2010-08_REC_AR

ANNUALREPORT09

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EXECUTIVESUMMARY Shortly after last year’s annual meeting, Roanoke EC and other electric cooperatives nationwide launched an effort aimed at educating you about energy conservation and efficiency.

Entitled “Together We Save,” the campaign (also the theme for this year’s Annual Meeting) is built on the concept that small changes in behavior can help your cooperative deliver more efficient, reliable and affordable energy.

At a time of steady growth and demand, every consumer has a responsibility to be more deliberate in using energy wisely and efficiently. Our ultimate objective is to provide our members with simple tools that translate into real savings. We encourage you to visit the www.togetherwesave.com website, which includes a virtual home tour with tips on how to save energy and money at home, interactive web applications, and the Touchstone Energy TV that features short videos on energy audits, lighting, insulation and more. If you have not already visited this site, you’ll find it very useful. Also, we encourage you to share your stories on things you’ve done to save on energy costs.

These testimonials are priceless when your peers hear from you.

We all have a responsibility in creating a greener world. By doing your part, not only are you reducing your overall energy budget, you are also helping REC lessen the need for additional power generation in the future, which could be very costly under proposed legislation and tougher federal guidelines.

In 2009, our staff managed another successful year by puting a lot of effort into finding ways to reduce operational costs and ultimately save you money.

Below are a few measures taken to reduce overall controllable expenses: ■ Reduced labor cost by: ✓ providing extensive cross-training to increase staff capacity and limiting the use of part-time employees B

✓ reducing corporate resources at events like the Annual Meeting ✓ continuing to deploy automated metering to eliminate the use of personnel and transportation to read meters ■ Reduced the company’s exposure to writing off unpaid bills by: ✓ implementing pre-paid/pay-as-you-go metering ✓ shortening our billing cycles (the length of time between members receiving their electric bills and disconnecting service for nonpayment) We take pride in knowing that we were able to meet these goals while continuing to improve overall customer service. Our signature project in 2009–opening a new state-of-the-art headquarter facility–infused a major boost in our service level. The new facility gives REC numerous opportunities to be more efficient. Examples include: becoming more centrally located to all parts of our service territory to reduce the drive time and fuel cost required for our service and maintenance personnel to reach our members; providing our members a drive-through window payment option; and establishing a way to better manage over $1 million in inventory via a larger more organized warehouse facility.

We always seek to provide affordable and dependable electric service. We are excited to bring you a new way to reduce your energy costs. Hopefully you will take advantage of our energy efficiency programs as your cooperative continues to find new ways to reduce its operating costs. With both of working using the resources made available to us, “Together We (Will) Save.”

WHEN WE WORK TOGETHER, ‘TOGETHER WE SAVE’

Allen Speller, Chairman

Curtis Wynn, President and CEO

TOGETHERWESAVE TOGETHERWESAVE

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“Together We Save,” this year’s annual meeting theme, coincides with a nationwide effort that affords members the opportunity to conserve energy and reduce their energy budgets. Conserving ultimately offsets pending costs to REC and other utility providers by lessening the need for additional power generation.

Along with this effort, your cooperative continues to communicate with our elected officials in Washington, D.C., on the importance of finding a balanced solution to our energy needs–one that achieves real environmental goals without draining family budgets or further harming the economy.

Working together and incorporating little changes will make a big difference! Today, that means focusing on energy conservation, efficiency, the latest technologies, and straight talk about energy costs. With that also comes a commitment from the cooperative’s family to continue providing safe, reliable and affordable electricity while enhancing the quality of life in the diverse communities we serve.

Garland and Sandra Lee are among area business owners who participate in the Co-op Connections program. Their restaurant, called A New Flavor, and other participating businesses offer special discounts to cooperative members. In exchange, the businesses get additional media exposure and increased visibility.

WORKSUMMARY ENGINEERING, OPERATIONS, AND TECHNICAL SERVICES This department is responsible for planning and designing the cooperative’s electric distribution system, maintaining all of the cooperative’s fleet of vehicles, maintaining existing cooperative lines, both overhead and underground, and constructing new lines as needed. Other responsibilities include administering information systems, system mapping, electric metering, material purchasing and supply, and substation monitoring.

Although there were many accomplishments in this area in 2009, the highlight is this department’s leadership in facilitating a successful move to the new headquarters facility. Other accomplishments are as follows: ■ Improved efficiency, accuracy and overall ability to manage the poles, wires and other materials stored in our warehouse ✓ These very expensive materials are critical to our ability to build and maintain our power distribution system and restore power for our members

✓ The new headquarters is better equipped to manage inventory material in an enclosed and centralized warehouse ■ Refined the process of tracking construction jobs from the beginning to the end, thus allowing us to better understand and manage costs ■ Installed new software that better enables the cooperative to monitor its electrical distribution system and quickly restore power outages ■ Improved communications capabilities at Mapleton substation

MEMBER SERVICES AND MARKETING This department provides members with up-to-date information about the cooperative and its services. In addition, it also administers a broad range of community relations and marketing efforts. Every year the cooperative offers numerous grants and youth programs, all designed to improve the communities in which our members live and work. This department is also responsible for billing, collecting payments, reading meters, and Continued on page D ROANOKE ANNUAL REPORT 2009

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coordinating all service requests as well as maintaining complete personal records of all consumer-members. The many exciting accomplishments in 2009 included: ■ Completed website updates ✓ The cooperative’s website was enhanced to allow more interactivity with members at a time that meets their schedules ✓ Requests for unclaimed capital credits, requests for capital credits of deceased estates, and new connect service orders can be coordinated through our website ■ Installed 400 prepaid metering accounts on system ■ Enhanced collection efforts to improve the cooperative’s exposure to delinquent accounts ✓ More remote disconnect collars were placed in the field ✓ The cooperative is now equipped to perform calls to delinquent accounts as another layer of notice prior to disconnection ✓ The cooperative also changed payment terms for delinquent accounts ■ Coordinated a strategic energy efficiency program ✓ The cooperative worked very closely with Greenco Solutions, a green services company owned by REC

Line Foreman Robert Price spoke with students at Riverview Elementary’s Career Day. and other cooperatives, to meet energy efficiency and renewable energy goals ✓ REC also worked very closely with the Roanoke Construction Group, a branch of the cooperative’s nonprofit affiliate, the Roanoke Center, to coordinate many energy efficiency programs. ✓ Members were (and still are) encouraged to visit www.togetherwesave.com for more information on conserving energy ■ Incorporated the Co-op Connections Card Program ✓ All members received this discount card in April 2009 ✓ This program links REC members to participating businesses in the area by receiving discounts for purchases at these businesses

✓ Businesses were (and still are) encouraged to participate ■ Completed setting up The Roanoke Center as a payment center

HUMAN RESOURCES DEPARTMENT The Human Resources department is a service-orientated team that provides expert consultation and support to REC and subsidiary employees, while serving as a resource for the REC Board of Directors. Responsible for developing and carrying out programs involving personnel administration including recruitment efforts, medical and disability insurance programs, policymaking, wage and salary program reviews, training, wellness programs, and all payroll activity, the Human Resources Department is committed to a holistic approach to excellence that includes caring for the people who work to serve you. That is why

WORKSUMMARY

CONTINUED

Right: REC’s Youth Tour representative Tatyanna Holley (third from left) with her family.

Below: The group for the 2010 Youth Tour got to see historic sights and learn about government in Washington, D.C.

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TOGETHERWESAVE

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ROANOKE CONSTRUCTION GROUP www.roanokeconstructiongroup.com The Roanoke Construction Group (RCG) was created to grow and support small and historically under-utilized construction and construction-related businesses. It promotes business opportunities as well as offers training and business programs.

REC’S WEBSITE—YOUR INFORMATION HIGHWAY Financial Literacy Program Coordinator Ann Riddick speaks with Bruce Grant, an exhibitor at the Financial Literacy Fun Day. The Roanoke Center was one of the event sponsors.

REC continues to invest in its employees by providing training, seminars and health and wellness programs. Exciting accomplishments in 2009 included: ■ Reviewed the performance management process to reinforce desired behaviors for successfully completing corporate goals ■ Cross-trained HR staff to handle multiple functions within the department ■ Worked with legal counsel to review and update personnel policies ■ Implemented rewards/recognition program ■ This programs rewards employees for meeting goals and criteria such as REC’s work plan objectives, member satisfaction, cost savings, process improvements and safety

FINANCE & ACCOUNTING The Finance & Accounting Department provides finance and accounting services for Roanoke Electric Cooperative and its affiliate organizations. The department’s goal is to provide accurate financial information to the CEO, Board of Directors and department heads to assist in making solid financial decisions.

Roanoke Electric Cooperative’s 2009 Combined Financial Audit was completed

by McNair, McLemore, Middlebrooks & Co., LLP. Exciting accomplishments in 2009 included: ■ Improved the cooperative’s purchasing procedures to insure competitive prices are obtained on all purchases ■ Implemented a new budgeting tool for a more precise budgeting process ■ Implemented the cooperative’s Record Retention Policy schedule, which

■ ■

www.roanokeelectric.com

provides a snap shot of what records are being kept by each department and for how long Completed an accounting transition plan for the new headquarters facility Improved overall reporting capabilities to better track costs and performance in areas such as construction, maintenance and work orders

THE ROANOKE CENTER www.roanokecenter.org The Roanoke Center offers financial literacy, wealth building, business counseling, accounting and administrative services for area organizations. This facility is housed at the former REC Rich Square location. The public is encouraged to visit and learn about the many programs available at the Center.

BUYER SUPPLIER NETWORKS www.whoswhosystem.com www.rfqhosting.com Buyer Supplier Networks (BSNs) are regionally focused economic development initiatives, which connects buyers, i.e., corporations and public sector agencies with locally owned qualified and diverse suppliers. This concept is driven by two web based technologies–the Who’s Who System and the RFQhosting system. The Who’s Who system is a registry for businesses that affords them the opportunity to deliver products and services to larger buyers. The RFQhosting system is the component of Buyer Supplier Network that handles the bid management process for buyers. This is where the same registrants in the Who’s Who System will present their quotes on requested products and services to prospective buyers.

Top: Our move to our new headquarters was successful. Here is the first customer at REC’s new facility in Ahoskie.

Bottom: Bobby Joe Lindsay gets her blood work done by Viquest staff.

ROANOKE ANNUAL REPORT 2009

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FINANCIAL SUMMARY 2009 Statistics of Operations Fiscal Year ending December 31, 2009

What We The Cooperative Collected: Total Electric Revenue Non-Operating Interest Total Revenues

$33,451,237.00 $381,229.00 $33,832,466.00

What The Cooperative Paid Out: Cost of Power

FINANCIALSUMMARY2009

Transmission Expense

F

$18,923,967.00 $0.00

Distribution/Operating Expense

$1,311,411.00

Maintenance Expenses

$1,651,190.00

Consumer Acct. Expense

$1,113,350.00

Customer Service and Info.

Sales Expense

$313,879.00 $0.00

Admin. and Gen. Expense

$2,919,611.00

Depreciation

$2,122,796.00

Taxes

$1,041,578.00

Interest on Long Term Debt

$1,915,131.00

Other Deductions Total Expenses Income (loss) from equity investments Total Margins

$11,846.00 $31,324,759.00 ($43,362.00) $2,464,345.00

Balance Sheet as of December 31, 2009 Assets (Membership Patronage Capital and other Equities) Electric Plant In Service, less depreciated Other Property and Investments Cash & Cash Investments Consumer and Acct. Receivable

$63,366,538.00 $5,780,424.00 $824,067.00 $6,669,207.00

Notes Receivable

$131,000.00

Materials and Supplies

$852,407.00

Other Assets Deferred Charges Total Assets

$51,773.00 $46,640.00 $77,722,056.00

Liabilities (What We Owe) Membership Patronage (Capital Credits and other Equities)

$24,476,572.00

Long Term Debt to REA and CFC

$41,122,015.00

Accounts Payable

$3,400,393.00

Consumer Deposits

$1,142,409.00

Deferred Credits

$202,776.00

Other Liabilities

$6,478,728.00

Other Current & Accrued Liabilities Total Liabilities

$899,163.00 $77,722,056.00

TOGETHERWESAVE

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ROANOKE ECONOMIC DEVELOPMENT, INC.

ROANOKE ENERGY RESOURCES

FINANCIAL SUMMARY 2009

FINANCIAL SUMMARY 2009

Statement of Revenue

Statement of Revenue

Operating Revenue

$504,077.00

Operating Expenses Cost of Goods Sold Customer Service and Information Administrative and General Taxes Total Operating Margins Before Interest Expense Interest Expense

Operating Revenues

$86,225.00

Operating Expenses $2,649.00

0.00

Cost of Goods Sold

0.00

Customer Service Expense and Information

$34,387.00

Administrative and General

$79,497.00

$656,989.00 0 $656,989.00 ($152,912.00) 0

$0.00

Taxes Total

$116,533.00

Operating Margins Before Interest Expense

($30,308.00) $13,054.00

Interest Expense

Operating Margins After Interest Expense

($152,912.00)

Operating Margins After Interest Expense

Net Margins

($152,912.00)

Nonoperating Revenue

0.00 ($43,362.00)

Net Margins

BALANCE SHEET AS OF DEC. 31, 2009

BALANCE SHEET AS OF DEC. 31, 2009

Assets

Assets

Plant

Plant

Nonutility Plant in Service-At Cost Gross Plant Accumulated Provision for Depreciation Dues from Affiliates Other Investments Total Utility Plant

$582.00

Nonutility Plant in Service-At Cost

$3,300.00

$582.00

Gross Plant

$3,300.00

$0.00 $39,165.00 $0.00 $38,747.00

Current Assets Cash and Cash Equivalents Notes Receivable Current Portion Accounts Receivables (Net)

Accumulated Provision for Depreciation

$189,639.00 $0.00 $171,621.00

Cash and Cash Equivalents

$0.00

Other

$0.00 $401,007.00

$7,437.00 $0.00 $16,965.00 $0.00

Total Assets

$36,135.00

Deferred Debits

$0.00

Total Assets

$40,304.00

Equities and Liabilities

Equities and Liabilities Donated Capital

$0.00

Donated Capital

Capital Stock

$0.00

Capital Stock

Long Term Debt

$0.00

Accounts Receivable (Net)

Materials and Supplies

$361,260.00

$11,733.00

Notes Receivable-Current Portion

$0.00

Retained Earnings

$4,169.00

Current Assets

Materials and Supplies

Total Assets

$0.00

Total Utility Plant

Accrued Utility Revenues

Deferred Debits

$869.00

Other Investments

$0.00

Total Assets

$0.00

Dues from Other Affiliates

Accrued Utility Revenues

Other

($43,362.00)

($1,233,613.00) $0.00

$540,000.00 $10,000.00

Retained Earnings

($3,462,314.00)

Long Term Debt

$185,000.00

Total

($2,727,314.00)

Current Liabilities Accounts Payables

$8,041.00

Due to Roanoke EC

$1,534,925.00

Current Liabilities Mortgage Notes

$70,000.00

Due to Roanoke Energy Resources, Inc.

$2,888.00

NRUCFC Line-of-Credit

Other

$8,766.00

Accounts Payables

$0.00

$1,554,620.00

Due to Roanoke EC

$2,662,379.00

Total Liabilities Deferred Credits Total Equities and Liabilities

$80,000.00 $401,007.00

$0.00

Due to Roanoke Economic Development, Inc.

$29,406.00

Other Deferred Credits Total Liabilities Total Equities and Liabilities

$0.00 $5,833.00 $2,767,618.00 $40,304.00

ROANOKE ANNUAL REPORT 2009

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BOARDOFDIRECTORS

Standing: Everette Winslow, REC’s General Counsel; Curtis Wynn, President & CEO; Millard Lee, District 6; Darnell Lee, District 7; Seated: Ken H District TOGETHERWESAVE Jernigan, 5; Allen Speller, District 8 (Board Chairman); Johnnie P. Garner, District 1 (Assistant Secretary-Treasurer); Robert “Nat” Riddick, District 4 (Vice Chairman); Carolyn Bradley, District 3; Delores Amason, District 2 (Secretary-Treasurer) and Chester Deloatch, District 9.

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