DEMCO 2011 AnnuAl rEpOrt

Our pEOplE - yOur

POWER

DEMCO exists to serve the members/customers through professionally trained employees providing safe, reliable and affordable electricity as well as other high quality products and services. As a good corporate citizen, DEMCO is committed to stimulating the economic growth and prosperity of our area through ethical conduct and sound business principles.

OUR MISSION

An everyday commitment to ensure the power is in your hands.

builDing. tEAChing. grOwing.

MOrE pOwEr. tO yOu.

CONTENTSpresident’s report . . . . . . . . . . . . . . . . . . . . . . . . 6

Community . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9

Additional resources . . . . . . . . . . . . . . . . . . . . . . 9

board of Directors . . . . . . . . . . . . . . . . . . . . . . . 11

2011 year in review . . . . . . . . . . . . . . . . . . . . . . 12

Economic Development . . . . . . . . . . . . . . . . . . . 14

together we Save . . . . . . . . . . . . . . . . . . . . . . . . 16

Our Employees . . . . . . . . . . . . . . . . . . . . . . . . . . 18

Financials . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20

System Statistics . . . . . . . . . . . . . . . . . . . . . . . . 23

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PRESIdENT’S REPORT

RIChaRd SITMaNPresidentDEMCO Board of Directors

in anticipation of DEMCO’s current wholesale

power contract expiring in 2014, your

democratically-elected board of directors,

along with the executive leadership at DEMCO,

has been hard at work in researching the

best available options for signing a new long-

term agreement that will keep your rates

affordable for years to come. throughout 2011

we studied extensively the changing power

market, negotiated with prospective wholesale

generating companies, collaborated with

independent consultants and worked with our

corporate attorneys to find the lowest possible

cost for all of our members.

Principally, we sought satisfactory answers to the

following key questions:

• would our wholesale provider be adequately

equipped to reliably serve our growing consumer

demand approaching 600 megawatts?

• would our wholesale provider produce electricity

using a diverse portfolio consisting of both non-

renewable and renewable resources to properly

address our present and future environmental

concerns?

• would our provider be able to offer stable,

affordable rates for our members that shield

ratepayers from erratic commodity prices and

the additional costs of any federal environmental

mandates that will be enforced over the next

decade?

As you can imagine, researching and negotiating a

contract of such importance requires tremendous

patience, scrutiny and perseverance. with over

100,000 members purchasing over 2 billion

kilowatt hours each year, the details are critical

when brokering such a deal. Although the new

power contract would not officially be signed

until January 2012, the lion’s share of the work

took place in 2011. this concerted effort proved

instrumental in coming to an agreement with

a wholesale power provider, Cleco power llC,

which will assure that DEMCO continues to provide

its members with safe, reliable and affordable

electricity well into the future.

in 2011, your cooperative was also able to add

balance to your life through its use of a newly

implemented rate structure, referred to as the

Formula rate plan. Approved by the louisiana

public Service Commission in October 2009, this

plan keeps your electric bill rate structure more

balanced and allows DEMCO to be more reactive in

keeping your rates consistent. the formula assures

that members are charged a fair and reasonable

rate for power, and that utilities are able to cover

their operating expenses and remain in good

financial standing. DEMCO members benefitted

from the plan throughout the year, as they received

a 3.18% credit on their bills beginning in April 2011.

As in years past, a review of DEMCO’s 2011 system

statistics reflects another solid year. DEMCO’s

kilowatt-hour (kwh) sales dipped slightly from

2,142,649,064 kwh in 2010 to 2,122,053,095 in 2011.

the number of members billed increased from

99,552 in 2010 to 100,487 in 2011. total miles of line

in operation increased from 9,613 miles last year to

9,691 miles at the end of 2011.

it is an honor to represent you, the valued members

of this electric cooperative, and report to you that

we are on firm financial footing and headed in a

positive direction. it is our hope to continue to bring

you the quality service you have come to know.

in closing, i would like to thank the members of the

DEMCO board of Directors for allowing me to serve

as president of the board. i consider it both an

honor and a privilege to serve in this position. i also

want to thank you the members of DEMCO for your

continued commitment to this organization and the

support you have shown for this board of directors.

respectfully submitted,

richard Sitman, president

DEMCO board of Directors

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not only is “commitment to community” at the heart of the cooperative business model, it is also found in our employees’ daily actions. the DEMCO family of employees continually demonstrates its desire to serve the community in a variety of ways. we volunteer and contribute to organizations such as the Susan g. Komen race for the Cure, Volunteers in public Schools, Family Services of greater baton rouge, and many more.

Our employees continue to make personal, financial donations year after year to the Dream Day Foundation and the Capital Area united way campaigns. in 2011 a total of over $74,000 was donated to these life-changing organizations directly from the personal funds of our employees. the cooperative spirit is alive and well at DEMCO, as evidenced by our employees’ heartfelt generosity.

DEMCO and its board of directors showed its commitment to community by investing in our members’ education. in 2011 DEMCO awarded 10 one-year college scholarships to the children of DEMCO members. Furthermore, DEMCO sponsored safety programs in area schools reaching thousands of elementary-aged children in its seven-parish service territory with valuable safety instruction.

we also sponsored our 33rd Annual rural Electric youth tour Essay Contest where hundreds of area high school juniors competed for a once in a lifetime trip to washington, D.C. DEMCO was honored to send the top four performers among their peers. For years the communities served by DEMCO have sung the praises of this great opportunity.

COMMUNITy addITIONalRESOURCES

the DixiebusinessCenter, located in Denham Springs, louisiana, is a small business incubator which offers consulting, administrative and financing support for new businesses. Office space is also available for long or short-term lease.

the DEMCO Foundation is a non-profit charitable organization established to provide financial assistance to DEMCO members in their times of need. individual assistance as well as college scholarships and emergency assistance are also available.

D E M C O Fo u n d a t i o n

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Randy LorioDISTRICT 3East Baton Rouge Parish

Leslie FalksDISTRICT 7Livingston Parish

Dennis LottSecretary/TreasurerDISTRICT 8Livingston Parish

Steve IrvingVice-PresidentDISTRICT 4East Baton Rouge Parish

BOaRd Of dIRECTORS

Clarence BrockDISTRICT 1Ascension Parish

Ann SamuelDISTRICT 2East Baton Rouge Parish

Glenn DeLeeDISTRICT 6East Feliciana Parish

Alice Faye MorrisDISTRICT 5East Feliciana Parish

Eugene O. TraylorDISTRICT 12Tangipahoa Parish

Joseph Self, Sr.DISTRICT 11St. Helena Parish

Freddy MetzDISTRICT 13West Feliciana Parish

Daniel P. BerthelotDISTRICT 9Livingston Parish

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JAnuARy 2011DEMCO continued its commitment to community by sponsoring the Dreams Come true radiothon. the cooperative teamed up with guaranty broadcasting to raise awareness of this wonderful organization that grants wishes to area children facing life threatening illnesses.

FEBRuARy 2011DEMCO joined other cooperative business professionals in lafayette for the louisiana Council of Farmer Cooperatives’ annual meeting. the lCFC serves not-for-profit cooperatives through scholarship programs, training and youth development.

MARCh 2011local high school students holton hancock of parkview baptist School, william Morvant of Christian life Academy, Emily Mann and Marquisse taylor, both of Zachary high School, each won an all-expense paid trip to washington, D.C. the four were winners in the 2011 DEMCO rural Electric youth tour essay contest.

APRIL 2011East baton rouge parish director Steve irving, East Feliciana parish director Faye Morris, livingston parish director Dennis lott, and St. helena parish director richard Sitman all returned to the DEMCO board of Directors as each was re-elected for a three-year term.

MAy 2011DEMCO and its employees once again served as the title sponsor for the 17th annual Dream Day Foundation Fishin’ galore event held at the 3 bar E ranch in Clinton, louisiana. DEMCO employees contributed over $62,000 through payroll deductions, all of which benefited St. Jude’s Children’s research hospital.

JunE 2011throughout the entire month of June, DEMCO hosted appreciation receptions in the seven parishes served by the cooperative. State and local community leaders were recognized and honored for their contributions to the public over the years.

JuLy 2011DEMCO continued to prove its commitment to safety education by sponsoring and participating in the louisiana Safety Council’s Safetyland Camp. Electrical cooperative employees presented numerous electrical safety demonstrations to the camp participants throughout the month-long event.

AuGuST 2011in its continuing efforts to support education among its members, DEMCO awarded 10 scholarships to children of its members. the winners were drawn randomly at the cooperative’s annual meeting from entries collected throughout the preceding months.

SEPTEMBER 2011Although 2011 produced a mild hurricane season, DEMCO faced tropical Storm lee throughout the first week of September. the storm did not reach hurricane status, however conditions warranted the cooperative to put its emergency response plan into action.

OCTOBER 2011DEMCO invested in the education of its youth by bringing the popular electrical safety magic show, “Making Accidents Disappear,” to area schools. Scott Davis of hot Springs, Arkansas presented his entertaining and educational magic show to thousands of elementary students at several schools throughout DEMCO’s service area.

nOvEMBER 2011Members of DEMCO’s cooking team prepared their award-winning jambalaya for 4-h members from around the state. the participating youths were winners of the annual 4-h Educational trip. Several DEMCO employees represented the cooperative by serving these outstanding leaders of tomorrow.

DECEMBER 2011DEMCO joined the East baton rouge parish Sheriff’s Office in dedicating its newest substation in the Chaneyville community. Elected officials, law enforcement personnel, and members of the community joined together to celebrate the opening of the new facility that DEMCO is proud to serve.

2011 yEaR IN REvIEW

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One project making a tremendous economic impact to livingston parish is the newly constructed Our lady of the lake regional Medical Center, located on highway 447 in walker, louisiana. the medical center broke ground in January 2011 on a 140,000 square foot complex that includes an emergency room, outpatient diagnostic clinic and physician offices. Future plans call for expanding the

facility, including beds for inpatient treatment. Our lady of the lake estimates 175,000 patient visits in the first year alone. At 236 acres, and larger than the property on which its main facilities in baton rouge sit, the new Our lady of the lake regional Medical Center will improve lives and serve the medical needs of livingston parish and the surrounding communities for years to come.

Another exciting project nearing completion is a new state-of-the-art school complex under construction in the City of Central. Central Community School System will complete the multi-campus project that will provide the community with a new intermediate school and a new middle school with a combined investment of approximately $33,000,000. Each campus has been designed to accommodate 1,200 students per campus for a combined total of 2,400 students from grades 3 through 8. DEMCO was selected by the Central Community School board to provide power to the campuses and is committed to assisting each of these communities reach its economic potential.

CEnTRAL COMMunITy SCHOOL SySTEM REnDERIng

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OuR LADy OF THE LAkE REgIOnAL MEDICAL CEnTER

ECONOMIC dEvElOPMENT

with local ownership and control, and a

focus on providing services and promoting

community growth, cooperatives are

considered by many to be an ideal business

model for local economic development.

your electric cooperative, DEMCO, was

once again proud to provide safe, reliable

and affordable electricity to our diverse and

expanding commercial development portfolio

throughout 2011. Delivering quality power to

our local businesses and commercial account

holders is something that we take seriously,

recognizing that we play an important role

in assisting growth in our local economies.

As our 2008-2011 four-year construction

work plan came to a close in December, it

provided the critical infrastructure necessary

to support the continued and future growth

of the communities we serve.

TOgEThER WE SavEDEMCO is a proud supporter of touchstone Energy’s together we Save program. in 1938, we set out to provide safe, reliable, and affordable electricity to our members. through this mission we saw the lives of our neighbors improved and our communities grow. now, we have a larger responsibility – to use energy wisely. the together we Save program educates members on how to efficiently use energy in ways that can save them money. by visiting www.togetherweSave.com, members can find valuable tools and resources to learn ways to improve their energy usage.

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Mike parker, Sr.lori peekShane pendarvispaula perryKelli persacMark phillips, Jr.gina pickeringJody picouDaniel poirrierDonnie prestJosh prestridgeJackie purvis, Jr.Krystal raymondterrie reedMatt reedwilliam reilyDonna roshtoSam rossorachel roulerandy rushinglinda Sandersnick SaucierAsa ScottArthur Selders, Jr.Fred SelfCorey Sharpelevy Sibley

brandon SimonDonna SistrunkJared SoileauChuck SpillmanSteven SpringDarren St. pierrerhonda StanleyJeremy StarnsJulia Starnswayne Stevensonlori Stewartraymond Stewart, Jr.blake SullivanMissy Sumrallpatrick tannerEsther tapiaCharles tateAgra templetMarci templetAaron terranceMason thackerrichie thomasDarren thomasgalen thomasAlvin thompsonbuddy thompson, iiirusty todd

Kleve tucker

David tucker

turk tynes

Jimmie Varnado

John Vranic

Debbie walker

Jeremy wascom

booker washington

Doug watson

Dale watts

Carl watts

James wells

Carl westbrook

Darrel white

robby white

royland wicker

Caleb wilkinson

randy williamson

Cindy willie

Shelly wintz

ronnie woodards

John woodburn

Curtis yaun

Joe young, Sr.

phill Zito

betty AdamsKarl AlbrittonJustin AndrewsJacob ArledgeMichael Armstrongwendy Armstronghijah ArmstrongShinell AultmanKenneth baileySean balfantzJohn ballardJason ballardKevin beauchampKeith beaucoudrayJeff bellingtonDebra bennetttroy bergeronJamie berrytrent bignerJeremy blouinMelody bourgeoisKenneth bourgeois, Jr.brent bradleyDebbie broadhurstDaniel brooksJulie burnsChasity Caldwell

Casey Carriergreg CarruthDovie CarterAndy Castellobeau Castontodd ChauvinMike Chiasson, Sr.Veronica ClaiborneJamie CoatsDonna CodyKevin CommanderJosh Conleaybonalee Conleeronnie Corkernpatricia CourtneyEric CrainDaniel CrossJohnathan Crowderrickey Cummingsrichard CutrerFred Dabney, Sr.Doug Dalgo, iiDanny DelatteScott Deleerobert Delee, Jr.paula DixonDarrell Doguet

Susan Donleypatrick Donohuewade DuplessieMartha DurdenAngie Elseynorman EnglerVince EstesJeremy FarrielJamie FortenberryDavid Fournetpenny Fruge

hilda galmonCecil garaudyrhianna garonCody glascocktravas glascockCalvin gozaVernon grahamAndy grahamJohn green

Dusty guarinoMichelle guidryStephanie guidrylee guillotCindy haistenAndy hallAmanda haneganDarren harrellphilip harrisDarryl hassellChuck heine

ray hill, Jr.beverly hodgesJimmy holdenthomas hollandAvesia hollandbilly hollemanAustin hudspethDarrell hughesholly Jackson

warren Jeffersonlarry JenkinsDavid JewellDale JohnsonAndrea JohnsonChanon Johnsontoni JohnsonKenneth Jonestammy KellyJosh Kilcreasethomas Klein, Jr.Mike Knightroy KyzarChad laCost, iVJan landryDevin landryChad landryMike landry, Sr.Jake laneDavid latonaJeff lealouis leeDentory leeShawn littleChanell lucasJeff lyonsCheryl Malbrough

Mel MartinMelanie Mathiesron Maypage McCluretheo McCray, Jr.Anita Mcnealtony Mcneesehaley Meadowsbrian MerrittJohnny Metzpernell MilesSonya MilesScott MillerJosh MillerJustin Miltonraymond Mizelltiffany Mooreben Moreinbubba MunnQuanika MuseChad norredEric Ouberrusschelle OverhultzJacob Overhultzphillip paceMelvin parkerShawn parker

OUREMPlOyEES

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fINaNCIalS

ASSETS utility Plant Electric plant in service $488,388,955 $469,223,213 Construction work in progress 31,661,471 16,185,392 Other fixed assets 4,604,915 5,026,533 524,655,341 490,435,138 Accumulated depreciation 122,372,391 117,755,031 402,282,950 372,680,107

Investments and Other Assets investments in associated organizations 8,634,147 8,218,473 notes receivable, long-term portion 716,966 958,568 9,351,113 9,177,041

Current Assets Cash and cash equivalents 581,382 503,639 Current portion of notes receivable Accounts receivable 241,602 241,602 Consumers (net of allowance for uncollectible accounts of $418,732 in 2011) 8,137,478 8,900,046 unbilled revenue 8,841,326 10,620,014 Current portion of other receivables (net of allowance of $511,760 in 2011) 4,916,721 7,035,410 Materials and supplies 3,877,043 6,016,324 prepaid Expenses 1,318,582 1,327,954

27,914,134 34,644,989

Other Assets Deferred charges 29,981,227 27,499,789 intangible, net 800 800 Certificate of Deposit - pledged 150,000 150,000 30,132,027 27,650,589 TOTAL ASSETS 469,680,224 444,152,726

2011 2010Equities Memberships $414,065 $409,285 patronage 82,614,943 77,393,724

83,029,008 77,803,009

Long-Term Debt notes payable, less current maturities 305,275,449 276,812,707 Deferred interest - ruS notes 4,216,571 5,224,126

309,492,020 282,036,833

Current Liabilities Managed overdraft 3,998,129 3,505,690 Current maturities of notes payable 6,936,219 9,649,764 line of credit 15,406,326 19,598,003 Accounts payable 11,085,610 13,672,844 Consumer deposits 7,086,950 6,839,836 Accrued interest 1,673,083 1,576,799 Other accrued expenses and deferred credits 1,939,702 1,808,582 Deferred fuel adjustment 1,671,081 2,882,283 Customer refund - Cajun 624,336 624,336

50,421,436 60,158,137

Deferred Credits and Other Liabilities Accrued post-retirement benefits 21,442,000 19,150,200 Accrued vacation and sick pay 5,295,760 5,004,547

26,737,760 24,154,747

TOTAL EquITIES AnD LIABILITIES 469,680,224 444,152,726

2011 2010EquITIES AnD LIABILITIES

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Operating Revenue $171,232,487 $174,933,819

Operating Expenses Cost of power 94,519,648 94,098,421 Cost of sales 135,838 202,504 Distribution - operations 6,417,026 6,544,082 Distribution - maintenance 16,444,481 14,048,734 Consumer accounts 5,583,508 5,523,862 Administrative and general 7,932,825 7,642,085 Depreciation and amortization 15,053,137 14,381,534 taxes 4,661,299 4,408,030 Other 5,754 1,539,851 150,753,516 148,389,103

Operating margins before fixed charge 20,478,971 26,544,716

Fixed Charges interest on long-term debt 13,441,317 13,337,755 Other interest 1,119,288 2,160,879 14,560,605 15,498,634

Operating margins after fixed charges 5,918,366 11,046,082

Capital Credits 860,776 1,037,050

nonoperating Margins interest income 191,736 152,938 Other income (expense) (1,749,659) (88,361) (1,557,923) 64,577

net margins 5,221,219 12,147,709

Patronage Capital, beginning of year 77,393,724 65,246,015

Prior Period Adjustment

Patronage Capital, beginning of year

Patronage Capital, end of year 82,614,943 77,393,724

Average Consumer Billed/Mo. ............................................................................................................100,487

Average Consumer/Mile of Line..............................................................................................................10.37

Average Miles of Line .............................................................................................................................. 9,691

Total KWhs Sold ........................................................................................................................ 2,122,053,095

Average KWhs/Month/Consumer ........................................................................................................... 1,760

Average KWhs/Month/Residential Consumer ....................................................................................... 1,474

Average Monthly Rev./Consumer ....................................................................................................... $141.22

Total KWhs Bought ................................................................................................................... 2,259,986,842

System Peak Demand .......................................................................................................................... 541,134

Month of System Peak ........................................................................................................................ January

2011 2010 SySTEM STATISTICS - 2011

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