Lake Region Electric Cooperative
Thank you to all the members who attended our three recent District Meetings. It was wonderful to have your participation. Each of the three incumbent directors were nominated for re-election.
Much of our focus during these meetings centered on rates and reliability. It is understandable and expected that our co-op member-owners will always rank these as top priorities. Let me assure you that they are also a priority for me, your directors, and our employees. It was a pleasure to report that we have great news on both fronts.
Rate stabilization is a key component of our long-range strategic planning. Success comes with creating opportunities for growth, controlling costs and simultaneously developing new revenue streams. Some key points you should know are:
The spending that is under our cooperative’s local control has declined. We are doing an excellent job in this area. Today, the controllable cost per member is actually less than it was in 2004.
The cooperative is receiving revenue from the new programs offered and previous investments made by the cooperative. New revenues help offset Lake Region’s fixed costs, thus reducing the funds that must otherwise come from electric rates. Every dollar that we can bring in from another source is a dollar less that’s paid through your electric bill. During the time frame of 2006 through 2017, Lake Region’s overall non-operating income increased from $300,000 to over $1 million. For instance, since we are now an owner of Carr’s Tree Service it has produced steadily increased revenues —$161,000 in new non-operating income in 2017 alone.
Our new natural gas business is another example of creating a revenue stream. Additionally, we have several employees who have been cross-trained to work in both electric and natural gas delivery. The gas business allows allocation of some employee costs away from the electric business and thereby has a positive impact on electric rates. Please see the related article for more information about our natural gas project.
Lake Region employees use technology to pinpoint and plan upgrades to the distribution system. We are using data analytics to identify areas of our grid which need additional scrutiny and attention. The software incorporates outage history and is used to identify what appear to be weak circuits in our system. This allows us to focus on the locations that seem to experience more frequent outages, so that we can correctly identify the causes and proactively make corrections.
Reliability has greatly improved with our investment in grid improvements, vegetation management, and right-of-way clearing. Power outages have been reduced by 57% since 2004. We made a large investment for the first tree clearing of our entire system. We are now undertaking our second system-wide clearing and have reduced the process to a four-year cycle. Lake Region spent less on vegetation management in 2017 than in 2004. We have also upgraded power cables, poles, and equipment.
For our members who desire additional security and peace of mind, Lake Region offers a residential standby generator program. Again, we are being proactive in how we meet your needs and expectations.
Lake Region Electric Cooperative strives to be a good steward of energy resources. Our industry will likely have less reliance on coal as a fuel for electric generation in years to come. Your cooperative will support wind, solar, and other renewable energy projects when they become feasible and are in the interest of our members.
Lake Region is in a very strong financial position. 2017 was another great year for your cooperative. We produced $4.6 million in margins. Member equity reached $52 million. This is an equity level of 41.9%, which is a dramatic increase from the 31% posted in 2005. In fact, the value of member equity has more than doubled since 2005 when it was $23 million.
