NorthFork Electrical Coop 2009 Annual Report

20 09 Together We Save

2009 Annual Report

Northfork Electric Cooperative, Inc.

NFEC Board of Trustees

Official Notice of Annual Meeting The annual meeting of the members of Northfork Electric Cooperative, Inc. will be held at Sayre Municipal Park, City of Sayre, Oklahoma, on the 21st day of August 2010. Registration for the meeting will begin at 9:00 a.m.

Purpose of the meeting is to elect Trustees/Directors for the Cooperative to serve for the following periods of time and/ or until their successors have been elected and shall have qualified places number One (1), Two (2) and Three (3) for a period of three (3) years.

(Standing left to right) Danny Davis, Ransom Snowden, Lendell Stowers, Charles Hickey and Lloyd Joe Patton. (Sitting left to right) Larry Smith, Jimmy Taylor and Chris Mackey.

CORPORATE PROFILE Northfork Electric Cooperative serves 6,376 meters through 2,466 miles of distribution lines in all or portions of Beckham, Custer, Dewey, Greer, Harmon, Roger Mills and Washita counties. The Cooperative’s headquarters are located in Sayre.

Thirty-five employees travel the Cooperative’s 1,004 square mile service territory daily.

The Cooperative is governed by an eight-member Board of Trustees who represent each of the Cooperative’s districts. The Trustees are nominated by a Nominating Committee and are elected by the membership attending annual meeting.

The Nominating Committee, appointed by the Board of Trustees, will present nominees for places One (1), Two (2) and Three (3). Report of the Nominating Committee will be posted at the Cooperative headquarters in Sayre, Oklahoma and will be presented to the membership at the annual meeting.

Members are further notified that additional candidates may be nominated by petition signed by fifteen (15) members of the Cooperative, no less than fortyfive (45) days prior to the meeting, and by petition, may nominate one (1) or more individuals for places One (1), Two (2) and Three (3).

President’s Message

S

teven Kaplan once said “When all is said and done, a lot more is said than done.” As I have journeyed through life I have observed there to be some truth to this statement. People will be upset about something and complain but the majority won’t take that next step and see what they might do to help solve the problem.

There are exceptions to this rule, however. I have seen both individuals and organizations willing to do more than talk about a problem. Instead of first complaining about an issue and pointing fingers, they will step up, get involved and try to make a difference. I feel very fortunate to be associated with one such organization, your cooperative – Northfork Electric.

As you know, Northfork is part of a cooperative network that includes the Oklahoma Association of Electric Cooperatives (OAEC) which works with statewide issues and the National Rural Electric Cooperative Association (NRECA) which works on national issues. Each of these organizations is very good at what it does and they represent you well in their respective areas. Part of that responsibility, however, is shouldered by individuals such as board members, managers, and staff and can sometimes be greatly enhanced by you – the consumerowner. When everyone works together in this way it becomes a true grassroots effort.

I recently attended our Legislative Rally in Washington, D.C. It was awesome to think that the group I was part of was representing more than 900 member cooperatives that serve 42 million consumers in 47 states.

It was very educational for me to share ideas with different people representing various systems from across the United States. Several states really had their work cut out for them as some of their Congressmen were totally

unfamiliar with the co-op program. They would have to explain some of the basic cooperative principles that make our program work and that we are not-for-profit.

Fortunately, the Oklahoma Congressional delegation is not that way. They are very knowledgeable and supportive of our program and of some of the issues affecting us. In many cases they are sponsors or co-sponsors of legislation that is critical to us. We had the opportunity to visit with them about several issues that could affect our cooperatives, and the need to keep electricity affordable to our consumers.

One issue that is particularly important to us is trying to prevent the EPA from using the Clean Air Act as a tool for reducing greenhouse gas emissions. We think it is Congress’ role to legislate greenhouse gas policy that is fair and affordable for all Americans. As of this writing there is currently a bill in Congress that would accomplish this goal. Here’s where we need your help.

Several of you have participated in the past by contacting Congress through the “Our Energy, Our Future” campaign and I thank you for your help. However, we need your assistance once again as there is a new message to Congress on the Web site. For those of you who haven’t participated before but would like to, go to www.ourenergy. coop, click on “join the campaign” and simply follow the instructions. It should take as few as 5 minutes.

I am proud to be part of this grassroots effort to keep our electricity affordable. Just imagine the impact if all 42 million consumers participated in this program. I am asking for you to get involved in this effort to keep your electricity affordable. This is your opportunity to help get it “done.”

Thank you in advance for your help and I look forward to seeing you at Annual Meeting.

Jimmy Taylor President, Board of Trustees

General Manager’s Message

D

on’t you love a good western movie? Or even some of the old, classic western TV shows? Bonanza, The Big Valley, Rawhide…you know the ones I’m talking about. I grew up watching them and couldn’t help but dream about what it must have been like to live back in those days. While I liked everything about those great westerns, I would have to say my favorite ones always had a cattle drive in them.

The mini-series Lonesome Dove was an instant classic.

That was one long cattle drive, wasn’t it? The best movie for cattle drive lovers like me, was probably Red River. There was one part of a cattle drive I never wanted to experience though...and that was a stampede.

The thundering hooves roaring all around you, screams from the trail hands that were overrun, the crash of the chuck wagon as it was knocked over and smashed…and the dust!

The dust was so thick that it choked you! It burned your eyes as you strained to see through it and frantically tried to keep from being trampled to death. …And that was just in my living room!

At last, the stampede would slowly grind to a halt. The roar of the hooves would finally die down. The cowboys’ heart rates would begin to return to normal. As the scene grew quiet, the last thing to happen was for the dust to settle.

First, faint images would begin to appear and gradually, the air would clear and you could begin to see what damage had been sustained during the stampede. In those first few

quiet moments, there was a huge sense of relief that you had actually survived, followed by an almost tranquil quietness.

At your cooperative, that’s pretty close to how we are feeling as employees and board members today. We’ve weathered a stampede of system growth that began about six years ago with a low rumble of oil & gas activity, and peaked in 2008 with new construction and upgrades coming at a chaotic pace.

From 2004 through the end of 2009, the peak demand on our distribution system stampeded from 23,354 kilowatts (kW) to 41, 328 kW…an incredible 77% increase! That increase in demand required a tremendous amount of work in a rather short timeframe. In some areas, it meant building powerlines where we had never had them before, while in others, it basically meant completely rebuilding existing circuits that were no longer adequate to carry the load.

As you can imagine, all that work costs an awful lot of money. The total utility plant value for NFEC increased from $23,427,478 to $36,399,799, which is a six-year growth of 55.4%. Add to that a complete upgrade of Western Farmers’ high-voltage transmission system in our area, and over $30 million of work has been completed for service to our members.

The roar slowly began to quiet in 2009 and today, finally… the dust has almost settled.

As the picture has cleared, we see an aftermath, not of destruction, but one of progress and improvement. Annual energy sales have risen from 121,702,027 kilowatt-hours (kWh) in 2004, to 232,488,688 kWh for 2009.

That’s an unbelievable growth of 91%!

Although there are costs associated with such growth, such as larger wholesale power bills from our supplier and higher debt costs to retire, those increased sales provide a healthier cash flow which affords us the opportunity to re-invest in our distribution system, specifically in the areas of new technology and equipment, and more aggressive preventative maintenance programs. These investments result in our entire system becoming more efficient, more reliable, and better maintained than ever before in our 71-year history. While our work is certainly not over, it has thankfully slowed to a more realistic pace.

The employees and the board have done a great job in managing this unique period of growth. In addition, you, the members, have been greatly supportive and patient when we experienced “growing pains” during the process. I appreciate that more than I could ever possibly express to you. As we move ahead together, I look forward to the opportunity to

continue the growth and improvement of your electric distribution co-op. I believe our future is a bright one.

Please make plans now to attend the 71st Annual Meeting of the Members for Northfork beginning at 9:30 a.m. on Saturday, August 21, in the Sayre City Park. It’s important for you to take an active part in the operation of your Cooperative by attending the business meeting and participating in the election of Trustees for Districts 1, 2, and 3. We’ll have some great prizes (including cash!), and some good barbeque from Dyer’s. Sarah Simpson, daughter of Northfork members, Mark and Debbie Simpson, and current Miss SWOSU, will be singing for your entertainment. If you haven’t heard Sarah before, you are in for a special treat. It will be a great day and will only be better if we have you there with us.

Scott Copeland General Manager

Statement of Revenue and Expenses For the year ending December 31, 2009

OPERATING REVENUE: Residential Irrigation Small commercial Large commercial Public street & highway lighting Miscellaneous service revenue

$5,954,309 164,099 1,572,166 8,722,103 71,272 123,607

RATIO OF OPERATING REVENUE*

Residential 36% Irrigation 1% Small commercial 9% Large commercial 53% St. & Highway lighting 0% Misc service revenue 1%

Total operating revenue

$16,607,556

OPERATING EXPENSES: Purchased power Distribution expense - operation Distribution expense - maintenance Administrative and general expense Consumers’ accounting and collection expense Energy conservation / utilization Depreciation Tax expense Interest expense on long-term debt Other deductions

$11,172,209 801,793 1,282,772 1,158,687 433,525 78,828 870,871 (2,978) 740,402 95,138

Total operating expenses

$16,631,247

Operating margins (patronage capital) for the year Non-operating margins (patronage capital) for the year Western farmers & other patronage capital for the year

Net margins

($23,691) 11,274 561,098 $548,681

RATIO OF OPERATING EXPENSES*

Purchased power 67% Oper., Maint., & Adm. 20% Consumers’ acc’t. & Coll.

3% Energy conserv. / Utilizat.

0% Depreciation 5% Taxes 0% Interest 5%

Balance Sheet

For the year ending December 31, 2009 ASSETS: Total cost of utility plant $36,399,798 Less depreciation reserve 9,398,686 Net value of utility plant Operating funds Special deposits Investments in associated organizations Amount due from electric bills Amount due from other accounts receivable Inventory on hand Investments in associated organizations - patronage capital Other assets

$27,001,112 762,542 0 578,073 2,253,330 90,131 577,539 3,564,581 140,594

Total assets

$34,967,902

LIABILITIES: We have borrowed from CFC $2,040,300 Amount not advanced 0 Less payments on principal 844,977 Balance we owe CFC We have borrowed from RUS Amount not advanced Less payments on principal

$1,195,323

$30,945,685 4,493,000 12,868,348

Balance we owe RUS

$18,077,337

Balance we owe CFC and RUS Notes payable Accounts payable Prepayments and accruals Meter deposits

$19,272,660 2,019,235 1,704,350 133,287 56,923

MEMBERS’ EQUITY (NET WORTH): Membership fees Patronage capital Other margins and equities

118,060 11,923,978 (260,591)

Total liabilities and member’s equity

$34,967,902

I certify that the above financial report is a true and accurate statement of Northfork Electric Cooperative, Inc., To the best of my knowledge and belief.

The records of the cooperative were audited for the fiscal year ended June 30, 2009 by Briscoe, Burke & Grigsby, LLP, Certified Public Accountants, Tulsa, Oklahoma.

— RANSOM SNOWDEN, SECRETARY-TREASURER

22

Dedicated Employees Serving You Years of Service

42 Barbara Swope, Reydon Cashier/Dispatcher

12 Chris Barton, Construction Foreman

9 Richard Bowdre, Manager of Operations Ron Waldrop, Construction Superintendent Terry Smotherman, District Lineman

Glen Tignor, Maintenance Superintendent

Glen Moore, Materials Handler

Jeff Mohr, Manager of Accounting & Finance

19

18

Gary Quinn, Subsidiary Services & Billing

Charlie Werner, Senior Accountant Steva Adams, Accounting Clerk

15

13

Kenny Waugh, Director of Marketing & Administrative Services

Heath Martin, Staking/Design Technician Chad Crompton, Construction Foreman

6 David Tignor, Construction Foreman Shawn Sawyer, Meter Technician Johnathon Hartman, Lineman Lisa Crauthers, Dispatcher Tony Carter, Lineman

25

30

37

Scott Copeland, General Manager Dan Dye, District Lineman

8

4

Karen Aston, AP clerklCashier

Michael Eagon, Lineman

5 T.J. Dorrell, Lineman Chance LaVelle, Purchasing Dustin Lowrance, Lineman

17 Kay Brown, Administrative Assistant Jack Sumpter, District Lineman

3

2

B. J. Carter, Lineman Brian Cotts, Lineman Travis Reeves, Lineman Tyler Heinsohn, Lineman Steve Cole, Lineman

Tiffanye King, Accountant

New Matthew Swint, Staff Assistant

Free Dollar Coin

Name ___________________________________________________________________

A free dollar coin will be given to each member’s child (12 years old and younger) when they register at the Annual Meeting registration booth.

Name ___________________________________________________________________

Children must be present.

Please list each child’s name and age:

Name ___________________________________________________________________ Parent’s Name(s) ________________________________________________________