Annual Report 2011
NOW & THEN EnergyUnited-0612 AR.indd 1
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Then
Now
Who We Are A leader among cooperatives, EnergyUnited continues to evolve and prepare for the future, but one thing remains the same: EnergyUnited is a member-owned business committed to delivering reliable energy services. With roots dating back to the late 1930’s, EnergyUnited was formed in 1998 by the consolidation of two strong, community-minded electric cooperatives, Crescent EMC and Davidson EMC. Today, EnergyUnited is the largest electric cooperative in North Carolina serving more than 120,000 customers in 19 counties stretching from the Virginia border to northern Mecklenburg County. As part of our commitment to our members and the communities we serve, EnergyUnited EMC has offices in seven cities and towns. In addition, EnergyUnited has a wholly-owned subsidiary – EnergyUnited Services which owns EnergyUnited Propane. EnergyUnited Propane serves more than 28,000 customers in 63 North Carolina counties and 11 South Carolina counties. As a cooperative, EnergyUnited EMC is owned by its electric members, who in turn elect a board of directors representing all parts of its service territory. Its employees are dedicated and well-trained and believe in and practice three guiding principles: integrity, commitment and excellence. Once a year, to provide members with a comprehensive understanding of the Cooperative, EnergyUnited proudly presents its annual report.
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Now & Then 3
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EnergyUnited is a member-owned business committed to delivering reliable energy services at competitive prices to improve the quality of life of its customers and communities.
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This American cooperative spirit lives on. Seventy-six years ago President Roosevelt created the Rural Electrification Act, and electric cooperatives like EnergyUnited were formed to bring power to rural homes and farms, as only 10 percent of rural Americans had electricity. And today, electric service is available to all. The 840 electric cooperatives, of which EnergyUnited is the 17th largest, serve 42 million people and collectively own 2.5 million miles of distribution lines covering 75 percent of our nation. That same American spirit that brought cooperatives into existence years ago is alive and well at EnergyUnited with our commitment to those we serve in the communities we live. EnergyUnited provides safe and reliable services at an affordable price. Last year, our reliability rating was 99.9 percent, which means electric service interruptions were minimal, despite the extraordinary storm activity that impacted our region. At 99.9 percent, EnergyUnited’s reliability rating continues to be one of the best in the country. In addition, customer satisfaction continued to outperform the best in the industry. According to the American Customer Satisfaction Index (ACSI), EnergyUnited scored 85 out of 100 on ACSI’s overall customer satisfaction index, outperforming other cooperatives by a significant margin of 10 points and investor owned utilities by 14 points. This high score shows that members appreciated the extra efforts EnergyUnited employees made on their behalf and that employees exceeded expectations. Energy costs have risen across the board in recent years, but through internal efficiencies, EnergyUnited absorbed most of those increases so that members did not face significant changes to their power bills. Although rates increased slightly in 2011, EnergyUnited’s rates remained extremely competitive against North Carolina electric utilities. One thing is for sure, electricity from EnergyUnited will always be a value.
improvements, any remaining funds are returned back to members in the form of capital credits. In 2011, EnergyUnited retired $3.3 million to its membership. EnergyUnited and its employees are dedicated to improving the quality of life in the communities we live and work in. EnergyUnited employees give time and personal resources unselfishly to help others, doing their part individually and collectively. Employees help in the schools, are volunteer firemen, and are positive role models as they coach various athletic teams. Employees also enthusiastically participate in activities EnergyUnited sponsors or supports, such as Relay for Life and United Way. EnergyUnited’s members also make a tremendous impact by their “round-up” contributions to the EnergyUnited Foundation. This year, the EnergyUnited Foundation granted almost $240,000 to help families or individuals in distress or organizations doing good work throughout the EnergyUnited 19-county service area. Year after year, EnergyUnited supports schools in educating and encouraging the future leaders of our communities through the Bright Ideas program. This year, EnergyUnited granted almost $40,000 to help bring local K-12 classroom educators’ ideas to life. As a result, twenty-five “Bright Ideas” will now become a reality. Since the program’s inception in 1994, EnergyUnited has awarded nearly $600,000 in grants. For nearly 75 years, EnergyUnited’s cooperative spirit has remained strong and shines through in EnergyUnited’s commitment to communities, member satisfaction and the drive to deliver value and quality service. And that’s one thing that will never change.
As a not-for-profit cooperative, members will never pay any more for electricity than they should. At the end of each year, once expenses are paid and reserves set aside for emergencies and capital
Our Mission 5
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The more things change the more they stay the same. A Letter From The President & CEO EnergyUnited will be the preeminent Energy Services Cooperative. Although a lofty vision for the Cooperative, we have a solid foundation to build on. We think President Franklin D. Roosevelt put it best when he wrote in a letter to members of the National Rural Electric Cooperative Association (NRECA) after their first annual meeting, “…I think that the forward march of electric cooperatives has an even more profound significance in terms of our fight to preserve democracy. For it represents an extension of what is perhaps the most democratic form of business enterprise, one in which the individual finds his greatest gain through cooperation with his neighbors.” Through the years, this democratic form of business has remained a cornerstone of everything we do. And proof once again, that the more things change, the more they remain the same. As a member/owner, you decide and elect board members to represent your best interests in your Cooperative. We are fortunate to have dedicated board members, who represent every part of our service area, guiding and setting the policies of EnergyUnited. Their service and devotion to the Cooperative’s principles and sound business practices are assurance that EnergyUnited will continue to provide extraordinary service and value. This year was no exception. In 2011, our dedicated employees accepted the challenge to improve upon their already impressive record, ensuring our high standards are not just maintained, but exceeded. In addition, we locally invested almost $24 million in capital expenditures to upgrade technology, and build new substations and transmission lines, while staying true to our mission and keeping a very high reliability rating. In the past year, we’ve worked diligently to manage the single most significant cost of your Cooperative, our wholesale contracts for electricity. We’ve worked with local businesses to improve their efficiency and energy savings. We helped attract new businesses and became the utility of choice in many cases, contributing to job creation as well. Additionally, our propane company added new customers and EnergyUnited Propane grew to become the 29th largest in the United States. And in true cooperative spirit, we assisted our neighbors. We sent line crews to Tennessee after devastating tornados ripped through that area in May. And we assisted with power restoration efforts in November, when nearly three million were left without electricity following a severe winter storm in Pennsylvania and New Jersey. Throughout this annual report, you will find additional examples of how EnergyUnited has performed on your behalf. This is an exciting time to be serving you, as each and every day we are faced with new challenges and opportunities. There is no such thing as standing still in our industry. And staying a step ahead has become a way of life at EnergyUnited. Sincerely, H. Wayne Wilkins, Chief Executive Officer & Dr. Max Walser, President 6
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Annual meeting, September 3, 1949 7
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2011
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The Year The Future Arrived In the future, people may not have to drive to a gas station. They will just drive back to their home or final destination and plug in their vehicle to recharge. 2011 saw the future arrive with more than 3,000 fully electric vehicles on the road, one of which is being used by the Cooperative. A new Chevy Volt joined the EnergyUnited stable of “clean-fleet” vehicles of propane, hybrid-electric, and now fully electric vehicles. And as part of EnergyUnited’s commitment to a cleaner tomorrow, EnergyUnited provided electric vehicle charging stations for its members to use free-of-charge. With the prediction that Americans will see 1.5 million electric vehicles in use by 2015, meeting the electric demands of this technology is at the forefront for EnergyUnited. To meet this forecasted increase in demand and with a continued commitment to the environment, EnergyUnited continues to explore innovative renewable resources for energy generation. Throughout the year 2011, EnergyUnited purchased energy produced from local renewable sources - a one-megawatt solar farm near Taylorsville and the Iredell County landfill, which produces electricity via methane gas generation. In addition, the Cooperative obtains hydroelectric resources from Southeastern Power Administration, and renewable energy credits from 11 hydroelectric projects in North Carolina. And EnergyUnited continues to carefully consider renewable energy generation produced from wind, solar, biomass, poultry and swine to complement its energy portfolio. EnergyUnited also made advances on reducing its carbon footprint with the implementation of new technologies. By the end of 2011, the Cooperative neared completion of the installation of its Advanced Metering Infrastructure (AMI) system. Significantly enhancing capabilities, these smart meters can store use, outage and voltage information, as well as communicate the information back to the Cooperative’s office; eliminating the need to visit each service location for meter reading, outage verification and preliminary voltage investigations. EnergyUnited Propane looked to mobile technology to reduce its carbon footprint as well. The new system provided operational efficiencies in routing and scheduling of propane gas deliveries as well as the dispatching of service requests. As we look to the future, one thing will remain the same: EnergyUnited is a member-owned business committed to delivering reliable energy services at competitive prices to improve the quality of life of its customers and communities. Year after year, EnergyUnited upholds its unwavering commitment to seek new and innovative ways to deliver on that promise.
As we look to the future, one thing will remain the same: EnergyUnited is a member-owned business committed to delivering reliable energy services at competitive prices to improve the quality of life of its customers and communities. 9
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And the Award Goes To EnergyUnited takes great pride in doing its part to care for and enhance North Carolina’s natural areas by working to preserve the plant life and animal habitats along its right-of-ways. To accomplish this, the Cooperative stays abreast of the latest developments and techniques in proper right-of-way maintenance. Its well-rounded vegetation management program is both environmentally sound and protects power lines to ensure uninterrupted electric service. Over the years, EnergyUnited has been recognized for our conscientious efforts protecting the environment and its habitats. In October, the Pollinator Partnership’s North American Pollinator Protection Campaign named Jimmy Brown, Director of Maintenance Services for EnergyUnited, a 2011 Pollinator Advocate Award recipient. One of just five winners from all over the world, he was recognized during a special ceremony at The Smithsonian Institute in Washington, DC. Jimmy Brown has a passion to protect the environment by incorporating wildlife conservation into the vegetation management and right-of-way initiatives. Under his leadership, EnergyUnited has set the standard for habitat protection in our region.
“EnergyUnited is challenged with providing safe and reliable service to members while protecting the environment for today and future generations,” explained Brown, who said the award is an honor and a testament to EnergyUnited’s commitment to vegetation management. “If all utilities followed Jimmy and his team’s lead in considering pollinators in their management regimes, there would be significant changes and improvements in the status of pollinator populations across the continent,” said Dr. Vicki Wojcik, Associate Program Manager for the Pollinator Partnership. “We enjoy what we do and we take it seriously when it comes to protecting the corridors where wildlife travels, and finds food and shelter,” Jimmy stated. EnergyUnited has countless acres of right-of-ways in 19 counties that are maintained using ecologically sound vegetation control practices to ensure that generations to come will be able to enjoy wildlife native to its region and endangered plants that have been part of the landscape for thousands of years.
Recently Jimmy and his team focused their efforts on promoting the pollinator species along all of EnergyUnited’s right-of-ways, creating a network of habitat spanning more than 1,000 miles and discovering and protecting three federally endangered plants along the way.
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Protecting the environment for today and future generations.
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EnergyUnited Goes to Washington Since the Rural Electrification Act was signed into law in 1936, legislative actions on both the federal and state level have had an effect on cooperatives and the electric industry as a whole. And since the legislative process can have a direct impact on operating policies and ultimately rates, EnergyUnited continues to assume a leadership role in bi-partisan political activities. This past May, EnergyUnited board members and staff joined approximately 2500 participants from cooperatives nationwide for the National Rural Electric Cooperative Association (NRECA) annual legislative conference in Washington. During the conference, EnergyUnited members visited the offices of our congressmen and senators to educate them on the needs of electric cooperatives and urge them to develop energy policies that consider the necessity of affordable and reliable electricity. While no major energy issues arose in 2011, electric cooperative representatives worked with leaders to build a strong working relationship built on the honesty and integrity for which local cooperatives are known. And EnergyUnited continues to keep a watchful eye on proposed legislation and supports issues that will benefit the Cooperative and its members.
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EnergyUnited Partners With Business And Industry As the national economy begins to recover, EnergyUnited continues to focus on strengthening the communities it serves through economic development efforts. Economic development means creating an environment in which the communities and citizens prosper and improve their quality of life. It is about building better communities. EnergyUnited’s business development department is often the first point of contact when perspective business or industries look to locate or expand within the Cooperative’s service area. Knowing just how important jobs are to strengthening the communities, they work hand-in-hand with local economic development corporations (EDC) to create incentive programs, identify available buildings and parcels of land, and offer creative approaches to providing electric service. A good example of this is Sav-a-Lot, one of the nation’s leading discount grocery retailers. When Sav-a-Lot showed an interest in locating to Davidson County, EnergyUnited’s business development representatives worked closely with both the Davidson County EDC and Sav-a-Lot representatives to make this a reality. As a result, Sav-a-Lot’s $24 million food distribution center is now located in the Lexington Business Center. EnergyUnited representatives not only make sure the needs of new businesses are met; they also work with existing members looking to expand their businesses in the area. This year, AVGOL, a nonwoven fabric product manufacturer and EnergyUnited’s largest member, selected their Mocksville facility for expansion instead of looking to expand overseas. EnergyUnited worked closely with AVGOL to ensure that the facility had adequate capacity to meet the needs of a 25 percent increase in energy demand. This expansion also created additional job opportunities in Davie County. In addition, EnergyUnited is a vital partner to thousands of businesses, helping them find solutions that affect their service and bottom line. The US Postal Service, for example, employs EnergyUnited to perform their utility management services in more than 6,000 facilities throughout the country. And in 2011, the Cooperative also worked with many local businesses to provide energy efficient lighting and other energy saving solutions. EnergyUnited is recognized as a strong part of the fabric of the communities it serves. Because of this recognition new businesses consistently select EnergyUnited when given a choice.
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EnergyUnited EMC 2011 in Review Killowatt Hours Sold to Members Average Residential Use Per Month Overall Consumer Use Per Month Number of Members Number of Services Number of Employees Miles of Line: Transmission Distribution - Overhead Distribution - Underground Capital Credits Retired in 2011
2,404,449,952 1,296 1,650 101,610 137,538 175
$
182 7,978 4,262 3,307,726
How Each Dollar Is Spent
CONSOLIDATED FINANCIAL HIGHLIGHTS 2011 Statistics Of Operation Operating Revenue Cost Of Sales Gross Profit On Sales
2011 $
Other Expenses: Advertising, Marketing, & Sales Product Services & Labor Other G&A Expenses Depreciation And Amortization Interest Other Total Expenses
238,927,180 184,340,018 54,587,162
2010 $
241,559,618 190,433,637 51,125,981
774,504 9,264,988 9,573,607 16,899,888 9,935,020 68,277 46,516,284
822,528 9,790,188 9,154,918 16,064,628 11,255,923 170,296 47,258,481
NET OPERATING MARGINS
8,070,878
3,867,500
Nonoperating Margins Other Income Gain (Loss) On Disposal Of Property Total Nonoperating Margins
3,292,659 992,879 76,890 4,362,428
3,685,254 947,998 684,210 5,317,462
NET MARGINS
$
12,433,306
$
9,184,962
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Balance Sheet ASSETS UTILITY PLANT Electric Plant In Service Property And Equipment- Subsidiaries Construction Work In Process Gross Utility Plant Less Accumulated Depreciation Total Utility Plant
2011
$
OTHER PROPERTY AND INVESTMENTS Restricted Property And Investments Investments In Associated Organizations Goodwill Other Assets Notes Receivable Total Other Property & Investments CURRENT ASSETS Cash And Cash Equivalents Consumer Accounts Receivable, Less Allowance For Doubtful Accounts of $1,790,861 & $1,914,993 for 2011 & 2010 Other Accounts Receivable Unbilled Accounts Receivable Inventories And Supplies Current Maturities Of Notes Receivable Current Investment In Leases Other Current Assets Total Current Assets DEFERRED CHARGES TOTAL ASSETS Equities & Liabilities EQUITIES Member Shares Patronage Capital Other Equities Accumulated Comprehensive Gain/(Loss) Total Equities
475,767,864 24,300,385 15,281,844 515,350,093 162,284,256 353,065,837
2010
$
460,991,876 23,938,171 11,713,001 496,643,048 151,291,347 345,351,701
893,405 15,496,759 689,309 1,398,095 422,500 18,900,068
1,092,048 14,918,216 702,232 1,326,454 210,000 18,248,950
2,415,393
6,529,093
12,414,321 454,612 10,667,901 6,067,151 25,000 – 1,413,581 33,457,959
13,632,290 1,407,681 12,476,046 5,598,283 15,840 253,651 2,243,786 42,156,670
2,572,048
1,351,558
$
407,995,912
$
407,108,879
$
506,180 92,855,182 63,688,814 (6,602,996) 150,447,180
$
504,775 87,540,789 59,873,404 (2,818,598) 145,100,370
NON-CURRENT LIABILITIES Long-Term Debt, Less Current Maturities Accumulated Obligation For Pensions And Benefits, Less Current Amount Other Noncurrent Accrued Liabilities Total Non-Current Liabilities
174,009,551
170,001,088
8,037,319 3,235,445 185,282,315
8,053,317 3,046,601 181,101,006
CURRENT LIABILITIES Current Maturities Of Long-Term Debt Short-Term And Line-Of-Credit Borrowings Accounts Payable Consumer Deposits Other Current Liabilities Total Current Liabilities
11,074,211 – 17,248,609 3,847,824 12,688,398 44,859,042
20,226,120 833,337 20,108,648 4,007,590 9,235,597 54,411,292
DEFERRED CREDITS
27,407,375
26,496,211
TOTAL EQUITIES & LIABILITIES
$
407,995,912
$
407,108,879
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EnergyUnited’s Board of Directors As a not-for-profit electric cooperative, EnergyUnited is owned by the members it serves. And as a member, one way to have a voice in the Cooperative is by electing fellow members to serve on the board of directors who review policies and governances. Over the years, board members have come from various backgrounds – farming, small business, banking, education, and other professions. Their diverse backgrounds and experience give strength to the board as they provide leadership for EnergyUnited. Through industry associations and other opportunities, board members continuously educate themselves on matters related to electric cooperatives, including industry trends and the latest equipment and technology. Thanks to their commitment and dedication to serve, EnergyUnited has evolved to the premier Cooperative it is today.
Board of Directors
Executive Staff
Dr. Max Walser President
H. Wayne Wilkins Chief Executive Officer
Edgar Cartner Vice President
Kathleen Hart Chief Information Officer & Vice President, Customer Care
Jeannette Overby Secretary Ronnie Harrison Treasurer Jerry Anderson Ann Eller Jimmy Horton Mack Shoaf Glenn Smith
Tim Holder Vice President, Sales & Economic Development
David Schleicher Vice President, Engineering & Operations Tom Tedrow Vice President, Human Resources Roy McDonald Corporate Attorney, Stoner, Bowers, Gray & McDonald, P.A.
Alec Natt Chief Financial Officer & Vice President, Corporate Services Jeff Ruffner General Manager, EnergyUnited Propane
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If I have seen farther than others, it is because I was standing on the shoulders of giants. Isaac Newton
In Recognition… EnergyUnited’s Board of Directors elected several new officers in 2011 - the newly appointed president is Dr. Max Walser; Edgar Cartner is vice president; Jeannette Overby will continue as secretary; and Ronnie Harrison is treasurer. Combined, these officers bring nearly 100 years of dedicated service as Cooperative Board members. EnergyUnited looks forward to their leadership and continued dedication in their new roles.
In Remembrance… EnergyUnited suffered two great losses in 2011, when former cooperative leaders Shirley “Jim” Johnson and Tommy Brotherton passed away. As prior members of the EnergyUnited Board of Directors, their guidance, direction and legacy of leadership will continue to help shape the Cooperative as it moves forward. They will be missed, but they will not be forgotten.
With Gratitude… Several Board members retired this year - Charles Hedrick, Richard Watts, and Rufus Wyatt, who all began their service on the former Davidson EMC Board of Directors. Also retiring were Emory Windsor and Jack Wooten, who began as Crescent EMC Board members. These five men were instrumental in the success of EnergyUnited and leave an extraordinary legacy of service.
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In 2011, we’re happy to report that EnergyUnited returned $3.3 million to our members in capital credits. A nice reminder that we are truly all in this together.
Annual meeting, September 3, 1949
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When you signed up to receive electric service from EnergyUnited, you became a member. As a not-for-profit electric cooperative, EnergyUnited is unlike investor-owned utilities because the Cooperative is not driven solely to make profits for shareholders. While investor-owned utilities return a portion of any profits back to their shareholders, electric cooperatives operate on an at-cost basis. If and when there is money remaining and EnergyUnited is financially able to do so, a portion of any leftover funds is returned to members in the form of a capital credit refund. In 2011, we’re happy to report that EnergyUnited returned $3.3 million to our members in capital credits. A nice reminder that we are truly all in this together.
Giving Back. 19
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ENERGYUNITED Post Office Box 1831 Statesville, NC 28687 Phone: 800.522.3793 | Fax: 704.878.0161 www.energyunited.com
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To Report an Outage: 800.EUNITED (800.386.4833) 24-Hour Account Information: 800.MEMBER1 (800.636.2371)
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