2013 10 upc ar

Making a Valuable Difference 2013 Annual Report

Union-1013-ar.indd 1

9/10/13 2:40 PM

Most great individuals, teams and organizations have principles—rules, beliefs or ideas that guide them and help them achieve success. Principles provide clear vision, uniting a group of individuals and moving them in the right direction. At Union Power, our 10 Guiding Principles convey our desire to exceed your expectations, and they unite us in our commitment to add value to your membership.

The foundation of our Guiding Principles is Member Focus. We do everything with you in mind.

Whether it’s providing superior customer service or integrating new technologies to help us serve you

more efficiently, member satisfaction is always at the forefront of our minds as we make important dayto-day decisions.

Integrity and Trust and Fiscal Responsibility are two Guiding

Principles that are very important for the success of any business. We value your trust, and we strive to steadily improve the Cooperative’s financial performance while being fiscally responsible with the money you spend on your electric bill.

We’ve succeeded in holding down operating costs by streamlining workflow processes, deploying state-of-the-art solutions to pinpoint and solve problems quickly, and proactively maintaining our system.

The Co-op’s strong financial health ensures that you get a return on your investment. Over the last five years, Union Power has distributed $14.3 million back to members through capital credits.

Three Guiding Principles, Continuous Improvement, Creative and Teamwork, come into play as we keep pace with everchanging technology. Co-op staffers

2 Union Power Cooperative

Union-1013-ar.indd 2

9/10/13 2:40 PM

Guiding Principles Member Focus Integrity & Trust developed Union Power’s Operations Dashboard, an award-winning, innovative way of merging data from across our business into one real-time, easy-to-use map that all personnel use. Our UPC Mobile App also demonstrates our commitment to add value by making it more convenient than ever for you to stay connected to the services we offer.

We demonstrate Stewardship by promoting conservation, energy efficiency, and the use of renewable energy sources, to help you save energy and money. We provide online energy-saving tools and information through our website, union-power.com. Union Power also participates in joint renewable energy projects with other electric cooperatives across the state, and we continuously educate and encourage our lawmakers to pass legislation that benefits you and keeps electric bills affordable.

Union Power employees demonstrate Citizenship, Teamwork, Empowerment, and Diversity as they work together to improve the quality of life in the communities we serve. During the past four years, our Hearts for Hospice campaign has contributed more than $156,000 to the Hospices of Union and Stanly counties through fundraisers and employees’

generous payroll deductions. Since 1994, our Bright Ideas educational grant program has awarded nearly $270,000 to fund more than 275 grants to teachers in our five-county service area. Projects like these show that the Cooperative and its employees value the communities where you live and work.

Our team here at Union Power keeps these Guiding Principles in mind every day as we work to ensure you get exceptional value from the money you spend on your electric bill. We will continually strive to add value to your membership while delivering the reliable service our members have depended on for 74 years.

Continuous Improvement Fiscal Responsibility Citizenship Teamwork Empowerment Stewardship Diversity

B. L. Starnes President, Board of Directors

Tony E. Herrin

Executive Vice President, General Manager

Creative 2013 Annual Report 3

Union-1013-ar.indd 3

9/10/13 2:40 PM

Making a Valuable Difference Union Power’s mission is to provide safe and reliable power with exceptional value. That value is represented in everything, whether it’s answering a question over the phone or restoring electricity after a storm. Members come first. The Board, staff and employees work together to deliver the highest standards of service and ensure that the objectives of the Cooperative are linked to your needs and expectations in the following five focus areas.

Union Power provides value by focusing on operational excellence.

Operational Excellence Union Power’s system is efficient and provides uninterrupted, reliable service 99.9% of the time: Continuous proactive maintenance helps personnel identify and correct small issues before they turn into larger, costlier problems. The Cooperative maintains more than 5,600 total miles of line in five counties. This includes approximately 3,100 miles of overhead lines and 2,500 miles of underground lines.

Building and upgrading infrastructure such as new substations and transmission lines helps the Co-op deliver reliable power and provide capacity for future load growth. Recent major projects include the upgrade of the Lambert Substation in Stanly County and the completion of the Twelve Mile Creek Substation and transmission line in Union County. Both projects ensure that the Cooperative continues to deliver safe, reliable power to thousands of members in portions of Stanly, Cabarrus and Union counties. Currently, a transmission

line siting study is underway to identify a route for a new 100,000-volt line connecting the Co-op’s Weddington and Marvin Substations in western Union County. The new transmission line will prevent overload of the existing 100,000-volt line while providing a second source of energy to each of the Cooperative’s five substations already serving the 17,000+ homes and businesses in that area.

Union Power’s vegetation management program is nationally recognized. The Co-op has been named a Tree Line USA Utility by the Arbor Day Foundation for commitment to proper tree pruning, planting and care. This is the Co-op’s eighth consecutive year of receiving this honor, and Union Power is the only electric cooperative in North Carolina to earn the distinction. Crews regularly trim trees and brush along power lines, preventing electrical hazards, and well-maintained rights-of-way have drastically decreased treerelated outages.

These upgrades and maintenance to the system are just a few ways

Financial Performance The Cooperative is always looking for ways to save on costs: By holding down operating costs, Union Power strives to help keep electric rates affordable. While there are external factors such as the cost of wholesale power and state taxes that cannot be controlled, the Co-op continually implements cost-saving measures throughout day-to-day operations.

The cooperative business model is special. Through capital credits, you receive returns on your investment in the Co-op. Union Power aims to operate at-cost, so any excess revenues are returned to you in the form of a check or a credit, depending on your length of service. This puts money back into your pockets. It’s a major difference between Union Power and investorowned utilities and an added benefit of being a Union Power member.

Member Service and Satisfaction Union Power’s goal is to meet or exceed member expectations by delivering valued products and services: Even though the Co-op is ranked in the top 5 percent of the largest electric cooperatives in the nation, Union Power personnel know that delivering real value to members includes providing that personal touch that may often be lacking from other service providers. In addition to member letters, emails

4 Union Power Cooperative

Union-1013-ar.indd 4

9/10/13 2:40 PM

and phone calls received praising Co-op employees for going “above and beyond” in providing excellent service, Union Power measures member service and satisfaction through participating in surveys. The American Consumer Satisfaction Index (ACSI) measures customer satisfaction on a 100point scale, across more than 190 of the leading corporations in America. In the last year, the Co-op received a high score of 87, which is a full 11 points higher than the utility industry average.

Union Power provides enhanced online energy tools to help you manage your energy use and find areas where you can save money. Being able to view account information and pay your bill online anytime adds value to your membership. Along with the Co-op’s website, Union Power offers members a mobile website and mobile apps to pay bills and stay connected to our many services.

Team Effectiveness Union Power strives to maintain an injury-free workforce that emphasizes safety both on and off the clock: Safety remains a top priority as Co-op employees continue to look

out for one another and educate members on electrical safety. All employees participate in numerous training programs to help in situations at work, at home, and in their communities. The goal is to reduce employee injuries and loss of work time, which in turn, helps hold down controllable costs. Union Power personnel conduct community workshops to educate members on safety and hold electrical safety demonstrations at elementary schools to discuss the importance of electrical safety with students.

Member Engagement Union Power cares about improving the quality of life in our communities: Union Power sponsors high school students to represent the Co-op as part of the Rural Electric Youth Tour. Students travel to Washington, D.C., where they have the opportunity to meet with congressmen, visit government agencies and historical sites, and learn more about government and the cooperative business model.

This program educates young people about the important role cooperatives play in the local and national economy.

Over the past 18 years, Union Power has invested nearly $270,000 in the lives of students through the Bright Ideas educational grant program. The Co-op has proudly awarded grants to deserving teachers for 276 innovative, classroom-based projects that would otherwise have gone unfunded, touching the lives of more than 52,000 students.

The Co-op Connections Card Program is a membership benefit that adds value to you and your family. This free membership provides discounts of 10 to 85 percent on prescriptions at more than 60,000 pharmacies nationwide.

In less than a year, Union Power members have saved more than $20,000 in prescription savings!

The card also offers savings from participating businesses on medical services, online discounts, and many local businesses.

Making a valuable difference in your life is what Union Power is about as Co-op personnel work together to provide exceptional value every day. Members will always come first as Union Power continually strives for excellence in each of these focus areas.

2013 Annual Report 5

Union-1013-ar.indd 5

9/10/13 2:40 PM

Financial Info

[as of December 31, 2012]

63%

How Each Dollar Is Spent

15%

7% 3%

8%

4%

Cost Of Power

Depreciation Costs

Cost to Operate

Cost of Borrowing Money

Net Margins

Taxes

Statistical Highlights Average Meters Billed Miles of Distribution Line Members per Mile of Line Total Assets Net Investment in Plant Total kWh Purchased Number of Employees Net Plant Investment per Member Monthly kWh Use per Residential Member Right-of-Way Maintenance Wholesale Power Costs % of Distribution System that is Underground

1992 2002 2012 29,187 3,555 8

47,481

67,157

4,890

5,608

10

56,344,101

131,105,347

44,321,336 482,119,470 89

12 258,913,573

114,992,731

224,967,189

884,982,743

1,239,266,437

109

114

1,519

2,422

3,350

1,150

1,285

1,260

754,431 1,787,332 2,963,831 25,803,932

42,482,946

84,593,736

14%

34%

46%

6  Union Power Cooperative

Union-1013-ar.indd 6

9/10/13 2:40 PM

Highlights of 2012 Annual Business Meeting What We Own

Assets:

Original Cost of Our System

We Estimate it Has Depreciated

Net Value of Our Property

Cash and Investment Reserves:

Cash on Hand and in Bank

$295,151,909 70,184,720 $224,967,189 17,044,474

Members Owe Us for Electric Bills

14,430,704

Materials and Supplies on Hand

1,967,636

Other Investments for Reserves & Property

Total Assets

503,570 $258,913,573

What We Owe

Liabilities:

Long-Term Debt

Notes Payable

14,000,000

We Owe for Power, Material, & Supplies

10,328,765

Current Portion Long-Term Debt

3,922,164

Consumer Deposits

3,453,933

Other Current & Accrued Liabilities

6,248,238

Deferred Credit

3,000,000

$111,336,096

Total We Owe

$152,289,196

Patronage Capital

106,624,377

Net Worth (Total Ownership in Co-op)

$106,624,377

Total Liabilities and Net Worth

$258,913,573

Where the

Money

Sale of Electric Energy

Came From

Non-Operating Income

How the

Money

was Used

Revenues:

Total Revenue

2,528,800 $137,063,208

Expenses: Wholesale Power Cost

84,593,736

Operating Expenses

22,190,132

Depreciation Expenses

Taxes Interest

134,534,408

Total Expense

8,747,435 4,325,683 5,989,310 $125,846,296

Net Margins

Secretary/Treasurer Jan Haigler read proof of mailing stating each member was notified by mail on September 24, 2012, of the date and time of the 2012 Annual Meeting.

Cooperative Attorney Bobby Griffin announced that 632 members were present or represented by proxy.

With Mr. Griffin presiding, Directors Jim T. Hartsell, Neil W. Hasty, Juanita W. Poplin, and B. L. Starnes were elected for three-year terms.

A short video entitled “Our Promise” was shown. Luanne Sherron, vice president of communications and key accounts, and Carrie Stroud, manager of communications, presented information about the Co-op Connections Card program.

Winners announced for $2,500 in door prizes.

Meeting adjourned by Board President B. L. Starnes.

$11,216,912

2013 Annual Report 7

Union-1013-ar.indd 7

9/10/13 2:40 PM

Board Members

Front, left to right: Juanita Poplin — District I, B. L. Starnes — President, District III, Lee Roy Kirk, Jr. — Vice President, District I, Rufus N. Reid — District VI

Monroe Corporate Office 1525 North Rocky River Road Monroe, NC 28110 Phone: (704) 289-3145

Back, left to right: Tom J. Caudle — District II, Carole P. Jones — District IV, Neil W. Hasty — District IV, Dent H. Turner, Jr. – Asst. Secretary-Treasurer, District I, Jan Haigler — Secretary-Treasurer, District V, David G. Hyatt — District II, Jim T. Hartsell — District VI

or (800) 922-6840 Fax: (704) 296-0408

Oakboro Office 474 S. Main Street Oakboro, NC 28129 Phone: (704) 485-3335 Fax: (704) 485-4725

union-power.com

Service Territories Union County is our largest service area. It covers 3,539 miles of energized line and 45,540 meters.

Stanly County is our second-largest service area. It covers 1,009 miles of energized line and 8,577 meters.

Cabarrus County is our third-largest service area. It covers 579 miles of energized line and 6,822 meters.

Mecklenburg County covers 349 miles of energized line and 6,025 meters.

Rowan County covers 156 miles of energized line and 1,061 meters.

Union-1013-ar.indd 8

9/11/13 9:18 AM