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
C o n t e n t s
Member Management . . . . . . . . . . . . . . . . . . . . . . . . .11
2009 in Review . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .12
Financial Highlights and Comparisons . . . . . . . . . .16
Financial Report . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .18
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.

1
 Below - Laurie Millen (left), receptionist,
and Debbie Lindquist (right),
administrative secretary.

Right - Our headquarters in Cadillac.

O v e r v i e w

2
Meeting Our Mission Today
Wolverine employees work hard to meet the coop-
erative’s mission of providing reliable, competi-
tively priced power to members. Nearly half of our
staff works at our headquarters in Cadillac, with the
remaining stationed throughout our service area.
Wolverine owns and operates five power plants pri-
marily used for peaking capacity. These facilities are
capable of generating 225 megawatts of electricity.
Our 1,600-mile transmission system extends through-
out the western and northern portions of Michigan’s
Lower Peninsula to serve our members. Our state-
of-the-art Energy Control Center monitors gen-
eration and transmission functions.
Looking to the Future
Wolverine is under contract through 2011 for the
majority of the power needed to serve members.
We continue to work on a number of initiatives to
secure long-term power supply. Among them are a
baseload power plant and wind farm we have pro-
posed for sites near Rogers City, Michigan.
We are also increasing our peaking capacity with
the purchase of the Sumpter power plant from
FirstEnergy Generation Corp. This new plant acqui-
sition, set to close in March 2010, will provide us
with an additional 340 megawatts of peaking
capacity.
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.
3
 Below - Great smiles from our
volunteers at a National Cherry
Festival parade.
M e m b e r s
Cherryland Electric Cooperative, Grawn
Great Lakes Energy, Boyne City
HomeWorks Tri-County Electric Cooperative, Portland
Presque Isle Electric & Gas Co-op, Onaway
Spartan Renewable Energy, Cadillac
Wolverine Power Marketing Cooperative, Cadillac

4
Four of Wolverine’s members – Cherryland Electric environmental attributes in Michigan’s electric
Cooperative, Great Lakes Energy, HomeWorks Tri- choice programs.
County Electric Cooperative and Presque Isle
Wolverine Power Marketing Cooperative is a retail
Electric & Gas Co-op – provide electric service to
electric cooperative selling energy to commercial
rural areas of Michigan. These cooperatives serve
and industrial businesses in the state’s choice market.
homes, farms and businesses in 35 counties in
Michigan’s Lower Peninsula. Wolverine is governed by a Board of Directors
comprised of two directors from each of our six
Spartan Renewable Energy is a for-profit corpora-
members.
tion organized to sell renewable energy and

and Ele
r yl c
er
tri
Ch

Cooperative

Presque Isle
Electric
& Gas
Great Lakes Co-op
Energy

Cherryland
Electric
Cooperative

Great Lakes Energy

HomeWorks
Tri-County Electric
Cooperative

5
 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, oppor-
tunity and progress. These words represent the resolve of the Wolverine Board of Directors,management team
and employees to meet the cooperative's mission.
Perseverance
The Wolverine Clean Energy Venture (WCEV) took several steps forward in 2009, 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 received a $2.7 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,
with additional grant monies available.
We expected a decision from the MDNRE on the air quality permit for our WCEV power plant and were dis-
appointed to close the year without one.
Despite no action on the air permit – the most critical permit for the project – our commitment to owning
baseload generation remains.
Opportunity
We announced plans to purchase a 340-megawatt peaking plant in Southeast Michigan in December 2009.
We were able to move quickly on this opportunity through close, effective communication with our directors
and members and because we had taken steps to strengthen our financial position should such an opportu-
nity arise.
We expect to finalize our purchase of the plant,located in Sumpter Township near Belleville,in the first quar-
ter of 2010. We are buying the facility from FirstEnergy Generation Corp.and will use it to meet the current and
future peaking needs of our members.
Progress
We can look throughout Wolverine and find progress in 2009. It starts with 60 miles of transmission line up-
grades and construction of five distribution and two transmission substations. Progress is also evident in the
work of our plant operators to repair a generator at Vestaburg and bring it back online.
A new multi-year labor agreement was ratified by our 45 union employees, and we underwent our second
North American Electric Reliability Corporation (NERC) compliance audit, utilizing the time and talents of more
than 20 of our employees.
We established credit with, and borrowed from, two new lenders and worked to build relationships with ad-
ditional lenders. We saw a growth in membership for Wolverine Power Marketing Cooperative and commit-
ments from existing members of that cooperative for service into the future.
Our Energy Control Center recorded a new March peak for transmission members,and a second peak record
was nearly set for the month of June. Despite the poor economy, our energy sales continue to remain steady
due to our members' predominantly residential customer base and diverse commercial load.
We hired a new safety director to build on our commitment to employee safety, and our information tech-
nology department teamed with two of our members to implement a new mobile radio system that greatly im-
proves communication for employees working in the field.
We track our work in key performance areas and share a progress report with members, directors and em-
ployees each quarter.
In closing
We advanced the mission of Wolverine Power Cooperative on many fronts in 2009, yet we know there is
much more work to be done. We welcome 2010 and the opportunities and challenges it will bring.

6
Dale Farrier Eric D. Baker
Chairman of the Board President & Chief Executive Officer

7
 B o a r d o f D i r e c t o r s

Dale Farrier Terry Lautner Paul Byl

Chairman Vice Chairman Secretary

Great Lakes Energy Cherryland Electric Spartan

Cooperative Renewable Energy

Wayne Swiler
Allen Barr Jack Pope
HomeWorks Tri-County
Presque Isle Electric Spartan Electric Cooperative
& Gas Co-op Renewable Energy

8
Jerry Akers John Brown Laverne Hansen

Treasurer Presque Isle Electric HomeWorks Tri-County

& Gas Co-op Electric Cooperative
Wolverine Power
Marketing Cooperative

Betty Maciejewski Dick Walsworth Mike McDonald

Cherryland Electric Great Lakes Energy Wolverine Power

Cooperative Marketing Cooperative

9
M a n a g e m e n t Eric Baker

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 General Manager
Steve Boeckman
Presque Isle Electric Cherryland Electric
President & Chief Cooperative
& Gas Co-op Executive Officer
Craig Borr
Mark Kappler Great Lakes Energy
President & Chief
President & Chief Executive Officer
Executive Officer
Wolverine Power Marketing
HomeWorks Cooperative
Tri-County Electric
Cooperative Spartan Renewable Energy

11
 Below - The Harvest Wind Farm.

Right - A rendering of the Wolverine

Clean Energy Venture power plant.

2 0 0 9 i n R e v i e w

12
Wolverine Clean Energy Venture
Wolverine's development of a power plant and
wind farm near Rogers City, Michigan, continued
in 2009.
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 site for the proposed power
plant. 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.
Our efforts to grow sustainable biomass crops
to fuel the power plant increased in 2009. Up to
20 percent of the fuel for the plant could be
sustainable biomass. Michigan Technological
University continued planting and evaluating
various tree species, and Michigan State University
joined our biomass team, planting switchgrass at
three sites near Rogers City.
The United States Department of Energy
awarded a $2.7 million grant to us for the
development of a carbon capture and
sequestration (CCS) demonstration project at the
power plant site. Additional grant dollars are
available and could be awarded to the CCS
project.
Wind farm
We collected weather data at the site of the
proposed wind farm throughout the year. A wind
energy research company is assessing the wind
speeds, wind directions and temperatures
recorded at the site to determine the project's
feasibility.
Harvest Wind Farm
We continued purchasing the total output of
the Harvest Wind Farm in 2009, seeing an
increase from the previous year in the amount
of electricity generated by the project's
32 turbines.
Harvest produced 132,940 megawatt hours
of electricity in 2009 compared to 122,254
megawatt hours in 2008. When all turbines are
operating, the farm is capable of meeting the
electricity needs of about 15,000 Michigan
homes.
We have a 20-year purchase agreement with
Harvest's owner and operator, John Deere Wind
Energy. Harvest is located near Elkton, Michigan,
and is the state's first commercial-scale wind
farm.
13
 Below - The Sumpter power plant.

Right - The Lewiston substation.

Far right - Pete Winter, Energy Control

Center power coordinator.

2 0 0 9 i n R e v i e w

14
Sumpter Peaking Plant
In December 2009, we announced our intent to
purchase a 340-megawatt peaking power plant
located in Sumpter Township near Belleville,
Michigan. The Sumpter plant will meet the
current and future peaking needs of our members.
FirstEnergy Generation Corp., of Akron, Ohio,
constructed the plant in 2002. The four units at
the facility are capable of generating
85 megawatts each and are permitted to
operate about 1,800 hours per year.
Transmission System and
Distribution Substations
Substantial investments were made in 2009 to
improve system reliability and provide future
capacity to serve our members.
We worked with our members on the
construction of five distribution substations -
Lewiston, Interlochen, New Era , Baseline and Deer
Lake. A sixth substation - South Boardman - was
energized in early 2010.
Two major transmission stations were
completed - Westwood and Gray Road. The Gray
Road station provides an interconnection for the
transmission systems of four utilities.
We also made significant improvements to
60 miles of line throughout our transmission
system.
Members Set New Records for
Electric Demand
We recorded new peaks for the combined electric
demands of Cherryland Electric Cooperative, Great
Lakes Energy, HomeWorks Tri-County Electric
Cooperative and Presque Isle Electric & Gas Co-op.
A new all-time March peak was reached in March
2009. The four members came close to setting a
new peak record for the month of June in 2009 as
well. In 2010, a new all-time peak for the month of
January was recorded.
Cherryland, Great Lakes, HomeWorks and Presque
Isle continue to have strong electric demands to
meet the primarily residential areas they serve.
15
 Right - Our Gaylord plant.

F i n a n c i a l H i g h l i g h t s a n d C o m p a r i s o n s
2009 2008 % Change

Assets $ 308,751,301 $ 258,588,102 19.4

Electric Revenue $ 242,146,027 $ 236,755,493 2.3
Other Revenue $ 14,031,132 $ 14,183,331 (1.1)
Operating Expense
Fuel $ 4,937,791 $ 5,094,959 (3.1)
Purchased Power $ 202,141,829 $ 195,559,277 3.4
Other $ 15,516,968 $ 14,363,855 8.0
Total Operating Expense $ 222,596,588 $ 215,018,091 3.5
Maintenance Expense $ 5,081,020 $ 4,770,636 6.5
Depreciation and Amortization $ 8,538,922 $ 8,258,358 3.4
Taxes $ 3,496,092 $ 2,765,141 26.4
Interest $ 4,981,701 $ 4,576,344 8.9
Non-Operating Income (Loss) $ 1,931,702 $ 1,953,823 (1.1)
Total Net Margins $ 13,414,538 $ 17,504,077 (23.4)
PSDF Margins $ 11,853,663 $ 13,005,840 (8.9)
Equity, % of Assets 46 50 (7.6)
Debt Service Coverage 2.13 2.12 0.5
Times Interest Earned Ratio 3.69 4.82 (23.4)
Full-Time Employees at Year End 110 108 1.9
Energy Purchased (MWh) 4,577,034 4,507,782 1.5
Energy Generated (MWh) 150,507 147,568 2.0
Energy Sold to Transmission Members (MWh) 2,327,255 2,347,313 (0.9)
Line Loss % 4.7 3.8 22.6
Bundled Rate to Transmission Members ($/MWh) 69.75 66.28 5.2

16
System Peak Demand for Transmission Members Bundled Rate to Transmission Members
(Megawatts) ($/MWh)
451 61.79 2005
486 62.69 2006
490 66.57 2007
427 66.28 2008
442 69.75 20097

0 100 200 300 400 500 0 10 20 30 40 50 60 70 80

Energy Generated (MWh) Operating Revenue (Dollars in millions)

170,655 185.2
112,873 195.7
119,016 239.6
147,568 250.9
150,507 256.2
Energy Sold to Transmission Members (MWh) Outstanding Long-Term Debt (Dollars in millions)
2,240,081 89.1
2,255,234 90.6
2,368,823 81.0
2,347,313 71.0
2,327,255 129.9

0 1,000,000 2,000,000 0 50 100 150 200 250

17
 Below - Ed Straathof, senior lineman.

F i n a n c i a l s

18
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.
Cadillac, Michigan

We have audited the accompanying consolidated balance sheet of Wolverine Power Supply Cooperative,
Inc. as of December 31, 2009 and 2008 and the related consolidated statements of operations, equities, and
cash flows for the years then ended. These consolidated financial statements are the responsibility of Wolver-
ine Power Supply Cooperative, Inc.’s management. Our responsibility is to express an opinion on these con-
solidated financial statements based on our audits.
We conducted our audits in accordance with auditing standards generally accepted in the United States
of America. Those standards require that we plan and perform the audits to obtain reasonable assurance
about whether the financial statements are free of material misstatement. An audit includes examining, on
a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also in-
cludes assessing the accounting principles used and significant estimates made by management, as well as
evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis
for our opinion.
In our opinion, the consolidated financial statements referred to above present fairly, in all material re-
spects, the consolidated financial position of Wolverine Power Supply Cooperative, Inc. at December 31, 2009
and 2008 and the consolidated results of its operations and its cash flows for the years then ended, in con-
formity with accounting principles generally accepted in the United States of America.

March 23, 2010

19
 Consolidated Balance Sheet

2009 2008
December 31
Assets

Electric Plant - At cost (Note 2)

In service $ 290,025,713 $ 259,969,685
Construction work in progress 19,177,888 9,583,859
Total cost 309,203,601 269,553,544
Less accumulated depreciation 124,856,164 117,202,077
Net electric plant 184,347,437 152,351,467
Power Supply Development Fund
Cash and cash equivalents - Restricted 41,849,506 35,210,936
Investments - Restricted - 800,000
Total Power Supply Development Fund (Note 4) 41,849,506 36,010,936
Other Assets (Note 4) 22,393,651 15,612,043
Investments (Note 3) 14,854,895 11,236,087
Cash and Cash Equivalents - Restricted 687,166 1,668,458
Current Assets
Cash and cash equivalents 6,736,741 511,574
Accounts receivable 23,064,224 23,024,369
Material and supplies inventory 14,120,740 16,405,440
Deferred tax asset (Note 7) 9,000 34,000
Prepaid expenses and other current assets 687,941 1,733,728
Total current assets 44,618,646 41,709,111
Total assets $ 308,751,301 $ 258,588,102

Equities and Liabilities

Equities
Memberships $ 1,600 $ 1,600
Patronage capital 83,365,071 81,804,196
Power Supply Development
Fund patronage capital (Note 4) 64,292,110 52,438,447
Accumulated other comprehensive income (Note 6) (4,470,659) (4,461,372)
Total equities 143,188,122 129,782,871
Long-term Debt - Net of current portion (Note 5) 116,308,725 60,146,758
Long-term Deferred Tax Liability (Note 7) 358,000 68,000
Other Long-term Liabilities
Accrued pension and postretirement (Note 6) 6,524,455 8,139,839
Other liabilities 890,326 -
Total other long-term liabilities 7,414,781 8,139,839
Current Liabilities
Current portion of long-term debt (Note 5) 13,589,291 10,853,694
Lines of credit (Note 5) - 20,296,937
Taxes payable 1,403,377 1,392,721
Accounts payable 23,150,629 21,561,787
Accrued wages and other liabilities 3,338,376 6,345,495
Total current liabilities 41,481,673 60,450,634
Total equities and liabilities $ 308,751,301 $ 258,588,102

See Notes to Consolidated Financial Statements.

20
Consolidated Statement of Operations

2009 2008
Year Ended December 31

Percent of Percent of
Operating Operating

Operating Revenue
Amount Revenue Amount Revenue
$ 256,177,159 100.0 $ 250,938,824 100.0
Operating Expenses
Purchased power 202,141,829 78.9 195,559,277 77.9
Power generation:
Operation 2,262,050 0.9 1,973,612 0.8
Maintenance 1,516,375 0.6 1,743,689 0.7
Fuel 4,937,791 1.9 5,094,959 2.0
Transmission expense:
Operation 4,366,136 1.7 4,001,711 1.6
Maintenance 1,812,347 0.7 1,482,423 0.6
Distribution expense:
Operation 558,490 0.2 631,011 0.3
Maintenance 938,185 0.4 796,563 0.3
Administrative and general:
Operation 8,330,292 3.3 7,757,521 3.1
Maintenance 814,113 0.3 747,961 0.3
Depreciation and amortization (Note 2) 8,538,922 3.3 8,258,358 3.3
Net (gain) loss on disposition of property (427,902) (0.2) 387,850 0.2
Taxes 3,097,692 1.2 2,542,254 1.0
Total operating expenses 238,886,320 93.2 230,977,189 92.1
Operating Margins Before Fixed Charges 17,290,839 6.8 19,961,635 7.9
Fixed Charges - Interest on debt (Note 5) 4,981,701 1.9 4,576,344 1.8
Operating Margins After Fixed Charges 12,309,138 4.9 15,385,291 6.1
Capital Credits 460,403 0.2 551,546 0.2
Net Operating Margins 12,769,541 5.1 15,936,837 6.3
Non-operating Margins
Interest income 887,257 0.3 1,736,530 0.7
Other non-operating income - Net 156,140 0.1 53,597 -
Total non-operating margins 1,043,397 0.4 1,790,127 0.7
Net Margins - Before income taxes 13,812,938 5.5 17,726,964 7.0
Income Tax Expense (Note 7) (398,400) (0.2) (222,887) (0.1)
Net Margins $ 13,414,538 5.3 $ 17,504,077 6.9

See Notes to Consolidated Financial Statements.

21
 Consolidated Statement of Equities

Power Supply
Development Accumulated
Fund Other
Patronage Patronage Comprehensive
Memberships Capital Capital Income Total

Balance - January 1, 2008 $ 1,600 $ 79,047,681 $ 39,432,607 $ (2,250,991) $ 116,230,897

Comprehensive income in 2008:

Net margins - 4,498,237 13,005,840 - 17,504,077
Recognition of post-retirement liability (Note 6) - - - (2,210,381) (2,210,381)
Total comprehensive income 15,293,696

Retirement of capital credits in 2008 - (1,741,722) - - (1,741,722)

Balance - December 31, 2008 1,600 81,804,196 52,438,447 (4,461,372) 129,782,871

Comprehensive income in 2009:

Net margins - 1,560,875 11,853,663 - 13,414,538
Recognition of post-retirement liability (Note 6) - - - (9,287) (9,287)
Total comprehensive income 13,405,251

Balance - December 31, 2009 $ 1,600 $ 83,365,071 $ 64,292,110 $ (4,470,659) $ 143,188,122

See Notes to Consolidated Financial Statements.

22
Consolidated Statement of Cash Flows

2009 2008
Year Ended December 31

Cash Flows from Operating Activities

Cash received from customers $ 256,013,213 $ 248,427,800
Cash paid to suppliers and employees (226,758,046) (221,447,793)
Taxes paid (3,170,436) (3,046,566)
Capital credits 234,468 380,395
Other income received 1,043,397 1,733,277
Interest paid (4,803,850) (4,568,107)

Net cash provided by operating activities 22,558,746 21,479,006

Cash Flows from Investing Activities

Construction and acquisition of plant (41,005,850) (19,855,873)
Cash paid for other assets (6,783,896) (5,859,318)
Proceeds from fixed asset disposals 1,105,691 857,693
(Increase) decrease in investments and other assets (2,592,873) 1,255,215

Net cash used in investing activities (49,276,928) (23,602,283)

Cash Flows from Financing Activities

Capital credit retirement payments - (1,741,722)
Net (payments on) proceeds from line of credit (20,296,937) 20,296,937
Proceeds from long-term debt 70,000,000 -
Principal payments on long-term debt (11,102,436) (10,004,724)

Net cash provided by financing activities 38,600,627 8,550,491

Net Increase in Cash and Cash Equivalents 11,882,445 6,427,214

Cash and Cash Equivalents - Beginning of year 37,390,968 30,963,754

Cash and Cash Equivalents - End of year $ 49,273,413 $ 37,390,968

Cash and Cash Equivalents

Cash and cash equivalents $ 6,736,741 $ 511,574
Cash and cash equivalents - Restricted (Note 4) 42,536,672 36,879,394

Total cash and cash equivalents $ 49,273,413 $ 37,390,968

See Notes to Consolidated Financial Statements.

23
 Consolidated Statement of Cash Flows (continued)

Year Ended December 31

2009 2008
Reconciliation of Net Margins to Net Cash
from Operating Activities
Net margins $ 13,414,538 $ 17,504,077
Adjustments to reconcile net margins to net cash from
operating activities:
Depreciation and amortization 8,538,922 8,258,358
Net (gain) loss on disposition of property (427,902) 387,850
Capital credits (225,935) (171,151)
Deferred income taxes 315,000 78,997
(Increase) decrease in assets:
Accounts receivable (163,946) (2,185,055)
Material and supplies inventory 2,284,700 (1,615,152)
Prepaid expenses and other current assets 1,045,787 24,689
Increase (decrease) in liabilities:
Taxes payable 10,656 (357,127)
Accounts payable and accrued liabilities (2,233,074) (446,480)

Net cash provided by operating activities $ 22,558,746 $ 21,479,006

See Notes to Consolidated Financial Statements.

24
Notes

NOTE 1 - NATURE OF OPERATIONS AND SIGNIFICANT ACCOUNTING POLICIES

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

25
 Notes

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

26
Notes

NOTE 2 - ELECTRIC PLANT AND DEPRECIATION

Major classes of electric plant and accumulated depreciation in service as of December 31, 2009
consisted of the following:
Accumulated Net Book Depreciable
Cost Depreciation Value Life (years)
Production $ 85,484,283 $ 52,885,077 $ 32,599,206 15 - 35
Transmission 119,140,847 42,355,393 76,785,454 35
Distribution 64,702,955 16,552,058 48,150,897 35
General 20,697,628 13,063,636 7,633,992 3 - 10
Construction in progress 19,177,888 - 19,177,888 -
Total $ 309,203,601 $ 124,856,164 $ 184,347,437

Major classes of electric plant and accumulated depreciation in service as of December 31, 2008
consisted of the following:
Accumulated Net Book Depreciable
Cost Depreciation Value Life (years)
Production $ 82,746,738 $ 49,016,417 $ 33,730,321 15 - 35
Transmission 99,436,171 40,936,915 58,499,256 35
Distribution 57,845,433 15,189,643 42,655,790 35
General 19,941,343 12,059,102 7,882,241 3 - 10
Construction in progress 9,583,859 - 9,583,859 -
Total $ 269,553,544 $ 117,202,077 $ 152,351,467

Depreciation and amortization was $8,538,922 and $8,258,358 for the years ended December 31,
2009 and 2008, respectively.

NOTE 3 - INVESTMENTS
Wolverine has three categories of investments: investments for its Power Supply Development Fund (see
Note 4), investments for its general account, and investments in other cooperatives. As of December 31,
2009 and 2008, all of the investments for Wolverine’s Power Supply Development Fund and its general ac-
count were invested in cash and marketable securities. Hence, all of the investments shown on the con-
solidated balance sheet are investments in other cooperatives. 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.
The primary cooperative in which Wolverine has an investment is the National Rural Utilities Cooperative
Finance Corporation (“CFC”). In order to borrow money from CFC, Wolverine is required to be a member
of CFC and to purchase capital term certificates, which are CFC-issued securities. These securities have
specific maturities and some bear interest while others do not.
Since CFC is a cooperative, it allocates its annual net margins to its members, including Wolverine. These
allocated net margins are reflected as patronage capital credits on Wolverine’s balance sheet. CFC retires
portions of its patronage capital credits from time to time by making cash payments to its members, but
is not required to do so.
Wolverine is a member of various other cooperatives that provide goods or services to Wolverine.
Investments in associated organizations consisted of the following at December 31, 2009 and 2008:
2009 2008
CFC unsecured subordinated securities $ 12,141,616 $ 8,750,968
CFC patronage capital credits 2,595,988 2,370,053
Other investments in associated organizations 117,291 115,066
Total investment in associated organizations $ 14,854,895 $ 11,236,087

27
 Notes

NOTE 4 - POWER SUPPLY DEVELOPMENT FUND

The Power Supply Development Fund amounts are derived from a 0.5 cents per kilowatt-hour charge to
Wolverine’s distribution members. The sole purpose and use of the charge is to accumulate funds to ac-
quire long-term power supply for Wolverine’s distribution members.
Wolverine has used these funds to plan the development of a baseload power generation plant. In 2006,
Wolverine began a project called the Wolverine Clean Energy Venture (“WCEV”), involving the develop-
ment of a solid-fuel power generation facility in Michigan. Expenditures on this project have been made
in 2006 - 2009; they are capitalized in Other Assets on the balance sheet.
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.

Power Supply Development Fund 2009 2008

Beginning balance $ 36,010,936 $ 29,868,832
Collected 11,641,615 11,707,840
Expended for WCEV (6,020,434) (6,864,779)
Earnings on investments 217,389 1,299,043
Ending balance $ 41,849,506 $ 36,010,936

The table below indicates the accounts on the balance sheet where the Power Supply Development Fund
funds are shown:
2009 2008
Power Supply Development Fund -
Cash and cash equivalents - Restricted $ 41,849,506 $ 35,210,936
Power Supply Development Fund -
Investments - Restricted - 800,000
Other assets 21,305,531 15,296,414
Accounts receivable 1,137,073 1,131,097
Total PSDF patronage capital $ 64,292,110 $ 52,438,447

NOTE 5 - DEBT
Lines of Credit
Wolverine has an unsecured line of credit with CFC that has a variable interest rate. The variable interest
rate is reset by CFC from time to time and was 4.95% on December 31, 2009 and 5.0% on December 31,
2008. In March 2009, the line of credit was increased from $45 million to $75 million, and the maturity date
was extended to March 6, 2012. There were no borrowings outstanding on this line of credit as of De-
cember 31, 2009.
On August 18, 2009, Wolverine entered into a $25 million unsecured line of credit with JPMorgan Chase
Bank, N.A., with a maturity date of August 31, 2010. The interest rate is based on LIBOR. There were no
borrowings outstanding on this line of credit as of December 31, 2009.
Long-term Debt
As of December 31, 2009, Wolverine had approximately $130 million of long-term debt outstanding from
two lenders, CFC and the Prudential Capital Group (“Prudential”). Wolverine has eight secured and three
unsecured notes outstanding with CFC with maturities that range from 2012 to 2025. Wolverine has two
secured notes outstanding with Prudential, both of which mature in 2039. The majority of Wolverine’s long-
term debt has fixed interest rates that range from 4.70% to 8.10%; approximately $7 million of the long-

28
Notes

NOTE 5 - CONTINUED

term debt has a variable interest rate that was 4.95% as of December 31, 2009. Most of Wolverine’s long-
term debt has monthly principal and interest payments.
In 2009, 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.
CFC has committed to lend $40 million of long-term debt, with maturities up to 35 years; this shelf facility
expires on April 9, 2011. Wolverine has not borrowed any funds under the CFC shelf facility. Prudential en-
tered into an uncommitted $125 million shelf facility with Wolverine that terminates on August 4, 2011.
Wolverine has borrowed twice under this shelf facility, issuing a total of $70 million of 30-year debt. Effec-
tive March 23, 2010, the Prudential shelf facility was increased to $200 million. The remaining amount that
Wolverine may borrow under this facility is $130 million.
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, including its key
contracts, to the trustee under the indenture for the equal benefit of all holders of debt issued thereunder.
The indenture has two key financial covenants. First, Wolverine is obligated to set its rates in a manner rea-
sonably expected to achieve a Margins For Interest Ratio (an interest coverage ratio that covers annual
interest charges on all debt secured under the indenture, and excludes capitalized interest charges) to be
equal to or greater than 1.10. Second, distributions of patronage capital are restricted if Wolverine is in de-
fault under the indenture or the ratio of equity to combined long-term debt and equity is less than 20%.
The loan agreements with CFC and Prudential impose two key financial covenants on Wolverine. The debt
service coverage ratio (for long-term debt secured under the indenture) must be equal to or greater than
1.0 and equity as a percent of total assets must be equal to or greater than 10%.
As of December 31, the Cooperative’s debt consisted of the following:
2009 2008
Line of credit $ - $ 20,296,937
Current portion of long-term debt 13,589,291 10,853,694
Non-current portion of long-term debt 116,308,725 60,146,758
Total debt $ 129,898,016 $ 91,297,389

Projected principal payments on long-term debt as of December 31, 2009 are as follows:

2010 $ 13,589,291
2011 13,950,844
2012 11,455,251
2013 8,774,797
2014 8,906,017
2015 and thereafter 73,221,816
Total $ 129,898,016

The Cooperative follows the policy of capitalizing interest as a component of the cost of plant constructed
for its own use. In 2009, total interest incurred was $5,835,828, of which $854,127 was capitalized and
$4,981,701 was charged to operations. In 2008, total interest incurred was $4,915,586, of which $339,242
was capitalized and $4,576,344 was charged to operations.

29
 Notes

NOTE 6 - PENSION AND POSTRETIREMENT BENEFIT PLANS

The Cooperative sponsors two qualified pension plans for employees and one non-qualified deferred
compensation plan for directors. The pension plan for union employees is managed by the National Rural
Electric Cooperative Association (NRECA) as part of a multi-employer plan. The Cooperative contributed
$186,949 in 2009 and $156,875 in 2008 to this plan. The Cooperative’s contributions to the defined ben-
efit plan are determined by the NRECA. Federal laws impose certain contingent liabilities on contributors
to multi-employer defined benefit plans. In the event of withdrawal from the plan and under certain other
conditions, a contributor to a multi-employer plan may be liable to the plan in accordance with formulas
established by law. 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.”
The Cooperative provides postretirement healthcare benefits and postretirement life insurance to its
employees. These benefits are combined in the presentations shown below and are called “other post-
retirement benefit plans.” These plans are unfunded.

Obligations, Funded Status, and Contributions

Pension Plans Other Postretirement Benefit Plans
2009 2008 2009 2008
Projected benefit obligation $ 12,044,334 $ 10,442,942 $ 1,212,215 $ 1,224,783
Fair value of plan assets 7,195,171 4,265,817 - -
Funded status at end of year $ (4,849,163) (6,177,125) (1,212,215) (1,224,783)

Accumulated benefit obligation $ 8,602,346 7,696,603 N/A N/A

Employer contributions 2,395,909 851,483 91,570 103,255

Participant contributions - - 159,217 172,562
Benefits paid 254,657 253,707 94,373 112,587

Amounts Recognized on the Balance Sheets

Pension Plans Other Postretirement Benefit Plans
2009 2008 2009 2008
Other long-term liabilities $ 4,849,163 $ 6,177,125 $ 1,212,215 $ 1,224,783

Amounts Recognized in Accumulated Other Comprehensive Income (AOCI)

Net loss $ 2,683,451 2,410,971 406,952 455,297
Prior service cost 1,232,616 1,595,104 - -
Transition obligation 147,640 - - -
Total AOCI $ 4,063,707 4,006,075 406,952 455,297

30
Notes

NOTE 6 - CONTINUED
Pension Assets
The goals of the pension plan investment program are to fully fund the obligation to pay retirement bene-
fits in accordance with the plan documents and to provide returns that, along with appropriate funding from
the Cooperative, maintain an asset/liability ratio that is in compliance with all applicable laws and regula-
tions and assures timely payment of retirement benefits.
The asset allocations for the pension plans at the end of 2009 and 2008, and the target allocation for 2009,
by asset category, are as follows:

Target Percentage of Plan

Allocation Assets at Year End
2009 2009 2008
Equity securities 55% 56% 39%
Debt securities 33 29 34
Insurance policies 7 7 12
Cash and cash equivalents 5 7 14
Other 0 1 1
Total 100% 100% 100%

The investment strategy for the non-union pension plan is to invest in a diversified portfolio of equity
securities, debt securities, and cash equivalents with the goal of maximizing the long-term return on plan
assets while maintaining a prudent level of risk. For the deferred compensation plan for directors, the Co-
operative buys life insurance policies on the directors. The assets of this plan consist of the cash surrender
value of the life insurance policies.
Equity securities primarily include investments in large-cap and mid-cap companies primarily located in
the United States. Debt securities include corporate bonds of companies from diversified industries, mort-
gage-backed securities, and U.S. Treasuries.
The fair values of the Cooperative’s pension and post retirement benefit plan assets at December 31, 2009
by major asset categories are as follows:
Quoted Prices in
Active Markets in Significant Other Significant
Identical Assets Observable Inputs Unobservable Inputs
(Level 1) (Level 2) (Level 3)
Equity securities $ - $ 4,008,373 $ -
Debt securities - 2,072,572 -
Insurance policies - - 557,991
Cash and cash equivalents - 476,038 -
Other - 80,197 -
Total $ - $ 6,637,180 $ 557,991

31
 Notes

NOTE 6 - CONTINUED

The above table presents information about the pension and postretirement benefit plan assets meas-
ured at fair value at December 31, 2009, and the valuation techniques used by the Cooperative to deter-
mine those fair values.
In general, fair values determined by Level 1 inputs use quoted prices in active markets for identical
assets that the Plan has the ability to access.
Fair values determined by Level 2 inputs use other inputs that are observable, either directly or indirectly.
These Level 2 inputs include quoted prices for similar assets and liabilities in active markets, and other
inputs that are observable at commonly quoted intervals.
Level 3 inputs are unobservable inputs, including inputs that are available in situations where there is
little, if any, market activity for the related asset. Significant level 3 inputs include the face value of the
insurance policies and discounted cash flow methodologies. Changes in fair value of level 3 plan assets
from December 31, 2008 to December 31, 2009 relate to net purchases, settlements, and changes in the
cash surrender value of the life insurance policies.
In instances where inputs used to measure fair value fall into different levels in the above fair value hierar-
chy, fair value measurements in their entirety are categorized based on the lowest level input that is
significant to the valuation. 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.

Assumptions
2009 2008
Non-Union pension plan:
Discount rate 5.50% 5.50%
Rate of compensation increase 4.00 4.00
Expected return on plan assets 8.00 8.00

Annual cost increase for health care:

Initial 8.00% 8.50%
Ultimate 7.00 7.00
Year ultimate reached 2011 2011

The expected return on plan assets represents a weighted average composite rate based on the his-
torical rates of returns of the respective asset classes.

32
Notes

NOTE 6 - CONTINUED

Components of Net Periodic Cost and Other Comprehensive Income (OCI)

Pension Plans Other Postretirement Benefit Plans
2009 2008 2009 2008
Service cost $ 646,201 $ 579,936 $ 39,577 $ 57,819
Interest cost 574,540 550,159 70,656 69,813
Expected return on assets (381,473) (420,824) - -
Amortization of prior service costs 107,184 107,184 - -
Amortization of loss 87,754 10,412 19,917 22,519
Amortization of transition obligation 23,654 - - -
Total net periodic cost 1,057,860 826,867 130,150 150,151

Prior service cost (credit) - - - -

Net loss (gain) emerging 228,679 2,410,971 (28,428) (10,100)
Amortization of prior service cost (107,184) (167,971) - -
Amortization of net gain (87,754) - (19,917) (22,519)
Amortization of transition asset (23,654) - - -
Total recognized in OCI 10,087 2,243,000 (48,345) (32,619)
Total net periodic cost and OCI $ 1,067,947 $ 3,069,867 $ 81,805 $ 117,532

Estimated Future Benefit Payments and Contributions

Other Postretirement
Pension Plans Benefit Plans
Estimated Contributions in 2010 $ 725,000 $ 90,000

Estimated Future Benefit Payments

2010 313,273 96,272
2011 343,278 94,478
2012 359,724 91,108
2013 398,126 83,014
2014 403,807 80,085
2015-2019 2,654,385 366,652

Defined Contribution Plans - The Cooperative contributes to two defined contribution retirement plans,
commonly called 401(k) plans. The first plan covers union employees and is administered by the NRECA.
The second plan is a single-employer plan that covers non-union employees and is administered by the
Cooperative. Wolverine’s contributions to the two plans totaled $276,247 in 2009 and $253,877 in 2008.
Non-qualified Deferred Compensation Plans - The Cooperative provides non-qualified retirement plans
for certain members of its management. There was no amount charged to operations related to these
plans in 2009 and 2008.

33
 Notes

NOTE 7 - INCOME TAXES

Wolverine is a non-profit corporation generally exempt from income tax under Section 501(c)(12) of the
Internal Revenue Code. Activities with non-member customers are subject to federal income taxes. Wolver-
ine had no federal income tax liability as of December 31, 2009 or 2008.
Spartan is a for-profit corporation and, as such, is subject to both federal and state income taxes. Spar-
tan’s federal and state income tax returns are open for potential examination by tax authorities for the years
including and subsequent to December 31, 2006.
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 Federal State Total
Current income tax benefit (expense) $ - $ (83,400) $ (83,400)
Deferred income tax benefit (expense) (36,000) (279,000) (315,000)
Total income tax benefit (expense) $ (36,000) $ (362,400) $ (398,400)

2008 Federal State Total

Current income tax benefit (expense) $ - $ (143,890) $ (143,890)
Deferred income tax benefit (expense) 29,003 (108,000) (78,997)
Total income tax benefit (expense) $ 29,003 $ (251,890) $ (222,887)

The provision for income tax benefit (expense) is computed by applying the statutory federal income tax
rate to income before taxes for Spartan, and the statutory Michigan Business Tax rates to income before
taxes for both Wolverine and Spartan. An income tax benefit represents taxable losses that can be used
to offset future taxable income. Differences from the application of statutory rates result primarily from
changes in prior year estimates.
A current tax liability or asset is recognized for the estimated payable or refund on tax returns for the year.
Deferred tax liabilities or assets are recognized for the estimated future tax effects of temporary differ-
ences between financial reporting and tax accounting. Deferred tax liabilities result primarily from future
taxability of fixed assets under the Michigan Business Tax for Wolverine. Deferred tax assets result from
recognition of expenses for financial reporting purposes that are not deductible for tax purposes until paid,
net operating loss carryforwards for Spartan, and future tax benefits obtained through the establishment
of the Michigan Business Tax for Wolverine.
The details of the deferred tax assets and liabilities are as follows:
2009 Federal State Total
Total deferred tax liabilities $ - $ (1,847,000) $ (1,847,000)
Total deferred tax assets 38,000 1,460,000 1,498,000
Net deferred tax asset (liability) $ 38,000 $ (387,000) $ (349,000)

2008 Federal State Total

Total deferred tax liabilities $ - $ (1,568,000) $ (1,568,000)
Total deferred tax assets 74,000 1,460,000 1,534,000
Net deferred tax asset (liability) $ 74,000 $ (108,000) $ (34,000)

For federal income tax purposes, Spartan has a net operating loss carryforward totaling approximately
$26,000 at December 31, 2009. The loss carryforwards will begin to expire in 2027.

34
Notes

NOTE 8 - COMMITMENTS AND CONTINGENCIES

As of December 31, 2009, substantially all of the Cooperative’s projected energy requirements are satis-
fied under various purchased power contracts, with the majority of the contracts expiring by the end of
2011. The prices under the contracts were at or below market rates when the agreements were entered
into. 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 3,613,854
2009 3,713,318
2010 3,938,678
2011 3,784,638
2012 1,755,206
2013 576,758
2014 138,758
2015 and thereafter 1,803,854

In addition, the Cooperative has entered into agreements for future capacity, equipment, and service
needs. The table below shows the amounts committed to the significant non-energy contracts:

Non-energy
Committed Purchases
2010 $ 9,664,843
2011 4,260,000
2012 4,832,400

35
 Notes

NOTE 9 - RELATED PARTY TRANSACTIONS

The Cooperative has entered into agreements with both Wolverine Power Marketing Cooperative and
Spartan to provide certain management and administrative services. Fees charged to Wolverine Power
Marketing Cooperative under its agreement were approximately $395,000 and $364,000 in 2009 and
2008, respectively. Fees charged to Spartan were eliminated upon consolidation.

NOTE 10 - FAIR VALUE OF FINANCIAL INSTRUMENTS

A summary of the fair values of financial instruments at December 31, 2009, as well as the significant as-
sumptions used to estimate fair values, are as follows:
Short-term Financial Instruments - The fair values of short-term financial instruments, including cash and
cash equivalents, investments, accounts receivable, lines of credit, accounts payable, and accrued lia-
bilities, approximate the carrying amounts in the accompanying consolidated financial statements due to
the short maturity of such instruments.
Investments in Associated Organizations - The carrying amounts of Wolverine’s investments in associ-
ated organizations, primarily investments in securities issued by CFC (see Note 3), are assumed to ap-
proximate fair value. There is no market or quoted prices for these securities.
Long-term Debt - The estimated fair value of the Cooperative’s long-term debt is based on borrowing
rates available on December 31, 2009 to the Cooperative from CFC and Prudential for loans with similar
terms and maturities. The fair value of the Cooperative’s long-term debt at December 31, 2009 was $132.5
million, compared to the actual principal outstanding of $129.9 million.

NOTE 11 – SUBSEQUENT EVENTS

In March 2010, Wolverine and FirstEnergy Generation Corp. ("FirstEnergy") entered into an agreement for
Wolverine to purchase FirstEnergy's 340-megawatt Sumpter Power Plant in Belleville, Michigan. The peak-
ing power plant was built in 2002 and consists of four 85-megawatt natural gas combustion turbines. The
sale is expected to close on March 31, 2010. The acquisition will significantly increase the size of the Co-
operative's net electric plant, and will be financed primarily with debt. As of March 23, 2010, the specific
financing plan had not been finalized.

36
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, Inc.
Cadillac, Michigan

We have audited the consolidated financial statements of Wolverine Power Supply Cooperative, Inc. as of
December 31, 2009 and 2008. Our audits were made for the purpose of forming an opinion on the
consolidated financial statements taken as a whole. 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. The consolidating
information has been subjected to the procedures applied in the audits of the consolidated financial
statements and, in our opinion, is fairly stated in all material respects in relation to the consolidated financial
statements taken as a whole.

March 23, 2010

37
 Consolidating Balance Sheet

December 31, 2009

Wolverine Spartan
Power Supply Renewable Eliminating Consolidated
Cooperative, Inc. Energy, Inc. Entries Totals
ASSETS
Electric Plant - At cost
In service $ 290,025,713 $ - $ - $ 290,025,713
Construction work in progress 19,177,888 - - 19,177,888
Total cost 309,203,601 - - 309,203,601

Less accumulated depreciation 124,856,164 - - 124,856,164

Net electric plant 184,347,437 - - 184,347,437

Power Supply Development Fund

Cash and cash equivalents - Restricted 41,849,506 - - 41,849,506

Other Assets 22,393,651 - - 22,393,651

Investments 14,904,895 19,951 (69,951) 14,854,895
Cash and Cash Equivalents - Restricted 687,166 - - 687,166

Current Assets
Cash and cash equivalents 6,718,685 18,056 - 6,736,741
Accounts receivable 23,014,940 482,370 (433,086) 23,064,224
Material and supplies inventory 14,120,740 - - 14,120,740
Deferred tax asset - 9,000 - 9,000
Prepaid expenses and other current assets 827,941 - (140,000) 687,941
Total current assets 44,682,306 509,426 (573,086) 44,618,646

Total assets $ 308,864,961 $ 529,377 $ (643,037) $ 308,751,301

EQUITIES (DEFICITS) AND LIABILITIES

Equities (Deficits)
Memberships $ 1,800 $ - $ (200) $ 1,600
Common stock - 55,000 (55,000) -
Patronage capital 83,455,744 (75,922) (14,751) 83,365,071
PSDF patronage capital 64,292,110 - - 64,292,110
Accumulated other comprehensive income (4,470,659) - - (4,470,659)
Total equities (deficits) 143,278,995 (20,922) (69,951) 143,188,122

Long-term Debt - Net of current portion 116,308,725 - - 116,308,725

Long-term Debt - Related party - 140,000 (140,000) -
Long-term Deferred Tax Liability 387,000 (29,000) - 358,000
Other Long-term Liabilities
Accrued pension and postretirement 6,524,455 - - 6,524,455
Other liabilities 890,326 - - 890,326
Total other long-term liabilities 7,414,781 - - 7,414,781

Current Liabilities
Current portion of long-term debt 13,589,291 - - 13,589,291
Taxes payable 1,400,944 2,433 - 1,403,377
Accounts payable 23,146,849 436,866 (433,086) 23,150,629
Accrued wages and other liabilities 3,338,376 - - 3,338,376
Total current liabilities 41,475,460 439,299 (433,086) 41,481,673

Total equities (deficits) and liabilities $ 308,864,961 $ 529,377 $ (643,037) $ 308,751,301

38
Consolidating Balance Sheet

December 31, 2008

Wolverine Spartan
Power Supply Renewable Eliminating Consolidated

ASSETS
Cooperative, Inc. Energy, Inc. Entries Totals

Electric Plant - At cost

In service $ 259,969,685 $ - $ - $ 259,969,685
Construction work in progress 9,583,859 - - 9,583,859
Total cost 269,553,544 - - 269,553,544

Less accumulated depreciation 117,202,077 - - 117,202,077

Net electric plant 152,351,467 - - 152,351,467

Power Supply Development Fund

Cash and cash equivalents - Restricted 35,210,936 - - 35,210,936
Investments - Restricted 800,000 - - 800,000
Total Power Supply Development Fund 36,010,936 - - 36,010,936

Other Assets 15,612,043 - - 15,612,043

Investments 11,286,087 37,817 (87,817) 11,236,087
Cash and Cash Equivalents - Restricted 1,668,458 - - 1,668,458
Current Assets
Cash and cash equivalents 396,486 115,088 - 511,574
Accounts receivable 23,133,248 485,820 (594,699) 23,024,369
Material and supplies inventory 16,405,440 - - 16,405,440
Deferred tax asset - 34,000 - 34,000
Prepaid expenses and other current assets 1,933,728 - (200,000) 1,733,728
Total current assets 41,868,902 634,908 (794,699) 41,709,111

Total assets $ 258,797,893 $ 672,725 $ (882,516) $ 258,588,102

EQUITIES (DEFICITS) AND LIABILITIES

Equities (Deficits)
Memberships $ 1,800 $ - $ (200) $ 1,600
Common stock - 55,000 (55,000) -
Patronage capital 81,981,118 (144,305) (32,617) 81,804,196
PSDF patronage capital 52,438,447 - - 52,438,447
Accumulated other comprehensive income (4,461,372) - - (4,461,372)
Total equities (deficits) 129,959,993 (89,305) (87,817) 129,782,871

Long-term Debt - Net of current portion 60,146,758 - - 60,146,758

Long-term Debt - Related party - 200,000 (200,000) -
Long-term Deferred Tax Liability 108,000 (40,000) - 68,000
Other Long-term Liabilities 8,139,839 - - 8,139,839
Current Liabilities
Current portion of long-term debt 10,853,694 - - 10,853,694
Line of credit 20,296,937 - - 20,296,937
Taxes payable 1,386,424 6,297 - 1,392,721
Accounts payable 21,560,753 595,733 (594,699) 21,561,787
Accrued wages and other liabilities 6,345,495 - - 6,345,495
Total current liabilities 60,443,303 602,030 (594,699) 60,450,634

Total equities (deficits) and liabilities $ 258,797,893 $ 672,725 $ (882,516) $ 258,588,102

39
 Consolidating Statement of Operations

Year Ended December 31, 2009

Wolverine Spartan
Power Supply Renewable Eliminating Consolidated
Cooperative, Inc. Energy, Inc. Entries Totals

Operating Revenue $ 255,698,238 $ 5,543,019 $ (5,064,098) $ 256,177,159

Operating Expenses
Purchased power 201,820,365 5,352,025 (5,030,561) 202,141,829
Power generation:
Operation 2,262,050 - - 2,262,050
Maintenance 1,516,375 - - 1,516,375
Fuel 4,937,791 - - 4,937,791
Transmission expense:
Operation 4,366,136 - - 4,366,136
Maintenance 1,812,347 - - 1,812,347
Distribution expense:
Operation 558,490 - - 558,490
Maintenance 938,185 - - 938,185
Administrative and general:
Operation 8,310,496 53,333 (33,537) 8,330,292
Maintenance 814,113 - - 814,113
Depreciation and amortization 8,538,922 - - 8,538,922
Net loss on disposition of property (427,902) - - (427,902)
Taxes 3,097,692 - - 3,097,692

Total operating expenses 238,545,060 5,405,358 (5,064,098) 238,886,320

Operating Margins Before Fixed Charges 17,153,178 137,661 - 17,290,839

Fixed Charges - Interest on debt 4,981,398 12,733 (12,430) 4,981,701

Operating Margins After Fixed Charges 12,171,780 124,928 12,430 12,309,138

Capital Credits 460,403 (17,866) 17,866 460,403

Net Operating Margins 12,632,183 107,062 30,296 12,769,541

Non-operating Margins
Interest income 895,966 3,721 (12,430) 887,257
Other non-operating income - Net 156,140 - - 156,140

Total non-operating margins 1,052,106 3,721 (12,430) 1,043,397

Net Margins - Before income taxes 13,684,289 110,783 17,866 13,812,938

Income Tax (Expense) Benefit (356,000) (42,400) - (398,400)

Net Margins $ 13,328,289 $ 68,383 $ 17,866 $ 13,414,538

40
Consolidating Statement of Operations

Year Ended December 31, 2008

Wolverine Spartan
Power Supply Renewable Eliminating Consolidated
Cooperative, Inc. Energy, Inc. Entries Totals

Operating Revenue $ 250,602,339 $ 4,627,466 $ (4,290,981) $ 250,938,824

Operating Expenses
Purchased power 195,324,174 4,463,202 (4,228,099) 195,559,277
Power generation:
Operation 1,973,612 - - 1,973,612
Maintenance 1,743,689 - - 1,743,689
Fuel 5,094,959 - - 5,094,959
Transmission expense:
Operation 4,001,711 - - 4,001,711
Maintenance 1,482,423 - - 1,482,423
Distribution expense:
Operation 631,011 - - 631,011
Maintenance 796,563 - - 796,563
Administrative and general:
Operation 7,715,414 104,989 (62,882) 7,757,521
Maintenance 747,961 - - 747,961
Depreciation and amortization 8,258,358 - - 8,258,358
Net loss on disposition of property 387,850 - - 387,850
Taxes 2,542,254 - - 2,542,254

Total operating expenses 230,699,979 4,568,191 (4,290,981) 230,977,189

Operating Margins Before Fixed Charges 19,902,360 59,275 - 19,961,635

Fixed Charges - Interest on debt 4,576,344 16,328 (16,328) 4,576,344

Operating Margins After Fixed Charges 15,326,016 42,947 16,328 15,385,291

Capital Credits 551,546 37,617 (37,617) 551,546

Net Operating Margins 15,877,562 80,564 (21,289) 15,936,837

Non-operating Margins
Interest income 1,747,050 5,808 (16,328) 1,736,530
Other non-operating income - Net 53,597 - - 53,597

Total non-operating margins 1,800,647 5,808 (16,328) 1,790,127

Net Margins - Before income taxes 17,678,209 86,372 (37,617) 17,726,964

Income Tax (Expense) Benefit (247,190) 24,303 - (222,887)

Net Margins $ 17,431,019 $ 110,675 $ (37,617) $ 17,504,077

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