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HomeMy WebLinkAbout1994 - Board of Water & Light Annual Report 1 1 1 1 1 1 P R O T E C T I N G O U R 1 1 , RE S O U R C E S I I I I 1 I I i 1 C A 1`. ow z - i rfk^t e9y_ Y �' zo f j L A N S I N G B O A R D O F W A T E R & L I G H T WATERAIGHT Lansing Board of Water&Light 1 9 9 4 A N N U A L R E P O R T 123 West Ottawa Lansing, Michigan 48933 FINANCIAL & STATISTICAL INFORMATION FISCAL YEARS ENDING (UnauditM) J U N E 30 WATER UTILITY 1994 1993 1992 1991 1990 Number of Customers(Average) Residential 41,948 41,586 41,140 40,571 39,857 Commercial 5,753 5,675 5,588 5,371 4,947 industrial 96 96 96 96 94 Total 47,797 47,357 46,824 46,038 44,898 WAMTE R& Water Sales(CCF) Residential 3,422,318 3,382,878 3,515,097 3,935,420 3,491,005 Commercial 3,073,216 2,996,583 3,296,251 3,507,073 3,206,178 Industrial 1,194,244 1,319,351 1,632,845 1,796,815 1,861,758 Other 112,137 112,240 112,200 112,240 112,13 Total 7,801,915 7,811,052 8,556,393 9,351,548 8,671,078 Operating Revenues Residential $5,930,085 $5,728,289 $5,839,450 $5,979,894 $5,178,803 Commercial 4,233,035 3,937,895 4,178,936 4,357,311 3,791,160 industrial 1,317,162 1,357,367 1,647,559 1,756,598 1,760,152 Other 1,333,639 1,268,995 1,242,93 1,227,460 1,035,709 Total $12,813,921 $12,292,546 $12,908,882 $13,321,263 $11,765,824 Operating Expenses (Ind. Depr.) $13,454,661 $12,894,227 $13,778,500 $11,813,015 $11,892,491 Operating Income ($640,740) ($601,681) ($86,9,618) $1,508,248 ($126,667) Net Income $110,878 $150,077 $76,246 $2,323,429 $746,245 ELECTRIC UTILITY Number of Customers (Averuge) Residential 78,579 77960 77,646 77,029 75,777 Commercial 12,222 11,863 11,652 11,336 10,840 Industrial 254 162 151 142 135 Total 91,055 89,985 89,449 88,507 86,752 Electric Sales (MWH) Residential 530,696 503,565 523,290 511,232 509,173 Commercial 986,039 940,175 940,834 950,161 926,058 Industrial 698,497 648,258 671,975 654,241 714,735 Sales for Resale 304,976 192,264 187,643 185,515 230,244 Other 38,44 36,386 36,597 36,072 36,211 Total 2,558,652 2,320,648 2,360,339 2,337,221 2,416,421 Operating Revenues Residential $30,665,985 $29,035,420 $-28,319,,671- $27,044,812- $26j-903,70T- Commercial 52,278,699 49,626,953 46,631,031 46,012,782 44,843,659 Industrial 31,987,556 30,498,322 29,176,493 28,250,222 30,669,438 Sales for Resale 8,874,536 6,435,550 5,903,554 6,122,374 7,365,103 Other 6,679,851 6,439,862 6308,407 6,083,980 5,817,865 0 �N� -2129 T Total $130,486,627 $122,036,107 $116,339,156 $113,514,170 $115,599,772 Operating Expenses (Ind. Depr) $124,985,001 $120,563,267 $111,133,336 $107,194,335 $105,180390 Operating Income $5,501,626 $1,472,840 $5,205,820 $6,319,835 $10,418,882 Net Income $6,343,329 $3,145,631 $8,046,045 $10,269,924 $15,406,269 STEAM UTILITY M" "Yet,� , 1- ,,, Ail', r. Eva L. Number of Customers (Average) Residential 25 25 27 29 32 DaNid OLea Commercial 304 312 322 341 363 Industrial John Stro Total 330 338 350 371 396 g Steam Sales(MLB) Residential 3,262 3,650 3,751 3,596 3,845 ................. ............... ....................... Commercial 555,766 528,330 544,498 558,459 537,360 Industrial 842,065 835,055 924,827 769,346 846,250 A Other 64,800 55,079 38,998 ilou 64,434 -d of Wotep &LiAt(MVI "P, Thc Boco scrves TOW 1,465,893 1,422,114 1,512,074 1,375,058 1,451,889 Operating Revenues -iound,ng communitics with cicr�. Michigan and'sm $21,686 $24,475 $24,892 $23,800 $25,327 Residential 14'ater and steamt. .......... Commercial 610- 3,622,977 .... ... 3,647,404 3,502,726 3,584,095 3,687,872 harterca m Industrial 5,959,976 6,281,480 6,709,819 6,230,306 6,696,633 Mi Other 451,858 393,939 271,313 303,275 B"T remains a publ 436,861 Total $10,080,924 $10,202,620 $10,590,119 $10,245,253 $10,781,798 -ter provides that the B of sel atnsing,'s itv Chai WL J "I g"00 Operating Expenses OW g vc ina ua gement qj the wa (Ind. Depr.) $9,698,472 $9,201,507 $9,225,340 $8,847,289 $8,601,328 s ialkhavc iftd!aud ex(lusi 'cc' Operating Income $382,452 $1,001,113 $1,364,779 $1,397,964 $2,180,470 steamande, tdc sen ices of the ci(y. An eight-persou board of commis Net Income $466,509 $1,109,425 $1,645,443 $1,850,570 $2,714,563 which is carried out In a staff under th general mouager. Board members are year terms b.-V the mavor with the advice wid consent gm N CRY couucil� conani%�Ioucl--s serve without pay. , 1 1--- �- V- DETAILS OF SOURCES AND USES OF CASH AND INVESTMENTS YEARS ENDED JUNE 30 T O O U R C U S T O M E R S (Note 1) 1994 AND 1993 4 Combined Water Electric Steam 1994 1993 1994 1993 1994 1993 1994 1993 Sources Net income $ 6,920,716 $ 4,405,134 $ 110,878 $ 150,076 $ 6,343,329 $3,145,632 $ 466,509 $ 1,109,426 Charge to income not affecting cash Depreciation 15,178,901 15,874,313 2,497,162 2,404,814 11,884,018 12,703,196 797,721 766,303 = s Total from operations 22,099,617 20,279,447 2,608,040 2,554,890 18,227,347 15,848,828 1,264,230 1,875,729 � 3 Contributions in aid c K of construction 1,141,836 1,047,177 1,141,836 1,047,177 Decrease (increase) F in inventories 5,275,343 1,643,042 61,835 264,912 5,366,479 1,371,130 (152,971) 7,000 Increase in long-term debt 22,984,162 12,629 7,584,872 4,263 15,399,290 8,366 x n � Increase (decrease) R,� � � � in allowance for uncollectible accounts (2,199) (87,190) 5,173 63,407 (2,974) 23,783 Decrease (increase) 'A in prepaid expenses 1,137 25,256 6,038 (560) (8,726) 22,986 3,825 2,830 x Increase(decrease)in accrued interest payable 522,876 (42,615) 174,275 (13,078) 348,601 (29,537) xx Increase (decrease) in customers' advances 1,125 (2,697) (2,697) 13,594 (12,469) Total sources 52,026,096 22,962,239 11,574,697 3,767,717 39,351,758 17,285,180 1,099,641 1,909,342 Uses Additions to utility plant- ou may not have noticed it yet,oWit the utility employees accepted the program and left the payroll September 1, major construction 17,184,774 20,113,285 1,753,638 2,907,831 13,960,300 13,076,238 1,470,836 4,129,216 Additions to utility plant- industry in the United States is undergoing profound reducing our workforce from about 900 budgeted positions to less normal construction 11,176,547 10,301,454 2,468,143 2,777,150 7,800,842 7,619,559 907,562 (95,255) chanf;e. And Lansing's hometown utility is changing too. than 800. Mild cost benefits will be realized in the 1995 fiscal year Payments of long-term debt Bonded 1,009,818 1,000,000 340,814 337,500 669,004 662,500 Traditionally, electric utilities in the United States have enjoyed with the majority of the savings coming in the following year, Other 142,556 133,392 12,733 12,069 124,804 116,566 5,019 4,757 Equity returned to the City 5,670,665 5,341,625 495,701 482,433 4,787,386 4,470,130 387,578 389,062 monopoly status. But, like the gas and telephone industries before For the second time in five years, BWL customers were invited Advances between utilities (95,544) (90,136) 95,544 90,136 it, deregulation is coming to the electric utility world. Many utilities to make a financial investment in the BWL's future. In January, the Increase (decrease) in deferred compensated are taking a critical look at themselves for the first time, discovering utility entered the bond market to raise money for needed capital absences 1,775,646 161,292 376,324 (31,593) 1,206,445 203,303 192,877 (10,418) Increase in perpetual that their rates are too high to compete in an environment where improvements. A total of$23 million in revenue bonds were care fund 8,693 15,111 6,350 13,155 2,343 1,956 Decrease (increase) customers may someday have a choice of energy providers. offered, with $3 million reserved for local sales to small investors. in customer deposits 10,921 175,061 (850) 39,990 11,729 134,798 42 273 We're proud to say that Board of Water& Light electric rates Some 265 hometown investors bought a piece of their hometown Increase (decrease) in accounts receivable 1,925,083 (232,814) 334,950 (316,170) 1,590,015 38,529 118 44,827 have always been among the lowest in Michigan or anywhere else. utility, purchasing all but $29,000 of the $3 million in bonds. Increase (decrease)in interest and dividends Still, we're looking at ourself in new ways to improve service, hold Five years earlier, the BWL sold $1.6 million in bonds locally as receivable 85,655 (310,264) 30,057 (16,256) 45,313 (256,923) 10,285 (37,085)Decrease (increase)in down costs and increase our accountability to our customers and part of a $16 million bond issue. arbitrage rebate payable 10,568 (24,822) 3,566 (8,378) 7,002 (16,444) owners, the citiz<-.ns of Lansing. This report to you is a small During the past year the BWL negotiated a new three-year Decrease (increase) in accounts payable and example. By utili'ing an insert in the Lansing State Journal we're agreement with the International Brotherhood of Electricsil Workers, other accrued expenses 526,446 (2,789,178) (390,602) (163,629) 1,096,290 2 596 266 179 242 (29,283) Total uses 39,527,372 33,884,142 5,424,474 6,020,947 31,209,936 23,375,009 2,892,962 4,488,186 sharing our annual report with 55,000 of our customers for about Local 352. Management and union members continue to look for Net Sources (Uses) of what it normally costs us to publish a few thousand reports. ways we can work together to provide better service to the Cash and Investments $12,4 88,724 $(10,921,903) $6,150,223 $(2,253,230) $8,141,822 $ (6,089,829) $(1,793,321) $(2,578,844) We'd like you to know of some other things we're doing to customers and owners of our utility 1. Allocation to water, electric and steam operations-components affecting cash and funds are allocated to the respective operation based on actual sources or hold down our costs and your utility rates. It's our intent and belief that actions over the last year have uses of cash by operation or on a basis derived from an identifiable source or use of cash. Medium-term plans call for keeping our controllable made the BWL a better and stronger utility, able to survive in END OF AUDITORS ' REPORT operating costs (operating costs minus fuel and purchased power) an increasingly competitive utility world. We look forward to at 75 percent of inflation. We exceeded that goal in 1994, with a improving on our century-long tradition of serving Lansing- 2 percent decrease in controllable costs compared against a area citizens with high-quality and reasonably priced electricity, _ 2.8 percent inflation rate. water and steam. Groundwork was also laid for realizing greater savings through �► workforce reductions. In March the BWL offered an early retirement �, and voluntary separation program to employees. Ninety-three Phillip E. Hassler Chairman Joseph Pandy,Jr. General Manager continued i S T A T E O F Y O U R U T 1 L I T Y DETAILS OF STATEMENTS OF INCOME YEARS ENDED JUNE 30 1994 AND 1993 i Combined Eliminations Water Electric Steam a 1994 1993 1994 1993 1994 1993 1994 1993 1994 1993 Operating Revenues i Water $ 12,813,921 $ 12,292,545 $ 12,813,921 $ 12,292,545 Electric j i Retail 121,095,139 115,083,605 $(516,952) $(516,952) $ 121,612,091 $115,600,557 Sales for resale 8,874,536 6,435,550 8,874,536 6,435,550 i Steam 10,080,924 10,202,619 10,080,924 10,202,619 Total 152,864,520 144,014,319 (516,952) (516,952) 12,813,921 12,292,545 130,486,627 122,036,107 10,080,924 10,202,619 iscal year 1994 reversed a return. Our Board of Commissioners has Proceeds from the sales will be used Operating Expenses Production 1 five-year trend of declining set a target rate of return ranging from to keep rates down for existing retail Fuel and other Operating expenses 83,417,306 76,335,740 (516,952) (516,952) 3,226,563 3,311,849 74,357,642 67,139,664 6,350,053 6,401,179 1 utility sales. Electric sales increased 6 to 7 percent. Yet, at year's end the water customers. Maintenance 7,813,083 9,311,415 1,184,312 1,167,160 5,286,773 7,135,044 1,341,998 1,009,211 1 Transmission and distribution I 10 percent and steam sales 3 percent, and electric utilities were both earning Purchased power costs have increased Operating expenses 5,038,876 5,485,511 978,187 968,296 4,027,796 4,481,438 32,893 35,777 i 564 252,239 684 243 047 348 2 840 691 2 132 817 093 614 1 117 044 3 177 while water sales were steady when negative rates of return while steam was every year since 1991 as the BWL phased Maintenance 4,177,044 3,117,614 1,093,132 , 2,840,348 2,047,684 , 1 � Administrative and 1 1 compared to the previous fiscal year. Total barely positive at .41 percent. in power from a new plant, the Belle River general 31,995,972 32,017,455 4,475,305 4,224,416 26,588,424 27,056,242 932,243 736,797 Depreciation 15,178,901 15,874,313 2,497,162 2,404,814 11,884,018 12,703,196 797,721 766,303 revenues increased 6 percent to nearly Even non-profit utilities like ours need Plant near St. Clair. These costs will level Total 147,621,182 142,142,048 (516,952) (516,952) 13,454,661 12,894,226 124,985,001 120,563,268 9,698,472 9,201,506 i $153 million. to earn money in order to make necessary off after 1995 when we begin taking our Operating Income (Loss) 5,243,338 1,872,271 (640,740) (601,681) 5,501,626 1,472,839 382,452 1,001,113 Our increased sales were responsible improvements to our system. How do we full increment of 156 megawatts from Other Income +or a 6.2 percent increase in the annual do that while still keeping our rates corn- Belle River. The electric utility continues Interest 2,102,923 2,611,350 (142,872) (148,523) 256,579 185,970 1,753,692 2,308,163 235,524 265,740 � Other 1,220,319 982,147 1,007,385 882,171 212,568 99,635 366 341 i payment we make to the City of Lansing petitive? These are our plans: to pursue markets to increase electric sales Total 3,323,242 3,593,497 (142,872) (148,523) 1,263,964 1,068,141 1,966,260 2,407,798 235,890 266,081 as a contribution in lieu of taxes. Our The second stage of a three-year water on the wholesale market, while enjoying Interest Expense Bonded debt 1,425,616 820,407 476 027 276 $5.67 million payment was larger than the rate increase takes effect in January 1995. increasing retail sales made possible by an 888 949,589 543,519 Other 220,248 240,227 (142,872) (148,523) 36,319 39,496 174,968 191,486 151,833 157,768 combined total from the city's 10 largest Beyond that, our water utility hopes to improved Lansing-area economy. Total 1,645,864 1,060,634 (142,872) (148,523) 512,346 316,384 1,124,557 735,005 151,833 157,768 property tax payers. modify the need for future rate increases by Our steam utility anticipates a mild Net Income $6,9 00,716 $ 4,4 55,134 None None $110,878 $150,076 $6,343,329 $3,1 55,632 $ 466,509 $ 1,109,426 Operating expenses, excluding fuel selling water to neighboring communities 3 percent rate increase in 1995, the utility's 4"and purchased power, declined 2 percent through wholesale water agreements or first general increase in 12 years. The rate DETAILS OF STATEMENTS OF CHANGES IN CITY EQUITY YEARS ENDED JUNE 30� � 1994 AND 1993 while total operating expenses increased participation in a regional water authority. adjustment will keep steam competitive - Combined Water Electric Steam 3.9 percent. The increase was due to higher with natural gas as a heating energy sourceM _ Contributions Contributions Contributions Contributions in Aid of Retained in Aid of Retained in Aid of Retained in Aid of Retained sales and the continued phase-in of power for General Motors and Lansing's Construction Income Construction Income Construction Income Construction Income from the Belle River plant, which will downtown businesses. Balance at July 1, 1992 $22,929,477 $287,707,763 $22,929,477 $11,483,858 $257,067,804 $19,156,101 Contributions 1,047,177 1,047,177 ensure meeting the Lansing area's future Net income 4,405,134 150,076 3,145,632 1,109,426 Equity returned to City L5 341625 (482,433) (4,470,130) (389,062) power needs. , Despite improved sales, none of our rm Balance atJune 30, 1993 23,976,654 286,771,272 23,976,654 11,151,501 255,743,306 19,876,465 Contributions 1,141,836 1,141,836 three utilities earned adequate rates of �f Net income 6,920,716 110,878 6,343,329 466,509 Equity returned to City f5 670 665 (495,701) 4 787 386 (387,578) Balance atJune 30, 1994 $25, 118,490 $288,021,323 $25, 118,490 $10,766,678 $257,299,249 $19,955,396 ce ¢Y & s V r- ,2 continued f k In December 1992,MPPA issued$44,600,000 principal amount of its Belle River Due to higher cash flows at certain times of the year, the BWL's investment in C CI M M U N 1 T Y 1 N V CI L V E M E N T Project Refunding Revenue Bonds, 1992 Series A,with rates ranging from 3.65% uncollateralized deposits, unregistered securities and in repurchase agreements to 5.80%,the proceeds of which were used,together with other available funds, for which the underlying securities were held by the bank increased significant- to refund the remaining 1983 Bonds outstanding.In March 1993, MPPA issued ly at times. The maximum amount during the year of"Uninsured and unregis- $323,615,000 principal amount of its Belle River Project Refunding Revenue tered"securities was$41,913,939, and"Uninsured and uncollateralized" Bonds, 1993 Series A,with rates ranging from 2.75%to 5.50%,the proceeds of deposits was$47,708,709. which were used to advance refund$288,775,000 aggregate principal amount of MPPA's$369,365,000 Belle River Project Refunding Revenue Bonds, 1986 Series. Management of the BWL believes that the BWL did not violate any legal or In August 1993,MPPA issued$46,190,000 principal amount of its Belle River contractual provisions for deposits and investments during the year, Project Refunding Revenue Bonds, 1993 Series B,with rates ranging from 2.65% t to 5.2%, the proceeds of which were used to advance refund the 1986 Series B 12. ESTIMATED LIABILITY FOR EXCESS EARNINGS ON WATER ' Bonds due January 1, 2019. SUPPLY AND ELECTRIC UTILITY SYSTEM REVENI¢tE BONDS In accordance with Section 148(0(2) of the Internal Revenue Code of 1986, as 10. DEFERRED COMPENSATION amended, the BWL is required on each anniversary date(July 1)of the Water The BWL offers its employees a deferred compensation plan created in actor- Supply, Electric Utility,and Steam Utility System Revenue Bonds,Series 1989 ; P P ry ys r dance with I.R.C. Section 457. All amounts of compensation deferred under A and B and Series 1994 A and B, to compute amounts representing the Aw the Plan have been recorded as BWL assets(Note 1)and all property rights cumulative excess earnings on such bonds.That amount essentially represents Aw ` purchased with such amounts, and all income attributable to such amounts, a defined portion of any excess on interest earned of funds borrowed over theP , or rights, are(until made available to the employee or other beneficia- interest cost of the tax exempt borrowin Expense is charged(credited)annu- ' property p �� � g ry)solely the property and rights of the BWL and(without being restricted to ally in an amount equal to the estimated increase (decrease) in the cumulative n a warm, sunny Saturday in mid-May, some the provisions of benefits under the Plan)subject only to the claims of the excess earnings for the year. On every fifth anniversary date and upon final BWLs general creditors. In the past, the Plan assets have been used only to pay maturity of the bonds,the BWL is required to remit to the Internal Revenue 400 volunteers worked together to clean up benefits.The BWL believes it is unlikely that it will use the assets to satisfy the Service the amount of any cumulative excess earnings computed on the date of ans Lin s River Trail and the Red Cedar and Grand rivers " claims of general creditors in the future. The Plan is administered by a trustee, such maturity plus an amount equal to estimated interest earned on previous g s. , The International City Management Association Retirement Corporation.At years segregated funds. _ x that run alongside it. June 30, 1994 and 1993,the value of the Plan assets,at market,was _ $20337,882 and$18,788,505, respectively. At June 30, 1994 and 1993, the estimated liability for excess earnings is It was the first organized river cleanup under the Board of Water : approximately$204,500 and$215,000,respectively. In accordance with the 11. CASH AND INVESTMENTS requirements of the Internal Revenue Code, the BWL is required to set aside &light's new Adopt A River program.And, by any standard, the g �` The BWL maintains special purpose investment funds designated to meet any current-year additions to this estimated liability in a Rebate Fund within 60 ,,M y" i specific operating requirements.The total of theses special purpose funds is days of the anniversary date of the bonds. day was a huge success. Adopt A River was first proposed by Mark u P P g q P PIP � asY resented on the balance sheet as "Other securities."In addition,investments p Nixon the editorial page editor of the Lansing State Journal. Nixon are separately held by several of the BWL's other designated funds. 13. EARLY RETIREMENT AND VOLUNTARY SEPARATION PROGRAM During fiscal year 1994,in conjunction with other cost-cutting measures, the proposed that a program similar to the Michigan Department of � y ; The captions on the June 30, 1994,balance sheet related to cash and invest- BWL instituted a voluntary worldorce reduction program which offered to its r - ments are as follows: employees incentives to voluntarily separate from employment with the BWL. Transportations Adopt A Highway program be adapted to the two Other securities $11,281,414 The revocation period ended July 7, 1994 and the effective date of employ- 3 F Current restricted funds 23,042,919 ment separation will be September 1, 1994.Twenty employees have elected to major rivers that run through Lansing. The program would Project funds 23,019 370 voluntarily terminate employment and seventy-three have elected early retire- Noncurrent restricted funds 18,606,904 . merit options.The BWL anticipates severance payments of approximately encourage businesses, church groups, civic clubs and others to r ,_R 1 _ 1.. Demand deposits 30,000 $370,000 for voluntary termination incentives and anticipates the increased ' ' I p mI'yadopt specific river sections and adjacent banks, to keep them ` Total $75, 880,607 pension benefits will not have a material effect on operations. ` clear of litter and perform various beautification projects. Deposits-At year-end, the carrying amount of the BWL's deposits was -- — 1 $41,913,938. Of the amount, $300,000 was covered by federal depository It was a good idea in need of some organizing. And the Board insurance and$41,613,940 was uninsured and uncollateralized. Collateral is INCOME AVAILABLE FOR YEARS ENDED of Water& Light happily stepped forward. The concept obviously not required for deposits not covered by federal deposit insurance. REVENUE BOND DEBT J U N E 3 0 R E T I R E M E N T struck a chord throughout our community because dozens of Investments-Statutes limit the BWL to investing in the obligations of the 1994 1993 United States Government and its agencies and commercial paper that is rated businesses and individuals quickly volunteered their help. in the highest category by a national recognized rating agency. Net Income Per Income Statement $ 6,920,716 $ 4,405,134 Add Some 34 organizations adopted quarter-mile sections of the The BWL's investments are categorized in the following give an indica- Depreciation expense 15 178 901 15,874,313 g g table to� � � River Trail, and hundreds of additioflol volunteers participated in tion of the level of risk assumed by the BWL at year-end. Category 1 includes Interest on long-term debt-dotes 220,248 17,164 investments that are insured or registered or for which the securities are held Interest on long-term debt-revenue bonds 1,425,616 820,407 Adopt A River's first organized cleanup May 21. The results were by the BWL or its agent in the BWLs name. Category 2 includes uninsured Total 16,824,765 16,711,884 and unregistered investments for which the securities are held by the bank's Income Available for Revenue Bonds and impressive: 100 cubic yards of litter and debris collected, 200 flats trust department or agent in the BWL's name. Category 3 includes uninsured Interest Redemption 23,745,481 21,117,018 g of flowers planted, fresh coats of redwood stain on 69 park benches, and unregistered investments for which the securities are held by the bank or Debt Retirement Pertaining to Revenue Bonds by its trust department or agent but not in the BWLs name. Principal 1,009,818 1,000,000 23 trash containers, 44 posts and 15 picnic tables. May's effort was Interest 1,425,616 820,489 Category Carrying Market Total 2,435,434 1,820,489 followed by an equally successful cleanup in early September, 1 2 3 Amount Value Income in Excess of Revenue Bonds and Following Adopt A River's first year, Nature Way Association U.S. Government Interest Requirements $ 21,310,047 $ 19,296,529 securities $31,714,669 $31714 669 $31730,116 assumed administration of the program with continuing help from F g K Commercial paper— $2,352,000 2,352,000 2,352,000 Percent Coverage of Revenue Bonds and Total investments $2,3 22,000 $31, 114,669 $34,066,669 13JR2116 Interest Requirements 975% 1,160% � q the BWL. We look forward to an even more successful year in 1995. AN ARMY OF VOLUNTEERS PITCHED IN TO ADOPT THE GRAND AND RED CEDAR RIVERS. �r y." �.� k r xz I� 1—' The pension benefit obligation was determined as part of an actuarial valuation The amount due the pension plan (see Note 5)results from unfunded current of the Plan as of February 28, 1994 and 1993.Valuation data was projected service costs for the years 1968 through 1972 and is included in plan assets forward to June 30, 1994 and 1993.Significant actuarial assumptions used in for actuarial valuation purposes, determining the pension benefit obligation include (a)a rate of return on the ' investment of present and future assets of 7.5%in 1994 and 1993,com In addition to providing pension benefits, the BWL provides certain hospital- pounded annually, (b)projected salary increases of 5.5%in 1994 and 1993, ization,major medical and life insurance benefits for retired employees in compounded annually, attributable to inflation, (c) additional projected salary accordance with Sec. 5-203 of the City of Lansing Charter. Substantially all of the BWL's employees ma become eligible for health care benefits and life `9 n increases ranging from 0.0%to 5 3%in 1994 and 1993, depending on age, y g Raising Awareness of Groundwater Resources attributable to seniority/merit,and(d) the assumption that benefits will not insurance benefits if they reach normal retirement age while working for the increase after retirement. BWL. The entire cost of life insurance benefits will be paid by bargaining unit Need a rundown of Lansing businesses that accept used motor ad . employees.The benefits are provided through an insurance company whose At June 30, 1991,arid 1993, the assets in excess of pension benefit obligation premiums are based on the benefits paid during the year.The BWL recognizes oil?Want tips on how to safely dispose of household chemicals? „. were$21,518,873 and$30,773,523;respectively,as follows: the cost of providing these benefits by expensing the annual insurance prerm Answers to those questions and more were provided to BWL ums,which were$2,213,153 for 1994 and$1,940,044 for 1993.There were <. 1994 1993 511 and 501 participants eligible to receive benefits at June 30, 1994 and customers in four monthly billing inserts. The idea was to help Net assets available for plan benefits,at market $147,085,831 $148,940,228 1993,respectively. , folks understand the importance of protecting our oundwater, Pension benefit obligation po p g gr 8. COMMITMENTS AND CONTINGENCIES Retirees and beneficiaries currently receiving the source of all drinking water in the Lansing area. The recycling w benefits and terminated employees with At June 30, 1994, the BWL has an unused open letter of credit totaling vested benefits 48,874,343 43,208,813 $817,220 issued to the Michigan Department of Natural Resources.The letter information has since been consolidated in a handy brochure. N Current employees of credit was issued to satisfy requirements of the Michigan Department of Vested benefits-employer financed 67,688,996 66,392,332 Natural Resources to provide financial assurance to the State of Michigan for Hundreds of customers have requested copies, but we still have s Nonvested benefits-employer financed 9,003,619 8,565,560 the cost of closure and post-closure monitoring and maintenance of a landfill some available. Call us at 371-6041 and we'll be happy to 4 Total pension benefit obligation 125,566,958 118,166,705 site operated by the BWL. ` Assets in excess of pension benefit obligation $ 21,518,873 $ 30,773,523 The BWL is subject to various laws and regulations with respect to environ- mental matters such as air and water quality,soil contamination,solid waste We're also putting our words into action when it comes to Contributions Required and Contributions Made The pension plan's funding disposal,handling of hazardous materials and other similar matters. In the Fall of 1990 we launched amulti-item recycling policy provides for periodic employer contributions at actuarially determined Compliance with these various laws and regulations could result in substantial recycling. Y rates that, expressed as percentages of annual covered payroll, are designed to expenditures.The BWL has established a Designated Purpose Fund(see Note and waste reduction program at all 15 of our BWL work locations. accumulate sufficient assets to pay benefits when due.The normal cost and 1) of which one of the purposes of the funds is to meet extraordinary expendi- amortization payment for the years ended June 30, 1994 and 1993,were lures resulting from responsibilities under environmental laws and regulations, Now,we're reusing more and throwing out less. Last year,we determined using an attained age actuarial funding method. Overfunded actu- Management believes that all known or expected responsibilities will not be arial accrued liabilities were amortized as a level dollar reduction of contribu- material to the financial statements and will be sufficiently covered by the recycled more than 235,000 pounds of paper and other material - "� tions over a period of 30 years. Designated Purpose Fund. while cutting waste material sent to landfills by 35 percent from During the years ended June 30, 1994 and 1993,employer contributions total- The BWL is involved in various other legal actions which have arisen in the 1990 levels.The efforts earned an Environmental Award from the ing$3,816,445 and$3,950,115,respectively,were made in accordance with normal course of business.Such actions are usually brought for claims in wcp is®o contribution requirements determined by an actuarial valuation of the Plan as excess of possible settlement or awards,if any, that may result.After taking into Greater Lansing Home Builders Association. Ana i~, "" ,M of February 28, 1993 and February 29, 1992. In 1994 and 1993,employer consideration legal counsel's evaluation of pending actions,management is of n t. contributions consisted of$5,441,699 and$5,387,518,respectively, for nor- the opinion that the outcome thereof will not have a material effect on the _ mal costs less$1,625,254 and$1,437,403,respectively,for amortization ofthe financial position of the BWL. Al overfunded actuarial accrued liability.The employer contributions for 1994 and 1993 represented 10.52%and 10.80%,respectively, of projected covered pay- In POWER SUPPLY PURCHASE ' p 1 p q February In 1983 the BWL entered into 35- ear power supply and project support con- 4 roll(projected payroll is equal to 1.036822 times the Febru 29 1992 valua- Y P pP Y P j pp K _ an tracts with the Michigan Public Power en (MPPA),of which the BWL is a tion payroll). g Agency member. Under the agreement, the BWL will purchase 64.29%of the energy ` There were no changes in the actuarial assumptions or methods or changes in generated by MPPNs 37.22%ownership in Detroit Edison's Belle River Unit . ` #1 which became operational in August 1984.These contracts require the benefit provisions affecting the February 28, 1993 and February 29, 1992 p gu q actuarial valuations. BWL to purchase approximately 15 megawatts of power in 1991,increasing to 156 megawatts in 1995 and thereafter.Detroit Edison repurchased 100%of Significant actuarial assumptions used to compute contribution requirements MPPAs entitlement from 1984 to 1991. During the repurchase period,MPPA ' were the same as those used to compute the standardized measure of the pen used the net cash flow generated from the sell-back to Detroit Edison to retire FOUR SUMMER ISSUES OF CONNECTIONS Sion benefit obligation. a portion of the outstanding bonds. For the year ended June 30, 1994, the a .< BWL recognized expenses totaling$36,997,633 to purchase power under the PROVIDED CUSTOMERS WITH USEFUL, ENVIRONMENT-FRIENDLY ADVICE. Analysts of Funding Progress-=Analysis of the dollar amounts of net assets terms of this contract.The price of this power was calculated on a basis, as. . y available for plan benefits,pension benefit obligation,and assets in excess of specified in the contracts, to enable MPPA to recover its production, transmis- .. the pension benefit obligation,in isolation,can be misleading. Expressing net Sion and debt service costs. ' assets available for plan benefits as a percentage of the pension benefit obliga- tion provides one indication of the extent to which the Plan is funded.Analysis Under the terms of its contract, the BWL must make minimum annual pay- u of this percentage over time indicates whether the Plan is becoming financially menas equal to its share of debt service and its share of the fixed operating " stronger or weaker.Trends in unfunded pension benefit obligation and annual costs of Detroit Edison's Belle River Unit#1.The estimated required payments covered payroll are both affected b inflation. Expressing the assets in excess of presented below assume no early calls or refinancing of existing revenue bonds P Yr Y FxP g s the pension benefit obligation as a percentage of the annual covered payroll and a 4.0%annual inflation of fixed operating costs. approximately adjusts for the effects of inflation and aids analysis of the Plan's z, Fiscal Year Debt Service Fixed Operating Total Required funding progress. $ $ $ 19951996 17,021,077 7,027,018 24,048,095 18,278,194 ' Fiscal 1997 18,725,580 7,992,8 96 98 2605 , �,99 8 w Year (1) (2) (3) (4) (5) (6) 1987 $80,536,399 $71,581,468 112.5% $8,954,931 $26,375,807 33.9% 1998 19,215,927 8,311,886 27,527,813 ��` 1988 85,945,213 78,467,688 109.5 7,477,525 29,003,074 25.8 1999 19,484,843 8,644,361 28,129,204 F 2019 � - m � 1989 98,993 574 83,698,572 118.3 15,295 002 30,784,780 49.7 2000- 388,061,415 267,708,962 655,770,377 s 1990 108,561,375 89,973,351 120.7 18,588,024 31,160,563 59.7 Total $480,787,036 $307,369,230 $ 788,156,266 1991 118,132,308 100,240,617 117.8 17,891,691 32,553,571 55.0 �F 1992 134,286,496 109,308,719 122.9 24,977,777 34,168,564 73.1 u K" In addition to the above required payments, the BWL must pay for fuel, other 1993 148,940,228 118,166,705 126.0 30,773,523 35,276,195 87.2 operating costs,and transmission costs related to any kilowatt hours (IZVVHs) 1994 147,085,831 125,566,958 117.1 21,518,873 36,277,993 59.3 purchased under these contracts. " 1=Net Assets Available for Plan Benefits(At Market) 4=Assets in Excess of PBO(1)-(2) g 2=Pension Benefit obligation(PBO) s=Animal Covered Payton In connection with the Belle River purchase,MPPA issued$590,000,000 of 3=Percentage Funded(1)1(2) 6=Assets in Excess of PBO as a Percentage of Gaveled Payroll(4)/(5) Wn J ]? Belle River Project Revenue Bonds in September 1983. In March 1986,MPPA A separate report-Plan for Employees'Pension of the Board of Water& defeased $335,000,000 of the initial Revenue Bonds with interest rates rang- <� � Light-provides historical trend information regarding progress made in accu- ing from 10-3/8%to 10-5/8%through the sale of$369,365,000 of refunding mutating sufficient assets to pay benefits when due. bonds with interest rates ranging from 5%to 7-3/8%. 1 f 1 1 1 Cash and Cash Equivalents-The BWL considers only the amounts of demand Water Supply and Electric Utility System Revenue 1 E X E C U T I V E S T A F F deposits and current restricted funds,which consist of cash and highly-liquid Bonds,Series 1994B,due serially through investments with an original maturity of 90 days or less, as cash and cash July 1, 2008, plus interest at rates ranging 1 equivalents for purposes of the statements of cash flows. from 3.95%to 5.00% 2,971,000 Water Supply and Electric Utility System Revenue � xk Other Securities-The BWL has established special purpose funds designated to Bonds,Series 1989A,due serially through meet specific operating requirements. These funds consist principally of certifi- July 1, 2004,plus interest at rates ranging Joseph Pandy,Jr. Terry D. Graham cates of deposit and United States Government securities and are segregated as from 5.75%to 7.75% 10,000,000 11,000,000 General Manager Director, Consumer Services : follows: Water Supply and Electric Utility System Revenue Bonds,Series 1989B, due serially through Joseph ose h D. Wolfe Roger A. Ophaug Carrying Value at June 30 July 1,2004, plus interest at rates ranging Designated Purpose 1994 1993 from 6.30%to 6.75% 1,652,414 1,649,070 Assistant General Manager Director, Engineering Planning Coal inventory fluctuation $3,065,714 $2,994,967 Land contract, due in annual installments of Litigation, environmental and uninsured losses 8,215,700 8,021,861 $40,000, including interest at 8%, Dana W, Tousley John Strickler Future power requirements 8,874,335 through July 26, 1994 37,038 71,332 Amount due Plan for Employees'Pensions in Treasurer/Controller Director, Communications and Marketing Total JU2i8l414 $19, 991,163 annual installments of$242,500,including , interest at 5.5%, through June 30, 2012 2,725,862 2,813,613 Clyde R. Dugan Mark Vander Jagt 2. RATE MATTERS Note payable,due in annual installments of o Director Water Utility Director, Human Resources Rates charged to customers are established solely by the governing board.The $31,245,including imputed interest at 7.0/o, BWL has agreed to charge rates sufficient to meet certain requirements of the with final payment September 30, 1996 76,225 96,736 bond resolution for the outstanding revenue bonds. Total 37,462,539 15,630,751 Roy E. Peffley Lawrence H. Wilhite Less current portion 1,099,403 1,142,556 Director, Electric Utility Staff Attorney, Special Assistant City Attorney 3. CONSTRUCTION IN PROGRESS Total 36 363136 111&8195 Construction in progress consists of major projects for expansion or addition to F , utility plant.The estimated additional cost to complete these projects,based Aggregate annual principal payments applicable to longterm debt are as follows: Joette C. Woodard Yauk Mary E. Sova on BWL authorizations, approximates$69,650,000 at June 30, 1994,includ- ing commitments on existing construction contracts approximating ,099,403 $10,520,000. These projects will be funded through operational cash flow, 1996 1,122,985 „ including the project funds reported as other assets, and, to the extent that 1997 1,131,163 Jolm'Elashkar Kellie L. Willson favorable rates can be obtained, through the issuance of bonded debt. 1998 1,108,708 1999 2,11.4,687 Director, Services Internal Auditor tea^ . 4. RESTRICTED FUNDS Thereafter 30,885,593x Total 37,462,539 The restricted funds at June 30, 1994,are required under the 1989 and 1994 Revenue Bond resolutions and the Nonarbitrage and Tax Compliance Certificates. These funds,which consist of cash, certificates of deposit, and Resolutions of the 1989 and 1994 bonds require the BWL to establish a United States Government securities, are segregated into the following funds: reserve account equal to the highest annual principal and interest requirements ' D E P E of such issues.Aso June `l`f 3 0 1994 the balance f h'eo t r J , is reserve account was Required at Ca Value at Ca Value at $2,874,133 (see Note 4). In order to assure the availability of funds necessary �� q �g rune to redeem the 1989 Series B bonds which are redeemable on demand the June 30 1994 Q ® R E J June 30, 1994 June 30, 1993 BWL obtained a$2,000,000 unsecured line of credit.At June 30, 1994, there Current re no outstare Bono_,' under this line of credit- Maintenance Operations and we r Fund $15,036,000 $20,309,901 $16,318,707 Bond and Interest All Water Supply and Electric Utility System Revenue Bonds were issued by Honorable Mayor, Members of City Council, an In our opinion, the financial statements referred to above Redemption Fund 1,872,988 2,733,018 1,854,008 authority of the Board of Water&z Light-City of Lansing, Michigan.These Total current 23,042,919 18,172,715 bonds were issued on a panty basis and are payable solely from the net rev- of the Board of Water& Light: present fairly,in all material respects, the financial position of the Noncurrent enues of combined water, electric and steam operations of the BWL. We have audited the accompanying balance sheets of the Board Board of Water&Light-City of Lansing, as of June 30, 1994 Construction Fund 15,517,646 15,517,646 The BWL may redeem outstanding Water Supply and Electric Utility System Bond Reserve Fund 2,856,042 2,874,133 of Water&r Light-City of Lansing as of June 30, 1994 and 1993, and 1993, and the results of its operations and its cash flows for Rebate Fund 204,557 215,125 190,303 Revenue Bonds prior to maturity at a premium and in the manner specified in Total noncurrent 18,606,904 190,303 the resolutions. and the related statements of income, changes in city equity, and the years then ended in conformity with generally accepted Total $41,649,823 $18,363,OI8 6. TRANSACTIONS W1Tli THE CITY OF LANSING, MICHIGAN cash flows for the years then ended. These financial statements are accounting principles. Operations-The BWL recognized revenues of$4,959,119 and$5,044,173 in The restrictions of the various funds are as follows: 1994 and 1993,respectively,for water, electric and steam services provided to the responsibility of the Board's management. Our responsibility is Our audits of the financial statements of the Board of Water& Operations and Maintenance Fund-By the end of each month this fund shall the City. The BWL incurred expenses for sewerage services purchased from the OPe}' Y � to express an opinion on these financial statements based on our Light-City of Lansing for the years ended June 30, 1994 and 1993, include sufficient funds to provide for payment of the succeeding month's expenses. City of$75,926 and$83,093 in 1994 and 1993, respectively. Bond and Interest Redemption Fund-This fund is restricted for payment of the Additionally, the BWL bills and collects sewerage fees for the City. In connec- audits. were made for the purpose of forming an opinion on the basic current portion of bond principal and interest. lion with these services, the BWL received sewerage collection fees of We conducted our audits in accordance with generally accepted financial statements taken as a whole. The additional information Construction Fund-This fund is restricted for payment of costs of the 1994 $987,267 and$886,689 in 1994 and 1993,respectively. auditing standards. Those standards require that we plan and which follows note 13, and which concludes on page 14, is bonded projects and costs of issuance of the 1994 revenue bonds. Equity Returned-The BWL returned to the City$5,670,665 in 1994 and p $5,341,625 in 1993 of operational cash flow in excess of debt service require- perform the audit to obtain reasonable assurance about whether presented for purposes of additional analysis and is not a required Bond Reserve Fund-Commencing February 1, 1994,for a period of 12 ments. the financial statements are free of material misstatement. An part of the basic financial statements. Such information,which is months, equal monthly amounts are deposited into this account until suffi- 7 RETIREMENT PLAN audit includes examining, on a test basis evidence supporting the the responsibility of the Boards management, has been subjected cient funds are available to cover the maximum annual principal and interest g� pp g p tY g , Plan Description The requirements for the outstanding 1994 and 1989 revenue bonds. has a noncontributory pension plan covering sub- amounts and disclosures in the financial statements. An audit also to the auditing procedures applied in the audits of the basic stantially all full-time employees. yees.A participant's interest is fully vested when g p pp nt.h i articpa as been credited with 10 years of vesting service. Rebate Fund-This fund shall include sufficient funds to enable the BWL to the p includes assessing the accounting principles used and significant financial statements and, in our opinion, the information is fairly rebate arbitrage investment earnings to the federal government in accordance Funding Status and Progress-The amount labeled as the "pension benefit obli- estimates made b management, as well as evaluating the overall stated in all material respects in relation to the basic financial with Section 148(fl(2) of the Internal Revenue Code of 1986, as amended.At y mana g , g June 30, 1994, the estimated liability for excess earnings is approximately gation"in the accompanying table is a standardized disclosure measure of the $204,557. present value of pension benefits, adjusted for the effects of projected salary financial statement presentation.We believe that our audits provide statements taken as a whole. increases estimated to be payable in the future as a result of employee service to a reasonable basis for our opinion. 5. LONG-TERM DEBT date.The measure is the actuarial present value of credited projected benefits Long-term debt as of June 30 consists of the following: and is intended to (a)help users assess the pension plan's funding status on a J��� 1994 1993 going-concem basis, (b)assess progress being made in accumulating sufficient ZZ assets to pay benefits when due,and(c)allow for comparisons among other August 26, 1994 Water Supply and Electric Utility System Revenue municipal utility pension plans. The measure is independent of the actuarial July 1,2013,pluuss in Bonds,Series 1 n due serially throughterest at rates ranging funding method used to determine contributions to the pension plan. from 4.70%to 6.20% $20,000,000 BALANCE SHEETS YEARS ENDED STATEMENTS OF INCOME YEARS ENDED STATEMENTS OF CASH FLOWS YEARS ENDED NOTES TO FINANCIAL STATEMENTS DUNE 30 J U N E 30 J U N E 30 YEARS ENDED JUNE 30, 1994 AND 1993 1994 1993 1994 1993 1994 1993 ' ASSETS Cash Flows from Operating Activities 1. SIGNIFICANT ACCOUNTING POLICIES Operating Revenues(Note i) Cash from customers Reporting Entity-The Board of Water&Light(BWL), a component unit of the Utility Plant(Note i) Water $ 12,813,921 $ 12,292,545 Water $ 13,466,237 $ 13,495,405 City of Lansing(the"City"),is an administrative board established by the City j Electric 129,969,675 121 519,155 Charter.The Ci Charter is the BWL full and exclusive many ement of Water $ 85,949,748 $ 83,986,328Electric 128,407,574 121,520,519 �' g Electric 344,851,913 333,218,756 Steam 10,080,924 10,202,619 the water,heat,steam and electric services of the City.The commissioners of Steam 10,080,806 10,157,792 ty Total operating revenues 152,864,520 144,014,319 Total 151,954,617 145,173,716 the governing board are appointed by the Mayor with approval of the CitySteam 24,352,462 22,273,609 Council.The BWL provides electric,water and steam services to the Cityand Common facilities 44,596,514 43,449,770 Operating Expenses surrounding townships.s. The financial statements include the financial activities Total 499,750,637 482,928,463 Cash paid to suppliers and employees g P Production of the water,electric and steam operations t of the BWL.The BWL is exempt Suppliers of coal,freight and P p Less accumulated depreciation 271,215,983 258,566,629 Fuel and other operating expenses 83,417,306 76,335,740 purchased power (67,721,109) (61,242,553) from taxes on income because it is a municipal entity. Total 228,534,654 224,361,834 Maintenance 7,813,083 9,311,415 Construction in progress(Note3) 33,737,224 24,689,127 Transmission and distribution Other suppliers and employees (61,755,474) (60,744,109) System o Accounts.-The BWLs accounts are maintained substantially in actor- Total utility plant 262,271,878 249,050,961 Operating expenses 5,038,876 5,485,511 Total (129,476,583) (121,986,662) Y f y ,670,665) (5,341,625) dance with the Uniform Systems of Accounts of the Federal Energy Regulatory Equity returned to City of Lansing (5 Maintenance 4,177,044 3,117,614 Net cash provided by operating activities 16,807,369 17,845,429 Commission for the electric and steam systems and in accordance with the Noncurrent Restricted Funds(Notes a and 11) 18,606,904 190,303 Administrative and general 31,995,972 32,017,455 Uniform Systems of Accounts of the National Association of Regulatory Utility Depreciation(Note 1) 15,178,901 15,874,313 Cash Flows from Capital and Related Financing Activities Commissioners for the water system. Other Assets Total operating expenses 147,621,182 142,142,048 Proceeds from new borrowings 22,994,731 12,628 Project funds(Notes3and ii) 23,019,370 25,197,705 Contribution in aid of construction-water 1,141,836 1,047,177 Utility Plant is stated on the basis of cost,which includes expenditures for Deferred compensation plan assets(Notes�and io) 20,337,882 18,788,505 Operating Income 5,243,338 1,872,271 Major construction (17,184,774) (20,113,285) new facilities and those which extend the useful life of existing facilities and Deferred compensated absences(Note a 4,589,860 Normal construction (11,176,546) (10,301,454) equipment. Expenditures for normal repairs and maintenance are charged to Other Income Perpetual care fund 36,691 27,998 Interest 2,102,923 2,611,350 Principal payments on debt (1,075,191) (1,050,216) maintenance expense as incurred. Other work in progress 110,241 148,740 Other 1,220,319 982,147 Interest on debt (914,957) (880,186) Depreciation of utility plant is computed using the straight-line method based Total other assets 48,094,044 44,162,948 Total other income 3,323,242 3,593,497 Net cash used for capital and on estimated useful lives. The resulting provisions for depreciation in 1994 and related financing activities (6,214,901) (31,285,336) 1993 expressed as a percentage of the average depreciable cost of the related Current Assets Interest Expense assets are as follows: Demand deposits(Note iu 30,000 30,000 Bonded debt 1,425,616 820,407 Cash Flows from Noncapital Financing Activities Other securities(Notes i and in 11,281,414 19,891,163 Other 220,248 240,227 Customer deposits (10,922) (175,061) Average Rate Accounts receivable,less allowance for Total interest expense 1,645,864 1,060,634 Interest on customer deposits (53,282) (63,740) Pension fund debt payments (87,751) (83,177) Classification of Utility Plant 1994 1993 .3 uncollectible accounts of$615,000 p ym in 1994 and 1993 12,028,785 10,103,701 Net Income � 6,920,716 $ 4,405,134 Interest on pension fund debt (154,749) (159,323) Water 2.8 3.1 Customer advances 1,125 (2,698) Electric 2.8 3.1 Interest and dividends receivable 325,015 239,359 see Notes to Financial statements. Other 194,569 80,388 Steam 2.8 2.8 Inventories(Note i) 11,097,072 16,372,416 Net cash used for noncapital Common facilities 6.2 6.5 Prepaid expenses 319,089 320,226 STATEMENTS OF CHANGES financing activities (111,010) (403,611) Restricted funds(Notesaand 1]) 23,042,919 18,172,715 IN CITY EQUITY When units of property are retired, their costs are removed from utility plant Deferred compensated absences(Note 1) 4,171,825 2,396,179 Cash Flows from Investing Activities and charged to accumulated depreciation. Total current assets 62,296,119 67,525,759 Contributions in Aid Retained Proceeds from the sale and of Construction Income Total maturity of investments 34,263,334 43,868,683 Inventories are stated at weighted average cost and consist of the following at Total Assets $391,268,945 $360,929,971 Interest received 2,017,267 2,921,614 June 30: Balances at x - Purchase of investments (41,891,852) (34,857,102) July 1, 1992 $22,929,477 $287,707,763 $310,637,240 Net cash provided by(used in) 1994 1993 Contributions(Note 1) 1,047,177 1,047,177 investing activities (5,611,251) 11,933,195 Coal $ 6,357,645 $11,387,758 CITY EQUITY AND LIABILITIES Net income 4,405,134 4,405,134 Materials and supplies 4,739,427 4,984,658 Equity returned to City 5 341625 (5,341,625) Net Increase(Decrease)in Cash and Cash Equivalents 4,870,207 (1,910,323) Total $11,097,072 $16,372,416 City Equity More 6 Contributions in aid of construction $ 25,118,490 $ 23,976,654 Balances at Cash and Cash Equivalents at Beginning of Year 18,202,715 20,113,038 Contributions in Aid of Construction represent nonrefundable amounts Retained income 288,021,323 286,771,272 June 30, 1993 23,976,654 286,771,272 310,747,926 Total City equity 313,139,813 310,747,926 Contributions(Note l) 1,141,836 1,141,836 received from customers for construction of utility plant.In accordance with Net income 6,920,716 6,920,716 Cash and Cash Equivalents at End of Year $ 23,072,922 $ 18,202,715 BWL policy,contributions for water are credited to Cityequity upon receipt, Long-Term Debt,Less Current Portion(Notes) 36,363,136 14,488,195 Equity returned to City _ 5 670 665 5 670 665 and electric and steam contributions are credited against the related assets. Arbitrage Rebate Payable(Note u) 204,557 215,125 (Note 6) Reconciliation of Operating Income to Net Cash Balances at Provided by Operating Activities Revenue is recorded when the customer is billed.Accordingly, the current year June 30, 1994 25 118 0 $288,021,323 $313,139,813 Operating income $ 'j,243,338 $ 1,872,271 revenue from customers whose billing period ends after June 30 will be reco Deferred Compensation(Notes i and io) 20,337,882 18,788,505 g p J g- Adjustments to reconcile operating income to net nized when billed. See Notes to Financial Statements. cash provided by operating activities Deferred Compensated Absences(Note I) 4,589,860 Equity returned to City of Lansing (5,670,665) (5,341,625) The water,electric and steam operations of the BWL bill each other for services Depreciation 15,178,901 15,874,313 provided, and these services are reported as revenue to the generating opera- Advances for Construction 239,928 238,804 Sewerage collection fees 987,267 886,689 Merchandising 27,914 39,893 don and expense to the consuming operation.Such internal billings aggregated Current Liabilities Changes in assets and liabilities $3,099,175 and$2,964,000 in 1994 and 1993,respectively. Accounts payable 8,092,959 9,526,925 Accounts receivable (1,925,083) 232,814 Deferred Compensated Absences-Effective July 1, 1993, the BWL adopted the Compensation and related amounts withheld 1,176,660 2,044,788 Inventories 5,275,344 1,643,042 provisions of Governmental Accounting Standards Board Statement(GASB) Customer deposits and related accrued interest 912,875- 923,797 Prepaid expenses 1,137 25,256 No. 16 which requires recording a liability for estimated compensated absences Accrued compensated absences(Not,1) 4,171,825 2,396,179 Payables (526,446) 2,789,178 Other and deferred costs (1,784,338) (176,402) that are attributable to services already rendered and that are not contingent on Accrued interest 940,047: 417,171 a specific event that is outside the control of the BWL and employee.This lia- Current portion of long-term debt (Moto) 1,099,403 1,142,556 Total adjustments 11,564,031 15,973,158 bility is to be accrued as employees earn the rights to such benefits.At June Total current liabilities 16,393,769 16,451,416 Net Cash Provided by Operating Activities $ 16,807,369 $ 17,845,429 30, 1994, the BWL estimates the current and noncurrent portions of the liabil- Noncash Transactions-During the years ended June 30, 1994 and 1993 the iry to be $8,761,685.The BWL has recorded such liability in accordance with Total City Equity and Liabilities $391,268,945 $360,929,971 Board of Water&Light-City of Lansing recorded$(10,569)and$24,822, the provisions of Statement of Financial Accounting Standards (SFAS) No. 71, See Notes to Financial Statements. respectively,for arbitrage rebate expense,which have not been reflected in the which provides,among other things, the deferral of costs to be recovered statements of cash flows. through future rate increases.Accordingly, at June 30, 1994, the BWL has recorded as deferred assets and liabilities current amounts of$4,171,825 and See Notes to Financial Statements. noncurrent amounts of$4,589,860. Deferred Compensation-In accordance with the provisions of Governmental Accounting Standards Board Statement(GASB)No. 2,deferred compensation funds and the associated liability(see Note 10)are reflected in the financial statements.