YEAR 2006 ANNUAL CUSTOMER REPORT

Information

Public Utility District No. 1 of Lewis County (District) is a municipal corporation of the State of Washington, formed by the people of Lewis County to provide electric service. Public utility districts are governed by commissioners who are elected locally to represent specific districts within the service area of the utility. Lewis County PUD (the District) has a board of three commissioners who serve staggered six-year terms representing their respective districts.

Electric Service

There are twenty-eight public utility districts throughout the State of Washington. Each has the authority to provide electric, water and sewer service within its service area. The District provides electricity to 29,586 consumers through 2,233 miles of distribution line.

Electric Generation

The District owns and operates the Cowlitz Falls Project which produces on average 261,000 megawatthours (Mwhrs) of electricity annually. This production is currently equal to 33% of the electric energy used by the District's customers. The District and the Bonneville Power Administration (BPA) cooperatively developed the Cowlitz Falls Project. The District is the owner of the Project, while the BPA has purchased the annual output under a long-term contract. In exchange for receiving the output of the Project, BPA pays all costs associated with its operation and maintenance. The District buys its power from BPA, so the power generated by the Cowlitz Falls Project helps supply the needs of Lewis County residents and businesses.

Public Purpose

The District offers a variety of residential, commercial and industrial conservation programs. However these programs change from time to time. The District entered into an agreement to purchase a 6 MW share of the output of the Energy Northwest Nine Canyon Wind Project. The Project is expected to produce approximately 16,800 MWH of renewable energy annually for the District. The District maintains a voluntary low income energy assistance program known as Project Share and provides agency referral information for customers needing payment assistance.

Rate Setting Process

The District proposes rates through a regulated process of proposal, public comment, and adoption at open meetings of the Lewis County PUD Board of Commissioners. Rates are developed on cost based accounting that arises from the non-profit classification of the District.

Statement of Net Assets as of December 31, 2006

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Statement of Revenues, Expenses and Changes in Net Assets for the Year Ended December 31, 2006

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CUSTOMER STATISTICS AND INFORMATION