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2010Southside Electric CooperativeAnnual Report

2 Southside Electric Cooperative

Corporate Profile

Southside Electric Cooperative(sec) is a not-for-profit, member-

owned electricdistribution cooperative, providing quality electric service(s) to 53,000-plus meters in

portions of 18 counties, six towns and one city in south-central Virginia. 74 years ago, no established utility

wanted to invest in a distribution system to sell electricity to the rural areas and small towns that were not

densely populated. In 1937, SEC was formed because rural neighbors of Southside Virginia had a shared

need for electricity, and they agreed to work together to obtain a service no one else would offer.

ments with other organizations or raises capital from

external sources, it is done so based on terms that en-

sure democratic control by the members and maintains

the cooperative’s autonomy.

5. Education, Training and InformationCooperatives provide education and training for mem-

bers, elected representatives, managers and employees

so they can contribute effectively to the development of

their cooperative. Members also inform the general pub-

lic about the nature and benefits of cooperatives.

6. Cooperation Among CooperativesCooperatives serve their members most effectively and

strengthen the cooperative movement by working together

through local, national, regional and international structures.

7. Concern for CommunityWhile focusing on member needs, cooperatives work for

the sustainable development of communities through

policies and programs accepted by the members.

Seven Cooperative Principles

1. Voluntary and Open MembershipCooperatives are voluntary organizations, open to all

people able to use their services and willing to accept the

responsibilities of membership, without gender, social,

racial, political or religious discrimination.

2. Democratic Member ControlCooperatives are democratic organizations controlled by

their members — those who buy the goods or use the

services of the cooperative — who actively participate in

setting policies and making decisions.

3. Members' Economic ParticipationMembers contribute equally to, and democratically

control, the capital of the cooperative. This benefits

members in proportion to the business they conduct with

the cooperative rather than on the capital invested.

4. Autonomy and IndependenceCooperatives are autonomous, self-help organizations con-

trolled by their members. If the co-op enters into agree-

Corporate Mission Statement

Our primary mission is to provide quality, dependable, uninterrupted electric service to our membership

as effectively, efficiently and economically as possible. To expand this mission and to be sure we continue to

be the service provider of choice to our members in an ever-changing electric utility environment, your

Cooperative will strive to make available other value-added services the membership desires.

For your Cooperative to remain the electric service provider of choice, we must ensure we offer

the best and most dependable service available and be as attentive and responsive to our members’

needs, requests and desires as possible. To do this, we must construct, maintain and improve our

distribution system to the highest degree.

2010Annual Report 3

FrankW. BaconChairmanDistrict 2

Earl C. Currin, Jr.Vice ChairmanDistrict 2

JohnM. BoswellSEC GeneralCounsel

Quentin E.WilhelmiSecretaryDistrict 1

Herbert E.WinnTreasurerDistrict 2

Charles J. FriedlDistrict 3

Lillian H. HicksDistrict 3

John L. Lewis, IIIDistrict 3

Michael A. LobueDistrict 1

Paul S. BennettDistrict 1

Our Business Is Electric ...But We Get Our Power From You.

2010 SEC Board of Directors

SEC’s CoreBusiness Processes

• Keep the Lights On

• Treat Membersas Members

• Recognize Value,Give Value


Message To The Membership

Dear Members:

This 2010 Annual Report provides information

to you about the overall operation and financial

health of your member-owned business. You are

encouraged to read this report and direct any

questions or comments you may have about any

part of it to the SEC board of directors and

management staff.

fewer new connections continued during 2010

The number of new connections the Cooperative made during 2010 was 738, compared to 841 in 2009.

Again, this was due, primarily, to the overall depressed economic conditions that continued to persist

during 2010. The amount of kilowatt-hours of electricity sold during 2010, however, increased to

916,475,000, compared to the 838, 341.266 kilowatt-hours that were sold during 2009.

work plan activities

Work Plan projects were completed in Bedford, Campbell, Charlotte, Dinwiddie, Nottoway, Powhatan

and Prince Edward counties. These projects were included in the 2010-2011 construction work-plan and

included substation upgrades, multi-phase conductor replacements and pole replacements. These projects

totaled 86 miles of distribution construction and an additional 275 distribution pole replacements due to

issues found during the Cooperative’s pole inspection program. The Cooperative also energized two new

substations (Mead’s Store in Bedford County and Lake Chesdin in Dinwiddie County) in its ongoing effort to

strengthen system reliability. All work was completed at a combined total of $7.64 million.

$2.4 Million in Capital Credits Paid to SEC Members

During December, 2010, Southside Electric Cooperative board of directors approved the payment of

$2.4 million in capital credits to approximately 30,636 active members and 21,204 inactive Cooperative

members under a “first-in-first-out” and “percentage method” of payment.

Capital credits are paid back to members as the Cooperative is deemed financially able to make

the payments. SEC is, however, limited by the Rural Utilities Services (RUS), its mortgagor, as to the

amount it can return to members annually. The recently adopted “first-in-first-out” and percentage

method,” therefore, seeks to maximize the number of members receiving capital credit retirements

from the Cooperative.

Jeffrey S. EdwardsSEC President &Chief Executive Officer

Dr. FrankW. BaconChairman of SECBoard of Directors

2010Annual Report 5

2009 2010Taxes Paid:

Personal Property $ 965,466 $ 1,035,888Payroll $ 933,308 $ 873,783Taxes $ 1,717,180 $ 1,735,242State Consumption Taxes $ 758,262 $ 824,956Special Regulatory Taxes $ 58,888 $ 118,679Local Consumption Taxes $ 280,792 $ 305,422

Taxes were collected for the following jurisdictions during 2010: Amelia, Appomattox, Bedford, Brunswick,Buckingham, Campbell, Charlotte, Chesterfield, Cumberland, Dinwiddie, Lunenburg, Mecklenburg, Not-toway, Pittsylvania, Powhatan, Prince Edward, Prince George and Sussex counties, the towns of Altavista,Blackstone, Crewe, Hurt, Kenbridge South Hill and the City of Petersburg at no costs to them.

Taxes Paid During 2009 and 2010

SEC Director District Map

Revised February 25, 2010

QUENTIN E. WILHELMIPAUL S. BENNETTMICHAEL A. LOBUE

FRANK W. BACONEARL C. CURRIN, JR.HERBERT E. WINN

CHARLES J. FRIEDLJOHN L. LEWIS, IIILILLIAN H. HICKS


Services & Programs

AWARE PROGRAM

AWARE is an SEC-sponsored member education

program that seeks to inform Cooperative members

about their member-owned business, how it operates

and some of the challenges SEC faces at the state and

national levels..

BUDGET BILLING

A fixed amount to be paid each month by the individual

member, based upon the previous twelve month’s electric

usage. Any previous balances (debits or credits) are

included in the calculations to “true up” the account. The

account is reviewed and could be revised every six months

to reflect changing weather patterns and other factors that

might affect actual usage.

CALL CENTER

Promotes consistency in the provision of services to

members, as well as providing timely responses to

members’ concerns/inquiries from a central, “one stop”

entity within the Cooperative.

EBUSINESS / WEBSITEONLINE PAYMENT

This service allows SEC members to pay bills online at

www.sec.coop. Members may use VISA, MASTERCARD,

DISCOVER, or an Electronic Check drawn from a checking

account. They may also view the details of their current bill,

view a 12-month usage history, calculate an estimated bill,

request a security light installation, or report service

problems or outages.

ELECTRICAL SAFETY PROGRAMS

SEC provides programs to teach/promote electric

safety to children/adults. Contact the Cooperative’s Call

Center for details.

ENERGY AUDITS/ONLINE ENERGY AUDITS

SEC personnel are available to perform energy audits of

homes and other facilities at no cost to Cooperative

members. The audits consist of a “walk-through” inspection

to determine levels of insulation, condition and type of

doors and windows, the nature of other conditions and

electrical equipment present, as well as to make

recommendations that will enhance overall electric energy

efficiency and use. Check out SEC’s online audit program at

www.sec.coop and click on the Home Energy Suite.

ENERGYSHARE PROGRAM

A one-time financial assistance to pay electric service

bill(s) of eligible SEC member(s) after they have been

deemed ineligible to secure assistance and/or have

exhausted efforts to obtain help from other federal/state

programs.

EZPAY

Under the EZPAY bill payment service, members allow

SEC to instruct their bank or credit union to automatically

deduct the amount of the electric service bill from a

specified account each month. Participating members

receive a monthly billing statement and notification as to

what day the payment will be deducted from the

designated account.

INTERACTIVE VOICE RESPONSE

Members of Southside Electric Cooperative will now use

an updated interactive telephone service when calling the

Cooperative. “Telelink,” a comprehensive automated

customer service system that uses “Interactive Voice

Response” technology, has been added to our automated

telephone system. With VOICE RECOGNITION, members

simply may now SPEAK THEIR RESPONSES OR USE A

TOUCH-TONE PHONE KEYPAD to enter their information.

MEMBER LIFE-SUPPORT EQUIPMENT

Members should inform the Cooperative if they have

some type of life-sustaining equipment in their homes. The

account location will then be identified on SEC’s mapping

system and the affected member(s) will be notified during

instances of planned electric power outages. Priority will

also be given to these locations in the event of extended

power outages. It is important that members be familiar

with the type of life-sustaining equipment being used, e.g.

back-up feature included or if some type of standby

generation is needed.

KEY ACCOUNTS PROGRAM

This program allows SEC an opportunity to establish

a relationship and provide products and services to

its key commercial and industrial customers, which, in

2010Annual Report 7

Services & Programs

turn, demonstrates the Cooperative’s commitment to

meeting their immediate and future power-supply and

business needs.

NRECA-SPONSORED GROUPINSURANCE

This insurance is available to SEC members through the

National Rural Electric Cooperative Association.

Other Loan Resources:

United States Department of Agriculture (USDA)

• Targets low to moderate income families.

• Rural Development 502 loans and 504 grants available

for home financing, improvement and purchase of

energy conservation/weatherization measures. For

additional information, contact Jerry Outlaw, area

specialist, 100 C Dominion Drive, Farmville, VA 23901,

434-392-4906, ext. 105, or [email protected].

FARM CREDIT LOAN PROGRAM(ELECTRIC CO-OP MEMBERS)

Electric cooperative members are now immediately

eligible to apply for energy efficiency loans from their

local Farm Credit office. Loans can be used for a variety

of projects/purposes including upgrading windows/doors,

adding insulation, replacing heating/air-conditioning

systems and appliances with more efficient models,

as well as many other similar projects. SEC members

are encouraged to contact their local Farm Credit office

for information on how to apply/obtain financing for

energy-efficiency measures under this loan program.

Contact Jim Belfield, Farm Credit, at 804-746-1252 or

[email protected].

SECURITY LIGHTING

SEC will install a security light upon an existing pole at

no extra charge upon request of the member. Additional

lights are also available. (See Billing Information, Security

Lights – Schedule SL for applicable monthly rates and

Terms and Conditions.)

SELECTION OF HVAC SYSTEMS

SEC will assist members in the proper selection, sizing

and installation of heating/cooling equipment and systems

for homes/facilities at no cost to them.

SPEAKERS BUREAU

Personnel from SEC are available to serve as speakers/

presenters on a variety of topics at schools, civic and other

community-based organizations.

STANDBY GENERATOR

PROGRAM

This service allows SEC to provide advisory/consulta-

tive services to members in the installation of portable

and stationary generators for emergency electric power,

including installation of a double-throw switch. Units are to

be installed in accordance with all applicable codes and

regulations and maintained according to manufacturer’s

recommendations.

THIRD-PARTY NOTIFICATION

If you are concerned that you may overlook paying your

bill at some point in time and risk having your service

disconnected, Third-Party Notification may be for you. With

your authorization, the Cooperative will attempt to contact

a relative or friend. This third party can then help you

arrange payment before any service interruption occurs.

Visit our website and download a copy of the Third-Party

Notification Form.

VIRGINIA FUEL/CRISIS/COOLINGASSISTANCE PROGRAMS

SEC participates in these programs in cooperation with

local county departments of social services/HOPE

Incorporated. These agencies take applications, determine

eligibility of persons seeking financial assistance in paying

fuel, e.g. heating, cooling, etc., bills. Approved applications

are then forwarded to the Virginia Department of Social

Services for payment to the Cooperative and other

fuel/energy providers.

WIRING AND ELECTRICALCONSULTATIVE SERVICES

These services are available to SEC members who

might be performing various types of new construction,

remodeling, upgrading, expanding or relocating existing

facilities and equipment and/or who may be purchasing

various types of energy-efficient electrical equipment/

appliances.


CREWE, VIRGINIABALANCE SHEETS

AS OF DECEMBER 31, 2009 AND 2010

Assets 2009 2010Utility Plant:Electric Plant in Service $ 265,680,799 $ 275,263,362Less Accumulated Provision for Depreciation 80,167,357 86,360,267___________ ___________

Net Utility Plant 185,513,442 188,903,095

Investments:Investments in Associated Organizations 36,518,916 42,551,996Other Investments 1,678,453 1,074,691___________ ___________

Total Investments 38,197,369 43,626,687

Current Assets:Cash 1,627,952 160,973Accounts Receivable 8,859,526 10,377,922Materials and Supplies 923,075 710,375Other Current and Accrued Assets 5,933,317 6,529,988___________ ___________

Total Current Assets 17,343,870 17,779,218

Deferred Charges 10,904 3,421,652___________ ___________Total Assets $ 241,065,585 $ 253,730,652___________ ___________

Liabilities and Equities 2009 2010Equities:Memberships $ 226,965 $ 227,815Other Comprehensive Income (Loss) 677,874 815,548Patronage Capital 85,588,392 92,933,472___________ ___________

Total Equities 86,493,231 93,976,835

Long-Term Debt: 126,965,171 128,656,904

Other Non-Current Liabilities: 2,580,372 1,258,685

Current Liabilities:Current Maturities of Long-Term Debt 4,471,288 5,163,296Line of Credit – CFC 8,000,000 11,886,329Accounts Payable 7,964,151 8,051,755Consumer Deposits 1,300,488 1,837,340Taxes Accrued 343,551 367,837Other Accrued and Current Liabilities 1,174,620 1,164,259___________ ___________

Total Current Liabilities 23,254,098 28,470,816

Deferred Credits 1,772,713 1,367,412___________ ___________

Total Equities and Liabilities $ 241,065,585 $ 253,730,652___________ ______________________ ___________

Southside Electric Cooperative, Inc.

2010Annual Report 9

CREWE, VIRGINIASTATEMENT OF REVENUE, EXPENSE, AND PATRONAGE CAPITALFOR THE YEARS ENDED DECEMBER 31, 2009 AND 2010

2009 2010Operating Revenues $112,759,583 $112,922,658Operating Expenses:Cost of Power 74,394,841 69,180,473Distribution – Operation 2,283,327 3,196,927Distribution – Maintenance 9,288,587 10,398,681Consumer Accounts 2,262,506 2,501,670Customer Service & Information 1,341,697 2,136,979Administrative & General 4,644,966 5,818,053Depreciation & Amortization 8,113,408 9,270,713Taxes 64,781 43,278Interest on Long-Term Debt 7,353,335 6,634,970__________ __________

Total Operating Expenses 109,747,448 109,181,744__________ __________

OperatingMargins (Loss) Before Patronage Allocations 3,012,135 3,740,914

Patronage Allocations:Generation andTransmission 6,323,605 6,010,004Other 262,637 232,943__________ __________

Total Patronage Allocation 6,586,242 6,242,947__________ __________Net OperatingMargins 9,598,377 9,983,861__________ __________

Non-Operating Income (Expense):Interest Income 111,146 101,936Other Non-Operating Income ( 185,680) (38,367)__________ __________

Total (74,534) 63,569__________ __________NetMargins 9,523,843 10,047,430__________ ____________________ __________

Other Comprehensive Income (Loss)Postretirement Benefit Termination Gain 6,632,158 0Unrecognized Postretirement Benefit Cost 0 0

Comprehensive income (loss) 16,156,001 10,047,430__________ __________

CHANGES IN PATRONAGE CAPITALPatronage Capital – Beginning of Year 78,366,150 85,588,392NetMargins 9,523,843 10,047,430Retirement of Capital Credits < 2,301,601> <2,702,350>

Patronage Capital – End of Year $ 85,588,392 $ 92,933,472__________ ____________________ __________

AUDITOR’S STATEMENT

Southside Electric Cooperative was audited for the year ending December 31, 2010, by Adams, Jenkins & CheathamCertified Public Accountants and Business Consultants of Midlothian, Virginia. The financial statements of SouthsideElectric Cooperative were found to present fairly the financial position and results of operations. The complete Accountant’sReport is available for inspection at the Cooperative's Headquarters Office in Crewe, Virginia.

Southside Electric Cooperative, Inc.


Consumer Accounts & Sales

Operations & Maintenance

Administrative & General

Depreciation

Interest Expense

Profits

Power Cost

Public Buildings

Small Commercial

Large Commercial

Residential

Percent of Expenses & Operating MarginsPer Revenue Dollar

Sources of Revenue(KWH Sales)

Sec Graphs

4.11%

5.15%

8.21%

5.88%

3.31%

6.1%

6.2%5.0%

61.30%

82.7%

12.04%

2010Annual Report 11

Mark Your Calendar and Plan to Attend!

Registration activities to take place from 8:30 a.m. until 10:45 a.m.

Featured activities include:

• Health Fair Activities from 8:30 a.m. to 11:00 a.m.Free Health Screening Information/Instructions

• Entertainment

• Lunch Served from approximately 11:45 a.m. to 1:00 p.m.

• Reports to Members

• Election of Persons to the Southside Electric CooperativeBoard of Directors for Districts I, II and III

• Free Registration Gifts for Members –Periodic Prize Drawings

• Exhibits – Good Fellowship and Much More!

Southside Electric Cooperative

Sec Meeting Agenda

74TH ANNUAL MEMBERSHIP MEETING

SATURDAY, SEPTEMBER 24, 2011,AT HOOPER PARK, CREWE, VA.

Headquarters Office & Central DistrictLocated on Highway 460West

P.O. Box 7, Crewe,VA 23930 1-866-878-5514 (outages only)VAWATSToll Free 1-800-552-2118 FAX (434) 645-1147

EASTERN DISTRICTOFFICE

19416CarsonRoadDinwiddie,VA23841

NORTHERN DISTRICTOFFICE

2370 EmmanuelChurchRoadPowhatan,VA23139

WESTERN DISTRICTOFFICE

2882Dearing FordRoadAltavista,VA24517

WEBSITE: WWW.SEC.COOP

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