FEMA assistance likely to help pay for Winter Storm Elliott costs
By Don Douglas
Washington Electric Cooperative works hard to provide the excellent service our members need and deserve. The COVID pandemic has been difficult on many levels for all of us. As we begin to transition into a post-pandemic world, the effects of it are still with us as we attempt to learn to live with the virus that has caused so many disruptions to our lives. Our office remains closed to walk-ins from the public and is open by appointment only.
In 2021, WEC experienced a slower increase in energy sales, which guided us in setting the budget for 2022. We guessed that many people were beginning their transitions back to their offices, and that students were returning to their classrooms, so we made no increases to our residential electric sale estimates for 2022. WEC’s revenue from members in 2021 was $16,944,489 and $17,384,203 in 2022. So, we guessed right in the budget.
However, we continued to experience decreased methane gas production at Coventry that caused us to incur higher power bills that exceeded our first quarter budgeted amounts by more than $1,000,000. Some of these increased costs were driven by natural gas supplies being diverted to home heating needs in the first quarter of 2022, as it was extremely cold. The need to heat homes took precedence over power generator facilities that use natural gas to fuel their generators. WEC power is 100% renewable and the Co-op purchases no natural gas-generated power, but this trend raised costs across the marketplace. The increase in power costs to replace the decrease in Coventry production ultimately led to WEC’s need to file for a rate increase with the Public Utility Commission. WEC filed for a proposed rate increase of 14.19% that went into effect November 1, 2022.
The increase in power costs to replace the decrease in Coventry production ultimately led to WEC’s need to file for a rate increase with the Public Utility Commission. WEC filed for a proposed rate increase of 14.19% that went into effect November 1, 2022.
– Don Douglas
In addition to the increase in power costs, WEC also suffered significant costs in outage restoration due to two late December storms. The storm that occurred over the Christmas weekend caused significant damage to WEC’s system, with over 40 broken poles. Both storm costs were almost triple what we budgeted for large storm expenses in 2022. We were fortunate that other costs remained low and that the Christmas storm has been requested to be declared a federal disaster, allowing us to recoup up to 75% of those costs with assistance from FEMA. With the anticipated reimbursement from FEMA, we are proud to report that WEC managed to meet its RUS loan covenant in 2022.
Our net margins (money collected in excess of our operating costs) in 2022 were $458,796, which is down from $1,040,784 in the prior year. Increased costs in power supply due to Coventry production remaining low and the significant storm costs incurred in December 2022 are the main reasons for the decrease in 2022 margins.
Capital credits are one of those things unique to cooperatives. Since co-ops are owned by their members, money is returned (retired) to them over the years. The amount retired is different each year because capital credits represent our margins. In short, WEC can return money to members when there’s a bit leftover at the end of the year. The Board of Directors is responsible for deciding if we can retire capital credits, and how much. Available cash is the metric we use to make this decision. Some years WEC has had very large allocations, and some years they were small, or even zero.
Our goal is to keep close to a 15-year cycle. Inactive members get a check in the mail if the total amount retired to them that year exceeds $50, and active members get a credit on their November bill. Since we began retiring capital credits in 1998, WEC has returned over $9,400,000 to members. Last year we set out to retire $400,000, retiring a portion of the capital credits from 1997 and 1998. We were also able to retire portions of 2013 (Contributions In Aid Of Construction) and 2021.
We also invite members to donate their capital credits to the Community Fund, which provides grants to non-profit organizations in the four counties WEC serves. This is a great way to make a real difference in your community. At present, over 1,400 members contribute, and the fund distributes more than $35,000 each year. For more information, please call the Co-op at 802-223-5245 or visit wec.coop/capital-credits.
On behalf of the Board of Directors, I want to thank the entire Finance Department for their hard work, attention to detail (every dollar) and their dedication to Washington Electric Cooperative. Copies of the audit can be found on the website at wec.coop/about-wec/financials.