2007 Annual Report

Tri-County EMC

2007 ANNUAL REPORT

A year of challenge and change for Tri-County EMC saw growth, progress, and achievement, including these significant highlights in the last twelve months: Converted 8,600 meters to the new TWACS automated meter reading system

Worked safely with no lost time accidents since November 7, 2005

Completed a new apparatus and meter shop at the headquarters in Gray

Generated 112,078,148 kWh in Green Power EMC sales since 2001

Completed a new truck storage and equipment building in Eatonton

Reached $500,000 in Operation Roundup contributions in March of 2007

Began work on an addition to the Eatonton District Office

Received the 2007 Award of Excellence for the cooperative’s Web site

Recorded a new system peak demand in August of 96 MW

Introduced the convenience of automated credit card drafts

Executive Message

“The only real constant is change.”

This phrase has taken on new meaning for Tri-County EMC’s members, board, and employees. For the past several months we have talked about a new “Challenge of Change” in our monthly newsletter. While our cooperative business model has and will remain constant, new challenges dictate that we must all change the way we think about this tool called electricity.

Georgia has enjoyed an abundant supply of inexpensive, reliable electric power for more than twenty years.

Our economy has flourished in this abundance. But rapidly growing energy needs and new environmental emphases mean our industry must now concurrently grow generation assets with new construction while learning to use energy efficiency as a “new” fuel.

There are some who contend that we don’t need new generating plants to meet growing demand. But to think that conservation alone will provide kWhs for the future is unrealistic. We can meet our future needs, while protecting our environment and our economy, by balancing new clean-coal technology, cost-effective nuclear units, natural gas generation, innovative renewable generation using materials available to us, and conservation to help manage load growth.

Tri-County EMC is constantly changing. New office space and a new truck bay in Eatonton, a new apparatus shop in Gray, the TWACS metering system, new electronic customer service options via the internet, and new energy efficiency services and products are all examples of changes put in place to better meet your needs.

We work every day to embrace the latest ideas and technology to insure that we fulfill our mission of “providing exceptional energy related services exceeding each customer’s expectations while actively seeking to provide innovative products and services.” To meet our goals in this “Challenge of Change”, we need you to join us in better utilizing electricity, the greatest energy of all.

“While our cooperative business model has and will remain constant, new challenges dictate that we must all change the way we think about this tool called electricity.�

(left to right) CEO C. Hill Bentley and Board of Directors Chairman Tom Thompson, Jr. visit the site of the Eatonton Office addition

Morgan County

The Tri-County EMC Board of Directors shown here inside the newly completed Apparatus Shop in Gray.

Putnam County



Jasper County

 The cooperative’s board includes (L-R): Secretary Treasurer Tommy Noles , Marion Nelson , Sammy Hall , Vice Chairman Brenda P. Green , Mike Rainey , Chester Mercer , Chairman Tom Thompson, Jr. , Dan Greene , and Rev. Charlie Richardson .

Jones County

Bibb County

 Baldwin County

Wilkinson County Twiggs County

Year In Review

I

f 2007 were to be reduced to one issue, it would be simple—find future capacity. Even in a year with record-setting summer heat, Tri-County and all of Georgia’s cooperatives were easily able to meet the capacity demands of our customers. But a look into the future tells a different story. With high growth rates of new homes and the average monthly usage for existing homes continuing to increase, Tri-County’s capacity needs steadily climb. In August, the cooperative’s system reached 96 MW, a three percent increase over the previous peak from 2005. Current projections show that Georgia’s electric cooperatives must nearly double existing generation capacity by 2020. To meet those needs, Georgia will have to enter what would likely be the largest push for electrical construction in the state’s history.

In the past twelve months, Tri-County EMC announced the intention to participate in the construction of two new nuclear units at Plant Vogtle in Waynesboro, Georgia. But Tri-County’s share of these two new facilities will add less than ten percent of the new capacity needed by 2020.

The cooperative’s staff continues to analyze other opportunities, including new coal generation plants. However, it appears that new fossil fueled power plants will have considerable hurdles for permitting.

But there are other options than building new capacity to meet these future needs. Tri-County has always supported energy efficiency programs and provided educational information to help our members get the most for their energy dollar. Through Green Power EMC, the cooperative has been a leader in delivering Georgia’s first renewable energy. A new portfolio of energy programs will be introduced in 2008, including a new energy audit program and

an emphasis on well sealed and insulated homes, energy efficient lighting, and perhaps a direct load control program. “A new emphasis on efficiency programs will help our members control their own energy usage while reducing our system’s peak demand,” says Vice President of Energy Services Greg Mullis. “Efficiency and conservation start at home. By finding capacity for future growth without building anything, we can reduce operating costs to serve our members now and in the future.”

Central to Tri-County’s new push for energy efficiency will be a theme of asking members to take the initiative in finding energy savings. As a customer-owned business, the success of the cooperative depends greatly on how we work as a team to address future growth. From on-site assistance to Web-based information and tools, Tri-County will work to make achieving efficiency easier.

“Our members have a vested interest in their electric cooperative,” comments CEO C. Hill Bentley. “All of us can find energy savings in our home. Even in small amounts, the collective savings can make a real impact on future energy costs.” For example, by replacing just one standard 75W incandescent bulb in every home on TriCounty EMC’s system with a 20W compact fluorescent lamp, the cooperative’s demand would be reduced by one megawatt, about one percent of the EMC’s total capacity.

While system growth has posed ongoing challenges, new programs implemented over the past few years have begun to bear great results. Most notable is an automated meter-reading system, TWACS (Two-Way Automated Communication System). The retrofitting of 8,600 meters serving customers in northern Baldwin County and southeastern Putnam County will be completed in 2007.

Year In Review This system offers power-line carrier based meter-reading and a host of other benefits, including outage identification and restoration and theft of service detection. Thousands more meters will be retrofitted in 2008 as this program is rolled out system wide.

New Tri-County EMC facilities will also mean better service to cooperative members. A new Apparatus Shop was completed in Gray during the summer of 2007. The new facility will provide a workspace for cooperative personnel to perform service and maintenance work on line apparatus, such as reclosers and regulators. The building also houses a new modern meter shop, where EMC staff will test and program the dozens of types of meters used on the Tri-County distribution system.

In August, Tri-County broke ground on an addition to the Eatonton customer service facility. This addition will increase available space for customer service and engineerOur Senior Staff: (left to right) ing staff while adding a redundant Steve McClendon, VP/COO; control center to be utilized in the Beverly Smith, Administrative Assistant; Greg Mullis, VP of Energy Services; and Dawn Haskins, VP/CFO. event of a catastrophic event at the headquarters control center in Gray as well as for system wide storm situations.

Finding better ways to service the cooperative’s members is a constant goal for Tri-County’s staff. As more people turn to the Internet for conducting business and gathering information, Tri-County continues to enhance our award winning Web site. The number of members paying electric bills online continues to increase. In 2008, Tri-County will introduce a new e-bill program, eliminating the need for printed bills and providing electronic notification that bills are available on-line the day they are generated.

Operation Roundup In 2001, Tri-County EMC introduced Operation Roundup by asking our members, “How will you help.” In March of 2007, Operation Roundup reached $500,000 in contributions, an emphatic answer to our call for help. With the average participating customer voluntarily contributing just fifty cents per month, reaching the half-million mark in six years seems impossible, but clearly demonstrates the power of the cooperative principles at work.

One hundred percent of the Operation Roundup funds benefit organizations and individuals here in Tri-County EMC’s service territory. And these funds touch lives. “I’m just so grateful to be in this new home,” says Rose Martin. In 2007, Operation Roundup helped to fund the construction of her new Habitat for Humanity home in Eatonton.

Dennis Eubanks, Construction Committee Chairman, Habitat for Humanity of Putnam County; homeowner Rose Martin; daughter Tara Martin; and Erlene Kirwen, President, Habitat for Humanity of Putnam County.

The following organizations received funds from the Tri-County EMC Foundation since September 2006.

Baldwin County Citizen Advocacy Baldwin County 4-H Boy Scouts of America, Pack 32 Boys and Girls Club of Jones County Boy Scout Troop 310 Central Baptist Church* Central Georgia American Red Cross Changing Stations Ministry* City of Gray Volunteer Fire Department Community Health Foundation* Compassionate Care Clinic, Inc. Eatonton/Putnam Arts Foundation, Inc. Exchange Club of Jones County* Ferst Foundation for Childhood Literacy Georgia College & State University Georgia College & State University GIVE Center Habitat for Humanity of Putnam County* Hope Missions* Jasper County High School FCCLA*

$1,500 980 1,000 800 2,000 2,875 2,000 2,800 2,500 2,578 1,800 2,500 3,795 1,000 2,500 2,800 3,000 2,500 1,000

Jones Area Council on Relief, Inc. (JACOR) Jones County Bicentennial Steering Committee Jones County 4-H Jones County 4-H SAFE Shotgun Team Jones County Fire/Rescue Station #5 Make-A-Wish Foundation of Georgia* Maranatha Outreach, Inc. Maynard Baptist Church* Milledgeville First UMC River of Life New Damascus Baptist Church* Oconee Valley American Red Cross Operation Roundup Foundation Scholarships (8)* Putnam County Bicentennial Committee Putnam County Family Violence Task Force, Inc. Putnam County 4-H Club Total: * denotes application on behalf of an individual(s).

2,500 1,000 1,500 600 550 5,000 3,000 5,000 2,500 4,000 2,100 4,000 1,000 1,000 2,500 $76,178

Financial Summary Statement of Operations (for the year ended April 30)

Operating Revenue and Capital

2006 $34,275,584

2005 $31,488,077

Average Monthly Residential Bill 1960 1970

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

22,600,462 5,634,407 2,365,676 2,500,759 33,101,304

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

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

1,174,280 6,798 331,543 147,154 $1,659,775

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

$7.60 $11.78 $41.43

1980

$72.28

1990

$91.05

2000

$107.87

2005

$118.52

2006

Average Monthly Residential kWh Usage 1960 1970 1980

319 576 755 873

1990

1,121

2000

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.

2005

1,225

2006

1,229

Residential Cost Per kWh (cents) 1960

2.39

1970

2.31

1980

5.55

1990

8.21

2000

8.12

2005 2006

8.81 9.64

Balance Sheet

Meters Per Mile Of Line 1960 1970

(as of April 30)

3.50 4.50 5.60

1980

7.00

1990

7.84

2000 2005

8.08

2006

7.98

Total Number of Accounts 1960 1970 1980 1990 2000

3,055 4,783 8,090 12,580 17,185

2005

19,695

2006

20,049

Where Your Energy Dollar Goes Operating Costs

15.16% Interest & Depreciation

13.74% Power Costs

Margins

63.31%

7.79%

Assets Total Utility Plant Less Depreciation Net Utility Plant Book Value

2006

2005

$79,597,098 13,067,306 66,529,792

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

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

8,560,420 556,124 1,825,775 501,569 33,184 370,163 $78,377,027

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

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

$860,520 25,089,520 45,097,518 6,279,569 857,142 192,758 $78,377,027

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

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