2011Annual Report

Robert HillChairmanPerryville

Larry WoodVice-Chairman

Lonoke

Robert MaertensSecretary-Treasurer

Benton

Jimmie CrockettRose Bud

Peggy CusickBenton

Tom HastyAlmyra

Rick LoveJacksonville

Improving Quality of LifeSince 1937 First Electric Cooperative has provided affordable,

reliable and safe power to its members in portions of 17 counties in Arkansas, powering homes, businesses and farms. Many things have changed over the years, but one thing has remained the same – our commitment to the members we serve. With employees who live and work in the communities, the cooperative cares about Arkansans.

Progress During the past 74 years, First Electric has grown from three em-

ployees and 150 members to more than 225 employees and 88,000 active accounts. During that period of time, the cooperative has built 43 substations and constructed more than 9,600 miles of lines. First Electric will continue to grow and make improvements with the purpose of better serving our members.

In 2011 First Electric completed its 43rd substation, Avilla. The substation, which is located in the Avilla community in the Benton district, was built to decrease the load on the Congo and Colleg-eville substations. Constructing the new substation shifted the load of 1,992 member-accounts to a single substation; therefore, reducing the load on the existing systems and allowing First Electric to pro-vide more reliable power.

The task of designing and building a system to remotely moni-tor and control the growing number of substations began in 2009. The Supervisory Control and Data Acquisition system, referred to as SCADA, improves load management and reduces outage lengths and system losses. Currently, SCADA is in the final stages of opera-tional and software testing.

Energy EfficiencyFirst Electric is committed to promoting the efficient use of elec-

tricity to meet the growing energy requirements of its members. First Electric marketing representatives are trained and certified to conduct either a free walk-through energy audit or a fee-based diag-nostic energy audit on members’ homes.

The free walk-through energy audit involves inspecting a home and evaluating the energy efficiency of the building, household ap-pliances, heating and cooling system and lighting.

The diagnostic energy audit uses a blower door test, infrared camera and duct blaster. These tools allow an energy auditor to iden-tify thermal deficiencies that cause high energy consumption and

an uncomfortable home. A detailed report is provided and includes the measured air tightness of the home, infrared camera results, duct leakage and specific recommendations for improvements that will reduce energy usage.

First Electric members William and Nancy Ferrell of Hopewell won the 2011 Electric Cooperatives of Arkan-sas $50,000 Energy Efficiency Make-over Contest. The Ferrells’ 31-year-old home received a comprehensive pre- and post-diagnostic energy audit, blower door test, duct blaster test and

infrared thermography. The home received numerous energy-saving applications, including a tighter building envelope, Retrofoam insu-

lation in the sidewalls, a foam-encapsulated attic, an energy-efficient Marathon water heater, an ultra-efficient geothermal heating and cooling system and high-efficiency windows and doors.

First Electric members who submit their application to the $50,000 Energy Efficient Makeover Contest are eligible for the $5,000 Mini Makeover Contest offered through the cooperative. One member from each district is selected annually to receive the mini makeover.

SafetySafety is THE top priority at First Electric. Employees working in

the field must follow safety procedures, and First Electric provides constant training to keep that at the forefront of their minds.

First Electric also focuses on the safety of our members as they interact with electricity in their daily lives. We educate elementary-age children on how to stay safe when near electricity with a magic show. For older children and adults, personnel use a high-voltage safety trailer to demonstrate firsthand the danger of coming into contact with energized lines.

Service-Driven, Not Profit-DrivenIn 2011, with historically low interest rates, First Electric took

advantage of an opportunity to refinance $53 million dollars. The transaction allowed First Electric and its members to save $1.8 mil-lion in interest cost.

First Electric’s philosophy of operating on sound, conserva-tive business principles makes it possible to provide the most re-liable service at the lowest pos-sible cost. In 2011, First Electric retired $3.8 million dollars to its members in the form of capi-tal credits. This brings the total returned to members to more than $53.2 million dollars.

Another service First Elec-tric provides is the Co-op Con-nections Card, which allows members to save money on products and services at participating local and national businesses. In Oc-tober 2010, the pharmacy discount was added to allow members to save money on acute care medications. First Electric members saved more than $147,000 on prescriptions filled with the Co-op Connec-tions Card in 2011.

Due to the generosity of First Electric members, Operation Round-Up donated more than $56,000 to local nonprofit organiza-tions in 2011. Since its inception in 1998, more than $500,000 has been donated on behalf of Operation Round-Up participants.

As we move into 2012, First Electric will continue to provide af-fordable, reliable and safe power to our members. Improving quality of life, that’s our commitment to you.

First Electric CooperativeImproving quality of life

Your Touchstone Energy® Cooperative

800-489-7405 www.firstelectric.coop

First Electric CooperativeImproving quality of life

Your Touchstone Energy® Cooperative

Board of Directors

The cooperative business model centers around seven principles, which guide First Elec-tric Cooperative.

Voluntary and Open Membership

Democratic Member Control

Members’ Economic Participation

Autonomy and Independence

Education, Training and Information

Cooperation Among Cooperatives

Concern for Community

Cooperative Principles

David LuebkeScott

Robert M. HillChairman

Don CrabbePresident/CEO

Condensed Balance Sheet

Condensed Operating Statement

Where the Dollar Comes From

Where the Dollar Goes

System Statistics

Number of member accounts served Miles of power line in operationNumber of accounts per mile of line

Total kWh bought by co-op membersAverage monthly residential kWh usageAverage monthly residential billAverage residential revenue per kWh

Total kWh purchased by cooperativeTotal cost of power purchased by co-op

Number of employeesNumber of distribution substations

Counties served, property taxes paidArkansas CountyCleburne CountyConway CountyFaulkner CountyGarland CountyGrant CountyIndependence CountyJefferson CountyLonoke CountyMonroe CountyPerry CountyPrairie CountyPulaski CountySaline CountyStone CountyWhite CountyYell County Total property taxes paid

201188,389

9,662 9.15

1,868,272,111 1,273

125.20 0.0984

2,003,311,464 101,278,973

22443

218,027 326,280

52,269 11,900

1,755 5,820 2,009

67,352 502,746

6,398 198,522

51,464 398,172 421,129

7,197 254,720

1,025 2,526,784

201087,271

9,597 9.09

1,898,306,212 1,331

129.14 0.0970

1,981,389,118 92,622,416

22342

218,680 330,118

52,535 12,325

1,752 5,679 1,842

67,063 509,081

5,627 200,817

52,031 407,838421,891

7,281 248,442

1,114 2,544,116

AssetsElectric PlantLess Accumulated DepreciationNet Utility PlantOther AssetsCurrent AssetsTotal AssetsLiabilities and Members’ EquityMembers’ EquityLong-term DebtCurrent LiabilitiesOther LiabilitiesTotal Liabilities and Members’ Equity

Operating RevenuesPower CostOperations and MaintenanceDepreciationTaxesInterestTotal Operating ExpensesMargins from OperationsNon-Operating MarginsNet Margins

2011421,893,987

123,259,791 298,634,196

86,634,584 32,377,817 417,646,597

193,070,865 187,118,623

19,186,484 18,270,625 417,646,597

2010407,218,883

116,956,483 290,262,400

80,093,590 36,808,584 407,164,574

182,514,917 191,446,736

18,156,232 15,046,689

407,164,574

2011 165,768,065

101,278,973 35,204,171 13,035,236

7,095 10,219,658 159,745,133

6,022,932 10,154,938 16,177,870

2010 168,115,194

92,622,416 36,907,645 12,692,113

13,263 12,169,108 154,404,545

13,710,649 7,859,048 21,569,697

Operations14%

Wholesale Power61%

OperatingMargins

4%Interest6%Depreciation

8%

MemberAccounting

4%

GeneralAdministration

3%

Residential71%

Commercial and Industrial

21%

Other2%

Public Authorities

1%

Irrigation5%

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