Hazardous Weather Forces Rescheduling of LREC District Meetings
The weather can be very humbling. Being in the electric utility business, we are very aware that Mother Nature often has the upper hand over our plans and schedules. Such was the case when we found it necessary to postpone our three District Meetings due to bitter temperatures, wind, and snow.
With the recent polar vortex dropping temperatures to negative 30 degrees, I am thankful that both our electric grid and natural gas system performed well. To our employees who braved the elements, we thank you for what you do for our Lake Region Electric members.
I want you to be aware of a few important topics. I’ll start with our 2018 financials. It was a banner year! Our cooperative’s total revenue reached $50.9 million—allowing us to post strong margins of $4.5 million and retire $1.2 million in capital credits. This is a wonderful financial scenario for Lake Region.
During 2018 we also completed our first full year in the natural gas business. As was considered in our business and financial plans, Lake Region Energy Services (LRES) lost $157,000 in year one due to business start-up costs, one-time equipment purchases, legal filings, and so forth. It is important to understand, however, that LREC was able to allocate approximately $239,000 of electric operating expenses to the natural gas side of our business. This is in part because no new employees were hired to operate the natural gas business. LRES natural gas utilizes the existing billing, accounting, customer service processes, and staffing as the electric side of the business. Many of our operations employees are cross-trained to perform technical tasks for both LREC and LRES.
Entering 2019, LRES now serves more than 500 natural gas accounts. This new business diversification further strengthens an already fiscally strong cooperative. Your local cooperative is now serving a broader range of the energy needs in our region. The electric and natural gas businesses work nicely together. We are proud of this and hope you are, too.
No Electric Rate Changes for 2019
We are pleased to announce that there will be no changes or increases in electric rates for 2019. We’ve done a good job of managing controllable costs and creating new revenue streams that offset the need to raise rates. Our goal is to maintain stable rates and provide reliable service. We hope you like this news, too!
Our wind and solar project has been constructed and is expected to be operational in early March. This is an exciting project that will reduce our wholesale power costs through the local production of low-cost energy that also helps us avoid wholesale transmission and capacity costs. The energy will be produced and used in the local Erhard Substation service area, but the benefits will be shared by all LREC members.
In reviewing our outage reports and reflecting on the success of our tree clearing and vegetation management program, it was very apparent that our aggressive efforts and rights-of-way management rotation are paying off. Compared to 2004, our outage hours have been cut in half. Again, storms and nasty weather play a big part in power outages. But keeping trees and limbs away from power lines certainly helps to limit their occurrence. Improving the reliability of our electric distribution system will remain a priority in 2019.
2018 was the second year of our residential back-up generator program. This is also working out well. Lake Region Electric will continue to embrace new technologies and engage in new ways of serving our members. It’s all part of our commitment to enhancing the quality of life of our cooperative members.
One other program that supports quality of life in our local communities is Operation Round Up. A total of $207,000 has been awarded locally to worthy causes since the program was started at Lake Region. This program is truly based on neighbors helping neighbors. After all, isn’t that what it means to be a cooperative? What it means to be part of a community? We think so.