BEC BOARD MEETING February 23, 2016

Transcription

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BEC BOARD OF TRUSTEES
Roxie Melton, President
District 2—
Boyd, Joliet
[email protected]
406-426-0135
Dan Dutton, Vice President
District 1—
Bridger, MT
Clark, WY
[email protected]
406-664-3000
Richard Nolan, Secretary/
Treasurer
District 4—
Red Lodge
[email protected]
406-425-2269
Arleen Boyd
Southern/SME Board Rep.
District 5—
Fishtail
[email protected]
406-328-6645
Laurie Beers
SME Board Rep.
District 6—
Nye
[email protected]
406-328-4283
Julie Lindgren
District 3—
Roberts, Bearcreek
[email protected]
406-671-1086
Dave Peterson
District 7—
Columbus, Rapelje
[email protected]
406-780-1305
_________________________
James Webb
President/CEO
Lower Valley Energy
236 North Washington
PO Box 188
Afton WY 83110
800 882-5875
[email protected]
BEC BOARD MEETING
February 23, 2016
Beartooth Electric Cooperative
Regular Board Meeting
Tuesday, February 23, 2016
12:00 noon Beartooth Electric Office
Agenda
1.
Call Meeting to Order
2.
Pledge
3.
Visitors Comments
4.
Approve Agenda
5.
Approve Minutes
 January 26, 2016 Regular Board Meeting
6.
Committee/Trustee/Attorney Reports
 Finance Committee (Dan Dutton)
 Communications Committee (Dick Nolan)
 Policy Committee (Laurie Beers)
 Risk Management Committee (Arleen Boyd)
 Southern Montana Electric Generation & Transmission Cooperative, Inc.
(Southern) & SME Generation and Transmission Cooperative, Inc. (SME)
(Arleen Boyd and Laurie Beers)
CONSENT AGENDA (Items 7 through 11)
7.
January Membership Connections and Cancellations
8.
Capital Credit to Estates
9.
January 2016 Financial Reports
10.
Summary of Attorney Fees
11.
Staff Reports
 Manager’s Report – Jim Webb
 BEC system goals update – Angie Jennings
 Member Services’ Report – Brian Tanabe and Kaaren Robbins
 Line Superintendent Report – Eric Elton
BEC Board Book February 2016 Page 2
12.
COSA/Rate Discussion
13.
Communication Plan
14.
Operation Roundup
15.
Disconnect Process
16.
Consolidation Update
17.
Upcoming Meetings
 BEC Board Meeting March 29, 2016
 BEC Abbreviated Board Meeting April 26, 2016
18.
Visitor Comments
19.
Executive Session
20.
Executive Action
21.
Adjourn
Minutes of the Board of Trustees’ Meeting, Tuesday, January 26, 2016
Held at the offices of Beartooth Electric Cooperative
Beartooth Electric Cooperative will be referred to as BEC herein;
Southern Montana G&T Cooperative as Southern; Lower Valley Energy,
Inc. as LVE. The Glossary of Terms and Acronyms website link is:
http://www.beartoothelectric.com/content/glossary.
Call to Order: Board Chair Roxie Melton called the meeting to order
at 12:00 p.m. Roll call determined that all board members were
present except Dave Peterson who joined the meeting by telephone.
Present: Presiding: Roxie Melton, Chair
Arleen Boyd, Dick Nolan, Julie Lindgren, Laurie Beers,
Dan Dutton, and Dave Peterson by telephone.
James R. Webb, General Manager
Bryan Case, CEO Fall River Electric
David Wheelihan, MECA CEO
Gary Wiens MECA Assistant General Manager
Beckie Frediane – MECA Staff Training
Brent McRae – MECA Board President
Rod R. Jensen – LVE Vice President by video
Brad Prophet, Accountant
Eric Elton, Line Superintendent
Brian Tanabe, Communications Manager -LVE by video
Angela Jennings, Staff Assistant – LVE by video
Rick Knori, Director of Engineering - LVE by video
Wade Hirschi, CFO – LVE by video
Gay Petersen, Executive Assistant/HR LVE by video
Members, Frank Willett, Jack Schutte and Deb Thomas
Approval of agenda:
A motion was made by Laurie Beers, seconded by Arleen Boyd
to approve the agenda as presented. Motion carried.
Voting
was unanimous.
Approval of minutes:
A motion was made by Dick Nolan, seconded by Laurie Beers,
to approve the November 24, 2015, regular board meeting
minutes. Motion carried. Voting was unanimous.
James R. Webb discussed the fees associated with different MECA
programs. He introduced Gary Wiens, MECA Assistant General Manager,
David Wheeliham MECA CEO, Brent McRae, MECA Board President and
Beckie Frediane, MECA Staff Training.
Gary Wiens then discussed the purpose and goals of MECA as a
statewide organization. He reviewed past legislation accomplishments
that brought savings to the Montana Cooperatives. Gary stressed that
MECA policies and decision are made on the grassroots level.
Discussion was held regarding the importance of MECA being
politically balanced and aiding cooperatives in looking toward the
future.
The MECA representatives left the meeting.
The Board discussed the pros and cons of MECA membership. It was the
consensus of the Board to not make any decisions at this time until a
decision is made on whether to join with Fall River and Lower Valley
Energy in forming a new cooperative.
Committee reports:
Finance:
No meeting was held.
Risk management, legal liaison, and Southern:
Arleen Boyd reported that the January 19, 2015 meeting where a
comprehensive review of financial model was presented by Wade Hirschi
was very beneficial to the committee members. The committee reviewed
potential scenarios for rate/revenue reductions and their impacts on
financial ratios going out 5 and up to 10 years. The committee
reviewed the amortization of the regulatory asset, potential debt
repayment periods, and amortization of the debt before doing a final
assessment of a rate decrease amount.
The committee recommended an immediate retail decrease of 10% with a
second decrease of 5% or greater later in 2016 if financial results
support model projections. The committee also recommended to
amortize the regulatory asset over 7 years and set a 7-year term
with a one year re-pricing for the $1.2 million loan prepaying the
BEC exit from Southern.
Discussion was held regarding the possibility and advantages of
writing off a portion of the regulatory asset.
It was the consensus of the board to have a new COSA completed with
more detail and review the updated COSA in the February board
meeting. It was also suggested that the board and management hold
meetings with irrigators and stock tank owners prior to making a
decision on rates.
A motion was made by Julie Lindgren, seconded by Laurie
Beers, to adopt a 10% revenue reduction distributed dependent
upon the revised COSA. Motion carried. Voting was unanimous.
A motion was made by Arleen Boyd, seconded by Laurie Beers,
to amortize the regulatory asset over a 7-year period.
Motion carried. Voting was unanimous.
A motion was made by Arleen Boyd, seconded by Dave Peterson,
to approve a 7-year term with a one-year
re-pricing for the $1.2 million loan prepaying the BEC exit
from Southern. Motion carried. Voting was unanimous.
Arleen reported that the letter to NorthWestern will be completed
after the board approves a rate decrease.
Discussion was held regarding the proposed confidentiality agreement
as requested by Southern.
A motion was made by Dan Dutton, seconded by Arleen Boyd, to
approve signing, under protest, the proposed Southern
confidentiality agreement allowing BEC to have access to
Southern’s financial statements. Motion carried. Voting was
unanimous.
Arleen continued with reporting that SME is on track for the
financial requirements for the corporate dissolution and will file
the articles of dissolution and distribute its remaining cash to its
member cooperatives and close down by the end of February 2016.
Arleen discussed the provisions of a merger or a consolidation and
the information that must be filed with the Secretary of State in
Montana. See attached report.
Jim Webb reviewed the recent LVE proceedings and discussions
regarding Fall River Electric/Lower Valley Energy consolidation. He
presented the EES study and the draft Lower Valley Energy/Fall River
MOU for the board’s review. He discussed the advantages and
disadvantages of BEC joining in the proposed consolidation.
Bryan Case, CEO of Fall River addressed the BEC Board and gave his
perspective on why a consolidation with LVE/BEC/FREC would be
favorable in the future.
Rod R. Jensen reviewed the logistics and benefits of consolidation of
the three cooperatives. He extended an official invitation to
Beartooth Electric Cooperative from Lower Valley Energy and Fall
River Electric to join with them in forming a new cooperative.
Board discussion was held regarding information transparency to
members, employee buy-in, timelines and the direction that may be
best for BEC.
Bryan Case issued an invitation to the BEC Board to attend the next
Fall River Electric Board Meeting to be held on February 22, 2016 at
10:00 a.m.
Deb Thomas addressed the board in regards to a Montana alternative
energy initiative.
Consent Agenda:
The board accepted the consent agenda as presented.
Jim discussed the December 2015 financial report.
General Manager Report:
Jim reviewed the general manager report and pointed out that BEC’s
membership in MECA needs to continue so that the Youth Tour could
continue as planned.
Staff Reports:
Eric Elton reviewed the December outage and safety reports and
answered questions from the board. He updated the board regarding
efforts to discover where system line losses may be occurring. The
board requested that he include hazards reported in his monthly
reports.
Jim Webb explained the need to update the RUS 674 forms.
A motion was made by Julie Lindgren, seconded by Laurie
Beers, to adopt the RUS Resolution and certificate of authority
for form 674 appointing James R. Webb as the Certifier on behalf
of BEC and Wade E. Hirschi as the Security Administrator on
behalf of BEC. Motion carried. Voting was unanimous.
Discussion of the BEC 2016 Calendar and schedule of meeting was held.
Brad Prophet presented the proposed resolution authorizing the writeoff of 2015 doubtful accounts.
A motion was made by Dan Dutton, seconded by Julie Lindgren, to
authorize the proposed doubtful write-off accounts in the amount
of $24,119.92. Motion carried. Voting was unanimous.
Adjournment.
Meeting adjourned at 4:05 p.m.
Upcoming meetings.
Future board meetings, all at BEC offices:


February 23, 2016 BEC Abbreviated Board Meeting 12:00 noon
March 29, 2016 BEC Board Meeting 12:00 noon
ATTEST:
_______________________________________
Richard Nolan, Secretary
Board Report -- January 2016 – Risk Management, SME, Southern, Legal
Risk Management Meeting, January 19, 2015 – Draft report
Present: Bill Pascoe, Dick Nolan, Jack Schutte, Judith Gregori, Frank Willett, Roxie Melton, Wade Hirschi, Arleen
Boyd. Attending by remote connection: Jim Webb, Laurie Beers, David Peterson.
Comprehensive (2-hour) review of financial model and presentation by Wade Herschi. Committee members
noted the length of the documents they had reviewed before the meeting and agreed that they were very clear
and provided the information necessary for serious comparison of potential scenarios for rate/revenue
reductions and their impacts on financial ratios going out 5 (and up to 10) years. The model data indicates that
the ratios can be sustained and improved with rate decreases up to 15%. The committee centered on the 5-year
model looking at the amortization of the regulatory asset, potential debt repayment periods, and amortization
of the debt before doing a final assessment of a rate decrease amount.
After in-depth discussion with Jim and Wade the committee put aside discussion of a 20% decrease as
demonstrably risky to financial ratios and recommends a 10% decrease in retail rates to be implemented
immediately following examination of the previous COSA recommendations and updated COSA analysis. The
model indicates that a decrease of an additional 5% or more should be sustainable and recommends that
evaluation of financial results begin immediately following the initial decrease with the objective of following
the 10% decrease with an additional 5% or more by the fourth quarter of 2016 if the data supports the current
model projections.
The committee recommends:





Immediate retail decrease of 10%
A second decrease of 5% or greater in 2016 if financial results support model projections
Amortization of the regulatory asset over 7 years
A 7-year term for the $1.2 million loan prepaying the BEC exit from Southern
Amortization of the $1.2 million loan over 7 years.
With a 10% decrease in BEC retail rates BEC members will pay lower rates than they would if an acquisition by
NWE went forward. The letter to NorthWestern (discussed by the board and committee) will be completed
after the board approves a rate decrease. The analysis that has been reported to members and discussed by the
committee and board then moves on to compare independent BEC with BEC merged or consolidated into a new
cooperative. The currently recommended rate decrease is possible because of the Southern exit and reduced
power costs with the new power contracts. With the new financial model a clear picture of the savings resulting
directly from the management agreement and proposed consolidation will be clear for comparison.
Southern -- We continue to fulfill our responsibilities under the exit agreement. After almost three months
Southern has not complied with the requirement under the agreement to provide their monthly financial
statements.
While there is no confidentiality agreement required, or mentioned, in the exit agreement, Southern’s counsel
reports that Southern refuses to send the required financial documents until a confidentiality agreement is
signed with Beartooth. Southern’s counsel drafted a proposed agreement that adds a highly unusual covenant
to the standard confidentiality language we have used with Southern in the past to confine distribution of
specific information to designated parties. The proposed covenant stipulates that BEC will “review and
discuss” the information only in closed sessions of the board. Such a provision would mean that 1) management
could neither review nor discuss the financial information, which has been public up until now, without
participating in a closed board meeting and that 2) the board could not circulate and review it efficiently.
The BEC objective of the provision in the exit agreement requiring Southern to share the financials is for BEC to
see:



Southern’s financial status regarding note-holder repayment (BEC stops paying A&G when the notes are
paid),
Any unusual payments to the noteholders,
Financial entries relating to either the FERC decision on NWE Schedule 3 overcharges or to potential
LGIA returns.
BEC counsel is discussing the proposal for a confidentiality agreement with Southern’s counsel. BEC counsel
anticipates a proposal to the board for a reasonable confidentiality agreement accompanied with a detailed plan
for BEC to receive regular updates on Southern’s activity seeking LGIA returns from NorthWestern Energy. If
that proposal is not complete for review by the January 26 board meeting the board should discuss timing for
resolution of the matter.
SME
Southern created SME in 2008 to assume responsibility for building the Highwood Generation Station (HGS)
when Yellowstone Valley Electric Cooperative, then a member of Southern, announced its intention to abandon
all support for the generating station. The members of SME were and are the Southern co-ops (including BEC)
with the exception of YVEC.
At the SME meeting on January 20 the SME board reviewed the year-end financials and voted to engage the
EIDE Bailey firm to file the 2015 tax returns and advise SME on any remaining financial requirements for the
corporate dissolution. The board heard from the SME attorney that the Certificate of Election to Dissolve has
been sent to the Montana Secretary of State’s office. Following a response from the Secretary, expected the
week of January 24, SME will post the required official notice of planned dissolution in newspapers for two
consecutive weeks. Then SME will file the articles of dissolution and distribute its remaining cash to its member
co-ops and close down. The closure is anticipated to be complete by the end of February. The current financial
statements indicate cash that should provide for BEC to receive close to $80,000. BEC has written off
approximately $5 million in Southern and SME investments in HGS.
Legal Memo from Counsel
For Montana rural cooperatives, the provisions for “merger” are set forth in 35-18-401 and the provisions for
“consolidation” are set forth in 35-18-402. For purposes of Montana rural utilities a merger is defined as “one or
more cooperatives, each of which is hereinafter designated a ‘merging cooperative’, may merge into another
cooperative, hereinafter designated the ‘surviving cooperative’ …” MCA 35-18-401. For purposes of Montana
rural utilities a consolidation is defined as “Any two or more cooperatives, each of which is hereinafter
designated a ‘consolidating cooperative’, may consolidate into a new cooperative, hereinafter designated the
‘new cooperative’ …” MCA 35-18-402. Hence, the only definitional difference is that in a merger one of the
original cooperatives survives while under a consolidation the existing cooperatives dissolve and an entirely new
entity is organized.
In practical terms, under Montana cooperative law, the following is a merger: BEC, Fall River, and LVE combine
and LVE survives (BEC and Fall River cease to exist as separate legal entities.) Under Montana cooperative law,
the following is a consolidation: BEC, Fall River, and LVE combine and the result is New Cooperative (BEC, Fall
River, and LVE cease to exist as separate legal entities.)
The majority of the requirements for “merger” and “consolidation” are substantially identical. The only real
difference is the information that must be filed with the Secretary of State. For a “merger” under 35-18-401, the
articles of merger must include a number of things, including a statement that the merging cooperatives elect to
be merged in the surviving cooperative. MCA 35-18-401(1). For a “consolidation” under 35-18-402 the articles
of consolidation must state the same things as the articles of merger, except, in lieu of the statement of intent,
BEC Board
Februarythe
2016
Page 10
the articles of consolidation must state the names and addresses of the persons who
shallBook
constitute
first
board of trustees of the new cooperative. MCA 35-18-402(1). The notice and member voting requirements are
identical. Compare MCA 35-18-401(2)-(3) with 35-18-402(2)-(3).
Finally, the effects of merger and consolidation are set forth jointly in 35-18-403 and are identical.
NorthWestern Energy Commiunity Meeting on Transmission Upgrades
NWE had materials, employees, and representatives of their new engineering group and environmental
contractor at the meeting in Columbus this month. The outline for the two-phase transmission project has not
changed. They plan to complete lines to just north of Highway 419 in 2016 and then to the new substation in
Nye in 2017. There was no formal presentation but ample opportunity to talk with their staff.
AGREEMENT FOR CONFIDENTIALITY
This Agreement for Confidentiality (“Agreement”) is executed effective this ___ of January
2016, between Southern Montana Electric Generation and Transmission Cooperative, Inc.
(“Southern”) and Beartooth Electric Generation and Transmission Cooperative, Inc. (“Beartooth”).
RECITALS
1.
Southern is a Montana cooperative in which Beartooth was formerly a member until
October 31, 2015. Beartooth and Southern agreed to terms for the exit of Beartooth from Southern
under that certain Agreement dated on or about August 10, 2015 (“Exit Agreement”).
2.
The Exit Agreement provides for certain additional payments potentially to be made to
Southern and for certain distribution or assignment rights for Beartooth in the event of specified credits
or refunds received by Southern subsequent to October 31, 2015, as more particularly set forth in the
Exit Agreement. In order that Beartooth can monitor Southern’s compliance with these aspects of the
Exit Agreement, the Exit Agreement provides that Southern provide Beartooth with financial
information as described below on an ongoing basis until the dissolution of Southern by its remaining
members.
3.
Beartooth has pledged to Southern that it will keep all information that it receives in this
regard confidential pursuant to the provisions below.
AGREEMENT
Now, therefore, for good and valuable consideration, the receipt of which is acknowledged, the
parties hereby agree as follows:
A.
Confidentiality. Upon Beartooth’s execution of this Agreement, Southern will deliver to
Beartooth the following information in the manner so described:
i.
Beginning in January 2016, Southern will provide the financial reports to Beartooth that
it provides to the Board of Southern for its monthly meetings (the “Financial
Information”) within five (5) business days of its delivery to the Southern Board. The
financial reports for October, November and December 2015 will be provided to
Beartooth upon execution of this Agreement.
ii.
The Financial Information provided to Beartooth will be that contained in the packet of
agenda items for the Southern Board’s regular monthly meetings as contained in prior
Board meetings or as delivered to the Board at such meetings, including, but not limited
to, a summary of cash position, amortization schedule, payments to Noteholders, balance
sheet, and statement of revenue and expenses.
iii.
Beartooth will not have a right to request additional information from Southern, including
financial information not otherwise provided to the Board as the described Financial
Information, unless and until an event triggering Southern’s compliance with paragraphs
7 or 11 of the Exit Agreement should occur (“Triggering Event”), it being recognized that
Southern is no longer a member of Southern, thus, it is not entitled to participate in the
receipt of all information from and for the company which might otherwise be received
by a member thereof.
iv.
The parties agree that the financial information filed with the Montana bankruptcy court
for the monthly operating reports of Southern, as long as the same are being filed, will
not be considered to be confidential information as that information becomes part of the
public record upon its filing through the electronic filing system of the court (the “Filed
information made public or
Information”). In addition to Filed Information, any financial
provided to any party or individual not subject to a duty of confidentiality or not party to
an express agreement of confidentiality will not be considered confidential information,
provided, however, that information provided by Southern to its lenders or to the HGS
Holding Trust will not be considered to be public, not confidential information (the
“Public Information”).
v.
All information, including the Financial Information, received by Beartooth from
Southern other than the Public Information, will be deemed to be confidential except
Southern will not be required to so mark or otherwise note the same on any document or
information relating thereto. Upon Beartooth’s receipt of the Financial Information, or
any other information other than the Public Information that may be later provided to
Beartooth to comply with a Triggering Event, Beartooth covenants and agrees that it will
only divulge the same to its directors, managers, staff, and financial and legal advisors.
Without limiting the restriction and confidentiality accorded to such information as stated
herein, Beartooth covenants that it will not divulge any portion or all of the information
provided to it by Southern, except for the Public Information, to the general public, the
media, its own members, or to any other person or entity not specifically described above
as a permitted party for receipt of such information.
vi.
Without varying the terms of the Exit Agreement between Southern and its Members,
including Beartooth, Southern agrees that it will continue to provide updated information
to Beartooth regarding the Standard Large Interconnector Agreement between Southern
and NorthWestern Energy (“LGIA Agreement”). Unless stated otherwise in a
transmission letter to Beartooth by Southern, information pertaining to the LGIA
Agreement will be deemed to be confidential and shall be subject to the requirements and
restrictions set forth in Subsection A.v. above; provided, however, that any information
relating to the LGIA Agreement that is made public by a party other than Beartooth or is
provided by Southern to any party other than Southern’s lenders or to the HGS Holding
Trust or NorthWestern Energy or is provided to an individual not subject to a duty of
confidentiality or not party to an express agreement of confidentiality will not be
considered confidential information. Without limiting the nature of the foregoing, any
written submission by Southern or NorthWestern Energy to the Federal Energy
Regulation Commission will not be deemed to be confidential.
B.
Further Effect. The parties hereto will take such other steps and execute such other
agreements as may be necessary to effectuate the terms of this Agreement.
C.
Enforcement. Any violation of this Agreement may be enforced by injunctive relief, in
addition to any other remedy available at law.
D.
General Matters. This Agreement will inure to the benefit of, and will be binding upon,
the parties hereto and their respective successors and assigns. The parties hereto agree that this
Agreement constitutes their entire Agreement regarding the matters stated herein, and that there are no
other writings or agreements or understandings, oral or written, between the parties hereto regarding the
matters stated herein, except as recited and/or contemplated herein; provided, however, that nothing
stated herein will be deemed to amended, modify or terminate the rights, duties and obligations of the
parties under the Exit Agreement. No amendment of this Agreement will be valid unless in writing and
signed by the parties hereto. Captions or headings in this Agreement are for convenience only and will
not be deemed to limit, construe, affect or alter the meaning, scope or intent of the provisions thereof.
The Recitals set forth in the preamble hereto are a material part hereof and are hereby incorporated
herein. If any term or provision of this Agreement or the application thereof to any person or
circumstance will to any extent be held invalid or unenforceable by any court of competent jurisdiction,
such invalidity will not affect other provisions of this Agreement or the applications thereof which can
be given effect without the invalid provision or application, and to this end, the parties hereto agree that
Board Book
February 2016
Page 13
the provisions of this Agreement are and will be severable. In the event of BEC
a material
violation
of this
Agreement, the party not in violation will be entitled to the payment by the party in violation of its
attorney fees and costs incurred in all enforcement and actions related to the preservation of the
protections provided by this Agreement.
Dated the year and date stated above.
Southern Montana Electric Generation
and Transmission Cooperative, Inc.
By:________________________
David Dover
Its: President
Beartooth Electric Generation and
Transmission Cooperative, Inc.
By: _______________________
_______________
Its: __________
According to the Paperwork Reduction Act of 1995, an agency may not conduct or sponsor, and a person is not required to respond to a
collection of information unless it displays a valid OMB control number. The valid OMB control number for this intbrmation collection is
0572-0031. The time required to complete this information collection is estimated to average 15 minutes per response, including the time for
reviewing instructions, searching existing data sources, gathering and maintaining the data needed, and completing and reviewing the
collection of information.
U.S. Department of Agriculture
Rural Development Utilities Programs
CERTIFICATE OF AUTHORITY TO SUBMIT OR GRANT ACCESS TO DATA
INSTRUCTIONS-Submit one copy to the Rural Development Utilities Programs headquarters and one copy to the GFR
In accordance with the requirements of the Rural Utilities Service, an agency delivering the U.S.
Department of Agriculture Rural Development Utilities Programs, herein after referred to as the Agency,
and by resolution, attached hereto, of the board of directors or other managing body
(the "Board" of Beartooth Electric Cooperative, Inc.
("the Borrower")
BORROWER'S NAME
1306 North Broadway Ave. PO Box 1110 Red Lodge, MT 59068
locatedffi------------------------------------------BORROWER'S ADDRESS
26
which resolution was adopted by a quorum of the Board, held on January
the Board hereby authorizes the officer or manager whose name, title, and USDA eAuthentication ID
appear below (Certifier), to certify and submit the data requested on the following Agency data
collections. Furthermore, said resolution authorizes the following employee whose name, title, and
eAuthentication ID appear below (Security Administrator), to give, as appropriate, other employees,
officers, or contractors access to the Borrower's data on the USDA Rural Development Data Collection
System, subject to the terms of the attached instructions, for the purpose of completing the required data
collection indicated below:
(Check All That Apply)
Form No. (if applicable)
1m
D
D
D
TITLE
7
Financial and Statistical Report (Electric- Distribution)
12
Operating Report (Electric - Generation)
--
Operating Report for Broadband Borrowers
--
Operating Report for Telecommunications Borrowers
This certification of authority shall remain in force until the Agency has been notified of, and
has acknowledged to the Board, its rescinding of the attached resolution.
Certifier
General Manager
TITLE
James R. Webb
NAME (TYPE OR PRINT)
Security Administrator
CFO
eAuthentication ID
Wade E. Hirschi
TITLE
NAME (TYPE OR PRINT)
eAuthentication I D
January 26, 2016
DATE
ROUP Form 674 (03-06)
SECRETARY'S CERTIFICATE
I,
Richard Nolan
do hereby certifY that: I am the Secretary of
Beartooth Electric Cooperative. Inc.
(hereinafter the "Corporation;") that the following are
true and correct copies of resolutions duly adopted by the Board of Directors of the Corporation at the
[regular/special] meeting held
January 26 , 2016
, and entered in the minute book of the
Corporation; that the meeting was duly and regularly called and held in accordance with the bylaws of the
Corporation; and that none of the following resolutions has been rescinded or modified:
RESOLUTIONS
I. RESOLVED that
James R. Webb , the [Manager/President) of the
Corporation, be the Certifier on behalf of the Corporation, who shall be responsible for
submitting and certifYing to the Rural Utilities Service, an agency of the United States
Department of Agriculture delivering Rural Development Utilities Programs, any and all
data required by ROUP Form 674;
2.
RESOLVED that
Wade E. Hirschi
(insert name), the
[position] of the Corporation, be the Security Administrator on behalf of the
Corporation, who shall give access to the Corporation's data, as appropriate, to other
employees, officers, or contractors of the Corporation, for the purpose of complying with
ROUP Form 674; and
CFO
3. RESOLVED that both shall comply with the Instructions for ROUP Form 674
in regard to use of the government's data collection system.
I FURTHER CERTIFY THAT each member of the Board of Directors of the Corporation was
furnished with notice of said meeting in compliance with the bylaws of the Corporation.
IN WITNESS WHEREOF I have hereunto set my hand and affixed the seal of the Corporation
this _ ;,:26"'t,_h
day of
January
, 20.!§_.
(Corporate Seal)
RESOLUTION AUTHORIZING
THE Write-off of 2015
Doubtful Accounts
WHEREAS, Beartooth Electric Cooperative,Inc. staff have exhausted the normal collection
procedures for some of our past due accounts as of the end of 2015. and
WHEREAS, Beartooth Electric Cooperative's book of record contained $24,640.45 of
uncollectable accounts as of December 31, 2015.
BE IT RESOLVED, that Beartooth Electric Cooperative,Inc. elects to offset doubtful accounts
of $24,640.45 against the Cooperative' Accumulated Provision for Uncollectable Accounts.
CERTIFICATE OF SECRETARY
I, Richard Nolan, certify that I am Secretary of the Board of Trustees and that the above is a true
excerpt from the minutes of a regular board meeting of the Board of Trustees Of Beartooth Electric
Cooperative, Inc., held on the 26th day of January 2016 at which a quorum was present and the
above portion of the minutes has not been modified nor rescinded.
IN WITNESS WHEREOF, I have set my hand and affixed the seal of Beartooth Electric Cooperative,
Inc. this 26th day of January, 2016.
(Seal)
BEARTOOTH ELECTRIC COOPERATIVE, INC.
PROPOSED AMOUNT TO BE WRITTEN OFF
2015
PROPOSED
$
$
$
$
24,640.45
15,885.79
9,847.51
23,098.01
$
21,834.54
$
15,190.08
$
$
$
13,200.00
13,200.00
37,910.30
Proposed 2015 Write offs on Inactive Accounts (38 Accounts)
Unretired Capital Credits available to offset write off
2011 Write offs on Inactive Accounts (16 Accounts)
(12.9% of2012 Write offs were collected)
Accrued in 2015 for write offs
Budgeted Accrued in 2016 for write offs
12/31/15 Balance for Accumulated Provision Uncollectable Accounts
An Outside collection agency will be utilized to continue collection effort.
Communications Committee
Members of the communications committee met on February 8th to discuss the coming challenge of
informing members about BEC’s future. Present were Arleen Boyd, Bill Hand, Deb Thomas, and Dick
Nolan. Board members, Dan Dutton and Laurie Beers, were also present. Jim Webb joined by video
conference.
Jim discussed the details and timing of the proposed merger between Lower Valley and Fall River, which
will represent a huge communications challenge because of Fall River’s bylaw requirement that 2/3 of
its membership approve the merger.
Jim also discussed the potential merger of BEC with Lower Valley and Fall River. If that effort goes
forward, it will need a coordinated, professional communications effort, first to get the attention of
members who have busy lives, and second, to inform them about the future options for the three coops collectively and individually. To manage that effort, Jim has budgeted sufficient funds for Banik to
provide professional communications support.
In discussing the communications effort ahead, Jim made the important point that the requirement for
information by members should be viewed as a bell curve. On one end of the curve are those who pay
little or no attention and on the other, are those who want lots of details. In the middle are the majority
of members who have busy lives and will not spend the time to read lengthy, detailed articles.
Communicating successfully with them will require short, concise, and visually appealing explanations of
future options. Jim conceded, however, that we’ll need to provide extensive detail to those who want it.
For BEC several communication challenges are ahead. Members will need to understand why joining
Northwest Energy is not a good option even though it may appear to be so by members living next to
neighbors who get their power from Northwest. The analysis of operating as a standalone when
completed will also need to be explained. Finally, the merger with Lower Valley and Fall River, though
presumably offering lower operating costs and thus the potential for lower rates, will need to explain
the compromises members will have to accept as the smallest partner in a three-way merger. In the
latter regard, Bill Hand eloquently pointed out the important governance and cultural issues BEC will
need to consider in deciding whether to merge with Lower Valley and Fall River.
Jim concluded the meeting by thanking committee members for a good discussion of the challenges
ahead and looked forward to the committees’ input as the communications with members goes
forward.
BEC Board Report – February 2016
SME will meet February 24 for what is anticipated to be its last meeting before
dissolution. The financials have been examined, the required reporting done, and
notice given. The BEC share of the remaining cash from proceeds of the sale of SME
property adjacent to the Highwood Generating Station site has been allocated to the
SME member systems. BEC will receive approximately $79,000 by the end of the
month.
Legal – The attorney engaged by Southern Montana Electric and Beartooth Electric
has filed a motion with FERC in response to the NWE request to have the Large
Generation Connection Agreement (LGIA) terminated without payment of any
refund to the customer (Southern) that provided financing for the transmission
connection facilities. The motion asks to intervene in the now pending decision
with arguments that payment be made to Southern as required in the LGAI
agreement. We will receive updates but do not expect any decision for at least two
months.
Risk Management Committee met February 18 – Present: Judith Gregori, David
Alberi, Frank Willett, Dick Nolan, Roxie Melton, Laurie Beers. Jim Webb, Wade
Hirschi and Gail Tabone from EES on the phone.
Gail Tabone talked the group through the EES COSA update and explained the three
scenarios for implementing the approved 10% rate reduction fairly across the
customer classes at Beartooth. The update focused largely on the irrigation
members identified in the analysis as lower than other classes in percentage of their
payment toward the cost of providing them service.
Based on input from Gail Tabone and Manager Jim Webb the committee
recommended Scenario 2 with whatever modifications management recommends
after incorporating input from the meeting scheduled with irrigators for February
22 before the board meeting.
The committee discussed the proposed outline of the ongoing analysis of the
remaining BEC alternatives: standalone Beartooth co-op and Beartooth merged with
Lower Valley Electric or consolidated into a larger cooperative with LVE and Fall
River Electric. Objective: Analyze benefits and risks (operations and governance) of
Beartooth standalone and Beartooth merged with Lower Valley or consolidated in new
cooperative formed by LVE, FREC, and BEC
After discussion input from Bill Pascoe, Arleen and Jim Webb the committee
discussed engaging a consultant to review the process and provide an independent
perspective to review the analysis process and help weigh evaluation of the
alternatives. The committee recommends that the board approve that Bill Pascoe,
Jim Webb, and Arleen Boyd evaluate candidates and engage a consultant with fees to
exceed $20,000 only after further discussion with the board.
###
After three years of work with NorthWestern Energy examining whether an
acquisition by NWE would deliver benefits for ratepayers at both utilities we have
concluded that, despite many advantages that could come with service from NWE,
the numbers show that BEC members will be better off for at least the next seven to
ten years as members of Beartooth Electric Cooperative. The work with NWE has
been focused and fair and we appreciate NorthWestern’s time and cooperation.
The following points are conclusions contributing to our decision.
Requirements for NorthWestern Energy to serve Beartooth members
 Acquisition is required for NWE to serve BEC.
 Formal negotiations for a purchase (and power supply) are legal only after
termination of any contract with a Generation and Transmission Cooperative
(the BEC contract with Southern).
 If NWE purchased BEC assets Beartooth area customers benefitting from the
assets (poles, wires, substations, etc.) would be required to return the NWE
investment (principal and interest) over time. IOU ratepayers do not pay for
investments without benefit to them.
 Two-thirds of all BEC members must vote to approve an acquisition, which
requires dissolution of the cooperative (MCA 35-18-405)
History of Acquisition discussions between NWE and BEC
 BEC approached NorthWestern Energy about serving BEC members in 2012.
 BEC financial condition 2012-2014 -- high wholesale power rates, enormous
write-offs of Highwood Generating Station “investments,” uncertainty due to
the bankruptcy of Southern Montana Electric Generation and Transmission
Cooperative.
 BEC commissioned appraisal of assets.
 BEC identified benefits associated with NWE, including size, quality
management, long-term power supply strategy, PSC oversight
 NWE and BEC worked together to examine financial models for potential
acquisition.
 NorthWestern prepared a financial model of a potential purchase by NWE of
BEC assets ($17 million) in November 2015.
 The model calculated repayment of the NWE acquisition investment over 10
years through a monthly surcharge for BEC members.
 While NorthWestern’s average rate for its customers is currently lower than
the Beartooth rate, when the rate for BEC members as NWE customers adds
the acquisition surcharge it becomes approximately 35% higher than the
average rate for other NWE customers.
 The BEC financial situation improved significantly by 2016 with the Southern
exit, payment of the BEC share of the HGS debt, contracts for power at a very
attractive fixed rate for seven years, and significantly reduced operating
costs.
 With implementation of the planned BEC rate decreases for 2016 members’
rates would be lower at BEC than their rates would be as customers of NWE

paying the acquisition surcharge – 8.8% lower after the approved 10%
revenue decrease and 15.2 % lower after an additional 5% decrease.
BEC financial projections show that this discrepancy would likely continue
for ten years, certainly for seven years.
According to the Paperwork Reduction Act of 1995, an agency may not conduct or sponsor, and a person is not required to respond to, a collection of information unless it displays a valid OMB
control number. The valid OMB control number for this information collection is 0572-0032. The time required to complete this information collection is estimated to average 15 hours per
response, including the time for reviewing instructions, searching existing data sources, gathering and maintaining the data needed, and completing and reviewing the collection of information.
UNITED STATES DEPARTMENT OF AGRICULTURE
RURAL UTILITIES SERVICE
BORROWER DESIGNATION
MT0019
PERIOD ENDED
FINANCIAL AND OPERATING REPORT
ELECTRIC DISTRIBUTION
January 31, 2016
BORROWER NAME
INSTRUCTIONS-See help in the online application
BEARTOOTH ELEC COOP INC
This information is analyzed and used to determine the submitter's financial situation and feasibility for loans and guarantees. You are required by contract
and applicable regulations to provide the information. The information is subject to the Freedom of Information Act (5 U.S.C. 552)
CERTIFICATION
We recognize that statements contained herein concern a matter within the jurisdiction of an agency of the United States and the making
of a false, fictitious or fraudulent statement may render the maker subject to prosecution under Title 18, United States Code Section 1001.
We hereby certify that the entries in this report are in accordance with the accounts and other records of the
system and reflect the status of the system to the best of our knowledge and belief.
ALL INSURANCE REQUIRED BY PART 1788 OF 7 CFR CHAPTER XVII, RUS, WAS IN FORCE DURING THE REPORTING
PERIOD AND RENEWALS HAVE BEEN OBTAINED FOR ALL POLICIES.
DURING THE PERIOD COVERED BY THIS REPORT PURSUANT TO PART 1718 OF 7 CFR CHAPTER XVII
(check one of the following)
___X___
All of the obligations under the RUS loan documents have been fulfilled in all material respects.
_________
There has been a default in the fulfillment of the obligations under the RUS loan documents. Said default(s) is/are
specifically described in Part D of this report.
2/18/2016
DRAFT
BRAD PROPHET, ACCOUNTANT
DATE
2/18/2016
DRAFT
JIM WEBB, LOWER VALLEY ENERGY PRESIDENT/CEO
ITEM
PART A. STATEMENT OF OPERATIONS
YEAR-TO-DATE
LAST YEAR
THIS YEAR
1. Operating Revenue and Patronage Capital...................................
2. Power Production Expense...............................................................
3. Cost of Purchased Power...............................................................
4.
5.
6.
7.
8.
9.
10.
11.
12.
13.
14.
15.
16.
17.
18.
19.
20.
21.
22.
23.
24.
25.
26.
27.
28.
29.
Transmission Expense.....................................................................
Regional Marketing Expense…………………………………………..
Distribution Expense-Operation......................................................
Distribution Expense-Maintenance.................................................
Consumer Accounts Expense..........................................................
Customer Service and Informational Expense...............................
Sales Expense.................................................................................
Administrative and General Expense...........................................
Total Operation and Maintenance Expense (2 thru 11).................
Depreciation and Amortization Expense........................................
Tax Expense - Property and Gross Receipts..................................
Tax Expense - Other.........................................................................
Interest on Long-Term Debt............................................................
Interest Charged to Construction - Credit......................................
Interest Expense - Other....................................................................
Other Deductions.............................................................................
Total Cost of Electric Service (12 thru 19)....................................
Patronage Capital and Operating Margins (1 minus 20)...............
Non Operating Margins - Interest...................................................
Allowance for Funds Used During Construction..............................
Income (Loss) from Equity Investments........................................
Non Operating Margins - Other...................................................
Generation and Transmission Capital Credits.............................
Other Capital Credits and Patronage Dividends.............................
Extraordinary Items..........................................................................
Patronage Capital or Margins (21 thru 28).....................................
RUS Financial and Operating Report Electric Distribution
DATE
(a)
1,022,663
0
514,260
374
0
68,982
23,185
22,727
3,145
2,211
85,847
720,731
79,161
0
170
50,143
0
1,348
150
851,703
170,960
1,011
0
0
(456)
0
0
0
171,515
BUDGET
THIS MONTH
(b)
(c)
(d)
959,740
1,027,600
959,740
0
0
0
310,000
330,165
310,000
365
372
365
0
0
0
60,576
68,584
60,576
12,462
27,173
12,462
17,308
19,758
17,308
4,550
6,778
4,550
1,116
900
1,116
79,319
90,405
79,319
485,696
544,135
485,696
79,949
81,250
79,949
0
0
0
234
234
234
54,537
52,855
54,537
0
0
0
85
1,667
85
150
150
150
620,651
680,291
620,651
339,089
347,309
339,089
1,023
1,084
1,023
0
0
0
0
0
0
518
148
518
0
0
0
59
0
59
0
0
0
340,689
348,541
340,689
Rev 2010
USDA - RUS
MT0019
PERIOD ENDED
FINANCIAL AND OPERATING REPORT
ELECTRIC DISTRIBUTION
January 31, 2016
PART B. DATA ON TRANSMISSION AND DISTRIBUTION PLANT
YEAR-TO-DATE
YEAR-TO-DATE
LAST YEAR
THIS YEAR
ITEM
LAST YEAR
THIS YEAR
ITEM
(a)
1. New Services Connected
(b)
(a)
1 5. Miles Transmission
4
(b)
15.21
15.21
1,307.25
1,310.54
475.44
478.10
1,797.90
1,803.85
6. Miles Distribution2. Services Retired
2
0
6,601
6,461
Overhead
7. Miles Distribution-
3. Total Services in Place
4. Idle Services
Underground
8.Total Miles Energized
(Exclude Seasonal)
775
460 (5 + 6 + 7)
PART C. BALANCE SHEET
ASSETS AND OTHER DEBITS
LIABILITIES AND OTHER CREDITS
1. Total Utility Plant in Service.................................................
30,213,839 30. Memberships...................................................................
2. Construction Work in Progress...........................................
382,639
3. Total Utility Plant (1 + 2).......................................................
30,596,478
4. Accum. Provision for Depreciation and Amort.................. 13,831,665
5. Net Utility Plant (3 - 4)...........................................................
16,764,813
6. Non-Utility Property - Net....................................................
0
7. Investments In Subsidiary Companies...............................
0
8. Invest. In Assoc. Org. - Patronage Capital.......................
361,429
9. Invest. In Assoc. Org. - Other - General Funds.................
0
10. Invest. In Assoc. Org. - Other -Nongeneral Funds..........
292,282
11. Investments In Economic Development Projects............
0
12. Other Investments..............................................................
0
13. Special Funds....................................................................
0
14. Total Other Property and Investments (6 thru 13)........
653,711
15. Cash - General Funds....................................................... 247,074
16. Cash - Construction Fund - Trustee..................................
1
17. Special Deposits................................................................
0
18. Temporary Investments....................................................
18,554
19. Notes Receivable (Net)......................................................
0
20. Accounts Receivable - Sales of Energy (Net).................. 1,218,869
21. Accounts Receivable - Other (Net)...................................
9,702
22. Renewable Energy Credits..........................................
0
23. Materials and Supplies - Electric and Other....................
338,410
24. Prepayments....................................................................... 264,009
25. Other Current and Accrued Assets...................................
3,809
26. Total Current and Accrued Assets (15 thru 25)............... 2,100,428
27. Regulatory Assets..............................................................1,162,045
28. Other Deferred Debits.........................................................
68,371
29. Total Assets and Other Debits (5+14+26 thru 28)............20,749,368
0
4,980,449
32. Operating Margins - Prior Years......................................
969,740
33. Operating Margins - Current Year.....................................
339,089
34. Non-Operating Margins...................................................
161,999
35. Other Margins and Equities.............................................
131,142
36. Total Margins and Equities (30 thru 35)............................. 6,582,419
37. Long-Term Debt - RUS (Net)..........................................
498,297
38. Long-Term Debt - FFB - RUS Guaranteed......................... 7,083,066
39. Long-Term Debt - Other - RUS Guaranteed.......................
0
40. Long-Term Debt - Other (Net).............................................4,599,824
41. Long-Term Debt - RUS - Econ. Devel. (Net)........................
0
42. Payments-Unapplied
0
43. Total Long-Term Debt (37 thru 41-42)...................................
12,181,187
44. Obligations Under Capital Leases-Noncurrent.................................... 0
45. Accumulated Operating Provisions...................................
0
31. Patronage Capital.............................................................
and Asset Retirement Obligations
46. Total Other Noncurrent Liabilities (44+45).........................
0
47. Notes Payable.................................................................. 1,200,000
48. Accounts Payable...........................................................
398,785
49. Consumers Deposits........................................................
58,715
50. Current Maturities Long-Term Debt...................................
0
51. Current Maturities Long-Term Debt-Ec.Dev......................
0
52. Current Maturities Capital Leases.....................................
0
53. Other Current and Accrued Liabilities................................
309,371
54. Total Current and Accrued Liabilities (47 thru 53)................1,966,871
55. Regulatory Liabilities......................................................
0
56. Other Deferred Credits...................................................
18,891
57. Total Liabilities and Other Credits
(36+43+46+54 thru 56).......................................................
20,749,368
PART D. NOTES TO FINANCIAL STATEMENTS
THIS SPACE IS PROVIDED FOR IMPORTANT DISCLOSURE NOTES TO THE FINANCIAL STATEMENT CONTAINED IN THIS REPORT.
(A SEPARATE SHEET MAY BE USED IF ADDITIONAL SPACE IS NEEDED.)
CFC Line of Credit Balance as of 1/31/2016 = $1,200,000
Contributions-In-Aid of Construction received through 1/31/16 totaled approximately $15,811,159
RUS Financial and Operating Report Electric Distribution
BEC Board Book February 2016 Page 26 Rev 2010
USDA - RUS
FINANCIAL AND STATISTICAL REPORT
MT019
USDA - RUS
FINANCIAL AND STATISTICAL REPORT
MT019
PERIOD ENDED
PERIOD ENDED
RUS USE ONLY
INSTRUCTIONS - See RUS Bulletin 1717B-2
INSTRUCTIONS - See RUS Bulletin 1717B-2
December 31, 2016
RUS USE ONLY
December 31, 2016
PART R. POWER REQUIREMENTS DATA BASE
CONSUMER
SALES
AND
REVENUE DATA
CLASSIFICATION
JANUARY
FEBRUARY
MARCH
APRIL
MAY
JUNE
(a)
(b)
(c)
(d)
(e)
(f)
a. No.Consumers Served
1. Residential Sales
(excluding seasonal)
b. kWh Sold
c. Revenue
$
LINE
ITEM
NUMBER
Seasonal
1000 kVa or Less
Over 10000 kVa
0
0
a.#Consumers
0
0
0
0
0
0
0
0
1. Residential Sales b. kWh Sold
0
0
0
0
0
843,822.05
$
-
$
-
$
-
$
-
$
-
(excluding seasonal)
Highway Lighting
c. Revenue
Seasonal
0
0
0
$
-
b. kWh Sold
$
b. kWh Sold
$
0
0
$
-
0
0
$
-
0
0
$
-
0
0
$
-
0
$
373
0
0
0
0
0
0
0
0
0
0
$
-
$
-
$
-
$
-
$
-
1
0
0
0
0
0
0
0
0
0
0
$
-
$
-
$
-
$
-
$
-
5. Comm. And Ind.
Over 10000 kVa
-
$
-
$
-
0
$
-
5,529,282
$
843,822.05
0
0
0
$
-
0
0
$
-
0
0
$
-
0
0
$
-
0
$
-
0
0
0
0
0
0
0
0
0
0
$
-
$
-
$
-
$
-
$
-
0
0
0
0
0
b. kWh Sold
0
0
0
0
0
c. Revenue
$
-
$
-
$
-
$
-
$
-
-
$
-
0
0
0
$
a.#Consumers
-
0
$
b. kWh Sold
$
0
-
780,823
$
106,137.58
$
7,827.01
0
0
$
-
74,100
a.#Consumers
b. kWh Sold
6. Public Street and
c. Revenue
Highway Lighting
b. kWh Sold
0
c. Revenue
$
-
$
-
$
-
$
-
a.#Consumers
b. kWh Sold
Public Auth.
c. Revenue
Public Auth.
c. Revenue
0
a.#Consumers
b. kWh Sold
8. Sales for Resale - b. kWh Sold
c. Revenue
RUS Borrowers
0
c. Revenue
a.#Consumers
b. kWh Sold
9. Sales for Resale - b. kWh Sold
c. Revenue
Others
10. TOTAL No. Consumers (lines 1a - 9a)
11. TOTAL kWh Sold (lines 1b - 9b)
5,890
0
0
0
0
0
6,384,205
0
0
0
0
0
12. TOTAL Revenue Received From Sales of
Electric Energy (lines 1c - 9c)
$
a.#Consumers
1000 kVa or Less c. Revenue
74,100
7,827.01
4. Comm. And Ind.
7. Other Sales to
Others
-
0
b. kWh Sold
c. Revenue
780,823
106,137.58
3. Irrigation Sales
-
b. kWh Sold
9. Sales for Resale -
$
c. Revenue
a.#Consumers
RUS Borrowers
-
a.#Consumers
7. Other Sales to
8. Sales for Resale -
$
0
2. Residential Sales - b. kWh Sold
6. Public Street and
(Contains a thru l)
0
b. kWh Sold
c. Revenue
TOTAL
(l)
0
5. Comm. And Ind.
DECEMBER
(k)
0
c. Revenue
c. Revenue
NOVEMBER
(j)
0
4. Comm. And Ind.
OCTOBER
(i)
0
b. kWh Sold
c. Revenue
SEPTEMBER
(h)
5,516
3. Irrigation Sales
AUGUST
(g)
5,529,282
2. Residential Sales -
JULY
0
c. Revenue
10. TOTAL No. Consumers (lines 1a - 9a)
0
0
0
0
0
0
11. TOTAL kWh Sold (lines 1b - 9b)
0
0
0
0
0
0
6,384,205
12. TOTAL Revenue Received From Sales of
$
957,786.64
$
-
$
-
$
-
$
-
$
-
Electric Energy (lines 1c - 9c)
$
-
$
-
$
-
$
-
$
-
$
-
$
957,786.64
13. Transmission Revenue
13. Transmission Revenue
$
-
14. Other Electric Revenue
14. Other Electric Revenue
$
-
15. kWh - Own Use
16. TOTAL kWh Purchased
43,958
0
0
0
0
0
15. kWh - Own Use
0
0
0
0
0
0
43,958
7,404,269
0
0
0
0
0
16. TOTAL kWh Purchased
0
0
0
0
0
0
7,404,269
17. TOTAL kWh Generated
18. Cost of Purchases and Generation
0
$
310,000.00
19. Interchange - kWh - Net
20. Peak - Sum All kWh Input (Metered)
o Coincident
x Non-Coincident
RUS Form 7 (Rev. 6-94)
Line Losses = (16.-11.-15.)./16. %
Line Losses less Transmission Losses
0
13,353
tbd
tbd
0
$
-
0
$
0
-
0
$
0
-
0
$
0
-
0
$
0
-
17. TOTAL kWh Generated
18. Cost of Purchases and Generation$
0
-
0
$
-
0
$
-
0
$
-
0
$
-
0
$
-
0
$
310,000.00
0
19. Interchange - kWh - Net
0
0
0
0
0
0
0
20. Peak - Sum All kWh Input (Metered)
o Coincident x Non-Coincident
0
0
0
0
0
0
13,353
#DIV/0!
100.00%
#DIV/0!
100.00%
0
0
0
0
0
#DIV/0!
100.00%
#DIV/0!
100.00%
#DIV/0!
100.00%
#DIV/0!
100.00%
#DIV/0!
100.00%
#DIV/0!
#DIV/0!
#DIV/0!
#DIV/0!
#DIV/0!
#DIV/0!
#DIV/0!
#DIV/0!
13.18%
-14.67%
COMPARATIVE BALANCE SHEET
January 31, 2016
CURRENT YEAR
LAST YEAR
DIFFERENCE
ASSETS AND OTHER DEBITS
----------------------TOTAL UTILITY PLANT IN SERVICE
CONSTRUCTION WORK IN PROGRESS
TOTAL UTILITY PLANT
$30,213,839.51
$29,729,369.68
382,638.58
101,958.38
$484,469.83
280,680.20
$30,596,478.09
$29,831,328.06
$765,150.03
-------------------- -------------------- -------------------ACCUMULATED PROVISION FOR DEPRECIATION
-$13,831,665.12
-$12,962,248.36
-$869,416.76
-------------------- -------------------- -------------------NET UTILITY PLANT
$16,764,812.97
$16,869,079.70
-$104,266.73
-------------------- -------------------- -------------------INVEST. IN ASSOC. ORG.-PATRONAGE CAPITAL
$361,429.30
$333,874.36
$27,554.94
INVEST. IN ASSOC. ORG. NON-GENERAL FUNDS
292,282.34
293,730.08
-1,447.74
-------------------- -------------------- -------------------TOTAL OTHER PROPERTY & INVESTMENTS
$653,711.64
$627,604.44
$26,107.20
-------------------- -------------------- -------------------CASH - GENERAL FUNDS
CASH - CONSTRUCTION FUND - TRUSTEE
TEMPORARY INVESTMENTS
$247,073.93
$145,105.96
1.00
1.00
$101,967.97
0.00
18,553.63
70,012.78
-51,459.15
-------------------- -------------------- -------------------TOTAL CASH ON HAND
NOTES RECEIVABLE
ACCOUNTS RECEIVABLE SALES OF ENERGY (NET
ACCOUNTS RECEIVABLE - OTHER (NET)
$265,628.56
$215,119.74
$0.00
$0.00
$50,508.82
$0.00
1,218,869.08
1,299,901.33
-81,032.25
9,701.95
12,108.70
-2,406.75
MATERIAL AND SUPPLIES - ELECTRIC & OTHER
338,410.43
309,284.79
29,125.64
PREPAYMENTS
264,008.97
200,982.43
63,026.54
3,808.59
3,808.59
0.00
OTHER CURRRENT AND ACCRUED ASSETS
-------------------- -------------------- -------------------TOTAL CURRENT AND ACCRUED ASSETS
$2,100,427.58
$2,041,205.58
$59,222.00
-------------------- -------------------- -------------------OTHER DEFERRED DEBITS
$1,230,415.65
$122,427.31
$1,107,988.34
-------------------- -------------------- -------------------TOTAL ASSETS AND OTHER DEBITS
$20,749,367.84
$19,660,317.03
$1,089,050.81
==================== ==================== ====================
LIABILITIES AND OTHER CREDITS
----------------------------MEMBERSHIPS
$0.00
$0.00
$0.00
4,980,448.98
4,437,810.14
542,638.84
OPERATING MARGINS- PRIOR YEAR
969,739.23
510,581.19
459,158.04
OPERATING MARGINS- CURRENT YEAR
339,088.90
170,960.00
168,128.90
NON-OPERATING MARGINS
161,999.43
145,364.36
16,638.07
OTHER MARGINS AND EQUITIES
131,142.09
123,132.10
8,009.99
PATRONAGE CAPITAL
-------------------- -------------------- -------------------TOTAL MARGINS AND EQUITIES
$6,582,418.63
5,387,847.79
1,194,570.84
-------------------- -------------------- -------------------LONG-TERM DEBT -RUS (NET)
$498,297.36
$522,220.79
-$23,923.43
LONG-TERM DEBT-FFB-RUS GUARANTEED
7,083,066.11
7,251,144.86
-168,078.75
OTHER LONG-TERM DEBT (NET)
4,599,823.93
4,677,234.83
-77,410.90
-------------------- -------------------- -------------------TOTAL LONG-TERM DEBT
$12,181,187.40
$12,450,600.48
-$269,413.08
-------------------- -------------------- -------------------NOTES PAYABLE
ACCOUNTS PAYABLE
CONSUMERS DEPOSITS
OTHER CURRENT AND ACCRUED LIABILITIES
$1,200,000.00
$725,000.00
$475,000.00
398,785.08
663,979.87
-265,194.79
58,715.00
71,570.00
-12,855.00
309,370.70
343,628.72
-34,258.02
-------------------- -------------------- -------------------TOTAL CURRENT AND ACCRUED LIABILITIES
$1,966,870.78
$1,804,178.59
$162,692.19
-------------------- -------------------- -------------------OTHER DEFERRED CREDITS
$18,891.03
$17,690.17
$1,200.86
-------------------- -------------------- -------------------TOTAL LIABILITIES AND OTHER CREDITS
$20,749,367.84
$19,660,317.03
$1,089,050.81
==================== ==================== ====================
Financial Information January 2016
Revenue & Cost of Power - 2016
$1,200,000
Operating Expenses - 2016
change
$250,000
YTD
YTD
JANUARY
$1,000,000
JANUARY
$200,000
$800,000
$150,000
$600,000
$100,000
$400,000
$50,000
$200,000
$$-
Actual
Budget
2015
Actual
Budget
2015
Operating Revenue
$959,740
$1,027,600
$1,022,663
$959,740
$1,027,600
$1,022,663
Cost of Power
$310,000
$330,165
$514,260
$310,000
$330,165
$514,260
Actual
Budget
2015
Actual
Budget
2015
Admin. & Gen.
$79,319
$90,405
$85,847
$79,319
$90,405
$85,847
Cust. Serv.
$22,975
$27,436
$28,083
$22,975
$27,436
$28,083
Oper & Maint
$73,403
$96,129
$92,540
$73,403
$96,129
$92,540
YTD Cumulative Margins - 2016
2015
Budget
Monthly Margins - 2016
Actual
2015
$3,000,000
Budget
Actual
$400,000
$350,000
$2,500,000
$300,000
$2,000,000
$250,000
$200,000
$1,500,000
$150,000
$1,000,000
$100,000
$50,000
$500,000
$$-
$(50,000)
Jan
Feb
Mar
Apr
May
Jun
Jul
Aug
Sept
Oct
Nov
Dec
Jan
Feb
Mar
Apr
May
Jun
Jul
Aug
Sept
Oct
Nov
Dec
Financial Information Through January 2016
Monthly kWh Sales
2016
2015
Delinquent Listing - Payments received thru
02/15/2016 - Over 30 Days
2014
7,000,000
Customer Information System
Payments Received
Balance Due
$160,000
6,500,000
$140,000
change d
$120,000
6,000,000
$100,000
5,500,000
$80,000
$60,000
5,000,000
$40,000
4,500,000
$20,000
4,000,000
$Jan
Jan 2016
January Aged Past Due Accounts Receivable
2016
Ratios: December 31, 2015 and January 31, 2015 & 2016
YE
2015
2015
Quick Ratio *
Current Ratio
$300,000.00
Equity as a % of Net Utility Plant**
$250,000.00
Equity as a % of Total Assets
Net TIER ***
DSC ****
Jan-Sept 15Oct 14-Dec14
$200,000.00
Cash & Investments
Receivables
719257.7 234820.8
$150,000.00
437917.9 150497.7
579696.8
582413.5 176335.9
$100,000.00
1037024
$50,000.00
2.33
2.79
906045
$-
30 Days
60 Days
90 Days
Total Past Due
Feb
Less Payables
Liquidity
Other Payments Due:
RUS Loan Payment
FFB Loan Payment
CFC Loan Payment
1.81
0.93 to 1
37.14%
30.33%
2.79
2.11
YTD
2015
1.42
1.13 to 1
31.94%
27.40%
4.42
1.69
248,135
1,216,367
1,464,502
(446,216)
1,018,286
215,120
1,312,010
1,527,130
(663,980)
863,150
Due
2/29/2016
3/31/2016
4/30/2016
$
4,126
116,550
185,000
YTD
2016
1.95
1.07 to 1
39.26%
31.72%
13.81
2.24
265,629
1,228,571
1,494,200
(398,785)
1,095,415
*Quick ratio=measures the ability of a company to use its cash and short-term/
demand deposits to extinguish current liabilities immediately
**Target - 40%
***Net TIER=Times Interest Earned Ratio (TIER) means the ratio of a
borrower’s net income (after taxes) plus interest expense,
all divided by interest expense
****DSC=Debt Service Coverage is a measurement to generate sufficient funds
to cover principal and interest of long-term debt on an annual basis
DSC Target = 1.5
SIMPLIFIED CASH FLOW
As of January 31, 2016
Black = creates cash
Red = uses cash
Thousands (000s)
CASH FROM OPERATIONS
Margins
Add back Depreciation
Cost from retirement of assets (poles, etc.)
Cash from Operations
Uses of Cash in Operations
Change in Ending Receivable Balance
Change in Ending Inventory Balance
Change in Ending Prepaid Expense Balance
Reduction of (payment for) other Current Assets
Change in Ending Accounts Payable Balance
Accrual/(payment) of other Current Liabilities
Cash created by (used in) operations
Actual
$
Budget
340.7
80.0
17.4
438.1
$
-
(12.2)
(23.2)
(175.8)
(0.8)
(47.4)
2.9
(256.5)
-
(54.1)
(54.1)
-
(118.9)
(4.1)
(1.0)
14.0
17.5
-
Cash and Investments beginning (per Budget)**
Change in cash
Cash and Investments ending
100.0
17.5
117.5
-
Payroll
Benefits
Total
78.2
38.5
116.7
-
Capital Spending
Utility Plant
Construction Work in Progress
Other Property & Investments
Cash (used in) Capital Spending
Net increase (pay down) of debt
Draw of Short-Term Line of Credit
Payment of Short-Term Line of Credit
Draw for Construction from Other Lender
Other creation (use of) cash
Regulatory Asset
Change in cash from all activities
*Note: Cash Flow Budget was forecasted on a quarterly basis. January 2016 is the first month of first quarter (March 2016).
**Note 2: Actual Cash and Investments beginning 1/1/16 was 248.1
Accounts Payable
Check Register
1/16/2016 To 02/15/2016
Bank Account: 1 - GENERAL FUND
Check /
Date
Tran
1053
Listed
1053
1/20/2016
1054
1/20/2016
1055
1/20/2016
1056
1/21/2016
1057
1/21/2016
1058
1/25/2016
1059
1/27/2016
1060
1/27/2016
1061
1/27/2016
1062
1/28/2016
1063
1/28/2016
1064
1/29/2016
1065
1/29/2016
1066
1/29/2016
1067
1/29/2016
1068
2/3/2016
1069
2/3/2016
1070
2/3/2016
1071
2/3/2016
1072
2/10/2016
1073
2/1/2016
56514
1/22/2016
56515
1/22/2016
56516
1/22/2016
56517
1/22/2016
56518
1/22/2016
56519
1/22/2016
56520
1/22/2016
56521
1/22/2016
56522
1/29/2016
56523
1/29/2016
56524
1/29/2016
56525
1/29/2016
56526
1/29/2016
56527
1/29/2016
56528
1/29/2016
56529
1/29/2016
56530
1/29/2016
56531
1/29/2016
56532
1/29/2016
56533
1/29/2016
56534
1/29/2016
56535
1/29/2016
56536
1/29/2016
56537
1/29/2016
56538
1/29/2016
56539
1/29/2016
56540
1/29/2016
56541
1/29/2016
56542
1/29/2016
56543
1/29/2016
56544
2/5/2016
56545
2/5/2016
56546
2/5/2016
56547
2/5/2016
56548
2/5/2016
56549
2/5/2016
56550
2/5/2016
Pmt
Type
Vendor Name
WIRE
WIRE
WIRE
WIRE
WIRE
WIRE
WIRE
WIRE
WIRE
WIRE
WIRE
WIRE
WIRE
WIRE
WIRE
WIRE
WIRE
WIRE
WIRE
WIRE
WIRE
CHK
CHK
CHK
CHK
CHK
CHK
CHK
CHK
CHK
CHK
CHK
CHK
CHK
CHK
CHK
CHK
CHK
CHK
CHK
CHK
CHK
CHK
CHK
CHK
CHK
CHK
CHK
CHK
CHK
CHK
CHK
CHK
CHK
CHK
CHK
CHK
CHK
PAYROLL
TWIN EAGLE RESOURCE MANAGEMENT, LLC
SOUTHERN MONTANA ELECTRIC G&T COOP., INC
NRECA
NRECA
INTERNAL REVENUE SERVICE
NEOPOST USA INC
NORTHWESTERN ENERGY
DEPARTMENT OF ENERGY
NATIONAL RURAL ELEC COOP ASSOC
NATL RURAL ELECTRIC COOP ASSN
A/P Clearing
USDA RURAL DEVELOPMENT
NATIONAL RURAL UTILITES
NATIONAL RURAL UTILITES
PAYROLL
INTERNAL REVENUE SERVICE
NRECA
NRECA
US BANK
NATL RURAL ELECTRIC COOP ASSC
AMERICA FAMILY LIFE INSURANCE CO
ANIXTER POWER SOLUTIONS, LLC
CARBON COUNTY TREASURER
LOCAL UNION 44
LOWER VALLEY ENERGY
MONTANA DEPT OF REVENUE
TITAN MACHINERY INC.
STILLWATER GROUP LLC THE
BANIK COMMUNICATIONS INC.
BIG SKY LINEN SUPPLY
CSV
ENERGY LABORATORIES INC
FELT, MARTIN, FRAZIER & WELDON, P.C.
HDR ENGINEERING INC
JACO ANALYTICAL, INC.
LANDIS+GYR TECHNOLOGIES LLC
MAILING SYSTEMS PLUS MORE
MCFARLAND CASCADE HOLDINGS
MONTANA ELECTRIC COOP ASSN., INC.
MORRISON MAIERLE SYSTEMS CORP
MOTOR POWER EQUIPMENT COMPANY
NISC
ONE CALL LOCATORS, LTD
QUILL CORPORATION
RESPOND SYSTEMS
KAAREN S ROBBINS
TERRELL'S OFFICE MACHINES, INC.
SAMUEL P WALKOWIAK
WYOMING DEPT OF REVENUE
DAVID REYNOLDS
JAMES R AVENT
TRAVIS BARKER
BASIN ELECTRIC POWER COOP
GUY C BEHRENT
CENEX
CENTURYLINK
WILLIAM R COLGROVE
Amount
Reference
PAYROLL
POWER BILL
SHARE OF G & A
401k PENSION PLAN
401k LOAN PAYROLL DEDUCTION PAYMENT
FEDERAL WITHHELD TAXES & FICA
POSTAGE
POWER BILL
POWER BILL
R & S PLAN
401k PLANS ANNUAL EMPLOYER EXPENSE
Clear $0 account vendors
USDA - RUS PRINCIPAL & INTEREST
CFC PRINCIPAL & INTEREST
LOC PAYMENT
PAYROLL
FEDERAL WITHHELD TAXES & FICA
401k PENSION PLAN
401k LOAN REPAYMENT PAYROLL DEDUCTION
MONTHLY CORP CC STATEMENT
GROUP INSURANCE 1ST QTR 2016 ADJUSTMENTS
PAYROLL DEDUCTION INSURANCE
MATERIAL
VARIOUS TRUCK REGISTRATIONS
UNION DUES PAYROLL DEDUCTION
MANAGEMENT AGREEMENT
MT WITHHELD TAXES
TRUCK REPAIRS
INACTIVE REFUND
COMMUNICATION SERVICES & NETWORK MAINTENANCE
RL & COLUMBUS RUG CLEANING
FUEL
COLUMBUS SUMP TESTED (2 DATES)
ATTORNEY STATEMENT
ENGINEERING CONSULTING
TWO OIL SAMPLES
LONG DISTANCE FEES
MAILING MACHINE SUPPLIES
88 POLES
GENERAL & SAFETY DUES, RM & N. BROADCAST
NETWORK MAINTENANCE & HOSTED EMAIL
UNIT #4 PART
AMS, ASP & H/W SUPPORT
BILLABLE TICKETS - MT & WY
OFFICE SUPPLIES
RL & COLUMBUS FIRST AID SUPPLIES
COMMUNICATIONS CONSULTING
BIZHUB MAINTENANCE
CDL PORTION REIMBURSEMENT
WY SALES & USE TAX
CHECK REWRITE
TELEPHONE REIMBURSEMENT
NISC VPN ACCESS
FUEL
LONG DISTANCE
23,816.26
241,394.00
9,363.61
4,929.90
312.31
10,007.34
500.00
44,715.78
18,422.10
35,561.76
4,737.00
4,126.32
185,010.56
4,045.73
23,834.08
9,818.28
4,391.77
312.31
7,333.93
42.30
404.48
17,964.03
1,348.23
928.28
49,322.85
1,773.00
48.45
70.05
551.40
114.08
941.71
920.00
3,624.00
846.53
22.00
141.08
23.04
27,104.00
7,881.33
1,289.00
62.01
7,569.71
1,928.41
96.43
492.39
2,943.59
118.47
25.00
2,848.46
758.37
184.92
184.92
39.90
184.92
1,268.81
32.69
184.92
Check Register
1/16/2016 To 02/15/2016
Bank Account: 1 - GENERAL FUND
Check /
Date
Tran
1053
56551
2/5/2016
56552
2/5/2016
56553
2/5/2016
56554
2/5/2016
56555
2/5/2016
56556
2/5/2016
56557
2/5/2016
56558
2/5/2016
56559
2/5/2016
56560
2/5/2016
56561
2/5/2016
56562
2/5/2016
56563
2/5/2016
56564
2/5/2016
56565
2/5/2016
56566
2/5/2016
56567
2/5/2016
56568
2/5/2016
56569
2/5/2016
56570
2/5/2016
56571
2/12/2016
56572
2/12/2016
56573
2/12/2016
56574
2/12/2016
56575
2/12/2016
56576
2/12/2016
56577
2/12/2016
56578
2/12/2016
56579
2/12/2016
56580
2/12/2016
56581
2/12/2016
56582
2/12/2016
56583
2/12/2016
56584
2/12/2016
56585
2/12/2016
56586
2/12/2016
56587
2/12/2016
56588
2/12/2016
56589
2/12/2016
56590
2/12/2016
56591
2/12/2016
56592
2/12/2016
56593
2/12/2016
56594
2/12/2016
56595
2/12/2016
56596
2/12/2016
56597
2/12/2016
56598
2/12/2016
56599
2/12/2016
56600
2/12/2016
56601
2/12/2016
Pmt
Type
CHK
CHK
CHK
CHK
CHK
CHK
CHK
CHK
CHK
CHK
CHK
CHK
CHK
CHK
CHK
CHK
CHK
CHK
CHK
CHK
CHK
CHK
CHK
CHK
CHK
CHK
CHK
CHK
CHK
CHK
CHK
CHK
CHK
CHK
CHK
CHK
CHK
CHK
CHK
CHK
CHK
CHK
CHK
CHK
CHK
CHK
CHK
CHK
CHK
CHK
CHK
Vendor Name
Amount
Reference
ERIC L ELTON
FARMER BROS CO
LEE G HAUGE
HI MOUNTAIN RECREATION
HORIZON COMMUNICATIONS
JULIE A LINDGREN
LINECO
METLIFE
MONTANA DEPT OF REVENUE
MONTANA MOBILE
NATIONAL RURAL ELEC COOP ASSOC
P D Q JANITORIAL SERVICE INC
DONALD W PARKS
JAMES PIHL
QUILL CORPORATION
REYNOLDS REAL ESTATE SERVICES, INC
RONNING AUTO TRUCK TRACTOR SERVICE
CONSTANCE S TEACHOUT
SAMUEL P WALKOWIAK
JAKE D WRIGHT
CARBON COUNTY TREASURER
CENTURYLINK
CHARTER COMMUNICATIONS
CIERRACOM SYSTEMS
CITY OF RED LODGE
CREDIT ASSOCIATES, INC.
CSV
ECOLAB PEST ELIM DIV
ERIC L ELTON
WILLIAM P. HANLEY
KENS I-90 REPAIR
MAID IN COLUMBUS LLC
MONTANA RAIL LINK
NEMONT
RICHARD T NOLAN
NORTHWEST PUBLIC POWER ASSOC
ONE SMART CONFERENCE, INC.
ONLINE INFORMATION SERVICES
REPUBLIC SERVICES #892
STILLWATER COUNTY TREASURER
UTILITIES UNDERGROUND LOCATE
VERIZON WIRELESS
WY RURAL ELECTRIC ASSOCIATION
WYOMING DEPT OF REVENUE
STEPHANIE EDWARDS
MARY M GATES
MORRIS A GIESICK
J O HASH JR
REBECCA J KANE
MOUNTAIN HANDYMAN LLC
LISA D WOOD
COFFEE
2015 CAN-AM OUTLANDER ATV & TRACKS
CALL CENTER
OTHER MEETINGS & EXPENSE REIMBURSEMENTS
LINEMAN INSURANCE
PAYROLL DEDUCTION INSURANCE
MT WITHHELD TAXES
MONTHLY SHREDDING SERVICE
SECTION 125 ADMIN FEE
RL OFFICE CLEANING SERVICE
COPY PAPER
LVE APT
UNIT #8 MOUNT TIRES & OTHER SERVICES
MILEAGE REIMBURSEMENT
UNIT #56 REGISTRATION
RL OFFICE, COLUMBUS SHOP & SUBSTATIONS
LVE APT CABLE
INCOMING 800 CALLS
MONTHLY WATER & SEWER
COLLECTION FEES
FUEL
RL & COLUMBUS PEST CONTROL
UNIT #17 BACKHOE CHAINS REIMBURSEMENT
DOT TESTING
UNIT #2 BRAKE CONTROLLER
CLEANING COLUMBUS SHOP
ANNUAL O/H WIRELINE XING - REED POINT
FOUR SUBSTATIONS
BOARD FEE, MILEAGE, EM & OTHER MEETINGS
2016 ANNUAL DUES
CONFERENCE CALLS
MONTHLY EXCHANGE SERVICE
GARBAGE DISPOSAL
UNIT #7 REGISTRATION
BILLABLE TICKETS
CELL PHONES & COLUMBUS INTERNET
2016 WREA MEMBER DUES
WY SALES & USE TAX
INACTIVE REFUND
Estate Retirements
09/22/2010 CHECK REWRITE
Estate Retirements
Estate Retirements
INACTIVE REFUND
INACTIVE REFUND
Total Payments for Bank Account - 1 : (109)
Total Voids for Bank Account - 1 : (0)
Total for Bank Account - 1 : (109)
184.92
49.21
184.92
13,293.98
87.79
2,153.76
10,272.96
25.00
1,740.00
45.00
22.50
920.00
184.92
184.92
90.93
1,200.00
618.00
31.34
184.92
184.92
349.92
1,270.47
63.25
601.62
59.60
341.95
634.30
170.26
120.00
95.00
959.00
200.00
100.00
259.04
1,103.44
5,091.42
32.89
8.10
174.10
200.25
48.67
179.47
1,000.00
2,895.32
10.34
2,016.27
27.68
1,101.49
807.79
155.90
185.26
818,839.59
818,839.59
First Interstate Bank - Checking
1/1/2016
2/1/2016
3/1/2016
414,213
5/1/2016
Totals
839,200
-
775,900
-
778,800
-
804,800
-
898,800
832,700
-
742,200
-
719,100
-
805,000
-
9,679,170
-
(49,154)
(24,282)
(48,498)
(52,000)
(28,000)
(46,916)
(78,000)
(42,000)
(52,416)
(52,000)
(28,000)
(46,916)
(52,000)
(28,000)
(46,916)
(52,000)
(28,000)
(46,916)
(52,000)
(28,000)
(46,916)
(78,000)
(42,000)
(52,416)
(52,000)
(28,000)
(12,013)
(52,000)
(28,000)
(12,013)
(52,000)
(28,000)
(12,013)
(52,000)
(28,000)
(12,013)
(673,154)
(360,282)
(435,965)
(4,126)
(185,011)
-
(4,126)
-
(4,126)
(116,560)
-
(4,126)
(185,011)
-
(4,126)
-
(4,126)
(116,560)
-
(4,126)
(185,011)
-
(4,126)
-
(4,126)
(116,560)
-
(4,126)
-
(4,126)
(185,011)
-
(4,126)
(116,560)
-
(49,516)
(740,042)
(466,238)
-
(42,545)
(76,252)
(32,374)
(140,131)
(313,895)
(49,323)
(2,114)
(10,273)
(268,047)
(326,647)
(48,000)
(1,809)
(10,273)
(119,548)
(284,403)
(48,000)
(2,042)
(42,545)
(149,860)
(272,043)
(6,192)
(48,000)
(2,010)
(10,273)
(194,350)
(236,424)
(110,202)
(48,000)
(2,180)
(10,273)
(196,927)
(237,579)
(48,000)
(2,090)
(42,545)
(268,977)
(241,386)
(48,000)
(2,042)
(10,273)
(265,094)
(282,439)
(48,000)
(2,102)
(10,273)
(203,085)
(258,078)
(48,000)
(2,065)
(42,545)
(203,484)
(227,156)
(6,316)
(48,000)
(1,933)
(10,273)
(141,905)
(227,863)
(112,406)
(48,000)
(1,631)
(10,273)
(224,691)
(258,373)
(200,000)
(48,000)
(1,819)
(252,364)
(76,252)
(32,374)
(2,376,097)
(3,166,286)
(235,116)
(200,000)
(577,323)
(23,837)
Total Payments
(967,704)
(785,819)
(757,368)
(836,703)
(732,471)
(742,470)
(919,004)
(784,450)
(734,200)
(625,574)
(823,228)
(955,855)
(9,664,847)
Ending Balance
172,432
414,213
521,245
523,741
567,170
603,499
489,296
603,646
702,146
818,772
714,644
563,789
563,789
1/31/2016
2/28/2016
3/31/2016
4/30/2016
5/31/2016
6/30/2016
7/31/2016
8/31/2016
9/30/2016
10/31/2016
11/30/2016
12/31/2016
66,279
72,246
72,246
72,246
72,246
72,246
72,246
72,246
72,246
72,246
72,246
72,246
66,279
(380,000)
-
-
-
-
-
-
-
-
-
-
-
(380,000)
-
702,146
12/1/2016
864,400
-
-
603,646
11/1/2016
1,027,600
-
-
489,296
10/1/2016
590,670
-
-
603,499
9/1/2016
Receipts
-
567,170
8/1/2016
380,000
(4,046)
-
523,741
7/1/2016
Transfers In
Transfers Out
-
521,245
6/1/2016
173,512
Payment
Payroll
Employees
Taxes
R&S/401k
Loans
RUS
CFC
FFB
FIB-LOC
Insurance
Group
General
WC
A/P
Power
Property Taxes
New Truck
LVE Mgmt
Other
172,432
4/1/2016
Beginning Balance
-
818,772
-
714,644
-
-
173,512
380,000
(4,046)
1st Bank
Beginning Balance
Transfers Out
Receipts
Ending Balance
385,967
-
-
-
-
-
-
-
-
-
-
-
385,967
72,246
72,246
72,246
72,246
72,246
72,246
72,246
72,246
72,246
72,246
72,246
72,246
72,246
4,090
16,414
28,114
38,414
52,214
64,514
81,114
101,414
121,814
148,214
171,914
183,614
4,090
-
-
-
-
-
-
-
-
-
-
-
-
First Interstate Bank - Savings
Beginning Balance
Transfers In
Transfers Out
-
12,325
11,700
10,300
13,800
12,300
16,600
20,300
20,400
26,400
23,700
11,700
10,300
Total Payments
-
-
-
-
-
-
-
-
-
-
-
-
Ending Balance
16,414
28,114
38,414
52,214
64,514
81,114
101,414
121,814
148,214
171,914
183,614
193,914
193,914
4,254
4,254
4,255
4,263
4,263
4,264
4,272
4,273
4,273
4,281
4,282
4,283
4,254
-
-
-
-
-
-
-
-
-
-
-
-
-
Receipts
189,825
-
All Other Accounts
Beginning Balance
Transfers In
Transfers Out
0
Receipts
1
8
1
1
8
1
1
8
1
1
8
37
Total Payments
-
-
-
-
-
-
-
-
-
-
-
-
-
Ending Balance
4,254
4,255
4,263
4,263
4,264
4,272
4,273
4,273
4,281
4,282
4,283
4,291
4,291
TOTAL ALL ACCOUNTS
$
265,346
$
518,828
$
636,168
$
652,465
$
708,194
$
761,132
$
667,229
$
801,980
$
926,887
$
1,067,214
$
974,787
$
834,240
CFC LOC
Beginning Balance
Transfers In (back to CFC)
Transfers Out (to BEC)
Ending Balance
Interest Paid on LOC
(1,204,046)
(1,200,000)
-
-
-
-
-
-
-
-
-
-
(1,204,046)
4,046
-
1,200,000
-
-
-
-
-
-
-
-
-
-
-
1,204,046
-
3,000
-
-
-
-
-
-
-
-
-
(1,200,000)
1/31/2016
-
2/29/2016
3/31/2016
4/30/2016
5/31/2016
6/30/2016
7/31/2016
8/31/2016
9/30/2016
-
3,000
BEC Board Book February
2016 Page
34
10/31/2016
11/30/2016
12/31/2016
Beartooth Electric Cooperative. Inc.
Summary of Attorney Fees
2016
General
Marsh
Mundorf Pratt
Felt, Martin, Frazier, et al
General
2016
Jan 2016
3,000.00
Policy Review
Lower Valley
SME G&T
Bankruptcy
Perkins Cole
Southern Exit Southern Exit Southern Exit
Negotiations Negotiations Negotiations
(estimated)
General
Monthly
Totals
Felt, Martin,
Frazier, et al
3,000.00
Bankruptcy
Monthly
Totals
-
Attorney AD&D
WY
Insurance/Other
Marsh Mundorf
Pratt
1.83
Monthly
3,001.83
MT and WY
MT and WY
2016 Budget
Monthly
2016 Budget
YTD
4,000.00
4,000.00
Feb 2016
-
-
-
4,000.00
8,000.00
Mar 2016
-
-
-
4,000.00
12,000.00
Apr 2016
-
-
-
4,000.00
16,000.00
May 2016
-
-
-
4,000.00
20,000.00
June 2016
-
-
-
4,000.00
24,000.00
July 2016
-
-
-
4,000.00
28,000.00
August 2016
-
-
-
4,000.00
32,000.00
Sept 2016
-
-
-
4,000.00
36,000.00
Oct 2016
-
-
-
4,000.00
40,000.00
Nov 2016
-
-
-
4,000.00
44,000.00
Dec 2016
-
-
-
4,000.00
48,000.00
2016
Attorney rates:
3,000.00
-
-
-
-
-
3,000.00
-
-
1.83
-
3,001.83
48,000.00
LRM = $235, MSS = $195
GENERAL MANAGER REPORT
February 23, 2016
Power Supply
I was able to have dinner at the NRECA Annual Meeting with John Wilkinson and
Murray Margolis from Morgan Stanley. I invited Bryan Case to join us so we could
update the Morgan Stanley folks regarding our potential three-way consolidation with
Lower Valley, Fall River and Beartooth. We discussed several interesting topics.
Morgan Stanley was the successful respondent to the BEC power supply request for
proposals (RFP) and will be delivering a five-year load following product to BEC starting
in October 2017. They have been very easy to work with and provided the best credit
terms. We discussed strategies to avoid a power supply cliff for BEC in seven years by
watching the market and cost averaging future power supply contracts when the market
looks favorable.
We found out that Morgan Stanley was one of the successful bidders to supply power to
BPA at Goshen in June when the Southeast Idaho Exchange expires. Goshen is the
substation that BPA uses to serve its six customers, including Lower Valley and Fall
River, in Southeast Idaho. That tells us that they can cost effectively deliver power to
Goshen which might make them a good candidate to serve future Tier 2 power needs for
Lower Valley and Fall River as the need arises. I am sure there will be several suppliers
we could make market purchases from for our Tier 2 needs but it is interesting to note
that Morgan Stanley will already have a presence at the Goshen Substation and we will
have a favorable credit relationship already developed with them through BEC.
Rate Reduction Strategy
The COSA was completed by EES and reviewed by the risk management committee on
February 18 and is included behind Tab 12. As indicated by the COSA, it appears that
our rates are under collecting from the irrigation class and over collecting from the small
commercial class. EES suggested three options for an overall 10% rate reduction:



Option 1:
o 10% decrease for all customer classes
Option 2:
o 10% decrease for Residential, Large Commercial and Industrial
o 12.7% decrease for Small Commercial Class
o 5% decrease for the Irrigation Class
Option 3:
o 10% decrease for Residential, Large Commercial and Industrial
o 15.2% decrease for Small Commercial Class
o 0% for irrigation
1
Wade prepared a spreadsheet showing the rate impacts for each option. The spreadsheet
is included behind Tab 12.
We have an informal meeting for irrigation customers set up for February 22 at 6:30 pm
at the BEC office in Red Lodge to discuss the COSA and to get feedback. After listening
to the irrigation customers we will have a recommendation for the board regarding which
rate reduction option to follow. Once the board selects an option we would like to make
the rate decrease effective on March 1, 2016. Remember, if things unfold financially as
outlined in the financial forecast we would like the board to consider another 5% rate
reduction in late August or early September.
2016 System Goals
We hope to establish the Operation Round-Up program as soon as it is approved by the
board. The required documents to establish the non-profit organization are included
behind Tab 14. Our goal is to have at least 200 customers participating in the program
by the end of the year. We look forward to your recommendations on who should be
invited to serve on the Operation Round-Up Board.
Meter Exchange
The result of changing all the meters on the Luther Substation to solid state electronic
Turtle Meters from the old electro-mechanical meters looks promising but not yet
conclusive. The last of the meters were changed out December 22, 2015. The monthly
line losses after transmission for Luther were as follows:
September 2015
October 2015
November 2015
December 2015
January 2016
9.5%
8.3%
3.2%
3.6%
5.7%
Timing issues with the billing can skew losses from month-to-month. To broaden our
study, we are going to change out 800 meters out of the Columbus Substation. We are
hoping to prove that a significant portion of our line loss is caused by metering and that
the savings could finance a new more accurate system such as TWACS. We are
estimating that to fully install a new TWACS System would cost $1.7 million to $2
million. The TWACS system would also allow us to provide daily and hourly use
information to our customers along with other valuable tools. The Turtle System is two
years out of production so obsolescence is also going to push us to make a change within
the next few years.
2
Consolidation Update
We will have an hour consolidation update meeting at 11:00 am during the LVE Board
Meeting. Included behind Tab16 are an agenda, an updated Memorandum of
Understanding (MOU), and draft timeline.
Since our visit, the PNGC staff has been working on an early buy-out number for Fall
River. Their goal is to keep the other PNGC members financially whole from the loss of
Fall River leaving the organization. We are guessing that the net present value of the
buyout could be between $5 million and $8 million. Fall River has about $1.4 million in
equity which they should be able to use to offset some of the exit fee. The PNGC Board
may not make a final decision of the fate of Fall River’s membership until the May 10
PNGC Board Meeting. The original timeline was to complete the member vote at the
June 23 Lower Valley Annual Meeting, and consolidate on January 1, 2017. With the
PNGC delay, it looks like we will have to push the member vote back to September 22
and the consolidation back to April or May 2017.
Three BEC board members plan to attend the Fall River Board Meeting on February 22
in Ashton, Idaho to get to know them better. The risk management committee met on
February 18 and will recommend a process to help the BEC Board make a decision on
whether or not to participate in the consolidation. BEC recently completed an evaluation
of a buy-out model from NorthWestern Energy, and determined it did not appear to be in
their members’ best interest. In March Gary Saleba will combine the Lower Valley/Fall
River consolidation study with the Lower Valley/Beartooth study done a year ago to
evaluate the benefits of Beartooth joining the consolidation. We will also produce a
spreadsheet comparing Beartooth as a stand-alone entity to a merged entity with Lower
Valley. The board may want to have an independent third-party review the three studies
and advise them on the decision making process.
Brian Tanabe and I worked with the communication committee to develop a
communication plan and timeline (see Tab 13) to help inform and educate BEC members
about their options.
NREC International Program
NRECA International provides people in developing countries access to safe, reliable and
affordable electricity. Sam Walkowiak, the BEC Red Lodge Foreman, has helped in
three countries, Peru, Chile, and Haiti in the past few years. Last year he helped rebuild
overhead distribution line in Haiti for three weeks. We are excited to announce that we
are sending three linemen in early April to Haiti for three weeks. Sam Walkowiak is
going again this year along with Tim Jenkins from Fall River Electric and Clay Skinner
from Lower Valley Energy. NRECA International pays for all the travel costs and
expenses. The three cooperatives will donate part of the labor costs while the three
linemen will use some vacation time.
3
We asked for volunteers and these three linemen willing stepped up and accepted the
assignment. Sam has been taking the lead in pulling the trip together. All three men are
going because of their belief in helping other people less fortunate than us. We believe
this is a great opportunity for these three linemen from our three cooperatives to build a
friendship that will be a bridge in linking our utilities together while at the same time
serving others.
Wounded Warriors
Marty Tomlin, our Beartooth Electric Staking Engineer, is involved in an amazing
program that helps wounded warriors. Operation 2nd Chance is a program started several
years ago by one of Beartooth Electric’s own members, Hank Toole. Wounded warriors
from throughout the country are given a chance come to Montana on an all expense paid
hunting trip. BEC donated three days of Marty’s time to participate in the program.
Donations provide the money to fly these warriors in, house and feed them, take them
hunting, fly them home and then send the game meat and mounts home to them all at no
cost to them. The hunting guides, the equipment and most of the services are donated by
local co-op and community members. For example, Marty, Dr. Bill George, Brent
Nearpass, Bill Mytton and 3 of the Red Rooster Ranch Spraying crew are all volunteer
hunting guides. The actual hunt is for four days. Several ranches are key to the
program’s success by opening up their lands to the hunters. Red Rooster Ranch Spraying
and several others donate the use of their side by side and 4-wheeler ATVs. Game
processing and even the taxidermy work is all donated.
This year four wounded warriors came and hunted. All four got their deer and elk. The
volunteers help the warriors in every way imaginable to be successful in their hunting
even carrying the warriors piggyback at times to get them into position to have a chance
at bagging their big game. These wonderful volunteers go well beyond comfort and
generosity in giving these warriors an experience that may well be a once in a lifetime
opportunity.
4
02/12/2016
Beartooth Electric Employee 401k Goal and Compensation Program
The 2016 BEC 401K System Goals are as follow:
1. There will be no lost-time accidents
2. We will score an 80% or better on three random safety inspections
3. At least 2 hazard identifications will be reported by the employees each month
4. Reduce System distribution line losses by at least 1.5%
5. At least 70% of the members will rate their overall satisfaction With BEC a 7 or better on a scale
of 1-10.
6. The total number of outages will be less than the average of the past three years
7. The year-end expenses will be less than 105% of the budgeted amounts
8. We will complete 100% of the system maintenance plan
9. Overtime hours will be less than the average of the past three years
10. We will implement an “Operation Round Up” program and sign up at least 200 members
There is a spreadsheet attached with the data that we have to date. The spreadsheet format is going to
show the cumulative total each month. Tracking on many of the goals rely on reports and are noted on
the spreadsheet. There currently have been no lost time accidents. Bill and Eric did a random
inspection this month and the crew scored 95%, the one item that they were marked down on was the
lack of a physical barricade for the bucket truck. One has been ordered for future safety. The February
Hazard Reports have been received and corrected. There are been some operational changes that we
are hoping will lower the line losses. As of December the Luther substation, where we changed meters
out, showed a drop from 8.2% to 5.7% for a decrease of 2.5%. The Operation Roundup program is still
in the implementation stage, but we are happy to say that two of the employees have already signed up
to contribute to the funds.
BEC 2016 401K Goal
Update
No Lost Time
Accidents
Score 80% or
Better on 3
Random
Inspections
At Least 2 Hazard
Reports by
Employees
Reduce System
Line Losses by at
least 1.5%
70% of Members
Rates BEC a 7 or
Better
Total # of Outages
will be less than 3
year average
Jan
Feb
8%
17%
0%
33%
8%
Report
lags 30
days
17%
Mar
Apr
May
Jun
Jul
Aug
Sep
Oct
Nov
Dec
Survey not Survey not
done yet done yet
8%
Waiting
for Month
End
Waiting
Waiting
for
for
Year End Expenses
January
February
less that 105% of
Budget
Financials Financials
Will Complete
100% of System
Maintenance Plan
8%
17%
Overtime will be
less than past 3
year average
8%
Waiting
for Month
End
Implement
Operation Round
Up program and
sign up 200
members
20%
25%
“Beartooth Electric is my
energy cooperative.”
RALPH LEWIS / Reed Point, Montana
your cooperative newsletter
March 2016
Welcome Members
James R. Webb
BEC General Manager
Lower Valley Energy,
President/CEO
Consolidation comes into the Conversation
All over the West, small rural electric co-ops are looking
for ways to cut costs and find stability in a changing energy
marketplace. Beartooth is not alone.
For nearly 3 decades, Lower Valley Energy (LVE) and
a neighboring co-op have talked about the benefits of
joining forces. Fall River Electric Cooperative (FREC) is headquartered
in Ashton, Idaho and serves about 16,000 connections in eastern
Idaho, western Wyoming and southwest Montana. In January, a joint
announcement proposed consolidation. The boards of the two co-ops are
working on terms. If all concerns are addressed, a vote could be scheduled as
early as June and take effect January 1, 2017.
What does this mean for Beartooth?
BEC is being managed under an agreement with LVE, signed in 2014. If the
consolidation goes through, there will be no LVE—it will be part of a brand
new co-op combined with FREC.
LVE
FREC
The BEC/LVE management agreement provides an option to merge. We’ve
been looking ahead to the possibility that BEC would become part of LVE—
an option that may go away.
BEC has been invited to consider consolidation; BEC, LVE and FREC would
become one new and larger cooperative. LVE and FREC have identified
cost savings for their members of almost $4 million a year. There could be
substantial benefits for BEC as well. Your board has stepped up efforts
to learn more about the potential effects and get information out to the
members.
BEC?
The decision will be yours. Either a merger or consolidation requires
approval by two-thirds of the members who vote. But it appears that a
pivotal point in Beartooth’s future is coming faster than we expected.
3
SERVING 4,400 OWNERS. AND COUNTLESS FUTURE GENERATIONS.
D.C. BOUND
Congratulations to BEC’s 2016 Youth
Tour candidates—Solomon Arno
from Rapelje High School and Chloe
Flynn from Absarokee High School.
The Electric Cooperative Youth Tour
has brought high school students to
Washington, D.C. every June since the late
1950s. Students apply and are selected for
this program by their local electric cooperative.
Solomon Arno
Rapelje High School
2016
This year BEC received seven applications for this
prestigious program. Thank you to all applicants for this year’s
Youth Tour competition including Solomon Arno, Destiny Ayers,
Dylan Blodgett, Nynah Marie Bryant, Chloe Flynn, Sidney Markle
and John Schladweiler.
The National Rural Electric Cooperative Association (NRECA)
hosts 1,700 future energy leaders in Washington, D.C. for the annual Electric Cooperative Youth Tour. Some of the nation’s best and
brightest high school students will meet with their elected officials
on Capitol Hill, train in leadership and form a network with their
peers from across the nation.
Chloe Flynn
Absarokee High School
“The annual Youth Tour is a vital opportunity for youth living in coop territory to visit our nation’s capital and learn about the importance of electric cooperatives,” said NRECA CEO Jo Ann Emerson.
“Our youth are our future leaders, politicians and educators, and
the Youth Tour is a strong reminder each year of how bright that
future will be.”
Your
trusted
source
for
power.
And
I n formation.
4
Did
you
know?
In 1977,
Apple’s CEO
Tim Cook was
a Youth Tour
candidate for
his Alabama
hometown
electric
cooperative,
Baldwin EMC.
Monthly Base Charge
(billed over 6 months)
-----------------------------------$121.80
kWh Energy Charge
(5% decrease from 2015)
------------------------------------$0.064439
kW Demand Irrigation
(no change in kW charge)
--------------------------------------$12.40
I rrigation
Season
April 1
through
September 30
Beartooth Alternatives:
Board Examines—Members Decide
Alternatives—With management input and Risk
Management Committee investigation the Beartooth
board continues to examine potential business
alternatives for BEC. If the board decides to
recommend change from an independent co-op to
a merged or consolidated cooperative, approval by
two-thirds of the members who vote will be required.
Montana law (MCA 35-18-405) requires two-thirds
of the entire membership to vote for approval of
an acquisition, which requires the existing co-op
to dissolve. We have reported on comparing the
standalone Beartooth option to both an acquisition by
NorthWestern Energy (NWE) and a merger with Lower
Valley Electric (LVE). A consolidation that would
create a new cooperative including Lower Valley,
Beartooth, and Fall River Electric may be considered.
purchased assets serve only
Beartooth area customers
NorthWestern would be
required to recover the
amount of the purchase from
those receiving the benefit
through a monthly charge to
Beartooth area ratepayers for
10 years. With the current
Arleen Boyd
BEC rate decreases
Risk Management Committee Chair
Trustee District 2
the calculated monthly
Submitted 2 8 2016
surcharge would push
rates with NWE well above what BEC ratepayers would
pay an independent Beartooth – also approximately
35 percent higher than what other NWE ratepayers
would pay. We are confirming the final analysis with
NorthWestern and will post the results for members.
In 2012 with our
power supplier,
Our analysis
Southern Montana
With the current BEC rate decreases the
examined
Electric, in
numbers with
calculated monthly surcharge would push rates
bankruptcy and
consideration
with NWE well above what BEC ratepayers would
proposals before the
of non-rate
pay an independent Beartooth.
court that could have
advantages
pushed Beartooth
and challenges
to bankruptcy, we asked NorthWestern Energy if it
including the advantages of co-op local control versus
was possible for them to provide power for Beartooth.
size, long-term power supply, and Public Service
Knowing that an acquisition would be required for
Commission oversight on the investor owned utility
NWE legally to serve our members, BEC and NWE
side. Similar financial and other factors will drive the
looked long and hard at whether an acquisition could
evaluation of our remaining potential alternatives.
deliver benefits for consumers at both utilities. No
formal proposal was legally possible until Beartooth
Risk management—The risk management committee
could sever its contract with Southern, but we
examined the financial projections for BEC and
examined the numbers for a potential acquisition
recommended a 10 percent revenue decrease and
carefully over the past three years.
evaluation of a subsequent reduction this year. The
committee also recommended a seven-year term
With our exit from Southern, favorable wholesale
for the loan to cover the $1.2 million BEC prepaid
power contracts fixed for seven years, and reduced
Southern on exit for the BEC share of the remaining
operations costs we are in a solid financial position
HGS debt, which BEC would have paid in 2016 as a
and are implementing rate decreases. Cost reductions
Southern member. With a low interest rate and seven
resulting from our management agreement with Lower
years to complete payment, BEC improves its
Valley Electric are expected to provide additional
cash position and sets the retirement of the loan
savings and potential for rate relief.
BEC Members are seeing small improvements in
their bills and with the approved reduction the trend
NorthWestern Energy and Beartooth used an NWE
at BEC is positive and sustainable. This new trend
acquisition model to evaluate the acquisition cost and
follows 16 rate increases levied by Southern Montana
potential impact on ratepayers. To acquire Beartooth
Electric between 2004 and 2011 that caused
NWE would pay BEC for its assets based appraisals.
Beartooth to raise rates 115% from 2006 through
The payment would allow BEC to retire its debt
2011. We are heading in an entirely new direction.
Continued on page 6
and meet other financial obligations. Because the
“
“
5
PRESIDENT’S Message
Well, it seems the ground hog
did not see his shadow this
winter so we are supposed to
Roxie Melton
expect an early spring. I hope
President
it’s correct. I was told that a
Trustee District 2
no shadow sighting has only
occurred 18 times since the tradition began. Many
of our ranchers are beginning/ending the calving
season and to have the weather on their side would
ideal. Calving in 0 to sub-zero temperatures can be
a daunting challenge.
I have some interesting if not exciting news about
our friends at Lower Valley Energy. It seems that
Lower Valley and Fall River have been talking about
merging for a number of years. They have finally
decided that the time is right and are going forward.
At the same time, an offer has been extended to
Beartooth to join the merger. This is a couple of
years earlier that we had originally planned but this
kind of opportunity does not come around very
often.
The benefits of having a large membership are
numerous. First the membership would increase
to almost 49,000 and both Lower Valley and Fall
River provide propane and natural gas service to
about 10,000 customers. With a large membership
they can offer many energy conservation initiatives,
renewable energy and hydroelectric power
production among other things. In 2014 Lower
Valley Energy had the enviable position of having
the lowest residential electric rates of all electric
cooperatives in the country. We would still bring
our power contracts with us, but it is encouraging to
know we would be joining a very financially sound
group.
You may be wondering which name the merged
cooperative will be using. The answer is none of the
above. This merger will also necessitate the need for
a new name.
In the next few months I will be meeting with
the other two board presidents and the coop
management teams. We will be going over the
financials and discussing the service advantages of
a merger. Once we get all the information together,
we will have a few town hall meetings to explain
the value of this endeavor. Later, we will need a
favorable vote by two thirds of the voting members
to approve the proposal. I am excited about this
proposition but a little saddened about leaving the
Beartooth name of 77 years behind.
Until next time, thank you for your support and
encouragement in our efforts to bring you affordable
and reliable electric service.
NEXT BEC BOARD MEETING
March 29, 2016 | 11:30 AM
Beartooth Electric Office
Red Lodge, MT
Continued from page 5
Southern and SME— Southern created SME in 2008 to assume responsibility for building the Highwood
Generation Station (HGS) and later returned that responsibility to Southern. On January 20 the SME board voted
to secure professional advice on any remaining financial requirements for corporate dissolution. The Certificate of
Election to Dissolve has been filed and official notice of dissolution has been placed in newspapers as required by
law. SME anticipates closure by the end of February 2016.
It is easy to confuse Southern Montana Electric Generation and Transmission Cooperative with SME Electric Cooperative. Their history, membership, finances, and logos overlap. Southern has no announced intention to close
although it has made public the expectation that it will complete payment of the Highwood Generating Station debt
by the fourth quarter of 2016.
We inform you to generate input and improve decision-making. Please contact any board member or our manager,
Jim Webb, for information—or with suggestions.
6
BEARTOOTH BULLETIN
March 2016
SERVING 4,400 OWNERS. THE FUTURE IS BRIGHT AT BEC.
By James R. Webb, BEC General Manager, Lower Valley Energy President/CEO
For nearly 3 decades, Lower Valley Energy (LVE) and a neighboring co-op have
talked about the benefits of joining forces. Fall River Electric Cooperative
(FREC) is headquartered in Ashton, Idaho and serves about 16,000 connections in eastern
Idaho, western Wyoming and southwest Montana. In January, a joint announcement proposed
consolidation. The boards of the two co-ops are working on terms. If all concerns are addressed, a
vote could be scheduled as early as June and take effect January 1, 2017.
LVE
FREC
What does this mean for Beartooth?
The BEC/LVE management agreement provides an option to merge. We’ve been looking ahead to the
possibility that BEC would become part of LVE—an option that may go away.
BEC has been invited to consider consolidation; BEC, LVE and FREC would become one new and
larger cooperative. LVE and FREC have identified cost savings for their members of almost $4
million a year. There could be substantial benefits for BEC as well. Your board has stepped up efforts
to learn more about the potential effects and get information out to the members.
BEC?
The decision will be yours ...Read my entire article at www.beartoothelectric.com...
PRESIDENT’s Message
OPTIONS FOR THE FUTURE
•
•
•
•
Remain an independent co-op
Acquisition by another utility
Merge with another co-op
Consolidation with other co-ops
It’s your decision. A merger or a
consolidation requires approval by two-thirds
of the members who vote. Montana law
(MCA 35-18-405) requires two-thirds of the
entire membership to vote for approval of an
acquisition.
MAR
29
BEC Regular Board Meeting
BEC Office—Red Lodge, MT
11:30 AM
By Roxie Melton, Trustee District 2, BEC Board President
I have some interesting if not exciting news about our
friends at Lower Valley Energy. It seems that Lower Valley
and Fall River have been talking about merging for a number
of years. They have finally decided that the time is right
and are going forward. At the same time, an offer has been
extended to Beartooth to join the merger. This is a couple of
years earlier than we had originally planned but this kind of
opportunity does not come around very often.
In the next few months I will be meeting with the other two board presidents
and the coop management teams. We will be going over the financials and
discussing the service advantages of a merger. Once we get all the information
together, we will have a few town hall meetings to explain the value of this
endeavor to all members ...Read my entire article at www.beartoothelectric.com...
APR
26
BEC Regular Board Meeting
BEC Office—Red Lodge, MT
11:30 AM
JUNE
1
2016 Trustee Nominations Open
District 2-Boyd Area
District 5-Fishtail Area
Get your app at the BEC office or on the website
Beartooth Alternatives: Board Examines—Members Decide
By Arleen Boyd, District 2 Trustee, Risk Management Committee Chair
“
“
With the current BEC rate decreases the calculated monthly surcharge would push
rates with NWE well above what BEC ratepayers would pay an independent Beartooth.
With management input and Risk Management Committee
investigation the Beartooth board continues to examine
potential business alternatives for BEC. We have reported
on comparing the standalone Beartooth option to both an acquisition by
NorthWestern Energy (NWE) and a merger with Lower Valley Electric (LVE).
A consolidation that would create a new cooperative including Lower Valley,
Beartooth, and Fall River Electric may be considered.
RATES TO DECLINE
Our analysis examined numbers with consideration of non-rate advantages and
challenges including the advantages of co-op local control versus size, long-term
power supply, and Public Service Commission oversight on the investor owned
utility side. Similar financial and other factors will drive the evaluation of our
remaining potential alternatives.
In addition, the risk management committee examined the financial projections
for BEC and recommended a 10 percent revenue decrease and evaluation of a
subsequent reduction this year. The committee also recommended a seven-year
term for the loan to cover the $1.2 million BEC prepaid Southern on exit for the
BEC share of the remaining HGS debt, which BEC would have paid in 2016 as a
Southern member. With a low interest rate and seven years to complete payment,
BEC improves its cash position and sets the retirement of the loan BEC Members
are seeing small improvements in their bills and with the approved reduction
the trend at BEC is positive and sustainable. We are heading in an entirely new
direction...Read my entire article at www.beartoothelectric.com...
A ten percent decrease
in energy rates for BEC
members was approved
at the January Board
meeting. Stay tuned for
new rate class energy
charges.
D.C. BOUND
Congratulations to BEC’s 2016 Youth
Tour candidates—Solomon Arno from
Rapelje High School and Chloe Flynn
from Absarokee High School ... Read
more at www.beartoothelectric.com...
IRRIGATION
SEASON
Irrigation Season
April 1 through September 30
Monthly Base Charge
(billed over 6 months)
$121.80
kWh Energy Charge
(5% decrease Aug 2015)
$0.064439
kW Demand Irrigation
(no rate change)
Solomon Arno
Rapelje High School
JUN/JUL
2016
BEC TOWN HALL MEETINGS
5 COMMUNITY MEETINGS
SCHEDULE COMING SOON!
AUG
6
$12.40
Chloe Flynn
Absarokee High School
2016 TRUSTEE NOMINATIONS CLOSE
District 2-Boyd Area
District 5-Fishtail Area
Apps must be submitted to BEC by 5PM
SEPT
24
BEC 78TH ANNUAL MEMBER MEETING
ROBERTS HIGH SCHOOL | 9AM
PLAN TO JOIN US!
BOARD REPORT
February 23, 2016
COMMUNICATIONS & MEMBER SERVICES
1. MECA Memorial Scholarship
BEC received 13 applications for the 2016 MECA Memorial Scholarship competition. The MECA Scholarship worksheet and
applicant personal statements appear at the end of the board book for trustee review, scoring and candidate selection. BEC’s
candidate will continue in the scholarship competition to be judged by MECA.
APRIL Rural Montana-Content Deadline
Please submit content no later than Thursday, March 3. Requested content:
1. The General Manager’s Message (Jim)
2. The President’s Message (Roxie)
3. Risk Management Committee (Arleen)
4. MECA Scholarship Candidate Announcement (Kaaren)
2. E-bill Participation Stats
The E-bill program continues to draw increased participation with current members at 1,268, an increase of 23 and accounts stand
at 1,608 showing an increase of 32.
E-Bill
Members
E-Bill
Accounts
Jan ‘16
Jan ‘15
Feb ‘16
Feb ’15
(data
cleanup)
1,245
1,174
1,268
1,035
1,111
1,120
1,127
1,608
1,875
1,640
1,327
1,407
1,424
1,435
Oct ‘15
Nov
’15
Jul ‘16
E-Bill
Members
E-Bill
Accounts
Jul ‘15
Aug ‘16
Aug ‘15
Mar ‘16
Sep ‘16
Mar ‘15
Sep ‘15
Apr ‘16
Oct ‘16
Apr ‘15
May ‘16
Nov ‘16
May ‘15
Jun ‘16
Jun ‘15
1,124
1,437
Dec
’16
Dec
’15
1,138
1,138
1,151
1,166
1,183
1,121
1,463
1,465
1,479
1,496
1,515
1,584
3. LISD/LIDD Program Stats
The program lost one participant this month.
Statement Date
16-Jan
BEC Low Income Senior and Disabled Discount
Total Members Total Month's Discounts Year-to-Date Discounts
45
$557.04
$557.04
15-Jan
43
$609.38
$609.38
15-Feb
45
$509.53
$1,118.91
14-Feb
48
$674.82
$1,349.64
15-Mar
47
$405.99
$1,524.90
14-Mar
42
$538.52
$1,976.86
15-Apr
49
$383.41
$1,908.31
14-Apr
42
$538.52
$2,515.38
15-May
49
$372.08
$2,280.39
14-May
40
$332.16
$2,847.54
15-Jun
48
$354.53
$2,634.92
14-Jun
40
$238.75
$3,086.29
15-Jul
48
$381.81
$3,016.73
14-Jul
39
$372.97
$3,459.26
15-Aug
48
$345.83
$3,362.56
14-Aug
39
$343.02
$3,802.28
15-Sep
47
$285.98
$3,648.54
14-Sep
39
$314.18
$4,116.46
15-Oct
46
$329.90
$3,978.44
14-Oct
40
$340.79
$5,199.11
15-Nov
45
$387.52
$4,365.96
14-Nov
42
$513.83
$5,712.94
15-Dec
45
$456.02
$4,821.98
14-Dec
42
$513.83
$5,712.94
Communications & Member Services
MECA 2016 MEMORIAL SCHOLARSHIP
Once again, it’s time to nominate a deserving BEC service area student for the 2016 MECA Memorial Scholarship. MECA will award one
scholarship in the amount of $500 in each of the four MECA districts. The GPA, ACT/SAT and Activities judging is completed and
applicants are ranked in descending order (All applicants were awarded the full 20% score in the activities section. Each applicant is
intricately involved in both their school and community).
Please review and score each applicant's personal statement. (The personal statement is 40% of the applicant's total score). Enter your
score in the personal statement column. For each candidate, add the GPA/SAT/Activities and Personal Statement scores to determine the
Total Score. Please bring your completed score sheet to the board meeting to participate in the BEC candidate selection process. Thank
you.
1
2
Emma Katharine
Chandler
Brianna Erfle
3
Nikkole Schneider
4
Colette Zentner
5
6
7
8
9
10
11
12
13
Brooke Krieger
Jared Schwend
Jessica Ausup
Bianey Lara Ambriz
Courtney Richardson
Jordan Phillip Marsh
Autumn Brimer
Annie Cooke
Kenyon Hatten
20%
20%
20%
GPA /
Class Rank
ACT/SAT
Activities
4.000
1 / 25
ACT 27
20.0%
20.0%
4.000
1/5
ACT 27
20.0%
20.0%
3.894
21/99
19.5%
ACT 26
GPA/SAT/
Activities
Score
40%
Personal
Statement
Score
TOTAL SCORE
20%
60%
%
%
20%
60%
%
%
20%
59%
%
%
20%
58%
%
%
20%
57%
%
%
20%
56%
%
%
20%
56%
%
%
20%
55%
%
%
20%
53%
%
%
20%
52%
%
%
20%
51%
%
%
20%
51%
%
%
20%
47%
%
%
19.3%
3.7619
2 / 11
ACT 26
18.8%
19.3%
3.957
2/5
ACT 23
19.8%
17.0%
3.91
4 / 27
ACT 22
19.6%
16.3%
3.813
7 / 54
ACT 23
19.1%
17.0%
3.894
3/5
ACT 21
19.5%
15.6%
3.291
7 / 12
ACT 23
16.5%
17.0%
3.670
5/5
ACT 19
18.4%
14.1%
3.667
13 of 26
ACT 17
18.3%
12.6%
3.10
12 / 29
ACT 21
15.5%
15.6%
2.85
19 / 27
ACT 17
14.3%
12.6%
BOARD REPORT By: Eric Elton, Line Superintendent
FEBRUARY 23, 2016
CONSTRUCTION, OPERATIONS & MAINTENANCE
 Red Lodge crews have been changing out poles in the Red Lodge and
Roberts’s areas. They are also building new services as they come in. With
the weather so mild people are still building.
 We have changed out just under 70 poles since October.
 Columbus crews have been working on some maintenance and tree
trimming.
 Altec has completed all the DOT inspections and dielectric tests on trucks
and trailers for the year. The inspections went very well with them finding
some minor problems.
 We did a complete material inventory this month and the inventory came
out pretty good considering the buying of all materials from HD Supply.
 On February 16th - 17th Lower Valley sent Aaron Johnson up and he
inspected all substations with an infrared camera. Aaron also helped us
repair a couple of regulators in the Roberts Substation. (We didn’t find any
bad connections).
 Bill Spaulding joined us for our safety meeting and also looked at several
projects around the system. (Including the river crossing in Fromberg).
 There were 4 new services installed the month of January.
 There was a total of 2 outages system wide the month of January. (This is
the smallest number of outages in a month that anyone can remember).
Please see attached breakdown sheet.
 There were 4 individual consumers out of power at some point in the
months of January, having duration of 785 minutes.
EDUCATION, SAFETY & LOSS
 We had a MECA safety meeting on the 27th of January. (Please see attached
sheet).
 There are no Lost Time Accidents to report for the month of January.
TRUCK, TOOLS & EQUIPMENT
 One of our bucket trucks is down in Billings. It is leaking oil into the fuel.
They have yet to find the cause.
 A new Four Wheeler has been purchased for Red Lodge. Tracks are ordered
but not in yet.
1
790
Consumer hit meter box with plow
01/22/16
240
3
300
Bad splice
TOTALS
305
4
Customer Minutes of
Interruption
RUS Cause Code
65
Cause of Service Interruption (RUS
Designation 1730A-119)
OH/ URD
Number of Customers
Affected
01/17/16
Date
Duration (Min)
S
t
a
r
t
T
i
m
e
Substation
January 2016 Outage Summary
Belfry
OH
65
Roberts
OH
720
785
RUS CAUSE CODE KEY
090
110
300
490
500
690
790
Absarokee
Belfry
Columbus
East Rosebud
Edgar/Fromberg
Luther
Nye
Red Lodge
Reed Point
Roberts
Weather
Planned Outage/Maintenance
Other Material/Equipment Fault
Trees
Transformer
Animals
Public Caused
0
1
0
0
0
0
0
0
0
1
BEARTOOTH ELECTRIC
COOPERATIVE
REDLODGE , MONTANA
JIM WEBB , Manager
Safety Meeting Report
January 27, 2016
1. TOPICS: ANNUAL GROUNDING JUMPER and LIVE LINE TOOL TESTING.
2. VIDEOS SHOWN: None.
3. REPORT OF ACCIDENTS: There were no reports of accidents at this time.
4. RECOMMENDATIONS AND COMMENTS: A total of 32 grounding jumpers
and 37 live line tools were tested at the safety meeting. Some grounding
jumpers needed some minor cleaning and all hot sticks were cleaned before
testing procedures began. The extend sticks once again needed more cleaning
than others because of the nature of the sticks. A reminder, to stretch them
out, and let them dry in a warm environment if used in a wet condition
outdoors. The crew is doing a good job with maintenance as I looked at
several grounds and sticks during the testing procedure. Thanks to the crew
for the assistance!
# of Class Hours: 6
# of Field Hours: 0
# of Personnel Present: 9
# of Board Members Present: 0
Manager Contacted: Yes
Manager Present: No
Thanks for your help and involvement.
Johnnie Stanton
MECA SL/C
EMPLOYEE NAME
ATTENDANCE
TRAVIS BARKER
X
JAKE WRIGHT
X
SAM WALKOWIAK
X
BILL COLGROVE
X
JAMES PIHL
X
LEE HAUGE
X
ERIC ELTON
X
JIM AVENT
X
BILL SPAULDING
X
Fleet Management
Expense Totals
JANUARY 2016
TOTALS
Light & Heavy Duty Trucks
Backhoes, Trailers & Chipper
YTD
Jan
Feb
Mar
Apr
May
Jun
Jul
Aug
Sep
Oct
Nov
Dec
Total
Total: 22,821.45
Miles
7,772
Cost Per Mile
2.94
Gallons of Gas 1,497.86
MPG
5.19
0.00
0
0.00
0
0.00
0
0.00
0
0.00
0
0.00
0
0.00
0
0.00
0
0.00
0
0.00
0
0.00
0
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
22,821.45
7,772
2.94
1,497.86
5.19
Total:
Hours
Cost Per Hour
Gallons of Gas
HPG
2,173.84
13
167.22
35.28
0.37
0.00
0
0.00
0
0.00
0
0.00
0
0.00
0
0.00
0
0.00
0
0.00
0
0.00
0
0.00
0
0.00
0
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
Jan
Feb
Mar
Apr
May
Jun
Jul
Aug
Sep
Oct
Nov
Dec
Total
Total: 24,995.29
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
24,995.29
FLEET TOTALS
2,173.84
13
167.22
35.28
0.37
YTD
February 15, 2016
Mr. Jim Webb
Lower Valley Energy
236 N. Washington
Afton, WY 83110
SUBJECT:
Updated Beartooth COSA Results for 2016
Dear Jim:
EES Consulting (EES) is pleased to provide the results of the update of the Beartooth
COSA for the 2016 budget year. The COSA follows the methodology used in the 2015
Beartooth COSA and a description of the methods included in the 2015 Report are not
duplicated here. The revenue requirement has been updated to reflect the 2016
budget for Beartooth and the projected sales by customer class. Several alternatives
for rate impacts by class have also been included and reflect the desired overall 10%
rate decrease and the COSA results.
Overview of COSA Update
While the expense items, sales by class and revenues have all been updated, the rate
base and load factor information have not been changed from the 2015 COSA. The
rate base by item has not changed significantly from 2015 and therefore the resulting
allocations derived from the rate base have not changed either. The load factors for
2014 were the basis for the 2015 COSA and have not been adjusted to reflect 2015
actuals. Updating these factors would create additional work that would not likely
change the results significantly. This also provides consistency with the past
assumptions.
The one area that was examined in greater detail was the irrigation class. Data was
provided on a per customer basis. The load factors were not significantly different
from 2014 and it would not be appropriate to change the load factors for one class
570 Kirkland Way, Suite 100
Kirkland, Washington 98033
Telephone: 425 889-2700
Facsimile: 425 889-2725
A registered professional engineering corporation with offices in
Kirkland, WA and Portland, OR
Mr. Jim Webb
February 15, 2016
Page 2
without changing all classes and balancing to the system total. The data did make it
clear that the loads shape varies quite a bit from one customer to the next. For that
reason the group coincidence factor for the irrigation class was changed from 100% to
75%. This factor reflects how much of the peak loads for individual customers occur at
the same time as other customers in the rate class. The impact was that the irrigation
class was allocated a reduced share of distribution costs to better reflect their
consumption pattern.
Revenue Requirements Results
A revenue requirement analysis compares the overall revenues of the utility to its
expenses and helps determine the overall adjustment to rate levels that is required.
For this analysis, a “cash basis” method was used for determining BEC’s revenue
requirement. Annual operating expenses for calendar year (CY) 2016 were used to
determine the revenue requirement and were based on the budget provided by BEC.
A base case was defined to develop the COSA. This base case assumed the following:

Forecast calendar year 2016 was selected as the period for the allocation of costs
within the cost of service study.

Purchased power was allocated on the basis of demand and energy according to
the purchased power components. This resulted in 19.4% being classified as
demand-related.

The debt service associated with the Southern buyout was classified the same as
the purchased power costs and was included in the cost of power.

Distribution plant was classified based both on a “minimum system” approach and
a “100% demand” approach.

Revenues are based on forecast loads and BEC’s current retail rates and differ
slightly from the 2016 budget amounts as the calculations are more detailed.

Capital improvement projects are fully funded from cash collected in rates.
Looking at the test period of CY 2016, revenues collected from rates are expected to
be $10.1 million, while expenses are projected to be $8.3 million. This results in an 18
percent surplus in retail rate revenues. As discussed with staff, a 10% rate decrease is
being proposed for 2016 to provide some financial reserves and to reflect the
uncertainty of costs in this transitional period under the new LVE management
agreement. If surplus revenue is available during 2016, it can be used to fund capital
Mr. Jim Webb
February 15, 2016
Page 3
improvements, pay off existing debt or provide an additional rate decrease in the
following year. A summary of the draft cash basis revenue requirement is shown in
Table 1.
Table 1
Revenue Requirement Summary
Applications of Funds
CY: 2016
Operation and Maintenance Expenses
Power Supply
$3,393,027
Transmission
6,070
Distribution
1,289,217
Customer Service and Accounting
Administrative and General
Total O&M Expenses
Capital Projects Funded From Rates
Taxes
Debt Service
Total Revenue Requirement
351,304
1,120,173
$6,159,791
868,800
2,811
1,327,439
$8,356,030
Less: Other Revenues/Net
(47,409)
Net Revenue Requirement
$8,311,432
Revenues at Current Rates
$10,108,048
Total Potential Retail Rate Decrease
-17.8%
Proposed Retail Rate Decrease
-10.0%
The revenue requirement for 2015 was $10.1 million. The 2016 revenue requirement
reflects savings of $1.8 million for the year. This savings is primarily related to the
new power supply arrangements for BEC. These power cost savings will continue over
the next several years. In addition, it is expected that savings in operations and A&G
will occur over the next several years as the management agreement proceeds and
costs stabilize.
Mr. Jim Webb
February 15, 2016
Page 4
Cost of Service Study
A cost of service analysis (COSA) is concerned with the equitable allocation of the
revenue requirement to the various customer classes of service. As is standard
procedure for cost of service analyses, the revenue requirement for BEC was
functionalized, classified and allocated. Unlike most cost of service studies, costs were
kept functionalized throughout the analysis which provides for greater transparency
when reviewing results.
A COSA study can be performed using embedded costs or marginal costs. Embedded
costs generally reflect the actual costs incurred by the utility and closely track the costs
kept in its accounting records. Marginal costs reflect the cost associated with adding a
new customer, and are based on costs of facilities and services if incurred at the
present time. This study uses an embedded COSA as its standard methodology.
Generally there are two methodologies that can be used to classify distribution costs:
100 percent demand and minimum system. The 100 percent demand methodology
assumes that the distribution system is built to meet the non-coincident peak.
Therefore, distribution costs using this method are classified as 100 percent demand
related.
Under the minimum system approach, specific distribution costs are split between
demand and customer. This approach reflects the philosophy that the system is in
place in part because there are customers to serve throughout the service territory
expanse, and that a minimally sized distribution system is needed to serve these
customers even if they only use 1 kWh of energy per year. The concept follows that
any costs associated with a system larger than this minimal size are due to the fact
that customers “demand” a delivery quantity greater than the minimum unit of
electricity and that therefore, those costs should be treated as demand related.
Because the residential class tends to have a higher share of the number of customers
as compared to the share of non-coincident peak, the minimum system methodology
tends to allocate more costs to the residential class and customer charges tend to be
higher than with the 100 percent demand methodology. Demand-vs-customer
allocations for the minimum system case were derived using data from BEC and other
Northwest public utilities.
Given a number of assumptions, the results show that using present rates, BEC would
be over-collecting revenues to meet allocation year costs. When examining the
results, it is important to note that the inter-class cost allocation is based on load data
estimates and usage pattern assumptions. Therefore, deviations of less than 10
percent from the cost of service typically do not warrant interclass rate modifications.
Mr. Jim Webb
February 15, 2016
Page 5
CY 2016 results are summarized for the minimum system approach in Table 2 and for
the 100 percent demand approach in Table 3.
Table 2
Summary of Functionalized Cost of Service – CY 2016
Minimum System Approach
Production Transmission Distribution
Customer
Direct
Related
Related
Related
Related
Assignment
Residential
Net Revenue
Requirement
$2,726,446
$12,340
$1,483,379
$2,718,689
$0
$6,940,854
255,375
628
78,505
174,781
0
509,288
146,844
657
78,969
23,571
0
250,041
Industrial
82,473
131
77,118
1,310
0
161,031
Irrigation
147,579
0
230,421
72,217
0
450,217
$3,358,717
$13,756
Small
Commercial
Large
Commercial
TOTAL
Residential
Small
Commercial
Large
Commercial
$1,948,392 $2,990,567
$0
Table 3
Summary of Functionalized Cost of Service – CY 2016
100 Percent Demand Approach
Production Transmission Distribution
Customer
Direct
Related
Related
Related
Related
Assignment
$8,311,432
Net Revenue
Requirement
$2,726,446
$12,340
$2,345,120
$1,646,719
$0
$6,730,625
255,375
628
124,111
105,865
0
485,979
146,844
657
124,845
20,075
0
292,420
Industrial
82,473
131
145,475
1,115
0
229,194
Irrigation
147,579
0
364,280
61,354
0
573,214
$3,358,717
$13,756
$3,103,831
$1,835,128
0
$8,311,432
TOTAL
The results change based on the methodology used. Under the minimum system
approach, higher costs are allocated to the residential and small commercial classes.
The 100% demand approach allocates higher costs to the industrial and irrigation
classes.
Based on the costs allocated in the COSA and the revenues at current rates for each
class, revenue to cost ratios were also calculated. Table 4 shows the revenue to cost
ratios by class, adjusted so that the total revenues equal the total costs overall.
Mr. Jim Webb
February 15, 2016
Page 6
Table 4
Summary of Revenues and Costs – CY 2016
Minimum System Approach
Revenues at
Current Rates
Net Revenue
Requirement
Difference
Revenue to
Cost Ratio
Adjusted
Revenue to Cost
Ratio
$8,346,459
$6,940,854
$1405,605
120.3%
98.9%
760,683
509,288
251,395
149.4%
122.8%
352,442
250,041
102,400
141.0%
115.9%
Industrial
205,037
161,031
44,005
127.3%
104.7%
Irrigation
443,427
450,217
-6,790
98.5%
81.0%
$8,311,432
$1,796,616
121.6%
Table 5
Summary of Revenues and Costs – CY 2016
100 Percent Demand Approach
100.0%
Residential
Small
Commercial
Large
Commercial
TOTAL
$10,108,048
Revenues at
Current Rates
Net Revenue
Requirement
Difference
Revenue to
Cost Ratio
Adjusted
Revenue to Cost
Ratio
$8,346,459
$6,730,625
$1,615,834
124.0
102.0%
760,683
485,979
274,704
156.5
128.7%
352,442
292,420
60,022
120.5
99.1%
Industrial
205,037
229,194
-24,157
89.5
73.6%
Irrigation
443,427
573,214
-129,787
77.4
63.6%
$10,108,048
$8,311,432
$1,796,616
121.6%
100.0%
Residential
Small
Commercial
Large
Commercial
TOTAL
When looking at the revenue to cost ratios it is important to reflect the uncertainty
inherent in any COSA due to methodology approaches and uncertainty in the load data
used to allocate costs. For that reason a range of 90% to 110% is typically used to
measure whether customer classes are paying an appropriate share of costs.
Based on the results under both methodologies, the residential class is near 100% and
should receive the average 10% rate decrease. The small commercial class is paying
above 110% in both cases and should receive a greater than average rate decrease if
BEC wishes to make adjustments between classes. For the Large Commercial and
Industrial classes, customers are paying too much under the minimum system
approach and too little under the 100% demand approach. For that reason it is
recommended that these two classes receive the average 10% rate decrease. Finally,
the Irrigation class is underpaying in both cases and should receive less than the full
10% decrease if BEC wants to make interclass adjustments.
Mr. Jim Webb
February 15, 2016
Page 7
Note that these findings are similar to the results from the 2015 COSA. The two
exceptions are that the Industrial and Irrigation classes are paying an amount closer to
their allocated costs than before.
For the Irrigation class, the COSA shows that they are still underpaying their cost of
service. This is not an unexpected result due to the nature of the service. On the
power supply side, the costs of purchased power do not differ based on season and so
there is no benefit to Irrigators related to their summer usage. Power costs may have
been more seasonal in the past, but BEC has changed its power supply source and
rates are flat across all hours. Because they do not peak at the time of the annual peak
for BEC they are not allocated any of the transmission-related costs, however, these
costs are small for BEC.
The issue is with the distribution costs. Distribution facilities are designed based on
the maximum peak load that the customer might have throughout the year. For this
reason the distribution costs are allocated on the basis of the non-coincident peak.
The Irrigators receive a full allocation based on their annual peak loads that occur in
the summer months. Unlike other classes, these distribution costs must be spread out
over a 4-5 month period rather than the full 12-month period used by other types of
customers. For that reason the COSA results show that their demand-related costs are
more than double those of the other classes.
However, the current rates for the Irrigation class have a demand charge that is the
same as for the Large Commercial and Industrial classes and an energy rate that is
lower than for all other classes. Because those rates do not line up with their costs,
the results show that they are paying only 63-81% of their assigned costs. If the
Irrigation class were to use electricity all year, their demand-related costs would be
spread over a larger number of kW and the revenue to cost ratio would increase.
Rate Design
Rate design encompasses a multitude of considerations that often are somewhat
removed from fundamental unit cost determinations. Issues such as appropriate price
signals, potential impact of rate adjustments, ability to pay, intra-class subsidies etc.,
will ultimately influence the final approved rate structure.
Output from the COSA analysis was designed to facilitate the development of rate
designs. Unit cost determinations, by function, typically represent the starting point
from which final rate design determinations can be developed.
There are several options for achieving the desired 10% overall rate decrease for the
utility.
Mr. Jim Webb
February 15, 2016
Page 8

Option 1:



10% decrease for all customer classes
Option 2:

10% decrease for Residential, Large Commercial and Industrial

12.7% decrease for Small Commercial Class

5% decrease for Irrigation Class
Option 3:

10% decrease for Residential, Large Commercial and Industrial

15.2% decrease for Small Commercial Class

0% decrease for Irrigation Class
Option 3 provides the best reflection of the COSA results. The utility will need to
balance the COSA results along with other issues to determine the appropriate level of
rate decrease for each customer class. Once the rate decrease by class is determined,
specific rate designs can be developed. The utility could apply the rate decrease
equally to all of the rate components (i.e. customer charge, demand charge, energy
charge) or reduce just the energy charge, as was done in 2015.
Recommendations
Based on the projected revenue requirement and COSA analysis, the following
recommendations for BEC have been developed by EES Consulting:

Using current rates, BEC is collecting more than sufficient revenues compared to
projected CY 2016 costs.

A decrease of 10.0 percent is recommended for 2016.

The utility needs to select the appropriate rate decrease for each customer class.

Specific changes to the rate components can then be set to collect the
appropriate total for each class.
Mr. Jim Webb
February 15, 2016
Page 9
Summary
I hope this letter report meets with your needs. Please feel free to contact me directly
if you have any questions or comments.
Very truly yours,
Gary Saleba
President
Beartooth Electric Cooperative, Inc.
Proposed Rate Structure
Option 1
Current Rates
Residential
Irrigation
Small Commercial
Large Commercial
Industrial
Totals
Avg
Customers
5,518
56
355
18
1
kWh
51,313,700
2,893,500
5,142,300
2,792,500
1,815,500
5,948
63,957,500
Facility
Charge
33.50
121.80
33.50
111.65
218.25
Demand
Charge
12.40
12.40
12.40
Avg
Demand
19.20
41.37
336.07
kWh Rate
0.119426
0.064439
0.120194
0.075126
0.076326
Revenue
8,346,400
427,900
760,800
344,700
191,200
%
Decrease
-10.0%
-10.0%
-10.0%
-10.0%
-10.0%
10,071,000
Other revenues
44,800
Total revenues
10,115,800
Revenue
Adjusted
Decrease
Revenues
(834,640) 7,511,760
(42,790) 385,110
(76,080) 684,720
(34,470) 310,230
(19,120) 172,080
(1,007,100) 9,063,900
-
44,800
(1,007,100) 9,108,700
Proposed Rates
Residential
Irrigation
Small Commercial
Large Commercial
Industrial
Totals
Avg
Customers
5,518
56
355
18
1
kWh
51,313,700
2,893,500
5,142,300
2,792,500
1,815,500
5,948
63,957,500
Facility
Charge
33.50
121.80
33.50
111.65
218.25
Demand
Charge
12.40
12.40
12.40
Avg
Demand
19.20
41.37
336.07
kWh Rate
0.103160
0.049642
0.105402
0.062778
0.065797
Revenue
7,511,757
385,111
684,719
310,229
172,081
9,063,897
Other revenues
44,800
Total revenues
9,108,697
Decrease
in kWh Decrease in
Charge
Revenue
13.6%
10.0%
23.0%
10.0%
12.3%
10.0%
16.4%
10.0%
13.8%
10.0%
10.0%
10.0%
Effect
"Average" Bill
Residential
Irrigation
Small Commercial
Large Commercial
Industrial
Average
kWh
775
4,306
1,207
12,928
151,292
Old
126.05
637.34
178.59
1,595.89
15,933.01
New
113.44
573.63
160.73
1,436.25
14,340.06
%
Difference Difference
12.61
10.0%
63.71
10.0%
17.86
10.0%
159.64
10.0%
1,592.95
10.0%
Option 2
Current Rates
Residential
Irrigation
Small Commercial
Large Commercial
Industrial
Totals
Avg
Customers
5,518
56
355
18
1
kWh
51,313,700
2,893,500
5,142,300
2,792,500
1,815,500
5,948
63,957,500
Facility
Charge
33.50
121.80
33.50
111.65
218.25
Demand
Charge
12.40
12.40
12.40
Avg
Demand
19.20
41.37
336.07
kWh Rate
0.119426
0.064439
0.120194
0.075126
0.076326
Revenue
8,346,400
427,900
760,800
344,700
191,200
%
Decrease
-10.0%
-5.0%
-12.7%
-10.0%
-10.0%
10,071,000
Other revenues
44,800
Total revenues
10,115,800
Revenue
Adjusted
Decrease
Revenues
(834,640) 7,511,760
(21,395) 406,505
(96,622) 664,178
(34,470) 310,230
(19,120) 172,080
(1,006,247) 9,064,753
-
44,800
(1,006,247) 9,109,553
Proposed Rates
Residential
Irrigation
Small Commercial
Large Commercial
Industrial
Totals
Avg
Customers
5,518
56
355
18
1
kWh
51,313,700
2,893,500
5,142,300
2,792,500
1,815,500
5,948
63,957,500
Facility
Charge
33.50
121.80
33.50
111.65
218.25
Demand
Charge
12.40
12.40
12.40
Avg
Demand
19.20
41.37
336.07
kWh Rate
0.103160
0.057036
0.101408
0.062778
0.065797
Revenue
7,511,757
406,506
664,180
310,229
172,081
9,064,754
Other revenues
44,800
Total revenues
9,109,554
Decrease
in kWh Decrease in
Charge
Revenue
13.6%
10.0%
11.5%
5.0%
15.6%
12.7%
16.4%
10.0%
13.8%
10.0%
10.0%
10.0%
Effect
"Average" Bill
Residential
Irrigation
Small Commercial
Large Commercial
Industrial
Average
kWh
775
4,306
1,207
12,928
151,292
Old
126.05
637.34
178.59
1,595.89
15,933.01
New
113.44
605.47
155.91
1,436.25
14,340.06
%
12.61
10.0%
31.88
5.0%
22.68
12.7%
159.64
10.0%
1,592.95
10.0%
Option 3
Current Rates
Residential
Irrigation
Small Commercial
Large Commercial
Industrial
Totals
Avg
Customers
5,518
56
355
18
1
kWh
51,313,700
2,893,500
5,142,300
2,792,500
1,815,500
5,948
63,957,500
Facility
Charge
33.50
121.80
33.50
111.65
218.25
Demand
Charge
12.40
12.40
12.40
Avg
Demand
19.20
41.37
336.07
kWh Rate
0.119426
0.064439
0.120194
0.075126
0.076326
Revenue
8,346,400
427,900
760,800
344,700
191,200
%
Decrease
-10.0%
0.0%
-15.2%
-10.0%
-10.0%
10,071,000
Other revenues
44,800
Total revenues
10,115,800
Revenue
Adjusted
Decrease
Revenues
(834,640) 7,511,760
427,900
(115,642) 645,158
(34,470) 310,230
(19,120) 172,080
(1,003,872) 9,067,128
-
44,800
(1,003,872) 9,111,928
Proposed Rates
Residential
Irrigation
Small Commercial
Large Commercial
Industrial
Totals
Avg
Customers
5,518
56
355
18
1
kWh
51,313,700
2,893,500
5,142,300
2,792,500
1,815,500
5,948
63,957,500
Facility
Charge
33.50
121.80
33.50
111.65
218.25
Demand
Charge
12.40
12.40
12.40
Avg
Demand
19.20
41.37
336.07
kWh Rate
0.103160
0.064439
0.097709
0.062778
0.065797
Revenue
7,511,757
427,927
645,158
310,229
172,081
9,067,152
Other revenues
44,800
Total revenues
9,111,952
Decrease
in kWh Decrease in
Charge
Revenue
13.6%
10.0%
0.0%
0.0%
18.7%
15.2%
16.4%
10.0%
13.8%
10.0%
10.0%
10.0%
Effect
"Average" Bill
Residential
Irrigation
Small Commercial
Large Commercial
Industrial
Average
kWh
775
4,306
1,207
12,928
151,292
Old
126.05
637.34
178.59
1,595.89
15,933.01
New
113.44
637.34
151.45
1,436.25
14,340.06
%
12.61
10.0%
0.0%
27.14
15.2%
159.64
10.0%
1,592.95
10.0%
Beartooth Electric Cooperative Timeline 2-12-16
February
1st week – RM sent out to members
4 – Hard deadline on articles to Kaaren for RM (Kaaren)
8 – Communication Committee Meeting
 Discuss communication strategy
 Discuss LVE/FREC potential consolidation
 Discuss BEC invitation to join the consolidation effort
 Discuss BEC as a standalone entity
 Discuss rate decrease strategy
9 – Proof of RM to Jim for approval (Kaaren)
11 – Final RM to MECA (Kaaren)
12 – Post RM to the BEC website (Randi)
13 – Develop bill stuffer – abbreviated 2-page with links to website (Kaaren)
15 – Send bill stuffer to Jim for approval (Kaaren)
16 – Develop Monthly email blast #1 and send to Jim for approval (Randi)
17 – BEC Employee Meeting – update on consolidation efforts (Jim)
17 – Send all communications/releases to Jim for board packet as PDF (Randi)
17 – Send all communications report to Jim for board packet as PDF (Kaaren)
18 – Send bill stuffer to NISC to print (Kaaren)
18 – Monthly email blast #1 – board meeting notice (Randi)
19 – Post BEC board reports on website (Randi)
22 – BEC Board Members to attend FREC Board Meeting in Ashton, ID
22 – Irrigation customer meeting in Red Lodge – opportunity to discuss LVE/FREC consolidation
23 – BEC Board Meeting
 Review updated COSA
 Develop rate decrease strategy
 Discuss opportunity to join LVE/FREC consolidation
 Select BEC’s MECA Memorial Scholarship candidate
 Copies of all communication material and web posting in the communication report
24 – Distill board meeting, send to Jim for content approval and Randi to develop email blast #2 (Brian)
24 – Post COSA, minutes and financial statements to website (Randi)
24 – Develop billing message on rate decrease (Kaaren)
24 – Develop press release – rate decrease (Randi)
25 – Press release to Jim for approval – rate decrease (Randi)
25 – Billing message to Jim for approval (Kaaren)
25 – Send email blast proof to Jim for approval (Randi)
25 – Lower Valley Board Meeting
26 – Monthly email blast #2, board meeting highlights (Randi)
26 – Press release on rate decrease (Randi)
29 – Topics for RM including announcement of the change to a news letter – send out to authors (Jim)
 COSA
 Rate Decrease
 Consolidation study
March
1st week – bill stuffer newsletter sent with bills
8 – RM proof to Jim for approval (Kaaren)
9 – BEC Employee Meeting – update on consolidation efforts and BEC rate decrease
10 – Final RM to Meca (Kaaren)
12 – Post article about LVE/FREC potential consolidation to the BEC website
22 – Risk Management Committee – Review EES study and LVE comparison (Jim)
 Review EES study on a LVE/FREC/BEC consolidation
 Review financial comparison of BEC with and without LVE
 Discuss what other information is needed for BEC to decide whether or not to participate in
consolidation
30 – Post EES study, minutes, financial statements to website
30 – Develop press release – ?? (Randi)
31 – Press release to Jim for approval – ?? (Randi)
31 – Board Meeting notice – Monthly email blast #2
31 – Set topics for next RM and send out to authors (Jim)
 BEC Achievement Scholarship winners
April
1 – Press release on ?? (Randi)
4 – Communication Committee meeting agenda sent out (Jim)
6 – Communication Committee conference call
7 – BEC Employee Meeting – update on consolidation efforts
 Make decision on joining the consolidation
 Develop language for consolidation ballot
 Trustee ballot
 Finalize Trustee nomination form
 Select electronic ballot vendor
 Create Trustee presentation of BEC scholarship calendar
27 – Post minutes, financial statements to website
28 – Send email blast proof to Jim for approval (Jim)
28 – LVE Board Meeting
29 – News release about decision whether or not to participate in consolidation effort
May
1 – Set topics for next RM
 2016 Trustee nominations
26 – News release – schedule of town hall meetings and voting process
June
10 – 17 Youth tour Washington DC
14 – Develop all talking points/powerpoint (Brian)
21 – Send town hall plan to Jim for edits/approval (Brian)
23 – Newspaper Ads??
26 – Finalize town hall presentation (Brian)
28 – Town Hall Meeting – A
29 – Town Hall Meeting – B
July
14 – Newspaper Ads ??
25 – Town Hall Meeting - C
 Annual Meeting Agenda draft review
 Annual Meeting handouts determination
 Annual Meeting presentation development
26 – Town Hall Meeting - D
28 – News release
August
5 – BEC Trustee nomination deadline
29 – Town Hall Meeting - E
30 – Town Hall Meeting – F
31 – Mail ballots
September
1 – Legal announcement BEC Annual Meeting
 CCN, SCN, Powell Tribune
14 – Board names Elections and Credentials Committee
23 – Annual Meeting set-up
24 – BEC Annual Meeting
24 – Board Special Meeting
30 – Youth Tour application open
October
17 – MECA Memorial Scholarship application open
17 – BEC Achievement Scholarship applications open
November
30 – Youth Tour application deadline
December
 Select 2017 Youth Tour Candidates
29 – Approve email blast content (Jim)
Communications for Co-op Members: Options for 2016
Update February 5, 2016
Prepared for:
Brian Tanabe, Communications/Marketing Manager
Lower Valley Energy/Beartooth Electric Cooperative
307-739-6046
307-690-9415
[email protected]
Prepared by:
Banik Communications
Randi Szabo, Dan Perbil, Heather Burcham
«Organization»
«Address»
«Address», «Address» «Address»
T 406-454-3422 x 103
F «Phone» [email protected]
Communications Goals

Increase the perception of competency and capable leadership of the LVE team

Introduce the FREC team and the consolidation idea

Communicate 10 company goals for improvement

Build trust in the BEC Board of Trustees

Continue to increase the perception of transparency and honesty

Educate and inform: Prepare the membership for the next phase of evolution for the coop by creating awareness and educating members on the advantages and
disadvantages of the options

Remind membership that it’s THEIR decision

Reinforce the understanding that the co-op is member-owned and members have a role
in the oversight of their co-op’s stability and financial future
Communications Objectives

Increase Customer Satisfaction (as measured in the 2012 and 2015 Surveys)

Increase the number of members who visit/get information from the website

Increase the number of email subscribers

Find additional ways to engage segments of the member audience

Increase attendance at town meetings
Beartooth Electric Cooperative Communications Options for 2016
Page 2 of 10
Messages for 2016

Improvements to system – 10 goals

Accomplishments that are benefitting members
 Detailed maintenance plan (proactive, surgical)
 Reduced costs (new budget, financial forecast, cost of service study)
 Stability (power supply for 7 years)

Community generating policy established

Rate decreases in Spring (10%) and Fall (5%) of 2016 (depending on various
timetables)
Messaging to be developed:

Managing risks in a changing energy environment

Advantages and disadvantages of consolidation
Communications Vehicles

Newsletters (6) – Now a 4-page color print insert in the billing statements (plus posting
on the website)

Website

Billing Inserts

Direct Mail

Email

BEC Member Automated Calls

Annual Meeting in September 2016

Town Meetings

Print Materials (fliers, leaflets for local distribution)
Page 3 of 10

News Releases, Guest Editorials, Letters to the Editor

Paid Advertising (newspaper, radio, online)

Recruitment of activist members who will reach into their communities for two-way
communication
Communications Strategies and Tactics
Provide value to the members
Information that helps save money or make life easier has value to customers. In 2016, we need
to increase the use of the website, email and other channels to provide content that is valuable.
Our strategy will be to drive members to the website to obtain valuable information…and to
make sure the website provides easy access to information they value.
Information of value may include:

Energy-saving tips and resources

Safety messages

Clean energy options appropriate for Beartooth customers
Rates are what the members care about most—so helping them find ways to save money is of
value. One existing tool to help save money is the Mobile App currently on the website. We can
promote this app through other channels as a way to drive website traffic. Other tools or
resources of similar value can be sought.
Page 4 of 10
Position management for thought leadership in the industry
Lower Valley Energy is known in the industry for innovation, excellent management, energy
savings and low rates. The reputation and quality of the organization are assets that support our
goal to build trust in the LVE management team.

Knowledgeable forecasting and tips about industry trends, clean energy and
conservation will be another way of providing value to the member
Keep the website fresh and updated
The website is the cooperative’s core publication and the best way to provide a repository of
information as well as the most real-time updates.
Although the newsletters will be more timely in 2016 (rather than a month old by the time
members receive them, as the previous rural Montana pages), website content can be updated
immediately at any time.
The website should be frequently refreshed with new content, visuals and information that is of
value to the visitor. We can use the appeal of say, new energy-saving tips or safety information,
to drive people to the website.

Update the look of the home page
Page 5 of 10

Improve the process of monthly updates

Add new safety content

Add new energy-saving content

Increase frequency of fresh materials, new visuals, etc.
Monthly Updates
The Committee Reports section of the website needs to be revamped and regularly
updated. We’d like to have a section for each committee and upload their reports each
month—as individual documents with a consistent look.
Communicate following every board meeting
Transparency from the board, involvement from the membership—all of our communications
goals can be helped by planned and regular communications from the board following each
regular and special meeting. The board makes decisions (and receives progress reports) at
every meeting; these should be shared with the membership. Diligent website users can search
“Board Minutes” to find out what happened at the meeting, but the information is neither very
accessible nor interpreted for its significance.

News release – we should determine the most newsworthy outcome of the meeting and
share it with local news outlets, as well as on the website and through the subscriber
email list

Email blast
Establish an umbrella theme for 2016 message strategy: the cooperative spirit
Our members value independence and self-reliance…but they also understand what it means to
work together and help a neighbor. Many of them remember the pioneer grit that helped settle
the west—from their own family history. Let’s remind our members of the cooperative spirit that
founded Beartooth and brought rural households, ranches and businesses into the 20th century.
Now the spirit of cooperation means working together to find a smart, stable and reliable future
in a changing world. The cooperative spirit was the solution to start with—and it still is today.
Page 6 of 10

Establish a tagline or catchphrase for this brand strategy

Start using the term member-owners; find ways to remind them of their ownership of the
co-op
Change the newsletter
In order to be effective as an element of strategic communications, the newsletter should deliver
messaging that is deliberate, planned and coordinated. The discontinuation of the Rural
Montana pages is the opportunity to develop a new and better format to effectively
communicate with members.

Alert members that the change in format is coming

Coordinate what the purpose, topics and authorship will be for each monthly issue in
advance

Better planning will allow for the use of more interesting graphics and photos

Use best practices in copywriting and layout to optimize access to the information in the
way that people read today
Reinstate the “Beartooth Bulletin”
When we need to communicate and important change or special opportunity, give it importance
by making it a “bulletin” brief rather than saving it for a newsletter. The bulletins are a single
attention-getting page inserted in the billing statement (or added to the email link).
Direct mail oversize postcards
There’s a reason political campaigns use this format—it works. Recipients don’t have to open a
letter; they have a boldly crafted headline arrive in their hands like a portable billboard. This
format is also highly cost-effective for bulk-mailings.
Page 7 of 10
Support ways for trustees to share information within their communities
Not all Beartooth members are reached through corporate email, meetings or the website.
Fliers, email trees, and phone trees are among local communications that may be provided for
distribution through the district representatives of the board. The board members are busy
people, but if we craft general messages that are approved by the group, it may help the board
members share information with their address books.
Cultivate two-way conversation
Two-way conversation with the membership is critical—and it should not be confined to one
annual meeting. The Customer Satisfaction Survey is very valuable, but does not cover all
topics or provide an ongoing insight into customer views. Social media both allow comments to
learn what members are thinking. Beartooth should cultivate these and other methods for
obtaining feedback. We can also renew promotion of the comment/questions-dedicated email
that was introduced during the power supply negotiations in 2015.
Prepare for the vote
This is the bottom line for 2016 communications. The experience of other co-ops shows us that
no matter how successful we are with the group communications, the final push will likely be a
one-on-one campaign. Our work in 2016 should plan for, prepare and arm our advocates for this
eventuality.
Paid media placement
Paid media placement should be used judiciously to support the cooperative’s objectives. For
the older audience, weekly newspaper ads are recommended.
•
Carbon County News (Red Lodge)
•
Stillwater County News (Columbus)
•
Powell Tribune (Powell , Wyoming)
Page 8 of 10
For younger adults, the more technologically connected of our audience segments, we
recommend zip code-targeted web ads on the home pages for the Billings Gazette and Billings
TV stations. Ads place through targeted Facebook ads and these media sites can costeffectively reach members in rural areas.
Online media placement has the advantage of being targeted, but also highly measurable. It can
be evaluated during the campaign and continually adjusted for optimum results.
Radio in the rural markets is also an effective way to reach diverse audiences; lots of people are
tuning in to The Mountain 99.3 FM out of Red Lodge.
Expand the email list
We need to try various methods to recruit subscriptions to the email list on the website.
Incentivized sign-ups is one method. The sign-up should be consistently promoted in the
newsletters and other communications.
Regular communications conference calls
A discussion specific to the organization’s communications activities should be held at least
every other month. This regular meeting would provide an internal evaluation of the progress
towards our objectives and needed adjustments in our on-going tactics.
Bring in an expert
Beartooth relies on some of the industry’s most trusted consultants…we should work harder to
distill specific sound bytes from their recommendations to be shared with the membership. But
there is also something to be said for the expertise of someone who does not have a stake in
the discussion. The commentary of someone like Travis Kavulla or another public or high profile
figure could be perceived as an objective and highly informed expert opinion. This has been
Page 9 of 10
effective at Annual Meetings. LVE may have some ideas on industry experts who could provide
comment:

At the town hall meetings (a “headliner” – come and meet….)

At a special board meeting (send out an invitation to members)

Guest blog on the website

Guest editorial for newspaper

Web conference or webinar for members to join
Find ways to introduce FREC and Bryan Case
One of our challenges has been to build familiarity with the LVE management team among our
members. Now we may have FREC to add to that challenge.

Use more photos in communications

Use fresh and frequent photos that show management interacting with members
Page 10 of 10
SECRETARY OF STATE
STATE OF MONTANA
PO Box 202801
Helena, MT 59620-2801
ARTICLES OF INCORPORATION
NONPROFIT PUBLIC BENEFIT CORPORATION
1. The name of the corporation shall be:
BEARTOOTH ELECTRIC OPERATION ROUNDUP, INC.
2. The name and address of the corporation’s initial registered agent is:
1306 N Broadway Ave
PO Box 1110
Red Lodge, MT 59068
3. The name and address of the incorporator is:
1306 N Broadway Ave
PO Box 1110
Red Lodge, MT 59068
4. This corporation is a public benefit corporation without members.
5. This corporation is organized exclusively for charitable, religious, educational, and scientific
purposes, including, for such purposes, the making of distributions to organizations that
qualify as exempt organizations under section 501(c)(3) of the Internal Revenue Code, or
corresponding section of any future federal tax code.
No part of the net earnings of the organization shall inure to the benefit of, or be distributable
to its members, trustees, officers, or other private persons, except that the organization shall
be authorized and empowered to pay reasonable compensation for services rendered and to
make payments and distributions in furtherance of the purposes set forth in the purpose
clause hereof. No substantial part of the activities of the organization shall be the carrying on
of propaganda, or otherwise attempting to influence legislation, and the organization shall not
participate in, or intervene in (including the publishing or distribution of statements) any
political campaign on behalf of any candidate for public office. Notwithstanding any other
provision of this document, the organization shall not carry on any other activities not
permitted to be carried on (a) by any organization exempt from federal income tax under
section 501(c)(3) of the Internal Revenue Code, corresponding section of any future federal
tax code, or (b) by an organization, contributions to which are deductible under section
170(c)(2) of the Internal Revenue Code, or corresponding section of any future federal tax
code.
Upon the dissolution of the organization, assets shall be distributed for one or more exempt
purposes within the meaning of section 501(c)(3) of the Internal Revenue Code, or
corresponding section of any future federal tax code, or shall be distributed to the federal
government, or to a state or local government, for the public purpose. Any such assets not
disposed of shall be disposed of by the Court of Common Pleas of the county in which the
principle office of the organization is then located, exclusively for the purposes or to such
organization or organizations, as said court shall determine, which are organized and
operated exclusively for such purposes.
6. I hereby swear, under penalty of law, including criminal prosecution, that the facts contained
in this document are true.
________________________________
James R. Webb
General Manager of Beartooth Electric Cooperative
________________________________
Date
BYLAWS
OF
BEARTOOTH ELECTRIC OPERATION ROUNDUP, INC.
ARTICLE I – NAME OF ORGANIZATION
The name of the Corporation shall be Beartooth Electric Operation Roundup, Inc., herein below
referred to as “Corporation.”
ARTICLE II – PURPOSE OF ORGANZIATION
The purpose of the Corporation shall be the accumulation and disbursement of funds for
charitable purposes in the service area of Beartooth Electric Cooperative, Inc. Upon dissolution
of the Corporation, any remaining funds shall be distributed only for charitable purposes.
ARTICLE III – FUNDING
The Corporation shall be funded according to such rules and regulations as may be promulgated
by the Board of Directors of Beartooth Electric Cooperative, Inc. and from any other source of
funds available to the Corporation.
ARTICLE IV – BOARD OF DIRECTORS
The Corporation shall be administered by a Board of Directors made up of not less than four (4),
and not more than seven (7), members. Board members shall live within the service territory of
At the initial organizational meeting of the Board of Directors, the members of the Board shall
by lot draw for terms of office of one (1), two (2) and three (3) years. Thereafter, the terms of
office for each Board member shall be for a period of three (3) years.
Board members may be reappointed to the Board at the end of their term.
ARTICLE V – QUALIFICATIONS OF BOARD MEMBERSHIP
A Board member of the Corporation shall be at least eighteen (18) years of age, a permanent
resident of the Beartooth Electric Cooperative, Inc. service territory, and of good moral
character. It shall not be necessary for members of the Board of Directors of the Corporation to
be members of Beartooth Electric Cooperative, Inc. No person seeking or holding a seat on the
Board of Directors of Beartooth Electric Cooperative, Inc. shall remain a member of the
Corporation Board.
ARTICLE VI – SELECTION OF BOARD OF DIRECTORS
The initial Board of Directors shall be designated by the Board of Directors of Beartooth Electric
Cooperative, Inc. Thereafter, when vacancies are to be filled or when terms expire, persons shall
1
be named to their respective vacancies on the Board of Directors by a vote of the Board of
Directors of Beartooth Electric Cooperative, Inc. The existing Board of Directors of the
Corporation may make recommendations to the Board of Directors of Beartooth Electric
Cooperative, Inc. for nominees for the Corporation Board.
ARTICLE VII – COMPENSATION FOR DIRECTORS
No Director shall receive compensation for serving on the Board of Directors of the Corporation.
Such Board members may, however, be reimbursed for mileage and out of pocket expenses
incurred while on the business of the Corporation when such business is sanctioned by the Board
of Directors of the Corporation.
ARTICLE VIII – MEETINGS OF THE BOARD OF DIRECTORS
A. REGULAR MEETING: The Board of Directors shall not meet less than quarterly at a place
designated by the Board. The Board of Directors may meet at such other times as they may
deem at their discretion to be necessary.
B. SPECIAL MEETINGS: Special meetings of the Board of Directors may be called by the
Chairman or by any three (3) Directors and it shall be thereupon the duty of the Secretary to
cause a Notice of such meeting to be given as hereafter provided. The Chairman or Directors
calling the meeting shall fix the time and place.
C. NOTICE OF DIRECTORS MEETING: Written notice of the time and place of regular and
special meetings of the Board of Directors shall be delivered to members of the Board not
less than five (5) days prior thereto, either personally, by mail, or at the direction of the
Secretary, and upon default in that duty by the Secretary, then by the Chairman or Directors
calling for such meeting.
ARTICLE IX – QUORUM
A majority of the Board of Directors shall, unless otherwise designated in these Bylaws,
constitute a quorum. In the event that less than a majority of the Board of Directors is present at
any meeting, the majority of those Directors present may adjourn the meeting and designate a
place and time for the next meeting. An act of the majority of the Board of Directors present at
any meeting at which a quorum is present, and unless otherwise provided in these Bylaws, shall
be the act of the Board of Directors of the Corporation.
ARTICLE X – REMOVAL OF MEMBER OF BOARD
Any member of the Board of Directors of the Corporation shall automatically cease to be a
member of the Board if, and in the event, such member misses three (3) consecutive Regular
Meetings as outlined in Section A of Article VIII of these Bylaws. Any members of the Board
of Directors of the Corporation may be removed from the Board by a two-thirds (2/3) vote of the
entire Board of Directors of the Corporation.
2
ARTICLE XI – OFFICERS OF THE Corporation
The officers of the Corporation shall be Chairman, Vice-Chairman, Secretary and Treasurer, and
such other officers as may be determined by the Board from time to time. For the purposes of
these Bylaws, the above four (4) officers shall constitute the Executive Committee of the
Corporation.
ARTICLE XII – ELECTION OF OFFICERS AND TERMS OF OFFICE
The officers shall be elected annually by the Board of Directors at a meeting of the Board of
Directors held on an annual basis after the initial organizational meeting.
The terms of the officers shall be for one (1) year, however, nothing shall prevent and officer
from being elected to consecutive terms of office.
ARTICLE XIII – EX OFFICIO MEMBERS OF THE BOARD OF DIRECTORS
The General Manager of Beartooth Electric Cooperative, Inc. shall be an ex officio member of
the Board of Directors of the Corporation.
ARTICLE XIV – POLICIES, RULES AND REGULATION
The Board of Directors of the Corporation shall have the power to make and adopt such rules
and regulations, not inconsistent with law, the Articles of InCorporation or these Bylaws, as it
may deem advisable for the management, administration and regulation of the business and
affairs of the Corporation.
ARTICLE XV – DUTIES OF OFFICERS
A. CHAIRMAN: The Chairman shall be the principal executive officer of the Corporation and,
unless otherwise determined by the Board of Directors, shall preside at all meetings of the
Board of Directors and in general perform all the duties incidental to the office of Chairman
and such other duties as my be prescribed by the Board of Directors from time to time.
B. VICE-CHAIRMAN: In the absence of the Chairman, or in the event of his inability or
refusal to act, the Vice-Chairman shall perform the duties of the Chairman, and when so
acting, shall have all the powers of and be subject to all the restrictions upon the Chairman.
The Vice-Chairman shall also perform such other duties as form time to time may be
assigned to him by the Board of Directors.
C. SECRETARY: The Secretary shall be responsible for keeping of the minutes of the
meetings of the members of the Board of Directors in one or more books provided for that
purpose; be responsible for seeing that all notices are duly given in accordance with these
Bylaws or as required by law; be custodian of the corporate records and of the seal of the
Corporation and affix the seal of the Corporation to all necessary documents, the execution
of which on behalf of the Corporation under its seal is duly authorized in accordance with the
3
provisions of these Bylaws; have general charge of the books of the Corporation; be
responsible for the keeping on file at all times a complete copy of the Articles of
InCorporation and Bylaws of the Corporation containing all amendments thereto; and, in
general, perform all duties incidental to the office of the Secretary and such other duties as
from time to time may be assigned to him by the Board of Directors.
D. TREASURER: The Treasurer shall have charge and custody of and be responsible for all
funds and securities of the Corporation; be responsible for the receipt of and the issuance of
receipts for monies due and payable to the Corporation from any source whatsoever, and for
the deposit of all such monies in the name of the Corporation in such bank or banks as shall
be selected in accordance with the provisions of these Bylaws; and in general perform all the
duties incidental to the office of Treasurer and such other duties as from time to time may be
assigned to him by the Board of Directors.
ARTICLE XVI – CHECK SIGINING
Any and all checks issued by the Corporation, for any purpose, shall be signed by two (2)
officers or one (1) officer and one (1) such other person or two (2) such other persons as may be
designated by the Board of Directors as having check signing authority.
ARTICLE XVII – DISBURSEMENT OF FUNDS
Except as otherwise provided in theses Bylaws, the Board of Directors of the Corporation shall
have the full and sole responsibility for the disbursement of all monies of the Corporation in
accordance with these Bylaws and the policies as adopted by the Board of Directors.
Primary priority in the disbursement of funds shall be energy assistance. Other charitable
assistance for food, shelter, clothing, health needs and education shall be based on the
availability of funds.
Prior to consideration by the Board of Directors of the Corporation of any disbursement,
member(s) of the Board of Directors of the Corporation shall disclose and explain any personal
and/or business interest, connection, kinship, or other association he or she has with the person,
family, group, Corporation or other entity under consideration for funding by the Corporation.
Such member shall, if requested by the Chairman or any three (3) members of the Board of
Directors of the Corporation, excuse himself from the meeting and not participate in the
discussion of or voting on the disbursement.
If no request is made that the interested director excuse himself or herself form the meeting, then
and in that event, said director may participate in the discussion of the disbursement but shall not
vote on the disbursement.
ARTICLE XVIII – ACCUMULATION OF FUNDS
4
The Corporation will receive funds transferred to it by Beartooth Electric Cooperative, Inc. The
Corporation may also solicit and accept contributions from other sources as deemed appropriate
by its Board of Directors.
ARTICLE XIX – INVESTMENT OF FUNDS
The Board of Directors of the Corporation shall be responsible for the funds entrusted to it and
shall make such investment of said funds in a manner which is reasonable and prudent and in
keeping with these Bylaws and the polices of the Corporation.
ARTICLE XX – AMENDMENT OF BYLAWS
The Bylaws may be altered, amended, or repealed by the Board of Directors of Beartooth
Electric Cooperative, Inc. at any regular meeting of said Board after at least ten (10) days notice.
The Board of Directors of the Corporation may make advisory recommendations to the Board of
Directors of Beartooth Electric Cooperative, Inc.
ARTICLE XXI – ACCOUNTING SYSTEM & REPORTS
The Board of Directors of the Corporation shall cause to be established and maintained a
complete accounting system that is in keeping with sound financial management and further
more the Board of Directors of the Corporation shall make reports to the Board of Directors of
Beartooth Electric Cooperative, Inc. on the operation and expenditures of the Corporation as may
be necessary and prudent, but in no case less than annually.
ARTICLE XXII – POLITICAL CONTRIBUTIONS
No funds of the Corporation shall in any fashion be used to support any candidate for political
office or for any political purpose.
ARTICLE XXIII – BORROWING FUNDS
The Corporation shall NOT have any authority to borrow monies from any bank, savings and
loan or other institution for any purpose.
ARTICLE XXIV – EMERGENCY EXPENDITURE
The Executive Committee of the Corporation by a vote of at least three (3) of its members may
from time to time make expenditures on an emergency basis, in accordance with these Bylaws,
and policies adopted by the Board of Directors of the Corporation, and in accordance with the
purpose of this Corporation in an amount not exceeding one-thousand dollars ($1,000.00) to any
person, family, group or organization. Such emergency expenditures shall be fully disclosed by
the Executive Committee at the next regularly called meeting of the Board of Directors of the
Corporation.
ARTICLE XXV – AMOUNT OF EXPENDITURES
5
Unless otherwise provided in these Bylaws, and in keeping with the purpose of the Corporation,
the Board of Directors of Corporation may make annual expenditures of Corporation funds by
majority vote of members present at a meeting and constituting a quorum according to the
following rules:
A. Not more than two-thousand-five-hundred dollars ($2,500.00), annually to any individual.
B. Not more than ten-thousand dollars ($10,000.00) annually to any family unit, group,
organization, charity or like organization.
ARTICLE XXVI – EXPENDITURES EXCEEDING TEN THOUSAND DOLLARS
Notwithstanding any other provision of these Bylaws, the Board of Directors of the Corporation
may, by a two-thirds (2/3) vote of the entire Board of Directors make expenditures in any
amount to any person(s), family unit, group, organization, charity or like organization which
such members determine is in keeping with the purpose and spirit of the Corporation and these
Bylaws.
ARTICLE XXVII – PROXY VOTING
Proxy voting at any meeting of the Board of Directors of the Corporation is not allowed.
ARTICLE XXVIII – AUDIT
On an annual basis the firm retained by Beartooth Electric Cooperative, Inc. will perform an
audit of the books and records of the Corporation and make a report to the Board of Directors of
the Corporation and the Board of Directors of Beartooth Electric Cooperative, Inc.
ARTICLE XXIX – FISCAL YEAR
The Fiscal Year of the Corporation shall commence on the first day of January of each calendar
year and end on the 31st of December of each calendar year.
ADOPTED: INSERT DATE
6

BEC BOARD MEETING February 23, 2016

Transcription

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