2023-09-CEMC AR

Powering Solutions

for a Brighter Future

Executive

Message

Your hometown utility continues to explore new energy solutions, enrich our communities and build a brighter future for those we serve.

Even as the utility industry landscape is changing, we’ve been keeping our members at the forefront of

innovation. Through a partnership with North Carolina Electric Membership Corporation (NCEMC), we’re integrating battery energy storage into our power supply mix. You’ll find more about this advanced technology on the following pages.

Board President Rebecca G. Cogan and CEO Eddie Oldham lead your cooperative in powering innovative solutions for a bright future.

With a goal of reaching net-zero emissions, we continued working towards reducing our carbon footprint and boosting your reliability. Working together with other North Carolina electric cooperatives, Central Electric is accessing a large network of resources, technologies and renewables.

As we continue this transition, we must also be careful of the speed at which we get there and conscious of the full-time capacity of resources. When renewable generation can't produce, because the sun doesn't always shine and the wind doesn't always blow, nuclear and natural gas help bridge the gap.

We focused on providing you with superior service, even in time of distress. We were put to the test last year when vandals damaged Duke Energy transmission equipment that served our Moore County substation. This unprecedented situation created widespread outages that left many members in the dark in the greater Carthage, Cameron and Vass communities.

Thanks to a contingency plan already in place, our team quickly restored service. We rerouted and distributed power from other areas of the system to those impacted. A continued emphasis on careful planning and security will help keep power flowing in the future.

Rising prices hit everyone’s wallet hard last year. And while your co-op wasn’t immune, we worked diligently to keep your costs low. Wholesale power expenses accounted for 62 cents of every dollar — slightly lower than budgeted. This allowed us to pass along a wholesale power cost adjustment (WPCA) credit on your 2022 December bill. Members also received capital credits, for the 14th consecutive year. Money back remains a benefit of being a memberowner of this not-for-profit cooperative.

As always, we focused on strengthening our communities and improving lives in 2022. Giving back our time and resources to groups in the local community remains a top priority for the co-op. We also continue to do our part in helping recruit new businesses and jobs to the area. In this report, you’ll find more ways we empowered our communities, provided opportunities for tomorrow’s leaders and energized education.

Our commitment to you and our communities grows even stronger each year, as we continue powering solutions for a brighter future that benefits us all.

Goals for a Brighter Future

By 2030

50% reduction in our carbon emissions from our 2005 levels

By 2050

Net-zero carbon emissions reached through a smart transition and diverse resources

reliability for you Enhancing

Your cooperative continually finds ways to best serve you. This includes innovative battery

Highlights

It takes a strong power delivery system to energize homes and businesses with safe, affordable electricity 24/7. To keep up with the evolving and expanding needs of our members and communities, we continually upgrade and maintain this system. We also incorporate cutting-edge ways to serve you.

For example, we added battery energy storage technology last year at our Doc’s Road substation near Spout Springs. Connected with other substation resources, the batteries charge when the demand for electricity is low and discharge during peak times, when demand is higher. This provides cost-effective backup power, while boosting power cost savings and reliability.

As members’ interest in residential solar and electric vehicles (EVs) grew last year, they relied on us for information. We delivered, with helpful tools and special rates on our website. And our energy experts answered members’ questions by phone.

Achieved a 99.9% reliability rating (uninterrupted power 99.9% of the time)

Maintained 2,615 miles of power lines

Added or replaced 38 miles of line

Managed 1,800 miles of right-of-way to help prevent tree-related outages

Our continued focus — and an essential part of achieving a brighter future — is safely providing you, our members, with power that’s affordable and reliable.

Trimming trees and overgrown vegetation along power lines decreases outages and helps keep safe, reliable power flowing.

energy storage.

Energizing local communities

It’s called our service area, with an emphasis on “service.” Our commitment to it remains woven into the very fabric of who we are. We demonstrated that care in multiple ways last year.

Operation Round Up® (ORU), funded by members’ voluntary donations, supported 40-plus local nonprofits, groups and charities. Our employees provided a hand to West Chatham Food Pantry, ensuring that residents in need received Thanksgiving meals.

Capital credit returns of more than $1 million signify the strength of the cooperative business model. Combined with our help in recruiting new businesses to the area, capital credits also boost our local economy and provide value directly to our members.

Twelve local educators were provided a total of $15,000 to help boost the curriculum in their classrooms, benefiting nearly 4,000 students from their innovative teaching projects. Five high schoolers received college scholarships, and our “Give Us an A” program rewarded 20 students for excellent grades.

Honoring our area’s military service members and veterans is an important part of giving back. Through a special partnership last year, we helped provide care packages, programs and services for military members stationed at Fort Bragg. Central’s Director of Marketing & Member Engagement, Janet Jackson, presents a check for $1,000 to Brian Knight, USO Sandhills Area Center Operations and Programs Manager.

At our Touchstone Energy Sports Camp last summer, two middle schoolers developed basketball and leadership skills. Three high schoolers attended Cooperative Leadership Camp, which emphasized both leadership and the co-op business model. As part of the Electric Cooperative Youth Tour in Washington, D.C., three students gained insight into how co-ops work, explored historical landmarks, cultivated leadership qualities and met with state legislators.

Connecting you with convenience and savings

Nearly half our members conducted business with us last year through digital, on-the-go services — including our online portal and mobile app. Those enrolled in Outage Texting quickly reported outages and received restoration updates.

With our free online energy tools, members identified ways to cut costs at their homes and businesses. Easy energy-saving tips, rebates on high-efficiency HVAC systems and programs like our low-interest Comfort Loan helped many reduce monthly bills. Our trusted energy advisors also performed phone and

in-home energy audits and answered members’ questions about high bills, solar energy and more.

We will continue to deliver convenient and innovative services that help you reduce costs and make life easier. This, too, builds a brighter future.

3,116 in-home, phone and online energy audits helped members cut energy costs.

Financial reports

The Balance Sheet shows total assets increased by more than $3.73 million during 2022. This raised the value of assets to more than $127 million. Central Electric’s membership fees, patronage capital and other equities totaled $62,706,936.

This member-furnished capital represents 49.05% of Central Electric’s assets. These funds are invested in Central Electric’s utility plant (lines, transformers, poles, trucks, etc.) to help ensure a reliable power delivery system.

The Statement of Operations shows operating revenue increased 1.42% from 2021. The total cost of supplying electric service increased 1.93% from 2021. Wholesale power, the largest expense, represented 62.80% of all expenses.

As a cooperative, operating margins (difference between revenue and cost of service) are posted to each member’s capital credits account. In 2022, operating margins were 1.39% compared with 1.89% in 2021.

The average number of consumers served increased from Jan. 1, 2022 to Dec. 31, 2022 by 1.59% as compared with 1.29% in 2021. The 2022 monthly average residential kilowatt-hours (kWh) sold per account was 1,305 kWh.

KEY STATISTICS

THE COST OF WHOLESALE POWER

HOW YOUR DOLLAR WAS SPENT IN 2022

Cost of Purchased Power (62%)

Operations Expense (25%)

Depreciation (8%)

Interest Expense (4%)

Total Operating Margins (1%)

The simplified Balance Sheet and Statement of Operations in this report for the 2022 and 2021 calendar years should assist members’ review of the cooperative’s financial condition. The accounting firm of Adams, Jenkins, and Cheatham completed its audit of the cooperative in April 2023. Copies of the report are available online at CEMCPower.com and at the Central Electric business office. The report shows Central Electric is financially sound.

MONEY BACK

As a member and an owner of Central Electric, you receive a unique benefit that you can “take to the bank.” Since we are a not-for-profit electric utility, a percentage of revenue left after paying expenses is returned to members in the form of capital credits. That means members get a share of what’s left over after expenses are paid and some funds are set aside for emergencies and the future. In 2022, the cooperative returned $1.1 million in capital credits to members who received service during 2002 and/or 2003, bringing the total returned to nearly $16 million since 2009.

YOUR Board of Directors

Rebecca G. Cogan President

Tommy Dalrymple Vice President

W. Phillip Thompson Assistant Secretary

Charles E. Cameron, Sr. L. Frank Comer, III

James B. Brooks Secretary-Treasurer

Henry OutzTimothy PriestHenry Randolph

Dr. Nancy Holmes