2006 Annual Report

2006 Annual Report

POWERED

BY YOU You depend on Tri-County EMC for the electricity we deliver. We depend on you for the power of the cooperative. A unique business model that places control in the hands of those we serve, Tri-County EMC is your energy company.

Tri-County EMC is dedicated to meeting your energy needs by embracing technology to deliver greater reliability and relying on the concepts of disciplined management and excellent customer service. As a responsible corporate citizen, we strive to make the community stronger while bringing a better quality of life to everyone in the place we call home.

2006 Summary

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ri-County EMC is a member-owned cooperative providing electrical service to over twenty-thousand accounts in eight middle-Georgia counties. Our nine member-elected directors and sixty-three employees are committed to providing exceptional reliability and service and competitive rates.

For Tri-County EMC, the past year has been very successful. Like every business or home, increased costs for fuel and virtually everything else we purchase have created challenges. While passing on as few of those increased costs as possible, your cooperative was able to maintain a competitive rate position while increasing the services provided to each member.

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Tri-County employees and contractors worked to restore power in Mississippi and Louisiana following Hurricane Katrina, and cooperative employees and members contributed over $16,600 toward hurricane relief.

In January, responding to increases in wholesale power costs, Tri-County EMC raised rates by an average of 10.69% across all rate classes, including a $3 increase in the minimum monthly charge.

Green Power EMC, a group of 29 electric cooperatives, including Tri-County, announced plans to purchase 20 megawatts of electricity from the first poultry litter-to-energy operation in Georgia. The plant is expected to be operational by mid-2007.

Thanks to Georgia House Bill 431, passed in 2005, Tri-County EMC granted more than $67,000 to seven organizations, benefiting local economic development and education. The funds were unclaimed capital credits that Tri-County unsuccessfully attempted to return to former members and would have otherwise had to be refunded to the state.

In May, Forest Lake substation was energized, providing improved reliability for members in southern Putnam and northern Jones County.

Tri-County EMC’s board and management entered negotiations for future investment in new coal and nuclear power plants to be located within the state of Georgia.

Since September of 2005, the Tri-County EMC Foundation awarded $73,298 for charitable needs and scholarships in our community. Since 2001, Tri-County members have contributed over $451,000 to the foundation through Operation Roundup.

The cooperative began the installation of TWACS (Two-Way Automatic Communication System), the next generation of automated meter reading.

Chairman Tom Thompson, Jr. (left) and CEO C. Hill Bentley

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Through a disciplined, responsible approach to business, our operating costs are now at 16.4%, an all-time low for the cooperative...

What has remained constant about your cooperative is you, the member...

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An Executive Message

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ixty-seven years of service to our members have seen enormous change in the electric utility industry. Yet these decades of change and growth have validated the business model upon which Tri-County EMC was founded. And, it is the business model that will guide the cooperative in an ever-changing future.

In 1960, operating costs, those costs controlled directly by your cooperative, were almost 28% of Tri-County’s operating budget. Through a disciplined, responsible approach to business, our operating costs are now at 16.4%, an alltime low for the cooperative. Wholesale energy costs have risen from 29% of your total power bill in 1960 to 68% in 2005.

The next decade will see a new surge in construction of both generating plants and the transmission system necessary to distribute kilowatt-hours. Long-term wholesale contracts tied to market-based energy will provide the stability necessary to deliver the lowest cost energy possible. Along with 41 Georgia cooperatives and other energy suppliers, Tri-County will participate in the planned construction of new coal, nuclear and renewable generation plants within the state.

In 2006, Tri-County began the installation of the next generation of meters. This new system will dramatically improve the amount of information available to operating personnel. This data will serve to increase efficiencies, improve service reliability, and reduce costs.

Tri-County EMC members are connected to the cooperative at an unprecedented level. A growing percentage of our membership uses the Internet to pay their power bill and learn valuable efficiency or program information. Efficient service means doing business on your terms when it is convenient for you.

What has remained constant about your cooperative is you, the member. It is and will be your cooperative. Future decades will see unimaginable change and advancement, but the power of Tri-County EMC will continue to be you.

Board Picture District One:

Board of Directors

Dan Greene  Chester Mercer 

Our member-elected Board of Directors each serve a three year term. While they represent the specific district in which they reside, they are elected at large by the cooperative’s members.

As your representative, they act on your behalf in guiding the policies of Tri-County EMC.

Rev. Charlie Richardson  District Two:

Brenda P. Green  Vice Chairman

Mike Rainey  

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

 

Tom Thompson, Jr. 

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 

Chairman 

District Three:

Sammy Hall  Marion Nelson  Tommy Noles  Secretary/Treasurer

Managing Costs

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f you have pumped a tank of gas or paid bills lately, you know that costs for virtually everything have gone up. In fact, through June of 2006, the Consumer Price Index (CPI) is up 4.53% for our service area over the last twelve months. Nationally, retail costs per kilowatt-hour increased 11.6% from April 2005 to April 2006. In some areas of the country, such as New England, electricity costs have increased 26%. Oil prices are certainly a key part of these increases. The increased costs to transport coal by rail continue to be a major factor in the higher wholesale power costs.

Positive news for Tri-County EMC is the stability brought by long-term power contracts and a commitment to controlling the costs of the cooperative. The operating costs for Tri-County, which are the costs to distribute electricity, maintain the distribution system, and provide billing and customer service, are the portion of the energy bill that the cooperative’s directors and management can directly control. In 1960, operating costs amounted to about 28% of the budget. In 2005, operating costs were at 16.4%, an all-time low for TriCounty EMC.

Tri-County’s distribution system has seen dramatic increases in meters and kWh sales per account. Likewise, much of Georgia and the southeast are experiencing similar growth and need for additional electric capacity. During 2006, Tri-County EMC, along with 41 other EMCs in Georgia, entered negotiations for future nuclear and coal base-load generation. Both would be located within the state. A new coal-fired power plant could be operating by 2011. A new nuclear plant, likely to be located at Plant Vogle near Augusta, could be operational by 2015.

New renewable generation is also on the way for TriCounty members. In March, Green Power EMC, a partnership of 29 electric membership corporations in Georgia, announced plans to purchase 20 megawatts of electricity from the first poultry litter-to-energy operation in Georgia. The plant, to be located in Franklin County, is expected to be online by the summer of 2007 and should provide enough energy for 15,000 homes.

Wholesale power costs per kWh have risen dramatically in recent years, largely because of increased costs to transport coal.

Power costs are at an all-time high as a percentage of the cooperative budget, while operating costs are at a new low.

Technology Infusion

Our Senior Staff: (left to right) Steve McClendon, VP/COO; Beverly Smith, Administrative Assistant; Dawn Haskins, VP/CFO and Greg Mullis, VP of Energy Services.

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he application of technology is one of many ways Tri-County EMC has increased service and reliability while holding down operating costs. In the last two years, more and more members are using the cooperative’s Web site to pay electric bills, read the cooperative newsletter, or perform a do-it-yourself home energy usage analysis.

Technology can extend into the field, enhancing every aspect of the service you receive.

In 2006, Tri-County began installing the next generation of automated meters. According to Steve McClendon, VP/COO and the engineer in charge of the conversion, “TWACS, or TwoWay Automatic Communication System, will use our existing power lines to communicate in

real-time with every meter on our system. The system will dramatically enhance service to our members.”

TWACS will allow the cooperative to collect a wide variety of usage data, remotely connect or disconnect meters, monitor tampering, and resolve numerous member issues or questions, all without ever leaving the office. “The system will allow us to quickly solve many service-related problems for our customers while better utilizing employee time. It will increase efficiency and reduce costs,” said McClendon. By poling meters and isolating outages, TWACS will also help diagnose the cause and location of outages before linemen are dispatched.

The TWACS Implementation Team meets to discuss details of the project. Several thousand meters will be retrofitted to the new automated system over the next few months.

Operation Roundup

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Chris Smarr joins Nate and Linda Carr in their newly remodeled home in Gray.

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ach month, thousands of TriCounty members contribute an average of fifty cents toward Operation Roundup by having their bill rounded to the next dollar. Since the inception of the program, over $451,000 have been contributed, one small donation at a time. Communities demonstrate power through purpose.

Jones County residents recently demonstrated this when Chris Smarr and the Changing Stations Ministry set out to make upgrades to the home of Nate and Linda Carr. Nate is the pastor of New Life Changing Ministries, a fledgling

church in Gray. Linda home-schools six of the family’s seven children. What began as repairs to a damaged floor turned into a total makeover of the entire home during a two week period. “The citizens of this community raised over $105,000 and came together in unbelievable ways to bless this family,” said Chris Smarr, the event organizer. The $3,000 contributed to the project by Operation Roundup was only a small portion of the total amount raised. Likewise, the tiny contributions of an individual member might seem small until the total impact of the program is realized.

The following organizations received funds from the Tri-County EMC Foundation since September 2005: Alzheimer’s Disease and Rel. Disorders Assn.

American Legion Auxiliary Unit 523 Baldwin County 4-H Baldwin County Special Olympics Big Brothers Big Sisters of the Oconee Boy Scout Troop 87 Boys and Girls Club of Baldwin and Jones Unit Changing Stations Ministry* Cub Scout Pack 363 Dames Ferry Elementary* Eatonton Presbyterian Church* Elam Baptist Church* Family, Career and Comm. Leaders of America GC&SU Give Center Habitat for Humanity of Putnam County Haddock Community Action Program Jones County 4-H Jones County High School Track Team

$2,000 570 960 1,510 800 1,237 1,000 3,000 500 3,000 2,000 3,690 239 2,500 3,500 1,300 960 1,000

Lockerly Arboretum Foundation, Inc. Lynn Haven Nursing Home Macon Jaycees Maranatha Outreach, Inc. Mt. Salem Missionary Baptist Church* New Damascus Baptist Church* Operation Early Intervention Operation Roundup Foundation Scholarships (8) Putnam County 4-H Putnam County FFA Dairy Judging Team Sinclair Baptist Church* Scouting Committee of Jones County VFW Auxiliary Total: *denotes application on behalf of individual(s)

1,000 400 1,500 2,500 2,400 9,500* 2,650 10,500 2,500 2,000 5,000 2,000 1,582 $73,298

Financial Summary

Total Number of Accounts

Meters Per Mile of Line

Where Your Energy Dollar Goes

Residential Cost Per kWh (cents)

Average Monthly Residential kWh Usage

Average Monthly Residential Bill

Statement of Operations (for the year ended April 30)

2006

2005

$31,488,077

$27,961,972

Operating Expense Cost of Power Purchased Operating the Electric System Depreciation Interest on Loans Total Cost of Electric Service

21,068,138 5,160,719 1,982,652 2,342,232 30,553,741

18,379,948 4,906,239 1,845,706 2,040,108 27,172,001

Patronage Capital and Operating Margins Non-Operating Margins G&T Capital Credits Other Capital Credits Total Patronage Capital or Margins

934,336 28,068 331,656 139,636 $1,433,696

789,971 26,517 335,049 85,596 $1,237,133

Operating Revenue and Capital

Balance Sheet (as of April 30)

Assets Total Utility Plant Less Depreciation Net Utility Plant Book Value

2006

2005

$73,107,297 11,921,349 61,185,948

$67,462,782 11,174,553 56,288,229

Investments in Associated Organizations Cash and Reserves Owed to EMC on Account and Notes Material in Inventory Expenses Paid in Advance Deferred Debits and Other Assets Total Assets

8,195,587 451,058 2,115,985 427,936 27,963 432,276 $72,836,753

7,800,008 233,694 1,830,236 386,293 41,869 509,724 $67,090,053

Equities and Liabilities Consumer Deposits Membership, Patronage Capital, Other Equities Long-term Debt Notes and Accounts Payable Other Current and Accrued Liabilities Non-current Liabilities Total Equities and Liabilities

796,840 23,466,843 41,404,796 6,191,766 792,472 184,036 $72,836,753

748,290 22,201,460 34,881,315 8,384,142 699,242 175,604 $67,090,053

Tri-County EMC is audited by the independent accounting firm of McNair, McLemore, Middlebrooks & Co., LLP. A complete financial statement may be obtained by calling Tri-County EMC at (478) 986-8108 or 1-866-254-8100, ext. 8108.

Tri-County Electric Membership Corporation P.O. Box 487 Gray, GA 31032 1.866.254.8100 478.986.8100 www.tri-countyemc.com