2013 Annual Report
A message from
Your board of trustees
Kip Justice
Danny McNeil
Debra E. Baxley
District 6 President
District 4 Vice President
District 1 Secretary
Donna Parrish
John Clark, Jr.
Tracy Reeder
District 2
District 3
District 5
Donald Ray Wilks
Greg McCullough
Nolan Laird
District 7
District 8
District 9
What is a hero? The theaters are filled these days with actionpacked movies featuring people with superhuman strength and abilities. We can all name at least one real person who has made a difference in someone’s life — they may not be able to “leap tall buildings in a single bound,” but to us and others they are definitely heroes. In this year’s annual report, we are shining a spotlight on some real-life heroes who live and work among us. The employees of Wiregrass Electric Cooperative not only do an amazing job in their day-to-day work, but they are also called upon to work under extremely stressful and often dangerous conditions. And they do it all to provide the convenience, the safety and the power of electricity to the homes and businesses of the Wiregrass — the people of our region. 2
Toward the back of this annual report to our members, you will find two pages of financial information. The top of the first page begins with “ASSETS,” and it lists the value of things such as our network of poles, wires and equipment that are part of the Wiregrass Electric distribution system (or “utility plant” as it is called in the industry). Now look on Pages 12 and 13. This is where you’ll find the real assets of this cooperative. The names and faces you’ll see there represent the true value of this organization. It is their commitment to Wiregrass Electric Cooperative and the communities we serve that empowers us to offer outstanding customer service, create new programs to help our members, weather the storms and keep the power flowing. They are our heroes, and we appreciate their efforts and dedication.
Going beyond the page ANNUAL REPORT FEATURES NEW LEVEL OF INTERACTIVITY There is so much we wanted to share with you in this year’s Annual Report that we couldn’t fit it all into these pages! Thanks to interactive technology, we are able to use our website, YouTube channel, Facebook page and more to help showcase all the different things your cooperative has accomplished this year.
FINDING OUR INTERACTIVE FEATURES IS SIMPLE:
INTERACTIVE PRINT
Download the free Layar App
Scan this page
Discover interactive content
It’s that simple. Whenever you see a page with the “AR” phone icon, scan the page with the Layar app on your smartphone. You’ll find additional material of interest, including: • Videos
• Website links
• Photo slideshows
• Downloads
NO SMARTPHONE? NO PROBLEM. If you don’t have a smartphone, don’t worry! All the extra features can be found on our website, including an interactive online version of this report. Just visit: www.wiregrass.coop/2013annualreport
Visit your iOS or Android app store, or use this handy QR code to download “Layar”
Use the Layar app to scan this page and you’ll see a link to download the WEC iPhone or Android app for your smartphone. The WEC app makes paying your bill and managing your account even easier. You can also see your electric usage and, if you are an InControl program member, deposit money into your prepay account.
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Tim Sanders, apprentice lineman
Working 24 /7
God made a lineman We created a video this year to salute the linemen who work so hard to maintain a reliable power system. It’s called “God Made a Lineman,” and it is based on the “God Made a Farmer” ad featuring Paul Harvey’s voice that was heard across the nation during the Super Bowl. SCAN THIS PAGE TO WATCH THE VIDEO “GOD MADE A LINEMAN” 4
M
ost everything you do throughout your day requires electricity. Alarm clocks, computers, refrigerators, TVs and much more call for a constant, reliable source of electric power.
When you flip the light switch or turn on an appliance, you expect the power to be there ready to work for you. Electricity is a basic necessity, impacting how we live our lives. That’s why Wiregrass Electric Cooperative’s employees are ready 24 hours a day, seven days a week to make sure we meet your expectations.
THE HEROES THAT MAKE IT HAPPEN The WEC Service and Operations crews are some of the most visible of all our employees. You see them in bucket trucks on the roadside, stringing wire to build our system. You see them responding to outages after storms or in the middle of the night. By definition, the job of a lineman is a hazardous one. But, thanks to WEC’s commitment to safety for its employees, it doesn't have to be a dangerous job. By August, the cooperative employees had logged more than 300,000 hours without a single lost-time accident. This marked the second year in a row they had finished accident free. “We work safely so we can make it home safely,” says Nathan Worsham, safety and compliance coordinator at WEC. “That’s why we do it. Our crews are trained to work quickly to restore power for our neighbors, and to do so in a safe manner. They do a great job of both.” RESPONDING QUICKLY When storms strike or trees fall across lines, WEC crews work to restore power as quickly and as safely as possible. Our highly dedicated employees are willing to climb out of bed at a moment’s notice and go to work with cutting-edge technology designed to help get the lights back on quickly. By continually upgrading our outage management system (OMS), we have made a number of improvements that help decrease outage times. “During an outage, the OMS helps manage the cooperative’s resources: outage phone calls, manpower, trucks, materials and more,” says Jason Thrash, systems engineer at WEC. OMS helps dispatchers communicate with our service and line crews to know exactly how and where to respond. “Combined with our System Control and Data Acquisition (SCADA) system,” says Thrash, “we now have the information we need in order to know what components have failed without spending time riding the lines trying to diagnose the problem.” The OMS can make accurate predictions about what equipment has failed based on which members are calling and where they are located.“ It cuts out a lot of guesswork, and I believe it has made a big difference in how quickly we can restore power for our members.”
HERE WHEN YOU CALL There are times when we aren't able to answer the phone when a member calls us. If there is a severe storm, our phone systems could be knocked out. Or, when regular business hours have ended, sometimes members still need to pay a bill over the phone or otherwise check on their account. For that purpose, we formed a partnership in 2011 with Cooperative Response Center, Inc. (CRC). This cooperatively owned service company operates every hour of every day. When WEC employees go home to their families, our partnership with CRC ensures that someone familiar with our operation is there to answer your calls. “It’s a great benefit to our members,” says Deanna Albritton, member services coordinator at WEC. “When our offices are closed or we are unable to use our phone system, they’re still open. We want our members to be able to talk to a live person 24/7 if they need to, and this allows us to do that. Since they’re a cooperative, we know they share our values and understand how important service is to us.”
SCAN THIS PAGE FOR PHOTOS OF OUR EMPLOYEES IN ACTION
MAGNET KEEPS OUR OUTAGE REPORTING NUMBER HANDY! Use the magnet included in your 2013 Annual Meeting packet to help remember our outage reporting number in the event of a power outage. It glows in the dark, making it even easier to find our number if the lights go out! 5
Larita Creech, member services representative
Helping OUR Neighbors
Interested in our InControl prepay program? SCAN THIS PAGE TO VISIT OUR INCONTROL INFORMATION CENTER
2013 Youth Tour Participants 6
Tommy Fondren, manager of corporate services
A
s a cooperative, we care about more than just electric service. We also care about our members, your communities and doing our best to improve the Wiregrass region. That’s
part of the cooperative spirit that helps define Wiregrass Electric Cooperative. This year we have continued that commitment by growing several of our programs aimed at helping our neighbors.
ADECA HELPS US REPAIR MORE HOMES Two years ago, WEC formed a partnership with Habitat for Humanity to offer basic energy-saving home repairs to our members who need it most. Every month since, we have helped people make their homes more energy efficient and lower their monthly power bills. “This program began,” says Jessie Ingram, energy services manager at WEC, “when we realized that instead of helping a member with a high bill secure funding through a charity or government program, we could treat the problem at its source. We could help fix their home and lower the amount of energy they use.” In January, the Alabama Department of Economic and Community Affairs (ADECA) validated and supported our program by presenting a $50,000 grant at an event held at our headquarters in Hartford. “This is an idea that is working,” says Brad Kimbro, director of member services at WEC. “We were very happy ADECA partnered with us and is helping us make a difference.” GROWING OUR PREPAY PROGRAM InControl, our program that allows members to prepay for electricity, celebrated its first year in March. There are now nearly 1,400 members enrolled in the program, which does away with traditional billing by having members purchase electricity before they use it. “Our InControl program is impacting lives,” says Kimbro. “With our traditional billing option, members sometimes end up with large deposits. If they are disconnected for non-payment, they may have to pay even more fees to get their power turned back on.” Our InControl prepay program changes that by doing away with the deposit requirement. Any deposits on an account can be applied toward the purchase of power (if the account is current). Since members buy the electricity beforehand, they are able to see how much they have left on balance at any given time using our website (wiregrass.coop), their email or their smartphone. They can also deposit more money at any time by using our website or automated phone system. WORKING WITH TOMORROW’S WIREGRASS We understand that for a better Wiregrass tomorrow, we need to invest in our young people today. That’s why each year we send students from across our service area to participate in Youth Tours in Montgomery and Washington, D.C. This year, nine area students visited the state capital in March to learn about
representative government and the electric utility industry. Two of those students were selected to go in June for a week-long tour of our nation’s capital. “I believe the youth tour shows students they are part of a larger community,” says Kimbro. “They return from the tour with a better understanding of the challenges our state and country are facing, particularly in the area of energy supply and rural development. We had an outstanding group of young people this year, and we are proud of all of them.” Wiregrass Electric also spent time this year educating young children about the value of electric safety through our Safety City Program. FINDING THE PROBLEM, DEVELOPING THE SOLUTION Wiregrass Electric is committed to helping our members become as energy efficient as possible. Using less electricity saves you money, helps our environment and helps us control our energy costs. That’s why last year we developed the “Four Blocks of Energy Efficiency,” a program designed to help any member: 1. Identify where their home is wasting energy through our free Home Energy Audits; 2. Find a reputable contractor they can trust to do the repairs with our Certified Contractor List; 3. Find a low-rate financing option to help complete the repairs through our Energy Efficient Loan Program; and 4. Get money back on the purchase of a new heating and cooling unit through our Heat Pump Rebate. This year, our members have been able to improve their homes and save money using these programs.
Thank you to our 2013 Youth Tour Participants! Morgan Roddam (Ashford), Callie Clark (Ashford), Courtney Wise (Cottonwood), Taylor Lowe (Cottonwood), Madison McCollough (Wicksburg), Tori Crews (Samson), Cameron Adams (Samson), Hunter McCoy (Samson), and Robin Miller (Geneva County) 7
Robbie Daniels, crew foreman
Delivering Super service
Kay Sullivan, manager of member accounts 8
W
iregrass Electric Cooperative believes in providing world-class service to our members, and every single employee helps make that a reality. Accountants, linemen, the member
care team and more all make it easier for you to do business with your cooperative. A MISSION OF SERVICE In May of last year, a survey of our members showed that 90 percent were either satisfied or extremely satisfied with their personal contact with WEC. Our member service representatives work most directly with our members and play a major role in the quality service you receive from your cooperative. “Our member service representatives are often the public face of Wiregrass Electric,” says Rhonda Webb, manager of member services at WEC. “But they are also member advocates as well. They understand what we can do to better serve our members, and they help the rest of the cooperative understand that as well. They are invaluable.” The member services department is also responsible for publishing Alabama Living magazine, the monthly newsletter My Hometown Power and the company e-newsletter. “We are committed to keeping the members of this cooperative informed,” says Brad Kimbro, director of member services at WEC. “We have a responsibility to help members understand the services and programs we offer that can help them live a more efficient, convenient and comfortable life. Through our many communications pieces, we are able to fulfill that mission.” This year, our Alabama Living magazine section won statewide awards for feature and news stories, while the 2012 annual report received national awards. MANAGE YOUR ACCOUNT AND MORE ONLINE This year, we completely overhauled our national awardwinning website, www.wiregrass.coop. The new website features all the information our members need to interact with their cooperative, laid out intuitively. From our home page you can access weather updates, Alabama Living magazine articles, account management functions and more. You can also log in with your account information to pay your bill, monitor how much energy you are using and more. “Our website gives members the power to view their electric use almost in real time,” says Jennifer Ward, manager of member care at WEC. “That’s a powerful tool that can help members understand how they use electricity and how they can make changes to become more energy efficient. Through our website, members can do almost anything they could do in person at one of our offices. Our website is really another branch office that is open 24/7.” REMAINING GOOD STEWARDS Another way we serve our members is through sound finance and accounting principles. By constantly monitoring benchmarks, key performance indicators and more, we are able to ensure that we remain on firm financial footing.
We seek to work as efficiently as possible in all areas. One way we achieve this goal is by providing our employees — our No. 1 asset — with the equipment, training and technology they need to do their jobs. While employees are always our number one asset, the electricity we purchase is our number one expense. Nearly three quarters of every dollar WEC receives is spent on purchasing wholesale power from our energy partner, PowerSouth. “The price of power is set by many factors,” says Les Moreland, chief financial officer and interim CEO at WEC. “And all of them are outside our control. But by controlling costs and equipping our employees, we are able to offer modern, convenient service to our members while serving as the reliable power source that fuels our region’s growth.” GIVING BACK TO OUR MEMBERS Because we are a member-owned cooperative, we are not expected to return a huge profit to Wall Street investors. Our profits are known as margins, and they are assigned to your capital credit accounts based on the amount of business you did with us during any given year. Since our founding, we have returned more than $3.8 million in capital credit refunds to cooperative members. Three years ago we restructured our rates to include a Wholesale Power Cost Adjustment (WPCA). When we develop our annual budget, we allocate about 75 percent of revenue for the purchase of wholesale power from PowerSouth. Sometimes, that number is lower than estimated. When wholesale power costs are lower than projected (as has been the case this year with natural gas expansion and efforts from PowerSouth to drive down costs), the WPCA gives us the mechanism to return a credit to you on your monthly power bill. As of Aug. 31, WEC had returned over $1,125,000 in WPCA credits. “WPCA credits allow the cooperative to return the money much faster than if it were simply counted as a margin and returned as capital credits,” says Moreland. “That process can take 30 years. Also, the WPCA allows us to quickly and accurately respond to monthly and seasonal costs of wholesale power.”
Get live updates from your cooperative Are you following WEC on Facebook? We offer up-to-the-minute updates on power outages, approaching storms and more. Find us here: www.facebook.com/ wiregrasselectric. 9
powering the wiregrass
Jason Grooms, apprentice lineman
Bill Cobb, serviceman 10
Dexter Tolbert, lineman
B
uilding and maintaining an electrical system that spans hundreds of miles is no easy task. It takes long-range planning to see where the need for infrastructure will be years down the
road. It also takes diligence and hard work to continually clear away overgrowth, replace wooden poles and repair advanced electrical equipment so that the electric distribution system operates at peak performance.
PROTECTING THE LINES It takes dedication and constant attention to maintain our distribution system. Tree limbs, rotted wood and underbrush all increase the chance of broken poles and lines, and the disruption to our system for possibly hundreds of members. To prevent such damage, Wiregrass Electric Cooperative has a system for keeping the right-of-way clear around power lines. By removing tree limbs and controlling undergrowth, we lessen the chance of damage to our power lines from falling limbs and brush fires. All of this helps provide reliable service to our members. Our strategy for right-of-way maintenance involves dividing our system into six sections. Each year, crews focus on a different section to cut and spray the dangerous growth in the right-ofway. “We currently trim in a six-year cycle,” says Tim Granger, right-of-way coordinator at WEC. “We work a different part of our system every year, then in the seventh year we go back and start over with the first section.” The first cycle, finished in 2012, greatly improved our system’s reliability. “To address problems that arise in between cuttings, we also have a half-cycle crew that circles back and cuts back things that are growing too quickly,” says Granger. Beginning next year, we are shortening our cycles to provide even better growth control. “We will begin using a four-year cycle starting in 2014,” says Granger. “That’ll make it a lot better. On a four-year cycle, we won’t need a half-cycle crew, and we can all focus on the same task. That makes our crews more efficient, and helps keep our power grid online.” PLANNING FOR THE FUTURE It’s not enough to keep the electric system in great shape and the lines free of trees. We must also be ready to meet the growing needs of the Wiregrass region. To help anticipate and prepare for future demand, we develop and follow a four-year work plan. “Through our work plan,” says Jason Thrash, systems engineer at WEC, “we are able to take data from accounting, consumer information and our mapping system and know where we need to build new infrastructure or improve current lines in the next four years.” Power lines can become overloaded as neighborhoods expand or new businesses are built. Through the four-year work plan, we can meet that demand before it has a chance to cause outages. The current work plan is in its second year and goes through 2015.
“We have a lot of growth around Dothan that we are preparing for,” says Joey Brown, manager of operations at WEC. ”We have seen growth along Highway 84 West as evidenced by the Publix area mall, McDonald’s and other commercial business.” THE POWER OF TECHNOLOGY The four-year work plan and the right-of-way maintenance program enable us to greatly increase system reliability — and this means that our members experience fewer outages. We also depend heavily on technology to monitor our system and help prevent outages. The SCADA, or Supervisory Control and Data Acquisition system, allows WEC to remotely control various pieces of field equipment. “The SCADA system allows us to isolate outages and perform switching without rolling a truck,” says Larry Galloway, manager of service department at WEC. “This helps us restore power quickly to many of our members. SCADA will also allow us to know where we have problems on our system in some cases before we receive a single phone call. SCADA makes us much more efficient and certainly reduces outages.” A PARTNER WEC CAN TRUST WEC is responsible for building and maintaining a reliable distribution system to power the homes and businesses across the area. We do not, however, generate electricity. That is the job of our wholesale power partner, PowerSouth Energy Cooperative. PowerSouth is a generation and transmission cooperative that supplies the electricity we distribute to members. They are more than a supplier; they are also a partner. PowerSouth helps us meet the energy demands of our service area, and also provides a larger voice on energy policy coming out of Washington, D.C., that impacts the cost of energy in rural America. They also help us with energy efficiency programs and economic development activities for our area. WEC could not offer so many programs without the support of the dedicated professionals at PowerSouth Energy.
Alabama Public Service Commissioner Jeremy Oden recently visited WEC SCAN THIS PAGE TO VIEW A VIDEO INTERVIEW WITH COMMISSIONER ODEN 11
Barbara Berry, accountant
the real SuperHeroes
Billy Watson, crew foreman
Lisa LeNoir, manager of accounting
Member Care Representatives (left to right) Katie Reynolds, Amber Jones and Mendy Davis, (seated) Jennifer Ward, manager of member care team
Johnny Hudson, lineman 12
Chris Jones, plant specialist
Anthony Glover, warehouseman
W
iregrass Electric Cooperative is a family. Our line crews and servicemen work in the sun, rain and storms to maintain a reliable source of power for this region. Customer
service representatives and our member care team give you the attention and service that make it convenient to do business with your cooperative. Our accountants, engineers and others work behind the scenes to ensure our cooperative is positioned to provide you with affordable, reliable service today, tomorrow and years to come. We want to say thank you to each and every Wiregrass Electric employee. These are the real hometown heroes: Danny Adams Marian Adkins Deanna Albritton Mitchie Bass Barbara Berry Greg Bradley Gene Brannon Joey Brown Wanda Broxson Tammie Byrd Bill Cobb Larita Creech Mark Croom Robbie Daniels Charlie Daugherty
Mendy Davis Parker Deese Mark Dillard Marritt Dorriety Danny Ealum Tommy Fondren Zane Fowler Larry Galloway Anthony Glover Tim Granger Jason Grooms Kathleen Hamman Jeff Harper Clint Hatcher Lorrie Hatcher
Janet Henderson Tiffany Howell Johnny Hudson Jessie Ingram Amber Jones Chris Jones Brad Kimbro David Lamb Lisa LeNoir Nichole McCollough Ben Miller Les Moreland Carole Nowling Bethany Retherford Katie Reynolds
Tim Sanders Bobby Shelley Chad Sorrells Lynn Stewart Kay Sullivan Jason Thrash Billy Tingle Dexter Tolbert Jennifer Ward Rebecca Waters Billy Watson Rhonda Webb Jeri Wiggins Nathan Worsham
Left to right: Apprentice Linemen, Chad Sorrells, Mark Dillard and Crew Foreman Robbie Daniels
Jessie Ingram, manager of energy services
Danny Adams, plant specialist 13
financial information ASSETS
UTILITY PLANT: Utility plant Construction work in progress Less: Accumulated depreciation Net utility plant OTHER ASSETS AND INVESTMENTS: Investments in associated organizations Economic development notes receivable Total other assets and investments CURRENT ASSETS: Cash and cash equivalents Accounts receivable: Customers, less provision for doubtful accounts of $65,144 in 2013 and $67,575 in 2012 Unbilled revenue Other accounts receivable Prepaid power Materials and supplies Other current and accrued assets Total current assets DEFERRED CHARGES: Work plan and preliminary charges Prepaid pension Total assets
2013
2012
$ 86,892,083 1,088,488 87,980,571 20,090,147 67,890,424
$ 81,767,888 598,527 82,366,415 18,384,107 63,982,308
16,154,677 197,657 16,352,334
14,666,446 236,628 14,903,074
4,468,947
2,431,153
1,669,695 2,200,668 46,491 1,712,825 460,624 297,979 10,857,229
1,712,362 2,321,510 139,363 4,340,600 567,060 288,012 11,800,060
42,738 1,908,482 1,951,220
39,588 39,588
$ 97,051,207
$ 90,725,030
$ 83,716 52,943,245 2,254,428
$82,806 47,993,367 2,226,897
55,281,389
50,303,070
36,632,181 1,005,033 1,326,303 36,310,911
34,715,729 1,259,721 964,883 35,010,567
1,326,303 177,787 2,041,110
964,883 288,739 2,041,934
1,272,701 641,006 5,458,907
1,469,323 646,514 5,411,393
LIABILITIES AND EQUITIES EQUITIES:
Memberships Patronage capital Other equities
Total equities
LONG-TERM LIABILITIES: Mortgage notes Capital lease obligations Less: Current maturities Total long-term debt CURRENT LIABILITIES:
Current maturities on long-term debt Accounts payable Customer deposits Accrued liabilities: Taxes Other accrued liabilities Total current liabilities
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Total equities & liabilities
$ 97,051,207
$ 90,725,030
financial information STATEMENT OF REVENUE
2013
OPERATING REVENUE OPERATING EXPENSES: Cost of Power Distribution - operations Distribution - maintenance Accounting and collections Administrative and general Depreciation expense Taxes Total operating expenses
$ 46,000,084
29,809,709 1,845,171 2,060,803 2,449,628 2,128,104 2,616,021 435,412 41,344,848
2012 $45,708,083
31,568,067 1,875,584 1,768,357 2,457,496 1,800,281 2,467,516 374,857 42,312,158
OPERATING INCOME
4,655,236 3,395,925
FIXED CHARGES Interest expense
1,972,002
1,759,627
OPERATING MARGINS AFTER FIXED CHARGES
2,683,234
1,636,298
G&T AND OTHER CAPITAL CREDITS
1,617,673
1,532,703
NET OPERATING MARGINS
4,300,907
3,169,001
NON-OPERATING MARGINS: Interest income
359,828
373.231
NET MARGINS FOR THE YEAR
4,660,735 3,542,232
STATEMENT OF PATRONAGE CAPITAL PATRONAGE CAPITAL AT BEGINNING OF YEAR $ 47,993,367 $ 44,743,796 RETIREMENT OF CAPITAL CREDITS (215,259) (351,315) UTILITY TAX REFUND 504,402 58,654 PATRONAGE CAPITAL AT END OF YEAR
$ 52,943,245
$ 47,993,367
2013 figures are from May 2012 to April 2013. 2012 figures are from May 2011 to April 2012. These figures represent the audited financials of Wiregrass Electric Cooperative.
Where does the money go? A majority of every dollar you pay WEC goes to pay for the wholesale power we distribute to our service area.
SCAN THIS PAGE TO VIEW OUR FINANCIAL CHARTS
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HEADQUARTERS 509 N. State Highway 167 • P.O. Box 158 • Hartford, AL 36344 334-588-2223 • 1-800-239-4602 • FAX: 334-588-0683 DISTRICT OFFICES Dothan – 6167 Fortner Street Ashford – 1066 Ashford Road Samson – 13148 W. State Highway 52
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Photography by W. Jones Photography, Cherokee Spivey and Deanna Albritton.