Choptank Electric Cooperative 2014 Annual Report

Choptank Electric Cooperative
2014 Annual Report
Letter to our Members
From the President and CEO
and the Chairman of the Board
Mission
Choptank Electric Cooperative exists to provide reliable and cost effective
electricity that improves the quality of life for our member-owners. We are
committed to service excellence and guided by the Seven Cooperative Principles.
2014 was a very successful but challenging year for our Cooperative. The year started
with cold weather in January and February which was scientifically explained to us as
a Polar Vortex. Our system held up well during the vortex with minimal issues. The extreme cold weather did lead to increased wholesale power
supply costs from Old Dominion Electric Cooperative (ODEC). Conversely the year progressed forward with mild weather in the summer and
fall which lead to lower kilowatt hour (kWh) sales for the entire year.
Olin S. Davis, III
Chairman,
Kent County
Jeffrey D. Rathell, Sr.
Vice Chair,
Talbot County
John J. Burke, Jr.
Secretary-Treasurer,
Cecil County
Robert E. Arnold
Queen Anne’s County
David W. Bruning
Worcester County
Francis A. Callahan, Jr.
Caroline County
Matthew R. Holloway
Wicomico County
Francis A. Ruffo, Sr.
Ocean Pines District
Douglas D. Scott
Dorchester County
Carl R. Widdowson
Somerset County
Our Reliability for 2014 was outstanding. Through Board supported and approved capital investments in infrastructure over the past several
years, 2014 was our best reliability year over the past 5 years. As measured by SAIFI, an industry statistic for frequency of outages, there was less
than one outage per member for 2014. As measured by SAIDI, an industry statistic for duration or length of outages, Choptank Electric had a
reliability rate of 99.98%. Both of these statistics have improved to the point where Choptank Electric exceeded state standards for 2014.
Over the past several years, our capital spending on infrastructure has focused on grid resiliency and preventing long-term outages. Part of this
spending goes towards converting overhead power lines to underground lines, which require less maintenance. In May 2014, the new Bayly
Substation in Cambridge became fully operational, improving our service in Dorchester County.
The lower kWh sales for the year, low system-wide growth over the past six years, along with our reliability and resiliency investments have
put pressure on the Cooperative to raise rates. For the first time in six years the Cooperative filed for a rate increase with the Maryland Public
Service Commission. The Commission rules on the need and the level of the increase. The new rates, if approved, are expected to be in place by
July of 2015.
In order to provide better service and rates over the long run we also began two significant projects in 2014. We held a groundbreaking
ceremony for a new Regional Service Center (RSC) in Salisbury. This RSC should provide for a larger, more flexible workforce for our members
in Worcester, Wicomico and Somerset Counties. It also provides redundant backups for our Member Service Center and 24-hour System
Control Center should a catastrophic event impact our Headquarters office in Denton.
Our other significant project for 2014 was making the decision to convert our existing meter system to a state-of-the-art advanced meter
infrastructure (AMI) system. This decision should help the Cooperative reduce costs over time, allow the member to view their usage, and make
informed decisions on how to save money on their electric bills. This system will also serve as a platform for us to deliver automatic electronic
messages to some of our equipment which will provide better service.
Our member communication efforts improved during the year as we increased utilization of social media, such as Facebook, Twitter, and
YouTube. The Cooperative also instituted the E-News Preference Center. This great new email communications tool enables our members
to pick and choose what kind of information they want from their cooperative. There are five different topics of information to choose from
including: Co-op News, Energy Efficiency, Green and Growing, Beat the Peak, and Special Alerts.
Our employees kept safety in the forefront during the year. We recently instituted a safety culture work group for our administrative
employees to parallel the outdoor workforce safety culture team we’ve had since 2009. We achieved a significant milestone during the year by
accomplishing over 750,000 hours without a lost time accident.
As we look back on 2014 and forward to 2015 and beyond, we continue to recognize that serving our members is our primary focus. Our Board
of Directors and employees work hard to provide our members with exceptional service. Members First, Every Day!
Michael I. Wheatley,
President and CEO
Robert P. Behlke,
Vice President of
Member Affairs
Todd R. Bireley,
Vice President of
Engineering Services
W. Lance Lockerman,
Vice President of
Distribution Services
The Board of Directors Management
Choptank Electric Cooperative is a member-focused business, with emphasis
on serving our members. Our mission to provide safe, reliable, and cost effective
electricity could be summarized by saying that we focus on two R’s and two S’s. The
two R’s of Reliability and Rates and the two S’s of Safety and Service could be viewed
as a four legged stool that helps us reach the next level of service for our members. It’s
important for us to emphasize and excel on each leg of the stool so that we can attain
member satisfaction.
Choptank Electric is a Touchstone Energy Cooperative...
Wildcat Point Generation Facility
Touchstone Energy is the national brand that champions the value of the cooperative difference. Its mission is to bring a
strong local and national presence to electric cooperatives. The network is made up of close to 750 local, member-owned
electric cooperatives in 46 states. Since 1999, Choptank Electric Cooperative has been a proud Touchstone Energy Cooperative
and abides by Touchstone Energy Cooperative’s four core values: Innovation, Integrity, Accountability, and Commitment to
Community.
Operations
Improvements
for 2014
The Choptank Electric
Board of Directors approves
funding for major and
minor improvements
and maintenance for
system-wide reliability. In
2014 Choptank Electric
improved substations, line
replacement, fiber, and
underground projects.
Each project was carefully
selected by the Engineering
and Operations departments
of the Cooperative.
Below: Because of
woodpecker issues, Choptank
Electric replaced nine wooden
poles on the Royal Oak
transmission line with the
first steel poles on Choptank
Electric’s system.
One of the major
accomplishments this year was
energizing Bayly Substation in
Dorchester County (left). This
substation was built to provide
better backfeeding capabilities,
more reliability, and voltage
improvement. Bayly Substation
has been operational since May
14, 2014.
Another improvement project
that was completed was the
transmission overhead line
replacement from the Hobbs
Substation to Williston Substation
in Caroline County. Originally
a part of Delmarva Power’s
infrastructure, Choptank Electric
upgraded the lines to improve
reliability.
Throughout the service territory, 12 substations were connected to Choptank Electric’s fiber optic network. Replacing old,
unreliable copper wiring with new fiber optic networking improves the reliability of Choptank Electric’s communication with
the substations.
Below Middle: During the summer, Choptank Electric replaced several miles of three phase line on Hooper’s Island and
on Hooper’s Island Causeway in Dorchester County. Most of the overhead line was converted to underground, and the
lines that traveled over the Causeway were brought closer to the roads for easier access by the crews. These changes
were made because storms consistently caused
outages for these members. This improvement will
create less frequent outages for the members.
Below: Choptank Electric reinstalls the Mardela
Substation transformer, located in Wicomico
County. Periodic oil testing on all transformers is
performed every year to prevent transformer failure.
This transformer had new windings installed to
prevent future transformer failure.
Along with these larger projects Choptank Electric
also completed numerous small overhead to
underground conversions, and replaced numerous
older reclosers with new electronic reclosers.
Wildcat Point is a state-of-the-art combined-cycle, natural gas-fired power plant energy
generation facility under construction in Cecil County, MD. Built by Old Dominion Electric
Cooperative (ODEC), Wildcat Point will create up to 600 construction jobs and approximately
30 permanent jobs. This facility will be one of the cleanest natural gas facilities of its size on the
East Coast and will generate approximately 1,000 megawatts, or enough electricity to power
390,000 homes. Wildcat Point was approved in May 2014 and the groundbreaking ceremony
was held on October 14, 2014. This facility is set to be completed in the spring of 2017.
Safety
Choptank Electric Cooperative is proud of its Grassroots Safety
Teams. These teams are comprised of hourly and management
employees. The teams identify safety concerns and issues, make
recommendations for improvements, and foster the best safety
practices throughout the cooperative.
As a result, by year’s end, Choptank Electric’s employees took
pride in having accomplished a 750,000 hour mark with no losttime accidents.
Vegetation Management
The mission of Vegetation Management is to provide
safe, reliable electric to the Cooperative’s members using
proven vegetation management activities such as tree
trimming, tree removal, mowing, and herbicide application
to clear non-compatible vegetation from within and
around the varying utility resources maintained by the
Cooperative.
Following sound vegetation management techniques that
meet all local, state, and federal regulations while enriching
the natural resources of the Eastern Shore of Maryland,
Vegetation Management represents the largest portion
of the Right-of-Way budget. This provides maintenance
activities for all nine counties in a three year maintenance
cycle.
Since May of 2003, all tree trimming and mowing
operations have been performed by Asplundh Tree Experts
of Willow Grove, PA. Over this 11-year period, they have
provided a mix of resources to assist the Cooperative in its
effort to maintain vegetation and minimize its impacts. In
2014, they trimmed 570 miles of line, mowed 391 acres of
land, removed 3,427 trees, and also sprayed 591 acres of
property with herbicide to keep the areas contained.
The Gaff N’ Go Rodeo is designed to help build confidence,
engage friendly competition, and provide teachable moments
for linemen in conjunction with the MD, VA, & DE Association.
Choptank Electric Cooperative had five employees attend the
Gaff N’ Go Rodeo in early April. Two employees competed
individually while three were judges for certain linemen competitions. Choptank Electric is very proud of the linemen who
participated and how they strive to better themselves and show
pride in what they do, every day.
The beginning of 2014 was one of the harshest winters
that the Eastern Shore has ever experienced. During harsh
weather events, the demand for electric goes up, causing
the price of electricity to skyrocket. This may create higher
than normal electric bills. During the month of July, a
Power Cost Adjustment was filed with the Maryland Public
Service Commission. This adjustment affected the power cost side of the bill. The increase
was driven by higher costs from our power supplier, Old Dominion Electric Cooperative
(ODEC) because of the colder than normal temperatures during the winter months.
Winter’s Harsh
Realities
The Cooperative also filed with the Maryland Public Service Commission in October 2014 to revise its rates and charges for electric service. Electric bills
are “unbundled” into distribution and supply, and this filing was an adjustment to the distribution rates. Distribution represents approximately one-third
of the total bill. This proposed rate adjustment, if approved, will result in an overall increase to residential rates of about seven percent. It has been six
years since the last rate increase of this kind. Choptank Electric anticipates the new rate to become effective July 2015.
Commitment to Community
Innovation
The new website and outage
map was launched to the
membership in May. Partnering
with Touchstone Energy
Cooperative’s Co-op Web
Builder, Choptank Electric
created a website with easily
accessible features. This
new website displays options
clearly and has quick links to
SmartHub, the online bill pay,
the newly re-designed outage
map, Facebook, Twitter, and
YouTube. Choptank Electric
promotes its programs and
special announcements in a
new rotating banner feature,
and is able to showcase new
videos on its homepage.
E-News Preference
Center
In October, Choptank Electric
introduced the newest
communications tool for its
membership: the E-News
Preference Center. This is a
more personalized approach to
communicating co-op news and
information to the membership.
Members are given five different
informational topics to choose
from: Co-op News, Energy
Efficiency, Green and Growing,
Beat the Peak, and Special
Alerts. Members can choose
all five or just one topic to be
emailed directly to their inbox.
The Preference Center gives
the member control over what
they want to receive from their
Cooperative.
The Co-op
Connections Card
Scan here for
a live view of
the Outage
Map!
Regional Service Center
Choptank Electric Cooperative held a
groundbreaking ceremony on October 28, 2014
to start the construction of a new Regional
Service Center. The new RSC will be located
on Walston Switch Road across from Wor-Wic
Community College in Salisbury, MD. The
architectural design
and plans are by Davis,
Bowen, and Friedel,
Inc. of Salisbury and
the construction has
been contracted with
Gillis Gilkerson Inc.
of Salisbury, MD. The
building will have the
distinction of being
LEED Silver certified
and is scheduled to be
completed in the fall of
2015.
Right: The Choptank
Electric Board of
Directors celebrating the
groundbreaking ceremony
for the RSC.
During the summer, the ALS Association (or Lou Gehrig’s Disease) had a surge in
exposure on Facebook through the Ice Bucket Challenge. Choptank Electric Cooperative
participated in the Ice Bucket Challenge by nominating President and CEO, Mike
Wheatley who passed the challenge on to the Choptank Electric linemen. The challenge
was met by the Denton District linemen. Choptank Electric is proud to support such a
worthy cause!
Capital Credits
Members contribute
equitably to, and
democratically control, the
capital of the Cooperative.
The economic benefits of
a Cooperative operation
are returned to the
members, reinvested in
the Cooperative, or used to
provide member services.
In December, the Choptank
Electric Cooperative Board
of Directors voted to return
more than $2 million to its
members.
Operation Round Up
The Co-op Connections Card, a Touchstone Energy
Program, is a member benefit card that offers
discounts on products and services at participating
local, regional, and national businesses.
The Co-op Connections Card also offers significant
savings on pharmacy prescriptions, up to 85 percent.
Since 2008, when the card was first introduced, our
members have saved over $500,000 on prescription
discounts!
A new program feature, Healthy Savings, offers
savings on dental, vision, hearing, chiropractic, lab
and imaging services. All members were mailed a new
Co-op Connections Card in October to introduce a new
look to the card, new smart phone app information,
and Healthy Savings features.
At the August Trust Board meeting, the Choptank Electric Trust reached
their $3 million donation milestone. Above, the Trust poses with the $3
million donation check. The Trust is funded through Operation Round Up,
a voluntary contribution program, whereby, Choptank Electric members
can “round up” their monthly bill to the nearest dollar. Choptank Electric
would like to thank all of the members who participate in this program.
Youth Tour
Pictured right are the five
high school juniors and
chaperone Kevin Wright,
Regional Member Service
Manager, who traveled
to Washington, D.C. in
2014. This unique trip gives
students the opportunity to
watch history come alive as
they explore the museums,
memorials, and monuments
with other students from
all across the U.S. while
also meeting Maryland’s
U.S. Representatives and
Senators.
Operation Round Up Trust Scholarships &
Additional Opportunities
The Choptank Electric Trust Scholarships are funded
by the Operation Round Up program, and awarded
by the Choptank Electric Trust. These scholarships,
worth $2,000, are awarded to eight students on the
Eastern Shore of Maryland. Applicants must be high
school seniors and their parents or guardians must be
members of Choptank Electric Cooperative.
An additional five students
received $1,000 “Luck of the
Draw” Scholarships presented
by the Choptank Electric
Board of Directors during the
2014 Annual Meeting.
The Youth Tour program
is a national program
sponsored by the
National Rural Electric
Cooperative Association
(NRECA). More than
1,500 students from
across the U.S. take
part in the Youth
Tour experience
each year.
Choptank Electric Cooperative, Inc.
Statement of Operations
Choptank Electric Cooperative, Inc.
Balance Sheet
December 31, 2014 and 2013 (Note: The Statement of Operations for 2014 and 2013 are audited results.)
Income
1.Revenue
Expenses
2.
Purchased Power Cost
3.
Operations Expense
4.
Maintenance Expense
5.
Consumer Account Expense
6.
Admin & General Expense
7.Depreciation
8.Taxes
9.
Interest Expense
10. Other Deductions
Total Expenses
Margins
11.
12.
13.
14.
Operating Margins
Non-Operating Margins
G & T Capital Credits
Other Cap Credits/Patronage Dividends
Total Margins
December 31, 2014 and 2013 (Note: The Balance Sheet for 2014 and 2013 are audited results.)
2014
$125,155,441
2013
$122,377,660
$80,312,741
$4,143,557
$7,034,859
$4,273,825
$6,542,149
$11,867,730
$3,168,300
$8,427,759
$354,720
$126,125,640
$72,019,571
$4,233,532
$6,585,678
$4,066,928
$6,869,555
$11,507,331
$3,180,477
$8,207,155
$229,061
$116,899,288
($970,199)
$621,832
$827,453
$747,430
$1,226,516
$5,478,372
$1,842,490
$869,523
$803,461
$8,993,846
Assets (What We Own)
1.
Net Utility Plant
2.Investments
3.Cash
4.
Accounts & Notes Receivable
5.
Materials & Supplies
6.
Prepaid Expenses
7.
Other Current & Accrued Assets
8.
Deferred Debits
2014
$266,506,095
$60,774,911
$2,074,700
$5,910,562
$7,654,846
$2,280,944
$15,165
$824,839
2013
$262,853,300
$61,328,696
$265,825
$6,909,586
$4,456,566
$1,813,510
$50,036
$215,784
$346,042,062
$337,893,303
Total Assets
Liabilities
9.
10.
11.
12.
13.
14.
15.
16.
Long Term Debt
Notes Payable
Accounts Payable
Consumer Deposits
Current Maturities Long-Term Debt
Other Liabilities
Deferred Credits
Accumulated Operating Provisions
$184,864,710
$9,240,000
$10,664,023
$2,447,527
$8,220,376
$3,694,034
$2,454,532
$8,039,343
$176,171,043
$12,117,499
$8,351,798
$2,271,543
$8,123,920
$3,678,563
$2,070,235
$6,722,000
Total Liabilities
$229,624,545
$219,506,601
Members’ Net Worth
Real Estate & Personal
Property Taxes
Paid by CEC
County
2014
Caroline
$686,698
Cecil
$136,354
Dorchester
$442,495
Kent
$201,382
Queen Anne’s
$195,552
Somerset
$221,580
Talbot
$301,896
Wicomico
$402,240
Worcester
$451,493
Total
$3,039,690
Cooperative Facts 2014
Purchase kWh from ODEC: 1,058,589,828
Purchase kWh from other sources: 995,650
Member average interruption time: 1.49 Hours
(Major storm and power supplier outages removed)
Total calls received in Member Service Center: 79,575
Peak System Load (Winter): 1/30/2014
Load: 284,154 kW
Time: 8am
Peak System Load (Summer): 7/2/2014
Load: 234,699 kW
Time: 4pm
17.
18.
19.
Membership Fees
Accumulated Margins
Other Equities
$384,455
$113,045,773
$2,987,289
$384,455
$114,643,141
$3,359,106
Total Members’ Net Worth
Total Liabilities/Net Worth
$116,417,517
$346,042,062
$118,386,702
$337,893,303
Meters
Residential 47,573
C & I
4,815
Primary 25
Lighting234
Total: 52,647
2014 Electric Revenue By
Rate Class (audited)
2014
Residential
$89,118,052
Commercial
$25,817,866
Power
$8,148,252
Street Light
$205,028
Other
$1,866,243
Total
$125,155,441
%
71.21%
20.63%
6.51%
0.16%
1.49%
100.00%
Choptank Services Corporation, Inc.
Balance Sheet and Income Statement
December 31, 2014 and 2013 (Note: The Balance Sheet and Income Statement for 2014 and 2013 are audited results.)
Income Statement
Expenses
Interest Expense
Professional Fees
Miscellaneous Expense
Total Expenses
Other Income
Gain – Sale of Stock
Dividend Income
Patronage Capital – CoBank
Income/Loss Investment Subsidiaries
Total Other Income
Net Income
Cooperative Energy Information
Choptank Services Corporation is a wholly-owned
subsidiary which owns approximately 44% of MidAtlantic Cooperative Solutions (MACS). MACS provides
multi-fuel distribution services including propane and
diesel oil, primarily to Pennsylvania and Maryland.
2014
2013
$99,025
$36,102
$21,639
$156,766
$120,783
$3,881
$15,497
$140,161
Kilowatt Hour Sales
(In Millions)
861.2
957.3
940.1
938.0
2007
2008
2009
1,000.4 1,002.1
956.6
970.7
993.6
1050
1000
950
900
850
$140,532
$167,200
$26,800
$242,156
$576,688
$419,922
$0
$107,888
$20,684
$387,260
$515,832
$375,671
800
750
2006
2010
2011
2012
2013
2014
$76.8
$76.1
$72.0
$80.3
2011
2012
2013
2014
Wholesale Power Cost
(In Millions)
$62.8
$76.2
$80.5
$80.3
$77.5
2007
2008
2009
2010
100
80
Balance Sheet
Current Assets
Cash
Prepaid Office Expense
2014
2013
$22,870
$106
$22,976
$100,105
$50
$100,155
$1,000
$3,408,572
$230,267
$3,639,839
$3,662,815
$1,000
$3,290,881
$223,567
$3,515,448
$3,615,603
$6,049
$2,327,898
$0
$2,333,947
$9,721
$1,869,336
$2,912
$1,881,969
$0
$0
$824,687
$2,706,656
$2,095,000
($1,186,054)
$419,922
$1,328,868
$3,662,815
$2,095,000
($1,561,724)
$375,671
$908,947
$3,615,603
60
40
Total Current Assets
Other Assets
Investment in CoBank
Investment in MACS
Patronage Capital – CoBank
Total Other Assets
Total Assets
Current Liabilities
Accrued Year End Expenses
CoBank Line of Credit
Payable to Choptank Electric
Total Current Liabilities
Long Term Liabilities
CoBank Fixed Rate Loan
Total Liabilities
Equity
Investment from Choptank Electric
Retained Earnings
Net Income
Total Equity
Total Liabilities and Equity
20
0
2006
Average Residential Usage
1,153
1,202
1,157
2007
2008
1,152
(Monthly)
1,230
1,222
1,141
1,179
1,217
2010
2011
2012
2013
2014
1250
1200
1150
1100
1050
2006
2009
Meters Served
(Annually)
51,097
51,641
2006
2007
52,002
52,143
52,243
52,264
52,259
52,406
2009
2010
2011
2012
2013
52,647
53000
52500
52000
51500
51000
50500
50000
2008
2014
Choptank Electric Cooperative, Inc.
P.O. Box 430
Denton, MD 21629
www.choptankelectric.coop
Toll-Free: 1.877.892.0001
Outage Reporting: 1.800.410.4790
Automated Member Service: 1.866.999.4574
Photo Cover: Levi Sparks, son of Shawn Sparks, Manager Operating Services, chose to dress as a
Choptank Electric Cooperative Lineman for Halloween 2014. (Photo Credit: Martha Sparks)
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