WIRED FOR THE FUTURE

06DEMCOANNUAL REPORT

DEMCO | P. O. Box 15659 | Baton Rouge, LA 70895 | 225.261.1221 | www.demco.org

DEMCO exists to serve the members/customers through professionally trained employees providing safe, reliable and affordable electricity as well as other high-quality products and services. As a good corporate citizen, DEMCO is committed to stimulating the economic growth and prosperity of our area through ethical conduct and sound business principles.

CONTENTS

WIRED FOR THE FUTURE :

Mission Statement

Presidents Report

A New Age Begins

WIRED FOR PROGRESS :

Connected by Service

Plugged in to the Community

Board of Directors

End of Year Summary

Economic Development

Year Rates

WIRED FOR INNOVATION :

Products and Service page

Touchstone Home page

Remembering Henry

Employee Listing

03

05

08

12

14

15

17

19

20

23

24

25

28

03 04

OUR MISSION

The past year has been an historic one as we experienced a time of great change at our cooperative. In November we said “farewell” to our longtime CEO and General Manager, Mr. Henry Locklar, as he retired from DEMCO after 35 years of distinguished service. When Henry became our CEO 22 years ago, DEMCO was a struggling electric cooperative faced with rising electr ic rates and 40,000 frus t rated consumers. Today, we serve over 92,000 members and provide some of the lowest electric rates in southeast Louisiana. Henry’s guidance and strategic direction have elevated DEMCO into one of the most reliable and widely respected electric cooperatives in the country. We are forever indebted to Henry for his loyal friendship, inspirational leadership, and dedicated service to the members of DEMCO. He wil l be missed, and certainly never forgotten.

THE PRESIDENT’S REPORT

On December 1, we welcomed Mr. Jeff Kilpatrick as our new CEO and general manager of DEMCO. I am exceptionally proud to report that after a nationwide search for the brightest talent from the electric cooperative utility industry, with the assistance of National Rural Electric Cooperative Association search consultants, the DEMCO Board of Directors discovered that the best talent available to lead our cooperative was a “home-grown” executive with unique experience. A native of Covington, Jeff comes to DEMCO after having served 19 highly productive years in management at Sam Houston Electric Cooperative in Livingston, Texas and the past six years as CEO of Washington-St. Tammany Electric Cooperative based in Franklinton, Louisiana.

While the other finalists for the CEO/GM position brought with them exceptional qualifications, Jeff had the unique “hands-on” experience of overseeing the recovery of an electric utility distribution system that was completely devastated by Hurricane Katrina in 2005. He has worked closely with Louisiana Generating, the wholesale power provider for the state’s electric distribution cooperatives, and is familiar with the workings of the Louisiana Public Service Commission. His understanding of the “co-op family” makes Jeff a great fit for DEMCO in preserving the standard of quality service, low rates, and commitment to community that sets us, along with our fellow cooperatives, apart from other power providers. We look forward to many exciting years to come with Jeff at the helm of our ship.

Although 2006 brought about a change in leadership at our cooperative, one thing has definitely remained the same. DEMCO remains financially stable as we once again met all of our financial goals and objectives for the year. As a result of this stability we can expect to continue to strengthen our relationships, as well as establish new partnerships, with financial lenders providing a secure future for new and existing members of the cooperative.

It is imperative that we mention the unprecedented and continued growth of our electrical system. DEMCO’s kilowatt-hour (kWh) sales increased from 1.733 billion kWh in 2005 to 1.796 billion kWh in 2006. The number of members served rose from 86,493 in December of 2005 to 89,605 in December of 2006. Our total miles of line in operation increased from 8,815 miles last year to 9,034 miles at this past year’s end.

2006 was also a year of economic growth and booming development in our local communities and a time of positive movement for business and community partnerships. Proudly, DEMCO was a part of it all as we continue to work side by side with residents, businesses, and community leaders to ensure a bright future in the years to come.

As I close, I would like to thank the members of our cooperative for their dedication and continued commitment to DEMCO. To the board of directors, thank you for allowing me to serve as president of the board. I am honored and feel privileged to serve the members of this extraordinary organization.

Respectfully submitted,

Richard W.Sitman, PresidentDEMCO Board of Directors

05 06

New CEO is ‘Home-Grown Talent’When the board of directors of DEMCO began its search for a replacement for longtime

CEO Henry Locklar they wanted someone who understood what “the co-op family” was all

about. After a national search that covered more than 70 applicants, they found their man

right in DEMCO’s backyard.

Jeff Kilpatrick, the former CEO and general manager of the Washington-St. Tammany

Electric Co-op based in Franklinton, not only had a deep commitment to the cooperative

business model and philosophy, he was also a Covington native and LSU graduate with an

insider’s understanding of the culture and economy of the capital area and South Louisiana.

To top it off, Kilpatrick had an item on his resume that few other candidates could match:

he had been at the helm of a South Louisiana utility when its infrastructure was virtually

annihilated by Hurricane Katrina, and he directed its recovery. The WST co-op lost 4,500

of its 6,000 miles of transmission and distribution lines to Katrina, and its employees were in

full emergency mode for six weeks. The co-op suffered more than $120 million in damage,

but was able to maintain the lowest rates in its service area.

All of that spells extraordinary preparation for leading one of the largest and fastest growing

consumer-owned electric co-ops in America. DEMCO now serves 92,000 consumers in

Ascension, East Baton Rouge, East Feliciana, West Feliciana, Livingston, St. Helena and

Tangipahoa parishes, making it the largest electric co-op in Louisiana.

“Having worked my entire professional life within the ‘co-op family’ I understand the

consumer-owned electric corporate environment and its rich history and traditions,”

Kilpatrick notes. “DEMCO embodies the best aspects of these traditions by providing

quality service, low rates and the kind of commitment to community that stands at the heart

of the co-op philosophy. I look forward to leading DEMCO as we face new challenges and

new opportunities.”

07 08A NEW AGE BEGINS

Energy. It is the lifeblood of progress. It fuels our thoughts,

sheds light on our ideas, and propels us forward as we

expand our horizons and find new and better ways to live

and work together. Energy. It is our responsibility. At DEMCO,

we keep the power on and the wheels of progress turning.

WIRED FOR PROGRESS

CONNECTED BY SERVICE

11 12

At DEMCO, providing safe, reliable electric service to our members at a competitive price

is our top priority. With advances in technology we have implemented a progressive

equipment maintenance plan and a nationally recognized vegetation management

program that allowed DEMCO to meet these objectives in 2006. Now, we are moving one

step further.

DEMCO’s implementation of a technologically advanced automated meter reading

(AMR) system in 2006 is a prime example of our commitment to serve our members. AMR

technology will reduce overall meter reading expense and provide our members with the

benefit of timely and accurate electronic meter readings. This sound business decision

positions DEMCO as the industry leader in AMR technology and will benefit the members

of our cooperative for years to come.

11

13 14

PLUGGED IN TO THE COMMUNITY

At DEMCO, we are proud to be a good corporate citizen. We demonstrate our commitment

to community in a variety of ways, most notably through employee volunteerism and

contributions to such worthy organizations as Dream Day Foundation, Capital Area United

Way, Relay for Life, March of Dimes, 4-H Foundation, and many more.

Supporting our local communities in their economic development pursuits and encouraging

positive commercial and residential growth is an important aspect of DEMCO’s promise

to its members. Through economic development, employment opportunities are created,

communities enjoy greater conveniences, and tax dollars are raised for use in improving

infrastructure, schools, and contributing to an overall improved quality of life.

DEMCO recognizes the value of education and dedicates time and resources in support

of educational pursuits. 2006 was no exception as DEMCO awarded four 1-year college

scholarships to children of DEMCO members. DEMCO employees served on the planning

committee and cooked for the 2006 Volunteers in Public Schools Annual Picnic as well as

the 2006 Young Heroes Award Luncheon. DEMCO also sponsored four high school juniors

on an all-expense paid trip to Washington, D.C. through its annual Rural Electric Youth Tour

and performed numerous electrical safety demonstrations to students of all ages throughout

its service region.

15 16BOARD OF DIRECTORS

Jeff Kilpatrick, CEOand General Manager

Richard W.Sitman, PresidentDEMCO Board of Directors

BOARD OF DIRECTORS

Leslie FalksSecretary/TreasurerDISTRICT 7Livingston Parish

Randy LorioVice PresidentDISTRICT 3East Baton Rouge Parish

Steve Ir vingDISTRICT 4East Baton Rouge Parish

Alice Faye MorrisDISTRICT 5East Feliciana Parish

James E. LottDISTRICT 8Livingston Parish

Daniel P. Ber thelotDISTRICT 9Livingston Parish

Amanda “Mandy” StroughterDISTRICT 6East Feliciana Parish

Eugene O. TraylorDISTRICT 12Tangipahoa Parish

Ann SamuelDISTRICT 2East Baton Rouge Parish

Clarence BrockDISTRICT 1Ascension Parish

Joseph Self, Sr.DISTRICT 11St. Helena Parish

Freddy MetzDISTRICT 13West Feliciana Parish

17 18END OF YEAR SUMMARY

JulyDEMCO was recognized at the 53rd annual meeting of the Association of Louisiana Electric

Cooperatives (ALEC) in Baton Rouge July 23-25 when it was presented the co-op Statewide

Safety Trophy by ALEC Director of Loss Control Mike Bergeaux for having the best accident

record among Co-ops in the state. DEMCO posted over 565,621 man-hours without a lost

time accident since February 2005.

AugustDEMCO member Arleen Petersen and her daughter, Heather, of Maurepas won an

early morning ride in the Touchstone Energy hot air balloon on August 5 and took part

in the Louisiana State Championships with pilot Shane Robinson of Springfield, Mo. The

Touchstone Energy hot air balloon is a goodwill ambassador for electric cooperatives and

DEMCO sponsored the team’s trip to Baton Rouge.

SeptemberGreystone Golf & County Club founder Mike Scurria declares that the Baton Rouge Metro

area’s newest 425-acre development is a lot more than a history making, championship

golf facility in Livingston Parish. “Greystone offers the superior quality of life, excellent

schools and scenic beauty that Livingston Parish has always been noted for and it offers the

advantage of reliable and economical underground electric service from DEMCO.”

OctoberAfter a nationwide search, the DEMCO Board of Directors selected Jeff Kilpatrick, General

Manager and CEO of Washington-St. Tammany Electric Cooperative (WSTE) serving the

Northshore of Lake Pontchartrain and based in Franklinton, La., as the new DEMCO chief

executive officer, effective December 1, 2006.

NovemberDEMCO’s Board of Directors, at its November meeting, voted unanimously to honor CEO

& General Manager Henry D. Locklar for his 35 years of service to DEMCO by renaming

its headquarters building, located at 16262 Wax Road, the Henry D. Locklar Headquarters

Building. Locklar served as the cooperative’s CEO for 22 years.

DecemberJeff Kilpatrick takes over as CEO and General Manager promising that the passion and

professionalism of the most experienced employees is passed on to the next generation.

Kilpatrick promises to intensify consumer awareness and educational programs to enable

members to fully participate in the democratic process that sets cooperatives apart from

other business models. He vows that DEMCO will meet the expectations of a society more

reliant on electricity than ever before.

JanuaryDEMCO was among a group of electric utilities and public tree care professionals who

took part in a community service project at the Sweet Olive Cemetery in mid-town Baton

Rouge in conjunction with the 2006 Arbor Day celebration in the Capital City. DEMCO

partnered with other arborists teams during a project organized by the East Baton Rouge

Tree and Landscape Commission to provide long overdue tree care and clearing at the

historic cemetery.

FebruaryDEMCO’s board of directors begins a nationwide search following an announcement by

CEO & General Manager Henry Locklar who announces he will retire December 1, 2006.

MarchLocal high school students Matthew Albright of Parkview Baptist High School, Matthew

Blanchard and Rachel Carlino, Redemptorist High School, and Gabrielle Sanchez, the

Maurepas School each won an all-expense paid trip to Washington, D.C. The four were the

winners in the DEMCO 2006 Youth Tour Essay Contest.

AprilAscension Parish director Clarence Brock, East Baton Rouge director Ann Samuel, Livingston

director Leslie Falks and St. Helena director Joe Self returned to the DEMCO Board of

Directors for a new three-year term, as each were unopposed in their re-election effort as the

2006 annual membership election process began.

MayEight Louisiana students were recognized as Louisiana Public Broadcasting’s 2006 Louisiana

Young Heroes May 3 at the Governor’s Mansion in Baton Rouge. The winners and their

families were honored at a luncheon provided by DEMCO. Governor Kathleen Blanco

greeted the children and read a proclamation declaring May 3 as Louisiana Young Heroes

Day in Louisiana.

JuneAmid much fanfare, following Hurricanes Katrina and Rita of the previous year, the 2006

hurricane season officially begins. While forecasters predict a very active season no

major storms enter the Gulf of Mexico and DEMCO members are spared the events that

devastated much of south Louisiana in 2005.

JAN 06

$10

$0

$20

$30

$40

$50

$60

$70

$80

$90

$100

$120

$130

$140

$150

$160

$170

$180

$190

FEB 06MAR 06

APR 06MAY 06

JUN 06JUL 06

AUG 06SEP 06

OCT 06NOV 06

DEC 06

$110

$200

JAN 07

YEAR 2006 / RATES FOR 1,500 KILOWATT HOURS

19 20

DEMCO’s seven-parish service territory experienced tremendous economic growth in 2006. New businesses and residential dwellings flourished throughout the region creating new jobs, increased tax revenue and an enhanced quality of life in our communities. Much of this growth was attributed to DEMCO’s solid business practices and its long-term power contract with Louisiana Generating, LLC. Our members directly benefited from this contract in 2006 and enjoyed electric bills that were significantly lower than that of our competition.

ECONOMIC DEVELOPMENT

These figures are taken from reports filed with the Louisiana Public Service Commission.

DEMCO

ENTERGY-GULF STATES

It is no secret that technology continues to expand and shape

the world around us. As your energy provider our focus is to

bring global thinking to a local level. With our team of excellent

employees, we are always pursuing more efficient ways to

push DEMCO into the forefront of technology and innovation.

WIRED FOR INNOVATION

An exhaust systemin bathrooms

Attic ventilation

Infiltration controlto prevent

air penetration

Metal insulatedducts with minimum

3” insulation wrapor locate duct in

conditioned spaceMetal insulateddoors or solid

core wood doors Double paneinsulated windows

R-19 floor insulationover open or closed crawl space

A high-efficiencyelectric heat

pump with L.M.T.

An energy efficientelectric water heater

An exteriorhouse wrap

Composite R-19wall insulation

R-30 ceilinginsulation

23 24

DEMCO has always placed a high priority on energy efficiency, and our consumers

appreciate the effort. In a recent survey of electric cooperative members throughout

Louisiana, responses were overwhelmingly in support of the benefits of a well insulated, all

electric home:

• Moreenergyefficient • Lessexpensivetooperate

• Cleanerandsafer • Morecomfortable

That’s why DEMCO offers the Touchstone Energy Home program, designed to assist our

members in building an energy efficient home that is all-electric. The program provides our

consumers with a roadmap to building an energy efficient home and helps to offset some of

the costs of the program through special incentives.

For more information on how the program can work for you call DEMCO at 225-261-

1221. The Touchstone Energy Home program is another reason that “DEMCO is the

power in your life.”

TOUCHSTONE ENERGY HOME

PRODUCTS AND SERVICES

D E M C O Fo u n d a t i o nThe DEMCO Foundation is a non-profit charitable organization established to provide

financial assistance to DEMCO members/customers in their times of need. Individual

assistance as well as college scholarships and emergency assistance is also available.

DEMCO.net provides quality high-speed Internet access and 24-hour support to all DEMCO

service areas. Service is only $18.95 per month and includes unlimited usage and local

access phone numbers in Ascension, St. Helena, East and West Feliciana and Livingston

parishes.

StrikeSafe™ surge protection is available to all electric utility customers and offers protection

from power surges and lightning strikes for residential customers

for only $6.95 per month.

The Dixie Business Center, located in Denham Springs, LA is a small business incubator

which offers consulting, administrative and financing support for new businesses. Office

space is also available for long- or short-term lease.

25 26

After 35 years of distinguished service to DEMCO, former CEO and General Manager Henry Locklar asked the question “How do you say goodbye to a career that has spanned 40 years and been the cornerstone of your lifes’s daily activities?” His answer was his heartfelt appreciation to his family and to the members and employees of DEMCO.

REMEMBERING HENRY

In response, the DEMCO family asked “How do we, as directors, employees, and members

say goodbye to Henry Locklar, an inspirational leader and true friend to everyone?” and

“How do we honor a man that has done so much for our cooperative?” That answer came

in November when the board of directors decided to rename the DEMCO headquarters

building, located at 16262 Wax Road, the Henry D. Locklar Headquarters Building.

“Renaming the building in Henry’s honor is a fitting tribute to his remarkable career. We

could not think of a greater honor to acknowledge what he has done for us,” stated Richard

Sitman, president of the DEMCO Board of Directors.

Locklar, who served as CEO and General Manager for 22 years, joined the DEMCO staff in

1972. Under his leadership, the cooperative has expanded to reach over 92,000 members

serviced by 9,000 miles of electric power lines. His guidance, revolutionary ideas, and

strategic direction have positioned DEMCO as one of the lowest cost, most reliable electric

cooperatives in the south.

“Henry has always been a man of great honesty and integrity. He will be missed and will

remain, forever, in the hearts of each of us,” added Sitman.

EMPLOYEE LISTING

Jeff Kilpatrick, CEO and General Manager

Jimmie Varnado, VP of Finance

John Vranic, VP of System Operations and Planning

Ron May, VP of Engineering and Operations

Bob Bateman, VP of Cooperative Affairs

Mark Bonner, VP of Marketing and Member Services

Diana Martin, Human Resources Manager

Donna Cody, Administrative Assistant

John M. Sharp, Corporate Attorney

EMPLOYEES

27 28

MANAGEMENT STAFF

Karl Albritton

John Arledge

Michael Armstrong

Wendy Armstrong

Shinell Aultman

Lynda Austin

Kenneth Bailey

Sean Balfantz

Jason Ballard

John Ballard

Kevin Beauchamp

Byron Beaucoudray

Jeff Bellington

Debra Bennett

Jamie Berry

Trent Bigner

Jeremy Blouin

Melody Bourgeois

Kenneth Bourgeois, Jr.

Sonya Boyd

Brent Bradley

Debra Broadhurst

Julie Burns

Bobbye Cantu

Steve Cantu

Kathy Carpenter

Greg Carruth

Dovie Carter

E. Beau Caston

Michael Chiasson, Sr.

Veronica Claiborne

Jamie Coats

Joseph Cofield

Kevin Commander

Josh Conleay

Susan Conlee

Bonalee Conlee, II

Ronald Corkern

Mark Coston

Patricia Courtney

O. Wyman Craig

J. Eric Crain

Johnathan Crowder

Rickey Cummings

Richard Cutrer

Frederick Dabney, Sr.

Justin Davis

Danny Delatte

Scott DeLee

Robert DeLee, Jr.

Robert Dickerson

Paula Dixon

Pearlie Dominick, Jr.

Patrick Donohue

Martha Durden

Angela Elsey

Norman Engler

Jerry Ferguson, Sr.

Jamie Fortenberry

David Fournet

Penny Fruge

Hilda Galmon

Cecil Garaudy

Vernon Graham

Andrew Graham

John Green

Dusty Guarino

Cynthia Haisten

Berlin Hall

Darren Harrell

Phillip Harris

Beverly Harris

Charles Heine

R. Ray Hill, Jr.

George Hills

Debra Hobbs

Beverly Hodges

Thomas Holland

Avesia Holland

Billy Holleman

Austin Hudspeth

Wydell Hughes

Dudley Hughes

Arthur Hurst

James Jackson

Warren Jefferson

J. Larry Jenkins

David Jewell

Robert Johnson

Andrea Johnson

Kenneth Jones

Tammy Kelly

Josh Kilcrease

Gail Kimball

Thomas Klein, Jr.

Michael Knight

Chad LaCost, IV

Devin Landry

Jan Landry

Michael Landry, Sr.

Harry Latiolais

Sherri Lee

Louis Lee

Shawn Little

Cheryl Malbrough

Barbara Manuel

P. Russchelle Marnett

Melanie Mathies

29EMPLOYEE LISTING

Page McClure

Theodore McCray, Jr.

Howell McCullough

Huey McLin, Jr.

Anita McNeal

Haley Meadows

Brian Merritt

Johnny Metz

Pernell Miles

Scott Miller

Raymond Mizell

Ronald Moreau, Jr.

Ben Morein

Marion Munn

Dennis Neal

Sara Nelson

Chad Norred

Eric Ouber

Jacob Overhultz

Phillip Pace

Melvin Parker

Shawn Parker

Michael Parker, Sr.

James Parrish

D. Shane Pendarvis

Paula Perry

Kelli Persac

Mark Phillips, Jr.

Gina Pickering

Jody Picou

J. Daniel Poirrier

Joshua Prestridge

Jackie Purvis, Jr.

Krystal Raymond

Eddie Reames, Jr.

Matthew Reed

Terrie Reed

Denise Reid

William Reily

Donna Roshto

Sam Rosso

Rachel Roule

Randall Rushing

Linda Sanders

Arthur Selders, Jr.

Frederick Self

Spring Seymore

Rhianna Sharp

Levy Sibley

Brandon Simon

Donna Sistrunk

Charles Smith

Charles Spikes

Charles Spillman

Steven Spring

Rhonda Stanley

Jeremy Starns

H. Wayne Stevenson

Lori Stewart

R. Blake Sullivan

I. Dianne Sullivan

Patrick Tanner

Charles Tate

Marci Templet

Agra Templet

Aaron Terrance

Josh Terrell

Mason Thacker

Richie Thomas

Alvin Thompson

William Thompson, III

Russell Todd

Barbara Trisler

David Tucker

D. Kleve Tucker

Turk Tynes

J. Charles Wascom

Jeremy Wascom

Booker Washington

Doug Watson

Carl Watts

Larry Watts

Harry Watts

Calton Watts

James Wells

Carl Westbrook

Robby White

Darrel White

Royland Wicker

J. Caleb Wilkinson

Randall Williamson

Cynthia Willie

Ian Wills

Shelly Wintz

Ronnie Woodards

John Woodburn

Curtis Yaun

Joseph Young, Sr.

Phillip Zito

DEMCO Equities and Liabilities

Equities 2006 2005

Memberships $379,420 $363,515

Patronage capital 50,557,309 43,076,390

50,936,729 43,439,905

Long-Term Debt

Notes payable, less current maturities 210,339,015 205,801,341

Deferred interest (related to RUS notes) 9,706,957 10,782,946

Other long-term debt, less current maturities 24,994

220,045,972 216,609,281

Current Liabilities

Managed overdraft 2,969,270

Current maturities of notes payable 8,454,083 8,068,775

Current maturities of other long-term debt 24,995 49,991

Line of credit 1,099,910 1,412,398

Accounts payable 10,801,056 11,202,248

Consumer deposits 5,072,408 4,296,418

Accrued interst 920,848 1,001,890

Other accrued expenses & deferred credits 1,144,388 1,226,764

Customer refund - Cajun 624,336 1,679,385

31,111,294 28,937,869

Deferred Credits & Other Liabilities

Accrued post retirement benefits 11,758,400 10,092,900

Accrued vacation & sick pay 4,532,222 4,230,539

16,290,622 14,323,439

Total equities & liabilities 318,384,617 303,310,494

Dixie Electric Membership Corporation & Subsidiaries Consolidated Statements of Operation & Patronage Capital Years Ended December 31, 2006 & 2005

2006 2005Operating Revenue $145,971,618 $135,618,965

Operating ExpensesCost of power 80,423,647 74,626,092

Cost of sales 53,760 54,714

Distribution - operations 4,572,192 4,392,600

Distribution - maintenance 13,724,050 12,669,623

Consumer accounts 5,395,509 4,964,842

Administrative & general 6,000,606 5,690,559

Administrative & amortization 11,252,401 10,856,978

Taxes 3,395,378 3,181,038

Other 1,618,400 1,319,713

126,435,943 117,756,159

Fixed ChargesInterest on long-term debt 12,863,597 10,553,711

Other interest 640,666 1,413,442

13,504,263 11,967,153

Capital Credits 957,481 593,453

Nonoperating MarginsInterest Income 350,630 288,615

Other income 141,396 159,163

492,026 447,778

Patronage Capital,beginning of year 43,076,390 36,139,506

Patronage Capital,end of year 50,557,309 43,076,390

Operating margins beforefixed charges 19,535,675 17,862,806

Operating margins afterfixed charges 6,031,412 5,895,653

Net margins 7,480,919 6,936,884

Utility Plant 2006 2005

Electric plant in service $352,052,320 $333,891,504

Construction work in progress 6,428,207 5,663,348

Other fixed assets 4,110,190 3,753,930

362,590,717 343,308,782

Accumulated depreciation (108,418,747) (100,299,247)

254,171,970 243,009,535

Investments & Other Assets

Investments in associated organizations 6,887,503 6,970,216

Notes receivable, long-term portion 31,922 42,145

Other receivables, long-term portion 17,224

6,919,425 7,029,585

Current Assets

Cash & cash equivalents 6,833,364 2,094,457

Restricted cash 523,218 2,133,777

Current portion of notes receivable 21,828 76,164

Accounts receivable

8,634,097 7,690,834

6,836,448 6,255,838

5,537,722 8,956,733

Materials & supplies 4,937,279 4,784,298

Deferred fuel adjustment 2,113,693 21,164

Prepaid expenses 818,513 912,952

36,256,162 32,926,217

Other Assets

Deferred charges 20,884,437 20,042,289

Intangible, net 2,623 2,868

Cerificate of deposit - pledged 150,000 300,000

21,037,060 20,345,157

Dixie Electric Membership Corporation & Subsidiaries Consolidated Balance Sheets December 31, 2006 & 2005

Assets

Consumers (net of allowance for uncollectible accounts of $347,221 in 2006 & $260,000 in 2005)

Current portion of other receivables (net of allowance of $534,987 in 2006 & $485,000 in 2005)

Unbilled revenue

Total assets 318,384,617 303,310,494

DEMCO System Statistics

Item 2006 2005

Av. Consumers Billed/Mo. 89,605 86,493

Av. Consumers/Mile of Line 9.92 9.81

Av. Miles of Line 9,034 8,815

Total KWHs Sold 1,795,882,376 1,733,224,860

Av. KWHs/Month/Consumer 1,670 1,670

Av. KWHs/Month/Residential 1,441 1,429

Av. Monthly Rev./Consumer $130.37 $129.74

Total KWHs Bought 1,940,103,047 1,861,890,272

Av.Cost/KWH Bought 41.76 mills 40.08 mills

Power Required for System Op. 144,220,671 128,665,412

System Peak Demand 470,967 kW 447,782 kW

Month of System Peak Demand August August

WIRED FOR THE FUTURE

06DEMCOANNUAL REPORT

DEMCO | P. O. Box 15659 | Baton Rouge, LA 70895 | 225.261.1221 | www.demco.org