REGULAR BOARD MEETING June 27, 2019 PLEDGE OF A! … · OWEN ELECTRIC COOPERATIVE REGULAR BOARD...

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OWEN ELECTRIC COOPERATIVE REGULAR BOARD MEETING

June 27, 2019

PRESENT The regular meeting of the Board of Directors of Owen Electric Cooperative, Inc.,was held at the Headquarters Building in Owenton, Kentucky, on June 27, 2019. All Directors were present, along with: Mark Stallons, Rusty Williams, Jim Petreshock, Scott Lawless, Teresa Hamilton, Jennifer Taylor, Christel Buffin and Attorney James Crawford. Guests present were: Kerry Bowlin, Blevins Bowlin, Shawn Murdock, and T J Scott, Charlie Cain.

CALL TO ORDER, PLEDGE OF A!-LEGIANCE AND INVOCATION

The meeting was called to order, and the Pledge of Allegiance and invocation were given by Jim Petreshock and Mr. Stallons, respectively.

ADOPTION OF AGENDA Upon a motion by Rick Messingschlager, seconded by Eddie McCord, the Board

voted unanimously to adopt the June, 2019, Board Meeting Agenda as presented.

MINUTES APPROVED Upon a motion by Charlie Richardson, seconded by Hope Kinman, the Board

voted unanimously to approve the May 28, 2019, Board Meeting Minutes as submitted.

MEMBER CONCERNS

Several board members discussed the many compliments they heard regarding good service from members at the annual meeting.

NEW MEMBERS ACCEPTED !

The Directors then reviewed and accepted the listing of 537 New Members.

REVIEW OF LISTING OF TERMINATED ACCOUNTS

The Directors then reviewed and accepted as information a listing of the terminated accounts.

REVIEW OF PRESIDENT'S CONSULTANT'S AND DIRECTORS' EXPENSES The Directors then reviewed and accepted as information a listing of the previous

month's expenses incurred by the President, Consultant and Directors.

UNCOLLECTIBLE WRITE-OFFS AND CAPITAL CREDIT PAYMENT

RegularBoard Meeting

June 27, 2019

Agenda

• Directors Present/Absent• Call to Order/Pledge of

Allegiance/Invocation

Agenda & Minutes

• Adoption of Agenda (Tab 3)

• Approval of Minutes of Previous Meeting

(Tab 4)

Review/Discuss Member

Compliments and/or Concerns

Review Agenda

• Review New Members: 537(Listing on Board Table)

• Review Listing of Terminated Accounts:268 Members at $31,974.19(Listing on Board Table)

Review Agenda

Review of President’s, Directors’ and Consultant

Expenses

May 2019

Consent Agenda Items

• Approve Uncollectible Member Write-offs: 78 Members at $15,773.34 (Listing on Board Table)

• Approve Payment of Capital Credits: $23,395.61(Tab 10)

• Approval of Consent Agenda Items– Motion ________________________– Second________________________

DepartmentalReports

Board of DirectorsJune 27, 2019

Department ReportSafety, HR, Accounting

2014 2015 2016 2017 2018 2019

Lost Time Restrictions No Lost Time Incident Rate

KPI Threshold Target Stretch YTDIncident Rate 3.77 1.51 0.00 2.22Severity Rate 42.23 21.90 0.00 31.07

Safety MetricsIncident Rate

KPI Threshold Target Stretch YTDIncident Rate 3.77 1.51 0.00 2.22Severity Rate 42.23 21.90 0.00 31.07

Safety MetricsSeverity Rate

79.88 76.91

221.00

2014 2015 2016 2017 2018 2019

Medical Plan - OEC

• Funding = $145,555• Claims = $267,147• Deficit = ($120,592)

May 2019

• Funding = $723,467• Claims = $933,412• Deficit = ($209,945)

$- $50,000

$100,000 $150,000 $200,000 $250,000 $300,000 $350,000

Jan Feb Mar Apr May

Plan Contributions Claims Funding

$200,000

$400,000

$600,000

$800,000

$1,000,000

Jan Feb Mar Apr May

Medical Plan - KREC

• Funding = $2,110,129• Claims = $2,470,198• Deficit = ($360,069)

May 2019

• Funding = $10,627,429

• Claims = $10,630,597• Deficit = ($3,169)

$500,000

$1,000,000

$1,500,000

$2,000,000

$2,500,000

$3,000,000

Jan Feb Mar Apr May

Jan Feb Mar Apr May $-

$2,000,000

$4,000,000

$6,000,000

$8,000,000

$10,000,000

$12,000,000

Statement of OperationsMAY 2019

5 Year ComparisonOperating Margins

($348) $10

($400)

($300)

($200)

($100)

2015 2016 2017 2018 2019

Operating Margins Operating Revenue Total Cost of Electric Service

Statement of OperationsYTD 2019

5 Year ComparisonOperating Margins

YTD thru MAY

$1,000

$1,500

$2,000

$2,500

$3,000

YTD 15 YTD 16 YTD 17 YTD 18 YTD 19

Operating Margins Operating Revenue Total Cost of Electric Service

12 Month Rolling AvgControllable Cost Per

Consumer

$306.93 $307.83

$313.97

$308.37

59,410

61,881

58,000

58,500

59,000

59,500

60,000

60,500

61,000

61,500

62,000

62,500

Expense per Consumer AVG 12-month consumers Linear (Expense per Consumer)

2019 YTDFinancial Metrics

Key MetricsMAY2019

Rolling 12 Month Benchmark

T.I.E.R 2.078 3.490 1.25O.T.I.E.R 1.861 - 1.10DSC 2.409 1.35ODSC - 1.857 1.35EQUITY w/o EKPC - 31.91% 20%-35%CURRENT RATIO - 0.862 > 1.0

Days of Liquidity

Days of Liquidity in Unrestricted Funds 36

Days of Liquidity in Credit Facility Availability 101

Days of Liquidity in Cushion of Credit 28

Total Days of Liquidity & Cushion of Credit 165

Member Services and Marketing Overview

Presented By: Scott Lawless

Member Services and Marketing Summary

May 2019 Statistics

Youth Tour Delegates

Frankfort Youth Tour – March 5, 2019

Congratulations to the following, as they havebeen selected on the basis of application,essay and participation to represent OwenElectric Cooperative in Washington D.C. on theWashington Youth Tour in June:

Jessa Luxon, School of the Rock – FlorenceSerenity Rogers, iLEAD Academy – WorthvilleAustin Arnold, Scott High School – IndependenceNoel Baker, Notre Dame Academy - Covington

Congratulations to Owen Electric Washington Youth Tour Delegate, Jessa Luxon, on being selected to represent Kentucky on the NRECA Youth Leadership Council (YLC). One student from each state is selected and will come back to Washington, D.C., in July for a leadership workshop which will focus on the electric cooperative industry.

Each student will prepare a 5-7 minute speech about what inspired them during their Youth Tour trip. The YLC National Spokesperson will be selected to address the membership at the NRECA Annual Meeting and to address the Youth Tour delegates the following year.

Members of the YLC play an important role during NRECA’s Annual Meeting the following spring. Not only are the YLCmembers recognized on stage, they have a hands-on experience with virtually every facet of the meeting including the resolutions process and helping our members communicate with their legislators.

Youth Leadership Council members leave more poised, confident and a better developed leader with a strong determination to improve your community and make their country a better place. Further, they leave having built life-long friendships with other student leaders from across the country.

(School of the Rock, from Florence)

Washington Youth Tour

2019 Member Appreciation Day and Annual Meeting

2018 Registered Members compared to 2019 Registered Members

020406080

100120140160180

Number Registered Per Half Hour

8:30 9:00 9:30 10:00 10:30 11:00 11:30 12:00 12:30 1:00 1:30 2:00 2:30 3:00 3:30 4:00 4:30 5:00 5:30 6:00

Total Registered Members Timeline

194 Scholarship Entries

Congratulations to winners of (12) $1,000 scholarships from our annual drawing:

Lauren Reinersman (California) Megan Wells (Verona)Maria Seiter (California) Allison Lenox (California)Nathan Harrigan (Burlington) Kirsten Bartlett (Burlington)Nolan Calhoun (Corinth) Ellie Martin (California)Megan Hugenberg (Union) Sophie Blaine (Dry Ridge)Tanner Green (Independence) Madelyn Kim (California)

Member Appreciation Day & Annual Meeting Prize Drawings

Grand Prize - $1,000 Energy Star Appliance Gift Certificate: Anita Boyer42” LED TV: Dwight and Debra Vater$150 Kentucky State Park Gift Card: Gregory & Jacqueline Mattan$150 Kentucky State Park Gift Card: Matthew & Danita SchwallerYeti Roadie 20 Cooler: Phillipp and Kitty HaberzKitchenAid Classic 4.5 Quart Mixer: Jeff and Linda MyersChar-Griller Wrangler Charcoal Grill: Angie GibsonFarberware 3.2 Quart Digital Oil-Less Fryer: Gary BrockApollo 53-Piece Roadside Emergency Kit: Joseph & Amy GregoryGirls 20” Bike: Destiny JacobsBoys 20” Bike: Kaden Lusby

Questions / Discussion

Operations Board Report

June 2019

2019 Right-of-Way

ROW program is now approximately 200 miles behind schedule:•100 miles carryover from 2018•100 miles YTD for 2019

This is due to weather and labor shortage.

YTD Target – 2019 % Complete

Trimming Miles 167.64 927 18%

Spraying Miles 0 790 0%

Capital vs Expense

Outage Expense YTD5 year comparison

Construction

219368

Jobs Worked Total Temporaries Connects

Construction

163141

Inactive Tear Outs Poles Changed Out Reconductor JobsWorked (Miles)

PSC Line Inspection

YTD Target - 2019 % CompleteNumber of Feeders 31 54 57%Number of Meters 17,503 29,035 60%Miles of Line 1,167 2038.80 57%

Inspection Hours 612.00Cost $56,268.50Inspection Hours/Meter .03Cost/Meter $3.21Cost/Mile of Line $48.21

Out of Town CrewsStorm Restoration

West KY RECCJune 21-25

(4) 2 men crews

(1) 4 men Construction Crew

Technology Report

June 2019

May Outages

178298

654534

Monthly 2019

Adjusted

2019 YTD

Adjusted

2018 YTD

Adjusted

Monthly 2018

Adjusted

53.40 53.2044.54

Interruptions by Outage TypeYTD & Monthly [May]

Q1 Q2* Q3 Q4 YTD

SAIDI 33.30 25.76 0.0 0.0 59.08

SAIFI 0.45 0.58 0.0 0.0 0.70MED 0 0 0 0 0

THRESHOLD

TARGET

STRETCH

Reliability KPIs

MonthMonthly

PeakMW

Shaved Times HrsKW Demand

SavingsKwh

Sales Loss

Jun-19** 1748.0 0.00 2 2.1 $0.00 $2,33707

** Current monthly peak as of this report

System Operations

Total MW

ShedPeaks

Caught

Total DVR

Periods

Total DVR

Total Yearly

Demand Savings

RunningTotal

Demand Savings

38.0 5 of 6 19 51.3 $113,789.98 $1,154,729.04

YTD DVR**

Monthly DVR

Phishing KPI

Phish Prone Limits Risk Level

>15% High Risk2.5 – 15% Medium Risk

< 2.5% Low Risk

Technology

Cyber Security Training KPI

Uncompleted Limits Risk Level

>20% High Risk

5 – 20% Medium Risk< 5% Low Risk

Technology

Questions??

Engineering ReportPresented By: Jennifer Taylor

June 2019

Engineering UpdateDG Unit

Runtime Efficiency

March 88.8% 39.5%April 85.0% 40.0%May 83.3% 37.9%Since start up 83.9% 39.4%

DG Stats

Runtime hit due to CAT installing new heads and gaskets (free) and a replacement of a spark plug (CAT provided plug).

Efficiency hit due to reduced runtime and a crack in the air intake (repaired early June).

Without Depreciation May-2019 YTD 2019 LTD

Purchased Power Savings $ 66,468 $ 373,098 $ 2,499,119

Power Production Costs $ 45,410 $ 276,084 $ 1,859,048

Net Savings $ 21,058 $ 97,014 $ 640,071

May-2019 YTD 2019 LTD

EKPC Power Cost/kWh $ 0.069303 $ 0.066606 $ 0.067829

DG Total Power Cost/kWh $ 0.043073 $ 0.044067 $ 0.045731

Net Savings $ 0.026023 $ 0.022538 $ 0.022098

Power Cost for 1 MWh(May)EKPC = $69.30DG Unit = $43.07Savings = $26.02

Engineering UpdateDG Unit

Power Cost for 1 MWh (LTD)EKPC = $67.83DG Unit = $45.73Savings = $22.10

Action Items

Review/Discuss/Approve

– Motion ________________________– Second________________________

Approve Committee Rotations Election of Officers for 2019-2020 Term

Review/Discuss/ApprovePURPA Cogen

– Motion ________________________– Second________________________

Action Items

PURPA/Cogen TariffPresented By: Mark Stallons

• Existing Facts– Amendment 3 ruling and existing Cogeneration

(Cogen) tariff specifies that EKPC negotiates with third party Cogen production facility

– Maximum Cogen project is 80MW at avoided cost– At avoided cost no Cogen projects are probable

• Positives to joining EKPC FERC Filing– Mitigates 80MW Cogeneration project to 20MW

PURPA/Cogen TariffPresented By: Mark Stallons

• Negatives to joining EKPC FERC filing– As long as EKPC is well managed and rates are

competitive there is no downside in the short term or long term

– Should our relationship with EKPC change we would need to

• Refile our Cogen tariff with the Kentucky PSC • Unwind the FERC agreement with EKPC

Action Items

Policies 308 & 316

-Motion ________________________-Second________________________

Action Items

RUS Loan/CFC Investment

-Motion ________________________-Second________________________

AV8 Loan – RUS/FFB approved funds from the 2014-2017 Construction Work Plan

• Final draw down for any more advances on the approved AV8 loan was on June 26th

• The next approval for advances from a construction work plan is potentially 12 – 18 months

• Due to time frame, it was decided to draw down $10 million with RUS @ 2.21% (2.34% with adder) and invest the funds with CFC Commercial paper at 2.41% until needed.

Oversight Agenda

EKPC Report

Report Presented by: Alan Ahrman

KEC Report

Report Presented by: Bob True

Attorney’s Report

Presented By: Jim Crawford

President’s ReportJune 2019Presented By: Mark Stallons

President’s Report OverviewPresented By: Mark Stallons

• Broadband Feasibility Study– We are looking at two options:

• Retail service to underserved Owen Electric territory• Partnership with White Cloud Communication where

Owen Electric provides mid-mile service.

– The May & June BROC meetings have been rescheduled.

– White Cloud Communications will be at our June board meeting.

• Enterprise Risk Management(ERM) – EKPC has included our Regulatory/Legislative risk profile into

their risk assessment process.– We have arranged a meeting with EKPC to discuss Nucor’s

credit risk profile.– Other risk profiles will be presented as follows:

• July 25th- Cyber security risk• Aug 29th – Safety risk & NG risk• Sep 26th - Interest Rate Risk• Oct 31st – Culture Risk profile• Dec 12th - DER risk (Home automation, solar & micro grids)

• Ark Encounter– No new information available.

• Cumberland Electric Membership Corp., Clarksville, Tennessee, 90,000 Members.Nashville NBC’s News4 reported that:1. Members “left in the dark” when told they couldn’t

attend Board meetings (May 28, 2019);2. Co-op employees received DUI’s, in “co-op vehicles” (May

29, 2019);and

3. Electric Co-op’s board pay among highest in state (June 10, 2019).

• Miscellaneous

InformationAgenda

2019 Board Meetings & Training

July 1-3, 2019 – CFC Forum; New York, NY July 16-18, 2019-CoBank Energy Directors Conference; Asheville, North Carolina July 25, 2019 – Regular Board MeetingAugust 29, 2019 – Regular Board MeetingSeptember 26, 2019 – Regular Board MeetingOctober 9-10, 2019 – NRECA Regional Meeting (Regions 2 & 3); Louisville, KYOctober 31, 2019 – Regular Board MeetingNovember 18-19, 2019 – KAEC Annual Meeting; Louisville, KYNovember 21, 2019 – Regular Board Meeting (changed due to Thanksgiving)December 12, 2019 – Regular Board Meeting and Christmas Luncheon

Information Agenda

• Conference Reports– As needed

• Old Business• New Business• Executive Session• Miscellaneous• Adjourn

– Motion ________________________– Second________________________

REGULAR BOARD MEETING June 27, 2019 PLEDGE OF A! … · OWEN ELECTRIC COOPERATIVE REGULAR BOARD...

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