2017 WEC Annual Report

ALWAYS & NEVER

17

ANNUAL REPORT

On the cover: Caleb Flippo, Groundman

always ... Be the Kind, Caring Difference Maker.

John Clark Jr. - President

Donna Parrish - Vice President

Debra E. Baxley - Secretary

Nolan Laird

Kip Justice

Greg McCullough

Danny McNeil

Tracy Reeder

Donald Ray Wilks

never ... Stop learning, growing, seeking knowledge, better ways of operating.

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WEC is always focused on you, our member A message from your board of trustees You can always tell what people care about by their actions, for actions speak louder than words. The same goes for companies as well. For 78 years, Wiregrass Electric Cooperative has operated with an absolute focus on serving our members to the best of our ability.

This year’s annual report is titled “Always and Never.” On the top of some pages, you will see a statement that begins with “Always,” and on the bottom you will see one that begins with “Never.”

The story of these phrases says a lot about the heart of your cooperative. WEC continually trains its employees on a variety of things, but teaching how to provide world-class member service is always a priority. In a recent training series, every employee came together to create a list of things they could do to make sure that every single experience a member has with Wiregrass Electric Cooperative is special. This list is in every WEC office, and every employee lives by it. It keeps the focus on you, the member. After all, You Are Our Reason!

It’s easy to look at the actions of Wiregrass Electric Cooperative and know that our members are what we care deeply about. This report will highlight some of WEC’s accomplishments over the last year. Awards, youth tours, scholarships, helping disabled veterans, reaching new milestones in safety and even relocating a large bee hive have helped define 2017. It’s a great story to tell, and we’re proud of what your cooperative has accomplished.

From member service training to a greatly improved website to scholarships for our youth to service reliability and more and more — at WEC, we will always focus on serving our members, and we will never lose sight of that promise.

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.

17,298 24,221 3,124 MEMBERS

METERS

MILES OF LINE 3

always ... Demonstrate the “Attitude of Gratitude.�

Greg Bradley, Engineering & Operations Technology Specialist

never ... Allow your ego or blind

spots to make you part of the problem.

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WEC will always provide world-class service for our members As a cooperative, Wiregrass Electric Cooperative is owned by the people it serves. Instead of a customer, you are a member-owner of WEC, and instead of serving a board of investors or seeking a profit, your cooperative exists to serve its members with affordable, reliable energy provided by people who are

your neighbors. In 2017, we continued our commitment to provide world-class member service through expanded scholarship opportunities for our young people, award-winning communications pieces, a newly redesigned website and more.

Our new website makes it even easier for members to do business with WEC WEC unveiled a completely new website in April, redesigned from the ground up. This new site acts as a 24/7 branch office for our members, giving them instant access to bill payment, account management, free efficiency

YOUTH TOUR

In 2017, WEC sponsored an all-expense-paid trip for 10 high school juniors to attend the Youth Tour in Montgomery in March to learn more about leadership and the importance of cooperatives. Each student also received a $500 scholarship.

From those 10 participants, Savannah Sapp, Hunter Weeks and Gavin Weber were selected to attend the Washington, D.C. Youth Tour and received an additional $500 scholarship.

tools, an interactive outage map and much more. The new site was designed to be simple to understand and to provide an intuitive, easy experience for members looking to do business with WEC.

RELIABILITY At WEC, reliability is central to everything we do.

We are proud to be at the top of our industry in reliability and outage prevention. Through careful planning and system maintenance, including an aggressive Right of Way program and a judicious use of technology, WEC offers dependable electric service to our members and an excellent response time when an inevitable outage occurs. We also have a new state-of-the-art dispatch center that allows us to work more efficiently and to prevent major outages. With our new system, we are able to monitor the entire service area and even reroute the power to limit the length of an outage. All of this is an effort to provide you, the member, with the most reliable service possible.

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always ... Be Truthful & Operate with Integrity.

Blair Howard, Member Services Representative/Cashier

never ... Stop seeking to be accountable

to yourself, your team, and to the Cooperative.

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WEC Operation Round Up will always improve our community This year was the second anniversary of WEC’s Operation Round Up Charitable Foundation, and the second year was better than the first. Operation Round Up is a voluntary program that allows WEC members to round up their monthly bill to the

SILENT HEROES OF THE WIREGRASS This year, WEC and WTVY formed an innovative partnership to recognize and support the “Silent Heroes of the Wiregrass.” A person or an organization is featured each month, and Operation Round Up donates to their cause while WTVY gives them a way to discuss the work they do. Organizations that help veterans, children with Down syndrome, people dealing with drug abuse, and that introduce kids to the arts are just a few examples of the people who have been featured.

nearest dollar as a tax-deductible donation to benefit communities in the WEC coverage area. Through scholarships, donations and the Silent Heroes of the Wiregrass, the program is helping change lives and make the Wiregrass a better place to call home.

Summary of Foundation Grants January-December 2016 Fire/Rescue/Police 16,000.00 Schools 22,500.00 Non-Profit Community Organizations 25,500.00 Scholarships 34,000.00 Individual Grant Recipients 3,465.77 Silent Heroes of the Wiregrass Grant 12,000.00 Hospital/Medical 20,000.00 Total Expenditures $133,465.77

SCHOLARSHIPS

Jennifer Ward, Manager of Communications and Public Relations and Jarrett Grubb.

Helping deserving students start their life after high school is a top priority at WEC. That’s why more money was spent on scholarships than anywhere else. This year, 16 college scholarships and two lineworker scholarships were awarded to students across the Wiregrass. For the first time, WEC awarded a $5,000 nontraditional scholarship, which goes to a student or adult who is supporting themselves.

The recipient was Slocomb’s Danielle Enfinger, who works two jobs to support herself and her younger brother. She would not have been able to attend college without the help of Operation Round Up.

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always ... Treat Others as THEY want to be treated.

Mark Olive; Barbara Berry; Misti Dixon, Accountant; Lisa LeNoir, Chief Financial Officer

never ... Be Rude or Disrespectful to any Member or Coworker.

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WEC will always remain faithful stewards CAPITAL CREDITS

Because WEC is a member-owned, not-for-profit utility, your cooperative doesn’t focus on making a profit for investors. Instead, we focus completely on providing affordable, reliable energy to our members at cost. When we do make a profit, called margins, they are assigned back to our members in the YOUR COOPERATIVE, form of a patronage capital or capital credits. However, those margins are YOUR INVESTMENT retained and used for a period of time to help operate the cooperative. When the board determines the cooperative’s financial position allows us to return those margins, they are sent to members based on the amount of business they did with WEC during any given year. This year will be even simpler for current, active members; they will receive credits on their electric bill instead of a check in the mail.

PCA

When we develop our annual budget, we allocate about 70 percent of revenue for the purchase of wholesale power. When that number is lower than estimated, the Power Cost Adjustment (PCA) gives us the mechanism to return a credit to you on your monthly power bill. When WEC has unexpected weather events, or other situations that change our budget estimations, the PCA is a reliable tool to be sure your cooperative can continue to have the resources it needs. Since 2010, WEC has returned more than $8 million to its members through the PCA.

BREAKING IT DOWN: EVERY DOLLAR COUNTS WHOLESALE POWER

WEC purchases its power from our wholesale energy provider, PowerSouth Energy Cooperative. PowerSouth determines that rate based on factors such as peak demand, transformer size and transmission. The cost of fuels, such as natural gas and coal, is another factor. Currently, 68.5 cents of every dollar is spent on wholesale power. WEC runs its entire distribution system on the remaining pennies. The remaining costs are 7.5 cents for depreciation expense, 6.5 cents for member accounts, 1 cent for taxes, 6 cents for maintenance, 5.5 cents for distribution operation and 5 cents for administrative and general costs.

68.5¢

7.5¢

Cost of Wholesale Power

6.5¢ Member Accounts

Depreciation Expense

6¢ DistributionMaintenance

5¢

1¢

Administrative & General

Taxes

5.5¢

DistributionOperation

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always ... Go the extra mile.

Bobby Groves, Journeyman Lineman

never ... Say, “It’s not my job.”

10

WEC will always strive for safety for our employees and our members

SAFETY TRAINING

WEC doesn’t just say that safety is a top priority, but they also put that into action by educating employees on how to be safe in the workplace.

Each month WEC hosts a safety meeting that all employees can attend. They also have an inside and outside safety committee, which is made up of appointed WEC employees from each department. Each committee helps raise awareness and helps educate employees about the dangers of the job.

Les Moreland, CEO

OUTAGE MANAGEMENT BOARD

WEC invests judiciously in technology that can help serve its members through increasing reliability and affordability. With their new outage management board, WEC can easily track and quickly respond to outages from a new state-of-the-art dispatch center in Hartford. WEC has four software programs that they can view from 12 TV screens on the wall, and its SCADA system allows monitoring of all 15 substations.

StreeTrek helps them keep track of all the service trucks, increasing safety for WEC line crews. Threat Net allows them to monitor the weather. And finally, they have Catalyst, which allows them to monitor and view the entire WEC system.

RESAP CERTIFICATION

I ALWAYS STRIVE TO BE A SAFETY CHAMPION

WEC linemen have a hazardous job, and keeping them and all employees and members safe will always be a top priority at WEC. For WEC’s dedication to safety, they received their RESAP (Rural Electric Safety Achievement Program) certification. The certification is done every three years and given to cooperatives who have embraced safety as a core value and have leadership that has shown an unwavering commitment to safety at all levels of the cooperative. WEC has been honored with this accreditation since 2011.

Dexter Tolbert, Serviceman

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BALANCE SHEETS ASSETS UTILITY PLANT: Utility Plant Construction Work in Progress

Less: Accumulated Depreciation Net Utility Plant

2017

$ 104,391,640 233,007 104,624,647

2016

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

23,733,561 80,891,086

21,856,781 78,676,945

20,276,963 520,725 20,797,688

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

4,487,111

7,795,836

Accounts receivable: Customers, Less Provision for Doubtful Accounts of $34,867 in 2017 and $59,226 in 2016 1,346,718 Unbilled Revenue 2,608,336 Other Accounts Receivable 39,957 Prepaid Power 700,703 Materials and Supplies 647,530 Other Current and Accrued Assets 246,434 Total Current Assets 10,076,789

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

OTHER ASSETS AND INVESTMENTS: Investments in Associated Organizations Economic Development Notes Receivable Total Other Assets and Investments

CURRENT ASSETS: Cash and Cash Equivalents

DEFERRED CHARGES: Work Plan and Preliminary Charges Prepaid Pension Total Deferred Charges

Total Assets

53,084 1,125,515 1,178,599

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

$ 112,944,162

$ 112,993,626

Statements of revenue and patronage capital are for the years ended April 30, 2017 and 2016.

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BALANCE SHEETS 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 CURRENT LIABILITIES: Current Maturities on Long-Term Liabilities Accounts Payable: Trade

Customer Deposits Accrued Liabilities: Taxes Other Accrued Liabilities

Total Current Liabilities

Total Equities and Liabilities

2017

2016

$ 86,885 61,092,542 3,991,069 65,170,496

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

41,594,247 1,477,071 2,107,227 40,964,091

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

2,107,227

2,465,331

316,333 2,148,687

425,864 2,111,870

1,274,545 962,783 6,809,575

1,308,968 847,049 7,159,082

$ 112,944,162

$ 112,993,626

Statements of revenue and patronage capital are for the years ended April 30, 2017 and 2016.

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STATEMENT OF REVENUE STATEMENT OF REVENUE

2017

2016

$ 46,659,930

$ 46,998,492

28,887,322 2,313,689 2,768,823 2,979,505 2,044,727 3,481,645 510,955 42,986,666

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

Operating Income

3,673,264

3,786,093

Fixed Charges: Interest Expense

1,799,556

1,742,257

Operating margins After Fixed Charges

1,873,708

2,043,836

927,066

1,076,932

2,800,774

3,120,768

546,613

487,661

$ 3,347,387

$ 3,608,429

Operating Revenue

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

G&T and Other Capital Credits Net Operating margins 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

2017

2016

59,164,465

56,552,975

(1,619,647) 200,337

(1,220,620) 223,681

$ 61,092,542

$ 59,164,465

WEC OPERATION ROUND UP CHARITABLE FOUNDATION

BALANCE SHEET

2016

2015

$ 42,459 28,780 71,239

$ 52,777 28,809 81,586

Liabilities Funds Payable

36,000

26,787

Net Assets Unrestricted

35,239

54,799

Assets Cash Accounts Receivable Total Assets

Total Liabilities and Net Assets

$ 71,239

$ 81,586

Statement of Activities Revenue Contributions

115,889

85,099

115,889

85,099

Expenses Organizational Funding Legal Fees Meeting and Office Expense

133,466 750 1,233

29,787 0 513

Total Expenses

135,449

30,300

Change in Net Assets

(19,560)

54,799

Net Assets At Beginning of Period

54,799

0

Net Assets At End of Period

$ 35,239

$ 54,799

Total Revenue

This statement is for the years ended December 31, 2016 and 2015.

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ALWAYS & NEVER

Parker Deese, Lineman Apprentice

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

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

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