WEC 2016: Annual Report

YOU are our reason

On the cover: Jerry Danford, owner of Jerry Danford Farms in Houston County

2016 ANNUAL REPORT

Debra E. Baxley

John Clark, Jr.

Kip Justice

Nolan Laird

Greg McCullough

Danny McNeil

Donna Parrish

Tracy Reeder

Donald Ray Wilks

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You are our reason ... Everything the employees of WEC do every day is centered around serving our members to the best of our abilities.

YOU are our reason ... for leadership A message from your Board of Trustees You are our reason. It seems like a simple message, but it forms the basis of everything we do here at Wiregrass Electric Cooperative. Everything the employees of WEC do every day is centered around serving our members to the best of our abilities.

We do that chiefly by providing affordable, reliable electric service. But that’s not all we do. As a cooperative, we take a holistic approach to service by investing in the future of this region. Beyond poles and lines, we invest in scholarships to help our youth get the education they need, in helping volunteer firefighters get better equipment to serve their neighbors, and in bringing together elected officials and businessmen to create new ways to bring industry and jobs into the Wiregrass.

In this report you’ll see a few of the things we’ve accomplished over the past year. As always, WEC has

been busy upgrading technology and finding new and innovative solutions to better serve our members. We’ve also continued our focus on member service and how we can make interactions with your electric cooperative simpler and more convenient.

You’ll also see some photos of WEC members and read their thoughts on their cooperative. We believe that the services we provide, and the great employees we work with every day, are improving lives in the Wiregrass. It’s what keeps us striving to do more every day.

If there is anything in the report you’d like more information about, please reach out to us through our office, phone or website (www.wiregrass. coop). We want everyone reading this document to know that you’re not a customer at WEC — you’re a member-owner with a staff dedicated to serving you. You are our reason!

VANCOUVER

HARTFORD

WEC

BY THE NUMBERS

66

EMPLOYEES

WEC maintains over 3,000 miles of electric line to bring power to our members. To put that into perspective, that’s the distance it would take to drive from Hartford to Vancouver.

17,038 24,002 3,067 MEMBERS

METERS

MILES OF LINE 3

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Wiregrass Electric powers our business. Everything we do for our business is done in our home, and we depend on WEC to keep our operation running.

Brett Smith, owner of Dothan Ice Cream Company

YOU are our reason ... for service Member satisfaction survey shows WEC is providing excellent, reliable service In our 2016 Annual Member Satisfaction Survey, WEC members gave us really high marks for going above and beyond in important areas such as customer service, reliability and restoring power after a storm.

WEC OVERALL SATISFACTION RATING

9.06 OUT OF 10

96% 95% 94%

In the survey, 96 percent of members said they were highly satisfied with WEC’s professional business manner and customer service. And, when the power does go out, our ability to restore power quickly also earned top marks with our members.

Highly satisfied with WEC member service Highly satisfied with WEC’s ability to restore power quickly after an outage Highly satisfied with WEC’s friendly and courteous employees

Communication Awards WEC educates members about energy issues impacting the cooperative and members’ power bills through a communications plan involving print and digital media, apps and more. Examples include outage alerts on social media and articles about energy-saving services in Alabama Living.

This year, we were honored with the National Rural Electric Cooperative Association’s Awards for Best Special Publication and Best Graphic Design. WEC also received several excellence in communications awards from the Alabama Rural Electric Cooperative Association (AREA).

Samantha Brown, Member Care Team Representative.

Shadowing Program Keeping electricity flowing reliably and affordably requires a diverse team. While all employees work toward the same goal, linemen don’t always know what accounting professionals do, and warehouse workers might not understand the demands placed on dispatchers.

Our shadowing program allows our employees to spend time in their co-workers’ shoes so that they better understand how we work for you. Ensuring that our employees understand the whole story is another way WEC serves our members best.

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As a member of the Operation Round Up Foundation Board representing Geneva County, I am humbled to serve with a team that works to give back to our community.

Susan Q. Bailey, director of sales and marketing at Highland Oaks on the Robert Trent Jones Golf Trail

YOU are our reason ... for giving One Year of Operation Round Up This year saw the first anniversary of WEC’s Operation Round Up Charitable Foundation. Operation Round Up is a voluntary program that allows WEC members to round up their monthly bill to the nearest dollar as a tax-deductible donation to benefit communities in the WEC coverage area. Below are a few ways that ORU has helped the Wiregrass this year.

>> COTTONWOOD SCHOOL

This K-12 school was awarded $7,500 to revitalize its playground with a new equipment set for elementary school students, including students with disabilities.

>> SCHOLARSHIPS

Ten local seniors were awarded $13,000 in scholarships this year. These scholarships will help the students achieve their goals of a higher education.

>> SLOCOMB MUNICIPAL FIRE DEPARTMENT

Operation Round Up was able to help the volunteer fire department buy $9,787 worth of equipment that will keep firefighters fit and ready for duty. The specialized workout equipment simulates firefighting techniques and is used in tough physical fitness certification tests that firefighters are required to pass.

Coordinator of Key Accounts and Community Relations Deanna Albritton presents Megan Elizabeth Justice of Geneva County High School (Hartford) with a $1,000 scholarship.

>> WICKSBURG VOLUNTEER FIRE AND RESCUE DEPARTMENT Operation Round Up gave $6,500 to buy new firefighting equipment that helped the fire department meet Insurance Service Office requirements. The new equipment will help slash homeowner insurance rates for the department’s entire service community.

>> FLOOD VICTIMS

Floods in late December destroyed homes and shattered lives. Operation Round Up provided checks of $1,000 each to the towns of Columbia, Gordon and Samson to help flood victims.

Stanley Aman, Operation Round Up board president presents a check to Columbia mayor Lanny Lancaster to help flood victims.

85% of all WEC members are contributing to Operation Round Up. As of Aug. 1, 2016, ORU has collected $153,028.

Number is unaudited and unofficial at time of publication.

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The best thing about Wiregrass Electric, for me, is their reliability. If the power goes out, I can’t bake cakes, and I can’t run my business.

Lindsey Woodham, owner of Flour Sack Bakery in Dothan

YOU are our reason ... for stewardship How each dollar is spent The cost of wholesale power is over two-thirds of WEC’s expense. However, WEC has no control over the cost of wholesale power, which is impacted by market conditions and the availability of energy resources such as coal, natural gas and renewables.

68.5¢

Cost of Wholesale Power

7.5¢

6.5¢

1¢

Depreciation Expense

Consumer Accounts

Taxes

6¢

5.5¢

5¢

DistributionMaintenance

Distribution-Operation

Administrative and General

Capital credits: Giving back to our members

The PCA allows a faster response

Because WEC is a member-owned, at-cost organization, it doesn’t focus on returning a huge profit to Wall Street investors. Its “profits” are known as margins, and they are assigned back to you based on the amount of business you did with your cooperative during any given year in the form of patronage capital or capital credits.

When we develop our annual budget, we allocate about 70 percent of revenue for the purchase of wholesale power from PowerSouth. Sometimes, that number is lower than estimated. When costs are lower than projected (as has been the case this year with natural gas expansion and efforts from PowerSouth to drive down costs), the Power Cost Adjustment (PCA) gives us the mechanism to return a credit to you on your monthly power bill.

Since being founded, WEC has retired more than $6.6 million in capital credits to cooperative members.

As of Aug. 15, 2016, WEC had returned nearly

$7,500,000

in PCA credits since 2010.

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Wiregrass Electric has powered our farm since they brought power out here in 1950, a few years after my father started it.

WEC is part of this farm’s past, present and future.

Ray Lewis, co-owner of Lewis Family Dairy in Ashford

YOU are our reason ... for progress Focused on safety Our linemen have a hazardous job, but at WEC our top goal is to achieve a 100 percent safety environment at all times for every employee. This year, our line crews continued to get updates on the newest safety standards through regular safety meetings and expert speakers from organizations like AREA. Working with electric lines always requires caution, but it doesn’t have to be dangerous.

WEC’s employees take safety seriously!

WEC’s new office in Samson provides new features to members in that area.

Ty Mock (left) and Ashley Hanks at the National Youth Tour in Washington, D.C.

Breaking new ground in Samson

Youth Tour

WEC was proud to open a new business office in Samson this year. The new facility replaced an older building that could not accommodate conveniences like a drive-thru and a 24-hour payment kiosk. The cooperative was glad to make this investment in our members living in the Samson community. In 2016, WEC also completed installing PaySite kiosks at all of our offices to make it possible to pay 24 hours a day.

This is one of many options that include in person, drive-thru, online, phone payment or bank draft.

WEC sponsored an all-expense-paid trip for 10 outstanding local high school juniors to attend the Youth Tour in Montgomery in the spring. Each student also received a $500 scholarship. This was the second year WEC awarded these scholarships. From that group, Ty Mock of Samson High School and Ashley Hanks of Geneva County High School were chosen to attend the Washington, D.C. Youth Tour and to receive an additional $500.

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BALANCE SHEETS Statements of revenue and patronage capital are for the years ended April 30, 2016 and 2015.

ASSETS 2016

UTILITY PLANT: Utility Plant Construction Work in Progress

Less: Accumulated Depreciation Net Utility Plant OTHER ASSETS AND INVESTMENTS: Investments in Associated Organizations Economic Development Notes Receivable Total Other Assets and Investments

CURRENT ASSETS: Cash and Cash Equivalents Accounts receivable: Customers, Less Provision for Doubtful Accounts of $59,226 in 2016 and $57,479 in 2015 Unbilled Revenue Other Accounts Receivable Prepaid Power Materials and Supplies Other Current and Accrued Assets Total Current Assets DEFERRED CHARGES: Work Plan and Preliminary Charges Prepaid Pension Total Deferred Charges

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Total Assets

2015

$ 100,018,005 515,721 100,533,726

$ 96,706,902 521,263 97,228,165

21,856,781 78,676,945

21,778,092 75,450,073

19,458,541 550,399 20,008,940

18,456,128 637,600 19,093,728

7,795,836

6,291,282

1,195,719 2,410,098 90,008 553,565 590,944 277,325 12,913,495

1,394,163 2,565,651 50,153 460,314 287,751 11,049,314

72,990 1,321,256 1,394,246

15,713 1,516,998 1,532,711

$ 112,993,626

$ 107,125,826

BALANCE SHEETS Statements of revenue and patronage capital are for the years ended April 30, 2016 and 2015.

LIABILITIES AND EQUITIES EQUITIES: Memberships Patronage Capital Other Equities Total Equities

LONG-TERM LIABILITIES: Mortgage Notes Capital Lease Obligations Less: Current Maturities Total Long-Term Liabilities

2016

$ 86,071 59,164,465 3,518,465 62,769,001

$ 85,216 56,552,975 3,131,567 59,769,758

43,730,478 1,800,396 2,465,331 43,065,543

40,963,939 1,271,528 2,114,445 40,121,022

CURRENT LIABILITIES: Current Maturities on Long-Term Liabilities 2,465,331 Accounts Payable: Trade

425,864 Purchased Power Customer Deposits 2,111,870 Accrued Liabilities: Taxes 1,308,968 Other Accrued Liabilities 847,049 Total Current Liabilities 7,159,082

Total Equities and Liabilities

2015

$ 112,993,626

2,114,445 514,522 301,990 2,072,356 1,383,637 848,096 7,235,046 $ 107,125,826

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STATEMENT OF REVENUE STATEMENT OF REVENUE

OPERATING REVENUE

OPERATING EXPENSES: Cost of Power Distribution - Operations Distribution - Maintenance Consumer Accounts Expense Administrative and General Depreciation Expense Taxes Total Operating Expenses

2015

$ 46,998,492

$ 48,780,931

29,589,314 2,368,026 2,693,192 2,789,416 2,017,113 3,225,564 529,774 43,212,399

33,394,436 2,227,457 2,859,961 2,655,844 1,929,391 3,009,016 524,440 46,600,545

OPERATING INCOME

3,786,093 2,180,386

FIXED CHARGES: Interest Expense

1,742,257

OPERATING MARGINS AFTER FIXED CHARGES

2,043,836 298,485

G&T AND OTHER CAPITAL CREDITS

1,076,932 1,032,244

NET OPERATING MARGINS

3,120,768 1,330,729

NON-OPERATING MARGINS: Interest Income

Net Margins for the Year

STATEMENT OF PATRONAGE CAPITAL

PATRONAGE CAPITAL AT BEGINNING OF YEAR

Retirement of Capital Credits Utility Tax Refund Patronage Capital at End of Year 14

2016

1,881,901

487,661

431,557

3,608,429

1,762,286

2016

2015

56,552,975 55,928,837 (1,220,620) 223,681

(1,301,589) 163,441

$ 59,164,465

$ 56,552,975

WEC OPERATION ROUND UP CHARITABLE FOUNDATION STATEMENT OF FINANCIAL POSITION This statement is for the year ended December 31, 2015.

ASSETS: Cash Accounts Receivable Total Assets

2015

$ 52,777 28,809 $ 81,586

LIABILITIES AND NET ASSETS LIABILITIES: Funds Payable NET ASSETS: Unrestricted

Total Liabilities and Net Assets

$ 26,787 54,799 $ 81,586

STATEMENT OF ACTIVITIES

From March 30, 2015 (date of inception) to December 31, 2015.

REVENUE: Contributions

2015

$ 85,099

Total Revenue

EXPENSES: Organizational Funding Meeting and Office Expense

85,099

Total Expenses

30,300

CHANGE IN NET ASSETS

54,799

29,787 513

NET ASSETS AT BEGINNING OF PERIOD NET ASSETS AT END OF PERIOD

$ 54,799

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Wiregrass Electric Cooperative Service Area

HEADQUARTERS 509 N. State Highway 167 • P.O. Box 158 • Hartford, AL 36344 800-239-4602 • FAX: 334-588-0683

DISTRICT OFFICES Dothan – 6167 Fortner St. Ashford – 1066 Ashford Road Samson – 13148 W. State Highway 52

Scan this QR code on your mobile device to access your WEC account!

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