Annual Report 2019
Annual Financial Report
In June, you received a copy of the summarized financial statements for 2019. It was included with your ballot in the annual meeting voter’s packet and annual report. The following are some of the financial highlights of last year.
When we met with you for the district meetings last year, we were still recovering from the most devastating weather event in Lane Electric’s history. The total cost to repair the system and restore power was $5.8 million. To help cover those costs, Lane Electric applied for Federal Emergency Management Administration grants that covered 75% of the cost, or about $4.4 million. The co-op borrowed the remaining $1.4 million.
We began 2019 with an equity ratio of 44% and ended with an equity ratio of 41.8%. The equity ratio is the measurement of total equity as a percentage of total assets, or how much of Lane Electric’s assets are financed through equity rather than debt. The board of directors has determined an equity ratio range of 40% to 45% is a measure of good financial health. A strong equity ratio supports system improvements and allows for capital credit retirements. It also helps maintain rate stability, provides for risk mitigation—a cushion for extreme weather events that significantly impact our margins—and allows us to take advantage of significant opportunities when they arise.
Other Notable Items for 2019
The board authorized the retirement of the 2018 outstanding capital credits, totaling $1,851,112 on a present-value basis. These capital credits were applied to your November 2019 bill.
Since 2008, Lane Electric has been the recipient of funds from a lawsuit with the Bonneville Power Administration. The settlement agreement provided for payments through September 2019. Throughout that period, we received a total of $4.9 million.
All in all, 2019 was another sound financial year for your cooperative, which provides the foundation for future financial health. We paid our bills on time, our bankers were satisfied with our financial performance, and we maintained the cooperative’s assets and good name.
The board of directors continues to maintain appropriate oversight with an adopted annual budget, review of monthly financial reports, and an annual audit. The board retained Aldrich Advisors + CPAs to perform the annual CPA audit, which again resulted in a clean, unmodified opinion.
We value your patronage and appreciate the opportunity to serve and support so many vibrant communities here in Lane County. Please don’t hesitate to contact us with any questions, comments, or concerns.
Annual Operations Report
At our district meetings last year, we talked about future measures we would incorporate to help mitigate the effects and the risk winter storms and years of drought have on our electric system. Fresh from the most devastating snowstorm in Lane Electric history, we went to work putting those measures in place.
In 2019, we converted more than a mile of existing overhead lines to underground, further reducing our exposure to falling limbs, trees, and ice buildup. This year, we are on track to convert 2.5 miles of overhead lines to underground.
Burying power lines is expensive—roughly three times the cost of replacing the line in its original overhead configuration. To help mitigate those costs, we have submitted four projects to the Federal Emergency Management Administration for reimbursement. Those projects are estimated to cost around $1.2 million to complete. While there is no guarantee these projects meet their criteria and are accepted, we will receive a 75% reimbursement if they do.
Following the storm, we surveyed our system looking for broken and leaning trees, hanging limbs and treetops—all of which threaten future damage to the system—and removed what we found.
As we discussed during district meetings, years of drought have wreaked havoc on our forests, and wildfire threats are an even greater risk to our system. To help mitigate this, we have significantly increased our efforts to proactively remove dead trees that threaten our power lines and ramped up our mowing budget to clear underbrush.
These efforts—among others we continue to explore alongside utilities from across the region—will help reduce future storm damage and mitigate our risk of a wildfire.
We want all of the communities we serve to feel safe, secure, and satisfied with the exceptional service Lane Electric provides.