oversight

Financial Statements of Alaska Federal Power Program

Published by the Government Accountability Office on 1977-02-11.

Below is a raw (and likely hideous) rendition of the original report. (PDF)

                         DOCUMENT RESUME
00282 - [A0751243J

Financial Statements of Alaska Federal Power Program. BED-77-17;
B-188151. February 11, 1977. 1 pp. + enclosures (8 pp.).

Report to Secretary, Department of Commerce; by Robert F.
Keller, Deputy Comptroller General.

Issue Area: Accounting and Financial Reporting (2800).
Contact: Energy and Hinerals Div.
Budget Function: General Government: Central Fiscal Operations
    (803).
Organization Concerned: Department of the Army: Corpu of
    Engineers; Alaska Power Administration.
Congressional Relevance: House Committee on Interior and Insular
    Affairs; Senate Committee on Public works.

         The statement of assets and liabilities of the Alaska
Federal Power Program was examined ia accordance with generally
acceptei auditing standards. The examination included tests of
the accounting records of the Alaska Power administration and
the Corps of Engineers District Office. Pindings/Conclusions:
Total operating revenues for the fiscal year ended June 30,
1976, were $2,125,000. Operating expenses were $1,355,000; net
operating revenues were $770,000; the net interest expense was
$2,046,000; and the net revenue was a loss of S1,276p000. The
Program had total assets of S109,159,000 in 1976. (RES)
       co>   ~      ~COMPTRCL.LER                GENERAL OF THE UNITED STATES
(il%                                         WASHINGTON. D.c.   "4



                 B-188151



                 The Honorable                                                  FEB   11   g
                 The Secretary of the Interior

                 Dear Mr. Secretary:

                      We have examined the Statement of Assets and Liabilities of the
                 Alaska Federal Power Frogram (see note 1 to the Financial Statements)
                 as of June 30, 1976, and June 30, 1975, and the related Statements of
                 Revenues and Expenses and of Changes in Financial Position for fiscal
                 years 1976 and 1975. Our examination was made in accordance with gen-
                 erally accepted auditing standards and included tests of the accounting
                 records of the Alaska Power Administration, Juneau, Alaska, and the
                 Corps of Engineers District Office in Anchorage, Alaska, and such other
                 auditing procedures as we considered necessary.

                      In addition, we reviewed pertinent legislation and congressional
                 hearings and reports applicable to the Alaska Power Administration and
                 Corps of Engineers activities in constructing and operating the Alaska
                 Power Administration.

                      The accompanying financial statements were prepared on a cost-
                 accounting basis which included depreciation. The statements do not
                 present the financial results on a basis designed to show whether power
                 rates are adequate to repay the Federal investment in the program either
                 for the fiscal year or cumulatively. (See note 1 to the financial
                 statements.)

                      In our opinion the accompanying financial statements (exhibits 1,
                 2, and 3) present fairly the financial position of the Alaska Federal
                 Power Program at June 30, 1976, and June 30, 1975, the financial results
                 of its power operations, and the change3 in financial position for the
                 years then ended, in conformity with accounting principles and standards
                 prescribed by the Comptroller General of the United States.

                      We are sending copies of this report to the Director, Office of
                 Management and Budget; the Chairman, Federal Power Commission; the
                 Administrator, Alaska Power Administration; and the Chief of Engineers.

                                                       Sincerely yours,




                                             DEPUTY Comptroller General
                                                    of the United States

                 Enclosures - 6                                                            EMD-77-17
                                                                   EXHIBIT 1

                      ALASKA POWER ADMINISTRATION
                         FEDERAL POWER PROGRAM
                  STATEMENT OF REVENUES AND EXPENSES
               FOR THE FISCAL YEARS ENDED JUNE 30, 1976
                           AND JUNE 30, 1975
                            (In thousands)

                                       Comb4 ned total                 1976
                                       1976      1975      Eklutna       Snettisham
                                               (Note 2)
OPERATING REVENUES:
  Seles of electric energy:
     Municipalities                $     783   $    479    $     783
     Rural cooperatives                  709        677          634       $     75
     Privately owned utilities           570                                    570
     Other                                 7          5            3              4

       Total                           2,069    1,161          1,420            649

  Other operating revenues                56          21          34             22

       Total operating revenues        2,125       1L182       1,454            671

OPERATING EXPENSES:
  Operation and maintenance
     expense:
     Operating expense                   660         291         357            303
     Maintenance expense                 311         146         175            136

       Total operation and
         maintenance expense             971         437         532             439
  Depreciation                           384         154         164             220

     Total operating expenses          1,355         591         696             659

       Net operating revenues            770         591         758              12


INTEREST:
  Interest on Federal investment
      (Note 3)                         2,761       2,534         556           2,205
  Less interest charged to
     construction                        715       1,981                         715

       Net interest expense            2,046         553         556           1,490

NET REVENUE (LOSS) (Exhibit 2)     $(1,276)     $     38   $     202      $(1,478)




"Notes to the Financial Statements" are an integral part of this statement.
                              ALASKA POWEL ADMINISTRATION
                                 FEDERAL POER PROGRAM
                          STATEMENT OF ASSETS AND LIABILITIES                                                                                                                 EXHIBIT 2
                         AS OF JUNE 30, 1976 AND JUNE 30, 1975
                                    (In thousands)


                                                  Combined total                   iY76                                                   Combired total                       1976
                                                1976        1975       Eklutna        Snettisham                                        1976        1975        Eklutna           Snettisham
                ASSETS                                                                                          LIABILITIES

FIXED ASSETS:                                                                                       PROPRIETARY CAPITAL:
  Completed plant (Note 2)                 $109,834       A 32,621     $32,073         $77,761        Investment of U.S. Government:
  Less accumulated depreciation            _   2j482         2,081       2,_z45            237          Congressional appropriations   $ 40,940    $ 39,885     $39,616            $ 1,324
                                             107,352        30,540      29,828          77,524          Interest on Federal
                                                                                                          investment (Note 3)            25,864     23,098       15,067             10,797
 Construction work in progress             _     1,411      ;4,899            1            1,410        Transfers from other Federal
                                                                                                          agencies, net                 65,913      62,906      _3,46*              69,339
   Total fixed assets                          108,763     105,439      29,829          78,934
                                                                                                         Gross Federal investment
                                                                                                            (Note 6)                    132,717     '25,889      51,257             81,460
                                                                                                     Less funds returned to U.S.
                                                                                                       Treasury                          30,813      28,540      29 915                898

                                                                                                        Net Investment of U.S.
                                                                                                          Government                    101_904      97,349      21,342             80 562

                                                                                                      Accumulated net revenues
                                                                                                        (Note 2):
                                                                                                        Ealace at beginn ng of vear       8,242       6,686        8,242                  0
                                                                                                        Net revenues--currenP year
                                                                                                          (Exhibit 1)                     1,276*           '8        702             1,478*
                                                                                                        Prior years adjustment
                                                                                                          (Note 5)                           11*      1,518              11*              0
                                                                                                                                                                          3
                                                                                                          Balance at end of year          6,955       8,8242       8,x3              1,478*

                                                                                                          Total proprietary capital     138,859     105,591      29,775             79,084

CURRENT ASSETS:                                                                                     CONTINGENCIES (Note 4)
  Unexpended funds                                  81          82           41               40
  Special funds                                     17           17           17               0    CURRENT LIABILITIES:
  Accounts receivable                              206         161           76              130      Accounts payable                       39            6R            16               23
  Materials and supplies                             t4                        0               4      Employees accrued leave                76            72            55               21
  Prepayments                                        5             0          6                1*
                                                                                                        Total current liabilities           115         140              71               44
    Total current assets                           313         264          140              173
                                                                                                    OTHER LIABILITIES AND DEFERRED
OTHER ASSETS AND DEFERRED CHARGES                   E3         286           62        _      2-1     CREDITS                               185         258           185                  0

    TOTAL ASSETS                           $109,159       $105,989     $30,031         $79,128          TOTAL LIABILITIES              $109,159    $105,989     $30,031            $79128




* Denotes deduction

"Notes to the Firancial Statements" are an integral part of this statement.
                                                                     EXHIBIT 3

                      ALASKA POWER ADMINISTRATION
                         FEDERAL POWER PROGRAM
              STATEMENT OF CHANGES IN FINANCIAL POSITION
               FOR THE FISCAL YEARS ENDING JUNE 30, 1976
                           AND JUNE 30, 1975
                            (In thousands)

                                       Combined total                   1976
                                        1976     1975       Eklutna       Snettisham
FINANCIAL RESOURCES
  PROVIDED FROM:
  Operations:
    Net revenues                       $1,276*   $    38    $   202        $1,478*

    Expenses not requiring
      repayment                           384       154         164              220
    Prior years adjustments (Note 5)       11     1,518          11*               0

      Resources provided
        from operations                   903*    1,710         355         1L258*

  Federal investment:
    Congressional appropriations        1,055        601        545              510
    Transfers from other Federal
      agencies, net                     3,007       675*        541*        3,548
    Interest on Federal investment      2,766     2,609         562         2,204

      Resources provided from
        Federal investment              6,828     2,535         566         6 262

  Other resources:
    Decrease in other assets net
      of other liabilities                130        125*       140               10*

      Total resources provided         $6,055    $4,120     $1,0XC         $4,994

FINANCIAL RESOURCES USED:
  Investment in electric utility
    plant and facilities, nit          $3,708    $3,041     $   551*       $4,259

  Funds returned to U.S. Treasury       2,273     1,259      1,584               689

  Other uses:
    Increase in current assets net
      of current liabilities               74        180*        28               46

      Total resources used             $6,055    $4,120     $1,061         $4,994

* Denotes deduction

"Notes to the Financial Statements" are an integral part of this statement.
                                                                                                                                   ,'cbsdul   A

                                                    ALASKA POWER ADMINISTRATION
                                                        FEDER.L i'OWER PROGRAM
                                                           EKLUT!IA PROJECT
                                      RECONCILIATION OF COST ACCOUNTING FINANCIAL STATEENITS
                                    ro REPAYMENT STUDY FOR THE FISCAL YEAR ENDED JUNE 30, 1976
                                                           (In thousands)

                                     Czlmulattve      Fiscal         Prior       Cumulative       Cumulative         Cumulative data
                                    n'et revenues   year 1976        years      net revenues     adjustment to    through June 30, 1976
                                   June 30 t 1975   operations    adjustments   June J0, 1976   repayment basis    on repayment study
                                                    (Exhibit 1)     (Note 5)                         (Note 1)

,OtERATING REVENUES                    $30.125        $1,454          $_2*         S31,577                               $31,577
EXPENSES:
  Operation and maintenance              6.375             532          -            6,907                                 6,907
  Interest erpense                      1,.891             556          5           13.452                                13,452
  Depreciation expense                   2,617             164          4            2, 85           S2,785*                   0
      Total expenses                    21,883           1,252          9           23,144            2 785*              20.359

NET REVENUES
  (Exhibit 2)                          $_8,242        $    202        $11-         $ 8,433

RECONCILIATION TO
  CUMULATIVE aMORTIZATION                                                          $ 8_433           $2,785               11,218

Amount repaid City of Anchoragel                                                                                           1,680*
Net rtirements from inception to
  June 30, 1976                                                                                                              540*

CUMULATIVE ANORTIZATION                                                 $S                                                 8.998

Completed plant (Exhibit 2)                                                                                              $32,073
Less amount being repaid to
  City of Anchorage                                                                                                        1,842

    U.S. Investment                                                                                                      S30,231

U.S. Jnvestment                                                                                                          $30,231
Less Amortization                                                                                                          8,998

    Unpaid Federal investment                                                                                            $21,233




a Covernment acquisition cost of the old Eklutna power
  plant and water rights is being paid through $5,900
  monthly credit until acquisition cost of $1,842,000
   da paid.

*   Denotes deduction
                                                           Schedule B
                     ALASKA POWER ADMINISTRATION
                       FEDERAl POWER PROGRAM
                         SNETTISHAM PROJECT
       RECONCILIATION OF COST ACCOUNTING FINANCIAL STATEMENTS
     TO REPAYMENT STUDY FOR THE FISCAL YEAR ENDED JUNE 30, 1976
                            (In thousands)

                                                               Cumulative
                                 Fiscal     Cumulative         data through
                               year 1976   adjustment to       June 30, 1976
                               operations repayment basis   on repayment study
                               (Exhibit 1)    (Note 1)

OPERATING REVENUES               $   671                          $    671

EXPENSES:
  Operation and maintenance
    expense                      $  439                           $     439
  Interest expense                1,490                               1,490
  Depreciation                      220        $220*                      0

    Total expenses               $2,149        $220*              $ 1,929

NET LOSS (Exhibit 2)             $1,478

RECONCILIATION TO CUMULATIVE
  AMORTIZATION                   $1,478*       $220               $ 1,258*

Retirements and other                                                    17

NEGATIVE AMORTIZATION                                             $ 1,241*

Completed plant (Exhibit 2)                                       $77,761
Plus negative amortization                                          1,241

  Unpaid Federal investment                                       $79,002

* Denotes deduction
Note 1. Major Accounting Considerations

The Alaska Power Administration (APA) is a bureau in the Interior
Department. The APA power program includes operation, maintenance, and
power marketing for the two Federal hydroelectric projects in Alaska--
the Eklutna Project constructed by the Bureau of Reclamation and the
Snettisham Project constructed by the Corps of Engineers.

APA is also responsible for planning programs in Alaskan water and power
resource development. The Federal investment in these planning programs
attributable to the Snettisham and Eklutna Projects is included in the
power program financial statements. However, the statements exclude a
Federal investment of $8.9 million, representing funds spent on other
planning programs and studies of potential future projects.

The financial statements are prepared on a cost accounting basis, including
compound interest depreciation and interest on the unamortized Federal
investment.

APA's wh-olesale power rates are established by using separate epayment
analyses for each project because they are not electrically interconnected.
The major difference between the financial statements and the historical
data on the repayment study is the treatment o£ fixed assets and amortization.

In the accompanying statements, the depreciation life for fixed assets is
about 87 years for the Eklutna Project and 75 years for the Snettisham
Project. The power rates in effect at the close of fiscal year 1976 were
based upon a 50-year repayment period as specified by the Secretary of
the Interior for Eklutna,

Snettisham wholesale power rates were established in 1973 based on the
estimated completion cost of the project. These rates will be adjusted
to reflect the new repayment criteria, including a 60-year repayment
period, in the Water Resources Development Act of 1976.

The latest Snettisham repayment study does not include the costs for
the authorized Crater Lake Project stage which may be constricted and
energized by the mid-1980's.

Schedules A and B provide a reconciliation between the accompanying cost
statements and cumulative totals shown in the first line of the separate
repayment analyses.
Note 2.   Comparative Figures

The Snettisham ?roject went into commercial service on October 28, 1975.
Therefore, the comparative figures for fiscal year 1975 only include
revenue and expenses for the Eklutna Project.




Note 3.   Interest Rates

Authorizing legislation for Snettisham and Eklutna Projects requires
3 percent and 2 1/2 percent interest retes respectively be applied to
the net investment of the U.S. Government. This legislation does not
permit modification of the interest rate to reflect the actual cost to
the U.S. Treasury at the time of construction.




Note 4.   Contingent Liabilities

Contingent liabilities total approximately $.5 million of contractor
claims agalist the Corps of Engineers at the Snettisham Project.
Note 5.   Adjustments to Accumulated Net Revenues

The following table lists the prior years' adjustments added to accumulated
net revenues as shown on kxhibit 2.

                                                    Fiscal     Fiscal
                                                     year       year
                                                     1976       1975
                                                      (in thousands)

     1.    Unrecorded Sales                         $( 2)    a/$     189

     2.    Earthauake Loss Reversal
           --Property Loss                            -0-    b/      834
           --Operation and Maintenance Expense        -0-    b/      516
           --Interest on the Federal Investment      ( 5)            -0-
           --Depreciation Expense                    ( 4)            -0-

     3.    Imputed Rent                               -0-            (14)

     4.    Additional Overhead Expense                -0-            ( 7)

           Net Increase (Dec:rease)                 $(11)         $1,518

     a/ The adjustment reflects a metering multiplier error on power
        delivered to Eklu:na Project customers.   Because of the error,
        customer bills du.ring October 1971 through December 1974 did
        not reflect totaL amount of power delivered.   The customers
        are reimbursing the Federal Government for the power received
        but not recorded in the original billings.

     b/ Adjustment reverses property loss and operation and maintenance
        expense associated with earthquake damage at the Eklutna Project.
        These losses and expenses were made nonreimbursable by P.L. 90-523.
Note 6. Nonreimbursable Costs

The U.S, Congress has declared certain costs at each project to be
nonreimbursable. At the Snettisham Project an estimated $11.0 million
of the replacement and relocation costs for the transmission line over
Salisbury Ridge were declared nonreimbursable by the Water Resources
Development Act of 1976. These costs are excluded from the construction
work in progress and the congressional appropriations shown on the
financial statements.

At the Eklutna Project the costs of rehabilitating the dam from damage
caused by the earthquake of March 27, 1964, were declared nonreimbursable
and nonreturnable up to $2.8 million by P.L. 90-523. Some of the nonreim-
bursable costs are included in prior years' adjustments. See Note 5.