Sunflower Electric Power Corporation · TRAITS Our company’s culture is the theme of this...

ANNUAL REPORT2004

Sunflower ElectricPower CorporationSunflower ElectricPower Corporation

ANNUAL REPORT2004

T R A I T SOur company’s culture is the theme of

this year’s annual report. TRAITS is an

acronym that stands for Technical

Competency, Respect and Dignity,

Accountability, Integrity,

Trustworthiness, and Servant

Leadership. At Sunflower Electric Power

Corporation these core values drive

every decision. Sunflower people expect

one another to behave in ways that

consistently exhibit these TRAITS. Join

us as we journey through the past,

present, and future to explore the

TRAITS that continue to define

Sunflower.

CONTENTSCompany Profile .................. 3Executive Report ................. 4Board of Directors ............... 6Sunflower Leadership ......... 8The Year in Review ........... 10Auditors’ Report ................. 15Financial Statements ......... 16System Map ...................... 30Generation Facilities.......... 31

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COMPANY PROFILESunflower’s primary mission is to provide a reliable, long-term power supply and

transmission services to its Member systems at the lowest possible cost consistent withsound business and cooperative principles.

Organized in 1957, Sunflower is a nonprofit, non-stock membership corporationoperated cooperatively by a federation of six rural electric distribution cooperatives servingpeople in 34 western Kansas counties.

Sunflower’s Members provide distribution services to approximately 50,000 meteringpoints and indirectly serve another 10,000 meters as wholesale power suppliers to citiesand towns in the region. A substantial amount of electric power and energy is alsoprovided to other utilities in the region.

The power generated by Sunflower’s six power plants is delivered across a highvoltage transmission network consisting of 27 substations and more than 1,150 miles of69-kV, 115-kV, and 345-kV transmission line.

As a member of the Southwest Power Pool and the Mid-Continent Area Power Pool,Sunflower supports, and is supported by, the regional power grid. This regional systemexists to enhance the reliability of electric service in the region and helps Sunflowermaintain its reputation to provide a highly-reliable power supply.

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T R A I T STechnical Competency –Being the most knowledgeableabout our specific job orprofession; the quality of beingwell qualified physically andintellectually to undertake atask; being committed tomaintaining and improving ourlevel of proficiency.

EXECUTIVE REPORT

Sunflower Electric PowerCorporation has been temperedover the years by the challenges ofnegative equity, fiscal constraintsfrom debt reorganization, ruraldemographics, and more recently,transitional market developmentsas a consequence of federalmandates. There have also beentransmission constraints,environmental impositions, and theinevitable aging of the plant.

These have been significantdrivers for both the day-to-day andlong-term focus of the company.

Sunflower has made significant strides in addressing,overcoming, and moving beyond impediments by claimingopportunities and exercising innovation in the industry. Asa leader in the industry, Sunflower continues to work hardto faithfully serve its Member systems.

It is important to recognize that these businessaccomplishments are directly related to staff competencyand employee dedication. The annual employeerecognition underscores the degree of faithfulness to acompany with significant challenges. The awardspresented reflect notable longevity throughout thecompany. This particular dynamic has become a focus forthe past year with the intentional development of thecompany culture. A culture statement identifying core

Charles McK. Ayers and L. Earl Watkins, Jr.

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values for the company. “Sunflower people value, and expect one another to behave inways that consistently exhibit the following characteristics: Technical Competency,Respect and Dignity, Trustworthiness, Integrity, Accountability, and Servant Leadership.”During the past year, significant time has been spent increasing understanding anddeveloping skills related to these core values.

The individual members who are served at the end of the line are the reason forSunflower’s existence. Consistent with the company’s culture, Sunflower considerspeople the primary resource for the success of its business. An organizational reviewmight start with the competent and experienced Board of Directors working effectivelywith mature and qualified administrative staff. Management is supported by effectiveleadership at all levels of the company with emphasis on responsibility, accountability,and communication. Understanding that outreach is a part of who we are, Sunflowerpeople seek to be leaders, not just in the industry, but in the communities where we liveand serve.

As in the past, there have been many accomplishments in 2004 for the company.The mortgage structure negotiated in 2002 allowed for the refinancing of a significantportion of long-term debt, at highly competitive rates, saving Sunflower approximately$60 million. The refinancing was an innovative and coordinated effort betweencommercial financial markets and traditional cooperative financial sources. Sunflowerhas initiated and managed two projects exploring new methods for emissions control;one focused on mercury and the other on nitrogen oxides. Sunflower was recognized bythe Electric Power Research Institute (EPRI) breakfast during the National RuralElectric Cooperative Association (NRECA) annual meeting for its work with mercurycontrols. A required rate case before the Kansas Corporation Commission (KCC) wasreceived and approved with compliments to the efficiency, accuracy, andresponsiveness of the Sunflower staff. An important rail contract was secured with theassistance of Western Fuels Association, ensuring long-term competitive rates for theHolcomb plant and future units. Experiencing a minimum of unscheduled outages, theHolcomb plant continues to operate with high levels of availability.

Sunflower continues with intentional commitment to serve the retail customersthrough its owner cooperatives. Led and supported by people committed to its mission,Sunflower has worked creatively, faithfully, and with clear purpose to achieve the resultsreflected in this year’s annual report.

Charles McK. Ayers L. Earl Watkins, Jr.Chairman President & CEO


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T R A I T SRespect – A feeling or attitudeof admiration and deferencetowards another person;treating someone with con-sideration and thoughtfulness.Dignity – Seriousness, re-spectfulness, or formality in aperson’s behavior and bearing.

BOARD OF DIRECTORS

The Sunflower Board of Directors is comprised ofbusinessmen from across western Kansas whowillingly spend time away from their families andbusinesses to direct the activities of the company onbehalf of their member cooperatives. Collectively,they have served Sunflower for 179 years.

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Charles Ayers Loren Ochs Larry Evans Terry JansonChairman Vice Chairman Director DirectorWheatland Victory Western Victory

Leoti Jetmore Gove Dodge City5 Years 26 Years 10 Years 5 Years

Dave Jesse Robert Johnson Allan Miller Neil NormanDirector Director Director DirectorPioneer Prairie Land Prairie Land WheatlandUlysses McDonald Norton Scott City15 Years 21 Years 16 Years 16 Years


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Perry Rubart Dave Schneider Paul Seib, Jr. Earl SteffensDirector Director Director DirectorPioneer Western Lane-Scott Lane-ScottUlysses WaKeeney Ness City Dighton20 Years 15 Years 26 Years 4 Years

T R A I T SAccountability – Adopting thecore values, and in a construc-tive manner, helping eachother live up to our commit-ments and responsibilities;being invitingly and willinglyresponsible to help others livethem as well.

SUNFLOWER LEADERSHIP

Front center – Earl Watkins,President and Chief ExecutiveOfficer, Hays, 27 years of service.Back from left – Mark Calcara,General Counsel, Great Bend, 25years of service; Sid Severson,Executive Vice President and CFO,Hays, 21 years of service; JimHanks, Senior Vice President,Administration, Hays, 20 years ofservice.

Front center – Jerry Herman, Manager, InformationSystems, Hays, 21 years of service. Back from left –Jana Horsfall, Manager, Purchasing and MaterialControl, Holcomb, 24 years of service; Steve Miller,Senior Manager, External Affairs, Hays, 21 years ofservice; Clare Gustin, Manager, EconomicDevelopment and Member Services, Hays, 7 years ofservice.

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Front center – Jayne Clarke,Senior Manager, FinancialServices, Hays, 16 years of service.Back from left – Bob Johnson,Senior Manager, Engineering &Energy Services, Hays, 19 years ofservice; Wayne Penrod, SeniorManager, Environment/ProductionPlanning, Garden City, 16 years ofservice; Tom Hestermann,Manager, Regulatory Relations,Hays, 24 years of service.

From left – Kyle Nelson, SeniorManager, Generation Engineering,Garden City, 15 years of service;Brad Schimke, Senior Manager,Power Production, Holcomb, 22 yearsof service; Steve Moss, Manager,Production Operations andMaintenance, Holcomb, 5 yearsof service.

From left – Keith Overland,Senior Manager, CorporateSecurity and TransmissionOperations and Maintenance,Garden City, 17 years of service;Carroll Waggoner, SeniorManager, Transmission Policy,Hays, 18 years of service;Noman Williams, SeniorManager, Transmission Services,Hays, 16 years of service.


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T R A I T SIntegrity – Consistently doingwhat I say I am going to do.This value includes the qualityof possessing and steadfastlyadhering to high moral prin-ciples and professional stan-dards. It is a state of beingcomplete, sound and reliable.

THE YEAR IN REVIEW

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The past year continuedwith positive changes andpresented opportunities forSunflower to continue to meetthe needs of its Membersystems.

Debt RefinancingTransaction

One example of positivechange occurred whenSunflower refinanced $213million of its debt with theRural Utilities Service (RUS)through National Rural UtilitiesCooperative FinanceCorporation (CFC) loaning

Sunflower $138 million and Lehman Brothers facilitatingthe private placement of $75 million in debt. Thistransaction will save Sunflower’s Member systems $60million in interest expense they would have otherwisepaid over the life of the loans.

At a meeting with Sunflower’s Board of Directors,Congressman Jerry Moran was thanked for his support ofthis transaction and the work he does to help ruralcommunities in Kansas overcome the obstacles eachface. Senators Roberts and Brownback have also beensupportive of and instrumental in Sunflower’s successand continue to advise Sunflower staff on matters ofnational importance to Sunflower, its Members, and theircustomers.

BNSF Rail AgreementAfter a long period of negotiation, a new rail

transportation agreement for coal deliveries to Holcomb

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Station was completed in 2004. In addition to the new rail agreement, the Board requestedthat Western Fuels begin a transition from steel rail cars to aluminum rail cars for coaldeliveries, thereby allowing Sunflower’s coal to Holcomb to be hauled in fewer trips fromthe mines.

Rate CaseDuring 2004, Sunflower also received approval of the rate case it filed with the KCC.

This case was filed as required by the KCC during Sunflower’s 2002 corporatereorganization activities. As requested by Sunflower, the case was settled in Novemberwith no change in Sunflower’s revenue or rate design.

Leadership ChangeEarl Watkins was selected by Sunflower’s Board of Directors to succeed Chris Hauck

who retired after dedicating 16 years as Sunflower’s Chief Executive Officer. BoardChairman Charles Ayers said, “Earl knows the company well, shares the Board’senthusiasm for the future, and has the dogged persistence to claim it.”

In remarks to Sunflower employees, Watkins said, “It is indeed my honor to serve theMember cooperatives that own Sunflower. I am convinced Sunflower is positioned toovercome the obstacles we will face as we work together to meet our Members’ needs inways that will help them effectively serve their western Kansas consumers.”

21st Century Leadership ProgramOne of the opportunities for Sunflower’s continuing success is a cooperative-wide

commitment to living a culture based on the core values featured throughout this report.The 21st Century Leadership program features training for all employees and involves notonly initial education, but also a system to help everyone deal with the challenges theyface each day as they participate in an industry constantly undergoing significant change.

Annual MeetingDuring the annual meeting in May 2004, Charles Ayers was re-elected Chairman of the

Board and Loren Ochs was elected Vice President. Also in 2004, the retiring Stan Braywas replaced by Katherine Lewis who joined Sunflower’s Board of Directors in Septemberas an Alternate Director representing Lane-Scott Electric Cooperative.

GenerationSunflower’s Holcomb unit set a record in 2004.The 2,596,608 MWhs produced

exceeded the previous record by nearly 2,000 MWhs. The unit experienced a Net CapacityFactor of 82.11%, which was just short of the record of 82.28%, but was much better thanthe 68.1% experienced by units similar to Holcomb throughout the North American ElectricReliability Council (NERC) reporting region.

The annual maintenance outage was conducted between April 23 and May 8. Onehundred fifty contractors and Sunflower employees made substantial repairs to many of


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T R A I T STrustworthiness – Reliablydemonstrating that I am per-forming my function to the bestof my ability for the company,to merit the trust and confi-dence of my colleagues, andto be dependable.

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the major component systems at Holcomb Station, thus ensuring the continuation of itssuperior operating performance. The demonstration of the technical competency ofSunflower’s workforce and its vendors made the outage a complete success.

In addition to other capitaladditions, Sunflower completednegotiations with EmersonProcess Management for thereplacement of the controlssystem at Holcomb. This $10.4million project began in 2004with Phase 1 being scheduledfor completion during the 2005spring outage. The project willbe completed with Phase 2installations in 2006.

Environmental ActivitiesSunflower continued to

demonstrate its leadership in theindustry through two projectsinvolving EPRI, the Department

of Energy (DOE), and other utilities. For several years,Sunflower has worked to find new technologies thatwould help powerplants burning low sulfur coal fromWyoming reduce their emissions of nitrogen oxides(NO ), and to discover innovative ways to reduce theemission of mercury.

For its efforts, Sunflower was presented the EPRI’sTechnology Achievement award for 2004. This nationalaward honors electric cooperatives that havedemonstrated leadership in the development, technologytransfer, application, and use of EPRI products andservices.

In addition to the work with DOE and EPRI, Sunflowerhelped form the Kansas Landfill Association, a grassrootsorganization created from the desire of landfill owners toshare information with one another and with regulatoryand legislative organizations. Similarly, Sunflower wasone of the founding members of the Kansas WaterSu

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Congress, a group of agricultural, industrial, and municipal water users from acrossKansas who are working together to ensure good water policy continues in Kansas.

TransmissionSunflower’s transmission operations are comprised of many departments at work

around-the-clock to make certain the power produced is reliably and safely delivered. In2004, the entire department worked on many major efforts like the Jameson-Dobson-Morris re-pole project completed in July.

The Pioneer-Walkemeyer-Hugoton transmission line project involving the constructionof a new line between Walkemeyer and the Hugoton substation was completed in 2004.Considerable progress was also made on the construction of a new 115-kV line betweenthe Hugoton and Pioneer substations. The project is forecast to be completed in 2005.

Relays were replaced on the Mingo-Red Willow portion of the 345-kV line and a year-long effort to finish the under-frequency load shedding system, as required by the SPP,was completed. This accomplishment represented a significant cooperative effort betweenSunflower and its Member systems. This system will provide for the shedding of as muchas 30% of the summer peak load if necessary.

Planning for the $1.7 million upgrade of Sunflower’s microwave system to digitaltechnology began in earnest during 2004. Phase 1 of this project is forecast to becompleted in 2005 with Phase 2 completion expected in 2007.

As always, the transmission system endured a stormy year. One storm producedwinds of up to 108 miles per hour, but miracuously, only two poles were broken. Onanother occasion, substantial vandalism was revealed on a line segment betweenRansom and Gove.

On a lighter note, Sunflower’s transmission personnel provided assistance to theGarden City Zoo in the construction of a new shade structure for their elephants. This wasjust one of many activities Sunflower undertook to use its assets to help others improvewestern Kansas.

Regional Development and Grassroots ActivitiesOther opportunities to help western Kansas were highlighted in Sunflower’s support of

the HorseThief Reservoir project and sponsorship of the regional electric car races at FortHays State University. While these activities may not result in the direct sale of power, theydo aid cooperatives across Kansas in their commitment to the communities they serve asrequired by their boards and as encouraged through involvement in the nationalTouchstone Energy program.

As a result of joint actions by Sunflower’s Members and its staff, two United StatesDepartment of Agriculture (USDA) loans were approved in 2004. These ongoing loanprograms represent another grassroots campaign among rural utilities working together toassist businesses that continue to invest in cooperative service areas.


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T R A I T SServant Leadership – Work-ing to serve the legitimateneeds of others to empower orotherwise enable others tooptimally perform their jobresponsibilities, including ad-herence to Sunflower’s culturalnorms; it is an approach toleadership development thatemphasizes the leader’s roleas steward of the resources(human, financial, and other-wise) provided by theorganization to him or her forpurposes of accomplishing themission.

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Sunflower was honored to be one of four finalists chosen from 286 nominees by theKansas Department of Commerce for the Governor’s Award of Excellence. Sunflower’sPresident and CEO, Earl Watkins, noted that, “This honor resulted from the vision of ourBoard of Directors and our culture of accountability and servant leadership.” He said, “Thepartnership among our electric cooperative owners is a great example of what can beaccomplished when we live our commitment of working together.”

Sunflower joined with other Kansas public utilities as participants in Transmission SummitII, a gathering designed to improve regional transmission infrastructure. The meeting wasorganized by State Representative Tom Sloan and featured Federal Energy RegulatoryCommission (FERC) Chairman Pat Wood as the keynote speaker.

Sand Sage PowerThe development of the Sand Sage Power, LLC project, also referred to as Holcomb 2,

continues to progress. While this project began in 2001, steady progress has been made asSunflower and its development team work to bring this project to a successful conclusion. As

the marketplace has changed with the exit of energytraders, Sunflower has modified its offers to interestedutilities in the region to ensure that the project can meettheir needs. Changes in the regional transmissionmarketplace with the emergence of regional transmissionorganizations have required extensive meetings withstakeholders. These meetings helped to ensure theproject maintains competitive transmission paths withrates that do not unfairly burden Sunflower’s Membersystems or the customers of the project. The KansasDepartment of Heath and Environment also extended theexpiration date of the construction air permit to October2005.

Sunflower management remains quite optimisticabout the probability of reaching financial closing of thisproject in 2005. Holcomb 2 remains one of the bestopportunities for coal-fired power delivered by aworkforce with a proven ability to operate assets of thisnature in a manner that consistently outperformsgenerating units of similar size and vintage.

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KPMG LLPSuite 2700707 Seventeenth StreetDenver, CO 80202

Independent Auditors’ Report

The Board of DirectorsSunflower Electric Power Corporation:

We have audited the accompanying combined balance sheets of Sunflower Electric PowerCorporation, Sunflower Electric Holdings, Inc., and subsidiaries, collectively Sunflower, as ofDecember 31, 2004 and 2003, and the related combined statements of operations, member and patrondeficit, and cash flows for the years then ended. These combined financial statements are theresponsibility of Sunflower’s management. Our responsibility is to express an opinion on thesefinancial statements based on our audits.

We conducted our audits in accordance with auditing standards generally accepted in the UnitedStates of America. Those standards require that we plan and perform the audit to obtain reasonableassurance about whether the financial statements are free of material misstatement. An audit includesconsideration of internal control over financial reporting as a basis for designing audit procedures thatare appropriate in the circumstances, but not for the purpose of expressing an opinion on theeffectiveness of Sunflower’s internal control over financial reporting. Accordingly, we express nosuch opinion. An audit includes examining, on a test basis, evidence supporting the amounts anddisclosures in the financial statements. An audit also includes assessing the accounting principlesused and significant estimates made by management, as well as evaluating the overall financialstatement presentation. We believe that our audits provide a reasonable basis for our opinion.

In our opinion, the financial statements referred to above present fairly, in all material respects, thecombined financial position of Sunflower as of December 31, 2004 and 2003, and the results of theiroperations and their cash flows for the years then ended in conformity with accounting principlesgenerally accepted in the United States of America.

Denver, ColoradoMarch 23, 2005

KPMG LLP, a U.S. limited liability partnership, is the U.S.member firm of KPMG International, a Swiss cooperative.


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Combined Balance SheetsDecember 31, 2004 and 2003

Utility plant, at cost:In service Less accumulated depreciation

Construction work in progressTotal utility plant (note 2)

Investments and other assets:Capital term certificates of the National Rural Utilities Cooperative Finance CorporationInvestments in associated organizationsEscrowed funds

Total investments and other assetsCurrent assets:

Cash and cash equivalentsAccounts receivable: Members Nonmembers Other

Inventories: Fuel Materials and supplies

Prepayments and other current assetsTotal current assets

Deferred charges (note 1(n))

Assets, Pledged (Note 3) 2004

581,322,898(300,300,756)281,022,142

369,945281,392,087

21,953,5823,379,671

522,51325,855,766

5,466,459

5,864,102 3,775,940

449,51310,089,555

2,162,7017,008,3009,171,001

922,42625,649,441

5,716,939338,614,233

2003

579,033,235(288,808,301)290,224,934

1,813,239292,038,173

2,193,6843,543,730

518,0186,255,432

2,419,657

518,9193,118,493

240,6863,878,098

2,754,1437,012,1789,766,321

978,67617,042,752

3,287,247318,623,604

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Combined Balance SheetsDecember 31, 2004 and 2003

Capitalization and Liabilities

Capitalization:Long-term obligations, less current maturities (note 3)Obligations under capital leases, less current portion (note 5)Member and patron deficit:

MembershipsDonated capitalAccumulated deficit

Total member and patron deficitTotal capitalization

Current liabilities:Current maturities of long-term obligations (note 3)Current portion of obligations under capital leases (note 5)Accounts payableInterest payableAccrued liabilities:

Taxes other than income taxesOther (note 7)

Total current liabilities

Deferred creditsCommitments and contingencies (notes 3, 4, 5, 6, 7 and 8)

2004

390,461,78610,254,468

9904,852,989

(89,213,735)(84,359,756)316,356,498

10,809,995 458,421

3,407,144 722,250

3,104,527 2,801,398

21,303,735

954,000

338,614,233

2003

380,353,06610,357,650

99077,989

(95,780,101)(95,701,122)295,009,594

13,606,923439,414

2,634,258—

3,131,8482,847,567

22,660,010

954,000

318,623,604

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Total (96,729,254)

1,028,132(95,701,122)

6,566,366

4,775,000(84,359,756)

Accumulateddeficit

(96,808,233) 1,028,132

(95,780,101) 6,566,366

—(89,213,735)

Donatedcapital

77,989—

77,989 —

4,775,0004,852,989

Combined Statements of Member and Patron DeficitYears ended December 31, 2004 and 2003

Combined Statements of OperationsYears ended December 31, 2004 and 2003

Operating revenue:Member power salesNonmember power salesOther

Total operating revenueOperating expenses:

Operations:Production and other power supplyTransmission

Maintenance:ProductionTransmission

Administrative and generalDepreciationOther taxes

Total operating expensesElectric operating margin

Less interest expense (note 3)Other deletions, net

Operating marginsNonoperating margins:

Investment incomeOther, net

Total nonoperating marginsNet margins

2004

78,171,79234,023,9614,700,295

116,896,048

51,617,6645,890,129

10,369,812 1,581,545 6,909,11611,961,773

28,434 88,358,47328,537,575

(22,867,765) (278,188)

5,391,622

509,864 664,880

1,174,7446,566,366

See accompanying notes to combined financial statements.

Balance, December 31, 2002Net marginsBalance, December 31, 2003Net marginsCapital contributions from members (note 1(j))Balance, December 31, 2004

Memberships990—

990—

—990

2003

79,103,61035,629,8454,681,340

119,414,795

55,977,1926,412,998

9,296,3491,528,0596,691,443

11,953,07028,750

91,887,86127,526,934

(27,141,882)(93,235)291,817

138,838597,477736,315

1,028,132

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2003

1,028,132

11,953,070(11,584)

1,603,981(496,526)

54,297(390,296)

(1,489,861) —

1,020,79612,243,87713,272,009

(2,341,082)800

(182,000)(5,775)

275,233(2,252,824)

—(10,310)

——

(12,537,062)(12,547,372)

(1,528,187) 3,947,844 2,419,657

2004

6,566,366

11,961,773(69,511)

(6,211,457)595,32056,250

(2,429,692) 772,886722,250(73,490)

5,324,32911,890,695

(1,388,588)409

(226,838)(4,495)

460,408(1,159,104)

4,775,000(11,683)

213,277,800(213,277,800)(12,448,106)(7,684,789)3,046,8022,419,657 5,466,459

Cash flows from operating activities:Net marginsAdjustments to reconcile net margins to net cash provided

by operating activities:DepreciationPatronage capital creditsDecrease (increase) in accounts receivableDecrease (increase) in inventoriesDecrease in prepayments and other current assetsIncrease in deferred chargesIncrease (decrease) in accounts payableIncrease in interest payableIncrease (decrease) in accrued liabilities

Total adjustmentsNet cash provided by operating activities

Cash flows from investing activities:Capital expendituresProceeds from utility plant dispositionsPurchase of investmentsPayments of escrowed fundsSale of investments

Net cash used in investing activities

Cash flows from financing activities:Capital contributions from membersPrincipal payments under capital lease obligationsProceeds from refinancing of debtPayments to refinance debtPrincipal payments on debt

Net cash used in financing activitiesNet increase (decrease) in cash and cash equivalents

Cash and cash equivalents, beginning of yearCash and cash equivalents, end of year

Supplemental information:Sunflower recorded net reductions in capital lease obligations according to RUS guidelines in theamounts of $72,492 and $422,546 in 2004 and 2003, respectively.

Sunflower paid $22,145,515 and $27,141,882 in cash for interest during 2004 and 2003,respectively.

During 2004, Sunflower entered into an agreement with the National Rural Utilities CooperativeFinance Corporation in which Sunflower purchased $19,759,898 of equity in return for LCTC Notesfor the same amount.

See accompanying notes to combined financial statements.

Combined Statements of Cash FlowsYears ended December 31, 2004 and 2003

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(1) Nature of Operations and Summary of Significant Accounting Policies

(a) Nature of Operations and Liquidity

Sunflower Electric Power Corporation (Sunflower) is an electric generation and transmissioncorporation. Sunflower is responsible for the electric power requirements of its six distributioncooperative members operating within Western Kansas: Lane-Scott Electric Cooperative, Inc.,Pioneer Electric Cooperative, Inc., Prairie Land Electric Cooperative, Inc., Victory ElectricCooperative Association, Inc., Western Cooperative Electric Association, Inc., and WheatlandElectric Cooperative, Inc. Rates to Sunflower’s members are subject to approval by the KansasCorporation Commission (KCC) and the Rural Utilities Service (RUS or the Government).

Sunflower’s primary resource for supplying the needs of its members is the Holcomb Station.Holcomb Station is a coal-fired generating facility with a net rating of 360 megawatts. Sunflower’saccredited generation with the Southwest Power Pool totals 642 megawatts, and includes allgeneration assets available. Sunflower purchases all of its coal from Western Fuels Association,Inc. (Western Fuels). During 2004 and 2003, Sunflower’s purchases from Western Fuels totaled$20.8 million and $27.1 million, respectively. During 2004, coal transportation purchases from otherstotaled approximately $5.1 million. Representatives from Sunflower’s board of directors andmanagement are members of Western Fuel’s board of directors.

At December 31, 2004, Sunflower had working capital, current assets less current liabilities, ofapproximately $4.3 million. Sunflower is also dependent on cash flows from member and nonmemberlong-term power supply contracts to meet its current obligations. Sunflower’s management isunaware of any significant changes to these contracts in the upcoming year that are expected tosignificantly impact its cash flows from power sales.

(b) The Financial Reporting Entity

On November 26, 2002, Sunflower Electric Holdings, Inc. (SEHI) completed negotiations torestructure its debt and signed the Agreement and Consent to Sunflower Restructuring, Dated asof September 30, 2002, By and Among Sunflower, SEP, HCF, the Government, CFC, Co Bank, andOther Creditors (the Consent Agreement). The Consent Agreement transferred all assets andliabilities, except for the long-term debt, from SEHI to SEP Corporation in exchange for certaindebt issued by SEP Corporation as noted in note 3. SEP Corporation legally changed its name toSunflower Electric Power Corporation (Sunflower) in March 2003. Sunflower is a nonprofitcorporation, operated on a cooperative basis. The ownership of Sunflower is in the same proportionas that of SEHI. Substantially all of Sunflower’s assets, contracts, and revenue are pledged assecurity under the mortgage provided for in the Consent Agreement.

As part of the November 2002 transaction, Holcomb Common Facilities, LLC (HCF) was createdas a wholly owned subsidiary of SEHI for the purpose of holding specific assets located at HolcombStation Unit No. 1 Power Plant (Holcomb Station). These assets are capital leased to Sunflower.Sunflower has three wholly owned subsidiaries: Sand Sage Power, LLC (Sand Sage); SunflowerRail Company, LLC (Sunflower Rail); and SEPC, LLC. Sand Sage and Sunflower Rail were createdfor future activities and currently do not hold any assets or liabilities. SEPC, LLC was formed topurchase and lease a communications tower in 2003. This tower is a capital lease to Sunflower aspart of the operation of the generation and transmission facilities.

The accompanying combined financial statements include the combined transactions of the aboveentities, collectively referred to as Sunflower. Intercompany balances and transactions have beeneliminated in combination.

Notes to Combined Financial StatementsDecember 31, 2004 and 2003

(Continued)

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(Continued)

(c) Basis of Presentation

The accompanying combined financial statements have been prepared using the accrual basis ofaccounting in accordance with accounting principles generally accepted in the United States ofAmerica. Transactions have been classified in accordance with the Uniform System of Accountsprescribed by the RUS.

(d) Use of Estimates

The preparation of combined financial statements in conformity with accounting principles generallyaccepted in the United States of America requires management to make estimates and assumptionsthat affect the reported amounts of assets and liabilities and disclosure of contingent assets andliabilities at the date of the combined financial statements and the reported amounts of operatingrevenue, expenses, and other items during the reporting period. Actual results could differ significantlyfrom those estimates.

(e) Utility Plant

Utility plant is stated at cost and accounted for in accordance with the Uniform System of Accountsprescribed by the RUS. The cost of maintenance and repairs, including renewals of minor items, ischarged to operating expenses. Expenditures for replacement of property units are recorded asutility plant. The cost of units replaced or retired, including cost of removal, net of any salvagevalue, is charged to accumulated depreciation.

Depreciation is provided on the composite straight-line method over the estimated useful lives ofthe assets. The method and rates are approved by the RUS. The average annual depreciationrates are:

Steam production plant 2.12 %Other production plant 1.82 %Transmission plant 2.45 %General plant 1.08 %

(f) Investments

Investments in associated organizations are stated at cost plus Sunflower’s share of patronagecapital credits allocated, reduced by distributions received. Sunflower’s ownership percentage inthese associated investments is less than 20%.

Capital term certificates and escrowed funds are carried at cost. Cost is estimated to approximatefair value due to the nature of the certificates and the underlying short-term investments held inescrow.

(g) Cash and Cash Equivalents

Cash and cash equivalents include cash deposits in banks and short-term investments with originalmaturities of three months or less. Included in short-term investments are overnight repurchaseagreements and treasury bills.

(h) Inventories

Inventories are recorded at the lower of cost or market and are expensed on an average-costbasis.

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(i) Prepayments and Other Current Assets

Prepayments and other current assets consist primarily of prepaid insurance, which is expensedratably over the life of the service period.

(j) Patronage Capital

All net margins are required to offset any losses incurred during the current or any prior fiscal year.Remaining net margins, if any, are allocated to members based on energy purchases. At December31, 2004 and 2003, no portion of equity had been allocated or assigned.

Under provisions of the mortgage with RUS, patronage capital cannot be distributed withoutapproval from certain long-term creditors. Sunflower allocates patronage capital on a tax basis.

During 2004, members contributed approximately $4.8 million in cash to improve Sunflower’sliquidity.

(k) Income Taxes

Sunflower is a taxable cooperative. Income taxes generally apply to Sunflower to the extent thattaxable income or losses are allocated to nonpatron activity. Sunflower accounts for income taxesattributable to nonpatron activity under Statement of Financial Accounting Standards No. 109,Accounting for Income Taxes (Statement 109). Under the asset and liability method of Statement109, deferred tax assets and liabilities are recognized for the future tax consequences attributableto differences between the combined financial statement carrying amounts of existing assets andliabilities and their respective tax bases. Deferred tax assets and liabilities are measured usingenacted tax rates expected to apply to taxable income from nonpatron sales in the years in whichthose temporary differences are expected to be recovered or settled. Under Statement 109, theeffect on deferred tax assets and liabilities of a change in tax rates is recognized in operations inthe period that includes the enactment date.

(l) Deferred Credits

Deferred credits consist of unearned revenue from contracts with power customers.

(m) Revenue and Fuel Expense Recognition

Electric energy sales and the related fuel expenses are recorded at the time electric energyis delivered.

(n) Deferred Charges

Deferred charges at December 31, 2004 and 2003, include legal and engineering fees incurred bySunflower for the potential construction of a new electric power generating station to be contiguousto the Holcomb Station. All charges are expected to be reimbursed by the development fundingentity. At December 31, 2004, deferred charges also include legal and filing fees incurred to refinanceits Secured “A” Notes in 2004. These charges are amortized over the life of the refinanced notes.

(o) Long-Lived Assets

Long-lived assets are reviewed for impairment whenever events or changes in circumstancesindicate that the carrying amount of an asset may not be recoverable. Long-lived assets to bedisposed of are reported at the lower of carrying amount or fair value. For the years ended December31, 2004 and 2003, management believes there has been no impairment of Sunflower’s long-livedassets.


(Continued)

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2003420,487,64214,158,831

116,749,27818,445,390

569,841,141

(288,808,301)

281,032,840

9,192,0941,813,239

292,038,173

(Continued)


(p) Reclassifications

Certain prior year amounts have been reclassified to conform with the current year presentation.

(2) Utility Plant

Utility plant balances by major class of asset are as follows at December 31, 2004 and 2003:

Steam production plantOther production plantTransmission plantGeneral plant

Total depreciable assets

Less accumulated depreciation

Net depreciable assets

LandConstruction work in progress

Total utility plant

2004422,322,50314,158,831

116,879,93018,769,540

572,130,804

(300,300,756)

271,830,048

9,192,094369,945

281,392,087

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$

$

2004

—

67,500,000

137,677,801

54,673,310

30,268,856

81,378,197

10,099,459

—

19,674,158

401,271,781

(10,809,995)

390,461,786


(Continued)

(3) Long Term Debt

(a) Outstanding Notes PayableThe outstanding note balances are as follows as of December 31, 2004 and 2003:

Secured “A” Notes, interest ranging from 2% to10%, due in quarterly principal and interestinstallments through 2016

Secured “A-1” Notes, 4.28% interest, due insemi-annual principal and interest installmentsthrough 2011

Secured “A-2” Notes, interest ranging from 2.8% to5.5%, due in quarterly principal and interestinstallments through 2016

Unsecured “A” Participation Notes, 8% interest,due in quarterly principal and interestinstallments through 2016

Secured “B” Notes, bearing no stated interest rate,quarterly installments applied 2 for 1, effectiveinterest rate of 3.8% through 2016.

Residual Value Notes, bearing no stated interestrate, lump sum payment due December 31,2016, effective interest rate of 3.59%

Unsecured “B” Notes, bearing no stated interestrate, due in quarterly installments through2027, effective interest rate of 5.3%

Western Fuels, Inc. Note, bearing variable interestrate, due in monthly installments until fullyamortized

National Rural Utilities Cooperative FinanceCorporation Loan Capital Term Certificate(LCTC) Notes, interest ranging from 2.8% to5.5%, due in quarterly principal and interestinstallments through 2016

Less current maturities of long-term obligations

Long-term obligations, less current maturities

2003

215,656,546

—

—

57,398,260

32,183,130

78,518,965

10,033,618

169,470

—

393,959,989

(13,606,923)

380,353,066

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$

$


(Continued)

On April 22, 2004, Sunflower completed a refinancing of the outstanding Secured “A” Notes, primarilyto reduce the interest rate. The Secured “A” Note debt was refinanced with the proceeds from theissuance of the Secured “A-1” and Secured “A-2” Notes. Upon the refinancing, all outstanding Secured“A” Note debt was extinguished. No gain or loss was recorded on the extinguishment given thecarrying amount of the extinguished debt was equivalent to the reacquisition price.

Prior to April 22, 2004, all Secured “A” Notes had interest ranging from 2% to 10%, with principal andinterest payable quarterly through 2016. Subsequent to the refinancing, the Secured “A-1” Notes, inthe amount of $75,000,000, bear interest at 4.28%, payable in semi-annual installments. The Secured“A-2” Notes, in the amount of $138,277,800, consist of 13 separate notes, with one note due eachyear beginning March 31, 2005 through March 31, 2016. The last note is due on December 31,2016. The Secured “A-2” Notes bear interest ranging from 2.8% to 5.5%.

The Secured “B” Notes were issued in November 2002, in the amount of $89,888,660, without astated interest rate. The quarterly principal payments are applied to reduce the outstanding notebalance on a 2 for 1 basis; for every $1 paid, the outstanding note balance is reduced by $2, resultingin expected future cash outflows of $37,826,448 as of December 31, 2004. For financial statementreporting purposes, the expected future quarterly payments have been discounted assuming aneffective interest rate of 3.8%, resulting in carrying amounts of $30,268,856 and $32,183,130 as ofDecember 31, 2004 and 2003, respectively.

The Residual Value Notes were issued for the greater of $125,000,000 or 43% of the fair value ofHolcomb Station on December 31, 2016, without a stated interest rate, payable in one lump sumamount on December 31, 2016. The Consent Agreement provides the terms for determining the fairvalue of 43% of Holcomb Station upon the December 31, 2016, appraisal date. The Residual ValueNotes contain a prepayment provision that is to be used upon prepayment of the notes or upon thesale of the Holcomb Unit 1 facility. The December 31, 2002 Stipulated Value of $75,760,193 outlinedin this prepayment provision grows to $148,181,482 through September 30, 2016. This amountexceeds the stated minimum amount due of $125,000,000, the excess of which is considered aprepayment premium. For financial statement reporting purposes, the note is reflected at an accretedcarrying amount originally equivalent to the beginning Stipulated Value of $75,760,193, fully accretingto $125,000,000 as of December 31, 2016. This results in interest at an effective interest rate of3.59% per year. Any amount that might be paid on this note in excess of $125,000,000 has beentreated as a contingent amount and, as such, is not currently recognized due to the uncertainties ofprepayment, sale of the Holcomb Unit 1 facility, or appraised fair value of the Holcomb Station as ofDecember 31, 2016.

Unsecured “B” Notes were issued in November 2002, totaling $17,997,972, without a stated interestrate, payable in quarterly installments through June 30, 2027. For financial statement reportingpurposes, the expected future quarterly payments have been discounted assuming an effectiveinterest rate of 5.3%, resulting in carrying amounts of $10,099,459 and $10,033,618 as of December31, 2004 and 2003, respectively.

The LCTC Notes were issued in the amount of $19,759,898, or 14.29% of the Secured “A-2” Notes,as part of the 2004 refinancing to the National Rural Utilities Cooperative Finance Corporation (CFC).Like the Secured “A-2” Notes, there are 13 separate notes, with one note due each year beginningMarch 31, 2005 through March 31, 2016. The last note is due on December 31, 2016. The LCTCNotes bear interest ranging from 2.8% to 5.5%. Required as part of CFC loan policy, Sunflowerpurchased an equity interest in CFC. The proceeds from these notes were used solely to purchaseCFC capital term certificates in an amount originally equivalent to the LCTC Note balance.

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The equity term certificates are reflected as capital term certificates of the National Rural UtilitiesCooperative Finance Corporation on Sunflower’s balance sheet. CFC repays the capital termcertificates to Sunflower as Sunflower’s outstanding Secured “A-2” Notes and LCTC Notes are repaid.Quarterly payments on the LCTC Notes, like the original borrowing, are equivalent to 14.29% of thequarterly payments made on the Secured “A-2” Notes.

At December 31, 2004, scheduled maturities of the long-term debt are as follows:

Year ending December 31: 2005 $ 10,809,995 2006 11,025,349 2007 18,920,291 2008 20,609,475 2009 23,647,942Thereafter 316,258,729

$ 401,271,781


(Continued)

(b) Contingent Notes

The November 26, 2002 Consent Agreement modified the Sunflower reporting entity. The ConsentAgreement transferred assets and liabilities, except for Sunflower Electric Holdings, Inc. (SEHI)long-term debt and the legal title to the Holcomb Common Facilities (Common Facilities) and RetainedInfrastructure, to SEP Corporation in exchange for debt issued by Sunflower. The Common Facilitiesand Retained Infrastructure included property necessary to operate one or more additional units ifbuilt on the Holcomb Station site. If additional generation units are constructed, rental payments foruse of the Common Facilities and Retained Infrastructure are to be paid to the creditors of SEHI.Although discussions continue in an effort to develop the plant site, no construction activities foradditional generating units have begun as of December 31, 2004; thus, SEHI’s contingent long-termdebt is not considered probable as to payment and, accordingly, is not reflected in the accompanyingcombined financial statements.

An Unsecured “B” Contingent Note was issued to one creditor in connection with the November 26,2002 transaction with payment terms contingent upon receipt by Sunflower of cash flows from thelease of property that would be used to build additional generating units on the Holcomb Station siteif the site is ever to be developed. As of December 31, 2004, no construction activities for additionalgenerating units have begun; thus, the Unsecured “B” Contingent Note is not considered probableas to payment and, accordingly, is not reflected in the accompanying combined financial statements.

Holcomb 3 Contingent Notes, totaling $3,145,000, were issued in connection with the November26, 2002 transaction. These are contingent notes bearing no interest through January 1, 2008, andaccruing interest at 5% thereafter until paid. The principal and accrued interest are payable in fullupon the commercial operation date of a third unit (Holcomb Unit 3) located on the Holcomb Stationsite. If commercial operation does not commence prior to December 31, 2021, or if Sunflower is notan owner or operator of Holcomb Unit 3, the notes, including accrued interest, are canceled. As ofDecember 31, 2004, no construction activities for additional generating units have begun; thus, theHolcomb 3 Contingent Notes are not considered probable as to payment and, accordingly, are notreflected in the accompanying combined financial statements.

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(4) Income Taxes

The tax effects of temporary differences that give rise to significant portions of the deferred taxassets and liabilities at December 31, 2004 and 2003 are presented below:

2004 2003Deferred tax assets:

Property and equipment, principally due to safe harborleasing transactions $ 11,683,321 12,019,667

Accrued vacation for financial reporting purposes 137,750 126,167Debt, principally due to differences in effective

interest rates — 5,184,999Investment in SEHI notes 752,992 784,055Net operating loss carryforwards 27,384,064 2,954,381

Total gross deferred tax assets 39,958,127 21,069,269

Less valuation allowance (18,413,459) (18,421,915)Deferred tax assets, less allowance 21,544,668 2,647,354

Deferred tax liabilities:Property and equipment, principally due to differences

in depreciation 1,851,617 2,042,874Debt, principally due to differences in effective

interest rates 19,100,985 —

Other 592,066 604,480

Total gross deferred tax liabilities 21,544,668 2,647,354

Net deferred tax assets $ — —

Management allocates deferred tax assets and liabilities based on average annual nonpatronkilowatthour sales percentages.

Although the table above presents the deferred tax assets and liabilities on a combined basis, SEHIand Sunflower each file separate income tax returns. As of December 31, 2004, SEHI hasapproximately $228 million of net operating loss carryforwards for regular and alternative minimumtax purposes that, if not utilized, begin to expire after 2013 through 2025. As of December 31, 2004,Sunflower has approximately $2.7 million of net operating loss carryforwards for regular and alternativeminimum tax purposes that, if not utilized, begin to expire after 2022 through 2024.

Management does not believe the deferred tax assets will be utilized; accordingly, it has provided avaluation allowance to reduce the net deferred tax assets to zero.


(Continued)

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(5) Leases

Sunflower is obligated under various leases for plant facilities, transmission lines, and equipmentwhich are accounted for as capital leases. The following is a schedule of the future minimum leasepayments under capital leases together with the present value of the minimum lease payments asof December 31, 2004:

Year ending December 31:2005 $ 1,085,9192006 1,085,9192007 1,083,0182008 1,070,3842009 1,070,384Thereafter 13,551,908

18,947,532

Less amount representing interest (implicit rates of 4.0% to 8.9%) 8,234,643Present value of minimum lease payments 10,712,889

Less current portion 458,421Long-term obligations under capital leases $10,254,468

Sunflower has several types of operating leases. One type is for leases of transmission lines fromseveral of Sunflower’s Member systems. The payment for the transmission leases are reducedover time as certain facilities are fully amortized while other leases provide for continued paymentsover time. Another type is a lease with Western Fuels for the use of steel railcars. Western Fuelshas leased two 115 steel car train sets. The two different railcar leases expire at the end of 2006 and2008, respecitvely. Also, as a result of the new rail contract with Burlington Northern Santa Fe(BNSF), Western Fuels leased an additional 32 steel railcars to Sunflower to supplement the existing115 steel car train sets to achieve the preferred train size of 128 cars plus spares. In addition to thelease payment for the supplemental lease, the agreements include a high mileage penalty of $0.025per mile that each rail car exceeds 60,000 miles per year. The supplemental lease for the steelrailcars expires in September 2005. Sunflower does have other operating leases but these renewon a yearly term, and are not included in the future minimum lease payments below. Future minimumlease payments under noncancelable operating leases as of December 31, 2004, are as follows:

Year ending December 31:2005 $ 4,694,1032006 4,676,8402007 4,453,2152008 4,417,5052009 4,056,959Thereafter 49,724,668

$ 72,023,290

Total expense associated with operating leases was $2,623,371 and $1,010,118 for the years endedDecember 31, 2004 and 2003, respectively.

(Continued)


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(6) Pension Plan

All Sunflower employees are covered by a defined benefit pension plan that is funded throughparticipation in the National Rural Electric Cooperative Association Retirement and Security Program,a multiple employer plan. Employees vest in the plan after one year of service. Information on theaccumulated benefits and plan assets are not determined or allocated by the employer. Pensionexpense for the years ended December 31, 2004 and 2003, was approximately $2,254,980 and$1,703,000, respectively. Sunflower did not incur any past service costs during 2004 and 2003.

(7) Postretirement Benefit Obligations

Sunflower provides health care benefits to eligible retirees under a multiple employer plan. Generally,the medical plan covers a portion of the retirees’ medical expenses, reduced by deductibles andother coverages. Sunflower retains the right, subject to existing agreements, to change or eliminatethese benefits. In order for retirees to be eligible for health care benefits, the participant must paythe premium cost associated with the coverage.

Sunflower accounts for postretirement health benefits under the provisions of Statement of FinancialAccounting Standards No. 106, Employers’ Accounting for Postretirement Benefits Other ThanPensions (Statement 106). Statement 106 requires that companies accrue the projected future costof providing postretirement benefits during the period that employees render the services necessaryto be eligible for such benefits. Sunflower elected to amortize its unrecognized, unfunded accumulatedpostretirement benefit obligation at the date Statement 106 was adopted over the average estimatedremaining service periods of the participants of 20 years.

As of December 31, 2004 and 2003, the accrued postretirement benefit obligation was approximately$1,162,823 and $954,384, respectively. The postretirement benefit obligation is unfunded.Contributions (premiums paid) from retired employees were approximately $107,700 and $100,800for the years ended December 31, 2004 and 2003, respectively. Benefits paid to eligible participantswere approximately $93,133 and $113,900 for the years ended December 31, 2004 and 2003,respectively.

Postretirement benefit expense was approximately $208,400 and $98,400 for the years endedDecember 31, 2004 and 2003, respectively. The weighted average discount rate used in determiningthe accumulated postretirement benefit obligation was 6.0% and 7.25% at December 31, 2004 and2003, respectively. A 10.0% annual rate of increase in the per capita cost of covered health carebenefits was assumed for 2004; the rate was assumed to decrease gradually to 5.0% by 2009 andremain at that level thereafter. If the annual rate changed by 1%, the effect would be insignificant.

(8) Commitments and Contingencies

In 2000, Sunflower and four of its six distribution cooperative members began self-insuring theirhealth plans. The Kansas Electric Cooperative Health Insurance Trust (KECHIT) was established tofinance the health plans. KECHIT is self-insured for up to $75,000 per individual loss and iscommercially insured up to 120% of actuarially-determined expected claims for the upcoming year.Sunflower has discretion over the amount of the premium it will subsidize for its employees, and issubsidizing part of the premium for active employees as of December 31, 2004. Retirees areresponsible for their entire premium payment. During 2004 and 2003, Sunflower paid premiums ofapproximately $2,466,000 and $2,424,000, respectively, to KECHIT. As of December 31, 2004 and2003, no amounts were owed to KECHIT by Sunflower. It is possible that claims incurred by Sunfloweremployees will exceed the amount funded by Sunflower in KECHIT.

(Continued)

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Sunflower has multi-year contracts to acquire and transport coal for Holcomb Station. Sunflower’scosts for both coal and transportation purchases were approximately $26.5 million and $27.1 millionfor the years ended December 31, 2004 and 2003, respectively.

Sunflower is a defendant in litigation matters and a party to various claims arising from its normalactivities. In management’s opinion, these actions will not result in a material adverse effect on thefinancial position, results of operations, or liquidity of Sunflower.

Beginning in 2004, Sunflower maintains a $6.9 million operating line of credit with CFC. Thesefunds are used periodically throughout the year to manage seasonal fluctuations of cash flows. Aspart of the terms, Sunflower can have up to $4.0 million in letters of credit issued against the line ofcredit. Sunflower did not have any funds borrowed or letters of credit issued against this operatingline of credit on December 31, 2004.

As part of the 2004 refinancing, RUS required Sunflower to issue a $3.1 million letter of credit for itsbenefit, through the earlier of January 15, 2017, or the date upon which Sunflower satisfies itsSecured “B” Note obligation to the Government. Sunflower is in compliance with the terms of theGovernment’s note and no draw was or has been made on the letter of credit as of December 31,2004.

As part of a tax benefit transfer transaction entered into in the early 1980s, Sunflower was requiredto maintain a letter of credit for the benefit of the tax lessor in the unlikely event that Sunflower’sactions might give rise to the potential loss of benefits sold. On December 31, 2004, the maximumamount that could be drawn upon the letter of credit was $15,575,792. As of December 31, 2004,events have not occurred that might give rise to the potential loss of benefits sold, and accordingly,no draw was or has been made on the letter of credit.

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SERVICEAREA MAP

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Sunflower’s Transmission System221 Miles of 345-kV Transmission Line837 Miles of 115-kV Transmission Line96 Miles of 69-kV Transmission Line27 Substations64 System Control and Data Acquisition (SCADA) units14 Microwave sites (for SCADA and other system uses)

Sunflower’s PeopleColby ............................3Hays ...........................34Garden City ................53Holcomb ................... 130

Total ............220

Holcomb StationCapacity: 360 MegawattsFuel source: Sub-bituminous coalPurpose: Base LoadPlaced into service: 1983

S-2 Steam TurbineCapacity: 99 MegawattsFuel source: Natural GasPurpose: Intermediate LoadPlaced into service: 1973

S-3 Gas TurbineCapacity: 13 MegawattsFuel source: Natural Gas/OilPurpose: Black Start/Emergency PowerPlaced into service: 1973

S-4 Gas TurbineCapacity: 58 MegawattsFuel source: Natural Gas/OilPurpose: Peaking, ReservePlaced into service: 1976

S-5 Gas TurbineCapacity: 55 MegawattsFuel source: Natural Gas/OilPurpose: Peaking, ReservePlaced into service: 1979

GC-3 Steam TurbineCapacity: 10 MegawattsFuel source: Natural Gas/OilPurpose: PeakingPlaced into service: 1962

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Generation Facilities – 595 MW (net)


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Sunflower Electric Power Corporation Visit Sunflower on the web at: http://www.sunflower.net

or contact any of the addresses listed below:

Hays Office: Holcomb Station:(785) 628-2845 (620) 277-2590P.O. Box 1020 P.O. Box 430301 West 13th Street 2440 Holcomb LaneHays, KS 67601 Holcomb, KS 67851

Colby Office: Garden City Complex:(785) 462-6458 (620) 275-01611970 Thielen Avenue P.O. Box 1649Colby, KS 67701 2075 West St. John Street

Garden City, KS 67846

A Touchstone Energy® Cooperative

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