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Rising to the Challenge: 2009 Report to Members

This year has presented Jackson EMC with some unique challenges. Some affected our day-to-day operations, such as restoring power after major storms or installing new technology to continue reducing costs and improving efficiency. And some have been beyond our control, such as this unprecedented recession and the threat of sweeping new energy legislation.

Through it all, Jackson EMC's senior management, its board of directors and its employees responded with the same determination they have always had to provide our members with the best service possible, and ensure a reliable source of electricity at a reasonable price.

Following Our Guiding Principle

Since Jackson EMC was founded 70 years ago, without deviation, serving you has been our guidepost. It's what gets us up in the morning - and sometimes keeps us up at night. Even in the face of tough challenges, this past year will be memorable to everyone at Jackson EMC because of the recognition given to us by our members.

Thanks to members' response to a first-ever survey of mid-sized utility customers, Jackson EMC was ranked highest in customer satisfaction among mid-size utilities in the South, as well as all utilities nationwide, in the prestigious 2008 J.D. Power and Associates Electric Utility Residential Customer Satisfaction Study.

Residential Customer Satisfaction Study

Later in the year, we received that members in Gwinnett County had, for the second year running, voted Jackson EMC one of Gwinnett Magazine's best companies for customer service.

The Jackson EMC family is honored and humbled by this acclaim. We will strive to earn your continued appreciation by always providing the best possible service.

Doing Business Better

In our continuing efforts to improve efficiency, reduce costs and keep your electric rates affordable, we implemented some important new programs, including installing automated metering technology, expanding the application of home energy audit tools and adding the prestigious ENERGY STAR® qualification to our Right Choice programs.

Following a test launch in January, we began a rollout of our Advanced Metering Infrastructure (AMI) program. We've installed over 15,000 Smart Meters and brought new installations up to an average of 6,000 per month, a rate that will allow us to meet our goal of upgrading all 200,000 meters in the Jackson EMC service area in three years.

The new meters are already saving time and money. Remote meter reading means that billing questions can be resolved quickly and easily with one phone call, and accurate readings obtained from meters that are difficult to access in person. In the event of an outage, Smart Meters tell us power has been restored, eliminating the time previously spent contacting individual customers to verify power restoration.

During the year we partnered our online Home Analyzer tools technology with our Right Choice ™ Home Performance with ENERGY STAR® Audit, adding new software that provides homeowners with even more robust information to improve their energy efficiency.

We added the ENERGY STAR® qualification to Right Choice new homes. As a result, we were recognized by the U.S. Environmental Protection Agency (EPA) with a 2009 ENERGY STAR® Leadership in Housing Award for promoting energy-efficient construction and environmental protection.

An Unprecedented Downturn

Like you, we've felt the sting of the recession. Beginning in 2008, we saw residential and commercial growth slow to a standstill. While over the last decade we welcomed several thousand new members each year to our cooperative, for the first time in Jackson EMC's 70-year history we experienced a net loss of members due to business closings, vacated apartments, idle speculative housing and home foreclosures.

At the same time, while power consumption in homes remained level, commercial and industrial use dropped significantly as some of our largest customers closed their doors, shedding jobs as they did, and others cut back on their operating hours. Topping that off was a year of milder weather, which also reduced anticipated power use.

The impact to the cooperative has been what you might call a perfect economic storm. A reduction in the amount of kilowatt hours sold meant less revenue coming in to meet operating costs that are not shrinking, including the rising cost of power generation. Compounding the economy's impact were the costs of distribution system repairs from a March snowstorm and windstorm that devastated parts of our service area.

Like you, we've taken prudent steps to tighten our belts. We've reduced our expenses by instituting a hiring freeze, eliminating most travel, finding ways to do business smarter and cutting expenses in every area of the cooperative. Like the businesses and households we serve, we're closely cutting back spending, eliminating all but essential activities and making every dollar count.

Knowing that in this economy you're closely watching your own budgets, we routinely provide a variety of tools you can use - online programs, tips, services and products – that you can use to make wise energy choices for your home and business.

We also provided you with a way to obtain some of the energy you need from the sun, through our Right Choice Sun Power Solar Program that provides support and rebates to members who install electricity-generating photovoltaic (PV) systems or ENERGY STAR-qualified solar thermal water heating systems in their homes.

On the business front, we have significantly increased the number of commercial energy audits we conduct and have helped several large customers retrofit their lighting to achieve substantial savings.

In addition, we're doing our part in the community by working shoulder to shoulder with state agencies, technical colleges, Chambers of Commerce and economic development organizations to keep existing businesses and plants open, as well as attract new industry and jobs to the area by ensuring Northeast Georgia has an attractive business climate.

Legislating A New Reality

While we're doing everything in our power to be more efficient and cost effective, Congress is headed in the opposite direction. The House has already passed and the Senate is considering the American Clean Energy & Security Act of 2009 (ACES), sweeping energy legislation that will impose standards for renewable power generation and drastically limit carbon emissions, not just by utilities, but all manufacturers.

Under the guise of improving the environment and promoting renewable energy, ACES has proposed standards that there is no existing technology to support and devised a scheme of penalties for not meeting those standards that amount to a blatant tax on Americans.

Our ability to meet the future demand for electricity at a cost our members can afford is seriously threatened by ACES. In my 40 years of electric industry experience, there has never been a more ill conceived piece of energy legislation - one that our members and consumers throughout the country will pay dearly for many years into the future if it is passed unchanged by the Senate.

This proposed new energy legislation could literally create a new reality in American life. At a time when we need lower prices and more jobs to bolster the economy, ACES would drastically increase electric rates. Those prices would turn what has been considered a basic service into a luxury for many consumers, drive up prices for manufactured goods and send more jobs overseas to countries that refuse to implement the same air quality standards.

Even though our growth has temporarily slowed, we must continue to plan for the future, for a time when the recession will give way to growth. The only way we can ensure our members will have reliable, economically priced power is to maintain a balanced portfolio of generation resources.

We have been, through our statewide and national organizations, fighting to ensure that any energy legislation passed will be fair to our members and keep the power they depend upon affordable. Congress needs to hear from each of you on this issue as well. I urge you to write our U.S. Senators, Johnny Isakson and Saxby Chambliss, both of whom have voiced their opposition to this legislation, and ask them to encourage their fellow Senators to defeat this bill.

Balance Sheets - May 31, 2009

Assets

May 31, 2009

May 31, 2008

 

Utility Plant

 

Electric Plant in Service – At Cost

$ 735,241,270

$688,256,565

Construction Work in Progress

    12,685,825

   23,542,241

 

Gross Utility Plant

747,927,095

711,798,806

Accumulated Provision for Depreciation

(178,557,003)

(163,071,655)

 

  569,370,092

  548,727,151

Other Property and Investments

 

Investments in Associated Organizations

90,576,680

83,560,534

Restricted Funds

   40,000,000

   40,200,000

 

 130,576,680

 123,760,534

Current Assets

 

Cash and Cash Equivalents

70,127,150

17,421,675

Accounts Receivable (Net of Accumulated Provision for Uncollectibles of $1,343,812 in 2009 and $1,454,318 in 2008)

22,480,972

23,228,579

Materials and Supplies

12,300,504

13,474,370

Other

     3,239,279

    3,667,512

 

 108,147,905

  57,792,136

Deferred Debits

     3,947,807

      3,202,390

Total Assets

$812,042,484

$733,482,211

Equities and Liabilities

2009

2008

 

Equities

Membership Fees

$    2,603,050

$    2,503,170

Patronage Capital

255,085,059

241,740,952

Other

        603,842

        555,761

 258,291,951

 244,799,883

 

Long-Term Debt

 435,791,970

 367,280,007

 

Other Long-Term Liabilities

 

Accumulated Provision for Postretirement Benefits – Noncurrent

  16,499,274

  13,498,525

 

Current Liabilities

Long-Term Debt – Current Portion

9,984,000

9,121,000

Accumulated Provision for Postretirement Benefits – Current Portion

805,625

915,083

Accounts Payable

27,089,571

27,247,894

Consumers' Deposits

6,670,402

6,789,869

Other

  10,588,917

  10,486,788

 

  55,138,515

  54,560,634

 

Deferred Credits

  46,320,774

  53,343,162

 

Total Equities and Liabilities

$812,042,484

$733,482,211

Statements

Statements of Revenue and Patronage Capital

May 31, 2009

May 31, 2008

 

Operating Revenues

$448,378,582

$429,765,646

 

Operating Expenses

 

Cost of Power

338,118,910

315,393,597

Distribution Operations

10,868,501

11,307,960

Distribution Maintenance

14,244,379

14,209,586

Consumer Accounts

14,191,824

15,315,878

Customer Information and Sales

7,183,716

8,705,344

Administrative and General

10,124,720

10,440,682

Depreciation

  24,225,424

  22,691,197

 

 418,957,474

 398,064,244

 

Operating Margins Before Interest Expense

29,421,108

31,701,402

Interest Expense

  21,600,382

  19,895,020

 

Operating Margins After Interest Expense

7,820,726

11,806,382

Nonoperating Margins

5,787,659

5,489,131

Generation and Transmission Cooperative Capital Credits

4,009,095

3,775,930

Other Capital Credits and Patronage Capital Allocations

      446,860

     542,965

Net Margins

18,064,340

21,614,408

 

Patronage Capital – Beginning

241,740,952

224,609,827

Retirement of Patronage Capital

(4,720,233)

(4,483,283)

 

Patronage Capital – Ending

$255,085,059

$241,740,952

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