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• Committed to Serve •

HIGHLINE NOTES

COMMIT TED T O S E RV E 2017 Annual Report

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April 2018 Highline Notes

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• Cass County Electric Cooperative Annual Report • Highline Notes • Volume 76, Number 4 • Writer: Peter Koepp, pkoepp@kwh.com • Designer: Jocelyn Hovland, jhovland@

contents 3 4 5 12

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April 2018 Highline Notes

kwh.com • Printer: Forum Communications Printing, West

LETTER TO MEMBERS NOTICE OF ANNUAL MEETING

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

2017 YEAR IN REVIEW FINANCIAL REPORTS

Fargo • Highline Notes (USPS 244-740) is published monthly by

200, Fargo, ND 58104. * © Copyright Cass County Electric Cooperative 2018. • 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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• Committed to Serve •

Dear member-owners, Our commitment to serve the membership, how we fulfill our mission, is a cornerstone of our business. Cass County Electric Cooperative (CCEC) is privileged to have an engaged board of directors and dedicated team of employees that works together to accomplish our mission. CCEC is governed by a nine-member board of directors that establishes policy, approves plans and programs, and delegates authority to the president/CEO to execute and carry out those plans, programs, and policies. Each month the board meets to review financials, provide reports from sub-committees and affiliated organizations, and hear reports from employees on cooperative operations. Annually the board reviews and approves the operating budgets and reviews and approves our financial and IT audits prepared by Eide Bailly. In 2017, the board approved retirement of $1.6 million in capital credits to our members. In today’s high tech/connected world, keeping the power on as much as possible is a priority for the cooperative. I am proud to say in 2017, CCEC had our best year ever with reliability at 99.9918 percent. This incredible reliability statistic means that on average, a member

was without power for just 43 minutes of the entire year. Another primary focus for the cooperative is to provide affordable power. Over the past five years, your cost of electricity has been stable. In 2017, approximately 74.6 percent of your bill was related to power production and delivery to the substations from Minnkota Power Cooperative. The remaining 25.4 percent of your power bill was the cost to operate CCEC. We are forecasting the price of electricity to remain stable for the next decade unless unforeseen events occur. This is good news for all members. In 2017, the cooperative had record sales of 1.21 billion kilowatt-hours and $128.7 million in revenue. With most members having access/connectivity to high-speed internet, the ability to access online information has never been easier. CCEC members have the option to access cooperative information through our website at kwh.com or through our SmartHub app on a mobile device. The SmartHub app is used to access online account information, pay a bill, report an outage, view outages, and more. Supporting our communities is a core value CCEC is committed to fulfilling. Operation Round Up has

the greatest community impact because of the funds generated by our membership. In 2017, CCEC members voluntarily roundedup their bills to the nearest dollar generating over $199,000 for the foundation. The Operation Round Up Board meets quarterly to determine what organizations/individuals receive funding. We also support our communities by donating nominal amounts to various non-profits throughout our service territory. For our youth, we sponsor two students to attend the annual NRECA youth tour in Washington, D.C., and every year the cooperative contributes to Dollars for Scholars to support scholarships at high schools in our service area. As we look ahead to future opportunities, electric vehicles appear to be gaining acceptance by the public and will someday become very prevalent in our area. CCEC recently purchased an electric vehicle to be used by employees for their daily work to learn more about the operation of the vehicle. As we complete our 80th year of service, our future looks bright, and as we envision new possibilities, we will always be committed to serving the members of CCEC.

Marshal Albright, President/CEO

Wendy Loucks, Chairman of the Board www.kwh.com

April 2018 Highline Notes

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• Cass County Electric Cooperative Annual Report •

notice of

ANNUAL MEETING The annual meeting of the members of Cass County Electric Cooperative Inc., will be held at the Fargo Holiday Inn, located at 3803 13th Avenue South, Fargo, North Dakota at 6:30 p.m.* on Tuesday, May 1, 2018, to act 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 2

Doug Anderson (I)

Arthur, ND

District 5(1)

Wendy Loucks (I)

Fargo, ND

District 3

Sid Berg (I)

Colfax, ND

Program 5:30 - 6:30 p.m. Registration*, meal and entertainment 6:30 - 8:30 p.m. Call to order and welcome Establish quorum Review minutes of previous meeting Election of directors Board chairman’s and president’s report Financial report Old and new business Open discussion Adjournment *Only registered members will be allowed to vote. 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.

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April 2018 Highline Notes

Marcy Svenningsen, Secretary Dated this 29th day of March, 2018

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• Committed to Serve •

About Us

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• committed to serve •

ACSI Score The American Customer Satisfaction Index measures overall satisfaction on a scale of 1-100. The national co-op average score was 78.

99.9918%

RELIABILITY The average CCEC member was out of power for just 43 minutes in all of 2017.

5,647 Miles of line Stretched straight out, our lines could reach from Fargo to Sao Paulo, Brazil, and would cover one-fifth of the circumference of Earth.

100

651 METERS PER EMPLOYEE

total employees

92 full-time employees and 59,875 meters

92 full-time • 4 regular part-time • 4 seasonal

CORE VALUES

Safety, Integrity, Innovation, Accountability, and Commitment to Community www.kwh.com

April 2018 Highline Notes

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• Cass County Electric Cooperative Annual Report •

A lot has changed for Cass County Electric Cooperative in the 80 years since we came to exist. The tools and technology we use today would baffle our co-op forebears. Cities have expanded onto our lines, and this entire region would be largely unrecognizable to the folks who gave us our start. Yes, 80 years can bring a million fascinating changes, but what’s perhaps most fascinating is what hasn’t changed. There’s no doubt that the band of rural farmers who went around collecting startup money for an electric co-op were committed to serve their friends and neighbors. And though the years have brought so much that’s new, that same old commitment still lies at our foundation.

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April 2018 Highline Notes

COMMITTED TO SERVE www.kwh.com

As a not-for-profit co-op, commitment is built into our business model, and our sole purpose is to serve our members with safe, reliable, and affordable electric service. It’s tough to guess what the future will bring, but you can bet that 80 years from now, that commitment to serve will still be fueling everything we do.


• Committed to Serve •

The push for paperless

In 2017, CCEC added 1,965 accounts to paperless billing, reaching a year-end total of more than 10,000 members who have chosen the inbox over the mailbox. This saves roughly 4,500 pounds of paper in a year and saves CCEC and its members about

Member services team

Our member accounts team handled 46,735 incoming calls in 2017—6,385 more than in 2016. In addition to helping callers with questions and concerns, the member accounts teams managed more than 15,000 service transfers and helped to establish service for more than 6,000 new members in 2017.

46,735

$72,000

incoming calls answered in 2017.

in printing and postage costs!

Youth education

Apprenticeship Program

Each year, CCEC sponsors two local high school students for the Electric Cooperative Youth Tour, where they join 1,500 other students from across the country for an educational week in Washington, D.C. CCEC also contributes $13,000 to local high school students through Dollars for Scholars.

Line crews are the muscle of an electric cooperative, and at CCEC, the experience and training required to maintain reliable power for more than 42,000 members begins early. Through our unique Lineworker Apprenticeship Program, seasonal apprentice lineworkers can gain hours needed to obtain journeyman status while on the job.

Georgetown University Energy Prize A local community partnership dubbed efargo and led by NDSU’s Malini Srivastava was successful in winning the $5 million Georgetown University Energy Prize. This nationwide competition spanned two years and challenged communities to rethink and reduce energy use. CCEC was an efargo partner and helped to provide energy use data to gauge the group’s efforts.

www.kwh.com

Employee retirements and business continuity Four longtime employees celebrated retirements in 2017, taking nearly 200 combined years of experience with them.

As the national workforce continues to change, CCEC expects to see many more retirements in coming years. We take great care to transfer knowledge and provide adequate training to ensure you continue to receive the high-quality service you expect from us.

April 2018 Highline Notes

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• Cass County Electric Cooperative Annual Report • Innovation is one of our core values, and it often calls to mind the array of gadgets and pieces of technology that we have at our disposal today to monitor our lines or pinpoint power outages. While we do take pride in our investments into the latest technology, it isn’t the only way innovation takes form at CCEC.

COMMITTED TO SERVE

You see, since we’re always working for the best interests of our members, we’re challenged to be innovative in every way possible. We’ve worked to introduce better ways of getting your bill to you, cutting down on expenses for paper and postage. We’ve examined the way the co-op runs and have reorganized its departments to increase work efficiency. We’ve analyzed emerging methods of communication and have taken stock of the outdated ones so that we can get you the information you need in the way you want it. Innovation is a tough concept to define with just a handful of examples. At CCEC, innovation is a state of mind—an attitude embraced by our employees and executive staff. It is a necessary trait to have in a time when things change at such a rapid pace, and you can bet that we’re going to keep up.

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April 2018 Highline Notes

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• Committed to Serve •

A culture of safety

Record-breaking reliability

When it comes to electric service, 2017 proved to be the most reliable year on record for CCEC members. The power was on for all members across the system for 99.9918 percent of the year—a new reliability milestone for CCEC. With an aggressive maintenance program and continued investments in new tools and technology, we’ll work to break our own reliability records time and again.

43 minutes The amount of time the average CCEC member was out of power in all of 2017.

CCEC touts a strong culture of workplace safety. In fact, safety is the top priority at CCEC, and with regular safety training, reminders, and reports, we make every effort to ensure our employees get home safe at the end of each day.

1,236,275

hours worked since last OSHA lost time injury at the end of 2017.

Planned power outages

Underground locate requests

CCEC received 19,865 requests for underground locates in 2017, which represented 12 percent of all locate requests received by North Dakota One Call for the entire state. CCEC partners with a locating contractor to handle our request volume, and in 2017 Citi Lites completed more than 75 percent of the requests on our territory. The rest were handled by our in-house locator or lineworkers.

19,865 locates

In 2017, 43 percent of CCEC’s service outages were planned, but these same outages represented just 11 percent of total outage minutes for the year. That’s good news! It means we were briefly interrupting power to perform system maintenance or upgrades in an effort to reduce future unplanned outages and increase reliability for you.

Community involvement

Commitment to community is one of our core values. For one of the community involvement efforts for 2017, employees from our member and energy services department took on a new volunteering opportunity and spent some time doing improvement projects at Fort Ransom State Park, Clausen Springs Park, and Little Yellowstone Park.

Grants for rural development As a member of the Rural Development Finance Corporation, CCEC received a $2,000 grant allocation for worthy causes in rural North Dakota. Employees were asked to nominate organizations in need, and four were selected: Harwood Area Fire & Rescue, Enderlin Park Association, Sheyenne River Valley Chapter of the North Country Trail Association, and the City of Kathryn. Each organization received $500.

80 Years of service

Cass County Electric Cooperative began in 1937 when a group of farmers banded together to bring electric service to their rural communities. Today, 80 years later, we are proud to serve safe, affordable, reliable service to more than 49,000 accounts across ten counties.

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April 2018 Highline Notes

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• Cass County Electric Cooperative Annual Report • At CCEC, we’re proud of the service we provide, but we’re also proud to be able to provide it. We live in a diverse and fascinating region, and the communities that we bring electricity to are rich and vibrant. They’re filled with people who work hard and accomplish amazing things. To be able to provide a service that helps people create, achieve, and inspire is an opportunity to be grateful for.

COMMITTED TO SERVE

CCEC doesn’t have customers; we have members. We’re in a partnership; we depend on each other. When you pay your electric bill, that money is allocated exactly where it needs to be to make things better for you. Your payments are investments, and given time, you’ll have capital credits coming back to you—a return of your investment in us. If you don’t think about your electric co-op every day, we won’t take offense. In fact, if CCEC isn’t on your mind, that’s probably a good thing. It means we’re doing our jobs and providing the service you expect. After all, you’re busy working, caring for a family, and striving toward your goals—we’re here to help you make it all happen.

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April 2018 Highline Notes

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• Committed to Serve •

Serving a growing region

It was another year of growth in the region, and CCEC welcomed more than 1,500 new services to our territory. Of these, 776 were residential, 556 were apartments, 219 were small commercial, 27 were rural, three were large commercial, and two were irrigators.

Cyber strength

With millions of pieces of data flowing to and from CCEC every day and cyber villains becoming more devious than ever, CCEC has gone to great lengths to ensure that cooperative and member data is secure. By regularly updating software and equipment and introducing new internal measures like application whitelisting, we’re continually striving to keep the bad guys out.

Capital Credits

Capital credits are your return on investment in the co-op. Allocations are mostly invested into construction projects until financial conditions allow for them to be retired, or returned, in the form of a check or bill credit. This year’s capital credit general retirement totaled more than $1.6 million, including credits for electricity used in 1993 and 1994, estate payments, and other miscellaneous retirements.

Solar power shines on

A slimmer, sleeker co-op

CCEC’s operating costs were down in 2017, and while lower system maintenance costs and customer accounting expenses contributed to this, the driving factor was an overall leaner and more productive organization. The co-op operates with less employees than it did a decade ago despite serving significantly more accounts, thanks to strategic investments in technology and tools and employees who are encouraged to seek process improvements.

2007: 32,394 active accounts, 97 FT employees. 2017: 49,191 active accounts, 92 FT employees.

Electrifying the road

The popularity of electric vehicles (EV) is growing, and CCEC has taken measures to prepare for what could be a new source of electricity demand. In 2017, CCEC partnered with Lignite Energy Council to establish new EV chargers in the metro, teaming up with Sanford Health to promote awareness of EVs in our region.

Operation Round Up

The Cass County Electric Cooperative Foundation celebrated another strong year of the Operation Round Up program. More than $206,000 was granted to 56 nonprofit organizations throughout the CCEC service area dedicated to making our communities better places to live.

Prairie Sun Community Solar saw its first full year in operation in 2017. Since coming online, the array has generated more than 180 megawatthours of electricity —

enough to power a TV for 52,654 days or nearly 1,400 computers for a year.

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In 2017, more than $206,000 was given back to 56 local nonprofits! April 2018 Highline Notes

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• Cass County Electric Cooperative Annual Report •

Comparative Statistics 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

2016

% Change

49,191 1,211,782,237 $128,710,833 10.62¢ 7.70¢ 2.20¢ 92

47,605 1,163,672,664 $121,241,584 10.42¢ 7.63¢ 2.28¢ 93

3.3% 4.1% 6.2% 1.9% 1.0% -3.5% -1.1%

*2016 U.S. median 11.28¢, **2016 U.S. median 6.69¢, ***2016 U.S. median 3.85¢

591

kWh Sales Growth

(rounded)

(millions)

Directors’ Expenses

board of directors

2017 director expenses totaled $174,831. Per member cost equals $3.55. Directors’ expenses include fees paid for attendance at regular monthly board meetings, other industry-related meetings, including training, and reimbursable travel expenses.

April 2018 Highline Notes

Wendy Loucks Board Chair District 5(1), Fargo

2013 2013

2.20¢

3.85¢ 2.28¢

3.75¢ 2.16¢

2.02¢

2.03¢

10.62¢

3.66¢

3.62¢

11.28¢ 10.42¢

2000 2005 2010 2015 2017

2000 2005 2010 2015 2017

Member Accounts Served

12

11.08¢

949 9.48¢

764

CCEC

9.40¢

29,300 21,100

1,212

U.S. Co-ops

CCEC

10.11¢

1,145

35,200

10.84¢

49,200 45,400

11.10¢

U.S. Co-ops

2014

2015

2016

2017

Avg. Selling Price/kWh

2014

2015

2016

2017

Operating Costs/kWh (excluding power costs)

Auditor’s Statement

The financial statements for Cass County Electric Cooperative Inc. and subsidiary as of and for the years ended December 31, 2017 and 2016, 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.

Russell Berg Vice Chair District 6, Horace www.kwh.com

Marcy Svenningsen Secretary District AL, Valley City

Jeff Triebold Treasurer District 4, Fargo


• Committed to Serve •

CONSOLIDATED STATEMENTS OF OPERATIONS OPERATING REVENUES Electric Other electric Total operating revenues

2017 $128,314,160 396,673 128,710,833

2016 $120,838,575 403,009 121,241,584

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

88,808,104 7,478,956 1,970,143 953,593 3,687,022 6,925,817 845,213 4,467,919 221,781 115,358,548

OPERATING MARGINS BEFORE CAPITAL CREDITS Other cooperative capital credits Net operating margin

6,069,382 308,971 6,378,353

5,883,036 299,391 6,182,427

NON-OPERATING MARGIN Interest income Other Lease income, net Loss on dissolution of subsidiary Net gain on sale of investments Total non-operating margins

845,699 16,500 266,019 0 205,364 1,333,582

635,853 19,552 257,756 (128,883) 7,733 792,011

$7,711,935

$6,974,438

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

NET MARGIN

Douglas Anderson District 2, Arthur

Sid Berg District 3, Colfax

John Froelich District 1, Valley City www.kwh.com

Glenn Mitzel District 5(3), West Fargo

Tom Seymour District 5(2), West Fargo April 2018 Highline Notes

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• Cass County Electric Cooperative Annual Report •

CONSOLIDATED BALANCE SHEETS ASSETS ELECTRIC PLANT In service Electric plant under construction Total electric plant Less accumulated depreciation Net electric plant

2017

2016

$258,349,950 8,523,673 266,873,623 66,023,911 200,849,712

$247,486,588 7,142,156 254,628,744 61,860,134 192,768,610

OTHER PROPERTY & INVESTMENTS Investments in available-for-sale securities Investments in associated companies Other investments Special funds Total other property and investments

3,612,838 7,673,117 248,637 5,300,000 16,834,592

3,057,380 7,580,967 229,898 5,300,000 16,168,245

CURRENT ASSETS Cash and cash equivalents Temporary investments Current maturities of avail-for-sale securities Accounts receivable, net Material and supplies Prepayments Interest receivable Total current assets

16,099,346 0 100,000 15,295,431 3,256,041 197,976 76,971 35,025,765

12,126,456 6,000,000 250,078 13,573,651 2,322,607 295,243 92,114 34,660,149

1,755,073

2,106,097

$254,465,142

$245,703,101

DEFERRED DEBITS Retirement security prepayment

Staff

TOTAL ASSETS

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April 2018 Highline Notes

Marshal Albright President & CEO

Karen Egeberg Executive Assistant www.kwh.com

Jodi Bullinger VP of Engineering and Operations

Paul Matthys VP of Member and Energy Services


• Committed to Serve •

EQUITIES & LIABILITIES EQUITIES Patronage capital Other equities Accumulated other comprehensive gain (loss) Total equities

2017

2016

$85,671,578 17,732,427 6,266 103,410,271

$80,613,718 16,423,724 (11,341) 97,026,101

LONG-TERM DEBT, LESS CURRENT MATURITIES & CUSHION OF CREDIT

121,533,198

120,428,084

OTHER NONCURRENT LIABILITIES Deferred revenue Accumulated provision for pensions and benefits Total noncurrent liabilities

5,300,000 2,096,742 7,396,742

5,300,000 2,135,734 7,435,734

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

6,143,041 150,000 885,487 9,229,631 2,078,117 1,933,426 7,983 668,836 21,096,521

5,676,285 200,000 704,341 8,795,339 1,772,900 1,849,763 15,599 626,663 19,640,890

366,717 291,948 246,342 123,403 1,028,410

400,886 418,771 259,958 92,677 1,172,292

$254,465,142

$245,703,101

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 & LIABILITIES

MISSION

To serve our members' energy

Chad Sapa VP of Corporate Services/ CFO

Tim Sanden VP of Information Technology/ CIO

needs with affordable and reliable electricity.

www.kwh.com

April 2018 Highline Notes

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• Cass County Electric Cooperative Annual Report •

3312 42nd St. S., Fargo, North Dakota 58104 800.248.3292 • www.kwh.com

CCEC

COMMIT TED TO SERVE Annual Meeting

May 1, 2018 | 5:30 Registration & Meal | 6:30 Business Meeting Holiday Inn - 3803 13 th Ave S, Fargo 701.356.4526 for more info

Meal. Entertainment. Cooperative updates. Prizes.

B rin g th is entire back page for easier regist ra tio n ! 16

April 2018 Highline Notes

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Profile for Cass County Electric Cooperative

2017 Annual Report  

2017 annual report/April issue of CCEC newsletter

2017 Annual Report  

2017 annual report/April issue of CCEC newsletter