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HIGHLINE NOTES
2018 ANNUAL REPORT
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ANNUAL REPORT
NOTICE OF ANNUAL MEETING
CONTENTS 3 Board of Directors 4 Letter to members 6 Safety 8 Integrity 10 Innovation 12 Accountability 14 Community 16 Financial reports
The annual meeting of the members of Cass County Electric Cooperative Inc., will be held at the Delta by Marriott, located at 1635 42nd Street South, Fargo, North Dakota at 6:00 p.m.* on Tuesday, April 23, 2019, to act upon the following matters: 1. The reports of officers and directors 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 John Froelich (I) Valley City District 5(3) Glenn D. Mitzel (I) West Fargo District 5(3) Arthur Rosenberg Fargo District 6 Stephen Hayton Horace District 6 Kalvin Hoff, P.E. Fargo Program 5:00 p.m. 5:30 p.m. 6:00 p.m.
Registration Meal 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
* Only registered members will be allowed to vote.
Highline Notes • Volume 77, Number 4 • Writer: Sara Erickson, serickson@kwh.com • Designer: Jocelyn Hovland, jhovland@kwh. com • Printer: Forum Communications Printing, West Fargo • Highline Notes (USPS 244-740) is published monthly by Cass County Electric Cooperative Inc., 3312 42nd St. S., Suite 200, Fargo, ND 58104. • Periodicals postage paid at Fargo, ND 58104. • Subscription Rate: 28¢/month. • Postmaster: Send address changes to Highline Notes, 3312 42nd St. S., Suite 200, Fargo, ND 58104. • 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.
Any person representing a corporation which is a member of the Cooperative shall present evidence of his or her authority to cast one vote on behalf of the corporate member.
Glen D Mitzel, Secretary Dated this 29 day of March, 2019
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BOARD OF DIRECTORS Members of the Cass County Electric Cooperative (CCEC) board of directors are elected to three-year terms every spring. Directors must be members of the cooperative and be a bona fide resident of the director district in which they are seeking directorship. That means you, as a member, can have a say in CCEC operations by voting for your directors. Democratic member control is one of the principles that sets cooperatives apart from other types of businesses and utilities.
Marcy Svenningsen District AL, Valley City Board Chair
Jeff Triebold District 4, Fargo Vice Chair
John Froelich District 1, Valley City
Wendy Loucks District 5(1), Fargo
Douglas Anderson District 2, Arthur
Tom Seymour District 5(2), West Fargo
Sid Berg District 3, Colfax Treasurer
Glenn D. Mitzel District 5(3), West Fargo Secretary
Russell Berg District 6, Horace
DIRECTOR EXPENSES 2018 director expenses totaled $171,333. Per member, cost equals $3.92. Directors’ expenses include fees paid for attendance at regular monthly board meetings and monthly retainer ($111,696.23), other industry-related conferences and meetings, including training and reimbursable travel expenses ($59,636.85).
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ANNUAL REPORT
LETTER TO MEMBERS Cooperative Difference Cass County Electric is a locally owned and controlled cooperative that is a communityfocused organization working to efficiently deliver affordable, reliable, and safe energy to our consumer members. • We belong to the communities we serve, so any excess revenue is shared back with the members. • We are led by consumers like you who understand and listen to the community. • We were built by the communities we serve. Affordability 2018 was a record year for the sales of electricity because of favorable weather and stable growth. Kilowatt hours sales and revenue exceeded our budget forecast. We also managed operating expenses ending the year below budget. As a result, your board of directors approved a reduction of $750,000 in your November and December bills to limit year-end margins. The board also approved paying back $1.58 million in capital credits to current and former members. Reliability In 2018, our reliability performance was
outstanding. We had our second-best year on record by keeping our member's power on 99.9913% of the time. Cass County Electric is in the top 10% of cooperatives in the U.S. and number two compared to cooperatives of similar size in reliability. In the future, outages will occur, and our continued focus is to limit the frequency and duration as much as possible by investing in maintenance and technology. Growth As the cooperative continues to grow, we reached a milestone, in 2018, by surpassing the 50,000 accounts threshold. We had an average growth year of around 1440 accounts including more than 800 new homes, along with an increase in commercial, farm and apartment accounts. Commitment to Community Giving back to the communities we serve is another excellent example of cooperative difference. In 2018, more than 80% of our members supported the Operation Round Up program. The Operation Round Up volunteer board approved funding more than $200,000 worth of grants to 57 organizations, 7 individuals, and 11 emergency applicants in need of financial
support throughout our service area. Thank you to all members that allow us to round up your bill to support the Operation Round Up program. Opportunities As we plan for the future, we will continue to embrace innovation and increase the use of technology to enhance the value of electricity for our consumer members. As electrification continues to evolve, especially in the transportation industry, the potential to power transportation with electricity from North Dakota’s energy resources is an exciting opportunity. Challenges Our future challenges will be to exceed our member's expectations for power reliability, affordability and to supply a balanced and responsible power supply mix. As a company, we continue to strive to provide exceptional service to our consumer members. We will continue to have a laser focus on controlling our costs to keep our member's rates affordable and invest in technology, maintenance, and resources to minimize outages.
Marcy Svenningsen Board Chair
Marshal Albright President & CEO
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ANNUAL REPORT
WH EN IT COM E S TO
S A F E T Y ...We deliver
Safety means a lot to a company specializing in a hazardous trade. Our work not only continues during dangerous weather conditions, but often increases. We know our consumer-members depend on reliable services for your businesses, farms and homes. At Cass County Electric Cooperative, training is crucial. When our linemen are working on a line, they depend on their co-workers for their safety. In 2018, all 93 employees signed pledges to make the "Commitment to Zero Contacts" initiative. Joining in the effort to eliminate serious injuries and fatalities due to electrical contacts. As part of the "Commitment to Zero Contacts," we handed out hats, duffle bags, and posters reminding everyone to take extra precautions while working. Throughout the year, we made tremendous strides in providing a safe workplace. We upgraded our vehicles' first aid kits to class B kits. We replaced work gloves with work gloves that are cut resistant and arc rated. We added bucket truck alarms to alert the linecrews if they aren't hooked in when they start to move. We also added back-up cameras to all our diggers and bucket trucks. Safety first, safety always - it's our way of life to deliver safety.
Bob Powell
Mike Hartsoch
Kelsey Gorder
Linecrew Foreman (retired)
Journeyman Line Worker
Linecrew Foreman
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ANNUAL REPORT
Andy Weiss Controller
Kristi Grandalen Accounting Specialist
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WH EN IT COM E S TO
I N T E G R I T Y ...We deliver
In 2018, your Board of Directors reduced your electric bills by a total of $750,000 in November and December. These additional revenues were available because of the stable growth and favorable weather for electricity sales. When you purchase electricity from Cass County Electric Cooperative, you’re not just a customer, you’re a member. Our margins from selling electricity are allocated to you based on how much electricity you purchased during the year. We return our margins to you in the form of capital credits. This year, the Board of Directors authorized the distribution of $1.58 million in total capital credit retirements, which is based on how much electricity a member purchased in 1994–1995. That's us delivering integrity and cash back to you—that's the cooperative difference!
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ANNUAL REPORT
WH EN IT COM E S TO
A C C O U N T A B I L I T Y ...We deliver We delivered power to our consumer-members 99.9913% of the time in 2018. We maximize our grid technologies to keep outages to a minimum. At Cass County Electric Cooperative, we aim to provide electricity that is reliable and affordable. Our electric meters work with our system that is enhanced with two-way automated communication systems (TWACS), and supervisory control and data acquisition software (SCADA), so our team of technicians and engineers are able detect changes and oddities on the system, from the safety of the office. If a fluctuation in voltage occurs, our reliable teams are notified to impending trouble and will quickly respond the situation to prevent or minimize an outage. We take our outages seriously and implemented some new technology to detect and prevent future outages. Our aggresive maintenance program is a ongoing effort. With continual investments of resources into the latest tools, technology, and training.
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Chris Erickson Manager of Technical Services
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ANNUAL REPORT
Paul Matthys
Chad Brousseau
Bob Miller
VP of Member & Energy Services
Manager of Energy Services
Business Accounts Executive
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WH EN IT COM E S TO
I N N O V A T I O N ...We deliver Electric vehicles are in the early stage of adaptation in our region, but in 2018 we partnered with local organizations to begin installing the infrastructure for electric transportation. Last year was a big year in the electric vehicle (EV) realm for Cass County Electric and North Dakota. At the Fargo Sanford Hospital, we installed an EV charger in partnership with Lignite Energy Council to increase EV awareness. Additionally, with our energy and industry partners, we helped secure $140,000 to supply West Fargo Public Schools with North Dakota’s first electric school bus. The bus will join the fleet in the fall of 2019. We jumped into electric vehicle education and ownership by adding our first all-electric vehicle to our service fleet. We hosted an EV Tailgating party for our members to also get a hands-on education. If you are interested in owning your own electric vehicle, we have an EV off-peak charging program that includes a free charger, contact our Energy Services team to find out more. Another great innovation in our toolkit is an unmanned aerial vehicle (UAV). Our UAV allows our crews to inspect areas of lines that are dangerous or difficult to access. UAV’s have helped increase the linecrew’s safety, and efficiency. When it comes to keeping up with emerging energy trends and advancing technology, we deliver.
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ANNUAL REPORT
WH EN IT COM E S TO
C O M M U N I T Y ...We deliver At Cass County Electric Cooperative, we belong to the communities we serve and, in 2018, we supported more than 50 different organizations either with donations, grants, sponsorships, student scholarships, and volunteering hours of service, including community parades, local food and supply drives, house building, holiday gift collection, and bell ringing. We are a member of the Rural Development Finance Corporation, and awarded two $1,000 grants. The recipients for 2018: City of Enderlin, North Dakota to help with the cost of the new swimming pool and splash pad; and Happy Trails Child Care, also of Enderlin, to assist in the construction of a long-term daycare facility. In 2018, with your partnership, through our Operation Round Up program, the volunteer board of directors approved more than $200,000 worth of grants to 57 organizations, 7 individuals, and 11 emergency applicants. Since the inception of the program in 1993, together, we have raised nearly $3 million making an impact on our community.
Delcy Fontaine Member Accounts Representative
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ANNUAL REPORT
Bob Powell Linecrew Foreman (retired)
COMPARATIVE STATISTICS 2018 Member accounts served Total energy (kWh) sold Revenues *Avg. selling price per kWh sold ** Power cost per kWh purchased ***Operating cost per kWh sold Employees (full-time)
2017
50,633 1,280,187,091 $136,761,156 10.68¢ 7.77¢ 2.17¢ 93
% Change
49,191 1,211,782,237 $128,710,833 10.62¢ 7.70¢ 2.20¢ 92
2.9% 5.6% 6.2% 0.6% 1.0% -1.4% 1.1%
*2017 U.S. median 11.52¢, **2017 U.S. median 6.85¢, ***2017 U.S. median 4.02¢
2000 2005 2010 2015 2018
Member Accounts Served (rounded)
2014
Avg. Selling Price/kWh
2015
2.17¢
4.02¢
2016
2.20¢
2018
3.85¢
2017
CCEC
2.28¢
2016
3.75¢
2015
2000 2005 2010 2015 2017
kWh Sales Growth (millions)
3.66¢
2014
591
2.16¢
21,100
2.02¢
764
10.68¢
949
29,300
11.52¢ 10.62¢
35,200
1,280
11.28¢ 10.42¢
1,145
11.08¢ 10.11¢
50,600 45,400
U.S. Co-ops
CCEC
11.10¢ 9.48¢
U.S. Co-ops
2017 2018
Operating Costs/kWh (excluding power costs)
MISSION STATEMENT To serve our members’ energy needs with affordable & reliable electricity.
NEW THIS YEAR:
ABSENTEE VOTING
At Cass County Electric Cooperative, we have historically chosen our Board of Directors by voting at the annual meeting. Thanks to the Board of Directors, new this year, if you are unable to attend the annual meeting in person, you can now vote absentee. To receive your absentee ballot, simply reach out and we will mail it to you! • Stop by our office 4100 32nd Ave. S. Fargo, ND 58104 • Give us a call toll free 800-248-3292 or locally 701-356-4400 • Send us an email at info@kwh.com • Fill out our online form kwh.com/contact-us
DISTRICT 1 DISTRICT 5 DISTRICT 6
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CONSOLIDATED STATEMENTS OF OPERATIONS 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 Other Lease income, net Interest Income Net gain on sale of investments and property Total non-operating margins Net margin
2018 $136,284,831 476,325 136,761,156
2017 $128,314,160 396,673 128,710,833
102,207,838 7,857,877 1,796,890 1,162,740 3,896,756 7,390,619 1,065,426 4,540,825 51,539 129,970,510
95,933,341 7,464,594 1,807,260 1,031,281 3,704,031 7,119,089 936,095 4,601,935 43,825 122,641,451
6,790,646 309,427 7,100,073
6,069,382 308,971 6,378,353
19,500 228,321 972,678 113,914 1,334,413
16,500 266,019 845,699 205,364 1,333,582
$8,434,486
$7,711,935
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ANNUAL REPORT
CONSOLIDATED BALANCE SHEETS
The financial statements for Cass County Electric Cooperative Inc. and subsidiary as of and for the years ended December 31, 2018 and 2017, 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.
Assets Electric plant In service Electric plant under construction Total electric plant Less accumulated depreciation Net electric plant
Brent Hodgson, Will Kronberg, & Phil Windjue Design & Construction Supervisors
Shannon Stumpf Energy Management Coordinator
2018
2017
$269,461,741 8,301,848 277,763,589 70,762,639 207,000,950
$258,349,950 8,523,673 266,873,623 66,023,911 200,849,712
Other property and investments Investments in available-for-sale securities Investments in associated companies Other investments Special funds Total other property and investments
3,858,003 7,749,054 273,886 5,300,000 17,180,943
3,612,838 7,673,117 248,637 5,300,000 16,834,592
Current assets Cash and cash equivalents Current maturities of avail-for-sale securities Accounts receivable, net Material and supplies Prepayments Interest receivable Total current assets
15,657,239 150,000 15,024,585 4,061,333 164,624 73,221 35,131,002
16,099,346 100,000 15,295,431 3,256,041 197,976 76,971 35,025,765
1,404,049
1,755,073
$260,716,944
$254,465,142
Deferred debits Retirement security prepayment Total assets
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Equities and liabilities Equities Patronage capital Other equities Accumulated other comprehensive gain (loss) Total equities
2018
2017
$90,796,104 19,469,175 (141,090) 110,124,189
$85,671,578 17,732,427 6,266 103,410,271
Long-term debt, less current maturities and cushion of credit
119,517,457
121,533,198
Other noncurrent liabilities Deferred revenue Accumulated provision for pensions and benefits Total noncurrent liabilities
5,300,000 2,097,264 7,397,264
5,300,000 2,096,742 7,396,742
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 Deferred credits Member energy prepayments Demand waiver project costs Estimated installation costs - special equipment Consumers' prepayments on community solar garden Total deferred credits Total equities and liabilities
Tony Tasa SCADA & Relay Technician
6,127,000 150,000 1,806,388 9,381,741 2,418,239 2,089,300 10,396 781,036 22,764,100
6,143,041 150,000 885,487 9,229,631 2,078,117 1,933,426 7,983 668,836 21,096,521
321,483 252,102 190,995 149,354 913,934
366,717 291,948 246,342 123,403 1,028,410
$260,716,944
$254,465,142
John Nelson Apparatus Supervisor
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ANNUAL REPORT
4100 32nd Ave. S., Fargo, North Dakota 58104 800-248-3292 | www.kwh.com
C O O P E R A T I V E
D I F F E R E N C E 2 0 1 8
A N N U A L
M E E T I N G
April 23, 2019 | 5:00 Registration | 5:30 Meal | 6:00 Business Meeting
Delta by Marriot - 1635 42nd St SW, Fargo, ND 58104
Bring this page to the meeting for express registration!