2022 Annual Report

A MESSAGE FROM THE GENERAL MANAGER

New Year’s Day power outage

2022 brought many challenges and triumphs, beginning with a power outage on New Year’s Day that affected over 5,000 members. These members experienced multiple momentary power outages from noon January 1 until 1 a.m. January 2. Duke Energy customers also experienced these outages, which were caused by a bad insulator on Duke Energy’s transmission line near Ross Millville Road. Butler Rural Electric Cooperative receives transmission service from Duke Energy.

Thanks to a co-op member who reported seeing sparks near the location of the bad insulator during the outage. We relayed this information to Duke Energy, who checked the location and found the problem.

Buckeye Power provides power to the 24 electric distribution cooperatives in Ohio and is owned by the same Ohio electric co-ops. Buckeye Power worked with American Electric Power, an investor-owned utility like Duke Energy, when building the Cardinal Plant in the 1960s. Most of the electricity we use is generated, or created, at the Cardinal Plant on the Ohio River in eastern Ohio. Transmission lines, including Duke Energy’s transmission lines, deliver electricity to our 16 substations. Butler Rural Electric Cooperative purchases transmission service and is subject to its cost and reliability.

Butler Rural Electric Cooperative employees meet with Ben Wilson, Buckeye Power’s director of power delivery engineering, and employees from Ohio transmission companies every year to find ways to avoid transmission interruptions like the one on New Year’s Day in 2022.

Thank you for your patience during power outages. Butler Rural Electric Cooperative’s board members and

many employees are co-op members, so we also experience power interruptions when our members do. We understand how frustrating these power interruptions are.

New Self-Serve Phone Number

Tom Wolfenbarger GENERAL MANAGER Tom Wolfenbarger GENERAL MANAGER

We sometimes receive reports of members experiencing busy signals when calling our office to report outages during large outages. These busy signals are due to high call volumes. We recognized the need to upgrade our phone system so members have more options when reporting outages by phone. In December, we introduced our new Self-Serve Phone Number for members to report power outages directly to our outage management system without experiencing busy signals. Our Self-Serve Phone Number is integrated with our outage management system, which is monitored 24 hours per day, 7 days a week. Our outage management system receives and organizes outages from our Self-Serve Phone Number almost immediately and helps us get lineworkers headed in the right direction to get power restored.

You can call 855-940-3867 to use our Self-Serve Phone Number and are encouraged to save your phone number as a contact in SmartHub before using Self-Serve. To do so, sign in to SmartHub and select Notifications > Manage Contacts > Add Phone Contact. More features, like Self-Serve payment options, will be available in 2023.

Members can continue to report outages through SmartHub, by texting OUT to 855-940-3867, and by calling 513-867-4400.

Our employees will always answer your calls during normal business hours and our after-hours call center does the same on evenings, weekends, and holidays.

Butler Rural Community Solar expansion

The Butler Rural Community Solar program allows members to purchase subscriptions to solar panels. Subscribers support the benefits of solar energy without incurring upfront costs and without having solar panels located at their home. Generating energy with solar power creates no pollution or carbon dioxide emissions and is a clean and renewable energy source.

Participating in Butler Rural Community Solar does not decrease participants’ monthly electric bill. The community solar rate is $0.10136 per kilowatt-hour. The average cost is approximately $1 per month per panel with the solar credit applied. This estimated cost will be in addition to participating members’ current electric bills.

Our first community solar array is located on the corner of Lanes Mill and Stillwell Beckett roads across from our office. Construction for the 228 panel array was completed in February 2017. Our newest array was completed in July and is located in Findlay, Ohio. This larger array, built together with

2022 HIGHLIGHTS

Ohio’s Electric Cooperatives, has 342 panels available for our members. Visit butlerrural.coop or call us at 513-867-4400 if you are interested in community solar.

Celebrating employees

We celebrated three retirements in 2022. Stephanie Lancaster, Greg Phillips, and Lisa Staggs Herrmann provided outstanding service to our members for many years. We will miss them, and I know many members will miss seeing them in our office and at our events. We wish them each a happy retirement.

We welcomed one new employee and celebrated three promotions in 2022. In June, Joe Chewning joined the co-op as our new systems technician in the IT department. In September, Debbie Carley accepted a new position as operations office supervisor, Emily Bourne accepted a new position as work order and inventory clerk in our operations department in November, and Laura Smith became the cooperative’s director of corporate and member services in December.

All of us at Butler Rural Electric Cooperative look forward to serving you in 2023. The cooperative would not exist without your support. Thank you for your membership and continued trust in us.

RATES

The cooperative has not increased distribution rates since 2017 – that’s ﬁve years of stability and value.

FIBER INTERNET TO ALL MEMBERS

Cincinnati Bell’s altaﬁber will extend ﬁber access to the remaining 2,800 cooperative members who are underserved.

COMMUNITY SOLAR EXPANSION

Our newest array, located in Findlay, has 342 panels available for our members.

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A MESSAGE FROM YOUR BOARD PRESIDENT

Fiber internet is coming to all underserved members!

In 2021, Butler Rural Electric Cooperative completed a partnership project with Cincinnati Bell, now known as altafiber, to bring fiber access to over 2,000 member locations where high speed internet was not available. The project also provided fiber service to the cooperative’s substations and switching equipment. The project was a huge success, bringing greater operational flexibility to enhance reliability while improving the quality of life for members.

We still have members who do not have adequate and reliable access to high speed internet, which is a quality of life issue.

Butler Rural Electric Cooperative and altafiber have continued to work together to extend access to rural areas. altafiber has informed the cooperative it will make the investment to extend fiber access to the remaining 2,800 cooperative members who are underserved. That’s terrific news for our members and the local community.

The expanded partnership will bring high-speed broadband fiber Internet access to an additional 5,000 addresses in Butler, Preble, Hamilton, and Montgomery counties beginning in the first half of 2023. In addition to Butler Rural Electric Cooperative services, altafiber will build fiber to 2,200 addresses in these counties that are not served by Butler Rural Electric Cooperative.

This announcement means Phase II of our effort to have high speed internet extended to all members will be completed at no cost to the cooperative and our members. That’s a $3.9 million value delivered to members!

deliver access to reliable connectivity to all members. Additional information about the next phase of our partnership will be on our website, butlerrural.coop, and in Ohio Cooperative Living once it becomes available.

David PRESIDENT,

No distribution rate increase in 2022

Butler Rural Electric Cooperative did not have a distribution rate increase in 2022. The cooperative has not increased distribution rates since 2017. That’s five years of stability and value.

Board members and employees work hard to provide the best value we can for the modern conveniences of electricity. Compared to price increases of common expenses like education, medical care, and groceries, electricity remains a good value.

Rates are always a major concern for the members and the board. The board works with the management team to ensure rates are fair and reasonable while also maintaining the financial strength of the cooperative.

Almost $2 million in capital credits retired to members

Unlike investor-owned utilities that maximize profits to pay shareholders, your not-for-profit cooperative provides electricity at cost. You receive capital credits because you’re an owner of Butler Rural Electric Cooperative. Capital credits represent this ownership and are one of the most unique and rewarding benefits of being a co-op member.

We are thrilled to build on this innovative partnership and

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Evans BOARD OF TRUSTEES

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David Evans PRESIDENT, BOARD OF TRUSTEES

At the end of each year, we subtract our operating expenses from the amount of money collected from members paying their electric bills. The money left is called margins. Your margins are based on the amount you paid for electric service and are deposited into your capital credits account at the end of the year. Butler Rural Electric Cooperative uses allocated margins to build and maintain our electric infrastructure by purchasing materials and equipment like poles and wires. These funds serve a vital function and allow the cooperative to operate economically and effectively while investing in the infrastructure necessary to meet the needs of our members.

Butler Rural Electric Cooperative’s board of trustees evaluates the financial stability of the co-op each year to determine if we can retire capital credits. When the co-op retires capital credits, we withdraw margins from your capital credits account and send them to you as a check or as a credit on your bill. The capital credits amount you receive is based on the amount you paid for electric service during the years of capital credits retirement.

In October, members who received electricity from Butler Rural Electric Cooperative in 2005, 2006, and/or 2021 may have received a capital credits check or a credit on their electric bill.

Thank you for your investment in Butler Rural Electric Cooperative. Your support allows the co-op to continue to provide safe, reliable, and affordable electric service.

2022 will be remembered as a year of challenges met. From beginning the year with a power outage affecting thousands of members, to delivering fiber internet access to all members without increasing rates, your cooperative met these challenges successfully.

2022 IN NUMBERS

190 MILES OF TREES TRIMMED

We invested over $1 million in tree and vegetation management.

3,000 POLES INSPECTED

Near our Reily and West Alexandria substations.

144 POLES REPLACED

A $576,000 investment to ensure our poles deliver the reliable electricity you expect from us.

OVER $3 MILLION IN TAXES PAID

Directly benefiting schools and services in your community.

29 RESIDENTIAL SOLAR INSTALLATIONS

An all-time high for installations in our territory. If you’re considering solar, contact us first to learn about rate structures, interconnection agreements, and essential safety precautions.

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Your BOARD OF TRUSTEES

We’re led by our members. Members serve on our board of trustees and members choose who’s on the board by voting for candidates each spring.

Board members meet each month with our attorney, general manager, and management staff and work together to make important decisions like setting policies and rates. They represent all members, not only the members in the township or district they live in.

A special thank you

We recognized Tom McQuiston, our former board president, in 2022. McQuiston finished a 14 year stint as the Ohio director for the National Rural Electric Cooperative Association in 2022. In that position, he provided leadership and guidance to the national cooperative program. McQuiston did not seek reelection as president of the board and presided over his last regular board meeting April 27, 2022, culminating 34 years as board president. In that time, McQuiston has been a steadying influence, leader, and guide, supporting the cooperative’s

efforts to improve financial strength, safety, reliability, and community involvement all while maintaining the focus on members. McQuiston will continue to serve as a Butler Rural Electric Cooperative board member.

Board of trustees election

Over 1,650 members voted in our board of trustees election in 2022. All cooperative elections are conducted by an independent third-party company, which maintains the integrity of our elections. Members re-elected Tom McQuiston in District 3 and Jay Hasbrook in District 4. Members chose James O’Brien in District 9.

New board officers

During their meeting in May, board members voted for officers. These officers are elected annually. Board members elected David Evans as president, Robert Hoelle was chosen as vice president, and Jim Meador was elected as the secretary and treasurer of the board of trustees.

David Evans

d.evans@butlerrural.coop 513-523-8967

Jim Meador

j.meador@butlerrural.coop 513-280-2003

Thomas L. McQuiston

t.mcquiston@butlerrural.coop

513-796-2983

Jay T. Hasbrook j.hasbrook@butlerrural.coop 937-307-5347

Robert Hoelle b.hoelle@butlerrural.coop 513-726-5356

Ronald Kolb

r.kolb@butlerrural.coop 513-757-4223

Mike Tilton

m.tilton@butlerrural.coop 513-266-4099

Robert Spaeth

b.spaeth@butlerrural.coop 513-738-2495

James O’Brien

j.obrien@butlerrural.coop

513-376-5639

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Board members want to hear from you – feel free to give them feedback or ask them questions about the cooperative.

David Evans, President DISTRICT 1 Mike Tilton DISTRICT 7 Jay T. Hasbrook DISTRICT 4 Thomas L. McQuiston DISTRICT 3 Jim Meador, Secretary + Treasurer DISTRICT 2 Robert Hoelle, Vice President DISTRICT 5 Robert Spaeth DISTRICT 8 Ronald Kolb DISTRICT 6

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James O’Brien DISTRICT 9

SAFETY CHECKLIST

Safety is at the heart of everything we do. It’s our focus and top priority every single day.

In 2022, Butler Rural Electric Cooperative achieved our best overall Rural Electric Safety Achievement Program score. Our employees worked over 86,750 hours with zero recordable injuries.

We surpassed 330,000 driving miles with zero recordable incidents.

EXCELLENT SATISFACTION

Our member satisfaction score is 88 out of 100. That means satisfaction with the co-op is higher than well-known businesses like Apple and Coca-Cola.

Butler Rural Electric Cooperative is working to create an electric vehicle charging rate. This rate incentivizes charging during the night, when electricity demand and wholesale energy rates are lower. If you’re not an EV user but like the incentives of a special rate, a time of day rate for other residential load will roll out simultaneously with the EV rate. We will share more information about these rates once they are developed.

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In May, lineworkers Jeremy Hill and Noah Krall taught local elementary students about Butler Rural Electric Cooperative and lineworker careers at Marshall Elementary School. In the spring, Butler Rural Community Connection helped fund an Explorer Mini, which helps young children with mobility impairments. 2022 marked the return of Family Day, which we missed for two years because of the pandemic.

In October,

employees

INDEPENDENT AUDITOR’S REPORT

To the Board of Trustees

Butler Rural Electric Cooperative, Inc. Oxford, Ohio

Opinion

We have audited the accompanying financial statements of Butler Rural Electric Cooperative, Inc., which comprise the balance sheets as of September 30, 2022 and 2021, and the related statements of revenue and expenses, changes in member’s equity, and cash flows for the years then ended, and the related notes to the financial statements. In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of Butler Rural Electric Cooperative, Inc., as of September 30, 2022 and 2021, and the results of its operations and its cash flows for the years then ended in accordance with accounting principles generally accepted in the United States of America.

Basis for Opinion

We conducted our audits in accordance with auditing standards generally accepted in the United States of America

Thank you members, board members, and employees who donated to the 2022 Holiday Harvest Food Drive! These donations assisted many local families during the holiday season. The cooperative also donated $1,000 worth of non-perishable items to the food drive.

and the standards applicable to financial audits contained in Government Auditing Standards, issued by the Comptroller General of the United States. Our responsibilities under those standards are further described in the Auditor’s Responsibilities for the Audit of the Financial Statements section of our report. We are required to be independent of Butler Rural Electric Cooperative, Inc. and to meet our other ethical responsibilities in accordance with the relevant ethical requirements relating to our audits. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion.

Responsibility of Management for the Financial Statements

Management is responsible for the preparation and fair presentation of the financial statements in accordance with accounting principles generally accepted in the United States of America, and for the design, implementation, and maintenance of internal control relevant to the preparation and fair presentation of financial statements that are free from material misstatement, whether due to fraud or error.

Continued on next page

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In August, the cooperative installed an electric vehicle charger in Talawanda High School’s parking lot with no construction cost to the Talawanda School District or to cooperative members. co-op planted trees and cleaned up honeysuckle and cattails at Hueston Woods State Park and Hueston Woods State Park Golf Course.

INDEPENDENT AUDITOR’S REPORT, CONT.

In preparing the financial statements, management is required to evaluate whether there are conditions or events, considered in the aggregate, that raise substantial doubt about Butler Rural Electric Cooperative, Inc.’s ability to continue as a going concern within one year after the date that the financial statements are available to be issued.

Auditor’s Responsibility for the Audit of the Financial Statements

Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditor’s report that includes our opinion. Reasonable assurance is a high level of assurance but is not absolute assurance and therefore is not a guarantee that an audit conducted in accordance with generally accepted auditing standards and Government Auditing Standards will always detect a material misstatement when it exists.

Misstatements are considered material if there is a substantial likelihood that, individually or in the aggregate, they would influence the judgment made by a reasonable user based on the financial statements.

In performing an audit in accordance with generally accepted auditing standards and Government Auditing Standards, we:

> Exercise professional judgment and maintain professional skepticism throughout the audit.

> Identify and assess the risks of material misstatement of the financial statements, whether due to fraud or error, and design and perform audit procedures responsive to those risks. Such procedures include examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements.

> Obtain an understanding of internal control relevant to the audit in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of Butler Rural

Electric Cooperative, Inc’s internal control. Accordingly, no such opinion is expressed.

> Evaluate the appropriateness of accounting policies used and the reasonableness of significant accounting estimates made by management, as well as evaluate the overall presentation of the financial statements.

> Conclude whether, in our judgment, there are conditions or events, considered in the aggregate, that raise substantial doubt about Butler Rural Electric Cooperative, Inc’s ability to continue as a going concern for a reasonable period of time.

We are required to communicate with those charged with governance regarding, among other matters, the planned scope and timing of the audit, significant audit findings, and certain internal control related matters that we identified during the audit.

Other Reporting Required by Government Auditing Standards

In accordance with Government Auditing Standards, we have also issued our report dated November 18, 2022 on our consideration of the Butler Rural Electric Cooperative, Inc.’s internal control over financial reporting and on our tests of its compliance with certain provisions of laws, regulations, contracts, and grant agreements and other matters. The purpose of that report is solely to describe the scope of our testing of internal control over financial reporting and compliance and the results of that testing, and not to provide an opinion on the effectiveness of the Butler Rural Electric Cooperative, Inc.’s internal control over financial reporting or on compliance. That report is an integral part of an audit performed in accordance with Government Auditing Standards in considering Butler Rural Electric Cooperative, Inc.’s internal control over financial reporting and compliance.

Circleville, Ohio

November 18, 2022

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BALANCE SHEETS

September 30, 2022 and 2021

ASSETS

Utility Plant

Electric plant in service

Construction work in progress

Less: Accumulated provision for depreciation and amortization

NET UTILITY PLANT

Investments and Other Assets

Investments in associated organizations

Investments in non utility property, net of accumulated depreciation of $1,114,011 ($1,027,760 for 2021)

Mortgage and notes receivable

Deferred charges

TOTAL INVESTMENTS AND OTHER ASSETS

Current Assets

Cash and cash equivalents

Accounts receivable, net of allowance for doubtful accounts of $12,065 ($63,088 in 2021)

Accounts receivable – other

Notes receivable

Interest receivable

Materials and supplies

Other current and accrued assets

TOTAL CURRENT ASSETS

TOTAL ASSETS

2021 $92,148,040 765,362 92,913,402 (24,680,339) 68,233,063 15,190,420 360,672 253,482 2,273,793 18,078,367 2,407,860 2,751,424 151,764 89,226 10,037 599,504 527,522 6,537,337 $92,848,767

2022 $96,706,031 636,804 97,342,835 (26,104,075) 71,238,760 14,763,043 397,307 223,243 167,396 15,550,989 3,407,833 2,803,112 68,450 81,135 10,037 687,029 1,377,522 8,435,118 $95,224,867 9

BALANCE SHEETS

September 30, 2022 and 2021

LIABILITIES AND EQUITIES

Equities

Patronage capital

Memberships

Other equities

TOTAL EQUITIES

Long-Term Liabilities

Mortgage notes payable – CFC

Mortgage notes payable – FFB

Mortgage notes payable – CoBank

Accrued postretirement benefits

TOTAL LONG-TERM LIABILITIES

Current Liabilities

Current maturities of long-term debt

Accounts payable – purchased power

Accounts payable – other

Provision for pensions and benefits

Consumer deposits

Accrued taxes

Other current liabilities

TOTAL CURRENT LIABILITIES

TOTAL LIABILITIES AND EQUITIES

2021 $42,488,468 119,970 116,020 42,724,458 983,832 30,164,446 12,355,274 349,333 43,852,885 1,820,098 1,438,787 343,750 51,000 123,727 1,146,159 1,347,903 6,271,424 $92,848,767

2022 $42,620,406 120,470 116,020 42,856,896 831,068 33,417,524 11,631,766 337,468 46,217,826 1,819,195 1,489,931 424,042 51,000 112,331 1,160,228 1,093,418 6,150,145 95,224,867 10

STATEMENTS OF REVENUE AND EXPENSES

For the Years Ended September 30, 2022 and 2021

OPERATING REVENUES

Operating Expenses

Cost of power

Transmission expense

Distribution expense – operations

Distribution expense – maintenance

Consumer accounts

Consumer service and information expense

Administrative and general

Maintenance of general plant

Depreciation of utility plant

Taxes

TOTAL OPERATING EXPENSES

OPERATING MARGINS BEFORE FIXED CHARGES

Interest on long-term debt

OPERATING MARGINS AFTER FIXED CHARGES

Capital credits

OPERATING MARGINS

Non-Operating Margins (Expense)

Interest income

Other income (expense)

TOTAL NON-OPERATING MARGINS

NET MARGINS FOR PERIOD

2021 $35,163,466 17,822,399 25,579 2,478,645 2,104,124 719,250 698,201 3,125,395 378,630 2,829,074 961,938 31,143,235 4,020,231 1,529,852 2,490,379 1,045,528 3,535,907 37,780 76,308 114,088 $3,649,995

2022 $36,161,762 18,586,180 58,478 2,775,042 2,381,897 722,152 813,309 3,343,538 355,352 2,827,353 962,856 32,826,157 3,335,605 1,519,089 1,816,516 891,493 2,708,009 58,715 (32,680) 26,035 $2,734,044 11

STATEMENT OF CHANGES IN MEMBERS’ EQUITY

For the Years Ended September 30, 2022 and 2021 PATRONAGE CAPITAL

Balance, October 1, 2020

Net margins for year

of prior

Balance, September 30, 2021

Net margins for year

Assignment of prior year's patronage capital

Change in membership

Assignment

year's patronage capital Change in membership Capital credits reassigned Retirement of patronage capital

Retirement

Balance,

2022 Assignable Assigned Total Memberships Other Equities $116,020 –––––116,020 –––––$116,020 $118,770 ––1,200 ––119,970 ––500 ––$120,470 $41,813,683 3,649,995 ––99,810 (3,075,020) 42,488,468 2,734,044 ––122,924 (2,725,030) $42,620,406 $40,181,502 –2,895,123 ––(3,075,020) 40,001,605 –3,254,411 ––(2,725,030) $40,530,986 $1,632,181 3,649,995 (2,895,123) –99,810 –2,486,863 2,734,044 (3,254,411)122,924$2,089,420

Capital credits reassigned

of patronage capital

September 30,

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STATEMENT OF CASH FLOWS

For the Years Ended September 30, 2022 and 2021

CASH FLOW FROM OPERATING ACTIVITIES

Net margins

Adjustments to reconcile net margins to net cash provided by operating activities:

Depreciation and amortization

Noncash capital credits

Loss on disposition of property

Changes in assets and liabilities:

Accounts, notes and other receivables (net)

Materials and supplies

Other assets

Deferred charges

Accounts payable

Accrued taxes and other liabilities

Consumer deposits

Accrued postretirement benefits Net

CASH FLOW FROM INVESTING ACTIVITIES

Extension and replacement of plant, net of salvage and removal costs

Proceeds from disposition of property

Investment in nonutility property

Proceeds from redemption of capital credits

(4,328,333) 55,830 (76,490) 1,007,923 (3,341,070) 2021 $3,649,995 3,294,638 (1,045,528) 2,171 (23,555) (66,845) 1,266,486 (1,085,675) (34,438) 99,072 (143,721) (51,550) 5,861,050 2021

cash

by operating activities $2,734,044 3,327,474 (891,493) 8,405 69,956 (87,525) (850,000) 2,016,701 131,436 (240,416) (11,396) (11,865) 6,195,321 2022

provided

Net cash used by investing activities (6,178,361) 12,732 (122,886) 1,318,870 (4,969,645) 2022 13

STATEMENT OF CASH FLOWS

For the Years Ended September 30, 2022 and 2021

CASH FLOW FROM FINANCING ACTIVITIES

Proceeds from long-term debt

Payments on long-term debt

Proceeds and reclassifications of patronage capital and memberships (net)

Patronage capital credits retired

Net cash provided by financing activities

Net decrease in cash and cash equivalents

Cash and cash equivalents at beginning of year

Cash and cash equivalents at end of year

1,345,212 (1,805,608) 101,010 (3,075,020) (3,434,406) (914,426) 3,322,286 $2,407,860 2021

4,275,000 (1,899,097) 123,424 (2,725,030) (225,703) 999,973 2,407,860 $3,407,833 2022

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2022 Annual Report