IT’S YOUR COOPERATIVE 2016 ANNUAL REPORT
WE ARE A MEMBEROWNED ENERGY COOPERATIVE COMMITTED TO SAFE, RELIABLE SERVICE AT COMPETITIVE RATES.
CONTENTS 1 3 5 7 9 11 13 15
BOARD OF TRUSTEES BOARD PRESIDENT & CEO LETTER FINANCIAL STATEMENTS INLAND BY THE NUMBERS RELIABILITY INNOVATION MEMBERSHIP COMMUNITY
BOARD OF TRUSTEES
1 | INLAND POWER
FROM LEFT TO RIGHT KRISTINA BAHR
BRIAN SLAYBAUGH
GALE RETTKOWSKI
AT-LARGE POSITION A Board President Trustee since 2001 Spokane Valley, WA
DISTRICT 7 Board Vice President Trustee since 2011 Pomeroy, WA
DISTRICT 5 Trustee since 1975 (Lincoln Electric), 1995 (Inland) Wilbur, WA
GERALD DAVIS
DANNY LEE
RICHARD ZIEHNERT
AT-LARGE POSITION B Trustee since 1984 Pullman, WA
DISTRICT 1 Trustee since 2015 Nine Mile Falls, WA
DISTRICT 2 Board Treasurer Trustee since 2013 Elk, WA
JAMES KROLL
DAVID SHILL
GARRY ROSMAN
DISTRICT 6 Trustee since 2007 Colfax, WA
DISTRICT 4 Trustee since 1990 Spokane Valley, WA
DISTRICT 3 Board Secretary Trustee since 2012 Davenport, WA
ANNUAL REPORT 2016 | 2
LOOKING BACK ON A GREAT YEAR & AHEAD TO AN EXCITING FUTURE.
DEAR VALUED MEMBERS, At Inland Power, our team is rallied around six core beliefs that give us a sense of purpose and serve as our guiding core values each and every day. As we look back to 2016, we’re proud of these beliefs – affordable rates, safety, reliability, innovation, membership and community. After all, Inland Power was founded in 1937 by some spirited forerunners who were dedicated to getting their farm neighbors “to see the light” and we continue in honor of their drive, effort and dedication.
it hard to diagnose after the fact. Now with the digital system reading every hour, our members literally have access to 24 reads every day, and that level of detail has been a real eye opener for many members. With the ability to correlate consumption to activities, members can actively take control of what level of usage makes sense for their lives and budget. That easily accessible information has led to comments from our members including:
2016 WAS THE YEAR TO
• “I didn’t think our new hot tub would use that much electricity.”
INNOVATE AND EXCEL
• “That little space heater sure drove up my bill.”
AT INLAND POWER.
• “We decided that the old extra refrigerator we plugged into the garage really isn’t worth the additional usage we’re paying.”
As you’ll see in this report, 2016 was the year to innovate and excel at Inland Power. After a couple of years implementing new internal software and digital meters, your staff had a focus on growth, success and productivity throughout the cooperative. Their collective willingness to explore new opportunities and try new things is part of what makes Inland Power a great cooperative. Inland Power always strives to be on the cutting edge of cost-effective technology. It was in pursuit of a better approach that we first brought digital meters to our system. And we couldn’t be more proud of the numerous benefits we’ve experienced with instantaneous meter reads and expeditious power restoration provided by the vast technology of these meters. One of the positive aspects we’ve experienced is how well the digital meters are working for members in conjunction with their online SmartHub account. It has been an amazing conservation tool that raises awareness of energy usage by identifying high and moderate use activities. With our old metering system, meter reads were self-read monthly, which generated a bill a month later. If a bill triggered questionable use, enough time had passed that most members had forgotten certain activities that generated an uptick in usage, making
3 | INLAND POWER
• “Wow, I can really see the impact frigid temperatures have on my bill.” We’ve also been able to solve some family mysteries as well, so to speak, like when a homeowner asked us to check on unexplained usage happening at their closedup cabin. Having the ability to show what days and times the usage happened, the homeowner discovered that a couple of teenagers were, well, ‘being teenagers’ and sneaking into their parent’s cabin without permission. It’s really been a great tool for our members in some very basic, as well as, unique ways. There’s no doubt this past year has been a very politically charged time, and we have been working with our legislators in Olympia to ensure rural areas get a voice in the halls of power in Washington. It’s not about red states and blue states. It’s about real people in real places facing real challenges. It’s about our co-op living out the principles of our movement: concern for community and democratic member control. We’ve been using our collective efforts in Olympia to ensure our members’ concerns are heard politically by imploring our lawmakers for less stringent rules to the renewable energy policy act. Cleaner energy sources are a good thing – but at what price? Without significant tax subsidies, wind and solar remain prohibitively
expensive. The energy needs of the nation are serious, but they must be balanced with the needs of the citizens and the environment. They must be affordable and realistically achievable. That is our legislative message on behalf of you, our members. In addition, Inland Power continues to serve you with energy that is 87% renewable and 97% carbon free, as you can see in the chart above. 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, and livestock shows just to name a few. It’s why we formed Operation Round Up in 2013. Supporting our community and rounding up small change may seem trivial, but we believe when even just one life is touched, a chain reaction can be unleashed that ultimately makes everyone and everything in its path stronger.
2016 alone, we saved $1.9 million. This is a direct saving in lower electrical rates to each of you. Lastly, we would like to thank our great employees. Day after day they are the ones who ensure great member service, reliability and the success of your cooperative. In 2016, Inland Power was honored to be named one of the top 25 places to work in the Inland Northwest by the Journal of Business. This award was based on employee engagement surveys and feedback. This is a huge honor and very gratifying success for the cooperative. We are very proud of this outstanding achievement. In the following pages, you will see what makes your cooperative special. We would like to thank our employees for their dedication, effort and willingness to embrace change this past year to accomplish all the successes highlighted in this annual report. We continue to believe that
WE WOULD LIKE TO THANK OUR EMPLOYEES FOR THEIR DEDICATION, EFFORT AND WILLINGNESS TO EMBRACE CHANGE THIS PAST YEAR. Inland Power is in great financial shape. As you can see in the financial section of this report, Inland’s operating margins were $4.8 million. In addition, in 2016 Inland Power entered its fourth year of our $173 million BPA prepayment program to help support upgrades to the federal hydro system. This program is paying great dividends. In
Chad V. Jensen Chief Executive Officer
our products, services and the value they add to our members remain the fundamental elements of our continued success. In 2017, Inland Power celebrates 80 years in business. That’s a tremendous feat and we look forward to another successful year of serving your energy needs.
Kristina Bahr Board of Trustees, President
ANNUAL REPORT 2016 | 4
2016
2015
$ 149,441,000
$ 147,323,000
11%
ASSETS
5,489,000
5,091,000
588,000
493,000
Accounts and Notes Receivable
8,967,000
10,380,000
Materials and Supplies
3,087,000
3,259,000
BPA Prepayment
143,094,000
152,103,000
Other Prepayment
4,269,000
Other Assets 479,000
$ 315,414,000
Accounts Payable Long Term Debt BPA Prepay Long Term Debt Other Liabilities
IRRIGATION
1,944,000 367,000 $ 320,960,000
EQUITIES, MARGINS & LIABILITIES
Equities and Margins
COMMERCIAL
$ 95,981,000
$ 92,467,000
6,371,000
5,978,000
56,791,000
59,233,000
140,618,000
149,954,000
12,571,000
10,135,000
Deferred Gain and Credits 3,082,000 3,193,000 $ 315,414,000 $ 320,960,000
NUMBER OF METERS 42,000
40,000
38,000
2012 2013 2014 2015 2016
STATEMENTS OF REVENUES AND MARGINS OPERATING REVENUE
2016
2015
$ 67,786,000
$ 66,822,000
EXPENSES
35,699,000
33,958,000
Operations and Maintenance
7,615,000
10,121,000
Consumer Accounts & Marketing
2,314,000
2,457,000
Administrative and General
6,305,000
6,573,000
Depreciation
6,773,000
6,492,000
Taxes
4,123,000
4,075,000
55%
ADMIN & OPERATIONS
25%
EXPENSES
Cost of Power
40,352
Cash and Cash Equivalents
RESIDENTIAL
39,872
Investments in Assoc. Organizations
69%
20%
38,950
Net Utility Plant
39,502
REVENUE
39,010
2016 FINANCIAL STATEMENT & RATES
BALANCE SHEETS
TAXES, DEPRECIATION & INTEREST POWER COSTS
20%
Interest 2,263,000 2,414,000
2,694,000
732,000
NET BENEFITS OF BPA PREPAY
1,900,000
2,213,000
NATIONAL AVERAGE
9.24¢
206,000 214,000
1200
NON-OPERATING MARGINS
12.22¢
NET MARGINS
$ 4,800,000
$ 3,159,000
600
$1,250
WASHINGTON AVERAGE
CAPITAL CREDIT RETIREMENTS (Thousands)
2012
5 | INLAND POWER
2013 2014
2015
$1,500
OPERATING MARGINS
8.5¢
$ 66,090,000
$1,500
Out of 891 cooperatives in the country Inland Power ranks 14th for lowest rates.
INLAND POWER
$ 65,092,000
$1,500
TOTAL COST OF ELECTRIC SERVICE
$1,500
INLAND POWER HAS THE LOWEST RATES IN THE NATION
2016
ANNUAL REPORT 2016 | 6
INLAND POWER
BY THE NUMBERS
40,352 86 METERS
EMPLOYEES
INLAND POWER SERVICE TERRITORY
MILES OF LINE
7,668
5.25 MEMBERS/MILE OF LINE
2016 KWH SALES
883,839,301 2016 ELECTRIC REVENUE
$65,916,019 TOTAL UTILITY PLANT
$231,217,224 NET UTILITY PLANT
$149,441,273 7 | INLAND POWER
ANNUAL REPORT 2016 | 8
RELIABILITY RESOURCES
2013
1.942
2014
1.656
2015
1.430
2016
1.440
dedication of your team and sustained investment in the strength of the distribution system. As technology continues to enhance and develop so do the systems that allow Inland Power to become more knowledgeable about outages and outage causes in the field. With our new digital meters, we have more information at our fingertips than ever
2016 OUTAGES BY CAUSE POWER SUPPLIER
44.5%
start to focus our efforts to reduce outages. While this is a work in progress we are improving and
SNOW/ICE
before. This means that we can now better track outage causes, low voltage issues and other areas that may impact the quality of your service. During 2016 we have been able to monitor that data and
UNKNOWN
EFFECTIVELY.
come by chance. It is through the hard work and
10.9%
PRUDENTLY AND
1.705
TREE
on this page is a summary of the accomplishments made over the last 12 months.
ANIMAL
FIRE
WIND
duration of outages throughout our system. Listed
2.4%
6.7% 6.5%
advancing our ability to reduce the number and
9.9%
OUR MEMBERS’
2012
PLANNED
WE ARE UTILIZING
flip of a switch. This kind of performance does not
5.1%
BUDGET ENSURES
24/7 to ensure that service is available to you at the
AVERAGE NUMBER OF OUTAGES PER MEMBER BY YEAR
MANMADE
IMPROVEMENT
without safe and productive employees. We work
12%
LONG-TERM CAPITAL
Inland Power could not reach any of its lofty targets
EQUIPMENT
DEVELOPING A
LIGHTNING
0.9% 0.7% 0.4%
9 | INLAND POWER
Hired two full-time pole test & treat inspectors.
Completed a five-year maintenance and
Since the wind and snow storm of
Began construction of a second
Crews continue to replace
They have a yearly rotation schedule to test Inland
operations plan for our distribution system.
2015, Inland Power has committed
power transformer in the West Plains
aluminum bells and cutouts as
Power’s 101,918 poles. In 2016 alone, we replaced
This plan will help us evaluate the weakest
itself to hazard tree mitigation beyond
substation to bring additional power
they are a consistent culprit in
1,050 poles that failed Inland’s test and treat
portions of our service territory and more
our normal right-of-way tree clearing.
to the Airway Heights area. The
outage causes. 273 bells and 380
program to help increase reliability of the system.
proactively plan preventative maintenance.
In 2016, approximately 5,000 hazard
transformer is scheduled to come online
cutouts were replaced in 2016.
trees have been removed.
in early summer 2017. ANNUAL REPORT 2016 | 10
Hand in hand, we take the journey to pioneer
A FEW EXAMPLES OF INNOVATION THAT YOUR TEAM HAS ACCOMPLISHED OVER THE LAST YEAR
the way in this fast-paced environment as
OUTAGE MANAGEMENT MOBILITY
DISASTER RECOVERY PLAN
NEW DIGITAL METERS
WORKFLOW PROCESS IMPROVEMENT
our new metering system, host a wealth of
With the amount of proactive real-
During the wind storm, we identified
We are nearing the completion of
Another area we have focused
information about your account and electric
time outage data being received
the need to have a very robust
the new digital meter rollout and are
on over the last year is workflow
use. Members can now manage payments,
from the meters, and the increasing
disaster response plan so we could
currently sitting at a 98.5% meter
and process improvement. As
sign up for services and check their electric
expectations from the members on
continue to provide the level of
read rate. The project has had a huge
technology and job demands
use down to the hour, all at the touch of a
outage communications and status
service expected by our members.
impact throughout the organization
change, we have to look closely
updates, it was critical to get information
Over the past year, we began the
from billing to operations and
at how these can complement
in the hands of crews. Each crew is now
process of defining a complete
engineering. We have only begun to
each other in order to gain
geared up with smartphones and iPads
disaster response plan, which
see the impact this system will have
efficiencies and ultimately
The new digital meter installation is by
with connectivity back into the outage
covers power backup, redundant
on helping to identify and increase
provide the best service we can
far the broadest reaching and impactful
management system. This provides crews
communications connectivity at our
reliability throughout our distribution
to the members.
organizational change in Inland history.
with the ability to receive live updates as
main office, to contingencies in the
system.
After a long, nearly three-year journey, the
outages change as well as allows them the
event we need to relocate personnel
ability to update outage information from
to continue electric services to our
the field to provide members with more
membership.
we pave the way towards creating value for our membership. You’ve never had so much information about your cooperative and your account at your fingertips as you do today. Our SmartHub portal and app, combined with
button.
project is nearing completion and moving to maintenance and full operation mode.
accurate outage restoration times and
We are experiencing a read rate of 98% and
status updates. In addtion, we launched
will be working to get those last meters
SmartHub messenger service that allows
communicating by the end of 2017.
members to opt in to email and text alerts for outage updates on their accounts.
INNOVATION 11 | INLAND POWER
ANNUAL REPORT 2016 | 12
MEMBERSHIP Inland Power is your cooperative and we want you to feel like a valued member with every interaction. Our employees work hard to give our members the best in member service. Year over year we receive high member service marks compared to our peers. This past year, 93% of our members rated their experience dealing with
METERS PER EMPLOYEE
Inland as excellent and the majority of the remaining were satisfactory. Our members
INLAND POWER 469
deserve the best and we will continue to make member satisfaction a high priority.
NATIONAL AVERAGE 306
In addition to great service, your cooperative strives for efficiency and productivity. The best indication of our productivity and efficiency is our high number of meters
WASHINGTON AVERAGE 290 BPA CUSTOMER AVERAGE 280
per employee. This statistic is a key ratio used to compare efficiency against other cooperatives across the nation. Inland Power is significantly higher than the national median, a statistic we are very proud of. Our great employees are just one way we make doing business with Inland Power as easy as possible. At the March 2016 Annual Meeting, a new set of bylaws was proposed and approved by the membership. These bylaws were drafted to better serve the membership and allowed for greater membership participation regarding board elections and
TOTAL NUMBER OF PHONE CALLS
53,943
districting. The first change expanded the trustee voting process to allow for voting AVERAGE WEEKLY PHONE CALLS
by mail, electronically or in person with a goal to increase member participation.
1,037
The second amendment allowed for the board of trustees the ability to change board districts per policy rather than through bylaw amendments. With the everchanging number of members within each district, this gives the board more liberty to redistrict to ensure equal membership representation within districts.
SMARTHUB ACCOUNTS
14,180 13 | INLAND POWER
PAPERLESS BILLS EMAILED
73,392
PAPER BILLS SENT TO HOME
424,272
PAY M E N T S P R O C E S S E D T H R O U G H
59,473 62,243 ELECTRONIC CHECK 142,131 PAPER CHECKS 170,143 SMARTHUB
CREDIT CARD
NEW SERVICE APPOINTMENTS
684
AVERAGE RESIDENTIAL MEMBER BILL
$113.10 | $3.77 M O N T H LY
DA I LY
ENERGY EFFICIENCY REBATES
776
ESTIMATED KWH SAVINGS FROM ENERGY EFFICIENCY
6,673,452 ANNUAL REPORT 2016 | 14
At Inland Power, we are committed to serving the communities where our members and employees live and work. Year over year our giving continues to grow and you can see our employees giving back to our communities through monetary gifts, volunteer time and food drives. This year your cooperative returned almost $70,000 to the communities we serve in the form of charitable donations. By sponsoring youth sports teams, local high schools, scholarships to member’s children and more, we are striving to make our communities better places to live and work.
The Operation Round Up program
Inland employees continue to sponsor
15 - $1,000 excellence award college
$22,500 donation to SNAP,
Sponsored 34 community sports
continues to grow with a balance
83 students from Snowdon Elementary
scholarship and three - $1,000
providing energy assistance
teams and educational events,
of $27,608. To date, we have 2,492
fulfilling all needed requests for
lineman scholarships for line school
to hundreds of our members.
along with participating in
participants and have donated to
weekend food for kids in need. In total,
awarded to member’s children and
livestock auctions and 4H groups
over 13 organizations since the
Inland and its employees donated over
dependents.
to support our incredible youth.
program’s inception in 2013. Thank
$13,500 to this program in 2016. In
you to our generous members for
addition, Inland employees sponsored
contributing to this great program.
a Tree of Sharing, sponsoring 25 students in need of gifts and clothing during the holidays.
COMMUNITY 15 | INLAND POWER
ANNUAL REPORT 2016 | 16
10110 W Hallett Rd. Spokane, WA 99224
inlandpower.com
RELIABILITY
INNOVATION
COMMUNITY
MEMBERSHIP