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AUTH.NAME AUTHOR AFFILIATIONCASILLAS;R.P. Arizona Power Authority
RECIP.NAME RECIPIENT AFFILIATIONI
SUBJECT: "Arizona Power Authority 35th .Annual Rept."DISTRIBUTION CODE: MO04D ,COFIES RECEIVED:LTR J ENCL J SIZE:TITLE: 50.71(b) Annual'inancial Report
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~ ..~-X~8'810
West Adams St. - ARIZONA POWER AUTHORITY- Phoenix, AZ 85M7
Document Control Desk
U.S. Nuclear Regulatory CommDocument Control Desk Pl-37Washington, DC 20555
In order to help conserve our natural resources, we are once again requesting your assistancein updating our mailing listfor the Arizona Power Authority's Annual Report. Please fillinthe necessary information, fold this sheet on the fold lines on thefron, tape it closed and returnto us. We hope you enjoy this, our 35th Annual Edition.
Continue sending the Annual Report as printed above.
Remove my name (and/or my company) from the list.
Make the following changes and continue sending.
Name:
17tle:
Company:
Address:
City/St/ZIP:
Thank you for your consideration. We sincerely appreciate it.
David O. OnstadAdministrator
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Drumbcr 28, 1993
, 1992-93 fiscal year, the
Arizona Power Authorityeither instituted or con-
tinued to develop several
programs critical to thc
welfare of'Authority cus-
tomers. Key among the
stafPs activities were ef-
forts to stabilize the costsI
of operations and mainte-
nance at Hoover Dam.
By law, these 08cM costs
are passed along to.
power customers in/
~ Arizona, Nevada, Rnd
California in the form ofrate increases. To stem
the accelerating pace of./cost increases:
~ The Engineering and
Operating Committee
continued to meet quar-
terly with U.S. Bureau of.
Reclamation (Reclama-
-'ion) staff to review and
make recommendations
concerning scheduled
OttiM and replacements,~ Authority Administrator
David Onstad, AuthorityAttorneyJam'es Bartlett,
and o0ier'taff have ne-
gotiated with representa-
tives from Nevada,and
California to reach agree-
ment with Reclamation
and the Western Area
Power Administration on
procedures to establisll
the lowest possible power
rates for Hoover Dam
that meet sound businessI I
~
principles. ~
The Commission
feels encouraged that/
methods other. than
'ower hikes willbe es-
tablished to pay a portion
of the debt service on the .
pew &hoover Dam Visi-
tors Center that has devi-'ted sharply from the
'acility envisioned in the
1984 legislation.
'To respond to some'referencepower cus-
tomers'ltered power
demands because of the
availability of Central
Arizona Project (CAP)I
water, the Authorityimplemented a one-'year
trial program allowing
these customers to "lay-
off" the power, making it.availablc to those who
do need it, without los-
ing lo'ng-term rights to.
the power.
The Commission 'ih
'confident tliat measures
are in place to protect
and enhance the long-!
standing commitments'o
Authority customers.=
'Sincerely,
.:~g~r~Robert P, Casillas
1Chairman
,r
rI
r
1
"The Commission2
believes... the Authorily
moist be tgble to adapt to
c
p 2
'ofSacramento. This'I - evaluation of current"and.
future needs resulted in,s
womajorachieve- . Customershad „amissiohto improve.ments in my second year expressed concern, that Authority leadership,
as Arizona Power Author- we were not letting the'm communications, and
ity Chairman were the 'now in a timely way relationship's. In addition-
.refinancing ofAuthority " abo'ut Commission deci-, to the communfcations
b'onds, which willsave sions and activities. 'The measures I mentioned
our customers approxi- Authority staff has taken above, key~ctions beingr
mately $ 1.1'million, and the initiative to increase considered include:
the continuing improve-< communication through n peeking opportunities for2
ment of commumcations letters and memos, tele- the Authority to'partici-
with our custoiners. phone conversations, and pate as an equity stake-
;meetings. We have re- holder in projects that/
.~c~~~~~ --. -,. y -,",, " ~'~ - '- ~'elved several letters dur'-;could benefit customers.
ing the year commepding 'Actively monitoringthe Ant/ority for its im- transmission access devil-,
Pg i pj'j J~ proved responsiveness. opments at the federal~'der '""'
DQ I 't~ .I/I~ "'he Commission is 'nd regional>eve>a, and
>)'~~",~... >. ',<> ~+l;~Qd '.$
,
'encouraged that the ex- aggressively evaluating
perimental power-layoff transmission oivnership „
proaram appears to be - issues to determine how
working as planned. The, Authority customers are
g ''rogram allows power . best served withrespect
that is not needed by'o service reliabilityand
power customers to be, -. costs./sold to other customers ~ Creating a policy position
who do need it, without ~ to guide Authority in-
the layoffcustomers for- „volvement in research,
f91 feiting their ongoing right planning, and develop-'s d 4'vc»W
.'h.'t»i ~ - -'
to that power. We are also ment of renewable energy'lvery pleased to report the projects,.
tt, s
Salt River Project contin- The Co'mmission's
*»pe . i, p~».','-. ",.'" „.'< „',.<4~@>', ~.'~~ h. 'es to provide'excellent goal continues to be thath
. service as the Authority's of providing guidance
power scheduling entity. 'hat willinvigorate the'I
The. Commission Authority's position as we
.believes that to survive' move totverd the 21st
nrmlg', I and continue to serve century. This is the time'\,
v Artzona's preference . to begin developing/
~ power community, the. constituencies that will*so ', ~I'uthority'must be able to provide political support
h,+ . ",, - -'- ='-.-.,- -. ~~~.~".~"='.''dapt to changing needs. for future changes benefi-
With our sights focu'sed cial to the Authority and
..on the long-term, the its customers.
Commission approved as
strategic plan prepareds
by Resource Manage-
ment International, Inc.
~ ~
. ~
TlicAuthority Commission
mccls thc third Tuesday
ofeach month to rcvicto
rluthorily activities and
Provide guidance on issues
a+ecting customers."
I,*
I~rmers Investment Co.,
a family-owned pecan
and cotton growing andn
processing lirm head-
quartered in Sahuarita,'rizona.He is a director ~
of the First Interstate
Bank, and vice-chairman
of the National Pecan
Shellers Association.-~f fW
Gila County supervisor' for eight years, and was
chairman three of those
years. He is a former
director of the Globe
. Lions Club and is a mem-
ber of'tlie Globe-Miami
Economic Development
Committee.Richard S. Walden
Dick Walden is the imme-
diate past chairman.
Appointed to the Com-
mission in 1984, Wakien
is serving his second con-
secutive six-year term.
Mr. Walden heads the
c
Jewell M. Lewis1
i Vice-ChairpersonDr. Lewis was first
appointed to the Commis-
sion in 1986 and has been
reappointed ror a second
term. Formerly a, teacher
Robert P. Casillas 'in the Phoenix school
Chairman syslem, she is chairperson
Bob Casillas willserve of the board of Media
as chairman through America Corp., which
January 1994. First owns KTVKChannel 3,
. ~ appointed to the Phocnist Maga@inc, KESZ
Commission in 1985, he Radio, and Desert Pro
was reappointed in 1990 duction Center. Dr. Lewis
. forasecondterm.A 'samemberofthenative of Miami, Arizona, Arizona Perinatal Board
Chairman Casillas, along . ofTrustees, the University
with his brother, founded ofArizona A,lumni Board,
C.C. Foods, Inc., a tprtilla and co-chair of the
manufacturing and dis- Orpheum Theatre
tributing firm in Phoenix, Renovation Foundation.
Arizona. He served as a
I,
) James K. Henness
Jim Henness has served" on the Commission for
12 years and was
J. S. Francis, Jr.
Jack Francis was
appointed, to the Commis-
sion in 1984 and served
as its chairman from
1988-90. He is also
serving a second six-year
term. Mr. Francis is
chairman of the board of
Valley Industries, a fam-
ily-owned agribusiness in
Glendale, Arizona, which
is celebrating its 70th
anniversary. He serves on
the boar'ds of the National
Cotton Council, the
Arizona CottonGrowers'ssociation,
and the
SuPima Association. ofh
America. He is chairman
,of the" Arizona Cotton
Growers Association *
State Support Committee.
chairman from 1984-86.
His second term ends in1994. A cotton farmer
from Casa Grande,
Arizona, Mr. Henness is
active in agribusiness,
environmental and com-
munity organizations, in-
eluding the Agri-Business'ouncilofArizona, the
National Association ofrConservation Districts, ~
and the Arizon'a Cotton
Growers Association.
"27u'Governor appoints individu-als toscrocon thcAuthority'sfioc-mnnbcr Commission, subj ca to
conjirmation by lhc stats Snurtc.
To provide continuity in lhc ad-
ministralion and opcralion ofthc
ct uthority, mnnbcrs arc appointedlo staggcrcd terms ofsiss years
cath. Thic Commission ckclspomits mcmbcrship a chairman and a
vice.chairman who hold ojfcccfortioo years, beginning 'and cndirlg
"on lhcji'rst htonday inJanuary.I
~ I'
Agribusiness inArizonaAgriculture is Arizona's
fourth Iargest indust'g"
after manufacturing, but they have to over- ~
tourism, and mining. Al- come the continuingthough irrigated farmland plague of whiteflies
is de'clining in the state, 'nd boll weevils, the'I
the industry is far from - —, > depressed worldwidedead: Arizona's climate is ~
~ I market fear cotton, and'ideal for a variety oE the stigpia of subsidjcs..crops and worldwide the ~ r While there is nodemand for agricultural . alternative to agriculture, ~
products is growing. Some recent refief "alternative agriculture"
Agribusiness is came in the form of is the contemporarysometimes referred to as fowered costs for Central buzzword. Agriculture is
a "hidden industry", . Arizona Project (CAP) taking on greater market .because its integral link in water. To help ke'ep orientation. It is not what
I
the world econoniy is so farmers int business, the farmers grow but whor
often overlooI'cd.. Central Arizona Water they grow lt for. "Niche
Agriculture provides Conservation District, farming" to explore newlife's basic necessities. which operates the CAP, opportunities is advo-
Almost any'crop will voted'to subsidize the, catcd by.the Agri-Busi-
grow in Arizona. And a - price of water. It willbe ness Council ofArizona,-I
market oP60 million — sold to irrigation districts .Inc. A gradual shift, fromr
'people lies within a for 817 an acre-foot, " central Arizona's4radi-'tivo-day truck haul. Why which is about a quarter- tional reliance on cottonthen are Arizona farmers of the market rate. is putting crops like
struggling? Because low The lower price will jojoba, childpeppers,'otton
prices, increasing help, but it willnot solve roses, durum wheat,
power and water costs, the farmers'inancial and.organically grownmother nature, bad press, dilemma. Some have had, produce into the market.and urban spra~t'rl Pave to remortgage their farms Thc trend is toward mak-
many farmers backed' to build canals that bring ing agricultuie indepen-into a corner. ', CAP iirigation water to den'tly sustainable in a
their land and to pay competitive marketplace./increased irrigation-
I
district tax assessments.
While only a thirdofArizona farms not on
Indian reservations are
dependent on CAP ivater,
there are, other challeng-
ing circumstances.4
Authority customers in~' the west Valley do not
have access to CAP water,
aul Pearcc and hip wife Marie farmA
r2,000 acres in the Eloy-Casa Grande area in
partnership with son Gale. They'vc been
farmers.all their lives. He came from Oklahoma
in 1936 and she's from h Texas cotton farrrf.
Pcarce's farming career has embraced many
years of civic and family commitment.
A board member of Electrical District No.4
for 35 years, he also served as mayor of Eloy
for 12,years. During October and November, hc
is a guide for the Sunland Visitor Centei "tag-
alo'ng" tours of.area cotton picking and ginning ~
operations. Mostly city folks sign up for theI
Wednesday morning tours that Pearce enthusi-
astically narrates for tourists who debark from
their: own cars at strategic points to learn about
the cotton industry. Pearce heads a close-knit
family of two sons', a daughter and-nine grand-
children who'all live near'Casa Grande.E
Poarcc.Farms has cultivated more than
cotton. Paul has planted lettuce, alfalfa and
grain "when the market is good" and as part of
the rotation program to improve the soil. ~
"Long staple yields have been down because of
'pinkies'pink boll worms], whitefiies and
several years. of extended high temperature,"
Pearce said.
"We'e had 'our ups and downs in the past
40 years," hc said. '<The farmer is going to haveI
to look at market potential for a crop more now.
than in th6 past."/ ~
~ iP
Both his sons are agribusiness college.
graduates, which Pearce said allows them td
understand the market better. "Grain buyersh
want dur'um wheat for pasta and cattle feed
and will pay a good price, for it," he said.
A.drawback to,switching from cotton to grain isr
.. the'fact that most farmers can't get financing to
produce a wheat crop.
"The Authority has done a great Job keep-
ing us supplied with reasonably'priced power to
pump water," Pearce said. "We'e fought hard'o
hold on to preference power," he said. "Now
, it's difficultto convince people we need it."
"Authorit'y,customers signed a 30-year
contract to pay for Hoover Dam, which wasI
paid out in 1987," explained Pearce.'"It
„'oesn't seem right that others should now be
able to take this power."i
Although Eg 4 & 5 farmers are using
mostly CAP water today because the new CAP
repayment agreement makes it affordable,
they don't want to lose their privileges for
, buying Hoover power. The
experimental power-layoff
program preserves this
preference privilege.
g i
6l '>.'<~
iil
"Thefarmer is going to
have to look at market
potentialfor a crop more
noro than in thepast."
It,lg „, ) /jg
4
"Power layogs alloro
the schedulers to take
the overall resource
/
and prom'de it rohere
'I
lt s needed most."
»
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»I,
all ls an especially busy season for
DeWayne Justice, vice-chairman and manager'fElectrical District No. 7. Not only is he
harvesting citrus crops on his own 30 acres and
$ 00 acres for other owners, and sending beef to/
market, he is also very involved with developing/
p'olicy issues with the Arizona Farm Bureau
to be lobbied in the state legislative session
commencing in'anuary.
Justice is'a native of the Waddell area,
where he earned his first farm wages at the age
of eight. A lifelong farmer and owner-operator- for 24 years, he is chairman of the
Arizona'arm
Bureau Water Committee, "The issues are
similar to those'of the Arizona Power Author-
ity," observed Justice. He said faimers must
continually try to correct misconceptions about
Arizona agriculture.
"There are so~e people who don't want/
federal water and power used for agriculturei"
he said. ED 7 depends solely on pumped»
groundwater. As'a result, Justice pointed out,-the Authority's ability to hold down costs Is
/vital. '„'The Authority's only source of revenue is
its customers," he said, "and they can stay in
business only as long as their-customerS can ~
pay their bills."
The experimental power-layoff program
benefits ED 7 by allowing the Dis-
trict to use the most economically g
priced resource available. "Power layoffs allow
power schedulers to redistribute the resources
from areas where customers are willingto
temporarily lay off Hoover power and provide it
temporarily to districts that have a.shortage,"
he said.'
Two common misconceptions that annoy"
Justice are charges that cattle'razing destroys
public lands ahd that farmers negligently use
pesticides. "The desert tortoise is threatened by
subdivisions not by. livestock," he said. "Buffalo
grazed western lands in much the same way
cattle do today. Properly managed ranches are
proven to be bettei'stewards of the land than
the stagnation of nonuse." As for pesticides,
'ustice said farmers are very concerned. "For
one thing, we live on the land," he said, "and/
4
we don't want our land and families poisoned."I
Also, pesticides are expensive. "Economics dic-
tate that we use as little as'possible," he'said.
Justice pointed out that-young people
in their twenties today are two generatidns
removed from the farm. "That's a problem
because they think food is producect in the
backroom of the grocery store," he said. "They
fail to recognize that the U.S.-has the cheapest,
safest, most abundant food supply in the world.
Only 16 percent of our disposable income goes
toward food. If taxes and regulations'drive
American agriculture out of business, our
nation will be dependent on foreign govern-
ments for its food'supply. A food embargo is a
frightening concept." ~
r
Justice fives in Waddell, Arizona, with his
wife Pam, daughter Terra, 17, and son'Selwyn, 4.
Experimental,Power-LayoffProgram Under WayThe Authority initiated a
power-layoff program in
July/August 1993 when it'ecameapparent that
there would be excessive
banked energy by the
end of the operating
year (September 30). To
alleviate thc situation, the-
Authority announced
that it would treat all
unscheduled banked..
energy for the remainder.'f
the 1993 operating
year as relinquished—
power for resale.'n
other words,
Hoover Schedule "A"
custoiners must sell their,excess power rather than
bank it. This procedure.
gives customers who can
use more than their allo-
cated amount of the
Hoover resource the
opportunity to schedule
and purchase the excess
(laid-ofi) capacity and/or
energy for the remainder
of the operating year.
As a result, on
October 1, 19P3, a dne-
year experimental layoff
program began for
Authority customers ofHoover Schedule "A"
power. The. Commission
authorized such custom-'rs
to lay offa portion
of their Hoover "A".
capacity and/or energy
making it available for
other Hoover customers
to purchase.
The Commission's
decision?s in keeping.
with the Authority's
energy conservation
objective ofusing the
Hoover r'esourcc in the
L
most efficient and
economical fashion. By
releasing Hoover "A"cus-
tomers from power
commitments they may
not need, other Authoritycustomers benefit from
this now-available source
of low-cost energy and
power.
i
/j-JL I ', lip
The proaram does
not relieve the customer
of its obligations for
purchase under its Power
Sales Contract. However,
the Authority willbilland attempt to collect forall. laid-offcapacity and/
or energy initiallyfrom
the customer(s) to whom
the laid-offpower was
sold. Layoffand'purchase
agreements between cus-
tomers must extend fora'minimumof one month.
A healthy resale
marketing etfort allowed
Hoover "A"customers to
layoff34,288,000 kilo-
watt-hours for the current
operating year ending
September 30, 1993. The
Autfioritywillmonitor
and evaluate the'layoff
program to determine its
merits and whether or
not to contique the pro- Igram after September 30,
1994.
Water and Power, South-
ern California Edison and
a number'of cities insouthern California. The
delegation seeks agree-
ment to control costs and
to Msure funding for. cer-'ain
operations and main-
tenance costs.
The delegation's
objective is a united frontto secure economic relief
by raising awareness ~
about the impact of rising
power rates onpreference'ower
customers.0
Asdt stands now,
Hoover power custonlers
, must pay for the entire
visitors facility, the cost ofwhich has ballooned fromthe original 832 millioricustomers agreed to in
1985 to more than $80
million today, plus inter-
est during construction.,
Negotiations Aimto Hold DownCustomer Costs
Representatives of the ~
power and water indus-
tries froin Arizona, ',
California, and Nevada
have met regularly for the„,
past year trying to reach, ~ ~ 4'"'~'..'t Novada
califosnla *
agreement on 11 issues of—.concern to Hoover power
Arizona
users. These efforts have
resulted in a settlement
proposal that willbe pre-.,
vented to the Bureau of . A spinoff advantage
. Reclamation and the of stabilizing costs would- Western Area Power Ad- be reliable funding for
ministration, the fegeral Reclamation and West-'
Agencies that generate, ~ em. This steady but con-
market and transmit fed- . trolled source of revenueI'rally produced power. should allow Reclamation
Two point's covered by to operate with greater ef-
the proposal. are measures ficiency.
,to control costs for 'he three-state del-
replacements at Hoover egation includes members
Dam, and a request that from the Arizona Power'n increment in the fee to Authority, the Coloradobci charged for admission River Commission
to the new. Hoover Dam (CRC), the MetropolitanVisitors Center bo used Water District ofSouth-
ta help cover the cast of em California, the Los
the center. „Angeles Department of/
4
reg Pierce, vice-chairman of Electric@i
District No. 8, is a fourth generation Arizona
farmer who has farmed in the west Valley far
20 years. He is a tenant on the Paloma Ranch,
the biggest ranch in the state. During the past
year, he,cultivated 4,500 acres of cotton, 2,500.
acres of wheat, and 300 acres of alfalfa. ED 8
has no access to CAP water and relies on
pumped groundwater.
Pierce believes the cotton industry is
more important than the Arjzona legislature ra-I
alizes. "They think we'e out there wasting "
I
water," he said. "Actually, we'e gotten much
mare efficient. We'e laser leveled our fielcfs
which saves us one to two acre-feet per field
ea'ch year," said Pierce. Ha explained that
10-row cultivators have replaced 4-row
cultivatars with the result that fewer farm
hands and tractors are needed. And better
pesticide management is saving dollars.
. For.example, "by regularly. field checking
the density of the whitefly papuiation with a/
trap-pan sampler," he said, "we can spray when
the flies are 30 per square inch, not 10 per
square inch. This reduces spraying frequency toI
those times when it's mast yffective."
8
~ ~
pr
h
.Arizona farmers have had to become~ t
—;"lean and mean" out of necessity„said Pierce,, ~ '
explaining tifat the selling price of cotton has'
'onefrom a.high of 90 cents lint/pound in ther
1970s to only 53 cents in 1993.
"What disturbs me,".he said, "are the
inefficiencies at Hoover Dam"—things like the ~
tripling in cost. of the new visitors'center and
ioutine maintenance being performed on-peak
rather than off;,peak. "The Authority is in tune
, with what our needs are and has represented 'rour desires in'trying to hold down costs," he
!
said. "Dave Onstad has been out to some of our.'
Jmeetings. They have done a,g'ood job."'o
what is the outlook for Arizona agricul-
ture? "I think it's'favorable ifwe can keep our .
hydropower, and ifwe can get whitdflies underI !
I
~ t'"27se Authority is in
tune with rohat our needs
're and has represented
'
Iourdesi'res ih hying -
„
= to hold doron costs." ~
control," said Pierce'\
/Pierce and his wife Kimb'erly live in
I'>~, ', ~ Buckeye, with their son Jason, 16,
I- and daughters Amber, 13, and
Tiffany, 6.-Ii
'!
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"Reasonably priced
electricity willbe there
for indushy
that looksfor it."
I-' i- I )t"
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,'.g(g
l~~, a~4v>.@~ -+
ater pricing in Electrical District,
No. 2 is complicated by the variety of surface
water sources, available in addition to ground~
water. Central Ariz'ona Project water is just one
of the several sources.
"The 517-an acre-foot price of CAP waterI
(compares with $ 25 af for well water) will/
impact pumping," predicted Tom Martin,
general manager of'ED 2 shortly after the CAP
pricing agreement was reached in OctoberI
1993. "The delivery rate for CAP in our area is
'imitedby the canal capacity," he said.
"Although the farm load is declining in
ED 2, farmers may need to turn on their electric
pumps to meet peak agricultural demands,"
said Martin, "because municipal and industrial
user's have first priority.on CAP water." Unlike
most, of the Authority's rural customers, ED 2
also serves residential, commercial, and indus-
trial load.'We
have to ensure we have the power
capacity for the few days that pumps are used,"
explained Martin, who. is a registered
professional electrical, engineer. *
He said the District often I Q< (
buys supplemental power
Q~G
10
ibecause it uses mbre power than it can get
from the Authority.
Martin, who moved to Coolidge from
Anchorage four years ago, f6resees very slow
development in Pinal County o0er the'ext five
to seven years. There is potential in the long
term for some big industries, like paper
recycllng, between Phoenix and Tucson.
"Reasonably priced electricity will be there forn
industry that looks for it," he "said.
"We see, wild swings iri Hoover capacity,
from month to month," said Martin, whd sees
the gngineering and Operating Committee/
playing an itnportant role ip decisions about
when a unit is taken out for'service. "The EEOC
,may be a new voice to help control the outages
that pile up on the Arizona side," Martin said.
"Since Hoover capacity is non-firm, when a unit/
isn't operating, there'.no power. Replacement
power can be'quite expensive. The Authority's operating<he best it can given that it has .
little control over the Bureau of Reclamation's
operating decisions," he said.
Born, in Oregon, Martin grew up In
Denver, graduated„from California, State Poly--
technic University, and worked in San Francisco'for
PG&E) and Sacramento (for R.W. Beck)
prior to spenliing seven years in Anchorage,
Alaska as director'of planning and rates for an
electric cooperative.
He iand his wife Toby are. avid scuba
divers. Most recently they.dove off Australia's
Great Barrier Reef, where they vacationed with
'daughter Jessica, 10, and son Colin, 5.
Engineering andOperating CommitteeTechnical representatives
from water and-power
agencies in Arizona, Ne-
vada, and California be-
came formalized nearlythree years ago as the En-
* gineering and OperatingCommittee (EEOC). The
committee meets withBureau of Reclamation
"
engineering and manage-
ment staff four times a
year to review Hoover
powerplant operations
and maintenance plans.
David Onstad and Don
Esgar represent the
Authority at these meet-
ings which are generally
held at McCarran
Airport in Las Vegas.
p< ~'Y~".c'e
In addition to
covering routine O&Mprocedures, Reclamation
identifies any extraordi-
nary capital improve-
ments or replacements
that require advanced
planning and significant
~/k .'t ~~investment. The E8c6C/has the opportunity to
question Reclamation
about its methods forcontammg costs and to
offer suggestions.i
The largest recent
item in this category was
the Programmable Master
Supervisory Control
(PMSC) system, which
automates and improves
specific powerplant
operations while, at.
the same time, reducing. labor costs.
The E&OC helped
monitor the final ye'ars ofthe Hoover UpratingProgram, wh'ich began in,the early 1980s and was
completed in%ay of1993. This modernization
of Hoover Dam genera-
tors increased electric
output by 500 megawatts.
11
12
down costs."
From kgb:
Dave Onslad,
James Bartlett
k
~)
i/
0
staff'is constantly refin-
ing its programs to help
customers survive in a
'ompetitive market-
place.
Today, small power
users are at the greatest
risk economically and
politically. The Autho,-
ing efforts between the
Authority and the West-
em Area Power Adminis-
tration to Ifold downt
costs. Western is the
federal agency respon-
'ible for transmitting and
marke'ting federally pro-
duced power. Western
has brought its customersc
including the Authority,into the process of devel-
oping a 10-year plan for
substations, transmission;
and joint transmission.
As a follbwup to this
effort, the Authonty'has
established customer
committees to work in
partnership with Western.
rity's strengthens the way
it serves small usersby'rovidingthem with
I II
he Arizona Power responses to legal, techni-
Authority receives cal, and programmaticpArizona's entitlement to changes.
hydroelectric pow'er The Authority's re-
generated at the Hoover sources include dedicatedr
powerplant and markets staff with capabilities tor
this power and energy to maintain a reference
38 eligible A'rizona enti- library, producepublica.'We'e
been improving ties, 3l ofwhifh areeur= tions and newsletters,
rently purchasing pow'er provide field services and
on a regular basis. The ~ '.total electric planning for
our working relationship Authority's customers in- smaller systems, includ-„
elude electrical, irriga- ing demand side manage-
tion, and inter conser- ment, integration of
roith Western'/o get a vation districts and cities. resources, and financing.
Since being creyted Throughout its rela-
in 1944 by the Arizona tionships with otherI /
better handle on holdtng, legislature, the Authority federal and state agencies
has evolved to sert e its and with customers, theI
customers in an ever- words partnership, cmpow-"
changing political envi- crmcnt, and quality set the
ronment. The Authority tone for communication
and cooperation.r<'~'I" Nowhere is this more
,1~l)) 'vident than in the ongo-
Arizona Power
Authority Staff
David O.'Onstad
Administrator
'ita Gallant
. Authority Secretary
James Bartlett
Legal Counsel
Frank Bonfili
ChicfAccountant-
Rosemary Anhalt
Fiscal Scrviccs'Specialist
Donna Robins
Administrative Secretary
Donald Esgar
Customer Services and
Contracts Managerc
Evelyn Magnusson
Pmcr Manager
Theodore Moss
Consulta'nt Supcrvisqr
David Southworthl
Computer Analyst
\ i
As the ESA legisla-iD 'ion currently stands, the
director of the Fish andeauthorization 'ildlifeService or the
of the 1973 Endangered Secretary of Interior canSpecies Act (ESA) is'a ~ autonomously designate
/majorland and water
" ., critical habitat'areas.Noissue facing the 103rd public review of their
'.S.Congress. The out-,, decisions fs required,come'ofthislegislation . Itisthe Authority'scould sigdificantly impact 'osition that the environ-
'
~ hydroelectric operations mental and economic/
on the Colorado River. „'mpacts of such a desig-I
The Authority sup- "critical habitat." Critical nation are so wide-rang-ports meaningful reform habitat contains the physi- ing and pignificant that anof the ESA which would cal and biological features environmental impact
-balance the goals of essential to conserve a statement sliould be pre-protecting and;conserving species and includes space pared before the processthreatened and endan- ~ for growth and normal, can be finalized. Zhe Au-gered species with the behavior, water, air, - thori(y is actively seeking'country's need for'contin- ~ light, minerals, and sites'hanges in the reauthori-/ued growth and 'develop> for breeding and rearing zation bill to ametitl whatment of natural resources. offspring. In the case of it sees as shortcomings.
II I \The U.S. Fish and the four identified fish, - Specifically, the Au-
WildlifeService has iden- this critical area encom- 'hority is very concernedtified four fish native to passes more than 2,000 about the economic im-the Colorado River as river miles. pact of critical habitat de-'being endangered. /he ~, Designation of criti- termination that couldspecies are the, Razorback cal habitat does not create ~ affect the cost, availabil-Sucker, Bonytail Chub, a wildliferefuge or close ity, and usefulness of hy-Colorado Squaiv'fish, and .the area to human i dropower as a reliable,Humpback Chub.. activity. It applies only to renewable energy, source.
= When a species is federal agencies that pro-
proposed for listing as en- pose to carry out acfivitihs,dangered,'areas of habitat that may adversely
I
considered essential to its modify the designated/conservation may be pro- critical habitat. Althoughposed for designation as .the exact constraints on
federal hydropowerI operations and their im-
pacts are not yet known,
the Authority anticipates
pressures to flatten flows
-, at all the Colorado, River.dam facilities similar to
the constraints imposedat'Glen
Canyon'Dam.
Razorback Su'cker
The U.S. Fish'and Wild-life Service is proposing15 river reaches'as criticalhabitat'. This represents
',824miles of, river or
52 percent of its historical
habitat.
I
Bonytail ChubThe U.S. Fish and Wild-life Service is proposingfive river reaches as criti- .
cal habitat. This repre-I /
sents 344 miles uf river or15 percent of its historical
habitat.
Colorado SquawfishThe U.S. Fish and Wild-life Service is proposingsix river reaches compris-
ing 1,148'miles of river or29 percent of its historical
habitat.
„Humpback ChubThe U.S. Fish and Wild-life Service is proposingI/seven river reaches as
critical habitat or 28
percent of its historical
habitat.
Power and Watero 1
Symposium
The Authority served on
the organizing committee
for the first Arizona
Public Power &WaterI
Symposium held at the
.Registry Resort inScottsdale in midJanuary
1993. The fwo-day
program brought together
government and industry*
policymakers, managers,
staff, and consultants. The
objective was to heighten
,
'warenes's among
Arizona customers that
the public power and wa-
ter organizations servmg
them are good stewards'fthe resources tlleymanage and deliver.
Speakers described
the challenges ahead and
expliined hoiv power and
water agencies may need
to respond. A second
Symposium willbe helP
in the spring of 1994.I
EPAMP rWestern's proposed
Energy Planningand'a'nagementProgram
(EPAMP) environmental
impact study is still being
considered for approval
by the U.S. Department
of Energy (DOE). After
DOE releases the draft ofEPAMP, possibly in
Dece'mber '1993, there
willbe a series of meet-
'ngs for public comment
oit the EIS, followed bydraft rules and regula-
tions to implement
EPAMP.
Western expects to
have 'the public process
and the necessary final .
documents completed for
implementation bySeptember 30, 1994.
'At that time, all Western
customers, including the
Authority and its custom-
ers, 1vill have 12 months
to submit to Western an
Integrated Resource Plan
(IRP). As currently
envisioned,-EPAMP willrftquire Authority cus-
tomers to perform inte-
grated resource planning.
The A'uth'ority's
customers who are
eligible for submitting an
IRP range from entities
requiring as little as 10
megawatt-hours a year to/large utilities using 17,000
'megawatt-hours a year.
To accommodate this
diversity, EPAMP pro-
vides enough Qexibillty
to embrace the needs ofeven the smallest utility.
According to West-
em's Robert N. Fullerton
at Western's customer
meeting in Las Vegas on
October 19, 1993> the
changes proposed to the
original EPAMP pro-
posai willnot designate a
preferred afternative, nor
willit include a link to
the power marketing op-
tion. Also, the perfor-
mance IIlan willbe
dropped.
She RPG grew out
of customers'esire for,a
user-friendly tool'to aid iin integrated resource
planning. It includes .
workbooks and computer
software incoiporating-diagrams and charts to
show 1vhat the IRP
process involves. Western
estimates that manually.
completing the workbook
takes approximately
32-40 hours, while the
computer version can be
completed in about four
hours.
Resource Planning
Guide
The Western Area Power
Administration has
helped develop a Resource
Planning Guide (RI'G)
designed to assist small-to
mid-sized power custom-
ers to perform the analy-
ses necessary to develop
an integrated resource
plan. The RPG project
willinclude workshops,
technical 'assistance, and
a hotline to support the
final, products. Western
anticipates creating a-users'roup to encourag
networking and peer
support.
Integrated Resource I'lan
Screenlna of Screen)ac ofItemand'Side Supply.SideAlternatives Alternatives
Resource PlanOptlmlaatlon
'CF
Financial/RateAnalyses
External Influences Rlslr Analysis/
PlanImplementation
'cheduling EntityAgreementSince 1988, as authorized
under'the Authority-
Western Power Sales
Contract, the Salt River
e Project (SRP) has sched-
uled Hoover power to
Arizona customers
through an interim agree-/
ment with the Authority.
Prior to that; the Western1
Area Power Administra-
tion served as the sched-
uling agent..
By the Authoritydesignating SRP as its
scheduling entity, Author-
ity customers have
'eceived b'enefits far
beyond expectations.
Specifically, the morithly
and seasonal load re-
quirements ofAuthoritycustomers were met more
compatibly without
impairing the rights ofAuthority customers to
receive Hoover power.
In ollter words, the
Authority and SRP have
arrived jt a contractual
scheduling agreement
that provifles AuthorityI
customers with the,I
flexibilityto use Hoover
power when they need it.
SRP absqrbs Author-
ity customers'nused
Hoover power during the
winter months'and banks
(saves) it in a deviation- account, for Authonty
customers,to tap when
they require additional
energy. Authority- customers must, however,
consume their fullHoover allotment by the
end of the operating year.
Hoover UpratlngProgram
The program, which be-
gan in 1981 to uprate the
original generators at the
Hoover powerplant,'illbe fullycompleted in
1995. As of this year, all
17 generators have been
mprated and are operating
as envisioned. The re-
.mainder of the pro'gram,
to be completed by 1995,
is the Programmable
Master Supervisory Con-
trol. This control system'illenable Reclamation
'o
coritrol all generating
units, including those at
Davis and Parker'ams,'roinone central point at „
the Hoover powerplant.
The AuthorityCommission regards the
Uprating Program as one
of its major accomplish-'entsin the past decade.
The upratigg-rewinding
using modern technol-—
ogy-of 17 generators
adds 528 megawatts ofgenerating capacity.
1
'~gji igCi
C
PCREDA ActivitiesThe Colorado River
Energy Distributors
Association (CREDA)
participates, on behalf ofits members, in environ-
mental impact studies offluctuating releases from
Glen Canyon Da'm on
downstream recreation,
beaches, wildlife,and
power. produced at Glen
Canyonpowerplant.'he
Authority is a
member of CREDA,whose members are pri-
marily power customers
of Western's Colorado "
River Storage Project
(CRSP). The proposed
modified flow,patterns
from Glen Canyon Dam
would impact CRSP cus-
tomers by dramatically
increasing power rates
and diminishing the use-
fulness of the electri'c re-
source. Many Authoritycustomers purchase
CRSP power to supple-
ment the energy they re-
ceive from the A'uthority.
. Other CREDA ac-
tivities during the past
yea'r included: 1) moni-
toring national energy
legislation, 2) workingwith Reclamation and
Western on issues affect-
ing the availability and
price of wholesale elec-
tric power, 3) monitoring,operation, maintenance
and replacement costs at
Reclamation and West-
ern power facilities to
control costs, 4) repre=
senting members'nter-
ests in efforts to preserve
the integrity of the
Grand Canyon, and
5) securing replacement
power for customers.
rs le-j ~„,
~ '
Power OperationsOn June 30, 1993, thewater stored in Lake
Mead was 21,258,000
acre-feet at a lake eleva-
tion of 1,188 feet. Duringthe 1992-93 fiscal year,
7,308,000 acre-feet ofwater released through
Hoover turbines
produced 3,372,000
megawatt-hours of en-
ergy. During that period,. ~
the Authority's share ofthe energy was 636,712
megawatt-hours.~The Authority
purchased 1,248 mega-'itt-hoursof thermal-
/geneiated energy under
wholesale power pur-chase contracts with the
Arizona Electric Power
Cooperative, Arizona
Public Service Companyand the Salt River Project.
The Authority sold this -"I
power wholesale to its
„customers.
g /
15
Agency of thy State ofArizon4
\'1 ~ r Schedut
July 1, 19
e of Power and Ene
92 throughJune 30, 19
rgy93,
,. Sale of Hydro PowerrAquiliIrrigation District
Avra Valtcy.Irrigation Ec,Drainage District'Bu'ckeye Water Conservation DistrictC.A.W:C.D.
Chandler Heights Citrus Irrigation District
Cortaro-Marana Irrigation District
Electrical District No.'1, Pinal
Electrical District No. 2, Pinal
Electrical,District-No..3, Pinal
"Electrical District No. 4, Pinal
Electrical District No. 5,,Pinal
Electrical District No. 5, Maricop'a .Electrical District No. 6, Pinal =-.
Electrical Distpct No. 7, Maricopa'lectricalDistrict-No. 8, Maricopa
Harquahala Valley Power District *
, ~
"~
'rr
Maricopa County Municipal Water District @1
'. McMullen Valley Water Conservation R Drainage District
Ocotillo Water Conservation District"
., Queen Creek Irrigation DistrictRoosevelt Irrigation District*
Roosevelt Water Conservation District
Salt River Project "
San Tan Irrigation Dis'trict
Silveibell Imgation 8r, Drainage District ~
Tonopah Irrigation DistrictWellton-Mohawk Irrigation 8r. Drainage District .
City OfMesa
,, City of Page.
City ofSafford,Town ofThatcher
Town ofWickeiiburg, ~
Ak-Chin IndianrCommunityArizona Electric Power
Cooperative''rizona
Public Service Co.
4
r4
Sales
Year EndingJune 30, 1993
r )r
Average MillsBilling 'elivered Per
Dcinand kW k)Vh 'morm, kWh
r4
3.887 9,358,000 . $ , 274,108 '9.29454 1,091,00D 32,332 29.63
2,284 4,332,000 128,873'9.75,53,081 '87;833,000 3;798,321
'3.24''07
" 2,766,000 59,612. 21.55
3,757 ',440,0DD',, '70,721 28.68
~ 0 '..0 .0 0.00
'3,428 62,551,00D 1,325,496 „'2L10, 11)530 43,645,000 ., 983,767 22.54 ~
, 3,038r,
10,415,000r" . 361,246 '4.693,159 ~ 10,713,00D, 323,077 30.16
.229 1,185,000 ' '24,340 20.54
4,641 — 25,899,00D 544,584 'L038,268 '4,470,000 * '64,485 2 32.10 .
14,163,, 39,491,000 - ',056,339 ' 26.75
'1,501'2, 38,000 . 97530 ', 35.62
7,233 ~, 13,669,000' '28,999 '" ',31:38
3,685' 13,612;000, 355,228; " 26.10
1,098 .. 4,321,000, . 107,588, '4.901,304 7;441,000; r .149,570, ', 20.10
3,148. 10,303,000: . 242,751... 23.56',90928,827,000.„', 567,250;" . '.19.68
$8)779 163,231)000 '. 3,402,633' 20.85
236 ', 877,000 . 24,177 27.57
388 " 1,362,000, 33,391 '24.52
1)009 5)106)000 '09)933 2' 21 53
2,654' 11,629,000 ~ 249,916 ' '21.49
219 ',866,000. '7,556 ' 20.13
444 991,000 34305'34.62
972; 4,063,000 99,932 —,24.60
49 367,000 " 7,727 r 21.05
146 -,,f)245,000 ~ 25,058, 20.13
1,047. " 6,507,000' 149,041, 22.90
Citfzens Utilities Co
Tohono 0'odham Utilities Authority
' 160,, 1,244)000 24,199
127 755,000 '6,36319.45
21.67
'an Carlos Irrigation Project
Tucson Electric Power Co.
110 933,000
428 3,806,00D
18,774
75,205
) 20.12
19.76
Total r
Sale of Thermal Power: Total Thermal Pawcr Sales
Other Electric Revenues'
Total 0 eratin .Revenues
194,382"
611,615,000 $ 16,012,695 ' 26.18
24 115 1 248 000, $ 1,050,770
$ '8,230$ , 17,101,696,
16'h r 'r
4 ~
An Agency of the State of Arizona
Table of Contents
Financial Section
APA General Fund, Hoover Uprating Fund and Combined Balance Sheets,
Junc30, 1993and 1992
APA General Fund, Hoover Uprating Fund and Combined Statements of Operations,Years EndhdJunc 30, 1993 and 1992
18
20
APA General Fund, Hoover Uprating Fund and Combined Statements of Changes in Fund Equity,Years Ended Junc 30, 1993 and 1992 21
APA General Fund, Hoover Uprating Fund and Combined Statement of Cash Flows,
Years EndhdJunc 30, 1993 and 1992 22
Notes to Financial Statements
Supplemental Schedule I —Statement of Operations of the Hoover Uprating Fund—
Individual Funds and Accounts, Year Ended Junc 30, 1993
Supplemental Schedule II—Debt Service Coverage Ratio of the Hoover Uprating Fund,
Year EndhdJunc'0, 1993 (Unaudited)
28
30
Independent Auditors'eport
17
An Agency of the State of Arizona
APA General Fund, Hoover Uprating Fund and Combined Balance Sheets
junc 30, 1993 and 1992
APA General Fund
1993 1992
Hoover Uprating Fund
1993 1992
Combined
1993 1992
Assets
Property, Plant and Equipment- Net (Note 3) $ 459,999 $ 535, 135
Advances for Hoover UpratingProject (Notes 2 and 6)
$ 459)999 $ 535,135
$ 53,658,364 $ 44,853,871 53,658,364 44,853,871
Current Assets:
Cash (Note 5)
Accourits receivable—
customers'ower purchases
Interest receivable
Prepaid purchased power
and other
4,768,911
21,234
26,703
1,411
4,593)036
319,622
78,076
1)905,326
5191185
1,535,489
853,451
1,926,560
545,888
1,855,111
931,527
991,714 993,125
6,524,760 6,256,404 11,293,671 10,849,440
Total current assets 4,818,259 4,990,734 9,940,985 - 8,645,344 14,759,244 13,636,078
Total $ 5,278,258 $ 5,525,869 $ 63,599,349 $ 53,499,215 $ 68,877,607 $ 59,025,084
See notes to combined financial statements.
18
An Agency of the State of Arizona
APA General Fund, Hoover Uprating Fund and Combined Balance Sheets
june 30, 1993 and 1992
APA General Fund
1993 1992
Hoover Uprating Fund
1993 1992
Combined
1993 1992
Fund Equity and Liabilities
Fund Equity:Contributed capital
Retained earnings (Note 9):
Allocated:
Investment in property, plant
and equipment
Property replacement reserve
General reserves
Unallocated
$ oooo $
, 459,999
646,502
4)000,000
145)621
9,000
535,135
570,931
, 4)000,000
103,540 $ 434,406 $ (571,145)
459,999
646,502
4,000,000
580,027
535,135
570,931
4)000) 000
(467,605)
9,000 $ 9,000
Total fund equity
Bonds Payable (Note 8) ~
'iscount on Bonds Payable
5,261,122 " 5,218,606 434,406 (571,145)
81)410,000 89,8201000
(2)285,423)
5,695,528
81,410,000
(2,285,423)
4,647,461
89,820,000
Less Investments Held by Trustee-Including unamortized premium
(discount) on investments
of$ 134,868 and.$ (132,871) in 1993
and 1992, respectively (Note 7) (18,417,312) (38,514,917) (18,417,312) (38,514,917)
Bonds payable —net 60,707,265 51,305,083 60,707,265 51,305,083
Current Liabilities:Accounts payable
Power contracts payable
Accrued interest payable (Note 8)
2,896
14)240 307,263
244,151
1,408,778
804,749
247,047
1,178,307 1,423,018
1,586,970 804,749
1,485,570
1,586,970
Total current liabilities 17,136 307,263 2,457,678 2,765,277 2,474,814 3,072,540
Total $ 5,278,258 $ 5,525,869 $ 63,599,349 $ 53,499,215 $ 68,877,607 $ 59,025,084
19
An Agency of the State ofArizona
Al>A General Fund, Hoover Uprating Fund and Combined Statements of OperationsIears Ended June 30, 1993 and 1992
APA General Fund
1993 1992
Hoover Uprating Fund
1993 1992
Combined
1993 1992
Operating Revenues $ 1,089,000 $ 2,496,079 $ 16,012,213 $ 14,173,076 $ 17,101,213 $ 16,669,155
Operating Expenses:
Purchased power (Note 2)
Western credits (Note 6)
Amortization of Hoover UpratingProject costs
Transmission
DistributionAdministrative and general
Depreciation
Allocation of depreciation
1>010,900
16,652
6,631
95,590
75,571
(61,744)
22>512
11,367
49,905
75,103
(62,553)
6,162,064
2,740,611
1,104,818
61,744
5,421,165
2,829,341
789,345
62,553
6,162,064
2,757,263
6,631
1,200,408
75>571
5,421,165
2,851,853
11,367
839,250
75,103
2>411,416 11,181,149 11,396,238 12,192,049 13,807,654
(6>162>064) '5>421>165) (6>162>064) (5>421>165)
Total operating expenses
Operating (Loss) In'come
Other Income (Deductions):Interest expense (Note 8)
Deferred interest expense
Interest income
Gain on sale of investments
Preliminary survey and
investigation costs
Other —net
1,143,600
(54,600)
167,571
(23,225)
(47,230)
2,507>750
(11>671)
248,584
244
(917,602)
(51,337)
15,088>322'23,891
(6,260,961)
3,625,982
2,532,543
180,380
3,716
15,077,477
(904,401)
(6,235,072)
2,900,000
3,585,885
893,403
4,431
(6,260,961)
3,625,982
2,700,114
180,380
(6,235;072)
2,900,000
3,834,469
893,647
(23,225) (917,602)
(43,514) (46,906)
16>231,922 17,585,227
869,291 (916,072)
Total other income (deductions)
Net Income (Loss)
97,116 (720,111) 81,660 1,148,647 178,776 428,536
$ 42,516 $ (731,782) $ 1,005,551 $ 244,246 $ 1,048,067 $ (487,536)
See notes to combined financial statements.
20
An Agency of the State of Arizona
APA General Fund, Hoover Uprating Fund and Combined Statements of Changes in Fund EquityYears EnChdJunc 30, 1993 and 1992
APA General Fund
1993 1992
Hoover Uprating Fund
1993 1992
Combined
1993 1992
Unallocated Retained Earnings:Balance, beginning ofyear $
Net income (loss)
Net transfers (to) from
allocated retained earnings (435) 887,922
103,540 $ (52,600) $ (571,145) $
42,516 (731,782) 1,005,551
(815,391) $
244,246
(435) 887,922
(467,605) $ (867,991)
1,048,067 (487,536)
Balance, end of year 145,621 103,540 434,406 (571,145) 580,027 (467,605)
Allocated Retained Earnings:
Balance, beginning of year
Net transfers from (to)
unallocated retained earnings
Balance, end of ear
5,106,066 5,993,988I
435 (887,922)
5,106,501 5,106,066
5,106,066
435
5,106,501
5,993,988
(887,922)
5,106,066
Contributed Ca ital 9,000 9,000 ~ 9,000 9,000
Total Fund E ui $ 5 261 122 $ 5 218 606 $ 434 406 $ 571 145 $ 5 695 528 $ 4 647 461
See notes to combined financial statements.
21
An Agency of the State of Arizona
APA general Fund, Hoover Uprating Fund and Combined Statements of Cash Flows
Years EndedJunc 30, 1993 and 1992
APA General Fund
1993 1992
Hoover Uprating Furid
1993 '992 Combined
1993 1992
Operating Activities:Net income (loss)
Adjustments to reconcile net in-
come (loss) to net cash prbvided
by (used in) operating activities:
Depreciation
Amortization of premiums and
discounts on investments
Write-offof preliminary survey
and investigation costs
Changes in assets and liabilities:
Preliminary survey and
investigation costs
Accounts receivable
Due'from (to) other funds
Interest receivable
Prepaid purchased power and other
Accounts payable
Power contracts payable
Accrued interest payable
75,10375,57175,10375)571
(155,442)
917,602
(268,169)(155,442)(268,169)
917>602
(24,904) ~
(66,661)
33,375
(42,480)
(24,904)
(54,575)(370,051) (71,663)12,086
(33,375)
152,753
98,182
(21,163)
(15,177)
298,388
$34,266
(1, 154,240)
244,794
392,998
(782,221)
110,273
98,182
(25,233)
45,111
385,638
(1,155,651)
247,690
99,976
(782,221)
51,372 .
(1,4ii)2,896
(293,022)
(4,070)
60,288
$ 42,516 $ (731,782) $ 1,005,551 $ 244,246 $ 1,048,067 $ (487,536)
Net cash provided by (used in)
operating activities 176,310 216,471 (597,072) 282,110 (420,762)"
498,581
Investing Activities:Cash from trustee funds
Acquisition ofproperty,.
plant and equipment
Sale of investments
Net cash (used in) provided byinvesting activities
(435)
(435)
20,365,344 8,128,527 20,365,344 8) 128,527
(4775)
2,999,800
(435) (4,775)
2,999,800
(4,775) 20,365,344 11,128,327 20,364,909 11,123,552
Financing Activities:Increase in advances for Hoover
, Uprating Project
Repayments of bonds
Issuance of bonds
Discount on bonds issued
(8,804,493)
(89,820,000)
81,410,000
(2,285,423)
(11,663,258) (8,804,493)
(89,820,000)
81,410,000
(2,285,423)
(11,663,258).
Net cash used in financing activities (19,499,916) (11,663,258) (19,499,916) (11,663,258)
Net Increase (Decrease) in Cash 175,875
Cash, Beginning of Year „ 4,593,036
21'1,696 268,356
4,381,340 ~ 6,256,404
(252,821)
6,509,225
444,231 (41,125)
10,849,440 10,890,565
Cash, End of Year $ 4,768,911 $ 4,593,036 $ 6,524,760 $ 6,256,404 $ 11,293,671 $ 10 849 440
Cash Paid for Interest
22
$ 6,260,961 $ 6,347,880 $ 6,260,961 $ 6,347,880
An Agency of the State ofArizona
Notes To Financial StatementsYears Ended June 30, 1993 and 1992
1. Summary of SignificantAccounting Policies
System of Accounting —The accounting records of the Arizona Power Authority ("APA")are main--
tained in accordance with applicable provisions of the Uniform System ofAccounts prescribed by the
Federal Energy Regulatory Commission ("FERC").I
Property and Depreciation —Property is stated at original cost. The costs ofproperty additions and
replacements are capitalized. Replacements of minor items ofproperty are charged to expense as in-
curred. Costs of property retired are eliminated from plant accounts, and such costs plus removal ex-
penses less salvage are charged to accumulated depreciation.
Depreciation is provided on the straight-line composite method based on the estimated useful lives ofthe property items, which range from 5 to 44 years.
Advances for Hoover Uprating Project —Proceeds from bonds payable are advanced by APA for
uprating the Hoover Power Plant and are recorded as advances. Such advances, including debt issue
costs, plus net interest expense incurred by APA are reimbursed in the form of credits on the monthlypower, bills rendered to APA by the Western Area Power Administration of the Department of Energy("Western" ). The credits are issued over the 30 year life of the bonds. Substantially all net interest ex-
pense on the bonds is charged to the uprating project as amounts to be recovered from future credits.
Reclassifications —Certain amounts in the 1992 financial statements have been reclassified to con-
form to the 1993 presentation.
2. Fund Accounting Hoover Uprating Fund —The Hoover Power Plant Act of 1984 ("Hoover Act") authorized the
United States Government'to increase the capacity of, i.e., "uprate", existing generating equipment at
the Hoover Dam Power Plant ("Uprating Project" ). Instead of appropriating further federal funds for
the Uprating Project, Congress implemented an advancement of funds procedure whereby prospective
non-federal purchasers of the uprated Hoover capacity and associated energy contribute to the
financing of the Uprating Project. APA financed a portion of the total Uprating Project by issuing
bonds (Note 8).
The Hoover Uprating Fund accounts for advances by APA in connection with the Uprating Project.
EffectiveJune 1, 1987, APA executed new power contracts with Western and APA customers which
expire in 2017. The revenues and expenditures applicable to the sale and transmission ofpower and
energy received by APA from Western under these contracts are accounted for in the Hoover
Uprating Fund.
APA General Fund —APA operations other than those applicable to the Hoover Uprating Fund are
accounted for in the APA General Fund. The purchase of steam power and the sale and transmission
of such power to APA's customers comprise the majority of this fund.
An Agency of the State ofArizona
3. Property, Plant and
EquipmentProperty, plant and equipment of the APA General Fund atJune 30 are as follows:
1993 1992
Transmission and distribution plant
General plant
$ 439,391 $ 439,391
667,110 666,675
Total
Less accumulated de reciation
Pro e, Iantand e ui ment-net
1,106,501 1,106,066
646,502 570,931
5 459,999 5 535,135
The transmission and distribution plant is comprised of a substation and related equipment. Purchased
power is delivered over transmission facilities owned by Western.
4. Preliminary Survey and« Investigation Costs
APA signed a participation agreement with the Colorado River Commission of Nevada, Bureau ofReclamation ("Bureau" ) and Western for the planning of the Hoover Modification Project. Ifcon-
structed, the project would have increased the power generating capacity of the Hoover Power Plant
by installing a new power plant. InJunc 1992 it was determined that the project would not be pursued
any further due to lack of customers willingto sign contracts for capacity generated by the project.
Therefore, APA expensed all deferred costs, totaling $917,602, associated with this project inJune
1992. The retained earnings allocated for the project were transferred to unallocated retained earnings,
substantially offsetting the current year loss recorded in unallocated retained earnings.
S. Cash In 1990, APA transferred their cash balances to the State of Arizona Treasurer for pooled investment
purposes. Statutes require the State Treasurer to invest these pooled funds in obligations of the United
States Government. Allinvestments are carried at cost.
6. Advances for Hoover
Uprating Project
Advances for the Hoover Uprating Project were scheduled to be reimbursed byWestern through
credits on APA's power bills in the amounts of $6,162,064 and $5,421,165 for the years ended June 30,
1993 and 1992, respectively. Of the 1992 amount, only $ 1,286,378 of the credits were actually granted.
These credits were repaid from bond proceeds in 1993 (Note 8). During the years ended June 30, 1993
and 1992, interest expense on the bonds issued to finance the Uprating Project exceeded interest rev-
enue and gain on sale of investments by approximately $3,600,000 and $2,900,000, respectively.
These amounts were charged to the cost of the Project.
24
An Agency of the State of Arizona
7. Investments As ofJune 30, 1993 and 1992, investments are insured or collateralized with securities held by APA's
agent in APA's name. Investments are carried at cost, which approximates fair value atJune 30.
Investments as ofJune 30 are as follows:
1993 1992
United States government securities
Repurchase agreements
Money market,
Total investments
$ 7,952,513 $ 12,726,631
10,396,605 24,244,396
68,194 1,543,890
$ 18,417,312 $ 38,514,817
On December 18, 1990, APA entered into a master repurchase agreement with Prudential-Bache
Securities Inc. ("PBS"), wherein APA agreed to effect a series of repurchase transactions with PBS.in
permitted investments. Permitted investments are defined as United States Treasury Securities,
Government National Mortgage Association Securities, Federal Home Loan Mortgage CorporationSecurities, Federal Housing Authority Securities and Student Loan Marketing Association Securities.
The securities are held by Bank One of Arizona, N.A., as Trustee, for APA. Ifat any time the aggre-
gate market value of all purchased securities is less that APA's aggregate margin amount (calculated
using a percentage of 102%), then APA may require PBS to transfer to APA cash or additional
securities, at PBS'ption, so that the cash and aggregate purchased securities willequal or exceed
APA's aggregate margin amount.
B. Bonds Payable On June 3, 1993, APA issued $ 81,410,000 in Revenue Bonds with an average interest rate of5% to
advance refund $89,820,000 of outstanding 1985 Series bonds with an average interest rate of 7%. The
net proceeds of $78,600,000 (after payment of approximately $ 1,700,000 in underwriting fees,
insurance, and other issuance costs) plus an additional $ 18,100,000 of 1985 Series sinking fund monies
were used to purchase U.S. government securities. Those securities were deposited in an irrevocable
trust with an escrow agent to provide for all future debt service payments on the 1985 Series bonds. As
a result, the 1985 Series bonds are considered to be defeased and the liabilityfor those bonds has been
removed from the Hoover Uprating Fund. APA advance refunded the 1985 Series bonds to reduce its
total debt service payments over the next 25 years by approximately $22,100,000 and to obtain an
economic gain (difference between the present values of the debt service payments on the old and
new debt) of approximately $5,700,000.i
P
The new bonds bear interest ranging from 2.8% to 5.6% and are due serially from 1994 through 2017
as follows:
1994
1995
1996
Thereafter
Total
$ 1,115,000
1,190,000
1>280,000
. 77,825,000
$ 81,410,000
25
An Agency of the State of Arizona
9. Retained Earnings Allocations of retained earnings for specified purposes are authorized by the Arizona Power AuthorityCommission ("Commission" ), APA's governing board, under provisions of the Arizona Power
Authority Act of 1944, as amended. The general reserves shown on the accompanying balance sheets
are comprised of the followingatJune 30:
APA General Fund
Resource Development
Operations fund
Power contracts
System improvement and repairs
1993
S 3,500,000 S
200)000
100,000
200,000
1992
3,500,000
200,000
100,000
200,000
Total 0, 4,000,00D 0 4,000,00D
10. Retirement and
Pension Plans
AllAPA full.time employees are required to participate in the Arizona State Retirement Plan (the
Plan" ), a multiple.employer, cost-sharing pension 'plan administered by the Arizona State Retirement
System (the "ASRS"). The payroll for employees covered by the Plan for the year ended June 30, 1993
and 1992 was $332,515 and 8374,200, respectively; APA's total payroll was 8337) 165 and 8378,524) re-
spectively.
ASRS provides for retirement, disability, death and survivor benefits. Retirement benefits are calcu-
lated on the basis of age, final average salary and service credit. Members are eligible for retirement
benefits on the first day of the calendar month following: 1) the attainment of age 65; 2) the attain-
ment of age 62 and ten years of credited service; or 3) the date when age plus total credited service
e'quals 80. The benefit is based on 2% of final average salary multiplied by the years of service credit.
Final average salary is defined as the period of36 consecutive months during which a participant re-
ceives the highest compensation within the last 120 months of service during which the employee
made retirement contributions as required by law. The compensation does not include vacation or an-
nual-leave, sick leave, compensatory time or any other form of termination pay. Persons who have
reached age 50 with at least five years of total credited service may take an early retirement which en-
titles them to a reduced retirement benefit. Retirement benefits vest after five years of service..
EffectiveJuly 1, 1988, members of ASRS became eligible for a disability benefit in the event they. be-
come unable to perform their work. A participant continues to earn credit of up to a total of25 years
of service during the period of disability.
Upon termination of employment, a member may withdraw contributions made to ASRS. The accep-
tance of a refund cancels the individual's rights and benefits in ASRS. Employers'ontributions to the
System are not refunded.
Coveted employees were required by State statute to contribute 3.59% of their salary to the Plan dur-
ing fiscal year 1992-1993 and 3.6% of their salary during fiscal year 1991-1992. APA is required to
match their contribution. Total contributions made by APA and its covered employees were 811,678
for each in 1993 and $ 13,470 for each in 1992.
26
An Agency of the State of Arizona
The pension benefit obligation is a standardized disclosure measure of the present value of pension ben-
efits, adjusted for the effects of projected salary increases estimated to be payable in the future as a re-
sult of employee service to date. The measure, which is the actuarial present value of credited
projected benefits, is, intended to help users assess the public employees retirement system's funding
status on a going-concern basis, assess progress made in accumulating sufficient assets to pay benefits
when due, and make comparisons among such systems. The Plan does not make separate measure-
ments of assets and the pension benefit obligation for individual employers. The pension benefit obli-
gations at June 30, 1992 for the Flan as a whole, determined through an actuarial valuation performed
as of that date, was $8,079,760,531. The Plan's net assets available for benefits on that date (valued at
market) werc $9,437,180,124. APA's 1992 contribution represented less than 1% of total contributions
required of all participating entities, which were $ 132,273,316 each for employers and employees in1992 (1993 information not available).
Ten year historical trend information showing the Plan's progress in accumulating sufficient, assets to
pay benefits when due is presented in ASRS'une 30, 1992, comprehensive annual financial report.
11. Additional Benefits In addition to the pension benefits described, ASRS offers health care benefits to retired and disabled
members that are no longer eligible for health care benefits through their former member employer's
group health plan. This program is administered in accordance with ARS 38-781.03. Retired is defined
as actively receiving an annuity benefit and disabled is defined as receiving a long-term disability
(LTD) benefit through the LTD program administered by ASRS. The ASRS provides the following
monthly premium benefits:
Years ofCredited
Service
MemberPercent of OnlyPremium Not Medicare
Benefit Eligible
With Dependent(s)
NotMedicare
EligibleMedicare
Eligible.
MemberOnly
MedicareEligible
With De endent(s)
NotMedicare Medicare
Eligible Eligible
5.0 —5.9
6.0 —6.9
L 70- 79
~8.0 —8.9
9.0 —9.9
10.0+
50%
60%
70%
80%
90%
100%
$47.50
857.00
86.6.50
876.00
885.50
$95.00
8 87.50
$ 105.00
$ 122.50
8140.00
$ 157.50
817s.oo
$ 72.00
8 87.00
8102.00
8116.00
$ 130.00
$ 145.00
832.50
839.00
845.50
$52.00
858.50
$65.00
8 72so
$ 87.00
81ol.so
$ 116.00
8130.50
8145.00
8 57.50
8 69.00
8 8o.so
8 92.00
8103.50
8115.00
The Arizona State Retirement System reimbursed approximately $23,700,000 towards the cost of
group health insurance coverage for the year. This figure represents an increase of 28.11% over the
previous year.
27
An Agency of the State of Arizona
Supplemental Schedule I - Statement of Operations of the Hoover Uprating Fund-Individual Funds and Accounts Year Ended Junc 30, 1993
RevenueFund
OperatingAccount
MonthlyPaymentReserveAccount
Note: The supplemental
schedule includes all funds and
accounts, as defined by the
APA Power Resource Revenue
Bond Resolution.
Operating Revenues
Operating Expenses:
Purchased power
Western credits
Amortization of Hoover Uprating Project costs
Transmission
Administrative and general
Allocation of,de reciation
8 16,012,213
8 ii,i8i,i49(6, 162,064)
6,162,064
2,740,611
1,104,818
61,744
Total
Operating Gain (Loss)
Other Income (Deductions):,Interest expense
Deferred interest expense
Interest income
Gain on sale of investment
Other —net
Total
Net Income (Loss)
Adjustments to Income (Loss) Under thePower Resource Revenue Bond Resolution:Add:
Accrued interest income FY 1992
Accrued interest expense FY 1993
Allocation of depreciation
Accrued revenue FY 1992
Accrued purchased power FY 1993
Deduct:
Accrued interest income FY 1993
Accrued interest expense FY 1992
Accrued revenue FY 1993
Accrued purchased power FY 1992
Prepaid purchased power FY 1993
Deferred interest expense
174,821
3,716
178,537
16,012,213 (14,909,785)
48,092
1,535,275
61)744
1,408,779
16,942
1,905,326
1,178,307
991,714
15,088,322
16,012,213 (15,088,322)
42,267
16,955
Income (Loss) As Defined Under the Power
Resource Revenue Bond Resolution
June 30, 1993 Cash and Investment Balance
$ 15 642 162 ~$ 15 578 183 $ 25 312
$ 2740062 8 3000000
2B
An Agency of the State of Arizona
ConstructionFund
DebtService
Account
DebtService
ReserveAccount
PowerResource
DevelopmentFund
GeneralReserves'und Total
$ 16,012,213
11,181,149
(6,162,064)
6,162>064
2,740,611
1,104,818
61,744
15,088,322
923,891
S (7,854) S (6,253,107)
3,625,982
2,357,722
180,380
2,530,248 (2,627,125)
2,530,248: (2>627>125)
(6,260,961)
3,625,982
2,532,543
180,380
3,716
81>660
1,005,551
478,906 17,001
804,749
261,154 5,030 1,001 853,451
804,749
61,744
1,535,275
1,408,779
324,395
1,586,970
3,625,982
159,647 1,245 519,185
1,586,970
1,905,326
1,178,307
991,714
3>625,982
$ 2,684,759 $ (7,018,327) $ 101,507 $ 3,785 $ 1;000 $ (4,137,935)
$ 10,724,444 $ 936,781 $ 7,185,017 $ 220,000 '24,807,204
29
An Agency of the State of Arizona
Supplemental Schedule II - Debt Service Coverage Ratio of the Hoover Uprating Fund
Year EnChdJum 30, 1993
(Unaudited)
Net Income $ 1,005,551
Add:Interest expense (1)
Depreciation (1)
Amortization of Hoover Uprating Project costs (1)
Interest income (2)
Accrued interest (3)
Total additions
6,260,961
61,744— 6,162,064
174,821
370,532
13,030,122
Deduct:Interest income (4)
Gain on sale of investments (5)
Deferred interest expense
Total deductions
Income Available for Debt Service
2,532,543
180,380
3,625)982
6,338)905
$ 7,696,768
Debt Service (6)
Debt Service Covera e Ratio
$ 6,439,851
1.20
(1) Interest expense, depreciation expense and amortization of Hoover Uprating Project costs are not
expenses under the Resolution.
(2) Interest income on revenues on deposit in the Debt Service Account and Operating Account.
(3) Added to Debt Service Account from refunding inJune 1993.
(4) Interest income on proceeds of the 1985 and 1993 Series Bonds other than such proceeds in Debt
Service Account and Operating Account is not income under the Resolution.
(5) Gain on sale of investments in the Debt Service Reserve Account is not income under the
Resolution.
(6) Net of capitalized interest.
30
An Agency of the State ofArizona
'IndependentAuditors'eport
The Arizona Power Authority Commission:
We have audited the accompanying combined financial statements ofArizona Power Authority (an
Agency of the State ofArizona) ("APA")and the separate financial statements of the APA General
Fund and the Hoover Uprating Fund ofAPA as ofJune 30, 1993 and 1992 and for'the years then
ended, listed in the Table of Contents Financial Section. These financial statements are the responsibil-
ity of the management ofAPA. Our responsibility is to express an opinion on these financial state-
ments 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 au'dits provide a reasonable basis forour opinion.
In our opinion, such financial statements present fairly, in all material respects, the combined financial
position of APA and the financial positions of the APA General Fund and the Hoover Uprating Fund,'f
APA atJune 30, 1993 and 1992 and the results of their operations and their cash ilows for'he 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. Supplemental Schedule I listed in the Table of Contents Financial Section, which is
also the responsibility of the management ofAPA, is p'resented for purposes of additional analysis and
is not a required part of the basic financial statements of APA. Such supplemental schedule has been
subjected to the auditing procedures applied in our audit of the basic financial statements and, in our
opinion, is fairly stated in all material respects when considered in relation to the basic financial state-
ments taken as a whole.
Supplemental Schedule II listed in the Table of Contents Financial Section is presented for purposes ofadditional analysis and is not a required part of the financial statements ofAPA. Such supplemental
schedule has not been subjected to the auditing proce'dures applied in the audit of the financial state-
ments, and, accordingly, we express no opinion on it.
July 31, 1993
Phoenix, Arizona
Credits
Godat/Jonczyk
Design
Pat LynnWriter
Jeff Smith, FotoSmith
Photography
Cnstomcr Projks and
pages 7 and 14
Hernandez Photography
Photography
Commission Portraits
and page 12
U.S. Bureau of Reclamation
Photography
pagcs4, 7, 11, 14and 15
5 peclal Thanks
Prokr International Corp.
Prokr Rccycling, Inc.
Coolidge Plant, page 10
32