DIXIE ELECTRIC COOPERATIVE
2 0 1 8 A N N U A L R E PO RT
GIVING THANKS
Executive REPORT Your cooperative has continuously grown and prospered since our incorporation in 1938. Each new year brings exciting changes and challenges, but your cooperative is always prepared to adapt and embrace whatever changes come our way. None of the accomplishments shared in this report would be possible without the cooperation and hard work of many individuals. As mathematician and philosopher Alfred North Whitehead once said, “No one who achieves success does so without acknowledging the help of others. The wise and confident acknowledge this help with gratitude.” Here at Dixie Electric Cooperative, we recognize that our success is only possible when everyone works together towards a common goal. The cooperative’s mission has always been to safely provide our memberowners with reliable electric service at an economical cost; and, our vision is to improve the quality of life in and around the communities we serve. We accomplish our mission by remaining committed to our core values of accountability, community commitment, efficiency, integrity, memberowner oriented, and safety.
TABLE OF CONTENTS Executive Report 2 Board of Trustees 3 Management Team 3 Thank You Linemen 4 Thank You Crews 5 2018 Facts and Figures 5 Thank You Engineers 6 Thank You Human Resources 7 Thank You Members 8 Thank You Member Services 9 2018 Balance Sheet 10 Secretary-Treasurer’s Report 11 Financial Report 11 2018 Statement of Operations 11 Distribution of Costs 11
We are grateful to our team here at Dixie for their constant efforts in adhering to these core values. There is an old Hansa Proverb that says, “Give thanks for a little and you will find a lot.” Because we have focused on being thankful for all the little things our team accomplishes, we have also been fortunate to witness the continuous growth and prosperity of your cooperative. We would be remiss if we failed to extend our gratitude to you, our member-owners. Without you, our hard work and effort would be meaningless. So, to each of you we say thank you for helping to make this, and every year, a success for your cooperative.
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Thank You BOARD MEMBERS
DIXIE ELECTRIC COOPERATIVE ANNUAL REPORT 2018
for your leadership
Thank You
MANAGEMENT TEAM for your guidance
GARY HARRISON PRESIDENT/CEO
PARKER GRAY MOUNT District 1, Seat 1
TOM JAMES District 1, Seat 2
JAMES SIKES Vice Chairman District 1, Seat 3
MIKE BARLOW
CHIEF FINANCIAL OFFICER
ERNIE FAULKNER
VICE PRESIDENT, MARKETING & ECONOMIC DEVELOPMENT
BRANDON JOHNSON
VICE PRESIDENT, ENGINEERING & OPERATIONS
HELENA DUNCAN District 2, Seat 4
KIM JACKSON Secretary/Treasurer District 2, Seat 5
JOHN LIVINGS District 2, Seat 6
BRENT MOFFETT
VICE PRESIDENT, EXTERNAL AFFAIRS AND SPECIAL PROJECTS
MICHELLE WARD
VICE PRESIDENT, HUMAN RESOURCES AND ADMINISTRATIVE SERVICES
ANDREW CALLAWAY Chairman District 3, Seat 7
ALBERT PERRY District 3, Seat 8
JIMMY ELLIS District 3, Seat 9
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Thank You LINEMEN for KEEPING THE LIGHTS ON
To Our LINEMEN Thank you for all of the sacrifices you make to keep the lights on for our member-owners. Regardless the weather, the day of the week, or the holiday, you are always willing to leave the comfort of your home to restore electricity for our membership. We understand that reliable electric service is a top priority for our member-owners.
In 2018, our system reliability level was 99.97 percent. While no utility can guarantee 100 percent reliability, we are always striving to keep your lights on 24 hours-a-day, 365 days-per-year. But, our commitment to providing reliable electric service is not just related to restoring power following an outage. It involves planning and preventative maintenance to minimize outages. 4
DIXIE ELECTRIC COOPERATIVE ANNUAL REPORT 2018
Thank You CREW MEMBERS
for your commitment to providing reliable electric service outage. In 2018, crews inspected 292 miles of overhead line, 590 padmounted transformers and 4,726 poles. As a result of these inspections, 960 poles were replaced in 2018. Our crews show this same commitment and dedication when we receive the call from a sister cooperative in need of mutual aid following a major storm. The year 2018 brought severe weather to many cooperatives, with Hurricanes Florence and Michael causing the most significant damage. From September through October 2018, we sent a total of 61 crew members, 37 vehicles, 10 pole trailers and a Terex light tree to assist five sister cooperatives. These dedicated individuals worked countless hours to restore power and make a difference for those in need.
Your cooperative has an extensive vegetation management program in place to help reduce outages due to trees and other vegetation. The program includes the use of heavy-duty clearing and trimming equipment to remove large trees and growth that jeopardize our lines. Right of way crews systematically work their way across our system clearing rights of way. Approximately one to two years after the right of way is cut, we follow up with a spray that promotes the growth of green plants, but eliminates wood stems and thick undergrowth. This process improves the aesthetics of the right of way, makes it easier to trim during the next maintenance cycle, reduces wear and tear on equipment, and ultimately limits the number of outages for our member-owners. In 2018, our crews trimmed and maintained almost 300 miles of line. Throughout the year, crews also inspect lines and equipment to evaluate and locate potential problem areas before they can cause an actual
FACTS AND FIGURES Total kWh sold 532,518,117 New services connected 453 Total number of active services 24,230 Miles of overhead lines 2,073 Miles of underground lines 597 Average monthly residential kWH usage 1,277 Full-time employees 88 5
Thank You ENGINEERING for OUR SYSTEM RELIABILITY
To Our ENGINEERS Thank you for everything you do to ensure our member-owners have reliable electric service at the flip of a switch. Each year, our engineers work with PowerSouth Energy Cooperative, our power supplier, to develop load forecasts to ensure we have an adequate power supply to meet the growing electric demands on our system. This involves a detailed analysis of historical data, as well as projected growth trends for our area. 6
Our engineering staff also works to develop fouryear and long-range work plans. The information contained in these plans helps staff determine where growth will take place, as well as the equipment and energy requirements necessary to meet the needs in those areas. Our total current base load capacity is 215.75 MW, provided through 16 substations. In 2018, we added our Park Crossing substation to help meet the growing demand in that portion of our system.
DIXIE ELECTRIC COOPERATIVE ANNUAL REPORT 2018
Thank You HUMAN RESOURCES for providing us with an amazing team
ways we can improve our procedures in order to operate more safely and efficiently. Your cooperative also participates in the Rural Electric Safety Achievement Program (RESAP). RESAP is a safety program that is administered by the National Rural Electric Cooperative Association (NRECA) and the Alabama Rural Electric Association of Cooperatives (AREA). RESAP involves a safety leadership commitment, an annual safety improvement plan, a resultsoriented assessment process including both an internal self-examination and an independent external safety assessment, and formal recognition. Cooperatives participating in the RESAP program must also provide key safety statistics on an annual basis, including: the U.S. Occupational Safety & Health Administration (OSHA) DART rate; OSHA LWDI rate; and vehicle accidents per 100,000 miles driven. In 2018, your cooperative reached a safety milestone by achieving four years with no losttime accidents.
In order to best serve our member-owners, it is important that we have highly trained and qualified personnel to fill the workforce needs throughout the cooperative. The cooperative has a Succession Management Plan in place that is updated on an annual basis to ensure that all key positions are covered, should a vacancy occur. Our management team is also dutiful in their efforts to seek training and development opportunities for the employees. To best utilize the human resources available in the cooperative, management also seeks opportunities to cross train employees and find a balance between the use of outside contractors and current employees. Dixie Electric Cooperative is dedicated to maintaining a culture of safety. Our employees go through countless hours of training to ensure they know proper precautions and procedures to avoid accidents. Our safety committee, made up of employees from various departments within the cooperative, is constantly looking for
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Thank You MEMBER SERVICES for PUTTING MEMBERS FIRST
To Our MEMBERS Thank you for allowing us the opportunity to serve you. Our mission is to safely provide you with reliable electric service at an economical cost. Your constant support and encouragement of our employees make serving our membership an easy task. In 2018, our member satisfaction survey once again reflected high levels of satisfaction among our membership. Over the years, you have consistently rated us with overall satisfaction scores in the 90s.
While we are grateful for such positive feedback, we are constantly striving to improve your satisfaction with the cooperative by utilizing your survey input and the data we gather to develop processes, procedures and programs to better serve you. We hope that in all of our actions, it is apparent that your cooperative is always looking out for you.
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DIXIE ELECTRIC COOPERATIVE ANNUAL REPORT 2018
Thank You MEMBER SERVICES Your cooperative currently provides over 19,000 member-owners with electricity to more than 24,000 businesses and homes in eight Alabama counties. As you would imagine, this number of member-owners equates to a significant amount of member interaction throughout the year. In 2018, our member service representatives processed almost 95,000 payments, of which over 81 percent involved direct interaction with a memberowner. This does not include payments received utilizing electronic payment methods. Our member service representatives also received over 57,000 phone calls during 2018, which is an average of almost 4,800 calls per month. This equates to our representatives having personal one-on-one interaction with approximately 10,000 memberowners each month, or more than one-half of our membership. In a world where many businesses are shutting down local offices, your cooperative is committed to the communities we serve and desires to maintain that personal touch through member engagement.
Our commitment to community is also reflected in the many programs and services we offer to our member-owners. We offer a variety of school programs to benefit students in our service area. In 2018, your cooperative awarded $37,500 in scholarships to 14 students in our community through both the Electric Cooperative Foundation Scholarship Program and the Youth Tour Program. In addition, eight area students represented Dixie Electric Cooperative during the Montgomery Youth Tour, and four of those students continued on to participate in the Washington Youth Tour. Our career fairs and safety demonstrations were presented to over 2,300 students during 2018, and we anticipate this number will continue to grow each year. Member-owners also benefit from our programs that promote energy conservation and efficiency. In 2018, we distributed 290 electric water heaters, performed 135 home energy audits, and helped eight member-owners close on loans through our various energy efficiency loan programs.
2018 Member Interaction with Member Services Representatives
5,726
6,438
6,327
5,527
6,847
6,632
6,750
6,367 5,797
6,453
10,000
6,356
12,000
7,095
14,000
8,000
3,584
4,479
4,752
4,346
5,483
5,553
5,281
4,821
3,981
4,779
4,775
4,000
5,454
6,000
2,000
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January
February
March
April
May
June
Calls
July
August
September
October
November
December
Payments
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FINANCIALS
NOTICE:
BALANCE SHEET AS OF DECEMBER 31, 2018
ASSETS 2018 Utility Plant
Electric plant in service, at cost Construction work in progress Total utility plant
$ 130,222,112 1,840,825 132,062,937
Less accumulated provision for depreciation Net utility plant
31,363,045 100,699,892
Other Assets and Investments
Investments in associated organizations Investments in Cooperative Utility Services Other Investments Non-utility property Total other assets and investments
23,040,679 2,097,903 29,654 1,365 25,169,601
Current Assets
Cash Accounts receivable Prepaid power Materials and supplies Other current and accrued assets Total current assets
1,136,264 4,978,680 10,825,000 1,131,216 150,592 18,221,752
Deferred Charges Total Assets
264,275 144,355,520
LIABILITIES AND OTHER CREDITS Equities
Memberships Patronage capital Other equities Total equities
101,930 61,579,992 2,089,012 63,770,934
Long-Term Debt
Mortgage notes payable Less: Current maturities Total long-term debt
62,611,986 2,344,833 60,267,153
Current Liabilities
The financial information provided is part of the financial statements for the year ended December 31, 2018, which contained an unmodified auditor’s opinion dated March 12, 2019. A copy of the financial statements is retained at the Cooperative’s office.
Current maturities on long-term debt Accounts payable Consumer deposits Accrued liabilities Line of Credit Total current liabilities
2,344,833 3,593,223 3,888,738 4,496,104 650,000 14,972,898
Other Liabilities Deferred Credits
4,854,645 489,890
Total Liabilities and Other Credits
$ 144,355,520
Thank You ACCOUNTING
for keeping us fiscally responsible 10
DIXIE ELECTRIC COOPERATIVE
DISTRIBUTION OF EXPENSE DOLLAR ANNUAL REPORT 2018 (BY PERCENTAGE)
REPORT OF THE SECRETARY-TREASURER
This graph provides a breakdown of our expenses by category and percentage. As you can see, the greatest expense incurred by your cooperative is purchased power. Power cost accounts for 64 percent of our expenses.
The board of trustees of Dixie Electric Cooperative has examined the balance sheet and financial statement for Dixie Electric Cooperative for the fiscal year ending December 31, 2018. All subsidiary records and accounting procedures of the cooperative are kept in accordance with the Uniform System of Accounts as prescribed by the Rural Utilities Service. Your board of trustees reviews monthly statements. In turn, an independent audit has been performed by Gruenloh and Associates, P.C., Certified Public Accountants, on all cooperative financial records on a fiscal year basis as of December 31 for the preceding 12 months. Kim Jackson Secretary-Treasurer
STATEMENT OF OPERATIONS
For the Year Ended December 31, 2018
Revenue 2018 Electric Revenue $ 60,858,248 Other Operating Revenue 911,397 Total Revenue 61,769,645 Expenses Cost of Purchased Power 38,459,153 Operations & Maintenance Expense 6,531,830 Consumer Accounts & Sales Expense 3,195,706 Administrative & General 3,382,516 Depreciation 3,645,344 Tax Expense 2,504,976 Interest Expense 2,328,473 Total Cost of Electric Service 60,047,998 Operating Margins 1,721,647 Non Operating Margins 623,340 Generation & Transmission Capital Credits 764,943 Other Capital Credits 212,580 Patronage Capital $ 3,322,510 NOTICE: The financial information provided is part of the financial statements for the year ended December 31, 2018, which contained an unmodified auditor’s opinion dated March 12, 2019. A copy of the financial statements is retained at the Cooperative’s office.
FINANCIAL REPORT Monies invested in system improvements and routine construction during the past year resulted in an increase in net utility plant of 1.4 percent. Kilowatt-hour sales increased 5.5 percent from 2017, while annual growth in consumers was slightly higher in 2018, increasing by 1.5 percent. The increase in kilowatt-hour sales can be attributed to changes in weather patterns, as well as growth in the number of members served. Purchased power, or wholesale power, is the single largest component of our rate. This expense comprises the cost of generating the electricity we provide to our member-owners (including generating fuel, capital expenses associated with constructing and operating power plants, and transmission costs to deliver energy from the power plants to our lines). Power cost per kilowatt-hour sold decreased 2.7 percent in 2018, with wholesale power accounting for 64 percent of our total cost of service – an uncontrollable yet essential expense. Total revenue for 2018 was $61,769,645. Operating margins were $1,721,647, or 2.8 percent of total revenue. 11
DIXIE ELECTRIC COOPERATIVE 9100 Atlanta Hwy, Montgomery, AL 36117 1.888.349.4332 www.dixie.coop