Message from the Chair & CEO

Michael Core — President & CEO
William Denton — Chair of the Board

The word efficiency, while often overused, is still one of the most important terms in the vocabulary of business operations. Efficiency is being productive without waste. In our business, efficiency has many applications. We strive to be efficient in our budgets and the use of funds in the operations of providing electric power supply to Big Rivers’ member distribution systems. We look to produce electricity as efficiently as possible.

While we continually work to improve our efficiencies at Big Rivers, we also believe our members and their member-consumers need to strive to use electricity more efficiently.

The appetite for energy in our country continues to steadily grow each year. This growth ultimately results in the need for new resources for generating additional electricity. The cost of building new electric generating plants is rising dramatically as materials and labor for construction are in high demand here and in other countries. It behooves us to use electricity more efficiently and avoid, where possible, the costs of building new generation.

Big Rivers and its member-systems are going to rededicate our efforts in emphasizing and focusing on helping the more than 110,000 member-consumers to become more efficient in their use of electricity. After all, Big Rivers and its members are cooperatives owned by those 110,000 member-consumers and we take to heart the need to provide the best service we can to our owners.

Big Rivers continues to be efficient in its operations and the result was its best year ever. Margins for 2006 were $34.5 million. Seeking better efficiency each year in all aspects of its operations has propelled Big Rivers to a string of annually improving financial results.

However, Big Rivers must continue those efforts of improved efficiency if it is to be successful in working to achieve an unwind of the 1998 transaction with E.ON U.S., LLC and certain of its affiliates. In the 1998 transaction, Big Rivers leased its generating facilities and assigned its rights under the HMP&L Station Two arrangements to E.ON U.S. Big Rivers and E.ON U.S. signed a Letter of Intent in late 2005 to move forward with the unwind of this transaction. A part of this effort includes a long-term power contract with the two smelters served by Kenergy Corp., one of the three Big Rivers member-systems.

This major effort, if successful, will bring the operations of our power plants back to Big Rivers as was the case prior to the 1998 transaction. It will require us to be efficient to accomplish the mountains of work necessary for this effort and to still operate Big Rivers on a daily basis. The results of this effort will be a Big Rivers on solid financial footing and playing a key role in the future economic development of rural western Kentucky.