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Financial Services
Bill Blackburn and Chief Financial Officer
Big Rivers Records Strong 2006
Financial Highlights - 2002 through 2006
Net Margins
Operating Revenue
Arbitrage Sales Big Rivers exceeded its previous year arbitrage margins record by 36 percent, reporting $35.5 million in 2006. The average price for 2.1 million MWh of surplus power was $39.81 per MWh in 2006, compared to a rate of $35.58 per MWh for 2 million MWh in 2005. Wholesale Member Sales The average price for 3.2 million MWh of member power increased to $34.11 per MWh in 2006 from $33.84 per MWh in 2005. Member sales to rural loads were $35.58 per MWh in 2006, up from $35.19 in 2005. Large industrial sales reflected a slight decrease from the previous year. Big Rivers continued the 3.3 percent revenue discount during 2006 that resulted in the benefits of the April 2000 sale-leaseback being passed through to its members. Long-Term Debt Voluntary prepayments on the Rural Utilities Service (RUS) promissory note led to a $1.7 million decrease in interest expense for 2006, compared to 2005. Pollution Control Bond interest expense reflects a $1.5 million increase over 2005 due to higher interest rates (3.49 percent for 2006 vs. 2.46 percent for 2005). Big Rivers holds a line of credit with National Rural Utilities Cooperative Finance Corporation for $15 million as of December 31, 2006. This line of credit has an underlying $15 million master letter of credit facility for supporting off-system sales. As of December 31, 2006, there was $5.95 million outstanding under the master letter of credit facility. Participation in the Midwest Independent System Operator Energy Market required a letter of credit in the amount of $1.0 million. Forward sales to Morgan Stanley, Fortis Energy Marketing and Constellation Energy required letters of credit in the amounts of $2.2 million, $2.5 million and $0.25 million, respectively. Cash Flow Higher net margins and efficient management of resources aided Big Rivers’ cash flow status in 2006. As of December 31, 2006, the company’s overall cushion stood at $130.9 million, an increase of more than $8 million over 2005. Cash and temporary cash investments amounted to $95.9 million, while voluntary prepayment of debt on the RUS notes totaled $35 million. Focused Audits In an effort to ensure that proper internal controls are maintained, the Big Rivers’ Board of Directors engaged the services of an outside auditor to perform a series of focused audits. The audits conducted in 2006 included purchasing and payroll cycles; cash management, debt and debt-related covenants; and power sales and load forecasting. Audit results indicated that proper internal controls were established and no irregularities were found to exist in those areas audited.
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| 201 Third Street | P.O. Box 24 | Henderson, KY 42419-0024 © 2006 Big Rivers Electric Corporation | ||||||||||