Good morning, I’m Shawn Stanley the Chief Financial Officer. I’ll be going over the Treasurer’s Report with you this morning.
First off, I’d like to cover the 2020 financial results. For 2020, revenue was at $59.8 million, expenses were at $50.9 million, and margins for the year were at $8.9 million. This was a very good financial year for the Cooperative, and it allowed the board to do some special things. First off, they were able to retire early $2.1 million of capital credit for the year 2019. These were issued as credits on 2020 bills. Additionally, we were able to under-recover $1 million in power costs. Normally, we would have passed this on and billed for these costs, but we were doing financial well, so we opted to under-recover.
Meters continue to grow by just over 1% annually, that’s about 150 meters per year. Through June 2021 we had 14,015 meters.
Energy sales are staying strong, and we are projecting 2021 to hit 400 million kWh. This is down from our all-time high in 2019, which was 512 million kWh. The pandemic slowed down the economy, and many of our industrial consumers ramped down their operations. Most of those are still connected to the system, and are slowly regaining normal operations.
Let’s take a look at the 2021 financial results through June. Through the first half of 2021, revenue was at $29.2 million, expenses were at $25.6 million, and margins were right at $3.6 million. We are trending well for 2021, and I expect margins to be somewhere in the $6.5 to $7 million at the end of the year.
Now I’d like to go over the Cooperative’s revenue with you. One of the Cooperative’s strengths is our diversified revenue mix, we have a good source of different revenues. This is good for the Cooperative, because we are not dependent on one revenue group or consumer. I’ve heard of utilities that have one consumer that makes up 90% of their sales. There is a lot of risk in that, and I’m happy to report that the Cooperative doesn’t have that type of revenue.
Revenue breakdown:
- Large power- 26%
- Commercial- 24%
- Residential- 23%
- Irrigation- 10%
- Military- 10%
- Seasonal- 4%
- Other 3%
We have a good diversified mix, and that is a strength for the Cooperative.
Expense for the Cooperative, through June 2021, were at $25.6 million.
Expenses breakdown:
- Power Cost- 54%
- Operations and Maintenance- 21%
- Depreciation- 11%
- Administrative- 8%
- Interest Expense- 3%
- Consumer- 2%
- Other- 1%
Power cost is by far biggest percentage of expenses. The Cooperative spends a lot of time and effort focusing on power costs. I’m happy to report that in the 5 years ending 2020, the Co-op’s power costs are 20-30% lower than the national average, and 5-8% lower than the Texas average.
One thing we do when were are negotiating contracts is we try to avoid risks, and that paid off tremendously during winter storm Uri. We weren’t out on the market and exposed to those $9,000 market prices that everyone has been talking about. If we had been out on the market, that could have cost the Cooperative in the range of $40 million. I’m happy to report we were not in that group that was significantly harmed by the winter storm. We had some high costs that we had to pay for ERCOT, but we were financially strong and more than capable of paying those costs.
Next up we have our borrowed debt. The Cooperative can borrow money to pay for capital improvements or get it from consumers. We have a lot weight when we go to borrow money, and can get very good low rates. Our debt was at $39.8 million, through June 2021. We haven’t borrowed a lot lately, but I’m excited to share we have a construction work plan that was just approved by the board. This will produce some really good projects across the service territory. With that work plan, we will be developing a loan package, and we will borrowing out in the future. It’s a good time to be borrowing, interest rates are low, and we’ll be able to lock in some really good rates for capital improvements.
Total utility plant is growing on average about $6.7 million per year. As of June 2021, we were right at $194.8 million. Total utility plant is everything, it’s the substations, poles, conductors, everything that the members own. We are constantly putting back, reinvesting into the system to keep it up and running, and improving it for the membership.
I’d like to conclude the treasurer’s report with the message that the Cooperative is in a good financial position. That’s despite going through a pandemic and an unprecedented winter storm. We’ve dodged those bullets, and the Cooperative is a good financial position to continue to meet the membership’s needs.
Again, I’m Shawn Stanley and I hope you enjoy the rest of the presentation.