A Powerful History - South Kentucky RECC

South Kentucky RECC
2011 Annual Report
A Powerful
History
The business of reliable and affordable electricity
T
he annual report for 2011 finds
South Kentucky RECC in a strong
position to continue the business of providing reliable and affordable
electricity.
That kind of success has come as a
result of the traditions and values that
first started the co-op in 1938.
South Kentucky RECC was not
founded to make money for shareholders.
Instead, the grandparents and greatgrandparents of our community joined
together in Wayne County for the sole
purpose of bringing affordable electricity
to the countryside.
To achieve that goal, they used a
unique business model that matched
their mission—a not-for-profit co-op
owned by the members it served.
And they worked with other electric co-ops forming around the country
to develop innovative technical solutions—the little-known job of distributing electricity into rural America required
creative engineering work.
In 2011, South Kentucky RECC
employed those techniques of technical and organizational innovation to meet
today’s requirements.
The business model that South
Kentucky RECC was founded on 74 years
On the cover
The progression of South
Kentucky RECC’s powerful
history is shown from early
construction to the annual
membership meeting in 2011.
RIGHT SKRECC energy
advisor David Withers assists
local builder Keith Owens
with constructing an energyefficient home. Withers
will use the house plans to
help Owens determine the
appropriate size of heating/
cooling system needed.
ago is still effective today; however, all
business models, including cooperatives,
are faced with rising organizational costs
and slowed growth.
These rising costs are at the top of
most of our minds these days, so that
guides the focus of SKRECC. The hightech present and future of the smart grid
promises more efficient management
of the flow and delivery of electricity.
South Kentucky RECC has been keeping
its system up to date with proven smart
meters and other technology.
Two major factors causing higher
electricity costs are the increasing environmental rules for cleaner and greener
energy causing very costly generating
plant upgrades, and the increasing cost of
fuel to run power plants, most of which
are coal-fired.
Last year, South Kentucky RECC was
among the six Kentucky electric co-ops
that filed for a rate adjustment, only
the second in more than 20 years. The
Kentucky Public Service Commission
granted a rate adjustment for the consumer charge. The overall increase
amounts to about 3.12 percent. (There
will be more on the rate adjustment in
the June magazine.)
While it appears that rising costs are
something everyone is going to have to
continue to manage, you will find in this
report that South Kentucky RECC is in
the process of employing the latest technology that will allow you to be a larger
part of the decision-making process of
how much and when electricity is used,
which will help you save on your energy
bill.
In addition, home energy efficiency
can help save you money on your energy
bills in your house, as well as slow the
need for expensive new power plants.
Savings are available right in your own
home through a variety of energy-efficient home improvements. Every month,
Kentucky Living magazine delivers, right
to your mailbox, numerous tips to save
money on electricity. You can get specific questions answered about the best
steps to take in your own house, by calling SKRECC and speaking to our energy
advisors, or you can do-it-yourself at
www.togetherwesave.com.
In today’s economy, South Kentucky
RECC finds success in relying on its historic values of dedication, first and foremost, to providing reliable and affordable
electricity to the co-op members and our
community.
South Kentucky Rural Electric Co-op’s
historic values mean operating the utility
with the latest technology, including
Advanced Metering Infrastructure; global
satellite mapping; and computer-based
communications. Photo: Tim Webb
A Powerful
History
Keeping technology up to date
R
eliable and affordable electricity is the centerpiece of
what South Kentucky RECC
does, and it is accomplished with the
assistance of the latest technology.
In 2010, South Kentucky RECC was
awarded a federal grant from the U.S.
Department of Energy as part of the
American Reinvestment and Recovery
Act to install an Advanced Metering
Infrastructure, or AMI, system. New
“smart” meters, which are the very
latest technology, have been installed
in all the residences across the SKRECC
system.
These meters record a member’s
usage and transmit this data back to
the co-op through the power lines. The
new, self-reading meters should eliminate estimated meter readings and aid
in outage notification and restoration
since they will be directly tied to the
co-op’s outage management system.
With the information gleaned from
the AMI system’s meter data management (MDM), SKRECC members will
soon be able to go online to view their
usage and usage patterns; they will be
able to overlay weather data that will
affect the amount of electricity they
are using—data such as high temperatures, low temperatures, average
temperatures, and heating and cooling
degree days.
Members will also be able to view
their hourly electricity usage. This
information can be used to note any
times of high electric usages and possibly make adjustments to lower consumption, which, in the end, should
help members manage their usage and
keep their electric bills consistent even
in this time of rising costs.
South Kentucky RECC is in the
process of designing rates that will
allow members to use electricity at
lower cost times of day, using information from the “smart” meter. With
MDM, members will know how much
power they are using and how much it
costs at a particular time, so they can
use their appliances at a different or
better time in an effort to avoid peak or
demand use periods.
Members who choose to switch to
a time-of-use rate can opt to use the
electricity on-peak and pay the higher
price, or move their usage to off-peak
hours and see a reduction in their electric cost. For instance, clothes dryers
and dishwashers can be set to run at
night during off-peak hours.
A Powerful
History
T
Always a part of our community
74 years of
proud history
In October 1938, a group of farmers
came together in Wayne County to
incorporate South Kentucky RECC, and
on January 23, 1940, the co-op first
energized lines, bringing light to what
had been a dark countryside.
Today, the co-op serves 66,259 in
all or parts of 11 Kentucky and two
Tennessee counties.
he offices and headquarters
for South Kentucky RECC
are located right here in our
communities.
It always has been and it always
will be.
That’s because all its customers live here. And since all of those
customers are also all of the owners,
South Kentucky RECC is as much a
part of our community as the community itself.
That means that for SKRECC to
thrive, the community must thrive.
From teaching schoolchildren about light bulbs when co-ops first
started, to sponsoring scholarship visits to the Capitol and other
educational and historical sites in Washington, D.C., South Kentucky
RECC continues its proud historical traditions.
You see the results of that local concern in the importance the co-op
places on providing reliable and
affordable electricity for all its members. You see it in the support the
co-op gives to area student scholarship and education programs. You see
it after a storm when South Kentucky
RECC crews work through the night,
weekends, and bad weather to
restore your electricity. You see it in
the activities of the co-op employees, who spend time outside of work
volunteering in a wide variety of local
groups and activities working to improve life in our
community.
Few businesses have
annual meetings like this
one. Every member is
invited, because they’re all
owners, and they have a
voice in the business of the
co-op.
That’s the way it’s been
since the beginning of
South Kentucky RECC. It’s
a powerful history of success since its beginning,
through 2011, and far into
the future.
Official Business Meeting Agenda
Richard G. Stephens
Chairman
Charles Gore
Vice Chairman
Annual Meeting
of Members
South Kentucky RECC
Where: Pulaski County High School
When: June 5, 2012
Registration Time: 4:00 p.m. EDT
Business Meeting Time: 7:00 p.m. EDT
The annual membership meeting of this co-op organizes to
take action on the following matters:
Tom Estes
Rick Halloran
Glen Massengale
John T. Pruitt Jr.
William Shearer
Darrell Saunders
Secretary-Treasurer
Board Attorney
1. Report on the number of members present in person in
order to determine the existence of a quorum
2. Reading of the notice of the meeting and proof of the due
publication or mailing thereof, or the waiver or waivers
of notice of the meeting, as the case may be
3. Consideration and approval of the minutes of 2011
Annual Meeting
4. Presentation and consideration of reports of officers,
directors, and committees
5. Report on the election of board members Districts 4
and 7
6. Unfinished business
7. New business as proposed in Bylaws – Section 3.08
Allen Anderson
President and CEO
MEMBERS BY COUNTY
Adair.................................... 629
Casey................................ 1,698
Clinton.............................. 6,644
Cumberland............................ 25
Laurel..................................... 12
Lincoln.............................. 1,239
McCreary........................... 6,263
Pulaski............................27,235
Rockcastle.............................. 72
Russell.............................. 9,859
Wayne.............................12,393
Pickett, TN........................... 168
Scott,TN................................. 22
Service Area
Revenue Sources
Other
2.75%
Commercial
30.50%
Accounts Billed
2001.................................. 57,294
2010.................................. 66,550
2011.................................. 66,259
Residential
66.75%
Average Residential
KWH Usage
2001.....................................1,059
2010.....................................1,198
2011.....................................1,132
Miles of Line
2001.....................................6,149
2010.....................................6,735
2011.....................................6,755
Members Per Mile
2001.......................................9.32
2010...................................... 9.88
2011.......................................9.81
Major Costs
80
Wholesale Power
75.32%
70
Operations
60
Depreciation
50
40
Interest
30
Taxes
20
10
0
Other Expenses
15%
4.76% 4.78%
.10%
.04%
2011 Statement
of Earnings
Balance
Sheet
Operating Revenue................................... $128,576,350
As of December 31, 2011
Cost of Electric Service
Cost of Electricity Purchased
From East Kentucky Power.......... $93,451,521 Cost of Operating the
Distribution System...................... $18,617,141 Depreciation Expense..................... $5,911,389 Interest Expense on Loans.............. $5,927,231 Public Service Commission
Assessment.........................................$119,014 Other Expenses....................................$44,575 Assets
Total Poles, Wires, And
Other Equipment...............................$218,725,184
Less Accumulated Depreciation........$46,428,651
Net Value of Poles, Wires, and
Other Equipment..............................................$172,296,533
Investments in Associated Organizations...........$40,223,155
Cash..................................................................... $1,883,872
Accounts and Notes Receivables ....................... $11,127,524
Material in Inventory........................................... $3,358,029
Prepaid Expenses.................................................... $192,177
Other Assets......................................................... $1,234,121
Total Assets..................................................... $230,315,411
Total Cost of Electric Service....................$124,070,871
Gross Margins from Electric Service............ $4,505,479
Non Operating Income................................. $3,984,727
Net Margins (Deficit)................................... $8,490,206
Liabilities and Members’ Equity:
Consumer Deposits............................................... $1,077,019
Members and Other Equities.............................. $68,331,614
Long-Term Notes Payable.................................$134,180,463
Notes and Accounts Payable Owed to Vendors...$15,425,714
Other Liabilities................................................. $11,300,601
Total Liabilities and Members’ Equity...............$230,315,411
ANNUAL MEETING
2012
“Just Got Started
Lovin’ You”
FEATURING
JAMES
OTTO
RegistRation - 4 p.m.
Tuesday, June 5
Pulaski Co. High
School
University Drive, Somerset, KY
Business meeting - 7 p.m.
• Free bucket and light bulbs for
all registering members
• Prizes for all ages
•Information about South Ky
RECC and our many services
•Rides and fun for the kids
Bring your family for an evening
filled with fun & entertainment!
All offices of SKRECC will
be OPEN Annual Meeting
day!