2014 Executive Report Board Chair/President & CEO

Transcription

1 2014 Annual Report

2 2014 Executive Report Board Chair/President & CEO YOUR COOPERATIVE had another strong financial year in Electric revenue was enhanced by strong sales during the cold weather in the first quarter stemming from the polar vortex. Margins for the year were about $2,600,000. This enabled your co-op to return $500,000 in capital credits payments to you based upon your patronage. The strong margins also enabled funding for improvements to your electric plant. Approximately $4.3 million was invested in the plant during the year. Wholesale power prices from our cooperative s power supplier, Allegheny Electric Cooperative, Inc., continued to be stable in Your cooperative s board and management team developed plans and strategies to operate your co-op while maintaining affordability for you, the member. Your retail electric rate continued to be competitive and one of the most reasonable energy values in our area. The cooperative has embarked on an extensive line improvement program designed to improve reliability. This project has been ongoing for about the last 30 years. The project includes replacing the old copper conductor with new aluminum wire that is stronger and can withstand the extreme weather conditions that are a common occurrence here in Northwestern Pennsylvania. This new conductor is more efficient and reduces line loss, helping to keep your electric rates affordable. During the process of making the upgrades, the cooperative also takes the opportunity to move the lines closer to the road. This allows our linemen to maintain the electric lines utilizing bucket trucks, which give them ease of access to the facilities. This means outage time is reduced because linemen do not have to carry heavy equipment and walk through lengthy rights-of-way to remote areas to make repairs. Reliability is one of our main objectives. We are taking advantage of low interest rates and reinvesting in our facilities to provide you with world-class service. Mary A. Grill, President & CEO The winter of 2014 was one of extreme weather. In January, peak demand for electricity was 25 percent higher than in a typical January. There was heavy electrical demand for heating due to the polar vortex, which brought record cold temperatures. PJM Interconnection the electric grid operator for this area reported tight operational conditions from Jan. 6-8, Voluntary demand response systems like our load management system were called upon twice on Jan. 7 to curtail load. For those who participate in load management, this meant that their electric water heaters and electric heat were shut off during the control periods. These voluntary systems like our load management program were very significant in helping PJM Interconnection manage the grid during this peak event. Your cooperative s load management continues to be one of our key programs. Not only has the load management program saved all of our members about a $1 million in power Kathryn J. Cooper-Winters, Board Chair costs during 2014 by lowering demand during peak periods, it is a real value to the participants. Members who participate agree to allow the cooperative to control or shut off their hot water tank or controlled heat during peak events. Members participating in the hot water heater program also benefit by 24/7 hot water heater servicing with a free tank replacement as needed. Members with controlled electric heat benefit from shared savings and a reduction in their heat rate. If you are one of the 9,000 members on our load management program, we would like to thank you for making a real impact, especially during last winter s polar vortex. In late 2014, your cooperative s emergency plan was put to the test. In the evening hours of Nov. 5, 2014, what appears to be a random act of violence occurred at our Edinboro West Substation. A round of bullets from a high powered semiautomatic rifle was fired at the 10-MVA substation transformer 12b P E N N L I N E S J U L Y

3 MARY AND HER VPS: from left, Ken Lindberg of human resources, Thomas Dimperio of IT, Mike Baker of finance, Danielle Haschalk of accounting, Mary Grill, Bradley Smith of member services, Kevin Hindman of operations/engineering, Michelle Garcia, executive secretary, and Linda King of communications and energy solutions. in service at Edinboro West. This caused extensive damage, and when our crews arrived on the scene they found mineral oil leaking from several small holes in the large substation transformer. Our fear was that the damaged unit would overheat and threaten fire. Had it not been for the swift actions of our highly trained engineers and linemen, the situation would have escalated to a serious scenario. Utilizing our advanced, hightech equipment, our engineers and line crews were quickly able to mitigate and respond to the accident. Our crews were able to manually transfer the electric load to an alternate location. Fortunately, your cooperative invested in a mobile substation many years ago. This equipment has been key to us over the years and was used to minimize outage time for members in the area until repairs could be made. The leaking oil was confined and we immediately began to remediate the site. I am pleased to tell you the state Department of Environmental Protection (DEP) approved the remediation of the site on April 3, We achieved the standard as set forth in Act 2 and the site attained a residential standard for soil. Law enforcement continues to investigate the incident. Thankfully, the loss was primarily covered by insurance. Therefore, it had minimal impact on your 2014 financial statements. The silver lining in this event is that it demonstrates our level of preparedness for emergency response. Your linemen work in the most challenging of conditions, and are true first-responders, always mindful of public safety. The management and board of your co-op are proud of the work of our Engineering and Operations Department, and this is another fine example of their commitment to keeping the lights on. One of our most important initiatives during the past year was to develop a succession plan for our organization. Your cooperative is a perpetual organization. We celebrated our 78th anniversary in 2014, and will be here to serve our members for many years into the future. Like many organizations, we are faced with a large wave of retirements in the next five- to 10-year period as the Baby Boomer generation prepares to retire. Many of our senior and experienced employees will be leaving the organization as they move into their retirement years. In 2014, your cooperative implemented a reorganization plan to prepare for the future. We have a new competent staff in place, and an extensive multifaceted training program has been developed to make certain our young employees will be prepared to take leadership roles when the time comes. I can assure you that your cooperative will be prepared to face the challenges of the future. Please accept this personal invitation to you and your family to help us celebrate our 79th year. Our annual meeting will be held at the Crawford County Fairgrounds on Saturday, Aug. 1. The fairgrounds open at 10 a.m. and we have a lot of fun things and great food planned for the whole family. Our cooperative business meeting is at 1 p.m., and there will be an election of three members to represent you on the board for a three-year term. Come join us for a day of co-op fellowship. This is your opportunity to exercise your democratic control one of the seven principles that has served your cooperative s business model well for the past 78 years. Kathryn J. Cooper-Winters Board Chair Mary A. Grill President & CEO J U L Y P E N N L I N E S 12c

4 Northwestern Rural Electric Cooperative Association, Inc. and Subsidiaries The financial statements of the cooperative for the year 2014 has been audited by Buffamante Whipple Buttafaro, P.C., Jamestown, New York. The audit resulted in a clean opinion stating that the financial statements presented fairly, in all material respects, the financial position of the cooperative and subsidiaries as of December 31, 2014, and results of their operations and cash flows for the years ended in accordance with accounting principles generally accepted in the United States of America. The auditor s complete report is on file in the office of the cooperative and is available for inspection by the membership. 12d P E N N L I N E S J U L Y

5 Northwestern Rural Electric Cooperative Association, Inc. and Subsidiaries Northwestern REC Quick Facts J U L Y P E N N L I N E S 12e

6 Statistics & Trends Liberty and a better life for all EVERY JULY, we take time to reflect on our country s history and remember how the actions of a few helped shape the way we live today. In the same way, we can look back on the rich history of the electric cooperative movement, and how some determined individuals working together were able to improve their quality of life and the quality of life for all those who would come after them. Every day, Northwestern REC members and employees pay homage to the legacy of our cooperative founders. And, because we are a part of an electric cooperative, we know we have the power to impact our present and shape the future, just like those who came before us. Through grassroots advocacy efforts, we help influence policy decisions that will affect our communities now and for years to come. We are the catalyst for change in our communities. We leverage our collective power to get things done. For example, in December 2014, the Northwestern REC Board of Directors made a $5,000 donation toward the creation of warming centers throughout Northwestern Pennsylvania. A $5,000 CoBANK grant was awarded to double those funds to $10,000. We work together, partnering with other co-ops, local businesses and community organizers to achieve economic development goals creating better opportunities and improving the quality of life for our families and communities just as our founding co-op members did. Today, the Co-op Connections Card has saved over $135,500 in prescription costs since We understand that the decisions we make today could greatly affect how future generations live, so we invest in energy-efficiency programs that protect our future generations while still providing high-quality, affordable electric power. Through the co-op s load management program, over $21 million has been saved in avoided power costs since 1985; nearly $1 million was saved in 2014 alone. Cooperatives are helping to build the next generation of leadership through our Rural Electric Youth Tour program that sends high school students to Washington, D.C., to meet with lawmakers and get an up-close view of how our government functions. Youth Tour participants leave our nation s capital feeling energized. It inspires them to make a difference in their communities and gives them a new perspective. Youth Tour provides young people from our communities with an opportunity they may otherwise have never known. All of these things, plus so much more, are what make up the cooperative difference. This Fourth of July, as we think about the future of electric cooperatives and how we will continue to shape our country and our society, Northwestern REC remembers what it took to bring power to our communities and let the determination of those who came before us guide us. 12f P E N N L I N E S J U L Y

7 Who answers your questions at the co-op? Loyal connections Co-ops change lives in the communities they serve LOYALTY IS a prized virtue to country, family, even the schools we attend. We keep those ties strong throughout our lives. We at Northwestern REC also have loyalties to the members and communities we serve. We have deep connections here because Northwestern Pennsylvania is our home, and you are our neighbor. When you signed up for service with Northwestern REC, you became a member, not a customer because each of our 20,000 consumermembers owns a portion of the cooperative. That means we care about improving the quality of life in the areas we serve. From sponsoring the scoreboard at the high school football stadium to taking donations for the local food bank, Northwestern REC invests in the places where you live and work. Northwestern REC doesn t exist to make profits for distant investors on Wall Street. We exist to provide you with safe, reliable, and affordable electric service and we are doing so in a way that makes things better for future generations. Because electric co-ops operate on a not-for-profit basis, we have no need to increase revenues above what it takes to run our business in a financially sound manner. This structure helps keep your electric bills affordable. We take our jobs seriously, but we also take our community roles seriously. That s why we offer scholarships to college-bound students, and offer hands-on teacher grants to our local educators. Through our Clearly Brighter Teacher Grant program, over $42,600 has been awarded in teacher grants since the program began in We don t participate in these activities simply because it s nice to do, or even the right thing to do. We do it because we remain loyal to our members, our neighbors, our home and a mission to make life better in the areas we serve. CO-OP MEMBER SERVICES: The Member Services Department handles everything from new membership applications to billing and payment questions. Capital credits and payment assistance are also handled by this department. Front row from left: Matt Stroup, Kati Miller, Kim Zombeck and Bradley Smith. Back row from left: Leslie Burton, Jill Glunt, Jane Brown, Melissa Newhard, Brenda Dugan and Gerda Frazier. CO-OP ENGINEERING & FIELD SERVICES: The Engineering, Operations and Field Services Department is responsible for right-of-way clearances, new construction, line relocations, outdoor lighting and safety hazard awareness. From left: Connie Sovisky, Amy DeWoody, Amanda Rhoades, Chuck Hickernell, Steve Miller, Bob Joslin, Ryan Meller, Jeff Kachik, Laura Roggenkamp, Brian Thompson, Rob Burns and Steve Kargol. J U L Y P E N N L I N E S 12g

8 Your board of directors Who is your director? NORTHWESTERN Rural Electric Cooperative is guided by a board of 10 directors (pictured left), one from each of the 10 districts within its service territory. Although each director is a member from his or her district, the entire co-op membership votes the directors into office through the election process held during the annual meeting. Director terms last for three years. William (Jack) Sheffer District 1 Roger Follett District 3 Kathryn Cooper-Winters District 5 Board Chair David Rectenwald District 7 Board Vice-Chair Larry Proper District 9 Board Secretary Jesse (Earl) Koon District 2 Board Treasurer Robert Agnew District 4 Kim Docter District 6 Bob Davis District 8 Lanny Rodgers District 10 NRECA Director District 1 Springfield, Conneaut, Girard, Elk Creek, Fairview, and Franklin townships, and Platea Borough in Erie County; and Monroe and Conneaut townships in Ashtabula County. District 2 McKean, Washington, Waterford, and LeBoeuf townships, and Edinboro Borough in Erie County. District 3 Amity, Union, Wayne, and Concord townships, and Elgin and Union City boroughs in Erie County; and Spring Creek Township in Warren County. District 4 Beaver, Spring, Conneaut, Summerhill, Summit, Sadsbury, and Pine townships, and Conneautville Borough in Crawford County; and Richmond and Pierpont townships in Ashtabula County. District 5 Cussewago, Hayfield, Venango, Cambridge, and Woodcock townships, and Woodcock and Saegertown boroughs in Crawford County. District 6 Rockdale, Richmond, Bloomfield and Athens townships in Crawford County. District 7 Sparta, Rome, Oil Creek, Steuben, and Troy townships, and Centerville Borough in Crawford County; and Southwest and Eldred townships in Warren County. District 8 East Fallowfield, Vernon, Greenwood, Union and Fairfield townships in Crawford County. District 9 West Mead, East Mead, East Fairfield, and Randolph townships, and Blooming Valley Borough in Crawford County. District 10 Wayne Township in Crawford County; Jackson, Plum, Oakland, Cherrytree, and Canal townships in Venango County; and French Creek Township in Mercer County. Safety is our core value NORTHWESTERN REC places the safety of our employees, our members, and our community as the primary focus to direct and guide our actions. The co-op has a Safety Committee that meets monthly to review any safety incidents and to direct our employees efforts toward safe work practices at work and at home. In 2014, Northwestern REC had 18 safety incidents, four of which were lost-work time incidents comprising 87 days of lost work time. Incidents ranged from twisted knees to strained backs and minor fender benders. 12h P E N N L I N E S J U L Y

9 What do the Declaration of Independence, rural electric cooperatives have in common? WHEN BENJAMIN FRANKLIN signed the Declaration of Independence, he is credited with saying, We must, indeed, all hang together, or most assuredly, we shall all hang separately. That recognition of the need to work together may also be why Franklin, in 1752, founded the first successful cooperative in the United States, the Philadelphia Contributionship for the Insurance of Houses from Loss by Fire, which still operates today. The principles behind the Declaration of Independence that form the basis of American democracy also form the basis of cooperatives. A cooperative is owned and democratically controlled by the people who use its services. Each member has one vote regardless of their stake; that is, some members cannot buy more control than anyone else. This stands in stark contrast to investor-owned businesses where only shareholders have a vote in how the business is run; and even among shareholders, some have more votes than others depending on their shares of stock. The Declaration of Independence declared the equality of rights of its citizens and that people had the right to organize to secure their futures when their rights were infringed upon. At the time the Declaration of Independence was written, democracy was a pretty untested idea but the founders of our country were determined to make it work. So when you celebrate the many liberties and rights we enjoy with our families and friends this year, think about those principles that inspired the Founding Fathers. They also inspired the pioneers who established electric cooperatives folks who were determined to provide safe, reliable and affordable power to secure the futures of rural communities. Northwestern REC has always operated under the principles of democracy, and we are dedicated to fulfilling that promise as we serve members today and in the future. J U L Y P E N N L I N E S 12i

10 Know the nominees You and the other members at the Northwestern REC Annual Meeting elect your board of directors on a rotating basis. This year, directors from Districts 3, 5 and 10 are up for election. Nominating meetings were held in each of the districts during April. The members who attended these meetings nominated people they believed met the qualifications necessary to be a director of Northwestern REC. The following biographical sketches will familiarize you with the candidates. District 3 Amity, Union, Wayne, and Concord townships, and Elgin and Union City boroughs in Erie County; and Spring Creek Township in Warren County. Michael Sample Buffalo Road Corry, PA Michael Sample, District 3 nominee Mike Sample has been a member of the Northwestern REC since He is the owner of The Titusville Herald and The Forest Press of Tionesta, Pa. Mike is also a co-owner of The Corry Journal, a family-owned local newspaper. As a business owner in an industry that has experienced tremendous challenges, Mike adapts to change very well. Mike graduated from Penn State Erie, The Behrend College, with a bachelor of science degree in management in He has worked at daily and weekly newspapers in Pennsylvania, New York, and Alabama, and has 30 years of experience in the newspaper industry. Mike has always called Northwestern Pennsylvania home. He is an active member of the Titusville Rotary Club, where his service includes cleaning up the community and helping decorate Titusville during Christmas. His dedication to helping the area does not end there. Mike has served as the campaign chair of the Titusville United Way and currently serves as the 2015 campaign vice chairman, helping raise money through donation work for local nonprofit agencies. In the past, Mike has helped regional businesses grow and prosper as a member of the Titusville and Corry Area Chambers of Commerce boards. Mike loves sports and giving back to the community, which is why he has also volunteered as a youth baseball coach. Mike and his wife, Debbie, and their children are members of Christ Our Hope Parish in French Creek, N.Y. They live outside of Corry on their farm. Roger Follett, District 3 incumbent Roger Follett s first term as Northwestern REC board director began in He has fulfilled the requirements for National Rural Electric Cooperative Association (NRECA) Director Certification. A co-op member for nearly 50 years, he has served as supervisor and township auditor, and is a member of the Wattsburg Historical Society. He graduated from Corry High School in 1949 and served three years in the United States Air Force. In 1952, he returned home to take up farming with his father. He continued dairy farming until 1978, when he went into the security field. Follett and his wife, Janet, have four children, five grandchildren and one greatgranddaughter. Roger Follett Follett Road Corry, PA at the Annual Meeting Saturday, August 1 Crawford County Fairgrounds 12j P E N N L I N E S J U L Y

11 Know the nominees You and the other members at the Northwestern REC Annual Meeting elect your board of directors on a rotating basis. This year, directors from Districts 3, 5 and 10 are up for election. Nominating meetings were held in each of the districts during April. The members who attended these meetings nominated people they believed met the qualifications necessary to be a director of Northwestern REC. The following biographical sketches will familiarize you with the candidates. District 5 Cussewago, Hayfield, Venango, Cambridge, and Woodcock townships; and Woodcock and Saegertown boroughs in Crawford County. Kathryn Cooper-Winters, District 5 incumbent Kathryn Cooper-Winters, first elected to the board in 1988, is currently serving her 15th year as board chair. She previously served as the board treasurer for 11 years and has met the requirements for NRECA Director Certification. She is the board representative to the Allegheny Electric Cooperative, Inc. Board of Directors in Harrisburg. She currently serves as the Allegheny Electric Cooperative, Inc. board vice chairman, and has in the past served as board treasurer. Cooper-Winters was employed by Northwestern REC as a communications specialist for eight years before working as a farm consultant with Agway, Inc. In 1984, she set up her own accounting and tax business with her father, the late Jess G. Cooper, a retired Pittsburg State University professor. Since retiring after the 2008 tax season, Cooper-Winters has been spending more time watching grandsons play sports and enjoying her hobbies of quilting and gardening. She is also a member of the Saegertown United Methodist Church, where she serves on the Finance Committee. She also volunteers for the local food pantry. Cooper-Winters is married to William R. Winters Sr. and has one son, five stepchildren, two grandsons and nine step-grandchildren. She has been a co-op member for 30 years. Kathryn Cooper-Winters State Highway 86 Saegertown, PA District 10 Wayne Township in Crawford County; Jackson, Plum, Oakland, Cherrytree, and Canal townships in Venango County; and French Creek Township in Mercer County. Lanny R. Rodgers, District 10 incumbent Lanny Rodgers retired as a regional manager for the Pennsylvania State Employees Retirement System. He served in the United States Marine Corps from 1962 to He is a former director of the Franklin YMCA, and is an active member of the Franklin BPO Elks Lodge No. 110, the Cochranton American Legion, and the National Association of Watch and Clock Collectors. Rodgers was first elected to the board of directors at Northwestern REC in He has served as board vice president, and as Northwestern REC s representative on the Pennsylvania Rural Electric Association Board of Directors from 2005 to He presently represents the Pennsylvania cooperatives on the National Rural Electric Cooperative Association board. He is also a Credentialed Cooperative Director and Board Leadership Director. He also serves on the board of directors for the Cochranton Area Redevelopment Efforts. Rodgers and his wife, Georgia, have two children and five grandchildren. They have resided in the Carlton/Cochranton area for over 30 years. Lanny R. Rodgers th Division Highway Carlton, PA at the Annual Meeting Saturday, August 1 Crawford County Fairgrounds J U L Y P E N N L I N E S 12k

12 EVERY MEMBER HAS A VOICE. EVEN THE ONES WHO CAN T YET SPEAK. As an electric co-op member, your household has a say in how the co-op is run. Which helps you care for an even bigger family your community. Learn more about the power of your co-op membership at TogetherWeSave.com. Northwestern Rural Electric Cooperative Association, Inc State Highway 86 P. O. Box 207 Cambridge Springs, PA Emergencies/outages: Northwestern REC fax: Office Hours Monday-Friday 7 a.m. 3:30 p.m. 12l P E N N L I N E S J U L Y