Connected. to the members we serve Annual Report

Transcription

1 Connected to the members we serve 2015 Annual Report

2 Our Mission To be a dynamic, progressive organization guided by cooperative principles and to provide energy and other value-added services to members and customers. The cooperative will participate in its community, providing leadership and support to improve the quality of life for all of its citizens. WHO WE ARE Almost 80 years ago, investor-owned utilities would not extend power lines into rural areas because doing so wouldn t produce a profit. Unwilling to do without electricity, a group of rural residents came together in order to accomplish one goal: bring safe, reliable and affordable electric service to rural areas. Citizens worked together to accomplish something that was too big for one group to do alone. With the support of President Franklin D. Roosevelt and the Rural Electrification Act of 1935, the foundation for the electric cooperative business model was established and rural residents were given the resources they needed to empower their own lives. The member-owned, not-for-profit business model was driven by values instead of profits. The cooperative form of business guarantees every member a voice in business decisions and is set apart from other business models because margins are returned to members in the form of capital credits. The cooperative is still owned and operated by the members we serve in Butler, Hamilton, Preble and Montgomery counties. Throughout the years, the cooperative has grown to serve more than 11,500 members in 17 local townships. Since the incorporation of the cooperative in 1936, the board of trustees and employees have worked diligently to hold down costs and provide safe, reliable and affordable electric service to all members. We take pride in serving our local community. The employees and trustees, past and present, are the neighbors, friends and families of our members. Our office is located in the heart of our territory, and we enjoy actively participating in community functions. We will always work for the people we serve, to enhance their lives, and provide them with safe, reliable and affordable electric service. There s a reason cooperatives have stood the test of time. The cooperative principles and values put power in the right hands - the members. Today, Butler Rural Electric Cooperative remains steadfast and committed to our members with the same values and principles as those who paved our way. That s the cooperative difference. One

3 A message to our members At Butler Rural Electric Cooperative, we are focused on keeping our members needs at the center of our decisions and goals. We serve members by providing safe, reliable and affordable electric service to homes and businesses and commit ourselves to our community. Our members are the owners of the cooperative. They have the power to elect the board of trustees each year at the Annual Meeting. Trustees meet monthly and vote on rates, policies and other matters affecting the cooperative. Each trustee has been educated on the cooperative business model and has gone through rigorous training, which gives them the ability to make informed decisions on behalf of the membership. Trustees and employees of Butler Rural Electric Cooperative work each day to bring value to the lives of our members and to the communities they live in. We want your experience with us to be more than just the end result of using electricity. We strive to make every contact with your cooperative positive and pleasant. Commitment to community is one of our four core values. The cooperative is dedicated to the communities we serve through scholarships, events, sponsorships and grants. Butler Rural Community Connection awards grants to organizations such as schools, fire and rescue squads and youth groups. Community Connection is made possible by the generosity of our members who voluntarily round up their monthly electric bills to the next dollar amount. opportunity to compete for a trip to Washington, D.C. Our commitment to the community and to our youth is an investment in the future for all of us. Building long-term relationships with young people and educating them about the significance of electric cooperatives helps to ensure the future success of our own cooperative. The electricity that powers your home and daily life is made up of a mix of resources such as coal, natural gas and wind. Our coal-fired plant, Cardinal, is among the cleanest in the country. Emissions have been slashed and we continue to work to make it cleaner. We also continue our vigilance with right of way clearing. Keeping trees and other vegetation away from power lines and equipment reduces outages, enhances reliability and holds down costs. It is a commitment to our members that we monitor and maintain the right of way so you receive consistent, reliable electric power. There s power in your co-op membership. Because we care, we re connected to the members we serve, now more than ever. The cooperative awards college scholarships every year. High school sophomores and juniors also have the Thomas McQuiston President, Board of Trustees Two Michael L. Sims General Manager

4 Butler Rural Electric Cooperative Board of Trustees Pictured from left to right, back row: David Evans, Ronald Kolb, James Meador, Michael Tilton, Richard Bair and Robert Spaeth. Front row: Robert Hoelle, Thomas McQuiston and Mary Beth Dorrell. Board of Trustee Officers Thomas McQuiston, President Board member since 1980, president since District 3 representative (Somers Township) Robert Hoelle, Vice President Board member since 2000, vice president since District 5 representative (Wayne and Madison townships) Mary Beth Dorrel, Secretary and Treasurer Board member since 1992, secretary and treasurer since District 9 representative (Ross, Fairfield, Crosby and Colerain townships) Board Members Richard Bair Board member since District 4 representative (Gratis and German townships) David Evans Board member since District 1 representative (Israel and Oxford townships) Ronald Kolb Board member since District 6 representative (Reily Township) James Meador Board member since District 2 representative (Milford Township) Robert Spaeth Board member since District 8 representative (Morgan and Harrison townships) Michael Tilton Board member since District 7 representative (Hanover and St. Clair townships) Three

5 Connected to our community Commitment to community, one of the seven cooperative principles, is a driving force behind Butler Rural Electric Cooperative. It is a standard we embrace as an integral element of the cooperative business model. We are proud that we make a difference in our communities and will continue to do so by promoting programs that improve the lives of those who live in the communities we serve. The 2015 Annual Meeting, held at Miami University s Millett Hall, was attended by more than 770 members and guests. Attendees enjoyed a buffet meal and entertainment by The Brian Young Band. The cooperative raffled off two TVs and $100 bill credits to members who attended. Throughout the year, five $50 bill credits were drawn at random each month from the pool of members who were in attendance. Four Family Day, our member appreciation event, was attended by more than 3,300 people on August 7. Members enjoyed a day of face painting, Flub s ice cream, hot dogs and games. Butler Rural Electric Cooperative and Touchstone Energy also sponsored the Oxford Music Festival, Hanover Township Cruise-In Car Show, and the Hueston Woods and College Corner fireworks. The annual Holiday Harvest food drive provided non-perishable food items for families in need in our community. Four local churches and a local food bank assisted in distributing the food.

6 Butler Rural Electric Cooperative s employees are dedicated to bringing power to our members and to our community. Our dedication doesn t stop when the work day is over. A number of local young people had the opportunity to develop their leadership skills through Butler Rural Electric Cooperative programs. A total of $12,600 in scholarships was awarded to five high school seniors and one student in Miami University s Institute for Environment and Sustainability master s program. Recipients were Ashlee Chadwick, John Winter, Carley Cruea, Bradley Robertson, Breanne Parks, and Rory Kaip. Three of the cooperative s scholarship winners advanced to the statewide competition. Ashlee Chadwick and John Winter received an additional scholarship from Ohio s Electric Cooperatives. Four high school students represented Butler Rural Electric at the Electric Cooperative Youth Tour in Washington, D.C. The students were Samantha Baker, Andy Denny, Rachel Hopkins and Colton Ruoff. Andy Denny was elected to represent Ohio at the Youth Leadership Council (YLC). YLC is a joint effort of local electric cooperatives, statewide electric cooperative associations and NRECA. The YLC is designed to provide participants with stronger leadership skills, presentation skills and a broader understanding of rural electric cooperatives. In 2015, $65,989 in grants were awarded. Since 1995, Butler Rural Community Connection has awarded $1,014,703 in grants to local organizations in our communities. The Oxford Relay for Life is held annually in June. The event is part of a world-wide movement to raise funding and awareness to fight the battle against cancer. Cooperative employees walk in solidarity in the fight against cancer. In 2015, 37 employees participated in the Oxford Relay for Life and raised $13,363 for the American Cancer Society. Each year, the American Customer Satisfaction Index (ACSI) score is determined for Butler Rural Electric Cooperative. The index measures the satisfaction of household consumers with the quality of products and services offered by individual firms. ACSI is the only national cross-industry measure of customer satisfaction in the United States. Overall satisfaction with the cooperative was excellent, with an ACSI score of 89, which is higher than industry leaders. The co-op is rated most positively for having friendly, courteous employees, being easy to reach, having employees who are highly trained and professional and supporting the local community. Butler Rural Community Connection has continued to make an impact on local organizations in our communities. Members voluntarily round up their bills each month to contribute small change to make a big difference. 7,876 Butler Rural Electric Cooperative members and employees are making monthly Community Connection contributions by rounding up their electric bills, which average about 50 cents each month. Five

7 Connected through member services The Member Services Department works on a daily basis to meet the needs of our member-owners by taking phone calls, answering questions and providing the best member service experience possible. In 2015, member service representatives answered 39,863 phone calls and took 9,137 payments. Butler Rural Electric Cooperative s online E-bill system, SmartHub, gives members the opportunity to report outages, manage account information, view energy use data and make payments. In 2015, there were more than 45,400 visits to SmartHub. There were also more than 56,900 visits to our website. Members have the opportunity to sign up for Co-op Owners for Political Action (COPA). To date, 337 members are participating in the future of their cooperative through COPA. Six

8 Connected through technology In 2015, our IT department performed a successful security audit of our computer and internet-related systems. They upgraded the cooperative s credit card processing systems to meet PCI compliance standards. They also upgraded SecurePay, the 24- hour payment option for our members. Consistently meeting PCI compliance standards helps provide members with confidence in our cyber security. Our IT team implemented a new process for registration at Butler Rural Electric Cooperative s Annual Meeting. They began the initial phases for a new mobile application for our linemen and field personnel. The IT department also participates on a national committee that helps guide the direction of software development such as SmartHub for electric cooperatives. IT upgraded the security camera system at the cooperative s office. They also upgraded our energy management system software and many desktop computers around the office. Connected through safety Approximately 1,375 people from local schools, fire departments and other community organizations saw a valuable demonstration from the cooperative s safety department that focused on the dangers of electricity. Safety for members, employees and the community is extremely important to Butler Rural Electric Cooperative. In 2015, cooperative employees worked a total of 88,332 hours and drove a total of 321,378 miles without a loss-time accident. Seven

9 Connected through reliability In 2015, the Operations Department maintained and upgraded the cooperative s system in order to provide members with safe and reliable electric service. Operations connected 61 new services and upgraded 24 services. The team responded to the needs of members for outages and other related issues 24-hours a day, seven days a week. A mile of electric line on Tolbert Feeder #1 was upgraded. Crews relocated lines along Burns, Hart, Howe and Millville Shandon road for road projects. We also relocated an electric line along Oxford Road for a Montgomery County project. A new feeder was added to the Jacksonburg Substation to increase reliability for members in the area. Automated switching was added to the Ross and West Alexandria substations. Automated switching enhances reliability and provides greater flexibility for switching electric loads during outages. In 2015, the cooperative tested 221 radiocontrolled switches for water heaters and 32 radio-controlled switches for air conditioners. These activities play a key role in holding down costs from our wholesale power supplier, Buckeye Power. In addition to upgrading existing lines and constructing new ones, Butler Rural Electric Cooperative invested in maintaining those already in service. Approximately $840,000 was invested in our right of way clearing program. Clearing the right of way protects the reliability of our electric system by focusing on the removal of hazardous trees and any other vegetation that interferes with our lines. Eight

10 16 substations serving members 11,252 services on the cooperative s system THE CALM BEFORE THE STORM IS NOTHING COMPARED TO THE CALM WE RESTORE AFTERWARDS. Butler Rural Electric s line crews are committed to helping members weather any storm before, during and after. 58,236 kw the cooperative s non-coincidental peak demand 1,077 miles of energized line on the cooperative s system Nine

11 Assets Utility Plant Electric plant in service Construction work in progress Less: Accumulated provision for depreciation and amortization Net Utility Plant Investments and Other Assets Investments in associated organizations Investments in non utility property, net of accumulated depreciation of $616,357 ($526,745 for 2014) Mortgage and notes receivable Deferred charges Total Investments & Other Assets Current Assets Cash and cash equivalents Accounts receivable, net of allowance for doubtful accounts of $46,760 ($36,788 for 2014) Accounts receivable - other Interest receivable Materials and supplies Other current and accrued assets Total Current Assets 2015 $77,411,931 1,497,292 78,909,223 (16,998,045) 61,911,178 12,105, , , ,589 13,633,900 3,089,503 2,659,819 67,796 10, ,187 1,589,264 7,793, $74,430,148 1,146,114 75,576,262 (15,652,390) 59,923,872 11,507, , , ,830 13,407,377 1,737,357 2,807,291 98,792 10, ,943 2,767,041 7,914,551 TOTAL ASSETS $83,338,774 $81,245,800 Liabilities and Equities Equities Patronage capital Memberships Other equities Total Equities Long-Term Liabilities Mortgage notes payable - RUS Mortgage notes payable - CFC Mortgage notes payable - FFB Mortgage notes payable - CoBank Accrued postretirement benefits Total Long-Term Liabilities Current Liabilities Current maturities of long-term debt Accounts payable - purchased power Accounts payable - other Provision for pensions and benefits Consumer deposits Accrued taxes Other current liabilities Total Current Liabilities TOTAL LIABILITIES & EQUITIES 2015 $39,202, , ,020 39,434,652-1,989,138 19,040,934 16,269, ,900 37,855,778 1,257,603 1,330,425 1,247,094 56, , , ,981 6,048,344 $83,338, $38,128, , ,020 38,360,764 15,970,298 2,086,409 17,684, , ,400 37,296,599 1,367,461 1,197, ,909 55, , ,438 1,084,329 5,588,437 $81,245,800 Ten

12 Statements of Revenue & Patronage Capital Operating Revenues Operating Expenses Cost of power Transmission expense Distribution expense - operations Distribution expense - maintenance Consumer accounts Consumer service and information expense Administrative and general Maintenance of general plant Depreciation of utility plant Taxes Total Operating Expenses Operating Margins Before Fixed Charges Interest on long-term debt Operating Margins After Fixed Charges Capital credits Operating Margins Non-Operating Margins (Expense) Interest income Other income (expense) Total Non-Operating Margins Net Margins For Period $32,950,788 16,841,622 26,344 2,350,821 1,896, , ,942 2,598, ,059 2,375, ,870 28,896,893 4,053,895 1,572,740 2,481,155 1,108,218 3,589,373 70,789 (57,554) 13,235 $3,602,608 $32,289,029 17,077,250 28,913 2,307,022 1,824, , ,063 2,528, ,604 2,300, ,296 28,908,436 3,380,593 1,656,781 1,723, ,605 2,645,417 72,395 (69,024) 3,371 $2,648,788 Statements of Changes Patronage Capital Assignable Assigned Total Memberships Other Equities Balance, October 1, 2013 $1,569,423 $35,829,838 $37,399,261 $115,690 $116,020 Net margins for year 2,648,788-2,648, Assignment of prior year's patronage capital (2,513,497) 2,513, Change in membership Capital credits reassigned 96,258-96, Retirement of patronage capital - (2,015,453) (2,015,453) - - Balance, September 30, ,800,972 36,327,882 38,128, , ,020 Net margins for year 3,602,608-3,602, Assignment of prior year's patronage capital (3,313,401) 3,313, Change in membership Capital credits reassigned 64,293-64, Retirement of patronage capital - (2,593,183) (2,593,183) - - Balance, September 30, 2015 $2,154,472 $37,048,100 $39,202,572 $116,060 $116,020 Eleven

13 Statements of Cash Flow Cash Flow From Operating Activities Net margins Adjustments to reconcile net margins to net cash provided by operating activities: Depreciation and amortization Noncash capital credits (Gain) loss on disposition of property Changes in assets and liabilities: Accounts, notes and other receivables (net) Materials and supplies Other assets Deferred charges Accounts payable Accrued taxes and other liabilities Consumer deposits Accrued postretirement benefits Net cash provided by operating activities 2015 $3,602,608 2,717,447 (1,108,218) 8, , ,756 1,177, , ,442 (134,081) 15,817 (75,913) 7,485, $2,648,788 2,630,478 (921,605) 21,893 18,570 (9,079) (1,380,328) 1, ,724 54,298 15,160 (225,566) 3,114,049 Cash Flow from Investing Activities Extension and replacement of plant, net of salvage and removal costs Investment in nonutility property Proceeds from redemption of capital credits Net cash used by investing activities (4,623,487) (16,919) 510,018 (4,130,388) (3,042,627) (91,814) 563,782 (2,570,659) Cash Flow From Financing Activities Proceeds from long-term debt Payments on long-term debt Proceeds and reclassifications of patronage capital and memberships (net) Patronage capital credits retired Net cash provided by financing activities Net increase (decrease)in cash and cash equivalents Cash and cash equivalents at beginning of year Cash and cash equivalents at end of year 17,887,267 (17,361,446) 64,463 (2,593,183) (2,002,899) 1,352,146 1,737,357 $3,089,503 1,699,000 (1,198,335) 96,458 (2,015,453) (1,418,330) (874,940) 2,612,297 $1,737,357 Twelve

14 INDEPENDENT AUDITOR S REPORT To the Board of Trustees Butler Rural Electric Cooperative, Inc. Oxford, Ohio Report on the Financial Statements We have audited the accompanying financial statements of Butler Rural Electric Cooperative, Inc., which comprise the balance sheets as of September 30, 2015 and 2014, and the related statements of revenues and expenses, changes in members equity, and cash flows for the years then ended, and the related notes to the financial statements. Management s Responsibility for the Financial Statements Management is responsible for the preparation and fair presentation of these financial statements in accordance with accounting principles generally accepted in the United States of America; this includes the design, implementation, and maintenance of internal control relevant to the preparation and fair presentation of financial statements that are free from material misstatement, whether due to fraud or error. Auditor s Responsibility Our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits in accordance with auditing standards generally accepted in the United States of America and the standards applicable to financial audits contained in Government Auditing Standards issued by the Comptroller General of the United States. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free from material misstatement. An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on the auditor s judgment, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the entity s preparation and fair presentation of the financial statements in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity s internal control. Accordingly, we express no such opinion. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of significant accounting estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion. Opinion In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of Butler Rural Electric Cooperative, Inc. as of September 30, 2015 and 2014, and the results of its operations and its cash flows for the years then ended, in conformity with accounting principles generally accepted in the United States of America. Report on Other Legal and Regulatory Requirements In accordance with Government Auditing Standards, we have issued our report dated November 19, 2015, on our consideration of Butler Rural Electric Cooperative, Inc. s internal control over financial reporting and our tests of its compliance with certain provisions of laws, regulations, contracts, grant agreements and other matters. The purpose of that report is to describe the scope of our testing of internal control over financial reporting and compliance and the results of that testing, and not to provide an opinion on the internal control over financial reporting or on compliance. That report is an integral part of an audit performed in accordance with Government Auditing Standards and in considering Butler Rural Electric Cooperative, Inc. s internal control over financial reporting and compliance. Circleville, Ohio November 19, 2015 Thirteen

15 Our Mission To be a dynamic, progressive organization guided by cooperative principles and to provide energy and other value-added services to members and customers. The cooperative will participate in its community, providing leadership and support to improve the quality of life for all of its citizens. Our Vision Butler Rural Electric Cooperative, known for its corporate professionalism, recognized for its leadership in safety, reliability, financial integrity, and community affairs constantly strives to demonstrate the cooperative difference for its members and in doing so, distinguishes itself as an industry leader. Fourteen

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