2018 Annual Report

OUR F U T URE IS

Bright 2018 ANNUAL REP ORT

INSIDE THIS REPORT

1 3 5 7 9 11

CEO AND PRESIDENT’S MESSAGE

INL AND POWER’S MISSION AND VISION

INL AND BY THE NUMBERS

2018 FINANCIALS

INL AND ACCOMPLISHMENTS

INL AND IN THE COMMUNIT Y

CEO & PRESIDENT’S MESSAGE We have come a long way since the early days of Inland Power. Over the decades we’ve seen advancements in medicine, education, technology and electrification.

From our humble beginnings back in

power in home and businesses means

1937 to the present day, Inland Power

not only improved quality of life today,

and Light has experienced tremendous

but more importantly, it ensures a bright

growth and innovation and this past year

future for generations to come. Today,

has certainly been no exception. We live

our focus is clear, it’s brightening your

in a world that is changing more rapidly

present and your future.

than we ever imagined.

In 2000, The National Academy of Perhaps, Inland Power’s success can best

Engineering, led by Neil Armstrong

be measured in terms of the ability to

compiled a list of the greatest

brighten the lives of our members. Electric

achievements of the 20th Century. Of the top 20 that made the list, electrification was considered the number one achievement. For us at Inland, that’s not surprising since the vast majority of everything in our lives is dependent on this vital commodity. From the early days when lightbulbs were introduced, to the

1 OUR FUTURE IS BRIGHT | 2018 ANNUAL REPORT

electric refrigerator in 1913, to today with the growing proliferation of electric cars, we still believe in the magic that happens every time we flip on a light switch.

TODAY, OUR FOCUS IS CLEAR: IT’S BRIGHTENING YOUR PRESENT AND FUTURE.

Inland Power is pleased to be the largest cooperative in Washington state, but no matter our size we remain committed

$181 million and long-term operating

communities through Operation Round

to our members. We work hard to keep

debt is $62 million. This healthy debt to

Up, scholarships and more (page 11).

your rates low and power reliable through

asset ratio preserves Inland in the top

fiscal responsibility, constant process

ranking of all electric cooperatives in

Inland Power’s founders built a solid

improvements and efficient operations.

the country – a position we have proudly

foundation from which we continue

held for many years.

to stand strong. Looking ahead to our future, we will stay true to our

Our 82 years of service has brought experience and wisdom to our

We also measure our success with an

founders’ vision of providing members

cooperative, but it has also brought the

equity position of 58 percent which

with superior service and value. We

need to replace our aging equipment and

compares total equity to total assets

will continue to strive for affordable

infrastructure. Although our plant assets

- meaning members own 58 percent

rates and reliable service to help us

have served our membership well over

of Inland’s assets. This is a common

remain strong and vital as we continue

the years, we have the duty to replace

financial ratio used by electric co-ops

to brighten the lives and future of our

and improve aging infrastructure in order

throughout the nation and ranks Inland

members.

to maintain a high level of service and

in the top 10 percent of the nation – a

reliability for you, our members.

position we are very pleased with and

This annual report is also an opportune

work hard to protect and maintain.

moment to highlight the contribution of all our employees and board members, past

For that reason, we have embarked on a multi-year plan to replace and upgrade

Serving homes and businesses across

and present, who, by their professionalism

many of our substation transformers

13 counties with safe, reliable and

and commitment, have strengthened the

and other aging equipment. As part

affordable service can be challenging.

image of Inland Power and contribute to

of this plan, during 2018 we spent just

Excellent service requires continuous

our long-term success. We are grateful

over $11 million in system upgrades and

improvement. Whether updating

to you, our valued members, for your

replacements. We are happy to report

technology to provide you with 24/7

support over the past 82 years and we

(page 6) that we are already seeing an

convenience through our SmartHub app

look forward to a vibrant future of serving

improvement in our system reliability

or adding digital meters for faster outage

you.

and expect this to continue well into the

restoration and reliability, you are our

future.

priority. Our mission is our members.

After all, owning your own utility does have its advantages.

Your board and management team have

While we are proud to work hard for

developed a sound fiscal strategy, and

you every day, we’re also honored

this is reflected in a strong year-end

to volunteer in your neighborhoods

balance sheet (page 7). Total assets are

and schools and give back to our

PRESIDENT BOARD OF TRUSTEES

CEO INLAND POWER & LIGHT

OUR FUTURE IS BRIGHT | 2018 ANNUAL REPORT 2

MIS S ION

OUR MISSION IS OUR MEMBERS

VIS ION

Be a premier member-owned energy cooperative committed to safe, reliable service at competitive rates with great member engagement and experiences.

3 OUR FUTURE IS BRIGHT | 2018 ANNUAL REPORT

A STRONG BELIEF IN OUR MISSION At Inland Power & Light our mission is simple. Our members are the reason we come to work every day. Our members are the reason our dedicated line workers brave the elements and extreme hours to ensure your power is reliable and affordable. It is because of you, our members, that Inland Power exists – which is why your Inland Power board of trustees voted to adopt our new mission statment – “Our mission is our members.”

Your board took it a step further and improved Inland Power’s vision statement. Our goal at Inland Power is to “be a premier member-owned energy cooperative committed to safe, reliable service at competitive rates with great member engagement and experiences.”

Like our new mission statement, it is all about you – our members.

For us, these changes are more than just words. We are committed to putting these words into action to ensure your experiences with Inland Power are consistently the best possible.

Inland Power is honored to sponsor the Junior League of Spokane Touch-A-Truck event each year.

OUR FUTURE IS BRIGHT | 2018 ANNUAL REPORT 4

INLAND BY THE NUMBERS 86 MEMBERS PER MILE OF LINE 5.79 MILES OF LINE 7,411 NUMBER OF POWER POLES 101,400 NUMBER OF TRANSFORMERS 31,819 NUMBER OF METERS 42,873 MEMBERS ENROLLED IN SMARTHUB 14,498

TOTAL NUMBER OF EMPLOYEES

15,933 ACCOUNTS

MEMBERS WHO ENROLLED IN SMARTHUB IN 2018 MEMBERS ENROLLED IN AUTOPAY

3,335

9,656

3,548 VIA CREDIT CARD; 6,108 VIA ELECTRONIC CHECKING/SAVINGS

2,667 NUMBER OF MEMBERS ENROLLED IN FLEXPAY 105 ANNUAL NUMBER OF PHONE CALLS 47,882 MEMBERS ENROLLED IN OPERATION ROUND UP:

AVERAGE WEEKLY PHONE CALLS: 921

NUMBER OF NEW SERVICE REQUESTS IN 2018

5 OUR FUTURE IS BRIGHT | 2018 ANNUAL REPORT

811

35.1

% Power Supplier

18

% Planned

4.5

% Snow/Ice

7.2%

Manmade

1.3%

12.3%

Fire

1.1%

Tree

Lightning

9.1

% Equipment

4

% Animal

3.6

% Unknown

2018 OU TAGES BY CAUSE

3.8

% Wind

Inland Power is a team sponsor of the West Plains Little League.

Go Team Inland Power!

OUR FUTURE IS BRIGHT | 2018 ANNUAL REPORT 6

AS A COOPERATIVE, OUR MEMBERS MAINTAIN AN OWNERSHIP INTEREST AND STAKE IN EVERYTHING WE DO, AND THAT INCLUDES OUR FINANCIAL STRENGTH. Preserving a strong bottom line is essential for ensuring Inland Power’s ability to deliver safe, reliable and costeffective electricity while planning for the future. In 2018, Inland Power had net margins of $6.26 million and gave back close to $2 million in capital credits to our members.

STATEMENTS OF REVENUES AND MARGINS

BALANCE SHEETS

Net Utility Plant

Non-Utility Plant

Investments in Assoc. Organizations

Cash and Cash Equivalents

Operating Revenue

2018 $ 74,719,000

2017 $ 74,604,000

39,789,000

39,391,000

2018

2017

$ 156,735,000

$ 151,582,000

2,000

2,000

Cost of Power

6,153,000

5,824,000

Operations and Maintenance

9,038,000

8,866,000

200,000

141,000

Consumer Accounts and Marketing

2,435,000

2,503,000

A S SE TS

EXPENSES

Accounts and Notes Receivable

10,587,000

11,424,000

Administrative and General

6,768,000

6,412,000

Materials and Supplies

3,480,000

2,610,000

Depreciation

7,100,000

6,953,000

124,244,000

BPA Prepayment

Other Prepayment

Other Assets

133,943,000

Taxes

4,458,000

4,576,000

859,000

1,033,000

Interest

2,447,000

2,101,000

3,725,000

4,224,000

$ 305,985,000

$ 310,783,000

Total Cost of Electric Service $ 72,035,000 $ $ 70,802,000

EQUITIES, MARGINS AND LIABILITIES

Equities and Margins

105,159,000

100,970,000

Accounts Payable

6,949,000

7,950,000

Long Term Debt

61,612,000

59,861,000

BPA Prepay Long Term Debt

120,858,000

130,924,000

Other Liabilities

8,131,000

7,984,000

3,276,000

3,094,000

$ 305,985,000

$ 310,783,000

Deferred Gain and Credits

OPERATING MARGINS

2,684,000

3,802,000

NET BENEFITS OF BPA PREPAY

1,763,000

1,872,000

NON-OPERATING MARGINS

1,809,000

Net Margins

$ 6,256,000

716,000 $ 6,390,000

EXPENSES

NUMBER OF ME TERS 2014

39,502 39,872 2015

20%

2016

40,352

TAXES, DEPRECIATION & INTEREST

2017

41,086 2018

42,873 7 OUR FUTURE IS BRIGHT | 2018 ANNUAL REPORT

25%

55%

ADMIN & OPERATIONS

POWER COSTS

INLAND POWER HAS SOME OF THE LOWEST RATES IN THE NATION Out of 891 cooperatives in the

8.37¢ 9.46¢

INLAND POWER

country Inland Power ranks 14th for lowest rates.

WASHINGTON AVERAGE NATIONAL AVERAGE

12.95¢

AVERAGE RESIDENTIAL RATES FOR 2018 PER kWh

REVENUE

CAPITAL CREDIT RE TIREMENTS (THOUSANDS) 2014

RESIDENTIAL COMMERCIAL IRRIGATION

74% 19% 7%

$1,500 2015

$1,500 $1,500 2016

2017

$1,961 2018

$1,976 OUR FUTURE IS BRIGHT | 2018 ANNUAL REPORT 8

INLAND POWER ACCOMPLISHMENTS One of our goals is to provide electricity in such a way that you don’t even think about it—the power is just there when you need it. In reality, much thought and effort goes into delivering electricity to you. We work 24/7 to ensure service is available to you at the flip of a switch.

Inland Power finds, develops and uses the latest technology available to proactively look at system improvements, capital investment projects and to be innovative in solving every reliability issue.

Dozens of reliability and system improvement projects were completed in 2018. They range from testing transformers, replacing poles, aluminum insulators and fuses to rebuilding several miles of overhead and underground lines. Inland Power is dedicated to serving you and will continue to do so into 2019 and beyond. Below is a summary of some of our biggest accomplishments made over the past 12 months:

ACCOMPLISHMENTS • Crews replaced just over a million

is putting the overhead feeder lines

• Main feeder upgrades were made

and a half dollars of buried cable in

underground. The balance of the

from the West Plains substation,

2018. Three primary areas were in

project will be completed in 2019.

north of Airway Heights. This feeder

Airway Heights, Meadow Lake and the cable to the top of Hoo Doo Mt. north of Blanchard.

upgrade will tie into the Airway Heights • The Hayford/Geiger Road feeders were upgraded to accommodate

substation allowing Inland Power to better balance loads in the West Plains.

larger loads, such as Amazon, coming • Inland Power replaced a total of 700

to the West Plains.

poles in the following areas:

• Significant voltage regulator work was completed in 2018 all around Inland

- Creston area in Lincoln County

• A very inaccessible, overhead feeder

Power’s system. Voltage regulators

- Halfmoon in the Deer Park area

line on Mt. Spokane that was very

help balance the system voltage on

- Spangle

prone to tree damage was placed

lines that are located long distances

- Riparia in Whitman County

underground. This project will make a

from the substation.

significant difference in tree related • FEMA work from the November 2015 wind storm continued in 2018. Half

outages to the Mt. Spokane area this coming winter.

• We replaced approximately 3 miles of wire and replaced multiple cross

of the Newman Lake to Greenbluff

arms on the 34.5 kV transmission

project was completed. This project

system in Lincoln County.

9 OUR FUTURE IS BRIGHT | 2018 ANNUAL REPORT

A LOOK AHEAD As we look ahead to our future, we look forward to achieving even more improvements and accomplishments in 2019. We at Inland Power know that in order

Inland Power Four Lakes foreman, Kyle Hasenoehrl

to continue providing safe and reliable energy at affordable rates, our infrastructure must be reliable and up-to-date. Your Inland Power crews are currently working to implement the 2019 work plan. Here is a snapshot of what will be working on in 2019.

• Replacement of aging underground cable throughout Inland Power’s system.

• Relocate lines for Spokane County’s Aero Road roundabout and three roundabout projects on SR 902

• Replacement of approximately 800

for WSDOT.

poles in the following areas: - Newport in Bonner County - Moab, Trentwood and Bigelow areas

• Replacement of power transformer at Pomeroy substation in Garfield County.

in Spokane County - Draper substation in Lincoln County - Diefe substation in Lincoln County • New Hallett & White substation feeder

• Complete second half of FEMA project from Newman Lake to Greenbluff.

• Continue the wire replacement of

to help with new large loads in the

the 34.5 kV transmission system in

West Plains.

Lincoln County.

• Bigelow Gulch Road line relocate for county road upgrade to include Argonne to Forker Road.

OUR FUTURE IS BRIGHT | 2018 ANNUAL REPORT 10

INLAND IN THE COMMUNITY At Inland Power, community and service is at the heart of everything we do.

We are committed to serving the communities where our members work and live and strongly believe our service goes beyond providing reliable and affordable power. For us, community is one of our core values and a fundamental part of our mission and service delivery. For most of our history, we have been giving back by supporting livestock shows, schools, higher education and other community events. In 2018, your cooperative donated approximately $70,000 back to the communities we serve.

• Inland donated $20,000 to Spokane Neighborhood

tree of sharing during the holidays. Employees

Action Partners (SNAP) to help Inland members in

donate from their personal finances to help these

SNAP’s energy assistance program.

children in need.

• Operation Round Up continues to thrive and has

• Inland awarded 15 - $1,000 scholarships to Inland

raised more than $87,000 in five years. Over the

Power’s members’ children and dependents to

course of this program, 15 organizations have

attend higher education.

received donations.

• Inland provided $7,800 to 4-H and FFA members • Inland employees sponsored approximately 80 students from Snowden Elementary through weekend food needs, school supplies and a

11 OUR FUTURE IS BRIGHT | 2018 ANNUAL REPORT

who showed and sold livestock at fairs and shows around eastern Washington.

CONGRATULATIONS TO INLAND’S 2018 SCHOLARSHIP WINNERS

MARIA ALVAREZ

LAKESIDE HIGH SCHOOL

JACKSON CLARK

FREEMAN HIGH SCHOOL

FIELDING DEMARS

CENTRAL VALLEY HIGH SCHOOL

RACHEL FRICKE

UNIVERSITY OF WASHINGTON

EMILY GRAHAM

MT. SPOKANE HIGH SCHOOL

ALI JONES

MT. SPOKANE HIGH SCHOOL

CATHERINE KARTCHNER

CENTRAL VALLEY HIGH SCHOOL

BENJAMIN KIEHN

CENTRAL VALLEY HIGH SCHOOL

GRACE LILJE

DAVENPORT HIGH SCHOOL

JOHN MIRES V

MEAD HIGH SCHOOL

MARLEY PRATT

FREEMAN HIGH SCHOOL

NICHOLAS ROLLINS

DEER PARK HIGH SCHOOL

TYSON SCHENK

LIBERTY HIGH SCHOOL

TYLER SHEA

NORTHWEST CHRISTIAN HIGH SCHOOL

LANESSA SIMON

EASTERN WASHINGTON UNIVERSITY

OUR FUTURE IS BRIGHT | 2018 ANNUAL REPORT 12

10110 W HALLETT RD. SPOKANE, WA 99224

DISTRICT 1 DANNY LEE, SECRETARY

NINE MILE FALLS, WASHINGTON

DISTRICT 2 DICK ZIEHNERT, TREASURER

ELK, WASHINGTON

DISTRICT 3 GARRY ROSMAN, VICE PRESIDENT

DAVENPORT, WASHINGTON

DISTRICT 4 DAVID SHILL

SPOKANE, WASHINGTON

DISTRICT 5 GALE RETTKOWSKI

WILBUR, WASHINGTON

DISTRICT 6 JIM KROLL

COLFAX, WASHINGTON

DISTRICT 7 BRIAN SLAYBAUGH, PRESIDENT

POMEROY, WASHINGTON

AT-LARGE POSITION A KRISTINA BAHR

SPOKANE VALLEY, WASHINGTON

AT-LARGE POSITION B RANDY SUESS CHENEY, WASHINGTON

LEF T TO RIGHT RANDY SUESS, JIM KROLL, KRISTINA BAHR, DAVID SHILL, DANNY LEE, GALE RETTKOWSKI, BRIAN SLAYBAUGH, GARRY ROSMAN, DICK ZIEHNERT

BOARD OF TRUSTEES