PRESIDENT'S MESSAGE

By Todd Ware, President & Chief Executive Officer

During our most recent annual meeting, I reflected on our cooperative’s progress and challenges during 2023. If you did not attend, I want to be sure you have access to the same information. Here is a recap of my Annual Report article and the information I shared on May 13, 2024 during the cooperative’s Annual Meeting of members.

2023, A YEAR OF GROWTH

The year continued to be a year of change within the cooperative, including plans and efforts to build a solid base for the future. This would include new pipes and electric lines in areas to provide redundancy. We also added a new gas tap for additional supply, and we purchased land to build new substations. We saw a slower increase in our membership than last year. However, many new projects have started, which should lead to robust growth in 2024. One milestone accomplished in 2023 was exceeding 5,000 propane members. This part of our business has continued to grow consistently while working to provide our members with quality service. We are grateful and excited to move into another year full of opportunities.

SAFETY

Safety remains, and will always be, one of our top priorities. We work hard to deliver your energy reliably while keeping employees and members safe. We continue to participate in national safety review programs for electric and natural gas and are considered leaders within those programs. As a result, our safety metrics continue to be significantly better than both state and national industry averages. Our electric cooperative has gone over twenty-four years without a lost-time injury.

FINANCIALS

Consolidated financial results for the year were slightly below budget, as we reported a positive net margin of over $6 million. This number was below budget due to lower member sales and higher interest costs. The effects of a warm winter and cool summer were the most significant drivers of the lower results. The overall inflationary price increases caused us to review our total expenses. We cut some operating expenses for 2023 to help keep overall expenses aligned with the budget.

The consolidated comprehensive income was $5.5 million, which was also below budget. These results raised our equity position to over 23%.

ELECTRIC

The electric division continued to work to improve reliability and member outage times during 2023. Our commitment to reliability is evident in the almost $10 million dollars spent on capital improvement projects. These projects focus on rebuilding aging infrastructure and constructing new distribution lines. Our electric division will continue to strive toward the lowest outage times possible. To that end, we reduced our outage times to 1.35 hours per member. This was a 15% reduction from 2022. In addition, we reduced our five-year loss line average by 4%.

NATURAL GAS

The natural gas cooperative continues to experience significant new growth as we added over six hundred new residential members. In 2023, the natural gas cooperative spent just over $15 million on capital improvement projects. Over twenty-one miles of pipe were replaced or added, including upgrading aging infrastructure. The replacement of this aging infrastructure and our focus on leak repairs have drastically reduced our unaccounted-for gas over the past four years. Another result of these projects is that our outstanding leaks are at the lowest level since we started keeping track of leaks many years ago.

ADMINISTRATIVE

We strive to provide the best service to our members. We use several metrics to evaluate the service we provide you, including the American Customer Satisfaction Index (ACSI), which scores our ability to meet your expectations and level of satisfaction. These scores improved or stayed the same in 2023 as compared to 2022. We have also worked hard to improve our communications using multiple methods to inform you about what is happening at your cooperative. As with all businesses today, we also devote many resources toward cybersecurity and protecting your information. These include an annual audit of our system against potential cyber attacks. We continue to look for additional methods of protection for our technology systems.

The future continues to be bright for the cooperative and our communities. Between massive growth opportunities and challenges, 2024 will be another eventful year.