Inside Passage Electric CooperativeJodi M. Mitchell, CMAChief Executive OfficerMay 22, 2015

Who is IPEC? Outline for presentation:• What is the electric cooperative structure?

• General information about IPEC

• What does IPEC have to offer Yakutat?

• What about electric rates?

• Summary and conclusions

• Q & A

What is the electric cooperative structure?• Non-profit, member-owned and governed

• One member, one vote

• Annual meeting of members held each year

• Board is elected by membership, 3 year staggered terms

• Margins allocated to member-owners via capital credits

• Concern for community

• Cooperation among cooperatives

• Education, training, access to information about latest technologies

Who is IPEC?IPEC is a non-profit, non-taxable member-owned and governed electric utility. We generate and sell electricity to about 1,325 customers in the communities of Angoon, Hoonah, Kake, Klukwan and the Chilkat Valley. IPEC has 12 full-time employees, and several part-time employees. IPEC has five board members who reside in each of the communities we serve. IPEC’s headquarters office is located in Auke Bay, Alaska, north of downtown Juneau. IPEC was founded in 1976.

IPEC serves its communities by providing:

Operations

• Centralized operations planning

• Overhauls and maintenance to all of Diesel engines

• Line extension and new service planning and construction

• Emergency and planned distribution line repair

• Fleet vehicle repair and maintenance

Administration

• Centralized billing and accounting, human relations, member communications

• Strategic planning, governance, energy planning

• Grant writing and administration

• Access to lobbyist, auditor, legal counsel

• Good relationships with contractors, AEA, legislators, and congressional delegation

ORGANIZATIONAL CHART FORINSIDE PASSAGE ELECTRIC COOPERATIVE

Board Member Board Member Board Member Board Member Board MemberAngoon Chilkat Valley Hoonah Kake Klukwan

Richard George Larry Beck Grace Villarreal Wilbur Brown Christopher Hotch

President Director Vice-President Treasurer/Secretary Director

Chief Executive Officer

& General Manager

Jodi Mitchell

Administrative Officer Generations Manager Operations Manager

Jerry Medina Brandon Shaw  

Head Operator Head Operator Head Operator # 1 Head Operator

Angoon Chilkat Valley Hoonah Kake

Ed Kookesh Jr. Jason Hainline Don Bolton Frank Hughes Jr. Head Operator # 2

Controller Hoonah

Roxanne Drake-Burkhart Brandin Hill

Billing Officer

Elnora "Rosa" Rice

Accounts Payable Tech.

Janice Keen

IPEC’s Management & Operations Team provides:• Self-performed engine overhauls & maintenance;

excellent reliability statistics

• Staff lineman for small jobs

• Bulk fuel contracts for low cost fuel

• Clean, impeccable annual financial audits

• Grant writing and administration (over $26 million in grant funding received since 2005)

• Sophisticated “utility specific” accounting and billing software

• Extremely low write-off percentage with online and credit card payments accepted

IPEC’s Management & Operations Team provides (continued):• Annual Membership meeting is rotated between

communities (election, food, prizes)

• Energy planning for each community to reduce or eliminate diesel reliance/work with community leaders

• Postage stamp rate structure, but community cost-based rates to be implemented

• PCE billing, regulatory compliance, COPA (fuel surcharge) filings

• Access to Cost of Service/rate study professionals

• Good relationships with AEA, legislators, congressional delegation, and the Governor’s Office

IPEC’s Board and Management Team has created a plan for each of our communities to reduce or eliminate diesel reliance

• We are currently building a hydro project in Hoonah – estimated completion date August 15, 2015

• We are working on developing a small hydro at Gunnuk Creek in Kake (grant funded from AEA)

• Hoonah has another potential hydro project which is currently being surveyed for initial design

• IPEC’s Klukwan and Chilkat Valley service area is currently nearly 100% hydro (IPEC owns 10 Mile Hydro)

• IPEC fully supports Kootznoowoo’s plans to build the Thayer Creek hydro project (they have sole rights) in Angoon

What does IPEC have to offer Yakutat?• Centralized billing, accounting, and collections

• PCE, COPA, regulatory compliance

• Online member access to account information, online payments

• Access to low cost financing for capital improvements

• Energy planning to reduce diesel dependence

• Grant writing and administration

• Overhauls and maintenance (similar power house design as Hoonah plant)

• Potential for reduced bulk fuel prices/synergies

What does IPEC have to offer Yakutat? (continued)

• An elected seat on IPEC’s Board of Directors

• Staff lineman for small jobs if needed

• Diesel generation expertise, hydro potential

• Annual membership meeting in Yakutat (rotation with other communities)

• Day trips to Yakutat possible from Juneau via AK Airlines

• Excellent employee benefits but lean staffing

• Access to legal counsel, auditors, engineering, and rate professionals

What about Rates?• IPEC currently charges a postage stamp rate to all of its

members (different rate classes, but everyone pays the same)

• However, IPEC has a cost of service study that is nearly complete, and implementation will occur soon

• Yakutat’s rates would be based on cost of service

• Bulk fuel price reduction is possible, and would help reduce Yakutat’s rates

Summary and Conclusions• IPEC and Yakutat have a lot in common, share the same

challenges

• IPEC can offer lower bulk fuel prices (Petro Marine)

• IPEC can provide many services to Yakutat to streamline operations and administration

• Yakutat’s customers would become member-owners of IPEC, and would share in profits through capital credits

• Yakutat’s customers would have online access to their accounts, and access to a toll-free line to IPEC’s customer service center

Questions?