forwards projected cash flow statements for pvngs ... · ect projects'tabilization and other...

CATEGORYREGULA Y INFORMATION DXSTRIBUTI SYSTEM (RIDS)

ACCESSION NBR:9806190087 DOC.DATE: 98/06/11 NOTARIZED: YES DOCKETFACIL:STN-50-528 Palo Verde Nuclear Station, Unit 1, Arizona Publi 05000528

STN-50-529 Palo Verde Nuclear Station, Unit 2, Arizona Publi 05000529STN-50-530 Palo Verde Nuclear Station, Unit 3, Arizona Publi 05000530

AUTH.NAME AUTHOR AFFILIATIONLEVINE,J.M. Arizona Public Service Co. (formerly Arizona Nuclea Power

RECIP.NAME RECIPIENT AFFILIATIONDocument Control Branch (Document Control

Derek)SUBJECT: Forwards projected cash flow statements for

PVNGS'articipants,per10CFR140.21.Cash flow statement for El PasoElectric Co should be withheld from public disclosure,per10CFR2.790(b)(4).

DISTRIBUT1ON CODE: M004D COPIES RECEIVED:LTR I ENCL l SIZE: ~ 4TITLE: 50.71(b) Annual Financial Report

NOTES:STANDARDIZED PLANTStandardized plant.Standardized plant.

RECIPIENTID CODE/NAME

PD4-2 LAFIELDS,M

COPIESLTTR ENCL

1. 11 1

RECIPIENTID CODE/NAME

PD4-2 PD

COPIESLTTR ENCL

1 1

0500052805000529005000530

R

INTERNAL: . - CgZXZ '

R/DRPM/PGEB

EXTERNAL: NRC PDR

1 1 NRR/DRPM1 1

LO Olk

1 1

D

E

N

NOTE TO ALL "RIDS" RECIPIENTS:PLEASE HELP US TO REDUCE WASTE. TO HAVE YOUR NAME OR ORGANIZATION REMOVED FROM DISTRIBUTION LISTSOR REDUCE THE NUMBER OF COPIES RECEIVED BY YOU OR YOUR ORGANIZATION, CONTACT THE DOCUMENT CONTROLDESK (DCD) ON EXTENSION 415-2083

TOTAL NUMBER OF COPXES REQUIRED: LTTR 7 ENCL 7

Palo Verde NuclearGenerating Station

James M. LevineSenior Vice PresidentNuclear

TEL (602)393-5300FAX (602)3934077

Mail Station 7602P.O. Box 52034Phoenix, AZ 65072-2034

U. S. Nuclear Regulatory CommissionATTN: Document Control DeskMail Station: P1-37Washington, DC 20555-0001

102-04133&ML/AKK/SAB/CJ JJune 11, 1998

Dear Sirs:

Subject: Palo Verde Nuclear Generating Station (PVNGS)Units 1, 2, and 3Docket Nos. STN 50-528/529/530Licensee Guarantee of Payment of Deferred Premium

Pursuant to the requirements of 10 CFR 140.21, Arizona Public Service Company(APS), for itself and on behalf of the PVNGS Participants, has enclosed projected cashflow statements for each participant in accordance with 10 CFR 140.21(e). Please notethat the projected cash flow statement for the El Paso Electric Company is considered aCONFIDENTIAL DOCUMENT, for which an affidavit is provided. The affidavit setsforth the basis on which the information may be withheld from public disclosure by theCommission and specifically addresses the considerations listed in 10 CFR2.790(b)(4). Accordingly, it is requested that the El Paso Electric Company projectedcash flow statement be withheld from public disclosure.

Should you have questions regarding this submittal, please contact Scott A. Bauer at(602) 393-5978.

Sincerely,

JML/AKK/SAB/CJ J

Enclosure

cc: E. W. Merschoff (w/o enclosure)K. E. Perkins (w/o enclosure)M. B. Fields (enclosure)J. H. Moorman (w/o enclosure)

9806190087 980611 UPDR ADOCK 05000528X PDRQ '

SOUTHERN CALIFORNIAPUBLIC POWER AUTHORITY

REPORT AND FINANCIALSTATEMENTSAND SUPPLE<MENTAL

FINANCIALINFORMATION

JUNE< 30, 1997 AND 1996

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400 South Hope Street Telephone 213 236 3000Los Angeles, CA 90071-2889

Price Paterhouse Lzz

REPORT OF INDEPENDENT ACCOUNTANTS

September 11, 1997

To the Board ofDirectors of theSouthern California Public Power Authority

In our opinion, the accompanying combined balance sheet and the related combinedstatements ofoperations and ofcash flows after the restatements described in Note 9,present fairly, in all material respects, the financial position of the Southern CaliforniaPublic Power Authority (Authority) at June 30, 1997 and 1996, and the results of itsoperations and its cash flows for the years then ended in conformity with generallyaccepted accounting principles. These financial statements are the responsibility of theAuthority's management; our responsibility is to express an opinion on these financialstatements based on our audits. We conducted our audits of these statements in accordancewith generally accepted auditing standards which require that we plan and perform theaudit to obtain reasonable assurance about whether the financial statements are free ofmaterial misstatement. An audit includes examining, on a test basis, evidence supportingthe amounts and disclosures in the financial statements, assessing the accounting principlesused and significant estimates made by management, and evaluating the overall financialstatement presentation. We believe that our audits provide a reasonable basis for theopinion expressed above.

In our opinion, the accompanying separate balance sheets and the related separatestatements of cash flows of the Authority's Palo Verde Project, Southern TransmissionSystem Project, Hoover Uprating Project, Mead-Phoenix Project, Mead-Adelanto Project,MultipleProject Fund and San Juan Project and the separate statements ofoperations ofthe Authority's Palo Verde Project, Southern Transmission System Project, HooverUprating Project, Mead-Phoenix Project, Mead-Adelanto Project and San Juan Project,after the restatements described in Note 9, present fairly, in all material respects, thefinancial position ofeach of the Projects at June 30, 1997 and 1996, and their cash flows,and the results ofoperations of the Authority's Palo Verde Project, Southern TransmissionSystem Project, Hoover Uprating Project, Mead-Phoenix Project, Mead-Adelanto Projectand San Juan Project for the years then ended in conformity with generally acceptedaccounting principles. These financial statements are the responsibility of the Authority'smanagement; our responsibility is to express an opinion on these financial statementsbased on our audits.

I

III

The Board ofDirectorsSeptember 11, 1997

Page 2

We conducted our audits of these statements in accordance with generally accepted'uditingstandards which require that we plan and perform the audit to obtain reasonable

assurance about whether the financial statements are free ofmaterial'misstatement. Anaudit includes examining, on a test basis, evidence supporting the amounts and disclosuresin the financial statements, assessing the accounting principles used and significantestimates made by management, and evaluating the overall financial statementpresentation. We believe that our audits provide a reasonable basis for the opinionexpressed above.

Our audits were conducted for the purpose of forming an opinion on the basic financialstatements taken as a whole. The supplemental financial information, as listed on theaccompanying index, is presented for purposes ofadditional analysis and is not a requiredpart of the basic financial statements. This information is the responsibility of theAuthority's management. Such information has been subjected to the auditing proceduresapplied in the audits of the basic financial statements and, in our opinion, is fairly stated inall material respects in relation to the basic financial statements taken as a whole.

~l

I

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SOUTHERN CALIFORNIAPUBLIC POPOVER AUTIIORITY

COMBINEDBALANCESHEET(In thousands)

Assets

PaloVerde

~Pro'ect

Southern

Transmission HooverSystem Uprating~Pro'ect ~Pro ect

June 30 1997

hicad- Mead-Phoenix Adehnto~Pro'ect ~Pro ect

hlultipleprojectFund

SanJuan

~Pro ect

projects'tabilization

and OtherFunds Total

Utilityplant:ProductionTransmissionGeneral

Less - Accumulated depreciation

Construction work in progressNuclear fuel, at amortized cost

$ 615,21414,153 $ 674,6062 656 IS 893

632,023 693,499

279.927 213 844

352,096 479,655

10,02613 514

S 51,1892 627

53,816

2 20251,614

$ 170,895335

171,230

5 $2$

165.402

S 183,208

7 865

191.073

43 112

147,961

210

$ 798,422910,843

32 376

1,741,641

544.913

1,196,728

10,23613.514

Net utilityplant 375 636 479 655 51.614 165 402 148 171 1.220478

Special funds:Available for sale at fair value (Note 2):

Decommissioning fundInvestmentsEscrosv account

Advance to lntennountain Power AgencyAdvances for capacity and energy, netInterest receivableCash and cash equivalents

43,943155,763

I>94627 396

138,550 S

15,48411,550

58332 442

4,906

24,5266

2 503

18,586 58,380 S 252,779 37,431 $ 4,442

690 2,057 9,288 134 72 761 4.229 73 7 503 10.463

43,943670,837'IS,48411,55024,52614,711

87.370

229 048 198 609 31 941 22.037 64.666 262 140 45.068 14.912 868 421

Accounts receivablehlaterials and suppliesCosts recoverable from (in excess of)

I'uture billings to participantsUnrealized loss (gain) on investments

in funds available for saleUnamortized debt expenses, less

accumulated amortization of$ 118,434

2,8787,511

230,497 241,326

733 (1,116)

1&2.491 197.675

(7,042)

3.058

4,163 14,544 33,706

9.368 26.639 2.805

2,122 5,386 (7,345)3,494

115

3,041

11,005

517,194

(190)

422 036

Lbbilitles

5 1.02$ .794 SI.1 16.149 $ 28031 3 89.3N $ 276.638 S 2S4 795 $ 233.247 8 15.027 S 3.011.9$ 5

Long-term debt $ 965,151 $ 1,065,877 $ 26,999 $ 86,570 S 268,456 S 243,466 $ 216,496 S 2,873,015

Deferred credits 112 3,073 3,185

Current liabilities:Long. term debt due within one year 28,570 21,360 515Accrued interest 22,660 24,394 40'3

Aeeca Icpaaa0leaadaccc edc pe cec 12413 4406 115

6Q75 56,7202,588 7,884 8/56 5,873 72,057

146 298 4.603 $ 15 027 37 008

Total current liabilities

Commitments and contingencies

63 643 50 160 1 032 2734 8182 8256 16751 15027 165785

5 10.8794 $ 1116149 $ 28031 3 89304 5276638 S 254795 $ 233247 5 15027 S 3041985

The accompanying notes are an integral part of these linancial statements.

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SOUTHERN CALIFORINIA PUBLIC POPOVER AUTHORITY

COMBINEDBALANCESHEET(In thousands)

June 30 1996

Assets

PaloVerde

~Pro ect

SouthernTransmission

System~94Hoover

Uprating~Pro'ect

Mead-Phoenix~Pro'ect

Mead- Multiple SanAdelanto Project Juan~Pro'ect Fund ~Pro ect Total

Utilityp!ant:ProductionTransmissionGeneral

Less - Accumulated depreciation

Construction iiork in progressNuclear fuel, at amortized cost

Nct utilityplant

$ 613,60814,1462 569

630,323250021

380,3029,503

13 225

403.030

$ 674,60618 893

693,499194 127

499,372

499.372

$ 171,068$ 48,307 164

I 971

50,278 171,232$46 I 255

49,432 169,9773,116

52.548 169.977

$ 183,309 $ 967,985737,223

8 613 32 046

191,922 1,737,25436 622 4$ 2 $71

155,300 1,254,3833,501 16,120

13 225

158.801 1.283.728

Special funds:Available for sale at fair value (Note 2):

Decommissioning fundInvestmentsEscrow account - Crossover series

Advance to Intermountain Power AgencyAdvances for capacity and energy, netInterest receivableCash and cash equivalents

33,474115,746

1,51267 &79

2111211

2,16990.324

8SSW

25,1836

I 997T6WI

102,842 S 9,628343,898

19,550

33,47421,591 62,562 S 250,888 34,1 70 597,427

343,89819,55025,183

841 2,285 9,220 67 16,100I 548 4 504 7.546 173.798

nial

N0'BT Tiirlir ~a Iilr445

Accounts receivablehiatcrials and suppliesCosts recovenble from (in excess of) future

billings to participantsUnrealized loss on investments in I'unds

avaihble for sale

Prepaid expensesUnamortized debt expenses, less

accumulated amortization of$ 139,796

738

9,240

217,926

456

191.712

2,687

215,490

2,865

163 079

19 1,750 4,741 (6,402) 945 4,4783,569 12,809

(7,526) 1,394 4,383 31,780 463,447

3 9 28 4 3,36526 66 92

3 307 9.888 28 123 3 090 399 199

Liabilities

Long-term debt

8 1.041.713 $ 1.442.276 8 32617 3 $9.595 $ 276669 5 "53706 S 239.972 $ 3,376,548

$ 981,155 $ I,045/92 $ 30,981 $ 86,417 $ 268,005 $ 242,786 $ 222,444 $ 2,877,080

Subordinate RefundingCrossover Series

Deferred credits347,388

2,664347,388

2,664

Current liabilities:Long-term debt due within one yearAccrued interestAccounts payable and accrued expenses

25,69024,53510333

10,845

38,436315

1,085 6,035 43,655489 2,588 7,884 8,256 5,994 ~ 88,182

62 590 780 5 499 17 579

Total current liabilities

Commitments and contingcncics

60.558 49596 1636 3178 8664 8256 17528 149416

S I 041 713 5 1.442.276 3 S2.617 $ 89 595 3 276669 $ 253 706 S 239972 3 3376 548

The accompanying notes are an integral part of these linancial statements.

-4-

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I


COMBINEDSTATEMENTOF OPERATIONS(In thousands)

Year Ended June 30 1997

PaloVerde

~Pro'ect

SouthernTransmission Hoover

System Uprating~Pro'ect ~Pro'ect

Mead-Phoenix~Pro ect

Mead-Adelanto

~Pro'ectSan Juan~Pro'ect Total

Operating revenues:Sales of electric energySales of transmission servicesReimbursement to participants

S 119,507S 85,054~8000

S 2,521S 3,282 S 8,194

S 58,017 S 180,04596,530

~8000

Total oPerating revenues 119 507 77 054 2 521 3 282 8 194 58 Q17 26g 575

Operating expenses:Amortization ofnuclear fuelOther operationsMaintenanceDepreciationDecommissioning

7,75521,411

5,818~ 18,371

11 593

9,9974,460

19,717

2,082 50773

1,356

875207

4,573

25737,181

9,1393 113

7,75535,12947,73953,15614 706

Total operating expenses 64 948 34 174 2 082 I 936 5 655 49 690 158 485

Operating income 54,559

Investment income I I 423

Income before debt expense 65,982

42,880

17 150

60,030

439 1,346 2,539 8,327 110,090

579 2,828 6,852 10,568 146,839

140 I 482 4 313 2 241 36 749

Debt expense

Costs recoverable from futurebillings to participants

'78 553 85 866 I 063 5 597 17 013 12 494 200 586

~$ 12 571 ~$ 25 836 ~$ 484 ~$ 2 769 ~$ 10 161 ~$ 1 926 ~$ 53 747

The accompanying notes are an integral part of these financial statements.

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COMBINED STATEMENTOF OPERATIONS(In thousands)

Year Ended June 30 1996

i Operating revenues:Sales ofelectric energySales of transmission services

Total operating revenues

PaloVerde

~Pro'ect

SouthernTransmission Hoover

System Uprating~Pro'ect ~Pro'ect

135 464 85 297 3 349

S 135,464 S 3,3498 85 297

Mead-Phoenix~Pro ect

Mead-Adelanto~Pro'ect

San Juan~Pro'ect Total

S 226 S 172$ 50,117 S 188,930

85 695

226 172 50 117 274 625

Operating expenses:Amortization ofnuclear fuelOther operationsMaintenanceDepreciationDecommissioning

7,94925,815

6,31718,42512 497

10,1925,236

20,329

2,200 21313

342

145

271,132

31435,760

9,0953 113

7,94938,87947,35349,32315 610

71 003 35 757 2 200 568 I 304 48 282 159 114

l Operating income (loss)

Investment income

64,461 49,540

10 886 28 993

1,149

874

(342) (1,132)

410 I 174

1,835 115,511

2 062 44 399

Income before debt expense

Debt expense

75,347 78,533 2,023 68 42 3,897 159,910

82 777 102 710 I 370 I 462 4 425 12 614 205 358

i Costs (recoverable from) in excessof future billings to participants ~$ 7 4~30 ~$ 24 177 S 653 (~$ 1 394 ~$ 4 383 ~$ 8 717 ~$ 45 448

The accompanying notes are an integral part of these financial statements.

-6-

SOUTIIERN CALIFORNIAPUBLIC POPOVER AUTIIORITY

COMBINEDSTATEMENTOF CASH FLOivs(Int ousan s)

June 30 1997Southern

Palo TransmissionVerde System

~Pro'ect ~Pro'ect

HooverUprating~Pro ect

Mead-Phoenix~pro'ect

Mead-Adelanto~Pro'ect

MultipleprojectFund

projects'an

StabilizationJuan and Other

~Pro'ect Funds Total

Cash flows from operating activities:Operating income $Adjustments to reconcile operating

income to nct cash providedby operating activities-

DepreciationDecommissioningAdvances for capacity and energy, net

. Amortization ol'nuclear I'uelReimbursement to participants

Changes in assets and liabilities:Accounts receivableMaterials and suppliesOther assetsAccounts payable and accrued

cxpcllscs

18,37111,593

7,755

19,717

1,710

1,356 4,573

(2,140)1,729

25

2,687 19 (372)

26

(646)

66

2.080 4.203 53 ~444) ~4$ 2)

54,559 $ 42,880 S 439 $ 1,346 S 2,539 8,327

9,1393,113

94575

896

$ 110,090

53,15614,706

1,7107,7558,000

4931,804

117

4.514

Net cash provided by operatingactivities4

Cash floia from noncapitalflnancing activities:

Advances from participantsPanicipant withdrawals

93 972 77 487 2.221 1.912 6.050 2D 703 202 345

$ 16,835 16.835~2.)49) ~2.149)

Nct cash provided by noncapitalfinancing activities

i h flows from capital and rehtednancing activities:Payments for construction of

facilitiesPayments of interest on long tenn debtProceeds from sale ofbondsTransfers from escrow account-Crossover seriesPayment for defeasance/redemptionofrcvcnue bonds

Repayment ofprincipal on long. termdebt

Decommissioning fundPayment for bond issue costs

(10.325)(51,127)153,034

(74.876)199,739

(1.784)

(25,690)(10.469)~3558

(10,845) (1.085)

343,898

(157.015) (561,565) (3,637)

(422)(4.924) (15.077) (S 16.512)

(1,623)(12,002)

(6,035)

14,686 14.686

(12,370)(176.302)352,773

343,898

(722.217)

(43,655)(10,469)~580$ )

Net cash used for capital andrelated financing activities ~)05150 ~)05899) ~6506) ~5346) ~15077) ~1651-") ~19660) ~74 150)

Cash flows I'rom investing activities:interest received on investmentsPurchases of investmentsProceeds from sale/maturity of

investments

10,989(111,714)

71420

17,741(161,198)

113.987

140(10,663)

15.314 3.953 13487 140 22 293 2.325 242 919

1,633 4.541 18,475 2,174 219 55,912(939) (9,276) (2,030) (25,553) (6,767) (328,140)

Net cash provided by (used for)investing activities

Net increase (decrease) in cashand cash equivalents

~29 305 ~29A70)

(40.483) (57.882) 506 1,213 (275) 73 (43) 10.463 (86,428)

4791 4647 8752 16585 ~IM6 ~4.22 ) ~29.309

LCash and cash equiva! ents at

beginning ofyear

Cash and cash equivalents at

67.879 90.324 1.997 1.548 4 504 7.546 173.798

$ 27 396 5 32A4- 5 "-.503 5 2.761 $ 4."29 5 73 $ 7.503 $ IDA63 5 87.370

The accompanying notes are an integral pan ofthese flnancial statements.

-7-

Cash flows from operating activities:Operating income (loss)Adjustments to reconcile operating income

(loss) to net cash provided byoperating activities-

DepreciationDecommissioningAmortization ofnuclear fuelAdvances for capacity and energy, netIVritcwffofconstruction vvork in progress

costsChanges in assets and liabilities:

Accounts receivableMaterials and suppliesOther assetsAccounts payable and accrued expenses

SOUTHERN CALIFORNIAPUBLIC POPOVER AUTHORITY

COMBINEDSTATEMENT OF CASH FLOtVS(In thousands)

Year Ended June 30 1996Palo Southern

Vcrdc Transmission~PI ~8771 P 4 cl

HooverUprating~Pro ect

Mead-Phocnix~Pro ect

Mead- MuluplcAdelanto Project~Pro'ect Fund

Juan~pro ect Total

18,425 20,32912,4977,949

1,313

1,784

342 1,132 9,0953,113

49@2315,6107,9491,784

1,313

174 (218)378

55~6437 ~1943

(19) 213

1,977556

(72)

3,467745

946 1,024110 48856 5,555

I 482 ~5604

S 64,461 $ 49,540 $ 1,149 ($ 342) (S 1,132) $ 1,835 S 115,511

Net cash provided by operating activities 97 502 69021 2.907 2.746 4.140 16.637 192 953

Cash flows from noncapital financing activities

i sh flows from capital and reiated financingtivities:

Payments for construction offacilitiesPayments of interest on long-term debtProceeds from sale ofbonds

I Payment for defeasance ofrcvcnue bondsDecommissioning fundRepayment ofprincipal on long.term debtPayment for bond issue costs

(10,892)(64,499)229,483

(233,632)(8,971)

(23,855)~4832

(88,370)

(14,325)

(1,979)

(610)

(13,208)(1,295)

(15,652) (1,938)(3,944) (S 16,512) (11,988)

(41,690)(188,587)229,483

(233,632)(8,971)

(38,790)~4 832

Net cash used for capital and related financingactivities ~117 198 ~102 695 ~2.589 ~14 503 ~19.596 ~16 512 ~13 926 ~287 019

Cash flows from investing activities:Interest received on investmentsPurchases of investmentsProceeds from sale/maturity of investments

10,597 28,631 894 815(154,685) (154,904) (22,665) (3,264)

182.309 195.593 20.705 14.474

1,865(9,184)23.000

18,380 2,064 63346(1,868) (14370) (360,940)

8 867 444.948

Net cash provided by (used for) investingactivitiesl Net increase (decrease) in cash and cashcquivalcnts

Cash and cash equivalents at beginning ofyear

Cash and cash equivalents at end ofyear

38 221 69320 ~1066 12.025 15.681 16 512 ~3439 147.254

18,525 35,646 (748) 268 225

49.354 54 678 2 745 I 280 4 279

(728) 53,188

8274 120610

$ 67.879 $ 90.324 $ 1.997 $ 1.548 $ 4.504 $ - $ 7,546 $ 173.798

Thc accompanying notes are an integral part ofthese financial statements.

-8-

gl

0>

le SOUTHERN CALIFORNIAPUBLIC POWER AUTHORITY

NOTES TO FINANCIALSTATEMENTS

NOTE I - ORGANIZATIONAND PURPOSE:

Southern California Public Power Authority (Authority), a public entity organized under the laws ofthe State ofCalifornia, was formed by a Joint Powers Agreement dated as ofNovember 1, 1980pursuant to the Joint Exercise ofPowers Act of the State ofCalifornia. The Authority's participantmembership consists of ten Southern California cities and one public district of the State ofCalifornia. The Authority was formed for the purpose ofplanning, financing, developing, acquiring,constructing, operating and maintaining projects for the generation and transmission ofelectricenergy for sale to its participants. The Joint Powers Agreement has a term of fiftyyears.

The members have the followingparticipation percentages in the Authority's interest in the projectsat June 30, 1997 and 1996:

~Pattici ants

SouthernPalo Transmission Hoover

S IIMead-

PhoenixMead- San

Adelanto Juan

i City ofLos AngelesCity ofAnaheimCity ofRiversideImperial Irrigation DistrictCity ofVernonCity ofAzusaCity ofBanningCity ofColtonCity ofBurbankCity ofGlendaleCity ofPasadena

6.54.91.01.01.04.4444.4

4.52.35.9

67.0% 59 5%17.6

5.4 10.251.0%

4.22.13.2

16.0

1.01.01.0

15.414.813.8

14.79.8

14.7

2.21.3

2.611.51 1.1 9.88.6

24.8% 35.7%42 6% 24.2 13.531.9 4.0 13.5

100 0% 100 0% 100 0% 100 0% 100 0% 100 0%

Mead-Phoenix participation reflects three ownership components (see below).

The members participate in the Projects'tabilization Fund by making deposits to the fund at theirdiscretion.

The members do not currently participate in the Multiple Project Fund as it was established toprovide funding for unspecified future projects.

-9-

~

yl

i

lg NOTE 1: (Continued)

Palo Verde Pro'ect

The Authority, pursuant to an assignment agreement dated as ofAugust 14, 1981 with the Salt RiverProject (Salt River), purchased a 5.91% interest in the Palo Verde Nuclear Generating Station(PVNGS), a 3,810 megawatt nuclear-fueled generating station near Phoenix, Arizona, and a 6.55%share of the right to use certain portions of the Arizona Nuclear Power Project Valley TransmissionSystem (collectively, the Palo Verde Project).

As ofJuly 1, 1981, ten participants had entered into power sales contracts with the Authority topurchase the Authority's share ofPVNGS capacity and energy. Units 1, 2 and 3 of the Palo VerdeProject began commercial operations in January 1986, September 1986, and January 1988,respectively.

Southern Transmission S stem Pro'ect

The Authority, pursuant to an agreement dated as ofMay 1, 1983 with the Intermountain PowerAgency (IPA), has made payments-in-aid ofconstruction to IPA to defray all the costs ofacquisitionand construction of the Southern Transmission System Project (STS), which provides for thetransmission ofenergy from the Intermountain Generating Station in Utah to Southern California.The Authority entered into an agreement also dated as ofMay 1, 1983 with six of its participantspursuant to which each member assigned its entitlement to capacity ofSTS to the Authority in returnfor the Authority's agreement to make payments-in-aid ofconstruction to IPA. STS commencedcommercial operations in July 1986. The Department ofWater and Power of the City ofLosAngeles (LADWP), a member of the Authority, serves as project manager and operating agent of theIntermountain Power Project (IPP).

Hoover U ratin Pro'ect

The Authority and six participants entered into an agreement dated as ofMarch 1, 1986, pursuant towhich each participant assigned its entitlement to capacity and associated firm energy to theAuthority in return for the Authority's agreement to make advance payments to the United StatesBureau ofReclamation (USBR) on behalf ofsuch participants. The USBR has declared that theProject is substantially complete. The Authority has an 18.68% interest in the contingent capacity ofthe Hoover Uprating Project (HU). Allseventeen "uprated" generators of the HU have commencedcommercial operations.

Mead-Phoenix Pro'ect

I

The Authority entered into an agreement dated as ofDecember 17, 1991 to acquire an interest in theMead-Phoenix Project (MP), a transmission line extending between the Westwing substation inArizona and the Marketplace substation in Nevada. The agreement provides the Authority with an18.31% interest in the Westwing-Mead project component, a 17.76% interest in the Mead Substationproject component and a 22.41% interest in the Mead-Marketplace project component. The Authorityhas entered into transmission service contracts for the entire capability of its interest with ninemembers of the Authority on a "take or pay" basis. In addition, the Authority has administrativeresponsibility for accounting for the separate ownership interest in the project by Western Area

-10-

Ig NOTE 1: (Continued)

Power Administration (WAPA), who is providing separate funding ($73,011,000 and $72,874,000 atJune 30, 1997 and 1996, respectively) for its interest. Commercial operations ofMP commenced inApril 1996. Funding was provided by a transfer of funds from the Multiple Project Fund (Note 4).

Mead-Adelanto Pro'ect

The Authority entered into an agreement dated as ofDecember 17, 1991 to acquire a 67.92% interestin the Mead-Adelanto Project (MA),a transmission line extending between the Adelanto substationin Southern California and the Marketplace substation in Nevada. The Authority has entered intotransmission service contracts for the entire capability of its interest with nine members of theAuthority on a "take or pay" basis. In addition, the Authority has administrative responsibility foraccounting for the separate ownership interest in the project by WAPA, who is providing separatefunding ($ 17,088,000 at June 30, 1997 and 1996) for its interest. Funding was provided by a transferoffunds from the Multiple Project Fund (Note 4). Commercial operations commenced in April1996. LADWP serves as both construction manager and operations manager.

Multi le Pro'ect Fund

>

During fiscal year 1990, the Authority issued Multiple Project Revenue Bonds for net proceeds ofapproximately $ 600 million to provide funds to finance costs ofconstruction and acquisition ofownership interests or capacity rights in one or more then unspecified projects for the generation ortransmission ofelectric energy.

In August 1992, the Authority's Board ofDirectors approved a resolution authorizing the use ofcertain proceeds ofMultiple Project Revenue Bonds to finance the Authority's ownership interests inthe Mead-Phoenix and Mead-Adelanto projects. Transfers made from the Multiple Project Fund are

sufficient to provide for the Authority's share of the estimated costs ofacquisition and constructionof these two projects, including reimbursement ofplanning, development and other related costs.

San Juan Pro ect

Effective July 1, 1993, the Authority purchased a 41.80% interest in Unit 3, a 488 megawatt unit and

related common facilities, of the San Juan Generating Station (SJGS) from Century PowerCorporation. Unit 3 is one unit ofa four-unit coal-fired power generating station in New Mexico.The Authority allocated the $ 193 millionpurchase price to the estimated fair value of the utilityplant ($ 190 million)and to materials and supplies ($3 million). The purchase has been financedthrough the issuance ofapproximately $237 million (par value) ofSan Juan Project Revenue Bonds.The Authority has entered into power sales contracts for the entire capability of its interest with five

members of the Authority on a "take or pay" basis.

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yl

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Iy NOTE 1: (Continued)

Pro'ects'tabilization Fund

In fiscal 1997 the Authority authorized the creation ofa Projects'tabilization Fund. Deposits maybe made into the fund from budget under-runs, after authorization of individual participants, and bydirect contributions from the participants. Participants have discretion over the use of their depositsto pay costs and expenses ofAuthority related projects. This fund is not a project-related fund,therefore, it is not governed by any project Indenture ofTrust.

NOTE 2 - SUMMARYOF SIGNIFICANTACCOUNTINGPOLICIES:

The financial statements of the Authority are presented in conformity with generally acceptedaccounting principles, and substantially in conformity with accounting principles prescribed by theFederal Energy Regulatory Commission and the California Public Utilities Commission. TheAuthority is not subject to regulation by either of these regulatory bodies.

i

The Authority complies with all applicable pronouncements of the Governmental AccountingStandards Board (GASB). In accordance with GASB Statement No. 20, "Accounting and FinancialReporting for Proprietary Funds and Other Governmental Entities That Use Proprietary FundAccounting," the Authority also complies with authoritative pronouncements applicable tonongovernmental entities (i.e., Financial Accounting Standards Board statements) which do notconflict with GASB pronouncements. =

The financial statements represent the Authority's share in each jointly-owned project. TheAuthority's share ofdirect expenses ofjointly-owned projects are included in the correspondingoperating expense of the statement ofoperations. Each owner of the jointly-owned projects isrequired to provide their own financing.

~Utilit Plant

The Authority's share ofall expenditures, including general administrative and other overheadexpenses, payments-in-aid ofconstruction, interest net ofrelated investment income, deferred costamortization and the fair value oftest power generated and delivered to the participants arecapitalized as utilityplant construction work in progress until a facility commences commercialoperation.

The Authority's share ofconstruction and betterment costs associated with PVNGS is included as

utilityplant. Depreciation expense is computed using the straight-line method based on theestimated service life ofthirty-fiveyears. Nuclear fuel is amortized and charged to expense on thebasis ofactual thermal energy produced relative to total thermal energy expected to be produced overthe life of the fuel. Under the provisions of the Nuclear Waste Policy Act of 1982, the Authority ischarged one millper kilowatt-hour, by the federal government, on its share ofelectricity produced byPVNGS, and such funds willeventually be utilized by the federal government to provide forPVNGS'uclear waste disposal. The Authority records this charge as a current year expense.

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The Authority's share ofconstruction and betterment costs associated with STS, MP, MAand S JGSare included as utilityplant. Depreciation expense is computed using the straight-line method basedon the estimated service lives, principally thirty-fiveyears for STS, MAand MP and twenty-oneyears for SJGS.

Interest costs incurred by the MP and MAprojects through the date commercial operationscommenced (April 1996) are capitalized as utilityplant. Interest costs capitalized in fiscal 1996were $ 11,827,000 for the MAproject and $3,881,000 for the MP project.

Advances for Ca acit and Ener

Advance payments to USBR for the uprating of the 17 generators at the Hoover Power Plant areincluded in advances for capacity and energy. These advances are being reduced by the principalportion of the credits on billings to the Authority for energy and capacity.

Nuclear Decommissionin

iDecommissioning ofPVNGS is projected to commence subsequent to the year 2022. Based upon anupdated study performed by an independent engineering firm, the Authority's share of the estimateddecommissioning costs is $ 85.5 million in 1995 dollars ($390 million in 2022 dollars assuming a 6%estimated annual inflation rate). The Authority is providing for its share of the estimated futuredecommissioning costs over the remaining life of the nuclear power plant (25 to 27 years) throughannual charges to expense which amounted to $ 11.6 million and $ 12.5 million in fiscal 1997 and1996, respectively. The decommissioning liability is included as a component ofaccumulateddepreciation and was $ 99.7 millionand $ 88.1 million at June 30, 1997 and 1996, respectively.

A Decommissioning Fund has been established and partially funded at $43.9 millionatJune 30, 1997. The Decommissioning Fund earned interest income of$2,690,000 and $ 1,341,000during fiscal 1997 and 1996, respectively.

Demolition and Site Reclamation

Demolition and site reclamation ofSJGS, which involves restoring the site to a "green" conditionwhich existed prior to SJGS construction, is projected to commence subsequent to the year 2014.Based upon a study performed by an independent engineering firm, the Authority's share of theestimated demolition and site reclamation costs is $ 18.7 million in 1992 dollars ($65.3 million in2014 dollars using a 6% estimated annual inflation rate). The Authority is providing for its share ofthe estimated future demolition costs over the remaining life of the power plant (18 years) throughannual charges to expense of$3.1 million. The demolition liabilityis included as a component ofaccumulated depreciation and was $ 12.5 millionand $9.3 million at June 30, 1997 and 1996,respectively.

As ofJune 30, 1997, the Authority has not billed participants for the cost ofdemolition nor has itestablished a demolition fund.

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NOTE 2: (Continued)

Unamortized Debt Ex enses

Unamortized debt issue costs, including the loss on refundings, are being amortized over the shorterofthe terms of the respective issues or the remaining terms of the bonds refunded, and are reportednet ofaccumulated amortization. Total deferred loss on refundings, net ofaccumulatedamortization, was $395,095,000 and $378,070,000 at June 30, 1997 and 1996, respectively.

Investments

Investments include United States Government and governmental agency securities and repurchaseagreements which are collateralized by such securities. Additionally, the Mead-Phoenix Project, theMead-Adelanto Project and the Multiple Project Fund's investments are comprised ofan investmentagreement with a financial institution earning a guaranteed rate of return. The SouthernTransmission System Project has debt service reserve funds associated with the 1991 and 1992Subordinate Refunding Series Bonds invested with a financial institution under a specific investmentagreement allowed under the Bond Indenture earning a guaranteed rate ofreturn.

iInvestments available for sale are carried at aggregate fair value and changes in unrealized net gainsor losses are recorded separately. Investments are reduced to estimated net realizable value whennecessary for declines in value considered to be other than temporary. Gains and losses realized onthe sale of investments are generally determined using the specific identification method. Asdiscussed in Note 3, all of the investments are restricted as to their use.

Cash and Cash E uivalents

Cash and cash equivalents include cash and all investments with original maturities less than 90days.

Revenues

Revenues consist ofbillings to participants for the sales ofelectric energy and of transmissionservice in accordance with the participation agreements. Generally, revenues are fixed at a level torecover all operating and debt service costs over the commercial life of the property (see Note 6).

Debt Ex ense

Debt expense includes interest on debt and the amortization ofbond discounts, debt issuanceexpense and loss on refunding costs.

- 14-

Arbitra e Rebate

A rebate payable to the Internal Revenue Service (IRS) results from the investment of the proceedsfrom the MultipleProject Revenue Bond offering in a taxable financial instrument that yields ahigher rate of interest income than the cost of the associated funds. The excess of interest incomeover costs is payable to the IRS within five years of the date of the bond offering and eachconsecutive five years thereafter. The Authority made a payment of$ 3.8 millionat the end of theinitial rebate period during fiscal year 1995. The next rebate payment to the IRS is due in fiscal year2000. As ofJune 30, 1997 and 1996, the Authority had no liabilityrelating to Arbitrage Rebate.

Reclassifications

Certain reclassifications have been made in the fiscal year 1996 financial statements to conform tothe fiscal year 1997 presentation.

Use ofEstimates

The preparation of financial statements in conformity with generally accepted accounting principlesrequires management to make estimates and assumptions that affect the reported amounts ofassetsand liabilities and disclosure ofcontingent assets and liabilities at the date of the financial statementsand the reported amounts of revenues and expenses during the reporting period. Actual results coulddiffer from those estimates.

NOTE 3 - SPECIAL FUNDS:

The Bond Indentures for the six projects and the Multiple Project Fund require the following specialfunds to be established to account for the Authority's receipts and disbursements. The moneys andinvestments held in these funds are restricted in use to the purposes stipulated in the BondIndentures. A summary of these funds follows:

Fund

Construction

Puruose

To disburse funds for the acquisition and construction of theproject.

Debt Service

Revenue

Operating

t Reserve and Contingency

)

To pay interest and principal related to the Revenue Bonds.

To initiallyreceive all revenues and disburse them to other funds.

To pay operating expenses.

To pay capital improvements and make up deficiencies in otherfunds.

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Fund Puruose

General Reserve

Advance Payments

To make up any deficiencies in other funds.

To disburse funds for the cost ofacquisition of capacity.

Proceeds Account To initiallyreceive the proceeds of the sale of the MultipleProjectRevenue Bonds.

Earnings Account To receive investment earnings on the Multiple Project RevenueBonds.

Revolving Fund

Decommissioning Fund

To pay the Authority's operating expenses.

To accumulate funds related to the future decommissioning ofPVNGS.

Issue Fund

i Escrow account - SubordinateRefunding Crossover Series

To initiallyreceive pledged revenues associated with the applicablesubordinated refunding series'ndenture ofTrust and pay the relatedinterest and principal.

To initiallyreceive pledged revenues associated withComponent 3 of the 1993 Subordinate Refunding Crossover

Series'ndentureofTrust and pay the related interest and principal.

Acquisition Account To disburse funds for the acquisition and construction of the Mead-Phoenix, Mead-Adelanto and San Juan projects.

Surplus Fund To make up any deficiencies in other funds of the Mead-Adelanto andMead-Phoenix projects.

Allof the funds listed above, except for the Revolving Fund, are held by the respective trustees.

-16-

Palo Verde Pro'ect

The balances of the funds required by the Bond Indenture are as follov s, in thousands:

June 301997

AmortizedCost

FairValue

1996Amortized

CostFair

ValueDebt Service Fund-

Debt Service AccountDebt Service Reserve Account

Revenue FundOperating FundReserve and Contingency FundDecommissioning Trust FundIssue FundRevolving Fund

$ 42,37767,317

1

25,81224,91144,39924,912

52

$ 41,69567,332

1

25,83024,98244,41824,738

52

$ 51,38674,420

5

20,13025,92434,13113,026

45

$ 51,39474,160

5

20,13426,10733,74013,026

45

Contractual maturities:Within one yearAfter one year through five yearsAfter five years through ten yearsAfter ten years

$229 781 $229.048 $219 067 $ 218.611

$ 80,473 $ 81,458136,250 134,524

3,238 3,2469 820 9 820

$ 229.781 $ 229 048

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NOTE 3: (Continued)


The balances in the special funds required by the Bond Indenture are as follows, in thousands:

June 301997

AmortizedCost

FairValue

1996Amortized

CostFair

Value

I

Construction fund - Initial Facilities AccountDebt Service Fund-


Operating FundGeneral Reserve FundIssue FundEscrow Account - Subordinate Refunding

Crossover SeriesRevolving Fund

Contractual maturities:Within one yearAfter one year through five yearsAfter five years through ten yearsAfter ten years

2,58721,339

6,545'1,772128,000

2,58721,379

6,54511,772

129,031

21,92186,220

6,0154,194

77,024

21,89686,189

6,0074,194

76,794

15,439 15,484 346,474 343,90315 15 15 15

5185 943 8187 059 8542 098 $ 539 233

$ 62,972 $ 63,41228,819 28,40243,031 44,12351 121 51.122

$ 185.943 $ 187.059

$ 246 $ 246 $ 235 $ 235

I In addition, at June 30, 1997 and 1996, the Authority had non-interest bearing advances outstandingto IPA of$ 11,550,000 and $ 19,550,000, respectively.

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NOTE 3: (Continued)

l Hoover U ratin Pro'ect


June 301997

AmortizedCost

FairValue

1996Amortized Fair

Cost Value

Operating-Working Capital FundDebt Service Fund-


General Reserve FundRevolving Fund

Contractual maturities:Within one year

7533,1261,871

15

7533,0811,845

15

2,3903,1225,318

2,3903,1215,316

$ 7A89 $ 7 415 $ 11.634 $ 11.631

$ 7.489 $ 7415

$ 1,724 $ 1,721 $ 804 $ 804

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$ 7 489 $ 7 415


June 30.

1997Amortized

CostFair

Value

1996Amortized

CostFair

Value

Acquisition AccountDebt Service Fund-


Revenue FundOperating FundSurplus FundRevolving Fund

$ 12,830 $ 12,830 $ 12,571 $ 12,571

2,9046,132

7988

4

2,9046,132

7988

4

4,9766,133

64239

4,9676,133

64239

In addition, at June 30, 1997 and 1996, the Authority had advances to USBR of$24,526,000 and$25,183,000, respectively.


$ 22 037 $ 22 037 $ 23 989 $ 23 980

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NOTE 3: (Continued)

Mead-Phoenix Pro'ectJune 30 1997

Amortized FairCost Value

Contractual maturities:Within one yearAAer one year through five yearsAfter ten years

$ 2,763 $ 3,451

19 274 18 586

$ 22 037 $ 22 037



1997June 30

1996Amortized

CostFair

ValueAmortized

CostFair

Value

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Acquisition AccountDebt Service Fund-


Revenue FundOperating FundSurplus FundRevolving Fund

Contractual maturities:Within one yearAfter one year through five yearsAfter ten years

S,32216,865

884

8,32216,865

884

15,19416,865

71

264

15,16616,865

71

264

6

$ 64.665 $ 64.666 $ 69.379 $ 69.351

$ 4,230 $ 6,2873,349 3,349

57.086 55 030

$ 64.665 $ 64.666

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$ 39,386 $ 39,387 $ 36,979 $ 36,979

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NOTE 3: (Continued)


r


June 301997

Amortized FairCost Value

1996Amortized

CostFair

Value

Proceeds AccountEarnings Account

$256,903 $256,9035.237 5.237

$256,830 $ 256,8303.278 3.278

Contractual maturities:After ten years

$262 140 $262 140 $260 108 $ 260.108

$ 262 140 $262.140

San Juan Pro'ect


< 1997June 30.

1996Amortized Fair

Cost ValueAmortized

CostFair

Value

Operating ReserveOperating Revenue FundAcquisition AccountDebt Service Fund-


Reserve and ContingencyRevolving

$ 1,932 $ 1,9327 7

553 553

9,088 9,08818,026 18,02615,455 15,452

10 10

$ 1 23S $ 1 23S7 7

527 527

8,607 8,59718,031 18,03113,377 13,383

r

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Contractual maturities:Within one yearAAer one year through five yearsAfter ten years

$ 45.071 $ 45 068 $ 41.787 $ 41.783

$ 12,084 $ 12,18414,961 14,85918 026 18 026

$ 45 071 $ 45 068

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Pro'ects'tabilization Fund

At June 30, 1997, the Projects'tabilization Fund investments had amortized cost and fair value of$ 14,986,000 and $ 14,871,000, respectively. Allcontractual maturities are within one year.

Pro'ect Investment Sales

There were no proceeds from sales of investments during fiscal 1997 or 1996.

NOTE 4 - LONG-TERM DEBT:

Reference is made below to the Combined Schedule ofLong-term Debt at June 30, 1997 for detailsrelated to all of the Authority's outstanding bonds.

Palo Verde Pro'ect

>

To finance the purchase and construction of the Authority's share of the Palo Verde Project, theAuthority issued Power Project Revenue Bonds pursuant to the Authority's Indenture ofTrust datedas ofJuly 1, 1981 (Senior Indenture), as amended and supplemented. The Authority also has issuedand has outstanding Power Project Subordinate Refunding Series Bonds issued under an Indenture ofTrust dated as ofJanuary 1, 1993 (Subordinate Indenture). The Subordinate Refunding Bonds wereissued to advance refund certain bonds previously issued under the Senior Indenture.

The bond indentures provide that the Revenue Bonds and Subordinate Refunding Bonds shall bespecial, limited obligations of the Authority payable solely from and secured solely by (1) proceedsfrom the sale ofbonds, (2) all revenues, incomes, rents and receipts attributable to the Palo VerdeProject (see Note 6) and interest on all moneys or securities (other than in the Construction Fund)held pursuant to the Bond Indenture and (3) all funds established by the Bond Indenture.

At the option of the Authority, all outstanding Power Project Revenue Bonds and SubordinateRefunding Term Bonds are subject to redemption prior to maturity, except for the 1996 SubordinateRefunding Series A and portions of the 1989A, 1992A, 1992B and 1993A Series bonds which arenot redeemable.

The Bond Indenture requires mandatory sinking fund installments to be made beginning in fiscalyear 2003 (1986 Series A Bonds and 1987 Series A Bonds), 2005 (1989 Series A Bonds), 2010(1993 Series A Bonds), and 2008 (1996 Subordinate Refunding Series B). Scheduled principalmaturities for the Palo Verde Project during the five fiscal years following June 30, 1997 are$28,570,000 in 1998, $30,195,000 in 1999, $32,040,000 in 2000, $33,815,000 in 2001 and$34,785,000 in 2002. The average interest rate on outstanding debt during fiscal year 1997 and 1996was 5.2% and 5.8%, respectively.

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NOTE 4: (Continued)


To finance payments-in-aid ofconstruction to IPA for construction of the STS, the Authority issuedTransmission Project Revenue Bonds pursuant to the Authority's Indenture ofTrust dated as ofMay 1, 1983 (Senior Indenture), as amended and supplemented. The Authority also has issued andhas outstanding Transmission Project Revenue Bonds 1991 and 1992 Subordinate Refunding Seriesissued under Indentures ofTrust dated as ofMarch 1, 1991 and June 1, 1992, respectively. The 1991and 1992 subordinated bonds were issued to advance refund certain bonds previously issued underthe Senior Indenture.

The bond indentures provide that the Revenue Bonds and the Subordinate Refunding Series Bondsshall be special, limited obligations of the Authority payable solely from and secured solely by (1)proceeds from the sale ofbonds, (2) all revenues, incomes, rents and receipts attributable to STS (seeNote 6) and interest on all moneys or securities (other than in the Construction Fund) held pursuantto the Bond Indenture and (3) all funds established by the Bond Indenture.

At the option of the Authority, all outstanding Transmission Project Revenue and Refunding Bondsare subject to redemption prior to maturity, except for the 1996 Subordinate Refunding Series Awhich is not redeemable.

The Bond Indenture requires mandatory sinking fund installments to be made beginning in fiscalyear 2019 (for the 1996 Series B Bonds). Scheduled principal maturities for STS during the fivefiscal years following June 30, 1997 are $21,360,000 in 1998, $21,970,000 in 1999, $23,110,000 in2000, $24,455,000 in 2001 and $26,040,000 in 2002. The average interest rate on outstanding debtduring fiscal year 1997 and 1996 was 5.1% and 5.6%, respectively.


To finance advance payments to USBR for application to the costs of the Hoover Uprating Project,the Authority issued Hydroelectric Power Project Revenue Bonds pursuant to the Authority'sIndenture ofTrust dated as ofMarch 1, 1986 (Bond Indenture).

The Bond Indenture provides that the Revenue Bonds shall, be special, limited obligations of theAuthority payable solely from and secured solely by (1) the proceeds from the sale of the bonds, (2)all revenues from sales ofenergy to participants (see Note 6), (3) interest or other receipts derivedfrom any moneys or securities held pursuant to the Bond Indenture and (4) all funds established bythe Bond Indenture (except for the Interim Advance Payments Account in the Advance PaymentsFund).

At the option of the Authority, all outstanding Hydroelectric Power Project Revenue Bonds aresubject to redemption prior to maturity.

)I

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NOTE 4: (Continued)

The Bond Indenture requires mandatory sinking fund installments to be made beginning in fiscalyear 2007 for the 1991 Series A Bonds maturing on October 1, 2010 and fiscal year 2011 for the1991 Series A Bonds maturing on October 1, 2017. Scheduled principal maturities for the HooverUprating Project during the five fiscal years following June 30, 1997 are $515,000 in 1998, $550,000in 1999, $580,000 in 2000, $615,000 in 2001 and $650,000 in 2002. The average interest rate onoutstanding debt during fiscal year 1997 and 1996 was 6.2% and 6.8%, respectively.

During fiscal 1997, the Authority redeemed $3,565,000 ofoutstanding Hydroelectric Power ProjectRevenue Bonds with funds in the Debt Service Fund.


To finance costs ofconstruction and acquisition ofownership interests or capacity rights in one ormore projects expected to be undertaken within five years after issuance, the Authority issuedMultiple Project Revenue Bonds pursuant to the Authority's Indenture ofTrust dated as ofAugust 1,1989 (Bond Indenture), as amended and supplemented.

iThe Bond Indenture provides that the Revenue Bonds shall be special, limited obligations of theAuthority payable solely from, and secured solely by, (1) proceeds from the sale ofbonds, (2) withrespect to each authorized project, the revenues ofsuch authorized project, and (3) all fundsestablished by the Bond Indenture.

In October 1992, $ 103,640,000 and $285,010,000 of the Multiple Project Revenue Bonds weretransferred to the Mead-Phoenix Project and the Mead-Adelanto Project, respectively, to finance theestimated costs ofacquisition and construction of the projects.

A total of$ 153,500,000 of the outstanding Multiple Project Revenue Bonds are not subject toredemption prior to maturity. At the option of the Authority, the balance of the outstanding bondsare subject to redemption prior to maturity.

The Bond Indenture requires mandatory sinking fund installments to be made beginning in fiscalyear 2006 for the 1989 Series Bonds. The first scheduled principal maturities for the MultipleProject Revenue Bonds for fiscal years following June 30, 1997 are $8,645,000 in 2000, $9,286,000in 2001 and $9,926,000 in 2002. The average interest rate on outstanding debt during fiscal year1997 and 1996 was 6.4%.


To finance the Authority's ownership interest in the estimated cost of the project, $ 103,640,000 ofthe Multiple Project Revenue Bonds were transferred to the Mead-Phoenix Project in October 1992.In March 1994, the Authority issued and has outstanding $51,835,000 ofMead-Phoenix RevenueBonds under an Indenture ofTrust dated as ofJanuary 1, 1994 (Bond Indenture). The proceeds fromthe Revenue Bonds, together with drawdowns from the Debt Service Fund and Project

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NOTE 4: (Continued)

Acquisition Fund, were used to advance refund $64,840,000 of the Multiple Project Revenue Bondspreviously transferred to the Mead-Phoenix Project.

The Bond Indenture provides that the Revenue Bonds shall be special, limited obligations of theAuthority payable solely from, and secured solely by, (1) proceeds from the sale ofbonds, (2) allrevenues, incomes, rents and receipts attributable to Mead-Phoenix (see Note 6) and interest on allmoneys or securities and (3) all funds established by the Bond Indenture.

At the option of the Authority, all outstanding Mead-Phoenix Revenue Bonds are subject toredemption prior to maturity.

The Bond Indenture requires mandatory sinking fund installments to be made beginning in fiscalyear 2018 for the 1994 Series Bonds. The first scheduled principal maturities for the Mead-PhoenixRevenue Bonds for fiscal years followingJune 30, 1997 are $ 1,295,000 in 2000, $ 1,390,000 in 2001and $ 1,486,000 in 2002. The average interest rate on outstanding debt during fiscal year 1997 and1996 was 6.3%.


To finance the Authority's ownership interest in the estimated cost of the project, $285,010,000 ofthe Multiple Project Revenue Bonds were transferred to the Mead-Adelanto Project in October 1992.In March 1994, the Authority issued and has outstanding $ 173,955,000 ofMead-Adelanto Revenue

Bonds under an Indenture ofTrust dated as ofJanuary 1, 1994 (Bond Indenture). The proceeds ofthe Revenue Bonds, together with drawdoivns from the Debt Service Fund and Project AcquisitionFund, were used to advance refund $ 178,310,000 of the Multiple Project Revenue Bonds previouslytransferred to the Mead-Adelanto Project.

The Bond Indenture provides that the Revenue Bonds shall be special, limited obligations of theAuthority payable solely from, and secured solely by, 1) proceeds from the sale ofbonds, (2) allrevenues, incomes, rents and receipts attributable to Mead-Adelanto (see Note 6) and interest on allmoneys or securities and (3) all funds established by the Bond Indenture.

At the option of the Authority, all outstanding Mead-Adelanto Revenue Bonds are subject toredemption prior to maturity.

The Bond Indenture requires mandatory sinking fund installments to be made beginning in fiscalyear 2018 for the 1996 Series Bonds. The first scheduled principal maturities for the Mead-AdelantoRevenue Bonds for fiscal years following June 30, 1997 are $3,560,000 in 2000, $3,824,000 in 2001and $4,088,000 in 2002. The average interest rate on outstanding debt during fiscal year 1997 and1996 was 5.6%.

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NOTE 4: (Continued)

San Juan Pro'ect

To finance the costs ofacquisition ofan ownership interest in Unit 3 of the SJGS, the Authorityissued San Juan Project Revenue Bonds pursuant to the Authority's Indenture ofTrust dated as ofJanuary 1, 1993 (Bond Indenture).

The Bond Indenture provides that the Revenue Bonds shall be special, limited obligations oftheAuthority payable solely from, and secured solely by, (1) proceeds from the sale ofbonds, (2) allrevenues, incomes, rents and receipts attributable to San Juan (see Note 6) and interest on all moneysor securities and (3) all funds established by the Bond Indenture.

At the option of the Authority, all outstanding San Juan Project Revenue Bonds are subject toredemption prior to maturity.

The Bond Indenture requires mandatory sinking fund installments to be made beginning in fiscalyear 2012 for the 1993 Series A Bonds. The scheduled principal maturities for the San Juan ProjectRevenue Bonds during the five fiscal years followingJune 30, 1997 are $6,275,000 in 1998,$6,540,000 in 1999, $6,825,000 in 2000, $7,140,000 in 2001 and $7,480,000 in 2002. The averageinterest rate on outstanding debt during fiscal year 1997 and 1996 was 5.3%.

I Refundin Bonds

In July 1992, the Authority issued $475,000,000 ofSouthern Transmission Project Revenue Bondsto refund $385,385,000 ofpreviously issued bonds. Principal and interest with respect to the 1992bonds were allocated into four separate components. Each ofcomponents 1, 2 and 3 were secured

by, and payable from, investments in its escrow fund until scheduled crossover dates. Component 4

proceeds of$ 14,100,000 were used to advance refund approximately $9,000,000 ofbonds in fiscalyear 1993. On the Component 1 Crossover date (January 1, 1994), Component 1 proceeds of$ 13,959,000 were used in fiscal 1994 to advance refund $ 13,455,000 ofpreviously issued bonds. Onthe Component 2 Crossover date (January 1, 1995), Component 2 proceeds of$5,519,000 were used

in fiscal 1995 to advance refund $5,335,000 ofpreviously issued bonds. On the Comp'onent 3

Crossover date (July 1, 1996), Component 3 proceeds of$321,069,000 were used in fiscal 1997 toadvance refund $313,050,000 ofpreviously issued bonds.

In September 1996, the Authority issued $42,245,000 of Southern Transmission Project Revenue

Bonds, 1996 Subordinate Refunding Series A and $ 121,065,000 ofSouthern Transmission ProjectRevenue Bonds, 1996 Subordinate Refunding Series B to refund $68,720,000 and $ 127,100,000 ofthe STS 1986 Refunding Series A and B, respectively. The refunding is expected to reduce totaldebt service payments over the next 26 years by approximately $ 125,382,000 (the differencebetween the debt service payments on the old and new debt) and is expected to result in a net presentvalue savings ofapproximately $32,526,000.

gI

In January 1992, $70,680,000 ofPalo Verde Special Obligation Crossover Series Bonds, were

issued, the proceeds ofwhich were placed in an irrevocable trust to redeem $69,125,000 ofpreviously issued bonds. On July 1, 1996, trust assets held in escrow of$63,415,000 were used toadvance refund $62,000,000 ofpreviously issued bonds.

-26-

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NOTE 4: (Continued)

In August 1996, the Authority issued $ 89,570,000 ofPalo Verde 1996 Subordinate Refunding SeriesC bonds to refund $95,015,000 of 1986 Refunding Series B bonds. The refunding is expected toreduce total debt service payments over the next 20 years by approximately $24,713,000 (thedifference between the debt service payments on the old and new debt) and is expected to result in a

net present value savings ofapproximately $ 16,955,000.

In April 1996, the Authority issued $ 152,905,000 ofPalo Verde 1996 Subordinate Refunding SeriesA Bonds to refund $ 163,355,000 ofpreviously issued Palo Verde 1987 Refunding Series A Bondsand issued $58,870,000 ofPalo Verde 1996 Subordinate Refunding Series B Bonds to refund ~

$ 18,555,000 and $40,315,000 ofpreviously issued Palo Verde 1986 Refunding Series B and 1987Refunding Series A Bonds, respectively. The refunding is expected to reduce total debt servicepayments over the next 13 years by approximately $50,967,000 (the difference between the debtservice payments on the old and new debt) and is expected to result in a net present value savings ofapproximately $29,537,000.

On July 1, 1995, the crossover date for the Palo Verde Special Obligation Bonds Series A, trustassets in escrow of$7,131,000 were used to advance refund $7,125,000 ofpreviously issued bonds.

In March 1994, the Authority issued $51,835,000 ofMead-Phoenix Project Revenue Bonds and$ 173,955,000 ofMead-Adelanto Project Revenue Bonds to refund $243,150,000 ofpreviouslyissued Multiple Project Revenue Bonds which were transferred to the Mead-Phoenix and Mead-Adelanto projects during fiscal year 1993. The partial refunding of the original issue within fiveyears of its issuance triggered a recalculation of the arbitrage yield. The recalculation resulted in ahigher arbitrage yield which reduced the rebate liabilityof the Authority. At June 30, 1997,cumulative savings due to the rebate calculation amounted to $7,344,715. This amount wasallocated $ 1,958,591 and $5,386,124 to the Mead-Phoenix and Mead-Adelanto Projects,respectively, and is recorded as accounts receivable in the accompanying combined balance sheet.

At June 30, 1997 and 1996, the aggregate amount ofdebt in all projects considered to be defeasedwas $3,543,995,000 and $3,535,075,000, respectively.

Interest Rate Swa

In fiscal year 1991, the Authority entered into an Interest Rate Swap agreement with a third party forthe purpose ofhedging against interest rate fluctuations arising from the issuance of the SouthernTransmission Project Revenue Bonds, 1991 Subordinate Refunding Series as variable rateobligations. The notional amount of the Swap Agreement is equal to the par value of the bond($291,000,000 and $291,700,000 at June 30, 1997 and 1996, respectively). The Swap Agreementprovides for the Authority to make payments to the third party on a fixed rate basis at 6.38%, and forthe third party to make reciprocal payments based on a variable rate basis (3.9% and 3.1% at June30, 1997 and 1996, respectively). The bonds mature in 2019.

- 27-

COMBINEDSCHEDULE OF LONG-TERM DEBTATJUNE 30. 1997

(In thousands)

A1987A1989A1992A1992B1992C

1993Sub1993A1996A1996B1996C

~Pro'«ct Series

Principal:Palo Verde Project Revenue and Refunding Bonds 1986

DateofSale

03/13/8602/I I/8702/15/89Ol/OI/9201/01/92Ol/Ol/9203/01/9303/01/9302/13/9602/29/9608/22/96

EffectiveInterest Rate

8.2%6.9%7.2%ti06.0%60%5.5%5.5%4.4%4.4%4.2%

Maturity onJulv I

1997 to 20061997 to 20171997 to 20151997 to 20101997 to 20061997 to 20101997 to 20171997 to 20171997 to 20171997 to 20172016 to 2017

Total

7,76540,140

281,5857,155

63,41510,63598,200

268,710152,90558,870&9.570

1.078.950

Southern Transmission System ProjectRevenue and Refunding Bonds

Hoover Uprating Project Rcvenuc and

Refunding Bonds

hlultiple Project Revenue Bondshlead.Phoenix Projecthlead-Adelanto Projecthlultiple Project

198&A1991 A

1992 Comp 1,2,41992 Comp 3

1993A1996A1996B

1991

198919891989

11/22/884/17/917/20/927/20/927/Ol/939/12/969/12/96

OS/Ol/91

Ol/04/90Ol/04/90OI/04/90

7.2%6.4%6.1%6.1%5.4%4.9%4.3%

62%

7.1%71%7.1%

1997 to 20152019

1997 to 20211997 to 20211997 to 20231997 to 20062019 to 2023

1997 to 2017

1999 to 20201999 to 20201999 to 2020

154,085291,000

35,705423,559119,94042,245

121.065

1.1&7.599

31.005

38,800106,700259.100

404.600

Mead-Phoenix Project Rcvenuc Bonds

Mead-Adelanto Project Revenue Bonds

San Juan Project Revcnuc Bonds

Total principal amount

Unamortized bond discount:Palo Verde ProjectSouthern Transmission System ProjectHoover Uprating Projecthfead Phoenix ProjectMead-Adelanto ProjectMultiple Project FundSan Juan Project

Total unamortized bond discount

Long term debt due vvithin one year

Total Iong. term debt, net

1994A

1994A

1993

03/Ol/94

03/01/94

06/Ol/93

5.3%

5.3%

56%

2006 to 2015

2006 to 2015

1997 to 2020

51.835

173.955

231.340

3.159.284

(85,229)(100,362)

(3,491)(4,065)

(12,199)(15,634)

8.569

229.549

56 720

2.873.015

I Note - bonds vvhich have bccn refunded are excluded from this schedule

-28-

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NOTE 5 - DISCLOSURES ABOUTFAIR VALUEOF FINANCIALINSTRUMENTS:

The followingmethods and assumptions were used to estimate the fair value of each class of financialinstruments for which it is practicable to estimate that value:

Cash and cash e uivalents

The carrying value approximates fair value because of the short maturity of those instruments.

Investments/Decommissionin fund/Escrow account - Subordinate Refundin CrossoverSeries/Crossover escrow accounts

l

<I

The fair values of investments are estimated based on quoted market prices for the same or similarinvestments.

Lon -term debt/S ecial Obli ation Crossover Series Bonds/Subordinate Refundin Crossover Series

The fair values of the Authority's financial instruments are as follows (in thousands):

1997June 30

1996Amortized Fair

Cost ValueAmortized Fair

Cost Value

The fair value of the Authority's debt is estimated based on the quoted market prices for the same orsimilar issues or on the current average rates offered to the Authority for debt ofapproximately the sameremaining maturities, net of the effect ofa related interest rate swap agreement.

Assets:Cash and cash equivalentsEscrow account - Subordinate Refunding

Crossover SeriesDecommissioning fundInvestments

15,439 15,484 346,46843,924 43,943 33,865

670,711 670,837 597,831

343,89833,474

597,427

87,370 $ 87,370 $ 173,798 S 173,798

Liabilities:DebtSubordinate Refunding Crossover Series

2,929,735 3,211,927 2,920,735 3,210,790347,388 385,516

OffBalance Sheet Financial InstrumentsSpecial Obligation Crossover Series BondsCrossover escrow accounts

63,41563,849

67,73963,849

-29-

NOTE 6 - POWER SALES AND TRANSMISSION SERVICE CONTRACTS:

The Authority has power sales contracts with ten participants of the Palo Verde Project (see Note 1).Under the terms of the contracts, the participants are entitled to power output from the PVNGS and are

obligated to make payments on a "take or pay" basis for their proportionate share ofoperating andmaintenance expenses and debt service on Power Project Revenue Bonds and other debt. The contractsexpire in 2030 and, as long as any Power Project Revenue Bonds are outstanding, cannot be terminatedor amended in any manner which will impair or adversely affect the rights of the bondholders.

The Authority has transmission service contracts with six participants of the Southern TransmissionSystem Project (see Note 1). Under the terms of the contracts, the participants are entitled totransmission service utilizing the Southern Transmission System Project and are obligated to makepayments on a "take or pay" basis for their proportionate share ofoperating and maintenance expensesand debt service on Transmission Project Revenue Bonds and other debt. The contracts expire in 2027and, as long as any Transmission Project Revenue Bonds are outstanding, cannot be terminated oramended in any manner which willimpair or adversely affect the rights of the bondholders.

In March 1986, the Authority entered into power sales contracts with six participants of the HooverUprating Project (see Note 1). Under the terms of the contracts, the participants are entitled to capacityand associated firm energy of the Hoover Uprating Project and are obligated to make payments on a"take or pay" basis for their proportionate share ofoperating and maintenance expenses and debt servicewhether or not the Hoover Uprating Project or any part thereof has been completed, is operating or isoperable, or its service is suspended, interfered with, reduced or curtailed or terminated in whole or inpart. The con'tracts expire in 2018, and as long as any Hydroelectric Power Project Revenue Bonds are

outstanding, cannot be terminated or amended in any manner which will impair or adversely affect therights of the bondholders.

In August 1992, the Authority entered into transmission service contracts with nine participants of theMead-Phoenix Project (see Note 1). Under the terms of the contracts, the participants are entitled totransmission service utilizing the Mead-Phoenix Project and are obligated to make payments on a "take

or pay" basis for their proportionate share ofoperating and maintenance expenses and debt service onthe Multiple Project and Mead-Phoenix Revenue Bonds and other debt, whether or not the Mead-Phoenix Project or any part thereof has been completed, is operating and operable, or its service issuspended, interfered with, reduced or curtailed or terminated in whole or in part. The contracts expirein 2030 and, as long as any Multiple Project and Mead-Phoenix Revenue Bonds are outstanding, cannotbe terminated or amended in any manner which willimpair or adversely affect the rights of thebondholders.

-30-

NOTE 6: (Continued)

In August 1992, the Authority entered into transmission service contracts with nine participants oftheMead-Adelanto Project (see Note 1). Under the terms of the contracts, the participants are entitled totransmission service utilizing the Mead-Adelanto Project and are obligated to make payments on a "takeor pay" basis for their proportionate share ofoperating and maintenance expenses and debt service onthe Multiple Project and Mead-Adelanto Revenue Bonds and other debt, whether or not the Mead-Adelanto Project or any part thereof has been completed, is operating and operable, or its service issuspended, interfered with, reduced or curtailed or terminated in whole or in part. The contracts expirein 2030 and, as long as any Multiple Project and Mead-Adelanto Revenue Bonds are outstanding,cannot be terminated or amended in any manner which willimpair or adversely affect the rights of the

bondholders.

In January 1993, the Authority entered into power sales contracts with five participants ofUnit 3 of theSan Juan Project (see Note 1). Under the terms of the contracts, the participants are entitled to theirproportionate share of the power output of the San Juan Project and are obligated to make payments on a"take or pay" basis for their proportionate share ofoperating and maintenance expenses and debt serviceon the San Juan Revenue Bonds, whether or not Unit 3 of the San Juan Project or any part thereof isoperating or operable, or its service is suspended, interfered with, reduced or curtailed or terminated inwhole or in part. The contracts expire in 2030 and, as long as any San Juan Revenue Bonds areoutstanding, cannot be terminated or amended in any manner which will impair or adversely affect therights of the bondholders.

NOTE 7 - COSTS RECOVERABLE FROM FUTURE BILLINGSTO PARTICIPANTS:

Billings to participants are designed to recover "costs" as defined by the power sales and transmission, service agreements. The billings are structured to systematically provide for debt service requirements,

operating funds and reserves in accordance with these agreements. Those expenses, according togenerally accepted accounting principles (GAAP), which are not included as "costs" are deferred to suchperiods when it is intended that they be recovered through billings for the repayment ofprincipal onrelated debt.

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NOTE 7: (Continued)

Costs recoverable from future billings to participants are comprised of the following (in thousands):

GAAP items not included in billings to participants:Depreciation ofplantAmortization ofbond discount, debt

issue costs, and cost of refundingNuclear fuel amortizationDecommissioning expenseInterest expense

BalanceJune 30,

1996

Fiscal1997

~Activi

BalanceJune 30,

1997

268,89919,54882,84330,899

57,968

6,7029,769

326,86719,54889,54540,668

$ 397,651 $ 53,156 $ 450,807

Bond requirements included in billings to participants:Operations and maintenance, net of investment incomeCosts ofacquisition ofcapacity - STSReduction in debt service billings

due to transfer ofexcess fundsPrincipal repaymentsOther

(88,315)(18,350)

67,559(261,689)

~35 598

(13,955)

99(56,086)

~3906

(102,270)(18,350)

67,658(317,775)

~39 504

$ 463 447 $ 53 747 $ 517 194

In March 1997, the Palo Verde Project participants approved a board resolution which instructs theAuthority to increase fiscal 1998 and future billings to Palo Verde participants so as to fullyamortize thecurrent costs recoverable from future billings to participants balance of$230,497,000 at June 30, 1997by June 30, 2003 and to prevent the further accumulation ofcosts recoverable from future billings toparticipants.

NOTE 8 - COMMITMENTSAND CONTINGENCIES:

In September 1996, Assembly Bill 1S90 (Bill)was given final approval. The Bill,which provides forbroad deregulation of the power generation industry in California, requires the participation of the state'investor-owned utilities. Consumer-owned utilities can participate on a voluntary basis but must holdpublic hearings as part oftheir decision making process. The Bill,which was supported by theAuthority, authorizes the collection of a transition charge for generation when a consumer-owned utilityopens its service area to competition and participates in the independent transmission system establishedby the legislation. The Billalso mandates the collection ofa public benefit charge from all electricutilitycustomers in the state. Although these funds (currently estimated at 2.5% ofgross revenues) mustbe spent on renewable resources, conservation, research and development, or low income rate subsidies,the governing authority ofeach consumer-owned utilitywillcontrol actual expenditures.

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NOTE 8: (Continued)

The Price-Anderson Act (the "Act")requires that all utilities with nuclear generating facilities share inpayment for claims resulting from a nuclear incident. The Act limits liabilityfrom third-party claims to$ 8.9 billionper incident. Participants in the Palo Verde Nuclear Generating Station currently insurepotential claims and liabilitythrough commercial insurance with a $200 million limit; the remainder ofthe potential liability is covered by the industry-wide retrospective assessment program provided underthe Act. This program limits assessments to $ 79.3 million for each licensee for each nuclear incidentoccurring at any nuclear reactor in the United States; payments under the program are limited to $ 10million, per incident, per year. Based on the Authority's 5.91% interest in Palo Verde, the Authoritywould be responsible for a maximum assessment of$4.7 million, limited to payments of$591,000 perincident, per year.

The Authority is involved in various legal actions. In the opinion ofmanagement, the outcome ofsuchlitigation or claims willnot have a material effect on the financial position of the Authority or therespective separate projects.

NOTE 9- RESTATEMENT OF PRIOR YEARS COMPARATIVEFINANCIALSTATEMENTS:


L

The Authority has restated prior year comparative financial statements for the Hoover Uprating Projectto reflect the application ofcredits on billings to participants for energy and capacity which reduceadvance payments made to USBR (Note 2) in accordance with Procedures and Practices for theAdministration ofSection 6.5 of the Electric Service Contracts dated June 1996. The effect of therestatement on Costs recoverable from future billings to participants in the statement ofoperations forthe year ended June 30, 1996 is as follows (in thousands):

Hoover U rating Pro ect

Costs recoverable from future billings to participantsas previously reported

Adjustment for effect of restatement

Costs (recoverable from) in excess of futurebillings to participants as adjusted

($ 239)892

$ 653

Advances for capacity and energy, net and Costs recoverable from future billings to participants at July1, 1995 have also been increased and reduced, respectively, by $ 14,172 to reflect the retroactive effect ofthe restatement on beginning Advances for capacity and energy, net and Costs recoverable from futurebillings to participants.

L-33-

NOTE 9: (Continued)

Palo Verde Pro'ect

The Authority has restated prior year comparative financial statements for the Palo Verde Project toreflect amortization over the remaining life of the bond ofdebt issue costs associated with the issuanceof the Palo Verde Refunding Bond Series 1985 A and B. Unamortized debt expenses and Costsrecoverable from future billings to participants at July 1, 1995 have been reduced and increased,respectively, by $ 12,981 to reflect the retroactive effect of the restatement on beginning Unamortizeddebt expenses and Costs recoverable from future billings to participants. The restatement had no effecton Costs recoverable from future billings to participants for the year ended June 30, 1996.


The Authority has restated prior year comparative financial statements for the Southern TransmissionSystem Project to reflect amortization over the remaining life of the bond ofdebt issue costs associatedwith the issuance of the Southern Transmission System Project Refunding Bond Series 1985A. TheAuthority has also restated prior year comparative financial statements for the Southern TransmissionSystem Project to reflect bond discount amortization over the life of the Southern Transmission SystemProject Refunding Bond Series 1992 Component 3.

The effect of the restatements on Costs recoverable from future billings to participants in the statementofoperations for the year ended June 30, 1996 is as follows (in thousands):

Southern TransmissionS"


Adjustment for effect of restatement($ 20,633)

(3,544)

Costs recoverable from future billings to participants as

adjusted ($ 24,177)

Unamortized debt expenses, Unamortized bond discount and Costs recoverable from future billings toparticipants at July 1, 1995 have also been (reduced)/increased by ($559), ($7,600) and $ 8,159,respectively, to reflect the retroactive effect of the restatement on beginning Unamortized debt expenses,Unamortized bond discount and Costs recoverable from future billings to participants.

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Combined Total

The effect of these restatements on the combined total ofcosts recoverable from future billings toparticipants in the statement ofoperations for the year ended June 30, 1996 is as follows (in thous"nds):

Combined Total


Adjustment for effect ofrestatement

Costs recoverable from future billings to participants asadjusted

($ 42,796)(2,652)

($ 45,448)

Advances for capacity and energy, net, Unamortized debt expenses, Unamortized bond discount andCosts recoverable from future billings to participants at July 1, 1995 have also been increased (reduced)by $ 14,172, ($ 13,540), ($7,600) and $6,968, respectively, to reflect the retroactive effect of therestatement on beginning Advances for capacity and energy, net, Unamortized debt expenses,Unamortized bond discount and Costs recoverable from future billings to participants.

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III

II


SUPPLEMENTAL FINANCIALINFORMATION

INDEX

Palo Verde Pro'ect

Supplemental Schedule ofReceipts and Disbursements in Funds Required by the BondIndenture for the Year Ended June 30, 1997



Hoover U ratin Pro ect



i Supplemental Schedule ofReceipts and Disbursements in Funds Required by the BondIndenture for the Year Ended June 30, 1997





San Juan Pro'ect


-36-

SOUTIIERN CALIFORNIAPUBLIC POPOVER AUTIIORITY

PALO VERDE PROJECT

SUPPLEMENTAI. SCI IEDULEOF RECEIPTS AND DISBURSEMENTSIN FUNDS REQUIRED BY TI IE BOND INDENTURE

FOR TI IE YEAR ENDIIDJUNE 30 1997

(In thousands)Debt Rcscrvc &,

Scrvicc Revcnuc Operating ContingencyI'und Fund I'und Fund

Issue

Fund

DecommissioningFundsI &. II Total

Balance at Junc 30, 1996Additions:

Investmcnt earningsDistribution of investmcnt earningsDiscount on invcstmcnt purchasesRevenue from power salesDistribution of rcvcnucsTransfers to escrow for refundingsTransfer from escrow Ior principal

and intcrcst payments

Total

$ 124 6115

3,944(4,722)

72381

51,719(7,649)

717 3311

761434

348,191

30121,355

(126.281)(3,333)

$ 19 949

1,134

(1,153)9619

40,679258

41 033

$ 25 582

1,110

(1,538)432

24

2,304(1,000)

I 332

663

(778)115

23,5835,433

1,630

853

7,996

8,515

2,249121,479

(6,291)

717 338

29 016 10 479 843 290

5 13 D17 $ 33 530 $ 216 767

Deductions:Construction cxpcnditurcsOperating cxpcnditurcsFuel costsBond issue costsPayment ofprincipalInterest paidPremium and interest paid on invcstmcntsPayment ofprincipal and intcrcst on

escrow bonds

25,69035,019

24

717 3311

27,3688,044

2,363104

1,585

15,6036 118

2,36327,477

8,0441,585

25,69050,622

148

717 338

Total

Balance at June 30, 1997

7711 D71

$ 108 048 5

35412 2 363 17298 123 833267

$ 25 570 $ 24 551 $ 24 735 $ 43 886 $ 226 79D

This schedule summarizes thc rcccipts and disburscmcnts in funds rcquircd under thc Bond Indenture and has been prcparcd from the trust statements. Thc balances in the fundsconsist ofcash and investmcnts at original cost. Thcsc balances do not include accrued interest rcccivable of$ 1,471 and $ 1,245 and Decommissioning Fund accrued interestreceivable of$475 and $267 at Junc 30, 1997 and 1996, respcctivcly, nor do they include total amortized nct invcstmcnt discounts of$ 1,045 and $788 at Junc 30, 1997 and 1996,rcspectivcly. Thcsc balances also do not include unrealized loss on invcstmcnts in funds available for sale of$733 and $456 at June 30, 1997 and 1996, rcspcctively.

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SOUTIIERN CALIFORNIAPUBLIC POPOVER AUTHORITY

SOUTIIERN TRANSMISSION SYSTEM PROJECT

SUPPLEMENTALSCHEDULEOF RECEIPTS ANDDISBURSEMENTSIN FUNDS REQUIRED BYTHE BOND INDENTURE

YEAR ENDED JUNE 30 1997(ln thousands)

ConstructionFund-InitialFacilitiesAccount

DebtService

Fund

GeneralOperating

FundReserve

FundIssueFund

EscrowFund Total

Balance at June 30, 1996 $ 234 $ 106411 8 6051 3 4 157 5 76 219 8 343 874 5 536946

Additions:Bond interest receivedInvestmcnt earningsDistribution ofinvestment earningsRevcnuc I'rom transmission salesDistribution ofrevenueTransfer from escrow for principal

and intcrcst paymentsOther receipts

Total

3,639(3@38)

(26,158)

20237255

176 670

45010,49991,689

(87,758)

328(327)

7,561

42

14 922 7 562

2546,964

15,897

86,415

12

109 542

(22,831)

19,940

254I I/92

91,689

202/72109

~891 305 816

Deductions:Operating expensesPayment ofprincipalIntcrcst paidPayment for defcasancc ofrevenue bondsPayment ofprincipal and interest on escrow bondsPremium and interest paid on investmcnt purchases

Bond issue costs

25,50731/10

202372172

174

14,43710,84547,682

593 228

326,539

14,43710,84573,189

357,849202372

231

3 402

Total

Balance at Junc 30, 1997

259 535 14 437 61&14 326539 462325

245 $ 23 546 $ 6 536 3 I I 719 $ 123 947 $ 14 444 3 180437

This schedule summarizes thc rcccipts and disbursements in fimds required under thc Bond Indcnturc and has hccn prcpnrcd from thc trust statcmcnts. Thc balances in thc fimdh consist ofcash amlinvestmcnts nt original cost. 'Ihcsc balances do nut include accrued intcrcst rcccivahlc of$583 and $2,169 at Junc 30, 1997 and 1996, rcspcctivcly, nor do they include total amortized nct invcsuncntdiscounts of$4923 and $2983 at Junc 30, 1997 and 1996, rcspcctively. These balances do not include unreal ized (gain) loss on invcstmcnts in I'unds availablc for sale of($ 1,116) and $2865 at Junc 30,1997 and 1996, respectively.

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SOUTHERN CALIFORNIAPUBLIC PONrER AUTHORITY

HOOVER UPRATING PROJECT

SUPPLEMENTAL SCHEDULE OF RECEIPTS AND DISBURSEMENTSIN FUNDS REQUIRED BY THE BOND INDENTURE

YEAR ENDED JUNE 30 1997

(In thousands)


Additions:Investment earningsDistribution of investment earningsDiscount on investment purchasesRevenue from power salesDistribution of revenuesTransfer from escrow forinterest payments

Miscellaneous transfers

Total

Deductions:Payment ofprincipalAdministrative expendituresInterest paidPayment of interest on escrow bondsOther

Total

AdvancePayments

Funds

$

OperatingPend

S 238

60(60)

508

804

I 312

335

43

378

RevenueFund

5

476

2,553(2,014)

I 020

OperatingWorkingCapital

Fund

S 560

DebtServiceAccount

$ 2 371

27(58)31

1,284

30,2603 852

35 396

4,650

1,85530,260

252

DebtServiceReserveAccount

$ 3 083

36(178)

142

GeneralReserveAcccccc

$ 5 259

25

(180)155

222

3 636

3 414

Total

$ 11 511

153

3282,553

30,260

33 294

4,650335

1,85530,260

295

37 395

Balance at June 30, 1997 8 I 172 $ - $ 560 $ 750 $ 3 083 8 I 845 $ 7 4 10

This schedule summarizes thc receipts and disburscmcnts in funds rcquircd tmdcr thc tlond lndcnturc and has bccn prepared 1'rom thc trust statcmcnts. Thc balances in thc funds consist ofcash and investmentsat original cost. These balances do not include accrued intcrcst rcccivablc of$6 at Junc 30, 1997 and 1996, nor do they include total amortized nct invcstmcnt discount of$73 and $ 117 at June 30, 1997 and1996, rcspcc(ivcly. These balances also do not include unrcalizcd loss on invcstmcnts in funds available for sale of$74 and $3 at Junc 30, 1997 and 1996, rcspcctivcly.

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MEAD-PHOENIXPROJECT


FOR THE YEAR FNDED JUNE 30. 1997(In thousands)

AcquisitionAccount

DebtServiceAccount


RcvcnucFund

IssueFund

OperatingFund

SurplusFund Total

Balance at June 30, 1996 $ 12.080 S 2.367 $ 5.916 S 65 $ 2.525 $ 237 S - S 23.190

Additions:Investment earningsTransfer of investmentsReimbursement from IVAPATransmission revenueTransfer ofmonthly

transmission costsTransfer of funds

950 145

(930)

2.550

435(435)

2222,912

(502)~2.7007

821,365

14 2 1,631

2222,912

416 86160

950 1.765 ~66 I 447 580 88 4.765

Deductions:Construction expendituresInterest paidPremium and interest paid

on investment purchasesOperating expenses

364

289

2,642 2,534

58

3645,176

58739 1.028

Total 653 2.642 2.592 739 6.626

Balance at June 30, 1997 S 12.377 S 1.490 $ 5.916 S - S 1.380 $ 78 $ 88 $ 21.329

This schedule summarizes the receipts and disbursements in funds required under thc Bond Indenture and has been prepared from the trust statementsThe balances in the funds consist ofcash and investments at original cost. These balances do not include accrued interest receivable of$690 and S84

at June 30, 1997 and 1996, respectively, nor do they include total amortized net investmcnt discount of$ 18 and premium ofS42 at June 30, 1997 and1996, respectively. These balances do not include unrealized loss on investments in funds available for sale of$9 at June 30, 1996.

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SOUTHERN CALIFORNIAPUBLIC POPOVER AUTHORITY

MEAD-ADELANTOPROJECT


FOR THE YEAR ENDED JUNE 30 1997

(In thousands)

AcquisitionAccount

DebtServiceAccount


OperatingFund

IssueFund

RevenueFund

SurplusFund Total

Balance at June 30, 1996 S 35.665 $ 6.497 $ 16.267 $ 263 $ 8.474 $ 71 S S 67.237

Additions:Investment earningsTransfer of investment earningsReimbursement from WAPATransfers of fundsTransmission revenueTransfer ofmonthly

transmission costs

2,667 384 1,1961,196 (1,196)

3.048

14

150

452

2 4,545

15

274

7,943

~452)

15

4,301 (7.585) 867.943

2.667 4.628 616 4.525 ~21) 58 12.502

Deductions:Construction expendituresInterest paidPremium and interest paid on

investment purchases

Operating expenses 365

7,270

851

8,505

195

(I)15,775

194

1.216

Total

i Balance at June 30, 1997

364 7.269 851 8.700 )7.184

$ 37968 $ 3856 $ 16267 $ 28 S 4349 $ - S 88 $ 62556

This schedule summarizes the receipts and disbursements in funds required under the Bond Indenture and has been prepared from the trust statements

The balances in the funds consist ofcash and investments at original cost. These balances do not include accrued interest receivable of$2,057 and

$2,285 at June 30, 1997 and 1996, respectively, nor do they include total amortized net investment discount of$ 53 and premium of$ 143 at June 30,

1997 and 1996, respectively. These balances do not include unrealized loss on investments in funds available for sale of$ 1 and $28 at June 30, 1997

and 1996, respectively.

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I

I

I

I

I

I


MULTIPLEPROJECT FUND

SUPPLEMENTAL SCHEDULE OF RECEIPTS AND DISBURSEMENTSIN FUNDS REQUIRED BYTHE BOND INDENTURE

FOR THE YEAR ENDED JUNE 30 1997(In thousands)


Additions:Investment earningsTransfer to earnings accountTransfer to debt service account

ProceedsAccount

$ 249 423

18,208(18,208)

DebtServiceAccount

16.512

EarningsAccount

$ 1.465

26818,208

~]6.5] 2

Total

$ 250.888

18,476

Total 16 512 ] 964 18.476

Deductions:Interest paidOther transfers 1 696

16,5121 696

16,512

Total 16 5]2 16.512

Balance at June 30, 1997 $ 247 727 $ - $ 5125 $ 252.852

This schedule summarizes the receipts and disbursements in funds required under the BondIndenture and has been prepared from the trust statements. The balances in the funds consist ofinvestments at original cost. These balances do not include accrued interest receivable of$9,288 and$9,220 at June 30, 1997 and 1996, respectively.

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SAN JUAN PROJECT


FOR THE YEAR ENDED JUNE 30 1997(In thousands)


Revenue Operating OperatingFund Fund Reserve

8 - 8 1253 $ 5

ProjectFund

$ 526

DebtService

$ 8 521

Reserve &,Debt Service Revenue

Reserve ~Cantle ene Total

$ 18025 $ 13321 5 41651

Additions:Investment earningsDistribution of investment earningsDiscount on investment purchasesRevenue from popover salesDistribution of revenuesTransfer of investment earningsMiscellaneous transfers

422,221

56,866(5G,330)

(2)~2797

60(73)

7

35,689

2 797

25(2)

I

38(311)279

18,514

1,066(1,066)

534(769)241

2,127

1,765

52856,866

Total 38 480 26 18 520 2 133 59 159

Deductions:Administrative expendituresInterest paidPremium and interest oninvestment purchases

Principal payment

37,79411,988

66 035

110

37,79411,988

1166 035

Total 37 794 18 029 110 55 933

Balance at June 30, 1997 $ $ 1 939 8 5 $ 552 $ 9 012 $ 18 025 $ 15 344 $ 44 877

This schedule summarizes the receipts and disbursements in funds required under the Bond Indenture and has been prepared from the trust statements. The balances in thefunds consist ofcash and investments at original cost. These balances do not include accrued interest receivable of$ 134 and $67 at June 30, 1997 and 1996, respectively, nordo they include total amortized net investmcnt discount of$60 and $69 at June 30, 1997 and 1996, respectively. These balances do not include unrealized loss on investmentsin funds available for sale of$3 and $4 at June 30, 1997 and 199G, respectively.

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