2009 || Corn Belt Power CooPerative|| annual · PDF file2009 || Corn Belt Power CooPerative||...

2 0 0 9 | | C o r n B e lt P o w e r C o o P e r at i v e | | a n n ua l r e P o rt

2 0 0 9 | | C o r n B e lt P o w e r C o o P e r at i v e | | a n n ua l r e P o rt

Corn BeltPower CooperativeA

photos CloCkwise, from upper left Iowa Lakes Electric Cooperative owns and operates wind turbines located near the Global Ethanol Plant site, Lakota, Iowa. Corn Belt Power purchases the wind energy generated; Corn Belt Power crews build a new substation near Corwith to serve the Hawkeye Pride egg-processing facility on Prairie Energy Cooperative lines; The new Touchstone Energy campaign “Together We Save” features two superheroes who help their mom save energy and money; Third and fourth from left, Brittany Dickey, development finance director, Corn Belt Power, and Rick Whalen, economic development director, Franklin REC, break ground June 15 in Hampton for the Franklin General Hospital renovation. Corn Belt Power and Franklin REC support the project through loans from USDA Rural Development.

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2009 || Corn Belt power Cooperative || Annual report

New projects. increasing challenges. Changing transmission operations. Growing power demands.

2009 was a year of several new directions for Corn Belt Power Cooperative, taken in response to a changing environment and challenges in transmission dispatching, new generation siting, proposed climate change legislation and emphasis on energy efficiency.

To deal with change and new challenges, Corn Belt Power turned to a tried and true practice – reaching out to partners and emphasizing the value of cooperative principles.

Indeed, 2009 was a year when Corn Belt Power Cooperative

extended its cooperative connections – strengthening its power supply partnership with Basin Electric, shifting its dispatching arrangement to Western Area Power Administration, growing its renewable energy supply, increasing its energy-efficiency programming and encouraging its elected officials to find a balanced solution to climate change legislation.

By extending its cooperative connections, Corn Belt Power remains strong in its pursuit of purpose – enhancing the quality of life for its members, employees and communities.

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eXteNDiNG our cooperative connections

ExEcutivE RepoRtDonald Feldman president

Kenneth Kuyper executive Vice president and General manager

mAiN photo With the Class A Basin Electric membership, the bulk of Corn Belt Power’s 161 kilovolt transmission system is now part of Western Area Power Administration’s integrated transmission system, allowing power purchases from Basin Electric with fewer transmission challenges.

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Our decision to become a Class A member of Basin Electric was based on similar reasons. We continue to experience growth in our system, realizing dramatically higher record peaks for the past two years. By partnering with Basin Electric, we can employ economies of scale when expanding our power supply. At the same time, Corn Belt Power retains ownership of its generating supply as a Class A Basin Electric member.

Additionally, we experienced a major shift in our transmission operations when our control area operator, MidAmerican Energy Company, announced it would join its transmission operations with the Midwest Independent System Operator. Our board was hesitant to subject Corn Belt Power to the price volatility and potential loss of operating control that can exist with regional transmission organization markets and transmission congestion management.

The decision to become a Class A member of Basin Electric was a relatively easy one. As a larger cooperative, Basin Electric offers economies of scale that a small system alone cannot achieve. Basin Electric is a well-run cooperative that allows us more financial leverage, political advantage and additional resources that come from a larger geographical footprint. Our Class A membership mitigates the reliability risk should one of Corn Belt Power’s large generators experience an unexpected outage. With Basin Electric membership, Corn Belt Power is not subjected so readily to volatile market power prices.

The deciding advantage that convinced our board to join Basin Electric as a Class A member was Basin Electric’s structure as a cooperative and Corn Belt Power’s ability to have a director on the Basin Electric board, offering input on decision making and fulfilling the cooperative way of doing business.

Basin Electric has welcomed our cooperative with open arms and its representatives have gone out of their way

to accommodate us. Corn Belt Power anticipates that its members’ power needs will grow, even though growth rate has slowed during this economic recession. Basin Electric will provide Corn Belt Power access to generation needed for growth.

The Corn Belt Power board values Basin Electric’s plan to increase its renewable energy supply with substantial addition of wind energy to its portfolio, which will make Basin Electric’s carbonless generating percentage similar to Corn Belt Power’s percentage previous to its Class A membership.

Having the Western Area Power Administration become our control area operator was an added bonus to our Basin Electric membership. We’ve noticed that, since we’ve joined forces, our plants are being dispatched at higher capacity levels.

Renewable eneRgy SupplieS 2009 also brought additional renewable energy to the Corn Belt Power generating supply. Since we are not seeing additional coal generation being built in Iowa, our next best option is to add renewables along with combustion turbines. The addition of Iowa Lakes Electric Cooperative’s wind energy works well for Corn Belt Power. The new wind farms supply power for two ethanol plants and create the unique circumstance of “renewables serving renewables.”

eneRgy efficiency Certainly energy efficiency was a primary focus of Corn Belt Power in 2009. We need to offer our members ways to use their electricity more efficiently. We’ve studied potential savings and added multiple new options so more members should be able to use programs that appeal to them.

It is important that co-ops make sure our state’s regulators and legislators know about our energy-efficiency efforts. Co-ops in Iowa plan to spend $71.5 million in the next five years on energy efficiency. Corn Belt Power’s share of that amount will total $8.4 million. This programming shows that we are responsibly helping members use energy efficiently and that it is unnecessary to mandate specific spending levels or programs.

2009 was a year of growth, financial success and extended memberships and connections for Corn Belt power Cooperative.

claSS a MeMbeR, baSin electRic poweR coopeRative We extended our access to power supply and other resources in 2009 when the cooperative became a Class A member of Basin Electric Power Cooperative, Bismarck, N.D.

This board strategy was not unlike other decisions Corn Belt Power’s board of directors made in years past. Corn Belt Power was created by joining Central Electric Federated Cooperative Association and Federated Cooperative Power Association back in 1947. The cooperatives were looking to finance larger generation projects due to growing system demand. They were comparatively small on their own and decided that joining forces would reduce risk, enable access to more resources and allow them to continue to direct their own course as a cooperative.

ABoVe photo Donald Feldman, president, and Kenneth Kuyper, executive vice president and general manager

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RecoRd peak deMand Despite a downturn in the economy, Corn Belt Power realized a new record peak demand on Nov. 12, 2009, of 347 megawatts, which was influenced greatly by drying demand from a large and wet corn crop. This new record demand also indicates that growth continues on our system. Livestock facilities are being built and commercial and industrial loads are coming online. This growth fits well with our decision to join Basin Electric, since a larger entity will have better opportunities to meet those needs.

We will continue to focus on growth in the future since we know a cooperative that stops growing starts falling behind. Growth not only helps spread out fixed costs, but also provides jobs and economic security to the communities in which we live.

cliMate change legiSlation Proposed climate change legislation discussed by our federal legislators in 2009 is a major concern for Corn Belt Power and its member cooperatives. Current proposed legislation is bad for the Midwest where we have a higher percentage of coal-fired

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1964 1967 1970 1973 1976 1979 1982 1985 1988 1991 1994 1997 2000 2003 2006 2009

generation. The Waxman-Markey bill, approved by the U.S. House of Representatives, would severely penalize our local economy. Instead of cap-and-trade legislation, we need to focus on developing new technology that will make carbon capture economically feasible. Technology must be developed before the regulation. That also applies to regulation from the Environmental Protection Agency.

tRanSMiSSion SySteM Maintenance We found that maintenance and reconstruction of our aging transmission system was

integral for withstanding the freezing rain and ice that Mother Nature sent with winter storms this past year. We know that having a strong transmission system is vitally important to Corn Belt Power’s bottom line. Rebuilding transmission line may seem expensive, but it pays in the long term.

SMaRt gRid 2009 marked continued development of smart grid technology for Corn Belt Power and its member cooperatives. This new technology will allow us to perform peak shaving and load management that will lower our costs of electricity. This investment in new technology will pay off

ChArt left Total sales include rural electric cooperatives, North Iowa Municipal Electric Cooperative Association, Webster City and sales to others.

total salEs

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in the long run and we are fortunate to have been awarded the Department of Energy grant to help fund this project.

financial StRength Corn Belt Power achieved financial success in 2009, with a strong operating margin, a significant increase in its equity level and good debt service coverage and times interest earned ratios. The Corn Belt Power board decided to write off expenses from the Sutherland plant and to defer some 2009 revenue in order to reduce future rate increases.

Certainly, 2009 was a successful year in which Corn Belt Power extended its connections to a new power supply partnership, new renewable energy sources, a new dispatching arrangement and new energy-efficiency opportunities.

It was also a year with a new record peak demand and financially strong margins.

Just think of what we can accomplish when the economy also takes a positive turn.

ChArt riGht Average REC member system cost, including substation charge; calculated average REC rate reflects power sold to municipals and others served by RECs.

By partnering with Basin electric, we can employ economies of scale when expanding our power supply. At the same time, Corn Belt power retains ownership of its generating supply as a Class A Basin electric member.

MEMbEr rEc ratEs

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basin ElEctricPowEr cooPErativEClAss A memBershipCorn Belt power Cooperative became a Class A member of Basin electric power Cooperative, Bismarck, N.D., on sept. 1, 2009. As part of a three-tier delivery system, Basin Electric sells wholesale power to Class A members such as Corn Belt Power. The Class A members sell power to their distribution cooperatives, which are Class C members of Basin Electric. These cooperatives, in turn, sell power to their retail member-owners. The boards and staffs of Basin Electric and Corn Belt Power worked many hours conducting studies, building models and finalizing contracts to facilitate the new membership. With an all-supplemental-requirements contract until 2050, Corn Belt Power retains ownership of its power plants and sells the output to Basin Electric. Corn Belt Power then purchases from Basin Electric all of its power needs above its current Western Area Power Administration hydropower contract and 50 megawatts of power previously contracted from Basin Electric.

For Corn Belt Power, this partnership helps reduce risk and buffers market volatility. It reduces Corn Belt Power’s future financial obligation, enhances long-term rate control through an alliance with a larger entity and positions Corn Belt Power to meet long-term power needs of its member co-ops.

In return, the partnership with Corn Belt Power offers benefits to Basin Electric. The addition of member load

grows the Basin Electric system, providing additional diversity and economies of scale. Corn Belt Power brings with it efficient coal generation, fuel diversity in its power supply and power generated with a fuel new to Basin Electric – nuclear energy.

Corn Belt Power and Basin Electric share the cooperative form

of doing business. Both cooperatives adhere to the seven cooperative principles and are directed by locally elected officials who receive their power from member cooperatives. Basin Electric and Corn Belt Power are also experiencing load growth and have high load factors, indicative of growing rural commercial and industrial loads. Both cooperatives have baseload coal as a vital component of their power supplies. They share ownership

of the Wisdom Unit 2 combustion turbine near Spencer. Studies forecast future rate increases at both cooperatives due to new generation costs, rising materials and fuel costs and potential carbon legislation.

opposite iNset left Basin Electric’s Dry Fork Station is under construction north of Gillette, Wyo. The 385-megawatt power plant is scheduled to be complete in 2011.

iNset miDDle Basin Electric President Wayne Child, left, and Corn Belt Power President Donald Feldman sign the Rural Utilities Service contracts for power purchase, scheduling and transmission lease arrangements between the two cooperatives at a ceremony following the special membership meeting Aug. 13.

iNset riGht Corn Belt Power’s Ken Kuyper, executive vice president and general manager, speaks during the Basin Electric special membership meeting Aug. 13 in Bismarck, N.D.

mAiN photo Corn Belt Power is a Class A member of Basin Electric Power Cooperative effective Sept. 1, 2009. Basin Electric’s headquarters are in Bismarck, N.D.

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extending our connections to the people of

Basin electric power Cooperative

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with an all-supplemental requirements contract until 2050, Corn Belt power retains ownership of its power plants and sells the output to Basin electric. Corn Belt power then purchases from Basin electric all of its power needs above its hydropower contract.

opposite With its Class A membership, Corn Belt Power extends its cooperative connections to Basin Electric’s personnel, including, from top left, Tim Helstedt, lead lineman, Logan transmission shop, and Jan Fasching, assistant transmission line superintendent; Clifton Hudgins, senior vice president and chief financial officer; Dave Raatz, manager of marketing and power supply planning; Becky Kern, power supply engineer III; Ron Harper, chief executive officer and general manager; Wayne Hermes, Antelope Valley Station maintenance planner/scheduler; Mary Albrecht, Leland Olds Station control room operator; Mike Risan, senior vice president, transmission; and Wayne Backman, senior vice president, generation.

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with the Class A membership, the bulk of Corn Belt power’s 161 kV transmission system is now part of western Area power Administration’s integrated transmission system, allowing power purchases from Basin electric with fewer transmission challenges. With its transmission part of the integrated transmission system, Corn Belt Power operates in the WAPA control area.

waPa control arEa, trANsmissioN AND suBstAtioNs

Corn Belt Power was the first entity in the Midwest Reliability Organization’s region to experience a critical infrastructure protection spot check. On Aug. 3 and 4, auditors from the MRO interviewed Corn Belt Power personnel and audited the cooperative

on six of the critical infrastructure protection standards, which included 13 requirements. The auditors found Corn Belt Power to be compliant with the standards and all requirements and found no violations.

Corn Belt Power transmission, electrical maintenance and field engineering crews worked on several construction projects in 2009 to improve the reliability of the system. Crews completed the new Hawkeye Pride Substation, rural Corwith, Nov. 19, which will serve the Hawkeye Pride egg-processing plant, a member of Prairie Energy Cooperative.

opposite mAiN photo Mike Sutter, left, apprentice electrician, and Jerry Kohlhaas, journeyman electrician, work on the new Hawkeye Pride Substation, rural Corwith. The new facility, completed Nov. 19, serves the Hawkeye Pride egg-processing plant, a member of Prairie Energy Cooperative.

iNset photo Western Area Power Administration now serves as the control area operator for Corn Belt Power. Shown here are transmission structures owned by WAPA.

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transMission ProjEctsGlidden – Thomas C. Conner reconductoring | Completed modification and reconductoring of six miles of 69 kV transmission line. Located in Carroll County, this line section was reconductored to improve reliability and increase transmission line capacity in the area.

Sheffield – Hampton reconductoring | Modification and reconductoring of 14.2 miles of 69 kV transmission line, with the modification completed and reconductoring underway. Located in Franklin County, this line section is being reconductored to improve reliability and increase transmission line capacity in the area.

Hawkeye Pride Tap | Construction of one and three-fourths miles of line, located near Corwith, to serve the Hawkeye Pride egg-processing plant, a member of Prairie Energy Cooperative.

Dolliver – Maple Hill Tap | Five and half miles of line located east of Estherville, to improve reliability and increase transmission line capacity in the area. To be completed in 2010.

Floyd – Black Hawk 161 kV maintenance | Replaced 34 poles in 45 miles of transmission line in Floyd, Bremer and Black Hawk counties.

Plainfield 161 kV Switching Station | Began making transmission additions to serve a new switching station, including a half mile of triple circuit and other 69 kV modifications. Will finish in 2010.

substation anD switching station ProjEctsHawkeye Pride Substation, Corwith | New substation built to serve the Hawkeye Pride egg-processing plant, a member of Prairie Energy Cooperative. Installed three motor-operated switches nearby.

Klemme Switching Station | Retired old electrical/mechanical relays and replaced with electronic computer-based relays. Also replaced three 69 kV circuit breakers.

Plainfield Substation | Revamped station equipment and structures to current specifications.

Pocahontas Substation | Revamped station equipment and structures to current specifications.

Sherwood Substation | Revamped station equipment and structures to current specifications.

Dickens Substation | Revamped station equipment and structures to current specifications.

Hutchins Substation | Installed new transformers and regulators. Increased capacity.

Aplington Substation | Installed new transformers and regulators.

Conrad Substation | Installed new transformers and regulators.

Denhart Substation | Installed new transformers and regulators. Increased capacity.

Hicks Substation | Installed new transformers and regulators.

opposite Corn Belt Power transmission, electrical maintenance and field engineering crews work on several construction projects in 2009 to improve the reliability of the system.

top row from left Justin Hinners, apprentice electrician; Dan Shiflett, right-of-way and land superintendent; David Heyden, journeyman electrician

seCoND row from left Bob Nielsen, line foreman; Jon Girres, journeyman electrician; Andy Stalzer, apprentice lineman

Bottom row from left: Connor Almond, apprentice electrician; Mike Finnegan, journeyman electrician; Joel Harklau, journeyman electrician

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mAiN photo Iowa Lakes Electric Cooperative owns and operates the first-in-the-nation wind energy projects designed to power ethanol production. Corn Belt Power purchases the output of the turbines, which began production in March 2009.

iNset photos Iowa Lakes Electric Cooperative personnel actively involved in the wind projects include, from top left: Terry L. Bruns, president and chief executive officer; September Dau, vice president of finance and human resources; L. Kirby Range, Iowa Lakes board chairman and Corn Belt Power director; Tresa Hussong, vice president of customer and corporate relations; Rick Olesen, vice president of operations and engineering; and Kirby Berhow, manager of renewable energy services.

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COAL

75.9%

NATURAL GAS

NUCLEAR

RENEWABLE(OTHER)

PURCHASERENEWABLE(HYDRO)

7.0%8.6%

5.6%

1.0%

OIL/DIESEL

0.1%

1.8%

corn bElt PowEr 2010 gEnEration Mix by FuEl

iowa lakes electric Cooperative dedicated two wind power projects during a ceremony Aug. 20. The two projects are the first in the nation to generate wind energy to serve another renewable energy source – ethanol plants near Superior and Lakota, Iowa.

The two cooperative-owned wind farms consist of seven turbines each and are strategically located to provide power to adjoining ethanol plants. Distributing generation close to large loads takes advantage of existing substation infrastructure and eliminates the need to add a transmission level connection, which can be extremely expensive. Corn Belt Power purchases all of the generation output of both wind projects.

The wind farms began with strategic planning by the Iowa Lakes board of directors, which identified northwest Iowa’s windy conditions as a resource the cooperative should use to help diversify revenue sources. Basin Electric Power Cooperative helped secure purchase of General Electric wind turbines for the project. Iowa Lakes broke ground in August 2008, and the turbines began generating power in late March 2009.

Interstate Power and Light Company, a subsidiary of Alliant Energy Corporation, cancelled plans March 5 to construct the proposed Sutherland Generating Station Unit 4 hybrid power plant in Marshalltown, Iowa. Corn Belt Power was a partner in the plant project, along with Central Iowa Power Cooperative and North Iowa Municipal Electric Cooperative Association.

Interstate Power and Light based its decision to cancel the project on a combination of factors including

the current economic and financial climate; increasing environmental, legislative and regulatory uncertainty regarding regulation of future greenhouse gas emissions; and the terms placed on the proposed power plant by regulators.

Planned maintenance outages took place at four of Corn Belt Power’s baseload generating plants in 2009. At Wisdom Unit 1, crews completed a steam turbine overhaul in January. Employees at NextEra Energy’s Duane Arnold Energy Center completed a scheduled refueling outage in February that included reactor refueling, main transformer replacement and steam turbine overhaul. In April and May, a baghouse and scrubber were placed in service and a secondary superheater bank was replaced in the boiler at the Walter Scott, Jr. Energy Center Unit 3. In October and November, Neal 4 underwent a low-pressure steam turbine overhaul.

PowEr supply

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WS 3

WS 4

NEAL 4

HANCOCK

ILECWIND

WAPA

OTHER*

6.7%

12.4%

17.0%

1.0%

2.0%

5.2%

1.0%

DAEC

18.2%BASIN RATE A

20.6%WISDOM 1

0.0%WISDOM 2

BASIN CONTRACT

CROSSWIND

13.7%

2.1%

0.1%

2009 total EnErgy

ABoVe photo Jake Olberding, left, project engineer I, and Brent Ulrich, general plant worker, test water at Wisdom Unit 1. Crews completed a steam turbine overhaul at the plant in 2009.

Below photo This artist’s rendering depicts the proposed Sutherland Generating Station Unit 4 hybrid power plant in Marshalltown, Iowa. Interstate Power and Light cancelled its plans March 5 to construct the coal plant. Corn Belt Power would have been a joint owner of the generating project.

* Excludes energy delivered to MidAmerican Energy dispatch and Basin Electric Power Cooperative


photo riGht Duane Arnold Energy Center is jointly owned by Corn Belt Power, NextEra Energy and Central Iowa Power Cooperative. The plant underwent a scheduled refueling outage in February that included reactor refueling, main transformer replacement and a steam turbine overhaul.

unit location Fuel Mwh %

Wisdom 1 Spencer, Iowa Coal 3,174 0.1Wisdom 2 Spencer, Iowa Natural Gas/

Fuel Oil196 0.0

Duane Arnold Palo, Iowa Nuclear 467,893 18.2Walter Scott 3 Council Bluffs,

IowaCoal 172,866 6.7

Walter Scott 4 Council Bluffs, Iowa

Coal 317,975 12.4

Neal 4 Sioux City, Iowa

Coal 435,915 17.0

Basin Contract

350,400 13.7

Crosswind Ayrshire, Iowa Wind 53,813 2.1Hancock Hancock

County, IowaWind 25,622 1.0

Iowa Lakes

Superior & Lakota, Iowa

Wind 51,682 2.0

WAPA South Dakota Hydro 132,783 5.2Basin Rate A 527,188 20.6Other Purchases*

25,179 1.0

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* Excludes energy delivered to MidAmerican Energy dispatch and Basin Electric Power Cooperative

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cooperative2008 kwh billed by

corn belt power2009 kwh billed by

corn belt power

Boone Valley Electric Cooperative 9,840,625 kWh 9,185,199 kWh

Butler County REC 191,906,006 kWh 255,500,429 kWh

Calhoun County REC 42,316,996 kWh 43,375,644 kWh

Franklin REC 64,702,991 kWh 59,801,796 kWh

Glidden REC 115,904,378 kWh 115,763,207 kWh

Grundy County REC 96,191,192 kWh 69,384,114 kWh

Humboldt County REC 59,312,018 kWh 58,542,231 kWh

Iowa Lakes Electric Cooperative 568,291,597 kWh 574,132,660 kWh

Midland Power Cooperative 254,761,608 kWh 248,916,753 kWh

Prairie Energy Cooperative 259,446,563 kWh 252,786,584 kWh

Sac County REC 34,178,064 kWh 34,620,142 kWh

total Kilowatt-hour salEs

Includes sales to RECs for special loads and municipals

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systEM PEaK, sAles, rAtes

Corn Belt Power’s wholesale power rate increased 5.4 percent in January to meet the financial requirements of the budget. The increase was due to the budgeted cost of power plant maintenance outages and anticipated increases in fuel and purchased-power costs.

2009 was an extremely positive year financially for Corn Belt Power. The board of directors implemented financial goals that had a direct impact on the cooperative, increasing its equity to 17.64 percent and achieving strong

times interest earned and debt service coverage ratios. In 2009, Corn Belt Power realized a significant margin, totaling $6.9 million, due to lower-than-budgeted market power prices, a patronage allocation from Basin Electric and a Department of Energy financial settlement.

Distribution co-op managers and Corn Belt Power staff studied rate design options in light of Corn Belt Power’s Class A membership in Basin Electric. Rate structures to be implemented in 2011 will include a production demand rate that will emulate Basin Electric’s demand charged to Corn Belt Power. Implementing this rate will allow the co-ops to realize savings from load management activities. Basin Electric offers alternative rates, including an electric heat rate, standby rate and small renewable energy rate, that are available to Corn Belt Power’s member cooperatives.

Sales to member co-ops, North Iowa Municipal Electric Cooperative Association and Webster City were strong in 2009, totaling 1,897,387,587 kilowatt-hours, slightly under the 1,913,474,594 kilowatt-hour record set in 2008.

mAiN photo Corn Belt Power sets a record-high system peak of 347 megawatts on Nov. 12. The peak was primarily the result of crop drying due to a cool summer and late harvest.

Corn Belt power set a record-high system peak of 347 megawatts at 6 p.m. on Nov. 12, 2009. The new record peak passed the previous record of 340 megawatts, which, when it was set in November 2008, was a dramatic 15 percent higher than the record peak that preceded it. Like the 2008 peak demand, 2009’s peak was primarily the result of crop drying due to a cool summer and late harvest. Natural gas pumping load totaling approximately 16 megawatts was not operating at the time of the peak. Also, temperatures during the 2009 peak day were considerably warmer than they were the previous year, reducing the amount of home heating load active at the time of the peak. Had the temperatures been colder and the natural gas pumping load been operating, Corn Belt Power could likely have seen the peak demand reach up to 45 megawatts higher than what was recorded.

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2006

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2007 2008 2009

corn bElt PowEr Monthly systEM PEaK(Corn Belt Power system peak = (RECs + Webster City) x 1.06 at time of Corn Belt Power 60-minute system peak.)

the board of directors implemented financial goals that had a direct impact on the cooperative, increasing its equity to 17.64 percent and achieving strong times interest earned and debt service coverage ratios.

ABoVe photo Ron Lanning, left, general accountant, works with auditors from KPMG on the 2009 audit. 2009 was an extremely positive year financially for Corn Belt Power.


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Corn Belt power and its member cooperatives launched the “find a Balanced solution” statewide media campaign in late June to draw attention to legislation being rushed through the u.s. house to combat global climate change. A series of television, radio, and print ads engaged Iowans in the debate about climate change and urged members of Congress to find a balanced solution.

A coalition of electric generation and transmission cooperatives across the country developed the ad campaign that encouraged visits to www.FindABalancedSolution.com to learn more about climate change and to find out how to contact members of Congress.

In late September, Iowa Sens. Charles Grassley and Tom Harkin

heard from Iowa electric co-op member-consumers who signed approximately 75,000 postcards asking the senators to ensure that cap-and-trade legislation keeps electric bills affordable. The cards were distributed at co-op meetings and through a direct mail campaign. Co-op leaders delivered the postcards to the senators’ district offices in Cedar Rapids, Council Bluffs, Davenport, Des Moines, Dubuque, Sioux City and Waterloo, while 32 co-op representatives met personally with the senators and Iowa Reps. Bruce Braley, Leonard Boswell, Dave Loebsack, Steve King and Tom Latham in Washington, D.C., to express their concerns about pending climate change legislation.

FinD a balancED solution for ClimAte ChANGe leGislAtioN

Television and radio spots that ran July through September communicated these messages:

• In addressing climate change, we need to be both environmentally and economically responsible.

• Cap-and-trade will raise electricity rates for everyone in businesses and homes all across the country.

• Reliable, affordable energy is critical to our economic recovery.

• We can’t afford policies that will set energy prices soaring.

• A balanced solution makes sense for everyone – for businesses, families and individuals, our environment and economy.

mAiN photo opposite In late September, cooperative representatives from Iowa gather in Washington, D.C., to meet with their senators and members of Congress and express concerns about pending climate change legislation.

iNset photos Rep. Tom Latham, Rep. Steve King and Sen. Tom Harkin

lower riGht photo Sen. Charles Grassley holds a town meeting at Rustix Restaurant in Humboldt in August. He addressed questions about health care reform and climate change legislation.

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mAiN photo Energy efficiency is a primary focus for Corn Belt Power and its member cooperatives. In 2009, electric co-ops completed an energy-efficiency potential study mandated by the Iowa Legislature; conducted ongoing programs that offer rebates for heat pump, water heater and compact fluorescent lamp purchases; and developed new programs offering incentives for adding insulation and weatherization, buying ENERGy STAR® appliances and recycling old, inefficient appliances. Several new displays were developed that educate members about energy efficiency.


27Corn Belt power hired power system engineering, inc., madison, wis., to assist with an energy-efficiency potential study mandated by the iowa legislature. The project began in 2008 and included a required progress report filed with the Iowa Utilities Board Jan. 1, 2009. The study continued through 2009, collecting data to evaluate the cost effectiveness of various energy-efficiency programs for residential, large and small commercial/industrial and farm members. Legislation required distribution co-ops to set goals for achieving energy-efficiency savings and file that information with the Iowa Utilities Board by a Jan.1, 2010 deadline.

In 2009, Touchstone Energy Cooperatives across the country launched a new integrated energy-efficiency campaign, “Together We Save,” featuring a Web site, TogetherWeSave.com, designed to inspire consumers to make changes to save energy and money. Together We Save includes new television, radio and print ads, along with brochures, posters and information. Television advertising, one of the most

effective means for educating consumers, started in Iowa in September and ran through the first week of November.

Additional Corn Belt Power programs promoting energy efficiency during the year included sponsorship of the Momentum is Building Conference Feb. 12-13 in Des Moines, Build It Right workshops in Fort Dodge, EnergyCast webinars featuring guest experts and presentation of the Touchstone Energy Discovery Map training for member cooperative employees.

On Nov. 23, the U.S. Department of Energy awarded National Rural Electric Cooperative Association’s Cooperative Research Network $33.9 million for a nationwide demonstration project that will bring together 27 rural electric cooperatives in 10 states to install more than 153,000 smart grid components.

salE oF sPEculativE builDingsiowa laKEs ElEctric cooPErativE

Arnold Motor Supply, Spencer – 20,000 square feet

FranKlin rEc

North Central Millwright, Hampton – 30,000 square feet

wEbstEr city MuniciPal utilitiEs

Infinity Services, Webster City – 20,000 square feet

As a result of the study and energy-efficiency goal setting, Corn Belt Power and its member systems will launch a host of new programs in 2010 to encourage members to incorporate energy efficiency into their homes and businesses. The programs will include new incentives that reward home weatherization, new ENERGy STAR® appliance purchases, installation of efficient heating and cooling systems and pulling the plug on old, inefficient appliances. Also new will be programs focused on agricultural uses of electricity.

Incentives offered in the past will continue, including rebates for energy-efficient heat pumps, high-efficiency central air conditioning and electric water heaters. Cooperatives will continue the annual “Change a Light” compact fluorescent lamp promotion. A variety of commercial and industrial energy-efficiency incentives will also remain.

EnErgy EFFiciEncy, loAD mANAGemeNt AND economic Development

Included in the group of cooperatives are Corn Belt Power and its member co-ops. Authorized by the American Recovery and Reinvestment Act, the smart grid grants, together with the $3.4 billion in smart grid investment grants announced in October, are part of a federal initiative to test and develop technologies that operate together to make the grid more efficient and reliable. Cooperative Research Network submitted a request for half of the project’s total cost of $67 million to the Department of Energy.

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Corn Belt Power’s application on behalf of its member co-ops resulted in the grant that provides approximately 40 percent of the cost to upgrade or install automated metering and “smart grid” technology. The grant will also pay for approximately 40 percent of the cost of communication equipment Corn Belt Power will need to install at substations to allow for load management capabilities.

In addition, Corn Belt Power will have access to cyber-security and system-integration software to help make its system more secure and efficient. The total Corn Belt Power system project will cost approximately $10 million, of which roughly $4 million will be covered by the DOE grant.

Throughout 2009, Corn Belt Power and its member cooperatives studied the economic feasibility and benefits of implementing a load management program; the co-ops committed to proceeding. The study indicates savings can be achieved by controlling water heaters, air conditioners and distributed generation at peak times, reducing demand charges. Load management preparation will continue with Corn Belt Power completing installation of the backhaul communication system, developing strategy, conducting

training, developing a plan to attract members to participate and reviewing incentives. Distribution co-ops will install load management equipment at substations, install switches in members’ homes and market the program to members.

With the downturn in the economy, economic development slowed in Corn Belt Power’s member cooperatives’ territories. The poultry industry showed some increase, however, with new and expanded egg laying and processing, chick hatching and cageless poultry production development in areas served by Franklin REC, Humboldt County REC, Iowa Lakes Electric Cooperative and Prairie Energy Cooperative.

Corn Belt Power partnered with Humboldt County REC, Iowa Lakes Electric Cooperative and Prairie Energy Cooperative to present three revolving loan fund workshops in 2009, held in Clarion, Garner and Humboldt. The workshops explained how revolving loan funds operate and coordinate with other lenders. Attendance exceeded 50 people and included bankers, economic developers and community leaders.

2008 2009

Total Energy Sales 1,913,474,594 kWh 1,897,387,587 kWh

REC Peak Demand (no losses) 295,498 kW 307,876 kW

System Peak Demand 339,834 kW 346,711 kW

Miles of Transmission Lines 1,700 1,702

Distribution Substations 148 149

Employees 96 96

upper riGht photo Centurion Hatchery plans to begin construction of a new facility in the Goldfield Industrial Park. The one-megawatt load will hatch 15 million chicks per year on Prairie Energy Cooperative’s lines.

lower left photo Jim Vermeer, left, vice president, business development, Corn Belt Power, and Terry L. Bruns, second from right, president and chief executive officer, Iowa Lakes Electric Cooperative, meet with representatives from the City of Spencer, Spencer Industries Foundation and Arnold Motor Supply to close on the sale of a speculative building in the Spencer Technical Park South.

cooPErativE highlights


Corn Belt Power’s Providing Opportunity Within our Economic Region Fund is a revolving loan fund made up of approximately $4.7 million in United States Department of Agriculture Intermediary Relending Program funds and USDA Rural Economic Development Loan & Grant funds. The fund began in 2000 with one USDA IRP fund totaling $1 million and has grown over the years with new loans and grants to total $4.7 million. Corn Belt Power has loaned out over $7 million to 47 projects since the fund’s beginning. These projects have created and retained over 1,000 jobs for the area. The fund serves 25 counties in north central Iowa.

nEw rEDl&g awarDs

Corn Belt Power received two new USDA Rural Economic Development Grants for Kossuth County Hospital and Franklin General Hospital in 2009. Each award was for $300,000 with Corn Belt Power providing a $60,000 match. These new awards are grants to Corn Belt Power which in turn loans them to the respective projects. As loans are paid back, the funds will contribute $720,000 to the revolving loan fund.

garnEr rural FirE DEPartMEnt

The Garner Rural Fire Department and the City of Garner jointly purchased a new fire truck in October 2009. Prairie Energy Cooperative loaned $100,000 from its revolving loan fund to the City of Garner and Corn Belt Power loaned $150,000 from the POWER Fund to the Garner Rural Fire Department to assist with the purchase of the fire truck.

bElMonD coMMunity hosPital

The Belmond Community Hospital accessed $150,000 from the POWER Fund, $150,000 from Prairie Energy’s revolving loan fund and bank dollars to finance its building renovation project in 2009. The renovation project included new office spaces, a new laboratory department and a remodeled area for a new computed tomography scanner. The Belmond Community Hospital employs 105 people and is a 22-bed hospital.

rEvolving loan FunD rEciPiEnts Amount loaned out in 2009: $612,500

t&M FooDs

In June 2008, T&M Foods, Inc., a grocery store in Greene, Iowa, owned and operated by Tony and Michelle Kreimeyer, was destroyed by severe flooding. The grocery store was rebuilt using $150,000 from the POWER Fund, Federal Emergency Management Agency funds from the Small Business Administration and a Jumpstart Grant.

Kossuth county hosPital

The 34,000-square-foot four-level $12 million construction project at the Kossuth Regional Health Center began in the spring of 2009. The project includes construction of a 13,655-square-foot 25-room inpatient care unit and energy-efficiency improvements for the entire building. This renovation strategy will result in the retention of the current 177 full-time employees and the creation of at least three full-time positions at the hospital. Corn Belt Power loaned $360,000 to the project.

gliDDEn DEvEloPMEnt grouP

Glidden Development Group partnered with Des Moines Area Community College Student Builders program to construct a 1,750-square-foot speculative energy-efficient home. The home will be built to Iowa Touchstone Energy Home specifications and is the first to go up in the Glidden High View neighborhood on the city’s northwest side. Construction on the home began in August 2009 and is estimated to be completed by the summer of 2010. The POWER Fund, Glidden REC’s revolving loan fund and Homeward, Inc., all provided financing for this project.

honary EntErPrisEs

Honary Enterprises, also known as Environmental Lubricants Manufacturing, maker of bio-based lubricants, purchased an 82,000-square-foot building in Grundy Center. The POWER Fund provided $150,000 and Grundy County REC’s revolving loan fund contributed $150,000 to the project.

FranKlin gEnEral hosPital

Franklin General Hospital, Hampton, Iowa, is undergoing a $15 million complete renovation of its facility which includes enlarging cardiac rehab and physical therapy departments; expanding emergency rooms and trauma treatment areas; and providing treatment rooms for specialty physicians. Renovation began in the spring of 2009 and will be completed in four phases. Franklin General Hospital received assistance for Phase I from Corn Belt Power and Franklin REC with two new USDA REDL&Gs totaling $1.1 million.

29

2009 corn bElt PowEr FunD ProjEcts

30



Donald McLean, long-time Corn Belt Power director representing Grundy County REC, announced his retirement from the Corn Belt Power board in November. The Grundy County REC board elected Larry Rohach to take his place. With the consolidation of Glidden REC and Sac County REC effective Jan. 1, 2010, Raccoon Valley Electric Cooperative directors elected David Onken to represent the new cooperative on the Corn Belt Power board. Director Jeff Cranston, who had represented Sac County REC, retired from the Corn Belt Power board.

retirementsBob Burgett | system operatorRobert Gress | journeyman linemanKenneth Stone | shift operatorJack Strickland | system electrical

superintendent

New employeesConnor Almond | apprentice electricianAdam Bird | apprentice linemanCarla Gates | environmental and

safety specialistMarena Fritzler | graphic designerJustin Hinners | apprentice electricianClayton Hood | electrical engineerJacob Olberding | project engineer IMark Saxton | apprentice lineman

service Awards45 yEars Ron Davis | communications technician

40 yEars Paul Clay | system operator

35 yEars Gary Brinkley | electrical

maintenance foreman

30 yEars Dennis Ernst | system operator David Heyden | journeyman electrician Dan Shiflett | right-of-way and land

superintendentDan Watnem | transmission

superintendentMichael Zabel | system switching

coordinator

boarD of DireCtors

huMan rEsourcEs

mAiN photo opposite The Corn Belt Power directors are, seated from left, Donald Feldman, president, Butler County REC; L. Kirby Range, Iowa Lakes Electric Cooperative; Donald McLean, Grundy County REC, assistant secretary/treasurer; William Courter, Calhoun County REC; and Dale Schaefer, Franklin REC, assistant secretary/treasurer (December); standing, from left: Scott Stecher, Prairie Energy Cooperative, secretary; Ronald Deiber, North Iowa Municipal Electric Cooperative Association, vice president; Charles Gilbert, Midland Power Cooperative, treasurer; David Onken, Glidden REC; Larry Tilton, Humboldt County REC; and Jeff Cranston, Sac County REC.

iNset photo left Senior staff members are, from left, Kevin Bornhoft, vice president, engineering and system operations; Jim Vermeer, vice president, business development; Kathy Taylor, vice president, corporate relations; Ken Kuyper, executive vice president and general manager; Mike Thatcher, vice president, generation; and Karen Berte, senior vice president, finance and administration.

iNset photo riGht Larry Rohach, Grundy County REC, director (December)

25 yEars James Sayers | energy services director

15 yEars James Fevold | custodian

10 yEars Anthony Borkowski | machinist-welder,

certifiedShane Darr | journeyman linemanScott Gilderhus | apprentice mechanic and

electricianJon Girres | journeyman electricianJoel Haynes | system operatorChris Shillington | communications

technician

5 yEars Jerry Kohlhaas | journeyman electricianKevin White | control operator

in remembranceAngie Reed | general services assistant

promotionsDaniel Amato | control operator to shift operatorJoel Harklau | apprentice electrician to journeyman electricianJerry Moritz | assistant system electrical superintendent to system

electrical superintendent

31

32



Corn Belt Power Cooperative, headquartered in Humboldt, Iowa, is a generation and transmission electric cooperative owned by its member systems. As a Touchstone Energy Cooperative, Corn Belt Power is committed to the values of accountability, integrity, commitment and teamwork. Corn Belt Power provides electricity to 10 member cooperatives and one municipal electric cooperative that serve farms, rural residences, small towns and commercial and

Corn Belt power Cooperative enhances the quality of life for members, employees & communities.

MEMbEr cooPErativEs1. iowa lakes electric Cooperative

2. humboldt County reC

3. Boone Valley electric Cooperative

4. prairie energy Cooperative

5. franklin reC

6. Butler County reC

7. raccoon Valley electric Cooperative (2010 consolidation of Glidden REC and Sac County REC)

8. Calhoun County reC

9. midland power Cooperative

10. Grundy County reC

North iowa municipal electric Cooperative Association (serving municipal utilities of Algona, Alta, Bancroft, Coon Rapids, Graettinger, Grundy Center, Laurens, Milford, New Hampton, Spencer, Sumner, Webster City and West Bend)

industrial members in 41 counties in northern Iowa. Corn Belt Power responsibly provides a safe, reliable and affordable supply of electricity and helps make the quality of life in our communities the best it can be.

33

34 Financial stAtemeNts

2009 || Corn Belt Power Cooperative || Annual Report

35

2009 2008Electric plant: In service . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 382,288,357 363,181,829 Less accumulated depreciation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (188,102,591 ) (176,512,913 ) 194,185,766 186,668,916 Construction work in progress . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10,869,414 22,154,596 Nuclear fuel, net of amortization . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11,788,182 11,836,451 216,843,362 220,659,963 Other property and investments: Nonutility property . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 256,384 261,480 Investment in the National Rural Utilities Cooperative Finance Corporation (NRUCFC) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4,587,008 2,561,313 Decommissioning fund . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27,443,055 20,546,842 Other investments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9,108,242 4,588,390 Notes receivable . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6,198,875 5,589,249 Other assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 873,516 935,991 48,467,080 34,483,265 Deferred charges: DAEC regulatory asset . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,709,944 638,800 Deferred refueling costs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,317,026 133,587 DAEC pension regulatory asset . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,864,000 2,097,000 Decommissioning regulatory asset . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33,393,416 31,133,166 Other . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6,701 2,579 38,291,087 34,005,132 Current assets: Cash and cash equivalents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7,352,890 2,278,511 Special funds . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2,846,624 3,881,100 Member accounts receivable . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9,073,926 9,632,254 Other receivables . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2,546,691 3,047,917 Inventories: Fuel . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13,073,099 13,544,882 Materials and supplies . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9,220,249 9,470,225 Prepayments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 288,136 260,747 44,401,615 42,115,636 $ 348,003,144 331,263,996

AssetsDecember 31, 2009 and 2008

See accompanying notes to financial statements.

EXTENDING our cooperative connections

36

MeMbership CApitAl And liAbilitiesDecember 31, 2009 and 2008

2009 2008Membership capital: Memberships, at $100 per membership . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 1,300 1,300 Deferred patronage dividends, restricted . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15,996,100 12,321,100 Other equities, per accompanying statements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 43,975,515 40,620,573 Accumulated other comprehensive income (loss) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2,554,471 (3,336,991 ) 62,527,386 49,605,982 Long-term debt: Federal Financing Bank . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 190,448,582 165,418,389 NRUCFC . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9,841,145 11,465,159 USDA intermediary relending program . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4,262,744 3,765,837 204,552,471 180,649,385 Less – current maturities of long-term debt . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13,738,935 11,753,418 190,813,536 168,895,967 Other long-term liabilities: DAEC decommissioning liability . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 58,282,000 55,017,000 Ashlandfillretirementobligation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 831,347 816,456 DAEC pension costs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,856,033 2,036,999 60,969,380 57,870,455 Current liabilities: Current maturities of long-term debt . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13,738,935 11,753,418 Short-term debt . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8,000,000 28,000,000 Accounts payable . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5,171,998 7,433,455 Accrued property and other taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3,330,815 2,894,901 Deferred credit . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2,800,000 3,858,000 Accrued interest and other . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 651,094 951,818 33,692,842 54,891,592 $ 348,003,144 331,263,996



37

stAteMents of revenues And expensesYears ended December 31, 2009 and 2008

2009 2008Operating revenues: Sale of electric energy . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 100,073,021 89,610,092 Lease revenue . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 480,253 — Other . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4,555,698 4,801,860 105,108,972 94,411,952 Operating expenses: Operation: Steam and other power generation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30,058,925 34,100,955 Purchased power, net . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23,967,517 13,068,908 Transmission . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6,246,019 5,036,761 Sales . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2,504,367 2,672,361 Administrative and general . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3,661,151 3,388,700 Maintenance: Steam and other power generation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7,418,173 7,138,640 Transmission . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2,056,498 1,525,772 General plant . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 167,584 173,851 Depreciation and decommissioning . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14,030,766 12,755,818 Loss on the disposition of property . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (3,042 ) (20,944 ) 90,107,958 79,840,822 Net operating revenues . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15,001,014 14,571,130

Interest and other deductions: Interest on long-term debt . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9,827,535 9,683,961 Interest during construction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (51,840 ) (1,023,817 ) Other interest and deductions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 610,621 1,256,407 10,386,316 9,916,551 Net operating margin . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4,614,698 4,654,579

Nonoperating margin: Interest and dividend income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 538,465 469,150 Patronage income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4,446,527 3,610,460 DOE settlement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,654,135 — Plant abandonment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (4,425,809 ) — Other, net . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 41,716 197,853 2,255,034 4,277,463 Net margin . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 6,869,732 8,932,042



38

stAteMents of MeMbership CApitAlYears ended December 31, 2009 and 2008

2009 2008Net margin $ 6,869,732 8,932,042 Change in unrealized gain (loss) in fair value of investments 5,891,462 (4,362,903 ) Comprehensive income $ 12,761,194 4,569,139

stAteMents of CoMprehensive inCoMeYears ended December 31, 2009 and 2008

Other equities Accumulated Deferred Reserve for other patronage Statutory contingent comprehensive Total Membership dividends surplus losses income (loss)

Balance, December 31, 2007 $ 42,493,187 1,300 10,821,100 4,687,484 25,957,391 1,025,912 Change in accounting principle (note 2(e)) 2,470,043 — — — 2,470,043 —Adjusted beginning balance as of January 1, 2008 44,963,230 1,300 10,821,100 4,687,484 28,427,434 1,025,912 2008 net margin 8,932,042 — 1,426,387 700,000 6,805,655 — Revenue deferred patronage dividends 73,613 — 73,613 — — — Change in fair value of investments (4,362,903 ) — — — — (4,362,903 ) Balance, December 31, 2008 49,605,982 1,300 12,321,100 5,387,484 35,233,089 (3,336,991 ) 2009 net margin 6,869,732 — 3,514,790 700,000 2,654,942 — Revenue deferred patronage dividends 160,210 — 160,210 — — — Change in fair value of investments 5,891,462 — — — — 5,891,462 Balance, December 31, 2009 $ 62,527,386 1,300 15,996,100 6,087,484 37,888,031 2,554,471



39

stAteMents of CAsh flowsYears ended December 31, 2009 and 2008

2009 2008Cashflowsfromoperatingactivities: Net margin $ 6,869,732 8,932,042 Adjustments to reconcile net margin to net cash provided by operating activities: Depreciation and decommissioning . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14,030,766 12,755,818 Amortization of nuclear fuel . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3,428,869 2,798,806 Amortization of deferred refueling costs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,546,601 1,603,040 Amortization of DAEC pension regulatory asset . . . . . . . . . . . . . . . . . . . . . . . . . . . 233,000 233,000 Undistributed patronage earnings from other investments . . . . . . . . . . . . . . . . (4,349,617 ) — Changes in current assets and liabilities: Receivables . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,059,554 (647,580 ) Inventories . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 721,759 (1,953,837 ) Prepayments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (27,389 ) (50,616 ) Deferred refueling costs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (2,730,040 ) — Other – deferred charges . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (4,122 ) 19,859 Accounts payable . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (2,333,721 ) 2,312,063 Accrued property and other taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 435,914 (150,967 ) Deferred credit . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (1,058,000 ) 3,858,000 Accrued interest and other . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (300,725 ) 394,228 DAEC pension costs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (180,966 ) (293,001 ) Net cash provided by operating activities . . . . . . . . . . . . . . . . . . . . . . . . 17,341,615 29,810,855

Cashflowsfrominvestingactivities: Additions to electric plant, net . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (9,646,423 ) (19,985,406 ) Additions to nuclear fuel . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (3,380,600 ) (3,820,161 ) Sale of nonutility plant, net . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5,096 16,000 Additions to decommissioning fund . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (1,600,000 ) (500,000 ) Distributions from (additions to) special funds . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,034,476 (3,881,100 ) Additions to other investments, other assets, investment in NRUCFC, and notes receivable . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (2,582,871 ) (2,514,695 ) Net cash used in investing activities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (16,170,322 ) (30,685,362 )

Cashflowsfromfinancingactivities: Proceeds from issuance of long-term debt . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36,392,000 6,346,000 Repayment of long-term debt . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (12,488,914 ) (12,771,541 ) Short-term borrowings, net . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (20,000,000 ) 9,065,000 Netcashprovidedbyfinancingactivities . . . . . . . . . . . . . . . . . . . . . . . . . 3,903,086 2,639,459 Net increase in cash and cash equivalents . . . . . . . . . . . . . . . . . . . . . . . . 5,074,379 1,764,952

Cash and cash equivalents at: Beginning of year . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2,278,511 513,559 End of year . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 7,352,890 2,278,511

Supplementaldisclosureofnoncashinvestingandfinancingactivity: During the year ended December 31, 2008, electric plant in service additions in the amount of $177,656 was increased through retirement obligations .



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notes to finAnCiAl stAteMents

(1) orgAnizAtionCornBeltPowerCooperative(theCooperative)isaRuralUtilitiesService(RUS)financedgenerationandtransmissioncooperativecreatedand owned by 11 distribution cooperatives and one municipal cooperative association . Electricity supplied by the Cooperative serves farms, small towns, and commercial and industrial businesses across counties in northern Iowa .

The Cooperative’s Board of Directors is comprised of one representative from each member cooperative and is responsible for, among other things, establishing rates charged to the member cooperatives .

(2) signifiCAnt ACCounting poliCiesThe Cooperative maintains its accounting records in accordance with the Uniform System of Accounts as prescribed by the RUS . The preparationoffinancialstatementsinconformitywithU.S.generallyacceptedaccountingprinciplesrequiresmanagementtomakeestimatesand assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financialstatementsandthereportedamountsofrevenuesandexpensesduringthereportingperiod.Actualresultscoulddifferfromthoseestimates.Thesignificantaccountingpoliciesareasfollows:

(a) eleCtriC plAntElectricplantisstatedatoriginalcost,whichincludespayrollandrelatedbenefits,salesandusetaxes,propertytaxes,interestduringthe period of construction, and the estimated asset retirement obligation .

Costs in connection with repairs of properties and replacement of items less than a unit of property are charged to maintenance expense . Additions to and replacements of units of property are charged to electric plant accounts .

Depreciation is provided using straight-line methods and RUS-prescribed lives . These provisions, excluding nuclear facilities, were equivalent to a composite depreciation rate on gross plant of 3 .06% and 4 .23% for 2009 and 2008, respectively .

Under a joint-ownership agreement, the Cooperative has a 10% undivided interest in the Duane Arnold Energy Center (DAEC), a nuclear-fueled generating station, which was placed in service in 1974 . The Cooperative is depreciating its interest in the DAEC and each year’s property additions subsequent to 1984 on a straight-line basis over the remaining term of the initial Nuclear Regulatory Commission (NRC) license for DAEC (2014) . The composite depreciation rate on gross plant for DAEC was 5 .48% and 4 .07% for 2009 and 2008, respectively .

During 2009, as a result of the majority owner operator deciding to abandon the construction of the Sutherland plant, which the Cooperative shared a 15 .4% interest in, the Cooperative incurred a $4,425,809 loss, which is recorded as plant abandonment in the statements of revenues and expenses .

(b) deCoMMissioning of dAeCThe Cooperative recognizes an asset retirement obligation for its 10% share of the estimated cost to decommission DAEC . A NRC estimate of the decommissioning costs of DAEC was updated in 2008 . This report estimated the Cooperative’s share of the decommissioning costs of DAEC to be approximately $81,464,200 (in 2008 dollars) . The Cooperative is providing for overall nuclear decommissioningcostsusingafundingmethodwhichassumesa4%rateofinflationanda3%realrateofreturn.ThemethodisdesignedtoaccumulateadecommissioningreservesufficienttocovertheCooperative’sshareofdecommissioningcosts.FPLEnergyDuane Arnold, LLC (FPL), the majority owner and operator of DAEC, has recently submitted an application to extend the plant license 20 years . The Cooperative anticipates the plant license extension will be approved by the NRC . During 2009, as a result of a settlement with the Department of Energy (DOE) relating to the DOE’s failure to accept nuclear waste from DAEC, the Cooperative received $1,654,135 . The Board approved $1 .6 million of these receipts to be transferred into the decommissioning fund, which is recorded in depreciation and decommissioning expense in the statement expenses and revenues .

The total fair value of the decommissioning funds accumulated at December 31, 2009 was $27,443,055, of which $17,286,898 has been placed in a fund legally restricted for use in decommissioning DAEC . The remaining $10,156,157, while not legally restricted, has been designated by the Cooperative for use in decommissioning DAEC . The total fair value of the decommissioning funds accumulated at December 31, 2008 was $20,546,842, of which $13,385,638 has been placed in a fund legally restricted for use in decommissioning DAEC . The remaining $7,161,204, while not legally restricted, has been designated by the Cooperative for use in decommissioning DAEC .


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AtDecember31,2009and2008,decommissioninginvestmentswereclassifiedasavailableforsaleandconsistedofthefollowing: Amortized Unrealized Unrealized cost gains losses Fair value 2009: Obligations of U .S . government and agencies $ 1,290,590 39,762 6,274 1,324,078 Corporate bonds 2,582,986 58,508 26,334 2,615,160 Common and preferred stock 11,183,277 2,670,218 558,590 13,294,905 Hedge funds 2,450,000 — 192,731 2,257,269 Cash and cash equivalents 878,853 — — 878,853 Foreign investments – common stock 5,669,124 1,025,366 463,564 6,230,926 Foreign investments – government 833,753 11,422 3,311 841,864 $ 24,888,583 3,805,276 1,250,804 27,443,055 Amortized Unrealized Unrealized cost gains losses Fair value 2008: Obligations of U .S . government and agencies $ 2,317,066 204,853 1,673 2,520,246 Corporate bonds 1,326,801 2,835 50,194 1,279,442 Common and preferred stock 9,649,021 261,851 1,699,470 8,211,402 Hedge funds 2,800,000 — 491,365 2,308,635 Cash and cash equivalents 1,805,665 — — 1,805,665 Foreign investments – common stock 5,233,073 38,429 1,548,893 3,722,609 Foreign investments – government 752,206 — 53,363 698,843 $ 23,883,832 507,968 3,844,958 20,546,842

MaturitiesofdebtsecuritiesclassifiedasavailableforsalewereasfollowsatDecember31,2009: Amortized Fair cost value Due within one year $ 2,356,211 2,357,856 Dueafteroneyearandthroughfiveyears 1,540,437 1,591,622 Dueafterfiveyearsandthroughtenyears 646,325 667,220 Due after ten years 164,356 164,404 Cash and cash equivalents 878,853 878,853 Equity securities 16,852,401 19,525,831 Hedge funds 2,450,000 2,257,269 $ 24,888,583 27,443,055

Realizedgainsandlossesfromtheavailableforsalesecuritiesaredeterminedonaspecific‑identificationbasis.Realizedlossesoninvestments available for sale were $2,217,220 and $5,398,273 for 2009 and 2008, respectively . These losses result in a corresponding increase to the decommissioning regulatory asset .

notes to finAnCiAl

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The following table shows the gross unrealized losses and fair value of the Cooperative’s investments with unrealized losses that are not deemed to be other–than–temporarily impaired, aggregated by investment category and length of time that individual securities have been in a continuous unrealized loss position, at December 31, 2009 .

Less than 12 months 12 months or greater Total

Unrealized Unrealized Unrealized Fair value losses Fair value losses Fair value losses Obligations of U .S . U .S . government and agencies $ 466,014 (5,335 ) 55,864 (939 ) 521,878 (6,274 ) Corporate bonds 888,792 (13,528 ) 474,811 (12,806 ) 1,363,603 (26,334 ) Common and preferred stock 1,762,478 (52,785 ) 2,112,666 (505,805 ) 3,875,144 (558,590 ) Hedge funds 2,257,269 (192,731 ) — — 2,257,269 (192,731 ) Foreign investments – government 72,094 (869 ) 312,946 (2,442 ) 385,040 (3,311 ) Foreign investments – common stock 850,893 (43,864 ) 1,530,076 (419,700 ) 2,380,969 (463,564 ) $ 6,297,540 (309,112 ) 4,486,363 (941,692 ) 10,783,903 (1,250,804 )

In evaluation of other–than–temporary impairment, the Cooperative’s considers its intent and ability to hold these investments for aperiodoftimesufficienttoallowfortheanticipatedrecoveryinthemarketvalueoftheseinvestments,whichmaybematurity,theseverity of the decline, and the length of time and the extent to which fair value has been below cost . The Cooperative does not consider these investments to be other–than–temporarily impaired at December 31, 2009 . Individually, none of the investments that have unrealizedlossesgreaterthan12monthsaresignificanttothefinancialstatements.

(c) nuCleAr fuelThe cost of nuclear fuel is amortized to steam and other power generation expenses based on the quantity of heat produced for the generation of electric energy . Such amortization was $3,428,869 and $2,798,806 for 2009 and 2008, respectively .

(d) other investMentsOther investments consist of funds held in trust (mainly from patronage income), cash held for the Cooperative’s intermediary relending program (see note 8), and common and preferred stock .

(e) inventoriesInventories consist of fuel, primarily coal, and materials and supplies . Cost for materials and supplies inventories are determined on a weighted average basis .

TheCooperativeelectedtochangeitsmethodofvaluingitsfuelinventoriestotheweightedaveragemethodfromthelast‑in,first‑out(LIFO) method . The new method of accounting for inventory was adopted due to the Cooperative’s agreements with Basin Electric (see note 3) as Basin Electric uses weighted average method and the change would be consistent with the Cooperative’s current accounting for its materials and supplies . The change in accounting principle was approved by RUS . A cumulative change in accounting principle wasrecordedasanadjustmenttobeginningequityasofJanuary1,2008for$2,470,043.Theimpactsonnetmarginandcashflowsfor2008 were not recorded as they were not material . Cost for fuel inventories as presented in the balance sheets were determined using the weighted average method .

(f) regulAtory MAttersTheCooperative’sutilityoperationsaresubjecttoprovisionsofAccountingStandardsCodification(ASC)Topic980,Regulated Entities (formerly, SFAS No . 71, Accounting for the Effects of Certain Types of Regulation) . Therefore, its utility operations recognize the effects ofrateregulationbytheBoardofDirectorsand,accordingly,haverecordedregulatedassetsandaliabilitytoreflecttheimpactofregulatory items for which future rates will be increased to recover . The regulatory assets are included within deferred charges and the regulatory liability is included within deferred credit on the balance sheets .



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(g) dAeC regulAtory AssetIn 2008, the Cooperative, with Board of Directors approval, established a regulatory asset in conjunction with the deferral of depreciation costs related to the DAEC until the extension of the plant license has been approved by the NRC (see note 2b) . Once the plant license extension has been approved, the Cooperative will amortize the asset over the remaining life of the license .

(h) deferred refueling CostsThe Cooperative defers extraordinary operation and maintenance expenses incurred during refueling outages of DAEC . DAEC nuclear refueling occurs every two years and occurred in January 2009 . These deferred costs are being amortized to expense based on the expected generation of the next fuel cycle which corresponds with the period the Cooperative is recovering these costs in its rates . Such amortization was $1,546,601 and $1,603,040 for 2009 and 2008, respectively .

(i) dAeC pension regulAtory Asset And pension CostsIn 2007, the Cooperative entered into an agreement with FPL to pay FPL $2,330,000 of pension costs related to DAEC over a 10–year period . The Cooperative has established a regulatory asset in conjunction with the pension costs and amortizes the liability over a 10–year period . Such amortization was $233,000 for 2009 and 2008 .

(j) interest during ConstruCtionInterestduringconstructionrepresentsthecostoffundsusedforconstructionandnuclearfuelrefinement.Theaverageratewas 2.4%and4.9%for2009and2008,respectively,andisbasedontheCooperative’scostsoffinancing.

(k) AgreeMent with webster CityThe Cooperative has a long-term lease agreement with Webster City under which Webster City has agreed to provide certain generation and transmission facilities to the Cooperative . The Cooperative has recorded these assets in electric plant .

The Cooperative continues to operate certain Webster City generation and transmission assets and pay for the operation, maintenance, andcapitaladditionsassociatedwiththoseassets.InDecember2009,theCooperativenotifiedthecityofWebsterCityofitsintenttoterminate the agreement in four years .

(l) inCoMe tAxesThe Cooperative is exempt from federal and state income taxes under Section 501(c)(12) of the Internal Revenue Code . Accordingly, noprovisionforincometaxeshasbeenincludedintheCooperative’sfinancialstatements.

Beginning with the adoption of new guidance in ASC Subtopic 740-10 (formerly, FASB Interpretation No . 48, Accounting for Uncertainty in Income Taxes), as of January 1, 2009, the Cooperative recognizes the effect of income tax positions only if those positions are more likely than not of being sustained . Recognized income tax positions are measured at the largest amount that is greater than 50% likely ofbeingrealized.Changesinrecognitionormeasurementarereflectedintheperiodinwhichthechangeinjudgmentoccurs.

(m) stAteMents of CAsh flowsForthepurposeofreportingcashflows,theCooperativeconsiderstemporarycashinvestmentspurchasedwithamaturityofthreemonths or less to be cash equivalents . Cash paid for interest was $10,544,848 and $10,433,667 for 2009 and 2008, respectively .

(n) operAting revenues And Cost of powerThe Cooperative recognizes sales of electric energy and the related cost of electric energy produced or purchased when energy is delivered to customers .

(o) eMission AllowAnCesThe 1990 Clean Air Act (the Act) established the requirement for fossil fuel electric generating plants to hold sulfur dioxide (SO2) emission allowances . In 2009, the Clean Air Interstate Rule (CAIR) established a similar requirement for nitrous oxide (NOx) annual and seasonal emission allowances . The Act and CAIR allocate a certain number of emission allowances to owners of fossil fuel generating plants and established an SO2, NOx annual and NOx seasonal emission allowance trading programs . Emission allowances that have been granted to the Cooperative as a result of the Act do not have any cost, and therefore, the use of these emission allowances does not result in expense . From time to time, the Cooperative will purchase a quantity of each type of emission allowance to ensure an

notes to finAnCiAl

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adequate number of allowances are held . The purchased allowances are combined with the allocated allowances to derive an average allowance cost each year for each type of emission allowance . Emission allowances purchased are capitalized in inventory and are charged to fuel expense as they are used in operations .

(p) fAir vAlue MeAsureMentsOn January 1, 2008, the Cooperative adopted the provisions included in ASC Topic 820 (formerly, FASB Statement No . 157, Fair Value Measurements and Disclosures),forfairvaluemeasurementsoffinancialassetsandliabilitiesandforfairvaluemeasurementsofnonfinancialitemsthatarerecognizedordisclosedatfairvalueinthefinancialstatementsonarecurringbasis.ASCTopic820definesfair value as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date . ASC Topic 820 also establishes a framework for measuring fair value and expands disclosures about fair value measurements .

OnJanuary1,2009,theCooperativeadoptedtheprovisionsofASCTopic820tofairvaluemeasurementsofnonfinancialassetsandliabilitiesthatarerecognizedordisclosedatfairvalueinthefinancialstatementsonanonrecurringbasis.

(3) AgreeMent with bAsin eleCtriC power CooperAtiveOn September 1, 2009, the Cooperative became a Class A member of Basin Electric Power Cooperative (Basin Electric) . As part of this agreement, energy and capacity needs above the WAPA allocation and a separate 50 MW power purchase agreement with Basin Electric are to be provided by Basin Electric at Class A member rates . Further, the Cooperative sells the energy from its generation facilities at cost to Basin Electric but continues to be responsible for and own those facilities . Also a portion of the 161 kV transmission system that is contiguous with Basin Electric is being leased to Basin Electric . During 2009, as part of these agreements, the Cooperative purchased $23,208,091 of power and sold $22,555,733 of power to Basin Electric, which is recorded net in purchased power, net, in the statement of revenues and expenses .

(4) fAir vAlue MeAsureMents

(a) fAir vAlue of finAnCiAl instruMentsThefollowingtablepresentsthecarryingamountsandestimatedfairvaluesoftheCooperative’sfinancialinstrumentsatDecember31,2009and2008.Thefairvalueofafinancialinstrumentistheamountthatwouldbereceivedtosellanassetorpaidtotransferaliabilityin an orderly transaction between market participants at the measurement date .

2009 2008

Carrying Carrying amount Fair value amount Fair value Financial assets: Cash and cash equivalents $ 7,352,890 7,352,890 2,278,511 2,278,511 Special funds 2,846,624 2,846,624 3,881,100 3,881,100 Member accounts receivable 9,073,926 9,073,926 9,632,254 9,632,254 Other receivables 2,546,691 2,546,691 3,047,917 3,047,917 Investment in the National Rural Utilities Cooperative Finance Corporation 4,587,008 4,587,008 2,561,313 2,561,313 Decommissioning fund 27,443,055 27,443,055 20,546,842 20,546,842 Other investments 9,108,242 9,108,242 4,588,390 4,588,390 Notes receivable 6,198,875 6,198,875 5,589,249 5,589,249 Financial liabilities: Long-term debt $ 204,552,471 209,113,944 180,649,385 177,508,591 Short-term debt 8,000,000 8,000,000 28,000,000 28,000,000 Accounts payable 5,171,998 5,171,998 7,433,455 7,433,455

Accrued liabilities 6,781,909 6,781,909 7,704,719 7,704,719



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The carrying amounts shown in the table are included in the balance sheets under the indicated captions .

ThefairvaluesofthefinancialinstrumentsshownintheabovetableasofDecember31,2009and2008representmanagement’sbestestimates of the amounts that would be received to sell those assets or that would be paid to transfer those liabilities in an orderly transaction between market participants at that date . Those fair value measurements maximize the use of observable inputs . However, in situations where there is little, if any, market activity for the asset or liability at the measurement date, the fair value measurement reflectstheCooperative’sownjudgmentsabouttheassumptionthatmarketparticipantswoulduseinpricingtheassetorliability.Those judgments are developed by the Cooperative based on the best information available in the circumstances .

Thefollowingmethodsandassumptionswereusedtoestimatethefairvalueofeachclassoffinancialinstruments:

Cash and cash equivalents, member accounts receivable, other receivables, special funds, short‑term debt, accounts payable, and accrued liabilities – The carrying amounts, at face value or cost plus accrued interest, approximate fair value because of the short maturity of these instruments .

Investment in the National Rural Utilities Cooperative Finance Corporation, other investments, and notes receivable – These accounts are recorded at cost . The carrying value of these investments approximates fair value as of December 31, 2009 and 2008 due to the nature of the accounts or underlying short–term nature .

Decommissioning Funds –Equitysecuritiesclassifiedasavailableforsalearemeasuredusingquotedmarketpricesatthereportingdatemultipliedbythequantityheld.Debtsecuritiesclassifiedasavailableforsalearemeasuredusingquotedmarketpricesmultipliedby the quantity held when quoted market prices are available . If quoted market prices are not available, the fair values are estimated usingpricingmodels,quotedpricesofsimilarsecuritieswithsimilarcharacteristics,ordiscountedcashflow.Forhedgefundswherenoreadily ascertainable market value exists, management, in consultation with their investment advisors, values these investments in good faithbasedupontheinvestment’scurrentfinancialstatementsorotherinformationprovidedbytheunderlyinginvestmentadvisor.

Long‑term debt – The fair value of the Cooperative’s long-term debt is measured based on the borrowing rates currently available to the Cooperative for debt with similar terms and maturities .

(b) fAir vAlue hierArChyASC Topic 820 establishes a fair value hierarchy that prioritizes the inputs to valuation techniques used to measure fair value . The hierarchy gives the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities (Level 1 measurements)andthelowestprioritytomeasurementsinvolvingsignificantunobservableinputs(Level3measurements). The three levels of the fair value hierarchy are as follows:

Level 1 – inputs are quoted prices (unadjusted) in active markets for identical assets or liabilities that the Cooperative has the ability to access at the measurement date .

Level 2 – inputs are inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly or indirectly .

Level 3 – inputs are unobservable inputs for the asset or liability .

The level in the fair value hierarchy within which a fair value measurement in its entirety falls is based on the lowest level input that is significanttothefairvaluemeasurementinitsentirety.

notes to finAnCiAl

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The following table presents assets and liabilities that are measured at fair value on a recurring basis (including items that are required to be measured at fair value and items for which the fair value option has been elected) at December 31, 2009 and 2008:

Fair value measurements at December 31, 2009 using

Quoted prices inactive Significant marketsfor other Significant identical observable unobservable December 31, assets inputs inputs 2009 (Level 1) (Level 2) (Level 3) Assets: Cash and cash equivalents: Commercial paper $ 7,085,338 7,085,338 — — Decommissioning fund: Obligations of the U .S . and agencies 1,324,078 1,324,078 — — Corporate bonds 2,615,160 — 2,615,160 — Common and preferred stock 13,294,905 13,294,905 — — Hedge funds 2,257,269 — — 2,257,269 Foreign investments – government 841,864 841,864 — — Foreign investments – common stock 6,230,926 6,230,926 — — Cash and cash equivalents 878,853 878,853 — — Total $ 34,528,393 29,655,964 2,615,160 2,257,269 Fair value measurements at December 31, 2008 using

Quoted prices inactive Significant marketsfor other Significant identical observable unobservable December 31, assets inputs inputs 2008 (Level 1) (Level 2) (Level 3) Assets: Cash and cash equivalents: commercial paper $ 1,600,000 1,600,000 — — Decommissioning fund: investment securities 20,546,842 18,238,207 — 2,308,635 Total $ 22,146,842 19,838,207 — 2,308,635



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ThefollowingtablepresentstheCooperative’sactivityforassetsmeasuredatfairvalueonarecurringbasisusingsignificantunobservableinputs(Level3)asdefinedinStatement157fortheyearsendedDecember31,2009and2008:

Balance at December 31, 2008 $ 2,308,635 Sales (265,418 ) Realized loss on sale (84,582 ) Unrealized gains included in other comprehensive income 298,634 Balance at December 31, 2009 $ 2,257,269

Balance at December 31, 2007 $ — Unrealized losses included in other comprehensive income (491,365 ) Purchases 2,800,000 Balance at December 31, 2008 $ 2,308,635

(5) investMent in the nAtionAl rurAl utilities CooperAtive finAnCe CorporAtion (nruCfC),

notes reCeivAble, And other investMentsThe Cooperative has investments in the following: 2009 2008Common and preferred stock $ 205,683 203,880 Funds held in trust 8,075,796 3,676,979 Restricted cash 1,700,279 1,643,522 Investment in NRUCFC 4,587,008 2,561,313 Economic development loans 6,198,875 5,589,249 $ 20,767,641 13,674,943

The above investments are included in the accompanying balance sheets as follows: 2009 2008Investment in NRUCFC $ 4,587,008 2,561,313 Notes receivable 6,198,875 5,589,249 Other investments 9,108,242 4,588,390 Other assets 873,516 935,991 $ 20,767,641 13,674,943

The Cooperative has an investment of $4,587,008 and $2,561,313, at December 31, 2009 and 2008, respectively, with the NRUCFC . This investment is required in order to allow the Cooperative to borrow funds from NRUCFC . The investment earns interest of 7 .5% on $2,000,000, which matures in 2044, 5% on $2,195,507, which matures between 2070 and 2080, 3% on $121,789, which matures in 2025 . The remaining balance of $269,712 does not earn interest .

Notes receivable consist of notes to member cooperatives and other businesses to assist in economic development of qualifying industrial sites, speculative buildings, rural housing, and certain joint venture projects . Interest rates on these notes receivable range from 0% to 7 .65% .

(6) deferred pAtronAge dividends And other equitiesIn accordance with the Iowa Code, the Board of Directors is required to allocate a portion of the current year’s net margin to statutory surplus until the statutory surplus equals 30% of total membership capital . No additions can be made to statutory surplus whenever it exceeds 50% of total membership capital . The Board of Directors appropriated $700,000 of the 2009 and 2008 net margins to statutory surplus .

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The equity designated “reserve for contingent losses” in the statements of membership capital is an appropriation of equity by the Board of Directors . The Board of Directors appropriated $5,124,985 (which included $2,470,043 for the change in accounting method related to inventory and $2,654,942 of current year margin) and $6,805,655 of the 2009 and 2008, respectively, net margin to reserve for contingent losses . There is no statutory restriction of this equity .

The Board of Directors is permitted by the Iowa Code to allocate the current year’s net margin to deferred patronage dividends upon meeting certainrequirementsandisrequiredtomakesuchallocationsifthenetmarginfortheyearexceedsspecifiedmaximums.TheBoardofDirectors has appropriated $3,675,000 and $1,500,000 of the 2009 and 2008 net margins, respectively, to deferred patronage dividends . Deferred patronage dividends are to be paid in the future as determined by the Board of Directors .

Under the conditions of the Cooperative’s mortgages, deferred patronage dividends cannot be retired without approval of the RUS and the NRUCFC unless the remaining equity meets certain tests . The Cooperative did not meet these tests at December 31, 2009 and 2008 .

(7) short‑terM debtIn 2008, the Cooperative entered into a $150,000,000 syndicated unsecured revolving credit facility with NRUCFC, The Bank of Tokyo-Mitsubishi UFJ, LTD, and Lloyds TSB Bank . On October 1, 2009, the Cooperative reduced the unsecured credit facility from $150,000,000 to $75,000,000 . The Cooperative has drawn down on this credit facility $8,000,000 and $28,000,000 as of December 31, 2009 and 2008, respectively . Interest rates for the 2009 advances range from 1 .09% to 1 .14% .

(8) long‑terM debtLong-term debt consists of mortgage notes payable to the United States of America acting through the RUS from the Federal Financing Bank (FFB)notesissuedinconjunctionwiththeissuanceofpollutioncontrolrevenuebonds,NRUCFCfinancing,andnotesborrowedthroughthe USDA Intermediary Relending Program (IRP Notes) and Rural Economic Development Loans and Grants (REDLG loans) Program . The proceeds of these IRP Notes and REDLG loans are then lent to other eligible businesses within certain approved counties in the Cooperative’s service area . Substantially, all the assets, rent, income, revenue, and net margin of the Cooperative are pledged as collateral for the long-term debt of the Cooperative, except for IRP Notes and REDLG loans, which are not secured by assets of the Cooperative . Long-term debt is comprised of: 2009 2008Mortgage notes due in quarterly installments: FFB 2 .563% – 10 .657%, due 2010 – 2039 $ 190,448,582 165,418,389 NRUCFC 4 .575% – 6 .125%, due 2010 – 2020 9,841,145 11,465,159 200,289,727 176,883,548 USDA IRP Notes and REDLG loans, 0% – 1%, due 2010 – 2035 4,262,744 3,765,837 $ 204,552,471 180,649,385

Maturitiesoflong‑termdebtforthenextfiveyearsareasfollows:

Year: 2010 $ 13,738,935 2011 13,873,713 2012 13,603,189 2013 11,160,893 2014 10,670,053 Thereafter 141,505,688 $ 204,552,471

Restrictive covenants required the Cooperative to set rates that would enable it to maintain a times interest earned ratio (TIER) of 1 .05 and a debt service coverage (DSC) of 1 .0 on average in at least two out of every three years . As of December 31, 2009 and 2008, the Cooperative wasincompliancewithitscovenantsonlong‑termdebtwithrespecttofinancialratios.



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During2009,theCooperativeborrowed$35,792,000fromtheFFBtofinancetransmissionandgenerationconstructionwithratesrangingfrom 3 .428% to 3 .970% .

USDA Rural Development requires all IRP & REDLG loans to be fully insured . The Cooperative maintains IRP & REDLG accounts with Bank Iowa . In October 2008, Bank Iowa entered into an agreement with Federal Home Loan Mortgage Corporation and Federal Home Loan Banks pledging $500,000 to each entity totaling $1,000,000 . This was pledged in the form of repurchase agreements to guarantee the IRP & REDLG accounts in case of default . The Cooperative does not incur any expenses related to this agreement as all expenses are paid by Bank Iowa . The maturity date of the agreement is February 23, 2017 for the Federal Home Loan Mortgage Corporation agreement and September 25, 2014 for the Federal Home Loan Banks agreement .

(9) CoMMitMents And ContingenCiesIn 2002, the Cooperative entered into a power purchase agreement to purchase 11 .49% of the monthly generation from the Hancock County Wind EnergyCenterupto11.22megawatts.ThisagreementiseffectivethroughDecember31,2022andratesarefirmforthelifeofthecontract.

In 2007, the Cooperative entered into a power purchase agreement to purchase the monthly generation from Crosswinds Energy, LLC upto21megawatts.ThisagreementiseffectivethroughJune15,2022andratesarefirmforthelifeofthecontract.

A long-term purchased power agreement with Basin began on January 1, 2008 for 50 MW and expires December 31, 2050 .

In 2008, the Cooperative entered into a power purchase agreement to purchase the monthly generation from Iowa Lakes Electric Cooperative’s two wind farms both of which started generating in 2009 . The agreement is effective through December 31, 2011 and can be extended if both parties mutually agree to extend it . Rates are based upon Basin Electric’s Commercial Wind Rate .

(10) Joint plAnt ownershipUnder joint ownership agreements with other utilities, the Cooperative had undivided interests at December 31, 2009 in electric plant, including construction work in progress, as shown below: Total Unit electric Accumulated accredited Cooperative’s plant depreciation capacity (MW) share (%)

Wisdom Unit 2 $ 16,156,626 2,696,084 79 43 .8 %Neal #4 47,789,957 39,399,755 644 11 .3 Walter Scott #3 26,518,181 12,218,914 690 3 .8 DAEC 95,657,907 67,980,067 614 10 .0 Walter Scott #4 65,620,737 5,207,583 804 5 .3 Walter Scott #4 – transmission 4,787,975 508,489 — 3 .9 Lehigh Webster – transmission 2,956,921 1,007,217 — 30 .4 Neal #3 Grimes-Lehigh – transmission 653,694 69,423 — 5 .2

Eachparticipantprovideditsownfinancingforitsshareoftheunit.TheCooperative’sshareofdirectexpensesofthejointlyownedunitsisincluded in the operating and maintenance expenses in the statements of revenues and expenses .

During 1991, the Cooperative; one of its members, North Iowa Municipal Electric Cooperative Association (NIMECA); and the City of Grundy Center, a NIMECA member, entered into a long-term lease agreement for the use by Grundy Center of two megawatts of the Cooperative’s capacity in the Neal #4 generation facilities . The Cooperative will continue to act as the Neal #4 partner on behalf of Grundy Center . The aboveplantstatisticshavebeenreducedtoreflecttheagreement.

During 2006, the Cooperative; one of its members, NIMECA; and the city of Spencer, a NIMECA member, entered into a long-term generation useagreementofapproximatelyfivemegawattsoftheCooperative’scapacityintheWisdomUnit2generationfacilities.Theaboveplantstatisticshavebeenreducedtoreflecttheagreement.

During 2009, the Cooperative had excess transmission capacity in the Walter Scott #4 transmission line, therefore, an agreement was reached whereby the excess was exchanged for additional ownership in Grimes-Lehigh and Lehigh Webster line .

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(11) Asset retireMent obligAtionThe Cooperative has asset retirement obligations (AROs) arising from regulatory requirements to perform certain asset retirement activities at the time of decommissioning DAEC and disposing of certain electric plant . The liability was initially measured at fair value and subsequentlyisadjustedforaccretionexpenseandchangesintheamountortimingoftheestimatedcashflows.Thecorrespondingassetretirement costs are capitalized as part of the carrying amount of the related long–lived asset and depreciated over the asset’s remaining useful life .

The Cooperative recognizes and estimates an ARO for its 10% share of the estimated cost to decommission DAEC . During 2008, a NRC estimate of the decommissioning costs was updated . This report estimated the Cooperative’s share of costs to be approximately $81,464,200 (in 2008 dollars) . Further, during 2008, FPL submitted an application to extend the plant license 20 years (from 2014 to 2034) . The Cooperative anticipates that plant license extension will be approved by the NRC . As a result, in 2008, the Cooperative recognized a change inestimateoftheAROduemainlytothetimingofestimatedcashflowsduetotheextensionoftheplantlicense.ShouldtheNRCnotapprovetheextensionofthelicense,thetimingofthecashflowswillbesignificantlyaffected.ThefollowingtablepresentstheactivityfortheAROsfor the years ended December 31, 2009 and 2008: 2009 2008Balance at January 1 $ 55,017,000 74,200,000 Changes in estimates, including timing — (22,947,00) Accretion expense 3,265,000 3,764,000 Balance at December 31 $ 58,282,000 55,017,000

In2008,theCooperativealsorecognizedtheliabilityforitsshareoftheestimatedcosttoremovetheashlandfillsatWalterScott#3andNeal #4 . A reconciliation of the changes in the asset retirement obligation is depicted below: 2009 2008Balance at January 1 $ 816,456 —Changes in estimates, including timing (24,732) —Accretion expense 39,623 —Obligations incurred — 816,456 Balance at December 31 $ 831,347 816,456

(12) nuCleAr insurAnCe progrAMTheCooperative,undertheprovisionsofthePrice‑AndersonAmendmentsActof1988(the1988Act),hasthebenefitof$11.7billionofpublic liability coverage . The coverage consists of $300,000,000 of insurance and $17 .5 billion of potential retroactive assessments from the owners of each commercial nuclear power plant . Under the 1988 Act, for losses relating to nuclear accidents in excess of $300,000,000, each nuclear reactor may be assessed a maximum of $117,495,000 per nuclear incident, payable in annual installments of not more than $17,500,000 . The Cooperative’s assessment on its 10% ownership in DAEC may be up to $11,749,500 per nuclear incident with a maximum of$1,750,000peryear.Theselimitsaresubjecttoadjustmentsforinflationinfutureyears.Existingnuclearpowerplants,includingDAEC,are covered under the insurance system of the 1988 Act for the remainder of their operating lives .

Pursuant to provisions in various nuclear insurance policies, the Cooperative could be assessed retroactive premiums in connection with future accidents at a nuclear facility owned by a utility participating in the particular insurance plan . In addition, the Cooperative could be assessed annually $3,235,467 related to coverage for excess property damage if the insurer’s losses relating to an accident exceed its reserves . While assessment also may be made for losses in certain prior years, the Cooperative is not aware of any losses in such years that it believes are likely to result in an assessment .

In the unlikely event of a catastrophic loss at DAEC, the amount of insurance available may not be adequate to cover property damage, decontamination, and premature decommissioning . Uninsured losses, to the extent not recovered through rates, would be borne by the CooperativeandcouldhaveamaterialadverseeffectontheCooperative’sfinancialpositionandresultsofoperations.



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(13) benefit plAnsThe Cooperative participates in the National Rural Electric Cooperative Association (NRECA) Retirement & Security Program (the Program) . TheProgramisadefinedbenefitpensionplanqualifiedunderSection401andtaxexemptunderSection501(a)oftheInternalRevenueCode . The Cooperative recorded a total current period service cost to the Program of $1,120,225 and $946,877 for 2009 and 2008, respectively.Inthismultiple‑employerplan,whichisavailabletoallNRECAmembercooperatives,theaccumulatedbenefitsandplanassetsare not determined or allocated separately by individual employer . The Cooperative also provides a 401(k) plan, available to all employees, with the Cooperative matching 40% of the employees’ contributions up to 5% of the employees’ wages . At December 31, 2009 and 2008, the Cooperative contributed $114,105 and $112,785, respectively, to the 401(k) plan .

(14) niMeCA CoMbined trAnsMission systeMIn 1989, the Cooperative and one of its members, NIMECA, entered into a joint transmission agreement that allows several members of NIMECA an individual undivided ownership interest in and access to the Cooperative’s transmission system . The Cooperative will continue to operate and maintain the system . NIMECA members will reimburse the Cooperative for the proportionate share of operating expenses of the system and will contribute proportionately for all future capital additions of the system . The reimbursement of the 2009 and 2008 operating expenses was $670,072 and $668,426, respectively, and was recorded as other operating revenues . Additionally, the Cooperative and NIMECA entered into a capacity sharing agreement that provided for the sharing of generating resources through August 2009 .

(15) CleAn Air ACtTheAct,asamended,madesignificantreductionsintheamountsofSO2andnitrogenoxide(NOx)emissionsallowedonanannualbasisnationwide.TheCooperative’scoal‑firedgeneratingstationsareincompliancewiththestandardsestablishedbyPhaseIandPhaseII of the Act .

On December 23, 2008, the U .S . Court of Appeals for the District of Columbia Circuit reversed its vacatur of the U .S . Environmental ProtectionAgency’s(EPA)CleanAirInterstateRule(CAIR).ThecourthadvacatedCAIRinJuly2008,citingsignificantflawsinEPA’sregulations.CAIRregulatesinterstateemissionsofoxidesinNOxandSO2contributingtononattainmentareasforfineparticulateandozone . CAIR permanently caps emissions of SO2 and NOx in the eastern states . When fully implemented, CAIR will reduce SO2 emissions over 70% and NOx emissions by over 60% from 2003 levels in the states affected .

InadditiontoCAIR,theEPAisworkingtowardmercuryemissionregulations.ItisexpectedthattheCooperative’scoal‑firedfacilitieswillbe affected .

The Cooperative believes that the combination of the costs for the required capital investments, increased operational expenses, and purchaseofemissionallowancesresultingfromthesenewregulationswillbesignificant.

(16) speCiAl funds And deferred CreditIn 2008, the Cooperative set aside $3,858,000 in cash accounts to cover the cost of outage expenses at Neal #4 for 2009 . The outage originally scheduled in 2008 was deferred by the majority owner-operator . Because the Cooperative did not anticipate this outage delay initsfinancialforecastandratemakingcalculationfor2008,theCooperative’sBoardofDirectorsapproveddeferringtherevenue.

In September 2009, the Cooperative became a Class A member of Basin Electric and collected additional revenue over the next four months not anticipated in the beginning of the year . Rate increases were forecasted at the beginning of 2010 therefore the Cooperative’s Board of Directors approved deferring $2,800,000 of revenue . The revenue deferral was set aside in a cash account to cover expenditures in 2010 . RUS requires these deferral plans be set aside in a special fund .

Inaddition,theCooperativesetasidemoneyinaspecialfundtocoverthefutureremovaloftheWisdomUnit1ashlandfill.Thebalance in the fund was $46,624 and $23,100 at the end of 2009 and 2008, respectively .

(17) subsequent eventsTheCooperativehasevaluatedsubsequenteventsfromthebalancesheetdatethroughMarch8,2010,thedateatwhichthefinancialstatements were available to be issued . Effective January 1, 2010, Raccoon Valley Electric Cooperative became a member of the Cooperative after a consolidation of two members cooperatives, Sac County Rural Electric Cooperative and Glidden Rural Electric Cooperative .

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independent Auditors’ report

The Board of Directors Corn Belt Power Cooperative:

We have audited the accompanying balance sheets of Corn Belt Power Cooperative (a cooperative association incorporated in Iowa) as of December 31, 2009 and 2008, and the related statements of revenues and expenses, membership capital, comprehensiveincome,andcashflowsfortheyearsthenended.ThesefinancialstatementsaretheresponsibilityofCornBeltPowerCooperative’smanagement.Ourresponsibilityistoexpressanopiniononthesefinancialstatementsbasedonour audits .

We conducted our audits in accordance with auditing standards generally accepted in the United States of America and the standardsapplicabletofinancialauditscontainedinGovernment Auditing Standards, issued by the Comptroller General of the United States . Those standards require that we plan and perform the audit to obtain reasonable assurance about whetherthefinancialstatementsarefreeofmaterialmisstatement.Anauditincludesconsiderationofinternalcontroloverfinancialreportingasabasisfordesigningauditproceduresthatareappropriateinthecircumstances,butnotforthepurposeofexpressinganopinionontheeffectivenessofCornBeltPowerCooperative’sinternalcontroloverfinancialreporting . Accordingly, we express no such opinion . An audit also includes examining, on a test basis, evidence supporting theamountsanddisclosuresinthefinancialstatements,assessingtheaccountingprinciplesusedandsignificantestimatesmadebymanagement,aswellasevaluatingtheoverallfinancialstatementpresentation.Webelievethatourauditsprovidea reasonable basis for our opinion .

Inouropinion,thefinancialstatementsreferredtoabovepresentfairly,inallmaterialrespects,thefinancialposition ofCornBeltPowerCooperativeasofDecember31,2009and2008,andtheresultsofitsoperationsanditscashflows for the years then ended, in conformity with U .S . generally accepted accounting principles .

Asdiscussedinnote2(e)tothefinancialstatements,CornBeltPowerCooperativehaselectedtochangetheirmethod ofaccountingforfuelinventoryfromthelast‑infirst‑outmethodtotheweightedaveragemethod.

In accordance with Government Auditing Standards, we also have issued a report dated March 8, 2010 on our consideration ofCornBeltPowerCooperative’sinternalcontroloverfinancialreportingandonourtestsofitscompliancewithcertainprovisions of laws, regulations, contracts, and grant agreements and other matters . The purpose of that report is to describe thescopeofourtestingofinternalcontroloverfinancialreportingandcomplianceandtheresultsofthattesting,andnottoprovideanopinionontheinternalcontroloverfinancialreportingoroncompliance.Thatreportisanintegralpartofanaudit performed in accordance with Government Auditing Standards and should be considered in assessing the results of our audit .

/s/ KPMG LLP

Kansas City, Missouri March 8, 2010

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