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e l e c t r i c

n e w s j u ly

2012

PRECORP

Annual Meeting issue

2012

August 25

th

gillette, wy Featuring chuck larsen Cowboy poet

Your 2012 voting ballot is inside!

Buffalo Apprentice Lineman Kyle Broderson drives a PRECorp digger truck at a worksite east of Buffalo.


August 25th

clarion Inn convention center

2012 annual meeting members PRECORP

of the

Elect your PRECorp Board of Directors Local poet Chuck Larsen to entertain at annual meeting Chuck Larsen’s poetry has the ability to make you roll in the aisle with laughter or bring a sentimental tear to your eye, as you hear, see and become part of his performance. Chuck’s unique style of writing and performing his poetry will allow you to “visualize” his cowboyin’ experiences as he relates them. Chuck has been writing and performing his poetry since 1990, and has been featured at many Cowboy Gatherings around the country. "Blue Cowboy Moon" and Chuck’s latest recording, "Stock Tank Reflections," are available on CD and his book "You’re Gonna Get A Kick Outta This!" is a great addition to a cowboy poetry collection. Growing up on his dad’s place in South Dakota, Chuck had ample opportunity to "do it all" when it came to working livestock. He and his wife Linda now have a little place in the Upper North Platte River Valley near the town of Saratoga, Wyoming, where they keep a string of good cow horses and pack mules. Although Chuck’s job at the Co-op takes up most of his time, he still finds plenty of opportunity to maintain his Cowboy Credentials, doin’ day work for local ranches. WARNING: Chuck also has an imagination that takes the bit in its teeth once in a while.

For more information on the Annual Meeting call PRECorp at 1-800-442-3630.

Members who attend the Powder River Energy Corporation Annual Meeting on Saturday, August 25, may cast their vote in person. If unable to attend the meeting, members may still cast their vote by mail or by proxy. How to vote: 1. Review the candidate information on pages 2 and 3 of the PRECorp News section inside this issue of the WREN magazine. 2. In Person: a. You must register at the meeting in order to vote. b. A ballot will be given to you when you register. 3. By Mail: a. Fill out the official mail-in ballot printed on the back cover of this magazine. Please follow the instructions carefully. b. Use the return envelope in the middle of this magazine to cast your vote by mail. The ballot must be received by 5 p.m. Friday, August 24. Voting Instructions If you plan to attend the meeting: • Vote in person • You must register at the meeting in order to vote. • A ballot will be given to you when you register. • If you will be representing by proxy, you must present the appropriate, properly completed voting designation form at registration. Cast your vote by mail: • Important: Your ballot will not be valid without your printed name and signature on the back of the Business Reply envelope enclosed in the middle of this magazine. Please ensure your name is exactly as it appears on the mailing label of WREN magazine. • Mailed ballots must be received by 5 p.m. Friday, August 24, to be valid. What is proxy voting? A PRECorp member may designate a substitute voter, or proxy, for the Annual Meeting. Complete the appropriate designation form inside the back cover of this magazine if: • You are representing a corporation, or • A partnership, or • If your membership is in your spouse’s name and he/she will not be attending the meeting.


POWDER RIVER ENERGY CORPORATION

PRECorp News J U LY 2 0 1 2

PRECORP

2012 annual

meeting of the members August 25th Gillette, wy

Clarion Inn Convention Center Registration 8:30 am • Meeting 9:30 am

The 67th PRECorp Annual Meeting will be held Saturday, Aug. 25, at the Clarion Inn Convention Center, Gillette, Wyo. By Tim Velder, PRECorp Marketing and Communications Specialist The 67th Annual Meeting of the members of Powder River Energy Corporation will be held at the Clarion Inn in Gillette, WY, on Saturday, August 25. Registration begins at 8:30 a.m. and the meeting opens at 9:30 a.m. The event will feature voting for board members, reports from PRECorp CEO Mike Easley, Board President Tom Davis and Treasurer Phil Habeck. Three three-year director seats are up for election this year. Incumbents Don Hamm (Campbell County) and Pam Kinchen (Johnson County) are unopposed for re-election. Weston County’s incumbent director Reuben Ritthaler, Upton, and Jerry Shepperson, also of Upton, are running for the Weston County seat that is up this year. Candidate profiles, annual reports and more information about this year’s event are printed inside. Voting information is printed on the outside cover around this magazine. Those voting absentee will find a pre-printed envelope inside. Those who attend will receive giveaways, and will be entered in a drawing for door prizes. The luncheon will feature entertainment by cowboy poet (and Carbon Power & Light General Manager) Chuck Larsen. Anyone needing a ride to the meeting should call PRECorp Member Service at 1-800-442-3630 to reserve a seat. The reservation deadline is Wednesday, August 1. Go to www.gillettechamber.com for more information about special things to do in town on August 25.

Anyone with questions about the Annual Meeting or its voting process, call PRECorp at 1-800-442-3630.

In This Issue Regular business: 1-800-442-3630 • Report an outage: 1-888-391-6220 www.precorp.coop

Pg. 2-3: Candidate profiles Pg. 4-7: Foundation Annual Report; Operation RoundUp enrollment form Pg. 8-9: Minutes of the 2011 Annual Meeting

Pg. 10-11: 2011 Financial Reports Pg. 12: Message from the CEO


2

Director Candidate Information Nominating Committee Report Following is the report of the 2012 PRECorp Annual Meeting Director Election Nominating Committee, as appointed by the Board of Directors, per Article IV, Section 4, NOMINATIONS of the cooperative’s bylaws. Members of this year’s Nominating Committee, two from each county holding an election, were as follows: • Campbell County: Bob Tarver and Kent Terry • Johnson County: Fred Carr and Ed Foust • Weston County: Lynn Jespersen and Bill Engle The Nominating Committee selected the following Powder River Energy members as director candidates: • Campbell County: Don Hamm • Johnson County: Pam Kinchen • Weston County: Reuben Ritthaler Jerry Shepperson On Pages 2 and 3 are brief profiles and statements of candidacy for each of the director candidates. If elected, each director will serve a three-year term. Please review the profiles and statements of candidacy to familiarize yourself with the candidates if you do not know them. Use this information to vote for your candidate of choice either in person at the Annual Membership Meeting on August 25, 2012, or via the proxy with the forms included on the cover of this WREN magazine. Ballots must be received at one of the three main PRECorp offices in Sundance, Gillette, or Sheridan by 5 p.m. on Friday, August 24, 2012.

The PRECorp Annual Meeting will include the formal election of directors to three-year terms on the PRECorp Board of Directors. Incumbents Don Hamm (Campbell County) and Pam Kinchen (Johnson County) are unopposed on the ballot for re-election. Their biographical information follows.

Campbell County Don Hamm

Don Hamm is running for re-election to a second term as director from Campbell County. He and his wife Melody operate a cattle ranch north of Rozet. They have a daughter Lexi. “I would like to thank the membership for allowing me to represent them for the last three years,” he said. “My first term has been an educational and rewarding experience.” Don would also like to thank the staff of PRECorp for their patience and time answering his questions and helping him to better understand PRECorp. “Last but not least I would like to thank my wife Melody for doing the work while I was gone.” “The board and staff have worked hard in difficult times to maintain quality service while holding rates to a minimum. Compare PRECorp rates to investor-owned utilities and you will see what I mean,” Hamm said. “As a director, I supported these efforts and will continue to do so if re-elected.” “I would be honored to serve the membership for another term. Please attend our annual meeting and cast your vote.”

Johnson County Pam Kinchen Pam Kinchen has lived in the Kaycee, Wyoming, area for 38 years. She has been a member of the electric cooperative since 1978. Pam has been ranching west of Kaycee at Barnum since 1984 and she has two grown daughters, Katy and Megan. Kinchen uses Powder River Energy electric service at her ranch, home, stock well and office in Kaycee. She is also a director for the Crisis Center in Buffalo and Funding Coordinator for the Chris LeDoux Memorial Foundation. Kinchen is seeking another term on the board because she would like to help guide the cooperative through a changing economy. “We have some real challenging times ahead in the next three years,” she said. “Our economic times are changing with the coal-bed methane slowdown. Things aren’t like they were 10 years ago.” Kinchen is a strong advocate for adopting the latest innovations in the electric cooperative industry. “It is so important that we stay on top of technology and that we have all of the new technology in place,” she said. She added, “But the most important thing we have is our people because that’s what a cooperative is all about.”


3

Mail in ballots must be received by August 24, 2012.

The Powder River Energy Corporation Annual Meeting will include the formal election of directors to three-year terms on the PRECorp Board of Directors. Incumbent Reuben Ritthaler of Upton and Jerry Shepperson of Upton are running for the Weston County director seat.

Weston County

Weston County

Reuben Ritthaler

Jerry Shepperson

Reuben Ritthaler is a lifelong resident of Weston County. He attended the University of Wyoming and was a graduate of the University of Wyoming Leadership Development Program.

Weston County livestock producer and County Commissioner Jerry Shepperson is offering his name as a choice on the 2012 PRECorp Board of Directors ballot for Weston County.

Reuben and his wife Shelly have a daughter, Min Dee. They own a cattle ranch west of Upton and have been members of PRECorp since 1975.

He has served seven years on the Weston County Commission, and also serves on the Weston County Predator Board and Weston County Search & Rescue.

Powder River Energy is very important to Ritthaler and he enjoys representing the PRECorp membership. “The electricity it provides is essential to my business and to the comfort of my home and family. This is something I never take for granted,” he said. He said that in today’s environmentally-aware world, electricity is not a luxury - it is a necessity. “We must have a reliable and affordable source of electricity. Changes that are happening right now in the industry threaten our reliable power, and its cost,” he said. “With the right planning, management, and leadership, these changes can be channeled into a good and equitable future for every member. The same cooperative spirit that built your electric utility can help us work together to make sure that today’s changes are not forced upon us, but that they work for us and the environment – today and in the future for each member. My goal is to make sure that this happens.” “I would like to continue to serve you and our co-op. Thank you for your support.”

d ot an l l a b Your ation m r o inf e to th proxy d e h s ttac of thi are a r e v co zine. a front g a h’s m mont

“I have no agenda,” he said. “We have to have people who will step up and serve. Our culture, heritage and way of life are near and dear to me.” Shepperson is concerned about federal intrusion in the lives of citizens and the costs imposed on local governments and business as a result. “Coal generated electricity is probably here to stay. Wind and solar cannot compete with coal for efficiency and cost of infrastructure,” he said. Shepperson and his wife Anita have three grown children and several grandchildren. They raise cattle, sheep and horses on their ranch 13 miles from Upton. He also brings experience in the coal industry, range management and law enforcement.

POWDER RIVER ENERGY CORPORATION SYSTEM STATISTICS

2011

2010

Number of Members 11,929 12,087 Miles of Power Line 11,252 11,198 New Services Connected 531 642 Average outage hours/consumer 6.05 4.92 kWh Sales 2,994,543,912 3,045,679,573 Average Cost / kWh $0.044 $0.0389 Number of Employees 165 168


4

PRECorp Foundation

Annual Report their quarterly meetings. In 2011, the PRECorp It’s been a great year for the PRECorp FoundaFoundation supported many organizations and tion. Established in 2007, the PRECorp Foundacauses with gifts totaling more than $32,000. As tion was created with a vision to support the the Foundation is still relatively new, its main charitable needs of the communities in northfocus to date has been to support local organizaeast Wyoming. The Foundation continues to extions that have limited sources ecute upon that original vision and of funding. While supporting has, as of the beginning of 2012, dothose organizations, the Founnated more than $72,000 back into Total Donations dation builds its own fundour communities within the PREsince 2007 ing base through Operation Corp service territory. RoundUp membership develThe Foundation is in a position to opment and fundraising. Total Donations provide scholarships and endowin 2011 Partnering with the Foundation ments and since 2009 has overhas many benefits. Mainly, the seen the Swanda Ag Scholarship. Foundation works with donors This scholarship, made possible Number of to make philanthropy easy by through the generosity of Crook Organizations and managing and administering County ranchers Antone and Julie Causes Supported in 2011 funds for organizations with Swanda, was established for the charitable objectives. There are benefit of a Crook County high no operating costs or fees, and school senior with plans to pursue 100 percent of the Foundation’s a degree in Agriculture or Animal income goes directly back to the Science. Moorcroft High School community. The Foundation is not a corporate graduate Laramie Jackson was the recipient of foundation. Instead, it acts as a community crethe 2011-2012 Swanda Ag scholarship in the ated out of caring members. Anyone can contribamount of $2,000 to help with her expenses at ute any amount to the Foundation and with the Sheridan College as she pursues courses in AgOperation RoundUp program, giving really can ricultural Science. be just a little amount of change each month. As To ensure the funding requests received by RoundUp participation increases, the Foundathe Foundation meet the criteria of a charition can manage the funds for growth. That intable donation, the Foundation board of dicome can then be used to make more grants. rectors reviews applications at great length at

$72,000+ $32,000+

11

See “Foundation” on Page 6


PRECorp Foundation

Annual Report

Foundation sponsors weather information system for Moorcroft “ It doesn’t matter if you are young or old, rich or poor, male or female… weather affects us all.” Moorcroft Science Teacher Lark Durnell By Tim Velder, PRECorp Marketing and Communications Specialist Accurate and up-to-date weather information for Moorcroft didn’t exist until the WeatherBug arrived in May. Powder River Energy Foundation pooled financial resources with Strata Energy, Moorcroft Junior and Senior High School, the City of Moorcroft, Fire and Rescue of Moorcroft, and Crook County Emergency Disaster, to pay for the installation of the weather reading equipment.

The community-based weather station will provide warnings and previews of coming weather events to local residents, businesses and surrounding areas. The data ranges from temperature and dew point, to air pressure, wind speed and direction, and other indicators. It can even detect lightning strikes before they happen. All of this data is important for the immediate well-being of the people

who view it, but there is also a longterm benefit for the education of Moorcroft students. “We will be supplied with software programs that can be utilized by teachers in a multitude of classrooms,” said Moorcroft Science Teacher Lark Durnell. “Since the data is from the Moorcroft area, the information is relevant and makes the learning feel real-to-life for the students. It doesn’t matter if you are young or old, rich or poor, male or female… weather affects us all.” See “WeatherBug” on Page 7

5


6

PRECorp Foundation Annual Report

Foundation... continued from Page 4

Most importantly, the Foundation fills in where other sources may not. Many non-profit organizations are struggling in a competitive market for funding and may lack resources, including staff for development and/ or grant writing. In the current economy funding is being reduced and nonprofit services are already strained by increased need. The Foundation can step in and assist. The

Foundation

is

funded

through private donations, charitable fundraising events, and PRECorp’s Operation RoundUp program. In 2012 the Foundation raised additional funds in raffle ticket sales of a donated turkey hunt, through the 2012 Durham Ranch Buffalo Stampede 5K/10K Run/Walk, and its annual golf tournament. The Operation RoundUp program continues to grow, with the money going to the Foundation for charitable disbursement. Addition-

ally, the Foundation is structured to accept funding from outside sources, and welcomes any and all donations. As the PRECorp Foundation is a 501 (c) (3) charitable organization, all donations are tax-deductible. The Foundation encourages anyone considering the creation of a scholarship or endowment to work with the Foundation as its recipient to establish an ongoing means of support for the benefit of northeast Wyoming.


7

Pictured on page 6: Powder River Energy Foundation Executive Les Penning, left, and Foundation Board Member John Flocchini, center, accept a $2,500 donation from Devon Energy Corporation representative Becky Byrum, at the 11th Annual Durham Ranch Buffalo Stampede on June 2 near Wright. The event raised approximately $7,000 for the Foundation. Photo by Tim Velder/PRECorp Marketing Communications

continued from Page 5

The information could be applied to studies in science, math, geography, technology and history. The WeatherBug is a web-based program, so any device that can access the Internet is able to load the latest weather information for Moorcroft. “This would include the weather conditions as well as watches and warnings that are issued by the National Weather Service,” Durnell said. “With the lightning detector equipment, the WeatherBug can issue warnings 15 minutes before lightning strikes in a 15-mile radius.” The WeatherBug Schools Program is committed to helping protect schools and provide an engaging teaching tool for students

nationwide. The WeatherBug interactive software program, WeatherBug Achieve, enables teachers to apply real-world conditions to help teach skills and concepts in math, science and geography. Teachers and students in K-12 have access to local weather conditions from any of the 8,000 WeatherBug sites across the country. Using WeatherBug Achieve, teachers can also create customized learning activities based on current and historical weather conditions from the WeatherBug stations and cameras located at the schools. For more information on the WeatherBug Schools Program, visit www.weatherbugschools.com.

RoundUp for Northeastern Wyoming. Enroll all my accounts in Operation RoundUp®

Either call, log onto our website, or fill out this form and remit with your bill to sign up for this great local program Each month, we will round-up your electric bill to the next whole dollar The extra cents will be contributed to the Operation RoundUp® fund The fund was created to help members connect with worthy causes in our communities

Enroll one of my accounts in Operation RoundUp® Enroll these specific accounts in Operation RoundUp®: Account #’s _________________________________________________________

Name:__________________________________________________________________ Phone Number:_________________________________________________________ Signature:______________________________________________________________ Date:_______________________________


8

2011 Annual Meeting Minutes Unapproved minutes of the Powder River Energy Corporation Annual Meeting of the Members On August 20, 2011 in Upton, Wyoming

Call to Order: The 66th Annual Meeting of the Members of Powder River Energy Corporation was called to order at 1:17 p.m. on Saturday, August 20, 2011 at the Upton Elementary/Middle School, Upton, Wyoming by Board President Tom L Davis. Appointment of Recording Secretary: President Davis appointed Deanna Steele as recording secretary for the meeting. Announcement of a Quorum: It was announced by Attorney Hughes that according to Article 3, Section 4 of the bylaws of Powder River Energy Corporation, a quorum was present. There were a total of 150 registered members in attendance and 185 proxy votes for a total of 334 registered members. There are 12,115 members.

Reading of Official Notice: Attorney Hughes read the Official Notice of the meeting and explained the purpose of the meeting. Recognition of Guests: CEO Easley introduced the PRECorp Directors and their spouses and recognized the candidates running for election to the Board of Directors: Incumbents Paul Baker/Crook County, and Dave Hoyt/ Sheridan County; and Johnson County candidates Mike Lohse and William Ramsbottom. Nominating Committee/ Election Judges: President Davis recognized the 2011 Annual Meeting Nominating Committee members Dennis Williams, Stephen Hilty, Ed Foust, Fred Carr, Gary Koltiska and Norma Malli and thanked them for their efforts in securing candidates for the election. In addition, he recognized 2011 Annual Meeting Election Judges: Gib Wilson, Richard Castello, Ed Foust, Larry Smith, Carlton Dewey, and Lorraine Kobielusz.

2010 Minutes: A motion was made to dispense of the reading of the minutes of the 2010 Annual Meeting and approve them as presented. Motion was seconded by many and carried without dissent. Voting: President Davis asked three times if there were any nominations from the floor. A motion to cease nominations was made and carried. President Davis declared the elections closed. Secretary/Treasurer Report: Secretary/Treasurer Philip Habeck gave the 2011 Treasurer’s Report. The 2010 Statement of Operations shows net margins of $6,767,000. Total revenues were $165,967,000 and total expenses were $165,446,000, for an operating margin of $521,000. Non-operating margin totals of $6,246,000 included G&T and Other Capital Credits of $5,298,000, interest income of $871,000, and other non-op margins of $78,000. PRECorp’s total sales revenue was $167.6 million, broken down by Coal Bed Methcontinued on Page 9

As a Touchstone Energy Cooperative, PRECorp is dedicated to four core values: PRECorp is proud to be one of the more than 680 Touchstone Energy co-ops in 46 states that collectively deliver power and energy solutions to more than 40 million members each day. Touchstone Energy emphasizes the significance of each co-op’s presence and unique ties to its community through sponsored events and informative programs.

1.

Commitment to the Communities We Serve

2. Integrity

3. Innovation 4. Accountability


9

Unapproved minutes of the PRECorp Annual Meeting of the Members on August 20, 2011 in Upton, Wyoming continued from Page 8

ane at $68.6M, Coal Mines $60.5M, Other Commercial $31.5M, and Residential/ Seasonal at $16.5M. PRECorp purchased 3.185 billion kWh of power in 2010 at a cost of $123.9 million. This equates to an average cost per kWh of 3.9 cents, compared to the U.S. median of 6.2 cents. A bill credit from Basin Electric in the amount of $4.3 million reduced the 2010 power costs and the savings were passed on to the members with a May bill credit. The Cooperative is taking steps to maintain a positive financial outlook in challenging economic times. Costs are being cut where appropriate and positioning the company to take advantage of future opportunities. A revenue deferral of $3.42 million was made to provide a mechanism to help maintain stable retail rates. In 2010, PRECorp paid back $2.286 million of Capital Credits to the members. Since its inception, PRECorp has paid back over $54.15 million. PRECorp’s continued pledge to the membership is to strive to provide reliable electricity at the lowest possible cost to our members. President’s Report: Board President Tom Davis thanked everyone for attending the meeting. He recognized the members that were present. He reported the Cooperative is reducing costs where needed. He specially recognized Board Member Ken Knudson who is retiring from the board, and he thanked him for his service. He also thanked candidates Mike Lohse and William Ramsbottom for running for a seat on the board.

$2.3 million in capital credits in 2010 and is on track to retire capital credits again in 2011. PRECorp “plays fair” by listening to its members when making rates, adding quality of life and leading by example. He said PRECorp strives to keep its members informed and keep a high rate of satisfaction with its customers. PRECorp’s American Customer Satisfaction Index score of 84 is well above the industry average of 75. He said overall sales declined by 2% in 2011 compared to 2010. CBM sales have declined nearly 7%. He said PRECorp filed a revision to its existing Idle Service Tariff with the Wyoming Public Service Commission and improved processes to identify and retire lines that are no longer needed or wanted. PRECorp has verified nearly 2,000 services with many of those being identified for removal. He said nearly $16 million is set aside for the ultimate retirement of the CBM facilities. PRECorp is also conducting audits on meters and billing systems. Metering variances in the customer’s favor are tracked to the date the error occurred and refunded accordingly. He discussed PRECorp’s commitment to safety and training programs.

CEO Report: CEO Easley welcomed the membership and thanked them for their attendance.

CEO Easley concluded his comments by saying the cooperative’s mission and ideals haven’t changed in the past 66 years, although the industry has undergone significant change. The cooperative movement is strong because of the statewide, regional, and national networks that bring power to 42 million people in 47 states.

His presentation correlated some basic ideals with the mission and vision of PRECorp, by weaving in themes from the book “All I Really Need to Know I Learned in Kindergarten,” by Robert Fulghum. Under the concept of sharing, CEO Easley reported PRECorp retired

DEPUTY GM REPORT: Deputy General Manager Les Penning discussed the “Together We Save” theme and how it relates to PRECorp, Touchstone Energy, Operation RoundUp and the Powder River Energy Foundation. He talked about specific local programs that

have been helped by Operation RoundUp funds through the PRECorp Foundation. PRECorp Foundation: Deputy GM Penning introduced PRECorp Foundation Board member Julie Swanda and welcomed her to the meeting. She reported that the Foundation has continued to execute upon the original vision set forth by the PRECorp Board of Directors. To date the Foundation has donated more than $72,000 to local communities. She thanked those who are enrolled in the Operation RoundUp Program and encouraged those who are not signed up to do so. Swanda introduced Jamie Purcell of the Wyoming Food Bank of the Rockies. The Foundation donated $7,500 to the organization in 2011. Youth Presentations: Operations Staff Assistant Missy Juelfs provided background on the Energy Leadership Camp in Steamboat Springs, CO. Each year PRECorp sponsors youth to attend. Hugh Cook, a 2010 scholarship recipient, was nominated for the 2011 National Leadership Camp in Washington, DC. He won the national speech contest and thanked the Board and membership for supporting his attendance. He read the speech for the audience. Unfinished Business: There was no unfinished business. New Business: There was no new business. Voting Results: Secretary/Treasurer Philip Habeck reported the winners of the election as follows: Paul Baker, Crook County; Dave Hoyt, Sheridan County; and Mike Lohse, Johnson County. Adjournment: There being no further business on the agenda, the meeting was adjourned at 2:51 p.m. The drawing for door prizes was conducted after the meeting.


2010 & 2011 Comparative Statement of Operations

10

INCOME STATEMENT

2010

OPERATING REVENUE AND PATRONAGE CAPITAL

2011

% of Revenue

$165,967,557 $ 179,159,059

Less: Cost of Purchased Power

$123,896,085 $ 137,942,103

77.0%

Gross Margin

$ 42,071,472 $ 41,216,956

23.0%

Less: Operating Expenses

$ 41,550,304 $ 40,599,927

22.7%

Operating Margins

$

521,168 $

617,029

Plus: Interest and Other Income

$

948,476 $

2,926,192

Plus: Capital Credit Allocations

$ 5,297,948 $

6,636,386

NET MARGINS

$ 6,767,592 $ 10,179,607 Transmission Expense $1,130,111 2.7%

2011 operating Expense by category

Operations $8,630,320 21.2% Maintenance $3,060,437

Other Deductions

Residential

7.5%

Irrigation Other Commercial

Residential /

Customer Service and Informational Expense $186,951 0.5%

Transmission

Interest on Long-term Debt

This breakout of PRECorp’s revenue from sales of electricity does not include other non-sales revenue and is presented before the effect of revenue deferral.

Customer Accounts $2,637,471 6.5%

Tax Expense

0.3%

Administrative and General Expense $5,651,546 13.9%

Operations

Irrigation

Coal Mines

Coal Mines

Coal Bed Methane

CBM

Other Comm

Depreciation and Amortization $12,322,028 30.3% Maintenance

Tax Expense $457,541 1.1%

and Informational

Customer Accounts

6

7

9.9%

Irrigation

$

201,353

0.1%

Coal Mines

$56,868,290

31.9%

8

9

10

Other Deductions $188,490 0.5%

CBM

$69,356,903

38.8%

Other Commercial

$34,449,089

19.3%

Operating Expenses $40,599,927 100.0%

$178,526,758

100.0%

This chart reflects the relationship between PRECorp’s purchased power cost and its other operating expenses detailed above.

Administrative Customer Service Customer Accounts

Maintenance Operations

Transmission

sion Transmis Expense

1 Customer 2 3 Service 4 5

$17,651,123

on Distributi Expense ns Operatio on Distributi Expense ance Mainten ts r Accoun Custome Expense

Admin. & General Exp.

Revenue From Sales of Electricity* Residential/Seasonal

Interest on Long-Term Debt and other $6,335,032 15.6%

r Service Custome ational and Inform Expense ative and Administr ense Exp General

Depreciation and Amortization

Purchased Power


2010 & 2011 Balance Sheet

11

As of December 31

BALANCE SHEET

2011

2010

Utility Plant (net)

$ 205,413,352

$ 209,777,554

Investments in Associated Organizations

$ 94,345,854

$

87,988,043

Other Investments

$ 29,822,234

$

28,613,057

$ 124,168,088

$ 116,601,100

$ 7,949,976 $ 13,035,848 $ 536,260 $ 10,527,660 $ 156,026

$ $ $ $ $

9,594,682 11,982,684 891,861 10,150,080 377,026

$ 32,205,770

$

32,996,333

Regulatory Assets

$

114,936

$

-

Deferred Debits

$

137,936

$

155,420

Other Assets And Investments

Current Assets

Cash and Cash Equivalents Accounts Receivable (net) Other Accounts Receivable Materials and Supplies Other Current Assets

Total Assets

$ 362,040,082

$ 359,530,407

$174,121,844

$166,150,963

Long Term Debt (Net Of Current Maturities)

$117,567,179

$121,509,046

Other Non-Current Liabilities

$ 2,035,538

$ 1,847,184

Equity And Margins

$ $ 11,855,981 $ 5,849,321 $ 5,715,898

$ 20,000 $ 12,857,075 $ 5,034,404 $ 5,041,100

$ 23,421,200

$ 22,952,579

Regulatory Liabilities

$ 6,820,000

$

Deferred Credits

$ 38,074,321

$ 39,798,445

$362,040,082

$359,530,407

Current Liabilities

Notes Payable Accounts Payable Other Current Liabilities Current Maturities of Long Term Debt

Total Equity And Liabilities

REPORT OF THE SECRETARY/TREASURER The Board of Directors of Powder River Energy Corporation (PRECorp) has examined the balance sheet and income statement for PRECorp for the year ended December 31, 2011. The accounting procedures and principles used by the cooperative are Philip Habeck kept in accordance with the Rural Utilities Secretary/Treasurer Service’s standards. The Board of Directors reviews financial statements monthly. Schmidt & Company LLC completed an annual independent audit of PRECorp’s financials records over the fiscal year, July 1, 2010 - June 30, 2011. Additional reviews are performed by the Rural Utilities Service to periodically check for compliance with loan requirements and accounting procedures.

7,272,190

FINANCIAL REPORT Revenues in 2011 increased about 8% over 2010. This can be attributed to a power cost increase of approximately 11% over 2010. The cooperative was able to decrease operating expenses by over 2% from 2010 to 2011, which helped to minimize the impact of additional revenue requirement that was created by rising power costs. Power cost Floyd Kanode/CFO was 75% of total revenue in 2010, and that has increased to 77% in 2011. Kilowatt-hour sales decreased by 1.7% from 2010 to 2011. This can be attributed to a 7% decline in CBM sales, as the residential, other commercial, and coal mines classes performed better than 2010. PRECorp continues to strive toward controlling operating expenses as much as possible to keep rates low.


12

CEO Straight Talk

PRECORP NEWS

At Powder River Energy, our mission for the past 67 years is to deliver high-quality, low-cost electricity, while embracing our cooperative principles and values. We pride ourselves in making sure you never have to worry about flipping the switch and not having the lights come on. Or being able to afford the bill when you do turn on your lights. When your electricity needs are taken care of, you can focus on the things that are important in your life: family, friends, and enjoying all that northeast Wyoming has to offer.

mike easley, CEO

However, there are ongoing challenges and opportunities that may affect your family and the lifestyle that many of us are used to. Our leaders are debating the future of our state and nation’s energy policy and environmental responsibility. These factors directly affect the affordablity and reliability of our electricity. The voice of America’s 42 million electric cooperative members needs to be heard, and that voice is raised one member at a time. Our strength lies in our numbers by those choosing to be active. You can learn more specifically about these issues by attending this year’s Annual Meeting August 25th in Gillette. We will bring you the latest information on our rapidly-changing industry and ways you can help shape the future. The coming years will be challenging for PRECorp, but we are prepared to execute our mission with a renewed vision by leveraging the strength of our culture and values, and making it easier for you to be heard. We look forward to your continued participation in the growth of your electric cooperative. Your attendance at the annual meeting - or at a minimum, voting by proxy – guarantees our future. Member-owned electric cooperatives cannot exist without member engagement. Your attendance of the annual meeting and your exercising of your member rights will keep our cooperative strong now and into the future.

POWDER RIVER ENERGY CORPORATION

This is your chance to vote on the direction you want PRECorp to take, by electing a Board of Directors that represents your interests. Learn more about these candidates on pages 2 and 3. The minutes of the 2011 Annual Meeting and financial reports are published on pages 8 through 11. Ballots and proxy forms are printed on the outside cover of this magazine. I will also report on PRECorp’s many accomplishments over the past year. The PRECorp team continues to pull together and produce amazing results as they face the increasing pressures of economic and regulatory challenges. I am very proud of them, and I am sure you will be too after I describe their accomplishments to you. A shining example of our commitment to community and your involvement is our Operation RoundUp program. We are marking five years since we launched the Operation RoundUp program at PRECorp. By now, members should be well aware of how to participate in the program and how their small donations every month add up to help local nonprofit organizations. If you would like more information, turn to pages 4 through 8 in this edition of PRECorp News. Member participation in the Operation RoundUp program continues to grow every month, and the giving power of the Powder River Energy Foundation is stronger now than ever before. When we established the Foundation five years ago, we sought to enhance our commitment to the communities we serve. Our mission has stayed the course and to date we have given more than $72,000 in large and small donations to a wide variety of organizations. Recipients are organizations who have improved the lives of young children, families in crisis, elderly, handicapped, and local communities. We look forward to meeting with you August 25th at the Clarion Inn in Gillette for the 2012 Annual Meeting. Please mark this on your calendar, and hold the date, for what I believe will be a very informative and worthwhile event.

Regular business: 1-800-442-3630 • Report an outage: 1-888-391-6220 www.precorp.coop


2010 & 2011 Comparative Statement of Operations

10

INCOME STATEMENT

2010

OPERATING REVENUE AND PATRONAGE CAPITAL

2011

$165,967,557 $ 179,159,059

% of Revenue 100.0%

Less: Cost of Purchased Power

$123,896,085 $ 137,942,103

77.0%

Gross Margin

$ 42,071,472 $ 41,216,956

23.0%

Less: Operating Expenses

$ 41,550,304 $ 40,599,927

22.7%

Operating Margins

$

521,168 $

617,029

$

948,476 $

2,926,192

$ 5,297,948 $

6,636,386

Plus: Interest and Other Income

Chart Title

Plus: Capital Credit Allocations

Cost of Purchased Power

NET MARGINS

Transmission Expense

Distribution Expense - Operations Customer Accounts Expense

0.3%

Expense $Distribution 6,767,592 $- Maintenance 10,179,607 Customer Service and Informational Expense

Administrative and General Expense 2011 Expense by category (Including cost of purchased power)

$160,000,000 $140,000,000 $120,000,000 $100,000,000 $ 80,000,000 $ 60,000,000 $ 40,000,000 $ 20,000,000 -0Cost of Purchased Power

Maintenance $3,060,437

Transmission

and Informational

Customer Accounts

Irrigation

7.54%

Depreciation and Amortization $12,322,028 30.35%

Admin. & General Exp.

8

Residential

Other Commercial

9

10

Residential / Irrigation

Coal Mines

Coal Mines

Coal Bed Methane

Administrative and General Expense $5,651,546 13.92%

Maintenance

7

Customer Administrative Service and and General Informational Expense Expense

Customer Service and Informational Expense $186,957 0.46%

Operations

6

Customer Accounts Expense

Customer Accounts $2,637,471 6.50%

Other Deductions

1 Customer 2 3 Service 4 5

Distribution Expense Maintenance

Operations $8,630,320 21.26%

Tax Expense

Depreciation and Amortization

Distribution Expense Operations

Transmission Expense $1,130,111 2.78%

2011 operating Expense by category

Interest on Long-term Debt

Transmission Expense

CBM

Other Comm

Revenue From Sales of Electricity*

Tax Expense $457,541 1.13%

Residential/Seasonal

$17,651,123

9.9%

Irrigation

$

201,353

0.1%

Interest on Long-Term Debt and other $6,335,032 15.60%

Coal Mines

$56,868,290

31.9%

CBM

$69,356,903

38.8%

Other Commercial

$34,449,089

19.3%

$178,526,758

100.0%

Other Deductions $188,490 0.46% Operating Expenses $40,599,927 100.0%

* Revenue from sales of electricity does not include other non-sales revenue and is presented before the effect of revenue deferral.


2010 & 2011 Balance Sheet

11

As of December 31

BALANCE SHEET

2011

2010

Utility Plant (net)

$ 205,413,352

$ 209,777,554

Investments in Associated Organizations

$ 94,345,854

$

87,988,043

Other Investments

$ 29,822,234

$

28,613,057

$ 124,168,088

$ 116,601,100

$ 7,949,976 $ 13,035,848 $ 536,260 $ 10,527,660 $ 156,026

$ $ $ $ $

9,594,682 11,982,684 891,861 10,150,080 377,026

$ 32,205,770

$

32,996,333

Regulatory Assets

$

114,936

$

-

Deferred Debits

$

137,936

$

155,420

Other Assets And Investments

Current Assets

Cash and Cash Equivalents Accounts Receivable (net) Other Accounts Receivable Materials and Supplies Other Current Assets

Total Assets

$ 362,040,082

$ 359,530,407

$174,121,844

$166,150,963

Long Term Debt (Net Of Current Maturities)

$117,567,179

$121,509,046

Other Non-Current Liabilities

$ 2,035,538

$ 1,847,184

Equity And Margins

$ $ 11,855,981 $ 5,849,321 $ 5,715,898

$ 20,000 $ 12,857,075 $ 5,034,404 $ 5,041,100

$ 23,421,200

$ 22,952,579

Regulatory Liabilities

$ 6,820,000

$

Deferred Credits

$ 38,074,321

$ 39,798,445

$362,040,082

$359,530,407

Current Liabilities

Notes Payable Accounts Payable Other Current Liabilities Current Maturities of Long Term Debt

Total Equity And Liabilities

REPORT OF THE SECRETARY/TREASURER The Board of Directors of Powder River Energy Corporation (PRECorp) has examined the balance sheet and income statement for PRECorp for the year ended December 31, 2011. The accounting procedures and principles used by the cooperative are Philip Habeck kept in accordance with the Rural Utilities Service’s standards. The Board of Directors Secretary / Treasurer reviews financial statements monthly. Schmidt & Company LLC completed an annual independent audit of PRECorp’s financials records over the fiscal year, July 1, 2010 - June 30, 2011. Additional reviews are performed by the Rural Utilities Service to periodically check for compliance with loan requirements and accounting procedures.

7,272,190

FINANCIAL REPORT Revenues in 2011 were an increase of about 8% over 2010. This can be attributed to a power cost increase of 11% over 2010. The cooperative was able to decrease operating expenses by over 2% from 2010 to 2011, which helped to minimize the additional revenue requirement that was created by rising power costs. Power cost was 74.7% of total revenue in 2010, and that has increased to 77% in 2011. PRECorp continues to strive toward lowering expenses other than power as much as possible to keep rates low. Kilowatt-hour sales decreased by 1.7% from 2010 to 2011. This can be attributed to a 7% decline in CBM sales, as the residential, other commercial, and coal mines classes performed better than 2010.

Floyd Kanode/CFO


clarion inn convention center 2012 voting designation forms

✂ Corporation Designation of Voting Representative , (Corporation Name) a member of Powder River Energy Corporation, is a corporation and does hereby designate and certify as their voting representative at the Annual Membership Meeting of Powder River Energy Corporation on August 25, 2012. I hereby certify that I am authorized by the corporation to make this designation: ATTEST: By , Corporation Secretary By , Corporation President

✂ Partnership Designation of Voting Representative , (Partnership Name) a member of Powder River Energy Corporation, is a partnership and does hereby designate and certify who is one of the partners, as their voting representative at the Annual Membership Meeting of Powder River Energy Corporation on August 25, 2012. ATTEST: By

, Partner

By

, Partner

By

, Partner

By

, Partner

✂ Spouse Designation of Voting Representative , (Print Name)

a

member

of

Powder

River

Energy

Corporation,

does

hereby

designate

and

certify

as my voting rep-

resentative at the Annual Membership Meeting of Powder River Energy Corporation on August 25, 2012. Attest: By , (Signature) By , (Witness)


2012 PRECORP Annual Meeting Details

Agenda 8:30 am Registration Begins 9:30 am Business Meeting 11:00 am Entertainment by Chuck Larsen 11:30 am Lunch is served 12:30 pm Election results and door prizes

Notice Notice is hereby given that the 2012 Annual Membership Meeting of Powder River Energy Corporation will be held in Gillette at the Clarion Inn Convention Center on Saturday, August 25, 2012. The order of business at the annual meeting and, so far as possible, at all other meetings of the members, shall be essentially as follows: 1. Report as to the number of members who are present in person in order to determine the existence of a quorum and the number of members represented by proxy. Items will include: Call to order and Appointment of Recording Secretary

Do you need a ride to the meeting? Call Pam Stinson at 1-800-442-3630 by Wednesday, August 1, 2012, to arrange transportation to the PRECorp Annual Meeting on August 25 in Gillette. Powder River Energy Corporation is a memberowned, not-for-profit electric utility serving the five northeast Wyoming counties of Campbell, Crook, Johnson, Sheridan and Weston. PRECorp has more than 160 employees and more than 12,100 members. Approximately 28,700 meters are served across more than 16,200 square miles of northeastern Wyoming and southern Montana.

2. Reading of the notice of the meeting and proof of the due publication or mailing thereof, or the waiver or waivers of notice of the meeting, as the case may be.

Items will include: Introduction of the PRECorp Board and Recognition of Visitors and Guests

3. Approval of unapproved minutes of previous meetings of the members.

Will include approval of the minutes of the 2011 Annual Meeting

4. Presentation and consideration of all necessary reports of the Corporation.

Items will include: Treasurer's Report, President's Report, CEO's Report, Foundation Report and Special Presentations

5. Election of directors. Items will include: Report of the Nominating Committee, Nominations from the Floor and Voting 6. Unfinished business. 7. New business. 8. Adjournment.

Will include prize drawings

✂

board of directors mail-in ballot Choose a candidate in each district regardless of what county you live in. Full candidate profiles are printed on pages 2 and 3 in the PRECorp News section inside this magazine.

Campbell County Don Hamm

johnson County Pam Kinchen

Not a Valid Vote Without Signature To be valid, mailed ballots must be received by the end of the business day, Friday, August 24, 2012.

Weston County Reuben Ritthaler Jerry Shepperson


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