ML20155E846

1987 Annual Rept for Soyland Power Cooperative,Inc

ML20155E846
Person / Time
Site:	Clinton
Issue date:	12/31/1987
From:	Fellin J SOYLAND POWER COOPERATIVE, INC.
To:
Shared Package
ML20155E817	List: ML20155E818 ML20155E846 ML20155E875 U-601211, Forwards 1987 Annual Repts for Util & Associated Cooperatives
References
NUDOCS 8806160223
Download: ML20155E846 (33)

Text

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x riowly, but steadily .. . rural Illinois is coming out of the economic Jstump of recent years. There are all kinds of hopeful signs.2 ~

Fcrm commodity prices are still painfully low, yet the grain' and livestock . -

prices are increasing. We've seen a growth in rural business J.'. . and rural '

home sales and construction is on the upswing. Rural electric rates have stabilized for thousands of families served by electric cooperatives.

Soyland Power Cooperative is working for its 14 member systems and the

!05,000 consumers they serve to ensure that rural lilinois continues to grow.

Soyland is working hard to develop new electric loads - commercial, residen, tial tnd industrial - for its member cooperatives. We're also working to bring economic development to the rural areas we serve . . . adding new jobs for hard-work;ng people, while bringing new revenue to rural communities.

Soyland is Pursuing Opportunity for the more than 105,000 consumer. ,

members of its 14 member-systems. We intend to make certain that rural 11 '

linois gets its share of the economic recovery, new jobs and increased tax revenues through our economic development efforts. .

, i Through the newly-formed subsidiary Applied Energy Systems of Illinois Inc., -

we wi!! pursue new technology that will promote the use of electric energy in the rural areas. Through the subsidiary, Soyland will help provide efficient '

and economical systems for heating and cooling the homes and. businesses : -

of consumer-memters. ,

We will continue to work with our elected representatives in Springfield '

cnd Washington, D.C. to be certain that electric cooperative members get' a fair shake.

. And we'll strive to add to the spirit and tradition of cooperation that has ,

,been the trademark of the rural electric program in Illinois for more than 50

. years. -

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P , V)Yl ANI) ANNilAl RE N)RI 1987 M)Yi ANI) ANNllAl RIW)RI 1987 M))! ANI) ANNllAl Rf PORI Member- Ciav Eieci,ic Co operaiive, inc.

Flora, Illinois

• James E. Campbell, Afanager COOperat.ives ,,,,ive, , n c.

Cun,on C,,n,,

Breese, Illinois

• E,em,,c Robert W. Coo, Van der Pluym, Afenager Coles Moultrie Electric Cooperative Mattoon, Illinois

• C. E. Ferguson, Afanager Corn Belt Electric Cooperative Inc.

Bloomington, Illinois

• jeffrey D. Reeves, Afanager Eastern Illini Electric Cooperative Paxton, Illinois

• Wm. David Champion, Jr., Afanager I

Edgar Electric Co operative Association Paris, Illinois

• Thomas J. Hentz, Afanager Farmers Mutual Electric Company Geneseo, Illinois

• Robert L. Delp, Afanager ,

Illinois Valley Electric Cooperative, Inc.

Princeton, Illinois

• Timothy L. Christensen, Afanager McDonough Power Cooperative Macomb, Illinois

• William C. Lemons, Afanager Monroe County Electric Co-Operative, Inc.

Waterloo, Illinois

• joseph J. Fellm, Afanager

~

Shelby Electric Cooperative Shelbyville, Illinois

• William E. LeCrone, Afanager Southwestern Electric Cooperative, Inc.

Greenville, Illinois

• Robert H. Neece, Afanager Tri County Electric Cooperative, Inc.

Mt. Vernon, Illinois

• James E. Hinman, Afanager Wayne-White Counties Electric Cooperative Fairfield, Illinois

• Bill Endicott, Afanager 2

1987 M)YLAND ANNUAL REM)RT 1987 M)YLAND ANNUAt REM)RI 1987 M)YL AND ANNUAL REM)RI 1

C oyland Po ver Cooperative is a J member owned, not for profit G&T, continue to efficiently operate under a lomt power pooling agree-fyf3ylpg

,O electric generation and transmission cooperative which supplies ment which went into effect on Jan.

1,1985. The power pool consists of:

h nVVnQ({y yl{V Jr wholesale electricity to 14 member

• 56 megawatts of cooperative-distribution cooperatives. These owned fossil generation-distribution cooperatises distribute

• 130 megawatts of nuclear and sell the electricity to over generation:

100,000 farms, homes, businesses,

• 400 megawatts of fossil fueled and industries within their local ser- generation from 10.7% of each vice areas. Soyland is one of more of Illinois Power Company's than 60 generation and transmission fossil generation plants, and; (G&T) cooperatives that supply

• 145.8 megawatts of fossil fueled wholesale electric power to rural generation from 5.2% of each of utilities in the United States. Central Illinois Public Service Soyland was organized in Company's generating plants.

September 1963, under the General Together, Soyland and WIPCO I Not For Profit Corporation Act of the provide electric power to member State of Illinois by six distribution cooperatives which have service cooperatives. Leaders of those areas spread across nearly two-thirds

cooperatives saw Soyland as a way of the land mass of the State of to gain energy independence and Illinois.

control over electric power costs. In Soyland and its 14 member 1975, nine additional cooperatives distribution cooperatives will con-joined the original six, and plans tinue to pursue opportunities to were launched to develop a reliable make rural Illinois a better place to and economical power supply lis e. We remain committed to system. enhancing economic deselopment During the past year, two of opportunities to attract businesses to Soyland's member cooperatis es, rural service areas to, in turn, provide Eastern Illinois Power Cooperative jobs for rural consumers.

headquartered in Paxton and Illini Since its inception in 1963, Electric Cooperative headquartered Soyland's goal has been to provide in Champaign consolidated their tw o a dependable source of wholesale systems. electric power to its members at the The combined cooperative, low est possible cost. Today, through Eastern Illini Electric Cooperative its unique b!end of fuels and serves more than 12,000 members generating plants, Soyland has built and is headquartered in Paxton. a stable base looking toward the Soyland and Western Illinois future.

Pow er Cooperative, a ses en-member 3

1987 V)Yt ANI) ANNUAf REPORT 1987 M)Yl ANI) ANNUAL RE W)RI 1987 M)Yi ANI) ANNUAL Rf P()RI i

l Board of Directors i

Yb'. t

- ; ae .

cs f

E. H. Williams Officers of the board of directors: Seated from left, Kenneth Ileinzmann, vice president, Clinton; loseph I.

French L. Traker (cIlin, president, Afonroe. Standing from left, Lyndall Pigg, Eurutac Vice President Attorney assistant secretary, A1cDonough, Jeffrey D. Reeses, and General Atanager secretary treasurer, Corn Belt.

lhL. Eugene Boldt Shelby f

H. Clifford Cammon Clay ff 5 James E. Campbell Clay

} &)

Wm. 0asid Champion, lr.

7--

Eastern Illini 4m , G't 5', , SS

(. / v h  ;

7 %W. S h t Y #

g Timothy L. Christensen Joe Danielson Robert L. Delp Bill Endicott Illinois Valley Illinois Valley Iarmers Mutual WayneMhite I

1987 SOYLAND ANNUAL REPORT 1987 SOYLAND ANNUAL REPORT 1987 SOYLAND ANNUAL REPORT

~_ -

a y i ,w!) s.

w a;. ,$ lhh C.E. Ferguson Tom J. Henti Jim E. Hinman Larry L. Hosselton Coles-Moultrie Edgar Tri-County Wa s ne-White gf I ~

l ty

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/ 1 William E. LeCrone William C. Lemons Alan G. Libbra Darwin J. Mann Shelb) Nk Donough Sout hw estern f armers Mutual

\ 'g f%4 yQf .z ;. Mp Robert H. Neece Thomas W. Rosenberg Irsin Stanford John W. H. Tompkins Sout hw est ern Mon roe In County Corn Helt m m r- .

I s l l

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Robert W. Vander Pluim Gene P. Warmbir loc Welsh Randall L. White Chnton Eastern llhni Edgar Coles-Moultne I

1987 SOYLAND ANNUAL REPORT 1987 50VLAND ANNUAL REPORT 1987 $OYLAND ANNUAL REPORT g

President's A a'es '"a ra'e si>u"= "-"" """" " * '"""" * ^""'e" well into the future has twen a Energy Systems of Illinois, Inc.,

Report sima ni a-mnhsh meni ihi, "a,i y ear. I am ab.o s ery pleased to report

<^tSii. ^tSi. doinn besiness es Waterf urnace of Illinois, has far sur-that the Clinton Power Station is passed initial sales projection self.

operating efficiently, providing a  ! ng 320 groend4ource heat . amps f _ , reliable source of base load capaci- to dealy's tr.roughout our sersice ty to our system. After the kngthy area in the first 12 months of opera-

,. N construction schedulc a: Chnton, we tion. Sefung the heat pump is yet p ,; look forward to many vears of suc- another way to assist memlwr-

? cessful operation, consumers in making wise decisions t P Soi l and's ability to stabORe elec- regarding their heating and cooling

@ ~, 4 tric rates during the past , ear was needs.

• D'

- k enhanced through efforts made in During the past year Soyland has I

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g

• V' Washington, D.C. The Illinois Con-gressional delegation representing been ins Olsed in twa major lawsuits.

Soyland was sued by one of its

% < ? ( 7' J' '# our electric cooperatises was in- member distribution cooperames.

b:. strumentalin helping to pass iegisla.

'h A '

tion which allowed Soyland to Southwestern Electric Coopera'ise.

in an attempt to break the all-p refinance high interest rate debt, requirements w holesale pow er con.

without paying proh,bitise!y high tract with So3 1and. The United States prepayment penalties. District Court, located in East St.

4 Soyland Power Coope,ative was Louis, rendered a decision on Dec.

the first generation and transmission 28. 1987, upholding the validity of cooperative in the country to utdize the contract. Southwestern has ap-

) ;oseph J. Fellin this legislation. As a result of refir.an- pealed the distnct court decision to President cing $282 million, Soyland sased its the Sesenth Circuit Court of Appeals mernbets oser $4 million per year in Chicago.

omt the life of our loans. A lawsuit was filed in Sangamon T his was made possible twcause of County Circuit Court in Springfield Ae support we received from Con- by Lewis Pow ell, et. al., representing gessmen Bob Michel, Ed Madigan 22 consumer n' embers of the 22 and Dick Durbin, and others who member distribution cooperatises. <

agreed that it was only fair that rural The lawsuit was onginally filed oeople be allowed to share in the against Illinois Power Company and savings t rought about by today's each of the Soyland and Western Il-lurer interest rates. linois Power Cooperatis e members.

During 1987. extremely hot The suit alleged mismanagement in weather drose the demand for elec- the construction of the Clinton tricity up to a ret ord high for the Power Station. Soyland and WIPCO Soyland'WIPCO power pool. Our intersened to gain control of the system is historically a winter peak- hm uit to pur;ue htigaticn against 11-ing system, but on Augu3t 2,1987, linois Power Company directly. In at 6 p.m. a new peak demand c.f 506 Janua.y, the Court ruled in favor of megawatts occurred. Soyland and WIPCO proceeding Although trv* extrerrc9 hot and with htigation against I!!inois Power.

dry summce dtd nothing :.4 help crop We enwct this litigation against II. ,

produc tion, t'+ rural n onomy doe <

. linois Power to continue during the seem to be graduaB. improving. Our next year or more, rural members can be assured that Duiing the past year, two of we are doing eserything within our Sayland's member c ooperatis es, power to keep ekctric power rates f astern Illinois Power Cooperatise as low as possible. The member headquartered in Paxton and llkni /

cooperatises and Soyland remain Electric Cooperatise headquartered dedicated to improving economic in Champaign consolidated. The conditions in rural llhnois, combined cooperatis e, Eastern I!hni One maior step we took last year Electric Cooperative, serses more was the creation of a new wholly- than 12,000 members and is head.

6

1987 SOYLAND ANNUAL REPORT -

1987 SOYLAND ANNUAL . REPORT . 1987 SOYLAND ANNUAL REPORT g

quartered in ?axton. The manage- years Soyland and WIPCO have g ment and board of directors of these operated as one. According to the. ,r two cooperatives should be com. Webster's dictionary Jefinition,  !'

mended for their determination and cooperation is an association of per- ,

foresight in achievbg c onomies of sons for a common benefit. As all of i scale which will - 1 savings to you know, Soyland and WIPCO are their members , years to committed to achieving a common <

come. goal. . providing a reliable source '

Soyland 'linois of electric power at the lowest possi-Power Cocpe. nued ble cost. That is our mission.

to successtoily s r over The board of directors, manage-the cast year tc reliable ment and staff will continue to pur-power at the lowes. - ae cost to sue opportunities, driven by a com- J the 21 membei distribution mitment to deliver quality service at / ) ,4 cooperatives. lhis year we began to the lowert possible price.

see the fruits of our labor over the past three yrcrs oay off. Working g '

together on efinancing and debt }

restructudng, combined with other cost saving neasures which have Jose h J. Fellin been implemented, have stabilized President >

electric power rates. This is a signifi-cant accompshment.

Through comprehensive planning

• over the past four years, we were i able to avoid the rate shock that I ,2 p

many utilities experience with new

? '

l plants going into commercial o era- j I Q; ,:. 7 K'(  ;

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I tion. The Clinton Power Station per-

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G[7 formance has been exceptional dur-  !

I- )4 $0 d ing its first three months of oporation, with no plant shutdowns and an *" '"1 Q" # ,

availability factor of 100%.

gg e. .-

,pp p 3 Soyland is our power supply . 4 sm - -  ;

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1', 9-organization. We organized Soyland ~. n nearly 25 years ago to do for us v hat ' ' ' i f zg- ,m ')- \.

, a-

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I each of us could not do individual-  ; t,i ~

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_ jq[{.%d,U - ' f [if};&

ly. Together, we are a powerful force.

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l In looking toward the future let us always keep the spirit of cooperation

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l i foremost in our minds. During the .l next few montns we will be consider-ing the merger between Soyland and WIPCO. As we approach the time for

,5 l that decision it is important to '

I remember that for the past three Alembers of the Illinois Congressional delegation played key roles in m y~~;~ p. - , L3y +

helping Scyland Power Cooperati:e to refinance its' Clinton related debt.

Co ressmen Dick Durbin, Ed Madigan and Bob Alichel received Q \y '

reso utions of appreciation from the Soylas.d

\,

' ,y.

L, 1 legislation conference in Washington, D.C.

Ypring. Left: David Kricke, p, bJdrd during the an A. ' assistant manager of Eastern Illini Electric Cooperative, present>

~}h Congressman Madigan with a framed certificate. Top: Ic5ha.'v,r Ilin,

'3'\

~

' manager of Monroe County Electric Co-Operative and presiden of the So nd board, presents Congressman Durbin with his certificate during a l _\ lu cheon. With Fellm and Durbin is Roger Mohrman, Adams Electrical A Co-Operative manager. Above: Congressman Michel played an integral role in the refinancin project. With Michel(s. waking Wpe podiund r

are, from left: Richa Lyng, Agriculture Sect 4ary: Congysman i a \ i .t,G Madigan, Fellin, and Ed Williams, Soyland ge,neral raana r.

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7 SOYLAND ANNUAL REPORT Ik7 SOYLAND ANNUAL REPORL 1987 SOYLAND ANNUAL REPORT dMd f ery major event occurred this past year at the Clinton Power million more per year over the life of the Clinton loans. As a result of the RenortF Station. After a lengthy constr ction schedule, the plant reached 100%

decreased ownership share, we are also able to reduce our share of full power commercial operation in operations and maintenance costs November 1987. Nuclear energy and future capital expenditures over from the Clinton Power Station will the life of the plant. However,

'g ) now supply just over 25% of our total through joint economic dispatch 1;  ; energy needs. wnh Illinois Power Company, we are f Careful planning over the past foer able to retain the benefit of the low

! years has paid off. I am tery proud cost energy from Clinton.

F' ( #

to say that even with Clinton fully Equally important to the cap was

? ~~,D# ,M. e operational, our electric power rates will remain stable through the re-out success in blending lower cost fossil fueled generating capacity with

mainder of this decade and beyond. the high cost nuclear capacity. In Oc-4 ( f

.i Over four years ago we recogniz. tober 1984, SoylandAVIPCO signed

'f"J]

r J , ed that rate shock associated with a new plant like Clinton going com-an ownership participation agree-ment with Illinois Power Company to mercW would occur if careful plan- purchase 400 megawatts of fossil ning was not implemented. Since fueled generating capacity. A similar then, the Soyland leadership has agreement was signed with Central taken many steps to minimize the af- Illinois Public Service Company in fect of Clinton on our rates. November 1985, for approximately J

The drst major step we took was 145 megawatts of fossil fueled implementing a plan we refer to capacity. In both agreements, we are E.H. Williams "Equity Funding." Over a three billed as if we owned the facilities.

Manager year period Soylmd collected Like the owner, SoylandAVIPCO pay

$42,000,000 from the rr. embers to be a fixe ( nercentage of the actual costs used for Clinton related costs. We rather than a fixed rate for the pur-

'j . realized then, as we do now, that in- chase of power.

j creasing electric rates is never easy. An agreement was reached with The muity Funding Plan was the cor- Central Illinois light Company nerstone of our entire rate phase-in (CILCO) in Noyember 1987, which pla n. provides wheeling services to transfer a

Another major step saw Soyland, energy from the cooperative system together with Western Illinois Power to Soyland's load in the CILCO con-8 Cooperative, successful!y negotiate trol area. Soyland had previously

, $450 mHlion cap on the purchased wholesale power from i cooperative's di>ect cost of placing CILCO to serve that load. The agree-Clinton into comrrercial operation. ment with CILCO will save Soyland and WIPCO have paid their Soyland/WIPCO over one half

, portion of direct construction costs. million dollars per year.

3' y This has resulted in an ow nership in These contracts for fossil capacity, Clinton of 7.02% for Soyland and combined with our share of nuclear

, 6.36% for WIPCO , Illinois Power capacity, have provided Soyland/

Company owns the remaining WIPCO with a broad mix of 86 62% of the plant and is responsi- generating capacity. Rather than ble for plant operation. owning just one large coal-fired

) , The cap was a critical component power plant, we have access to of .Soyland and WIPCO's plan to 10.7% of each of Illinois Power Com-stabilia rates. Witiout the cap, panies 23 fossil units through 1992, SoylandAVIPCO would have incur- 8% in !993 and 1994, and 4% in red an estin.ded additional $225 1995 through 2004. In addition, the million in direct construction costs contract with CIPS provides s and $27 million in additionalinterest SoylandAY!PCO with 5.2% of each costs during construction. This addi- of CIPS 13 fossil fueled units through

/ tional investment in Clinton would 1988,5.6% in 1989,7.6% from 1990 4

have cost us approximately $25 through 1994, and 3.6% from 1995

) )

8

1987 SOYLAND ANNUAL REPORT 1987 SOYLAND ANNUAL RkPORT 1987 SOYLAND ANNUAL f(EM)R.T

\ SoylandMIPCO utilize the CIPS

\ and Illinois Power Company

\ high voltage transmission i systems to serve native load

\ 1 and to interconnect with

/y neighboring utility companies.

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through 1999. We have 56 Reconciliation Act of 1986 which megawatts of cooperative-owned allowed G&T cooperatives to fossil generation and 130 megawatts refinance debt without paying pro-of cooperative-owned nuclear hibitively high prepayment penalties.

generation. We have generating This, too, has been an important step capacity to meet our projected in our plan to stabilize electric power energy requirements until the mid rates to our members.

1990s. Soyland/WIPCO also transmit energy through the IP and CIPS SoylandlWIPCO Power Pool transmission and subtransmission 1987 marked the completion of systems. three years of successful operation in addition to these agreements, under the power pooling contract Soyland has been able to further between Soyland and WIPCO. Since reduce costs by refinancing high in- 1985, we have successful!y operated terest rate debt. In March 1987, as one entity, having combined per-Soyland successfully refinanced ap sonnel, electric power loads and proximately $282 million of Federal power supplies. During these three Financing Bank debt utilizing private, years we have continued to work non-government banking sources. toward rate stability for members of Soyland was the first C&T in the both G&T cooperatives.

country to utilize legislation passed During these past few years by Congress in the Omnibus Budget Soyland has actively worked with 9

1987 S'OYLAN,0 ANNUAL REPORT 1987 SOYLAND ANNUAL REPORT 1987 SOYLAND ANNUAL REPORT dUdh6 3 WIPCO to restructure WIPCO's Clin.

ton Power Station debt. Negotiat,ons

@ have been ongoing with the Rural Electrification Administration and we hope to soon reach a restructuring agreement for the benefit of all

(, ,_w'.m.; m m ,,c.m 1 cooperative members.

As a result of provisions contained in the Omnibus Budget Reconcilia- _ ,,_

tion Act of 1987, WIPCO successful-ly refinanced $282 million of high in- _ _

terest Federal Financing Bank debt on February 22,1988. WIPCO, utiliz- -

ing the National Rural Utilities Cooperative Financing Corporation M8!M gC **zi g.

as its banker, reduced interest costs from approximately 11 % to a current

Z

.. M,Y- ~#rN: JT

{ [r, 5yb level of 7.5%. The savings from .

,p.MJ& 7py p ;p refinancing will be utilized by Soyland and WIPCO to maintain the

(- i g :g pl 4-lowest possible electric power costs. -- M Vy . 1 Clinton Power Station '

The Clinton Power Stction became 5 [ E C  % . % : g mv - f g an operating nuclear power plant in & r - i ,h 1987. The Clinton station was syn- A- _

chronized to the electric power grid $

and began 100% full power opera-tion on Nov. 24,1987.

Full power operation occurred '

- t after the 100-hour warranty run was successfully completed and a scheduled 35-day surveillance testing and maintenance outage was con-cluded. The warranty run was the P_

final test event of the power ascen-sion program. The Clinton Power Sta-tion successfully reached the 950 megawatt net production level that it was designed for.

g,-

The Clinton Power Stat!on has run continuously since it began opera-tion in November. The plant has had a very high capacity factor, operating

( in excess of 87% from Nov. 24,1987, through March 19,1988. Over the next several years, w e expect Clinton The 298-megawatt Ifennepin iA to providejust over 25% of our total poner plant flop) prosides base load poner to the Soyland/ v energy requirements.

WIPCO/Ilhnois Power Company

,,.b' In the Nuclear Regulatory Commis-Power Pool. Soyland/WIPCO have g- si n,s annual review of Clinton,s pe -

a broad mix of power plants, L w- c m :emp u formance, called the Systematic Ap-including 5.2% of CentralIllinois V ~"% praisal of License Performance Public Service Company's il s- WU '

(SALP, report, the Clinton Power Sta-flutsonville station (bottom). L A'W-<M .R M- tion received the highest achievable 10

1987 SOYLAND ANNUAL REPORT 1987 SOYLAND ANNUAL REPORT 19$7 SOYLAND ANNUAL REPORT l

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grade in licensing activities and in across the country. The 950-megawatt Clinton preoperational and startup testing. The first refueling outage for the Power Stition began ful/ power Clinton also received acceptable Clinton Power Station is scheduled operation in Nosember 1987.

ratings in nine other areas and had for early 1989. The base-load unit provides no unacceptable ratings. The NRC approximately 25% of indicated that the plant had improv- Operat. ions and Engineering Soyland/W/PCO energy ed in three areas since the last annual The engineering and operations ###I""## #"# 8 '

review, department provided engineering In addition to the NRC, the In- and technical support to the member stitute of Nuclear Pow er Operations, distribution cooperatives for the con.

(IN PO), completed a comprehensis e struction and maintenance of res iew of the plant. INPO was transmission facilities, organized by the nuclear power in- We also assisted the distribution dustry shortly after the Three Mile cooperatives, in the development of Island incident occurred. The goal of work plans for distribution and INPO is to impose standards of ed transmission facilities. We completed cellence and self regulation on its ongoing technical studies for our member-utilities. member systems throughout the INPO's resiew of the plant was year.

completed in February 1988. INPO Soyland entered into an intercon-selected sesen "good practices" nection agreement with another ll-which were in use at the plant to linois generation and transmission share with other nuclear utilities cooperatis e. Southern Illinois Power 11

' 1987 SOYLAND ANNUAL REPORT ' 1987 SOYLAND ANNUAL REPORT, 1987 SOYtAND ANNUAL. REPORT Manager's C - gereiwe in u arien. This a8ree-ment provides for the interchange of own neiionei iebbvins or8anization.

the National Rural Electric Renort F emergency, short term maintenance power and economy and Cooperative Association (NRECA).

G&T refinancing has once again energy between the two intercon. been of primary concern to Soyland.

nected G&T's. As we have in the past, we will con-tinue to work with NRECA to achieve Commum. cat. ions and legislative victories for the Government Re ations cooperatives.

Communication with our member Acid rain legislation will once again systems continues to be a priority at be discussed by Congress this year.

Soyland. We have held regional Since SoylandAVIPCO have an in-meetings to discuss issues regarding terest in over 600 megawatts of fossil power supply with the directors and fueled generating capacity, this issue employees of our member distribu- will continue to be very important to tion cooperatives. Staff members re- us. We will make our position known main available to make presentations regarding any potential legislation about power supply and economic that would affect the cooperatives in development issues to both civic and lilinois, educational groups and cooperative We continue to believe that one-member advisory committees. on-one communication is the best We continue to make our views on kind. As the power supply industry legislative issues known in continues to change, it is paramount Washington, both to members of that we continue to effectively Congress and their staffs, and to our communicate.

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WaterFurnace of Illinois attracts increasing interest in ground- 1 source heat pump technology.

• Afanager Steve Smith, seated, ' '

discusses energy savings with members of Edgar Electric Co-operative at their annual ,

membership meeting. L'x- . -

12

/( %J 8

987 SOYLAND ANNUAL REPORT 1987 SOYLAND ANNUAL REPORT '1987 SOYLAND ANNUAL REPORT 4

Subsidiary Operations During the past year Soyland took the initiative to help bring to the marketplace the ground-source heat pump, a product unmatched in g energy efficiency for central heating and cooling and water heating. g' When Soyland's Marketing Commit- -

tee examined the state of the ground- p source heat pump industry, it found a technically advanced and proven energy system with little market A,,4 penetration or consumer accep- , g tance. Much of this was directly at- n .. _, e . , a , 'g3@,A s' ' g

~~ ,. .c ' . .n (

tributed to the lack of distributors for -

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the product. u .'e 2' R p y * 'l %

On March 7,1987, Soyland seiz-ed the opportunity to fill this

,.ipMcy.,@.p.J4h ~'

1 .$ g$ d._

3!94T"Qc' '  % - IAi distributor void and became an ac-tise participant in the ground source kk# ,

g

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i j heat pump industry by forming Ap-2 . ;g ,,

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plied Energy System's of Illinois, Inc.

(AESl). AESI, doing business as g ._ [ 1 j WaterFurnace of Illinois, is now a

( -

successful statewide stocking *

• n distributor of ground source heat , v , -

3 .

g pumps manufactured by WaterFur-nace International of Fort Wayne, in-(

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gy diana. In just one year of operation f

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WaterFurnace of Illinois has p- -

( 'v j

desek) ped a broad netaork of train- -

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ed and certified dealers, impros ed in.

stallation tec hniques, low ered os erall

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system costs ard dramatically in-5

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i creased sales. To our end consumers v?  ;;p& T ~ Yg * .

"rC' N j.p' . 3y this initiatise has made aw.ilable a

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state of the art heating and coolin h . [ p s)3 tem at a competitise cost. To A

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cooperatne3 it has meant increased j'. C.g t'Q' .

{  ;,,Q-sales of energy and the abilqy to once again market an all-electnc energy f,, 4gy 4' 3

.g, x, l system which is affordable and .

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yp,v,yf efficient. Q^[e ' ' y1 '

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First-year sales for WaterFurnace of (k g

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s i T 'A Q lilinois tripfed initial projections with -

the subsidiary's dealer network in- -

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creasing from an original number of 19 to more than 40. volume dictated Pictured above is the installation of a horizontalloop for a ground-source the employment of two additional heat pump. Piping is installed in trenches at depths of three and fise feet.

full-time employ ees for the subsidiary in early 1988 to assist with dealer technical support and sales promo-tion. At the recent annual distributor's meeting of WaterFur-nace International in Fort Wayne, In-diana, WaterFurnace of Illinois was twice honored: once for the third 13

1987 SOYL.AND AN'NUAL REW)RT 1987 SOYLAND ANNUAL REPORT 19h7 $OYLAND ANNUAL REW)RT l

l Manaper's O highest sales volume among all distributors in one year and again for economy. The economic profile of rural America is changing dramatica!-

setting the WaterFurnace record in Report mst.yee, seies fe, e new dist,ibete,.

ly, and the cooperatives in Illinois are dediceted te img,eving the All expectations are for even greater economic condition of their rural ser-sales in the coming year. vice areas.

With its first subsidiary venture New emphasis is being placed on solidly under way, Soyland's board the promotion of Soyland as a and management are continuing to qualified source of affordable energy study other opportunities that may for commercial and industrial con-yield similar benefits to Soyland's sumers. "Discover the Power of Cen-members and their consumers. tral lilinois" is the theme of Soyland's Technological advancements in the newe:t promotional publication. It energy and telecommunications will carry Soyland's message to fields are showing increasing promise business leaders and developers as business endeavors. Whatever the throughout the country who are options, we are confident that seeking information on potential thorough cost / benefit analyses and business locations. Further exposure sound judgment will allow c3 to pur- has been gained through the publica-sue opportunities which will benefit tion of site brochures and mailers all of our members aimed at enticing businesses into cooperative areas, and through per-Econom.ic Development sonal contact by Soyland's economic Soyland's subsidiary operation development staff with state and came about as an outgrowth of our '

private organizations working to im-commitment to marketing and prove the downstate economy.

economic development. Likewise, Continued involvement in the this commitment has led us into ag- State of Illinois' regional develop-gressive participation in the move- ment efforts has been a mainstay of ment to revitalize the rural Illinois Soyland's economic development 3 f.)

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A member-homeowner from y\'?. J

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Southwestern Electric '\

Cooperative inspects his new ,' r ' ' N y- /. % jl; .,ye ,Q _ .?.

heating and cooling system.

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Ground source heat pump iL" o '

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owners can save up to 60% on - L ,

heating,30% on cooling, and 50% on water heating costs. m q

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• ND ANNUAL REPORT 1987 SOYLAND ANNUAL REPORT , 1987 SOYLAND ANNUAL REPORT Advancements in ground source heat pump technology have made this product an affordable and efticient energy alternative for consumers.

N'

-

: , !: *, NN~Og fWf Tj .?f% R f',?my :A 2.  ? n. n - { .cpk , [k9 ' .f h'3h ,epf'~ c . 'qq _.v. ,, y** - + .g@~ ?dd' PACO .s C ', =e . f"v. > . ~ ? r .J . :. program. Through these state- printing, graphics and audio visual assisted regional development staffs. groups, Soyland has contributed We are proud that two new financially and with staff support to businesses have become cooperative advertising ca mpaigns, industrial pro- consumers under Soyland's spect trips, trade shows, target in- economic development rate in the dustry studies and economic past seseral months, and prospects assessments and audio-visual promo- for additional commercial / industrial tions. For much of this support we consumers in the near future are work closely with our statewide bright. Through Applied Energy Association of Illinois Electric Systems of lilinois, the potential ex. Cooperatives, and their information, ists for participation in the develop-15 h 1987 SOYLAND ANNUAL REPORT ' 1987 ' LAND ANNdAL REPORT 1987 SOYLAND ANNUAL REPORT Manaver's meot oriadoetriei narks aadzor com- ecoaomie siesiiiiv ia the r rai erees. O struction of speculative commercial all of which are welcome signs. But, Renort " d ' " d "" " ' '" " d ' " 8' "* i " "' service area, as a further incentive to "*'d'v " " "d i * " " "i i g- to come. In looking towards tomor-  ! attract new business. row, we must have a course of ac-For electric cooperatives, the tion that provides for change. There future is full of exciting opportunities are many unknowns ahead - the to serve their members better - bet- economy, energy requirements, ter than yesterday, better than today. sources of energy generation, owner. By increasing sales, broadening the ship of generating plants, etc. There member base and working to im- are many questions to be addressed prove the economic vitality of our in planning for the ft.ture. service areas, Soyland is seizing the However, there are some things opportunity to better serve its we do know. We must not put ail of members in rural Illinois. our financial resources into one basket. We must spread our risks. The Future: Pursu, m g Opportunity Utilities must utilize available capaci-As we look back upon 1987, we ty that exists today before proceeding see the results of past efforts. We see with plans to build new power the nuclear Clinton Power Station plants. We must reconsider "plant operating in excellent fashion, power ownership." Should plants continue costs stabilizing, and increasing to be owned by utility companies or D0 d 7mm D[ N = ) LA J G.m . - - -am - + @@ ]J gga O ., . . > assris *g

• Eq = _. -

n" .. . . w -- V >: ~ " ' ~ .l <

- _ _ = - . .-

] f - ,g ! /1 ~ [ [i' 2 _ddl W, __ '.i_I_ The Pearl Station control room operator stays in contact with the SoylandiWIPCO/ Illinois Power pool dispatch center to ^ -m ensure the most economical -- utilization of available generation. D t 1 16 l l 1987 SOYLAND ANNUAL REPORT 1987 SOYLAND ANNUAL REPORT 1987 SQYLAND ANNUAL REPORT l should they be owned by other place to be. We cannot afford to organizations that sell their energy to overlook the value of industry with existing utilities? History tells us that regard to cogeneration and its ap-Illinois utilities, regardless of their plication to our utility operations. size, cannot stand the financial risk There are many things to be con-associated with individual plant sidered w hen planning for the future. ownership. While an investor owned utility has We must continue to utilize natural a responsibility to its stockholders, resources within our state boundaries our stockholders are the members and reduce our dependence on im. served by each of our cooperatives. ported resources from other states We are not in the business to make and nations. This will require con- a profit. We are in business to pro-tinued development in the utilization vide reliable electric power at the of higher sulfur coals. In Illinois, we lowest possible cost. The future is have vast resources of coal, much of bright and we at Soyland look for-which is high in sulphur. We must ward to the challenges ahead, continue to work on developing technology for the utilization of this . coal. We must work with both existmg - and new industry, so that we con- E.H. Williams tinue to make Illinois o profitable Manager y-g , l_. ( ); 1 J . .1 ^;g m E L ', .- ==

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17

n rm, KPMG Peat Marwick Certified Public Accountants Peat Marwick Mein & Co.

1000 Davenport Bank Building 220 Main Street Davenport, IA 52801 The Board of Directors Soyland Power Cooperative, Inc.

and Subsidiary:

We have examined the consolidated balance sheets of Soyland Powe r Coo pe r a t ive ,

Inc. and subsidiary as of December 31, 1987 and 1986 and the related consolidated statements of revenues and expenses and deficit, and changes in financial position l for the years then ended. Our examinations were made in accordance with generally I accepted auditing standards and, accordingly, included such tests of the account-ing records and such other auditing procedures as we considered necessary in the circumstances, s

In our opinion, the aforementioned consolidated financial statements present fair-ly the financial position of Soyland Power Coo'pe r a t ive , Inc. and sqbsidiary at December 31, 1987 and 1986 and the results of their operations and the changes in their financial position fo r the years then ended, in conformity with generally accepted accounting principles applied on a consistent basis.

W '

1 February 5, 1988 1

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Consolidated Balance Sheets December 31,1987 and 1986 ASSETS (note 3) 1987 1986 Electric utility plant, at cost (note 2):

In service . $490,067,612 $ 9,514,709 Less accumulated depreciation . 1,857,345 1,115,270 488,210,267 8,399,439 Construction work in progress 5,522 488,713,236 Nuclear fuel, at cost less accumulated amortization of $956,735. 11,807,726 -

Plant site held for future use . 7,260,346 7,260,346 Net electric utility plant 507,283,861 504,37').121 investments:

i investment in associated organization, at cost. 6,404,520 5,503,780 Notes receivable (note 2) 12,986,078 8,995,058 Other investments 24,205 27,701 Total ins estments 19,414,803 14,526,539 Current assets:

Cash and invested cash . 4,883,906 5,125,429 Temporary insestments, at cost, which approximates market . 3,500,000 16,186,990 Accounts receivgble, members . .. ... 10,617,561 10,611,617 Other receivables, primarily from related cooperative 7,678,967 1,490,066 Inventories ... ... 2,614,625 -

Prepayments and other 7,982 30,637 Deterred charged 158,478 214,550 Total current assets . 29,461,519 33,659,289 Deferred charges . 409,528 430,724

$556,569,711 $552,989,573 CAPITAllZATION AND LIABILITIES Capitalization:

Members' deficit:

Membership fees. 1,500 1,500 Deficit (48,076,215) (49,855,209)

Total members' deficit. (48,074,715) (49,853,709) long-term debt, excluding current installments (note 3) . 512,840,786 536,319,697 Total capitalization 464,766,071 486,465,988 Current liabilities:

Current installments of long. term debt (note 3) . 4,169,000 1,114,111 Accounts payable . 11,481,617 14,645,502 Advances from members . 8,164,183 7,401,855 Accrued interest . 7,813,187 1,225,894 Accrued expenses 343,651 136,223 Total current liabilities 31,971,640 24,523,585 Deferred credits (notes 1 and 2):

Equ 'y funding payments . 42,000,000 42,000,000 Deferred revenue . 17,832,000 -

Total deferred credits 59,832,000 42,000,000 Commitments and contingencies (notes 2,6 and 7)

$556,569,711 $552,989,573 See accompanying notes to consolidated financial statements.

19

Consolidated Statements of Revenues and Expenses and Deficit Years ended December 31,1987 and 1986 1987 1986 Operating revenues:

Electric energy sales . . $95,891,781 $91,337,001 Sales of ground source heat pumps, net . . . . . . 723,767 -

Distribution revenue. . . . . 101,415 281,843 Rent of electric property . . 24,881 17,115 Other. . ... 8,657 13,065 Total operating revenues . 96,750,501 91,649,024 Operating expenses:

Operation:

Purchased capacity (note 6) . . . 30,298,815 47,445,967 Energy costs (note 6). . 30,934,946 32,361,713 Transmission 1,306,377 1,199,955 Distribution .

10,919 66,250 Cost of ground source heat pumps sold. 562,658 -

Maintenance . 336,004 20,752 Administrative and general 2,448,160 2,560,900 Depreciation . 1,264,968 291,787 Refinancing expense (note 3) 3,015,484 -

Property and other taxes 146,000 94,777 Other operating expenses 24.280 141,572 Total operating expenses 70.348.611 84,183,673 Net operating margin 26,401,890 7,465,351 Other resenue, principally interest income 498,727 178.837 Net margin before interest charges 26,900.617 7,644.188 Interest charges:

interest on long. term debt . 44,424,368 51,320,550 Other. 594,192 656,121 Allowance for borrowed funds used during construction . (19,896,937) (45,9.34,336)

Net interest charges 25,121,6b 6,022,335 Net margin 1,778,994 1,621,853 Deficit at beginning of year (49,855,209) (51,477,062)

Deficit at end of year $(48.076,215) $(49,855,209)

See accompanying notes to consolidated financial statements.

20

Consolidated Statements of Changes in F.inancial Pos.t.i ion Years ended December 31,1987 and 1986 Sources of working capital: 1987 1986 Net margin . . ... ... ... $ 1,778,994 $ 1,621,853 ltems that did not use (provide) working capital:

Depreciation . . . 1,264,968 296,489 Amortization of nuclear fuel... ..... 956,735 -

Other amortization . ... ... 3,496 -

Patronage capital allocations not received in cash . (934,373) (441,037)

Amortization of deferred credits - (625,192)

Working capital provided by operations , 3,069,820 852,113 Proceeds from long-term borrowings ... 281,795,433 49,386,000 Equity funding contributions from members - 15,982,341 Increase in deferred resenues . . . 17,832,000 -

Settlement and other transfers of prior year construction costs 10,874,923 -

Current portion and repayment of notes receivable 3,900,600 -

Receipt of prior years' patronage capital allocations . 33,633 24,512 Decrease in notes receivable. -

431 Decrease in working capital 11,645,825 -

$329,152,234 $66,245,397 Uses of working capital:

Additions to electric utility plant, net . . . . . . 20,078,614 45,427,929 Transfer of transpission and substation facilities to Illinois Valley Electric Cooperative consisting of:

Property and equipment, net of accumulated depreciation of $515,433 (4,071,148) -

Deferred charg,es . (117,116) long. term debt ... 4,198,215 -

Purchase of Grantor Trust certificates . 14,986,250 -

Increase in notes receivable 7,891,620 -

Increase in deferred charges .... ..... 95,920 430,724 Current installments and repayment of long-term debt . 286,089,879 1,279,553 Increase in working capital -

19,107,191

$329,152,234 $66,245,397 Changes in components of working capital:

Increase (decrease) in current assets:

Cash and invested cash (241.523) (2,275,358)

Temporary investments . .. (12,686,990) 16,186,990 Accounts and other receivables . 6,194,845 (4,146,026)

Inventories . ...... 2,614,625 -

Prepayments and other. (22,655) 3,770 Deferred charges . (56.072) 214,550 (4,197,770) 9,983,926 Increase (decrease) in current liabilities:

Current installments of long-term debt 3,054,889 587,597 Accounts payable ... (3,163,885) 639,090 Advances from members , 762,330 2,940,429 Notes payable, other - (1,590,000)

Accrued interest 6,587,293 (11,727,080)

Accrued expenses . 207,428 _ 26,699 7,448,055 (9,123,265) increase (decrease) in working capital . $(11,645,825) $19,107,191 See accompanying notes to consolidated financial statements.

21

Notes to Consolidated Financial Statements December 31,1987 and 1986 (1) Organization and Summary of SignifiCant Accounting Policies (a) Organization The consohdated financial statements reflect the accounts of Soyland Power Cooperatne. Inc. (the Cooperatne) and its who!!y owned subsidiary. The subsidiary was created in 1987 for the purpose of selling ground source heat pumps to rural consumers. All significant intercompany transactions hase been eliminated in consolidation.

(b) Basis of Accounting The accounting records of the Cooperatise are maintained in accordanct with the Uniform system of Accounts prescobed by the Rural Electrification Administration. The Cooperatise is a generation and transmission cooperatne providmg whotesale electnc service to its fourteen members.

The Cooperatis e's rates are estabbshed by the Board of Directors and are subject to approsal by the Rural Electnfication Administration.

The Cooperatne is not subject as to rates, accounting and other matters relating to the regulatory authority of the Ilknois Commerce Commission.

The Cooperatne has entered into w holesale power agreements with each of its members w hich require the members to buy and receise from the Cooperatise all their power and energy requirements and require the Cooperatne to sell and deliver power and energy in satisfaction of such requirements. The wholesale power agreements with the members estend to the year 2015.

(c) Electric Utility Plant Depreciation of equipment is prosided over the estimated usefullises of the respectne assets on the straight-line basis at rates ranging from 2.5% to 20%.

Maintenance and repair of property and replacements and renewals of items determined to be less than units of property are charged to expense.

properties Replacement are disposed and of, the original renewals cost. plus cost ofof items remos considered al less saisage of suctoh be unitsis of property, property charged are charged to a cumulated to the pro depreciation.

(d) Allowance for Borrowed Funds Used During Construction s

The a!!owance for borrowed funds used during the penod of construction represents the estimated interest cost of borrowed funds used for construction purposes. The composite rate used to calculate the allowance approsimated 8 4% for 1987 and 19% for 1986.

The Cooperatne capitahzed interest on borrowed funds relating to its intestment in the Chnton nuclear generating fachty through June 30,1987 Beginning July 1,1987, interest on borrowed funds relating to the Chnton faohty are being expensed and collected from members through ratet (c) Nuclear Fuci The cost of nuclear fuel. indud ng capitahied interest and oserheads, is being amortved to fuel espense on the basis of the number of units of thctmal energy produced in relationship to the total thermal units espected to be produced oser the hfe of the fuel. Nuclear fuel espense indudes a prousion for estimated spent nuclear fuel disposal cost which is being coDetted currently from members.

(f) Ins entories insentories are stated at moung aserage cost, (g) Pension Plan The Cooperatne makes annual contnbutions to the plan equal to the amount accrued for pension espense.

th) "ower Supply Pa)ments Payments made under power supply agreements (see note 6) are classif;ed as purchased capacity, energy costs and transmission es.

pense in the statement of resenues and espenses.

til Deferred items Deferred credits consist of equity fundmg payments and other deferred revenues. The equity fundmg payments were collected from men.oer, and w ere used to reduce borrow mgs related to the Chnton generatmg facihty. These payments will be amortized to revenue oser a penod not esceeding ten years. The deferred resenues represent payments collected from members during 1987 for estimated operatmg espenses of the Chnton generating facihty that were not incurred due to Chnton not being placed into commercial operation until December 1987. These pay ments will be amortized to res enue oser a period not to exceed three years beginning in 1988. Defer.

red (harges consist ponc pally of recoserable energy costs which will be recosered through rates in future years.

(j) Re(lassification Certain accounts for 1986 hase been reclassifrd to conform with the presentation for 1987.

22

(2) Electric Utility Pbnt in Service The major classes of elec tnc utihty plant in serm e at De(emlwr ll,1987 and 1986 are as fNlows:

1987 1986 Nuclear Plant and related fu ihties . $487.306,444 $ 2.302,697 Transmission Plant . 610,713 5,112.613 Distribution Plant . '7,292 General Plant . 2.150.455 2,022.107 Electric utihty plant in sersice $490,067.612 $ 9.514.709

he Cooperatn e Fad a 10.5% mterest (adjusted to 7.02% in 1987 as descnbed below) in the 950 megaw att Chnton nuclear generating facihty located in Chntoa, Ilknois. Construction and testing of this unit was completed during 1987 and the Cooperathe placed the unit in sersice in December 1987 at an aggregate cost of $500,070,905 (including nuclear fuel, capitahzed interest, plant site and substation) or 90% of total assets at December 31,1987. The aggrrgate cost of the unit r' aced in seruce is subject to adjustment based upon a determination of the 6nal ownership percentage discussed belo v.

In October 1984 the Cooperatne entered into an agreement with Illinois Power Company t80% owner and project manager of the Clinton facihty) which hmits the Cooperatne's insestment in Chnton feuluding nuclear fuel, capitahred interest, plant site and substaton) to $236.250.000 of the direct costs of placing the plant m commercial operation. Thrs hmit was reached in February 1985. With the completion of the Chnton facihty, the Cooperatne's 10.5% ownership interest was adiusted in 1987 based upon lihnois Power's estimate of the total direct cost of the Chnton facihty. This percentage is subject to further adjustment based upon a determination of the final direct costs of the facihty.

In connection with the completion of the Chnton facility dunng in87, the Cooperath e and libnois Power negotiated a prehminary settlement on nuclear fuel insentory and other costs not subject to the cost hmits des nbed abose. The settlement is to reimburse or charge the Cooperatne for its proportionate share of these costs based upon the estimated lower ow r,ership percentage. The settlement will result in an estimated reimbursement of $10,197,619 of nuclear fuel and other costs and an estimated charge of $2,306,000 relating to insentones. The estimated net reimbursement amount of $7.891,619 will be paid to the Cooperatise by lihnois Power oser fne years beginning in 1988 plus mterest on the unpaid balance.

During 1987, the ooperathe co!!ected $17,832 000 in resenues from members for estimated operating expenses of the Chnton facihty. As a result of Chnton not bemg placed into commercial operation until December 1987, these estimated oparating expemes were not incurred.

Accordmgly, the $17.832.000 in res enues collected from members has bee i reflected as a deferred crecht in the consohdated balance sheet at December 31,1987.

Although the estimp cost of Chnton to the Cooperatne is sigmhcantly higher than original estimates. the Cooperatne estimates that its rates (arter considenng the interest reduction related to the debt re6nancing discussed in note 31 will be suf6cient to fully recoser its insest.

ment in Chnton oser the hie of the facihty. Mana jement is currently descioping a rate modi 6 cation plan to be implemented in 1988 w hich i, designed to obtain full recosery of all Chnton costs. The p!an will be des eloped to comply with Statement of Financial Accounting Stan.

dards No. 92 and w?! include the deferral of certam costs for future recovery and the amortization of equity funding payments. The plan will be designal to proside the Cooperathe a level or cash rates that will be adequate to meet the Cooperatn e's operating needs. The Cooperatn e estimates that its rates under such a plan will increase by approumately 4% during the first full year of commercial operation of the Chnton facihty in 1988 with )early increases thereafter aseraging 2.5% through 1997.

(3) Long Term Debt Long term debt at December 31,1987 and 1986, consists of the following:

1987 1986 Federal Financing Bank (FFB)-7.337% 10 0% rmngage r.aes payable, guaranteed by the Rural Electnfication Adrr mistration tREA), due m quarterly installments through 2018. $192,138,376 $474,323,789 Rural Electnc Cooperatne Grantor Trust Certi6 cates-7.3% to 9.7% notes payable, guaranteed by the Rural Electrification Administration IREA), matunng from 1992 through 2017. 281,000 000 -

National Rural Utihties Cooperatn e Fmance Corporation (CFC) s ariable rate (currently 7.85%) mortgage notes payable, due in quarterly installments beginning in 1988 through 1998. 58,707,660 58.707,660 Rural Electnfication Administration tREA)-5.00% mortgage notes payable, due in quarter.

ly installments approumating $48.000, including interest, through 2018; transferred to

!!hnois Valley Electric Cooperathe in 1987 - 2.957,310 National Rural Utihties Cooperatne Finance Corporation (CFC) 10 00% notes payab!e, due in quarterly installments approximatir g $34,000. including interest, through 2015; transferred to !!!inois Va!!ey Electric Cooperathe in 1987. - 1,265,049 Notes payable-7.375% due in var ous installments through 1992. 150,000

_ 180.000 Total long-term debt . $5 31,996,036 $ 537,4 33.808 1.ess:

Current installments - 4.169.000 1,114,111 Reacquired Grantor Trust Cert 4 cates. net of discount . 14.986.250 -

Long-term debt. euludmg current mstallments and reacquired debt $ 512.840.786 $ 5 36.319.697 23

(3) LongoTerm Debt (continued)

On March 19,1987, the CooperatNe, with REA approval, refinanced approximately $282,000,000 of outstanding FFB debt. The refinancing was completed by issuing notes to the private sector through the Rural Electric Grantor Tn,sts. The Cooperathe used the proceeds from the issuance of these notes to repay existing FFB debt without prepayment penalty. The costs associated with the refinancing were expensed and recosered from members through rates in 1987.

Annual maturities oflong-term debt for the fhe years ending December 31,1992 are as follows: 1988, $4,169,000,1989, $7,218,000; 1990,

$8,180,000; 1991, $9,379,000 and 1992, $10.287,000.

At December 31,1987, the Cooperathe had $7,416,000 of unadvaxed funds available from long4erm loans approwd by FFB and $24,000,000 of unadsanced funds available from short-term loans approsed by CFC, Al! assets of the Cooperative are pledged to secure the long term debt to FFB and CFC.

(4) Pension Plan The Cooperathe participates in a multi-employer defined contribution pension plan which co~ers substantially all employees. Pension ex-pense amounted to $78,130 in 1987 and $80,635 in 1986.

(5) Income Tax Status The Cooperatne is a nonprofit corporation under the laws of Illinois and is exempt from Federal and state income taxes under applicable tax laws.

(6) Commitments in October 1984 the Cooperative entered into agreement w.th Western Illinois Power Cooperative, Inc. (WIPCO) to pool operations effec-the January 1,1985, and to merge into one cooperathe at an unspecified future date. Under the pool agreement, the Cooperative and WIPCO combine their power supply facilities and related costs in order to provide power to their members at the lowest possible rate.

WIPCO is a generation and transmission cooperathe that provides wholesal'lectric service to its sesen members. WIPCO also had a 9.5%

interest in the Clinton nuclear generating facihty, WIFCO's investment in the ,n generating station has also been kmited and their ownership percentage has been adjusted to 6.36% in 1987 in a manner consistent wm oat used to adjust the Cooperative's ownership percentage.

As of December 31,1987, summarized unaudited financial information c; WiPCO is as follows:

Total assets . , $482,622,836 Total capitalization (including long-term debt of $431,430,936) . .. $43N078,862 Total liabilities and deferred credits . $50,543.974 in 19d7, the Cooperative received $1,250.000 from WIPCO as an adjustment of fised costs. This amount has been netted against pu chased capacity costs in the consolidated statements of revenues and expenses.

WIPCO has been unable to satisfy the debt service requirements dunng 1986 and 1987 on certain debt owed to FFB (which is guaranteed by REA). Management of the Cooperathe has indicated that a proposed restructuring agreement between REA and WIPCO is currently being negotiated whereby WIPCO's debt would be restructured to allow for attainable debt service. However, if an acceptable debt restructuring plan can not be obtained, WIPCO would be unable to meet its continuing obligations which could impact the terms of the pooling and merger agreement referred to above.

The Cooperathe anticipates that the Clinton generating station will furnish approximately 30% of the SoylandAVIPCO energy requirements.

The current and additional long-term SoylandAVIPCO energy requirements will be furnished through power supply agreements with lilinois ,

Power Company UP) and Central lilinois Pubhc Service Company (CIPS) as discussed below.  !

The Cooperatne and WIPCO hase contracted to purchase capacity from IP's fossil fueled generating plants through 2004 as follows:

1988-1992 - 400MW 1993-1994 - 300MW 1995-2004 - 150MW t

The Cooperathe and WIPCO hase also contracted to purchase capacity from CIPS's coal-fueled units through 1999 as follows:

1988 - 146MW 1989 - 157MW 1990 1994 - 213MW 1995-1999 - 101MW The contract payments to IP and CIPS are determined on an "as if owned" basis and include capacity charges (consisting of production, operation and maintenance costs) and energy charges. Tota 1 contract payments made to IP and CIPS amounted to approximately $40,700,000 and $17.800,000, for 1987, and $40,300.000 and $35,100,000 for 1986, respectively.

(7) Contingencies Under the Pric6 Anderson Act, all nuclear power station operators are subiect to public liabihty for a nuclear incident which is currently limited to $695 million per incident Coverage of the first $160 million is provided by private insuraxe with the balance provided by retrospecthe premium assessments against each licensed nuclear unit in the United States. As a joint owner of the Clinton nuclear facility, the Cooperative is a party to the insurance policies which are maintained by illinois Power Company (80% owner and operator of Clinton) and is charged for its proportionate share of such insurance costs, in the esent of an incident at any nuclear plant in the United States in excess of $160 million, the Cooperative could be assessed a maximum of $525,000 per incident, with a maximum assessment of $1,050,000 per year.

The Cooperathe is a defendant in various claims and lawsuits. In the opinion of management, these actions are not expected to have a material adverse effect on results of operations or financial position.

24

_ _ ~ _ - . __ __ - _ _

l N O T E S 1

1 1

l l

l

' 1 l

l l

25

l MEMBE R COOPERATIVES' 1987 Operating Statistics STATEMENT OF OPERATIONS: Clinton Coles.

(In $1,000) Clay County Moultrie

.m ~ w-,,,r '

, - _ ~

-a#

L Operating Revenue G . . . , i, . -

+%_

3.. ... . .. .. .,..

- -- -u m wam .

$3,809;'~m g .-' $8575.i

._. ._ & - - ' W$_M _

Purchased Power $2,544 $6,449 $ 7,501 Operating Expenses. 740 1,102 1,778 Depreciation Expenses 217 259 383 Tax Expense. 51 62 134 Interest . 170 248 302 r -- - - - - - ~ - ,,-. m m. m ,. .

i ~ " $3,722 . .r ow

~ ' " .m. -,$8,120

. . _ _ .J-' -.

'. . . . i- - m? . w.. E$10,0W. ._1.,_. ~D

{. Total a.-m Costm ._- A- Electricm.um m.:.ua;m. Service .' s Operating Margins 5 87 5 55 $ 727 Non. Operating Margins &

Capital Credits 24 69 210

,-~~ .. . ..

nnn -r gn. - ,-- - - - - -- --

. m a[. Total Patronage Capital or Margins . . . N.,, . . .."3

_w--.--n.~.nwm.wm.a

. . .mn- nm,-e

. . $ 111 =wL

$ -124 - .. '$L 937-a m-a ~- ..x ASSETS & OTHER DEBITS Total Utility Plant $8,084 $4.608 $14,583 Accumulated Provision for Depreciation & Amortization 2.063 2,680 4,348

_ ._. , . _ . _ , . , ,,._..,m,.., _ , _ - _

_ ' , y~ - . _ . _ . , , ,

p__ Net Uti ity Pl_nt

~

gi a .....n '. .....  ; ..

$6,0213 '-' $6,928 0 - ,$10,235 ? '

u:aw.mua.wu - -

-.~ - . . . '- -

- - - u. - - -~.wa -

Total Other Property &

Ins estments S 760 $ 510 $ 722 Current & Accrued Assets. 722 1,926 3,652 Deferred Debits 67 41 38 F Tciial Aliel C T 7 ." ".~ T T.

w _ _.m.w_- ,m.a.cu.a . ' ~ " .~ .w.mm.2 T.".".T.'77IT.N *$7,' 570 TI" K405P $T4Tf17?

.am _ - --  ;= m LIABILITIES & OTHER CREDITS Margins & Equities $3,031 $3,541 $ 8,339 Long. Term Debt 3,654 5,617 5,775 Current & Accrued Liabilities . 443 112 322 Deferred Credits 442 135 211

n. .- .g,,,-..w,...e

, . . , , , ' , $7,560

. . - ~ .

i Total Liabi it,ies . . . . . - ' ,n$9,405 '

1 . .a . . .'i. .' . .. . . $14,647

..._a u___ w. 2.m2.. 2;wn .w .m. ma . 2 OTHER STATISTICS Miles of Line 909 955 1,760 Consumers Sersed 2,958 4,499 7,590 Consumers Per Mile 3.25 4.71 4.31 KWH Sold Per Consumer. 13,435 19,242 13,987 Total MWH Sales 39,741 86,572 106,159 Annual Revenue Per Consumer . 1,288 1,817 1,426 P',nt Insestment Per Consumer . 2,733 2,136 1,921 26

m4 ha = "m **e .*x. WI$ , . . . , , ,

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/T'% So ' land Head ( uarters . .

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{- '.E$T12,3W ~ [iT20I5'8?NP57I8,'Ii9'"~$ $ id79977

=

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$ 9,455 $ 15,614 $ 14,043 $ 15,972 $112,343 $ 8,025 1,619 2,630 2,405 2,211 23,037 1,646 424 995 799 794 6,967 498 588 258 195 193 2,273 162 3 1,345 878 642 7,905 565

't n f ' $ ~12,089. __n$

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$ 18,320 e ' 1 $ _..__&a_.

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- $~ .10,895 c lR --- 1 h__ .. wh. - -.ww . $152,525

_ .. _ _ '. y,u a m -. - _ . .w 254 (255) 359 335 1,427 102 209 68 130 347 2,208 158 l

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$ 13,679 5 41,694 $ 28,723 $ 27,697 $275,506 $ 19,679 l 6,673 10,187 6,710 9,448 72,511 5,179

~

L_ {._760FW$~fil5bf~"u~~$'22Wi3~~$"lo,749"~~'~$207,993"_~"_A___J

_ . _- . ' "' .u ., '- -

$~1ES00'l =

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$ 2,710 $ 1,553 $ 1,232 5 1,333 $ 15,787 $ 1,128 421 4,592 1,394 3,490 34,588 2,471 1 43 114 59 787 56 pm q -

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254,157

~

.. -. . ~= .: ._.w. , a P"..$Tf83i3C .. ..

$ 9,859 $ 10,703 $ 7,173 $ 12,916 5 96,193 5 6,871 0 24,464 17,109 9,341 144,217 10,301 90 2,408 491 400 11,359 811 189 120 0 474 2,388 171 l

~

L a?w.Tl 3 138' . .uz ~.T f5?T6Vf w-.I ~ f M!773P~ w. $13;i31a:-~7$15{1W~~~~"flC153'd

_ a.uu. ..

2,036 3.027 2,640 3,224 27,792 1,985 8,443 13,511 12,768 13,318 107,566 7,683 4.11 4.46 4.84 4.13 -

3.91 16,340 14,123 16,059 18,428 - 14,226 '

137,955 190,818 205,037 245,422 1,584,533 113,181 1,462 1,524 1,463 1,513 - 1,4') 1 1,620 3,086 2,250 2,080 -

2,557

Corn- Eastern / Illinois Belt Illini Edgar Farmers Valley McDonough Monroe f . $i5',888 Y

~

$17,478 _ ,'7f 5498~ $ 13 O [ [ w -53,8211L.i $# 5,9667GV' i nsM416 7

e. . . .-.a . - .

• x

$ 10,993 $11,479 $ 3,954 $ 1,116 $ 4,242 $ 4,598 $ 4,383 2,490 3,691 1,045 226 1,457 896 747 829 1,009 202 86 483 212 275 266 175 94 24 104 73 56 1,408 960 149 86 1,285 128 301

. . . - - n -.

w$3,5,986 '. . - ,,

Fa5 7 $i7,314 -- '- '$ 5,444 r. n ,' $ 1,538 .. me,'m

~ .

m __ o. '. $7,571 -. ww. $ :5,907 J -:$f5,762  %,

ua--.es (98) 164 254 56 (750) 59 180 440 245 119 13 155 137 42 l

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$33,357 $37,552 5 9,188 $ 3,259 $29,778 $ 7,582 $10,722 7,200 9,8'4 3,064 953 2,927 3,459 2,925

~I65i T". "$72l506"W"f25 551  ? f.TW~fff97.i"ilg

~

{. $26,157 "$27,678 __. .a

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$ 1,494 $$ 1,971 5 1,452 $ 178 $ 1,000 421 $ 431 7,149 3,606 1,408 155 3,323 2,386 364 20 85 1 4 267 17 30 F""Jj4,820 E 1 ~$33,340 "$"8,985.au.A '

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$ 10,860 f 13,140 $5,145 966 $ 3,880 $ 4,214

$ $ 2,426 22,084 18,081 3,526 1,565 24,301 2,514 5,986 1,595 1,887 262 112 3,032 99 106 281 232 32 0 28 120 104

~

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2,793 4,529 1,473 339 1,738 1,379 970 11,344 12,499 4,892 1,248 5,414 4,617 4,465 4.06 2.76 3.32 3.68 3.12 3.35 4.60 14,062 13,198 11,174 11,842 10,860 14,124 12,295 159.522 164,965 54,661 14,779 58,795 65,210 54,897 1,401 1,398 1,165 1,277 1,260 1,292 1,331 2,941 3,004 1,878 2,611 5,500 1,642 2,401

I l

l Executive e.n. wiliiams, executive vice President and cenerai s<anaser

& Wiiiiam V. Checsman, Afanager of Engineering and Operations Douglas A. Dougherty, Director of Economic Development James Greenwood, Afanager of Power Supply Kenneth W. Kammeier, A1anager of Finance and Administration l Petricia S. Reynolds, Director of Public Relations 1

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