State of Your Cooperative

By CEO Brett Orme

Hey, Kiamichi Electric Members. 2020 has been a very trying year to say the least. COVID-19 has had a substantial effect on all of us. I am very disappointed it was necessary to postpone this year’s annual meeting. I always enjoy the opportunity to meet with you, our members face to face and hear what is important to you. With the current status of the health risk to members and employees as well as CDC guidelines postponing seemed the safest option available. We were also not able to secure our normal venue due to the pandemic which caused other logistical concerns.

I would like to update you on the state of your cooperative.

The first item I would like to address in the State of Your Cooperative is your cooperative’s financial health.

Kiamichi is in good financial health. Your year-end revenue was $40.4 million which was up approximately 5% from the previous year. Your net margins were $1.66 million at fiscal year-end. Kiamichi’s lenders require us to maintain margins on an annual basis, but these are ultimately returned to you, the members of the cooperative.

CAPITAL CREDITS AND FINANCIAL AUDIT

Your Board voted to return just over $1 million in margins in 2020. This makes the 10th straight year that the board has voted to return at least 1 years’ worth of margins back to our members. This puts Kiamichi Electric Cooperative 4.5 years ahead of schedule for returning these margins to the membership. Your Board also voted to return these margins early this year to try and help in a small way by getting the money back in the pockets of the members during these difficult times.

KEC has returned a total of $14.9 million in capital credit retirements since inception in 1945.

Returning these margins as capital credits to you our members is what makes electric cooperatives different! These are not returned as profits for shareholders but to you the members.

Every year the KEC Board of Trustees contracts with an independent external auditor to audit Kiamichi Electric’s financials. This is done through a competitive bidding process. The audit ending calendar year 2019 had a clean audit opinion and there were no material misstatements. The audited financials were published in the Light Post that was sent out to all members. The financial statements can also be viewed on the website at www.kiamichielectric.org

FUTURE OF KEC RATES

Something important to all of us and that is electric rates:

In 2019 Kiamichi Electric’s average residential rate was 11.2 cents which was below the state average for co-ops of 11.55 cents, ranking KEC at number 15 out of 27 cooperatives in the state. KEC is planning to do a cost of service study in 2021 to evaluate the adequacy of our current rates as well as the cost recovery from all member classes.

There will be some upward pressure on rates in 2021. We are still benefitting from low fuel costs but loss of load in some sectors has the potential of driving up our wholesale cost of purchased power. This expense accounts for 60% of KEC’s total costs. KEC did restructure rates in 2017, but this was revenue neutral to the cooperative. The last rate increase KEC had was in 2014. A cost of service study that is conducted by an independent third-party consultant forecasts KEC’s rate requirements going forward in 2021.

KEC AND RENEWABLES

Kiamichi has been implementing a balanced blend of renewable energy and an array of fossil fuel generation to help stabilize rates.

Over 40% of KEC’s power is currently coming from renewable energy primarily wind and solar and is projected to be over 50% soon.

Kiamichi will do everything we can to keep rates as low as possible while still providing a safe and reliable power system to you our members.

KEC’S RESPONSE TO COVID

Kiamichi Electric has taken several measures to ensure the safety of employees and members as well as try and assist with the financial burden on our members throughout this pandemic. We are mostly back to normal operations at this point. All employees are back to normal duties. Our lobby is open, but we are encouraging social distancing. We are having no all employee meetings and have limited travel. Training and meetings are being done virtually to the extent possible. KEC is encouraging masks when you cannot social distance and we are limiting building access to non-employees.

During the onset of this pandemic to help our members KEC:

• Waived late fees

• Made arrangements for bills due

• Postponed disconnects for non-pay

• Directed members to resources for payment assistance

• KEC has applied for eligible assistance to help with member rates

• Retired Capital Credits early

• Implemented several employee precautions

KEC IN OUR COMMUNITIES

Something that you the members can be very proud of and deserve all the credit for is Operation Round Up (ORU). Through your generosity, great things are being done through the ORU program as well as through the cooperative directly. A total of almost $100,000 has been given to very worthy causes in 2020. Some of these causes are:

• Scholarships for kids

• Coats for kids

• Community grants

• Nutrition programs

• Assistance in implementing telemed

• Salvation Army

• As well as other worthy organizations.

Thank you for your generosity and helping to support these very worthy causes. Since ORU’s inception in 2000, this organization has donated over $1.5 million throughout KEC’s service territory.

I would also like to take this opportunity to thank your employees for a job well done all the time but especially during these very difficult times we have had in 2020. Many of you have also taken the time to submit emails, letters, Facebook posts as well as phone calls expressing appreciation for the work KEC’s employees have done for you. Your kind words are greatly appreciated! You have an exceptional group of employees and I am very thankful for all of them. It takes everyone working together to make Kiamichi Electric Cooperative function daily.

I hope everyone is doing well and encourage you to stay safe. If you have any specific questions please do not hesitate to give us a call or message on Facebook or the KEC website.

Thank you.