From time to time, I’ve used this space to tout the cooperative business model – the one where the dollars left after paying our expenses are allocated back to our members and eventually returned as capital credits. That cooperative business model has served Nodak and its members well over the last 75 years and again shows a bright spot in 2014 and 2015.
The year 2014 was a good year for your cooperative in terms of net margin, those dollars left over after we pay all of our expenses. In fact, we believe it to be the best ever in that regard. In the world of investor-owned power companies, those margins become part of the stockholders’ value and potentially paid out in dividends or higher stock prices. In the cooperative world, we put those dollars to work for our consumers who also happen to be our owners. That is exactly what we are going to do in 2015.
In April of this year, our wholesale power provider, Minnkota Power Cooperative, will have a fairly modest 5 percent rate increase. The good news is because of the successful year we had in 2014, Nodak will not pass along that rate increase to our members, at least for a while. At our January board meeting, your Board of Directors approved a plan to defer approximately $4 million from 2014 revenues into 2015 to offset much of the wholesale rate increase.
What that means is although Nodak has one of the lowest markups on wholesale power cost of any cooperative across the country, at least for part of 2015 it will be even lower.
Eventually, we will have to pass along the rate increase to our members, but that will depend on factors like the weather, member growth and load growth. When our margins fall below target levels, we will then have to raise our rates to cover this increase. That could happen later in 2015 or even into 2016 or later, depending on how things go. For now, we will put our members’ equity to work in holding the line on our retail rates.
Look for the notice to our 75th annual meeting in this publication and save the date. We’d love to have you join us to celebrate and be our guest for supper.