SECO Energy 2021 Annual Report
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LETTER TO MEMBERS
ABOUT SECO ENERGY
ACSI
BOARD OF TRUSTEES
DISTRICT MAP
EXECUTIVE LEADERSHIP
AUDITOR’S REPORT
BALANCE SHEETS STATEMENTS OF REVENUES AND PATRONAGE CAPITAL STATEMENTS OF COMPREHENSIVE INCOME STATEMENTS OF CASH FLOWS 1
SECO Energy 2021 Annual Report
DEAR MEMBERS, I AM EXCITED TO BEGIN MY TENURE AS SECO ENERGY’S NEW CEO AND RETURN TO MY HOME STATE OF FLORIDA. FLORIDA AND SECO ARE EXPERIENCING A POPULATION UPTICK. THIS GROWTH IS EXCITING AND CHALLENGING. I PREDICT A BUSY FUTURE FOR YOUR ELECTRIC COOPERATIVE.
With Board of Trustees approval, we returned $6.5 million in Capital Credits to current and former members in 2021. SECO has returned almost $80 million in Capital Credits since its inception as a not-forprofit electric cooperative in 1938. Assigning and returning margins to our members makes us different from other electric utilities. This is what we like to call “the cooperative difference.”
I am dedicated to member engagement, energy-efficiency and community-partner projects such as expanding the use of electric vehicles (EV) in our service area, preparing to embrace an advanced metering infrastructure (AMI) program and increasing our philanthropic outreach to help those less fortunate in our communities. I along with SECO’s leadership team are looking into ways we can reduce and optimize wholesale power expenditure while lowering electric bills and reducing energy use.
We were proud to learn that SECO once again scored remarkably well in the 2021 American Customer Satisfaction Index (ACSI). Members who were surveyed by the ACSI rated SECO with a customer satisfaction score of 91. SECO’s 91 shows that your electric cooperative is both a state and national frontrunner when compared to investor-owned and municipal utilities as well as our cooperative peers. Our 400+ employees provide exceptional customer service every day.
In 2021, we added more than 5,770 new active services systemwide. This brings our active meter count to 222,188 at yearend 2021. In 2021, you and your fellow members consumed over 3.68 billion kilowatt hours – an increase of 40 million kilowatt hours from 2020. We are working hard to meet the increasing demand for reliable, safe and affordable energy, while maintaining existing infrastructure and preserving reliability. SECO is investing significant dollars to serve new members and continue to serve our loyal members reliably. At yearend 2021, SECO’s investment in facilities topped over $1 billion and continues to grow. This ongoing facilities investment averages over $6 million per month. We have retained our position as the third-largest Florida electric cooperative and seventh largest nationally out of about 800 distribution co-ops. Among our co-op peers, a growing infrastructure supporting more than 220,000 metered accounts is extraordinary. Our facilities include 48 substations and 13,000 miles of line to reliably serve members.
We control costs, maintain healthy equity, return excess margins like a true co-op should and provide competitive rates. We pledge to provide you with the most reliable and lowest cost electricity possible while not losing sight of the high premium you place on customer service. SECO Energy is an extraordinary not-for-profit electric cooperative, and I am honored to serve as its CEO. Best regards,
CURTIS WYNN, CEO
SECO Energy 2021 Annual Report
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OUR YEAR BY THE NUMBERS
M E T E RS
3.68
91
2 02 1 AC SI SCO R E
33.48% M E M B E R E QUI TY
B I L L I ON KW H S OL D
TIER 2.54
3rd
LARG E ST CO -O P IN FLO RI-
7th
LARGEST IN THE
NATION 3
SECO Energy 2021 Annual Report
TOTAL PLANT INVESTMENT
$1.019 BILLION
91 72
72 71
73 77
SECO ENERGY
OTHER CO-OPS
MUNICIPALS
INVESTOR-OWNED
In 2021, members rated SECO Energy a customer satisfaction leader. Our 2021 ACSI score is an impressive 91. This is the second year in a row we have scored a 91 in the ACSI. Our score is tops when compared to average ACSI scores in the energy industry. Nationally, cooperative utilities averaged 73 in 2021, which mirrors the 2020 average score. Investorowned utilities averaged 72, while municipal utilities averaged 71.
Thank you, members, for your recognition of our employees’ efforts.
SECO Energy 2021 Annual Report
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BOARD OF TRUSTEES
< RICHARD DENNISON President District 4
> SCOTT BOYATT District 1
> RAY VICK District 5
< JOSEPH KUSIAK District 7
< JOYCE ANDERSON Secretary/Treasurer District 2
< GERALD ANDERSON Vice President District 3
> MIKE MUFFETT District 6
< BILL JAMES District 8
< MORGAN HATFIELD District 9
SECO Energy’s Board of Trustees are members who live in SECO’s service territory. They are elected to oversee the governance of the cooperative. Each Trustee on the Board is elected by the members who reside in his/her District. Collectively, the Trustees are responsible for establishing, reviewing and revising corporate policies to ensure that SECO continues to preserve reliable, affordable service for all members.
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SECO Energy 2021 Annual Report
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LEVY
DISTRICT MAP
41
40
Ocala
200
75
Lake Weir 19
MARION CITRUS
Umatilla
301
44
44
Wildwood Lake Griffin
Lake Eustis 441
Lake Panasoffkee
41
Lake
Leesburg Lake Harris
48
District 1
Boyatt
Lake Apopka
District 2
301
J Anderson District 3
G Anderson
50
HERNANDO
Clermont Clermont
District 4
471
Dennison District 5
Vick
District 6
LAKE PASCO
SUMTER
33
27
Muffett
District 7
Kusiak
District 8
James
District 9
Hatfield
SECO Energy 2021 Annual Report
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OUR PURPOSE > CURTIS WYNN Chief Executive Officer
< MICHEAL WHITE VP of Engineering
> KATHRYN GLORIA VP of Corporate Communications
> GENE KANIKOVSKY Chief Financial Officer
< JOHN LASELVA VP of Operations
OUR VALUES 7
SECO Energy 2021 Annual Report
< NORA BROWN Executive Administrator for the CEO & Board
< GREGG MORRELL VP of Corporate Services & Human Resources
INDEPENDENT AUDITOR’S REPORT In performing an audit in accordance with generally accepted auditing standards and Government Auditing Standards, we: Board of Directors Sumter Electric Cooperative, Inc. Sumterville, Florida OPINION We have audited the accompanying financial statements of Sumter Electric Cooperative, Inc. (the Cooperative), which comprise the balance sheets as of December 31, 2021 and 2020, and the related statements of revenues and patronage capital, comprehensive income, changes in comprehensive income, 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 the Cooperative, as of December 31, 2021 and 2020, 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. BASIS FOR OPINION We conducted our audits in accordance with auditing standards generally accepted in the United States of America 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 the Cooperative 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. MANAGEMENT’S RESPONSIBILITY FOR THE FINANCIAL STATEMENTS Management is responsible for the preparation and fair presentation of these 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. 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 the Cooperative’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 will always detect a material misstatement when it exists. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control. Misstatements, including omissions, 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.
•
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 the Cooperative’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 the Cooperative’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 February 11, 2022, on our consideration of the Cooperative’s internal control over financial reporting and our tests of its compliance with certain provisions of laws, regulations, contracts and grant agreements, and other matters. The purpose of that report is 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 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 the Cooperative’s internal control over financial reporting and compliance. OTHER REPORTING REQUIRED BY 7 CFR PART 1773 In accordance with 7 CFR Part 1773, Policy on Audits of Rural Utilities Service Borrowers, §1773.33, we have also issued our report dated February 11, 2022, on our consideration of the Cooperative’s compliance with the terms, covenants, provisions, or conditions of their loan, grant, and security instruments as set forth in the regulatory requirements for electric borrowers, insofar as they relate to accounting matters enumerated therein. The purpose of that report is to describe the scope of our testing of the Cooperative’s compliance with the regulatory requirements for electric borrowers and the results of that testing, and not to provide an opinion on the Cooperative’s compliance with the regulatory requirements for electric borrowers. That report is an integral part of an audit in considering the Cooperative’s internal control over financial reporting and compliance.
February 11, 2022 Ocala, Florida Certified Public Accountants Gainesville | Ocala | Tallahassee | Sarasota | Orlando | Lakeland Members of American and Florida Institutes of Certified Public Accountants An Independent Member of the BDO Alliance USA
SECO Energy 2021 Annual Report
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BALANCE SHEETS | DECEMBER 31, 2021 AND 2020 ASSETS
2021
2020
Electric Plant
Construction Work in Progress Total Electric Plant
$ 951,885,716
$ 922,879,948
66,676,784
33,032,725
1,018,562,500
955,912,673
(Accumulated Provision for Depreciation and Amortization)
(230,900,496)
(213,663,635)
Total Electric Plant - Cost Less Depreciation and Amortization
787,662,004
742,249,038
Investments Investments in Associated Organizations and Other Special Funds
Cash and Cash Equivalents Accounts Receivable - Consumers (Less Provision for Doubtful Accounts 2021 - $3,342,450, and 2020 - $3,156,995)
110,235,579
103,325,828
2,618,401
3,027,273
2,008,157
Unbilled Electric Revenues
15,569,841
19,187,937
Inventories
30,158,476
18,216,283
556,339
233,091
62,041,773
50,576,446
1,767,206
2,835,227
961,706,562
898,986,539
Total Assets
SECO Energy 2021 Annual Report
Patronage Capital
2020
$
993,100
$
964,520
314,375,193
295,776,013
Accumulated Other Comprehensive Income
(597,935)
(885,278)
Other Equities
7,481,232
6,643,341
Total Equities
322,251,590
302,498,596
549,934,567
488,851,496
Capital Lease Obligations
2,971,968
3,466,003
Deferred Compensation Liability
2,826,473
2,710,063
555,733,008
495,027,562
20,060,564
22,296,782
1,352,269
1,366,170
Non-Current Liabilities Long-Term Debt
Current Liabilities Long-Term Debt - Portion Due Within One Year Capital Lease Obligation - Portion Due Within One Year Line of Credit
8,312,577
Prepayments and Other Current Assets
9
1,936,442
10,793,402
Other Receivables
Memberships
Total Non-Current Liabilities
Current Assets
Deferred Charges
2021
Equities
Distribution, Transmission, and General Plant
Total Current Assets
EQUITIES AND LIABILITIES
-
10,424,576
Accounts Payable
18,652,084
26,231,618
Consumer Deposits
19,437,220
18,728,158
9,921,020
10,940,320
Total Current Liabilities
69,423,157
89,987,624
Deferred Credits
14,298,807
11,472,757
$ 961,706,562
$ 898,986,539
Other Current or Accrued Liabilities
Total Equities and Liabilities
STATEMENTS OF REVENUES AND PATRONAGE CAPITAL | DECEMBER 31, 2021 AND 2020
2021
2020
$ 430,075,641
$ 422,968,807
270,608,332
260,423,605
301,586
295,142
19,068,513 46,890,387 13,781,276
17,991,874 39,556,325 17,878,479
2,383,345
2,156,114
18,867,675 29,475,322
18,178,503 28,286,393
Taxes - Expense
120,528
129,259
Other Expense
342,335
1,150,532
(401,839,299)
(386,046,226)
Operating Revenues Operating Expenses Cost of Power Transmission Expense Distribution Expense - Operations Distribution Expense - Maintenance Consumer Accounts Expense Customer Service and Informational Expense Administrative, General, and Other Expense Depreciation Expense
(Total Operating Expenses) Operating Margins Before Fixed Charges
28,236,342
36,922,581
(16,085,020)
(15,684,929)
12,151,322
21,237,652
Fixed Charges Interest on Long-Term and Short-Term Debt Operating Margins After Fixed Charges
2021
2020
Other Margins G&T Cooperative Capital Credits Other Capital Credits and Margins
$
5,340,490
$
5,237,639
1,736,497
1,189,923
7,076,987
6,427,562
19,228,309
27,665,214
370,435
451,687
4,742,517
384,101
5,112,952
835,788
24,341,261
28,501,002
295,776,013
272,268,172
Patronage Capital (Retirement of Capital Credits)
760,472
1,065,683
(6,502,553)
(6,058,844)
Patronage Capital, End of Year
$ 314,375,193
$ 295,776,013
Total Other Margins Net Operating Margins Non-Operating Margins Interest Income Other Non-Operating (Expense) Income Total Non-Operating Margins Net Margins Patronage Capital, Beginning of Year Reallocation of Unclaimed
SECO Energy 2021 Annual Report
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STATEMENTS OF COMPREHENSIVE INCOME DECEMBER 31, 2021 AND 2020 2021 Net Margins
$
24,341,261
2021
2020
$ 24,341,261
$ 28,501,002
2020 $
28,501,002
Other Comprehensive Net Margins
Cash Flows from Operating Activities Net Margins
Adjustments to Reconcile Net Margins to Net Cash Provided by (Used in) Operations:
Amortization of Unrecognized Prior Service Costs and Unrecognized Actuarial (Loss) Gain Comprehensive Net Margins
STATEMENTS OF CASH FLOWS DECEMBER 31, 2021 AND 2020
287,343 $
24,628,604
(193,122) $ 28,307,880
Capital Credits and Patronage Dividend Certificates Assigned
(7,076,987)
(6,427,562)
Depreciation
30,440,782
29,439,841
300,000
5,152,353
1,148,029
1,148,029
837,271
(7,953,235)
Other Receivables
(1,019,116)
15,884,722
Prepayments and Other Current Assets
(323,248)
146,109
Deferred Charges
(80,008)
(465,743)
Accounts Payable
(7,579,534)
6,682,811
709,062
908,996
(1,019,300)
(7,809,582)
116,410
577,600
2,826,050
(3,651,245)
19,279,411
33,633,094
43,620,672
62,134,096
Change in Inventory - Net of Salvage
(11,942,193)
(2,333,907)
Contributions in Aid of Construction Received Proceeds from Disposition of Property
24,730,115 1,158,446
13,303,379 674,596
Provision for Uncollectible Accounts Amortization of Prepaid Pension Changes in Assets - Decrease (Increase) and Liabilities - Increase (Decrease): Accounts Receivable
STATEMENTS OF CHANGES IN COMPREHENSIVE INCOME DECEMBER 31, 2021 AND 2020 2021 Accumulated Other Comprehensive Income (Loss)–Beginning of the Year
$
$
(692,156)
Consumer Deposits Other Current Liabilities
Amortization of Unrecognized Prior Service Costs and Unrecognized Actuarial (Loss) Gain Accumulated Other Comprehensive Income (Loss)–End of the Year
(885,278)
2020
287,343 $
(597,935)
(193,122) $
(885,278)
Deferred Compensation Liability Deferred Credits Total Adjustments Net Cash Provided by (Used in) Operating Activities Cash Flows from Investing Activities
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SECO Energy 2021 Annual Report
STATEMENTS OF CASH FLOWS | DECEMBER 31, 2021 AND 2020 2021
2020
Proceeds from Redemption of Patronage Capital Certificate
274,849
353,809
Proceeds from Redemption of Other Investments
81,683
205,086
(189,296)
(184,606)
(94,786,694)
(63,790,000)
(5,458,817)
(7,067,464)
(86,131,907)
(58,839,107)
Line of Credit (Net)
(9,877,601)
1,738,444
Proceeds on Long-Term Debt
86,470,000
15,941,200
Payments on Long-Term Debt
(28,033,791)
( 20,184,621)
Utilization of Cushion of Credit
(136,331)
5,808,275
(2,004,734)
(1,631,835)
1,125,234
590,098
28,580
27,510
760,472
1,065,683
(6,502,553)
(6,058,844)
Purchase of Other Investments Extension and Replacement of Plant Plant Removal Cost Net Cash Provided by (Used in) Investing Activities Cash Flows from Financing Activities
Payments on Capital Lease Obligation Other Equities Membership Fees Reallocation of Unclaimed Patronage Capital Retirement of Capital Credits Net Cash Provided by (Used in) Financing Activities
41,829,276
(2,704,090)
Net Increase (Decrease) in Cash and Cash Equivalents
(681,959)
590,899
Cash and Cash Equivalents, Beginning of Year
2,618,401
2,027,502
Cash and Cash Equivalents, End of Year
$
1,936,442
$
2021
2020
Supplemental Disclosures of Cash Flow Information Cash Paid During the Year for: Interest
$
15,703,071
$ 15,809,391
Supplemental Schedule of Non-Cash Investing and Financing Activities The Cooperative Retired Certain Assets from its Plant Records as Follows: Cost of Assets Retired Plant Removal Costs Material Salvaged Net Reduction in Accumulated Depreciation
$
10,971,807 5,458,817 (1,826,120)
$
14,965,541 7,067,464 (358,064)
$ 14,604,504
$
21,674,941
The Cooperative Financed Certain Equipment Using a Capital Lease: Amounts not Included in Proceeds from Capital Lease Obligation
$
1,496,798
$
1,318,400
Amounts not Included in Extension and Replacement of Plant
$
1,496,798
$
1,318,400
2,618,401
SECO Energy 2021 Annual Report
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a
Outage Map StormCenter is SECO Energy’s allin-one online outage reporting and communications platform. Members can report an outage 24/7, check the status of an existing outage or report an area light malfunction. StormCenter is designed specifically for use on your smartphone or tablet. Enroll in outage notifications to receive updates about current outages or scheduled system maintenance in your area. Members can choose to receive notifications via email, text, voice message or all three. Update your contact information and other settings to prepare for storm season. Visit SECOEnergy.com > StormCenter to explore the options.
CENTER Report Outage
Check Status
Manage Notifications CHECK STATUS
REPORT AN AREA LIGHT OUTAGE OR ISSUE.
NEED HELP? CONTACT US
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SECO Energy 2021 Annual Report
LETTER TO MEMBERS
Dear Members, SECO Energy’s mission is to construct, maintain and restore the electric system when outages occur. We construct new facilities to meet the growing demand for affordable, safe, reliable power in our 2,100-square mile territory. Our system is upgraded and rigorously maintained to prevent outages. When an outage occurs, crews quickly respond to restore service safely.
and microwave backhaul for automated communications that facilitate faster and safer outage restoration.
Storm our
hardening electric
In 2019, SECO added 6,189 new services. Our member count at 2019 year-end was 210,815 members. Growth of this caliber is almost unheard of among electric cooperatives, as the median size co-op nationally is just 13,000. SECO is the third-largest cooperative in Florida and the seventhlargest cooperative in the nation.
For just pennies a day, SECO Energy’s Surge MitiGator™ helps take the bite out Growth brings its own unique challenges. The cost of of damaging andconstructing spikes everything power associated surges with operating, and maintaining a state-of-the-art electric system that can damage destroy household is rising. We are or building new substations, adding power transformers at existing substations, appliances and sensitive electronics. upgrading voltage and conductor and converting This valuable protection is “Made critical overhead facilities to underground. in the Our USA” and includes a beastly 2020 construction work plan tops $55 million and is configured to preserve the balance between warranty. Visit SECOEnergy.com > reliability and affordability. The work plan includes Energybuilding Solutions > Surgetowers, MitiGator new communication upgrading our radio system and installing fiber-optic cable to enroll or learn more today. SURGE@SECOENERGY.COM
Jim
Jerry HatSECO Energy 2021 Annual Report
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“Highest in Customer Satisfaction among Cooperatives (2017 & 2016) and among South Midsize Utilities (2015)”
“
Highest in Customer Satisfaction among Cooperatives (2017 & 2016) and among South Midsize Utilities (2015) To learn more about SECO Energy visit us at secoenergy.com.
”
For J.D. Power award information, visit jdpower.com.
For J.D. Power award information, visit jdpower.com. | To learn more about SECO Energy visit secoenergy.com. SECO Energy 2021 Annual Report
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