Gainesville Regional Utilities 1999-00 Annual Report

02 from the general manager

05 performance and reliability

09 partnership and contributions

13 stewardship and resources

17 citizens and volunteers

20 customer information

21 report on audit of financial statements

(on the cover) Nature and high tech rarely combine for a warm story - but 37 supplemental we have one. When a beautiful pair of ospreys built their data nest atop a GRUCom telecommunications tower, solving the problem was a matter of great importance to us. We set about to find a solution that would benefit the ospreys and GRU. Our employees built an osprey-friendly platform and mounted it on top of a utility pole - then erected the struc ture near the GRUCom tower. The nest was moved to the platform while the ospreys were in flight, and upon their return they readily accepted their new home. The project was such a success that we built another osprey tower at our newly constructed Chapman's Pond Nature Trails - already known as one of the best birding sites in the county. Soon, another pair of ospreys had found a new home. Ponds, streams, waterfalls and general irrigation for the new park are provided through our reclaimed water program - another way we connect with our community.

gru onnuoa report 01 from the general manager

We strive to go "above and beyond" our customers' expectations and to antic ipate their needs before they arise. In that light, it was a year of progressive ini tiatives at GRU - one in which we enhanced our competitive position, expanded our ability to meet future demands and engaged in building positive relationships with our customers and employees. The convenience we offer our customers by providing a multitude of services is unmatched in the industry and remains a key ingredient of our success.

To meet the future energy needs of our community, we broke ground last year on a repowering project at our downtown electric generating station. The 110 megawatt natural gas-fired combined cycle unit will come on line in 2001 resulting in financial savings and cleaner air for our city. By holding community charrettes, we gained citizen support for this positive addition to the historic dis trict of Gainesville.

Over the past year, we became an equity owner of The Energy Authority (TEA), an organization of six publicly owned utilities whose combined resources strengthen our ability to buy and sell energy in the wholesale marketplace. Being able to identify the best prices quickly, and having the capacity to meet large transaction requirements makes us formidable competitors. We have benefited greatly from this strategic alliance.

We now have more than 60 percent of our total commercial electric revenue signed to tong-term agreements, providing even more financial stability and demonstrating sound relationships with this important segment of our customer base. We are also working with several of our very largest customers to develop on-site generation projects that will offer additional reliability to the customer while providing us with additional energy for resale.

We are able to provide both large and small customers with energy choice and convenience unmatched by our competitors. Nearly 28,000 customers receive natural gas from GRU, and our gas system is available in virtually every new development built in our rapidly expanding community. Our telecommunications division, GRUCom, continues to grow and expand - providing high-speed, high

02 gru annual report p '

(left) Gainesville Mayor Paula DeLaney and General Manager Michael L. Kurtz survey pole storage facili

ties at Koppers Industries, Inc.

volume voice and data communications to our business community. And nearly We have reduced costs through 3,000 customers receive Internet service from GRU.Net, making us one of the strategic alliances with vendors largest local Internet service providers. such as Koppers. The alliance with Koppers, our local utility

pole supplier, allows our crews

We are nearing completion of two new wells in our water system that will to pick up poles at the suppli guard against water supply challenges presented by ongoing drought conditions in er's yard as needed. This elimi the region. These wells will increase our pumping capacity by 30 percent. Our nates costly on-site inventory and repetitive handling of the Largest wastewater plant is expanding its treatment capacity by nearly 50 percent. poles - at an annual savings of And our reclaimed water program encourages inventive ways to reuse treated up to $25,000. wastewater for irrigation and community beautification.

From a financial standpoint, in spite of deregulation initiatives in other states and changes in our industry, we have maintained our strong "double A" credit rat ings with both Moody's Investors Service and Standard & Poor's. Our debt service coverage ratio is close to three times our aggregate debt service and nearly two and one-half times our total debt service. We have a proven history of solid finances, with a forecast of continued stability.

We recommended and the City Commission adopted a change in the General Fund Transfer formula, effective October 1, 2001, for the electric and telecommunications systems. This change promotes performance, profitability and sales while still pro viding support to vital community services such as police and fire protection.

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gru annual report 103 We can only be successful, however, with the full involvement of our employ ees, so we have made new efforts to continue to improve our internal relation ships. Our Interest Based Bargaining Team made great strides in bringing management and employee goals together through a process of "mutual gains" bargaining. We streamlined work with cross training and cooperative efforts to implement advanced joint trenching practices for our multiple utility services. We increased employee awareness with advanced information technology and encour aged workforce diversity through our recruitment programs.

As the American Public Power Association (APPA) president-elect in 1999, and now as president, I've been privileged to travel all over the country as a repre sentative of public power. I traveled to California as the drama of deregulation was unfolding there, and was home in Florida as the Governor initiated the Energy 2020 Study Commission to consider Florida's future energy policy. From my view point, and judging from my conversations with others in our industry, public power has experienced unprecedented positive exposure for steadfastly carrying out its commitment to customer service and consumer protection. We embrace the future and all the uncertainty it brings.

Michael L. Kurtz General Manager

04 gru onnuol report When the game is on the line, all that is secondary dissipates. At that moment, aLL the issues boil down to one overriding question - can you deliver?

'. performance and reliability

When it comes to service - we are the one We strive to be the best in serving our customers. Our multi-service utility pro vides convenience unmatched by any of our competitors - one bill, one call one company. This past summer we conducted customer focus groups and satis faction surveys, and compared our results with other utilities in North Florida. One notable piece of evidence highlighted the satisfaction level of our Top 400 largest customers - 97.8 percent of these customers reported satisfaction with (previous page) our services. We perform in the community. As the exclusive Official Energy

Sponsor of the Florida Gators, We are returning superior value to our community we have aligned ourselves with The citizens of the City of Gainesville are our "shareholders," and we are com the most prominent sports pro mitted to providing superior value to the community for their investment. We con gram in North Florida. This tinue to transfer a substantial amount to the General Fund of the City of sponsorship affords us the Gainesville for use in supporting police and fire protection, parks and recreation, opportunity to benefit local transportation, and other important services. This transfer stays children with programs such as here - helping hold down "Game Day with the Gators," in property taxes and providing our community with a better standard of which we treat disadvantaged living. youth and school children to We have had a formula in place for many years to determine the funds to be live Gator sporting events. transferred by each of our five utility systems. With the competitive environment in the electric and telecommunication systems changing, we recommended and (right) the City Commission adopted a new formula for those two systems, effective Our fiberoptic network October 1, 2001. It promotes shared goals between the utility's enterprise func produced our fifth utility tions and general government services, and helps prepare us for competition. This GRUCom telecommunications. very creative formula incorporates funding criteria based on performance, prof Shands Hospital at the itability and University of Florida is at the sales.

heart of one of the largest med Under this new formula, the projected General Fund Transfer from the Electric ical centers in the southeastern System for the 2001 fiscal year is $15.7 million and the total transfer for all util United States and is a GRUCom ity systems is projected to be nearly $24 million. partner and customer. GRUCom provides local commerce with reliable high-speed, high volume data transmission. GRUCom is also an Internet

Service Provider - through our fast growing dial-up service, GRU.Net.

06 gru annu a report (left) Medline is a nationally based medical supply company with a distribution center in east In addition to the direct financial contribution the utility makes to the com Gainesville. Here, our repre munity, we employ approximately 750 people who, along with their families, Live, sentatives and conservation here, and make a substantial contribution to the vibrancy of work and volunteer specialists discuss the energy our community. efficient group relamping of the facility with the distribution GRUCom and GRU.Net - we are turning light into information center's director of operations. This effort is part of a city-wide GRUCom, our telecommunications business unit, is a Low cost provider of high attempt to bolster the business quality communications transport for large and small organizations, governmental community in east Gainesville, service agencies and other commu entities, educational institutions, emergency one of our community's historic nications providers. The fiber optic services offered through GRUCom range in areas. speed from leased private Lines at 1.544 Mbps (DSI) to 2.5 Gbps (OC-48). GRU.Net is the Internet Service Provider of choice for a rapidly growing cus tomer base in the Gainesville area. For average users, unlimited Internet access is available for one of the lowest prices in the area. For smaller users, there is up to 20 hours of even less expensive Internet access each month. For larger needs, there is ISDN service. In all plans, there are personal web pages and free techni cal support.

New wells are coming - we are keeping ahead of the weather Gainesville's water supply is among the state's best, requiring minimal treat ment after being drawn from the Floridan Aquifer. Nevertheless, we closely moni tor a seven-step treatment process that assures customers the highest quality water possible.

! i gru annual report i07 With a major drought affecting the entire region, it is even more important to protect our community's drinking water supply. We are constructing two addition a[ supply wells, which should be on line by May 2001. Additionally, a new supply main will be completed to the southwest quadrant of our service area to ensure adequate water pressure for that rapidly developing area. These measures will give us the capability of providing up to 60 million gallons a day, enough to supply predicted needs until the year 2026.

We are expanding the use of reclaimed water The Kanapaha Water Reclamation Facility is the only plant of its kind in the State of Florida that is permitted to discharge drinking water quality effluent directly into the lower regions of the Floridan Aquifer. However, much of this reclaimed quality effluent is now being reused for local irrigation. The Chapman's Pond Nature Trails, a GRU-constructed community park, is a prime example of the utility's commitment to water reclamation. It is an inviting nature park replete with butterflies, birds, turtles and other wildlife. In fact, Chapman's Pond is considered one of the premier birding sites in the county. When complete, the park will return nearly 1.5 million gallons of reclaimed water back to the earth each day, where it will eventually filter back into the aquifer. Chapman's Pond is only one of many reclaimed water projects that add to the beauty of our community. Others include GRU-constructed water gardens at a botanical gardens, an environmental training center, a middle school, and irriga tion for the Veterans Memorial, soccer fields, golf courses and a number of resi dential neighborhoods.

Safety and training - we are assuring top performance We achieved widespread recognition for safety with industry awards from the Florida Municipal Electric Association (FMEA). In May we received a first place award in the categories of Power Supply, Energy Delivery and Administrative Services for safety performance from FMEA and recognition from APPA. The importance of our nationally-accredited driver training program was rein forced by the release of a 1999 accident history for public employees issued by the State of Florida Division of Labor, which revealed the worst killer of employ ees at public agencies to be driving while at work. As the result of training, we enjoy one of the best driving safety records in the state.

08 gru annuoa report

partnerships and contributions

Partnering with business - we are creating lasting relationships

Customer satisfaction is key to the success of any business, so our Business Partners Program was created to identify and satisfy the needs of our commercial customers. This program builds alliances with our business partners by helping them improve their profitability. These services include energy and water conservation surveys, high-efficiency Lighting retrofits, a power quality program and rebates for gas cooling and solar water heating. We offer advice on insulation, landscaping, the use of heat pumps (previous page) and whether electric or gas will best suit energy needs. And our New Services divi We hit the mark with our sion advises all developers on the economy and convenience of unifying the con Business Partners program. struction of multiple utilities. North American Archery Group signed a ten-year, exclusive To date, nearly 600 commercial Business Partners signed 10-year contracts, agreement with us in exchange representing nearly 65 percent of our commercial electric revenue. for a four-year, 10 percent elec tric rate discount. This special No doubt about it - we are Gators! Flex Rate was developed to We partnered with one of our largest customers, the University of Florida, to attract and retain businesses become the "Official Energy Sponsor of the Florida Gators." This connects us with and was successfully used to keep the North American our Gator-enthusiastic community and brings us closer to the university. We pro Archery Group from moving vide UF's many off campus facilities with electric, water and other services, and their facilities to another com provide natural gas and water to the main campus. The sponsorship gives us both munity. Over 60 percent of our Local and regional visibility. commercial revenue is signed to In addition to the benefits of brand identification, we share our Gator sports a Business Partners contract. connection with middle and elementary school students and many disadvantaged in our community through "GRU's Game Day with the Gators." Through this pro (right) gram we treat thousands of local students and families to a multitude of Gator We work with local businesses sports events. to increase energy-efficiency. A local franchise of eight Pizza Hut restaurants made GRU recommended changes in their operations that save the fran chise $20,000 in annual energy costs. Their efforts, which also

reduce overall emissions, earned them an Energy Star award from the Environmental Protection Agency.

10 gru annual report We are promoters of energy efficient commercial lifestyles (above) We are an equity owner of The As an "Energy Star" Buildings ALly, during this past year we provided 165 Energy Authority (TEA), a com energy surveys to our commercial and industrial customers. One of these cus pany jointly owned by six pub tomers, a Local franchise of eight Pizza Hut restaurants, made GRU-recommended lic electric utilities - Santee changes in their operations that saved the franchise $20,000 in annual energy Cooper (SC), JEA (Jacksonville,

costs. The Environmental Protection Agency judged it a national Energy Star win FL), Municipal Electric Authority ner based on cost savings, creativity and innovation. of Georgia, Nebraska Public Power District, City Utilities of

We are serving public safety through modern radio communications Springfield, Missouri, and GRU. By combining resources, TEA We began operation of our multi-agency 800-Megahertz Trunking Radio members are highly competitive System. The system is designed to serve all public safety and public service agen as buyers and sellers of whole

cies in Alachua County. The new radio system will eliminate signal interference and sale energy. channel congestion, improve coverage and expand channels to support rapid growth in the use of two-way radio systems. The clarity of the system is benefit ing GRU, the city's General Government, Gainesville Police Department and

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, , I / g9r u nn uai %repor•e•o 11 \\ / / / K (right)

We are contributing to the revitalization of downtown Gainesville by "re-powering" the J.R. Kelly Generating Station to meet the future energy needs of our growing area. The construc tion of a new clean and efficient Gainesville Fire Rescue, as well as the University of Florida Police Department, 110 MW natural gas burning Alachua County General Government departments and the Alachua County Sheriff's combined-cycle generating unit Office. Alachua County Fire Rescue wilt be added this year. will be coordinated with a redesign of the surrounding We are energizing our community with underground power neighborhood - a concept endorsed by the local Over half of our electric distribution Lines are now Located underground. We community. have one of the most aggressive undergrounding programs in the State of Florida. This feat was accomplished in part through infrastructure cost sharing alliances with government and private developers. Through joint trenching, we can underground electric lines, gas lines and telecommunication Lines in a single trench, reducing time, cost and [and. Four utility joint trenching was first used during construction of the University of Florida's Hotel and Convention Center. Our Gas Department personnel Laid the con duit for four different utilities - gas, electric, telecommunications and traffic signal circuits. By laying all four utilities at once, four to five miles of pipe were laid in four weeks. Only a utility Like GRU, which delivers multiple services, can coordinate such an effort so seamtessly and cost-effectively.

12 gru onnual report

stewardship and resources

In the protection of drinking water, we are uncompromising

To guard the purity of our community's drinking water, we purchased conser vation easements for 7,100 acres of pine plantation and wetlands surrounding our Murphree Water Treatment Plant's weltfield expansion corridor. The agreement ensures that the weltfield will remain free from development, greatly limiting the potential for contamination.

Clean natural gas - we are making it available to more customers (previous page) We are an essential part of a Because natural gas burns with fewer emissions than any other fossil fuel, it forward-thinking community, is often referred to as the cleanest and most efficient energy source. Virtually making us ever aware of our every new subdivision within our service area is served by natural gas from GRU, duty to protect and preserve giving homeowners greater energy options. the environment. We recently We aggressively seek customers for natural gas, even in neighborhoods beyond purchased the development our established natural gas system network, often by creating LP distribution sys rights to 7,100 acres of wood tems. These distribution "islands" are supplied by strategically placed community lands surrounding our Walter LP tanks. Once enough customers have been secured to make the transition to E. Murphree Water Treatment Plant's wellfield and two new natural gas cost-effective, customer equipment is switched over to natural gas. wells are already under construction. We are promoting green energy initiatives

Green Energy options under study include energy generated by biomass-derived (right) gas, a student-interactive Solar for Schools program, and the evaluation of alter- Our Natural Gas Sales division promotes the use of efficient, environmentally friendly natural gas. Our New Services division assists local developers in gain ing timely access to all utility services and promotes the advantages of natural gas. As a result, we build natural gas mains in virtually every new development within our rapidly expanding community.

14 gru annual report native fuels for our fleet vehicles. And our staff has been working with the ALachua County Public Works Department to determine the feasibility of producing energy from gas produced at the now closed Southwest Landfill. The volume of gas pro duced from garbage degradation could fuel up to three megawatts of electrical generation capacity.

(left) Our electric powered demon

stration truck is seen crossing

Paynes Prairie, a local natural attraction populated with alli

gators, beautiful sandhill cranes We are driving home the need for good air quality and a herd of American bison.

We use a factory built Ford Ranger Electric Vehicle (EV) to raise public aware We encourage the preservation of nature through the promo ness of the economics and air quality advantages of alternative energy vehicles. tion of these alternative fueled Account representatives give visibility to this issue by driving this vehicle to work vehicles. each day, as well as to school and civic demonstrations. In a significant air quality initiative, we actively participated in the delibera tions of the Alachua County Air Quality Commission. We also promoted efforts by the FLorida Department of Environmental Protection (FDEP) to provide additional air quality monitoring in Alachua County. As a consequence, we received a PEP (Partnership for Ecosystem Protection) award from FDEP.

By recycling by-products, we are saving money

Each year the Murphree Water Treatment Plant produces more than 22,000 tons of spent lime solids, mainly calcium carbonate, from its processes. Another cen-

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gru annual report 15 I I' tral Florida utility needed such a product to remove sulfur from its stack gases and agreed to pay for the transportation costs. This not only saves us considerable dis posal expense, but also provides another utility with an environmentally impor tant product. Through another creative recycling agreement, Florida Rock Industries began hauling 800 million pounds of coal ash from our Deerhaven Generating Station. A five-year contract allows them to excavate the ash from a 10-acre on-site landfill and transport it for use in cement manufacturing. As a result, our ash disposal solution is creating another useful product.

We are joining together to find mutual gains To make certain our customers' and employees' needs are met in a mutually beneficial manner, we have engaged in Mutual Gains Bargaining, also known as Interest Based Bargaining (IBB). By discussing the "interests" of both labor and management, this problem-solving process has enabled the city to implement con tract changes that benefit all interested parties. Labor contract changes made our employee benefits program more competitive through the addition of a cost-neutral PTO (Paid Time Off) leave system that com bines sick and vacation leave to provide employees more discretionary time off. Mutually beneficial modifications also were made to our defined benefit retirement plan and overtime policies, and we added a Deferred Retirement Option Plan (DROP). Recruiting and retaining a diverse, highly skilled work force creates and main (righ t) tains resources critical to our success. Our work force must represent and better GRU and Gainesville General understand the customers we serve. To ensure a diverse work force, we expanded Government management repre efforts to recruit minority and female employees, created internship and pre sentatives and union members apprenticeship programs to help grow our own, and developed and implemented celebrate the successes and Affirmative accomplishments of our Interest Action work plans for all managers. Based Bargaining Team. The team uses mutual gains bargain ing to achieve a better working relationship among employees.

Mutual gains focuses on the benefits of working together to create win-win results and has achieved a high degree of coop eration on matters that further both the organization and the employees.

16 gru annual report .... citizens and volunteers

As individual employees, we are giving back to our community

Our employees volunteer considerable personal time and provide significant monetary support to the United Way, March of Dimes and many other community service organizations. Their efforts as volunteers are so outstanding they have been recognized nationally by the American Public Power Association and at the state level by the Florida Municipal Power Agency and the Florida Department of Education. In support of volunteerism, we work closely with the Central Florida (previous page) Community Action Agency in the HomeFix program, which provides home repair We have created community assistance to low-income members of the community. recreation sites that offer the Our employees donate their wonders of nature while time off to make energy efficient repairs specifically designed to decrease waste promoting water reuse. At ful energy and water consumption.

Chapman's Pond Nature Trails, we are constructing wetlands, We are helping our customers share with their neighbors trails, ponds, streams and Our customer-funded Project SHARE program pays emergency energy-related waterfalls that demonstrate the bills for the elderly or those in hardship due to illness. Our customers are safety and beauty of reclaimed given water. the opportunity to have their donations automatically deducted from their bills and our conservationists evaluate the energy-efficiency of the recipients' homes to (right) make certain the contributions are used effectively. We donate refurbished comput ers throughout the local school system rather than retiring them to surplus. We also train interns, such as this student from Eastside High School, to

renovate the computers. Some are donated to our adopt-a school, Williams Elementary, where students receive tutoring and mentoring from our employee volunteers.

18 gru annuol report (left) Our employees take pride in vol

unteering for many charitable projects and services, especially Through computer donations, we are helping to educate children those that illustrate the conser vation-minded values promoted We donate refurbished computers throughout the local school system rather in our community. These than retiring them to surplus. Interns, including high school students, are trained employee volunteers participate to renovate the computers before they are delivered. In addition, we have in the annual HomeFix project, installed nearly 30 high-speed digital links between the county's schools and a partnering of GRU and the

GRUCom's fiber-optic network. To access schools in one nearby community, we Central Florida Community built a special fiber optics network in order to supply them with greater band Action Agency, which renovates width. the homes of deserving area residents. Special attention is

Gainesville is Tree City USA - we are helping to keep it that way given to improvements that conserve energy and water. GRU was recently named a Tree Line USA Utility by the National Arbor Day Foundation for our sensitivity to the community's strong interest in its tree canopy. We are one of only 74 utilities in the nation to receive this designation. During our annual Tree-mendous Appreciation Day, thousands of native shrubs and mid-sized trees are given away to customers. Since 1992, Tree City USA has 27,000 more trees, thanks to GRU. We also offer a Trade-a-Tree program, in which customers have received 3,600 replacement trees for those removed to ensure safe and efficient electric service.

We are proud to have so much to celebrate

Our many contributions to the community have led us to observe an annual Electrifying Celebration - and the thousands of customers who join us each year are a testament to our success. As they bask in the Florida sunshine they gather helpful utility information while enjoying entertainment such as bucket truck rides, live music, University of Florida Cheerleaders and Dazzlers, clowns, jugglers and much more. In our fourth year of this celebration we moved the event down town to accommodate larger crowds. They come to celebrate their ownership of GRU - the utility that provides services above and beyond the competition.

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20 ,r, onuc.. report Report on Audit Gainesville Regional Utilities of Financial Statements The Combined Utility Funds September 30, 2000 of the City of and 1999 Gainesville, Florida

gru onnual report 21 22 gru annual report The Combined Utility Funds of the City of Gainesville, Florida Report on Audit of Financial Statements and Supplementary Data

Independent Auditors' Report

The Honorable Mayor and Members of the In our opinion, the financial statements referred to above pres City Commission City of Gainesville: ent fairly, in all material respects, the financial position of Gainesville Regional Utilities, as of September 30, 2000 and We have audited the accompanying balance sheets of 1999, and the results of its operations and its cash flows in con Gainesville Regional Utilities (the Combined Utility Funds of the formity with accounting principles generally accepted in the City of Gainesville, Florida) as of September 30, 2000 and 1999, United States of America. and the related statements of revenue and expense and retained earnings, and cash flows for the years then ended. These finan Our audits were made for the purpose of forming an opinion on cial statements are the responsibility of the Gainesville Regional the basic financial statements of Gainesville Regional Utilities Utilities' management. Our responsibility is to express an opin taken as a whole. The supplementary information included in ion on these financial statements based on our audits. the accompanying schedules is presented for purposes of addi tional analysis and is not a required part of the basic financial We conducted our audits in accordance with auditing standards statements. The information has been subjected to the auditing generally accepted in the United States of America. Those stan procedures applied in the audits of the basic financial state dards require that we plan and perform the audit to obtain rea ments and, in our opinion is fairly stated in all material respects sonable assurance about whether the financial statements are in relation to the basic financial statements taken as a whole. free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial state Davis, Monk & Company ment presentation. We believe that our audits provide a rea Gainesville, Florida sonable basis for our opinion.

As discussed in note 1, the financial statements present only Gainesville Regional Utilities (the Combined Utility Funds of the KPMG LLP City of Gainesville, Florida) and are not intended to present St. Petersburg, Florida fairly the financial position of the City of Gainesville, Florida, and the results of its operations and the cash flows of its pro prietary fund types in conformity with generally accepted accounting principles. December 14, 2000

gru annual report 23 Balance Sheets

Assets 2000 1999 Utility plant: Utility plant in service $ 811,442,830 806,430,226 Plant held for future use 6,053,926 6,047,876 Plant unclassified 20,297,601 10,333,029 Construction in progress 102,706,991 49,612,613 940,501,348 872,423,744 Less accumulated depreciation and amortization (324,626,553) (297,730,254)

Net utility plant 615,874,795 574,693,490

Current assets: Cash and short-term investments 7,688,078 3,505,102 Accounts receivable, net of allowance for uncottectib[e accounts of $537,000 in 2000 and $611,000 in 1999 28,589,962 24,448,212 Fuels contracts 2,283,800 Prepaid rent - Lease/teaseback 10,686,909 10,686,909 Deferred fuel charges 4,404,500 2,286,053 Inventories: Fuel 3,977,190 12,729,874 Materials and supplies 4,869,410 5,444,719

Total current assets 62,499,849 59,100,869

Long-term investments 1,660,011 1,763,565

Restricted assets - cash and investments: Utility deposits 3,881,897 4,486,110 Debt service fund 57,399,148 57,008,375 Rate stabilization fund 71,028,968 58,697,382 Construction fund 11,321,629 19,319,321 Utility plant improvement fund 21,911,448 11,707,978 Decommissioning reserve fund 3,263,292 2,849,617 Investment in the Energy Authority 1,400,844

Total restricted assets 170,207,223 154,068,783

Prepaid rent - Lease/leaseback 183,458,604 194,145,513 Deferred charges 17,271,790 16,324,378

Total assets $1,050,972,272 1,000,096,598

See accompanying notes to financial statements.

24 gru annual report Balance Sheets

Liabilities and Fund Equity 2000 1999 Long-term debt and fund equity: Long-term debt: Utilities system revenue bonds $ 341,380,000 351,570,000 Utilities system commercial paper notes 75,109,000 28,508,000 416,489,000 380,078,000

Less unamortized loss on refinancing (29,502,610) (31,432,074) Less unamortized bond discount (4,253,314) (4,549,991)

Total Long-term debt 382,733,076 344,095,935

Fund equity: Contributions in aid of construction 102,231,056 99,898,660 Retained earnings 276,782,103 261,006,852

Total fund equity 379,013,159 360,905,512

Total long-term debt and fund equity 761,746,235 705,001,447

Current liabilities: Fuel payable 10,484,086 6,842,052 Accounts payable and accrued liabilities 7,214,327 6,118,894 Operating lease - lease/Leaseback 12,461,112 12,461,112 Due to other funds 3,244,080 3,326,691

Total current liabilities 33,403,605 28,748,749

Payable from restricted assets: Utility deposits 3,931,869 4,611,212 Long-term debt payable-current 10,190,000 10,165,000 Accrued interest payable 9,948,013 10,198,478 Construction fund: Accounts payable and accrued liabilities 1,805,250 3,139,932

Total payable from restricted assets 25,875,132 28,114,622

Operating lease - lease/Leaseback 213,915,757 226,376,869 Other liabilities and deferred credits 16,031,543 11,854,911

Total liabilities and fund equity $1,050,972,272 1,000,096,598

gru onnuol report 25 Statements of Revenue and Expense and Retained Earnings

2000 1999 Operating revenue: Sales and service charges $ 187,075,522 176,461,165 Other operating revenue 5,639,338 5,149,371

Total operating revenue 192,714,860 181,610,536

Operating expenses: Operation and maintenance 95,273,118 78,943,699 Administrative and general 18,587,591 21,329,710 Depreciation and amortization 26,106,388 22,863,419

Total operating expenses 139,967,097 123,136,828

Operating income 52,747,763 58,473,708

Non-operating income (expense): Interest income 11,234,208 9,411,921 Interest expense, net of AFUDC (24,097,214) (23,916,528) Gain (loss) on sate of investments (769,260) 1,705,461

Total non-operating expense (13,632,266) (12,799,146)

Net income 39,115,497 45,674,562

Retained earnings, beginning of year 261,006,852 242,828,208

Operating transfer to City of Gainesvilte General fund (23,340,246) (27,495,918)

Retained earnings, end of year 276,782,103 261,006,852

See accompanying notes to financial statements.

26 gru annual report Statements of Cash Flows

2000 1999 Cash flows from operating activities: Cash received from customers $ 180,135,982 173,111,325 Cash payments to suppliers for goods and services (65,283,454) (70,325,344) Cash payments to employees for services (32,741,899) (24,103,708) Cash payments for operating transactions with other funds (4,448,832) (3,875,888) Other operating receipts 3,865,135 5,149,370 Net cash provided by operating activities 81,526,932 79,955,755

Cash flows from noncapitaL financing activities: Transfers to other funds (23,340,246) (27,495,918) Net cash used in noncapital financing activities (23,340,246) (27,495,918)

Cash flows from capital and related financing activities: Principal repayments on long-term debt (12,845,000) (52,946,000) Proceeds from sale of property and equipment 33,795 418,974 Interest paid on long-term debt (24,051,000) (24,265,038) Capital grants 120,000 108,633 Acquisition and construction of fixed assets (including allowance for funds used during construction) (66,160,904) (51,012,326) Proceeds from Lease/Leaseback transaction 249,305,589 Payments for [ease/[easeback transaction (213,738,179) Proceeds from commercial paper issued 49,281,000 Cash received for connection charges 3,708,594 3,947,419 Net cash used in capital and related financing activities (49,859,515) (88,180,928)

Cash flows from investing activities: Interest received 6,574,396 8,078,020 Purchase of investments (506,049,793) (529,022,096) Investment in The Energy Authority (1,428,571) Distribution from The Energy Authority 27,727 Proceeds from investment maturities 490,907,565 555,894,291 Net cash provided by investing activities (9,968,676) 34,950,215

Net decrease in cash and cash equivalents (1,641,505) (770,876)

Cash and cash equivalents, beginning of year 5,989,361 6,760,237

Cash and cash equivalents, end of year $ 4,347,856 5,989,361

(continued)

gru annual report 27 Statements of Cash Flows, Continued

2000 1999 Recondliation of operating income to net cash provided by operating activities: Operating income 52,747,763 58,473,708 Adjustments to reconcile operating income to net cash provided by operating activities: Depreciation and amortization 24,332,185 22,863,419 Receivables (6,260,197) (2,604,785) Prepaid expenses (2,283,800) (8,045,914) Inventories 9,327,993 (6,751,627) Deferred charges (1,857,242) 957,387 Accounts payable and accrued liabilities 3,402,785 13,842,285 Due to other funds (82,611) 687,544 Utility deposits (679,343) (745,054) Other liabilities and deferred credits 2,879,399 1,278,792

Net cash provided by operating activities $ 81,526,932 79,955,755

Noncash, investing, capital and financing activities: Utility plant contributed by developers in aid of construction was $1,970,700 and $2,502,898 in 2000 and 1999, respectively.

See accompanying notes to financial statements.

28 gru annual report Notes to Financial Statements

(1) Summary of Significant Accounting Policies (d) Investments GRU follows the provisions of Governmental Accounting (a) Organization Standards Board Statement No. 31, Accounting and Financial Gainesville Regional Utilities ("GRU") is a combined munici Reporting for Certain Investments and for External Invest pal utility system operating electric, natural gas, water, ment Pools. Statement No. 31 requires governmental entities wastewater, and telecommunications ("GRUCom") utilities. to report investments at fair value in the balance sheet. All GRU consists of the combined Utility Funds of the City of short-term commercial paper with maturities less than one Gainesville, Florida ("City"). GRU is a unit of the City and, year have been reported at cost. accordingly, the financial statements of GRU are included in the annual financial reports of the City. (e) Fuels Contracts GRU uses futures contracts to hedge a portion of its com (b) Basis of Accounting modity natural gas price risk. Natural gas contracts are trad The financial statements are presented on the accrual basis ed on the New York Mercantile Exchange ("NYMEX") in fixed of accounting. Under this basis, revenue are recognized in units of 10,000 MMBtus. NYMEX requires both parties (buy the period earned and expenses are recognized in the peri ers and sellers) to futures contracts to deposit cash or other od incurred. GRU applies all applicable Financial Accounting assets (margins) with a broker at the time the contract is Standards Board ("FASB") pronouncements issued on or initiated. Brokers mark open positions to the market daily before November 30, 1989, in accounting and reporting for with the margin account requirements adjusted for market its operations. In accordance with government accounting swings or changes in NYMEX requirements. At September 30, standards, GRU has elected not to apply FASB pronounce 2000, GRU had net deposits of $641,953, with brokers for ments issued after that date. In accordance with the margin accounts, included in current assets and $2,283,800 Utilities System Revenue Bond Resolution (Bond Reso included in the fuels contracts line of the balance sheet. lution), rates are designed to cover operating and mainte There were no futures contracts outstanding at nance expense, debt service and other revenue requirements, September 30, 1999. which exclude depreciation expense and other noncash expense items. This method of rate setting results in costs At contract maturity date, gains or Losses on hedging trans being included in the determination of rates in different actions are recognized into the fuel account. At September periods than when these costs are recognized for financial 30, 2000, there was $1,139,810 in deferred gains from out statement purposes. The effect of these differences is rec standing contracts. ognized in the determination of net income in the period that they occur in accordance with GRU's accounting poUi (f) Inventories cies. GRU has adopted the uniform system of accounts pre Inventories are stated at cost using the weighted average scribed by the Federal Energy Regulatory Commission unit cost method for materials, and the last-in, first-out ("FERC") and the National Association of Regulatory Utility (LIFO) method for fuel. Obsolete and unusable items are Commissioners (NARUC). Rates are approved annually by the reduced to estimated salvage values. The cost of fuel used City Commission. for electric generation is charged to expense as consumed.

(c) Use of Estimates (g) Utility Plant The preparation of financial statements in conformity with Property and equipment are recorded at cost. Maintenance generally accepted accounting principles requires manage and repairs are charged to operating expense as incurred. ment to make estimates and assumptions that affect the The average cost of depreciable plant retired is eliminated reported amounts of assets and Liabilities and disclosure of from the plant accounts, and such costs, plus removal costs contingent assets and Liabilities at the date of the financial less salvage, are charged to accumulated depreciation. statements, and the reported amount of revenue and expens es during the reporting period. Actual results could differ Plant unclassified includes property and equipment of from these estimates. capital projects placed into service which have not been classified in the related asset category within utility plant in service.

(continued)

gru annual report 29 Notes to Financial Statements

(h) Depredation and Nuclear Generating PLant (m)Funds in Accordance With Bond Resolutions Decommissioning Certain restricted funds of GRU are administered in accor Depreciation of utility plant is computed using the straight dance with bond resolutions. These funds are as follows: line method over estimated service lives ranging from 6 to Debt Service Fund 50 years. Depreciation was equivalent to 3.17 percent and Subordinated Indebtedness Fund 2.98 percent of average depreciable property for 2000 and Rate Stabilization Fund 1999, respectively. Depreciation expense includes a provi Construction Fund sion for decommissioning costs related to the jointly owned Utility Plant Improvement Fund nuclear power plant (see note 5). The Debt Service Fund accounts for funds accumulated to (i) Amortization of Nuclear Fuel provide payment of principal and interest on or redeem out The cost of nuclear fuel, including estimated disposal cost, standing debt. is amortized to fuel expense based on the quantity of heat The Subordinated Indebtedness Fund, grouped in the Debt produced for the generation of electric energy in relation to Service Fund for financial reporting purposes, accounts for the quantity of heat expected to be produced over the Life funds accumulated to pay principal and interest on subordi of the nuclear fuel core. These costs are charged to cus nated indebtedness. tomers through the fuel adjustment clause. The Rate Stabilization Fund accounts for funds accumulated (j) Revenue Recognition to stabilize rates over future periods through the transfer of Revenue is recorded as earned. GRU accrues for services ren funds to and from operations as necessary. dered but unbiLled which amounted to approximately $11,577,000 and $9,605,000 for 2000 and 1999, respective The Construction Fund accounts for funds accumulated for Ly.Fuel adjustment revenue is recognized based on the actu the cost of acquisition and construction of the system. al fuel costs. Amounts charged to customers for fuel are based on estimated costs, which are adjusted for any differ The Utility Plant Improvement Fund accounts for funds used ences between the actual and estimated costs once actual to pay for certain capital projects or debt service, the pur fuel costs are known. If the amount recovered through rates chase or redemption of bonds, or otherwise provide for the exceeds actual fuel costs, GRU records deferred fuel as a lia repayment of bonds. bility. If the amount recovered through rates is Less than the actual fuel costs, GRU records deferred fuel as an asset, for (n)Allowance for Funds Used During Construction (AFUDC) amounts to be collected through future rates. As of An allowance for interest on borrowed funds used during September 30, 2000 and 1999, deferred fuel charges were construction of $195,000 and $284,000 in 2000 and 1999, $4,404,500 and $2,286,053, respectively. respectively is included in construction in progress and as a reduction of interest expense. These amounts are computed (k)Administrative and General Expense by applying the effective interest rate on the funds borrowed GRU began allocating certain payroll costs to the various to finance the projects to the monthly balance of projects operating departments in fiscal year 2000. In fiscal 1999, under construction. The effective interest rate was approxi these costs were classified as administrative and general mately 5.4 percent. expense. The change in allocation resulted in $3,310,000 of payroll costs being recorded in operation and maintenance (o)Contributions in Aid of Construction expense in fiscal year 2000 that would have been reported Utility plant in service for the water, wastewater and as administrative and general in fiscal year 1999. GRUCom funds includes assets received from contributions in aid of construction (CIAC). Contributions in aid of con (L) Interfund Transactions struction are amortized on a straight-Line method over Interfund balances between electric, gas, water, wastewater the Life of the related asset. The amount of amortization and GRUCom funds are offset for the combined utility funds. expense included in the statement of revenue and expense Interfund revenue and expenses are not eliminated in the and retained earnings relating to the contributed assets is combined utility funds. Additionally, there are interfund credited to depreciation and amortization expense and transactions between GRU and general government opera amounted to $3,464,000 and $3,258,000 in 2000 and 1999, tions of the City, which do not bear interest. respectively.

30 gru annual report Notes to Financial Statements

(p)Cash and Cash Equivalents GRU's cost of fuel for the electric and natural gas systems is For purposes of reporting cash flows, cash and cash equiva passed directly through to its customers. Each month, GRU staff lents include cash on hand, bank demand accounts, and estimates the cost of fuel and consumption for both the electric overnight repurchase agreements. and natural gas systems. These estimates are combined with a true up for actual costs from previous months into a current (q)Unamortized Loss on Refinancing month electric fuel adjustment and natural gas purchased gas Losses resulting from advance refinancing of bonds are adjustment. Amounts overbilled or underbilted are passed along deferred and amortized over the life of the bonds. to customers and are either accrued or deferred at year end.

The Florida Public Service Commission does not regulate rate (2) Rates and ReguLation levels in any of GRU's utilities. They do, however, have jurisdic tion over rate structure for the electric system. GRU's rates are established in accordance with the Utilities System Bond Resolution and the Utilities System Subordinated Currently, GRU prepares its financial statements in accordance Bond Resolution as adopted and amended. Under these docu with Statement of Financial Accounting Standards ("SFAS") No. ments, rates are set to recover Operation and Maintenance 71, and records various regulatory assets and liabilities. In order Expenses, Debt Service, Utility Plant Improvement Fund contri for a company to report under SFAS No. 71, the company's rates butions and costs for any other lawful purpose such as the must be designed to recover its costs of providing services, and General Fund Transfer. the company must be able to collect those rates from cus tomers. If it were determined, whether due to competition or Each year, during the budgeting process, and at any other time regulatory action, that these standards no longer applied, GRU necessary the City Commission approves rate changes and other could be required to write-off its regulatory assets and liabili changes to GRU's charges. ties. Management believes that GRU currently meets the criteria for continued application of SFAS No. 71, but will continue to evaluate significant changes in the regulatory and competitive environment to assess continuing applicability of the criteria.

(continued)

gru annual report 31 Notes to Financial Statements

(3) Long-Term Debt

Long-term debt outstanding at September 30, 2000 and 1999 consisted of the following: 2000 1999 Utilities System Revenue Bonds: Series 1983 (1983 Bonds) - interest payable semi-annually to October 1, 2014 at a rate of 6.0% $ 4,675,000 4,675,000

1992 Series A (1992 A Bonds) - interest payable semi-annuaLLy to October 1, 2002 at various rates between 5.9% and 6.1% 4,410,000 5,720,000

1992 Series B (1992 B Bonds) - interest payable semi-annually to October 1, 2017 at various rates between 6.0% and 7.50 61,920,000 61,920,000

1993 Series A (1993 A Bonds) - interest payable semi-annuaLLy to October 1, 2006 at various rates between 4.75% and 5.3% 25,205,000 28,675,000

1993 Series B (1993 B Bonds) - interest payable semi-annual[y to October 1, 2013 at various rates between 4.75% and 5.5% 117,720,000 121,625,000

1996 Utilities System Revenue Bonds - 1996 Series A (1996 Series A) interest payable semi-annually to October 1, 2026 at rates between 4.0% and 5.75% 137,640,000 139,120,000

Utilities System Commercial Paper Notes, Series C (C Notes) Interest at various market rates 63,028,000 28,508,000

Utilities System Taxable Commercial Paper Notes, Series D (D Notes) Interest at various market rates 12,081,000 426,679,000 390,243,000

Less current portion of long-term debt (10,190,000) (10,165,000)

Less unamortized Loss on refinancing (29,502,610) (31,432,074)

Less unamortized bond discount (4,253,314) (4,549,991)

Total long-term debt $ 382,733,076 344,095,935

(continued)

32 gru annual report Notes to Financial Statements

GRU is required to make monthly deposits into separate Under the terms of the Bond Resolution relating to the sale of accounts for an amount equal to the required share of principal the Utilities System Revenue Bonds, payment of the principal and interest becoming payable for the revenue bonds on the and interest is secured by an irrevocable lien on GRU's net rev payment dates of April 1 and October 1. enue (exclusive of any funds which may be established pursuant to the Bond Resolution for decommissioning and certain other The following table lists the Debt Service requirements (princi specified purposes), including the investments and income, if pal and interest) on the Long-Term Debt (excludes Utilities any, thereof. System Tax-Exempt Series C and Taxable Series D Commercial Paper) outstanding at September 30, 2000: The Bond Resolution contains certain restrictions and commit ments, including GRU's covenant to establish and maintain rates and other charges to produce revenue sufficient to pay opera Period ending Total debt service tion and maintenance expenses, amounts required for deposit in October 1, requirements the debt service fund, and amounts required for deposit into the 2001 $ 29,765,187 utility plant improvement fund. 2002 29,762,722 2003 29,769,389 The 1983 Bonds mature on October 1, 2014. Those Bonds are 2004 29,192,355 subject to redemption at the option of the City as a whole at 2005 28,036,308 any time or in part on any interest payment date, at a redemp 2006 28,032,395 tion price of 100 percent plus accrued interest to the date of 2007 32,223,754 redemption. 2008 34,633,734 2009 34,635,408 The 1992 A Bonds mature at various dates through October 1, 2010 34,634,435 2002. Those Bonds are not subject to redemption. 2011 34,633,459 2012 34,625,435 The 1992 B Bonds mature at various dates from October 1, 2001 2013 34,641,735 to October 1, 2017. Those Bonds maturing on or after October 2014 20,425,950 1, 2003 through October 1, 2007, amounting to $14,310,000, 2015 18,653,430 are subject to redemption at the option of the City on and after 2016 18,441,580 October 1, 2002, as a whole at any time or in part on any 2017 18,250,480 interest payment date, at a redemption price of 102 percent in 2018 11,605,260 2002, 101 percent in 2003 and 100 percent thereafter. The 1992 2019 9,507,140 B Bonds maturing on October 1, 2017, amounting to 2020 9,509,300 $22,335,000, are subject to redemption at the option of the 2021 9,511,960 City on and after October 1, 2002, as a whole at any time or in 2022 9,509,080 part on any interest payment date, at a redemption price of 100 2023 3,949,880 percent. 2024 3,947,180 2025 3,950,900 The 1993 A and B Bonds mature at various dates through 2026 3,950,260 October 1, 2013. Those Bonds maturing on or after October 1, $ 555,798,716 2004, amounting to $113,925,000, are subject to redemption at the option of the City on and after October 1, 2003, as a whole at any time or in part on any interest payment date, at a redemption price of 102 percent in 2003, 101 percent in 2004 and 100 percent thereafter.

(continued)

gru annual report 33 Notes to Financial Statements

The 1996 A Bonds mature at various dates through October 1, (4) Deposits and Investments 2026. Those Bonds maturing on or after October 1, 2010 are subject to redemption at the option of the City on or after Deposits are held in a qualified public depository institution October 1, 2006 as a whole or in part at any time at a redemp insured by the Federal Depository Insurance Corporation and as tion price of 102 percent in 2006, 101 percent in 2007, and 100 required by the Bond Resolution in a bank, savings and loan percent thereafter. association or trust company of the United States or a national banking association having capital stock, surplus and undivided Utilities System Commercial Paper Notes, Series C Notes (tax earnings aggregating at Least $10,000,000. exempt) in a principal amount not to exceed $85,000,000 may continue to be issued to refinance maturing Series C Notes or In accordance with state laws and the Bond Resolution, GRU is provide for other costs. Liquidity support for the Series C Notes authorized to invest in obligations which are unconditionally is provided under a long-term credit agreement dated as of guaranteed by the United States of America or its agencies or March 1, 2000 with Bayerische Landesbank Girozentrale. The instrumentalities, repurchase agreement obligations uncondi obligation of the bank may be substituted by another bank tionally guaranteed by the United States of America or its agen which meets certain credit standards and which is approved by cies, corporate indebtedness, direct and general obligations of GRU and the Agent. Under the terms of the agreement, GRU may any state of the United States of America or of any agency, borrow up to $85,000,000 with same day availability ending on instrumentality or local governmental unit of any such state the termination date, as defined in the agreement. Series C (provided such obligations are rated by a nationally recognized Notes of $37,200,000 were issued in May 2000. Series C Notes bond rating agency in either of its two highest rating cate of $2,680,000 and $45,521,000 were redeemed during 2000 and gories), public housing bonds, and certain certificates of 1999, respectively. Proceeds from GRU's lease/leaseback trans deposit. Investments in corporate indebtedness must be rated action, along with other funds on hand were used to redeem the in the highest rating category of a nationally recognized rating Series C Notes in 1999. See also note 13. GRU issued agency and in one of the two highest rating categories of at $16,500,000 of Series C Notes in 1999 to finance future electric least one other nationally recognized rating agency. construction projects. Investments are categorized in the following table in accor In June 2000, a Utilities System Commercial Paper Note dance with Governmental Accounting Standards Board Program, Series D (taxable) was established in a principal Statement No. 3. All of GRU's investments fall under category 1, amount not to exceed $25,000,000. Liquidity support for the which includes investments that are insured or registered or Series D Notes is provided under a long-term credit agreement held by the Utility or its agent in GRU's name. dated June 1, 2000 with SunTrust Bank. The obligation of the bank may be substituted by another bank which meets certain (continued) credit standards and is approved by GRU. Under the terms of the agreement, GRU may borrow up to $25,000,000 with same day availability ending on the termination date, as defined in the agreement. As of September 30, 2000, $12,081,000 of Series D Notes were outstanding.

34 gru annual report Notes to Financial Statements

September 30, 2000 Carrying value Market value U.S. Government securities $ 78,108,369 78,108,369 U.S. Government bonds 21,299,343 21,299,343 Corporate commercial paper 74,047,775 74,045,861 Total $ 173,455,487 173,453,573

September 30, 1999 Carrying value Market value U.S. Government securities $ 67,051,507 67,051,507 U.S. Government bonds 21,010,132 21,010,132 Corporate commercial paper 64,008,509 64,280,323 Total $ 152,070,148 152,341,962

Cash and investments are contained in the following balance sheet accounts:

2000 1999 Restricted assets: 4,486,110 Utility deposits $ 3,881,897 Debt service fund 57,399,148 57,008,375 Rate stabilization fund 71,028,965 58,697,382 Construction fund 11,321,629 19,319,321 Utility plant improvement fund 21,911,448 11,707,978 Decommissioning reserve fund 3,263,292 2,849,617 Investment in The Energy Authority 1,400,844

Current assets Cash and short-term investments 7,688,078 3,505,102

Long-term investments 1,660,011 1,763,565

Total cash and investments 179,555,312 159,337,450

Less cash and cash equivalents (4,347,856) (5,989,361) Less accrued interest receivable (1,751,969) (1,277,941) Total investments $ 173,455,487 152,070,148

(5) Jointly-Owned Electric Plant

GRU-owned resources for supplying electric power and energy GRU, as a part of this participation agreement, is responsible for requirements include its 1.4079 percent undivided ownership its share of future decommissioning costs. Decommissioning interest in the Crystal River Unit 3 (CR3) nuclear power plant costs are funded and expensed annually and are recovered operated by Florida Power Corporation. GRU's net investment in through rates charged to customers. The most recent decom CR3 at September 30, 2000 and 1999 is approximately missioning cost estimates provided by Florida Power Corporation $8,893,000 and $8,578,000, respectively. CR3 operation and in April 1999, estimated GRU's share of total future decommis maintenance costs, which represent GRU's part of expenses sioning costs to be $8,582,000. At September 30, 2000, GRU attributable to operation of CR3, are recorded in accordance has funded $3,263,000 of this cost. with the instructions as set forth in the FERC uniform system of accounts. Payments are made to Florida Power Corporation in (continued) accordance with the CR3 participation agreement.

gru annual report 35 Notes to Financial Statements

(6) Contributions in Aid of Construction Contributions in aid of construction are as follows at September 30: 2000 1999 Contributions in aid of construction: Utility plant, property and equipment contributed by municipality $ 3,982,276 3,982,276 Federal and state grants in aid of construction 22,892,374 22,772,374

Contributions from customers and developers: Plant contributed by developers 59,015,525 57,044,826 Connection charges 63,256,277 59,547,682 149,146,452 143,347,158

Accumulated amortization (46,915,396) (43,448,498)

Contributions in aid of construction $ 102,231,056 99,898,660

(7) Retained Earnings Retained earnings reserved for debt service and unappropriated are as follows at September 30: 2000 1999 Reserved for debt service $ 37,261,135 36,644,898 Unappropriated 239,520,968 224,361,954

Total retained earnings $ 276,782,103 261,006,852

Retained earnings balances at September 30, 2000 and 1999 reserved in debt service fund accounts are as follows: 2000 1999 Reserve account $ 37,064,150 36,456,039 Debt service account 20,000,364 20,057,198 Subordinated indebtedness fund account 326,061 493,000 Commercial paper note payment account 8,573 2,138 57,399,148 57,008,375

Less amounts appropriated for current interest and principal payable 20,138,013 20,363,477 $ 37,261,135 36,644,898

(8) Retirement Plans

The City sponsors and administers one defined benefit pension The City accounts for and funds the costs of the Employees Plan plan and two defined contribution plans (collectively, the Plans) as they accrue. Such costs are based on contribution rates that includes GRU and other City employees. The Plans do not determined by the most recent actuarial valuation. The total make separate measurements of assets and pension benefit obli contributions by GRU, including amortization of prior service gations for individual units of the City. Such information is pre costs, for the years ended September 30, 2000 and 1999 were sented in the City of Gainesville, Florida, September 30, 2000 $1,391,000 and $1,218,000, respectively. Comprehensive Annual Financial Report. Certain limited employees are eligible to participate in defined The General Employees Pension Plan (Employees Plan), a con contribution plans managed by outside fiscal agents for the City. tributory defined benefit pension plan, covers all employees of Under the first plan, the City contributes a percentage of an GRU, except certain Limited personnel who elect to participate employee's annual salary and employees contribute a specified only in a Defined Contribution Plan.

(continued)

36 gru onnual report Notes to Financial Statements

percentage. AlL employees have the option to participate in the The remaining balance in deferred charges at September 30, second defined contribution plan. Total defined contribution 2000 and 1999 is comprised of unamortized bond issuance costs cost for GRU for the years ended September 30, 2000 and 1999 of approximately $3,190,000 and $3,384,000, respectively, was $347,000 and $373,000, respectively. amortized straight-line over the life of the bonds (which approx imates the effective interest method), environmental costs of (9) Postretirement Benefits $7,250,000 in 2000 and $5,075,000 in 1999 (see note 12), and deferred acquisition cost of $3,275,000 in 2000 and $3,400,000 In addition to providing pension benefits, the City provides cer in 1999. tain health care insurance benefits for retired employees of the City and GRU. The City also permits retirees to participate in the (12) Environmental Liabilities life insurance program. Most permanent full and part-time employees who are eligible for normal, early retirement, or dis GRU is subject to numerous Federal, state, and local environ ability are eligible for these benefits. Individual benefits are the mental regulations. Under the Comprehensive Environmental same for all employees, but the cost to the City may vary. Response Compensation and Liability Act, commonly known as Contributions by the City to fund these benefits are neither "Superfund," GRU has been named as a potentially responsible mandated nor guaranteed. Funds are appropriated annually to party at two hazardous waste sites. In addition, in January fund the actuarially determined costs of the health insurance 1990, GRU purchased the natural gas distribution assets of a program and to cover the costs of other programs. The City company and pursuant to the related purchase agreement, recognizes the cost of these benefits on a monthly basis by assumed responsibility for the investigation and remediation of contributing a percentage of active payroll costs. The cost of environmental impacts related to the operation of the former providing these benefits for the GRU retirees for the fiscal years manufactured gas plant. Based upon GRU's analysis of the cost ended September 30, 2000 and 1999 were $776,000 and to clean up these sites and other identified environmental con $734,000, respectively. tingencies, GRU has accrued a liability of $7,250,000 and $5,075,000 as of September 30, 2000 and 1999, respectively. (10) Transfers to General Fund Because GRU believes it is probable that it will recover the costs of environmental clean up through future customer rates, a reg GRU makes transfers to the City's general government based ulatory asset of equal amount has been reflected as a deferred on a formula that ties the transfer directly to the financial per charge in the accompanying balance sheet. Although uncertain formance of the system. The transfer to the general fund may be ties associated with environmental assessment and remediation made only to the extent such moneys are not necessary to pay activities remain, GRU believes that the current provision for operating and maintenance expenses and to pay debt service on such costs is adequate and additional costs, if any, will not have the outstanding bonds and subordinated debt or to make other a material adverse effect on GRU's financial position, results of necessary transfers under the Bond Resolution. The formula operations or liquidity. based fund transfer to the general fund for the years ended September 30, 2000 and 1999 was $23,340,246 and (13) Lease/Leaseback $22,357,105, respectively. In addition, a one-time transfer of $5,138,813 was made as a result of a Lease/Leaseback transac On December 10, 1998, GRU entered into a Lease/leaseback tion in 1999 (see note 13). transaction for all of the Deerhaven Unit 1 and a substantial portion of the Deerhaven Unit 2 generating facilities. Under the (11) Deferred Charges terms of the transaction, GRU entered into a 38-year lease and simultaneously a 20-year leaseback. At the end of the leaseback Included in deferred charges at September 30, 2000 and 1999 period term, GRU has an option to buy out the remainder of the is the unamortized balance of $1,084,000 and $3,469,000, lease for a fixed purchase option amount. respectively, remaining of the original payment of $27,375,000, in full settlement in connection with the City's cancellation of a contract for supply of coal to the Deerhaven II generating plant. The settlement payment is being recovered through future utility fuel adjustment revenue through the year 2003.

gru annual report 37 Notes to Financial Statements

Under the terms of the transaction, GRU continues to own, oper culating GRU's share of net income or loss, profit on trans ate, maintain and staff the facilities. actions between GRU and TEA have been eliminated. Such transactions primarily relate to purchases and sales of electrici The proceeds received by GRU from this transaction were ty between GRU and TEA. TEA's profit on these transactions has approximately $249 million. From these proceeds, GRU deposit been reflected as a reduction to GRU's reported revenue or ed $142 million as a payment undertaking agreement and a expense. As of September 30, 2000, GRU's investment in TEA second deposit of $72 million in the form of a collateralzed was $972,273. Additionally, in accordance with the membership Guaranteed Investment Contract (GIC), both with an AAA rated agreement between GRU and its joint venture members, GRU has insurance company. The deposit instruments will mature in advanced funds to TEA for the purpose of providing cash collat amounts sufficient to meet the annual payment obligations eral of $428,571 to guarantee trades and has provided further under the leaseback including the end of term fixed purchase trade guarantees of $3,846,154 for securing power marketing option if elected by GRU. transactions. This cash collateral is reflected within the invest ment in TEA on the balance sheet. The net benefit of this transaction, after payment of transaction expenses, was approximately $35 million and resulted in a The following is a summary of the unaudited financial informa deferred gain, which will be amortized as income on a straight tion of TEA for the nine months ending September 30, 2000 (in line basis over the leaseback period of 20 years. Of the $35 mil thousands): lion net benefit, approximately $5 million was transferred to the City of Gainesville's General Fund with the remainder being used, Unaudited along with other funds on hand, to pay off approximately $43 Condensed statement of operations: million of tax-exempt commercial paper. Total revenue $ 265,105 Total cost of sales and expenses 189,827 GRU accounted for the Lease/leaseback transaction as an operating Lease in 2000. Amortization of the net benefit was Operating income $ 75,278 $1,774,000 and $1,479,000 in 2000 and 1999, respectively, and was reported as a component of other operating revenue. Net revenue $ 75,917

(14) Investment in The Energy Authority Condensed balance sheet: Current assets $ 86,943 In May 2000, GRU became an equity member of The Energy Noncurrent assets 22,377 Authority ("TEA"), a power marketing joint venture. As of September 30, 2000 this joint venture was comprised of six Total assets $ 109,320 municipal utilities across the nation. GRU's ownership interest was 7.14 percent and it accounted for this investment using Current liabilities: equity accounting. Current liabilities $ 75,906 Noncurrent liabilities 20,510 To become a member, GRU paid an initial capital contribution of Members capital 12,904 $1 million and a membership fee of $867,360. The membership fee is to be amortized over 24 months. Included in deferred Total equity and liabilities $ 109,320 charges at September 30, 2000, is the unamortized balance of $686,660. GRU has reflected the capital contribution as an TEA issues separate audited financial statements on a calendar investment in TEA. The investment balance has been adjusted year basis. for GRU's subsequent share of TEA's net income or loss. In cal-

38 gru onnual report Supplemental Gainesville Regional Utilities Data The Combined Utility Funds of the City of Gainesville, Florida

gru annual report 39 Schedules of Combined Net Revenues in Accordance with Bond Resolution

2000 1999 1998 1997 1996 Revenue: Electric fund: Sales of electricity $ 142,078,330 135,625,527 132,144,457 126,465,575 128,402,775 Lease/Leaseback revenue 249,220,553 Other electric revenue 2,433,111 2,419,798 2,715,250 2,258,951 2,116,497 Transfers to rate stabilization (6,790,929) (12,199,403) (6,440,936) (2,199,957) (3,932,344) Interest income 5,106,585 6,405,429 6,705,946 4,990,841 5,227,158

Total eLectric fund revenue 142,827,097 381,471,904 135,124,717 131,515,410 131,814,086

Gas fund: Gas sales 15,275,788 12,309,930 14,421,979 14,712,153 15,238,782 Other gas revenue (expenses) (95,558) (5,839) 3,485 68,391 65,131 Transfers from (to) rate stabiLization (180,744) 306,100 (262,546) 642,016 (908,478) Interest income 483,108 456,378 560,866 309,943 411,727

Total gas fund revenue 15,482,594 13,066,569 14,723,784 15,732,503 14,807,162

Water fund: Sales of water 12,356,275 12,183,647 11,520,726 10,645,851 10,240,394 Other water revenue 2,084,675 1,775,024 1,539,268 1,209,873 1,373,707 Transfers to rate stabilization 43,359 (435,500) (301,322) (14,874) (1,494,278) Interest income 1,280,250 1,264,766 1,169,324 862,158 890,854

Total water fund revenue 15,764,559 14,787,937 13,927,996 12,703,008 11,010,677

Wastewater fund: Wastewater billings 15,363,519 15,115,652 14,155,134 14,146,461 13,839,294 Other wastewater revenue 1,967,796 2,370,807 1,924,334 1,558,309 1,924,636 Transfers from (to) rate stabilization 1,672,756 468,024 592,711 239,220 (2,651,214) Interest income 1,915,226 1,854,421 1,892,685 1,467,280 1,609,603

Total wastewater fund revenue 20,919,297 19,808,904 18,564,864 17,411,270 14,722,319

GRUCom fund: Sales to customers 2,001,610 1,226,409 556,127 965,938 854,353 Other GRUCom revenue 1,303,706 1,058,495 729,419 387,479 Transfers from (to) rate stabilization 62,000 728,000 (790,613) Interest income 27,341 8,410 85,562 98,274 1,291

Total GRUCom fund revenue 3,332,657 2,293,314 1,433,108 2,179,691 65,031

Total revenue $ 198,326,204 431,428,628 183,774,469 179,541,882 172,419,275

(continued)

40 gru annual report Schedules of Combined Net Revenues in Accordance with Bond Resolution, Continued

2000 1999 1998 1997 1996 Operation, maintenance, and administrative: Electric fund: Fuel expense $ 53,477,676 44,564,775 45,762,356 46,003,652 44,988,387 Operation and maintenance 22,541,187 19,121,149 19,426,427 18,648,302 19,568,982 Administrative and general 9,437,967 11,476,499 11,806,671 10,896,966 11,807,272

Total electric fund expense 85,456,830 75,162,423 76,995,454 75,548,920 76,364,641

Gas fund: Fuel expense 7,723,731 5,800,620 7,502,765 8,076,857 7,849,998 Operation and maintenance 729,547 542,303 573,941 555,819 1,043,298 Administrative and general 3,176,704 2,935,549 2,942,988 3,073,681 2,070,371

Total gas fund expense 11,629,982 9,278,472 11,019,694 11,706,357 10,963,667

Water fund: Operation and maintenance 4,142,401 3,630,657 3,605,347 3,437,563 3,556,204 Administrative and general 2,491,069 2,733,859 2,626,502 2,633,090 2,155,092

Total water fund expense 6,633,470 6,364,516 6,231,849 6,070,653 5,711,296

Wastewater fund: Operation and maintenance 5,239,109 4,628,489 4,711,541 4,964,647 4,885,952 Administrative and general 3,028,587 3,533,424 3,384,955 3,151,861 2,320,753

Total wastewater fund expense 8,267,696 8,161,913 8,096,496 8,116,508 7,206,705

GRUCom fund: Operation and maintenance 1,419,468 655,707 542,847 418,594 49,470 Administrative and general 453,264 650,379 615,089 133,841 15,561

Total GRUCom fund expense 1,872,732 1,306,086 1,157,936 552,435 65,031

Total operation, maintenance, and administrative 113,860,710 100,273,410 103,501,429 101,994,873 100,311,340

Net revenue in accordance with bond resolution: Electric 57,370,267 306,309,481 58,129,263 55,966,490 55,449,445 Gas 3,852,612 3,788,097 3,704,090 4,026,146 3,843,495 Water 9,131,089 8,423,421 7,696,147 6,632,355 5,299,381 Wastewater 12,651,601 11,646,991 10,468,368 9,294,762 7,515,614 GRUCom 1,459,925 987,228 275,172 1,627,256

Total net revenue in accordance with bond resolution $ 84,465,494 331,155,218 80,273,040 77,547,009 72,107,935

Aggregate bond debt service $ 29,458,515 29,899,917 30,782,845 30,744,550 28,956,424

Aggregate debt service coverage ratio 2.87 11.08 2.61 2.52 2.49

Total debt service $ 34,904,989 33,891,908 39,470,246 44,196,126 51,396,381

Total debt service coverage ratio 2.42 9.77 2.03 1.75 1.40 See note on page 47.

gru annual report 41 Schedules of Net Revenues in Accordance With Bond Resolution Electric Utility Fund

2000 1999 Revenue: Sales of electricity: Residential sales $ 44,288,788 43,591,629 General service and large power 37,920,728 37,428,687 Fuel adjustment 38,975,261 32,133,088 Street and traffic lighting 2,888,204 2,770,087 Utility surcharge 3,198,155 3,104,062 Sales for resale 5,346,568 5,442,996 Interchange sales 9,460,626 11,154,978

Total sales of electricity 142,078,330 135,625,527

Other electric revenue: Lease/leaseback revenue - 249,220,553 Service charges 1,934,644 1,924,691 Pole rentals 124,118 142,106 Miscellaneous 374,349 353,001

Total other electric revenue 2,433,111 251,640,351

Transfers to rate stabilization (6,790,929) (12,199,403) Interest income 5,106,585 6,405,429

Total revenue 142,827,097 381,471,904

Operation, maintenance, and administrative expense:

Operation and maintenance: Fuel expense: Retail and purchased power 48,450,221 40,896,025 Interchange 5,027,455 3,668,750 Total fuel expense 53,477,676 44,564,775 Power production 16,170,575 13,643,855 Transmission 658,153 576,637 Distribution 5,712,459 4,900,657

Total operation and maintenance 76,018,863 63,685,924

Administrative and general: Customer accounts 3,053,573 2,549,042 Administrative and general 6,384,394 8,927,457

Total administrative and general 9,437,967 11,476,499

Total operation, maintenance, and administrative expense 85,456,830 75,162,423

Net revenue in accordance with bond resolution: Retail 52,937,096 298,823,253 Interchange 4,433,171 7,486,228 Total net revenue in accordance with bond resolution $ 57,370,267 306,309,481

See note on page 47.

42 gru annuol report Schedules of Net Revenues in Accordance With Bond Resolution Gas Utility Fund

2000 1999 Revenue: Sales of gas: Residential $ 7,956,943 6,392,810 Interruptible/commercial 6,686,254 5,365,609 Other sales 632,591 551,511

Total sales of gas 15,275,788 12,309,930

Other gas revenue (expense) (95,558) (5,839) Transfers (to) from rate stabilization (180,744) 306,100 Interest income 483,108 456,378

Total revenue 15,482,594 13,066,569

Operation, maintenance, and administrative expense: Operation and maintenance: FueL expense 7,723,731 5,800,620 Operation and maintenance 729,547 542,303

Total operation and maintenance 8,453,278 6,342,923

Administrative and general: Customer accounts 1,584,807 1,222,579 Administrative and general 1,591,897 1,712,970

Total administrative and general 3,176,704 2,935,549

Total operation, maintenance, and administrative expense 11,629,982 9,278,472

Total net revenue in accordance with bond resolution $ 3,852,612 3,788,097

See note on page 47.

gru annual report 43 Schedules of Net Revenues in Accordance With Bond Resolution Water Utility Fund

2000 1999 Revenue: Sales of water: General customers $ 9,700,240 9,593,105 University of Florida 622,596 601,453 Fire protection 989,702 970,460 Generating stations 42,504 58,194 Utility surcharge 1,001,233 960,435

Total sates of water 12,356,275 12,183,647

Other water revenue: Connection charges 2,080,129 1,769,775 Miscellaneous 4,546 5,249

Total other water revenue 2,084,675 1,775,024

Transfers from (to) rate stabilization 43,359 (435,500) Interest income 1,280,250 1,264,766

Total revenue 15,764,559 14,787,937

Operation, maintenance, and administrative expense: Operation and maintenance: Source of supply 7,073 15,703 Pumping 1,002,082 941,695 Water treatment 1,963,702 1,917,120 Transmission and distribution 1,169,544 756,139

Total operation and maintenance 4,142,401 3,630,657

Administrative and general: Customer accounts 878,226 712,521 Administrative and general 1,612,843 2,021,338

Total administrative and general 2,491,069 2,733,859

Total operation, maintenance, and administrative expense 6,633,470 6,364,516

Total net revenue in accordance with bond resolution $ 9,131,089 8,423,421

See note on page 47.

44 gru onnuol report Schedules of Net Revenues in Accordance With Bond Resolution Wastewater Utility Fund

2000 1999 Revenue: Wastewater billings: Billings $ 14,100,390 13,906,750 Utility surcharge 1,263,129 1,208,902

Total wastewater billings 15,363,519 15,115,652

Other wastewater revenue: Connection charges 1,748,465 2,179,479 Miscellaneous 219,331 191,328

Total other wastewater revenue 1,967,796 2,370,807

Transfers from rate stabilization 1,672,756 468,024 Interest income 1,915,226 1,854,421

Total revenue 20,919,297 19,808,904

Operation, maintenance, and administrative expense: Operation and maintenance: Collection 1,392,173 1,047,032 Treatment and pumping 3,846,936 3,581,457

Total operation and maintenance 5,239,109 4,628,489

Administrative and general: Customer accounts 768,959 639,266 Administrative and general 2,259,628 2,894,158

Total administrative and general 3,028,587 3,533,424

Total operation, maintenance, and administrative expense 8,267,696 8,161,913

Total net revenue in accordance with bond resolution $ 12,651,601 11,646,991

See note on page 47.

gru annual report 45 Schedules of Net Revenues in Accordance With Bond Resolution GRUCom Utility Fund

2000 1999 Revenue: Sates to customers $ 2,001,610 1,226,409 Other GRUCom revenue 1,303,706 1,058,495 Interest income 27,341 8,410

Total revenue 3,332,657 2,293,314

Operation, maintenance, and administrative expense: Operation and maintenance 1,419,468 655,707

Total operation and maintenance 1,419,468 655,707

Administrative and qeneral: Customer accounts 124,825 108,531 Administrative and qenerat 328,439 541,848

Total administrative and qenera[ 453,264 650,379

Total operation, maintenance, and administrative expense 1,872,732 1,306,086

Total net revenue in accordance with bond resolution 1,459,925 987,228

See note on page 47.

46 gru annuoa report Notes to Schedules of Net Revenues in Accordance with Bond Resolution

"Net revenue in accordance with bond resolution" differs from * Other water and wastewater revenue include fees for connec "Net income" which is determined in accordance with generally tion, installation, and backflow prevention. accepted accounting principles. Following are the more signifi cant differences: * Transfers to the general fund are excluded.

"*Interest income does not include interest earned on construc "*Other revenue include transfers (to) from the rate stabilization tion funds. fund.

"*Operation and maintenance expenses do not include deprecia "*Revenue from Lease/Leaseback transaction (see note 13). tion, amortization, or interest expense.

gru onnua{ report 47 Combining Balance Sheet

Assets Electric Gas Water Wastewater GRUCom Combined Utility plant: Utility plant in service $ 512,938,927 32,902,899 110,945,105 146,226,748 8,429,151 811,442,830 Plant held for future use 6,053,926 6,053,926 PLant unclassified 10,570,374 958,513 3,040,232 4,882,977 845,505 20,297,601 Construction in progress 71,277,348 2,818,853 8,186,913 9,437,152 10,986,725 102,706,991 600,840,575 36,680,265 122,172,250 160,546,877 20,261,381 940,501,348 Less accumulated depreciation and amortization (214,655,983) (16,112,895) (39,375,804) (51,475,249) (3,006,622) (324,626,553)

Net utility plant 386,184,592 20,567,370 82,796,446 109,071,625 17,254,759 615,874,795

Current assets: Cash and short-term investments 2,286,244 1,345,544 1,514,101 2,542,1 89 7,688,078 Accounts receivable, net 25,047,037 1,352,932 661,989 899,287 628,7 17 28,589,962 Fuels contracts 2,283,800 - 2,283,800 Prepaid rent- [ease/[easeback 10,686,909 - 10,686,909 Deferred fuel charges 4,404,500 - 4,404,500 Inventories: Fuel 3,977,190 - 3,977,190 Materials and supplies 3,701,867 244,965 539,339 9 383,2 30 4,869,410

Total current assets 50,101,303 3,884,141 2,546,872 2,413,397 3,554,136 62,499,849

Long-term investments 1,660,011 - 1,660,011

Restricted assets: Utility deposits: Cash and investments 3,881,897 -- 3,881,897 Debt service fund: Cash and investments 39,565,900 3,236,017 6,150,553 8,162,804 283,874 57,399,148 Rate stabilization fund: Cash and investments 39,189,217 2,738,178 11,532,661 17,568,827 82 71,028,965 Construction fund: Cash and investments 6,722,706 3,154,862 (3,525,244) 2,266,370 2,702,935 11,321,629 Utility plant improvement fund: Cash and investments 6,114,327 2,398,364 5,440,292 7,458,929 499,536 21,911,448 Decommissioning reserve fund: Cash and investments 3,263,292 - 3,263,292 Investment in the Energy Authority: Cash and investments 1,400,844 -- 1,400,844

Total restricted assets 100,138,183 11,527,421 19,598,262 35,456,930 3,486,427 170,207,223

Prepaid rent - [ease/teaseback 183,458,604 - 183,458,604 Deferred charges 10,408,813 5,775,540 424,543 513,811 149,083 17,271,790

Total assets $731,951,506 41,754,472 105,366,123 147,455,766 24,444,405 1,050,972,272

48 gru annual report Combining Balance Sheet

Liabilities and Fund Equity Electric Gas Water Wastewater GRUCom Combined Long-term debt and fund equity: Long-term debt: Utilities system revenue bonds $201,394,958 26,150,229 47,912,830 65,921,983 - 341,380,000 Utilities system commercial paper notes 40,800,000 3,900,000 4,374,091 7,153,909 18,881,000 75,109,000 242,194,958 30,050,229 52,286,921 73,075,892 18,881,000 416,489,000

Less unamortized Loss on refinancing (21,857,842) (911,070) (3,483,646) (3,250,052) (29,502,610)

Less unamortized bond discount (2,624,001) (331,675) (530,513) (767,125) - (4,253,314)

Total Long-term debt 217,713,115 28,807,484 48,272,762 69,058,715 18,881,000 382,733,076

Fund equity: Contribution in aid of construction - 39,878,229 61,582,221 770,606 102,231,056 Retained earnings 256,689,928 2,424,004 10,003,097 8,699,270 (1,034,196) 276,782,103

Total fund equity 256,689,928 2,424,004 49,881,326 70,218,491 (263,590) 379,013,159

Total Long-term debt and fund equity 474,403,043 31,231,488 98,154,088 139,340,206 18,617,410 761,746,235

Current liabilities: Fuel payable 9,705,276 778,810 - 10,484,086 Accounts payable and accrued liabilities 6,356,761 28,643 242,085 396,670 190,168 7,214,327 Operating Lease - Lease/Leaseback 12,461,112 12,461,112 Due (from) to other funds (13,337,648) 3,618,073 4,159,783 3,096,818 5,707,054 3,244,080

Total current liabilities 15,185,501 4,425,526 4,401,868 3,493,488 5,897,222 33,403,605

Payable from restricted assets: Utility deposits 3,931,869 3,931,869 Long-term debt payable - current 7,280,573 233,659 1,126,024 1,549,744 10,190,000 Accrued interest payable 5,806,826 799,736 1,369,134 1,920,445 51,872 9,948,013 Construction fund: Accounts payable and accrued liabilities 1,309,181 (29,080) 13,894 659,466 (148,211) 1,805,250

Total payable from restricted assets 18,328,449 1,004,315 2,509,052 4,129,655 (96,339) 25,875,132

Operating tease - 213,915,757 tease/teaseback 213,915,757 - - Other liabilities and deferred credits 10,118,756 5,093,143 301,115 492,417 26,112 16,031,543

Total Liabilities and fund equity $731,951,506 41,754,472 105,366,123 147,455,766 24,444,405 1,050,972,272

gru annual report 49 Combining Statement of Revenue and Expense and Retained Earnings

Electric Gas Water Wastewater GRUCom Combined Operating revenue: Sales and service charges $142,078,330 15,275,788 12,356,275 15,363,519 2,001,610 187,075,522 Other operating revenue 4,207,313 (95,558) 4,546 219,331 1,303,706 5,639,338

Tota[ operating revenue 146,285,643 15,180,230 12,360,821 15,582,850 3,305,316 192,714,860

Operating expenses: Operation and maintenance 76,018,863 8,453,278 4,142,400 5,239,109 1,419,468 95,273,118 Administrative and general 9,437,967 3,176,704 2,491,069 3,028,587 453,264 18,587,591 Depreciation and amortization 20,114,575 1,267,848 1,824,769 1,943,032 956,164 26,106,388

Total operating expense 105,571,405 12,897,830 8,458,238 10,210,728 2,828,896 139,967,097

Operating income 40,714,238 2,282,400 3,902,583 5,372,122 476,420 52,747,763

Non-operating income (expense): Interest income 6,772,662 701,737 1,414,951 2,062,740 282,118 11,234,208 Interest expense, net of AFUDC (14,000,306) (1,741,482) (2,993,186) (4,200,561) (1,161,679) (24,097,214) Gain (loss) on sate of investments (446,385) (42,710) (125,824) (153,483) (858) (769,260)

Total non-operating expense (7,674,029) (1,082,455) (1,704,059) (2,291,304) (880,419) (13,632,266)

Net income 33,040,209 1,199,945 2,198,524 3,080,818 (403,999) 39,115,497

Retained earnings, beginning of year 239,071,638 2,281,938 10,625,600 9,433,473 (405,797) 261,006,852

Operating transfer to City of Gainesville General Fund (15,421,919) (1,057,879) (2,821,027) (3,815,021) (224,400)(23,340,246)

Retained earnings, end of year $256,689,928 2,424,004 10,003,097 8,699,270 (1,034,196) 276,782,103

50 gru ann ual report Schedule of Utility Plant Properties Combined Utility Fund

- Utility Plant Properties Sales, Balance Balance retirements September 30, September 30, and transfers 2000 1999 Additions

Plant in Service Electric utility fund: 282,102,335 $ 282,102,335 Production plant 6,668,515 6,599,512 69,003 Nuclear fuel 186,101,082 183,975,959 2,125,123 Transmission and distribution plant 38,066,995 37,768,612 298,383 General and common plant 10,570,374 8,616,946 1,953,428 Plant unclassified 523,509,301 519,063,364 4,445,937 Total electric utility fund

Gas utility fund: 26,841,104 26,661,335 179,769 Distribution plant 1,411,160 1,411,160 General plant 4,650,635 4,650,635 Plant acquisition adjustment 958,513 745,865 212,648 Plant unclassified 33,861,412 33,468,995 392,417 Total gas utility fund

Water utility fund: 18,164,011 18,164,011 Supply, pumping and treatment plant 89,083,180 88,011,463 1,071,717 Transmission and distribution plant 3,697,914 3,697,914 General plant 3,040,232 292,480 2,747,752 Plant unclassified 113,985,337 110,165,868 3,819,469 Total water utility fund

Wastewater utility fund: 56,887,563 525,567 57,413,130 Pumping and treatment plant 81,471,362 80,728,320 743,042 Collection plant 2,084,956 2,084,956 Reclaimed water plant 5,257,300 5,257,300 General plant 4,882,977 677,552 4,205,425 Plant unclassified 151,109,725 145,635,691 5,474,034 Total wastewater utility fund

GRUCom utility fund: 8,139,404 8,139,404 Distribution plant 289,747 289,747 General plant 845,505 186 845,319 Plant unclassified 9,274,656 8,429,337 845,319 Total GRUCom utility fund 831,740,431 $ 816,763,255 14,977,176 Total plant in service

Plant held for future use 6,053,926 $ 6,047,876 - electric 6,050

Construction in Progress 71,277,348 $ 29,341,646 44,561,611 2,625,909 ELectric utility fund 219,599 2,818,853 856,758 2,181,694 Gas utility fund 3,638,805 8,186,913 6,101,426 5,724,292 Water utility fund 5,474,034 9,437,152 9,095,543 5,815,643 Wastewater utility fund 845,319 10,986,725 4,217,240 7,614,804 GRUCom utility fund 102,706,991 65,898,044 12,803,666 Total construction in progress $ 49,612,613

gru annual report 51 L

Schedule of Accumulated Depreciation and Amortization Combined Utility Fund

Balance Sales, Balance September 30, retirements September 30, 1999 Additions and transfers 2000 Electric utility fund: Production plant $ 137,537,920 8,484,403 146,022,323 Nuclear fuel 5,592,330 269,586 5,861,916 Transmission and distribution ptant 41,555,659 5,146,279 46,701,938 General and common plant 12,844,316 3,225,490 16,069,806 Total electric utility fund 197,530,225 17,125,758 214,655,983

Gas utility fund: Distribution plant 11,144,107 862,088 12,006,195 General plant 753,485 156,755 910,240 Plant acquisition adjustment 2,896,097 300,363 3,196,460 Total gas utility fund 14,793,689 1,319,206 16,112,895

Water utility fund: Supply, pumping and treatment plant 7,314,495 656,194 7,970,689 Transmission and distribution plant 26,166,379 2,143,172 28,309,551 General plant 2,809,014 286,550 3,095,564 Total water utility fund 36,289,888 3,085,916 39,375,804

Wastewater utility fund: Pumping and treatment plant 19,721,502 2,074,935 21,796,437 Collection plant 23,513,556 1,630,862 25,144,418 Reclaimed water plant 177,515 41,679 219,194 General plant 3,788,108 527,092 4,315,200 Total wastewater utility fund 47,200,681 4,274,568 51,475,249

GRUCom utility fund: Distribution plant 1,857,117 1,057,854 2,914,971 General plant 58,654 32,997 91,651 Total GRUCom utility fund 1,915,771 1,090,851 3,006,622

Total $ 297,730,254 26,896,299 324,626,553

52 gru annual report 1999-00 highlights 2000 1999 %chg

Financial Net revenues 84,465,494 331,155,218 -74.4 Aggregate debt service 29,458,515 29,899,917 -1.5 Aggregate bond coverage ratio 2.87 11.08 -74.2 Total debt service coverage ratio 2.42 9.77 -75.2 Long-term debt 382,733,076 344,095,935 11.2 Net utility plant 615,874,795 574,693,490 7.2 Cash and investmrents: Rate stabilization fund and revenue fund 80,377,054 63,966,049 25.7 Customers (12 months average) Residential electric 69,837 68,096 1.1 Non-residential eletric 8,313 81151 2.0 Total electric 78,150 76,247 1.2 Water 57,280 55,568 3.1 Wastewater 50,901 49,423 3.0 Natural gas 27,930 27,273 2.4 Sales of energy (gigawatt-hours) Residential 776.7 764.7 1.6 General service/,large power 837.6 819.0 2.3 Lighting 22.1 21.6 2.3 Sales for resale 115.9 107.0 8.3 Sub-total 1,752.3 1,712.3 2.3 Interchange 212.2 147.2 44.2 Total 1,964.5 1,859.5 5.6 Sales of water (miaLon gallons) 8,389.1 8,324.7 0.8 Wastewater billed (miltion gallons) 5,291.4 5,215.6 1.5 Natural gas (mil[ion therms) 21.5 19.7 9.1

I9 99-00 statistics

Energy Supply Deerhaven Generating Stetion Net Capability ...... 424 megawatts (MW) John R. Kelly 6ereeoting Station Net Capability ...... 115 MW Share Ownership of Crystal River 3 ...... Net Capability 11 MW Combined System ...... Net Capability 550 MW Energy Delivery Service Area ...... 130 sq. miles Transmission ...... 116.5 miles of 138 kilovoLts (kV) 2.5 miles of 230 kV - 119.0 total circuit mites Distribution ...... 614 Overhead (OH) circuit miles at 12 kV 629 Underground (UG) circuit miles at 12 kV - 1,243 total circuit miles Distribution Substations ...... 7 (138 kV/12kV) Natural Gas System Service Area ...... 83 sq. miles Distribution Mais ...... 570 miles Delivery Points ...... 5 Water System Walter E. Miurphree Water Treatment Plant Treatment Capacity ...... 40 million galtons/day (MGD), peak day Storage Capacity ...... 19.5 miLlion gallons (MG) Supply Wells ...... 11 Water Service Area ...... 118 sq. miles Distribution Mains ...... 938 miles Wastewater System Konopoha Wote, Redcrnotion Focilife Treatment Capacity ...... 10 MGD, Avg. Annual Daily Fto,.,' (AADF) iMoin Street l/oseer Treatment Ptant Treatment Capacity ...... 7.5 MGD, AADF Combined Treatment Capacity ...... 17.5 MGD, AADF Collection Service Area ...... 115 sq. miles Gravity Mains ...... 518 miles Force Mains ...... 121 miles Lift Stations ...... 144 Communications Miles of Fiber Optic Cable ...... 151.5 miles On-net Locations ...... 159 Maximum Band Widti .1...... OC-48 (2.5 gigabits/second)