09 Annual Report Final | Deferred Tax | Pension

2009 Annual Report

Pe r s eve r a n c e . O p p o r t u n i t y. P r o g r e ss .

Overview . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .2 Members . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .4 Chairman’s and President’s Report . . . . . . . . . . . . . . .6 Board of Directors . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .8 Wolverine Management . . . . . . . . . . . . . . . . . . . . . . . .10

Member Management . . . . . . . . . . . . . . . . . . . . . . . . .11 2009 in Review . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .12 Financial Highlights and Comparisons . . . . . . . . . .16 Financial Report . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .18

C o n t e n t s

Below - Ross Crysler (left), operator II, and Charlie Sheldon (right), chief operator, at our Hersey plant. On the cover - Bob Smith, instrumentation & communications technician II.

Perseverance. Opportunity. Progress.
Wolverine Power Cooperative is a generation and transmission electric cooperative headquartered in Cadillac, Michigan. We are owned by and provide wholesale electric service to six members: Cherryland Electric Cooperative Great Lakes Energy HomeWorks Tri-County Electric Cooperative Presque Isle Electric & Gas Co-op Spartan Renewable Energy Wolverine Power Marketing Cooperative Our mission is simple To provide outstanding service to our members by delivering reliable, competitively priced power supply. It drives our day-to-day business and our plans for the future.

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Below - Laurie Millen (left), receptionist, and Debbie Lindquist (right), administrative secretary. Right - Our headquarters in Cadillac.

O v e r v i e w

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Our engineering department’s five-year work plan maps out the projects we will complete on our transmission system to ensure reliable service to our members. competitively priced power to members. We are also increasing our peaking capacity with the purchase of the Sumpter power plant from FirstEnergy Generation Corp. Wolverine owns and operates five power plants primarily used for peaking capacity. with the remaining stationed throughout our service area. We continue to work on a number of initiatives to secure long-term power supply. Our 1. 3 . This new plant acquisition. Our stateof-the-art Energy Control Center monitors generation and transmission functions.Meeting Our Mission Today Wolverine employees work hard to meet the cooperative’s mission of providing reliable. Looking to the Future Wolverine is under contract through 2011 for the majority of the power needed to serve members. Among them are a baseload power plant and wind farm we have proposed for sites near Rogers City. will provide us with an additional 340 megawatts of peaking capacity. Nearly half of our staff works at our headquarters in Cadillac. These facilities are capable of generating 225 megawatts of electricity. set to close in March 2010. Michigan.600-mile transmission system extends throughout the western and northern portions of Michigan’s Lower Peninsula to serve our members.

Portland Presque Isle Electric & Gas Co-op. Boyne City HomeWorks Tri-County Electric Cooperative. Onaway Spartan Renewable Energy. Cadillac M e m b e r s Wolverine Power Marketing Cooperative.Great smiles from our volunteers at a National Cherry Festival parade. Grawn Great Lakes Energy. Cadillac 4 . Cherryland Electric Cooperative.Below .

Wolverine is governed by a Board of Directors comprised of two directors from each of our six members. Ch er and Ele r yl c c tri Great Lakes Energy Presque Isle Electric & Gas Co-op Cherryland Electric Cooperative Great Lakes Energy HomeWorks Tri-County Electric Cooperative Cooperative 5 . Wolverine Power Marketing Cooperative is a retail electric cooperative selling energy to commercial and industrial businesses in the state’s choice market. farms and businesses in 35 counties in Michigan’s Lower Peninsula. Great Lakes Energy.Four of Wolverine’s members – Cherryland Electric Cooperative. Spartan Renewable Energy is a for-profit corporation organized to sell renewable energy and environmental attributes in Michigan’s electric choice programs. HomeWorks TriCounty Electric Cooperative and Presque Isle Electric & Gas Co-op – provide electric service to rural areas of Michigan. These cooperatives serve homes.

7 million grant award from the United States Department of Energy for development of a carbon capture and sequestration demonstration project at the power plant site.and a second peak record was nearly set for the month of June. two new lenders and worked to build relationships with additional lenders. and our information technology department teamed with two of our members to implement a new mobile radio system that greatly improves communication for employees working in the field. opportunity and progress. We expect to finalize our purchase of the plant. Our Energy Control Center recorded a new March peak for transmission members. Despite the poor economy. 6 . Despite no action on the air permit – the most critical permit for the project – our commitment to owning baseload generation remains. We established credit with. including the approval of a harbor expansion permit and our filing with the Michigan Department of Natural Resources and Environment (MDNRE) for the landfill permit. We are buying the facility from FirstEnergy Generation Corp. In closing We advanced the mission of Wolverine Power Cooperative on many fronts in 2009. Opportunity We announced plans to purchase a 340-megawatt peaking plant in Southeast Michigan in December 2009. We expected a decision from the MDNRE on the air quality permit for our WCEV power plant and were disappointed to close the year without one. and we underwent our second North American Electric Reliability Corporation (NERC) compliance audit. We were able to move quickly on this opportunity through close.F r o m t h e C h a i r m a n a n d P r e s i d e n t Three words come to mind when describing Wolverine Power Cooperative in 2009 – perseverance. These words represent the resolve of the Wolverine Board of Directors. We received a $2. with additional grant monies available. Progress is also evident in the work of our plant operators to repair a generator at Vestaburg and bring it back online. and borrowed from.management team and employees to meet the cooperative's mission. our energy sales continue to remain steady due to our members' predominantly residential customer base and diverse commercial load. yet we know there is much more work to be done.and will use it to meet the current and future peaking needs of our members. Perseverance The Wolverine Clean Energy Venture (WCEV) took several steps forward in 2009. Progress We can look throughout Wolverine and find progress in 2009. directors and employees each quarter. A new multi-year labor agreement was ratified by our 45 union employees. We saw a growth in membership for Wolverine Power Marketing Cooperative and commitments from existing members of that cooperative for service into the future. utilizing the time and talents of more than 20 of our employees. We track our work in key performance areas and share a progress report with members. It starts with 60 miles of transmission line upgrades and construction of five distribution and two transmission substations.located in Sumpter Township near Belleville.in the first quarter of 2010. effective communication with our directors and members and because we had taken steps to strengthen our financial position should such an opportunity arise. We hired a new safety director to build on our commitment to employee safety. We welcome 2010 and the opportunities and challenges it will bring.

Baker President & Chief Executive Officer 7 .Dale Farrier Chairman of the Board Eric D.

B o a r d o f D i r e c t o r s Terry Lautner Vice Chairman Cherryland Electric Cooperative Paul Byl Secretary Spartan Renewable Energy Dale Farrier Chairman Great Lakes Energy Allen Barr Presque Isle Electric & Gas Co-op Jack Pope Spartan Renewable Energy Wayne Swiler HomeWorks Tri-County Electric Cooperative 8 .

Jerry Akers Treasurer Wolverine Power Marketing Cooperative John Brown Presque Isle Electric & Gas Co-op Laverne Hansen HomeWorks Tri-County Electric Cooperative Betty Maciejewski Cherryland Electric Cooperative Dick Walsworth Great Lakes Energy Mike McDonald Wolverine Power Marketing Cooperative 9 .

Eric Baker M a n a g e m e n t President & Chief Executive Officer Craig Borr Executive Vice President Janet Kass Chief Financial Officer W o l v e r i n e Craig Borton Vice President Human Resources Pete Chase Vice President Power Supply & Energy Control Dan DeCoeur Vice President Generation Danny Janway Vice President Engineering & Operations Rick Kehl Vice President Accounting & Risk Management Kim Molitor Vice President Rates & Administrative Services Brian Valice 10 Staff Attorney .

M e m b e r M a n a g e m e n t Brian Burns Tony Anderson President & Chief Executive Officer Presque Isle Electric & Gas Co-op Mark Kappler President & Chief Executive Officer HomeWorks Tri-County Electric Cooperative Steve Boeckman President & Chief Executive Officer Great Lakes Energy General Manager Cherryland Electric Cooperative Craig Borr President & Chief Executive Officer Wolverine Power Marketing Cooperative Spartan Renewable Energy 11 .

2 0 0 9 i n R e v i e w 12 .The Harvest Wind Farm. Right .Below .A rendering of the Wolverine Clean Energy Venture power plant.

the site for the proposed power plant. A wind energy research company is assessing the wind speeds. seeing an increase from the previous year in the amount of electricity generated by the project's 32 turbines. continued in 2009. and is the state's first commercial-scale wind farm. planting switchgrass at three sites near Rogers City. Power plant The Michigan Department of Natural Resources and Environment (MDNRE) issued a permit to expand the existing harbor in the Carmeuse Lime & Stone quarry . the farm is capable of meeting the electricity needs of about 15.940 megawatt hours of electricity in 2009 compared to 122. John Deere Wind Energy. When all turbines are operating. A decision on the landfill permit for the plant will be made by the MDNRE in the first quarter of 2010. We continue to await a decision from the MDNRE on the air permit for the power plant. Up to 20 percent of the fuel for the plant could be sustainable biomass. wind directions and temperatures recorded at the site to determine the project's feasibility. Our efforts to grow sustainable biomass crops to fuel the power plant increased in 2009. The United States Department of Energy awarded a $2. Michigan Technological University continued planting and evaluating various tree species. Wind farm We collected weather data at the site of the proposed wind farm throughout the year. Additional grant dollars are available and could be awarded to the CCS project. Michigan. 13 . and Michigan State University joined our biomass team. Michigan. We have a 20-year purchase agreement with Harvest's owner and operator.7 million grant to us for the development of a carbon capture and sequestration (CCS) demonstration project at the power plant site. Harvest Wind Farm We continued purchasing the total output of the Harvest Wind Farm in 2009.000 Michigan homes. Harvest produced 132. Harvest is located near Elkton.254 megawatt hours in 2008.Wolverine Clean Energy Venture Wolverine's development of a power plant and wind farm near Rogers City.

Right .The Lewiston substation.The Sumpter power plant.Pete Winter. 2 0 0 9 i n R e v i e w 14 . Far right . Energy Control Center power coordinator.Below .

We worked with our members on the construction of five distribution substations Lewiston. Two major transmission stations were completed . constructed the plant in 2002. Cherryland. Transmission System and Distribution Substations Substantial investments were made in 2009 to improve system reliability and provide future capacity to serve our members. FirstEnergy Generation Corp. New Era . The Sumpter plant will meet the current and future peaking needs of our members. Interlochen. Members Set New Records for Electric Demand We recorded new peaks for the combined electric demands of Cherryland Electric Cooperative.800 hours per year. A new all-time March peak was reached in March 2009. 15 . Great Lakes. Baseline and Deer Lake.South Boardman . The four members came close to setting a new peak record for the month of June in 2009 as well.Westwood and Gray Road. a new all-time peak for the month of January was recorded. Great Lakes Energy. HomeWorks Tri-County Electric Cooperative and Presque Isle Electric & Gas Co-op. we announced our intent to purchase a 340-megawatt peaking power plant located in Sumpter Township near Belleville. Ohio. The four units at the facility are capable of generating 85 megawatts each and are permitted to operate about 1. In 2010. HomeWorks and Presque Isle continue to have strong electric demands to meet the primarily residential areas they serve.was energized in early 2010. A sixth substation .Sumpter Peaking Plant In December 2009. The Gray Road station provides an interconnection for the transmission systems of four utilities.. Michigan. of Akron. We also made significant improvements to 60 miles of line throughout our transmission system.

9 (1.031.102 236.327.568 2.094.5 2.751.701 1.855 215.829 15.0 (0.4) 1.596.538 11.255 4.75 $ $ $ $ $ $ $ $ $ $ $ 5.034 150.1) Assets Electric Revenue Other Revenue Operating Expense Fuel Purchased Power Other Total Operating Expense Maintenance Expense Depreciation and Amortization Taxes Interest Non-Operating Income (Loss) Total Net Margins PSDF Margins Equity.3 (1.516.588. % of Assets Debt Service Coverage Times Interest Earned Ratio Full-Time Employees at Year End Energy Purchased (MWh) Energy Generated (MWh) Energy Sold to Transmission Members (MWh) Line Loss % Bundled Rate to Transmission Members ($/MWh) $ $ $ 308.313 3.027 14.576.092 4.6) 0.2 16 .020 8.277 14.146.018.5 (23.1) (23.791 202.13 3.358 2.702 13.6 5.937.9) 22.5 3.577.9) (7.0 3.091 4.755.363.82 108 4.4 2. F i n a n c i a l H i g h l i g h t s 2009 a n d 2008 C o m p a r i s o n s % Change 19.347.258.922 3.931.840 50 2.8 66.559.301 242.183.7 69.344 1.12 4.081.141 4.005.765.414.4 26.331 $ $ $ $ $ $ $ $ $ $ $ 4.69 110 4.636 8.770.663 46 2.981.4) (8.496.132 $ $ $ 258.Our Gaylord plant.493 14.504.538.28 (3.1) 3.Right .9 1.4 8.588 5.141.4 8.782 147.507.959 195.853.5 6.968 222.823 17.077 13.507 2.953.

507 Energy Sold to Transmission Members (MWh) 2.000 2.9 0 50 100 150 200 250 17 .000.1 90.9 256.655 112.240.6 250.823 2.000 185.2 195.69 66.0 129.016 147.79 486 490 427 442 0 100 200 300 400 500 0 10 20 30 40 62.568 150.000.368.System Peak Demand for Transmission Members (Megawatts) 451 Bundled Rate to Transmission Members ($/MWh) 61.6 81.081 2.313 2.255.75 50 60 70 80 2005 2006 2007 2008 20097 Energy Generated (MWh) Operating Revenue (Dollars in millions) 170.347.57 66.255 0 1.0 71.28 69.873 119.327.7 239.234 2.2 Outstanding Long-Term Debt (Dollars in millions) 89.

Ed Straathof. F i n a n c i a l s 18 . senior lineman.Below .

March 23. Inc. In our opinion. Our responsibility is to express an opinion on these consolidated financial statements based on our audits. and cash flows for the years then ended. Inc.I n d e p e n d e n t A u d i t o r ’ s R e p o r t To the Board of Directors Wolverine Power Supply Cooperative. Inc. 2010 19 . the consolidated financial statements referred to above present fairly. in all material respects. as of December 31. 2009 and 2008 and the consolidated results of its operations and its cash flows for the years then ended.’s management. These consolidated financial statements are the responsibility of Wolverine Power Supply Cooperative. An audit also includes assessing the accounting principles used and significant estimates made by management. We conducted our audits in accordance with auditing standards generally accepted in the United States of America. Cadillac. An audit includes examining. on a test basis. 2009 and 2008 and the related consolidated statements of operations. the consolidated financial position of Wolverine Power Supply Cooperative. as well as evaluating the overall financial statement presentation. at December 31. Michigan We have audited the accompanying consolidated balance sheet of Wolverine Power Supply Cooperative. Inc. evidence supporting the amounts and disclosures in the financial statements. We believe that our audits provide a reasonable basis for our opinion. Those standards require that we plan and perform the audits to obtain reasonable assurance about whether the financial statements are free of material misstatement. in conformity with accounting principles generally accepted in the United States of America. equities.

At cost (Note 2) In service Construction work in progress Total cost Less accumulated depreciation Net electric plant Power Supply Development Fund Cash and cash equivalents .694 20.Restricted Current Assets Cash and cash equivalents Accounts receivable Material and supplies inventory Deferred tax asset (Note 7) Prepaid expenses and other current assets Total current assets Total assets Equities and Liabilities Equities Memberships Patronage capital Power Supply Development Fund patronage capital (Note 4) Accumulated other comprehensive income (Note 6) Total equities Long-term Debt .646 308.733.859 269.506 22.853.102 $ $ $ 1.393.936 800.600 81.721 21.166 6.301 $ 1.668.024.673 308.450.728 41.467 35.888 309.544 117.438.447 (4.296.936 15.000 36.937 1.895 687.440 34.854.758 68.781 13.659) 143.369 16.856.481.583.392.377 23.600 83.236.Consolidated Balance Sheet 2009 December 31 Assets Electric Plant .043 11.120.553.025.685 9.787 6.372) 129.164 184.414.365.588.741 23.292.077 152.782.146.612.Restricted Investments .601 124.725 358.403.224 14.345.177.376 41.751.804.071 64.064.347.196 52.203.849.561.618.110 (4.139.651 14.629 3.455 890.524.Net of current portion (Note 5) Long-term Deferred Tax Liability (Note 7) Other Long-term Liabilities Accrued pension and postretirement (Note 6) Other liabilities Total other long-term liabilities Current Liabilities Current portion of long-term debt (Note 5) Lines of credit (Note 5) Taxes payable Accounts payable Accrued wages and other liabilities Total current liabilities Total equities and liabilities 2008 $ 290.736.574 23.713 19.437 41.709.202.122 116.010.308.461.470.839 8.338.Restricted Total Power Supply Development Fund (Note 4) Other Assets (Note 4) Investments (Note 3) Cash and Cash Equivalents .000 6.000 1.210.506 41.351.291 1.740 9.188.849.000 8.087 1.941 44.495 60.000 687.405.969.634 258.839 10.871 60.751.326 7.301 $ 259.102 $ $ See Notes to Consolidated Financial Statements.111 258.139.458 511.588.589.150. 20 .

Before income taxes Income Tax Expense (Note 7) Net Margins $ $ See Notes to Consolidated Financial Statements.689 5.937.959 4.5 (0.9 0.320 17. 21 .141.576.0 92.542.9 1.9 0.726.850 2.9 Operating Revenue Operating Expenses Purchased power Power generation: Operation Maintenance Fuel Transmission expense: Operation Maintenance Distribution expense: Operation Maintenance Administrative and general: Operation Maintenance Depreciation and amortization (Note 2) Net (gain) loss on disposition of property Taxes Total operating expenses Operating Margins Before Fixed Charges Fixed Charges .692 238.938 (398.127 17.7 7.7 0.403 12.9 0.8 0.Net Total non-operating margins Net Margins .136 1.837 1.9 1.397 13.538 100.516.423 631.0 1.504.7 0.886.177.3 $ 250.011 796.1 7.7 2.541 887.258.2 5.3 0.936.3 0.366.050 1.2 93.812.964 (222.001.3 (0.292 814.375 4.3 0.961 8.597 1.159 202.902) 3.757.922 (427.829 2.530 53.482.2 1.3 3.743.3 0.400) 13.097.563 7.4 3.812.973.140 1.257 156.981.791 4.6 0.347 558.262.521 747.9 0.3 3.824 195.185 8.Consolidated Statement of Operations Year Ended December 31 2009 2008 Percent of Percent of Operating Operating Amount Revenue Amount Revenue $ 256.961.490 938.309.094.2 6.2) 1.790.2) 5.358 387.3 3.291 551.Interest on debt (Note 5) Operating Margins After Fixed Charges Capital Credits Net Operating Margins Non-operating Margins Interest income Other non-operating income .546 15.612 1.701 12.077 100.7 0.839 4.736.189 19.043.1 0.414.1 0.635 4.2 6.1 0.559.277 1.977.0 77.711 1.2 0.8 1.113 8.0 78.938.9 4.1) 6.8 6.0 (0.254 230.290.330.1 0.3 0.6 1.538.769.6 0.138 460.385.4 5.344 15.887) 17.

December 31.696 (1.372) - 1.287) 13.461.782.414.681 Total $ 116.991) Balance . 2009 Memberships $ 1.251 $ 143.897 - 4.077 (2.071 $ 64.560.600 (1.122 $ 1.741.December 31.405.210.293.365.381) 15.250.470.Consolidated Statement of Equities Power Supply Development Fund Patronage Capital $ 39.871 1.005.432.196 52.659) See Notes to Consolidated Financial Statements.722) 81.804.607 Accumulated Other Comprehensive Income $ (2.600 $ 83.381) 17.853.504.188.230.447 (4.110 $ (4.438. 22 . 2008 Comprehensive income in 2008: Net margins Recognition of post-retirement liability (Note 6) Total comprehensive income Retirement of capital credits in 2008 Balance .840 - (2.287) 13.047.292.600 Patronage Capital $ 79.875 - 11.January 1.663 - (9.498.722) 129.237 - 13. 2008 Comprehensive income in 2009: Net margins Recognition of post-retirement liability (Note 6) Total comprehensive income Balance .538 (9.741.210.

046) (3.413 $ (1.Beginning of year Cash and Cash Equivalents .968 49.283) (20.479.Restricted (Note 4) Total cash and cash equivalents $ Year Ended December 31 2009 2008 $ 256.273.754 37.427.215 (23.213 (226.436) 38.413 $ 511.550.968 $ 6.436) 234.873) (49.390.873) (5.491 6.277 (4.746 $ 248.800 (221.741.963.End of year Cash and Cash Equivalents Cash and cash equivalents Cash and cash equivalents .000.394 37.558.882.000 (11.693 1.850) (6.968 $ $ See Notes to Consolidated Financial Statements.803.937) 70.255.741 42.046.566) 380.724) 8.296.276.592.859.896) 1.691 (2.004.736.468 1.855.390.214 30.602.600.395 1.170.672 49.445 37.273.733.879.574 36.447.427.627 11.568.043.013.793) (3.Consolidated Statement of Cash Flows Cash Flows from Operating Activities Cash received from customers Cash paid to suppliers and employees Taxes paid Capital credits Other income received Interest paid Net cash provided by operating activities Cash Flows from Investing Activities Construction and acquisition of plant Cash paid for other assets Proceeds from fixed asset disposals (Increase) decrease in investments and other assets Net cash used in investing activities Cash Flows from Financing Activities Capital credit retirement payments Net (payments on) proceeds from line of credit Proceeds from long-term debt Principal payments on long-term debt Net cash provided by financing activities Net Increase in Cash and Cash Equivalents Cash and Cash Equivalents .390.318) 857.937 (10. 23 .006 (41.783.850) 22.296.102.722) 20.928) (19.758.536.107) 21.397 (4.105.005.

479.233.538.185.689 (357.127) (446.850 (171.656 (2.935) 315.284.615.045.504.902) (225.358 387.000 (163.074) $ 22.Consolidated Statement of Cash Flows (continued) Year Ended December 31 Reconciliation of Net Margins to Net Cash from Operating Activities Net margins Adjustments to reconcile net margins to net cash from operating activities: Depreciation and amortization Net (gain) loss on disposition of property Capital credits Deferred income taxes (Increase) decrease in assets: Accounts receivable Material and supplies inventory Prepaid expenses and other current assets Increase (decrease) in liabilities: Taxes payable Accounts payable and accrued liabilities Net cash provided by operating activities 2009 2008 $ 13.152) 24.006 See Notes to Consolidated Financial Statements.700 1.151) 78.414.558.538 $ 17.077 8.746 $ 8.787 10. 24 .258.055) (1.480) 21.946) 2.997 (2.922 (427.

Accounts receivable are stated at net invoice amounts.000 retail customers located in the northern and western portions of Michigan’s lower peninsula. An allowance for doubtful accounts is established based on a specific assessment of all invoices that remain unpaid following normal customer payment periods. 2010 and remain under the regulation of the Michigan Public Service Commission for all other areas of regulation. 25 .Notes NOTE 1 . Cherryland Electric Cooperative is member regulated for rates and charges. Accounts receivable from member cooperatives accounted for 91% of total accounts receivable at both December 31. 2009 and 2008. Management has determined that no allowance for doubtful accounts is required at December 31. Accounts Receivable . Great Lakes Energy Cooperative. Inc.The Cooperative considers money market funds and all short-term debt securities with a maturity of three months or less to be cash equivalents. These distribution members purchase both generation and transmission service from Wolverine and resell that power to about 214. billing practices. HomeWorks Tri-County Electric Cooperative will be under member regulation for rates and charges. (the “Cooperative” or “Wolverine”) is a non-profit generation and transmission electric cooperative incorporated in Michigan. Principles of Consolidation . (“Spartan”) and Wolverine Power Marketing Cooperative. are licensed alternative electric suppliers in Michigan. The Cooperative has four traditional cooperative members: Cherryland Electric Cooperative. Revenue from providing wholesale electric service to members comprised 88% and 86% of total revenue in 2009 and 2008. and Presque Isle Electric & Gas Co-op. Forty-two percent of the Cooperative’s employees are covered by a collective bargaining agreement that expires on March 31. HomeWorks Tri-County Electric Cooperative. Inc. The Cooperative’s two other members.NATURE OF OPERATIONS AND SIGNIFICANT ACCOUNTING POLICIES Wolverine Power Supply Cooperative. The Cooperative is subject to a variety of risks due to concentrations of business activity. Cash and Cash Equivalents . which are also located in Michigan. billing practices.The accompanying consolidated financial statements include the accounts of Wolverine and its majority-owned member. All significant intercompany transactions and balances have been eliminated upon consolidation. 2014. Spartan. Spartan Renewable Energy. This service is provided in accordance with the terms of all-requirements power purchase agreements that expire on December 31. Great Lakes Energy Cooperative and Presque Isle Electric & Gas Co-op are regulated by the Michigan Public Service Commission. respectively. and accounting standards after April 7. The Cooperative is regulated by the Federal Energy Regulatory Commission. 2009 and 2008. and accounting standards and remains under the Michigan Public Service Commission for all other areas of regulation. It provides wholesale electric service to its six members. 2050. All amounts deemed to be uncollectible are charged against the allowance for doubtful accounts in the period that such determination is made. The Cooperative’s rates for regulated services are established on a cost recovery basis and are subject to regulatory approval.

Investments in Associated Organizations . adjusted for capital credits earned or retired. Accordingly. Electric Plant and Depreciation .CONTINUED Materials and Supplies Inventory . and accumulated other comprehensive income. and accounts for depreciation and amortization on the straight-line method for specific units.Accounting principles generally require that recognized revenue.The Cooperative’s equity consists of memberships. Patronage capital is the Cooperative’s retained net margins. Power supply development fund patronage capital reflects funds collected from members to obtain future power supply. Equities . Other Comprehensive Income . such as amounts recognized related to defined benefit pension and postretirement benefit plans (gains and losses. The Cooperative recognizes gains and losses on disposal of electric plant assets.Additions to the electric plant with a life expectancy of more than one year are recorded at cost. power supply development fund patronage capital. along with the net income (loss) of those items.The financial statements and related disclosures include evaluation of events up through and including March 23. prior service costs. patronage capital. 26 .Electrical materials and supplies are stated at the lower of average cost or market. which is the date the financial statements were issued. Certain changes in assets and liabilities. and losses be included in net income. expenses. Subsequent Events . Use of Estimates . are components of comprehensive income.Notes NOTE 1 .The carrying values of investments in associated organizations are stated at cost. Such items. 2010. which have been allocated to members based upon their respective power purchases in accordance with the Cooperative’s bylaws and written policies. Memberships are $200 non-refundable investments that are required to become a member of the Cooperative. are reported as a direct adjustment to the equity section of the consolidated balance sheet. gains. actual results could differ from those estimates.The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect certain reported amounts and disclosures in the financial statements. and transition assets or obligations). Accumulated other comprehensive income represents certain amounts recognized related to defined benefit pension plans and postretirement benefit plans as direct adjustments to equity.

355.066 $ 11.189. These securities have specific maturities and some bear interest while others do not.370.730. Hence.077 42.053 115.258.Notes NOTE 2 .988 117.888 309. 2009 and 2008.847 64.347.351. which are CFC-issued securities.888 184.616 2.177.859 152.436. Investments in associated organizations consisted of the following at December 31.35 35 35 3 . 2008 consisted of the following: Cost 82.202.283 119. As of December 31.141.702.102 $ 117.10 - Production Transmission Distribution General Construction in progress Total $ $ $ $ Depreciation and amortization was $8.897 7.750. all of the investments shown on the consolidated balance sheet are investments in other cooperatives.655.343 9.454 48.393 16.785.697.203. These allocated net margins are reflected as patronage capital credits on Wolverine’s balance sheet.087 27 $ .ELECTRIC PLANT AND DEPRECIATION Major classes of electric plant and accumulated depreciation in service as of December 31. NOTE 3 .636 $ 124.992 19.538.437 Depreciable Life (years) 15 .206 76.35 35 35 3 .177.885.164 $ Net Book Value 32.484.601 Accumulated Depreciation $ 52. 2009 and 2008. and investments in other cooperatives.915 15.746.599.845.895 $ 2008 8.321 58.291 14.016. In order to borrow money from CFC.150.358 for the years ended December 31.859 269.433 19. investments for its general account. Wolverine is a member of various other cooperatives that provide goods or services to Wolverine. it allocates its annual net margins to its members.856.499.063.628 19.467 Depreciable Life (years) 15 . Since CFC is a cooperative.955 20.241 9.583.738 99. including Wolverine.256 42.236.077 Net Book Value 33.643 12. 2009 consisted of the following: Production Transmission Distribution General Construction in progress Total $ Cost 85.544 Accumulated Depreciation $ 49. respectively.INVESTMENTS Wolverine has three categories of investments: investments for its Power Supply Development Fund (see Note 4). These investments are classified as investments in associated organizations because Wolverine has a minority ownership interest in each of the cooperatives with which it does business. CFC retires portions of its patronage capital credits from time to time by making cash payments to its members.595.553. 2009 and 2008: CFC unsecured subordinated securities CFC patronage capital credits Other investments in associated organizations Total investment in associated organizations $ 2009 12.417 40.882.059. but is not required to do so. The primary cooperative in which Wolverine has an investment is the National Rural Utilities Cooperative Finance Corporation (“CFC”).140.854.633.171 57.058 13.583.941.552.936. Wolverine is required to be a member of CFC and to purchase capital term certificates.10 - $ $ Major classes of electric plant and accumulated depreciation in service as of December 31.968 2.922 and $8. all of the investments for Wolverine’s Power Supply Development Fund and its general account were invested in cash and marketable securities.790 7.

936 800.210.073 Total PSDF patronage capital $ 64.2009.434) 217. N.864.A. In 2006.615 (6. approximately $7 million of the long- 28 .779) 1. with a maturity date of August 31.95% on December 31.531 Accounts receivable 1.Notes NOTE 4 .043 $ 36.707. the line of credit was increased from $45 million to $75 million.849.292.000 15.299.506 2008 $ 29. 2009.70% to 8. On August 18. both of which mature in 2039.DEBT Lines of Credit Wolverine has an unsecured line of credit with CFC that has a variable interest rate.832 11.137. CFC and the Prudential Capital Group (“Prudential”).641.010.447 NOTE 5 .506 Power Supply Development Fund Investments . Wolverine entered into a $25 million unsecured line of credit with JPMorgan Chase Bank.305. The table below shows the amounts collected under the Power Supply Development Fund charge and the amounts used for planning and development of the power generation plant during 2009 and 2008.840 (6. There were no borrowings outstanding on this line of credit as of December 31.. Long-term Debt As of December 31. Power Supply Development Fund Beginning balance Collected Expended for WCEV Earnings on investments Ending balance 2009 $ 36.0% on December 31. In March 2009. Expenditures on this project have been made in 2006 . 2009. The sole purpose and use of the charge is to accumulate funds to acquire long-term power supply for Wolverine’s distribution members. 2009 and 5.Restricted $ 41. Wolverine had approximately $130 million of long-term debt outstanding from two lenders. Wolverine has two secured notes outstanding with Prudential.936 11. The interest rate is based on LIBOR. they are capitalized in Other Assets on the balance sheet.POWER SUPPLY DEVELOPMENT FUND The Power Supply Development Fund amounts are derived from a 0. 2010. 2012.414 1.849.020.868. and the maturity date was extended to March 6. involving the development of a solid-fuel power generation facility in Michigan. 2008. The majority of Wolverine’s longterm debt has fixed interest rates that range from 4.389 $ 41.5 cents per kilowatt-hour charge to Wolverine’s distribution members.131.936 The table below indicates the accounts on the balance sheet where the Power Supply Development Fund funds are shown: 2009 Power Supply Development Fund Cash and cash equivalents . 2009.10%.438. Wolverine began a project called the Wolverine Clean Energy Venture (“WCEV”). Wolverine has eight secured and three unsecured notes outstanding with CFC with maturities that range from 2012 to 2025.296.110 2008 $ 35.010. 2009. Wolverine has used these funds to plan the development of a baseload power generation plant. There were no borrowings outstanding on this line of credit as of December 31. The variable interest rate is reset by CFC from time to time and was 4.097 $ 52.Restricted Other assets 21.

Most of Wolverine’s long-term debt is secured under an indenture adopted in December 2008 that pledges substantially all of Wolverine’s tangible assets and certain of Wolverine’s intangible assets. 2009. As of December 31. First.221.576. CFC has committed to lend $40 million of long-term debt.455.906. to the trustee under the indenture for the equal benefit of all holders of debt issued thereunder. The remaining amount that Wolverine may borrow under this facility is $130 million.95% as of December 31.898. the Prudential shelf facility was increased to $200 million.017 2015 and thereafter 73.291 2011 13.774. total interest incurred was $4.344 was charged to operations. Effective March 23.589.589.CONTINUED term debt has a variable interest rate that was 4.816 Total $ 129.242 was capitalized and $4. Wolverine entered into two long-term debt shelf agreements under which Wolverine may borrow debt at a time of its choosing at the interest rate offered by the lender on the date of Wolverine’s request. The loan agreements with CFC and Prudential impose two key financial covenants on Wolverine.694 116.10. The indenture has two key financial covenants.146.853. Prudential entered into an uncommitted $125 million shelf facility with Wolverine that terminates on August 4.296.251 2013 8. total interest incurred was $5. Wolverine has not borrowed any funds under the CFC shelf facility. Most of Wolverine’s longterm debt has monthly principal and interest payments.016 The Cooperative follows the policy of capitalizing interest as a component of the cost of plant constructed for its own use. this shelf facility expires on April 9.797 2014 8. The debt service coverage ratio (for long-term debt secured under the indenture) must be equal to or greater than 1.$ 20. Second. Wolverine has borrowed twice under this shelf facility.950.Notes NOTE 5 .758 $ 129. the Cooperative’s debt consisted of the following: Line of credit Current portion of long-term debt Non-current portion of long-term debt Total debt $ 2008 . Wolverine is obligated to set its rates in a manner reasonably expected to achieve a Margins For Interest Ratio (an interest coverage ratio that covers annual interest charges on all debt secured under the indenture. 2011.937 13.308.127 was capitalized and $4. 2011.586. and excludes capitalized interest charges) to be equal to or greater than 1.389 2009 Projected principal payments on long-term debt as of December 31. 2009 are as follows: 2010 $ 13. In 2009. with maturities up to 35 years.835.981. In 2009.0 and equity as a percent of total assets must be equal to or greater than 10%. 2010.725 60. In 2008.915. including its key contracts.701 was charged to operations.297. 29 . of which $854.016 $ 91. distributions of patronage capital are restricted if Wolverine is in default under the indenture or the ratio of equity to combined long-term debt and equity is less than 20%. issuing a total of $70 million of 30-year debt. of which $339.898.828.291 10.844 2012 11.

224.707 Other Postretirement Benefit Plans 2009 2008 $ 1.783 (1.232.212.587 Amounts Recognized on the Balance Sheets Other long-term liabilities Pension Plans 2009 2008 $ 4.PENSION AND POSTRETIREMENT BENEFIT PLANS The Cooperative sponsors two qualified pension plans for employees and one non-qualified deferred compensation plan for directors.971 Prior service cost 1.” The Cooperative provides postretirement healthcare benefits and postretirement life insurance to its employees. The pension plan for non-union employees and the deferred compensation plan for directors are combined in the presentations shown below and are called “pension plans.952 406.346 2.783) N/A 91.104 Transition obligation 147.657 7.949 in 2009 and $156.044.215 $ 1.297 455.195.215 $ 1.215) (1.265.602.075 406.224.212. Obligations. Funded Status.849.595.410.334 $ 10.640 Total AOCI $ 4.006.163 $ 6.875 in 2008 to this plan.217 94.177.683.” These plans are unfunded.707 4. The Cooperative’s contributions to the defined benefit plan are determined by the NRECA.212.451 2.562 112.909 254. The pension plan for union employees is managed by the National Rural Electric Cooperative Association (NRECA) as part of a multi-employer plan.297 30 . Federal laws impose certain contingent liabilities on contributors to multi-employer defined benefit plans.163) (6.063.942 7.442.570 159.171 4.817 $ (4.395.255 172.603 851. and Contributions Projected benefit obligation Fair value of plan assets Funded status at end of year Accumulated benefit obligation Employer contributions Participant contributions Benefits paid Pension Plans 2009 2008 $ 12.952 455.224. In the event of withdrawal from the plan and under certain other conditions. These benefits are combined in the presentations shown below and are called “other postretirement benefit plans.Notes NOTE 6 .373 N/A 103.125 Other Postretirement Benefit Plans 2009 2008 $ 1.125) $ 8.783 Amounts Recognized in Accumulated Other Comprehensive Income (AOCI) Net loss $ 2. The Cooperative contributed $186.696.616 1. a contributor to a multi-employer plan may be liable to the plan in accordance with formulas established by law.483 253.177.849.

and U. Treasuries.991 Equity securities Debt securities Insurance policies Cash and cash equivalents Other Total 31 .008.038 80. The assets of this plan consist of the cash surrender value of the life insurance policies.637. are as follows: Target Allocation 2009 55% 33 7 5 0 100% Percentage of Plan Assets at Year End 2009 2008 56% 39% 29 34 7 12 7 14 1 1 100% 100% Equity securities Debt securities Insurance policies Cash and cash equivalents Other Total The investment strategy for the non-union pension plan is to invest in a diversified portfolio of equity securities. 2009 by major asset categories are as follows: Quoted Prices in Active Markets in Identical Assets (Level 1) $ $ Significant Other Observable Inputs (Level 2) $ 4. For the deferred compensation plan for directors.991 $ 557. the Cooperative buys life insurance policies on the directors.572 476. The fair values of the Cooperative’s pension and post retirement benefit plan assets at December 31.197 $ 6. along with appropriate funding from the Cooperative.072. The asset allocations for the pension plans at the end of 2009 and 2008. and the target allocation for 2009. maintain an asset/liability ratio that is in compliance with all applicable laws and regulations and assures timely payment of retirement benefits.373 2.CONTINUED Pension Assets The goals of the pension plan investment program are to fully fund the obligation to pay retirement benefits in accordance with the plan documents and to provide returns that. debt securities. by asset category. Debt securities include corporate bonds of companies from diversified industries.Notes NOTE 6 .180 Significant Unobservable Inputs (Level 3) $ 557. Equity securities primarily include investments in large-cap and mid-cap companies primarily located in the United States. and cash equivalents with the goal of maximizing the long-term return on plan assets while maintaining a prudent level of risk. mortgage-backed securities.S.

00 2011 8. 2008 to December 31. market activity for the related asset. 32 .00 8. The Cooperative’s assessment of the significance of particular inputs to these fair value measurements requires judgment and considers factors specific to each plan asset. fair value measurements in their entirety are categorized based on the lowest level input that is significant to the valuation.50% 7. Fair values determined by Level 2 inputs use other inputs that are observable.00 2011 The expected return on plan assets represents a weighted average composite rate based on the historical rates of returns of the respective asset classes.Notes NOTE 6 .50% 4. fair values determined by Level 1 inputs use quoted prices in active markets for identical assets that the Plan has the ability to access.00 8. 2009 relate to net purchases. Level 3 inputs are unobservable inputs. 2009. settlements. and changes in the cash surrender value of the life insurance policies. Assumptions 2009 Non-Union pension plan: Discount rate Rate of compensation increase Expected return on plan assets Annual cost increase for health care: Initial Ultimate Year ultimate reached 5. including inputs that are available in situations where there is little. Changes in fair value of level 3 plan assets from December 31.CONTINUED The above table presents information about the pension and postretirement benefit plan assets measured at fair value at December 31. if any.00 2008 5. and the valuation techniques used by the Cooperative to determine those fair values. either directly or indirectly.00% 7.50% 4.00 8. In general. and other inputs that are observable at commonly quoted intervals. In instances where inputs used to measure fair value fall into different levels in the above fair value hierarchy. Significant level 3 inputs include the face value of the insurance policies and discounted cash flow methodologies. These Level 2 inputs include quoted prices for similar assets and liabilities in active markets.

936 574.085 366.540 550.000 3.247 in 2009 and $253.754 10.201 $ 579.126 403.754) (23.805 (10.108 83.057.067.654) 10.917 22.410.654.577 $ 57.014 80.The Cooperative provides non-qualified retirement plans for certain members of its management.971 (167.971) 2. 33 .807 2.867 228.947 $ 2.Notes Components of Net Periodic Cost and Other Comprehensive Income (OCI) Service cost Interest cost Expected return on assets Amortization of prior service costs Amortization of loss Amortization of transition obligation Total net periodic cost Prior service cost (credit) Net loss (gain) emerging Amortization of prior service cost Amortization of net gain Amortization of transition asset Total recognized in OCI Total net periodic cost and OCI Pension Plans 2009 2008 $ 646.385 96.679 (107.532 NOTE 6 .428) (19.867 Other Postretirement Benefit Plans 2009 2008 $ 39.478 91. There was no amount charged to operations related to these plans in 2009 and 2008.278 359.917) (48.159 (381.724 398.519 130.069.100) (22.619) 117.654 1.652 Defined Contribution Plans .The Cooperative contributes to two defined contribution retirement plans.824) 107.184 107.184) (87.150 150.473) (420.000 313.087 $ 1.860 826.151 (28.519) (32. Non-qualified Deferred Compensation Plans .813 19.412 23.184 87. The second plan is a single-employer plan that covers non-union employees and is administered by the Cooperative.000 Other Postretirement Benefit Plans $ 90.819 70. The first plan covers union employees and is administered by the NRECA.656 69. commonly called 401(k) plans.243.273 343.272 94. Wolverine’s contributions to the two plans totaled $276.345) 81.877 in 2008.CONTINUED $ $ Estimated Future Benefit Payments and Contributions Estimated Contributions in 2010 Estimated Future Benefit Payments 2010 2011 2012 2013 2014 2015-2019 Pension Plans $ 725.

A current tax liability or asset is recognized for the estimated payable or refund on tax returns for the year. Spartan has a net operating loss carryforward totaling approximately $26.498.000) 1.003 $ $ State (83.890) $ $ Total (83.000) Total $ (1.847. Deferred tax assets result from recognition of expenses for financial reporting purposes that are not deductible for tax purposes until paid.400) (279. 2006.887) $ $ $ $ $ $ The provision for income tax benefit (expense) is computed by applying the statutory federal income tax rate to income before taxes for Spartan.000 State $ (1.000 State $ (1.003 29.000 38. 34 .568.000) Total $ (1.400) (315.000 $ (108.000) 2008 Total deferred tax liabilities Total deferred tax assets Net deferred tax asset (liability) $ $ Federal 74.000 $ (34. and the statutory Michigan Business Tax rates to income before taxes for both Wolverine and Spartan.Notes NOTE 7 . An income tax benefit represents taxable losses that can be used to offset future taxable income.568. as such.000) 1.890) (108.INCOME TAXES Wolverine is a non-profit corporation generally exempt from income tax under Section 501(c)(12) of the Internal Revenue Code.000) 1.997) (222.400) Total (143. The components of the income tax provision included in the statement of operations are all attributable to continuing operations and are detailed as follows: 2009 Current income tax benefit (expense) Deferred income tax benefit (expense) Total income tax benefit (expense) 2008 Current income tax benefit (expense) Deferred income tax benefit (expense) Total income tax benefit (expense) $ $ Federal (36.000 at December 31.890) (78. The loss carryforwards will begin to expire in 2027. net operating loss carryforwards for Spartan.000 $ (387. Differences from the application of statutory rates result primarily from changes in prior year estimates. Deferred tax liabilities result primarily from future taxability of fixed assets under the Michigan Business Tax for Wolverine. Activities with non-member customers are subject to federal income taxes.000) (36.000) (251.000) Federal 29. Spartan’s federal and state income tax returns are open for potential examination by tax authorities for the years including and subsequent to December 31. Wolverine had no federal income tax liability as of December 31.534.400) State (143. Deferred tax liabilities or assets are recognized for the estimated future tax effects of temporary differences between financial reporting and tax accounting. Spartan is a for-profit corporation and. 2009. The details of the deferred tax assets and liabilities are as follows: 2009 Total deferred tax liabilities Total deferred tax assets Net deferred tax asset (liability) $ $ Federal 38.000) For federal income tax purposes. and future tax benefits obtained through the establishment of the Michigan Business Tax for Wolverine.000) 1.000 $ (349. is subject to both federal and state income taxes. 2009 or 2008.847.000 74.000) (362.460.000) (398.460.

832. 2009.318 2010 3.784. and service needs.613.938.000 4.843 4.260.854 In addition. The table below shows the amounts committed to the significant non-energy contracts: Non-energy Committed Purchases $ 9.638 2012 1.400 2010 2011 2012 35 .664. substantially all of the Cooperative’s projected energy requirements are satisfied under various purchased power contracts.206 2013 576.678 2011 3.803.758 2014 138. The prices under the contracts were at or below market rates when the agreements were entered into.Notes NOTE 8 .755.854 2009 3.758 2015 and thereafter 1. equipment. with the majority of the contracts expiring by the end of 2011. The table below shows the actual megawatt hours of power purchased in the prior two years under these contracts and the megawatt hours that will be purchased in future years: Committed Energy Purchases (MWh) 2008 3.COMMITMENTS AND CONTINGENCIES As of December 31. the Cooperative has entered into agreements for future capacity.713.

000 in 2009 and 2008. NOTE 10 .The fair values of short-term financial instruments. as well as the significant assumptions used to estimate fair values. respectively. investments. the specific financing plan had not been finalized. are as follows: Short-term Financial Instruments . approximate the carrying amounts in the accompanying consolidated financial statements due to the short maturity of such instruments. 36 . The fair value of the Cooperative’s long-term debt at December 31.5 million. The acquisition will significantly increase the size of the Cooperative's net electric plant. 2010. The sale is expected to close on March 31. Fees charged to Spartan were eliminated upon consolidation. 2009 to the Cooperative from CFC and Prudential for loans with similar terms and maturities. accounts receivable. Fees charged to Wolverine Power Marketing Cooperative under its agreement were approximately $395. As of March 23. There is no market or quoted prices for these securities. 2009 was $132.The estimated fair value of the Cooperative’s long-term debt is based on borrowing rates available on December 31. accounts payable. primarily investments in securities issued by CFC (see Note 3).000 and $364. including cash and cash equivalents. and accrued liabilities. Long-term Debt .Notes NOTE 9 . compared to the actual principal outstanding of $129.RELATED PARTY TRANSACTIONS The Cooperative has entered into agreements with both Wolverine Power Marketing Cooperative and Spartan to provide certain management and administrative services. Investments in Associated Organizations . lines of credit. Wolverine and FirstEnergy Generation Corp. ("FirstEnergy") entered into an agreement for Wolverine to purchase FirstEnergy's 340-megawatt Sumpter Power Plant in Belleville.FAIR VALUE OF FINANCIAL INSTRUMENTS A summary of the fair values of financial instruments at December 31. The peaking power plant was built in 2002 and consists of four 85-megawatt natural gas combustion turbines. Michigan. and will be financed primarily with debt. 2010. are assumed to approximate fair value. 2009.9 million.The carrying amounts of Wolverine’s investments in associated organizations. NOTE 11 – SUBSEQUENT EVENTS In March 2010.

as of December 31. March 23. in our opinion. Inc. 2009 and 2008. 2010 37 . Inc.A d d i t i o n a l I n f o r m a t i o n To the Board of Directors Wolverine Power Supply Cooperative. Our audits were made for the purpose of forming an opinion on the consolidated financial statements taken as a whole. Michigan We have audited the consolidated financial statements of Wolverine Power Supply Cooperative. The consolidating information has been subjected to the procedures applied in the audits of the consolidated financial statements and. Cadillac. The accompanying consolidating balance sheet and statement of operations are presented for the purpose of additional analysis of the consolidated financial statements rather than to present the financial position and results of operations of the individual companies and are not required parts of the basic consolidated financial statements. is fairly stated in all material respects in relation to the consolidated financial statements taken as a whole.

470.941 44.940 14. Eliminating Entries Consolidated Totals Electric Plant . 2009 Wolverine Power Supply Cooperative.682.414.751.659) 143.377 (433.000 509.377 (433.188.370 9.849.086) (140.751) (69.651 14.037) 13.470.278.751.849 3.414.086) $ (643.292.301 38 .Consolidating Balance Sheet December 31.961 $ 2.Net of current portion Long-term Debt .673 $ 308.589.864. Spartan Renewable Energy.741 23.166 6.864.291 1.301 Equities (Deficits) Memberships Common stock Patronage capital PSDF patronage capital Accumulated other comprehensive income Total equities (deficits) Long-term Debt .475.347.895 687.393.951) (140.393.403.338.433 436.120.064.326 7.426 529.481.854.Restricted Other Assets Investments Cash and Cash Equivalents .291 1.904.025.203.713 19.120.856.166 19.056 482.685 23.086) $ (643.725 358.Related party Long-term Deferred Tax Liability Other Long-term Liabilities Accrued pension and postretirement Other liabilities Total other long-term liabilities Current Liabilities Current portion of long-term debt Taxes payable Accounts payable Accrued wages and other liabilities Total current liabilities Total equities (deficits) and liabilities 1.177.659) 143.455 890.725 387.740 9.618.292.000) - $ 1.849.961 $ 18.740 827.365.713 19.506 22.338.150.651 14.377 23.308.524.460 $ 308.000 (29.164 184.455.000 6. Inc.000 (75.086) (433.146.866 439.856.400.376 41.000 687.951) - 41.995 116.326 7.646 $ 308.941 44.922) 140.224 14. Inc.122 116.308.629 3.306 308.At cost In service Construction work in progress Total cost ASSETS $ 290.071 64.744 64.781 13.800 $ 83.922) (20.Restricted Current Assets Cash and cash equivalents Accounts receivable Material and supplies inventory Deferred tax asset Prepaid expenses and other current assets Total current assets Total assets EQUITIES (DEFICITS) AND LIABILITIES $ $ 41.718.000) (573.203.000 6.$ 55.601 124.437 $ - $ - $ 290.524.736.110 (4.000) - (200) (55.376 41.000) (14.944 23.299 529.177.600 83.589.347.781 .164 184.037) 6.014.951 - (69.895 687.437 Less accumulated depreciation Net electric plant Power Supply Development Fund Cash and cash equivalents .110 (4.506 22.888 309.025.455 890.601 124.888 309.

804.000 36.574 23.133.859 269.438.000 634.797.699) (594.893 $ 37.386.959.Consolidating Balance Sheet December 31. Inc.583.Net of current portion Long-term Debt .458 396.458 511.450.853.893 $ 672.443.248 16.000) (32.010.516) 35.758 68.At cost In service Construction work in progress Total cost Less accumulated depreciation Net electric plant Power Supply Development Fund Cash and cash equivalents .000 8.461.936 800.236.Restricted Current Assets Cash and cash equivalents Accounts receivable Material and supplies inventory Deferred tax asset Prepaid expenses and other current assets Total current assets EQUITIES (DEFICITS) AND LIABILITIES Total assets ASSETS $ 259.139.839 10.405.561.668.612.202.438.297 595.544 117.553.871 60.694 20.588.196 52.369 16.817) (200.210.440 1.839 10.516) $ 258.668.699) $ (882.588.392.800 $ 81.936 15.817 115.685 9.296.043 11.817) (594.000 8.372) 129.000 (40.699) $ 1. Inc.345.612.088 485.495 60.853.936 15.351.010.902 $ 258.721 21.000) (594. Spartan Renewable Energy.030 (200) (55.544 117.699) (200.461.139.Restricted Total Power Supply Development Fund Other Assets Investments Cash and Cash Equivalents .000 36.993 60.937 1.820 34.709.345.Restricted Investments .440 34.000) (794.937 1.753 6.447 (4.111 $ 258.102 39 .351.868.210.908 672.467 35.600 81.102 Equities (Deficits) Memberships Common stock Patronage capital PSDF patronage capital Accumulated other comprehensive income Total equities (deficits) Long-term Debt .Related party Long-term Deferred Tax Liability Other Long-term Liabilities Current Liabilities Current portion of long-term debt Line of credit Taxes payable Accounts payable Accrued wages and other liabilities Total current liabilities Total equities (deficits) and liabilities $ 1.859 269.560.087 1.424 21.024.077 152.495 60.043 11.733.$ 55.000 (144.447 (4. 2008 Wolverine Power Supply Cooperative. Eliminating Entries Consolidated Totals Electric Plant .634 $ 258.000) 6.933.305) (89.000 1.583.303 .405.969.758 108.617) (87.936 800.685 9.981.787 6.467 $ - $ - $ 259.372) 129.077 152.733 602.728 41.118 52.553.146.202.694 20.305) 200.146.486 23.725 $ (882.725 (87.087 1.969.728 41.296.797.286.782.

140 1.262.347 558.365 2.922 (427.052.140 1.545.Consolidating Statement of Operations Year Ended December 31.064.430) 17.490 938.400) 68.366.538.405.296 202.966 156.347 558.886.185 8.698.769.937.178 4.097.062 (5.721 110.138 460.320 17.902) 3.136 1.684.403 12.490 938.661 12.866 $ 887.783 (42.721 3.543.019 $ (5.902) 3.403 12.516.106 13.791 4.060 17.561) (33.938 (398.839 4.238 $ 5.Before income taxes Income Tax (Expense) Benefit Net Margins 201.791 4.430) 12. 2009 Wolverine Spartan Power Supply Renewable Eliminating Consolidated Cooperative.050 1.153.537) (5.358 137.Interest on debt Operating Margins After Fixed Charges Capital Credits Net Operating Margins Non-operating Margins Interest income Other non-operating income .538.820.113 8.050 1.030.981.310.981.928 (17.098) $ 256.701 12.352.Net Total non-operating margins Net Margins .328.692 238. Inc. Entries Totals $ 255.159 Operating Revenue Operating Expenses Purchased power Power generation: Operation Maintenance Fuel Transmission expense: Operation Maintenance Distribution expense: Operation Maintenance Administrative and general: Operation Maintenance Depreciation and amortization Net loss on disposition of property Taxes Total operating expenses Operating Margins Before Fixed Charges Fixed Charges .397 13.383 $ (12.333 5.289 $ 3.257 156.414.375 4.692 238.430) (12.171.496 814.097.309. Inc.289 (356. Energy.812.922 (427.000) $ 13.866) 107.829 2.812.366.185 8.516.866 30.136 1.780 460.043.262.141.064.025 53.113 8.812.430 17.632.937.292 814.541 895.400) 13.866 17.398 12.183 5.375 4.733 124.538 40 .098) (12.177.330.290.

258.711 1.635 4.360 4.328) (16.099) (62.699.602.019 $ 5.850 2.423 631.202 104.887) 17.961 8.228.977.358 387.597 1.011 796.254 230.617) (37.617 80.689 5. Inc.290.530 53.568.711 1.258.576.077 .715.431.303 110.612 1.576.466 $ (4.882) (4.190) $ 17.011 796.189 19.423 631.627.094.562 4.289) 195.736.542.127 17.850 2.678.521 747.808 86.747.964 (222.546 15.174 1.800.675 $ (16.617) (21.328) 16.542.617) $ 1.981) $ 250.Consolidating Statement of Operations Year Ended December 31.191 59.Interest on debt Operating Margins After Fixed Charges Capital Credits Net Operating Margins Non-operating Margins Interest income Other non-operating income .326.647 17.277 1. Eliminating Entries Consolidated Totals Operating Revenue Operating Expenses Purchased power Power generation: Operation Maintenance Fuel Transmission expense: Operation Maintenance Distribution expense: Operation Maintenance Administrative and general: Operation Maintenance Depreciation and amortization Net loss on disposition of property Taxes Total operating expenses Operating Margins Before Fixed Charges Fixed Charges .989 4.961 8.001.743.947 37.824 195.358 387.324.328 42.973.254 230.612 1.463. 2008 Wolverine Power Supply Cooperative.290.979 19.757.564 (4. Inc.959 4.808 5.936.372 24.050 53.973.743.209 (247.344 15.291 551.339 Spartan Renewable Energy.275 16.001.328) (37.094.961.959 4.726.Before income taxes Income Tax (Expense) Benefit Net Margins $ 4.016 551.877.Net Total non-operating margins Net Margins .981) (16.597 1.837 1.559.563 7.689 5.504.902.563 7.385.328 (37.344 15.546 15.414 747.938. $ 250.790.482.482.

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