UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549

FORM 10-K

(An Electric Membership Corporation)
(Exact name of registrant as specified in its charter)

       Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yeso No ý

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       Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of registrant's knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K. ý

       Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of "large accelerated filer," "accelerated filer," and "smaller reporting company" in Rule 12b-2 of the Exchange Act. (Check one):Large accelerated filero Accelerated filero Non-accelerated filerý Smaller reporting companyo

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       State the aggregate market value of the voting and non-voting common equity held by non-affiliates computed by reference to the price at which the common equity was last sold, or the average bid and asked price of such common equity, as of the last business day of the registrant's most recently completed second fiscal quarter.NoneThe Registrant is a membership corporation and has no authorized or outstanding equity securities.

       Indicate the number of shares outstanding of each of the registrant's classes of common stock, as of the latest practicable date.The Registrant is a membership corporation and has no authorized or outstanding equity securities.

       Documents Incorporated by Reference:None

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OGLETHORPE POWER CORPORATION

20082009 FORM 10-K ANNUAL REPORT

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i

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SELECTED DEFINITIONS

       The following terms used in this report have the meanings indicated below:

ii

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PART I

ITEM 1.  BUSINESS

OGLETHORPE POWER CORPORATION

General

    Oglethorpe Power Corporation (An Electric Membership Corporation) ("Oglethorpe") isWe are a Georgia electric membership corporation (an EMC) incorporated in 1974 and headquartered in metropolitan Atlanta. Oglethorpe isWe are owned by 38our 39 retail electric distribution cooperative members (the "Members"). Oglethorpe'smembers. Our principal business is providing wholesale electric power to the Members.our members. As with cooperatives generally, Oglethorpe operateswe operate on a not-for-profit basis. Oglethorpe isWe are the largest electric cooperative in the United States in terms of assets, kilowatt-hour ("kWh") sales to Membersmembers and, through the Members,our members, consumers served, and isserved. We are also the second largest power supplier in the state of Georgia. OglethorpeWe have 207 employees.

    In December 2009, Flint EMC, which withdrew as a member in January 2005, became our 39^th member. Currently, Flint does not have a percentage capacity responsibility from any of our operating generation resources; however, it is participating in generation resources under construction and has 176 employees.the right to participate in any future generation resources we may acquire or construct. Since Flint is not a participant in our operating generation resources, we do not supply any of its capacity or energy requirements. However, all the historical member statistics in this report include Flint.

    The MembersOur members are local consumer-owned distribution cooperatives providingthat provide retail electric service on a not-for-profit basis. In general, theour members' customer base of the Members consists of residential, commercial and industrial consumers within specific geographic areas. The MembersOur members serve approximately 1.71.8 million electric consumers (meters) representing approximately 4.1 million people. (See "THE"OUR MEMBERS AND THEIR POWER SUPPLY RESOURCES.")

    Oglethorpe'sOur mailing address is 2100 East Exchange Place, Tucker, Georgia 30084-5336, and its telephone number is (770) 270-7600. Oglethorpe maintainsWe maintain a website atwww.opc.com. Oglethorpe'sOur annual reports on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K and amendments to those reports are made available on this website as soon as reasonably practicable after this material is filed with the Securities and Exchange Commission ("SEC").Commission. Information contained on thisour website is not incorporated by reference into this annual report on Form 10-K and information contained on this website should not be considered to be part of this annual report on Form 10-K.

Cooperative Principles

    Cooperatives like Oglethorpe are business organizations owned by their members, which are also either their wholesale or retail customers. As not-for-profit organizations, cooperatives are intended to provide services to their members at the lowest possible cost, in part by eliminating the need to produce profits or a return on equity. Cooperatives may make sales to non-members, the effect of which is generally to reduce costs to members. Today, cooperatives operate throughout the United States in such diverse areas as utilities, agriculture, irrigation, insurance and credit.

    All cooperatives are based on similar business principles and legal foundations. Generally, an electric cooperative designs its rates to recover its cost-of-service and to collect a reasonable amount of revenues in excess of expenses, which constitutes margins. The margins increase patronage capital, which is the equity component of a cooperative's capitalization. Any suchThese margins are considered capital contributions (that is, equity) from the members and are held for the accounts of the members and returned to them when the board of directors of the cooperative deems it prudent to do so. The timing and amount of any actual return of capital to the members depends on the financial goals of the cooperative and the cooperative's loan and security agreements.

Power Supply Business

    Oglethorpe providesWe provide wholesale electric service to our members for the 38 Members for a substantial portionmajority of their aggregate power requirements primarily from a combination of itsour generation assets andbut also with power purchased from other power marketers and other suppliers. Oglethorpe providesWe provide substantially all of this service pursuant to long-term, take-or-pay Amended and Restated Wholesale Power Contracts, dated January 1, 2003, and amended aswholesale power contracts, with a small amount supplied to seven of June 1, 2005 (the "Wholesale Power Contracts").our members through a power sale agreement we acquired in conjunction with the acquisition of the Hawk Road Energy Facility in 2009. The Wholesale Power Contractswholesale power contracts obligate the Membersour members jointly and severally to pay rates sufficient for us to recover all the costs of owning and operating Oglethorpe'sour power supply business, including the

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payment of principal and interest on Oglethorpe'sour indebtedness. The MembersOur members satisfy all of their power requirements above their Oglethorpe purchase obligations to us with purchases from other suppliers. (See "THE"OUR MEMBERS AND THEIR POWER SUPPLY RESOURCES –Member Power Supply Resources.")

    Oglethorpe hasWe have interests in 2429 operating generating units. These units, provide Oglethorpe with a total of 4,744 megawatts ("MW") of nameplate capacity, consisting of 1,501 MW of coal-fired capacity, 1,185 MW of nuclear-

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fueled capacity, 632 MW of pumped storage hydroelectric capacity, 1,411 MW of gas-fired capacity (206 MW of which is capable of running on oil)by nuclear, coal, gas, oil and 15 MW of oil-fired combustion turbine capacity.

    Oglethorpe also purchases approximately 300 MW of power pursuant to a long-term power purchase agreement.hydro. (See "OGLETHORPE'S"OUR POWER SUPPLY RESOURCES" and "PROPERTIESand"PROPERTIES – Generating Facilities.")

    In 2008,2009, three of Oglethorpe's Members,our members, Cobb EMC, Jackson EMC and Sawnee EMC, accounted for 12.8 percent, 11.4 percent15.0%, 11.6% and 10.4 percent10.2% of Oglethorpe'sour total revenues, respectively. NoneEach of theour other Membersmembers accounted for as much as 10 percentless than 10% of Oglethorpe'sour total revenues in 2008.2009.

Wholesale Power Contracts

    Oglethorpe hasThe wholesale power contracts we have with each member are substantially similar Wholesale Power Contracts with each Member extendingand extend through December 31, 2050. Under the Wholesale Power Contracts,wholesale power contracts, each Membermember is unconditionally obligated, on an express "take-or-pay" basis, for a fixed percentage of the capacity costs (referred to as a "percentage capacity responsibility") of each of Oglethorpe'sour generation resources and purchased power resources.resources with a term greater than one year. Each Wholesale Power Contractwholesale power contract specifically provides that the Membermember must make payments whether or not power is delivered and whether or not a plant has been sold or is otherwise unavailable. Oglethorpe isWe are obligated to use itsour reasonable best efforts to operate, maintain and manage itsour resources in accordance with prudent utility practices.

    PercentageWe have assigned fixed percentage capacity costs responsibilities have been assigned to our members for all of Oglethorpe'sour generation and purchased power resources, although not all members participate in all resources. Percentage capacity responsibilities forFor any future resource, we will be assignedassign fixed percentage capacity costs responsibilities only to Membersmembers choosing to participate in that resource. The Wholesale Power Contractswholesale power contracts provide that each Membermember is jointly and severally responsible for all costs and expenses of all existing generation and purchased power resources, as well as for any approved future resources, (as described below), whether or not such Memberthat member has elected to participate in suchthe future resource. For resources so approved in which less than all Membersmembers participate, costs are shared first among the participating Members,members, and if all participating Membersmembers default, each non-participating Membermember is expressly obligated to pay a proportionate share of suchthe default.

    To acquire future resources, Oglethorpe iswe are required to obtain the approval of 75 percent of Oglethorpe's Board of Directors, 75 percent75% of the Membersmembers of our board of directors, 75% of our members and Membersmembers representing 75 percent75% of theour patronage capital of Oglethorpe. Certaincapital. We can make certain resource modifications can be made by Oglethorpe if approved by more than 50 percent of Oglethorpe's Board of Directors and 50 percent50% of the Members.members of our board of directors and 50% of our members.

    Under the Wholesale Power Contracts, Oglethorpe iswholesale power contracts, we are not obligated to provide all of the Members'our members' capacity and energy requirements. Individual Membersmembers must satisfy all of their requirements above their Oglethorpe purchase obligations from us from other suppliers, unless Oglethorpewe and the Membersour members agree that Oglethorpewe will supply additional capacity and associated energy, subject to the approval requirements described above. In 2008,2009, we supplied energy supplied by Oglethorpethat accounted for approximately 65 percent55% of the Members' retail energy requirements.requirements of our members. (See "THE"OUR MEMBERS AND THEIR POWER SUPPLY RESOURCES – Member–Member Power Supply Resources.")

    Under the Wholesale Power Contracts,wholesale power contracts, each Membermember must establish rates and conduct its business in a manner that will enable the Membermember to pay (i) to Oglethorpeus when due, all amounts payable by the Membermember under its Wholesale Power Contractwholesale power contract and (ii) any and all other amounts payable from, or which might constitute a charge or a lien upon, the revenues and receipts derived from the Member'smember's electric system, including all operation and maintenance expenses and the principal of, premium, if any, and interest on all indebtedness related to the Member'smember's electric system.

New Business Model Member Agreement

    Oglethorpe and its Members are parties to aThe New Business Model Member Agreement that we have with our members requires Membermember approval for Oglethorpeus to undertake certain activities. The agreement does not limit Oglethorpe'sour ability to own, manage, control and operate itsour resources or perform itsour functions under the Wholesale Power Contracts.wholesale power contracts.

    OglethorpeWe may not provide services unrelated to itsour resources or itsour functions under the Wholesale Power Contractswholesale power contracts if suchthese services would require itus to incur indebtedness, provide a guarantee or make any loan or investment, unless approved by 75 percent of Oglethorpe's Board of Directors, 75 percent75% of the Members,members of our board of directors, 75% of our members, and Membersmembers representing 75 percent75% of theour patronage capital of Oglethorpe. Oglethorpecapital. We may

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provide any other unrelated service to a Membermember so long as (i) doing so would not create a conflict of interest with respect to other Members,members, (ii) suchthe service

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is being provided to all Membersmembers or (iii) suchthe service has received the 75 percentthree 75% approvals described above.

Electric Rates

    Each Membermember is required to pay Oglethorpeus for capacity and energy furnishedwe furnish under its Wholesale Power Contractwholesale power contract in accordance with rates established by Oglethorpe. Oglethorpe reviews itswe establish. We review our rates at such intervals as it deemsthat we deem appropriate but isare required to do so at least once every year. Oglethorpe isWe are required to revise itsour rates as necessary so that the revenues derived from itsour rates, together with itsour revenues from all other sources, will be sufficient to pay all of the costs of itsour system, including the payment of principal and interest on Oglethorpe'sour indebtedness, to provide for reasonable reserves and to meet all financial requirements.

    Oglethorpe'sOur principal financial requirements are contained in the Indenture, dated as of March 1, 1997, from Oglethorpeus to U.S. Bank National Association, as trustee (successor to SunTrust Bank,Bank), as trustee) (as supplemented, the "Mortgage Indenture").amended and supplemented. Under the Mortgage Indenture, Oglethorpe isindenture, we are required, subject to any necessary regulatory approval, to establish and collect rates which are reasonably expected, together with our other revenues, of Oglethorpe, to yield a Marginsmargins for Interest Ratiointerest ratio for each fiscal year equal to at least 1.10. "MarginsMargins for Interest Ratio"interest ratio is the ratio of "Marginsmargins for Interest"interest to total "Interest Charges"interest charges for a given period. Margins for Interestinterest is the sum of:

•

our net margins of Oglethorpe (which includes our revenues of Oglethorpe subject to refund at a later date but excludes provisions for (i) non-recurring charges to income, including the non-recoverability of assets or expenses, except to the extent Oglethorpe determineswe determine to recover suchthese charges in rates, and (ii) refunds of revenues we collected or accrued by Oglethorpe subject to refund), plus

•

interest charges, whether capitalized or expensed, on all indebtedness secured under the Mortgage Indentureindenture or by a lien equal or prior to the lien of the Mortgage Indenture,indenture, including amortization of debt discount or premium on issuance, but excluding interest charges on indebtedness assumed by Georgia Transmission Corporation ("Interest Charges")(which, as described below, was formed in 1997 to operate the transmission business we previously owned), plus

•

any amount included in net margins for accruals for federal or state income taxes imposed on income after deduction of interest expense.

    Margins for Interestinterest takes into account any item of net margin, loss, gain or expenditure of any affiliateof our affiliates or subsidiary of Oglethorpesubsidiaries only if Oglethorpe haswe have received suchthe net margins or gains as a dividend or other distribution from such affiliate or subsidiary or if Oglethorpe haswe have made a payment with respect to suchthe losses or expenditures.

    The formulary rate we established by Oglethorpe in the rate schedule to the Wholesale Power Contractswholesale power contracts employs a rate methodology under which all categories of costs are specifically separated as components of the formula to determine Oglethorpe'sour revenue requirements. The rate schedule also implements the responsibility for fixed costs assigned to each Member (that is, the Member'smember based on each member's fixed percentage capacity responsibility).costs responsibilities for all of our generation and purchased power resources. The monthly charges for capacity and other non-energy charges are based on Oglethorpe'sour annual budget. SuchThese capacity and other non-energy charges may be adjusted by the Boardour board of Directors,directors, if necessary, during the year through an adjustment to the annual budget. Energy charges reflect the pass-through of actual energy costs, including fuel costs, variable operations and maintenance costs and purchased energy costs. (See "MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS – Summary of Cooperative Operations –Rates and Regulation.")

    The rate schedule formula also includes a prior period adjustment mechanism designed to ensure that Oglethorpe achieveswe achieve the minimum 1.10 Marginsmargins for Interest Ratio.interest ratio. Amounts, if any, by which Oglethorpe fails to achieve awe fall short of the minimum 1.10 Marginsmargins for Interest Ratiointerest ratio are accrued as of December 31 of the applicable year and collected from the Membersour members during the period April through December of the following year. The rate schedule formula is intended to provide for the collection of revenues which, together with revenues from all other sources, are equal to all costs and expenses we recorded, by Oglethorpe, plus amounts necessary to achieve at least the minimum 1.10 Marginsmargins for Interest Ratio.interest ratio.

    To enhance the financialmargin coverage during an anticipatedthe period of generation facility construction, the Boardour board of Directorsdirectors approved a budgetbudgets for 2009 and 2010 to achieve a 1.12 Marginsand 1.14 margins for Interest Ratio. The Boardinterest ratio, respectively; each above the minimum 1.10 ratio required by the indenture. As our generation construction program evolves, our board of Directorsdirectors will continue to evaluate the level of margin coverage ratios throughoutand may choose to further increase, or decrease, the period of anticipated construction andmargins for interest ratio in the future.

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may choose to increase or decrease MFI coverage in the future.

    Under the Mortgage Indentureindenture and related loan contract with the Rural Utilities Service, ("RUS"), adjustments to Oglethorpe'sour rates to reflect changes in Oglethorpe'sour budgets are generally not subject to RUSRural Utilities Service approval. Changes to the rate schedule under the Wholesale Power Contractswholesale power contracts are generally subject to RUSRural Utilities Service approval. Oglethorpe'sOur rates are not subject to the approval of any other federal or state agency or authority, including the Georgia Public Service Commission (the "GPSC").Commission.

Relationship with Smarr EMC

    Smarr EMC is a Georgia electric membership corporation owned by 36 of Oglethorpe's 38 Members.our 39 members. Smarr EMC owns two combustion turbine facilities with aggregate capacity of 709 MW. Oglethorpe providesmegawatts. We provide operations, financial and management services for Smarr EMC. (See "THE"OUR MEMBERS AND THEIR POWER SUPPLY RESOURCES – Member Power Supply Resources.")

Relationship with GTCGeorgia Transmission Corporation

    Oglethorpe, the 38 MembersWe and Flint EMCour 39 members are members of Georgia Transmission Corporation (An Electric Membership Corporation) ("GTC"), which was formed in 1997 to own and operate the transmission business we previously owned by Oglethorpe. GTCowned. Georgia Transmission provides transmission services to its members for delivery of theits members' power purchases from Oglethorpeus and other power suppliers. GTCGeorgia Transmission also provides transmission services to third parties. Oglethorpe hasWe have entered into an agreement with GTCGeorgia Transmission to provide transmission services for third party transactions and for service to Oglethorpe'sour own facilities.

    In 1997, GTCGeorgia Transmission assumed certain indebtedness associated with pollution control bonds ("PCBs") originally issued on behalf of Oglethorpe.our behalf. If GTCGeorgia Transmission fails to satisfy its obligations under this debt, Oglethorpe would thenwe remain liable for any unsatisfied amounts. (See "MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS – Financial–Financial Condition –Off-Balance Sheet Arrangements.")

    GTCGeorgia Transmission has rights in the Integrated Transmission System,integrated transmission system, which consists of transmission facilities owned by GTC,Georgia Transmission, Georgia Power Company, ("GPC"), the Municipal Electric Authority of Georgia ("MEAG") and the City of Dalton, ("Dalton").Georgia. Through agreements, common access to the combined facilities that compose the Integrated Transmission Systemintegrated transmission system enables the owners to use their combined resources to make deliveries to or for their respective consumers, to provide transmission service to third parties and to make off-system purchases and sales. The Integrated Transmission Systemintegrated transmission system was established in order to obtain the benefits of a coordinated development of the parties' transmission facilities and to make it unnecessary for any party to construct duplicative facilities.

Relationship with GSOCGeorgia System Operations Corporation

    Oglethorpe, GTCWe, Georgia Transmission and the 38 Membersour 39 members are members of Georgia System Operations Corporation, ("GSOC"), which was formed in 1997 to own and operate the system operations business we previously owned by Oglethorpe. GSOCowned. Georgia System Operations operates the system control center and currently provides Georgia Transmission and us with system operations services and administrative support services to Oglethorpe and to GTC. Oglethorpe hasservices. We have contracted with GSOCGeorgia System Operations to schedule and dispatch Oglethorpe'sour resources. OglethorpeWe have also purchased from Georgia System Operations services that it purchases from GSOC services that GSOC purchases from GPCGeorgia Power under the Control Area Compact,control area compact, which Oglethorpewe co-signed with GSOC.Georgia System Operations. (See "THE"OUR MEMBERS AND THEIR POWER SUPPLY RESOURCES –Members' Relationship with GTCGeorgia Transmission and GSOC.Georgia System Operations.") GSOCGeorgia System Operations provides support services to Oglethorpeus in the areas of accounting, auditing, communications, human resources, facility management, telecommunications and information technology at cost-based rates.

    Oglethorpe has a modest amountAs of December 31, 2009, we had approximately $8.0 million of loans (approximately $9 million) outstanding to GSOC,Georgia System Operations, primarily for the purpose of financing capital expenditures. GSOCGeorgia System Operations has an additional $3$6.0 million that can be drawn under one of its loans with Oglethorpe.us.

    GTCGeorgia Transmission has contracted with GSOCGeorgia System Operations to provide certain transmission system operation services including reliability monitoring, switching operations, and the real-time management of the transmission system.

Relationship with RUSRural Utilities Service

    Historically, federal loan programs administered by RUSthe Rural Utilities Service, an agency of the United

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States Department of Agriculture, have provided the principal source of financing for electric cooperatives. Loans guaranteed by RUSthe Rural Utilities Service and made by the Federal Financing Bank ("FFB") have been a major source of funding for Oglethorpe.

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us. However, the availability and magnitude of RUS-guaranteedRural Utilities Service-guaranteed loan funds is subject to annual federal budget appropriations and thus cannot be assured. Currently, RUS-guaranteedRural Utilities Service-guaranteed loan funds are subject to increased uncertainty because of budgetary and political pressures faced by Congress. The President's budget proposal for fiscal year 2009 submitted2011 proposes to reduce funding by almost 40% from 2010 levels and, in support of the prior administration asserted that the RUS loan program is no longer necessary for the construction of new generating plants. Further, RUS indicated that the prior administration's position was that RUS will no longer provide loan guaranteesPresident's commitment to reduce inefficient fossil-fuel subsidies, prohibits loans for new baseload (coalor existing fossil-fueled generation. The budget limits the use of electric loan funds to renewable energy, transmission, distribution and nuclear) generation. However, the budget proposal also indicated that loan levels for suchcarbon-capture projects on generation may be considered when Congress authorizes a fee for such loans. Such legislation is currently under consideration.facilities. Although Congress has historically rejected proposals to dramatically curtail the RUSRural Utilities Service loan program, there can be no assurancesassurance that it will continue to do so. The Obama administration has not yet submitted a budget in sufficient detail to ascertain the proposed funding for the RUS loan program. Because of these factors, Oglethorpewe cannot predict the amount or cost of RUS-guaranteedRural Utilities Service-guaranteed loans that may be available to Oglethorpeus in the future.

    Oglethorpe hasWe have a loan contract with RUSthe Rural Utilities Service in connection with the Mortgage Indenture.indenture. Under the loan contract, RUSthe Rural Utilities Service has approval rights over certain significant actions and arrangements, including, without limitation,

•

significant additions to or dispositions of system assets,

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significant power purchase and sale contracts,

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changes to the Wholesale Power Contractswholesale power contracts and the rate schedule contained therein,in the wholesale power contracts,

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changes to plant ownership and operating agreements,

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amountamounts of short-term debt outstanding exceeding 30% of our total utility plant through December 31, 2014 and 15% of total capitalization thereafter, and

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in limited circumstances, issuance of additional secured and unsecured debt.

    The extent of RUS'sthe Rural Utilities Service's approval rights under the loan contract with Oglethorpeus is substantially less than the supervision and control RUSthe Rural Utilities Service has traditionally exercised over borrowers under its standard loan and security documentation. In addition, the Mortgage Indentureindenture improves Oglethorpe'sour ability to borrow funds in the capital markets relative to RUS'sthe Rural Utilities Service's standard mortgage. The Mortgage Indentureindenture constitutes a lien on substantially all of the owned tangible and certain intangible property of Oglethorpe.we own.

Relationship with GPCGeorgia Power Company

    Oglethorpe'sOur relationship with GPCGeorgia Power is a significant factor in several aspects of Oglethorpe'sour business. GPCGeorgia Power is responsible for the construction and operation of all of Oglethorpe'sour co-owned generating facilities, except the Rocky Mountain Pumped Storage Hydroelectric Facility, ("Rocky Mountain"), on behalf of itself as a co-owner and as agent for the other co-owners. GPCGeorgia Power supplies services to Oglethorpeus and GSOCGeorgia System Operations to support the scheduling and dispatch of Oglethorpe'sour resources, including off-system transactions. GPCGeorgia Power and the Membersour members are competitors in the State of Georgia for electric service to any new customer that has a choice of supplier under the Georgia Territorial Electric Service Act, which was enacted in 1973, (the "Territorial Act").commonly known as the Georgia Territorial Act. For further information regarding the agreements with GPCbetween Georgia Power and Oglethorpe'sus and the Members'our members' relationships with GPC,Georgia Power, see "THE"OUR MEMBERS AND THEIR POWER SUPPLY RESOURCES – Service Area and Competition" and"PROPERTIESand "PROPERTIES – Fuel Supply," " –"– Co-Owners of Plants –Georgia Power Company" and " – The Plant Agreements."

Competition

    Under current Georgia law, the Membersour members generally have the exclusive right to provide retail electric service in their respective territories. Since 1973, however, the Georgia Territorial Act has permitted limited competition among electric utilities located in Georgia for sales of electricity to certain large commercial or industrial customers. The owner of any new facility may receive electric service from the power supplier of its choice if the facility is located outside of municipal limits and has a connected load upon initial full operation of 900 kilowatts or more. The MembersOur members are actively engaged in competition with other retail electric suppliers for these new commercial and industrial loads. While the competition for 900-kilowatt loads represents only limited competition in Georgia, this competition has given the Membersour members the opportunity to develop

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resources and strategies to prepare for a more competitive market.

    Some states have implemented varying forms of retail competition among power suppliers. No legislation related to retail competition has yet been enacted in Georgia, and no bill is currently pending in the Georgia legislature which would amend the Georgia Territorial Act or

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otherwise affect the exclusive right of the Membersour members to supply power to their current service territories. The GPSCGeorgia Public Service Commission does not have the authority under Georgia law to order retail competition or amend the Georgia Territorial Act.

    Oglethorpe We cannot predict at this time the outcome of the various developments that may lead to increased competition in the electric utility industry or the effect of suchany developments on Oglethorpeus or the Members. Nonetheless, Oglethorpe has taken several steps to prepare for and adapt to the fundamental changes that have occurred or may occur in the electric utility industry and to reduce potential stranded costs. In 1997, Oglethorpe divided itself into separate generation, transmission and system operations companies in order to better serve its Members in a deregulated and competitive environment. Oglethorpe also implemented an interest cost reduction program, which included refinancings and prepayments of various debt issues that significantly reduced annual interest expense.our members.

    Oglethorpe and/or the Members continue toWe routinely consider, along with our members, a wide array of other potential actions to meet future power supply needs, to reduce costs, to reduce risks of the competitive generation business and to respond to competition. Alternatives that could be considered include:

•

power marketing arrangements or other alliance arrangements;

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whether potential load fluctuation risks in a competitive retail environment can be shifted to other wholesale suppliers;

•

changingadjusting the current mix of ownership and purchase arrangements used to meet power supply requirements;

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construction or acquisition of power supply resources, whether owned by Oglethorpeus or by other entities;

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use of power purchase contracts to meet power supply requirements, and whether to use short, medium or long-term contracts, or a mix of terms;

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participation in future power supply resources developed by others, whether by ownership or long-term purchase commitment;

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whether disposition of existing assets or asset classes would be advisable;

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extensions of nuclear facility licenses;

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additional maturity extensions of existing indebtedness;

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potential prepayment of debt;

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various responses to the proliferation of non-core services offered by electric utilities;

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mergers or other combinations among distributors or power suppliers; and

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other regulatory and business changes that may affect relative values of generation classes or have impacts on the electric industry.

    OglethorpeWe will continue to consider industry trends and developments, but cannot predict at this time the results of these matters or any action Oglethorpewe or the Membersour members might take based thereon. Suchon these industry trends and developments. These considerations necessarily would take account of and are subject to legal, regulatory and contractual (including financing and plant co-ownership arrangements) considerations.

    Regulation of greenhouse gas emissions has the potential to affect energy suppliers, including us and our competitors, differently, depending not only on the relative greenhouse gas emissions from a supplier's sources, but also on the nature of the regulation. For example, current legislative proposals include various credits that would ultimately be phased out to offset the initial economic impact of regulation. Our greenhouse gas emissions are significant, but we also have generation sources that emit no greenhouse gases (see "ENVIRONMENTAL AND OTHER REGULATIONS –Carbon Dioxide Emission and Climate Change – Pending Legislation" and "RISK FACTORS"). Some of our competitors use sources that emit proportionately more greenhouse gases, while the sources of some competitors emit less. Further, third-party suppliers to our members rely on generation sources that emit greenhouse gases. The contracts with these third-party suppliers would determine the extent to which our members would be affected by regulation of the greenhouse gas emissions of their suppliers. We believe our and our members' diverse portfolios of generation facilities, including the diversity of third-party suppliers, along with potential credits that would be available to us or our members under the current legislative proposals, would mitigate the impact, if any, on our and our members' competitiveness resulting from these legislative proposals, if enacted.

    Many Membersmembers are also providing or considering proposals to provide non-traditional products and services such as telecommunications and other services. In 2002, the Georgia legislature enacted legislation empowering the GPSCGeorgia Public Service Commission to authorize Membermember affiliates to market natural gas. The GPSCGeorgia Public Service Commission is required to

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condition suchany authorization on terms designed to ensure that cross-subsidizations do not occur between the electricity services of a Membermember and the gas activities of its gas affiliates.

    Depending on the nature of the generation business in Georgia, there could be reasons for the Membersmembers to separate their physical distribution business from their energy business, or otherwise restructure their current businesses to operate more effectively.

    Further, a Member'smember's power supply planning may include consideration of assignment of its rights and obligations under its Wholesale Power Contractwholesale power contract to another Membermember or a third party. Oglethorpe hasWe have existing provisions for Wholesale Power Contractwholesale power contract assignment, as well as provisions for a Membermember to withdraw and concurrently to assign its rights and obligations under its Wholesale Power Contract.wholesale power contract. Assignments upon withdrawal require the assignee to have certain published credit ratings and to assume all of the withdrawing Member'smember's obligations under its Wholesale Power Contractwholesale power contract with Oglethorpe,us, and must be approved by Oglethorpe's Boardour board of Directors.directors. Assignments without withdrawal are governed by the

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Wholesale Power Contract wholesale power contract and must be approved by both Oglethorpe's Boardour board of Directorsdirectors and RUS.the Rural Utilities Service.

    From time to time, individual Membersmembers may be approached by parties indicating an interest in purchasing their systems. A Membermember generally must obtain our approval from Oglethorpe before it may consolidate or merge with any person or reorganize or change the form of its business organization from an electric membership corporation or sell, transfer, lease or otherwise dispose of all or substantially all of its assets to any person, whether in a single transaction or series of transactions. The MemberA member may enter into such a transaction without Oglethorpe'sour approval if specified conditions are satisfied, including, but not limited to, an agreement by the transferee, satisfactory to Oglethorpe,us, to assume the obligations of the Membermember under the Wholesale Power Contract,wholesale power contract, and certifications of accountants as to certain specified financial requirements of the transferee. The Wholesale Power Contractswholesale power contracts also provide that a Membermember may not dissolve, liquidate or otherwise wind up its affairs without Oglethorpe'sour approval.

    Effective January 1, 2005, one of Oglethorpe'sour members, Flint, EMC, withdrew from Oglethorpemembership in us and assigned, with Oglethorpe'sour consent, its Wholesale Power Contractwholesale power contract to Cobb EMC. A portion of the power supply resources covered by the Flint EMC Wholesale Power Contractwholesale power contract was reallocated to six other Members.members. Cobb EMC also acquired Pataula EMC and provided Oglethorpeus a guarantee of Pataula EMC'sPataula's payment obligations under its Wholesale Power Contract.wholesale power contract. Other Membersmembers could consider similar arrangements.

    In December 2009, Flint again became one of our members. For further discussion regarding Flint, see " – General."

Seasonal Variations

    TheOur members' demand for energy by the Members is influenced by seasonal weather conditions. Historically, Oglethorpe'sour peak sales have occurred during the months of June through August. Even so, summer sales historically have been lower when weather conditions are milder, and higher when weather conditions are more extreme. While changing weather patterns, whether resulting from greenhouse gas emissions or otherwise, could, under certain circumstances, alter seasonal weather patterns, predictions of future changes in weather patterns are inherently speculative, and we can not make accurate conclusions about seasonality related to changes in climate, whether as a result of greenhouse gas emissions or otherwise. Energy revenues track energy costs as they are incurred and also fluctuate month to month. Capacity revenues reflect the recovery of Oglethorpe'sour fixed costs, which do not vary significantly from month to month; therefore, capacity charges are billed and capacity revenues are recognized in substantially equal monthly amounts.

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OGLETHORPE'SOUR POWER SUPPLY RESOURCES

General

    Oglethorpe suppliesWe supply capacity and energy to the Membersour members for a portion of their requirements from a combination of itsour generating assets and power purchased from other suppliers. In 2008, energy2009, we supplied by Oglethorpe accounted for approximately 65 percent55% of the Members' retail energy requirements.requirements of our members.

Generating Plants

    Oglethorpe's 24 generating units consist of 30 percent undividedWe have interests in 29 operating generating units. The Municipal Electric Authority of Georgia, the Edwin I. Hatch Plant ("Plant Hatch"), the Alvin W. Vogtle Plant ("Plant Vogtle") and the Hal B. Wansley Plant ("Plant Wansley"), a 60 percent undivided interest in the Robert W. Scherer ("Plant Scherer") Unit No. 1 ("Scherer Unit No. 1"), and the Robert W. Scherer Unit No. 2 ("Scherer Unit No. 2"), a 74.61 percent undivided interest in Rocky Mountain, a 100 percent interest in the Talbot Energy Facility ("Talbot"), a 100 percent interest in the Chattahoochee Energy Facility ("Chattahoochee") and a 100 percent interest in the Doyle I, LLC Generating Plant ("Doyle") through a power purchase agreement that Oglethorpe treats as a capital lease, all totaling 4,744 MWCity of nameplate capacity.

    MEAG, Dalton and GPCGeorgia Power also have interests in eight of these units - at Plants Hatch, Vogtle, and Wansley and Scherer Units No. 1 and No. 2. GPCScherer. Georgia Power serves as operating agent for these units. GPCGeorgia Power also has an interest in Rocky Mountain, which is operated by Oglethorpe.we operate.

    See "PROPERTIES" for a description of Oglethorpe'sour generating facilities, fuel supply and the co-ownership arrangements.arrangements and Note 4 to Notes to Consolidated Financial Statements regarding the power purchase agreement with Doyle I, LLC that we treat as a capital lease. Also see "PROPERTIES – The Plant Agreements –Doyle."

Power Purchase and Sale Arrangements

Power Purchases

    Oglethorpe has a contract through 2019 to purchase approximately 300 MW of capacity from Hartwell Energy Limited Partnership ("Hartwell"), a joint venture between Bicent Power LLC, and American National Power, Inc., a subsidiary of International Power PLC. This capacity is provided by two 150 MW gas-fired combustion turbine generating units on a site near Hartwell, Georgia. Oglethorpe has the right to dispatch the units.

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    See "MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS – Financial Condition –Capital Requirements –Contractual Obligations" for Oglethorpe's commitments under theseWe currently have no material power purchase agreements and "Note 4 to Notes to Consolidated Financial Statements" regarding a poweragreements. We purchase agreement with Doyle I, LLC that Oglethorpe treats as a capital lease. Also see "PROPERTIES – The Plant Agreements –Doyle."

    In addition, Oglethorpe also purchases small amounts of capacity and energy from "qualifying facilities" under the Public Utility Regulatory Policies Act of 1978 ("PURPA").1978. Under a waiver order from the Federal Energy Regulatory Commission, ("FERC"), Oglethorpewe historically made all purchases the Membersmembers would have otherwise been required to make under PURPAthe Public Utility Regulatory Policies Act and Oglethorpe waswe were relieved of itsour obligation to sell certain services to "qualifying facilities" so long as the Membersmembers make those sales. Purchases by OglethorpeIn 2009, our purchases from such qualifying facilities provided less than 0.1 percent0.1% of Oglethorpe'sthe energy requirements for the Members in 2008.we supplied to our members. Under their Wholesale Power Contracts,wholesale power contracts, the Membersmembers may now make such purchases instead of Oglethorpe.us.

Power Sales

    In conjunction with our acquisition of the Hawk Road Energy Facility in 2009, we accepted assignment of a power purchase and sale agreement pursuant to which we sell 500 megawatts of capacity and associated energy to seven of our members, with a term through December 31, 2015.

Other Power System Arrangements

    Oglethorpe hasWe have interchange, transmission and/or short-term capacity and energy purchase or sale agreements with approximately 50 utilities, power marketers and other power suppliers. The agreements provide variously for the purchase and/or sale of capacity and energy and/or for the purchase of transmission service. Oglethorpe isWe are currently using only about one-third of these agreements, primarily to facilitate the short-term management of itsour resource portfolio.

Future Power Resources

Plant Vogtle Units No. 3 and No. 4

    Oglethorpe isWe are participating in 30 percent30% of the costs of the construction of two additional nuclear units at Plant Vogtle, Units No. 3 and No. 4, scheduled for commercial operation in 2016 and 2017.

    GPC,In April 2008, Georgia Power, for itself and as agent for Oglethorpe, MEAGus, The Municipal Electric Authority of Georgia and the City of Dalton Georgia (the "Owners")Owners), has signed an Engineering, Procurement and Construction ("EPC") Contract with Westinghouse Electric Company, LLC and Stone & Webster, Inc. (the "Consortium")Consortium). Pursuant to the EPC Contract,contract, the Consortium will supply and construct two 1,100 MWmegawatt nuclear units using the Westinghouse AP1000 technology, with the exception of certain owner supplied items. Under the EPC Contract,contract, the Owners will pay a purchase price that is subject to certain price escalation and adjustments, including index-based adjustments, as well as adjustments for change orders and performance bonuses. This agreement was amended in February 2010. This amendment, which the parties agreed is subject to the approval of the Georgia Public Service Commission, replaces certain of the index-based adjustments with fixed escalation amounts.

Each Owner is severally, (not jointly)not jointly, liable to the Consortium based on its ownership share. The EPC Contractcontract includes certain liquidated damages upon the Consortium's failure to comply with schedule and performance guarantees, as well as certain bonuses payable to the Consortium for early completion and unit performance. The Consortium's liability for those liquidated damages and for warranty claims is subject to a cap. The obligations of Westinghouse and Stone & Webster are guaranteed by their parent companies

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Toshiba Corporation and The Shaw Group, Inc., respectively. In the event of certain credit rating downgrades of any Owner, that Owner would be required to provide a letter of credit or other credit enhancement to the Consortium. In addition, the Owners may terminate the EPC Contractcontract at any time for their convenience, provided that the Owners will be required to pay certain termination costs and, at certain stages of the work, cancellation fees to the Consortium. The Consortium may terminate the EPC Contractcontract under certain circumstances, including delays in receipt of the combined construction permits and operating licenses, ("COL") or delivery of full notice to proceed, certain Owner suspension or delays of work, action by a governmental authority to permanently stop work, certain breaches of the EPC Contractcontract by the Owners, Owner insolvency and certain other events.

    Oglethorpe'sOur rights and obligations with respect to these additional units are contained in an Ownership Participation Agreement, the Plant Vogtle Operating Agreement (amended to include Units No. 3 and No. 4), and the Nuclear Managing Board Agreement (amended to include Units No. 3 and No. 4). The Ownership Participation Agreement is similar to the agreement that covers Units No. 1 and No. 2.

    In August 2006, Southern Nuclear Operating Company, ("SNOC"), on behalf of the Owners, filed an application with the Nuclear Regulatory Commission ("NRC") for early site permits ("ESP") for these two additional units, and in March 2008 filed an application

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for a COLcombined construction permits and operating licenses for two 1,100 MWmegawatt units, using the Westinghouse AP1000 technology.

    Five entities intervened in the Plant Vogtle ESPearly site permit process. The NRCNuclear Regulatory Commission appointed an Atomic Safety and Licensing Board ("ASLB") panel to rule on the contentions of the intervenors. An ASLB panelAfter a hearing was held in March 2009, after which the ASLBAtomic Safety and Licensing Board panel will providefound in favor of the Owners and the Nuclear Regulatory Commission, and against the intervenors.

    In August 2009, the Nuclear Regulatory Commission issued the early site permit and a final ruling onlimited work authorization, allowing subsurface foundation work to proceed in advance of a combined construction permit and operating license. In October 2009, the contentions.intervenors in the aforementioned litigation filed a petition for review of the early site permit decision in the United States Court of Appeals for the District of Columbia.

    An ASLBAtomic Safety and Licensing Board panel was also appointed to preside over hearings in the COLcombined construction permit and operating license proceeding. The NRCBoard admitted one contention of intervenors for hearing. The Nuclear Regulatory Commission schedule for this proceeding contemplates a decision in fourth quarter 2011.

    In August 2009, the Nuclear Regulatory Commission issued letters to Westinghouse revising the review schedules needed to certify the AP 1000 standard design for new reactors and expressing concerns related to the availability of adequate information and the shield building design. The shield building protects the containment and provides structural support to the containment cooling water supply. Southern Nuclear is continuing to work with Westinghouse and the Nuclear Regulatory Commission to resolve these concerns. Any possible delays in the AP 1000 design certification schedule, including those addressed by the Nuclear Regulatory Commission in their letters, are not currently expected to affect the projected commercial operation dates for Plant Vogtle Units No. 3 and No. 4.

    Oglethorpe'sOur estimated total costs for the new units, including allowance for funds used during construction, ("AFUDC"), are approximately $4.2 billion. Oglethorpe hasWe submitted a loan application to the Department of Energy ("DOE") seeking partial funding for these proposed nuclear units.units and have been offered a conditional term sheet for 70% of the eligible project costs. See "MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS –Financial Condition –Capital Requirements –Capital Expenditures" and " – Financing Activities."

Biomass Plant

    Our members have subscribed for a 100 megawatt biomass-fueled generating plant. We have acquired a site in Warren County, Georgia and are currently in the process of conducting preliminary engineering work and environmental analyses, acquiring major equipment, and requesting proposals for an engineering, procurement and construction contract. This plant is planned for commercial operation in 2014.

    Our estimated cost to construct this facility is $477 million, including allowance for funds during construction. We have submitted a loan application to the Rural Utilities Service for financing of this project. See "MANAGEMENT'S DISCUSSION AND ANALYSIS OF

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FINANCIAL CONDITION AND RESULTS OF OPERATIONS – Financial Condition –Capital Requirements –Capital Expenditures" andExpenditures" and " –Financing Activities.".

Biomass Plants

    Oglethorpe is pursuing development of two 100 MW biomass-fueled generating plants that haveWe acquired a site for a second plant, which had been subscribed by Members. The plants are plannedconsidered for commercial operation in 20142015, but which has now been delayed for an indefinite period of time.

Combined Cycle Plant

    Our members have also subscribed for a two on one, 605 megawatt, combined cycle plant with anticipated commercial operation in 2015. Current activities include site selection and 2015. Oglethorpeenvironmental permitting. The estimated cost for this facility is currently in the process of acquiring sites and conducting preliminary engineering work.

    Oglethorpe's construction budget for these two projects is $933approximately $750 million, including AFUDC. However, no significant capital expenditures will be required until after 2011. Oglethorpe has submittedallowance for funds used during construction. We plan to submit a loan application to RUSthe Rural Utilities Service for financing of these projects.this project. See "MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS – Financial Condition –Capital Requirements –Capital Expenditures" and " –Financing Activities."

Heard County Generating Facility

    Oglethorpe has signed an agreement with a subsidiary of Dynegy, Inc. ("Dynegy") to purchase Heard County Power, L.L.C., which owns a generating facility consisting of three combustion turbines with an aggregate capacity of approximately 500 MW. In conjunction with this purchase, Oglethorpe will assume responsibility for an existing power purchase and sale agreement with seven of Oglethorpe's Members to provide 500 MW of capacity through December 31, 2015. After 2015, the output of the plant will be available to Oglethorpe's subscribing Members. This transaction is expected to close in the second quarter of 2009.

Other Future Power Resources

    From time to time, Oglethorpewe may assist the Membersour members in investigating potential new power supply resources, after compliance with the terms of the New Business Model Member Agreement (see "OGLETHORPE POWER CORPORATION – New Business Model Member Agreement"). The Members requested that Oglethorpe assist them with an evaluation of future power supply needs. In addition to Vogtle Units No. 3 and No. 4, the biomass plantsplant and the Heard County facility, Oglethorpe hascombined cycle plant, we have identified for the Membersour members other future generation resource development possibilities to help meet their power supply needs over the next ten years. The MembersOur members have given general approval for the future development of certain quantities of gas-fired combustion turbine plants and combined cycle plants that may be planned for commercial operation prior to December 31, 2016, subject to future Membermember subscription for specific projects only as needed. Oglethorpe isprojects. We are continuing development activities to be prepared for construction as needed.

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THEOUR MEMBERS AND THEIR POWER SUPPLY RESOURCES

Member Demand and Energy Requirements

    The MembersOur members are listed below and include 3839 of the 42 electric distribution cooperatives in the State of Georgia.

Altamaha EMC
Amicalola EMC
Canoochee EMC
Carroll EMC
Central Georgia EMC
Coastal EMC (d/b/a Coastal Electric Cooperative)
Cobb EMC
Colquitt EMC
Coweta FayetteCoweta-Fayette EMC
Diverse Power Incorporated, an EMC
Excelsior EMC
Flint EMC (d/b/a Flint Energies)
Grady EMC
GreyStone Power Corporation, an EMC
Habersham EMC
Hart EMC
Irwin EMC
Jackson EMC
Jefferson Energy Cooperative, an EMC
Little Ocmulgee EMC
Middle Georgia EMC
Mitchell EMC
Ocmulgee EMC
Oconee EMC
Okefenoke Rural EMC
Pataula EMC
Planters EMC
Rayle EMC
Satilla Rural EMC
Sawnee EMC
Slash Pine EMC
Snapping Shoals EMC
Southern Rivers Energy, Inc., an EMC
Sumter EMC
Three Notch EMC
Tri-County EMC
Upson EMC
Walton EMC
Washington EMC

    The MembersOur members serve approximately 1.71.8 million electric consumers (meters) representing approximately 4.1 million people. The MembersOur members serve a region covering approximately 37,00038,000 square miles, which is approximately 65 percent65% of the land area in the State of Georgia, encompassing 150151 of the State's 159 counties. SalesHistorically, our members' sales by the Members in 2008 amounted tocustomer class have been approximately 35 million megawatt hours ("MWh"), with approximately 68 percent67% to residential consumers, 29 percent30% to commercial and industrial consumers and 3 percent3% to other consumers. The MembersOur members are the principal suppliers for the power needs of rural Georgia. While the Membersour members do not serve any major cities, portions of their service territories are in close proximity to urban areas and have experienced substantial growth over the years due to the expansion of urban areas, including metropolitan Atlanta, into suburban areas and the growth of suburban areas into neighboring rural areas. The 38 Members have experienced approximate average annual compound growth rates from 2006 through 2008Each year we file with one of 2.2 percent in number of consumers, 2.1 percent in MWh salesour quarterly reports on Form 10-Q an exhibit containing financial and 5.5 percent in electric revenues.statistical information for our 39 members for the most recent three year period.

    The following table shows the aggregate peak demand and energy requirements of the 38 Membersour members for the years 20062007 through 2008,2009, and also shows the amountsamount of their energy requirements supplied by Oglethorpe.that we supplied. From 20062007 through 2008,2009, demand and energy requirements of the Members increasedmembers declined at an average annual compound growth rate of 2.9 percent4.5% and 1.2 percent,1.1%, respectively. This decline is the result of milder weather and general economic conditions in 2008 and 2009.

2010, and any new standards will be the subject of this or other future rulemaking.rulemakings.

    Regional Haze.    EPA's 1999 regional haze rule was created for the control of certain sources that emit nitrogen oxides or sulfur dioxide that contribute to the degradation of visibility in mandatory federal Class I areas, such as national parks and wilderness areas. A revised rule was issued in 2005 to address portions of the 1999 rule remanded to EPA. Another rule and guidance to implement the regional haze rule were also proposed by EPA in 2005. The goal of the regional haze rule is to restore natural visibility conditions in the Class I areas by 2064. Interim milestones reflecting reasonable progress towards this goal are required beginning in 2018. Moreover, the rule requires the application of Best Available Retrofit Technology ("BART")best available retrofit technology for a certain class of sources (including Plants Scherer and Wansley) contributing to the impairment of visibility in the Class I areas. The Georgia SIP to implement BARTbest available retrofit technology and reasonable further progress, originally due in December 2007, has beenwas submitted in February 2010 to EPA in draft form. That draftEPA. While the current SIP calls for no further controls for Plants Scherer or Wansley, but the SIP is stillit remains subject to EPA'sEPA review and approval.

    Short-term NAAQS for Sulfur Dioxide.    AlthoughIn November 2009, EPA had decided notproposed to impose a new NAAQSstrengthen the primary standard for sulfur dioxide, by replacing the current annual and 24-hour standards with a new, more stringent one hour standard. Changes would include siting of future monitors for measuring short-term ambient concentrations of sulfur dioxide. While no changes have been proposed to the secondary standard, EPA has indicated that decision remains remandedit is considering such changes pursuant to a separate review.

    Short-term NAAQS for Nitrogen Dioxide.    In January 2010, EPA established a new, primary 1-hour standard for further rulemaking.nitrogen dioxide. EPA is also requiring changes to its monitoring requirements for nitrogen dioxide, by establishing a new monitoring network, principally in urban areas, requiring that such new monitors be installed and operational by January 2013. EPA has indicated that this new standard must be taken into account when permitting new or modified sources of NO_x emissions such as fossil fuel-fired power plants.

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    Clean Air Mercury Rule and State-Related Mercury Rules.    In 2005, EPA finalized a regulation that would control emissions of mercury, by creating a market-based cap-and-trade program that would reduce emissions of mercury in two phases, with the first phase becoming effective in 2010 and the second in 2018. In litigation challenging the rule, in early 2008, the D.C. Circuit vacated and remanded the cap-and-tradethis rule and a companion ruleregulation delisting electric generating units from the hazardous air pollutant source list in Section 112 of the Clean Air Act. Appeal of this decision to the U.S. Supreme Court was recently dismissed. While Georgia elected to include the EPA cap-and-trade program in its SIP, the outcome of this litigation is expected to negatehas negated that portion of Georgia's plan. Recently, EPA indicated its intent to conduct a rulemakingrulemakings that would set Maximum Achievable Control Technology ("MACT")maximum achievable control technology limits for certain hazardous air pollutants (that would include mercury) for coal and oil-fired electric generating units.units, proposing such rules by March 2011 and finalizing such regulations by November 2011. In addition, EPA has issued an information collection request to collect data intended for use in such rulemakings. Georgia's mercury rules include a "multi-pollutant rule" that requires operation of the existing SCRsselective catalytic reduction systems (nitrogen oxides) and scrubbers (sulfur dioxide and mercury) being installed at Plant Wansley as well as additional controls for mercury (activated carbon injection and baghouse), sulfur dioxide (scrubber) and nitrogen oxides (selective catalytic reduction system) at Plant Scherer. The MACTmaximum achievable control technology rulemaking for mercury and other hazardous air pollutants might affect current state rules like the multi-pollutant rule, and might require other rules or revisions to Georgia's SIP.

    New Source Review ("NSR").Review.    In November 1999, the United States Justice Department, on behalf of EPA, filed lawsuits against GPCGeorgia Power and some of its affiliates, as well as other utilities. The lawsuits allege violations of the new source review provisions and the new source performance standards of the Clean Air Act at, among other facilities, Scherer Unit Nos. 3 and 4. Oglethorpe isWe are not currently named in the lawsuits and Oglethorpe doeswe do not have an ownership interest in the named units of Plant Scherer. However, Oglethorpewe can give no assurance that units in which Oglethorpe haswe have an ownership interest will not be affected by this or a related lawsuit in the future. The case has remained administratively closed since the spring of 2001. The resolution of this matter is highly uncertain at this time, as is any responsibility of Oglethorpe for a share of any penalties and capital costs required to remedy anyour violations at its co-owned facilities.

    In December 2002Rulemakings that could impose new source review requirements on greenhouse gases (including carbon

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dioxide) under the Prevention of Significant Deterioration (PSD) preconstruction permitting program began in earnest last year. After a September 2009 rule regulating greenhouse gas emissions from new motor vehicles and an October 2003,2009 rule applying the motor vehicle rule to stationary sources were proposed, EPA promulgated revisions to its NSR rules. Petitions to review both of theseissued a final rules were filed with the D.C. Circuit. In June 2005, that Court upheld the December 2002 rule in part. However, it also vacatedDecember 2009 determining that certain portions of the rule,greenhouse gas emissions from new motor vehicles, including those excluding pollution control projects from NSR. The October 2003 rule, which was intendedcarbon dioxide, endanger public health or welfare. Until very recently, EPA indicated its intent to clarify the scope of the exclusion for routine maintenancefinalize these proposed rules and repair, was vacatedother proposed rules by the court in March 2006.Spring of 2010, such that certain greenhouse gases (including carbon dioxide) would become regulated pollutants for stationary sources (including power plants) under the PSD preconstruction permitting and the Title V operating permit programs at that time. In October 2005,late February of 2010, however, EPA also proposed a rule to clarify the test to be usedindicated that PSD for determining whether, following a change to a unit, an emissions increase would, for purposes of NSR, be deemed to occur. However, on December 10, 2008, EPA announced that itmajor stationary sources would not finalize that proposal.be triggered before January 1, 2011.

    Clean Air Act Summary.    Oglethorpe believesWe believe that the controls being designed and/or installed at Plants Wansley and Scherer will meet the requirements of the rules described above. However, because (1) several of these proposed or final Clean Air Act regulations could require control of the same emissions, (2) the compliance requirements remain uncertain, (3) litigation challenging some or all of these rules is likely, and (3)(4) specific control technologies affect multiple emissions, Oglethorpewe cannot determine the aggregate effect of these or future regulations.

    Depending on the final outcome of these developments, and the implementation approach selected by EPA and the State of Georgia with respect to environmental regulations, we may have to incur significant capital expenditures and increased operation expenses could be incurred by Oglethorpe for the continued operation of Plants Wansley and/or Scherer.

    Compliance with the requirements of the Clean Air Act may also require increased capital or operating expenses on the part of GPC.Georgia Power. Any increases in GPC'sGeorgia Power's capital or operating expenses may cause an increase in the cost of power purchased from GPC.Georgia Power. (See "THE"OUR MEMBERS AND THEIR POWER SUPPLY RESOURCES –Member Power Supply Resources –GPCGeorgia Power Block Purchase."")

Carbon Dioxide Emissions and Climate Change

    Efforts to limit emissions of carbon dioxide from power plants continue to increase. Laws that would limit suchSuch limitations on emissions could originate in the Congress, the executive branch or existingthe courts. International developments may also influence the development of any laws could be applied as an outgrowth of litigation.to control emissions or carbon dioxide from power plants.

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    Congress continues to consider legislation, including climate-change legislation, that    Congressional legislative proposals being considered would amend the Clean Air Act or other federal statutes, many versions of which may impose new types of regulation or more stringent emissions limitations for greenhouse gases, including limits related to carbon dioxide, emissions on power plants. Although there are many differences in these legislative proposals, mostIn June 2009, the House of Representatives passed the American Clean Energy and Security Act of 2009 (H.R. 2454), also known as the Waxman-Markey bill, which would impose caps on emissions of carbon dioxide at existing and future power plants that would increase in stringency over time. In addition toestablish, among other things, a cap-and-trade system (starting at 17% below 2005 levels by 2020, tightening to 83% by 2050) for greenhouse gas emissions in the U.S. The bill also includes a national renewable electricity standard, which would begin at 6% of retail sales in 2012, increase to 20% in 2020, and remain at that level through 2039. While we will not be subject to the annual renewable electricity standard – it would apply only to retail electric suppliers that sell at least 4,000,000 megawatt hours of electricity to retail consumers – initially two of our members would be subject to the standard. We are currently pursuing the construction of a 100 megawatt renewable biomass power generation facility in Georgia that we believe would qualify under the bill's renewable electricity standard. Senate legislation and initiatives, like the Clean Energy Jobs and American Power Act of 2009, the American Clean Energy Leadership Act of 2009 and the Kerry – Lieberman – Graham framework could includeproduce results similar to H.R. 2454. We cannot predict at this time whether any legislative actions will result in a tax on carbonrenewable electricity standard applicable to our members or in the regulation of greenhouse gas emissions and/or incentives to develop low-carbon technology. Congress may also consider other legislation with perceived GHG reduction benefits, such as afrom our power plants, nor can we predict the impacts from any relevant federal renewable energy portfolio standard. Oglethorpe's emissionslegislation. Emissions of carbon dioxide from itsour plants totaled approximately 1310 million short tons in 2008. The impact of any federal legislation would depend upon the specific requirements enacted and cannot be determined at this time.2009.

    Litigation related to carbon dioxide emissions continues on numerous fronts, and the outcome of such litigation could affect the power plants owned by Oglethorpe.    Executive Branch Action.    In 2007, the U.S. Supreme Court ruled inMassachusetts v. EPA that certain greenhouse gases, including carbon dioxide, wereare pollutants which EPA has the authority to regulate under the Clean Air Act, if EPA concludes regulation is needed to protect public health or welfare. The Court directed EPA to decide whether such regulation is

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needed. In response, and as a reflection of current Administration priorities, EPA issued an advance notice of proposed rulemakinga final rule in July of 2008, seeking comment on whether EPA should undertake to regulateDecember 2009 determining that certain greenhouse gas emissions (including carbon dioxide) from new motor vehicles endanger public health or welfare. Other relevant rules, while not yet finalized, could lead to the direct regulation of greenhouse gas emissions from power plants. In September 2009, EPA proposed a rule relating to the regulation of greenhouse gases from light-duty vehicles. In October 2009, EPA proposed another rule conveying its interpretation of when a pollutant (such as a greenhouse gas like carbon dioxide) becomes "subject to regulation" under the Clean Air Act. Further,Also in October 2009, EPA recently announcedproposed significance thresholds for greenhouse gas emissions, to determine when new or modified stationary sources could trigger new source review and issued a proposed rule that would requirerequiring the annual reporting (beginning in 2011 for 2010 emissions) of greenhouse gas emissions by many industries, including the electric utility industry, and by fossil fuel suppliers. Until very recently, EPA has stated its intention to finalize these proposed rules in the Spring of 2010, and has taken the position that these rules when finalized would begin the process of regulating emissions of greenhouse gases from both mobile and stationary sources. In late February of 2010, however, EPA indicated that new source review for major stationary sources of greenhouse gas emissions would not be triggered before January 1, 2011. Finally, EPA has stated its intention to issue a revised New Source Performance Standard (NSPS) for steam generating units operated by electric utilities (and other industrial and commercial facilities) in 2010. That rulemaking is in response to a petition for review of EPA's refusal to adopt regulations governing power plant emissions of carbon dioxide and other greenhouse gases under the Clean Air Act. After the Supreme Court reached its decision inMassachusetts v. EPA, the U.S. Court of Appeals for the D.C. Circuit remanded the case back to EPA in September 2007 for further proceedings in light of that decision. Both of the final rules discussed above are subject to numerous petitions for review, and challenges to the remaining rules may be brought if and when such rules are finalized. We cannot predict at this time whether these developments will ultimately result in the regulation of greenhouse gas emissions from our power plants, or the effects of any such regulation.

    Litigation.    Litigation related to carbon dioxide emissions continues on numerous fronts, and the outcome of such litigation could affect the power plants we own. In another case, in 2004, Attorneys General from eight states and the Corporation Counsel of New York filed a complaint in the U.S. District Court for the Southern District of New York against Southern Company and four other electric power companies. The complaint alleges that the companies' emissions of carbon dioxide contribute to global warming, which the Plaintiffsplaintiffs claim is a public nuisance. Plaintiffs seek injunctive relief only to abate the alleged nuisance. In September 2005, the Court granted the defendants' motions to dismiss, which the plaintiffs appealed in October 2005. The matter is now awaiting decision inIn September 2009, the U.S. Court of Appeals for the Second Circuit. In a companion case toCircuit ruled in favor of the Supreme Court matter, state, municipalplaintiffs, vacating dismissal of their claims and private parties filed a petition for review of EPA's failure to adopt regulations governing power plant emissions of carbon dioxide and other greenhouse gases under the Clean Air Act. In issuing a new final rule establishing updated New Source Performance Standards ("NSPS") for steam generating units operated by electric utilities (and other industrial and commercial facilities), EPA took the position that it did not have the authority to set NSPS regulating these greenhouse gases under the Clean Air Act. EPA did not set a NSPS for carbon dioxide in the rule, relying on its findings prior to the Supreme Court case that it has no authority under the Clean Air Act to establish regulations that address climate change. Petitioners challenged the NSPS on numerous grounds, including that EPA should have set a standard for carbon dioxide. After the Supreme Court reached its decision discussed above, the D.C. Circuit remandedremanding the case back to EPAthe district court. In November defendants sought rehearing in the case, which also is subject to a potential appeal.

    In an October 2009 decision involving common law claims for both injunctive relief and property damage allegedly caused by greenhouse gas emissions, the U.S. Court of Appeals for the Fifth Circuit reversed the U.S. District Court for the Southern District of Mississippi's dismissal of private property claims against certain oil, coal, chemical and utility companies alleging damages from Hurricane Katrina. In reversing the case, the Fifth Circuit held that plaintiffs have standing to assert their nuisance, trespass and negligence claims. Contrary to the decision of the District Court, the Fifth Circuit concluded that these claims were not barred by the political question doctrine where, under separation of power principles, federal courts decline to rule on questions deemed more appropriate for action first by Congress or the Executive Branch. In March of 2010, however, the Fifth Circuit agreed to a rehearing of the case before the entire Court.

    In February 2008, the Native Village of Kivalina and the City of Kivalina filed suit in the U.S. District Court for the Northern District of California against several electric utilities, several oil companies and one coal company, alleging that their village in Alaska is being destroyed by erosion caused by global warming attributable to defendants' greenhouse gas emissions. The plaintiffs assert claims for public and private nuisance and seek damages, on a joint and several basis and in the range of $95 million to $400 million from defendants for lost property values and the costs of relocating the village. In September 2007of 2009, the district court granted defendants' motions to dismiss the case,

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ruling the plaintiffs lacked standing to bring the case and that plaintiffs' claims were barred by the political question doctrine. Plaintiffs appealed the case to the U.S. Court of Appeals for further proceedingsthe Ninth Circuit in lightNovember of that decision.2009.

    In June 2008, a Fulton County, Georgia Superior Court Judge overturned an air quality permit issued to Longleaf Energy Associates, LLC ("Longleaf") for the construction of a coal-fired power plant in Early County, Georgia. This permit had previously been upheld by the Office of State Administrative Hearings ("OSAH")(OSAH) after an appeal by the Sierra Club and Friends of the Chattahoochee. The judgment set aside OSAH's decision, on every issue raised on appeal, and concludedconcluding that carbon dioxide emissions are regulated and thus require permitting under the Clean Air Act, an issue withAct. On appeal, the potential to bring the permitting of new air emission sources of any significant size in Georgia (including new electric generating plants currently being considered by Oglethorpe) to a halt. Both Georgia and Longleaf appealed, and that ruling is currently under reviewdecision was reversed by the Georgia Court of Appeals. Oglethorpe is participating as an Amicus CuriaeThe case was, for other reasons, remanded for further OSAH evidentiary proceedings unrelated to the carbon dioxide issue. Sierra Club and Friends of the Chattahoochee applied for discretionary appeal of the case to the Georgia Supreme Court, which in that appeal,September 2009, decided not to hear the appeal. Recently, Sierra Club and cannot at this time determine whether any ruling will ultimately impactFriends of the process of permitting new or modified sources in Georgia. Other ongoingChattahoochee filed a motion for reconsideration with the Georgia Supreme Court. That motion was denied, ending the appeal. Ongoing litigation and administrative review actions are pending in other states, where, like the Georgia case, it is being argued that Best Available Control Technologybest available control technology is required for carbon dioxide emissions from new or modified sources under the Clean Air Act. We cannot predict at this time whether any of these actions will result in the regulation of greenhouse gas emissions from our power plants, or the effects of any such regulation.

    Other issues raised by global climate change are also being litigated in courts throughout the United States.

For example, a current case in the United States District Court for the District of Columbia (Sierra(Sierra Club v. USDA, et al.al.; No. 07-1860) is based on an argument that the consents or approvals issued by RUSthe Rural Utilities Service in its capacity as a lender for a coal-fired power plant constitute a major federal action and therefore triggerstriggering the environmental review requirements of the National Environmental Policy Act ("NEPA").(NEPA), which requires federal agencies to assess the environmental impacts of their major actions. Other litigation addresses the extent to which any reviewing federal agency must consider the impact of GHGgreenhouse gas emissions in the NEPANational Environmental Policy Act review process. WeIn February 2010, the Council on Environmental Quality issued draft guidance confirming that federal agencies, when conducting their scoping reviews under NEPA, should consider whether an analysis of direct and indirect emissions of greenhouse gases from their proposed actions may provide meaningful information to decision-makers and the public. Federal agencies are instructed to consider not only whether evaluated actions may increase emissions of greenhouse gases, but also the relationship climate change effects may have on proposed and considered actions. Given the broad nature of these inquiries, we cannot currently predict how GHGgreenhouse gas emissions issues will arise in connection with our pending or future permit proceedingsinteraction with federal agencies, including the pursuit of necessary consents, approvals or permits, or whether litigation based on climate change issues will adversely affect our construction and development plans.

    International Developments.    International climate change negotiations under the United Nations Framework Convention on Climate Change continue. In the latest round of formal discussions in Copenhagen in December of 2009, nonbinding agreements were reached that included a pledge from participating countries to reduce their emissions of greenhouse gases. The outcome and impact of these international negotiations cannot be determined at this time.

    While the outcome of these matters cannot be determined at this time, adverse results in one or more of these casesthe above-described matters could result in substantial capital expenditures and/or increased operating costs at Oglethorpe'sour fossil-fuel fired power plants (especially Plants Wansley and Scherer) and potentially impact the ability to permit new sources.

Other Environmental Regulation

    After the release of over five million cubic yards of fly ash from a power plant ash storage facility in Tennessee in December 2008, EPA has been under increased pressure to regulate the handling and storage of coal combustion products at the federal level. Coal combustion waste disposed in landfills and surface impoundments is currently a regulated solid waste thatonly at the state level and in most cases is exempt fromnot considered a hazardous waste regulations.waste. As part of a 2000 regulatory determination, EPA ishad been developing national solid waste management standards to address coal combustion waste and is continuing to consider whether coal combustion waste may continue to be classified as

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non-hazardous under the Resource Conservation and Recovery Act. The new standards, expected in early 2010, will likely include increased groundwater monitoring, more stringent siting requirements and closure of existing coal waste management facilities not meeting minimum standards. EPA has requested information on current ash impoundments at coal-fired power plants and is continuing to evaluate the safety of these structures. In January 2010, EPA also proposed to include the electric utility industry among those for which it plans to develop proposed regulations identifying appropriate financial responsibility requirements under the Comprehensive Environmental Response, Compensation, and Liability Act. Depending on the outcome of such rulemaking, whichthese rulemakings, we may occur in 2009,incur substantial additional costs for the management, beneficial use and disposal of these wastes might be required of Oglethorpe.

    Under the Clean Water Act, EPA and state environmental agencies are developing total maximum daily loads ("TMDLs") for certain impaired state waters. The establishment of TMDLs and/or additional measures to control non-point source pollution may result in a tightening of limits in water discharge permits for power plants, including Plants Wansley and Scherer. As the impact will depend on the actual TMDLs and the corresponding permit limitations that are established, the effects of such developments cannot be predicted at this time.wastes.

    Since 2005, EPA has been carrying out a review of wastewater discharges from coal-fired power plants to determine whether new Steam Electric Power Generating effluent guidelines that cover wastewater limitationsdischarge standards under the Clean Water Act are needed. In August 2008, EPA published an interim report on the status of the studies undertaken and the findings to date. Upon completion of the study, EPA announced in late 2009 its intention to revise these guidelines, proposing to adopt such revisions by 2013. We cannot predict at this time whether any such regulations by EPA, will determine whether the current national effluent limitations guidelines for power plants need to be updated. Depending upon the outcome of this determination andor any implementing actionsaction by the State of Georgia, will impact the current methods of wastewater permit limitsor ash disposal utilized at Plants Scherer and Wansley could be affected.our plants.

    In February 2008, the Georgia legislature adopted a comprehensive state water plan for Georgia. The stated purpose of this plan is to guide Georgia in managing water resources in a sustainable manner to support the state's economy, to protect public health and natural systems, and to enhance the quality of life for all citizens. The plan lays out statewide policies, management practices, and guidance for regional planning. The provisions of this plan are intended to guide river basin and aquifer management plans and regional water planning efforts statewide in a manner consistent with existing state law. Power generation is a key use of water in the state, and any regulations or other enforceable requirements developed in response to this plan or subsequent regional plans may have substantial effects on the operations of Oglethorpe'sour facilities or future facilities constructedwe construct or acquired by Oglethorpe.acquire. The impacts of this water plan cannot be determined at this time and will depend on the development of future implementing regulations.

    Oglethorpe isWe are subject to other environmental statutes including, but not limited to, the Georgia Water Quality Control Act, the Georgia Hazardous Site Response Act, the Toxic Substances Control Act, the Endangered Species Act, the Comprehensive Environmental Response, Compensation and Liability Act, the Emergency Planning and Community Right to Know Act, and to the regulations implementing these statutes. Oglethorpe doesWe do not believe that compliance with these statutes and regulations will have a material impact on itsour financial condition or results of operations. Changes to any of these laws, some of which are being reviewed by Congress, could affect many areas of Oglethorpe'sour operations. Although compliance with new environmental legislation could have a significant

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impact on Oglethorpe,us, those impacts cannot be fully determined at this time and would depend in part on the final legislation and the development of implementing regulations.

    Oglethorpe,We, or generating facilities in which Oglethorpe haswe have an interest, are also subject, from time to time, to claims relating to operations and/or emissions, including actions by citizens to enforce environmental regulations and claims for personal injury due to such operations and/or emissions. OglethorpeWe cannot predict the outcome of current or future actions, theour responsibility of Oglethorpe for a share of any damages awarded or any impact on facility operations. Oglethorpe,We, however, doesdo not believe that the current actions will have a material adverse effect on itsour financial position or results of operations.

Nuclear Regulation

    Oglethorpe isWe are subject to the provisions of the Atomic Energy Act of 1954 as amended (the "AtomicAtomic Energy Act")Act), which vests jurisdiction in the NRCNuclear Regulatory Commission over the construction and operation of nuclear reactors, particularly with regard to certain public health, safety and antitrust matters. The National Environmental Policy Act has been construed to expand the jurisdiction of the NRCNuclear Regulatory Commission to consider the environmental impact of a facility licensed under the Atomic Energy Act. Plants Hatch and Vogtle are being operated under licenses issued by the NRC.Nuclear Regulatory Commission. All aspects of the construction, operation and maintenance of nuclear power plants are regulated by the NRC.Commission. From time to time, new NRCCommission regulations require changes in the design, operation and maintenance of existing nuclear reactors.

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Operating licenses issued by the NRCCommission are subject to revocation, suspension or modification, and the operation of a nuclear unit may be suspended if the NRCCommission determines that the public interest, health or safety so requires. The operating licenses issued for each unit of Plants Hatch and Vogtle expire in 2034 and 2038 and 20272047 and 2029,2049, respectively. An application to extend the licenses for each Unit at Plant Vogtle for an additional 20 years was submitted to the NRC in June 2007.

    Applications have been filed with the NRCNuclear Regulatory Commission for an Early Site Permitearly site permit and for a Combined Constructioncombined construction permits and Operating Licenseoperating licenses that would allow the construction and operation of two additional Unitsunits at Plant Vogtle. See "OGLETHORPE"OUR POWER CORPORATIONSUPPLY RESOURCES –Future Power Resources."

    Pursuant to the Nuclear Waste Policy Act of 1982, as amended, the federal government has the responsibility for the final disposal of commercially produced high-level radioactive waste materials, including spent nuclear fuel. This Actact requires the owner of nuclear facilities to enter into disposal contracts with the DOEDepartment of Energy for such material. These contracts require each such owner to pay a fee, which is currently just under one dollar per MWhmegawatt-hour for the net electricity generated and sold by each of its reactors.

    Contracts with DOEthe Department of Energy have been executed to provide for the permanent disposal of spent nuclear fuel produced at Plants Hatch and Vogtle. DOEThe Department of Energy failed to begin disposing of spent fuel in 1998 as required by the contracts, and GPC,Georgia Power, as agent for the co-owners of the plants, is pursuing legal remedies against DOEthe Department of Energy for breach of contract. See Note 1 of Notes to Consolidated Financial Statements for information regarding the outcome of this litigation.

    Plants Hatch and Vogtle currently have on-site spent-fuel wet storage capacity and Plant Hatch has an on-site dry storage facility. The on-site dry storage facility for Plant Hatch became operational in 2000 and can be expanded to accommodate spent fuel through the life of the plant. Plant Vogtle's spent fuel pool storage is expected to be sufficient until 2015. Oglethorpe expectsWe expect that procurement of on-site dry storage capacity at Plant Vogtle will commence in sufficient time to maintain full-core discharge capability to the spent fuel pool. (See Note 1 of Notes to Consolidated Financial Statements.)

    For information concerning nuclear insurance, see Note 8 of Notes to Consolidated Financial Statements. For information regarding NRC'sthe Nuclear Regulatory Commission's regulation relating to decommissioning of nuclear facilities and regarding DOE'sthe Department of Energy's assessments pursuant to the Energy Policy Act for decontamination and decommissioning of nuclear fuel enrichment facilities, see Note 1 of Notes to Consolidated Financial Statements.

Federal Power Act

    Oglethorpe isWe are subject to the provisions of the Federal Power Act applicable to licensees with respect to their hydroelectric developments. Rocky Mountain is a hydroelectric project subject to licensing by FERC.the Federal Energy Regulatory Commission.

    Oglethorpe hasWe have a license, expiring in 2027, for Rocky Mountain. See "PROPERTIES –Generating Facilities" for additional information.

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    Upon or after the expiration of the license, the United States Government, by act of Congress, may take over the project or FERCthe Federal Energy Regulatory Commission may relicense the project either to the original licensee or to a new licensee. In the event of takeover or relicensing to another, the original licensee is to be compensated in accordance with the provisions of the Federal Power Act, such compensation to reflect the net investment of the licensee in the project, not in excess of the fair value of the property taken, plus reasonable damages to other property of the licensee resulting from the severance therefrom of the property taken. If FERCthe Federal Energy Regulatory Commission does not act on the new license application prior to the expiration of the existing license, FERCthe commission is required to issue annual licenses, under the same terms and conditions of the existing license, until a new license is issued.

    The Energy Policy Act of 2005 amended the Federal Power Act to authorize FERCthe Federal Energy Regulatory Commission to establish regional reliability organizations authorized to enforce reliability standards and to establish clear responsibility for FERCthe commission to prohibit manipulative energy trading practices. As a generation owner and participant in wholesale power transactions, Oglethorpewe could be subject to penalties for violation of these standards and regulations.

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ITEM 1A.  RISK FACTORS

    The following describes the most significant risks, in management's view, that may affect Oglethorpe'sour business and financial condition. This discussion is not exhaustive, and there may be other risks that Oglethorpe faceswe face which are not described below. The risks described below, as well as additional risks and uncertainties presently unknown to Oglethorpeus or currently not deemed significant, could negatively affect Oglethorpe'sour business operations, financial condition, and future results of operations.

We are undertaking a large capital expansion program that will significantly increase our long-term debt.

    We are undertaking a large capital expansion program to meet the future energy needs of our members, and we will incur a significant amount of long-term debt in connection with this capital expansion program. As of December 31, 2009, we had $4.3 billion of long-term debt outstanding. For 2010 through 2017, we project that we will invest approximately $6.0 billion to $8.0 billion in new generation facilities and upgrades to our existing generation facilities. As a result of this program, we project that we will have approximately $10.0 billion in long-term debt outstanding by the end of 2017. See "BUSINESS – OUR POWER SUPPLY RESOURCES – Future Power Resources" and "MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS – Financial Condition –Capital Requirements –Capital Expenditures."

    As discussed below, Oglethorpe's operations are affected by local, nationalThis significant increase in long-term debt is expected to increase the cost of electric service we provide to our members. In addition, we will continue to be highly leveraged and worldwide economic conditions. The consequencescertain of a prolonged recessionour financial metrics may include a lower levelweaken, which could impact our credit ratings. To address this situation, our board of economic activitydirectors approved budgets for 2009 and uncertainty regarding energy prices2010 to achieve 1.12 and 1.14 margins for interest ratios, respectively; each above the capitalminimum 1.10 margins for interest ratio required under the indenture. However, even with these higher margins, due to the amount of incremental debt associated with new generation construction, our equity ratio will continue to decrease during the period of construction. Any reduction in our credit ratings could increase our borrowing costs and commoditydecrease our access to the credit and capital markets.

Oglethorpe'sWe are exposed to cost uncertainty in connection with our construction projects at existing and new generating facilities.

    Our existing facilities require ongoing capital expenditures in order to maintain efficient and reliable operations. Many of our facilities were constructed over 20 to 30 years ago and, as a result, may require significant capital expenditures in order to maintain efficiency and reliability, and to comply with changing environmental requirements. In addition, due to projected growth in their service territories as well as the expiration or renegotiation of certain of their supplemental power supply agreements, our members have requested that we expand our existing generating facilities and build or acquire new generating facilities, which will require significant capital expenditures and investment.

    The completion of construction projects without delays or cost overruns is subject to substantial risks, including:

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potential contract disputes;

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shortages and inconsistent quality of equipment, materials and labor;

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work stoppages;

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permits, approvals and other regulatory matters;

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adverse weather conditions;

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unforeseen engineering problems;

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environmental and geological conditions;

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delays or increased costs to interconnect our facilities to transmission grids;

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unanticipated increases in the costs of materials and labor;

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performance by engineering, construction or procurement contractors;

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increases in our cost of debt financing; and

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attention to other projects.

    In addition, the construction of large generating plants involves significant financial risk. Moreover, no nuclear plants have been constructed in the United States using advanced designs. Therefore, estimating the cost of construction of any new nuclear plant is inherently uncertain. Although our engineering, procurement and construction contract for the additional