President’s Message
By Todd Ware, President & Chief Executive Officer
Due to concerns surrounding the coronavirus, we were unable to hold our traditional annual meeting this year. Instead we released a virtual business meeting on our website. Board Chairman Nelson Smith called the meeting to order and introduced the Board of Directors. The cooperative’s legal counsel announced the results Todd Ware of our recent Director elections, and I shared an update that I typically give in person during the annual meeting. I also want to share those highlights in this newsletter.
often find opportunities for operational improvements. We successfully completed required commitments in both programs during 2019.
MEMBER SERVICE MEASURES One way we measure our level of service is through our annual American Consumer Satisfaction Index (ACSI) scores. Our scores continue to increase steadily. The electric cooperative scored 84 with a 78% retention rate, and our natural gas cooperative scored 87 with an 81% retention rate. Both scores are well above the utility industry average.
QUESTIONS FROM OUR MEMBERS
When will the cooperative start paying capital credits/ dividends? Your Board of Directors have the authority to COOPERATIVE FINANCES institute payments of capital credits if it is not harmful In 2019, the cooperative had a positive margin of $6.7 to the condition of the cooperative. Our primary lender million, as compared to 2018 net margin of $9.9 million. We requires our equity to be at 20% or higher before we pay finished just ahead of our budget of $6.4 million for 2019. capital credits to members. Our equity level at the end of The comprehensive income for the year was $5.3 million. 2019 was 17.2%. The Board is working towards the goal Comprehensive income is calculated by adjusting net of paying capital credits. At this time, however, I do not margin by any unrealized gains/losses from post retirement know when that will be. The Energy Cooperative currently health plans. In 2019, we have a $1.4 million unrealized loss. allocates capital credits to members and pays capital credits Major factors impacting our 2019 results were weather, to member estates. operating expenses and reduced patronage capital from Why do I pay a fixed cost for natural gas in the summer our generation supplier Buckeye Power. The year 2019 was when I do not use it? Our goal is for all member classes to 7 percent warmer than the 30-year average and 6 percent share fixed costs equally. We have a large amount of expenses warmer than 2018. This resulted in lost revenue of $4 that are fixed. The monthly facility fee covers the cost of million for the cooperative. providing you access to the natural gas pipeline system year round. The Energy Cooperative must maintain and have the Operating expenses were lower than budget by 1.5 percent system available year round. The fixed cost does not change or $800,000. Our Debt Service Coverage (MDSC) remained depending on the time of year. Whether you use a lot or strong at 1.46. This ratio measures our cash flow versus our a little energy each month, the cost of delivering natural debt payments. Our bank requires a minimum of 1.35 MDSC gas to your home or business stays the same. Rates must two out of every three years. We continued to grow equity be designed to align fixed revenues with fixed costs. This as it has grown to 17.23 percent as of December 31, 2019. principle also applies to our electric rates.
SAFETY IS ALWAYS OUR TOP PRIORITY
I would like to conclude by thanking our members. We appreciate the accolades our employees receive when working in your backyard, especially during severe weather and dangerous conditions. We have a very dedicated group of employees who hard work everyday. With their efforts, and the strategic direction provided by the Board of Directors, The Energy Cooperative will continue to provide you with safe, reliable, and affordable energy — now and always.
Our electric and gas operations continue to participate in the National Rural Electric Cooperative Association (NRECA) Safety Achievement Program and the American Gas Association Peer Review Program. These voluntary programs allow electric cooperatives and natural gas company employees to share leading work and safety practices along with their peers and they look for and 3
