SALE OF BONDS

The bonds were purchased by a syndicate of investment bankers headed by Alvis and Company of Jackson, Mississippi and then resold to investors throughout the United States. The financing of the natural gas project was accomplished without cost by taxation or otherwise to the inhabitants of the service area or the State of Florida. The bonds issued and sold by the District were payable both as to principal and interest entirely by the income of the District's gas system. The taxpayers of the service area or the State of Florida have not incurred any liability for the support of the District or its indebtedness.

CONSTRUCTION COMPLETED

Although the system was not fully completed, the District began gas service to a limited area on November 1, 1963. It was not until April 1964 that the entire system was completed and placed into full operation.

PROGRESS TO DATE

By the end of August 1965, the District had connected its service to approximately 2,200 customers. The District then estimated it would have 3,450 customers on its lines by November 1, 1966. For the fiscal year ended October 31, 1966, the District estimated gross revenues of $325,000, with a corresponding profit (before debt service) of $100,000. It was also estimated that corresponding franchise payments would be $7,500. In contrast, the District currently has approximately 14,718 customers (residential, commercial, industrial and transportation). For the fiscal year ended September 30, 2007, the District had revenues of $13,558,044 with a corresponding profit of $1,797,686. Franchise fees paid to municipalities were in excess of $280,000. Additional distribution to member municipalities was $125,000. Finally, the District returned to the communities more than $2,600,000 in salaries and utilization of local merchants and utilities. As the District continues to grow, it continues to be a source of increasing revenue to its cities, to its counties (Orange, Lake), to the State of Florida, and to area businesses.

The system is constructed of high tensile strength steel welded pipe and heat-fusioned plastic pipe, ranging from 8" in diameter to 1½" in diameter. There are currently 630 miles of mains in the ground, with 16,000 service lines connected to the system.

SERVICE FACILITIES

In addition to the pipeline system, the District has a main office located in Winter Garden, as well as branch offices in Apopka and Clermont. In March 1998, the District built a new facility, increasing both administrative and warehouse capabilities. It has modern billing, accounting and communications systems. The physical properties of the system are maintained in excellent operating condition, meeting all regulatory criteria. A trained and experienced organization provides both operational and administrative depth, which allows the District to provide the best, most efficient and safest natural gas service to its customers.

RATES

Considering the large investment per customer, which was originally necessary to bring natural gas to the area, the District's current rates are fair to customers as well as competitive. Recent rate comparisons indicate that the District continues to rate well against other natural gas systems in the State of Florida.

CONCLUSION