4. Investments:

Investments in debt and equity securities

Investment securities we hold are classified as available-for-sale. Available-for-sale securities are carried at market value with unrealized gains and losses, net of any tax effect, added to or deducted from patronage capital, except that, in accordance with our rate-making treatment, unrealized gains and losses from investment securities held in the nuclear decommissioning trust fund are directly added to or deducted from the regulatory asset for asset retirement obligations. Realized gains and losses on the nuclear decommissioning trust fund are also recorded to the regulatory asset. All realized and unrealized gains and losses are determined using the specific identification method. Approximately 95% of these gross unrealized losses were in effect for less than one year.

For those securities considered to be available-for-sale, the following table summarizes the activities for those securities as of December 31, 2012 and 2011:

	Gross Unrealized


		(dollars in thousands)

2012		Cost		Gains		Losses			Fair Value

Equity	$	153,846	$	45,071	$	(3,675	)	$	195,242
Debt		163,127		10,286		(4,501	)		168,912
Other		13,654		–		–			13,654

Total	$	330,627	$	55,357	$	(8,176	)	$	377,808

		(dollars in thousands)
		Gross Unrealized
2011		Cost		Gains		Losses			Fair Value

Equity	$	149,263	$	29,789	$	(9,996	)	$	169,056
Debt		160,218		18,021		(11,063	)		167,176
Other		15,646		1,035		(1,541	)		15,140

Total	$	325,127	$	48,845	$	(22,600	)	$	351,372

All of the available-for-sale investments are marked to market in the accompanying consolidated balance sheets, therefore the carrying value equals the fair value.

The contractual maturities of debt securities available-for-sale, which are included in the estimated fair value table above, at December 31, 2012 and 2011 are as follows:



		(dollars in thousands)
		2012				2011
		Cost		Fair Value		Cost		Fair Value

Due within one year	$	2,265	$	2,191	$	2,074	$	2,051
Due after one year through five years		43,050		43,533		32,149		32,598
Due after five years through ten years		68,893		71,217		68,987		74,010
Due after ten years		48,919		51,971		57,008		58,517

Total	$	163,127	$	168,912	$	160,218	$	167,176

The following table summarizes the realized gains and losses and proceeds from sales of securities for the years ended December 31, 2012, 2011 and 2010:



		(dollars in thousands)
		For the years ended December 31,
		2012			2011			2010

Gross realized gains	$	28,959		$	31,130		$	24,634
Gross realized losses		(18,175	)		(16,215	)		(10,395	)
Proceeds from sales		666,481			1,064,377			622,124

Investment in associated companies

Investments in associated companies were as follows at December 31, 2012 and 2011:



		(dollars in thousands)
		2012		2011

National Rural Utilities Cooperative
Finance Corporation (CFC)	$	24,005	$	23,993
CoBank, ACB		2,931		3,345
CT Parts, LLC		7,128		5,633
Georgia Transmission Corporation		20,867		19,291
Georgia System Operations Corporation		4,375		3,911
Other		1,464		1,453

Total	$	60,770	$	57,626

The CFC investments are primarily in the form of capital term certificates and are required in conjunction with our membership in CFC. Accordingly, there is no market for these investments. The investments in CoBank and Georgia Transmission represent capital credits. Any distributions of capital credits are subject to the discretion of the board of directors of CoBank and Georgia Transmission. The investments in Georgia System Operations represent loan advances. The loan repayment schedule ends in December 2015.

CT Parts, LLC is an affiliated organization formed by us and Smarr EMC for the purpose of purchasing and maintaining a spare parts inventory and administration of contracted services for combustion turbine generation facilities. Such investment is recorded at cost.

We and our 38 members are members of Georgia Transmission. Georgia Transmission provides transmission services to its members for delivery of its members' power purchases from us and other power suppliers. We have entered into an agreement with Georgia Transmission to provide transmission services for third party transactions and for service to our own facilities. For 2012, 2011, and 2010, we incurred expenses from Georgia Transmission of $26,035,000, $25,128,000, and $25,491,000, respectively.

We, Georgia Transmission and 37 of our members are members of Georgia Systems Operations. Georgia Systems Operations operates the system control center and currently provides us system operations services and administrative support services. For 2012, 2011, and 2010, we incurred expenses from Georgia Systems Operations of $18,870,000, $17,793,000, and $16,848,000, respectively.

Smarr EMC is a Georgia electric membership corporation owned by 35 of our 38 members. Smarr EMC owns two combustion turbine facilities. We provide operations, financial and management services for Smarr EMC.

Rocky Mountain transactions

In December 1996 and January 1997, we entered into six long-term lease transactions relating to our 74.61% undivided interest in Rocky Mountain. In each transaction, we leased a portion of our undivided interest in Rocky Mountain to six separate owner trusts for the benefit of three investors, referred to as owner participants, for a term equal to 120% of the estimated useful life of Rocky Mountain. Immediately thereafter, the owner trusts leased their undivided interests in Rocky Mountain to our wholly owned subsidiary, Rocky Mountain Leasing Corporation, or RMLC, for a term of 30 years under six separate leases. RMLC then subleased the undivided interests back to us under six separate leases for an identical term.

In 2012, we terminated five of the six lease transactions prior to the end of their lease terms. The five leases were each owned by separate owner trusts for the benefit of two of the owner participants, and represented approximately 90% of the six original lease transactions. As a result, only one of the original lease arrangements, approximately 10% of the original lease transactions, remains in place. In connection with these terminations, we incurred termination costs of $22,500,000 and recognized $41,400,000 of the deferred net benefit associated with the terminated leases, resulting in a net gain on termination of $18,900,000. The termination of these five leases significantly reduced our exposure to the credit counterparties participating in the leases.

The assets of RMLC are not available to pay our creditors or our affiliates', other than RMLC, creditors.