lcec AnnuAlRepoRt

powerprofiles

Due largely to the underlaying and ongoing economic conditions, lcec sales and electric operating revenues fell short of budget projections. With the support and commitment from employees, lcec acted quickly, aggressively to reduce operating and maintenance expenses. As a result, all financial targets and margin obligations were met by year-end. 1

Financial Highlights

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FInAncIAl HIGHlIGHTS ‘092009 2008Operating Revenue $ 406,251,664 $ 372,893,985 Operating expense $ 364,312,695 $ 341,298,067

Interest expense $ 16,012,387 $ 15,952,598

net Margins $ 35,467,819 $ 22,026,280

net Plant $ 545,188,585 $ 547,002,808

Total Assets $ 649,989,243 $ 646,391,079

Total customers 193,731 191,125

kWh Purchased 3,711,872,416 3,683,625,350

kWh Sold 3,512,603,036 3,493,951,057

Miles of energized line 8,038 8,011

Average Monthly Residential kWh used 1,119 1,100

equity Distribution $ 5,590,123 $ 4,985,499

capital expenditures $ 30,969,568 $ 42,699,782

customers per employee 497 470

301.7 357.7 369.4 372.9 406.3 ‘05 ‘06 ‘07 ‘08 ‘09

10.9 18.3 17.8 22 35.4‘05 ‘06 ‘07 ‘08 ‘09

80.3 100.3 69.7 42.7 30.9‘05 ‘06 ‘07 ‘08 ‘09

3.3 3.5 3.6 3.5 3.5‘05 ‘06 ‘07 ‘08 ‘09

515.6580.3 624.2646.3 649.9‘05 ‘06 ‘07 ‘08 ‘09

182.7 194.7 195 191 193.7‘05 ‘06 ‘07 ‘08 ‘09

Operating Revenue (in millions)

net Margins(in millions)

capital expenditures(in millions)

kWh Sold(in billions)

Total Assets(in millions)

Total customers(in thousands)

3President &

ceO

Message

Trustee At large .................................................................. carlos cavenagoDistrict 1 - Marco Island and Goodland .................. curtis W. BostickDistrict 2, Seat 1 - cape coral ....................................... David W. GomerDistrict 2, Seat 2 - cape coral ....................................... Dr. Darlene AndertDistrict 2, Seat 3 - cape coral ....................................... David c. ScottDistrict 3 - Sanibel, captiva, and Pine Island ......... Geoffrey W. RoepstorffDistrict 4 - lehigh Acres .................................................. larry TurbevilleDistrict 5, Seat 1 - north Fort Myers .......................... General James DozierDistrict 5, Seat 2 - north Fort Myers .......................... William G. MathisDistrict 6 - Immokalee, everglades city ................... Frank c. Garrett

Board of trustees

The lcec Board of Trustees is made up of members elected by the members of lcec. Board members possess a diverse range of business experience, policymaking understanding and provide fair and equal representation for the lcec service territory. The lcec Board provides oversight of the management of the organization and monitors adherence to principles of sound corporate governance. The direction they provide is intended to be in the best interest of all lcec members. The Board delegates to management the responsibility for day-to-day operations.

Larry Turbeville, President of the BoardDennie Hamilton CEO and Executive Vice President

‘09At lcec we are constantly striving to improve all aspects of our business – whether it is reliability, customer service, technology, safety or financial performance. Our focus on delivering the power that energizes our communities began nearly seven decades ago when the cooperative was established and has become the foundation of everything we do. Our commitment to our core values, unwavering ethical business practices and diligent community support is part of our rich history, and it is the basis for how we conduct our business every day.

This 2009 report serves as an overview of our business efforts during the past year and a guide to our areas of focus in the future. We are pleased with the progress we have made in managing costs, promoting conservation and expanding our service options. looking ahead, lcec remains committed to pursuing new initiatives that improve our business and our communities while maintaining our tradition of providing efficient, reliable, cost-competitive electricity, emerging energy solutions and excellent service.

PROFIleS OF leADeRSHIP

5Managing the financial aspect of the organization is critical to maintaining reasonable electric rates. Directing resources, assessing needs, setting priorities and administering a stringent budget process while continuing to meet customers’ needs was never more important, or challenging, than in 2009.

Maintaining a responsible budget, stabilizing debt, exploring options for process improvement and developing solutions for future challenges were all part of the lcec integrated business plan during the year.

Fiscal Responsibility

•True to the lcec mission, the organization remained focused on providing reliable electricity and quality service. A base rate increase during the year was not an option. Facing the prospect of sales and revenues below forecast levels, the lcec team took aggressive measures to control operating costs. These measures included reducing travel and non-mandatory training, reviewing the need to fill vacant positions, delaying non-critical projects, reducing overtime by adjusting work schedules, and eliminating salary increases not required by bargaining unit agreements.

• lcec is planning for little growth in the customer base over the next few years, and due to careful cost management, a base electric rate increase is not planned for 2010. Although many projects remain deferred, capital and operation and maintenance projects that are critical to the reliability of the electric system will move forward. The next year will be difficult, but with a solid integrated business plan, dedicated employees, and long-standing customer support, lcec is poised to meet the challenge.

‘09 PROFIleS OF STABIlITy

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7Although lcec faced challenges throughout the year due to the economic climate, reliability and quality customer service did not waver. Providing customers with a multitude of payment options and varied online tools such as Billing Insights, Online energy usage and calc-u-Saver helped customers manage their energy usage and navigate through difficult times.

customer experience

• A new offering of credit and debit card payment options added to customer convenience along with the addition of authorized payment stations throughout the lcec service territory. customers have the option of paying their bill anytime and anywhere to fit their lifestyle. Depending on preference, lcec customers can pay their bills online, by phone, in person or by mail.

• The addition of authorized payment stations allowed LCEC to close a remote payment center in Cape Coral, which will help to reduce expenses while continuing to offer customer convenience. existing staff was transferred to headquarters, minimizing the need for additional employees as customer needs increase.

• In an effort to maintain and strengthen relationships with customers, LCEC continued to randomly survey customers on a daily basis. Surveys asked customers about their interaction with lcec employees and offered an opportunity for open feedback. More than 87 percent of customers who responded were satisfied with the service that they receive from lcec.

‘09 PROFIleS OF SOluTIOnS

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lcec was established to provide reliable electric distribution services, and this remains the core business. Planning, maintenance, vegetation management, construction and use of technology ensure the electric system is ready to meet the needs of customers and withstand potential incidents based on weather, increased energy usage or other threats to the electric system.

electric Reliability9

‘09• In 2009, the LCEC long-range system plan proved its value. In

spite of cold snaps early in the year, warmer-than-usual summer temperatures and seasonal lightning storms, reliability remained stable. This accomplishment was based on several efforts including a strong maintenance program, system expansion and dedicated field employees and support staff.

• LCEC crews performed inspections and maintenance on 118 miles of transmission line, 656 miles of distribution line and all substations. Vegetation management activities were performed on 265 miles of transmission line and 883 miles of distribution line. This was all achieved in spite of reducing maintenance expenses by more than $1 million.

• LCEC also continued to actively participate in regulatory compliance activities to meet requirements of the North American electric Reliability corporation and the Florida Reliability coordinating council. Working safely also remained on the forefront, and the organization met its safety goals.

PROFIleS OF DePenDABIlITy

The foundation of the organization is based on a rigorous integrated business planning process. All employees are part of the planning process and work toward meeting business scorecard metrics. In 2009, lcec strategic priorities were based upon meeting customers’ needs, talent management, fiscal responsibility, regulatory policies, and optimizing processes and technology.

Business Strategy11

‘09• While the electric operations division worked to provide a reliable

electric infrastructure, many other lcec teams assisted with project planning. coordinating and allocating needed resources helped the business run smoothly.

• LCEC measured employee engagement through a nationwide survey and followed up with various programs designed toward succession planning, career development and training. A newly developed Project Management Office began to develop organization-wide methodology and training for continuous process improvement, change management and project management.

• In 2009, the foundation was laid for an LCEC business intelligence initiative. Business intelligence will ensure skills, processes, technologies, applications and practices are in place to help make informed business decisions easier. Increased access to data and analytics will help in planning and mapping solutions and offer efficiency improvements in the business.

PROFIleS OF AGIlITy

13lcec team members have an exceptional mix of unique skill, experience, talent and community commitment. Addressing the complexities of the utility business while maintaining a work environment where all employees can achieve their full potential are goals that are met through a multitude of programs and initiatives.

These dedicated employees’ skills are utilized for organizational success but also lend themselves to the betterment of the communities we serve through corporate stewardship and employee volunteerism.

People Behind the Power

‘09• A positive work atmosphere during challenging economic and business conditions was never more important than in 2009. lcec was recognized by AARP as one of the top places to work in the united States for those over 50. All employee and customer segments benefit from a workplace culture with an emphasis on respect, dignity, health, safety and skills enhancement.

• Energizing the community encompasses the delivery of electricity and also expresses a commitment to supporting communities in philanthropic endeavors. lcec’s involvement includes contributions and thousands of volunteer hours for agencies such as united Way, American Heart Association, American cancer Society, Junior Achievement, and multiple projects with chambers of commerce and civic organizations throughout the five-county service area.

• LCEC’s commitment to the environment goes beyond partnerships to promote protection of local wildlife. An official avian protection program along with educational brochures ensures that birds and infrastructure exist in the same location. lcec also does its part to conserve energy, implement material disposal alternatives and recycle in the office and in the field. A net metering program was implemented in 2009 for customers who own renewable generation resources and wish to interconnect with the lcec electric system.

PROFIleS OF STeWARDSHIP

Corporate/Information

Office: 4980 Bayline Drive North Fort Myers, FL 33917-3910 (239) 995-2121 • 1-800-282-1643

Mailing Address:Post Office Box 3455North Fort Myers, FL 33918-3455

General Counsel:Henderson, Franklin, Starnes & HoltPost Office Box 280Fort Myers, FL 33902-0280

Independent Auditors:Jackson Thornton & Co., P.C.200 Commerce StreetMontgomery, AL 36104-2591

corporate Information

LCEC is fully committed to Equal Employment Opportunity. We reaffirm our full support of Equal Employment Opportunity for all employees and applicants for employment at LCEC. We ensure that all employment actions are free of illegal discrimination based upon race, color, religion, gender, national origin, age, disability and veteran status. Employment actions include recruitment, selection, promotion, demotion, transfer, termination, layoffs, job classification, benefits, pay adjustments and training opportunities.

www.lcec.net

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