The year 2001 was a very good year for the cooperative. When the annual financial reports are completed, we expect them to reflect year-end margins at least as high if not slightly higher than budget. Much of our success this year was due to moderate growth in sales, and thankfully, the absence of a severe ice storm. We will provide much more detail about the past year in our Annual Report. This report will be distributed to all members in March, along with notice of our annual meeting.
The most significant change in our business this past year was due to the merger of Nodak Electric Cooperative headquartered in Grand Forks and Sheyenne Valley Electric Cooperative headquartered in Finley. The goal behind this merger is to gain efficiency with larger numbers, and we are well on our way in achieving the strategies tied to this goal.
Prior to the merger, the two cooperatives had 87 employees, two full governing boards of directors, and a headquarters located in both Grand Forks and Finley. One year after the merger date, we have 77 employees, one governing board of directors, and have sold the headquarters building in Finley. There are many other expenses that have been reduced because of the merger. Legal fees, auditing fees, Statewide Association dues, annual meeting expenses, and bill processing are just a few. The bottom line is significant money can be saved through a merger, with no reduction in service quality.
The biggest challenge for Nodak in 2002 will be a projected increase in our cost of power from Minnkota Power Cooperative. At the time of this writing, we have been informed of Minnkotaâ€™s intention to increase our wholesale rates approximately 8.5%, effective March 20. With this increase, roughly $1.7 million will be added to our wholesale power cost for the year.
Between now and March 20, we will need to determine how we will deal with this increase in cost for the cooperative. The simplest solution is to increase your electric rates. An across-the-board increase of 6% will generate the required amount to pay the additional $1.7 million on our wholesale bill. While this is an option, it will be our last resort.
We hope we can absorb at least part of this increase by operating with lower margins and with continued growth in our service area. We also are looking harder to find expenses we can cut without degrading your level of service and reliability. We donâ€™t know if these items will have sufficient effect to completely avoid a rate increase, but they will help to minimize the amount of a rate increase.
We have not had a general increase in our retail rates since 1993. We donâ€™t want to have a rate increase this year, but if we do need one, we pledge to keep the increase as low as possible. We guarantee you will not see the type of increase that plagued natural gas and other energy sources last year. You will continue to have low-cost electric rates and enjoy rate stability in comparison to other energy sources.