2006 Executive Report

All puzzles are comprised of many pieces. Anyone completing a typical jigsaw puzzle knows how difficult it can be to place all the pieces in their proper place. Sunflower and its Member Systems have been working for many years to complete a puzzle which results in a picture of system reliability and stable rates.

Last year, we reported on Sunflower’s power production records, our financial performance, generation expansion agreements, and the work our Members were doing to acquire new electric properties. This year, we update our progress on the numerous pieces in our puzzle and describe the new pieces we have added to our mosaic.

For the existing Sunflower system, reliability and stable rates are possible only when the Holcomb plant is efficiently producing power around the clock. To ensure that continues, a major overhaul of the Holcomb unit was conducted last spring. The 56-day outage, described later in this report, was a marvelous accomplishment for our workforce and the vendor community we depend on for support of our operations. The collaboration among all involved will surely be remembered as one of Sunflower’s most successful maintenance projects.

The same can be said for the tremendous commitment and dedication exhibited by our transmission and system control departments as they battled, right along with our Members’ crews, to fight back the devastation brought to our system on several occasions last year. Without question, the havoc wreaked on our transmission system by the New Year’s Eve ice storm will be talked about for generations.

Electric growth in western Kansas was best demonstrated by the new system peak demand record of 449 megawatts. Although the total production for the year was down due to the extended Spring outage, three of the months in 2006 were some of the highest production months in the Holcomb plant’s 23-year history.

Our efforts to add wind energy to Sunflower’s generation portfolio were bolstered in 2006 by a new agreement with Tradewind Energy for the purchase of 50.4 megawatts of energy from the Smoky Hills Wind Project which will be located west of Salina along the I-70 corridor.

A number of pieces to our Holcomb Expansion project puzzle were completed in 2006 with the announcement of Golden Spread Electric Cooperative’s investment in the project and the commitment by Midwest Energy to purchase 75 megawatts of power from the Holcomb East unit.

Our application for a construction air permit for the Holcomb Expansion project was filed with the Kansas Department of Health and Environment (KDHE) in February. The KDHE held three public hearings across the State concerning the application. Sunflower certainly appreciated the wide base of support expressed during these hearings for the project from governmental organizations, political leaders, and individuals.

In August, Sunflower announced the formation of an alliance with the National Institute for Strategic Technology Acquisition and Commercialization (NISTAC) and the Kansas Bioscience Authority (KBA) to develop an integrated bioenergy center at Holcomb Station. This project will feature many renewable energy businesses which will have the ability to use waste streams from each business to improve the efficiencies of all participants. The announcement of the bioenergy center was made during a tour of the plant facilities by USDA Undersecretary for Rural Development Thomas Dorr, Congressman Jerry Moran, KBA President Clay Blair, NISTAC President Kent Glasscock and USDA State Director Chuck Banks. 

Sunflower continued its assistance to Member cooperatives in their successful bid to acquire Aquila’s Kansas Electric Network. Mid-Kansas Electric Company, LLC (MKEC) will complete the acquisition effective April 1, 2007, following an order approving the transaction by the Kansas Corporation Commission.

This acquisition is important for Sunflower because it will be able to operate, and jointly dispatch, the resources of Sunflower and MKEC as if they were a single system. The result of this joint operation will allow Sunflower to provide additional reliability and low-cost, reliable electric service to existing Members and the new patrons of MKEC.

As you read through this report, it is obvious that Sunflower is focused on building trusting relationships with its employees, its Member cooperatives, its Holcomb Expansion development partners, governmental officials, vendors, and many other companies and individuals across the region. We believe these trusting relationships are essential to operating a successful public utility to the level expected by our Members.

The puzzle we are assembling, while not fully completed, is much closer to that goal than it was one year ago. We know our work is an effort that central and western Kansans count on us to perform to the highest standards each day. As they have for nearly 50 years, the cooperative families that own our assets and manage these activities will continue to assemble these pieces so the faith placed in our companies will continue to be well deserved.