ML20248E890

Electric Membership Corp Annual Rept 1988

ML20248E890
Person / Time
Site:	Catawba
Issue date:	12/31/1988
From:	Hubbard J NORTH CAROLINA ELECTRIC MEMBERSHIP CORP.
To:
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ML20248E878	List: ML20248E875 ML20248E880 ML20248E886 ML20248E890
References
NUDOCS 8910060091
Download: ML20248E890 (30)

Text

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THEEMC . .

REPORT 1988.

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. .' . Reflecting over the past year is an impor-tant task for a service organization.We use tids

. 'N. self-assessment to see how well we have met

, ' %E, our goals and how well we have handled the unexpceted challenges of the year.What we

. h.u. '~j learn gives us a better perspective for future

. C planning.

Wldle looking back can be at times sober-I c .

ing,it is also a very satisfying experience It's ex-citing and gratifying to achieve the results we've been working toward. At Statewide,'ve have achieved many of our goals in the past year,and we have unde progress in reaching athers.

Fbr our onymization,1988 was a year of transition-continuing a trend of the past several years. Because the Statew ide,as pmsently orgardzed,is only five years old,it is hwing to mature as rapidly as possible in order to function i

effectively as a utility and provide the services that members need and deserve.

! With this changing envirorunent,it was Statewide's goal this year to pursue f objectives and implement strategies that would: (1) improve the delivered cost

! and reliability of wholesale p<nver; and (2) provide qualit y services to memiers in an effective manner.

Various initiatives were planned and implemented to knver the cost of

l. power.There was a continuing effort to arbitrate the Catawba contract and a number of issues were won by NCf31C.Thisjob is not complete,but we f elieve that we are well on the road to solving the problem of contract benefits erosion.

After ajoint ownership agreement for generation and transmission facil-ities with Carotina Power & Light Company (CP&L) failed to materialize in 1987, we began to study the feasibility of peaking generation.That effort also continued into 1988, leading to the conchision that significant savings could le realized by all member systems.The Board of Directors approved the reconunendation to proceed with a peaking generation engineering and siting study for ali power

, supply areas, in the past year,the reliability of power supply in theYepco area has sigidf-icantly improved. Reliability in this area had leen wtsatisfactory for the previous three years and twl iecome an area of perfornumee targeted for improvement.

The severity and frequency of supply outages diminished substantially this year from those experienced during the 1985-87 period.This progress was brought I about largely by mutual aid agreements Ietween Vepco and the 13iCs,the stepping-up of time schedules for major system improvements,and an effort by the EMCs to enhanceVepco's overall sensitivity toward reliability pmblems.

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The performance of the Catawba Station Nuclear Plant during the past year was again well above industry average.The sellback agreement wah Duke Power,however,is scheduled to end in 1996 with NCEMC assuming 100% of its ownership capacity. In order to ameliorate the rate impact of NCEMC's resultant i excess capaeny,we began in 1988 to study the options for effectively utilizing Catawba capacity and keeping costs from rising to a non-competitive level.

Through negotiations with CP&L,the magnitude of wholesale rate in- (

creases was reduced substantially from proposed levels.Since this rate case placed the remaining part of the Shearon Harris Nuclear Plant in the rate base,

. . CP&L projects no further rate increases,except possibly fuel,for the next 2 to 3 1 years.This settlement also included,for the first time,a modified coincident I peak (CP) billing rate which had been under negotiation for several years. <

89 m The major emphasis in marketing last year was on phmning. Marketing i research was conducted with member systems to determine present and future i Y direction on a short and long range basis. A five-year strategic phtn was developed with specific programs and resources reconunended for 1989. Economic develop-

. ment activity and results increased significantly over previous years. NCEMC 4 supported a munber of EMCs with industrial clients. Approximately 3,723 new jobs were provided,along with a growth of 18 megawatts of new load,through thisjoint effort.NCEMC conunitted a $1 million hwestment in the N.C. Enterprise  !

Corporation to provide mezzanine financing to rural North Carolina businesses forgrowth and retention.

l As member systems throughout the state continued to grow and expand, the material and supply needs directly affected TEMA.In 1988, member sak's through TEMA exceeded $34 million,an increase of approximately 20% over i 1987. A payment of $751,000 in patronage capital was made to member systems in December.This demonstrates how cooperatives, working together,can produce

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6 Over the years, Statewide has responded to requests from its memt er l y J systems by offering an extensive number of oualit3 services such as publications, 1 _

4 educationalprograms,compensationsurveg aobilesubstations, legislative Gj m# -

support,and assist ing with the formation of Rural TV. The year 1988 was no except ion. A record number of over 1,500 directors and employees from all 28 N N, . - EMCs participated in a comprehensive training calendar.In addition,an ex-

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"[7.C M-2 if . .w pandedjob training and safety program provided for increased visits to EMCs.  ;

Camlina Con ntry, Statewide's award-winning monthly publication, strengthened its appeal to national ad buyers by making a number of publica-tion improvements.This magazine,which goes direct ly to consumer members across the state, continues to be a flagship publication and a powerful tool for goodwill at the disposal of member systems and Statewide.

Legislative services in 1988 primarily monitored Congress and General Assembly activity for any measures t hat could be detrimental to the rural electrification program. Legislative intiatives were minimal.

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Support functions at Statewide-such as accounting, finance, data systems, l corporate planning, personnel administration,and many others-are critical to the efficient delivery of all member services.With three separate corporations i operating in a complex, changing envimnment,there is a continuous updating )

and installation of new systems.We are making a conscious effort to improve nunagement effectiveness,while recognizing that we still have a way to go.

In the past year,your Statewide staff grew in ntunber and in quality.These

.I empkiyees are conunitted to professional growth and improving the delivery of more and better services to the 28 members of the Statewide.They am dedicated t people who believe in the future of rural electric cooperatives in North Carolina.

Throughout our history,the EMCs and Statewide haw been people-

! oriented.Our purpose was and is to serve rural people and improve their quality oflife.

As we kxak ahead,we boki to the same purpose,though the environment m which we will have to perform is becoming vastly different from that in the h past.We firmly believe that we can meet the new challenges with confidence and in so doing, carry out the Statewide mission.fto ensure the success of the

' rural electric program in North Carolina" M

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,lamesMlludani Executite VicePresident C., 3Dm-avn cund 1 .M _ m, , .o;3

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NCAEC Officers

. .' H. IVayne 1Vilkins, Secretary IVeasurer Emmit P.1Yood, Vice-President t - DavidJ. Batten, President 3

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Albemarle EMC French Broad EMC Roanoke EMC i

DorrisB. IVhite CharlesR. 'Iblicy Euge,w IV Brown,Jr. .

1 LA. Harris,Jr. Joseph G. Justice Alatthew Grant Blue Ridge EMC Halifax Eh1C Rutherford EMC

• IVayneD. Keller A1ichaelE.Finney Gary A.1Vhitener 3 '1 JohnnieR. Austin AforrellJones,Jr. JosephN. Quinn Brunswick EMC Harkers Island EMC South River EMC DavklJ. Batten E TravisDavis Afarvin O. Afarshall .. i BeasicyStrickland LouisSalter Keskrr C. Butler NRECA Director Capellatteras EMC Haywood EMC Sum-Yadkin EMC BobL.3fcDuffic Clyton E. Austin,Sr. John iY Browning J. Kelly Hutchens Randolph EMC Jacks. Gray EmmitP TYood Grady VNichols Carteret-Craven EMC Jones-Onslow EMC Tideland EMC H. Eugene Clayborne J.Ronaki AlcEuieney LloydH. Lee IVJ.1Yynne,Jr. Hagh L Batts CarrollAustin l Central EMC Lumbee River EMC 'IYi-County EMC L.ReidHarris RonnieE Hunt J.MichaelDath IVilliam C. Dalrymple RonaldHanunonds LeslieJ. Bell =

Crescent EMC Pee Dee EMC Union EMC DonaldD. Rice Emmett S Patterson PhilipL 1Vally Henry C. Gabriel Richard H. Johnson J. Grant DuncanJr.

(ye 9;rcc,0r Davidson EMC Piedmont EMC Wake EMC Janws H. Garner H. Wayne 1ViUcins EarlJ. Ross JamesE Alangun,Jr. Bandalp1LEMC N. AiackShoqf Richard C. Roberts John Ai.Ferrell Edgecombe-Martin Co. EMC Ett & Greene EMC <

James B. Kinghorn,Jr. Afark A.Suggs AliceE IVilson J.J. Grinsley 4' W'

. 4 4 Four CountyEMC Randolph EMC EdwardE Brown,Jr. BobL AlcDuffie 4 .

R.1V Blanchard,Jr. Charles Teague j

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} [N . n NRTC Director DavidJ. Batten Brunswick EMC 4

4 NCEMC Officers J. Kelly Hutchens, Secretary 7Veasurer Ronnie E. Hunt, President .

I Y, . Eugene IV Brown,Jr., Vice-President l

I Albemarle EMC Davidson EMC Immbee RiverEMC South River EMC DorrisB.117 tite H.11'ayne 1Yilkins RonnieE. Hunt Afarvin O. Afarshall Blue RidgeIMC Edgecombe-Martin Co. EMC Pee Dee EMC SurIy-Yadkin EMC li'ayneD.Keller NoelLee,Jr. Emmett S.Patterson J.KellyHutchens Enmswick EMC Four County EMC Piedmont EMC Tideland EMC DavidJ. Batten EdwardE. Brown,Jr. EarlJ. Ross LloydH. Lee Cape Hatteras EMC Halifax EMC Pitt & Greene EMC 'IYi-CountyIMC Cliflon E. Austin Sr. A1ichaelE.Fimwy A1 ark A.Suggs J.MichaelDavis Carteret-Craven EMC HarkersIsland EMC Randolph EMC Union EMC David Af. Chadwick E. 7Vavis Davis Bob L. AfcDu[fie Philip L.11' ally CentralEMC Haywood EMC Roanoke EMC Wake EMC L.ReidHarris John 11 Browning Eugene 11' Brown,Jr. Janws E. Afangum,Jr.

Crescent EMC Jones-Onslow EMC Rutherford EMC DonaldD. Rice J. Ronald A1cEuteney JosephN. Quinn w m n w n n.m n - w -,- m , m m m

+ ' TEMA Officers Gary A. Whitener, Secretary-7Yeasurer

% A James E. A1angum,Jr., President 4 H. Eugene Claybonw, Vice President p . .

1 Blue Ridge EMC Halifax EMC Pee Dee EMC Rutherford EMC Thomas Cockerham A. G. \Yillco.r,Jr. RichardH. Johnson Gary A. M11itener I

! Brimswick EMC Haywood EhiC Pitt & Greene EMC Wake FRC FrederickA.7bdder LawrenceH.1kmson AfarkA.Suggs JamesE Afangwn,Jr.

h Carteret-Craven EMC H. Eugene Clayborne 5

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'Ib deliver an adequate and reliable supply of power at a competitive price to member ,

EMCs is an overall objective of the Power Supply -

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Division.We present to you here the highlights .

i of our various efforts to accomplish that objec-tive in 1988. David n.Mccue n w sun,h Mam m Thejointly-owned Catawba Station forms the foundation for base kud generation in '

NCEMC long range plans to meet the members' power supply needs.Under the Catawba con- The EMCsincreased the amount of k)ad tract, Duke Power Company operated the plant they can shed by adding 14,000 new load man-and,when compared to industry criteria,its per- agement switches.The overall total of load 1 formance was exceptional. Unit 1 achieved 76.98 management switches increased to 151,000, percent and Unit 2,62.22 percent,for a station representing a 10 percent increase in the num-average of 70 percent.This is the second consec- ber of switches. )

utive year that the station has operated above a A k>ad forecast model was installed on the l 65 percent capacity factor.The sellback schedule central computer in December,giving NCEMC 1 of the contract called for the sale to Duke Power an increased ability to predict the Duke Power l of 70 percent of the power output of Catawba 1 system load peak.During 1989,this model will and 80 percent of the output from Catawba 2. be expanded to include the ability to forecast ,

The load management system experienecd Vepco and CP&L k> ads. '

its second full year of operation under the cen- The mobile substation pool program com- l tral coordination system.1n October,NCEMC pleted its first full year of operation.The last started controlling the CP&L rate for the first two of the four new units were brought into ser-l' time during the monthly coincident peak.During vice during the first part of the year.The seven 1988, load was controlled during the peak hours mobile substations were used for 60 days during for 10 out oi 12 months in the Duke rate area, emergency and routine maintenance.

including t he summer peak,11 of 12 mont hs in A key initiative in pover supply planning the Vepco rate area and 3 of 3 months in the

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for the future was formalized in a peaking gen- l CP&L rate area. eration project for NCEMC. Conceptual design work was completed after a feasibility study a and financial forecast showed that the use of

_~' generation to serve peak loads would be cost-

.,- , effective.Other activites will be performed in

-* preparation for construction to begin in 1989.

NCEMC initiated discussions with Duke Power Company in 1988 to explore options in 4 utilizing excess capacity of Catawba in the post-1995 time period.These discussions will ,

continue with Duke,and possibly other utilities, d until fm' al resolution of the issue.

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The kilowatt demand in 1988 grew at the A wholesale rate study was completed in rate of 14.3 percent on a total NCEMC basis. 1988 which msulted in the reconunendation This mpresents a significant increase and was and approval by the members of a new rate l

influenced primarily by extreme temperature policy and methodology.

periods in sununer and winter.The CP&L rate Overall,significant progress was made area experienced an increase of 11.4 percent, in 1988 t<nvards achieving the mission to while the Duke rate area had a 17.9 pe.rcent deliver electric power on a reliable and cost increase,and the Vepco rate area increase was competitive basis.  ;

9.7 percent Statewide enen;y sales grew 7.9 percent l

compared to 1987.The average revenue per kWh supplied to the 37 member EMCs showed an increase of 10.2% compared to previous year's billing as shown beknv:

Demand and Energy:

Rate 1987 1988 1987 1988 Change Area MWD MWD GWH GWH MWD GWH CP&L 858(Jul) 964(Aug) 3,532 3,836 11.4% 8.6%

Duke 655(Aug) 772(Jan) 3,166 3,352 17.9% 5.9%

N.C. Power 134(Aug) 147(Jul) 551 631 9.7% 14.5%

NCEMC 1,647 1,883 7,249 7,819 14.3 % 7.9%

Average Cost (cents /kWh): 1 1987 1988 Change CP&L 4.76 5.33 12.0 %

Duke 4.05 4.39 8.4%

N.C. Power 4.35 4.63 6.4%

NCEMC 4.42 4.87 10.2%

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During 1988, North Carolina's Statewide .

i organization (NCAEC,NCEMC,and TEMA) continued to make significmit progress in carry-ing out its corporate mission.This progress f,, I was made possible by the successful execution .

.'g of ongoing programs and implementation of orrieIwn new initiatives. Finance & Accounting Manager The role of the Finance & Accotmting Division is to administer accounting, budgeting, data processing, finance and tax services for the NCEMC Statewide.Because the success of North During1988,NCEMC adopted a new rate Carolina's cooperative program and the fuum- design methodology requiring that any net mar-cial viability of the Statewide are closely related, gins in excess of 1.05 TIER coverage be refunded the Finance & Accounting Division works to to member cooperatives in the subsequent year.

maintain and enhance the financial standing of As a result,NCEMC deferred $8,871,051 of net .

the Statewide organization. Summarized here margins as of December 31,1988.These monies I are the finance and accounting highlights of each will be refunded to members after NCEMC has of the companies which comprise the Statewide: received the annual true-up associated with the Catawba agreements.

NCAEC NCEMC's actual electric energy revenues Vigorous support from member coopera- for 1988 were $639,825,907.Of this amotmt, tives and adherence to sound financial policies $247,300,298 was related to sales to nonmem-resulted in a 1987 year-end cash position for bers and $392,525,609 was related to sak s to this company that was better than needed to member cooperatives. Budgeted electric energy keep NCAEC on a sound financial footing. As a revenues for 1988 were $596,901,232, nonmem-result,NCAEC's Board of Directors elected to ber and member sales Ieing $218,406,590 and budget negative net margins of $120,000 for the $378,494,642,respectively. Actual electric 1988 calendar year.NCAEC's 1988 income from energy revenues for 1987 were $623,768,790, operations was $2,362,675 which was $147,739 with nonmember and member sales of higher than budgeted income and $159,806 $290,126,261 and $333,642,529,respectively.

higher than the actual 1987 income.NCAEC's NCEMC's actual kWh sales for 1988 were 11.23 1988 operating expenses were $2,435,480,which gigawat t -hours,3.41 gigawatt-hours to nonmem-was $87,544 higher than budgeted expenses and bers and 7.82 to members.This reflects an in-

$333,229 higher than actual 1987 expenses. crease in sales to members of 13.5 percent as The primary reason that 1988 expenses compared to the 1988 budget and 7.9 percent as were higher than both 1988 budgeted expenses compared to 1987 actual gigawatt-hours sold.

and 1987 actual expenses was the increased Sales to nonmemters decreased by 0.1 percent 4 cost of publication of Carolina Comttr!/ Mag- as compared to the 1988 budget and 4.2 percent azine. Publication expenses for 1988 were as compared to 1987 actual gigawat t-hours sold.

$1,015,063,which was $107,063 higher than NCEMC sold power during 1988 at an average budgeted publication expenses and $192,416 system-wide price of 5.6970 c/kWh.The average higher than actual 1987 publication expenses. 1988 price to members was 5.0201 C/kWh and These incremental publication expenditures 7.2486 C/kWh to nonmembers.

were directly related to Carolina Countryhmar-keting efforts which resulted in the sale of more pages of advertising than were projected in the 1988 budget and more pages than were actually purchased in 1987.

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TEMA The quality of services TEM A provides to member cooperatives can be measured by t he high level of support that the members offer to t his company. During 1988, TEM A at t ained record high sales of $33,951,239.That sales level was $5,303,229 higher t han in 1987 and

$7,951,239 higher t han the 1988 budgeted sales

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level. Actual cost of goods sohI of $31,882,760 was $7,156,760 higher 1 han t he 1988 budgeted

)- cost of goods sold and $4,702,101 higher t han t he I

actual cost in 1987.Ikith of these gains reflect the record high sales achieved during 1988.

TEM A's 1988 net income of $1,451,552 was

$835,926 higher than the 1988 budgeted net income and $572,953 higher t han the 1987 actual net income.

The inerease in t he 1988 net incon ie ls duc in part to a enange in the mix of sales.ln the past year,65.8 percent of TEM A's sales came from warehouse shipments and 31.2 percent from shipments to member cooperatives directly from TEM A's vendors. In 1987,57.6 percent came from warehouse sales and 42.4 percent from direct fN shipments. During 1988, TEM A's average ware- I house inventory was $3,579,417, result ing in an Q'N2'?x wl',N s'Ns s

inventory turnover of 5.651imes.In 1987,the average warehouse inventory was $2,643,682,

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"I\vo important legal accomplislunents -

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lead the list of achievements in 1988.NCEMC >!

won summaryjudgment against Duke Power h~ .

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Company in the Cherokee-Perkins e t- andon- 1 I

ment costs dispute, resulting in refunds to r ~y i

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NCEMC of $12.5 million and additional savings ' nim meh .

of $7.5 million. And, die corporation won sum. tesubumi maryjudgment against the North Carolina Department of Revenue, receiving refunds of

$320,000 in sales tax in connection with the purchase,did not list pktnt abandonment cost k>ad management progrmn. among the items that Duke is permitted to charge It is unlikely that Duke will pursue its NCEMC and the other Catawba buyers in arriving case further,since both the Federal Energy at the cost of supplemental power. Duke neverthe-Regulatory Commission (FERC)and the U.S. less charged all Catawba buyers with this cost Court of Appeals for the District of Columbia until NCEMC and the other buyers filed a Com-Circuit rendered decisions of an unequivocal plaint at FERC. FERC agreed with NCEMC and nature. At year's end, Duke had made no state- ordered Duke to make the refunds. Duke appealed ment ou whedier it would seek review in the U.S. to the District of Columbia Circuit and lost.

Supreme Court. Also high on the list of 1988 accomplish-The Cherokee-Perkins dispute with Duke ments was set tlement with Carolina Ibser &

involved write-off of $700 million in costs that Light Company on the second wholesale rate Duke had invested in the two abandoned nuclear proceeding involving placing the Harris Nuclear pktnts.The North Carolina Utilities Conunission Phtnt in CP&L's rate base.NCEMC fought this

@CUC) permit ted Duke to recover the retail. battle on two fronts: before the North Carolina jurisdiction's portion of these write-offs and the Utilities Conunission and at the I&deral Energy North Carolina Supreme Court affirmed the Com- Regulatory Conunission. At the North Carolina i mission by an equally divided court.(Whenever Commission,CP&L was not alk>wed to mcover {

the vote of the high court is equally divided,the all the it had spent on Harris.The Commission lower tribunal's decision is permit ted to stand.) made CP&L's shareholders absorb approximate-NCEMC's Interconnect ion Agreement wit h Duke, ly $142 million of the Harris cost because of con-entered into as part of the Catawba Nuclear Plant struction delays thtt the NCUC said resulted from mismanagement.NCEMC was able to settle .

.. the wholesale case with CP&L based on the prewdent established before the i f

retail commission.CP&L had requested a $24.4 million increase.The set t lement

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In the past year,NCEMC's tax records and Vepco concerning various power supply received an in-depth review by the Office of the matters; work with the Marketing Division on a inspector General (OlG)of the U.S. Depart- new narketirg program (including preparation nont of Agriculture.This review grew out of an for presenting the program to the N.C. Utilities l investigation'of Oglethorpe 1 ower Corporation, Commission as required by law); preparation of i the Generation and Transmission Cooperative a contingency plan to be implemented in the

'. . that serves 39 of the 43 EMCs that operate in ' event any North Carolina EMC becomes the Georgia,by the Internal Revenue Service in object of a take-over attempt; working with the connection with several leveraged leasing trans- executive team of NCEMC,NCAEC and TEM A

) actions.NCEMC was investigated by the OIG on strategic phmning; winding up the decades-old l' because its CPA and tax adviser, Arthur Andersen Nantahala cases; working with Central EMC in

& Company,is also Oglethorpe's CPA and tax its attempt to gain a kod from Goldkist*; work-adviser.The OlG visited all of the U.S.G&Ts ing with the Ad Hoc Rate Committee completing that have Arthur Andersen as their CPA and the REA Loan on Mobile Substations; teaching E tax adviser. Spearheading NCEMC's msponse to theWills section of NCAEC's Pre-Retirement ,

the OlG was NCEMC Staff Attorney Thomas K.' . Seminar; working with the Power Supply Divi- l Austin, assisted by NCEMC Legal Assistant sion and outside consultants on peak-shaving Otrolyn Rice and by various persons from the generation; and internal training on Personal Raleigh and Durham offices of NCEMC's outside Computers and Westlaw* computerized legal legalcounsel, Moore & Van Allen. research system.

Otheritems ofintemst handled by the .

' Promirent on the horizon in 1989 are the Legal Department in 1988 included disputes with antitrust case against Carolina Power & Light Duke Power Company concerning payments Company, contract disputes with Duke Power under the Catawba contracts; ad valorem tax Company (including the tax normalization issue),

appeals handled by Thomas J.Ik>lch and Thomas and territorial matters im'olving municipal K. Austin in behalf of various EMCs; a wheeling electric systems and investorovned utilities.

l contract between NCEMC and Cape Hatteras l EMC involving power NCEMC sells to Tidebtnd EMC for its Ocracoke load; a territorial dispute between Rocky Momit and Edgecombe-Martin County EMC in which the Cooperative won a 1leilig-Meyers furniture distribution warehouse load; modifications in joint-use agreements with Southern Bell and Carolina'Iblephone that will resultinreceiptof additionalhundredsof thou-sands of dollars by EMCs throughout the state in comirg years; meetings with representatives of municipal electric systems on territorial matters; meetings with Duke,the municipalities

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Responsibilities that range from conunu- ,. .

nications equipment tojob safety are the work of the Association and Corporate Services <

Division.This division serves in a variety of ways lx>th the membership and the corporate /

operation. David Williams Among our Association duties is the han- Ameiatim & coriorauervices Manager dling of all training programs offered by the Statewide, including the Statewide Annual Meeting. Staff of this division also make the travel arrangements for the NRECA Annual Safety and technical training are two Meeting,and oversee the Job Training and related and vital parts of utility work,and this Safety Program. division does much of the work to enswv high Our Corporate services include personnel, standardsin both areas.

facilities management,and purchase of office In 1988, Association and Corporate supplies,as well as communicat ions equipment Services completed a comprehensive training and services.When the need for a special project, calendar that rated well above acceptable such as Rural TV, arises, Association and standards. Over 1,500 directors, numagers, and Corporate Services is often the division that empk>yees from all 38 EMCs and the Statewide handles thejob. attended various programs.

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Training calendar for t he year was as folkrws:

Administrative' Raining Current Issues ofIk>ard Concerns

-NilECA 510.2 Organizational Problem Solving-NItECA 410.2 Directing and Cont rolling-NItECA 320.2

) O>mmunicating with Members (Four Sessions)

Director-Empkyee Orientation-NitECA 1111 Pre ltetirement Workshop 4 r

'IbchnicalTraining N ';\; "

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Apprentice Linenttn I ,

Apprentice Linenuut 11(2 Sessions)

Apprentice Linenuut 111 a Apprentice Linenum IV y Staking School Substation Equipment Selml A A Conferences Safety Coordinator's Conference Director's Confbrence R

Manager's Contbrence llunuut itesources Conference [ $

Firuutee-Accounting Conference Data Processing Conference W[b Y M# '

' Member Services Confbrence

• Womeris MillForum Engineer's Conferenm V' Line Supervisor's Confemnce

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The Statewide AnnualMeeting was presented in a shorter,more " upbeat" format y that was well received by participants.Both .

Governor James Martin and Lieutenant Gov.

ernor Robert Jordan were on the program, as well as Billy Ray Hall of the NC Center for RuralEconomicDevelopment.

NRECA AnnualMeeting was held in New Orleans.Over 350 representatives from North Carolina attended and stayed at the Meridian Hotel.

In1988 the membership commitment to safety was reflected in the addition of a fourth JT&S Specialist.That has expanded the ability of thestaff tocoordinatetrainingsessionsand increase regular visits at member EMCs. Safety programs presented at EMCs included fire ex-tinguisher use and care,back safety, eye safety, 9 decibellevel testing of equipment,line work sably, pole top rescue, bucket rescue and annual inspections. Special emphasis was pheed in test-h

'9 ing grounds and,as always, assisting EMCs with the NRECA Safety Accreditation Program.

Instruction on both CPR and First Aid certifica-tion were provided to member cooperatives as g needed. wi m,gif With assistance of the JT&S Subcommit-tee,we published in 1988 safety nunuals for member EMCs.Each manual reflects the safety rules and regulations of the individual coopera-tive."The Lineman" newsletter continues to be published quarterly, displaying a summary of accidents,as well as offering timely safety information.

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14

Corporate services of the division have Pacilities nuungement operations continue increased with the number of Statewide to adjust to the needs of the organization's grow-employees. Activity in the personnel area was ing staff. Grounds appearance at the headquar-substantial as the staff responded to growing ter's building is substantially improved and needs for recruitment, orientation,and training. continues to improve.

In-house training sessions were held on Plan- As1988 closed,the NCAEC Board of ning, Project Managemeid and Controlling Dirretors had approved a resolution of assis-Priorities.The annual wage and salary survey Lance for the formation of an organization to for mentber EMCs was completed and delivered provide RuralTV progranuning in North Caro-in Jwie.Our Statewide service awards program lina.This clune as the cuhnination of several moved into its second year and the annual meetings of the Ad HocRural'Iblecommunica-company picnic attracted over 125 empkryees tions Conunittee established by the Board in and their families.In the empkjyee benefits June,1988.

area, Statewide implemented the Wellness Plan Association and Corporate Services con-and the SHARE Plan to improve empk>yee tinues to develop new ideas to improve service health and reduce the cost of benefits.These and to respond to the internal and exterral programs will be expanded in the coming year. needs of the organization.We are "On Line to Records numagement services entered ServeYour the spotlight in August as we were required to produce several thousand docmnents as part of an inquiry from the office of the hispector General.The request was fulfilled on a satis-factory and timely basis.

t NCAEC l NCEMC 1

TEMA 1

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% mmiwamNA:sefW '. . . . T Once again this past year,the Tarheel Elee.

trical Membership Association,Inc.(TEMA)has achieved record revenues for the sale of mate- ,

rials, equipment,and supplies. Approximately

$34,000,000 in total revenue production was achieved during1988. tais win TEM A, formed in late 1975 and opened for Material supply Mmmer business in January of 1976,was the product of memler systems combining efforts to purchase nuiterial, equipment,and supplies utilized in elec-t ric pluit construction and mainteruuxe at com- Currently, TEM A maintains an inventory petitive prices with timely delivery schedules. value of approximately $4,000,000,which con.

Maintaining a cent ral warehouse also sists of protective equipment (arresters, cutout s, opened up the possibility for cost reduction in etc.), conductor,(both primary overhead and I he carrying of inventories. In order to firuuice underground arul secondary,) hardware, insula-the organization,each member system by way tors, meters,crossarms, transformers,and ather of promissory note,provided capital for the puxiucts utilized in plant construction and initialstocks of materials. maintenas cc.

Additionally,a line of credit was estab- Ibles are negotiated annually with suppli-lished with the Cooperative Firuuice Corpora- ers and shipped directly to t he members.While tion. Margins from t he sale of equipment and TEM A maintains stocks of both three-phase supplies have been utilized to pay d(nvn the and single 9hase transformers,most arv shipped promissory notes arul the CFC credit line.The directly from the manufactumr.Of the record association pays patronage to the purclutser $34,000,000 total revenue production during at the rate of 20 percent on margins produced 1988,$22,000,000 was shipped from the wnt ral during the previous year with the remaining warehouse.

80 percent paid on a 10-year cycle.1 knvever,be-cause the association is debt-free,the 80 percent portion has been reduced to a payout on a six-year eycle.

During 19S8,1he association returned to members and nonmernbers $751,203, the 20 x % .- ..

percent port ion of 1987 nutrgins, and the remain -

ing nuirgins held for t he 1981 arn! 1982 years.

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c Conunon carriers are utilized to ship to The increased sales and the added support member systems from the central warehouse. of our memter systems are rewards for which The decision to ship via common carrier rather we are most appreciative.Our continued test than using company-owned trucks and trailers efforts will be empkiyed in the future Ihr the was based not only on economics,but also on operation,nnintenarre,and development of service. In owning and operating our own equip- your materialsupply program.

ment we would have to establish delivery routes with scheduled deliveries.By utilizing common carrier,we have the ability to receive an order one day and deliver the material the folknving day to 55 headquarters and district k> cations.

Most orders are phoned to TEMA for same-day shipment.

The success of the noterial supply division is due to nembers systems working together, sharing ideas, consolidat ing efforts, standardiz-ing on equipment and construction methods, and workingjointly with the Stater;ide staff to achieve a conunon goal.The Statewide staff is highly motivated and dedicated to the coopera-tive program and strives to react to the denund.

We continue to place et nphasis on serving our members'needs as efficiently and economically as possible.How effectively we mact has direct bearing on our members' service to t he member-consumer.

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p 6 In the past year,we have improved our ser- s 1 vices ta members, redesigned Candina Country {

and increased its circulation,and continued to ]

represent NCEMC before Congress and the . '

General Assembly Mr member services,1988 was a year of James Lee nurney Public Affairs Manager growth,not only for ongoing projects,but also in the addition of new activities as well.

Mini-conferences during the year focused on a variety of topics including effective empk>yee TheWomeds Committee developed note programs, marketing, positive member relations, cards depicting the IlE A 50th Anniversary meter-tampering,and effectively conunmticating Commemorative Quilt and " Times Past" by Allen during crisis. A total of 153 participants attended Montague,the painting commissioned b3 State-the 12 sessions throughout the state. wide for ItEA's anniversary.Through sale of the Other meetings were also very successful. cards,and of the Womeds Commit tee cookbooks, The 1988 Member Services Conference attracted the Gwyn B. Price Youth Tour Scholarship fund staff from 23 EMCs for a total of 50 attendees. is now self-supporting.

'l\vo workshops,one on telephone courtesy,the The Annual YouthTour to Washington other on eklerly consumer awareness,were pre- included high school students from 18 EMCs,a sented to five EMCs,n' aching about 150 staff total of 41 youth tourists.The Soda Pop Co-op members. A special session on lessons learned again gtwe students a hands-on experience in  ;

in Brighton, Colorado,was provided to 70 running a cooperative business. By organizing  !

employees of one EMC. their own co-op to sell soft drinks during the trip, j The volunteer program has also grown this they learned the principles of cooperative effort. j year.Wrty participants attended the hll Fbrum New projectsincluded the compiling of a representing eight EMCs.The " Register and Vote" book of maps and specific directions to local campaign workshop initiated during the State- EMC headquarters for local EMC staff members.

wide Annual Meeting Women's Business session The main purpose was to assist member service resulted in the distribution of 250 posters.This staff of local EMCs who attend conferences and program led to the sponsorship of four on-site workshops at neighboring EMCs.1 knvever,many voter registrations. requests for the book have come from other empk tvees as well.

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L The initiation of a new youth program,t he Youth Energy Retreat, attracted 20 participants Revolving Fund,$350 million in FFB pre-from10 EMCs.While the W)uthTourto payment authority, continuation of the Washington is for rising high school seniors,the current loan criteria and ratios with no three-day weekend Youth Energy Ret reat is generalfunds policy, designed to at tract and educate a younger group-

• FY89 Treasury / Postal Service appropria-rising high school freslunen and sophomores. tions containing $436 million in funding The EMC history project is proceeding as for nonprofit mailers.

scheduled,with several local EMC histories near

• FY89 Interior appropriations including completion. Photographs of the first permanent $525 million to the Department of Energy nuumgers of North Carc, lina EMCs have been for development of technology to burn collected for the library.These will be mounted coal wit h less pollution and $575 million for displayin 1989. for clean coal technology research demon-in the area of government rehttions,1988 stration projects.

activities were mainly focused on issues before

• The Price-Andersen Act Amendment the U.S.Cmgress.This was due htrgely to t he extending the 1957 Price-Andersen nucle-fact that Ihe North Carolina General Assembly ar liability insurance law for 15 years and met this past year only for a short session,and raising t he nuclear power indust ry's acci-

, most of the issues of interest to NCEMC had dent liability to $7.1 billion.

already been disposed of during the long ses-

• Satellite 7Hevision Fair Marketing Act, sion in 1987.One issue involving ad valorem which would have required cableTV pro-taxes was folknved,however,and our efforts in granuners to make signals available to all t his case were instrumental in reaching a com- dist ributors interested in selling the promise favorable to the EMCs and other utilities. product.This effort did result in the l Last year,we supported the folknving Nat ional R ural Telecon u nunicat ions I issues before the U S. Congress: Cooperative negotiating a contract for the purchase of television progranuning from

• FY89 Ag-ieulture appropriations including Ihe umjor suppliers.

an R E A insured kun level of $633 million l to $933 million and a guaranteed loan level of $813 million to $1.962 billion,in addition to $341 million to reimburse the 19

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a ptrt of tir solution by signitg up for I/ tad Managnient.lly if you'd like a lit tie mon' security 11uut Fido {.

Iv A ling down p'ak &mands,y air EMC can amid bringirig pnwides,we'd like to sttatest an EMC security light. I mstly oil finst g wrators into service. Aiul,tir ru ed for It s quiet, worry fne and very econonucal. And exIensive r rw Paver plants will I e delaptl. . since it turns itself on at dusk and off at dawn,you know if y ni tune an ch vt ric water lu siter and 6r cent ral air w wp you to sign up a nt All yxi luive to do is call yair Ehk;, " it's standing guani,even when you and Fido am away aid we'lltake it fnxn tIrm. fronihonin.

If you're interested.all ,mu lune to do is pick up ilFn A//In7his74rther l.he phone and call yot tr EMC%iql take it f roin Iherv.

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In addition,much effort was spent on pro- New activites in publications include estab-tecting the Power Marketing Administrations lishment of " News Service" as a delendable from being disnuntled and,at the same time, resource for EMC newletters.We also now have working to keep them operating as hydroelectric responsibility for coordination of "The Lineman" projects rather than solely as lakes used for The EMC Directory continues to be a useful tool recreation. for statewide staff and memier EMCs; it has main-In1988,many improvements were made tained the broad support of vendors who adver-I in information services activities of our organ- tise in it regularly.In addition,we produced in ization.Oneof thehighlightsof theyearwas the last year a test-run edition of an all-f encompassing publication for co-op employees l a major change in Carolina Comdry. A new design for the magazine was introduced and and directors.

then refined throughout the course of the year. Preliminary plans for a production of video We also developed a new media kit for use in were completed and a script has leen written.

advertising sales promotion,which incorporates We expect progress on this project in the com-the new logo design.The magazine had a suc- ing year. Finally.an EMC newsletter competition cessfulyear financially,as advertising revenues was held for the first time,with an allied work-remained strong.The circulation grew from shop.Through this contest,a total of 10 co-ops 341,000 in January to 354,000 in December. were recognized for their newsletters.

j In addition, progress was made on several I fronts in our efforts to generate national ad sales . ._

through the Sunrise group. A comprehensive .

a readership survey was completed,giving us the 4.t >

demographic data that will help sell our audience .

to national media buyers.We have also in the past year reviewed woposals from national sales

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representatives and selected Fox and Associates ..

of Chicago to work with us.We expect to see solid I resultsof theseeffortsin1989.

Carolina Com#m now hasincreased  ; -

staff coverage of rural electrification and related y  % .- ~.

l developments. And,this year we produced two I special election issues.The magazine recently I underwent its second ABC audit, making use of a streamlined record-keeping process that was developed after ourinitialaudit.

In 1988,we intensified media relations k activities through regular distribution of news releases and personal contacts with media i representatives. As part of this effort,we identi-fled key contacts at the various major daily news.

4N pgers serving North Carolina. And,we're now carrying out a new program to keep them d*

f M informed about ongoing activities in rural ,

! electrification. t ..

S' 21

It has been said even thelongest trip

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begins with a single step. .

The re-direction, initiated in 1987,of North .

j Carolina EMC and its member systems to a new '

constuner-driven marketing front presents a major task. Goals and objectives for such an Jimmy M. Autry undertaking often revoh'e around time periods Marketing Manager f

of five years andlonger.

In 1987,the Board of Directors of NCEMC commissioned the Marketing Division to take Housed under the residential marketing the necessary first step toward successfulimple- heading,these achievements were measured and mentation of the new marketing plans.Research, markedin the pastyear.

situation analysis and development of the Five- *The first Five Year Strategic Year Strategic Phn comprised the largest part of Marketing Plan has been written the Division's efforts. for implementationin 1989. i This Five-Year Strategic Plan is not a Mar-

• The Electric Power Research Institute's {

keting Division initiative.Neither can it be simply Customer Preference and Behavior Study {

the Statewide phn.For Marketing to be success- continues.The projected completion date  ;

fu\the phn must effectively be adopted by the on the Blue Ridge EMC,NCEMC, North j individual member systems, integrated into their Carolina Alternative Energy Corporation j goals and objectives,and operated upon as if it case study is April,1990. Products deliv-belongs to each of the nearly 2,400 empk)yees cred from the national project include the and directors in the rural electric program of " Pulse" and "Chssify" soft ware. Based North Carolina. upon national statistical samples,

• Pulse" The issue is the same for individual member estimates consumer participation in systems. Marketing phnning and the drawing of a dem md side management programs.

plan can always be delegated to a department or

• Member systems received the "Enercom" division.But marketing implementation can residential audit software,a customized

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never be delegated. A consumer-driven strategy computer software which speeds the must permeate the entire organization, allowing home energy audit process for marketing every employee to breathe and sense the needs personnel.

of the member-consumer, feeling their wants and

• NCEMC provided training opporttmities desires and hearing their honest concerns. to member systems including the first i While research and planning continued Basic Utility Marketing School.

toward the Strategic Marketing Plan for NCEMC,

• The Division developed trade ally relation-several existing functions were supported and shipswith key industries.

made progressin1988.

• The residential marketing section deliv-ered the first programs from the cafeteria menu of service offerings to memler systems.

22

In the economic and community develop-

• Assisted member systems with new ment area: recruitment proposals and with ad-

• Additional economic development work vertising specific to k) cal EMC sites.

provided empktyment to 3'T23 new The overallnarketing tasks arejust empkiyees,50 percent more than in 1986, Ieginning.That first step toward success-and growth of 18 megawatts of new load. ful marketing may be tentative,but as in a Crescent EMC armounced service to the child,each step becomes stronger,more de-Asmo Automotive DC motor plantin liberate and more driven toward the vision  ;

Statesville. or goals which haveleen set.

• NCEMC supported Wur County EMCin its bid to serve a 16-megawatt load for the North Carolina Ethanol,Ltrl., plant near Bison. An opportunity exists for NCEMC l

f to tecome affiliated with the Energy Resources and Logistics, Inc. cogeneration plant at the same site. Announcement for thisdevek>pment camein early1989.

,

• NCEMC conunitted a $1 million invest-

, ment in the North Carolina Enterprise Corporation to provide mezzanine finan-cing to rural NC businesses for growth l

and retention.

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• NCEMC supported Piedmont EMC with a joint proposal to serve the Superconduct-ing Super Collider in its territory.While

, the US Department of Energy selected

'Ibxas as the host site,the proposal pro-vided two key accomplishments: v 1)The State of North Carolina and the other power suppliers of the state i recognized NCEMC as a viable gen-eration and transmission entity, highly capable of preparing plans

{ g to serve a 200 megawatt load.

f 2)NCEMC's Marketing and Power 8 Supply Divisions,and Piedmont < Qgg J EMC successfully integrated eco-

) nomic development, marketing, Greens.

L rates, generation,and transmission objectivesin a short time frame to j ;N P prepare a feasible and highly com- ,,

petitive Super Collider proposal. ,

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• Co-sponsored " Competing in a Global i Economy"with Rep. Martin Lancaster Helping beal emaunities gnm and prosper in Goldsboro. is tte ultimate goal of tie TimYear Strategic

• Sponsored two training courses:" Sharing Plan" and tie new economic development the Success" testimonials on winning brochum. city Blues vs. country Greens-industrial rveruitments,and " Rural Development Financing Workshop

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23

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A EMCEmpkyees credit Union experi- ,

uj enced another year of progress in 1988.Mem- a bership increased 10 percent to 3,946,k>ans l grew 17;ercent to $8.2 million, deposits l increased 14 percent to $9.7 million,and assets s ,  !

grew 15 percent to $10 million.1988 was indeed .

a year of growth! It will also be a memorable i

year because we reached the long-awaited mile- Kay vause f stone of $10 million in assets. credit Union Manager j This record growth can be attributed to l our members' trust in the Credit Union and our The year also brought a change in our field  !

philosophy of "not for profit,but for service? It of membership through action of die Board of l illustrates to us that our members appreciate Directors.Now, employees' family members,includ- ,

one of the best empkiyee benefits available to ing anyone related by bk>od, marriage or adoption, them-their EMC Employees Credit Union.The canjoin the Credit Union.Not only can grand- l mission of the Credit Union is "to enable our pamnts, parents, spouses, child ren, and grand-members to maximize their financial resources; children lecome members,but so can brothers, to offer them choices of econontic opportunity, sisters, aunts,tmcles, adopted children,steppamnts, ,

which may or may not be available to them else- stepchikiren,and in-laws of employees. Also,the i where;and to make it as easy as possible to obtain Board approved expansion of membership to in-these services: The Credit Union strives to be the clude the telephone and electric cooperatives in primary financialinstitution of our member- West Virginia.

owners.Therefore,we offer many competitively Other major accomplishments include priced services through a friendly, professional, several cross-sell prograrns,a new brochure and financially sound institution. series,implementationof theTruth-in-Savings i in the past year,the Credit Union accom- Program,and involvement in a national market-plished many goals.We added two new savings ing campaign entitled,"We've Got the Answers!

programs.The Special Share accolmt,known as in reviewing our success in 1988,we must the "u-name-it" account, allows members to save pause to commend the efforts of our volunteers for a special purpose or expense.The Christmas and other supporters.Our success can only be Club accotmt assists members in saving for attributed to de conunitment of the Board of Christmas.Indeed,our members showed over- Directors, committees, loan officers, assistant j whelming enthusiasm for this accotmt. Also,ad- loan officers and the support of the coopera-justments were made to other savings accounts tives and the Statewide.We certainly appmciate that the Credit Union offers.The rate structures the cooperation we receive from de cooperative i of our im*estment programs were changed to managers,who alknv our volunteers to serve our simplify the accounts and make them more members on a local ktvel.We also appreciate our competitive. loan officers' and assistant loan officers' day-to-p -

, , - - < day contmitment.They are truly dedicated.Of 1I course,the leader-ship provided by our Board of j(( ' (hrlg{ggg Dimetors is im aluaNe and de commhment of gpd 1 x our committee members is most appreciated.

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Furthermore,the Credit Union staff is comprised of dedicated professionals.These empkyees work D [

hard to provide the best possible service to each

y. i #[ N and every member.We are very proud of our staff.

h_ . h a ^ MC ip3k In our 2() years of providing financial h;Mh " -~

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services to our member-owners,we have come g yy '+ ,

tARNING

' CHECMNG a long way.We intend to make every effort to keW'our support in the future.

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NORTH CAROLINA ASSOCATION OF ELECTRIC COOPERATIVES NORTH CAROLINA ASSOCIATION OF ELECTRIC COOPERATIVES STATEMENT OF OPERATIONS AND MEMBER EQUITY BALANCE SHEET For the years ended December 31,1988 and 1987 For the years ended December 31,1988 and 1987 (Unaudited) (Unaudited) 1988 1987 ASSETS 1988 1987 Operatin9 income Current Assets Dues.. $1,125,402 1,121,035 Cash . S 229,056 309,211 Publication income . 1,237,273 1,081.834 Accounts Receivable (Net) . 313,598 291,995 inventores . 2,097 2,668 TotalOperatingincome . 2,362,675 2202.869 Prepaid Expenses. . 26,691 17246 TotalCurrent Assets . 571,442 621,120 Operating Expenses p Administrative and General. 1,420,417 1279.694 Office Fumrture and Fixtures . 183,814 149,527 PublicationExpense. , 1,015,063 822,647 Vehicles . 101,954 80226 2,102251 285,768 229,753 TotalOperating Expenses . 2,435,480 Less: Accumulated Depreciation. 155,792 117.446 Operatir.g income (Loss) . (72,805) 100.618 TotalFixed Assets . 129,976 112.307 Otherincome (Expenses)

Interestincome. 23,851 16.101 Other Assets Interest Expense. Deferred Charges - Past Service Cost, (3.021) 17,569 23,426 Pension Plan.

TotalOtherincome(Expenses) . 23,851 Deferred Compensation Fund. 144,934 122.520 13.080 Membership Certificates. . 200 200 Net Margin (Loss) . (48,954) 113.698 TotalOther Assets. 162,703 146,146 Membership Equity - Beginning of Year. 535,100 421.402 Membership Equity- End of Year. S 486,146 535,100 Total Assets . S 864,121 379,573 LIABMilES AND EOUlTY Current Liabilities Note Payable-Current Portion . $ - 1,050 Accounts Payable. 100,672 91,947 AccruedLiabilites . 53,492 37,389 Unearned income. 24,777 38,517 TotalCurrent Liabilities. 178,941 168.903 Long Term Debt Note Payable . 53,400 53,400 Less: Current Portion. -

1.050 TotalLong Term Debt. 53,400 52,350 Deferred Compensation Reserve . 144,934 122,520 TotalLlabilities. 377,275 343.773 Equity Membership Fees. . 700 700 Members' Equh. . 486,146 535.100 TotalEquity 486,846 535.800 TotalLiabilities and Equity . S 864,121 879.573 25

qvmonummemwmmmmm*mynormmy*M7my7v:n n .. r NORTH CAROLINA ELECTRIC MEMBERSHIP CORPORATION NORTH CAROLINA ELECTRIC MEMBERSHIP CORPORATION STATEMENT OF OPERATIONS AND PATRONAGE CAPITAL BALANCE SHEET For the years ended December 31,1988 and 1987 For tne years ended December 31,1988 and 1987 (Unaudited) (Unaudited) 1988 1987 ASSETS 1988 1987 Operating Revenues Utility Plant Etactric energy sevenues. $634,899,336 623,768,790 Property, plant and equipment. $1,429,236,072 1,396,195,841 Other operating revenue, 268,401 4,934 Less: Accumulated depreciation. 236,386,480 157,544,734 TotalOperating Revenues . 635,167,737 623] 73,724 1,192,849,592 1,238,651,107 Construction workin progress. 20,324,418 23,222,584 OWN @m Production . 60,939,078 62,385,107 TotalUtility Plant . 1,213,174,010 1.261,873,691 Cost of purchased power . 345,099,819 319.228,496 Transmission expenses. . 11,237,540 9,994,942 Other Assets Administrative and general expenses . 5,257,952 4,489.858 investmentsin associated organizations . 7,635,215 7,632,398 Maintenance . 21,555,687 13275.235 Depreciation. 53,233,007 52,539.556 Other Investments. . 46.208.908 12,114,970 Taxes. 37,106,326 59,789,135 TotalOperating Expenses . 534,429,409 521,702.329 Operating Margin . 100,738,328 102,071,395 34,628 as 65,048 Specialdeposits. 28,667,340 27,563,409 Otherincome 7,812,370 Temporary cashinvestments. 131,718,497 94,887,363 Interest , 10,516,050 Accounts receivable . 176,088,144 140,519.826 Other . 87,646 216.217 Othercurrent assets . 241,673 107,707 TotalOtherincome , 10,603,696 8,028.587 TotalCurrent Ass, ate . 336,780,702 263,112.933 Interest Char 9es Deterred Char 9es . 22,024,244 21288,436 Totalinterest expense . 109,579,775 108,356,229 Less: lnterest charged to construction . - - $1,625,823,079 1.566,022,428 Amortization of debtexpense . 1,214,852 1229,368 EQUITIES AND LIABILITIES Totalinterest Char 9es. 110,794,627 109,585,597 Equities Net Margin . 547,397 514.385 Membership Fees. . S 700 700 Patronage Capital- Beginning of Year . 16,108,716 15,594.331 Patronage Capital. 16,656,113 16,108,716 Patronage Capital- End of Year. $ 16,656,113 16,108,7 _16 TotalEquities . 16,656,913 _ 16,109.416 Long Term Debt . 1,388,411,308 1,393,520,375 Current Liabilities Notes payable. . - -

Accounts Payable-Trade . 52,063,695 38.486,239 Affiliated Companes. . 167,316 48,514 interest accrued . 25,947,886 1,710,917 Other accrued expenses. . 71656,255 1,648.869 TotalCurrent Liabilities 85,835,452 41,894,539 Deferred Credits . 134,919,506 114 498.098

$1,625,823,079 1,566,022,428 26

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TARHEEL ELECTRIC MEMBERSHIP ASSOCIATION,lNC. TARHEEL ELECTRIC MEMBERSHIP ASSOCIATION.INC.

STATEMENT OF OPERATIONS AND PATRONAGE CAPITAL BALANCE SHEET For the years ended December 31,1988 and 1987 For the years ended December 31,1988 and 1987

) (Unaudited) (Unaudited) 1988 1987 ASSETS 1988 1987

,. Sales (Net). $33,951,239 28,648,010 Current Assets Cash . $ 170,022 -

Cost of Goods Sold Accounts Receivable-Trade. 2,350,984 2,284,151 Beginnrng inventory . 3,489,565 2,095,445 11,328 9,287 AccountsReceivable-Other .

Purchase (Net) . 31.677,179 28.575,179 3,294,758 3,501,523 inventories .

35,167,144 30.670.624 Less:Ending Inventory . 3,284,384 3.489.965 Fixed Assets TotalCost of Goods Sold. 31,882,760 27,180.659 Office Furniture and Fixtures . 47,173 47,173 Vehicles . 38,267 38,267 Cross Margin. , 2,068,479 1,467,351 Warehouse Equipment. 103,503 103103 Operating Expenses. 721,454 712.166 Buddings . 614,017 609.833 Operating Margin . 1,347,025 755.185 802,960 798,776 Less. Accumulated Depreciation. 383,414 333.046

) Otherincome Interest locome. 59,483 54,768 419,546 465,730 MisceP,aneousincome . 45,044_ 69.233 Land. 157,250 157.250 Totalotherincome . 104,527 124,001 TotalFixed Assets . 576,796 622.980 int restExpense. -

587 Other Assets . 165,55( 161.889 1,451,552 Total Assets . $6,584,022 5.593.523 Net Margin , 878.599 Patronage Capital- Beginning of Year . 3,910,834 3.645,481 Change in ACRS Depreciation Reserve . -

(7.797) LIABILITIES Less:

572,071 431,702 Cuner.WaMes Retirement of Patronage Certificates .

Accounts Payable . $1,720,255 2.437.594 Patronage CapitalReclassifed to CurrentLiabdites . 361,620 179.747 Accrued Liabilites. . 72,752 64.648 PatronageCapitalPayable . 361,620 179.747 P;tronage Capital-End of Year. $ 4,428,695 3.910.834 TotalCurrent Liabilities. 2,154,627 2.681.989 TotalLlabilities. 2,154,627 2 681.989 Equity Membership Fees. . 700 700 Patronage Capital. 4.428,695 3.910.834

) Total Equity. 4,429,395 3.911.534 TotalLiabilities and Equity . S6,584,022 6.593.523 27

.hl $ h]'@ I P M Y L' T10llS i

1.AlbemarleEAfC,11er(ford 15.Joncs-OnslowDfC, Jacksonville ,

2.BlueRidyeDIC,Lenoir 16.LurubecRiverEA1C,RedSprings 3.BruuswickEUC,Shallotte 17.PeeDeeEUC, Wadesboro  !

4. CapellatterarDIC,Buxton 18. Piedmont DIC,11illsborough

5. Carteret Craven EAIC, Aforchead City 19.Pitt & Greene EAIC,Funnville l

6. CentralEhfC,Sartford 20 Randolph EAIC, Asheboro

7. Crescent EAfC,Statesville 21.RoanokeEAIC, Rich Square 8.Davidson DIC,Lexington 22 RutherfordDIC, Forest City

9. Edyecombe-A1artin Co. D1C, 7b rboro 23. South RiverEAIC,Dunn 10.Ihur CountyEAIC,Burgaw 24.Surry%adkin DIC,Dobsor>

11. French Bn>adEAfC, A1arshall 25. TidelandEAIC,Pantego 12,11alifaxEAIC,Ertfield 26. 7Yi-County DIC,Dudley 13.11arkers Island EA fC, Har kers Isla nd 27. Union DfC, Aionroe 14.11aywoodEhiC, \\'aynesville 28. \\'ake EAfC,11'akeForest f

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North Carolitui Association ofElectric Cooperatives,Inc.

North Carolina Electric Aferubership Corporation 7h rheel Electric hfembership Association,1nc.

3400 Su nmer Blvd., R O. Box 27306, Raleigh, NC27611 (

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North Carolina Electric Membership Corporation

@ Tarheel Electric Membership Association,Inc.

3400 Sumner Bh d.,RO. Box 27306, Raleigh,NC 27611 l

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