2015 Annual Report - …siouxvalleyenergy.coopwebbuilder2.com/sites/siouxvalleyenergy/files... · LEADERSHIP REPORT. e e ... Dawn Schneider Deb Barger Deb Biever Derek Locke ... Peggy

ANNUAL REPORT

2015 Annual Report

LEADE

RSHIP

REPO

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Sioux Valley Energy had a very productive and busy year in 2015. One of the more notable events was the process of selling Sioux Valley Wireless (the Cooperatives wireless subsidary). The transaction was not complete until April, 2016 but the transition work began much earlier than that. The purchaser--SpeedConnect--is a privately held Broadband Wireless Access (BWA) provider with offices in Sioux Falls, S.D.

Sioux Valley Wireless provided much needed cable television and Internet services to rural areas with no other options for many years. In 2009, SVW discontinued the television service and the Board of Directors eventually made the decision to exit the Internet business as well, to allow the Cooperative to focus on its sole mission of

Tim McCarthy providing reliable, safe electricity at cost-based rates.General Manager/CEO

2015 Workplan ReportSioux Valley Energy, along with 11 other electric distribution cooperatives, wrote a new page in history on

July 31, 2015 with the completion of the acquisition of Alliant Energys electric service territory in southern Minnesota. The Cooperative gained 850 new members in this acquisition.

Revenue from electric sales was just over $70-million compared to $68-million in 2014. Margins were $6.67-million and our equity dropped slightly to 35.9 percent from 36.1 percent, which is still within the range established by the Board. Capital credits totaling $2.7 million were retired. This included a special retirement of $1-million due to a bill credit from our power suppliers. Capital credits that are retired are paid back to the membership.

There was no rate increase needed in 2015. There will be an increase in the basic service charge for some rate classes in 2016, however, the actual energy charge will decrease for those rates. The Cooperative does anticipate increases from its power suppliers in 2016 and 2017. As always, we will work to balance members expectations of high levels of service reliability and affordable rates as upward pressure on power supply costs increase.

The capital budget comparison shows that nearly $13-million of construction work was completed in 2014. Our work included 75.47 miles of line, 618 transformers, 414 new services, 293 service rebuilds, 61 street and security lights and many other improvements. The use of contractors for construction projects was again significant. We worked with two underground line construction contractors with an annual expense of approximately $1.5-million. Sioux Valley Energy plans to continue aggressive workplans into the future, including the replacement of overhead lines, to ensure high reliability of the electric system.

STRATEGIC LEADERSHIP TEAM

Ted Smith Debra Biever Betty VanDerWerff Carrie Law

Rodney DeMent Allan Weinacht Allan Kooima Arlyn Zylstra

President Vice-President Secretary Treasurer Humboldt, SD Colton, SD Volga, SD Jasper, MN District 7 District 5 District 2 District 10

Bruce Martinson, Rural Trent, SD District 3

Gary Drost Luverne, MN District 8

Mark Rogen Garretson, SD District 6

Gary Fish Brandon, SD District 6

Henning Hansen Elkton, SD District 1

Gregg Johnson Pipestone, MN District 9

Mark Kahler Wentworth, SD District 4

BOAR

D OF D

IRECT

ORS

R E V E N U E F RO MELECTRIC SALES

35% RURALRESiDENtiAL

Pow

er C

ost

O&

M

Cust

omr A

ccou

nts

Cust

omer

Ser

vice

&Sa

les

A&G

Fixe

d Co

sts

Taxe

sO

pera

ting

mar

gin

-

Meters Served

22,625 Meters 11 12 13 14 15

Electricity Sold Total KwH (Millions)

734.6-Million kwh 11 12 13 14 15

$.029 Distribution Cost $.061 Wholesale Power

Distribution vs. Wholesale Power Cost (per KwH)

11 12 13 14 15

Wholesale and distribution costs stay steady.

H OW YO U R D O L L A R S WERE SPENT

$..052 $.059 $.061 $.061 $.060

21,380 21,727 22,033

22,302

22,625

666 662

712

741 734.6

$.029$.029 $.032 $.029 $.030

1% cUStOMER SERVicE & SALES

1% tAxES

63% pOWER cOStS

5% MARgiNS

6% A&g

9% OpERAtiONS& MAiNtENANcE

2% cUStOMER

Acct.

13% FixED cOStS

DEpREciAtiON/

iNtERESt/tAxES

H OW YO U R D O L L A R SWERE SPENT

1% cUStOMERSERVicE& SALES

9% OpERAtiONS& MAiNtENANc

2% cUStOMER

Acct.

11 12 13 14 15

Electric Plant Investment (Millions)

$184.8-Million

Capital Credit Retirements

$2.7-Million 11 12 13 14 15

11 12 13 14 15

3,293 Miles Underground2,553 Miles Overhead

$1.29 $1.4 $1.5

$1.72

$2.7

$150.9 $155.8 $164.2 $172.7

$184.8

2,716 3,079

2,675 3,138

2,611

3,226

2,553

3,293

2,612

3,380

(Millions)

Miles of Overhead &

Underground Lines

R E V E N U E F RO M ELECTRIC SALES

8% cOMMERciAL

35% RURAL RESiDENtiAL 36% LARgE

pOWER

20% tOWN RESiDENtiAL

1% iRRigAtiON

E

BALAN

CE SH

EET

SIOUX VALLEY ENERGY AND SIOUX VALLEY WIRELESS CONSOLIDATED BALANCE SHEET

FOR THE YEARS ENDED DECEMBER 31, 2014 AND 2015

Assets: Distribution and General Plant

Less Depreciation

Net Plant

Other Property and InvestmentsInvestments

Total other property and investments

Current Assets: Cash

Accounts receivable

Inventory

Other current assets

Total Current Assets

Deferred Debits

Assets of Discontinued Operations

Total AssetsEquities:

Patronage capital

Other equities

Total Equities

Liabilities: Long-term DebtCurrent Liabilities

Current maturities of long-term debt Accounts payable Other current and accrued liabilities

Total current liabilitiesOther Liabilities

Consumer deposits

Deferred creditsLiabilities of Discontinued Operations

Total liabilitiesTotal Equities and Liabilities

2015

$186,642,469 40,095,119

146,547,350

34,358,778 34,358,778

2,630,111 6,630,112 4,377,887

517,988 $14,156,098

219,841

2,038,833

$197,320,900

68,206,200 2,713,365

70,919,565

108,218,639

4,355,000 4,901,466 2,845,807

12,102,273

432,170

5,468,623 179,630

126,401,335 $197,320,900

2014

$172,702,784 38,325,916134,376,868

33,575,578 33,575,578

2,479,474 7,077,034 4,450,742

557,001 $14,564,251

121,969

2,199,541

$184,838,207

64,261,535 2,527,785

66,789,320

100,392,218

3,864,000 4,522,1313,012,964

11,399,095

477,521

5,571,814 208,239

118,048,887 $184,838,207

SIOUX VALLEY ENERGY AND SIOUX VALLEY WIRELESS CONSOLIDATED STATEMENT OF OPERATIONS

FOR THE YEARS ENDED DECEMBER 31, 2014 AND 2015

Operating Revenues:Revenue from electric sales

Total Operating Revenue

Operating Expenses:Cost of Power

System operations and maintenance Customer accounts expense Customer service and sales expense Administrative and general expense Depreciation Interest Taxes Other expense

Total operating expenses

Operating margins

Non-operating MarginsMerchandising Interest income Gain (Loss) on sale of equipment or property

Total non-operating margins

Capital credits from associated organizations

Margins From Continuing Operations

Discontinued OperationsMargins from Discontinued Components

Net Margins

2015 2014

$70,007,804 $68,195,264

70,007,804 68,195,264

43,942,583 45,068,0886,657,916 6,242,1891,201,011 1,177,096

620,199 589,586 3,546,879 3,580,5074,603,250 4,323,7204,660,112 4,667,952 1,074,437 1,068,130

37,026 41,088

66,343,413 66,758,356

3,664,391 1,436,908

(23,630) (38,849)345,328 361,274

9,076 (239,519)

330,774 82,906

2,508,898 2,410,278

6,504,063 3,930,092

172,035 457,585

$6,676,098 $4,387,677

STATEM

ENT O

F OPE

RATIO

NS

Proposed Bylaw Amendment to be Voted on atthe SVE Annual Meeting, June 6, 2016 A proposed bylaw amendment will be brought to the membership at the 2016 Annual Meeting. The proposed change deals with how the cooperative handles director vacancies. In the past, if a director has resigned in the middle of his or her term, the board sends a notice to the membership in that district seeking applicants for the open position. Under the current policy, the Board President appoints a special committee which includes the chair, the incumbent director, and directors from the surrounding districts. The board then makes an appointment for the remainder of the unexpired term.

The proposed bylaw amendment would put more control in the hands of the members. It would require that the remainder of any vacancy be filled by the vote of members at the next regular district meeting. If the district meeting is more than ninety days from the time a vacancy occurs, the normal petition, nomination and election process will be used. If the next district meeting is ninety days or fewer from the time a vacancy occurs, nominations will be taken from the floor. The director elected to fill the unexpired portion of a term will be seated immediately. For a complete copy of the bylaws, go to www.siouxvalleyenergy.com or call 1-800-234-1960 to request a printed copy.

Current Bylaw:

Article IV SECTION 9. Vacancies. Any vacant Directors seat on the board shall be filled by the affirmative vote of the majority of the remaining Directors for the unexpired portion of the term.

Proposed Bylaw Change:

Article IV SECTION 9. Vacancies. The unexpired remainder of any vacant Directors term on the Board shall be filled by the vote of the members of the district in which the vacancy exists at the next regular district meeting. If the next district meeting is more than ninety days from the time a vacancy occurs, the petition, nomination and election process described in Article IV, Section 3, will be employed. If the next district meeting is ninety days or fewer from the time a vacancy occurs, nominations shall be received from the floor at the district meeting and the election shall proceed as described in Article IV, Section 3. The director elected to fill the unexpired portion of a term shall be seated immediately.

http:www.siouxvalleyenergy.com

Amy Voelker Angela Boughton Ben Pierson Betty VanDerWerff Bill OLoughlen Brenda Schelhaas Brian Meyer Bruce Barrick Carrie Law Casey Lowe Chad Lade Chad Williams Chinelle Christensen Cody Bunkers Cody Fritz Craig Namken Dan Doyle Dana Foster Dave Bormann Dave Jensen Dave Ossefoort Dawn Schneider Deb Barger Deb Biever Derek Locke Eliza Tupa Elliot Ostercamp Garth Park Greg Meyer

Greg Selken Gwen Larsen Jager Rus Jake Dybedahl Jan Christiansen Janae Phillips Jason Sage Jeff Huebner Jennie Patrick Jim Beyers Jim George Jim Kuyper Joan Wangberg Jody Lebahn Josh Entzel Justin Moose Kara LeBrun Kathy Nepp Kevin Leighton Kim Hansen Kim Brendsel Kimberly Brown Kyle Thomson Leann Nelson Lisa Johnson Loren Halgerson Lori George Lucas Hofman Mark Anderson

Matt Determan Matt Seivert Michael Amundson Michael Oines Michele Nielson Michele Wanner Mike Gengler Mike Uhing Molly Williams Nick Smith Paul Anderson Paul Mantz Paul Schamber Peggy Sip Randy Oswald Reggie Gassman Robert Johnson Ryan Gruber Ryan Hyland Ryan Olson

Sandy Zwart Sarina Hanson Sharla Haugen Shawn Bruns Sheila Gross Stacey Pierce Steve Dvergsten Steve Neises Susan Hilmoe Tanner Donelan Ted Smith Terry Ebright Terry Plecity Tim Durst Tim Fey Tim McCarthy Tim Schoolmeester Tom Sebert Toni Kruger Tony Remund

SVE W

ORKFO

RCE

2015

ANNU

AL ME

ETING

MINU

TES

MINUTES OF THE ANNUAL MEETING OF THE MEMBERSHIP OF SIOUX VALLEY ENERGY June 2, 2015

Pursuant to notice having been given on the 14th day of May, 2015, the annual meeting of the members of the Sioux Valley-Southwestern Electric Cooperative, Inc. (dba Sioux Valley Energy) was held on Tuesday, June 2nd, 2015 at the McCrossan Boys Ranch in Sioux Falls, South Dakota. A member appreciation event featuring a mini-rodeo was held in conjunction with the meeting.

Carrie Law, Director of Communications and Government Relations, gave the invocation and introduced Sara Haugen, EmPOWER Youth Leadership participant, who performed the National Anthem.

Carrie Law then introduced the members of the Sioux Valley Energy board of directors, former directors and employees, special guests and dignitaries.

The business meeting was called to order at 6:00 p.m. by Board President Mark Rogen, who presided as Chairperson and Rodney DeMent, Board Secretary, acted as Secretary for the meeting.

The Secretary presented the Notice of the Meeting and the Proof of Mailing and reported that a quorum was present with 343 members registered. A motion was made and seconded to approve the minutes of the June 3rd, 2014 annual meeting as printed in the 2014 annual report. Arlyn Zylstra, Board Treasurer, presented the Treasurers report for 2014. A motion was made and seconded that the Treasurers Report be approved as presented.

CONSIDERATION OF PROPOSED AMENDMENTS TO BYLAWS

Board President Mark Rogen served as temporary chairman for the Bylaw amendments vote and presented the proposed Bylaw amendments recommended by the Board of Directors relative to director districts and capital credits. President Rogen reviewed a summary of the proposed amendments as printed in the 2014

annual report, Cooperative Connections newsletter, and on Sioux Valley Energys website, along with a handout distributed to members at the annual meeting. Members were offered an opportunity to ask questions and discuss the proposed bylaw amendments. A written ballot vote was taken on the three issues referred to as Issue A, B, and C. The following excerpt contains the proposed amendments as presented by President Rogen.

ISSUE A. SECTION 2. ELECTION AND TENURE OF

OFFICE The first sentence of Section 2 be amended to read: The Cooperative shall be comprised of ten (10)

director districts. SECTION 4. DIRECTOR DISTRICTS The preamble to Section 4 be amended to read: The territories served by the Cooperative shall be

divided into ten (10) districts. Each district, other than District No. 6, shall be represented by one Director. The ten (10) districts shall be as follows:

SECTION 4. DIRECTOR DISTRICTS The following district descriptions in Section 4 be

amended to read: District No. 6 shall be made up of those Townships

in Minnehaha County, South Dakota, which lie within Range 47, 48, 49 and Townships 101, 102, 103 and 104. Two at large Directors will represent District No. 6. At the first election following the passage of this amendment, one at large director shall be elected for a two year term and thereafter the elected director shall serve a three year term, and one at large director shall be elected for a three year term.

ISSUE B. SECTION 4. DIRECTOR DISTRICTS The following district descriptions in Section 4 be

amended to read: District No. 8 shall be made up of those Townships

in Rock County, Minnesota, which lie within Range 44, 45, 46 and 47 and Townships 101 and 102.

District No. 9 shall be made up of those Townships in Pipestone County, Minnesota, which lie within Range 44, 45, 46 and 47 and Townships 106, 107 and 108. The first Director elected from District 9 following the passage of this amendment shall be seated for a two year term and thereafter the elected director shall serve a three year term.

District No. 10 shall be made up of those Townships in Pipestone County, Minnesota and Rock County, Minnesota, which lie within Range 44, 45, 46 and 47 and Townships 103, 104 and 105. The first Director elected from District 10 following the passage of this amendment shall be seated for a one year term and thereafter the elected director shall serve a three year term.

ISSUE C. SECTION 4. ASSIGNMENT OF CAPITAL

CREDITS Paragraph 6 be amended to read: The assignment, gift or forfeiture of Capital Credits

shall become effective only upon the expiration of the time and in the matter and under the conditions provided by the state law applicable to the Members capital credit allocation.

Attorney Alan Peterson served as parliamentarian and the Credential and Election Committee collected and tallied the votes. The proposed amendments referred to as Issue A, B, and C were approved by a majority vote from the membership.

GENERAL MANAGER/CEO REPORT/EMPLOYEE & POWER AND HOPE AWARDS

The management report was presented by General Manager/CEO Tim McCarthy. As part of the management report, Manager McCarthy announced the scholarship winners from the first class of the Cooperatives EMPOWER Youth Leadership program. He also recognized the 2015-2016 class of 32 participants.

The scholarship winners included: $1,000 award Shantelle DesMarais, Pipestone High School $750 award Brianna Renaas, Rutland High School

Thea Richards, Hills-Beaver Creek High School $400 award Molly Hageman, Sioux Valley High School Hannah Hoogland, Luverne High School Garret Sands, Garretson High School Laura Selman, Chester Area School $250 award Ryleigh Beers, Luverne High School Levi Burggraff, Tri-Valley High School Kelsey Geraets, Chester Area School Noah Laycock, Brandon Valley High School Samantha Ykema, Luverne High School

Manager McCarthy introduced Ryleigh Beers of Luverne, Minnesota who was selected from a group of five finalists to receive the third annual Power and Hope award. Ryleigh Beers will receive $1,000 to donate to the charity of her choice. Wanda Artz of Humboldt, Adam DeJong of Hartford, Ernie Kroeger of Hartford and Valerie Larson-Holmes of Brandon were introduced as the other finalists for the award. They will also receive $100 to donate to the charity of their choice. The Power and Hope award recognizes SVE members who are pillars of their community and give selflessly to others without asking for recognition.

Manager McCarthy also recognized the following Sioux Valley Energy employees who have collectively given 80 years to the Cooperative.

Paul Anderson, Journey Lineworker 25 years Loren Halgerson, Metering Coordinator 25 years Joan Wangberg, Lead Customer Service Representative 30 years

In closing, Manager McCarthy discussed the completion of a Cooperative-owned solar project that was constructed at the Brandon Service Center. Members will be able to monitor the production of the solar array on Sioux Valley Energys website. The goal of the project is to share accurate information on designing and maintaining a solar array and output production in our area.

ADJOURNMENT There being no further business to come before the

meeting, Chair Rogen declared the meeting adjourned at 6:45 p.m.

1 .800.234.1960 www.s iouxva l leyenergy.com

NOTICE OF ANNUAL MEETING Monday, June 6, 2016

The annual meeting of the members of Sioux Valley Energy will be held at the Swiftel Center in Brookings, SD. Located at 824 32nd Avenue--Brookings SD 57006.

Agenda 5:00-6:30 p.m. Registration, Complimentary meal, Activity booths & Bingo

6:30-7:15 p.m. Annual Meeting (Vote on Proposed Bylaw Amendments)

7:30-8:30 p.m. Annual Meeting

http:www.siouxvalleyenergy.com

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