REC is focused on improving our safety efforts with an eye on being at least satisfactory in all facets at the next triennial review.

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Barbra Cooper
5 years ago
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2016 was a year of making progress on several important projects. First, our efforts to find the right solar generation project came to fruition with the Penitente Solar project. This 2.

This project will produce about 7,000 megawatt hours annually throughout the life of the project, which is expected to be 25 years.

The Penitente project along with our power purchase agreement for the hydroelectric power from the Humphrey s and Roaring Fork projects will provide 3.

2 2016 was a year of making progress on several important projects. First, our efforts to find the right solar generation project came to fruition with the Penitente Solar project. This 2.75 megawatt project started construction in April of this year and should be generating electricity by July. This project will produce about 7,000 megawatt hours annually throughout the life of the project, which is expected to be 25 years. In addition, the project will save a modest amount annually on our wholesale power costs. The Penitente project along with our power purchase agreement for the hydroelectric power from the Humphrey s and Roaring Fork projects will provide 3.7 percent of the electricity REC members consume annually. In 2013, replacement of our obsolete electric meters began with the installation of new advanced meters that provide many benefits to the operations of our cooperative. These meters have reduced operating expenses by more than $300,000 annually through savings in meter reading, truck rolls to investigate outages and service calls for disconnects. In addition to reducing operating expenses, these new meters will enable the implementation of new rate tariffs such as prepaid accounts, which help members manage their accounts more effectively. In the near future, members will be able to log into a web site and view their usage on an hourly or daily basis. In 2012, REC conducted the initial feasibility study for the deployment of a fiber optic based broadband system throughout the San Luis Valley. Based on that study, a subsequent market study, and financial analysis, REC began the construction of fiber optics in 2013 and a pilot project of 20 residences in Based on all this work and information, REC created a wholly owned subsidiary, Ciello, Inc. We began a full deployment effort in South Fork in 2015 and continued in the Creede area in By early 2017, Ciello services have covered almost the entire area west of Del Norte, including Del Norte. The 2016 goal of having 1000 accounts was achieved through the hard work and dedication of all REC employees. The 2017 goal is 2000 accounts. Every three years, our electric cooperative undergoes a review of our safety practices and records. This review, Rural Electric Safety Achievement Program (RESAP), is conducted by a team of peers from other Colorado electric cooperatives under the guidance of Colorado Rural Electric Associations Loss Control department. REC s 2016 RESAP review covered 17 separate facets with 11 facets receiving a generally satisfactory rating, 4 receiving a satisfactory rating and 1 a strong performance rating. While there were no serious deficiencies, REC is focused on improving our safety efforts with an eye on being at least satisfactory in all facets at the next triennial review. Last, REC had a good financial year for 2016, ending with a margin of just over two million dollars. Other financial metrics include modified debt service coverage and equity as a percent of assets. These metrics are well within REC s financial requirements with its lender National Rural Utilities Cooperative Financial Corporation. More detail on REC s financial performance can be found in financial section of this annual report. Loren Howard CEO of REC

Technology has a profound effect on our lives. Smart Phones, PC s, and internet have had a great influence on the way we conduct business, communicate, and entertain ourselves.

Better connectivity will enrich our lives just as electrification did in the early 1900 s. Our electric grid is benefiting also.

Beyond that, our members benefit from greater control of their electric usage with this system. It is a great privilege to serve as President of the REC Board of Directors.

3 Technology has a profound effect on our lives. Smart Phones, PC s, and internet have had a great influence on the way we conduct business, communicate, and entertain ourselves. That is why SLVREC started Ciello to provide the San Luis Valley with internet service that rivals any service in the country. Better connectivity will enrich our lives just as electrification did in the early 1900 s. Our electric grid is benefiting also. We are able to have an advanced metering infrastructure which provides better supervisory control, this allows us to be more efficient and respond better to outages. Beyond that, our members benefit from greater control of their electric usage with this system. It is a great privilege to serve as President of the REC Board of Directors. Holding this position on the board means representing the memberhsip as a whole. I take this position very seriously and strive to do my best for our members. I would like to thank Loren and the entire staff for their hard work and dedication. They all do What Ever it Takes to serve our membership and to make our lives a little bit better. Cole Wakasugi REC Board President District 2 Costilla County

STATEMENT OF OPERATIONS December 31, 2016 REVENUES 2016 Sales of Electric Energy $ 32,001,784 Other Electric Revenue 870,997 TOTAL REVENUES 32,872,781 EXPENSES Purchased Power 17,079,363 Operations

EXPENSES 30,585,096 MARGINS Operating Margins, Net 2,287,685 G & T and Other Capital Credits 891,995 Other Non-Operating Margins (1,107,356) NET MARGIN $ 2,072,324 STATEMENT OF FINANCIAL CONDITION

CURRENT ASSETS 7,701,510 OTHER ASSETS Other Property and Investments 23,259,650 Deferred Debits 405,818 TOTAL OTHER ASSETS 23,665,468 PLANT Electric Plant 123,572,866 Less: Accumulated Depreciation

4 STATEMENT OF OPERATIONS December 31, 2016 REVENUES 2016 Sales of Electric Energy $ 32,001,784 Other Electric Revenue 870,997 TOTAL REVENUES 32,872,781 EXPENSES Purchased Power 17,079,363 Operations and Maintenance 4,278,834 Consumer Accounting and Service 1,443,323 Administrative and General 2,368,096 Depreciation and Amortization 2,840,183 Interest 2,429,509 Other Deductions 145,788 TOTAL EXPENSES 30,585,096 MARGINS Operating Margins, Net 2,287,685 G & T and Other Capital Credits 891,995 Other Non-Operating Margins (1,107,356) NET MARGIN $ 2,072,324 STATEMENT OF FINANCIAL CONDITION December 31, 2016 ASSETS 2016 CURRENT ASSETS Cash and Temporary Investments $ 782,011 Accounts Receivable 2,775,638 Materials and Supplies 3,735,881 Prepayments and Accrued Assets 407,980 TOTAL CURRENT ASSETS 7,701,510 OTHER ASSETS Other Property and Investments 23,259,650 Deferred Debits 405,818 TOTAL OTHER ASSETS 23,665,468 PLANT Electric Plant 123,572,866 Less: Accumulated Depreciation (42,144,791) NET VALUE OF ELECTRIC PLANT 81,428,075 TOTAL ASSETS $ 112,795,053 LIABILITIES AND EQUITY CURRENT AND ACCRUED LIABILITIES Accounts Payable 1,684,767 Consumer Deposits 190,062 Other Current and Accrued Liabilities 2,702,286 Current Portion - Long-Term Debt 1,763,797 TOTAL CURRENT AND ACCRUED LIABILITIES 6,340,912 OTHER LIABILITES Long Term Debt due CFC 51,688,199 Deferred Credits 183,556 Accumulated Operating Provisions 30,938 Notes Payable 4,950,000 TOTAL OTHER LIABILITES 56,852,693 MEMBERS EQUITY 49,601,448 TOTAL LIABILITIES AND EQUITY $ 112,795, Financial Reports 0% Street Light CONSUMER REVENUE BY CLASS: No. of Accounts Consumer Class Sales 6246 Residential $8,964, Seasonal 1,975, Irrigation 14,756, Small Commercial 5,997, Large Commercial 300, Street Lights 7, $32,001,784 EXPENSES: DESCRIPTION AMOUNT Purchased Power $17,079, Operations 4,278, Administrative 2,368, Depreciation 2,840, Interest 2,575, Consumer Services 1,443, TOTAL $30,585,096

MINUTES ANNUAL MEETING OF MEMBERSHIP SAN LUIS VALLEY RURAL ELECTRIC COOPERATIVE, INC. 14 June 2016 The following directors were present: Scott A. Wolfe (president), K.

Howard (chief executive officer), Gregg Kampf (corporate attorney), JoAn R. Waudby (corporate treasurer), Michelle Trujillo (assistant corporate secretary).

5 MINUTES ANNUAL MEETING OF MEMBERSHIP SAN LUIS VALLEY RURAL ELECTRIC COOPERATIVE, INC. 14 June 2016 The following directors were present: Scott A. Wolfe (president), K. Cole Wakasugi (vice-president), Ernest D. Ford (corporate secretary), Michael D. Rierson, Richard P. Inman, Eleanor E. Valdez, and Carol Lee Dugan. Corporate officers present included Loren H. Howard (chief executive officer), Gregg Kampf (corporate attorney), JoAn R. Waudby (corporate treasurer), Michelle Trujillo (assistant corporate secretary). President Scott Wolfe welcomed all those in attendance. Cub Scout Troops presented the colors and led the Pledge of Allegiance. Eleanor Valdez gave the invocation. The SLVREC commercial was shown to those present. Scott Wolfe thanked Eleanor Valdez for the invocation, SLVREC staff, ASU personnel and Cub Scouts Troop 287 along with their leaders for their service at this meeting in presenting the Colors and leading the Pledge of Allegiance. Scott Wolfe introduced members of the board of directors, along with the corporate attorney, chief executive officer, and corporate officers. Loren Howard introduced special invited guests. Scott Wolfe introduced the Credentials Committee: Karla Shriver (chairperson), and Charlie Versaw. Karla Schriver presented a verbal report declaring a quorum with 92 members present. The Annual Meeting of the membership of San Luis Valley Rural Electric Cooperative, Inc. was called to order at the ASU campus in Alamosa, Colorado at 7:05 p.m. pursuant to legal notice sent to the membership in accordance with the bylaws. Corporate Attorney Gregg Kampf certified that the Notice of Annual Meeting had been properly and legally performed. A copy will be kept on file for record. Kampf introduced the uncontested directors Scott Wolfe of District 4, Alamosa County and K. Cole Wakasugi of District 2, Costilla County. Due to the uncontested election, Kampf asked that a motion be entertained to have the candidates elected by acclamation. A motion was duly made and seconded; Scott Wolfe of District 4, Alamosa County and K. Cole Wakasugi of

6 District 2, Costilla County were re-elected for a term of four years. Kampf asked for a motion to be entertained to dispense with the reading of the 2015 Annual Meeting minutes and approve them as published. A motion was duly made and seconded to dispense with the reading of the minutes and to approve them as published. Kampf discussed the proposed bylaw changes and addressed questions from the membership. A motion was duly made and seconded; by show of hands it was approved to amend the bylaws as proposed for the removal of directors stated in Article 3, Section 5. Rick Inman announced the 2016 scholarship recipients and Scott Wolfe and Cole Wakasugi presented them with a small gift. The Adams State University (ASU) 4-year Scholarship recipient spoke briefly about his future plans and thanked SLVREC for the scholarship. The 2016 recipients are listed below: ASU 4-year Scholarship Kyle Freel, Sangre de Cristo High School Basin Scholarship Brooke Mitchell, Sargent High School SLVREC Robert Wolfe Scholarship Mary Hood, Sargent High School SLVREC Past Director Scholarship Emmett White, Sangre de Cristo High School SLVREC Retired CEO (John & Ray Villyard) Scholarship Emily Novotny, Alamosa High School Tri-State G&T Scholarships Michael Valdez, Monte Vista High School Macayla Hicks, Del Norte High School SLVREC & Tri-State G&T Scholarships Logan Sessums, Sargent High School Joseph Yonkerman, Sargent High School Kye Glover, Del Norte High School Carmen Ruggles, Center High School The Washington D.C. Youth Tour recipient was announced. Youth Leadership Camp Lilliana Chavez, Sanford High School Scott Wolfe expressed his appreciation for the past several years serving on the board, mentioned the board decision to move forward with providing broadband services in the Valley promoting economic development as well as enhancement to our members and also referenced his service on the Board of Tri-State G&T. JoAn Waudby presented the annual treasurer s report. Waudby provided an overview of the 2015 Statement of Operations and the general financial condition of SLVREC. Loren Howard thanked everyone for coming, provided demographic information for SLVREC, presented overall 2015 performance data such as SAIDI and SAIFI, discussed the status of the SLVREC solar project, Advanced Meter Installation project, safety statistics for SLVREC, and gave an update on the telecommunications sales and design plans. Barry Ingold, Senior Vice-President/Generation of Tri-State Generation and Transmission (TSGT) introduced himself and provided demographic information about Tri-State G&T. Further, he reviewed the 2015 financial performance for TSGT, mentioned significant issues in 2015, and discussed their generation facilities. Kent Singer, Executive Director of Colorado Rural Electric Association (CREA) provided general information regarding the safety, communication, education and legislative functions of CREA. He closed his presentation with a legislative update. Loren Howard fielded question from those members present. Unfinished Business: None. New Business: None. Kampf declared the meeting adjourned at 8:28 p.m. Chairman of the Board (SEAL) Corporate Secretary Recording Secretary

7 Annual Meeting Agenda 5:30 p.m. Registration Opens 6:45 p.m. Presenting of Colors 6:50 p.m. Invocation 6:55 p.m. Determination of Quorum 7:00 p.m. Business Meeting Called to Order Please RSVP If you are planning to attend please RSVP with the number in your party by June 13, Business Meeting Agenda 1. Call To Order 2. Special Presentation 3. Notice of Annual Meeting 4. Introduction of Candidates 5. Voting/Ballot Collection 6. Approval of Minutes 7. Approval of Bylaws 8. Scholarship/Youth Tour Presentation 9. President s Report 10. Treasurer s Report 11. Executive Report 12. Guest Speakers 13. Unfinished Business 14. New Business 15. Adjournment

2017 Scholarship Recipients Baliey Jones, Del Norte ASU 4yr Scholarship Cole Cooper, Sangre Electric Lineworker Scholarship Wyatt Clark, Sargent Robert Wolfe Kirsten Faucette, Sanford Past Director

9 2017 Scholarship Recipients Baliey Jones, Del Norte ASU 4yr Scholarship Cole Cooper, Sangre Electric Lineworker Scholarship Wyatt Clark, Sargent Robert Wolfe Kirsten Faucette, Sanford Past Director Scholarship Henry White, Sangre Past Retired GM Ray Villyard & CEO John Villyard Scholarship Brandon Middlemist, Centauri SLVREC Olivia Valdez, Centauri SLVREC Kathleen Martinez, Del Norte SLVREC Melissa Bower, Sargent SLVREC Elaiza Gallegos, Centennial Tri-State D Anna Widger, Monte Vista Tri-State Ireland Caldon, Sanford Basin Electric Scholarship Blake Kreps Energy Camp and Washington D.C. Youth Tour

10 3625 US HWY 160 W Monte Vista, CO REC Annual Meeting June 13, 2017 Adams State University, Student Union Building Banquet Rooms

2017 ANNUAL REPORT IT S THE WATER... POWERING OUR COMMUNITIES UMATILLA ELECTRIC

2017 ANNUAL REPORT IT S THE WATER... POWERING OUR COMMUNITIES UMATILLA ELECTRIC C O O P E R A T I V E CELEBRATING ANOTHER YEAR OF GROWTH A Message From UEC s Board President and General Manager/CEO. We