Click Here For Archived Manager's Reports

June 2007

CEO's REPORT: 2007 Annual Meeting

For those members who could not attend the meeting, an adapted version of the CEO's Report is included here. For meeting photos and more, view the June issue of FKEC News.

Welcome everyone! It's great to see so many of you out here today. This is our 66th annual meeting and we keep trying to make them better every year. This year we expanded our meeting outside with new information booths provided by each of our departments. I hope you found the displays informative and useful and enjoyed Jack Pinder's jambalaya lunch.
If you were here last year, you may recall we spent a lot of time talking about hurricanes. 2005 was a very active year but our system proved to be strong and reliable. Last year I also discussed our plans to make our system even more storm resistant and to improve reliability. This year, I would like to report our progress in those and a few other areas.

STORM HARDENING

Strengthening the Power Infrastructure
"Hardening" the power infrastructure means building a system that is more storm resistant in every way. This ongoing process encompasses a variety of programs, including the following: routine pole inspections and replacements, adoption of the Extreme Wind Standard, aggressive vegetation management, promotion of underground power, and comprehensive system maintenance and upgrades.

Pole inspections and replacements
FKEC has stepped up its pole inspection program and is systematically evaluating the condition of existing poles and is replacing those that have reached the end of their useful lives. In 2006, we replaced about 100 poles throughout our system, along with 5,500 feet of the service wire that attaches your meters to our poles. During these replacements, we also replaced the corresponding pole transformers.

Extreme Wind Standard
Also in 2006, FKEC's board of directors adopted the National Electric Safety Code extreme wind construction standard. This means that any new construction or any reconstruction of our existing system will be built to the NESC's standard. For example, the poles we replaced last year were replaced with "beefier" poles. Not necessarily taller, but stronger. Right now we are also finalizing a study that will tell us if we need to replace our current facilities in order to meet the NESC standard. We should have that study complete in the next couple of months.

In addition to just looking at our own system, we are also evaluating the telephone and cable company equipment that attaches to our poles. We are working with those companies to ensure that they maintain their equipment to the same standards. In 2006, we provided those companies with lists of items we thought they needed to correct and they have been responsive to our concerns.

Vegetation Management
FKEC has also been continually ramping up our efforts in vegetation management. Just like oil and water, power lines and trees do not mix well. So one way to avoid outages is to do a thorough job managing vegetation around our lines and poles.

Last year, we added manpower to our trimming efforts with two more contract tree crews. That brings our total to five contract tree crews in addition to the two or three internal crews we have on hand at all times.
Our crews and contract crews trimmed 225 miles of line in 2006. That is roughly one third of our system, which is consistent with our goal of trimming the entire system on a three-year cycle.

In addition to trimming trees we also implemented a new "Trade-a-Tree" program for trees that we just can't seem to keep out of the lines. With this new program, we have the option of working with the home or land owner to replace a tree we have to remove with a different tree Ð probably a native species Ð planted the proper distance away from the lines so it won't become a problem as it grows. There are also cases where the problem tree itself can be safely moved, but this is not always possible for large mature trees.

Underground Power
I touched on the subject of underground power last year and in 2006, FKEC's board of directors revised our underground power policy. In a nut shell, the board will now require more participation from FKEC in underground projects whether the project involves a single residence or a large construction project. This increased participation will be in the form of both dollars and manpower.

Comprehensive Maintenance
In addition to the above storm hardening programs we discussed last year, FKEC also performed its scheduled system maintenance in addition to other necessary upgrades.

Early in January 2006, our system experienced several power outages caused by failed lightning arresters in the Marathon Substation. As a result of those failures, we replaced a total of 15 of those same type of substation lightning arresters throughout the system to prevent future outages.

So far we have talked quite a bit about our programs for storm hardening and improving system reliability. Next, I would like to review our 2006 accomplishments in these areas.

RELIABILITY

99.98% Reliable in 2006
Last year, FKEC's average outage time was 1.8 hours per member. Our goal for the year was 1.22, so we have reset the same goal for 2007 and are currently on track to meet it this year.

Unusual Outages
In 2006, we experienced some unique outages that we hope never to see again. We already talked about the unexpected breaker and lightning arrester failures in January. Then in February, a large truck ran into a transmission pole which caused a transmission outage. Several months later, a contractor replanting trees in Key Largo accidentally pulled a tree into our lines, which relayed the power out again. Then, just a few days later, a propane gas tank began leaking in Key Largo. Officials requested that FKEC de-energize the lines to avoid igniting the propane. Finally, our most unique outage last year that we hope never happens again was when a skydiver landed on and broke one of our poles near the Marathon airport.

Without some of those unique outages we would have easily met our goal. But even at 1.8 hours of outage time, we still did well compared to our counterparts.

Better than Average
Although we did not meet our 2006 goal of 1.22 outage hours per member, our average of 1.8 hours is still better than average on a state and national level. The state's average for cooperatives was 4.48 hours and the national average was 2.74 hours. If you look at reliability as a percentage, an average of 1.8 hours a year means that our power was on 99.98% of the time. Statewide, that percentage was 99.95% and nation-wide the average was 99.97%.

System Upgrades & Expansion
FKEC is continually upgrading and expanding our system as demand increases and technology advances to provide new and better ways of delivering energy to our members.

In 2006, we completed a multi-year project to add a second power transformer to our substation in Tavernier. This large piece of equipment steps down the high voltage from the main transmission lines to the lower voltage used by our local distribution system.

Adding the second transformer and its related power equipment will provide greater capacity out of the Tavernier substation and will also provide the flexibility to switch loads between transformers to restore power more quickly during certain outage situations.

System Upgrades & Expansion
In addition to the expansion of the Tavernier Substation, FKEC is also making other smaller improvements. The first is replacing its current inline switches with gang operated switches. The function of switches is to turn power on and off in a local area or redirect it when necessary. An "inline" switch requires a lineman in a bucket to pull three separate switches to open each power phase. A "gang operated" switch allows all three to operate simultaneously, improving efficiency and reducing outage time. Another planned upgrade this year is to install under-frequency load shedding equipment designed to help keep the main transmission system operating in periods of instability.

Outage Management System
In 2006, we also began work on an advanced outage management system that will help pinpoint the location of an outage and provide an idea of the immediate cause. It will also allow our system operators to dispatch linemen more quickly and to identify potential problem areas.

CUSTOMER SERVICE

Focused on Serving YOU
While storm hardening programs and reliability upgrades provide you with better electric service, FKEC is also focused on providing you with better customer service as well.

Transactional Survey Program
FKEC is focused on becoming a friendlier company for you to deal with on a regular basis. One of the things we've added recently is a new transactional survey program which asks you, our members, to rate our service after you have placed a service order with us. Based on preliminary results, we are proud to be receiving mostly "excellent" ratings and about 20% "good" ratings. Our goal is to achieve only "excellent" scores.

Single Point of Contact
Another customer service change we've made recently in Tavernier and Marathon is to assign specific employees as the single point of contact for members. This means if a service request involves multiple departments, members will be able to call one person for status requests or changes instead of having to explain the request to a new person each time.

Online Account Access
In the last quarter of 2006, FKEC implemented its new online account access at www.fkec.com. The new system allows you to view and pay current bills online using a checking account or a credit card. You can also view previous bills and usage charts.

Online account access also allows you to sign up for paperless billing. Paper bills consume trees and use energy to produce and fuel to deliver by planes, cars and trucks. So we encourage members with email access to make the switch to paperless as an environmentally friendly alternative.

ENVIRONMENTAL FOCUS

A Greener Electric Utility
Speaking of the environment, I'd like to finish today by discussing our environmental accomplishments.

Switch to Biodiesel Fuel
The most significant change we made recently was switching our truck fleet to biodiesel fuel. Biodiesel reduces our emissions and means we will save about 5,200 barrels of oil from processing per year. Biodiesel also decreases our dependency on foreign oil and ultimately supports American farmers because biodiesel can be produced from soybeans and other crops. We were happy to switch once we found a reliable supplier and the trucks didn't have to be modified.

33,281 Tree Snails Moved to Date
Dr. Deb Shaw, FKEC's on-staff biologist, has been relocating tree snails from our Card Sound Road right-of-way since 1993. We have to trim that right-of-way every year and Dr. Shaw works in front of the tree crews to move the snails by hand. So far she has relocated 33,281 snails!

Free Recycling Bins!
Another contribution your co-op made to environmental causes lately is to provide free recycling bins. Although it seems like an unusual match for an electric utility, our COO John Stuart learned that most of our members can no longer acquire bins from their local garbage collector. He thought FKEC could offer this valued service and I agreed. So far, we've purchased 2,000 bins and gave them away at the Green Living & Energy Education Expo (FKEC is a major sponsor), Earth Day at Cheeca Lodge, and at local schools. We also have bins here today and will store them in Tavernier and Marathon. So if you want to recycle but can't get a bin, stop by and we'll give you a free one.

Compact Fluorescent Bulbs
Annual meeting attendees should have received fluorescent light bulbs in their registration bags today. We also gave one to each voter at the district elections in March. We are distributing these bulbs because switching just one incandescent bulb will save $50 over its lifetime on your bill. Multiply this by the number of bulbs in your house and you could save a lot of energy and money, even though they cost a little more. About 40% of your bill is incandescent lighting, but these bulbs use 75% less energy to produce the same light. They also last 10 times longer, so they are more affordable in the long run.

Free Energy Audits
If you need more help saving energy, we offer free energy audits. Our Member Service Representatives will inspect your home or business and provide a report on how you can save energy. Just call the Tavernier or Marathon office to set up a free appointment. We also have a do-it-yourself audit link on our website.

THANK YOU

A Tribute to FKEC's Employees
Finally – of all the projects and programs we talked about today, not one would get done without the hard-working employees of FKEC. I know I don't say it enough, so today I want to say "thank you" for all they do.

– Adapted from the CEO's Report by Scott Newberry, April 21, 2007

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.