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June 2008

?New Facilities, Reliability and Green Initiatives Discussed at 67th Annual Meeting

**CLICK HERE to WATCH a VIDEO PRESENTATION of this REPORT**

Florida Keys Electric Cooperative’s 67th Annual Meeting & Picnic on April 19 attracted 578 registered members and their families to Coral Shores High School and was held in conjunction with the Sun 103 Kids Show. The meeting was preceded by a free barbecue lunch prepared by FKEC and a free performance by Comedian Gary Claxton.

FKEC Board President David Ritz presided over the meeting and discussed FKEC’s Alternative Power Research and Green Initiatives, and Board Treasurer Frank Hawkins presented the Financial Report. CEO Scott Newberry then presented his report on issues facing the co-op today. An abridged version of the CEO’s Report is included here for members who could not attend.

CEO’S REPORT

Today I am going to address four specific topics: the new Tavernier Operations Center; reliability statistics for 2007; a solar project we are currently working on; and finally, the most important thing at FKEC, our employees.

Tavernier Operations Center

Construction & Building Design

Probably the most significant milestone in 2007 was breaking ground on FKEC’s new storm hardened operations center, which is the culmination of four or five years of planning. The current design grew out of the increasing concern that our metal warehouse in Tavernier wouldn’t withstand an extreme or even mild hurricane. After that initial concern, we went through a full facility assessment and determined that most current facilities wouldn’t survive a major storm either, which is bad news when you want to get the power back on as quickly as possible.

So after four or five years of hard work, the foundation for the new, stronger warehouse and fleet maintenance facility are complete. The walls will be tilted up in the next four to six weeks, so one day soon you’ll drive by and there will suddenly be a building there.

Storm Hardened

As I mentioned, our primary concern in designing this building was to withstand in excess of category 5 winds, up to about 200 miles per hour. It will be made entirely of concrete from the foundation to the walls to the roof. All poured concrete. The entire structure is also elevated to 12 feet above sea level to protect the hundreds of thousands of dollars worth of material that are critical for restoring power after a hurricane. And it really doesn’t do us any good to protect material if we don’t have the equipment to get out on the road, so this warehouse has been designed so that we can actually drive our bucket trucks into it prior to a storm. That way, they’ll be protected from the wind and flood waters, so as soon as conditions allow we should be able to get to work restoring power to you.

We also wanted this building to be able to operate for 72 hours in a stand-alone mode, in case we are ever entirely cut off from the mainland for any reason. In that instance, we will be able to work for at least three days before we’d need any kind of re-supplies. The building will have full back-up generation and adequate fuel storage to run those generators for at least three days. We also have a 1,000 gallon fresh water storage tank within the building, so in the event that a storm knocks out the pipeline we’ll have at least enough drinking water for three days. There will also be adequate food storage and preparation facilities for three days.

On the second floor of the building there will be a multipurpose room with a kitchen, walk-in coolers and freezers. These will be stocked by hurricane season each year so if a storm strikes we will be prepared and ready to go.

Building “Green”

Although our first priority was to build a fully storm hardened and storm ready facility, we were also concerned that the building be as “green” as possible. One of the most prominent “green” features will ironically be a red “eyebrow” around the top of the building. This “eyebrow” actually serves two energy efficiency purposes. First, it will keep direct sunlight from penetrating the windows, reducing the cooling load and energy requirements of the building. Second, while it is keeping direct sunlight out, it will also be letting indirect light in. So it should be light and bright within the building which should reduc­e the lighting load and again help with the energy efficiency. The building will also have all-solar water heating.

The first thing built for this building was a 30,000 gallon cistern, which is a huge poured concrete tank. All the rain that falls onto the roof will be directed into this cistern.

The cistern will provide water for landscaping and vehicle washing when necessary. We really like this feature and worked hard to include it in the design.

The building’s energy efficiency features include commercial grade, high efficiency chillers instead of standard central air. The chillers will also have a computerized management system to limit cooling during unoccupied hours and on weekends. The building will then automatically cool itself on Monday morning before employees report to work.

Finally, we also incorporated recycled or renewable building materials as much as possible. The carpet and tile will be made with recycled materials, and the wood floors will be bamboo. Bamboo is fast growing plant and by using it we reduce the need to harvest slower growing trees.

That finalizes the discussion of our new building. As I mentioned before, the concrete shell will be standing before hurricane season and we’ll spend the next few months finishing out the interior. By this time next year we’ll be operating out of that facility.

99.99% Reliable

3X Better Than National Average

Moving on, I will now discuss reliability. This is a topic of significant interest to your board of directors as well as the management of the co-op. We of course want to provide the most reliable service possible. The board has set a high standard for reliability, with a goal of only 1.22 average hours out per member or less on an annual basis. Although it is a mouthful, it is a way for us to measure our reliability against other co-ops around the nation. It’s a tough goal to achieve and we didn’t make it in 2006, but this year we hit it! Our average outage time per customer was only 50 minutes this year.

What that means is that in 2007, FKEC’s electric service was 99.99 percent reliable. That is about three times better than the national average for rural electric cooperatives. Again, we were very happy to accomplish this because it takes a lot of luck and no major storms to achieve, but it also takes preventative maintenance, routine testing and inspections, and aggressive line clearance.

Maintenance & Line Clearing

Every year you see a helicopter flying along the main transmission line beside U.S. 1. This annual aerial inspection is just part of our preventative maintenance program to discover problems on the high voltage system before they cause outages. We also have six substations to transform that 138,000 volts of high voltage electricity and step it down to about 25,000 volts, which is then distributed to your neighborhoods and houses. Over the past two years, FKEC has increased its preventative maintenance schedule inside those substations by testing breakers and relays much more then we had in the past. This program is helping us achieve our reliability goals as well.

We’ve also stepped up the inspection and maintenance of our distribution system. One of the big projects we’ve implemented over the past few years is to spend more time actually testing and maintaining wooden distribution poles in our system. We’ve set a goal for ourselves to inspect every wooden pole at least once every five years. We have roughly 15,000 wooden poles within our system so we are looking at 3,000 a year. Last year, we concentrated on our Marathon area. After that inspection, 163 worn poles were replaced. By replacing poles before they fail, we hope to prevent local outages.

Another area that every utility really needs to focus on to maintain reliability is line clearance. FKEC’s goal is to trim all of our lines in a three-year rolling cycle, which means we have to trim about 220 miles each and every year. Naturally, people don’t always like us in front of their homes trimming limbs, but we are required by law to maintain certain clearances. Like I often say at talks like this...just like oil and water don’t mix, neither do trees and power lines.

Extreme Wind Standard In order to help our system survive a storm in the future, we are not only looking at hardening our new operating facility, but we also have to look at all the structures we have out in the field. Last year, the board of directors adopted the National Electric Extreme Wind Standard. This means we are now building our facilities to a much higher standard than would normally be required for a utility like us. What this means is that for any new construction or reconstruction in our system, we are holding ourselves to a higher standard. For example, the 163 poles we replaced in Marathon were designed specifically for our local use. One new pole type that will be in service soon is a fully self supporting pole for areas without enough right-of-way for adequate down-guides. Down-guides are the metal cables that anchor poles to the ground for additional support. These self-supporting poles will be much beefier concrete poles then you see now; not necessarily taller, but much thicker and heavier. We hope these poles will also help our system survive extreme winds and help us keep the power on.

Outage Response System

Finally, one more way to achieve great reliability is to correct the outages that do occur more quickly. For the past year and a half we have been working on implementing a computerized outage response system. We plan to have this system fully functional by July. With this new system, you will still have to call when you experience an outage, but the program will use your phone number to pinpoint exactly where you are. It will tell our dispatchers which poles, lines, transformers and substations provide service to your home or business, so they can accurately assess the nature of your outage. They will then be able to send crews to the correct location right away.

The most important feature of this new software is that it uses your phone calls to predict the cause of the outage. So it is very important that you have at least one current phone number on file with FKEC. In the next four or five weeks you will receive a letter requesting your phone numbers. Please respond to it. You can list all the numbers you might call from to report an outage, including cell phones. That way, if you do experience an outage, the Caller I.D. feature of this system will know who you are and where you are so we can respond more quickly.

Solar Power Generation

Installing 150 kW of Solar Panels

Board President David Ritz mentioned some of FKEC’s “green” initiatives and alternative power research in his report earlier, but one technology that we are actively putting in place at FKEC right now is solar. We recently applied for and received $1 million worth of funding from the Internal Revenue Service’s Clean Renewable Energy Bond program, administered by the CFC.
With that money we are adding at least 150 kilowatts of solar power generation to our system. The process of planning this installation has taught us a lot of new things about solar power.

To me, one of most disappointing discoveries was that despite how long solar power technology has been in use,
it is still very inefficient and expensive compared to traditional methods of power generation.

Challenges of Solar Power

As we began to plan this solar generation project, I was also surprised to learn that appropriate sites in our area are quite difficult to find. Solar generation requires a lot of cleared area to place an array of panels. No part of the array can be in a shadow or the shade for any part of the day, because as soon as a shadow falls across one panel, the whole array quits producing. So we’ve had a tough time finding sites for our first project, but what we are working on right now is a parking canopy structure at our Marathon generating plant. The canopy will provide shade for the cars below and have solar panels attached to the top.

This first installation will provide 42.5 kW at peak, which will power fewer than 10 homes on average. We were hoping to have this project producing electricity today, but it didn’t work out primarily because the original supporting structure design was too expensive to build. I would rather spend the bond money on the solar panels themselves not the parking canopy, so we are back to the drawing board on how to best build this canopy. It is my hope and my intention to have the full 150 kW delivering solar power to you by the end of the year.

People Power

Milestones & Continuity

Finally, the most important part of any organization is the people that work for it. And there is no way we could accomplish anything we do without these fine people you see around the room.

In 2007, FKEC achieved many significant milestones as a company, but the most important and impressive milestone achieved this year was reached by Mr. Willie West. In September of 2007 he celebrated his 50th employment anniversary with FKEC!

So here we are, a half a year later, and Willie is still contributing to our daily operations. But while Willie is still here, we did have a few significant retirements over the last year. First and foremost, Carl Paul retired in January 2008 after 46 years with FKEC. Carl started as a groundman digging with a pick axe, and worked his way up to Superintendent of Operations. He finished his career as Marathon Operations Manager, so we’d like to congratulate Carl on 46 years.

Richard Norton also retired in the summer of last year after 26 years of service. I think he is busy playing golf!
Jack Pinder also retired last year and although you may not know him personally, you certainly know his cooking if you’ve been coming to our annual meetings the past couple of years. Up until last year, Jack was our Supervisor of Fleet and Building Maintenance and also the head chef for all of our company events. Fortunately for us, he trained Eddie Dudley and his crew to take over for him before he left. Jack also came out of retirement to supervise for us today, so special thanks to Jack for being here.

One thing that has always impressed me about FKEC is the dedication of all the employees. Willie has achieved 50 years, but you there are a whole lot of people who have been working for this company for over 20 years. In fact, almost 25% of our employee base has been with us for 20 years or more.

Like any company, we do have a lot of long-term employees but we’re always recruiting new people as well; the next generation you might say. And we’d now like to welcome those new faces to our FKEC family.

And finally…it is truly an honor and a privilege for me to have the opportunity to work with all these dedicated people every day. They certainly make my job more rewarding and much easier. So to Willie, our longest-serving employee, all the way down to our newest hire, I would like to say simply, thank you.

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.