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Producing Excellence

Associated Electric Cooperative

Springfield, MO

Product: Wholesale electric power

Size of Operation: 6 regional and 51 local electric cooperative systems

In Business Since: 1961

Farm Credit Partner: CoBank

For the management team at Associated Electric Cooperative, it was a novel opportunity. Key components of a high efficiency, low-emissions natural gas power plant were sitting unused in the Arizona desert. And the company had an opportunity to acquire the assets at a substantial discount. With backing from CoBank, Associated Electric purchased the equipment and moved it to Pryor, Oklahoma, where the company used it to build a new, state-of-the-art power plant.

“Having the flexibility and certainty through our long-standing relationship with CoBank is what allowed us to have the confidence to make these moves to diversify our generation portfolio during a highly compressed timeframe,” Chief Financial Officer David McNabb said. “CoBank’s people are focused on the customer, truly listening to us and working to meet our business needs.”

The 540-megawatt Chouteau 2 power plant will go online in mid-2011, helping Associated Electric provide low-cost energy to 51 rural electric cooperatives and more than 875,000 customers in Missouri, Oklahoma and Iowa. Associated Electric’s other generation assets include two coal-based resources, three intermediate plants and four peaking natural gas turbines.

Though coal-fired plants are still the least expensive source of electric power for the nation today, Associated Electric and many other utilities are increasingly turning to natural gas and other options as a hedge against uncertainty. “There are probably more unknowns in the power industry than there’s ever been,” Director of Power Production Duane Highley said. “If the market changes and we need natural gas to produce more and more power, then we’re well positioned to do that at the lowest cost to our owners.”

In addition to providing funding for construction of the new plant, CoBank is Associated Electric’s No. 1 source for operating capital and liquidity. The benefit of ownership provided through the cooperative model is an important factor for Associated Electric. “Our goal is to save a dollar for somebody at the end of the line and make a difference in their life, and keeping their power affordable is a pretty big deal,” David said. “We live the co-op model, so doing business with people who also live it, like CoBank, is extremely beneficial.”

For 50 years, Associated Electric Cooperative Inc. has provided reliable wholesale power generation and transmission to its owner-members. AECI is owned by and provides wholesale power to six regional and 51 local electric cooperative systems in Missouri, northeast Oklahoma and southeast Iowa that serve more than 875,000 customers.

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