ANNUALREPORT09

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B TOGETHERWESAVE

Shortly after last year’s annual meeting, Roanoke EC and other electric cooperatives nationwide launched an effort aimed at educating you about energy conservation and effi ciency. Entitled “Together We Save,” the campaign (also the theme for this year’s Annual Meeting) is built on the concept that small changes in behavior can help your cooperative deliver more effi cient, reliable and affordable energy.

At a time of steady growth and demand, every consumer has a responsibility to be more deliberate in using energy wisely and effi ciently. Our ultimate objective is to provide our members with simple tools that translate into real savings. We encourage you to visit the www.togetherwesave.com website, which includes a virtual home tour with tips on how to save energy and money at home, interactive web applications, and the Touchstone Energy TV that features short videos on energy audits, lighting, insulation and more. If you have not already visited this site, you’ll fi nd it very useful. Also, we encourage you to share your stories on things you’ve done to save on energy costs. These testimonials are priceless when your peers hear from you.

We all have a responsibility in creating a greener world. By doing your part, not only are you reducing your overall energy budget, you are also helping REC lessen the need for additional power generation in the future, which could be very costly under proposed legislation and tougher federal guidelines.

In 2009, our staff managed another successful year by puting a lot of effort into fi nding ways to reduce operational costs and ultimately save you money.

Below are a few measures taken to reduce overall controllable expenses:

■ Reduced labor cost by: ✓ providing extensive cross-training to

increase staff capacity and limiting the use of part-time employees

✓ reducing corporate resources at events like the Annual Meeting

✓ continuing to deploy automated metering to eliminate the use of personnel and transportation to read meters

■ Reduced the company’s exposure to writing off unpaid bills by:

✓ implementing pre-paid/pay-as-you-go metering

✓ shortening our billing cycles (the length of time between members receiving their electric bills and disconnecting service for non-payment)

We take pride in knowing that we were able to meet these goals while continuing to improve overall customer service. Our signature project in 2009–opening a new state-of-the-art headquarter facility–infused a major boost in our service level. The new facility gives REC numerous opportunities to be more effi cient. Examples include: becoming more centrally located to all parts of our service territory to reduce the drive time and fuel cost required for our service and maintenance personnel to reach our members; providing our members a drive-through window payment option; and establishing a way to better manage over $1 million in inventory via a larger more organized warehouse facility.

We always seek to provide affordable and dependable electric service. We are excited to bring you a new way to reduce your energy costs. Hopefully you will take advantage of our energy effi ciency programs as your cooperative continues to fi nd new ways to reduce its operating costs. With both of working using the resources made available to us, “Together We (Will) Save.”

WHEN WE WORK TOGETHER, ‘TOGETHER WE SAVE’

Allen Speller, Chairman

Curtis Wynn,President and CEO

EXECUTIVESUMMARY

B TOGETHERWESAVE

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ROANOKE ANNUAL REPORT 2009 C

Continued on page D

WORKSUMMARY

“Together We Save,” this year’s annual meeting theme, coincides with a nationwide effort that affords members the opportunity to conserve energy and reduce their energy budgets. Conserving ultimately offsets pending costs to REC and other utility providers by lessening the need for additional power generation. Along with this effort, your cooperative continues to communicate with our elected offi cials in Washington, D.C., on the importance of fi nding a balanced solution to our energy needs–one that achieves real environmental goals without draining family budgets or further harming the economy.

Working together and incorporating little changes will make a big difference! Today, that means focusing on energy conservation, effi ciency, the latest technologies, and straight talk about energy costs. With that also comes a commitment from the cooperative’s family to continue providing safe, reliable and affordable electricity while enhancing the quality of life in the diverse communities we serve.

ENGINEERING, OPERATIONS, AND TECHNICAL SERVICES

This department is responsible for planning and designing the cooperative’s electric distribution system, maintaining all of the cooperative’s fl eet of vehicles, maintaining existing cooperative lines, both overhead and underground, and constructing new lines as needed. Other responsibilities include administering information systems, system mapping, electric metering, material purchasing and supply, and substation monitoring.

Although there were many accomplishments in this area in 2009, the highlight is this department’s leadership in facilitating a successful move to the new headquarters facility. Other accomplishments are as follows:

■ Improved effi ciency, accuracy and overall ability to manage the poles, wires and other materials stored in our warehouse

✓ These very expensive materials are critical to our ability to build and maintain our power distribution system and restore power for our members

Garland and Sandra Lee are among area business owners who participate in the Co-op Connections program. Their restaurant, called A New Flavor, and other participating businesses offer special discounts to cooperative members. In exchange, the businesses get additional media exposure and increased visibility.

✓ The new headquarters is better equipped to manage inventory material in an enclosed and centralized warehouse

■ Refi ned the process of tracking construction jobs from the beginning to the end, thus allowing us to better understand and manage costs

■ Installed new software that better enables the cooperative to monitor its electrical distribution system and quickly restore power outages

■ Improved communications capabilities at Mapleton substation

MEMBER SERVICES AND MARKETINGThis department provides members with up-to-date information about the cooperative and its services. In addition, it also administers a broad range of community relations and marketing efforts. Every year the cooperative offers numerous grants and youth programs, all designed to improve the communities in which our members live and work. This department is also responsible for billing, collecting payments, reading meters, and

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D TOGETHERWESAVE

coordinating all service requests as well as maintaining complete personal records of all consumer-members. The many exciting accomplishments in 2009 included:

■ Completed website updates ✓ The cooperative’s website was

enhanced to allow more interactivity with members at a time that meets their schedules

✓ Requests for unclaimed capital credits, requests for capital credits of deceased estates, and new connect service orders can be coordinated through our website

■ Installed 400 prepaid metering accounts on system

■ Enhanced collection efforts to improve the cooperative’s exposure to delinquent accounts

✓ More remote disconnect collars were placed in the fi eld

✓ The cooperative is now equipped to perform calls to delinquent accounts as another layer of notice prior to disconnection

✓ The cooperative also changed pay-ment terms for delinquent accounts

■ Coordinated a strategic energy effi ciency program

✓ The cooperative worked very closely with Greenco Solutions, a green services company owned by REC

and other cooperatives, to meet energy effi ciency and renewable energy goals

✓ REC also worked very closely with the Roanoke Construction Group, a branch of the cooperative’s nonprofi t affi liate, the Roanoke Center, to coordinate many energy effi ciency programs.

✓ Members were (and still are) encouraged to visit www.togetherwesave.com for more information on conserving energy

■ Incorporated the Co-op Connections Card Program

✓ All members received this discount card in April 2009

✓ This program links REC members to participating businesses in the area by receiving discounts for purchases at these businesses

✓ Businesses were (and still are) encouraged to participate

■ Completed setting up The Roanoke

Center as a payment center

HUMAN RESOURCES DEPARTMENTThe Human Resources department is a service-orientated team that provides expert consultation and support to REC and subsidiary employees, while serving as a resource for the REC Board of Directors. Responsible for developing and carrying out programs involving personnel administration including recruitment efforts, medical and disability insurance programs, policymaking, wage and salary program reviews, training, wellness programs, and all payroll activity, the Human Resources Department is committed to a holistic approach to excellence that includes caring for the people who work to serve you. That is why

Right: REC’s Youth Tour representative Tatyanna Holley (third from left) with her family.Below: The group for the 2010 Youth Tour got to see historic sights and learn about government in Washington, D.C.

Line Foreman Robert Price spoke with students at Riverview Elementary’s Career Day.

WORKSUMMARYCONTINUED

Continued from page D

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ROANOKE ANNUAL REPORT 2009 E

REC continues to invest in its employees by providing training, seminars and health and wellness programs. Exciting accomplishments in 2009 included:

■ Reviewed the performance management process to reinforce desired behaviors for successfully completing corporate goals

■ Cross-trained HR staff to handle multiple functions within the department

■ Worked with legal counsel to review and update personnel policies

■ Implemented rewards/recognition program

■ This programs rewards employees for meeting goals and criteria such as REC’s work plan objectives, member satisfaction, cost savings, process improvements and safety

FINANCE & ACCOUNTINGThe Finance & Accounting Department provides fi nance and accounting services for Roanoke Electric Cooperative and its affi liate organizations. The department’s goal is to provide accurate fi nancial infor-mation to the CEO, Board of Directors and department heads to assist in making solid fi nancial decisions.

Roanoke Electric Cooperative’s 2009 Combined Financial Audit was completed by McNair, McLemore, Middlebrooks & Co., LLP. Exciting accomplishments in 2009 included:

■ Improved the cooperative’s purchasing procedures to insure competitive prices are obtained on all purchases

■ Implemented a new budgeting tool for a more precise budgeting process

■ Implemented the cooperative’s Record Retention Policy schedule, which

provides a snap shot of what records are being kept by each department and for how long

■ Completed an accounting transition plan for the new headquarters facility

■ Improved overall reporting capabilities to better track costs and performance in areas such as construction, mainte-nance and work orders

THE ROANOKE CENTERwww.roanokecenter.orgThe Roanoke Center offers fi nancial literacy, wealth building, business counseling, accounting and administrative services for area organizations. This facility is housed at the former REC Rich Square location. The public is encouraged to visit and learn about the many programs available at the Center.

BUYER SUPPLIER NETWORKSwww.whoswhosystem.comwww.rfqhosting.comBuyer Supplier Networks (BSNs) are regionally focused economic development initiatives, which connects buyers, i.e., corporations and public sector agencies with locally owned qualifi ed and diverse suppliers. This concept is driven by two web based technologies–the Who’s Who System and the RFQhosting system. The Who’s Who system is a registry for busi-nesses that affords them the opportunity to deliver products and services to larger buyers. The RFQhosting system is the component of Buyer Supplier Network that handles the bid management process for buyers. This is where the same registrants in the Who’s Who System will present their quotes on requested products and services to prospective buyers.

ROANOKE CONSTRUCTION GROUPwww.roanokeconstructiongroup.comThe Roanoke Construction Group (RCG) was created to grow and support small and historically under-utilized construction and construction-related businesses. It promotes business opportunities as well as offers training and business programs.

REC’S WEBSITE—YOUR INFORMATION HIGHWAYwww.roanokeelectric.comFinancial Literacy Program Coordinator Ann Riddick speaks with Bruce Grant, an exhibitor

at the Financial Literacy Fun Day. The Roanoke Center was one of the event sponsors.

Top: Our move to our new headquarters was successful. Here is the fi rst cus-tomer at REC’s new facility in Ahoskie. Bottom: Bobby Joe Lindsay gets her blood work done by Viquest staff.

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FINANCIAL SUMMARY 2009 Statistics of Operations Fiscal Year ending December 31, 2009

What We The Cooperative Collected:

Total Electric Revenue

Non-Operating Interest

Total Revenues

What The Cooperative Paid Out:

Cost of Power

Transmission Expense

Distribution/Operating Expense

Maintenance Expenses

Consumer Acct. Expense

Customer Service and Info.

Sales Expense

Admin. and Gen. Expense

Depreciation

Taxes

Interest on Long Term Debt

Other Deductions

Total Expenses

Income (loss) from equity investments

Total Margins

$33,451,237.00

$381,229.00

$33,832,466.00

$18,923,967.00

$0.00

$1,311,411.00

$1,651,190.00

$1,113,350.00

$313,879.00

$0.00

$2,919,611.00

$2,122,796.00

$1,041,578.00

$1,915,131.00

$11,846.00

$31,324,759.00

($43,362.00)

$2,464,345.00

Balance Sheet as of December 31, 2009

Assets (Membership Patronage Capital and other Equities)

Electric Plant In Service, less depreciated

Other Property and Investments

Cash & Cash Investments

Consumer and Acct. Receivable

Notes Receivable

Materials and Supplies

Other Assets

Deferred Charges

Total Assets

Liabilities (What We Owe)

Membership Patronage (Capital Credits and other Equities)

Long Term Debt to REA and CFC

Accounts Payable

Consumer Deposits

Deferred Credits

Other Liabilities

Other Current & Accrued Liabilities

Total Liabilities

$63,366,538.00

$5,780,424.00

$824,067.00

$6,669,207.00

$131,000.00

$852,407.00

$51,773.00

$46,640.00

$77,722,056.00

$24,476,572.00

$41,122,015.00

$3,400,393.00

$1,142,409.00

$202,776.00

$6,478,728.00

$899,163.00

$77,722,056.00FINA

NCIA

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ROANOKE ANNUAL REPORT 2009 G

Assets

Plant

Nonutility Plant in Service-At Cost

Gross Plant

Accumulated Provision for Depreciation

Dues from Other Affi liates

Other Investments

Total Utility Plant

Current Assets

Cash and Cash Equivalents

Notes Receivable-Current Portion

Accounts Receivable (Net)

Accrued Utility Revenues

Materials and Supplies

Other

Total Assets

Deferred Debits

Total Assets

Equities and Liabilities

Donated Capital

Capital Stock

Retained Earnings

Long Term Debt

Total

Current Liabilities

Mortgage Notes

NRUCFC Line-of-Credit

Accounts Payables

Due to Roanoke EC

Due to Roanoke Economic Development, Inc.

Other

Deferred Credits

Total Liabilities

Total Equities and Liabilities

$3,300.00

$3,300.00

$0.00

$869.00

$0.00

$4,169.00

$11,733.00

$0.00

$7,437.00

$0.00

$16,965.00

$0.00

$36,135.00

$0.00

$40,304.00

$540,000.00

$10,000.00

($3,462,314.00)

$185,000.00

($2,727,314.00)

$70,000.00

$0.00

$0.00

$2,662,379.00

$29,406.00

$0.00

$5,833.00

$2,767,618.00

$40,304.00

Statement of Revenue

Operating Revenue

Operating Expenses

Cost of Goods Sold

Customer Service and Information

Administrative and General

Taxes

Total

Operating Margins Before Interest Expense

Interest Expense

Operating Margins After Interest Expense

Net Margins

$504,077.00

0.00

0.00

$656,989.00

0

$656,989.00

($152,912.00)

0

($152,912.00)

($152,912.00)

ROANOKE ECONOMIC DEVELOPMENT, INC.FINANCIAL SUMMARY 2009

Assets

Plant

Nonutility Plant in Service-At Cost

Gross Plant

Accumulated Provision for Depreciation

Dues from Affi liates

Other Investments

Total Utility Plant

Current Assets

Cash and Cash Equivalents

Notes Receivable Current Portion

Accounts Receivables (Net)

Accrued Utility Revenues

Materials and Supplies

Other

Total Assets

Deferred Debits

Total Assets

Equities and Liabilities

Donated Capital

Capital Stock

Retained Earnings

Long Term Debt

Current Liabilities

Accounts Payables

Due to Roanoke EC

Due to Roanoke Energy Resources, Inc.

Other

Total Liabilities

Deferred Credits

Total Equities and Liabilities

$582.00

$582.00

$0.00

$39,165.00

$0.00

$38,747.00

$189,639.00

$0.00

$171,621.00

$0.00

$0.00

$0.00

$361,260.00

$0.00

$401,007.00

$0.00

$0.00

($1,233,613.00)

$0.00

$8,041.00

$1,534,925.00

$2,888.00

$8,766.00

$1,554,620.00

$80,000.00

$401,007.00

BALANCE SHEET AS OF DEC. 31, 2009

Statement of Revenue

Operating Revenues

Operating Expenses

Cost of Goods Sold

Customer Service Expense and Information

Administrative and General

Taxes

Total

Operating Margins Before Interest Expense

Interest Expense

Operating Margins After Interest Expense

Nonoperating Revenue

Net Margins

$86,225.00

$2,649.00

$34,387.00

$79,497.00

$0.00

$116,533.00

($30,308.00)

$13,054.00

($43,362.00)

0.00

($43,362.00)

BALANCE SHEET AS OF DEC. 31, 2009

ROANOKE ENERGY RESOURCESFINANCIAL SUMMARY 2009

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H TOGETHERWESAVEStanding: Everette Winslow, REC’s General Counsel; Curtis Wynn, President & CEO; Millard Lee, District 6; Darnell Lee, District 7; Seated: Ken Jernigan, District 5; Allen Speller, District 8 (Board Chairman); Johnnie P. Garner, District 1 (Assistant Secretary-Treasurer); Robert “Nat” Riddick, District 4 (Vice Chairman); Carolyn Bradley, District 3; Delores Amason, District 2 (Secretary-Treasurer) and Chester Deloatch, District 9.

BOARDOFDIRECTORS

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