COMMITTED TO COMMUNITY 2019 ANNUAL REPORT
1
TABLE OF CONTENTS EXECUTIVE REPORT BOARD OF TRUSTEES MANAGEMENT TEAM FACTS AND FIGURES PROGRESS
ON THE COVER
3 4 5 6 6
A Dixie Electric Cooperative lineman working to safely restore power to a member. Our 99.971 percent reliability level demonstrates our commitment to safely providing reliable electricity at an economical cost.
SYSTEM RELIABILITY FUTURE GENERATIONS EDUCATIONAL PROGRAMS FINANCIALS SECRETARY-TREASURER’S REPORT
7 8 9 10 11
EXECUTIVE REPORT Commitment has been defined as “the state or quality of being dedicated to a cause or activity.” This describes the driving force of Dixie Electric Cooperative’s board of trustees, management team and employees. We are committed to our members and the communities we serve. As you read through our 2019 Annual Report, you will find examples of our commitment to progress to improve system reliability and ensure a sustainable source of electricity for many years to come. You will also learn about our programs and services that are designed to engage and empower future generations. Our commitment goes far beyond our mission of safely providing reliable electric service at an economical cost. Our vision is to improve the quality of life in and around the communities we serve. That is why you see us out volunteering at the ball fields, in classrooms, and at local charity events. We understand the importance of making a difference in the lives of those around us.
R. Gary Harrison President/CEO Dixie Electric Cooperative
2019 Annual Report | 3
BOARD OF TRUSTEES
THOMAS ELLIS District 1, Seat 1
HELENA DUNCAN
TOM JAMES
Vice Chairman District 1, Seat 3
KIM JACKSON
JOHN LIVINGS
District 2, Seat 4
Secretary/Treasurer District 2, Seat 5
ANDREW CALLAWAY
ALBERT PERRY
Chairman District 3, Seat 7
4 | Board of Trustees
JAMES SIKES
District 1, Seat 2
District 3, Seat 8
District 2, Seat 6
JIMMY ELLIS
District 3, Seat 9
MANAGEMENT TEAM
COOPERATIVE GOVERNANCE
Your cooperative is governed by a board of trustees comprised of nine Dixie Electric Cooperative members who live in various locations throughout our service area. These members receive electricity from the cooperative and, like you, have a vested interest in the success of our operations. Our service area is divided into three board districts, with three trustees representing each of the three districts. Three board seats are up for election annually, one from each board district, and trustees for those seats are nominated and elected through a democratic process by the cooperative’s membership. The individuals representing our membership on the board of trustees devote countless hours each year to your cooperative. On behalf of all of the members, they approve annual operating budgets and construction work plans, all in an effort to ensure a long-term supply of reliable, economical electricity. They also develop strategic plans to identify key issues that Dixie Electric Cooperative will face in the coming years and provide a common framework for the strategic direction of your cooperative now and in the future. It is also the responsibility of the board to approve plans for the management of member equity, and to select independent auditors to perform an annual financial audit. The board works closely with the cooperative’s management team to develop policies to ensure we are looking out for the best interests of our members. Your board encourages cooperative staff to research and develop programs and services to educate members about the efficient and safe use of electricity.
GARY HARRISON PRESIDENT/CEO
MIKE BARLOW
CHIEF FINANCIAL OFFICER
ERNIE FAULKNER
VICE PRESIDENT, MEMBER SERVICES, MARKETING & ECONOMIC DEVELOPMENT
BRANDON JOHNSON
VICE PRESIDENT, ENGINEERING & OPERATIONS
BRENT MOFFETT
VICE PRESIDENT, EXTERNAL AFFAIRS AND SPECIAL PROJECTS
MICHELLE WARD
VICE PRESIDENT, HUMAN RESOURCES AND ADMINISTRATIVE SERVICES
Your board of trustees is also committed to the communities we serve because they too are a part of these communities. They support the cooperative’s constant efforts to give back to others in our area. They understand the importance of neighbors helping neighbors.
2019 Annual Report | 5
COMMITTED TO PROGRESS
2019 FACTS AND FIGURES Total kWh sold New services connected Miles of overhead lines Miles of underground lines Average monthly residential kWh usage Full-time employees
6 | Progress
532,518,117 453 2,073.03 597.29 1,278 88
ENGINEERING & OPERATIONS
The integrity of our electric system plays a major factor in the level of reliability you receive from the cooperative. We spend a significant amount of time planning for your future electric needs by evaluating our current system, anticipating future growth, and working with PowerSouth Energy Cooperative, our energy supplier, to ensure they have adequate generation capacity to meet the future electric load demand on our system. Through this planning process, our engineering team, along with PowerSouth, develops both four-year and long-range work plans.
SYSTEM RELIABILITY
Your cooperative has an extensive vegetation management program in place that includes the use of heavy-duty clearing and trimming equipment to remove large trees and growth that jeopardize power lines, paired with a herbicide application process to improve the aesthetics of the right of way. Through this program, crews cleared and trimmed 423 miles of right of way in 2019. While we would prefer that you have electricity 100 percent of the time, outages are unfortunately something that all utilities experience at some point in time. We analyze our outage data each year in an effort to improve any areas we can by maintaining and upgrading equipment; however, there are some causes that are completely beyond our control. In those instances, our crews work diligently to safely restore power as quickly as possible. In today’s world, so many aspects of our lives depend on electricity, which makes system reliability crucial to our members. We recognize that even the smallest of outages can have an impact on daily activities for all members, whether commercial, industrial, or residential. In 2019, our overall system reliability for the year was 99.971 percent.
NO LOST TIME
Your cooperative is committed to safety. We have a committee in place that is comprised of employees from various departments. We also have a safety director on staff whose job is to focus on safety by reviewing work practices and establishing safety programs to help educate and protect our employees and members. Our employees go through extensive training programs to ensure they know proper procedures to avoid accidents and injuries. As a result of this commitment, we achieved a safety milestone in 2019 by reaching five years with no lost time accidents.
“Celebrating Five 99.971% Years of No Lost Time Accidents.” SYSTEM RELIABILITY
SYSTEM IMPROVEMENTS
Your cooperative embarked on several large projects in 2019 to improve system reliability and plan for the future needs of our membership. Crews completed line upgrades in several areas of Montgomery County, including Cedar Pines, Flowers Road, Gibson/ Goodwin Road, and Turkey Creek. Upgrades were also completed in the Farmville Road area of Macon County. Our Pintala substation was rebuilt in late 2018, and energized in early January 2019. We also rebuilt our Halstead substation which was energized in December 2019.
2,629,746 minutes 43,829 hours 1,826 days
2019 Annual Report | 7
COMMITTED TO FUTURE GENERATIONS
YOUTH PROGRAMS
We recognize that the youth of today are the leaders of tomorrow. The students we reach today have the potential to be cooperative board members, employees and members in the future. That is why we invest so much time and energy in programs that benefit our youth. Through educational programs, financial opportunities, and educator training, we have the ability to empower future generations.
EMPOWER WORKSHOP
Your cooperative sponsored 15 educators to attend PowerSouth Energy Cooperative’s EMPOWER Energy Education Workshop. This workshop provides training and resources to assist educators with STEM curriculum and experiments in the classroom.
8 | Future Generations
YOUTH TOUR
The Rural Electric Cooperative Youth Tour program offers high school juniors the opportunity to learn more about the cooperative form of business, develop a greater understanding of the political process, and tour sites in our state capital, as well as our nation’s capital. In 2019, your cooperative sponsored eight students from our area to participate in the Montgomery Youth Tour. Four of these students continued on to participate in the Washington Youth Tour, a week-long event held in Washington, D.C. Participants had the opportunity to tour sites such as the Capitol, Mount Vernon, the Lincoln Memorial, the Vietnam War Memorial, and the WWII Memorial. They also had the opportunity to visit and interact with congressional leaders.
SCHOLARSHIPS & DONATIONS
We understand the importance of education. In 2019, your cooperative awarded $37,500 in scholarships to 14 local students. These funds will be used for them to continue their education in trade schools, two-year or fouryear college programs. The cooperative also provided financial donations and assistance of over $10,000 to schools served by the cooperative.
“Education is the foundation upon which we build our future.”
CAREER & SAFETY PROGRAMS
Cooperatives not only supply millions of homes across the country with electricity, they are also a source of employment for many across the nation and right here at home. Your cooperative is actively involved with schools in our area and often participates in career fairs to teach students about the many employment opportunities available at cooperatives. Our career fair program offers hands on learning opportunities for the students to wear the gear our lineworkers wear while attempting to maneuver tools and equipment. We also spend many hours educating our youth and others in the community about the importance of electrical safety. In 2019, we reached more than 2,400 students through these programs.
COMMUNITY ENGAGEMENT
2430
14
Students reached through career programs
Scholarships given to students in our service area
15 Educators trained at EMPOWER energy education workshop
MEMBER INITIATIVES
Energy Programs Our energy auditor performed a total of 94 residential and commercial energy audits in 2019. In addition, your cooperative shared valuable energy saving tips, information regarding loan and rebate programs, and distributed 231 energy efficient electric water heaters.
COMMUNITY ASSISTANCE
Our employees understand the importance of giving back to the community. Each year, we participate in a variety of projects that help enhance the lives of others in our area. One of the largest events we help organize and provide volunteers for is 12’s Day of Giving and the Summer Fund and Food Drive, co-sponsored by WSFA-TV. These drives benefit local charities such as Christmas Clearinghouse, the Montgomery Area Food Bank, and Toys for Tots. Since their inception, we have raised over $650,000 in monetary donations and collected an additional 62,000 toys and 165,000 pounds of food to assist our neighbors in need. Employees also adopt families at Christmas through local organizations and prepare almost 300 fruit baskets annually to be delivered to elderly members of the community. These are just a few examples of the many ways your cooperative is committed to the communities we serve.
2019 Annual Report | 9
FINANCIALS
BALANCE SHEET AS OF DECEMBER 31, 2019 ASSETS Utility Plant Electric plant in service, at cost Construction work in progress Total utility plant Less accumulated provision for depreciation Net utility plant
Other Assets and Investments Investments in associated organizations Investments in Cooperative Utility Services Other investments Non-utility property Total other assets and investments
2019 $ 139,583,490 880,969 140,464,459 32,192,968 108,271,491
LIABILITIES AND OTHER CREDITS Equities Memberships Patronage capital Other equities Total equities
61,969,088 2,508,808 64,581,293
Mortgage notes payable
62,326,041
Less: Current maturities
2,495,382
Total long-term debt
59,830,659
1,724,834 23,866 1,365 25,777,642
Current Liabilities Current maturities on long-term debt Accounts payable Consumer deposits Accrued liabilities Line of Credit Total current liabilities
15,579,106
Deferred Credits Other Liabilities
812,354 4,778,983
Total Liabilities and Other Credits
Total Assets
103,397
Long-Term Debt
24,027,577
Current Assets Cash 2,180,557 Accounts receivable 4,708,120 Materials and supplies 1,220,151 Prepaid power 3,150,000 Other current and accrued assets 66,574 Total current assets 11,325,402 Deferred Charges
$
2019
207,860
$145,582,395
NOTICE: The financial information above is part of the financial statements for the year ended December 31, 2019, which contained an unmodified auditor’s opinion dated March 24, 2020. A copy of the financial statements is retained at the Cooperative’s office.
2,495,382 3,468,511 4,237,805 4,749,367 628,041
$145,582,395
FINANCIALS
REPORT OF THE SECRETARY-TREASURER
DISTRIBUTION OF EXPENSE DOLLAR BY PERCENTAGE
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, 2019. 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 Hardy 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.
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.
KIM JACKSON SECRETARY-TREASURER
STATEMENT OF OPERATIONS FOR THE YEAR ENDED DECEMBER 31, 2019 Revenue 2019 Electric Revenue Other Operating Revenue Total Revenue
$
Expenses
Cost of Purchased Power Operations & Maintenance Expense Consumer Accounts & Sales Expense Administrative & General Depreciation Tax Expense Interest Expense Total Cost of Electric Service
39,778,555 6,682,821 3,411,880 3,514,443 3,737,193 2,533,004 2,404,988 62,062,884
Operating Margins
601,711
Non Operating Margins Generation & Transmission Capital Credits Other Capital Credits
Patronage Capital
61,735,192 929,403 62,664,595
652,156 890,489 185,917 $
2,330,273
NOTICE: The financial information above is part of the financial statements for the year ended December 31, 2019, which contained an unmodified auditor’s opinion dated March 24, 2020. 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 7.5 percent. Kilowatthour sales increased .6 percent from 2018, while annual growth in consumers was slightly higher in 2019, increasing by 1.4 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 members (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 increased 2.8 percent in 2019, with wholesale power accounting for 64 percent of our total cost of service – an uncontrollable yet essential expense. Total revenue for 2019 was $62,664,595. Operating margins were $601,711, or 1.0 percent of total revenue.
2019 Annual Report | 11
ELECTRIC COOPERATIVE DIXIE ELECTRICDIXIE COOPERATIVE 9 1 00 ATLA N TA HWY 91 0 0 AT L AN TA MON H W YTGOME RY, A L 3 6 1 1 7 M O N TGO M ERY, AL 3 6 117 1 - 888- 3 49 - 43 3 2 1 - 8 8 8 - 3 4 9 - 4 3 3 2www. d i x i e. co o p
w w w.d i x i e .coop