notes to financial statements

weathering the storm
: A n nu a l Re p o r t 2 0 0 9
“We’re doing our part to
help turn around the economy
in the communities we serve.”
{
a message from our
president/ceo
jackson emc annual report 2009
O
ur challenge this year has been
year to our cooperative, we experienced
standing, Northeast Georgia enjoyed a
weathering storms on a wide
for the first time in our 70 year history
mild winter. And this summer’s cooler
variety of fronts. Whether it was the
a net loss of members. It was a ripple
weather has not created the peak use
heavy weather of recession, which drove
effect from business closings, vacated
we normally experience.
down membership and sale of electrici-
apartments, idle speculative housing
ty; or the gathering cloud of proposed
and home foreclosures. Since our
been what you might call a perfect eco-
new energy legislation, which threatens
members own the cooperative and
nomic storm.
to skyrocket power bills; or the real sort
share its cost, a shrinking customer
created by Mother Nature, which may
base meant costs were shared by fewer.
have been the quickest and easiest of all
to handle.
At the same time, kilowatt hour sales
The impact to the cooperative has
Beginning last fall with budgeting
for 2009, we’ve taken prudent steps to
tighten our belt. We’ve reduced our
declined. While power consumption in
expenses by instituting a hiring freeze,
Through it all, Jackson EMC’s sen-
homes remained level, commercial and
eliminating most travel, finding ways
ior management, its board of directors
industrial use dropped significantly as
to do business smarter and cutting
and its employees steered a steady
major customers closed their doors and
expenses in every area of the cooperative.
course with the determination they
others cut shifts or operating hours,
Like the businesses and households we
have always had - providing our mem-
or simply responded to a drop in
serve, we’re closely cutting back spending,
bers with the best service possible and
customer traffic. A reduction in the
eliminating all but essential activities
ensuring them reliable electricity at a
amount of kilowatt hours sold meant
and making every dollar count.
reasonable price.
less revenue coming in to meet operating
the perfect economic storm
We know our members are in the
costs that are not shrinking, including
same boat. Some of them have felt the
the rising cost of power generation.
economy’s impact through layoffs and
Compounding the economy’s
foreclosures. I’m sure all have felt the
Like those we serve, we’ve felt the
impact were the costs of distribution
resulting uncertainty. Knowing that
recession’s sting. Beginning in 2008,
system repairs from a March snowstorm
they’re closely watching their own
we watched as the rapid residential and
that cut off power to nearly every
budgets, we’re proud to provide them
commercial growth our region has
member in Madison County and an
with a variety of tools - energy audits,
experienced over the past decade slow
April windstorm that left some 30,000
online programs, efficiency tips, services
to a standstill. Used to welcoming
members in Jackson and Gwinnett
and products - that they can use to make
several thousand new members each
counties powerless. Snowstorm with-
wise energy choices for their home.
annual report 2009
[ 1 ]
On the business front, we have sig-
Under the guise of improving the
Even though our growth has
nificantly increased the number of
environment and promoting renewable
temporarily slowed, we must continue to
commercial energy audits we conduct,
energy, ACES has proposed standards
plan for the future, for a time when the
helping several large customers retrofit
that there is no existing technology to
recession will give way to growth. The
their lighting to achieve substantial
support and devised a scheme of penal-
only way we can ensure our members
savings. We’re also providing manufac-
ties for not meeting those standards
will have reliable, economically priced
turers with infrared scans of large
that amount to a blatant tax on
power is to maintain a balanced portfolio
electric motors, a costly service if they
Americans.
of generation resources. What the
had to purchase it.
In addition, we’re doing our part
Our ability to meet the future
situation calls for is a balance in our
demand for electricity at a cost our
role as good stewards of your money
to help turn around the economy in
members can afford is seriously threat-
and the environment. While we are
the communities we serve. By working
ened by ACES. In my 40 years of
proud to be a founding member of
shoulder-to-shoulder with state agen-
electric industry experience, there has
Green Power EMC, we must continue
cies, technical colleges, Chambers of
never been a more ill-conceived piece
to seek out a variety of generation
Commerce and economic development
of energy legislation - one that our
resources to satisfy energy demands
organizations, we’re helping keep exist-
members and consumers throughout
and provide for the ever-increasing
ing businesses and plants open, as well
the country will pay dearly for many
energy needs of the not-too-distant
as attract new industry and jobs to the
years into the future if it is passed
future.
area by ensuring Northeast Georgia has
unchanged by the Senate.
an attractive business climate.
legislating a new reality
This proposed new energy legisla-
We have been, through our
statewide and national organizations,
tion could literally create a new reality
fighting to ensure that any energy
in American life. At a time when we
legislation passed will be fair to our
need lower prices and more jobs to
members and keep the power they
While we’re doing everything in our
bolster the economy, ACES would
depend upon affordable. And we’ve
power to be more efficient and cost-
drastically increase electric rates. Those
been gratified to see other organiza-
effective, Congress is headed in the
prices would turn what has been
tions, like the Georgia Chamber of
opposite direction. The House has
considered a basic service into a luxury
Commerce, join in opposition to this
already passed and the Senate is con-
for many consumers, drive up prices
legislation.
sidering the American Clean Energy &
for manufactured goods and send
Security Act of 2009 (ACES), sweeping
more jobs overseas to countries that
energy legislation that will impose stan-
refuse to implement the same air quality
dards for renewable power generation
standards.
and drastically limit carbon emissions,
not just by utilities, but all manufacturers.
[ 2 ]
annual report 2009
“We’re proud to provide our members with a
variety of tools — energy audits, online
programs, efficiency tips, services and
products — that they can use to make wise
energy choices for their home”
getting on with business
When the weather is stormy, it’s easy
to get distracted from the business at
hand. But since our lines were first
powered 70 years ago, without deviation, our focus has been on serving our
members. 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, our cooperative was ranked
highest in customer satisfaction among
midsize 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.
Later in the year, we received word
that members in Gwinnett County had,
for the second year running, voted
Jackson EMC one of Gwinnett Magazine’s
best companies for customer service.
Our Jackson EMC family is honored
and humbled by this acclaim. As we
have in the past, we will always work to
provide the best possible service.
A part of maintaining that service
is continuing to improve efficiency and
reduce costs, which helps us keep
electric rates affordable. This year we’ve
accomplished that by implementing
some important new programs, including
automated metering technology.
Following a test-launch in January,
we began a two-year rollout of our
Advanced Metering Infrastructure
(AMI) program. We currently have
more than 15,000 Smart Meters in
service and are adding an average of
6,000 per month, a rate that will meet
our goal of upgrading all 200,000
meters we serve in three years.
These Smart Meters are already
saving time and money. Remote meter
reading allows us to resolve billing
questions quickly and easily with one
phone call, and obtain accurate readings
waiting for the weather to clear
Like good sailors, we have to rig for
rough weather and keep an eye on the
horizon for clearer skies. Real estate
experts report that home sales are
beginning a slow climb, which could
result in membership gains for us, even
though we expect those gains will be
modest for some time. Signs of a turnaround have been seen in some businesses
sectors, but signals are mixed on
whether foreclosures and layoffs have
bottomed out. I’m sure you join me in
hoping that small signs of economic
recovery are really the beginning of
smoother sailing. In the meantime,
Jackson EMC will continue steadily on
its course of providing the services our
members need and looking out for
their best interests.
from meters that are difficult to access
in person. In the event of an outage,
Smart Meters notify us that power has
been restored, eliminating the time our
employees previously spent contacting
individual customers to verify power
Randall Pugh
President/CEO
restoration. We’re conserving important
resources, too, by reducing the number
of vehicles on the road manually reading
meters, and by retraining meter reading
personnel to install Smart Meters.
annual report 2009
[ 3 ]
[ 4 ]
annual report 2009
“
We have been fighting to ensure that
any energy legislation passed will be fair
to our members and keep the power
they depend upon affordable.
”
offering shelter to our members
T
he stronger the economic winds blow, the more important
Jackson EMC’s support becomes to both our residential and
commercial/industrial members. During a time when the future holds
such uncertainty, when paychecks are held close and budgets are closely
scrutinized, the wise use of energy resources becomes a more serious issue.
annual report 2009
[ 5 ]
Ann Pierce, Amy Bryan and Tiffany Tolder are part of the Residential Services and Marketing Group that helped
Jackson EMC receive the U.S. Environmental Protection Agency's 2009 ENERGY STAR® Leadership in Housing
Award for promoting energy-efficient construction and environmental protection.
[ 6 ]
annual report 2009
{
“
Members want information
on an energy efficiency-related
topic from a source they can
trust.
”
good news for the household budget
As individuals and families look for ways to economize and
customized look at their energy use, check the energy used
stretch their income, they can get a helping hand from their
by their appliances, compare the energy use of different
electric cooperative through a wide variety of Right Choice™
types of television sets, calculate their savings from switching
services and products they can take advantage of to use
out incandescent light bulbs for compact fluorescents and
electricity more efficiently.
figuring annual savings on updating heating and cooling
“If our members want information on an energy
efficiency-related topic from a source they can trust, they can
simply open their monthly Jemco News newsletter for the latest
systems. All are available at a keystroke whenever our
members want to use them.
“Energy audits are extremely valuable tools in improving
tips or go to the cooperative’s www.jacksonemc.com website
home energy efficiency, and Jackson EMC offers a number
to look up “Smart Connections” topics from air conditioning
of choices to its residential members, structured to fit their
to zoning,” says Residential Marketing Director Amy Bryan.
needs,” Bryan notes. For those who prefer to do their own
And the cooperative is building a library of “how to”
audit, a do-it-yourself kit with a step-by-step checklist and
information, from caulking to insulating attic access doors.
DVD or videotape guide will enable them to examine their
A selection of online Home Analyzer tools allow
home and identify potential problems.
members to use their own account information to get a
annual report 2009
[ 7 ]
For the less adventurous, the cooperative will send a staff
concepts, have enhanced communication,” says Bryan.
member who has the expertise to conduct a free walk-
Instant email capabilities between the Home Performance
through audit of the home and report efficiency problems.
technicians and contractor network companies provide a
And for those who have difficulty pinpointing comfort or
better information flow to the contractors who must produce
energy use issues, the Right Choice™ Home Performance
accurate energy improvement bids for work recommended
with ENERGY STAR® audit can use computer technology
by the audit.
and sophisticated tests to conduct a scientific analysis of the
If a member is interested in an energy efficient new
home, giving the homeowner a prioritized list of recommen-
home, the cooperative has partnered with area builders to
dations for improvement.
produce highly energy efficient Right Choice™ homes, one
In 2008, the Home Performance audit was partnered
of the best new home products provided by utilities in the
with Home Analyzer technology and new reporting software,
country. Designed for the most efficient energy use from the
adding the customer’s billing history to the analysis.
planning stage to completion, these homes are constructed by
“Online test results that the homeowner can access at any
participating builders and contractors to standards that are
time, coupled with a PowerPoint presentation to simply
verified through high tech testing and third party evaluations.
explanation of test results and explain home performance
Right Choice™ homeowners are guaranteed energy saving
[ 8 ]
annual report 2009
{
“
Right Choice homeowners are guaranteed
energy savings and comfort, in addition to
thousands of dollars in operating and
maintenance savings over the life of
the home.
”
and comfort, in addition to thousands of dollars in operating
appliances and lighting, Jackson EMC is helping to promote
and maintenance savings over the life of the home.
energy efficient living,” Bryan explains.
In 2009, Right Choice™ standards were partnered with
The cooperative also began providing its members with
those of the national ENERGY STAR® program, providing
a way to obtain some of the energy they need from the sun,
additional confidence for homebuyers who know and trust
through a Right Choice™ Sun Power Solar Program that
the ENERGY STAR® brand. As a result, Jackson EMC
provides support and rebates to members who install
received the U.S. Environmental Protection Agency’s 2009
electricity-generating photovoltaic (PV) systems or
ENERGY STAR® Leadership in Housing Award for promoting
ENERGY STAR® qualified solar thermal water heating systems
energy-efficient construction and environmental protection.
in their homes. This program can reduce peak load and adds
An ENERGY STAR® partner since 2005, the cooperative
joins more than 15,000 public and private organizations
to the cooperative's renewable generation resources.
All of these products and services are backed up by the
that are improving energy efficiency through their products
experience and expertise of the cooperative staff, providing
and services. “From using ENERGY STAR® standards in our
support residential members can count on to see them
new and existing home products, to educating members on
through tough times.
the value of purchasing ENERGY STAR® qualified
annual report 2009
[ 9 ]
Jackson EMC engineer Mark Zoller (left) and Commercial & Industrial Director, Lee Chapman (right),
worked with Larry Buice of Athens Stonecasting to help the manufacturer of garden ornaments
reduce monthly power consumption.
[ 10 ]
annual report 2009
a bright spot on the bottom line
With the economy shrinking revenues and putting even more
Frequently, part of the energy audit includes changing
emphasis on cost reduction, companies are cutting shifts,
misconceptions about efficiency. “Audit results provide
reducing hours of operation and looking for every savings.
customers with a clear picture of their energy consumption and
Members with commercial and manufacturing operations
efficiency, giving them information they can use to improve,”
can also turn to their cooperative as a partner in making
he explains. “But at the end of the process the commercial
their business more efficient and economical.
member must decide if they’re willing to invest in improvements
Commercial/industrial members can access the
www.jacksonemc.com website any time they like for information
that will have a long-term, rather than short-term, payback.”
Opportunities for improvement always involve two areas:
on how to develop an energy management plan, common
optimizing equipment and conserving energy. Making better
problems found by energy audits and other valuable
use of equipment can involve improvements such as
information.
installing energy efficient lighting or using chillers and
Like residential members, commercial/industrial
refrigeration more efficiently. Conservation recommendations
members can get an expert analysis of their energy use and
usually focus on better control of energy resources through
recommendations for improvement from the cooperative at
the use of timers and motion sensors to keep from lighting,
no charge. Audits may be arranged by commercial/industrial
heating or cooling space while it’s unoccupied.
marketing representatives, through direct contact with
“Lighting retrofits are popular energy efficiency programs
members, and requested by the cooperative’s Contact Center,
since they're ‘low hanging fruit’ for the member,” says Zoller.
as a result of bill inquiries, but all are handled by Jackson
With state and Federal tax incentives, lighting retrofits can be
EMC engineer Mark Zoller.
relatively inexpensive, quick and easy to implement, as well
“The fact that we're seeing more members - in both large
as produce an immediate cost savings. Jackson EMC is
and small commercial operations - request audits is a good
frequently called in as a third-party expert to analyze retrofit
indicator of the economy’s impact,” comments Zoller.
recommendations and verify projected cost savings.
annual report 2009
[ 11 ]
Energy audit recommendations can also include lighting
“Since the beginning of the Lunch and Learns, we’ve
recommendations, as it did for Athens Stonecasting, the
reached more than 1,000 individuals through the program,”
southeast’s largest manufacturer of garden ornaments, where
notes Director of Residential Marketing Amy Bryan, providing
the recommended use of natural light significantly reduced
them with information and recommendations about smart
the company’s power consumption for lighting.
energy use and Jackson EMC’s residential programs and
“In this economy, no-cost services are more attractive to
businesses than ever,” says Commercial & Industrial
services, squeezed into a lunch hour, with key recommendations they can take home and act on immediately.
Marketing Director Lee Chapman. “In addition to energy
“I really didn't know how popular Lunch and Learns
audits, the cooperative can also provide our members with
were until I began offering them to my key accounts. When I
infrared scans of electrical panels and large electric motors to
told them we could do this for them, they jumped on it,”
detect the hot spots that indicate equipment is coming to the
Evans comments. “Energy efficiency is a very timely issue.
end of its lifecycle; demand-side management assistance and
The sessions allow our member companies to offer their
recommendations; review of new construction, expansion or
employees a unique benefit.”
renovation designs for energy efficiency; and assistance with
internal power quality issues.”
But the cooperative is always looking for new and different
ways it can support the businesses it serves. A unique opportunity to both promote energy efficiency and add value to the
One of the Lunch and Learns Evans arranged was with
Sage Software, a company already known for being green and
demonstrating a commitment to the environment, where the
energy efficiency message was especially appreciated.
The takeaway for the cooperative is a stronger relationship
relationships with business members presented itself this year.
with its key accounts, a result of higher visibility and added
“Adding value to the association with Jackson EMC is an
value. “Any time you have the opportunity to do something
important part of what we do for our members, and an
like this for your customers, it continues to reinforce your
excellent example is the Lunch and Learn sessions that we’ve
image as a person who helps them, rather than just the guy
partnered with our Residential Marketing group to present
they call when they have a problem. It takes our working
to the employees of key account customers, selected
relationship to another level.”
non-manufacturing members, municipal groups, community
On a variety of fronts, these services are just a part of the
service organizations and Chambers of Commerce,” explains
partnership role the cooperative plays in helping our business
Gwinnett District Commercial & Industrial Marketing
members survive and succeed in uncertain times.
Representative Todd Evans.
[ 12 ]
annual report 2009
Todd Evans, Commercial & Industrial Marketing Representative meets with Rachel Blankenship
of Gwinnett-based Sage Software, a company that has benefitted from a focus on energy-efficiency.
annual report 2009
[ 13 ]
“
Since our lines were first lines were powered
70 years ago, without deviation, our focus
has been on serving our members.
”
helping our communities navigate
A
s the recession forces businesses to scale back operations, reduce
their workforce or even close their doors, the ripple effect can be
felt throughout the community. As area county and city governments try to
navigate the hazardous waters of this economy, Jackson EMC continues to
invest its resources in the ongoing work of local government, Chambers
of Commerce and Economic Development Councils to ensure existing
business and industry can prosper and that the area remains attractive to
new business and industry. That role is more critical now than ever.
[ 14 ]
annual report 2009
As a member of the Greater Hall Chamber of Commerce executive board, Commercial & Industrial Marketing Representative,
David Lee has served on the Vision 2030 committee as a way to help guide the area towards attracting business and industry.
annual report 2009
[ 15 ]
Sr. Commercial & Industrial Representative Randy Dellinger helps Gwinnett County move in the
right direction by serving as vice chairman of the Chamber's Economic Development Committee.
[ 16 ]
annual report 2009
annual report 2009
[ 17 ]
“When we have major customers close their doors, it
resources, such as Lanier Tech and its Quick Start Training
doesn’t just hurt the cooperative,” says Commercial &
Program, or the Center of Innovation and Manufacturing, or
Industrial Marketing Director Lee Chapman, “it hurts the
the Manufacturing Development Center,” Lee explains.
community in many ways. There’s the impact to the tax
Fellow employee Benny Bagwell, District Engineering &
base, which hurts revenue; the impact to other business in
Operations Coordinator, chairs the Chamber’s Economic
the area when employees lose their jobs and stop spending;
Development Council, which works both with businesses
and the indirect impact from time and money the business
looking to expand their current operations and new business
used to put into the community by sponsoring Little League
looking to move to the county. The focus on economic
teams, Relay for Life.”
development, through the Chamber’s HALLmark initiative, will
A member of the Greater Hall Chamber of Commerce
board of directors and executive board, Gainesville District
grow the job base and continue diversifying the local economy.
Lee says that by investing in and working with the
Commercial & Industrial Marketing Representative David
Chamber, Jackson EMC is helping itself and the community.
Lee serves with other District employees to support
“Like other businesses, we have a lot at stake in our commu-
Chamber activities that work to ensure the success of existing
nity’s success, and we have a long history of serving through
business and attract quality business and industry to the
the Chamber.”
area through its Vision 2030 visioning project. “A project
In Gwinnett County, that Chamber connection has
like Vision 2030 brings together all aspects of the community
helped the cooperative be a catalyst and force in the
to ensure that we have not just the infrastructure, but the
community. Another example of a long-standing investment
quality of life that makes companies feel good about bringing
in area Chambers of Commerce, the partnership that has
their employees to this community and makes them want
culminated in Jackson EMC’s involvement with Partnership
to stay once they’re here,” Lee notes.
Gwinnett, a two-and-a half-year-old economic development effort
Companies already doing business in the area look to the
Chamber for support in workforce and skills development.
“We work with them to get them connected to the right
[ 18 ]
annual report 2009
that to date has resulted in the relocation or expansion of 110
companies and brought more than 6,000 jobs to the county.
Jefferson District Commercial & Industrial Marketing Representative Scott Martin, stands at one of the industries built within the
Valentine Farms Industrial Park — a project he shepherded as chairman of the Jackson County Industrial Development Authority.
annual report 2009
[ 19 ]
Joe Hicks is one of several Jackson EMC employees serving on both Barrow County’s
Chamber, as well as the county’s Economic Development Council, providing
resources to help develop job opportunities for the community.
[ 20 ]
annual report 2009
“At the beginning, Jackson EMC was part of the
discussion that led to this initiative,” notes Gwinnett
District Commercial & Industrial Marketing Representative
“I grew up here, live here, am raising my family here and
have an interest in the county’s future,” Martin explains.
Heading the IDA involves advertising and promoting
Randy Dellinger, currently serving on the executive board of
Jackson County, as well as meeting with prospects. “We’ve
Partnership Gwinnett and vice chairman of the Chamber’s
worked hard to get Jackson County on the map,” he says,
Economic Development Committee. “Through the initiative,
pointing to the increase from 2 to 15 industrial parks and
we have identified very specific industries that we want to use
the entry of two national developers into local projects.
our limited funds and manpower to actively recruit. Those
Along the way, an Economic Development Council was
efforts have lead to major triumphs like the relocation of the
formed to bring together key players to ensure projects’ success.
NCR headquarters to Gwinnett, creating jobs and adding to
“We’ve worked hand-in-hand to promote the county with state
the county’s tax base.”
officials, economic development professionals, and prospect
Dellinger also serves as an information source for the
Chamber’s Business Development Managers, helping them
companies that are considering an investment here,” Martin says.
He points to a diverse industrial base that includes man-
analyze the needs of new businesses and the resources they’ll
ufacturing, distribution and commercial retail as the fruits of
require. And he helps the Chamber by working with incoming
that successful partnership, a strategy that has helped the
businesses to find existing office or manufacturing space that
county weather the economic downturn.
will meet their needs.
“I am a cheerleader for the Chamber, and it’s because I
“An excellent example of what we’ve accomplished is the
Valentine Farms Industrial Park, which formerly was a cattle
believe in the product,” emphasizes Dellinger. “When
farm. The most innovative thing we’ve done is to sponsor
Gwinnett County is successful, Jackson EMC is successful.”
long-term bonds with the County Commission that have
Nowhere is the cooperative’s involvement in the county’s suc-
built roads like Valentine Farms Industrial Parkway that are
cess more direct than in Jackson County, where Jefferson
paying for themselves. The road paved the way for the five
District Commercial & Industrial Marketing Representative
industries and seven buildings built along that road, totaling
Scott Martin chaired the Chamber’s Economic Development
a $130 million investment that’s adding revenue to the county’s
Committee for eight years and has served as chairman of the
tax base and jobs to the economy, all in just four years and
Jackson County Industrial Development Authority for 10 years.
with room to grow.”
annual report 2009
[ 21 ]
As communities grow and develop, the support they
“Our involvement is just good business,” says Hicks. “It’s
need from Jackson EMC changes. In response to those
good for area businesses in general and our key accounts in
changing needs, Jackson EMC has made an additional
particular to see us active in the community through the
investment in human capital in Barrow County by repurposing
Chamber and see us working to support the county’s success.
the Chamber support provided by Gwinnett District
Commercial & Industrial Marketing Representative Joe Hicks.
“Our Jefferson District Manager, Don Stewart, has been
While bringing in new business is important, the cooperative is working in some nontraditional ways to help support
local economies. It has provided additional expertise to help
active with the Chamber here for a long time,” notes Hicks,
the Barrow County Economic Development Council with its
“but the county has been growing and we felt we needed to
rebranding effort and website redesign, supported the devel-
take the opportunity to make an additional contribution to
opment of a new website for the Lumpkin County Economic
its success.”
Development Authority and helped the Banks County
By working as a resource for the Chamber’s Community
Economic Development Council, Jackson EMC helped
Barrow County Economic Development Director Linda
Moore put together a workshop for 35 key community
leaders, with Georgia EMC Economic Development
Consultant Niki Knox and UGA Department of Agriculture
and Applied Economics Professor Jeffrey Dorfman presenting
ideas on how the community could effectively present itself
to companies looking to relocate.
The cooperative has also established a strong partnership
with the Barrow County School System, the strength of
which is vital to attracting new business and industry.
It actively supports the school system in recruiting and
retaining high quality teachers.
[ 22 ]
annual report 2009
Chamber of Commerce create its first economic development
brochure.
annual report 2009
[ 23 ]
FINANCIALS
AUGUST 13, 2009
REPORT OF INDEPENDENT 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,
2009 and 2008 and the related statements of revenue and patronage capital and cash flows for the years then
ended. These financial statements are the responsibility 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 auditing standards generally accepted in the United States of
America and the standards applicable to financial audits contained in Government Auditing Standards, issued by the
Comptroller General of the United States. 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
consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate
in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Corporation’s
internal control over financial reporting. Accordingly, we express no such opinion. An audit also includes examining,
on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting
principles used and significant 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, 2009 and 2008, and the results of its operations
and cash flows for the years then ended in conformity with accounting principles generally accepted in the United
States of America.
In accordance with Government Auditing Standards, we have also issued our report dated August 13, 2009 on
our consideration of Jackson Electric Membership Corporation’s internal control over financial reporting and on our tests
of its compliance with certain provisions of laws, regulations, contracts and grant agreements and other matters. The
purpose of that report is to describe the scope of our testing of internal control over financial reporting and compliance
and the results of that testing, and not to provide an opinion on the internal control over financial reporting or on
compliance. That report is an integral part of an audit performed in accordance with Government Auditing Standards
and should be considered in assessing the result of our audits.
McNAIR, McLEMORE, MIDDLEBROOKS & CO., LLP
[ 24 ]
annual report 2009
BALANCE SHEETS
May 31
ASSETS
Utility Plant
Electric Plant in Service-At Cost
Construction Work in Progress
Gross Utility Plant
Accumulated Provision for Depreciation
Other Property and Investments
Investments in Associated Organizations
Restricted Funds
Current Assets
Cash and Cash Equivalents
Accounts Receivable (Net of Accumulated Provision for
Uncollectibles of $1,343,812 in 2009 and $1,454,318 in 2008)
Materials and Supplies
Other
Deferred Debits
Total Assets
EQUITIES AND LIABILITIES
Equities
Membership Fees
Patronage Capital
Other
Long-Term Debt
Other Long-Term Liabilities
Accumulated Provision for Postretirement Benefits -Noncurrent
Current Liabilities
Long-Term Debt-Current Portion
Accumulated Provision for Postretirement Benefits Current Portion
Accounts Payable
Consumers’ Deposits
Other
Deferred Credits
Total Equities and Liabilities
2009
2008
$735,241,270
12,685,825
$ 688,256,565
23,542,241
747,927,095
(178,557,003)
711,798,806
(163,071,655)
569,370,092
548,727,151
90,576,680
40,000,000
83,560,534
40,200,000
130,576,680
123,760,534
70,127,150
17,421,675
22,480,972
12,300,504
3,239,279
23,228,579
13,474,370
3,667,512
108,147,905
57,792,136
3,947,807
3,202,390
$812,042,484
$ 733,482,211
2009
2008
$ 2,603,050
255,085,059
603,842
$ 2,503,170
241,740,952
555,761
258,291,951
244,799,883
435,791,970
367,280,007
16,499,274
13,498,525
9,984,000
9,121,000
805,625
27,089,571
6,670,402
10,588,917
915,083
27,247,894
6,789,869
10,486,788
55,138,515
54,560,634
46,320,774
53,343,162
$812,042,484
$733,482,211
The accompanying notes are an integral part of these balance sheets.
annual report 2009
[ 25 ]
STATEMENTS OF REVENUE AND PATRONAGE CAPITAL
For the years ended May 31
2009
$448,378,582
2008
$429,765,646
338,118,910
10,868,501
14,244,379
14,191,824
7,183,716
10,124,720
24,225,424
315,393,597
11,307,960
14,209,586
15,315,878
8,705,344
10,440,682
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
446,860
542,965
18,064,340
21,614,408
241,740,952
224,609,827
(4,470,233)
(4,483,283)
$255,085,059
$241,740,952
Operating Revenues
Operating Expenses
Cost of Power
Distribution Operations
Distribution Maintenance
Consumer Accounts
Customer Information and Sales
Administrative and General
Depreciation
Other Capital Credits and Patronage Capital Allocations
Net Margins
Patronage Capital-Beginning
Retirement of Patronage Capital
Patronage Capital-Ending
The accompanying notes are an integral part of these statements.
[ 26 ]
annual report 2009
STATEMENTS OF CASH FLOWS
For the years ended May 31
2009
2008
$18,064,340
$ 21,614,408
25,590,332
(4,457,385)
(10,665,362)
2,891,291
(192,432)
23,871,658
(4,318,895)
(10,533,468)
(11,169,551)
(26,658)
747,607
428,233
(158,323)
102,129
3,596,817
(64,823)
(1,509,437)
(1,071,528)
32,350,430
35,533,991
(48,326,862)
356,443
(3,000,000)
(2,444,328)
4,730,349
(745,417)
1,173,866
(56,137,126)
552,072
(1,460,772)
3,272,184
(1,028,612)
(667,422)
(48,255,949)
(55,469,676)
62,000,000
99,880
(11,469,081)
(4,720,233)
84,796
3,642,974
(119,467)
48,081
200,000
18,844,044
34,324,000
112,555
(9,787,431)
(4,483,283)
67,307
1,138,552
(123,906)
27,043
23,681,952
(16,860,310)
68,610,994
28,096,479
Net Increase in Cash and Cash Equivalents
52,705,475
8,160,794
Cash and Cash Equivalents-Beginning
17,421,675
9,260,881
$ 70,127,150
$ 17,421,675
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
Deferred Revenue
Postretirement Benefits
Loss on Sale of Utility Plant
Change In
Accounts Receivable
Other Current Assets
Accounts Payable
Other Current Liabilities
Cash Flows from Investing Activities
Extension and Replacement of Plant
Return of Equity from Associated Organization
NRUCFC Member Capital Securities
Plant Removal Costs
Material Salvage
Deferred Debits
Materials and Supplies
Cash Flows from Financing Activities
Advances from Long-Term Debt
Membership Fees
Principal Repayment of Long-Term Debt
Retirement of Patronage Capital
Investment in Capital Term Certificates
Deferred Credits
Consumers Deposits
Other Equities
Restricted Funds
Advance Payments on Long-Term Debt Unapplied
Cash and Cash Equivalents-Ending
The accompanying notes are an integral part of these statements.
annual report 2009
[ 27 ]
NOTES 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.
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.
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.
Long-Lived Assets
The Corporation evaluates long-lived assets for impairment when
events or changes in circumstances indicate that the carrying value
of such assets may not be recoverable. The determination of
whether an impairment has occurred is based on either a specific
regulatory disallowance or an estimate of undiscounted future cash
flows attributable to the assets, as compared with the carrying
value of the assets. If an impairment has occurred, the amount of
the impairment recognized is determined by estimating the fair
value of the assets and recording a provision for loss if the carrying
value is greater than the fair value. For assets identified as held for
sale, the carrying value is compared to the estimated fair value less
the cost to sell in order to determine if an impairment provision is
required. Until the assets are disposed of, their estimated fair value
is reevaluated when circumstances or events change.
Accounting standards require the present value of the ultimate cost
for an asset’s future retirement be recorded in the period in which
the liability is incurred. The cost should be capitalized as part of the
related long-lived asset and depreciated over the asset’s useful life.
The Corporation has no legal retirement obligations related to its
distribution facilities; therefore, a liability for the removal of these
assets will not be recorded. Management believes the actual cost
of removal, even though not a legal obligation, will be recovered
through rates over the life of the distribution assets.
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.
[ 28 ]
annual report 2009
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.
Provision has been made for depreciation of distribution plant at
straight-line rates ranging from 2.3 to 6.7 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 3.0 to 14.0 percent per annum.
The costs of maintenance, repairs and replacements of minor items
of property are charged to maintenance expense accounts.
Accounts Receivable
An allowance is made for doubtful accounts based on experience
and other circumstances which may affect the ability of consumers
to meet their obligations. Accounts considered uncollectible are
charged against the allowance. Receivables are reported on the
balance sheets net of such accumulated allowance.
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.
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. Total equities
approximated 32 and 33 percent of total assets as of May 31,
2009 and 2008, respectively.
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 $17,276,000 and $17,349,000 for 2009 and
2008, respectively.
Cost of Purchased Power
Cost of power is expensed as consumed.
NOTES TO FINANCIAL STATEMENTS
(1) Summary of Significant Accounting Policies (Continued)
Generation and Transmission Cooperative Capital Credits
Generation and transmission cooperative capital credits represent
the annual capital furnished generation and transmission cooperatives 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.
(2) Utility Plant
Listed below are the major classes of the electric utility plant as of
May 31:
2009
2008
$641,775,247
12,652,143
80,813,880
$601,153,368
12,652,143
74,451,054
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.
Electric Plant in Service
735,241,270
Construction Work In Progress 12,685,825
688,256,565
23,542,241
$747,927,095
$711,798,806
Fair Value of Financial Instruments
Financial instruments include cash and cash equivalents, restricted
funds, other investments and longterm debt. Investments in
associated organizations are not considered a financial instrument
because they represent nontransferable interest in associated
organizations.
(3) Investments in Associated
Organizations
2009
National Rural Utilities Cooperative
Finance Corporation
Capital Term Certificates
$ 3,467,470
Member Capital Securities
3,000,000
Capital Credits
1,443,636
Oglethorpe Power Corporation
Capital Credits
59,500,529
Georgia Systems Operations
Corporation
Capital Credits
21,980
CoBank
Stock
426,691
Georgia Transmission Corporation
Contributed Capital
5,166,245
Capital Credits
12,153,286
GRESCO Utility Supply, Inc.
Capital Credits
2,166,928
Smarr EMC
Contributed Capital
617,420
Capital Credits
2,593,742
Green Power EMC
Contributed Capital
12,400
The National Rural Telecommunications
Cooperative
Capital Credits
5,213
Memberships in Associated Organizations 1,130
Other
10
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.
Income Taxes
The Corporation has obtained exemption from federal and state
income taxes under Section 501(c)(12) of the Internal Revenue
Code which provides, in part, that the Corporation derive at least
85 percent of its annual gross income from members. The
Corporation files an information return with the Internal Revenue
Service each year and has always met this requirement. In addition,
the Corporation is subject to income taxes on its net unrelated
business income.
New Accounting Pronouncements
In September 2006, the Financial Accounting Standards Board
(FASB) issued Statement of Financial Accounting Standards (SFAS)
No. 158, Employers’ Accounting for Defined Benefit Pension and
Other Postretirement Plans – an amendment of FASB Statements
No. 87, 88, 106, and 132(R). SFAS No. 158 requires an employer
that sponsors a defined benefit postretirement plan to report the
current economic status (the overfunded or underfunded status)
of the plan in its balance sheet, to measure the plan assets and
plan obligations as of the balance sheet date, and to include
enhanced disclosures about the plan. The Corporation was required
to adopt the recognition and disclosure provisions of SFAS No. 158
for the fiscal year ended May 31, 2008 and will be required to
adopt the measurement date provision for the fiscal year ending
May 31, 2009.
Distribution Plant
Generation Plant
General Plant
$ 90,576,680
2008
$ 3,552,266
–
1,476,428
57,354,958
20,509
426,691
5,166,245
10,610,549
2,042,819
617,420
2,274,426
12,400
4,683
1,130
10
$ 83,560,534
(4) Deferred Debits
Deferred debits are comprised of the following as of May 31:
2009
2008
Software
$ 163,317
$ 355,317
Prior Service Cost-Pension
1,401,600
1,632,000
Resource Planning
2,209,355
1,199,030
Other
173,535
16,043
$ 3,947,807
annual report 2009
$ 3,202,390
[ 29 ]
NOTES TO FINANCIAL STATEMENTS
(5) Patronage Capital
Assignable
Assigned
Retired
2009
$ (1,952,471)
330,943,502
2008
$ (3,217,859)
314,144,550
328,991,031
(73,905,972)
310,926,691
(69,185,739)
$255,085,059
$241,740,952
2009
$ 534
324,414
278,894
2008
$ 534
322,862
232,365
$ 603,842
$ 555,761
(6) Other Equities
Capital Gains and Losses
Retired Capital Credits-Gain
Donated Capital
(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, NRUCFC and FFB. Substantially
all the assets of the Corporation are pledged as security for longterm debt of the Corporation. The notes generally have 35-year
maturity periods and are payable on an installment basis.
2009
2008
RUS
4.46% to 5.75% $268,766,708
NRUCFC
4.40% to 6.90% 127,992,793
(12,983,531)
RUS Cushion-of-Credit 5.00%
FFB
2.998%
62,000,000
$275,340,425
132,888,157
(31,827,575)
445,775,970
376,401,007
(9,984,000)
(9,121,000)
$435,791,970
$367,280,007
Holder of Note Interest Rate
Maturities Due
Within One Year
Principal maturities of long-term debt approximate $9,984,000
for each of the ensuing five years.
The Corporation has $104,204,000 in unadvanced loan funds on
commitment from FFB. The availability of the unds is contingent
on the Corporation’s compliance with one or more preconditions
set forth in the mortgage agreement.
The Corporation has a $50,000,000 line-of-credit at 4.25 percent
with NRUCFC which had no outstanding balance as of May 31,
2009 and 2008. The Corporation also has a $50,000,000 line-of
credit at 3.72 percent with CoBank which had no outstanding
balance as of May 31, 2009 and 2008.
[ 30 ]
annual report 2009
Interest payments totaled $21,316,684 and $19,907,417 for the
years ended May 31, 2009 and 2008, respectively.
The Corporation has made unapplied advance payments to the RUS
Cushion-of-Credit program. Under this program the Corporation
may make voluntary deposits into a special cushion-of-credit
account. The cushion-of-credit account balance accrues interest to
the Corporation at a rate of 5 percent per annum. The use of the
cushion-of-credit account is restricted to funding the future debt
service payments that the Corporation is obligated to pay against
its outstanding indebtedness to RUS.
(8) Deferred Credits
Deferred credits are comprised of the following as of May 31:
Unclaimed Retired Capital Credits
Power Cost Revenue Deferral
Benefits Clearing Account
2009
$ 4,133,832
38,857,397
3,329,545
2008
$ 3,820,403
49,522,759
–
$ 46,320,774
$53,343,162
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
Returned to Revenue
2009
$49,522,759
(10,665,362)
2008
$ 60,056,227
(10,533,468)
Ending Balance
$ 38,857,397
$ 49,522,759
The revenue deferrals detailed above are in compliance with SFAS
No. 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 have been set aside as restricted
funds and RUS cushion-of-credit for the years ended May 31,
2009 and 2008.
NOTES TO FINANCIAL STATEMENTS
(9) Retiree Benefits
Pension Plan (Defined Benefit)
Pension benefits for substantially all employees of the Corporation
are provided through participation in the National Rural Electric
Cooperative Association (NRECA) Retirement and Security Program,
a defined benefit plan qualified under Section 401 and tax exempt
under 501 (a) of the Internal Revenue Code. The Corporation
makes annual contributions to the program equal to the amounts
recorded for the pension expense. Total pension cost of
$3,736,667 and $3,294,671 was charged to operations for the
years ended May 31, 2009 and 2008, respectively. In this multiemployer 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.
Defined Contribution Plan
The Corporation also provides additional employee benefits to
substantially all employees through the NRECA sponsored defined
contribution Savings Plan (401-k). In this defined contribution
plan, the Corporation’s contributory portion of costs of this plan
totaled $647,235 and $638,539 for the years ended May 31,
2009 and 2008, respectively.
Postretirement Healthcare Benefits
The Corporation provides medical benefits and life insurance to
qualified retirees and directors. The Corporation had previously
adopted SFAS No. 106, Employers’ Accounting for Postretirement
Benefits Other than Pensions. This standard requires cooperatives to
recognize the estimated future cost of providing healthcare and
any other postretirement benefits on an accrual basis.
The Corporation also adopted the recognition provisions of SFAS
No. 158, Employers’ Accounting for Defined Benefit Pension and
Other Postretirement Plans-An Amendment of FASB Statements
No. 87, 88, 106 and 132(R), as of May 31, 2008, which requires
that the funded status of defined benefit pension and other
postretirement plans be fully recognized in the balance sheets.
The status of the Corporation’s postretirement healthcare plan as of
May 31 is detailed as follows:
Accumulated Postretirement
Benefit Obligation
Fair Value of Assets
Funded Status
Employer Contributions
Plan Participant Contributions
Benefits Paid
2009
$ 36,218,524
2008
$36,667,680
(18,913,625)
(22,254,072)
$17,304,899
$14,413,608
$1,145,885
–
$1,319,611
$5,712,739
–
$1,140,508
Amounts recognized in the balance sheets consisted of:
Noncurrent Liabilities
Current Liabilities
2009
$ 16,499,274
805,625
2008
$13,498,525
915,083
$17,304,899
$14,413,608
Other changes in benefit obligations recognized in patronage
capital are as follows:
Service Cost
Interest Cost
Actuarial (Gain) Loss
Loss on Plan Assets
Total Recognized in Net Periodic
Cost and Patronage Capital
$2,044,850
2,195,366
(3,329,545)
$2,184,504
2,015,496
12,483,801
910,671
3,345,824
16,683,801
138,082
$4,256,495
$16,821,883
The following table shows key assumptions used for the
measurement of obligations for the plan.
Description
Discount Rate
2009
6.00%
May 31
2008
6.00%
2007
6.00%
Long-term Rate of Return
8.50%
8.50%
8.50%
Medical Trend Rate
Medicare Ineligible
Initial
Ultimate
Fiscal Year Reached
8.50%
5.50%
2017
8.90%
5.50%
2017
9.20%
5.50%
2017
Medicare Eligible
Initial
Ultimate
Fiscal Year Reached
8.00%
5.50%
2017
10.00%
5.50%
2017
10.50%
5.50%
2017
Dental Trend Rate
Initial
Ultimate
Fiscal Year Reached
6.00%
5.00%
2014
7.00%
5.00%
2014
7.33%
5.00%
2014
Utilizing SFAS No. 71, the Corporation recognizes any gain or loss
and prior service cost on a current basis.
annual report 2009
[ 31 ]
NOTES TO FINANCIAL STATEMENTS
The following benefits are expected to be paid:
Year
Amount
2010
$ 805,625
2011
862,482
2012
888,140
2013
998,924
2014
1,107,556
2015-2019
6,980,358
receivable are limited due to the large number of customers
comprising the Corporation’s customer base.
The following table sets forth the weighted-average asset allocations
of the Corporation’s postretirement medical benefits at May 31,
2009 and 2008 by asset category.
Year
2009
2008
Money
Market
Funds
3.6%
1.3%
Bonds
51.4%
42.4%
Equities
45.0%
56.3%
Totals
100.00%
100.00%
The Corporation employees a total-return investment approach
whereby a mix of equities and fixed income investments is used
to maximize the long-term return of plan assets for a prudent
level of risk. Risk tolerance is established through careful consideration of plan liabilities, plan funded status and corporate financial
condition. Investment risk is measured and monitored on an
ongoing basis through quarterly investment portfolio reviews and
annual liability measurements.
The Corporation estimates that it will make a voluntary contribution
of approximately $1,320,000 to its postretirement medical plan in
2010.
(10) Nonoperating Margins
Nonoperating margins are comprised of the following as of May 31:
Interest and Dividend Income
Gain on Sale of Property (Net)
Equity Gain of Cooperative
Choice, LLC
Other
2009
$ 4,598,578
206,951
2008
$ 4,177,958
74,133
982,189
(59)
$ 5,787,659
1,236,826
214
$ 5,489,131
(11) Concentration of Credit Risk
Financial instruments that potentially subject the Corporation to
concentrations of credit risk consist principally of cash and cash
equivalents, restricted funds and consumer accounts receivable.
The Corporation maintains its cash balances in financial institutions;
cash balances throughout the year periodically exceed federally
insured deposit limits of $250,000.
At May 31, 2009, commercial paper in the amount of $14,500,000
was held by the Corporation. The amount is not secured or
otherwise subject to federally insured deposit liability coverage.
Concentrations of credit risk with respect to consumer accounts
[ 32 ]
annual report 2009
(12) Commitments
The Corporation has a wholesale power contract with Oglethorpe
Power Corporation (OPC) through 2050. 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 $61,575,000 for the year ended May 31, 2009,
are expected to be at the same level for future years.
The Corporation entered into a power purchase agreement with
Smarr EMC for a facility known as the Smarr Energy Facility.
Under the terms of the agreement, the Corporation is responsible
for 9.0310 percent of the Smarr Energy Facility fixed costs. In
addition, the Corporation has agreed to guarantee 7.4735 percent
of the indebtedness of Smarr EMC related to the Sewell Creek
Facility. The total indebtedness for the facility as of December 31,
2008 was approximately $90,397,000.
The Corporation entered into power purchase agreements dated
November 1, 2001, related to the Chattahoochee Energy Facility
and the Talbot Energy Facility. These facilities are owned by OPC,
and under the terms of the agreements, the Corporation is responsible for 10.4453 percent of the Chattahoochee Energy Facility
fixed costs and 2.9633 percent of the Talbot Energy Facility fixed
costs. The Corporation’s portion of these fixed costs, which totaled
approximately $3,627,000 for the Chattahoochee Energy Facility
and $682,000 for the Talbot Energy Facility for the year ended
May 31, 2009, are expected to be at the same level for future
years. The agreements are in effect through December 31, 2025.
Effective February 20, 2001, the Corporation entered into a power
supply and energy call agreement. The agreement commenced on
October 1, 2001 and will continue through December 31, 2015.
Under the terms of the agreement, the Corporation is required to
maintain a modified debt service coverage ratio of greater than or
equal to 1.25. In the event this condition is not met, the
Corporation will be required to provide the supplier with acceptable
credit support in an amount equal to $65 million. Once the
condition is again met by the Corporation, the remaining amount
of credit support will be returned. Also under the terms of the
agreement, the supplier will supply 100 percent of all reserve
requirements for load obligations.
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.
(13) Litigation
The Corporation is involved in litigation arising in the ordinary course
of business. After consultation with legal counsel, management
estimates that these matters will be resolved without material
adverse effect on the Corporation’s future financial position or
results from operations.
Otis Jones, Chairman
Gwinnett County
Chuck Steele, Vice Chairman
Barrow County
Rodney Chandler, Secretary-Treasurer
Madison County
Bill Carpenter
Jackson County
Charles Gorham
Jackson County
board of directors
Balfour Hunnicutt
Clarke County
Ray Jones
Hall County
John Mitchell
Banks County
Lynn Price
Gwinnett County
Randal Pugh, President/CEO
Statement of Nondiscrimination
Jackson EMC is the recipient of Federal financial assistance from the Rural Utilities Service, an
agency of the U.S. Department of Agriculture, and is subject to the provisions of Title VI and
Title VII, of the Civil Rights Act of 1964, as amended, Civil Rights Act of 1991, Section 503
and 504 of the Rehabilitation Act of 1973, as amended, The Americans with Disabilities Act
of 1991 and the rules and regulations of the U.S. Department of Agriculture and the U.S.
Department of Labor, OFCCP, which provide that no person in the United States on the basis
of race, color, national origin, age or handicap shall be excluded from participation in, admission
or access to, denied the benefits of, or otherwise subjected to discrimination under any of this
organization’s programs or activities.
The person responsible for coordinating this organization’s nondiscrimination compliance efforts
is William P. Ormsby, Manager, Corporate Administration. Any individual, or specific class of
individuals, who feels that this organization has subjected them to discrimination may obtain
further information about the statutes and regulations listed above and/or file a written
complaint with this organization; or the Secretary, U.S. Department of Agriculture, Washington,
D.C. 20250; or the Administrator, Rural Electrification Administration, Washington, D.C. 20250,
and the Director, U.S. Department of Labor, Office of Federal Contract Compliance Programs,
Washington, D.C. 20250. Complaints must be filed within 180 days after the alleged
discrimination. Confidentiality will be maintained to the extent possible.
P.O. Box 38
Jefferson, Georgia 30549
w w w.jacksonemc.com