Message to our Members

With this annual report, we close the books on 75 years of member-owned energy delivery, and celebrate the growth and prosperity that our cooperative business model has afforded us over those many years. We’ve come a long way since our first meter was energized at the Percy Donnelly farm on Dec. 23, 1939. At the close of 2014, we had 18,646 metered locations spread across 8,040 miles of energized distribution line. That sort of success was again fueled by a good year in 2014.

While 2014 certainly was not ideal for those of us braving the long cold winter, or for our farmers who struggled through a short growing season, it was a good one for electric sales. The frigid winter held on long into spring and returned early in November. A wet start to the harvest also bolstered crop conditioning sales. Those two things, coupled with robust growth in industrial and general service sales, pushed kilowatt-hour deliveries up 5.9 percent over last year to create a new all-time high for energy sales of 1.16 billion kilowatt-hours.

The fiscal impact of this steady growth is reaping benefits in our rates. In November, our power supplier, Minnkota Power Cooperative, announced a 5 percent increase in its rates effective April 1, primarily due to the completion of a 250-mile long transmission line needed to serve the growing energy needs of the Minnkota system. At the cost of $354 million, this line is now officially part of our transmission system backbone and will serve our needs over the next 30-plus years.

The good news is that the strong financial performance of your cooperative has allowed us to establish a revenue deferral plan. By deferring revenue from 2014 into 2015, we are able to absorb, or at least delay, passing along Minnkota’s rate increase through 2015.

Setting aside dollars from 2014 to help mitigate and flatten out rate adjustments is one way your cooperative works to keep dollars in the pockets of our ratepayers. The year 2014 marked a continuation of stable retail rates. We had no general rate increase last year beyond the addition of a one mill pass-through of Minnkota’s renewable energy market adjustment. That’s three years without a rate increase. At some point that will change, but our goal is to make them as small and predictable as possible.

The year 2014 was a nonlegislative year in North Dakota, so our focus was trained more on the national and regional political arenas. In June, the Obama Administration and the Environmental Protection Agency (EPA) outlined a plan to restrict CO2 emissions from existing power plants over the next decade. That draft rule came under heavy scrutiny during its comment period, and many of you were part of the 1.2 million people who filed formal comments on our behalf at the cooperative action network, www.action.coop. We are hopeful our grassroots army sent a message loud and clear that we want a common sense solution to energy regulation across America. EPA’s final rule is due in summer 2015.

Closer to home, the Minnesota Public Utilities Commission delayed the construction of a crude oil pipeline through its regulatory siting process. This proposed project would carry Bakken crude oil from western North Dakota through our service area into Superior, Wis. When constructed, this pipeline will add to the growing number of pumping stations we have on our system that already comprise 22.8 percent of our total annual sales. With a projected in-service date of 2017, we look forward to this project getting off the drawing board and pumping oil soon.

At various points throughout last year, we migrated all of our members to calendar month billing. As of now, all member bills begin on the first of each month and end on the last day of each month. We understand that for some members this required a period of adjustment, but this small alteration in our billing cycle has helped tremendously in areas of member communication, accuracy and cash flow. We want to say thank you for your patience and cooperation on this matter.

In keeping with our longstanding philosophy of returning member equity as soon as we can, those of you who were members in 1996 received your share of $1.5 million in capital credit retirements last year. Each year, your share of the cooperative’s margin is allocated to your member account. Those dollars are kept at Nodak and used for financing and operational needs. When your board of directors deems it appropriate, those dollars are deducted from your equity account and sent back to you. In 2014, capital credit retirements averaged $153.07 per member.

Something introduced in 2014 I want to point out is our Electric Heating Rebate Program. In 2014, Nodak teamed with our power supplier, Minnkota Power Cooperative, to provide rebates for new or replaced off-peak electric heating systems. In the short time between May and December, we provided our members with more than $35,000 in rebates as part of this program. This successful program continues into 2015, so if you’re planning a new heating system, make sure you call our Energy Services Department for details.

We encourage you to review the accompanying financial statements, along with the report from secretary-treasurer Luther Meberg. I’m sure you’ll agree that Nodak ended 2014 in sound financial position. We will provide you with more detail about our year during our annual meeting Tuesday, March 31, 2015, at the Alerus Center in Grand Forks. Until then, I hope you enjoy the walk down memory lane provided in the following pages. The last 75 years of Nodak’s history are chronicled in those pages from the time Franklin Roosevelt created the Rural Electrification Administration and our first meter was energized through the major events of the past eight decades.

On behalf of your board of directors and the employees of Nodak Electric Cooperative, we want to thank you for your patronage in 2014 and for the opportunity to serve you. We hope to see you at our annual meeting on March 31.