Umatilla Electric Cooperative is growing rapidly – power sales are up 17 percent over last year, and more than 70 percent in the last five years. We have grown into the largest electric cooperative in the 10 west-ern states in terms of power sales.
We are expanding, and rebuilding, at a pace not seen at UEC in 40 years. Our new-ly built Tumbleweed Substation at Board-man is the 30th substation on our system.
We opened our Boardman Operations Center next to the Port of Morrow in January 2016. With more than half of UEC’s power sales and revenue coming from Boardman, our new Operations Center gives us a base to better respond fully and immediately to community needs.
We have completed and energized the Moyer-Tolles Solar Station, our first utility-scale power generating plant, located south of the Port of Umatilla at McNary. We have six acres of solar panels converting sunshine to 1 megawatt of electricity. Our solar plant is a first step toward having UEC member-owned resources that will even-tually satisfy a state mandate for renew-able energy sources. We look to expand opportunities to develop clean, renewable resources.
But we are also focused on improving our existing system, much of it built dur-
ing the irrigation boom of the 1970s. We recently finished major upgrades at our substations near Hat Rock and Stanfield. We did the same at our Port of Morrow substation. We are working all the way to the end of the line, with ongoing upgrades at Weston Mountain and Meacham.
We will invest more than $40 million over the next two years on system improve-ments, including the proposed construc-tion of our 31st substation, called Herm-iston East. This investment will improve reliability and accommodate growth for both UEC and Hermiston Energy Services.
Fortunately, the impact of Bonneville Power Administration’s wholesale power rate increase was less than anticipated. We were able to limit our overall retail rate increase to less than 2 percent, effective February 2016.
During 2015, the Board made contribu-tions to Farmers Ending Hunger, American Cancer Society Relay for Life, Desert Arts Council, Farm-City Pro Rodeo, SAGE Visi-tor Center, Clean Hydro and NRECA Inter-national. Through donated materials and labor, UEC also made a significant contribu-tion to installing the electrical system of the Eastern Oregon Trade and Event Center at Hermiston.
As a cooperative, our profits, called mar-
gins, stay right here in the community as we work to return them to you each year. Last year, $3.6 million was returned to you in refunds sent in April and December.
General Manager Steve Eldrige announced his retirement after 44 years with Umatilla Electric, effective in March 2016. We greatly appreciated his contributions to UEC and to the Northwest public power industry over the past 44 years.
We wish Steve and his wife Kathy the very best in retirement.
After a five-month search, and after re-viewing candidates from eight states, the Board of Directors picked one of UEC’s own to lead UEC, Robert Echenrode. Rob-ert began working at UEC three years ago as our engineering manager, after more than 20 years of management experience with rural electric cooperatives. He began his new duties as our general manager in March.
Our cooperative is strong and building for the future for one reason - because you are investing in the future. Thank you for allowing us to serve your needs.
INVESTING FOR A GROWING DEMANDPresident Jeff WenholzIrrigon, District 2
Vice President Bryan WolfeHermiston, District 3
Secretary-TreasurerBob MacPhersonStanfield, District 4
Lee DockenBoardman, District 1
Glenn RohdeEcho, District 5
RoseEtta AnsoteguiPendleton, District 6
John OtisHermiston, District 7
BOARD OFDIRECTORS 2015 UMATILLA ELECTRIC
COOPERATIVE ANNUAL MEETING MINUTESThe 78th Annual Meeting of the members of the Umatilla Electric Cooperative was held at the Hermiston Conference Center at 415 S. Highway 395, Hermiston, Oregon, on April 18, 2015.
President Jeff Wenholz presided, and UEC attorney Tom Grim confirmed that a quorum was present as required by the UEC Bylaws.
A motion was made, seconded and carried to dispense with the reading of the Minutes of the Annual Meeting held April 19, 2014, and approving the same as written.
Board of Director Candidates from Districts 3 and 4 were introduced. A call for casting of ballots from Districts 3 and 4 was made, after which casting of the ballots was closed.
President Wenholz reflected on the “Homegrown” theme of this year’s Annual Meeting and how our area’s agricultural and energy production greatly contributes to our nation and the world. Umatilla Electric stands ready to respond to the growth in our area. A new Operations Center will be built in Boardman to improve member services in that area. Umatilla Electric Cooperative’s margins stay in our communities through capital credit refunds and support of local services, events, civic clubs, sports associations and other worthwhile events.
MINUTES
ATTENDANCE
NOMINATIONS
PRESIDENT’S REPORT
Auditor Brent Mickelsen of Blodgett, Mickelsen, and Naef presented UEC’s 2014 audit report; financial highlights were provided. Auditor Mickelsen advised that he found UEC to be in compliance with applicable accounting standards, which resulted in a clean audit.
General Manager & CEO Steve Eldrige recapped the positive year for Umatilla Electric Cooperative. Growth was experienced, both in sales and in utility plant, prompting a $40 million plant investment and refurbishment. A new solar array is planned for later this year. With Umatilla Electric positively situated with a good membership that has instilled trust in the board and employees, Mr. Eldrige announced his retirement after 44 years with the cooperative. He thanked the membership, board and employees for the hard work and ability to do work that mattered.
Tom Grim announced the election results: Bryan Wolfe was re-elected as Director for District No. 3 and Robert MacPherson was re-elected as Director for District 4.
President Wenholz announced the floor was open to discuss any new or old business. There was no old or new business.
There being no further business before the membership, the meeting was adjourned at 5:45 p.m.
AUDIT REPORT
GENERAL MANAGER’S REPORT
ELECTION RESULTS
NEW OR OLD BUSINESS
ABOUT US OUR MISSION
ADJOURNMENT
Incorporated in 1937 through the Rural Electrification Act, Umatilla Electric serves portions of Umatilla, Morrow and Union counties. Over 50 percent of the co-op’s power serves the commercial and industrial sectors, providing a base for ongoing economic development and community improvement.
Directors present were Jeff Wenholz, Bryan Wolfe, Glenn Rohde, Lee Docken, Bob MacPherson, RoseEtta Ansotegui, and John Otis. General Manager and CEO Steve Eldrige, UEC attorney Tom Grim, and UEC Auditor Brent Mickelsen were also in attendance.
Umatilla Electric Cooperative is a member-owned business that sells energy and in-vests in and supports other services to im-prove the quality of life in our communities.
Hermiston Office, 750 W. Elm, 541 567-6414Boardman Office, 400 N.E. Eldrige Drive, 541 481-2220
2 0 1 5 A N N U A L R E P O R T S U M M A R Y
Robert EchenrodeGeneral Manager & CEO
Jeff WenholzBoard President
UEC U M A T I L L A E L E C T R I C C O O P E R A T I V EA TOUCHSTONE ENERGY COOPERATIVE
Building for the
ASSETS 2015 2014UTILITY PLANT
Electric Plant in Service $148,775,292 $137,654,198 Construction Work in Progress 22,454,903 15,911,363 Retirement Work in Progress 29,744 56,922 Electric Plant Acquisition Adjustment 109,028 109,028
171,368,967 153,731,511Less Accumulated Depreciation 58,105,179 57,244,209TOTAL UTILITY PLANT $113,263,788 $96,487,302
NON UTILITY PLANT 9,929,611 8,655,236Less Accumulated Depreciation 5,050,423 4,360,246NET NON-UTILITY PLANT $4,879,188 $4,294,990
INVESTMENTS
Investments in Associated Organizations 6,785,826 6,382,660 Other Investments 4,290,453 3,589,004TOTAL INVESTMENTS $11,076,279 $9,971,664
CURRENT ASSETS
Cash and Cash Equivalents 2,667,985 15,976,841 Accounts Receivable 9,850,624 9,273,019 Materials and Supplies 3,398,263 2,103,480 Other Current and Accrued Assets 1,976,801 1,033,882TOTAL CURRENT ASSETS $17,893,673 $28,387,222
OTHER ASSETS
Contracts Receivable 2,515,990 2,904,823 Deferred Tax Asset 175,000 175,000 Deferred Debits 2,338,962 2,671,555 Receivable from EOH Minority Interest 110,825 113,765TOTAL OTHER ASSETS $5,140,777 $5,865,143TOTAL ASSETS $152,253,705 $145,006,321
LIABILITIES & MEMBERS’ EQUITY 2015 2014MEMBERS’ EQUITY
Membership Fees $49,400 $49,405 Member Capital Credits 55,416,667 49,728,976 Other Equities 12,831,518 12,682,541TOTAL EQUITIES AND MARGINS $68,297,585 $62,460,922
MINORITY INTEREST $141 $2,080
LONG-TERM DEBT, LESS CURRENT MATURITIES
RUS Mortgage Loans 45,411,897 46,833,489 CFC Mortgage Loans 10,901,236 9,407,154 Other Notes Payable 3,490,069 3,028,488TOTAL LONG-TERM DEBT $59,803,202 $59,269,131
POST RETIREMENT OBLIGATION $1,005,973 $1,118,886
CURRENT LIABILITIES
Accounts Payable 7,782,089 6,460,733 State Revenue Tax Payable 1,210,316 1,147,364 Accrued Interest 41,495 34,028 Other Current and Accrued Liabilities 7,212,603 3,632,941 Current Maturities of Long-Term Debt 2,789,312 2,596,341TOTAL CURRENT LIABILITIES $19,035,815 $13,871,407
DEFERRED CREDITS $4,110,989 $8,283,895TOTAL LIABILITIES AND MEMBER EQUITY $152,253,705 $145,006,321
UEC CONSOLIDATED BALANCE SHEET
MARGINS (LOSSES) FROM SUBSIDIARY OPERATIONS 2015 2014
Revenue (expense) - net - from RSC activity ($75,541) ($91,547)
Revenue (expense) - net - from EOT's operations (250,499) (76,129)
Revenue (expense) - net - from NEON’s operations (5,171) (35,712)
Minority interest in net margins 157,171 24,169
($174,040) ($179,219)
Patronage Capital Credits 53 39
Interest Income 15,991 9,345
Gain on Equity Investments in LightSpeed Networks 676,846 732,096
Net Margins Before Income Taxes $518,850 $562,261
Provision for Deferred Income Taxes $0 $55,000
Net Margins for the Year $518,850 $617,261
Retained Earnings at Beginning of the Year $166,373 ($450,888)
RETAINED EARNINGS AT END OF THE YEAR $685,223 $166,373
ASSETS 2015 2014NET NON-UTILITY PLANT $4,391,901 $3,971,097
INVESTMENTS - At Cost
Investments in Associated Organizations 197,824 238,595
Other Investments 3,711,678 3,052,940
TOTAL INVESTMENTS $3,909,502 $3,291,535
CURRENT ASSETS
Cash and Cash Equivalents 65,680 324,210
Accounts/Contracts Receivable 653,719 618,535
Materials and Supplies 131,716 87,431
Other Current and Accrued Assets 168,855 60,133
TOTAL CURRENT ASSETS $1,019,970 $1,090,309
OTHER ASSETS $548,835 $638,766
TOTAL ASSETS $9,870,208 $8,991,707
LIABILITIES AND MEMBERS’ EQUITY
2015 2014
MEMBERS’ AND STOCKHOLDERS’ EQUITY
Capital Stock $3,500,171 $3,500,171
Retained Earnings 685,223 166,373
TOTAL MEMBERS’ AND STOCKHOLDERS’ EQUITY $4,185,394 $3,666,544
MINORITY INTEREST $141 $2,080
LONG-TERM DEBT, LESS CURRENT MATURITIES $4,060,626 $3,824,973
CURRENT LIABILITIES
Accounts Payable 80,990 108,657
Other Current and Accrued Liabilities 838,057 759,453
Current Maturities of Long-Term Debt 705,000 630,000
TOTAL CURRENT LIABILITIES $1,624,047 $1,498,110
TOTAL LIABILITIES AND EQUITY $9,870,208 $8,991,707
RURAL SERVICES COMPANY (RSC)CONSOLIDATED BALANCE SHEET
RSC CONSOLIDATED STATEMENT OF REVENUE AND RETAINED EARNINGS
OPERATIONS & ENGINEERING
MEMBER SERVICES & ENERGY EFFICIENCY
OUR YEARAT A GLANCE
MILESTONES
UEC completed 106 free home energy audits and 122 residen-tial members took advantage of rebate, heat pump or weath-erization programs; and 42 members participated in commer-cial, industrial or irrigation programs during BPA’s fiscal year, ending Sept. 30, 2015. Overall, ENERGY SAVINGS TOTALED 23,746,382 MILLION kWh, or about 1,413 average-sized homes for one year.
Faced with increasing system demand and the high cost of developing additional generation capacity, BPA announced a new regional Demand Response Pilot Program. UEC had sev-eral commercial and industrial members in the program during 2015, reducing their energy use during times of peak demand in exchange for a financial incentive.
UEC’s Revolving Loan Fund, seeded with federal grants, is helping local businesses with gap financing. OUR SUMMER HYDROMANIA CAMPS FOR GRADE SCHOOLERS CEL-EBRATED ITS 16TH YEAR in 2015. UEC sent a high school student to NRECA’s Washington, D.C. Youth Tour in June.
More than 60 LOCAL BUSINESSES NOW OFFER discounts through UEC’s CO-OP CONNECTIONS CARD.
We’re especially proud to let you know our employees achieved a SECOND STRAIGHT YEAR WITH NO LOST-TIME INJURIES during 2015, while working 155,854 hours and driving 432,193 miles.
Judy Kuo, with 36 years of service; Jeanne Hanson, with 35 years; and Lou Burkholder, with 15 years, retired during 2015.
In March, UEC, joined with 13 other North-west electric cooperatives, as PNGC Power, to acquire the Coffin Butte Landfill Gas Gen-eration Project, located near Corvallis. Coffin Butte Project generates clean, renewable en-ergy that comes from landfill gas—a natural by-product of the organic matter in the neigh-boring regional landfill, also known as Cof-fin Butte. The project has a capacity of 5.66 megawatts, and produces enough energy to power 4,000 homes.
In 2015, UEC MAINTAINED 99.961% RELI-ABILITY for the year. That’s .019% better than 2014. UEC’s reliability is based on strong preven-tative maintenance programs for our substations and power lines, and an aggressive tree trimming schedule. In 2015, UEC trimmed or removed more than 9,339 trees away from power lines and cleared 912 spans of conductor.
Another THREE MILES OF DISTRIBUTION LINES ON WESTON MOUNTAIN were rebuilt during 2015 to improve reliability.
Hermiston recorded a record breaking 14 DAYS OF ABOVE 100 DEGREES on July 9. This heat wave sent our electrical demand - the collective sum of all power in use by our membership - spiking to record levels. UEC deployed its mobile substation along East Walls Road. Crews began installing the portable substation at 10 a.m. July 2 and had it energized by 11:30 a.m. July 3. This was the first time the portable substation had been energized and carrying load.
UEC helped integrate BPA’s new Morrow Flat sub-station into its system. UEC further assisted BPA as it UPGRADED ITS TRANSMISSION LINES IN THE MCNARY AND BOARDMAN AREAS.
REVENUES 2015 2014 Industrial $43,950,914 49.90% $33,301,074 43.10% Irrigation 16,156,358 18.30% 15,970,148 20.70% Residential 12,562,610 14.30% 13,324,074 17.20% Commercial 12,271,317 13.90% 11,750,380 15.20% Seasonal/Domestic 1,127,011 1.30% 1,155,835 1.50% Other Income 957,800 1.10% 811,871 1.10% Patronage Capital 547,391 0.60% 492,517 0.60% Interest Income 284,365 0.30% 277,986 0.40%
Service Charges 172,245 0.20% 146,360 0.20%
Street Lights 55,511 0.10% 55,319 0.10% TOTAL REVENUES $88,085,522 $77,285,564
EXPENSES 2015 2014 Purchase Power PNGC $57,744,120 72.40% $46,973,073 67.40% Purchase Power PRC -748,265 -0.90% 857,894 1.20% Operations and Maintenance 6,317,369 7.90% 6,039,763 8.70% Depreciation 4,792,565 6.00% 4,621,818 6.60% General Administration 4,359,475 5.50% 4,003,949 5.70% Interest and Other Expenses 2,930,497 3.70% 3,085,933 4.40% Billing and Member Services 2,701,050 3.40% 2,784,586 4.00% Taxes 1,602,454 2.00% 1,405,904 2.00% TOTAL EXPENSES $79,699,265 $69,772,920
UEC REVENUE AND PATRONAGE