2014
EMPIRE ELECTRIC ASSOCIATION ANNUAL REPORT
REPORT TO THE MEMBERS
FROM PRESIDENT WILLIAM BAUER AND GENERAL MANAGER JOSH DELLINGER
FINANCIALS
Empire Electric Association completed 2014
in a strong financial position. As a non-profit
cooperative, financial strength is not measured by profit earnings. Instead the electric
cooperative industry uses several standard indicators to evaluate overall financial strength.
These include indicators such as debt service
coverage ratios and times interest earned
ratios. Empire’s board of directors developed
a financial goals policy that assigns target
values for each of these indicators. In 2014, we
comfortably exceeded our financial goals.
If you are a member of Empire, then you are
an owner of Empire. A benefit for memberowners is receiving refunds of their investments in the cooperative. These refunds are
termed capital credits. Each year the Empire
board of directors considers the financial
position of the cooperative and determines
how many capital credits will be paid. We
returned $2,011,741 to our membership in 2014.
In its history, Empire refunded approximately
$20,272,000 in capital credits.
POWER SUPPLY AND RATES
As a distribution cooperative, Empire does
not generate wholesale power. Our core
business is to distribute power to homes and
businesses in our service territory. Empire
purchases power from Tri-State Generation
and Transmission Association and we were
pleased that Tri-State did not implement a
rate increase in 2015. Unaltered Tri-State rates
coupled with Empire’s strong financial health
led to no rate increases in 2015 for the vast
majority of our members. In fact, the power
cost adjustment component of our rates
remained the same for the large power rate
class and decreased for all other rate classes.
There was a slight increase to the street lighting rate, which followed the slight increase of
the western region consumer price index.
Moving forward, it is very hard to predict
what will happen with energy costs as there
are many unknowns. Perhaps the most significant is proposed regulations from the EPA’s
Clean Power Plan. If approved as currently
proposed, the cost of operating coal-fired
power plants could increase significantly.
Tri-State’s generation portfolio includes
several coal-fired power plants that would
be affected. Since purchased power accounts for approximately 78 percent of
Empire’s annual costs, any increases in TriState’s costs could substantially impact our
rates.
Also, we are expecting changes to TriState’s present rate structure. Empire, along
with fellow cooperatives La Plata Electric
Association and White River Electric Association, jointly filed a complaint against Tri-State
with the Colorado Public Utilities Commission
in 2013. The complaint asserted that Tri-State’s
present all-energy rate structure was unfair.
Empire is pleased that the parties agreed to a
preliminary settlement agreement in late 2014
and we look forward to working constructively and cooperatively with Tri-State in
the future. As a result of the PUC litigation,
Tri-State revamped its rate committee and
is re-evaluating its rate structure. We are
expecting a shift from the present all-energy
rate to a more traditional demand-energy
structure in 2016.
Once the new Tri-State rate is established,
Empire will perform a cost of service study
to help determine the most appropriate
methods for recovering our operating costs.
The results of this study will guide Empire
as we strive to maintain equitable rates that
minimize subsidies between members.
The average outage
time per consumer in
2014 was 0.74 hours,
which corresponds to
99.99 percent reliability.
ELECTRIC SYSTEM
We added a net total of 66 meters to our
retail system in 2014. This corresponds to a
modest 0.42 percent growth, which is typical
for what we experienced over the past 10
years. However, our carbon dioxide load is in
William Bauer
Board President
Josh Dellinger
General Manager
the midst of significant expansion. Two new
substations were built and energized in 2014
and there are several in-progress projects
expected to be completed in 2015.
Empire remains committed to providing reliable electric service to its membership. The
average outage time per consumer in 2014
was 0.74 hours, which corresponds to 99.99
percent reliability. We recognize that outages
will occur from time to time, but our employees do a great job minimizing occurrences
and performing quick and safe restorations.
Empire continues to proactively mitigate
potential outages through our tree-trimming
and system maintenance programs.
Empire also remains committed to safety.
We worked very hard to develop and maintain a culture of safety in an industry that
is inherently hazardous. There were four
personal injury reports in 2014, none of which
resulted in lost time for the employee. We are
certainly grateful that there were no lost-time
accidents in 2014 and we continue to strive
for zero future incidents.
COMMUNITY INVOLVEMENT AND
MEMBER SERVICES
Empire exists to serve its membership and
one way we do that is by giving back to the
communities the Cooperative serves. Every
year Empire makes significant contributions
to community causes. In 2014 the Cooperative gave over $144,000 in donations to over
50 organizations and provided over $35,000 in
sponsorships and giveaways.
Another way Empire serves its membership
is through energy efficiency programs. Empire
partners with Tri-State to administer several
programs that provide rebates for energy
efficient products. Altogether, over $107,000
in rebates were returned to our members in
2014. Please give us a call or stop by our office
if you are interested in learning more about
these programs.
Empire Electric Association 2014 Annual Report
2014 EMPIRE ELECTRIC ASSOCIATION ANNUAL REPORT
REPORT TO THE MEMBERS
Empire’s “Power To” seminars continued in 2014. These seminars
are designed to educate members about practices and programs
that can help them conserve energy and save money. We conduct
four Power To seminars a year. They are free of charge and typically include an Empire-sponsored lunch. Upcoming seminars will be
advertised through local media. We hope to see you at a Power To
event in 2015.
Empire expects to launch a revamped website in 2015. The new
website will be built on a platform designed specifically for electric
cooperatives.
We are also in the middle of an advertising survey that is designed
to help us determine the most effective means of distributing and
receiving information. We need to be able to efficiently and effectively communicate with our members and our members need
to be able to do the same with us. This is a challenge in today’s hightech environment where communication mediums are constantly
changing. The results from our advertising survey will guide our
future communication efforts.
PROPERTY AND FACILITIES
Entry and exit for large trucks and trailers became increasingly difficult at our old warehouse facilities. Safety, access and functionality
were greatly improved by moving our warehouse facilities and field
personnel to our new Engineering and Operations Center. With the
old facilities no longer in use, we are
evaluating options for selling or leasing this property. Empire also owns
approximately 80 acres near Totten
Lake that are for sale.
THANKS AGAIN
“What is the
best way to
effectively and
efficiently
communicate
with our
members?”
In 2014 Empire marked its 75th year
as an electric distribution cooperative. There has been uncertainty in
the past and there will be uncertainty
in the future, but Empire is wellpositioned to engage future challenges. Empire will continue to
safely and responsibly provide reliable electricity to our members in
southwestern Colorado and southeastern Utah. Empire’s memberowners are the foundation of this cooperative. This is your electric
utility and we hope you are proud of it. The board and employees
again extend sincere appreciation to the members for your continued support.
Empire is a cooperative. This means that it is owned by the members who receive electricity from Empire. It is democratically governed and all
profits are returned to the members as capital credits.
The 7 Cooperative
Principles
1. Voluntary &
Open Membership
2. Democratic Member
Control
3. M
embers’ Economic
Participation
4. A
utonomy &
Independence
5. E ducation, Training
& Information
6. Cooperation Among
Cooperatives
7. Concern for Community
Empire Electric Association 2014 Annual Report
EMPIRE’S SERVICE TERRITORY
EMPIRE ELECTRIC ASSOCIATION ANNUAL REPORT
STATEMENT OF OPERATIONS
BALANCE SHEET
Assets
20142013
Operating revenue
20142013
Net utility plant
$59,129,719
$60,261,059
Residential
Other assets and investments
$43,742,081
$42,585,265
Irrigation
$19,455,162
$14,930,580
Small commercial
$14,737
$31,773
Large commercial
Current assets
Deferred charges
Total assets
$122,341,699
$117,808,677
Capital equities
$63,456,163
$60,368,413
Long-term debt
$44,901,067
$45,271,865
Current liabilities
$12,874,327
$9,787,887
Deferred credits
$1,110,142
$2,380,512
$122,341,699
$117,808,677
$5,970,596
$5,516,941
$36,820,258
$31,819,750
Street lighting
$166,061
$162,227
Other revenue
$345,817
$384,412
$65,802,587
$60,182,774
$51,550,087
$46,929,630
$5,704,327
$5,871,038
Administrative and general
$2,463,116
$2,028,286
Depreciation and amortization
$2,309,171
$2,248,601
Purchased power
Operations and maintenance
Interest and other deductions
Total expenditures
$1,942,408
$1,948,608
$63,969,109
$59,026,163
Margins
Large
commercial
9.1%
Operating margins
Small
commercial
10.3%
$1,833,478
Nonoperating margins
G&T and other capital credits
Irrigation 0.4%
Net margins
Residential
23.5%
Street lighting 0.2%
2014 Revenue Dollars Went
Depreciation 3.5%
Interest & other 3.0%
Administrative 3.7%
Operations &
maintenance 8.7%
Purchased power
78.3%
$6,805,147
Expenditures
Other revenue 0.5%
Operating margins 2.8%
$236,127$199,186
$6,771,745
Total operating revenue
2014 Revenue Dollars Came From
CO2 Loads
56.0%
$15,491,983$15,295,111
CO2 loads
Liabilities and capital
Total liabilities and capital
2014
$1,156,611
$357,976
$263,512
$2,858,451
$3,238,454
$5,049,905
$4,658,577
OFFICIAL NOTICE OF ANNUAL MEMBERSHIP MEETING
Empire Electric Association, Inc.
June 18, 2015
The Annual Meeting of the members of Empire Electric Association, Inc., will be held
in Cortez, Colorado, at Empire Electric, 801 N. Broadway, Cortez, Colorado, beginning
at 5:30 p.m., Thursday, June 18, 2015, to transact the following business:
I. Election of directors submitted by written petition pursuant to Article III Section 4
of the bylaws of the cooperative. One director is to be elected from each district.
DISTRICT NO.5
[Four-Year Term]
J. KENT LINDSAY
Cortez, CO 81321
ERIC LINDGREN
Cortez, CO 81321
DISTRICT NO. 6
[Four-Year Term]
DAVID SITTON
Cortez, CO 81321
II. V oting upon proposed amendments to the bylaws, as follows:
NOTE: No bylaw or article changes submitted
III. Reports of officers, directors and committees and action thereon
IV. A ny other business transacted which may properly come before the meeting or
any adjournment thereof.
William C. Bauer, President
Empire Electric Association, Inc.
PO Box K • Cortez, Colorado 81321
Empire Electric Association 2014 Annual Report
BOARD
OF
DIRECTORS
SYSTEM STATISTICS
2014 EMPIRE ELECTRIC ASSOCIATION ANNUAL REPORT
20042014
Total active services as of 12/31
14,883
15,847
1,865
1,938
Total kWh purchased
488,521,692
708,305,415
Total kWh sold
477,228,061
698,129,595
666
652
$64.95
$98.19
Total miles of line
William C. Bauer
President
District 3
Average monthly kWh usage for
residential class Average monthly billing for
residential class System peak demand kW
Month of peak
Number of full-time employees
Jerry Fetterman
Secretary/Treasurer
District 1
57
61
$5,049,905
Cost per kWh purchased
4.032¢
7.278¢
Cost per kWh sold 6.172¢ 9.163¢
Revenue per kWH sold
6.237¢
9.426¢
Capital Credits Retired
Empire
$750,000
G & T
$1,008,210
$492,001
Dolores County
$48,656
San Juan County, Utah
$3,196
$47,696
Ute Mountain Ute possessory tax
0
Franchise taxes paid to cities and towns
$712,262
Sales tax
$651,375
Payroll taxes
$352,160
Other taxes
0
Total 2014 tax obligations
$2,307,346
$2,011,741
PROPERTY
TAXES
Montezuma County
San Miguel County
Sue McWilliams
District 2
$881,676
$258,210$1,130,065
TOTAL
J. Kent Lindsay
District 5
106,644
November
$3,754,866
Total margins
David Sitton
Vice President
District 6
76,048
January
VISIT OUR NEW WEBSITE
William Mollenkopf
District 4
John Porter
District 7
STAY CONNECTED
Follow Empire on Facebook.com/
EEACortez
Stay informed of any outages or changes at
Twitter.com/EEACortez
Empire Electric Association 2014 Annual Report
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