2015 ANNUAL REPORT • People. Power. Purpose. •
HIGHLINE
notes April 2016
A newly constructed Minnkota Power Cooperative transmission line in south Fargo helps meet the growing energy needs of the metro area. www.kwh.com
April 2016 Highline Notes
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• Cass County Electric Cooperative Annual Report •
Dear Member-owners, Our purpose has remained unchanged for decades — to power communities and empower members to improve the quality of their lives. The cooperative business model created a means for people to come together and improve the quality of their lives by securing electric service for themselves. That life-changing opportunity provided the first generation of CCEC members with growth, prosperity, economic security and unmatched political strength. People defines our board of directors, our employees, our member/owners, and the communities we serve. CCEC’s board provides governance and sets policy to guide how the cooperative’s assets are used. Our employees are committed to providing outstanding service to our member/owners and the communities served by CCEC. Power is the rate at which work is performed and energy is delivered. As our membership continues to grow at a robust pace, we rely on Minnkota Power as our wholesale energy supplier to deliver the current and future energy needs of your cooperative. To meet these needs in our urban growth areas, Minnkota is in the process of increasing the capacity of its transmission network in the Fargo metro area. Minnkota is also increasing maintenance on its more rural transmission network to reduce blink outages, especially on the west side of our service territory. Work performance over the past year for CCEC employees has been outstanding. In 2015, we
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April 2016 Highline Notes
added more than 2,900 new accounts. All of our employees played a role in adding the new members, especially our engineering team, linemen and member account representatives. To measure our performance, we track numerous statistics to compare your cooperative with others of similar size and scope. Keeping your power on is our primary goal. This year we are very proud to say your power was on 99.9911 percent of the time, with an average outage time per member of 46 minutes in 2015. This does not just happen by accident. Our engineering team and linemen have built a robust, high tech power distribution system to manage your power supply and restore outages as safely and as quickly as we can. On the power supply front, Minnkota Power is working with the State of North Dakota on how to comply with the Environmental Protection Agency’s Clean Power Plan, if the plan moves forward. As some of you may recall, the U.S. Supreme Court placed a “stay” on the rule pending a legal decision from the Court of Appeals of the District of Colombia Circuit, which is expected sometime this summer. Depending on the outcome of the Court of Appeals decision, the case will likely be appealed and end up in the Supreme Court to decide the fate of the Clean Power Plan. Our electric rates remained stable over the past year and because of better than anticipated financial performance, CCEC’s board voted to reduce the purchased power adjustment on your
bills for a total of $2.3 million in rate relief this past fall. As your trusted energy advisers, we work with members on a daily basis to help them understand how to use electricity efficiently. Members have access to their past energy use information and costs through our SmartHub mobile app. The SmartHub app receives data from new meters that record hourly energy data. This data has helped members and employees analyze their energy use to confirm when the power was used. We have highly trained experts in all areas of our business and use the latest high tech equipment to serve our members’ energy needs. In 2016 we start the next generation of leadership at CCEC. Our President/CEO for the past 14 years, Scott Handy, retired on April 1. Through Scott’s leadership, he helped build a great company with solid financial health, strong equity, modern facilities and equipment, all while keeping the cost to run your cooperative among the lowest in the country. We are proud of Scott’s accomplishments and wish him the best during his retirement from CCEC. As we prepare our workforce for tomorrow, we will reflect back on our past successes. No doubt we will have our challenges in the future, but with an engaged and committed board of directors and a great team of dedicated employees, CCEC has a bright future ahead. We will not forget about our people, our power and our purpose. Marshal Albright, President/ CEO Wendy Loucks, Chairman of the Board www.kwh.com
• People. Power. Purpose. •
NOTICE OF ANNUAL MEETING THE ANNUAL MEETING OF THE MEMBERS OF CASS COUNTY ELECTRIC COOPERATIVE INC., WILL BE HELD AT THE VALLEY CITY EAGLES, LOCATED AT 345 12TH AVE NE, VALLEY CITY, NORTH DAKOTA AT 6:30 P.M. ON TUESDAY, APRIL 19, 2016, TO TAKE ACTION UPON THE FOLLOWING MATTERS: 1. The reports of officers, directors and committees 2. The election of three directors 3. All other business which may come before the meeting, or any adjournments thereof
Pursuant to the bylaws, the following members have filed petitions for directorship of the Cooperative: District 1 District 5(3) District 6
John Froelich (I) Glenn Mitzell (I) Russel Berg (I)
Valley city, ND West Fargo, ND Fargo, ND
PROGRAM
5:30 - 6:30 p.m. Registration & Meal 6:30 p.m. Call to order/Welcome Establish quorum Review minutes of previous meeting Election of directors Board chairman’s & president’s report Financial report Old and new business Open discussion Adjournment
contents 4 STATS 5 CCEC BOARD & STAFF 6 SAFETY 9 INTEGRITY 10 INNOVATION 13 ACCOUNTABILITY 14 COMMUNITY 16 FINANCIAL REPORTS Highline Notes • Volume 74, Number 3 • Writer: Peter Koepp, pkoepp@
kwh.com • Designer: Jocelyn Hovland, jhovland@kwh.com • Printer: Forum Communications Printing, West Fargo • Highline Notes (USPS 244-740) is published monthly except for July by Cass County Electric Cooperative
Inc., 3312 42nd St. S., Suite 200, Fargo, ND 58104. • Periodicals postage paid
John Froelich, Secretary Dated this 29 day of March, 2016
at Fargo, ND 58104. • Subscription Rate: 28¢/month. • Postmaster: Send
address changes to Highline Notes, 3312 42nd St. S., Suite 200, Fargo, ND 58104. * © Copyright Cass County Electric Cooperative 2015. • All rights reserved. Information about the cooperative, articles of incorporation,
bylaws and more can be found at www.kwh.com. • This institution is an equal opportunity provider and employer.
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April 2016 Highline Notes
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80
• Cass County Electric Cooperative Annual Report •
About Us
ACSI Score
people. power. purpose.
The American Customer Satisfaction Index measures overall satisfaction on a scale of 1-100. National utility average score is 75.
99.9911%
RELIABILITY
The average CCEC member was out of power for 46.6 minutes in all of 2015.
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Power Mix 58% Coal 29% Wind 9% Hydro 3% Other
total employees
94 full-time • 4 regular part-time • 6 seasonal
4,823 Miles of line
For perspective, there are 4,936 miles between Fargo, N.D. and Rome.
: { CCEC MISSION
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April 2016 Highline Notes
{
To serve our members' energy needs with reliable electric service, while delivering the values of cooperative membership in an ever changing world.
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• People. Power. Purpose. •
www.kwh.com
Wendy Loucks Board Chairman District 5(1), Fargo
Russell Berg Vice Chairman District 6, Horace
John Froelich Secretary District 1, Valley City
Sid Berg Treasurer District 3, Colfax
Douglas Anderson District 2, Arthur
Jeff Triebold District 4, Fargo
Marcy Svenningsen District AL, Valley City
Steve Swiontek District 5(2), Fargo
Glenn Mitzel District 5(3), West Fargo
Scott W. Handy President and CEO Retired April 2016
Karen Egeberg Executive Assistant
Brad Schmidt VP of Engineering and Operations
Marshal Albright VP of Member and Energy Services President/CEO; effective April 2016
Chad Sapa VP of Corporate Services/ CFO
Tim Sanden VP of Information Technology/ CIO
April 2016 Highline Notes
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• Cass County Electric Cooperative Annual Report •
S AFE T Y People. Power. Purpose.
Educating people—employees and the public—so they are protected from or unlikely to cause danger, risk, or injury.
Safety means a lot to a company specializing in a hazardous trade, whose operations
can be spread across a 10-county area at any given time, whose work not only continues during dangerous weather conditions but often increases, and whose end users depend on reliable service at all times. For a company like Cass County Electric, training is
crucial, as the outcome to a dangerous situation often lies in the hands of those who face it. But preparation comes in many forms.
Cass County Electric’s employees rely on a fleet of 75 vehicles to not only transport them to the work that needs to be done, but also to complete that work safely and
effectively. 75 digger derricks, aerials, backhoes, trenchers, heavy-duty trucks, pickups and service trucks, cars, vans, and SUVs are all tools of the trade. Regular and thorough
maintenance of every single one of those vehicles keeps employees safe on the road, in the mud, through the snow, or wherever the work may be.
If an accident does happen, in a vehicle or anywhere else, it’s shared with all
employees—not to shame or embarrass, but to educate. After all, we learn from our
mistakes. With safety always on the mind, our goal is for employees to make it home healthy and whole at the end of each day.
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April 2016 Highline Notes
813,467 HOURS WORKED since last lost-time injury Zero lost time injuries in the last 4 years!
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• People. Power. Purpose. •
Steve Cossette Fleet Supervisor
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April 2016 Highline Notes
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• Cass County Electric Cooperative Annual Report •
Paul Matthys Key Accounts Executive
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April 2016 Highline Notes
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• People. Power. Purpose. •
I N TE G RI T Y People. Power. Purpose.
Maintaining our purpose of being honest and having strong moral principles. These days it’s never a bad idea to keep an eye out for a good deal. We all know how
important it is to get the most for a hard-earned dollar. What does a good deal look like
$
$2.3
MILLION
though? Does it come in the form of a buy-one-get-one sale? Are your monthly bills a great value?
What about electricity? Sure, it gets lumped in with everything else you have to pay once a month, but have you ever stopped to think about how useful it is? We use it to keep
our food cold and to heat it up. We use it to keep our homes bright and comfortable, our
water hot, and our clothes clean. We use it for entertainment—TVs, DVRs, stereos, video game systems, computers, tablets, smartphones.
One little kilowatt-hour goes a long way, especially if you use it wisely. Cass County
Electric works to make sure you can get quite a few kilowatt-hours for each of your hardearned dollars too. Because when it comes down to it, electricity powers our lives, and that’s a great value we can all agree on.
reduction of purchased power adjustment on members' bills in 2015 www.kwh.com
April 2016 Highline Notes
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• Cass County Electric Cooperative Annual Report •
I NNO VATIO N People. Power. Purpose.
Powering lives by introducing new methods, ideas, or products.
You can’t go very long these days without hearing about a new gizmo or gadget (or
smartphone app) that has been designed to make your life easier. Not one to fall behind, Cass County Electric has stayed on top of all the cool stuff in the electric industry.
We will soon finish enhancing every last one of our meters with advanced metering
infrastructure (AMI) technology. It makes things a lot easier for our technicians and it provides a wealth of information about energy use—information that you can use to
make wise energy decisions. You can see the daily energy use in your home and learn how it impacts your bill with the SmartHub app. SmartHub links up to your electric account, so you can make payments and change billing preferences as well.
This bit of innovation is meant to help you save both energy and money. When you
learn about how you use energy, you gain the ability to control your bill. At Cass County Electric, we believe that empowering and educating our membership is of great importance.
572 METERS/ EMPLOYEE 94 full-time employees and 53,813 meters
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April 2016 Highline Notes
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• People. Power. Purpose. •
Troy Knutson, PE Manager of Technical Services
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April 2016 Highline Notes
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• Cass County Electric Cooperative Annual Report •
Chad Brousseau
Manager of Energy Management
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April 2016 Highline Notes
www.kwh.com
• People. Power. Purpose. •
ACCOUNTABILIT Y People. Power. Purpose.
Instilling a condition of being accountable and responsible as a matter of purpose. Cass County Electric strives to provide service that is reliable and affordable. But we’re looking both ways. We’ve worked tirelessly to improve the environmental impacts of
our power plants, and that work has paid off. Of course, that payoff didn’t come easy—it didn’t come cheap either. But we highly value environmental stewardship, and that is what’s important.
For more than a decade, we’ve worked to strike a balance between affordability,
reliability, and environmental stewardship. We’ve increased the amount of renewable
energy in our power mix through wind and hydropower projects. We worked to develop a biofuel system at a local landfill, which derives energy from decaying waste. We even launched Prairie Sun Community Solar, the first community solar program available in
73.5% of every $ of revenue goes to wholesale power costs
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North Dakota.
The Environmental Protection Agency seeks to hold states accountable for the energy
resources they use, and we’re holding ourselves accountable too. But as a cooperative,
we want to follow a plan that was created with input from everyone. Energy affects every business, farmer, and family, urban and rural. We know things are going to change—they have been for over a decade already. As that change continues, we’ll keep working with, and for, our members, just like we always have.
April 2016 Highline Notes
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• Cass County Electric Cooperative Annual Report •
C OMMU NI T Y People. Power. Purpose.
Being devoted to the people of a specific area considered collectively, especially in the context of social values and responsibilities.
When you purchase electricity from Cass County Electric, you’re not just a customer, you’re a member of a local cooperative. The cost of your monthly bill doesn’t include extra markups to pay investors. That’s because this is your cooperative. And if our
financial performance ends up better than planned, that money comes right back to you. You are the boss, after all.
You decide who serves on the Cass County Electric board of directors. All nine of them buy electricity and are members just like you. You can run for an open position for the
district you live in if you’d like. If you’re elected to the board, you’ll work directly with the president/CEO and executive team of the cooperative in making decisions that benefit the rest of your fellow members.
We’re about as local as it gets too. Sure, we cover an area that spans 10 counties, but
most of our employees live in that same area. Quite a few of them even grew up around here. When it comes to business, we work with as many other local companies as
possible. We support local non-profits that strive to improve our community too. Our purpose is to bring power to the people of this community of incredible growth and opportunity—that’s a purpose we’re proud of.
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April 2016 Highline Notes
$167,714
ORU
(OPERATION ROUND UP) funds given to non-profits and individuals in need in 2015 www.kwh.com
• People. Power. Purpose. •
Trudy Wanner Manager of Marketing & Communications
www.kwh.com
April 2016 Highline Notes
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Comparative Statistics (excluding subsidiary) • Cass County Electric Cooperative Annual Report •
Member accounts served Total kWh sold Revenues *Avg. selling price per kWh sold ** Power cost per kWh sold ***Operating cost per kWh sold Employees (full-time)
2015
2014
% Change
45,353 1,144,971,497 $115,783,792 10.11¢ 7.43¢ 2.16¢ 94
42,412 1,194,910,125 $112,294,693 9.40¢ 6.91¢ 2.02¢ 94
6.9% (4.2%) 3.1% 7.6% 7.5% 6.9% 0.0%
*2014 U.S. median 11.10¢, **2014 U.S. median 7.37¢, ***2014 U.S. median 3.66¢
1995 2000 2005 2010 2015
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kWh Sales Growth April 2016 Highline Notes
(millions)
2014
2012
2013
2014
2.16¢
3.66¢
2011
2.02¢
2015
3.62¢
2013
Avg. Selling Price/kWh
CCEC
2.03¢
484
3.62¢
2012
764 591
2.23¢
2011
3.48¢
1,145
U.S. Co-ops
CCEC
2.16¢
949
U.S. Co-ops
10.11¢
(rounded)
11.10¢
1995 2000 2005 2010 2015
Member Accounts Served
The financial statements for Cass County Electric Cooperative Inc. and subsidiary as of and for the years ended December 31, 2015 and 2014, have been audited by an independent accounting firm, Eide Bailly. An unmodified opinion was issued for each year. Copies of the complete audited financial statements are on file at the cooperative’s office.
9.40¢
16,900
2015 director expenses totaled $155,967. Per member cost equals $3.43. Directors’ expenses include fees paid for attendance at regular monthly board meetings, other industryrelated meetings, including training and reimbursable travel expenses, and insurance.
10.84¢ 9.48¢
21,100
10.70¢ 9.90¢
35,200 29,300
Auditor’s Directors’ Expenses Statement
10.60¢ 9.12¢
45,400
2015
Operating Costs/kWh (excluding power costs)
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CONSOLIDATED STATEMENTSOF OPERATIONS • People. Power. Purpose. •
Operating Revenues Electric Other electric Total operating revenues Operating expenses Cost of power Operations and maintenance Member accounting Member service, informational and sales Administrative and general Depreciation Taxes Interest on long-term debt Other electric Total operating expenses Operating margins before capital credits Other cooperative capital credits Net operating margin Non-operating margin Interest income Other Lease income, net Income tax gain (loss) Net gain on sale of investments Total non-operating margins Net margin www.kwh.com
2015 $115,275,602 508,190 115,783,792
2014 $111,891,129 403,564 112,294,693
85,045,036 6,560,403 1,910,613 931,633 3,423,348 6,404,259 834,999 4,638,476 29,219 109,777,986
82,567,648 6,362,038 1,937,463 909,157 3,277,315 6,076,285 985,518 4,563,159 30,081 106,708,664
6,005,806 304,151 6,309,957
5,586,029 386,249 5,972,278
625,142 17,189 232,577 (345) 0 874,563
491,606 13,755 187,203 8,765 74,008 775,337
$7,184,520
$6,747,615 April 2016 Highline Notes
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• Cass County Electric Cooperative Annual Report •
CONSOLIDATED BAL ANCE SHEETS Assets Electric plant In service Electric plant under construction Total electric plant Less accumulated depreciation Net electric plant
2015
2014
$235,679,809 10,167,976 245,847,785 58,761,385 187,086,400
$222,622,752 7,212,650 229,835,402 55,076,342 174,759,060
Other property and investments Investments in available-for-sale securities Investments in associated companies Other investments Special funds Total other property and investments
2,458,226 7,480,492 235,150 5,300,000 15,473,868
2,351,225 7,396,563 213,890 6,004,410 15,966,088
Current assets Cash and cash equivalents Current maturities of avail-for-sale securities Current maturities of ERC loans Accounts receivable, net Material and supplies Prepayments Interest receivable Total current assets
9,443,670 452,241 763 11,866,620 2,491,733 241,694 67,732 24,564,453
11,475,518 1,976,922 10,000 13,233,662 2,512,151 388,008 78,598 29,674,859
0 2,457,121 2,457,121
21,280 2,808,145 2,829,425
$229,581,842
$223,229,432
Deferred debits Past service pension costs Retirement security prepayment Total deferred debits Total assets
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April 2016 Highline Notes
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• People. Power. Purpose. •
Equities and liabilities Equities Patronage capital Other equities Accumulated earnings of subsidiary Accumulated other comprehensive gain (loss) Total equities
2015
2014
$76,075,780 11,440,168 3,514,436 (28,190) 91,002,194
$71,133,245 10,086,692 3,515,731 23,246 84,758,914
Long-term debt, less current maturities and cushion of credit
110,855,343
111,020,797
Other noncurrent liabilities Pension restoration plan Deferred revenue Accumulated provision for pensions and benefits Total noncurrent liabilities
401,399 5,300,000 2,131,656 7,833,055
401,399 6,000,000 2,194,524 8,595,923
Current liabilities Current maturities of long-term debt Current maturities of post-retirement benefits Accounts payable - general Accounts payable to associated co. - power costs Customer deposits Accrued taxes Accrued interest Other current and accrued liabilities Total current liabilities
5,314,000 325,000 900,669 7,907,459 1,560,666 1,844,806 44,294 1,153,922 19,050,816
4,920,000 200,000 540,374 8,150,360 1,344,961 2,060,746 27,998 1,135,797 18,380,236
452,915 387,519 840,434
208,429 265,133 473,562
$229,581,842
$223,229,432
Deferred credits Consumers’ energy prepayments Estimated installation costs - special equipment Total deferred credits www.kwh.com
Total equities and liabilities
April 2016 Highline Notes
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County • Cass County Electric Cooperative Annual Cass Report • Electric is a member of Touchstone Energy, a national alliance of
local, member-owned electric cooperatives providing high standards of service to all members, large and small. In order to qualify as a Touchstone Energy partner, electric cooperatives must be active members of their communities, dedicated to serving all members with integrity, accountability, innovation and commitment to community.
3312 42nd St. S., Fargo, North Dakota 58104 800-248-3292 • www.kwh.com
people.
power.
purpose.
Cass County Electric Cooperative - 2016 Annual Meeting April 19, 2016 | 5:30 Registration & Meal | 6:30 Business Meeting Valley City Eagles - 345 12 th Ave NE | 701.356.4526 for more information
BRING THIS PA G E F OR RE GI S TR ATIO N
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April 2016 Highline Notes
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