Thank you to all who attended the District Meetings. Between 50 to 80 people participated in each of the three meetings. It was wonderful to interact with so many Lake Region members. The ability to meet face-to-face, ask questions and have them answered, and hold conversations at the grassroots level is something that energizes me. It is something that I truly hope will never change.
District Meetings are a key piece of our grassroots organization. This year, we have two Director retirements due to term limits. The nominating process that happens during the District Meeting is the first step in securing leadership that will guide our future and in ensuring that our cooperative’s leadership will be accountable to the member-owners.
Working to meet, and perhaps exceed, our members’ needs has always been a goal. Member feedback helps keep our actions on track. Survey results showed that from 2017 through 2019, overall member satisfaction increased from 8.6 to 8.9 on a 10-point scale. Besides member satisfaction trending upward, Lake Region’s rates and monthly facility charges remain lower than that of many peer electric cooperatives in Minnesota. In fact, our controllable costs per member have remained quite stable for the past few years and are $170 per member less than the state average.
The District Meetings covered several topics in detail. Three of these topics are Service Reliability, our Rate Stability Plan, and Forward Thinking. While each is important, they really must work together to be effective.
2019 was a record-breaking year. We posted both our highest revenues and highest margins. Member equity increased to 43.4%, an increase of $35 million since 2005. Additionally, we retired back to our members a record $1,670,000 in capital credits. This was the first year that wholesale power supplier Great River Energy paid our cooperative capital credits of $318,320 and this was passed on to our local Lake Region members. This makes 2019 the seventh consecutive year in which Lake Region has paid back more than $1 million in capital credits. This benefits our members directly, as well as the economies of our local communities. Capital credits epitomize the grassroots nature of this cooperative.
Service Reliability has a direct bearing on member satisfaction. We’ve taken a three-pronged approach that focuses on system improvements, equipment replacements, and tree clearing. During 2019, we replaced 468 power poles and all 7,432 cut-outs (line fuses) across the system. The total combined cost outlay was approximately $3,224,951 in 2019—a big expense, but well worth it if it means fewer outages and a safer system. In fact, we’ve noted that cut-out related outages diminished from about 62 per year to zero. Furthermore, we’ve worked with wholesale power supplier Great River Energy on substation and transmission line upgrades that will increase reliability and voltage support for about 65% of Lake Region’s members.
Our Rate Stability Plan builds on our financial strength. Lake Region Energy Services (LRES), our natural gas subsidiary, has helped provide rate stability not only through new energy sales revenue, but also through the allocation of costs from the electric to the gas side of the business because both utilities share employees and equipment. Our natural gas business created a positive margin of $81,000 and cost allocation from electric to gas of $184,000. This is a $265,000 positive rate impact to Lake Region members. This helps to stabilize electric rates.
Our local solar/wind hybrid generation facility also helps stabilize rates and hold down the cost of electricity. It provided approximately $200,000 in cost savings and produced more electricity from renewable sources for local consumption.
Our Standby Generator Program also provides revenue and rate benefits. Combined, Lake Region Energy Services, the renewable hybrid facility, and the Standby Generator Program provided more than a half million dollars in savings to Lake Region Electric Cooperative.
Your cooperative’s directors, staff, and employees remain committed to Forward Thinking. We have a great story to tell and a successful foundation on which to build. We are proud of the accomplishments made and anticipate a bright future! As always, if we are not meeting your expectations please give me a call. We are here to serve you.