In the electric industry, we regularly measure success in terms of the good things that happened during the year, like financial gains or reliability. Frequently, we measure success relative to the lack of bad things or undesirable events. The absence of electrical injury to our employees or the public, absence of major outage-causing ice storms, or the absence of retail rate increases are all good measures of success.
I’m happy to report that in all these regards, we had a very successful year. Most importantly, we were able to continue reliable service to our member/ owners without any serious injuries to either an employee or a member of the public. Safety is always our number-one priority and something we never take for granted or take lightly.
As a member-owned cooperative, we are guided by seven cooperative principals, such as open and voluntary membership and democratic member control. One of those guided principals is cooperation among cooperatives, which is the idea that cooperatives are most effective and efficient when working together. We were blessed that the harsh North Dakota winter spared us from major ice storms that have a tendency to impact our ability to keep the lights on. Members of our cooperative family in western North Dakota were not as fortunate. In April, a major snowstorm caused widespread outages and devastated their distribution systems. In a display of cooperatives helping cooperatives, we sent crews and equipment to western North Dakota for four weeks to help our cooperative friends get services restored to their membership. It’s more than likely when, not if, we will need the support of other cooperatives in the future, so we are happy to help out when we can.
To coin a phrase from President Warren G. Harding, 2022 was in many respects a “Return to Normalcy.” We had 12 in-person board meetings and returned to in-person meetings and training. We even tried to have an in-person annual meeting. In many ways though, 2022 was anything but normal. Costs for the materials and equipment we need to extend new services and keep our system operating have skyrocketed, and our supply chain is strained. In many cases, lead times on what were already extended deliveries have more than doubled. In some cases, we are having to order materials we need 18-20 months early without knowing exactly how much it will cost, or when it will arrive. Despite these challenges, we were still able to deliver very strong results and are pleased to enter 2023 as the seventh year in a row without any rate increases. Rate stability is important to us as it helps keep our members’ dollars in their pockets – right where they belong.
Record sales revenue and record kilowatt-hour sales contributed to another robust financial performance. An operating margin of over $4.5 million and a total net margin of just under $7 million helped to keep your cooperative in a very strong position. In May of 2022, your board of directors approved a $3.8 million capital credit retirement, which was a record for our cooperative. With such a strong financial performance in 2022, the board of directors will match that dollar amount for the next capital credit retirement. Our member-owners are once again reaping the benefit of the cooperative business model where all operating margins are eventually returned to the members that created them. That’s the power of ownership.
The strength of our business continues to be our cooperative structure. We are owned by and serve local North Dakotans. We are governed and regulated by people you elect, and who pay a Nodak electric bill themselves. More importantly, they answer to you as ratepayers every day when they see you in the local restaurant, in church, or at a ballgame. The board of directors will always listen to your opinion and act in the best interest of the membership as a whole.
Nodak Electric has operated as a consumer-owned and consumer-controlled business for over 80 years and has done so successfully by keeping our focus on the member at the end of the line. Thank you for your support and patronage over the past year, and thank you for the opportunity to serve you and the cooperative. We hope we will see you at your cooperative’s annual meeting at the Alerus Center in Grand Forks on April 11.