FOR IMMEDIATE RELEASE                   FOR MORE INFORMATION CONTACT:

August 24, 2009                                         Tim Gossett                         or         Dan Burgess                                                                                            

                                                                   tgossett@mcrecc.com                     dburgess@doeanderson.com

                                                                   (270) 422-2162                            (502) 314-4006

MEADE COUNTY RURAL ELECTRIC CORP. AVOIDS MAJOR RATE INCREASE,

REGAINS CONTROL OVER POWER GENERATION

BRANDENBURG, KY – Meade County Rural Electric Cooperative Corp. members will continue to enjoy historically low rates for electricity now that a new operational model has been approved for the cooperative’s power supplier, Big Rivers Electric Corp.  Had the new arrangement not been worked out, an immediate rate hike of some 15% would have been necessary to cover Big Rivers’ operational costs for electricity generation and transmission to members of MCRECC.

Big Rivers is owned by MCRECC and two other non-profit electric cooperatives. Its power plants had been operated for several years by a subsidiary of E.ON U.S. under a lease agreement that was to run until 2023, but all parties had been working for a number of years to “unwind” the arrangement and return control of the plants to Big Rivers.  In July, the Kentucky Public Service Commission approved the complicated transaction, allowing the rate hike to be avoided and putting a number of factors in place to keep rates low long into the future.

 “This is an important day not only for MCRECC, but for all of western Kentucky,” said MCRECC CEO Burns Mercer.  “Decisions about power generation and how those facilities are managed now are back in the hands of people who live and work in this part of the state.”

As a result of the Unwind transaction, some new charges are appearing on MCRECC members’ electric bills, but there are also credits designed to offset the charges.

With the new operational model in place for Big Rivers:

• Immediate electric rate hikes have been avoided that otherwise would have been necessary.
• Big Rivers has emerged as one of the financially strongest electric generating cooperatives in the country.
• Big Rivers and MCRECC now have the flexibility to participate more directly in economic development efforts throughout the region.

The new charges and credits listed on MCRECC invoices are explained below:

Fuel Adjustment Clause

The Fuel Adjustment Clause passes along the cost of fuel (mainly coal) used to generate electricity.  This is strictly a pass-through and MCRECC receives no profit from this charge.

Environmental Surcharge

This charge covers the cost of complying with the Federal Clean Air Act and other federal, state, and local environmental laws and regulations.  Like the Fuel Adjustment Clause, this too is a pass-through and there is no profit to MCRECC.

Unwind Surcredit

The new operational model for Big Rivers is the result of the “unwind” of a number of prior agreements.  Part of the new arrangement is that two large industrial customers, in return for getting long-term power contracts, are paying a surcharge that is passed along to MCRECC to help offset the charges listed above.  This line shows the amount of this payment that has been credited to members’ bills.

Rebate Adjustment

In any year that Big Rivers’ earnings exceed a pre-determined level, it may seek approval to rebate those excess earnings to MCRECC and the two other distribution cooperatives who share ownership of Big Rivers.  The rebate then is shared among the members.

Member Rate Stability Mechanism

Another part of the Unwind agreement created a pool of money (known as a reserve account) to be used to offset the charges listed above after taking into account the Unwind Surcredit and the Rebate Adjustment. 

“The Unwind was an immensely complicated process,” said Mercer, “but well worth the years of hard work by so many people because of the long-term benefits to MCRECC members and the people of western Kentucky.  I’m proud that we’ve all been able to bring this to a successful closing.”