2000 Jackson EMC Annual Report

P.O. Box 38
Jefferson, Georgia 30549-0038
www.jacksonemc.com
jackson emc
2000 Annual Report
the power to improve your life
Our coverage area is one of the fastest growing in the nation.
In the past ten years we’ve added
over 56,000 customers.
We’re averaging 8,000 new members a year – nearly the total
size of a typical EMC.
A decade ago, who would have thought that an EMC in
Jackson County, Georgia would sell more power than any other
EMC in America?
Well…we did. Which is why – today – when you need the
power…we have the power.
The power to improve your life!
p. 1
replace heating and cooling systems or improve a home’s efficiency; ComfortHome™ technology that guarantees a home’s livability; security services to help protect homes and businesses, property and loved ones; outdoor
lighting that provides added security and safety; standby generators that help to ensure the safety of poultry
farmers’ livestock in the event of a power interruption; and credit union membership that offers numerous
financial benefits.
p r e s i d e n t Report
’s
F
rom our beginnings in 1939 Jackson EMC has had the power to improve the
lives of those we serve. In those early days we brought electricity to communities
and farms that had never read by electric light, cooked dinner in an electric oven,
milked cows with electric machines, or watered their crops with electric pumps.
The men and women who began our cooperative were true visionaries, and to
them we owe a true debt of gratitude.
Over the 61 years we have been serving our members, our founders’ vision has constantly guided how we provide
service. Because of this vision, Jackson EMC has not just grown, it has prospered. In the past two decades, we
have tripled in size, growing from a little over 46,700 customers in 1979 to more than 150,200 today. In fact,
Jackson EMC has now become the third largest EMC in the entire United States.
Sound, conservative policies have given us the ability to meet the challenges of this phenomenal growth, while
at the same time, keeping our costs low. We’ve been able to effectively meet the needs of these new members,
growing from just over 4,624 miles of line two decades ago, to more than 10,000 miles of line today. And, at the
same time, by emphasizing efficiency, we’ve been able to reduce the ratio of employees to members.
Good old-fashioned smart management has permitted us to generate even more savings. In 1996, we implemented a visionary approach that has continued to benefit our members year after year. By purchasing electricity
from power marketers, rather than generating it on our own, we have saved more than $30 million since 1996.
Such sound business decisions have enabled us to reduce our members’ average cost for electricity from 7.9 cents
per kilowatt hour in 1994 to 6.9 cents per kilowatt hour today. A decrease of more than 12% during a time when
other costs have kept going up.
We take great pride in the fact that the rate we charge for average summer residential use this year was the sixth
lowest rate among all 42 of Georgia’s EMCs, and Jackson EMC continues to provide power to our members at
a rate 15% below the national average.
And because Jackson EMC is a not-for-profit organization, we return margins to our members.These are the revenues we receive each year above our actual cost of doing business. In December of 1999 we mailed $3.5 million
in refunds to about 130,000 eligible members. This December, we are pleased to be mailing $3.5 million in margin refunds to more than 125,700 members.
While providing our members with low cost power, we never lose sight of our commitment to superior customer
service. That commitment pays off in countless ways every day. Currently, our customer approval rating is at its
highest level in our history, having improved by 10 points over the past seven years. We continue to monitor our
customer service daily, and we continue to work to improve it.
Every one of these products and services is offered by Jackson EMC to help improve the lives of our members,
and most of them can be billed as part of their regular monthly electric statement.
But, by themselves they’re just more products and services. Standing behind them are the men and women who
staff our offices, answer our phones, process orders and payments, maintain our lines and continually work to
upgrade electric service.
These are the people who come in after hours to answer phone calls when a power pole has been knocked down;
the people who are out in the rain restoring service after a storm, even before the thunder fades; the people who
make an extra effort to answer questions and make sure that members get the service they need.
This was especially true in January, when the worst ice storm our region has seen struck our service area, causing widespread damage and power outages. Our line crews worked day and night, in freezing temperatures and
dangerous conditions, to restore power as quickly as possible. For the first couple of days, some of the linemen
themselves went home to cold and dark houses, because they, too, were without power. Each of them deserves
our appreciation for their hard work and dedication in the face of such a massive cleanup effort. They are truly
amazing people!
And while no company is perfect, we continue to receive letters and e-mails, reply cards and phone calls from our
members, telling us what a great job our people do.
Jackson EMC has the power to improve your life, and indeed we do! We improve our members’ lives by making our
communities better places to live and work. Through the resources of Jackson EMC and its employees, we support community efforts such as the American Cancer Society’s Relay for Life, The March of Dimes and the
United Way.
We help enrich lives in the communities we serve by helping to bring music and arts programs to residents. Our
contributions benefit such programs as the Gainesville Children’s Theater, Pro Musica and Art in the Park. We
enhance our communities’ education by awarding six A.T. Sharpton Scholarships, participating in four different
Partners in Education programs and supporting Gainesville College, Lanier Technical College and Gwinnett
Technical College.
We help develop the youth in our communities by sponsoring programs such as the FFA Wiring Contest, the
Quality Beef Show, Speech and Energy Bowl competitions that send students to the annual Washington, D.C.
Youth Tour, and we sponsor mentor programs and youth apprentice programs.
Jackson EMC employees enrich the communities we serve through the personal time that they donate to a wide
variety of local civic and service organizations, as well as through their involvement in their churches, synagogues
and chambers of commerce.
Since our beginning, Jackson EMC has been called upon to provide energy to support the remarkable progress
that our region has experienced – the power that has helped farmers thrive, the power that has attracted new
business and industry to bring greater prosperity to our communities, the power to improve your life.
Having the power to improve your life is a responsibility that we take very seriously and we at Jackson EMC are constantly looking for new ways to bring our members even more high-quality, innovative services at a reasonable
cost. It’s a tradition that has continued since the days when we served only 250 families with 100 miles of wire;
yet that tradition is alive today as we serve more than 150,200 members with over 10,000 miles of wire. It’s a commitment that we make to our members for our future together.
Today we have the power to change thousands of lives through the many products and services that we provide
as an added value of membership in Jackson EMC. The list is impressive, and includes paging services to keep
members in touch with business associates and loved ones; weather radios that provide warning of dangerous
storms; surge suppression devices that protect possessions from lightning damage; low interest loans that help
Randall Pugh,
President and CEO
p. 2
p. 3
the
b e g i n n i Jackson
n g ofEMC
A
s a little girl, Voncille McRee read by the light of a kerosene lamp. As a young
bride, she and her husband milked cows by hand. Born in Jackson County 87 years
ago, she was a country girl and, like most rural Americans of her era, she lived without electricity. Life wasn’t easy for Voncille.
“Back when I was growing up, we helped my father in the fields when we got home
from school. Then we did our lessons by the light of a kerosene lamp,” Voncille
recalls. “When I was older, the boll weevils ate up everything and my father gave up
farming. I married my husband, Ford, in 1932. We moved into a house that was just
in front of the one I’m in now. It set right out there,” she says, pointing off in the
distance, “before Ford built this one.
“Until Jackson EMC brought power out here, farming was right hard. We’d milk
the cow and then put the milk down in the well to keep it cool. There wasn’t any
refrigeration, you see,” she explains. “And we’d have to tote the water from the well
in buckets back to the chicken house. When we heard that power lines were coming out here, we had a neighbor boy come and wire the house. Wiring was pretty
simple then, because all we needed was enough for the lights, the cooking, the
refrigerator and the radio. There was no TV or any of these modern appliances.
Having a radio was special. Not everybody had one. It was 1941 when we first got electricity and the neighbors would gather here of an evening to listen to the war news.
“Having electricity out here changed everything,” Voncille exclaims. “It sure was a
happy day when we saw them stringing that wire down the road.”
In today’s electrified world, it’s hard for us to realize that just fifty years ago most
of America was still living much as it had for decades. Electric lights were for city
dwellers. Rural America was still in the dark. Power companies considered it too
large and expensive an undertaking to run lines to such vast, sparsely populated
areas. It took Franklin Roosevelt’s Rural Electrification
Administration in 1935 to begin changing the situation.
By lending money to groups that wished to pioneer rural
electrification, the REA enabled the formation of electric
cooperatives. Granted its charter in 1938, Jackson EMC
< Voncille McRee
Jackson EMC member
for over 60 years.
p. 4
began bringing electricity to farms and changing the
standard of life for Voncille and hundreds of other
Georgians.
p. 5
and
jackson
e
m
c
Our Customer Service
O
ne day earlier this year, John Marciano arrived home after work to be met
by his wife, Barbara, with the news that several of their power outlets weren’t
working. John went to his circuit breaker panel and found that he’d lost one leg
of his 220v service. So he called Jackson EMC and talked with a service representative who told him it would be reported.
For twenty seven years, John worked for a large utility company in White Plains,
N.Y. He and Barbara moved down to Lawrenceville to be near their youngest son,
with the expectation of retiring in a warmer, friendlier climate.
“The people down here are fantastic!” John exclaims. Even so, having spent so
many years inside the bureaucratic maze of a large corporation, he was unprepared for the service he received from Jackson EMC. “Within a half-hour I received
a call back telling me a technician would be on site within an hour.
To my surprise, he was at my home within 45 minutes. The technician determined
that the problem lay between the transformer and the meter panel. He told me
that a crew would have to dig up the buried cable to make the repairs, and said
they would be there in about an hour.”
“Again, to my surprise, the crew was there in 45 minutes, dug up the concrete-hard
soil and replaced the service. They back-filled the ditch and told me another crew
would be there in three or four days to restore my grass. Sure enough, when I
returned home from work four days later the ground was raked and the grass was
replaced.
“In all my years as a field manager in the telecommunications industry, I have
never been able to work within the company infrastructure to have a job completed as efficiently as Jackson EMC was able to do at my home. My hat is off to your
people and managers for a job well done.”
Here at Jackson EMC, problem solving is at the heart of everything we do. We were formed because people in rural areas needed electricity and no one else was meeting their need. Today,
Jackson EMC continues to find more ways to help our customers. That begins with giving them even better service than
they expect.
p. 6
John Marciano >
Satisfied Jackson EMC
member.
p. 7
jackson emc
and
the EC Loan
“T
he house we live in has a really high pitched roof, so there’s lots of space for
rooms on the second floor,” says Tammy Casey. “But, when we bought it, that
space was all unfinished. With the kids growing up, we wanted to give them more
space, so we’ve been finishing that upstairs area. We knew that heating this additional space would require an additional heat pump, so we talked with our contractor about our options.
Kent and Tammy Casey moved to Lawrenceville about six years ago in order for
Kent to be closer to his client base. Kent owns KC Systems, Inc., a computer programming and consulting firm that is now located in Atlanta. Tammy helps out
with the bookkeeping when she and the kids, Tyler and Hope, aren’t on the tennis courts. At 14, Tyler’s tennis ranking is number 38 in the state.
“Cost efficiency was what we were looking for,” says Kent. “We shopped for loans
and couldn’t find anything anywhere that could beat the EC Loan available from
Jackson EMC. So our initial transaction with Jackson EMC was a very favorable
one. The next step was to determine just what size heat pump we were going to
need for this area.”
“Well,” Tammy adds, “I had seen in the Jemco News (Jackson EMC’s monthly
member newsletter) about a new diagnostic tool that Jackson offered to determine the best system for the space. So we got our contractor in touch with
Jackson EMC and they’re working together to make sure we get the right system.
“But that’s not all. We can add this to our electric bill and, since Jackson offers
direct billing to our credit card, the payments are made automatically and I don’t
have to worry about ever being late or missing a payment. And on top of all that,
we can write off the interest,” says Tammy.
“We’ve been extremely pleased with the services that Jackson offers,” agrees Kent.
Jackson EMC is always looking for ways to help our members use energy more
efficiently. We can do that by providing low interest loans to help customers like
Tammy and Kent improve the energy efficiency of their existing home. We
< Tammy Casey
Jackson EMC EC Loan
recipient
p. 8
also offer loans to members to replace heat
pumps and finance standby generators for poultry farmers.
p. 9
jackson emc
and
EMC Security
S
everal years ago when they were living in Florida, Allen and Linda Blount’s
home was burglarized. “Since then,” says Allen, “wherever we live, we consider a
security system to be absolutely essential.” When the Blounts moved to
Gainesville, they immediately set about getting estimates from three different
security firms, including Jackson EMC’s EMC Security, another firm they’d had
service from in Florida and a third company that a friend recommended.
“There was just no comparison between Jackson EMC’s equipment and maintenance charges and the others,” says Allen. “We selected an EMC Security system
based on price. But the more we got into it, the more impressed we were with everyone involved – from the team that went over the system with us to the installers.
All of them were thoroughly professional and did a superb job.”
Jackson EMC continues to find ways to provide our customers with the power to
improve their lives. Not just the kind of power that turns on the lights, but the
kind that gives them greater security and protection. More and more North
Georgians are turning to Jackson EMC’s EMC Security for the peace of mind that
comes with knowing that they are protected from intruders, fire, medical emergencies and other home accidents. The fact that EMC Security is offered as a service of Jackson EMC gives it an added reliability and provides subscribers with an
extra level of comfort.
“I’m a rep for packaging equipment with customers like Coca-Cola, Merial and
Glidden and Piedmont Labs, here in Gainesville. All my business records are here
at the house, so it was important that the system also include fire monitoring,”
Allen explains.
Linda, who works part-time teaching English as a second language, added, “Our
children are all grown and our schedules are flexible enough so that when we
want to jump in the car and go somewhere, we can. The other week we went
to Birmingham to see a Mattisse exhibition, and we just activated the
security system from the car as we drove out of the garage.”
EMC Security also offers state-of-the-art integrated security solutions for industrial and commercial customers, from small businesses to large manufacturers. Whether customers need automated
security, fire alarm, closed circuit television, or access control, EMC
Security can custom-design a system to meet their individual needs.
p. 10
Allen & Linda Blount >
Jackson EMC Security
customers
p. 11
and
energy-efficiency
the ComfortHome Program
™
“W
hen it came to making a decision on heating and air, we knew that our res-
idents would want a system that could provide certification on insulation and
efficiency,” says Mark Drumm, Vice President of Cannon Company, developers of
Caswyk Lanier, a gated apartment community located on the banks of Lake
Lanier in Gainesville.
When completed, the complex will have 657 units, two club houses, two swimming
pools and two tennis courts. There are walking trails through a 38 acre preserve
area, a cardio-vascular fitness center and an executive conference center, complete
with fax and copier, available for the residents’ use. Residents choose from nine
floor plans that include such amenities as direct-access garages, a monitored alarm
system, oak cabinetry, marble vanities, oversized balconies to take advantage of the
lake view and mountains beyond, and computer rooms for residents working out
of their homes.
The Cannon Company felt that for such a complex there could be no compromise
on comfort. “We had to consider everything,” Mark explained. “When heat pumps
are used, it’s difficult to feel the air flow, either warm or cool. Because people sometimes need to feel that air flow to feel comfortable, they might perceive this as a deficiency. But, on the other hand, since we’re near Lake Lanier and the mountains, we
also wanted to make certain there weren’t any drafts in the units. We didn’t want anyone leaving us because of the comfort factor. So ComfortHome™ from Jackson EMC
was chosen, primarily as a practical necessity, because it made our homes more comfortable...more livable. And Jackson EMC has done a great job in providing information on ComfortHome™, so our residents understand its quality and benefits.
“We’ve also had people who moved to Caswyk Lanier from homes or other apartments who have been extremely pleased with their fuel bills here. Where they had
been getting bills of $150 or so, they’re now getting bills for $75 to $95, instead,”
says Mark.
Jackson EMC wants to give our customers the opportunity
to live in the most energy-efficient homes technology can
provide. That’s why we offer ComfortHome™. It’s a total
turnkey approach that provides technically advanced
energy efficiency and, as a by-product, a high degree of
< Mark Drumm
Vice President of Cannon
Company
p. 12
customer satisfaction. Not only individual homeowners,
but also developers such as the Cannon Company, have
come to appreciate the advantages of ComfortHome™.
p. 13
jackson emc
and
Our Reliability
I
n 1994, after an extensive location search, the executives of T.C. Mirafi knew
where they wanted to locate their newest 400 thousand square foot plant, but one
question had to be answered. Would dependable power be available? The company produces geo-textiles that are used in the construction industry for reinforcement, stabilization and erosion control. Named for a combination of the first
parts of “Miracle Fibers,” T.C. Mirafi boasts over $66 million in annual sales.
“Our manufacturing process involves extruding a poly-propylene resin into a staple fiber. A continuous, uninterrupted power flow, with no spikes, surges or outages, is critical,” says Plant Manager, Tom Edwards. “Any interruption of power
can result in hundreds of pounds of wastage. Before this site was chosen we had
to know that Jackson EMC could deliver this kind of service. How they do it, I
don’t know, but they do. We’ve had only a couple of interruptions in the past five
years, and those were due to something like a car running into a power pole.
“We’ve had a great relationship with the people at Jackson EMC. They’ve always
been very receptive to our needs and a great help to us in a number of ways. For
instance, our facility designers originally determined that we should have two
backup generators on the site, which Jackson supplied to us without hesitation.
At that time they were intended for use if there were power outages, to avoid the
costs of downtime and stoppages that I just mentioned. But it has turned out
that, because of Jackson EMC’s ability to provide such excellent service, we haven’t
needed the backup generators.
“In another situation, we found ourselves isolated here on one occasion when our
entrance was cut off by a train on the railroad spur that runs to our plant. Here we were
with no way to get in and out of our facility. Jackson EMC has property adjacent to
ours and offered us an easement so we could have an emergency exit. So Jackson has
been a lot more than just good business partners, they’ve been good neighbors, too.”
Jackson EMC’s coverage area is one of the fastest growing in the nation. In the
past ten years, we’ve added over 56,000 customers, and we’re averaging 8,000 new
members a year – nearly the total size of a typical EMC. Today, Jackson EMC sells
more electricity than any other EMC in America. The foresight of our board and
management team in anticipating such growth has enabled us to successfully
respond to the challenge. Without that
capability, industries that now enrich
our area in numerous ways would
have gone elsewhere.
p. 14
Tom Edwards >
Plant Manager, T.C. Mirafi
p. 15
jackson emc
and
Our Quality and Price
“W
hen we began planning the first phase of Huntcrest, a four story office
building that housed 103,650 square feet,” said, Michael Pelt, executive vice president of M.D. Hodges, “we determined that we needed competitive bids on the
power source. The development was going to require a one-mile-long concrete
conduit to bring in the power. We also needed a high reliability power system that
could potentially serve the rest of the project.”
M.D. Hodges Enterprises is a 42-year-old Atlanta-based commercial real estate
development company. At present, it has a portfolio of 10 million square feet in
twelve locations throughout the metro area, and more than 1,500 acres on various
sites available for office, industrial, hotel and retail development in the greater
Atlanta area. Until a few years ago, the company specialized exclusively in industrial development, but moved into office development with its 416 acre Huntcrest
development in Gwinnett County.
“Jackson EMC won the competitive bid,” Michael said, “which included rates for
the building as well as the infrastructure improvements, such as the concrete conduit I mentioned, running all the way back to their substation. This means that
we’re able to offer our clients a service reliability far superior to anything our competition offers in the area. In today’s high-tech business world, such power reliability provides M.D. Hodges a real selling advantage that will be a significant factor in the long-term success of Huntcrest. With over 112 million square feet of
office space available in the greater Atlanta area, it’s essential to have an edge on
the competition.”
Even while Jackson EMC has grown to meet the increased power demands for our
service area, we have been able to provide power to our members at a rate that
remains 15% below the national average. This is an obvious benefit to our individual members. It is, perhaps, a less obvious but more significant benefit to our
business customers. You’ve already read that Jackson EMC’s ability to provide a
< Michael Pelt
Executive Vice President of
M.D. Hodges
p. 16
reliable source of power was a determining factor in T.C. Mirafi’s decision to
locate in Jackson County. Jackson EMC’s quality and price are also valuable sales
tools that give our customers a competitive edge.
p. 17
j a c k sSupport
o n of es mma l cl b’uss i n e s s
T
raveling across the country today, you’ll find ornaments and sculptures made
by Athens Stonecasting decorating lawns and gardens all across America. Their catalog includes over six hundred pieces, ranging from whimsical frogs to beautiful
angels, tiny rabbits to elaborate fountains. For many years, Athens Stonecasting
had a single location near the railroad tracks in Center, between Athens and
Commerce. Today, in addition to that retail store, their manufacturing operation
closer to Athens covers 145 acres.
With industries such as T.C. Mirafi, engineers and designers have projected the company’s power needs far into the future before construction even begins. Smaller
businesses like Athens Stonecasting, on the other hand, often find themselves
expanding into new services and new inventory that were unheard of just a few years
ago. With expansion they find themselves outgrowing once adequate power sources.
“When I bought the operation from Johnny Warren in 1984 there was the gift shop
with the concrete statues, a small recycling business and two employees,” says Danny
Whitsel. “About a year later, Scott Buice joined me as partner. He had some molds
and a small customer base of landscapers and lawn and garden shops that we supplied with the yard sculpture. At that time we manufactured the statues only in the
summer months, but things broke for us when we decided to produce year-round.
Then, about five or six years ago, we started calling on major chain stores. The real
breakthrough came when we got in Wal-Mart. Home Depot and Lowe’s followed
after that. We started storing inventory in chicken houses at a farm down the road
from the original location. But we kept growing until we just bought the entire farm.”
“That’s when we knew we needed some help, says Scott. “We brought in a lot of
new machinery that required three-phase power. Now, neither of us are electricians, so we called in Jackson EMC and they got very involved in helping us plan
the layout of the new facility, determining where to run the lines and where to
position the poles. They showed us how to upgrade the security lighting and
developed a long-range plan so that when we need the power, it’s there.
Everyone at Jackson EMC, from the service personnel who worked with us,
to the people who handle the billing, are all good people – total
professionals – always there to help.”
That’s a perfect description of our service philosophy. For businesses large and small, for industries and individuals, Jackson
EMC is always there to lend a hand.
p. 18
Danny Whitsel &
Scott Buice
>
Athens Stonecasting
p. 19
jackson emc
J
and
Our Community Involvement
ustin Poe stands in a spot of shade next to a Jackson EMC truck a mile or two outside Braselton, where the crew he works with has been clearing tree limbs from the rightof-way. Justin is this year’s winner of the State FFA Wiring Contest. The son of Marvin
and Carol Poe of Jefferson, he graduated from high school this past June.
“Daddy always taught me about electricity and mechanics ever since I was small,” says
Justin. “So when I got to high school, I knew I wanted to take the wiring class. I had my
eye on the Wiring Contest from the beginning.”
For the past 33 years, Jackson EMC has sponsored and supported the FFA Wiring
Contest on the local level. Over the years we’ve proudly watched as students from our
area went on to win the area contests and even the state contest.
“I took the wiring class first in the eleventh grade, then again when I was a senior,” Justin
explains. “That second time Mr. Embrick, my teacher, used me as sort of an assistant, and
that’s what really prepared me for the contest. I learned more from telling others how to do it.
“There were several students that wanted to enter the contest and Mr. Embrick would
come in after school and help us. There are several competitions, starting locally, and if
you’re lucky you work your way up to state. I came in second in the first round. Then
several of us from Jefferson went on to the next competition, and from then on I came
in first. It’s a great competition all the way through. The teachers, the students and
Jackson EMC all made it more like a friendly day in the park than a competition.
“On the state level I went over-time on my talk and I felt like I made a couple of other
mistakes, so I was amazed when I found out I won.
“The summer after graduation, I was working in a pizza parlor when I got a call from
Jackson EMC telling me that they had an opening and asking if I was interested. Of course
I was interested. This was what I had spent the last several years training for,” says Justin.
Jackson EMC is pleased that we’ve had a part in helping Justin realize his dreams. He is
now a member of the Jackson EMC family, working with a Right-of-Way Crew along
with several experienced men who are happy to show him the ropes. Justin plans to use
the scholarship money in the contest he won to become an electrical engineer.
< Justin Poe
2000 Winner of the State
FFA Wiring Contest and
now a Jackson EMC
employee
p. 20
Jackson EMC believes that it is our responsibility to take an active role in the communities we serve. And we are particularly proud to be able to sponsor programs that benefit
our young people. Jackson EMC sponsors the Jackson County Comprehensive High
School electric vehicle project and the Quality Beef Show, as well as sponsoring the FFA
Wiring Contest, the Energy Bowl and Speech Bowl. When we look at our young people
today, we know that America’s finest hour is yet to come.
p. 21
balance
r e pIndependent
o r t of Accountants
The Board of Directors
Jackson Electric Membership Corporation
We have audited the accompanying balance sheets of Jackson Electric Membership
Corporation as of May 31, 2000 and 1999 and the related statements of revenue and patronage
capital and cash flows for the years then ended. These financial statements are the responsibil-
Sheets
ASSETS
Utility Plant
Electric Plant in Service-At Cost
Construction Work in Progress
May 31, 2000
$
Gross Utility Plant
Accumulated Provision for Depreciation
Other Property and Investments
Investments in Associated Organizations
Restricted Funds
Other Investments
ity of the Corporation's management. Our responsibility is to express an opinion on these
financial statements based on our audits.
We conducted our audits in accordance with generally accepted auditing standards and
Government Auditing Standards, issued by the Comptroller General of the United States.
Current Assets
Cash and Cash Equivalents
Accounts Receivable (Net of Accumulated Provision for
Uncollectibles of $780,526 in 2000 and $722,463 in 1999)
Materials and Supplies
Other
398,848,312
6,414,222
1999
$ 357,097,115
11,735,895
405,262,534
(60,527,451)
368,833,010
(51,692,842)
344,735,083
317,140,168
55,884,321
1,267,516
367,264
52,562,775
1,798,150
1,464,665
57,519,101
55,825,590
806,602
900,205
13,550,540
5,445,873
674,359
14,077,187
5,171,998
996,944
20,477,374
21,146,334
1,563,124
815,841
424,294,682
$ 394,927,933
Those standards require that we plan and perform the audits to obtain reasonable assurance
about whether the financial statements are free of material misstatement. An audit includes
examining, on a test basis, evidence supporting the amounts and disclosures in the financial
Deferred Debits
statements. An audit also includes assessing the accounting principles used and significant
Total Assets
$
estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in all material respects,
the financial position of Jackson Electric Membership Corporation as of May 31, 2000 and 1999,
EQUITIES AND LIABILITIES
Equities
Membership Fees
Patronage Capital
Other
2000
$
and the results of its operations and cash flows for the years then ended in conformity with
generally accepted accounting principles.
1,536,440
143,451,138
351,944
1999
$
1,424,275
138,336,019
357,432
145,339,522
140,117,726
126,213,726
78,315,534
129,324,192
57,579,337
204,529,260
186,903,529
Other Long-Term Liabilities
Accumulated Provision for Postretirement Benefits Other Than Pensions
11,031,927
9,948,407
Current Liabilities
Mortgage Notes-Current Portion
Notes Payable-Line-of-Credit
Accounts Payable
Consumers’ Deposits
Other
4,370,000
32,100,000
15,866,091
3,184,695
5,638,809
4,244,000
30,200,000
13,577,101
2,736,781
4,837,475
61,159,595
55,595,357
2,234,378
2,362,914
424,294,682
$ 394,927,933
Long-Term Debt
RUS Mortgage Notes
NRUCFC Mortgage Notes
In accordance with Government Auditing Standards, we have also issued a report dated
July 25, 2000, on our consideration of Jackson Electric Membership Corporation’s internal
control over financial reporting and our tests of its compliance with certain provisions of
laws, regulations, contracts and grants.
McNAIR, McLEMORE, MIDDLEBROOKS & CO., LLP
Macon, Georgia
July 25, 2000
Deferred Credits
Total Equities and Liabilities
$
The accompanying notes are an integral part of these balance sheets.
p. 22
p. 23
s t a t e m e n t s of Cash Flow
s t a t e m e n t s of Revenue & Patronage Capital
Operating Revenues
$
Operating Expenses
Cost of Power
Distribution Operations
Distribution Maintenance
Consumer Accounts
Customer Information and Sales
Administrative and General
Depreciation
May 31, 2000
221,696,035
$
1999
213,946,909
159,298,428
7,365,972
6,785,648
6,099,387
5,660,155
6,416,273
12,526,126
148,215,795
6,165,634
7,297,297
5,768,063
5,002,437
6,739,265
10,934,710
204,151,989
190,123,201
Operating Margins Before Interest Expense
17,544,046
23,823,708
Interest Expense
12,537,741
11,466,723
5,006,305
12,356,985
Operating Margins After Interest Expense
Nonoperating Margins (Losses)
(205,185)
Generation and Transmission Cooperative Capital Credits
Other Capital Credits and Patronage Capital Allocations
Net Margins
Patronage Capital-Beginning
Retirement of Patronage Capital
667,870
3,195,802
3,388,817
617,799
537,882
8,614,721
16,951,554
138,336,019
124,634,161
(3,499,602)
Patronage Capital-Ending
$
143,451,138
(3,249,696)
$
138,336,019
May 31, 2000
Cash Flows from Operating Activities
Net Margins
Adjustments to Reconcile Net Margins to Net Cash Provided by Operating Activities
Depreciation and Amortization
Patronage Capital from Associated Organizations
Postretirement Benefits
Gain Sale of Utility Plant
Change In
Accounts Receivable
Other Current Assets
Accounts Payable
Other Current Liabilities
Cash Flows from Investing Activities
Proceeds from Sale of Utility Plan
Extension and Replacement of Plant
Return of Equity from Associated Organization
Plant Removal Costs
Material Salvage
Deferred Debits
Materials and Supplies
Cash Flows from Financing Activities
Advances from Long-Term Debt
Line-of-Credit
Memberships
Principal Repayment of Long-Term Debt
Retirement of Patronage Capital
Investment in Capital Term Certificates
Deferred Credits
Consumers' Deposits
Other Equities
Restricted Funds
Other Investments
8,614,721
$
16,951,554
13,349,745
(3,813,602)
1,083,520
–
11,722,115
(4,903,760)
1,088,456
(508,114)
526,647
322,585
2,288,990
801,334
(2,614,683)
7,079
1,080,835
991,354
23,173,940
23,814,836
–
(40,698,729)
460,892
(884,179)
638,248
(128,536)
(273,875)
664,307
(37,342,030)
657,083
(727,218)
867,806
(706,314)
2,008
(40,886,179)
(36,584,358)
22,000,000
1,900,000
112,165
(4,248,269)
(3,499,602)
31,164
(747,283)
447,914
(5,488)
530,634
1,097,401
–
20,400,000
102,340
(4,071,185)
(3,249,696)
27,777
(1,800,532)
386,140
13,782
1,621,080
(528,137)
17,618,636
12,901,569
Net Increase (Decrease) in Cash and Cash Equivalents
(93,603)
132,047
Cash and Cash Equivalents-Beginning
900,205
768,158
Cash and Cash Equivalents-Ending
$
The accompanying notes are an integral part of these balance sheets.
The accompanying notes are an integral part of these balance sheets.
p. 24
$
1999
p. 25
806,602
$
900,205
n o t e s to Financial Statements
n o t e s to Financial Statements
(1) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Accounting policies of the Corporation reflect practices appropriate in the
electric utility industry. The following describes the more significant of those
policies.
Operating Revenues and Patronage Capital
Operating revenues which include patronage capital are billed monthly to
consumers. Electricity which had been used by members of the Corporation
but had not been billed to the members was not recorded. This unbilled electric revenue totaled approximately $8,490,000 and $7,850,000 for 2000 and
1999, respectively.
Nature of Operations
Jackson Electric Membership Corporation is a not-for-profit corporation
organized to provide electric service to its members. The Corporation operates as a cooperative whereby all monies in excess of cost of providing electric
service are capital, at the moment of receipt, and are credited to each member’s capital account.
Cost of Purchased Power
Cost of power is expensed as consumed.
Generation and Transmission Cooperative Capital Credits
Generation and transmission cooperative capital credits represent the
annual capital furnished Oglethorpe Power Corporation through payment
of power bills. The capital is recorded in the calendar year provided, even
though notification of the capital allocation is not received until later.
Use of Estimates
The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements. Estimates also affect the reported amounts of revenues and expenses
during the reporting period. Actual results could differ from those estimates.
Cash Equivalents
For purposes of the statements of cash flows, cash equivalents include time
deposits, certificates of deposit and all highly liquid debt instruments with
original maturities of three months or less.
Utility Plant
Utility plant is capitalized at cost less related contributions in aid of construction. In general, utility plant is capitalized at the time it becomes part of an
operating unit and has been energized. However, certain items of plant
referred to as special equipment items (meters, transformers, oil circuit
reclosers, etc.) are capitalized at the time of purchase along with the related
estimated cost of installation.
Fair Value of Financial Instruments
Financial instruments include cash and cash equivalents, restricted funds,
other investments and long-term debt. Investments in associated organizations are not considered a financial instrument because they represent nontransferable interest in associated organizations.
The carrying value of cash and cash equivalents, restricted funds and other
investments approximates fair value because of the short maturity of those
instruments. It is not practicable to estimate the fair value of long-term debt;
additional information pertinent to its value is provided in the footnote for
long-term debt.
Depreciation and Maintenance
Depreciation of capitalized cost is provided using straight-line rates. When
property subject to depreciation is retired or otherwise disposed of in the normal course of business, its capitalized cost and its cost of removal less salvage
are charged to the accumulated provision for depreciation.
Income Taxes
The Corporation operates under the Internal Revenue Code, Section
501(c)(12), as a tax-exempt cooperative. Accordingly, no provision for income
taxes has been made in the financial statements.
Provision has been made for depreciation of distribution plant at straight-line
rates ranging from 2.8 to 4.4 percent per annum.
Depreciation of general plant is provided on a straight-line basis over the estimated useful lives of the various assets. The rates range from 3 to 14 percent
per annum.
(2) UTILITY PLANT
Listed below are the major classes of the electric utility plant as of May 31:
(3) INVESTMENTS IN ASSOCIATED ORGANIZATIONS
2000
1999
National Rural Utilities Cooperative
Finance Corporation
Capital Term Certificates
$
3,841,829
$ 3,872,993
Capital Credits
1,733,949
1,761,652
Oglethorpe Power Corporation
Capital Credits
40,668,525
38,173,485
Georgia Systems Operation Corporation
Capital Credits
6,050
3,886
CoBank
Stock
274,621
160,394
Georgia Transmission Corporation
Contributed Capital
5,166,245
5,166,245
Capital Credits
1,928,813
1,230,215
Georgia Rural Electric Service Corporation
Capital Credits
1,247,187
1,176,803
Smarr EMC
Contributed Capital
1,015,987
1,015,987
Memberships in Associated Organizations
1,105
1,105
Other
10
10
$
$
Distribution Plant
Generation Plant
General Plant
Materials and Supplies
Materials and supplies are stated at lower of cost or market. Cost is determined substantially by the moving average method of inventory valuation.
Electric Plant in Service
Construction Work In Progress
Patronage Capital and Margins
Jackson Electric Membership Corporation operates under the cooperative
form of organization. As provided in the bylaws, any excess of revenues over
expenses from operations is treated as advances of capital by the patrons and
credited to each of them on an individual basis. Under provisions of the longterm debt agreements, until the total equities and margins equal or exceed 30
percent of the total assets of the Corporation, the return to patrons of capital contributed by them is limited. As of May 31, 2000 and 1999, the total
equities approximate 34 and 35 percent of total assets, respectively.
2000
$ 351,768,116
6,956,201
40,123,995
1999
$ 320,188,731
–
36,908,384
398,848,312
6,414,222
357,097,115
11,735,895
$ 405,262,534
$ 368,833,010
1,563,124
$
Assignable
Assigned
Capital Gains and Losses
Retired Capital Credits-Gain
Donated Capital
$
Interest payments totaled $12,436,916 and $10,658,815 for the years ended
May 31, 2000 and 1999, respectively.
(8) POSTRETIREMENT BENEFITS OTHER THAN PENSIONS
The Corporation provides medical benefits and life insurance for retirees with
ten or more years of service after age forty-five.
The plan's funded status is comprised of the following:
2000
Accumulated Postretirement Benefit Obligation
Retirees and Dependents
$
2,669,555
Fully Eligible Active Plan Participants
2,106,811
Other Active Plan Participants
5,114,630
1999
703,001
19,636
64,679
–
28,525
9,890,996
Actuarial Gain
1,140,931
Plan Assets at Fair Value
–
Accrued Postretirement Benefit Obligation
in Excess of Plan Assets
$ 11,031,927
815,841
$
$
$
2,769,000
2,025,600
4,363,107
9,157,707
790,700
–
$
9,948,407
For measurement purposes, an 8.5 percent annual rate of increase in the per
capita cost of covered health care benefits was assumed for 2000. The rate was
assumed to decrease gradually to 5 percent by the year 2007 and remain at
that level thereafter. The health care cost trend rate assumption has a significant effect on the amounts reported. Increasing the assumed health care cost
trend rates by one percentage point in each year would increase the accumulated postretirement benefit obligation as of May 31, 2000 by $1,306,396 and
the aggregate of the service and interest cost components of postretirement
expense for the year then ended by $208,078.
1999
534
306,654
50,244
357,432
(7) LONG-TERM DEBT
Long-term debt consists primarily of mortgage notes payable to the United
States of America acting through the Rural Utilities Service (RUS) and the
National Rural Utilities Cooperative Finance Corporation (NRUCFC). The
notes are secured by a mortgage agreement among the Corporation, RUS and
NRUCFC. Substantially all the assets of the Corporation are pledged as security for long-term debt of the Corporation. The notes generally have 35-year
maturity periods and are payable on an installment basis.
p. 26
1999
Postretirement expense includes the following components for the years
ended May 31:
2000
1999
Service Cost
$
541,500
$
547,617
Interest Cost on Accumulated Postretirement
Benefit Obligation
692,900
679,583
$
1,234,400
$
1,227,200
1999
$
287,610
173,096,011
173,383,621
(35,047,602)
$ 138,336,019
$
1999
$ 132,485,192
58,662,337
191,147,529
(4,244,000)
$ 186,903,529
The Corporation has a $50,000,000 line-of-credit with NRUCFC and a
$50,000,000 line-of-credit with CoBank. As of May 31, 2000, the Corporation
had an outstanding obligation of $20,000,000 on the NRUCFC line-of-credit and an outstanding obligation of $12,100,000 on the CoBank line-of-credit.
(6) OTHER EQUITIES
2000
534
307,968
43,442
351,944
2000
$ 129,405,726
79,493,534
208,899,260
(4,370,000)
$ 204,529,260
Principal maturities of long-term debt approximate $4,370,000 for each of
the ensuing five years.
(5) PATRONAGE CAPITAL
2000
$ (3,399,250)
185,397,592
181,998,342
(38,547,204)
$ 143,451,138
Interest Rate
2% to 5.5%
5.75% to 6.95%
Maturities Due Within One Year
$ 52,562,775
(4) DEFERRED DEBITS
Deferred debits are comprised of the following as of May 31:
2000
Financial Software
$
852,339
$
Engineering Software
12,903
Mapping Software
46,197
Underrecovery of Wholesale Power Cost
609,752
Other
41,933
Retired
The costs of maintenance, repairs and replacements of minor items of property are charged to maintenance expense accounts.
55,884,321
Holder of Note
RUS
NRUCFC
The weighted average discount rate used in determining the accumulated
postretirement benefit obligation was 8.25 percent.
p. 27
board
n o t e s to Financial Statements
(9) DEFERRED CREDITS
Deferred credits are comprised of the following as of May 31:
2000
1999
Pension Cost Revenue Deferral
$ 1,172,881
$ 1,351,058
Unclaimed Retired Capital Credits
964,582
784,645
Overrecovery of Wholesale Power Cost
–
128,796
Other
96,915
98,415
$ 2,234,378
$ 2,362,914
(10) PENSION PLAN
The employees of the Corporation participate in the National Rural Electric
Cooperative Association (NRECA) Retirement and Security Program. The
Corporation makes annual contributions to the plan equal to the amounts
accrued for pension expense. In this master multi-employer plan, which is
available to all member cooperatives of NRECA, the accumulated benefits
and plan assets are not determined or allocated separately by individual
employer. Pension costs for this plan for the years ended May 31, 2000 and
1999 were $1,415,325 and $1,305,231, respectively.
The pension cost revenue deferral represents revenues which have been
deferred by the differential between actual pension cost billed by NRECA and
estimated pension cost of 9.1 percent of payroll based on actuarial estimates
as provided for in the existing rate structure. In addition, if the actual expense
exceeds revenues provided and the total deferred balance, the additional
amount will be charged to expense in the current year.
Plan transactions were as follows:
2000
Beginning Balance
$ 1,351,058
Current Year Deferral
392,489
Utilized for Pension Cost
–
Returned to Revenues (Time Limitations)
(570,666)
1999
$ 2,177,760
296,423
–
(1,123,125)
Ending Balance
$ 1,351,058
$ 1,172,881
The power cost revenue deferral represents revenues which are being recognized to reduce the impact of power cost on the Corporation's rate structure.
Plan transactions were as follows:
Beginning Balance
$
Utilized to Offset Power Cost Increases
Ending Balance
$
2000
–
–
–
$
$
1999
16,185
(16,185)
–
The revenue deferrals detailed above are in compliance with Financial
Accounting Statements Number 71 and have been approved by the Rural
Utilities Service.
The board of directors of Jackson Electric Membership Corporation specified
the deferred funds be deposited in special accounts until such time as a like
amount is subsequently amortized into revenue. Accordingly, the funds are
recorded as restricted funds for the years ended May 31, 2000 and 1999,
respectively.
The employees of the Corporation also participate in the NRECA SelectRe
401K Program. In this defined contribution plan, the Corporation makes
contributions to the plan equal to the amounts accrued for pension expense.
Pension costs related to this plan were $359,509 and $331,542 for the years
ended May 31, 2000 and 1999, respectively.
(11) NONOPERATING MARGINS (LOSSES)
Nonoperating margins (losses) are comprised of the following
as of May 31:
2000
1999
Interest and Dividend Income
$ 277,687
$ 305,462
Gain (Loss) on Sale of Property
(5,143)
508,114
Equity Earnings (Loss) of
Cooperative Choice, LLC
(653,197)
(165,340)
Other
175,468
19,634
$ (205,185)
$ 667,870
of Directors
Randall Pugh
President, CEO
Ray Jones
Chairman
Hall County
Bill Carpenter
Vice Chairman
Jackson County
Balfour Hunnicutt
Secretary Treasurer
Clarke County
Paul Burroughs
(12) COMMITMENTS
The Corporation has a wholesale power contract with Oglethorpe Power
Corporation (OPC) through 2025. Under the terms of the contract, the
Corporation is responsible for 11.62 percent of OPC’s fixed costs. The
Corporation’s portion of these costs, which totaled approximately
$72,000,000 for the year ended May 31, 2000, are expected to be at the same
level for future years. Under current law, the Corporation has the ability to
recover these costs from its members; however, any change to existing laws
could adversely affect the ability to recover these costs.
Madison County
The Corporation has acquired additional generation under a contract with a
power services corporation. This agreement commenced on June 1, 2000 and
continues for a period of five years. The Corporation’s minimum payments
for the next five years under this agreement are $570,000 per year.
Gwinnett County
The Corporation guarantees a $3,000,000 line-of-credit of an entity of which
it owns 50 percent. The maximum exposure for the Corporation is
$1,500,000.
Barrow County
Charles Gorham
Jackson County
Otis P. Jones
C.B. “Chuck” Steele
Haywood O’Kelley
Lumpkin County
Thomas K. Wilson
Banks County
p. 28