDC rating of each Catawba and McGuire unit to 1129 mW effective January 1, 1988. The

power agency is challenging this change, and negotiations are continuing.

NCMPA 1 took advantage of market conditions in -I)clA _tatistics

March 1993 with a bond refunding of $616.3 million. This Debt Outstanding refunding had present value savings of $52 million.

Also, the power agency issued commercial paper in Vaue Weht Avrg the amount of $200.6 million in May 1993. This issuance refunded $217 million in bonds with an assumed present 12/31/93 value savings of $42 million.

The Local Government Commission, a Department Fixed RaeBod of the State Treasurer division, is involved in all phases of $2,393,582 the agency's debt financings, monitors the financial T Ee Cm rla condition of the agency and participants, and has statutory authority to require power agency-served cities to set electric rates sufficient to meet their contractual obliga- 12/31/92 tions to the agency. $2,591,032 6.99%

Earnings*

Income Rate of Return Bonds Outstanding 12/31/92 $2,591,032,000 1993 $49,666,000 7.06% 1992 54906,000 7.6% Issued Series 1993 616,275,000 1992 56,490,000 7.62%3,207,307,000

MreVauaso 23*Matured 1/93 24,810,000 Market Value as of 12/31* Rfne 8,1,0

Value Average Maturity Rfne 8,1,0 Vale Aerge atuO' Bonds Outstanding 12/31/93 $2,393,582,000 1993 $810,229,151 4.1 years 1992 816,757,538 3.8 years Bonds Outstanding 12/31/93

Transactions Series 1993 $ 616,275,000 NumberSeries 1992 1,222,555,000

1993 522 $3,882,671,662 Series 1988 155,52,000 1992 539 4,341,769,917 Series 1986 33,830,000

* orSeries 1986 146,835,000

For Earnings and Market Value, amounts include Series 1985A 30,420,000 income from and market value of securities held in the Series 1985 61,40,000 decommissioning trust.s

Series 1984 9,575,000

12/31/9

Bo.ard o ornnissioners an0 Managernent Staff

COMMISSIONERS'- Radford L. Thomas -Kimberley L. Phillips 1993 OFFICERS City Manager Commissioner

* Raymond I. Allen Newton Huntersville Chairman City Manager George W. Clay, Jr. Albemarle Mary Ann Creech Ed Humphries Mayor, Shelby

Town Administrator Town Manager * Janice L. Hovis Pineville Huntersville Vice Chairman

City Manager A. W. Hutfman, Jr. Cherryville * George W. Clay, Jr. * A. B. Patterson, Jr. Mayor, Granite Falls

Mayor Public Works Director * James L. Dorton Shelby Landis Secretary-Treasurer

Alderman R. Duke Whisenant Concord Arthur E. Peterson -John T. Walser, Jr. City Manager

Council Member Council Member Lexington * Winton Poole Statesville Lexington

Commissioner AT-,A I Comelius ALTERNATE R. Duke Whisenant EXECUTIVE

C&F IISSIONERS o City Manager 0 )N Ii ElT * Morris Baker Lexington NIENIBEks

Town Manager Tidus Stanback Drexel Council Member * Jerry L. Campbell Morris Baker

Albemarle Mayor Town Manager * Franz F. Holscher Lincolnon Drexel

Council Member * Jack F. Neel Gastonia Council Member Kevin C. Sanders Janice L. Hovis

Albemarle Administrative City Manager * A. W. Huffman, Jr. Assistant Cherryville

Mayor * S. Kyle Beam Maiden Granite Falls Council Member Arthur E. Peterson

Cherryville * Donald D. Mitchell Council Member * J. William McGuinn Electrical Director Statesville

High Point * Roberta Bales Monroe Commissioner

* Myra Skinner Cornelius John N. Parker ;VTAFF Commissioner Electric System Huntersville * Alan Washam Manager James T. Bobo

Commissioner Morganton General Manager " Bobby 0. Wood Cornelius

Town Clerk T. Jack Matthews William H. Batt Landis * Benny J. Orders City Engineer Director

Alderman Newton Finance and L. Klynt Ripple Drexel Administration Utilities Commission J. K. Mills Member * Dale Becker Council Member Jack S. Childs Lexington Electric Director Pineville Director

Gastonia Communications Stephen H. Peeler Smith D. Lingerfelt Director of Public * Danny Crew Electrical Alice D. Garland Works and Utilities City Manager Superintendent Director Lincolnton Gastonia Shelby Goverment Affairs

Marcus C. Midgett *Linda K. Story John E. Marshall Arthur L. Hubert Jr. Council Member Town Manager Council Member Director Maiden Granite Falls Statesville Operations and Services

Jerry E. Cox . H. Lewis Price Larry M. Cranford 'As of December 31. /993. City Manager City Manager Electrical Utility 'The Commissioners sea Monroe High Point Director

Michael C. Cronk Lloyd D. Shank, Jr. December 31, 1993. City Manager Director of Electric 'The Alternate CommisMoreanton Utilities sioners' seas in Bosuic

High Point and Concord were vmannt

s of December 31, /993.

*0dHmhis aoSeb

George Clay, Shelby (left), and Jim Bobo, ElectriCities.

Franz Holscher, Gastonia, and Smith Lingerfelt, Elaine Bagley, ElectriCities, and Duke Shelby. Whisenant, Lexington.

John Walser Lexington. Don Mitchell and Jerry Cox, Monroe. Dennis Roberts, Lexington, and Mary Ann Creech and Kenny Mills, Pineville.

Bob Race, Cornelius. Duke Whisenant Lexington.

Bobbie Ross and Ed Humphries, Huntersville.

Bert Huffinan. Granite Falls. Lloyd Shank, High Point. Marcus Midgett, Maiden. Mike Cronk, Morganton.

Northy CM-ol0n Municipa

Pow'-r A cgency Nm la 1 er 1

A Power Plant

Gross Revenues

City Customers From Sales*

A lbem arle...........................10,840 ............................... $ 16,875,919 B ostic ................................. 173 .................................... 142,4 17

Cherryville ........................... 2,373 ................................. 4,060,954

C ornelius ............................. 1,179 ................................. 1,633,623

D rexel...............................1,136 ................................. 1,198,585 G astonia ............................ 23,310 ................................ 44,545,453

G ranite Falls..........................1,843 ................................. 3,000,567

H igh Point...........................31,390 ................................ 58,834,000 H untersville ........................... 1,250 ................................. 1,861,027 L andis...............................2,482 ................................. 2,623,020

Lexington ........................... 16,795 ................................ 31,162,259 Lincolnton ............................ 2,544 ................................. 4,078,111

M aiden ................................ 968....... ................... 3,913,223

M onroe .............................. 8,399 ................................ 25,024,755

Morganton . ..................... 7,355 ......................... 17,177,920

Newton................. ...... 3,569..........................5,545,464

Pineville.......................2,064..........................5,168,999 Shelby.........................7,758... .................... 12,231,437

Statesville ....................... 11,230 .. ......................... 23,706,679

Total 136,658 $262,784,412

*Based on information from participant questionnaires, June 30, 1993

Lepo o 0- pent ent -u to .

Board of Commissioners North Carolina Municipal Power Agency Number 1

We have audited the balance sheets of North Carolina Municipal Power Agency Number 1 as of December 31, 1993, and 1992 and the related statements of revenues and expenses and changes in retained earnings, and cash flows for the years then ended. These financial statements are the responsibility of the agency's management. Our responsibility is to express an opinion on these financial statements based on our audits.

We conducted our audits 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 audits provide a reasonable basis for our opinion.

In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of North Carolina Municipal Power Agency Number I at December 31, 1993 and 1992, and the results of its operations and its cash flows for the years then ended in conformity with generally accepted accounting principles.

Our audits were conducted for the purpose of forming an opinion on the basic financial statements taken as a whole. The Schedules of Revenues and Expenses per Bond Resolution and Other Agreements and Changes in Assets of Funds Invested are presented for purposes of additional analysis and are not a required part of the basic financial statements of North Carolina Municipal Power Agency Number 1. Such information has been subjected to the auditing procedures applied in our audits 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.

Raleigh, North Carolina March 31, 1994

Balance Sheets ($OOO)

December 31, 1993 1992

Assets

Electric Utility Plant (Note B): Electric plant in service, net of accumulated

depreciation of $294,784 and $275,239 $1,107,603 $1,138,277 -Construction work in progress 9,008 7,049 Nuclear fuel, net of accumulated

amortization of $218,467 and $195,068 70,609 60,166 1,187,220 1,205,492

-Non-Utility Property and Equipment, net -(Note B) 2,062 2,151

Special Funds Invested (Notes B, C, and E): Bond fund 279,939 291,196 Reserve and contingency fund 18,427 21,925

Special reserve fund 1,077 1,113 299,443 314,234

Trust for Decommissioning Costs (Note B) 37,034 31,409

Operating Assets: Funds invested (Notes B, C, and E):

Revenue-fund 321,853 341,400

Operating fund 98,060 102,999

. Supplemental fund 25,017 2,374 444,930 446,773

Participant accounts receivable 16,590 15,469

Operating accounts receivable 11,443 Prepaid expenses 36,742 42,200

509,705 504,442

Deferred Costs (Note B): Unamortized debt issuance costs 35,974 40,845

Excess costs on advance refundings of debt 371,718 319,874

Net costs to be recovered from future billings to participants (Note D) 93,962 89,642

$2,537,118 $2,508,089

See notes to financial statements.

December 31, 1993 1992

Liabilities anid Retainied Earings

Long-Term Debt: Bonds, net of unamortized discount

(Notes B and E) $2,181,269 $2,370,915

Special Funds Liabilities: Current maturities of bonds (Note E) 27 ,875 24,810 Accrued interest on bonds 67,123 52,608 Tax-exempt commercial paper (Note F) 200,600 Accrued interest on commercial paper 806

296,404 77,418

Liability for Decommissioning Costs (Note B) 37,034 31,409

Operating Liabilities: Accounts payable 980 10,394 Accrued taxes 14,031 13,674

15,011 24,068

Commitments and Contingencies (Note G)

Retained Earnings 7,400 4,279

$2,537,118 $2,508,089

December 31, 1993 1992

Operating Revenues: Sales of electricity to participants $204,557 $183,609 Sales of electricity to utilities _23_854 2

443,511 418,234

Operating Expenses: Operation and maintenance 79,294 76,013 Nuclear fuel 28,601 32,972 Interconnection services:

Purchased power 115,660 125,058 Transmission and distribution 12,195 11,649 Other (5,095) (2,509)

122,760 134,198

Administrative and general 22,418 22,978 Gross receipts and excise taxes (Note B) 9,112 8,585

Property tax (Note B) 12,084 11,147

Depreciation _44,213 4370 318,482 _329594

Net Operating Income 125,029 88,640

Interest Charges (Credits): Interest expense 146,842 176,511 Amortization of debt refunding costs 20,300 11,216 Amortization of debt discount and

issuance costs 5,918 3,729 Investment income (46,832) 53,960)

126,228 137,496

Net Costs to be Recovered from Future Billings to Participants (Note D) 4,320 43,057

Excess (Deficiency) of Revenues Over Expenses 3,121 (5,799)

Retained Eamings, beginning of year 4,279 10,078

Retained Eamings, end of year $7,400

See notes to financial statements.

December 31, 1993 1992

Cash Flows from Operating Activities: Receipts from sales of electricity $ 424,887 $ 437,837 Payments of operating expenses (240,642) (261,964)

Net cash provided by operating activities 184,245 175,873

Cash Flows from Capital and Related Financing Activities: Bonds issued 616,275 1,222,555 Commercial paper issued 200,600 Bonds refunded (788,915) (1,062,145) Interest paid (115,166) (177,496) Refunding Trust Fund requirement (46,315) (95,162) Additions to electric utility plant and

non-utility property and equipment (54,304) (22,525) Bonds retired (24,810) - (42,600) Debt discount and issuance costs paid (32,363) (105,493)

Net cash used for capital and related financing activities (244,998) (282,866)

Cash Flows from Investing Activities: Sales of investment securities 3,857,592 4,223,200 Purchases of investment securities (3,842,520) (4,165,317) Investment earnings receipts from

non-construction funds 45,732 49,108

Net cash provided by investing activities 60,804 106,991

Net Increase (decrease) in Cash and Cash Equivalents 51 (2)

Operating Cash, beginning of year 8 10

Operating Cash, end of year (Note C) $ 59 $ 8

See notes to financial statements.

December 31, 1993 1992

Reconciliation of Net Operating Income To Net Cash Provided by Operating Activities:

Net operating income $125,029 $ 88,640 Adjustments to reconcile net operating income

to net cash provided by operating activities: Depreciation 44,213 43,701 Amortization of nuclear fuel 28,601 32,972 Changes in assets and liabilities:

Increase in participant accounts receivable (1,121) (1,188) (Increase) decrease in operating accounts receivable (11,443) 15,008 Decrease (increase) in prepaid expenses 5,458 (3,760) Decrease in accounts payable (6,849) (1,901) Increase in accrued taxes 357 2,401

Total adjustments 59,216 8

Net cash provided by operating activities $184,245 $175,873

See notes to financial statements.

A. General M'Iatters The Operation and Fuel Agreement provides for Duke to operate, maintain, and fuel the station; to make

North Carolina Municipal Power Agency Number 1 renewals, replacements, and capital additions-as approved (agency) is a joint agency organized and existing pursuant by the agency; and for the ultimate decommissioning of to Chapter 159B of the General Statutes of North Carolina the station at the end of its useful life. to enable municipalities owning electric distribution sys- The agency's acquisition of its ownership interest is tems, through the organization of the agency, to finance, being financed by the issuance of electric revenue bonds construct, own, operate, and maintain electric generation pursuant to Resolution No. R-16-78, as amended, (resolu and transmission facilities. The agency has twenty mem- don) of the Board of Commissioners of the agency. The bers, nineteen (participants) which receive power from the resolution established special funds to hold proceeds from agency and one which receives power from Duke Power debt issuance, such proceeds to be used for costs of acquiCompany (Duke). sition and construction of the project, and to establish

The agency has entered into several agreements with certain reserves. The resolution also established special Duke which govern the purchase, ownership, construc- funds in which project revenues are deposited and from tion, operation, and maintenance of the project: .which project operating costs, debt service, and other

The Purchase, Construction, and Ownership Agree- specified payments relating to the project are made. ment provides, among other things, for the agency to pur- The agency has entered into a Project Power Sales chase a 75% undivided ownership interest in Unit 2 of the Agreement and a Supplemental Power Sales Agreement Catawba Nuclear Station (station) and a 37.5% undivided with each participant. These agreements provide for each ownership interest in certain support facilities of the sta- participant to purchase from the agency its all requiretion. However, by virtue of various provisions in the Inter- ments bulk power supply, in excess of power allotments connection Agreement and the Operation and Fuel Agree- from the Southeastern Power Administration (SEPA), ment, the agency (1) bears the costs of acquisition, con- which includes its total share of project output (as defined struction, operation, and maintenance of 37.5% of Unit I by the Project Power Sales Agreement). The agency is and 37.5% of Unit 2, and (2) has the same proportionate obligated to provide all electric power required by each right to the output of and bears the risks associated with participant at the respective delivery points. Each particithe lack of operation of such units. pant is obligated to pay its share of the operating and debt

The Interconnection Agreement provides for the in- service costs of the project. terconnection between Duke's electric power system and The agency's participants receive their total electric the agency's project and for the exchange of power be- power, exclusive of power allotments from SEPA, from tween Unit I and Unit 2 of the station and between the the agency. Such power is provided by project output Catawba units and Duke's McGuire Nuclear Station. The together with supplemental purchases of power from agreement also provides for the purchase and sale of ca- Duke. Pursuant to two "Reliability Exchanges" contained pacity and energy, and the transmission of energy to the in the Interconnection Agreement, project output is proagency's participants. vided in essentially equal amounts from Catawba Unit 2

As part of the Interconnection Agreement, the agency and three other nuclear units (Catawba Unit 1, McGuire agrees to sell back to Duke,,on a "take-or-pay" basis, ca- Unit 1, and McGuire Unit 2) in operation on the Duke pacity from each Catawba unit in decreasing amounts. In system, all of similar size and capacity. The reliability calendar year 1993 and 1992, the agency retained approxi- exchanges are intended to make more reliable the supply mately 25 percent and 22 percent, respectively, of the of capacity and energy to the agency in the amount to agency's share of the station's aggregate available capac- which the agency is entitled pursuant to its ownership ity, and will retain increasing amounts hereafter through interest in Catawba Unit 2, and to mitigate potential adDecember 31, 2000. Thereafter, the agency retains 100 verse economic effects on the agency and the participants percent of its share and the sell-back arrangement termi- from unscheduled outages of Catawba Unit 2. Conrenates. Continued

reewl, elaemnsad aptl diton-s proe

spondingly, the agency bears risks resulting from Nuclear Fuel unscheduled outages of any Catawba or McGuire Unit. All expenditures related to the purchase and construc

ElectriCities of North Carolina, Inc. (ElectriCities), tion of nuclear fuel cores, including interest expense net of organized as a joint municipal assistance agency under the General Statutes of North Carolina, is a public body and body corporate and politic created for the purpose of At that time, they are amortized and charged to fuel exproviding aid and assistance to municipalities in connec- pense on the units of production method. Amortization of tion with their electric systems and to joint agencies, such as the agency. The agency has entered into a management $,00a nd $,400 for te year ended D m agreement with ElectriCities. Under the current manage- 31, 1993 and 1992, respectively. ment agreement, ElectriCities is required to provide all personnel and personnel services necessary for the agency Non-Utility Property and Equipment to conduct its business in an economic and efficient manner. All expenditures related to purchasing and installing

an in-house computer, jointly owned with North Carolina

B. Sinific tAcco tig P icieEastern Municipal Power Agency (NCEMPA), have been capitalized and are fully depreciated. Also included are the

Basis ofAccounting land and administrative office building jointly owned with

The accounts of the agency are maintained on the NCEMPA and used by both agencies and ElectriCities. accrual basis, in accordance with the Uniform System of The administrative office building is being depreciated Accounts of the Federal Energy Regulatory Commission, over 37 1/2 years on a straight-line basis. and are in conformity with generally accepted accounting Investments principles (GAAP).

Investments are carried at amortized cost. Discounts

Electric Plant in Service and premiums, if any, are amortized over the terms of the

Allrelated investments in a manner which yields a constant A constructiondtue assoae ite ntan rate of return. In those instances where market values are

Catawba station, including interest of invest- below amortized cost, no provision for loss has been pro

ment income on funds not yet expended, have been re- ties to maturity. corded at original cost and are being depreciated on a straight-line basis over the average composite life of each Decommissioning Costs unit's assets.

U.S. Nuclear Regulatory Commission (NRC) regula

Construction Work in Progress tions require that each licensee of a commercial nuclear

All expenditures related to modifications identified power reactor furnish to the NRC certification of its finan

priorcial capability to meet the costs of nuclear decommission

including interest expense net of investment income on As a coliens of tab uit 2 the aencyes sct

funds not yet expended, are capitalized as construction tse reuirens a therefo e aefumis ct

work in progress until such time as they are completed to ois finan to funishe ofh and transferred to Electric Plant in Service. Depreciation costs of d msining te w Sao

expense is recognized on these items after they are ostsf the NC' s fin aa air t tran sferred . iz d suti su i the c s ar p aced i t h re a to r.

the agency established an external trust fund (the "Decom

0

missioning Trust") pursuant to a trust agreement with a privilege taxes. In lieu of North Carolina property taxes, bank. The agency's certification of financial capability the agency pays an amount which would otherwise be requires that the agency make annual deposits to the De- assessed on the non-utility property and equipment of the commissioning Trust which, together with the investment agency. In lieu of a franchise or privilege tax, the agency earnings and amounts previously on deposit in the trust, pays to North Carolina an amount equal to 3.22% of the are anticipated to result in sufficient funds being held in gross receipts from sales of electricity to participants. Electhe Decommissioning Trust at the expiration of the current tric utility property is located in South Carolina and subject operating licenses for the Catawba Units to meet the to South Carolina property tax. An electric power excise agency's share of the decommissioning cost figure of tax equal to .05% (5/10 mill) for each kilowatt-hour of $105 million per unit (1986 dollars) set forth in the NRC electric power sold for resale within South Carolina is also regulations. The Decommissioning Trust is irrevocable, paid. and funds may be withdrawn from the trust solely for the purpose of paying the agency's share of the costs of Statements of Cash Flows nuclear decommissioning.

Under the NRC regulations, the Decommissioning The agency has adopted cash flow reporting as reTrust is required to be segregated from the agency assets quired by Govemmental Accounting Standards Board and outside the agency's administrative control. The Statement No. 9. For purposes of the statements of cash agency is deemed to have incurred and paid decommis- flows, operating cash consists of unrestricted cash included sioning costs as annual withdrawals are made from the in the line item on the balance sheets "operating assets: Decommissioning Fund and deposited to the Decommis- funds invested". sioning Trust.

C. Ilive~'stinceiits

Deferred Costs

UnaortizedThe resolution authorizes the agency to invest in 1)

mulated amortization, are being amortized on the interest direst are uncoition g n by, the nited method over the term of the related debt. Excess costs on ates .) 2)olitionay aey the US.eo advance refundings of debt are deferred and amortized over the term of the debt issued on refunding. Net costs to corporation wholly owned by the U.S., 3) dict and genbe recovered from future billings to participants are not eral obligations of the State of North Carolina or any politiamortized but will be recovered through future rates (See cal subdivision thereof whose securities are rated "A" or Note D). better, 4) repurchase agreements with the Bond Fund

Trustee, Construction Fund Trustee, or any government Discount on Bonds bond dealer reporting to the Federal Reserve Bank of New

York which mature within nine months from the date they Discount on bonds is amortized over the terms of the were entered into and are collateralized by previously de

related bonds in a manner which yields a constant rate of scribed obligations, and 5) bank time deposits evidenced interest. by certificates of deposit and bankers' acceptances.

Bank time deposits may only be in banks with capital Taxes stock, surplus, and undivided profits of $20,000,000 or

Income of the agency is excludable from federal in- $50,000,000 for North Carolina banks and out-of-state come tax under Section 115 of the Internal Revenue Code. banks, respectively, and the agency's investments deposChapter 159B of the General Statutes of North Carolina ited in such banks cannot exceed 50% and 25%, respecexempts the agency from property and franchise or other tively, of such banks' capital stock, surplus, and undivided

profits. Continued

The resolution permits the agency to establish official D. Ne Costs To Be Recovered From

depositories with any bank or trust company qualified FLLure iliiirfs To Paricipaitts

under the laws of North Carolina to receive deposits of public moneys and having capital stock, surplus, and undi- Rates for power billings to participants are designed vided profits in excess of $20,000,000. At December 31, to cover the agency's "costs" asdefinedby (1) the 1993 and 1992, the agency had $79,000 and $11,000, resolution, (2) the Project Power Sales Agreements, and respectively, so deposited. (3) the Supplemental Power Sales Agreements. The

The agency's investments are categorized in the fol- agency's rates are structured to systematically provide for lowing table to give an indication of the level of risk as- the debt requirements, operating funds, and reserves as sumed by the agency at year-end. All agency investments specified by the resolution and power sales agreements. are category 1 which includes investments that are insured Recognition of "expenses" (defined according to GAAP) or registered or for which the securities are held by the which are not included as "costs," is deferred to such agency or its agent in the agency's name. (In thousands of period as it is intended that such "expenses" be covered dollars). Please see chart below. by rates. Recognition of those "revenues," which under

In accordance with the provisions of the resolution, the resolution and the power sales agreements are the collateral under the repurchase agreements is segre- collected to cover "costs" that are not "expenses," is gated and held by the trustee for the agency. deferred to such period as it is intended that such

December 31, 1993 1992

CarFying Market Cariying Market Amount Value Amount Value

Repurchase agreements $108,965 $108,965 $ 77,328 $ 77,328 U.S. government securities 159,181 165,908 186,793 195,104 U.S. government agencies 303,713 325,318 404,040 426,732 Municipals 21,294 21,771 4,094 4,301 Commercial Paper 346 346 Collaterized mortgage obligations 141,389 140,785 77,667 77,031

734,888 $763,093 749,922 $780,496

Operating cash 59 8 Restricted cash 20 3 Accrued interest 9,406 11,074

Total funds invested $744,373 $761,007

Consisting of: Special funds invested $299,443 $314,234 Operating assets 444,930 446,773

$744,373 $761,007

19319

"revenues" cover "expenses." Future refundings may result in the issuance of additional All rates must be approved by the Board of bonds.

Commissioners. Rates are designed on an annual basis As of December 31, 1992, the agency had and are reviewed quarterly. If they are determined to be outstanding $2,591,032,000 of bonds. On January 1, 1993, inadequate, rates may be revised. the agency made principal payments of $24,810,000 for

Net costs to be recovered from future billings to maturing bonds. In March 1993, an additional participants includes the following (in thousands of $616,275,000 of Bonds were issued (Series 1993). dollars). Please see chart below. Proceeds of this issue were used to establish a trust for

advance refunding portions of Series 1978, 1985, 1985A, E. B1 nds 1985B, 1986, and 1990 Bonds totaling $571,860,000. In

May 1993, $200,600,000 of tax-exempt commercial paper The agency has been authorized to issue Catawba (TECP) was issued to establish a trust for refunding the

Electric Revenue Bonds (bonds) in accordance with the remaining portion of Series 1979, 1981, 1982, and 1983 terms, conditions, and limitations of the resolution. The Bonds totalling $217,055,000, bringing the total total to be issued is to be sufficient to pay the costs of outstanding bonds at December 31, 1993,-to acquisition and construction of the project, as defined, $2,393,582,000 as follows (in thousands of dollars): and/or for other purposes set forth in the resolution. Continued

Year Ended Incepion to December 31, December 31,

1993 1992 1993 1992 GAAP Items Not Included in Billings to Participants:

Interest expense not capitalizable $148,993 $180,240 $1,422,917 $1,273,924 Depreciation 61,800 52,384 387,706 325,906 Training costs refunding 6,696 6,696

210,793 232,624 1,817,319 1,606,526 Bond Resolution Requirements

Included in Billings to Participants:

Special funds deposits (withdrawals) 17,120 (25,883) 298,972 281,852 Debt service 174,069 206,405 1,357,769 1,183,700 Investment income not available

for operating purposes 21,086 24,195 166,072 144,986 Special funds excess valuations (5,802) 15,15 99,456) 93,654)

206,473 189,567 1,723,357 1,516,884 Net costs to be recovered

from future billings to participants $ 4,320 $ 43,057 $ 93,962 $ 89,642

December 31, 1993 1992

Series 1978

5.9% to 6.45% maturing annually from 1993 to 2000 $49,605 6.6% maturing in 2003 with annual sinking fund

requirements beginning in 2001 25,870 6:7% maturing in 2008 with annual sinking fund

requirements beginning in 2004 55,935

6.875% maturing in 2020 with annual sinking fund

requirements beginning in 2009 236,90 367,600

Series 1979

6.3% to 6.9% maturing annually from 1993 to 2000 17,525

7.1% maturing in 2004 with annual sinking fund requirements beginning in 2001 12,905

7.375% maturing in 2020 with annual sinking fund

requirements beginning in 2005 108,350 . _138,780

Series 1981

9.75% to 10% maturing annually from 1993 to 1995 3,115

8.5% maturing in 2017 with annual sinking fund

requirements beginning in 2011 24,685

Series 1982

7.5% maturing in 2018 with annual sinking fund requirements beginning in 2009 24,30

- Series 1983

8.5% to 9.25% maturing annually from 1993 to 1996 4,625

7% maturing in 2018 with annual sinking fund requirements beginning in 2009

29,625

Series 1984

9.25% to 9.75% maturing annually from 1994 to 1996 9,575 13,050

December 31, 1993 1992

*Series 1985

8.0% to 8.5% maturing annually from 1994 to 1996 $14,820 $ 19,085 7% maturing in 2020 with annual sinking fund

requirements beginning in 2019 46,720 50,000 61,540 69,085

*Series 1985A

8.2% to 9.0% maturing annually from 1994 to 1998 4,315 4,990 7% maturing in 2020 26,105 39,545

30,420 45

*Series 1985B

8.0% to 8.4% maturing annually from 1994 to 1997 20,710 47,310 6% maturing in 2020 with annual sinking fund

requirements beginning in 2018 125,615125 146,32517,2

*Series 1986

6.7% to 7.3% maturing annually from 1994 to 1998 19,010 22,125 7% maturing in 2018 with annual sinking fund

requirements beginning in 2007 14,820 148,305 33,830 _170,430

* Series 1988

Zero coupon priced to yield 7.3% to 7.6% maturing annually from 2000 to 2003 11,052 11,052

7.75% maturing in 2010 with annual sinking fund requirements beginning in 2009 8,310 8,310

7.625% maturing in 2014 with annual sinking fund requirements beginning 2011 16,180 16,180

6% maturing in 2015 with annual sinking fund requirements beginning in 2014 35,000 35,000

7% maturing in 2016 with annual sinking fund requirements beginning in 2015 60,000 60,000

7.5% maturing in 2017 25,000 25,000 155,542 155,542

December 31, 1993 1992

Series 1990

Zero coupon priced to yield 6.75% maturing in 2004 3,670 $ 3,670

6% to 6.9% maturing annually from 1994 to 2003 12,025 35,970 6.5% maturing in 2010 with annual sinking fund

requirements beginning in 2007 91,600 91,600

7% maturing in 2019 with annual sinking fund requirements beginning in 2014

117,520 54,375

* Series 1992

:3.5% to 8% maturing annually from 1994 to 2011 523,200 523,200

Zero coupon priced to yield 6.55% to 6.7% maturing annually from 2008 to 2012 100,000 100,000

5.75% maturing in 2015 with annual sinking fund requirements beginning in 2013 191,030 191,030

6.25% maturing in 2017 with annual sinking fund requirements beginning in 2016 135,495 135,495

6.2% maturing in 2018 83,540 83,540

5.75% maturing in 2020 with annual sinking fund requirements beginning in 2019 123,990 123,990

6% Indexed Caps Bonds maturing in 2012 1,255 1,2555

*Series 1993

2.75% to 5.5% maturing annually from 1994 to 2010 296,405

PARS maturing in 2012 with annual sinking fund requirements beginning in 2011 and with an initial rate of 2.6% 27,400

INFLOS maturing in 2012 with annual sinking fund

requirements beginning in 2011 and with an initial rate of 8.12% 27,400

5% maturing in 2015 with annual sinking fund

requirements beginning in 2013 103,390 5% maturing in 2018 with annual sinking fund

requirements beginning in 2016 91,680

PARS maturing in 2020 with annual sinking fund

requirements beginning in 2018 and with an initial rate of 2.6% 35,000

INFLOS maturing in 2020 with annual sinking fund

requirements beginning in 2018 and with an initial rate of 8.32% 35,000 616,275 ____

2,393,582 2,591,032

Less: Current maturities of bonds 27,875 24,810

Unamortized discount19 $2,181269 $2370915

12053,7

The fair market value of the agency's long-term debt Series 1984 January 1, 1994 was estimated using a yield curve derived from December Series 1985 January 1,1995 31, 1993 market prices for similar securities. Using these Series 1985A, 1985B, yield curves, market prices were estimated to call date, to and 1986 January 1996 par call date, and to maturity. The lowest of the three Series 1988 January 1, 1998 prices was used as the estimated market price for each Series 1990 January 1,2000 individual maturity and the individual maturities were Series 1992 and 1993 January 1, 2003 summed to arrive at a fair market value of $2,445,404,000 and $2,549,429,000 at December 31, 1993 and 1992, The bonds are special obligations of the agency, payrespectively. able solely from and secured solely by (1) project rev

Certain proceeds of the Series 1984, 1985A, 1985B, enues (as defined by the resolution) after payment of 1988, 1990, 1992, and 1993 bonds and the TECP were project operating expenses (as defined by the resolution) used to establish trusts for advance refunding of and (2) other monies and securities pledged for payment $3,450,900,000 of previously issued bonds. At December thereof by the resolution. 31, 1993, $1,229,800,000 of these bonds have been re- The resolution requires the agency to deposit into deemed. Under these Refunding Trust Agreements, obli- special funds all proceeds of bonds issued and project gations of, or guaranteed by, the United States have been revenues (as defined by the resolution) generated as a placed in irrevocable Refunding Trust Funds maintained result of the Project Power Sales Agreements and Interby the Bond Fund Trustee. The government obligations in connection Agreement. The purpose of the individual the respective Refunding Trust Funds along with the inter- funds is specifically defined in the resolution. est earnings on such obligations, will be sufficient to pay Maturities and redemptions of outstanding bonds all interest on the refunded bonds when due and to redeem through 1998 and thereafter are as follows (in thousands all refunded bonds at various dates prior to their original of dollars: maturities, in amounts ranging from par to a maximum redemption price of 103%. The monies on deposit in each 1994 $ 27,875 Refunding Trust Fund, including the interest earnings 1995 38,575 thereon, are pledged solely for the benefit of the holders of 1996 40,500 the refunded bonds. Since the establishment of each Re- 1997 43,240 funding Trust Fund, the refunded bonds are no longer 1998 44,650 considered outstanding obligations of the agency.

As a result of the refunding by the Series 1993 T2,198,742 Bonds, the agency increased excess costs on advanced refundings of debt by $47,002,000. However, the agency On February 16, 1994, the agency entered into a forwill benefit from reduced debt service costs of $156,486,000 over the life of the Series 1993 Bonds. ward swap on portions of the Series 1985 A and 1986

As a result of the refunding by the TECP, the agency Bonds totaling $41,935,000. The agency will pay the unwill increase excess costs on advanced refundings of debt derwrter 5.75% semi-annually and variable rate bonds by $25,143,000. Based upon current interest rates, the with a final maturity of January 1, 2020 will be issued to agency will benefit from reduced debt service costs over call the refunded bonds on January 1, 1996. the life of the TECP. However, the savings cannot be quantified due to the variable interest rate of the TECP.

Interest on the bonds is payable semi-annually. The bonds are subject to redemption prior to maturity at the $ n7May01993, themgecori t iae o option of the agency, on or after the following dates at a maximum of 103% of the respective principal amounts: Continued

Seres198 Jnury , 99

provide for the refunding of certain outstanding bonds and Property damage insurance coverage presently avail

for the financing of the replacement of the steam genera- able for the station has a maximum benefit limited to

tors at Unit 1. of the Catawba Nuclear Station. The agency $2,700,000,000. Such available coverage has been ob

issued $200,600,000 of TECP to accomplish the refunding tamed.

of $217,055,000 in bonds. As of December 31, 1993, the The steam generators at the Catawba Station have

agency had $200,600,000 of TECP outstanding with an experienced stress corrosion cracking in the steam genera

average maturity of 82 days and an average interest rate of tor tubes. Duke has signed an agreement to purchase re

3.1%. The agency maintains a line of credit with a consor- placement steam generators for Catawba Unit 1. Catawba

tium of banks.upon which the agency may draw for the Unit 2's steam generators have not shown the degree of

payment of maturing principal and interest on the TECP. corrosion stress cracking which has occurred in Catawba

-.The agency currently pays approximately $552,000 per Unit 1 and the Unit 2 steam generators have not been

year in fees for the line of credit which currently expires scheduled for replacement. The Catawba Unit 1 steam

May 25, 1996. There were no borrowings under the line of generator replacement is scheduled for 1996 and is ex

credit agreement at December 31, 1993. The agency may. pected to take approximately four months and cost ap

issue additional TECP up to a total outstanding amount of proximately $200 million, excluding the cost of replace

$275,000,000, such additional amount may be used to ment power. The agency's share of the anticipated costs of

finance the costs of the steam generators. replacing the steam generators at Catawba Unit 1 (excluding the cost of replacement power) is approximately $70

.G. Commitients ari Cortince ncies nillion. In 1990, Duke, purporting to act on behalf of all

The agency.has a contractual agreement with co-owners of the Catawba Nuclear Station, filed suit in

ElectriCities whereby ElectriCities provides, at cost, gen- U.S. District Court in Charleston, S.C. against the

eral management services to the agency. This agreement Westinghouse Electric Corporation. The suit alleged that continues through December 31, 1995, and is automati- when Westinghouse sold the Catawba and McGuire steam

cally renewed for successive three-year periods unless generators to Duke, it represented that the generators

terminated-by one year's notice by either party prior to the would last for the 40-year life of the stations. It also al

end of the contract term. leged that the steam generators are defective and will have

For the years ended December 31, 1993 and 1992, the to be replaced well short of their design life. In November

agency paid ElectriCities $2,400,000 and $2,472,000, re- 1990, the agency became a plaintiff in the suit. In March

spectively. 1994, a settlement was reached and the lawsuit was dis

The Price-Anderson Act limits the public liability for a missed. The settlement results in the agency receiving

nuclear incident at a nuclear generating unit to future cash payments, discounts on future services and

$9,400,000,000, which amount is to be covered by private equipment, and additional warranties and services for the

insurance and agreements of indemnity with the Nuclear steam generators at Catawba Unit 2.

Regulatory Commission. Such private insurance and agreements of indemnity are carried by Duke on behalf of all co-owners of the station. The terms of this coverage require the owners of all licensed facilities to provide up to $79,000,000 per year per unit owned (adjusted annually for inflation) in the event of any nuclear incident involving any licensed facility in the nation, with an annual maximum assessment of $10,000,000 per unit owned. If any such payments are required, the agency would be liable for 37.5% of those payments applicable to the station.

exeine8tescroincrcigi h ta eea

Year Ended Year Ended December 31, 1993 December 31, 1992

Project Supplemental Total Project Supplemental Total

Revenues:

Sales of electricity to participants $ 73,261 $131,296 $204,557 $ 55,081 $128,528 $183,609

Sales of electricity to utilities 238,954 238,954 234,625 234,625

Rate stabilization fund withdrawal 3,113 3,113 46,115 46,115

Funds valuations 5,802 5,802 15,150 15,150

Investment revenue available

for operations 25,117 629 \ 25,746 29,061 704 29,765

346,247 131,925 478,172 380,032 129,232 509,264

Expenses:

Operation and maintenance 79,294 79,294 76,013 76,013

Nuclear Fuel 28,601 28,601 32,972 32,972

Interconnection services:

Purchased power 5,934 109,726 115,660 5,596 119,462 125,058

Transmission and distribution 12,195 12,195 11,649 11,649

Other (5,209) 114 (5,095) (2,509) (p2, ) 725 122,035 122,760 5,596 128,602 134,198

Administrative and general-Duke 18,216 18,216 19,132 19,132

Administrative and general-agency 1,679 1,846 3,525 1,720 1,782 3,502

Miscellaneous agency expense 677 677 344 344

Gross receipts and excise taxes 4,951 4,161 9,112 4,512 4,073 8,585

Property tax 12,084 12,084 11,147 11,147

Debt service 177,751 85 177,836 206,175 230 206,405

Special funds deposits:

Decommissioning fund 2,713 2,713 2,533 2,533 Reserve and contingency fund 20,233 20,233 20,232 20,232

22,946 - 22,946 22,765 22,765

346,247 128.804 475,051 380,032 135,031 515,063

Excess (deficiency) of Revenues

over Expenses $ 0 $ 3,121 $ 3,121 $ 0 $ (5,799) $ (5,799)

Funds

Invested Bond and Power

January 1, Note Billing Investment

1992 Proceeds Receipts Income Disbursements Transfers

Bond fund:

Interest account $ 91,494 $ 1,578 $ 1,373 $(220,688) $ 179,246

Reserve account 212,490 683 18,738 (18,659)

Principal account 23,748 440 (23,150) 23,903

Retirement account 19,540 5 (19,450) (95)

347,272 2,261 20,556 (263,288) 184,395

Reserve and contingency fund 21,602 2,975 (5,152) 2,500

Special reserve fund 1,119 47 (53)

Revenue fund:,

Revenue account 29,822 9,655 45,560 823 110,810 (146,590)

Rate stabilization account 313,242 24,193 (46,115)

343,064 9,655 45,560 25,016 110,810 (192,705)

Operating fund:

Working-capital account 37,731 4,708 (139,936) 148,113

Fuel account 47,312 5,071

85,043 4,708 (139,936) 153,184

Supplemental fund 18,476 136,763 658 (6,202) (147,321)

$816,576 $11,916 $182,323 $53,960 $(303,768) $ 0

Sched es of Changes in Assets af Fun s Investec ($.000)

Funds Funds Invested Bond Power Invested Dec. 31, and Note Billing Investment December 31,

1992 Proceeds Receipts Income Disbursements Transfers 1993

$ 53,003 $(14,723) $ 1,050 $(114,099) $142,293 '.- $ 67,524 213,252 (28,351) 15,824 (16,463) 184,262

24,941 (3,034) 405 (24,810) 30,651 '28,153

291,196 (46,108) 17,279 (138,909) 156,481 279,939

21,925 (2,835) 2,673 (15,984) 12,648 18,427

1,113 34 (70) 1,077

50,080 12,487 66,989 622 88,169 (214,780) 3,567 291,320 21,085 5,881 318,286

341,400 12,487 66,989 21,707 88,169 (208,899)- 321,853

50,616 4,546 (159,939) 134,084 29,307 52,383 16,370 68,753

102,999 4,546 (159,939) 150,454 98,060

2,374 136,093 593 (3,429) (110,614) 25,017 $761,007 $(36,456) $203,082 $46,832 $(230,092) $ 0 $744,373

1993 1992 1991 1990 1989 Kilowatt-hour Sales (000) 3,976,104 3,757,172 3,722,099 3,585,461 3,572,021

Peak Billing Demand (kW): 788,060 740,847 742,108 721,247 689,304

Operating Revenues $443,511,000 $418,234,000 $438,810,000 $432,647,000 $429,098,000

Excess (Deficiency) of Revens over Expenses $3,121,000 ($5,799,000) ($12,544,000) ($18,534,000) $19,167,000

Sales-to Duke (Revenues) $238,954,000 $234,625,000 $262,456,000 $266,086,000 $263,034,000

Average Monthly Power Purchases by Cities (MWh) 331,342 313,098 310,175 298,788 297,668

Average Monthly Billings by Cities $17,046,000 $15,301,000 $14,696,000 $13,880,000 $13,839,000

1988 1987 1986 1985 1984

-Kilowatt-hours

Sales (000) 3,473,529 3,358,447 3,190,842 3,020,916 2,894,769

Peak Billing Demand (kW) 723,078 666,802 653,210 610,358 597,979

Operating Revenues $425,772,000 $430,546,000 $331,907,000 $206,195,000 $110,003,000

Excess.(Deficiency) of Revenues over Expenses ($6,034,000) $8,197,000 $6,075,000 $4,497,000 $2,399,000

Sales to Duke (Revenues) $269,443,000 $280,810,000 $194,986,000** $83,175,000* $33,000

Average Monthly Power Purchases by Cities (MWh) 289,461 279,871 265,904 251,743 241,231

Average Monthly Billings by Cities $13,027,000 $12,478,000 $11,410,000 $10,252,000 $9,164,000

*Catawba Unit I began commercial operation in June 1985.

**Catawba Unit 2 began conmercial operation in August 1986.

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