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Chief Executive Officers Report

January 2006

Looking Forward

As the new CEO of Florida Keys Electric Cooperative, I am looking forward to the new year and the new opportunities it presents, and also to beginning a new chapter in the history of FKEC.

FKEC was founded more than 65 years ago by local residents who wanted a brighter future for the Florida Keys, but I'm sure none of them could have envisioned the Keys as they are today.

With so many changes coming our way between the new 18-mile Stretch and the drawing boards full of new government buildings, new resorts, new condominiums and larger new homes, it's hard to open the local paper without landing on an architect's rendering.

With all this community growth and improvement in the works, FKEC has also been busy planning for the future. Not only are we expanding our system's capacity to help support our members' rising demand (see page 7) but we are also planning new facilities in Tavernier to more efficiently serve our members and to better protect our operations from future hurricanes.

A brief overview of what we're looking forward to in 2006 (and beyond) is included here. As the year progresses, I will continue to provide more details about these topics and provide updates as they become available. The only thing that hasn't really changed since FKEC was founded in 1940 is that, as always, the future looks bright...

MEMBER SERVICE IMPROVEMENTS

In 2006, FKEC members will enjoy many improvements in the way they access their account information. The co-op is currently working on a system which will provide on-line account access to review and pay bills through the Internet. The system will also allow members to make some updates and changes to their account information.

SYSTEM UPGRADES

The second phase of a three-phase upgrade project at the Tavernier Substation is now being completed, and the final phase should be complete by the end of 2006. This upgrade will add capacity to the substation and provide needed back-up to the current system.

The North Key Largo Substation project is also progressing, with the permitting process entering its final stages this year.

NEW TAVERNIER HEADQUARTERS

Like most businesses in our community, FKEC is also preparing for the company's future facilities needs by planning a modern administration and operations center for its Tavernier headquarters. FKEC's staff and board of directors are now in the final planning stage of a three-year process to design a combined office/warehouse facility on the company's Bayside property. FKEC's Board will make the final decision on whether or not to construct the facility after a firm design-build price is determined early this year.

FKEC's new headquarters building has been designed to meet the following criteria:

* Hurricane Preparedness
Most of FKEC's current Tavernier buildings were not designed to meet today's hurricane codes and are not likely to withstand a major hurricane. Plans for the new headquarters include a poured concrete roof and other hurricane resistant features so FKEC will be prepared to restore our community's power quickly and efficiently. The design also includes a large reinforced cafeteria/multipurpose room with moveable partitions and an attached commercial kitchen to house and feed employees and crews (and any outside crews) after a major storm.

* Operational Efficiency & Safety
FKEC's present administrative offices are on the oceanside in Tavernier and the operations complex is across the street on the Bayside. This means employees and members are frequently crossing busy U.S. 1 to access the company's various services and departments. The new facility would combine the administration and operations functions for both greater operational efficiency and for the safety of consumers and employees. By co-locating all the different departments, FKEC's employees will be better able to coordinate their efforts and share information and resources. The new facility would also incorporate many security features to help ensure personal safety while working inside the building.

* Energy Efficiency & Conservation
In addition to hurricane resistance and improved operations, the planned facility will also provide the benefits of energy efficient design and other environmental conservation features. FKEC's goal is to meet the LEED (Leadership in Energy and Environ-mental Design) Green Building requirements (www.leedbuilding.org). Current plans include: high efficiency chillers in lieu of standard central air; a louvered "eyebrow" around the top of the building to direct natural light in while keeping heat out; solar-assist water heating; a cistern to collect rain water; recycled building materials where possible; and an efficient cross-ventilation system in the warehouse.

FKEC's directors are expected to vote on this project in a few months.

Scott is an active member of the Upper Keys community and is a past president, current director and president-elect of the Rotary Club of Key Largo, is a director for the Key Largo Chamber of Commerce and is co-founder and president of the Upper Keys Golf Association.

In 1994, Scott completed the three-year national electrical course for apprentice linemen to further his education in cooperative operations. He is a graduate of Leadership Monroe County Class XI and completed the National Rural Electric Cooperative Association's Management Internship Program in 2005.

Scott graduated from Arkansas State University with a degree in Agriculture Business and Economics in 1986. In 1988, he began his career in the electricity industry when he joined the Rural Electrification Administration (REA) in Washington, D.C. With the REA, he worked first as a Commercial Loan Specialist and was later promoted to Power Requirements Officer before moving to the Florida Keys to join FKEC in 1990.