80 YEARS OF TRANSFORMING LIVES 2017 ANNUAL REPORT
1 3 5 7 9 11
CEO AND PRESIDENT’S MESSAGE 80 YEARS OF COMMITMENT INLAND BY THE NUMBERS 2017 FINANCIALS AND RATES CHANGING LIVES INLAND MISSION & BOARD OF TRUSTEES
Inland crews setting one of the first of many power poles in 1937.
80 YEARS OF TRANSFORMING LIVES This past year, the members and employees of Inland Power proudly marked the 80th anniversary of our cooperative, a notable milestone by any measure. As such, this annual report will highlight our prior year’s accomplishments, while weaving in highlights from the past 80 years to celebrate our long-term success as a cooperative. Much has changed since Inland Power was formed by some spirited forerunners who were dedicated to getting a few farm folks “to see the light” back in April 1937. Their dedication started by transforming the lives of 160 farms northeast of Spokane and continues to transform lives with 41,984 meters by the end of 2017. When we think of transforming lives, we think of Franklin Delano Roosevelt’s New Deal Rural Electrification Administration (REA), which made Inland Power a reality. A favorite FDR quote is “the only limit to our realization of tomorrow will be our doubts of today.” Without his passion and vision to get the U.S. out of the great depression, our world would look a lot differently, and a lot darker, today. Like many of Roosevelt’s New Deal reform efforts, REA has proven to be good for both our members and the United States. But Roosevelt’s strong support wasn’t the force that made the program a national success, it was only the catalyst. It was left up to regional men and women, like our founders, sacrificing their time to transform hopes and dreams of electrification.
1 | 2017 ANNUAL REPORT
Perhaps, Inland Power can best be measured in terms of our ability to transform the lives of our members. Where jobs did not exist, now the wheels of industry spin. Where men and women had to labor arduously with hand tools, now electric motors run to support these efforts. In the remote areas Inland Power serves, people could not live, now they get to enjoy their homesteads. Inland Power altered the landscape from darkness to light. Even today, our focus is clear, improving lives for you, our valued members. Throughout Inland’s long history — through economic cycles, rising power costs, aging infrastructure, legislation, regulation and technological developments — Inland Power has not only survived, but has thrived, and continues to perform at the highest levels today. What’s behind this longevity? We believe the primary explanation lies in Inland Power’s member-focused mission. One constant over our many years has been our commitment to, and success in, providing our members with superior service, in the form of exceptional rates and reliability. We’ve also invested judiciously in maintenance and systems that improve member value and service. Most businesses progress through a life-cycle of birth, growth, maturity and decline followed by revival or death. Inland Power has avoided this seemingly inevitable aging process by adapting to changing conditions while always adhering to our fundamental mission and principles of transforming the lives of our valued members. We have changed with the times without changing who we are or why we exist. We continue to believe that our products, services and the value they add remain the fundamental elements of our continued success. We are a member-owned electric cooperative, and we start each day honored with the opportunity to power our community and bring you reliable electricity at the lowest possible price. Over the next decade, Inland Power and our members will face significant cost pressures.
With increasing energy rate pressures from our wholesale power provider (Bonneville Power Administration), from increased maintenance and operating costs with aging infrastructure, fish and wildlife mitigation and carbon tax initiatives; Inland Power will remain flexible and streamline our processes to remain as efficient as possible to ensure that our rates remain low and our reliability high. Inland Power’s founders built a solid foundation from which we continue to stand strong. Looking ahead to the next 80 years, we commit to stay true to our founders’ vision and our core mission of providing members with superior service. We will continue to strive for exceptional and reliable service to help us remain strong, vital and continue to improve the lives of our membership. This anniversary is the opportune moment to highlight the contribution of all our employees and board members, past and present, who, by their professionalism and commitment, have strengthened Inland Power and contributed to our long-term success. We are grateful to our members for your support over the past 80 years and we look forward to a vibrant future and another 80 great years. Thank you for allowing us to be a part of your lives, for your support and most importantly for your trust. Cooperatively,
Chad Jensen, CEO Kristina Bahr, President Brian Slaybaugh, President-Elect
Inland construction crews build a support to carry a line across the Pend Oreille River.
80 YEARS OF COMMITMENT March 16, 1937 Inland Empire Rural Electrification, Inc. becomes a legal entity. Founded by Arnold Burgess, Leo Thams & Dan Hopkins.
Pend Oreille Electric Cooperative consolidated with Inland Power, adding service territory in Pend Oreille, Stevens and northern Spokane Counties as well as Bonner and Kootenai Counties in Idaho.
New building constructed on the West Plains. Field crews and office together again after 60 years.
2017
2016
2015
New long-term BPA power contract goes into effect until 2028.
At the 2016 annual meeting, Inland Power members approved a significant bylaw amendment allowing all members the ability to vote for their trustees in person, by mail or electronically.
Completed the first full year of the Operation Round Up program. Donated to four charities and collected over $10,000 to give back to the membership.
2014
2006
Lincoln Electric Cooperative merged with Inland Power bringing membership to 21,700 and 5,336 miles of line.
BPA Prepay Agreement saves members over $21 million over the next 15 years.
2011
Inland Power had margins of $432,656 and as a result, 1975 was the first year Inland paid capital credits to its members.
2010
1974
At the annual meeting in Rosalia, the membership adopted a bylaw, which set up a capital credit system allocating net margins back to the membership.
Washington voters pass Initiative 937, a clean energy initiative requiring Inland Power to meet progressive renewable energy requirements into the future.
1995
1965
1946
Inland Power served more than 9,000 members with over 4,000 miles of line.
1955
Shortly thereafter, a second section was energized in southern Spokane County and northern Whitman County, followed by a third section in other parts of Whitman County.
Inland brings power to the 5,832 foot Mt. Spokane.
Inland Power purchased the electric system serving Airway Heights.
1949
April 27, 1938, 160 farms northeast of the Spokane area were the first Inland members to receive power from the cooperative.
1940
1939
1938
1937
By the June 7, 1937 board meeting, the Inland Empire Rural Electrification had received 972 applications for rural electricity.
Garfield County was added to the area served along with the Pullman area. By the end of 1941, 3,040 meters served over 1,549 miles of line.
Changed name from Inland Empire Rural Electrification, Inc. to Inland Power & Light Company.
2013
1954
In September 2014 Inland Power launches its first community solar program giving members an affordable way to participate in solar power. The first installation sells out immediately via a lottery process due to high demand. In early 2015, Inland builds a second phase to the maximum size allowed by Washington state so that more members can participate in the highly successful program.
Inland Power successfully converts to NISC and installs digital meter system, Tantalus, which allows us to remotely read meters and proactively inform Inland Power of outages. Members no longer have to read their own meters.
March 16, 2017 Inland Power celebrates 80 years of service. Inland is the largest electric cooperative in Washington state and continues to grow. Serving 13 counties, 41,984 members and 7,369 miles of line.
Inland’s take-off pole at the Bonneville substation above Colfax. Site of Inland Power’s first connection with BPA. 3 | 2017 ANNUAL REPORT
BY THE NUMBERS EMPLOYEE DETAILS
AVERAGE kWh USAGE
1 937
MISC DETAILS
RESIDENTIAL
MEMBERS ENROLLED IN SMARTHUB
2017
5
86
TOTAL NUMBER OF EMPLOYEES
44 FIELD 42 OFFICE
PLANT & UTILITY DETAILS MEMBERS PER MILE OF LINE
MILES OF LINE
2017 1941
5.7 3 13
1,549 7,369
NUMBER OF COUNTIES SERVED
19 41
2 017
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NUMBER OF POLES
101,897 31,403
NUMBER OF TRANSFORMERS
2 01 7
160 41,984 WASHINGTON:
40,166
IDAHO:
SMALL COMMERCIAL
LARGE COMMERCIAL
IRRIGATION LARGE
NUMBER OF METERS
1 9 41
1,500 kWh 1,244 kWh 48,700 kWh
1,818
DURING IRRIGATION SEASON
68,320 kWh 1,284 kWh SMALL
13,365
(15,933 ACCOUNTS)
MEMBERS ENROLLED IN AUTOPAY
8,519
2,726 VIA CREDIT CARD 5,793 VIA ELECTRONIC CHECKING/SAVINGS)
MEMBERS ENROLLED IN OPERATION ROUND UP
2,595
AVERAGE COST OF MEMBER’S MONTHLY BILL 1938
2017
$35.02 $125.55
BALANCE SHEETS
REVENUE 2017
2016
7%
ASSETS
Net Utility Plant
$ 151,582,000
Non-Utility Plant Investments in Assoc. Organizations Cash and Cash Equivalents Accounts and Notes Receivable Materials and Supplies BPA Prepayment Other Prepayment
$ 149,441,000
2,000
2,000
5,824,000
5,489,000
141,000
588,000
11,424,000
8,967,000
2,610,000
2,216,000
133,943,000
143,210,000
1,033,000
Other Assets 4,244,000
20%
IRRIGATION RESIDENTIAL COMMERCIAL
73%
901,000 4,600,000
$ 310,783,000 $ 315,414,000
NUMBER OF MEMBERS 42,000
Long Term Debt BPA Prepay Long Term Debt Other Liabilities
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62,372,000
56,791,000
130,924,000
140,618,000
11,653,000
18,476,000
40,000
38,000
2013 2014 2015 2016 2017
Deferred Gain and Credits 2,582,000 2,606,000 $ 310,783,000 $ 315,414,000
Residential Rates for 2017 per kWh National Average 13.01 cents/kWh
EXPENSES
10.70 10.08 12.89
14.47
11.60
11.16
10.53 10.52
18.77 12.26
12.02
12.48
17.81 15.24
12.03 13.47 12.4
13.37
14.50
12.49
10.97
10.46
10.76
10.87 10.28
11.7 11.67 11.02
RI - 20.48 CT - 20.70 NJ - 15.34 DE - 13.81 MD - 13.35 DC - 14.00
12.70
11.44 12.54 10.99 11.40
21.90
MA - 19.36
12.92
9.29
FL - 12.47
Operating Revenue
2017 $ 74,604,000
2016 $ 66,981,000
Cost of Power
39,391,000
35,699,000
Operations and Maintenance
8,867,000
7,615,000
Consumer Accounts and Marketing
2,503,000
2,314,000
6,411,000
6,271,000
Depreciation
6,953,000
6,772,000
Taxes
4,576,000
4,122,000
Interest 1,420,000 1,534,000
11.51 - 16.50 16.51+ Average customer usage based on 1,500 kWh’s/month EIA Data, November 2017
Out of 891 cooperatives in the country, Inland Power ranks 14th for lowest rates.
INLAND POWER
TOTAL COST OF ELECTRIC SERVICE
WASHINGTON AVERAGE NATIONAL AVERAGE
OPERATING MARGINS NET BENEFITS OF BPA PREPAY
8.56¢
NON-OPERATING MARGINS
9.73¢
POWER COSTS
$ 70,121,000
$ 64,327,000
4,483,000
2,654,000
1,191,000
1,246,000
716,000
899,000
53%
TAXES, DEPRECIATION & INTEREST
17%
CAPITAL CREDIT RETIREMENTS (Thousands) 1,600
INLAND POWER HAS THE LOWEST RATES IN THE NATION
ADMIN & OPERATIONS
30%
EXPENSES
Administrative and General
8.50 - 10.00 10.01 - 11.50 30.58
STATEMENTS OF REVENUES AND MARGINS
800
$1,961
9.69
11.05
$1,500
9.73
$1,500
NH - 19.88 VT - 17.87 16.05
$1,500
Preserving a strong financial bottom line is essential for ensuring Inland Power’s ability to deliver safe, reliable and cost-effective electricity while proactively planning for the future. In 2017, Inland Power had net margins of $6.39 million and returned over $1.9 million in capital credits to our members.
942,000
$1,500
As a cooperative, our members maintain an ownership interest and stake in everything we do, and that includes our financial strength.
2,282,000
39,872
Accounts Payable
$ 95,981,000 39,502
$ 100,970,000
39,010
Equities and Margins
40,352
EQUITIES, MARGINS AND LIABILITIES
41,984
13.01¢
NET MARGINS
$ 6,390,000
$ 4,799,000
2013 2014 2015 2016 2017
CHANGING LIVES Changing Lives Through Innovative Approaches
We live in a world that is changing more rapidly than we ever imagined. Inland Power must keep pace with advancing technologies. You can count on your cooperative to remain flexible as we streamline our processes to remain as efficient as possible to ensure that our rates remain low, our reliability high and that we provide tools to help you easily manage your account and energy use. • Our Advanced Metering Infrastructure (AMI) has reached a 99.5% meter read rate throughout our system. By using our SmartHub website or smartphone app, members can view accurate usage information when and where they want. AMI has also had a dramatic impact on our outage response, with near real-time outage notifications.
Inland crews undergrounding power line atop Mt. Spokane in 1940.
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• As technology advances so do member’s expectations, this is why we have been focusing heavily on business continuity. Our members have an expectation that critical systems like outage management are online and available when they need them, so we have developed a comprehensive business continuity plan to ensure critical systems and other resources are online and available during the rare occasion when your power goes out. • We kicked off a continuous improvement initiative in 2017 to evaluate all our internal processes and procedures to identify areas where we can improve. While this hasn’t been easy, the efficiency gains identified so far have had a dramatic impact on how we conduct business day-to-day and are improving the overall service levels we provide our members.
Changing Lives with Reliability and Growth As your cooperative, we work tirelessly to ensure you enjoy the electricity that powers your daily life. Safely keeping affordable and reliable electricity flowing
through our communities requires a focus on maintaining infrastructure. It also means being progressive in improving the delivery system to provide the most value.
Changing Lives Through Strong Partnerships
• Recently, we implemented a comprehensive substation equipment replacement program. With new technology in our substations, Inland Power now has valuable data to evaluate which substations are being over/underutilized and develop comprehensive plans to upgrade, replace or shift load to increase reliability.
At Inland Power, we are committed to serving the communities where our members live and work. Community is one of our core values and a vital part of our mission and service delivery. For decades, we’ve been giving back by supporting schools, higher education, livestock shows and other community events. This year your cooperative donated approximately $70,000 back to our rural communities.
• West Plains substation, a 2nd transformer addition was completed this fall. This transformer is part of Inland Power’s growth strategy and will allow Inland Power to serve additional loads in the West Plains area, Inland’s fastest growing region.
• Operation Round Up continues to grow with a balance of $42,456. Over the course of the program, this fund has given $20,800 back to our members.
• After years of difficult power line maintenance and tough storm restoration efforts, Inland Power was able to use FEMA funding to place the main feeder lines at Newman Lake underground. With 70,000 feet of new high capacity cable in conduit forming a dependable “backbone” around the lake, a marked increase in our reliability has been achieved.
• Inland employees sponsored approximately 80 students at Snowden Elementary through weekend food needs, school supplies and a tree of sharing during the holidays. • 15 - $1,000 scholarships for college, trade or line school to Inland Power member’s children and dependents were awarded. • $7,800 to livestock auctions and 4H groups to support our youth and these vital programs.
A STRONG BELIEF IN OUR MISSION
We are a member-owned energy cooperative committed to safe, reliable service at competitive rates.
INLAND POWER OFFICES THROUGH THE PAST 80 YEARS OUR BOARD OF TRUSTEES DISTRICT 1 Danny Lee Secretary
DISTRICT 5 Gale Rettkowski
NINE MILE FALLS, WASHINGTON
DISTRICT 6 Jim Kroll
DISTRICT 2 Dick Ziehnert Treasurer ELK, WASHINGTON
DISTRICT 3 Garry Rosman Vice President DAVENPORT, WASHINGTON
DISTRICT 4 David Shill SPOKANE, WASHINGTON
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WILBUR, WASHINGTON
COLFAX, WASHINGTON
DISTRICT 7 Brian Slaybaugh President POMEROY, WASHINGTON
AT-LARGE POSITION A Kristina Bahr SPOKANE VALLEY, WASHINGTON
10110 W Hallett Rd. Spokane, WA 99224
Carl Smith, Inland Power lineman from 1944 to 1970.