Transcript
A Touchstone Energy Cooperative
R
2009 ANNUAL REPORT
Year End Financial Statements for 2009 and 2008
BALANCE SHEETS South Central Power Company
Ralph E. Luffler
President and CEO
From the PRESIDENT and
December 31
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2009 2008 Tough times. Assets You don’t have to be reminded of the economic Total utility plant $338,050,204 $349,540,220 problems weighing down our families, communities, Less accumulated provisions for depreciation and nation, neither do the folks at your electric 107,034,664 101,336,407 state cooperative. The recession has hit us, too. 236,713,797 Instead of Net utility plant 242,505,556
continued growth in new services and revenues, we’ve seen home and commercial construction come to a near Investments and fund accounts 98,740,655 102,889,091 standstill. Operating costs are increasing as consumer demand for electricity is decreasing. Wholesale power Current assets: rates continue their upward trend. Cash and cash equivalents can-do spirit of those who founded 9,894,223 But in the electric cooperatives during the era 2,726,305 of the less Depression, the Accounts receivable, Greatallowance for challenges of 2009 are proving to be the foundation for a stronger $442,000 losses in collection (2009: and more efficient South Central Power. You’ll read more in the pages that follow, but here are a few highlights. 2008: $539,000) 10,213,290 13,310,995 Rate adjustments. In January 2009, the customer charge for residential Inventories 2,577,647 3,153,075 consumers served under Schedule R increased from $9.00 per month to $11.00 Prepaid insurance month. Theexpenses per and other monthly customer charge for commercial consumers served210,618 under 293,544 Schedule GS increased from $9.00 to $13.00. 22,978,704 19,400,993 The increased customer charge helps the cooperative recover costs associated with active Long-term Note Receivable electric services. 167,495 203,713 Trimming the budget. For decades, South Central Power has received Deferred debits capital credits from Buckeye Power, Inc., the wholesale power supplier to Ohio’s 80,992 573,262 electric cooperatives. Total assets However, when Buckeye Power’s fiscal year ended on June 30, $359,780,856 2009 capital $364,473,402 credits were not available due to an operating loss. Growing construction and maintenance costs for environmental control equipment at the Cardinal Generating Station in Brilliant, OH were to blame. So Equities and Liabilities was the rising cost of coal and other consumables needed to operate the power Member and patron equities consumers are cutting their use of electricity and that 202,698,255 $ 199,109,997 $ is affecting plant. Thrifty revenue, too. To safeguard its own finances from the loss of Buckeye Power capital credits, Long term liabilities net of current maturities 130,510,438 125,300,094 South Central Power undertook cost-saving measures during 2009 that continued Current liabilities: into 2010. No 2010 base rate increase. After a thorough budget review, your electric Trade accounts payable 14,687,977 cooperative reduced or eliminated programs and costs wherever 13,343,437 possible. Consumer deposits expense reductions reflect South Central Power’s acknowledgement that 1,150,075 949,597 The Accrued salaries, wages and related items household expenses during the recession. customers are struggling with 4,643,153 4,509,721 Like our customers, we’re less. Then tradition Accrued property and miscellaneous taxes doing more with6,141,925 again, it is our 6,070,191 to plan and properly time expenditures, decide thoughtfully and spend carefully. Other current liabilities 1,380,864 1,346,466 Be assured that the budget cuts are not lowering the quality of our customer Current maturities on long-term liabilities 6,607,402 5,345,337 service or the reliability of the electric system. 34,611,396 31,564,749 The expense reductions, combined with prudent spending, allowed the Board of Trustees to pass the 2010 budget without increasing the base rate or Deferred Credits the monthly customer charge. 241,571 217,758 Wholesale power costs. While South Central Power is making a significant effort to Total equities and liabilitiescontrol internal costs, approximately 66 percent of its costs are from the $ 364,473,402 $ 359,780,856 electric energy it buys from Buckeye Power.
Board of Trustees
STATEMENTS OF REVENUES AND EXPENSES, AND MEMBER AND PATRON EQUITIES South Central Power Company Year Ended December 31
Kenneth d. davis
Chairman
Richard Poling
Vice Chairman
2009
Wholesale power costs are on the rise because of higher fuel Operating revenues $206,027,744 costs, growing operational costs at the Cardinal Generating Station Operating expenses: and investment in environmental technology at the power plant to complyof power Cost with federal Clean Air Act standards. 134,591,272 On July 1, 2009, Buckeye Power instituted a slightly more than Mike Hummel aTransmission half-cent per kWh increase in the cost of wholesale power. The 344,916 Asst. Vice Chairman increase added approximately $5.00 more per month for 1,000 Distribution: kWh of electricity. Another increase is anticipated in 2010 and it Operation is expected that wholesale power costs will continue rising over 3,899,152 21,696,252 the Maintenance next few years. In an effort to show what the wholesale power costs are, South 4,780,150 Consumer accounts Central Power added a new line on your monthly electric bill in May Consumer service and information 2009. The wholesale cost of power is reflected as the “Generation 2,581,538 Kobi Lawrence Asst. Secretary Administration and general and Transmission” charge. 8,537,692 Capital credits paid. For 30 years, cooperative members have Depreciation 10,337,831 received estate and general capital credit refunds from South Central Power. In Taxes 9,176,541 2009, nearly $6.9 million was refunded. Life-to-date capital credit refunds total approximately $80.6expenses Total operating million. 195,945,344 Congratulations. Congratulations to South Central Power Board of Trustees Assistant Secretary Lawrence Kobi. He earned his Board Leadership Certificate Operating2009 frombefore fixed charges (BLC) in margins the National Rural Electric Cooperative Association. The 10,082,400 BLC can only be attained after a director earns the Credentialed8,358,312 Cooperative Fixed charges - interest on long-term debt Director Certificate (CCD). Kobi and fellow Trustee W. Edward King both attained Operating margins after fixed charges BLC and CCD are earned by taking 1,724,088 their CCD accreditation in 2006. Both the courses in cooperative board governance, finance, operating performance and efficient energy use. FEMA storm reimbursement 0 Welcome. South Central Power welcomes Daniel Gunsett of the Columbus Generation and transmission capital credits 0 law firm of Baker Hostetler as its new legal counsel. He is guiding South Central Power through the vast array of legal issues at the state and federal level that Other capital credits and patronage dividends 1,196,916 have the potential to impact your electric cooperative. Net operating margins are tough all over,” the old saying goes. 2,921,004 Summary. “Things We do not know when economic conditions will improve. Not even the economists and financial- experts can predict when the economy will66,885 turn the Non-operating margins other income (expense) corner or what recovery from the Great Recession will look like. The country Non-operating margins - interest income 285,538 has entered new and unfamiliar territory. However, all of us at Net margins for the period South Central Power - the Board of Trustees, 3,273,427 management and employees - are committed to working smart and in a costeffective manner. Every penny we save and each process we streamline Member and patron equities,for your cooperative and you, its 202,698,255 produces bottom-line benefits beginning of year members. We are working diligently to reduce operating and administrative expenses, so Retirement of patronage capital (6,861,685) what you pay for electricity is as low as possible.
2008
$192,254,174 123,756,473 317,111 Thomas Lamb
Secretary
4,150,155 20,221,136 4,905,952 2,500,478 James Evans Treasurer 8,177,450 9,852,040 9,429,600 183,310,395
Harold Cooper
Asst. Treasurer
8,943,779 8,104,615 839,164
889,782 5,968,117 Alan Gabriel 1,073,945 8,771,008 21,276 358,588 W. Edward King 9,150,872 200,317,860 (6,770,477)
Michael Vinka $202,698,255
Member and patron equities, end of year
$199,109,997
South Central Power Company’s audit, as of December 31, 2009, was completed by GBQ Partners LLC of Columbus, Ohio. Copies of the report are available at each South Central Power district office.
Ralph Luffler President and CEO Kenneth D. Davis Chairman
The SFI® program is a comprehensive system of principles, objectives and performance measures developed by foresters, conservationists and scientists, that combines the perpetual growing and harvesting of trees with the protection of wildlife, plants, soil and water quality.
Stephen Johnson
S C
Communities count on South Central Power to be a good neighbor. The cooperative and its employees are happy to respond and assistance is offered in many different ways.
GUIDING PRINCIPLES
MISSION STATEMENT
The mission of the Board of Trustees and employees of South Central Power Company is to provide cost effective, quality electric and other services to its customers and communities through integrity, commitment and accountability.
South Central power’s
STRATEGIC DIRECTIVES
South Central Power’s top scholars Maxwell Cothrel and Rebekah Linton receive congratulations from Ohio Rural Electric Cooperatives President and CEO Tony Ahern for also winning college scholarships in the statewide competition.
to quality customer service. An organization prepared to excel in a changing environment. Effective communication within the organization and with the membership. Managed financial stability. Cooperative-based services that meet our consumers’ needs.
Field Service Technicians Bruce Duck (left) and Jason Thomas, as well as Director of Diversified Services Carol Disbennet, showcased the Security Division at the Lancaster-Fairfield County Chamber of Commerce Trade Show. They also attended chamber events and home shows in other counties.
A Health Fair at the Annual Meeting offered free screenings and information from Employee commitment area health-related businesses and organizations.
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During the holidays each South Central Power office gathers items for a local charity. (From left) Lori McMahon, Bonnie Detty, Barb Carruthers, Martha Harless, Deb McCoy, Laura Holley and their coworkers took holiday donations for Canal Winchester’s Human Services agency.
AJIT KADAKIA
Executive Vice President
CATHY BITLER
Vice President Administration
SUSAN EVERLY
Vice President Human Resources
S G
The Canal Winchester Chamber of Commerce named South Central New Electric Consumers Added:
1,552
Capital Credit Payments: Electric Bills Rendered: Security Bills Rendered: WildBlue Bills Rendered: Total Employees: Total Vehicles: Miles Driven:
$6,862,000 1,384,482 16,469 9,098 235 128 2,261,000
Power its 2009 Business of the Year. Representing the co-op were (from Total Active Electric Consumers: 114,790 left) Jeff Campbell, Lisa Hooker, Carol Disbennet, Miles Donnie Miller, Richard Blackstone,Bitler, 11,818 of Line: Donna Ackers, Cathy Brad Markwood and Richie Martin.
Average Consumers per Mile of Line: 9.7 Kilowatt Hours Sold: Operating Revenue: Total Assets: 2,240,577,000 $206,028,000 $364,473,000
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100 South Central Power representatives Amber Stephens of Baltimore and Cullen Ashley of Sugar Grove joined 1,500 other teens at NRECA’s annual Youth Tour to Washington D.C. in June. 80
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Chuck Chafin, Bob Wynkoop and Roy Hodge put Fairfield County’s final emergency warning siren into place. County officials commended South Central Power for installing 24 refurbished units over two years. Attending the recognition event were (from left): Brad Markwood, Chuck Chafin, Kim Hoffman, Bob Wynkoop, Roy Hodge, Donnie Miller, James Graf, Commissioner Judy Shupe, EMA Director Jon Kochis and Commissioner Mike Kiger.
Ninth grade students Stephen Hartline (top) of Woodsfield and Aaron Slatzer of Somerset attended the 2009 Youth Power Energy Camp held at the Cardinal Generating Station courtesy of South Central Power.
EDSON KINDLER
Vice President Customer Services
JOHN SAYRE
Vice President Operations
JAMES MEYERS
Assistant Vice President Operations
S E S C C
The strength of the electric system is of utmost importance toCentral Central and electric National Rural Electric Cooperative Association, South South Power Power. The cooperatives across the nation are working to ensure any climate change perform at is fair, affordable cooperative knows consumers count on its equipment and employees to legislation top level. During for consumers andwere made in the electric system to strengthen it further. 2009 investments technologically achievable. New transformers. South Central Power put its Even though Congress focused on healthcare legislation during 2009, it was climate change largest transformer ever into service during 2009. legislation that had the attention of electric In March, a 100 MVA unit was installed at the cooperatives. Shannon Road Substation in Canal Winchester. As the issue works its way through the The unit provides additional electric capacity legislative process, the National Rural Electric and improved reliability during outage restoration Cooperative Association and co-ops across the and times of equipment maintenance. When country continue to advocate for climate change necessary, the transformer’s large capacity allows legislation that is fair to all regions of the country, the cooperative to distribute electricity to distances affordable for all electricity consumers and farther than smaller transformers allow. technologically achievable. In May, a new 20 MVA dual voltage transformer Cap-and-trade is at the center of the debate. arrived at Hooker Substation in Fairfield County.While electric cooperatives support sensible, low South Central Power operates at two different approaches to climate change, cap-and-trade cost South Central Power’s Lisa Hooker and Brad Markwood is incoming transmission voltages: 69 kv and 138 kv.not the answer. listen to remarks by U.S. Representative Steve Austria. Crews lower the climate change provisions will The dual voltage transformer adds flexibility to the If enacted, South Central Power’s largest transformer into place at the Shannon Road Substation. impact the monthly electric bills of all consumers, not only those served by electric cooperatives. system, as it can be used at substations across the Because of its of the voltage level. territory regardlesspotential to significantly increase the price customers pay for electricity, South Central Power encouragedsearching for copper continuevoices heard. Central Power offices and Copper theft. Vandals its consumers to make their to target South What is Thieves have removed electric wire from thelimit carbon emissionspoles, the use of substations. cap-and-trade? Cap-and-trade is a way to cooperative’s electric from energized fossil fuels.and substations. equipment Beyond monthly electric bills, consumers can expect higher prices for natural gas, gasoline The safety hazards are obvious. Thieves, as well as the employees who unknowingly walk into and groceries. Why? The cap-and-trade approach affects all items that use any fossil fuel in their unsafe situations, can be injured or killed. production, operation or transport. The vandalism also causes power outages for consumers. The replacement costs for material, The federal government would set annual limits, or caps, on how much carbon dioxide and equipment and labor are utilities and industries can emit. Credits, also called allowances, would other greenhouse gases significant and impact every South Central Power customer. To help the total emissions South under be issued forthwart future thefts,allowedCentral Power enhanced security at its facilities. Various components are in place. the annual cap. Equipment installed in 2009 includes portable Cap-and-trade’s impact on the cost of electricity would vary by state. It is anticipated monitored surveillance systems at various electricity prices would increase more in Ohio substations. The units can be moved between and other states that rely heavily on coal than facilities as needed. in states that use different energy sources that Day or night, motion triggers the cameras and produce comparatively little carbon. real time video is sent to the monitoring station. Approved in the U.S. House of Rep- The instant notification determines if an actual resentatives. The American Clean Energy theft is in progress. If so, law enforcement is and Security Act of 2009 narrowly passed the contacted immediately. House in June. It is commonly known as the The cooperative is offering a $5,000 reward for Waxman-Markey bill. information that leads to the arrest and conviction The legislation calls for atmospheric carbon ofLisa Hooker and Brad Markwoodproperty. All damage people who damage co-op also joined the meeting dioxide to be 17 percent below 2005 levels The dual voltage transformer is moved into and thefts are reported to the appropriate law with U.S. Representative Mary Jo Kilroy during by 2020 and 83 percent lower by 2050 using Hooker Substation. NRECA’s legislative conference in perpetrators are enforcement agency. When the Washington D.C. cap-and-trade. found, South Central Power will prosecute to the full the coal-fired law. Electric cooperatives opposed the bill. In Ohio, extent of the Cardinal Generating Station is South any cap-and-trade emission provisions and the resulting price increases. subject to Central Power asks its consumers to keep a watchful eye for suspicious activity in and around the servicealso objected to the allocationthe cooperative and its customers credits. prevent Cooperatives territory. By working together, formula for the carbon emission can help untimely accidents, additional co-op expense and inconvenient outages. Power for the Cardinal As passed by the House, the carbon emission credits allocated to Buckeye
plant decline over time. To make up the growing Storms. South Central Power’s electric system weathered two major difference, Buckeye Power would have to further reduce storms in 2009. its carbon emissions. Or it could purchase the remainder The January 28 storm system that of the credits at auction or on the open market without passed through the service territory any consumer price protections. started with rain and ended with snow. Each of those options is expensive and would In between, the hours and hours of increase the cost of electricity for Ohio’s electric freezing rain caused the real damage. cooperative consumers. As a not-for-profit entity, South Central Power passes through any and Several inches of ice coated roads, all pricepower lines, poles and trees. electric increases to its electric customers. That would include increases resulting from climate change29,000 South Central Power About legislation. The Energy Information Administration’s (EIA) assessment of the House-passed bill found it consumers were in the dark at the will increase electricity costs by 20 percent by 2030. The EIA, an independent agency within the peak of the outage. U.S. Energyheels of the ice storm,energy issues without advocating for or against Administration On the Department, analyzes a wind storm policies. struck on February 11. The Journeyman Linemen Brian Cope and Brian Waddell of the Circleville office search for equipment, line and pole in the year by widespread damage caused nearly On to the U.S. Senate. Electric cooperatives contend a bill passed laterdamage during the the January 2009 ice storm. 19,000 Environment and Public Works Senate consumers to lose their electric Committee includes unachievable emissions caps and service at the inadequate storm. timelines, and height of thetechnology development incentives. The two storms bill, South Central Power approximately $3 million. to guarantee consumer The Kerry-Boxer cost as it is called, also does not include mechanisms Unlike previous storms in 2004 and 2008, costs associated with the 2009 events did not qualify for reimbursement from electric bills will remain affordable. the Federal Emergency Management Agency. The cooperative had to cover these unplanned, yet Many observers wonder, though, if Senators will pass climate change legislation during this term. sizeable, storm-related expenses. Shifts in public opinion, concerns about the price tag and revelations of scientific data manipulation appear to have diminished its chances of quick and easy approval. The latest wrinkle. In December, the U.S. Environmental Protection Agency (EPA) declared that carbon dioxide and five other greenhouse gases endanger public health and welfare. This action gives the EPA an opening to enact sweeping new regulations under the Clean Air Act. However, Not surprisingly, the national and state economic turmoil is EPA regulation of greenhouse bipartisan bills are pending in the House and Senate to blockimpacting South Central Power. The cooperative is carefully balancing the recession’s toll on customers’ ability to pay their electric gases. bills with its overall financial picture. Any EPA carbon emission restrictions would cause Ohio electric cooperative consumers’ bills to go up, as they would apply to the Cardinal Generating Station. Revised delinquency policy. Because of the economy and lingering high unemployment, some Instead of EPA regulation, electric co-ops believe that any carbon controls should be established customers find they cannot pay their electric bill in a timely manner. The cooperative regularly offers by Congress where their cost and impact are subject to public debate. assistance by making alternative payment arrangements. If those arrangements are not honored, Participating in the process. Because of the very real impact climate change legislation though, the cost of delinquent and write-off accounts ultimately is absorbed by all South Central could have on their electric bills, a growing number of consumers are making their voices heard Power consumers. Unpaid bills also can contribute to rate increases. in Washington DC. In 2009, the cooperative wrote off $1.2 million in past due bills. That amount represented Nearly 1,200 South Central Power consumers joined the Our Energy, Our Future email 3,510 accounts with an average uncollected balance of $346. Many bills had considerably higher campaign.though. balances, The national grassroots initiative makes it easy to send elected officials emails conveying the To reduce its losses, the cooperative revised its delinquent bill practices in 2009 to reduce the importance of affordability in the debate. They emailed more than 6,100 messages to their elected officials regardingdisconnection. Previously, it was possible for an account to be 70 days time from delinquency to climate change. Through due before than 481,000 actually occurred. or more past 2009, more disconnection cooperative customers across the country sent Congress three million email messages through Our Energy, Our Future. Now when a bill is 30 days past due, the next month’s bill shows the account is delinquent and South disconnection also introduced its consumers to Cooperative Owners for Political Action subject to Central Power 16 days later. To avoid disconnection, customers are asked to make and (COPA), a political action committee of the National Rural Electric Cooperative Association. follow through with payment arrangements. Theshortening was time from delinquency to disconnection to 30 days, South Centralelectric By response the overwhelming. Approximately 600 South Central Power residential Power customers joined COPAdelinquencies considerably. While the full effects of the policy change expects to reduce its through their voluntary financial won’t be evident until the end of 2010, improvements contributions. They join more than 34,000 like-minded are already evident. Each month since the revisions took effect in May 2009, the average delinquency total is less than the same month in the COPA members nationwide in the fight to keep their previous year. electric bills affordable.
M E R
Customers expect more than ever from South Central Power. Our employees strive every day not only to meet, but exceed, those expectations. While the cooperative’s employees are the cornerstone of co-op customer service, recent investments in technology are boosting their efforts. Save energy and money. Tighter household budgets have customers paying more attention to their monthly electric bill. As consumers look for ways to save energy and money, they are turning to their electric cooperative for sound energy advice. South Central Power’s energy advisors spent much of 2009 assisting customers with energy efficiency and conservation efforts. Questions frequently centered on heating and cooling systems, weatherproofing, insulation, electric water heaters and other appliances. The new phone system allows Barnesville Energy Energy advisors show consumers how small Advisor Rose Grear to assist customers more efficiently. adjustments can have a big impact on electricity use. Those changes usually cause little or no inconvenience to homeowners and small business owners. New telephone system. Customers often use the telephone to contact South Central Power. In March, the cooperative installed a new phone system to assist more customers faster. Now customers save time spent on the phone. The cooperative can address questions and concerns more quickly, while making efficient use of its staff. When a consumer calls the cooperative a series of prompts offers options, including being connected to the next available representative. As a result, it is likely callers will not be connected to their local office. That is not cause for concern, though. Rather, more employees are available to take customer calls. Because of cross-training, the first person who answers the phone can usually address the question or concern, regardless of what office they are working from. If callers need to speak to a special person or call a certain office, the prompts offer the opportunity to enter the direct extension or speak with someone who can direct the call accordingly. Online customer service survey. Whenever consumers have contact with South Central Power, they are encouraged to tell the cooperative how well its employees handled the in-person or telephone interaction. A brief online survey is found at www. tellsouthcentralpower.com. It takes less than five minutes to complete and is entirely anonymous. Log on today. Outage Watch online improvements. Outage Lancaster Energy Advisor Rod Evans inspects a Watch is among the most viewed pages on the consumer’s electric heat pump. cooperative’s website. Those turning to South Central Power’s website for outage information have no doubt noticed big changes to the online feature. The most recent updates provide a better understanding of how many customers are without electric service and where the outages are located.
Visitors now are directed to a county-by-county outage summary page when they click on Outage Watch from the home page. The total number of customers without service is listed at the top of the outage table in red. For each county experiencing outages, the number of customers without electric service also is listed in red. Outage categories by size were broadened and color-coded, too. A small outage map on the same page is a link to the map page. For location details, visitors can click the “View Map” link, a county name in the summary table or the county itself on the map. South Central Power also added a new link from the Outage Watch section. The Homeowners’ Responsibilities section outlines situations where consumers must make repairs before the cooperative’s line crews can restore power. Dispatch Center improveSee the status of power outages online at any time on Outage Watch. ments. As technology changes, so does the job of the dispatchers. South Central Power’s dispatchers have a new work space that better matches today’s technology. Those changes affected what dispatchers needed in their work space to be most effective. Previously, dispatchers relied on large paper maps, so physical space was needed to handle them. Room also was needed to sort individual paper outage tickets. Recent technological upgrades eliminated the paper maps and outage tickets, so additional work stations could be added. The previous Dispatch Center had three work stations, resulting in inefficiencies during times of widespread outages. The renovated space has six work stations that adjust to each individual. Two of them have electric desks that can be elevated high enough to work while the dispatcher stands. That is helpful during large outages when they work long hours and need to stretch. By remodeling a conference room outside of the Dispatch Center, planning restoration strategy Dispatcher Johnny Rotonda explains the Dispatch is easier and more efficient for all of the people Center technology to visitors from the Lancasterinvolved. Fairfield County Chamber of Commerce. Additionally, the Lancaster office’s warehouse area was renovated to add office space for the two warehouse workers. The expansion allows them to better manage the flow of supplies needed by line crews not only during storms, but also in their day-to-day duties.
S E S C C
The strength of the electric system is of utmost importance Central Central Power. The The National Rural Electric Cooperative Association, South to South Power and electric cooperatives across consumers count on its equipment and employees to perform at top level. During cooperative knows the nation are working to ensure any climate change legislation is fair, affordable for consumers and technologically achievable. 2009 investments were made in the electric system to strengthen it further. New transformers. South Central Power put its Even though Congress focused on healthcare legislation during 2009, it was climate change largest transformer ever into service during 2009. In March, a 100 MVA unit was installed at legislation that had the attention of electric the cooperatives. Shannon Road Substation in Canal Winchester. As the issue works its way through the The unit provides additional electric capacity legislative process, the National Rural Electric and improved reliability during outage restoration Cooperative Association and co-ops across the and times of equipment maintenance. When country continue to advocate for climate change necessary, the transformer’s large capacity allows legislation that is fair to all regions of the country, the cooperative to distribute electricity to distances affordable for all electricity consumers and farther than smaller transformers allow. technologically achievable. In May, a new 20 MVA dual voltage transformer Cap-and-trade is at the center of the debate. arrived at Hooker Substation in Fairfield County. While electric cooperatives support sensible, low South CentralLisa Hooker and Bradat two different approaches to climate change, cap-and-trade Power operates Markwood cost South Central Power’s incoming transmission voltages: 69 kv and 138 is not the answer. kv. listen to remarks by U.S. Representative Steve Austria. enacted, South Central Power’s provisions will The dual voltage transformer adds flexibility to the If Crews lowerthe climate change largest transformer into place at the Shannon Road Substation. impact the monthly electricat substations across the only those served by electric cooperatives. system, as it can be used bills of all consumers, not Because of its potential to significantly territory regardless of the voltage level. increase the price customers pay for electricity, South Central Power encouraged its consumerscopper continue to target South Central Power offices and Copper theft. Vandals searching for to make their voices heard. What is cap-and-trade? Cap-and-trade is a way to limit carbon emissions from the use of substations. Thieves have removed electric wire from the cooperative’s electric poles, energized fossil fuels. and substations. equipment Beyond monthly electric bills, consumers can expect higher prices for natural gas, gasoline The safety hazards are obvious. Thieves, as well as the employees who unknowingly walk into and groceries. Why? The cap-and-trade approach affects all items that use any fossil fuel in their unsafe situations, can be injured or killed. production, operation or transport. The vandalism also causes power outages for consumers. The replacement costs for material, The federal government would set annual limits, or caps, on how much carbon dioxide and equipment and labor are significant industries every South Central Power customer. other greenhouse gases utilities and and impactcan emit. Credits, also called allowances, would To help thwart future thefts, South Central be issued for the total emissions allowed under Power enhanced security at its facilities. Various components are in place. the annual cap. Equipment installed in 2009 includes portable Cap-and-trade’s impact on the cost of monitored surveillance systems at various electricity would vary by state. It is anticipated substations. The units can be moved between electricity prices would increase more in Ohio and other states that rely heavily on coal than facilities as needed. in states that use different energy sources that Day or night, motion triggers the cameras and produce comparatively little carbon. real time video is sent to the monitoring station. Approved in the U.S. House of RepThe instant notification determines if an actual resentatives. The American Clean Energy theft is in progress. If so, law enforcement is and Security Act of 2009 narrowly passed the contacted immediately. House in June. It is commonly known as the The cooperative is offering a $5,000 reward for Waxman-Markey bill. information that leads to the arrest and conviction The legislation calls for atmospheric carbon of people who damage co-opalso joined the meeting Lisa Hooker and Brad Markwood property. All damage dioxide to be 17 percent below 2005 levels The dual voltage transformer is moved into and with U.S. Representative Mary Jo Kilroy during law thefts are reported to the appropriate by 2020 and 83 Hooker Substation. 2050 using percent lower by NRECA’s legislative conferencethe perpetrators are enforcement agency. When in Washington D.C. cap-and-trade. found, South Central Power will prosecuteIn Ohio, the coal-fired Cardinal Generating Station is Electric cooperatives opposed the bill. to the full extent of the law. South Central Power asks its consumers to and a watchful eye for suspicious subject to any cap-and-trade emission provisionskeep the resulting price increases. activity in and around the service territory. By working together,formula for the carbon emission credits. prevent Cooperatives also objected to the allocation the cooperative and its customers can help untimely accidents, House, the co-op expense and inconvenient to Buckeye Power for the Cardinal As passed by the additional carbon emission credits allocated outages.
plant decline over time. To make up the growing Storms. South Central Power’s electric system weathered two major difference, Buckeye Power would have to further reduce storms in 2009. its carbon emissions. Or it could purchase the remainder The January 28 storm system that of the credits at auction or on the open market without passed through the service territory any consumer price protections. started with rain and ended with snow. Each of those options is expensive and would In between, the hours and hours of increase the cost of electricity for Ohio’s electric freezing rain caused the real damage. cooperative consumers. As a not-for-profit entity, South Central Power passes through any and Several inches of ice coated roads, all price increases poles and trees. electric power lines, to its electric customers. That would include increases resulting from climate change legislation. About 29,000 South Central Power The Energy in the dark at the consumers wereInformation Administration’s (EIA) assessment of the House-passed bill found it will increase electricity costs by 20 percent by 2030. The EIA, an independent agency within the peak of the outage. U.S. Energy Department, analyzes a On the heels of the ice storm, energy issues without advocating for or against Administration wind storm struck on February 11. The Journeyman Linemen Brian Cope and Brian Waddell of the Circleville policies. office search for equipment, line and later in the year by widespreadthe U.S. Senate. Electric cooperatives contend a bill passedpole damage during the the On to damage caused nearly January 2009 ice storm. 19,000 consumers to lose their electric Senate Environment and Public Works Committee includes unachievable emissions caps and service at the height of the storm. timelines, and inadequate technology development incentives. The two storms cost South Central also does not include mechanisms to guarantee consumer The Kerry-Boxer bill, as it is called, Power approximately $3 million. Unlike previous storms in 2004 and 2008, costs associated with the 2009 events did not qualify for reimbursement from electric bills will remain affordable. the Federal Emergency Management Agency. The cooperative had to cover these unplanned, yet Many observers wonder, though, if Senators will pass climate change legislation during this term. sizeable, storm-related expenses. Shifts in public opinion, concerns about the price tag and revelations of scientific data manipulation appear to have diminished its chances of quick and easy approval. The latest wrinkle. In December, the U.S. Environmental Protection Agency (EPA) declared that carbon dioxide and five other greenhouse gases endanger public health and welfare. This action gives the EPA an opening to enact sweeping new regulations under the Clean Air Act. However, Not surprisingly, pending in and state and Senate to block EPA regulation of greenhouse bipartisan bills are the national the House economic turmoil is impacting South Central Power. The cooperative is carefully balancing the recession’s toll on customers’ ability to pay their electric gases. bills with its overall financial picture. Any EPA carbon emission restrictions would cause Ohio electric cooperative consumers’ bills to go up, as they would apply to the Cardinal Generating Station. Revised delinquency policy. Because of the economy and lingering high unemployment, some Instead of EPA regulation, electric co-ops believe that any carbon controls should be established customers find they cannot pay their electric bill in a timely manner. The cooperative regularly offers by Congress where their cost and impact are subject to public debate. assistance by making alternative payment arrangements. If those arrangements are not honored, Participating in the process. Because of the very real impact climate change legislation though, the cost of delinquent and write-off accounts ultimately is absorbed by all South Central could have on their electric bills, a growing number of consumers are making their voices heard Power consumers. Unpaid bills also can contribute to rate increases. in Washington DC. In 2009, the cooperative wrote off $1.2 million in past due bills. That amount represented Nearly 1,200 South Central Power consumers $346. Many bills had considerably higher 3,510 accounts with an average uncollected balance ofjoined the Our Energy, Our Future email campaign. The national grassroots initiative makes it easy to send elected officials emails conveying balances, though. the importance of affordability in the debate. They emailed more than 6,100 messages to their To reduce its losses, the cooperative revised its delinquent bill practices in 2009 to reduce the elected delinquency to disconnection. Previously, it was possible for an account to be 70 days time fromofficials regarding climate change. Through 2009, more than 481,000 cooperative customers across the country sent Congress or more past due before disconnection actually occurred. three million email is 30 days past due, the Energy, Our Future. Now when a bill messages through Our next month’s bill shows the account is delinquent and South Central Power also introduced its consumers to Cooperative Owners for Political Action subject to disconnection 16 days later. To avoid disconnection, customers are asked to make and (COPA), a political action committee of the follow through with payment arrangements. National Rural Electric Cooperative Association. The response was overwhelming. Approximately 600 South 30 days, South Central electric By shortening the time from delinquency to disconnection toCentral Power residential Power customers reduce its delinquencies considerably. While the full effects of the policy change expects to joined COPA through their voluntary financial won’t be evident until themore of 2010, improvements are already evident. Each month since the contributions. They join end than 34,000 like-minded revisions took effect in May 2009,the fight to keep their COPA members nationwide in the average delinquency total is less than the same month in the previous bills affordable. electric year.
M E R
S C
Communities count on South Central Power to be a good neighbor. The cooperative and its employees are happy to respond and assistance is offered in many different ways.
GUIDING PRINCIPLES
MISSION STATEMENT
The mission of the Board of Trustees and employees of South Central Power Company is to provide cost effective, quality electric and other services to its customers and communities through integrity, commitment and accountability.
South Central power’s
STRATEGIC DIRECTIVES
South Central Power’s top scholars Maxwell Cothrel and Rebekah Linton receive congratulations from Ohio Rural Electric Cooperatives President and CEO Tony Ahern for also winning college scholarships in the statewide competition.
to quality customer service. An organization prepared to excel in a changing environment. Effective communication within the organization and with the membership. Managed financial stability. Cooperative-based services that meet our consumers’ needs.
Field Service Technicians Bruce Duck (left) and Jason Thomas, as well as Director of Diversified Services Carol Disbennet, showcased the Security Division at the Lancaster-Fairfield County Chamber of Commerce Trade Show. They also attended chamber events and home shows in other counties.
A Health Fair at the Annual Meeting offered free screenings and information Employee commitment from area health-related businesses and organizations.
T M T
During the holidays each South Central Power office gathers items for a local charity. (From left) Lori McMahon, Bonnie Detty, Barb Carruthers, Martha Harless, Deb McCoy, Laura Holley and their coworkers took holiday donations for Canal Winchester’s Human Services agency.
AJIT KADAKIA
Executive Vice President
CATHY BITLER
Vice President Administration
SUSAN EVERLY
Vice President Human Resources
S G
The Canal Winchester Chamber of Commerce named South Central New Electric Consumers Added: 1,552 Power its 2009 Business of the Year. Representing Consumers: Total Active Electricthe co-op were (from114,790 left) Jeff Campbell, Lisa Hooker, Carol Disbennet, Miles Donnie Miller, Richard Blackstone,Bitler, 11,818 of Line: Donna Ackers, Cathy Brad Markwood and Richie Martin.
Capital Credit Payments: Electric Bills Rendered: Security Bills Rendered: WildBlue Bills Rendered: Total Employees: Total Vehicles: Miles Driven:
$6,862,000 1,384,482 16,469 9,098 235 128 2,261,000
Average Consumers per Mile of Line: 9.7 Kilowatt Hours Sold: Operating Revenue: Total Assets: 2,240,577,000 $206,028,000 $364,473,000
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100 South Central Power representatives Amber Stephens of Baltimore and Cullen Ashley of Sugar Grove joined 1,500 other teens at NRECA’s annual Youth Tour to Washington D.C. in June. 80
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Chuck Chafin, Bob Wynkoop and Roy Hodge put Fairfield County’s final emergency warning siren into place. County officials commended South Central Power for installing 24 refurbished units over two years. Attending the recognition event were (from left): Brad Markwood, Chuck Chafin, Kim Hoffman, Bob Wynkoop, Roy Hodge, Donnie Miller, James Graf, Commissioner Judy Shupe, EMA Director Jon Kochis and Commissioner Mike Kiger.
Ninth grade students Stephen Hartline (top) of Woodsfield and Aaron Slatzer of Somerset attended the 2009 Youth Power Energy Camp held at the Cardinal Generating Station courtesy of South Central Power.
EDSON KINDLER
Vice President Customer Services
JOHN SAYRE
Vice President Operations
JAMES MEYERS
Assistant Vice President Operations
Year End Financial Statements for 2009 and 2008
BALANCE SHEETS South Central Power Company
Ralph E. Luffler
President and CEO
From the PRESIDENT and
December 31
2009 2008 Tough times. Assets You don’t have to be reminded of the economic Total utility plant $338,050,204 $349,540,220 problems weighing down our families, communities, Less accumulated provisions for depreciation and nation, neither do the folks at your electric 107,034,664 101,336,407 state cooperative. The recession has hit us, too. 236,713,797 Instead of Net utility plant 242,505,556
continued growth in new services and revenues, we’ve seen home and commercial construction come to a near Investments and fund accounts 98,740,655 102,889,091 standstill. Operating costs are increasing as consumer demand for electricity is decreasing. Wholesale power Current assets: rates continue their upward trend. Cash and cash equivalentscan-do spirit of those who founded electric cooperatives during the era But in the 9,894,223 2,726,305 of the less Depression, the Accounts receivable,Great allowance for challenges of 2009 are proving to be the foundation for a stronger $442,000 losses in collection (2009:and more efficient South Central Power. You’ll read more in the pages that follow, but here are a few highlights. 2008: $539,000) 10,213,290 13,310,995 Rate adjustments. In January 2009, the customer charge for residential Inventories 2,577,647 consumers served under Schedule R increased from $9.00 per month to3,153,075 $11.00 Prepaid insurance month. The expenses per and other monthly customer charge for commercial consumers served 210,618 under 293,544 Schedule GS increased from $9.00 to $13.00. 22,978,704 19,400,993 The increased customer charge helps the cooperative recover costs associated with active Long-term Note Receivable electric services. 167,495 203,713 Trimming the budget. For decades, South Central Power has received Deferred debits capital credits from Buckeye Power, Inc., the wholesale power supplier to Ohio’s 80,992 573,262 electric cooperatives. Total assets However, when Buckeye Power’s fiscal year ended on June 30, 2009 capital $364,473,402 $359,780,856 credits were not available due to an operating loss. Growing construction and maintenance costs for environmental control equipment at the Cardinal Generating Station in Brilliant, OH were to blame. So Equities and Liabilities was the rising cost of coal and other consumables needed to operate the power Member and patron equities consumers are cutting their$use of electricity and that is affecting 199,109,997 $ 202,698,255 plant. Thrifty revenue, too. To safeguard its own finances from the loss of Buckeye Power capital credits, Long term liabilities net of current maturities 130,510,438 125,300,094 South Central Power undertook cost-saving measures during 2009 that continued Current liabilities: into 2010. No 2010 base rate increase. After a thorough budget review, your electric Trade accounts payable 14,687,977 cooperative reduced or eliminated programs and costs wherever 13,343,437 possible. Consumer deposits expense reductions reflect South Central Power’s acknowledgement that 1,150,075 949,597 The Accrued salaries, wages and related items household expenses during the recession. customers are struggling with 4,643,153 4,509,721 Like our customers, we’re less. Then Accrued property and miscellaneous taxes doing more with6,141,925 again, it is our tradition 6,070,191 to plan Other current liabilities and properly time expenditures, decide thoughtfully and spend carefully. 1,380,864 1,346,466 Be assured that the budget cuts are not lowering the quality of our customer Current maturities on long-term liabilities 6,607,402 5,345,337 service or the reliability of the electric system. 34,611,396 31,564,749 The expense reductions, combined with prudent spending, allowed the Board of Trustees to pass the 2010 budget without increasing the base rate or Deferred Credits the monthly customer charge. 241,571 217,758 Wholesale power costs. While South Central Power is making a significant effort to are from the Total equities and liabilitiescontrol internal costs, approximately 66 percent of its costs$ 359,780,856 $ 364,473,402 electric energy it buys from Buckeye Power.
Board of Trustees
STATEMENTS OF REVENUES AND EXPENSES, AND MEMBER AND PATRON EQUITIES South Central Power Company Year Ended December 31
Kenneth d. davis
Chairman
Richard Poling
Vice Chairman
2009
Wholesale power costs are on the rise because of higher fuel Operating revenues $206,027,744 costs, growing operational costs at the Cardinal Generating Station Operating expenses: and investment in environmental technology at the power plant to comply with federal Clean Air Act standards. Cost of power 134,591,272 On July 1, 2009, Buckeye Power instituted a slightly more than Mike Hummel aTransmission half-cent per kWh increase in the cost of wholesale power. The 344,916 Asst. Vice Chairman increase added approximately $5.00 more per month for 1,000 Distribution: kWh of electricity. Another increase is anticipated in 2010 and it Operation is expected that wholesale power costs will continue rising over 3,899,152 21,696,252 theMaintenance next few years. In an effort to show what the wholesale power costs are, South 4,780,150 Consumer accounts Central Power added a new line on your monthly electric bill in May Consumer service and information 2009. The wholesale cost of power is reflected as the “Generation 2,581,538 Kobi Lawrence Asst. Secretary Administration and general and Transmission” charge. 8,537,692 Capital credits paid. For 30 years, cooperative members have Depreciation 10,337,831 received estate and general capital credit refunds from South Central Power. In Taxes 9,176,541 2009, nearly $6.9 million was refunded. Life-to-date capital credit refunds total approximately $80.6 million. Total operating expenses 195,945,344 Congratulations. Congratulations to South Central Power Board of Trustees Assistant Secretary Lawrence Kobi. He earned his Board Leadership Certificate Operating 2009 frombefore fixed charges (BLC) in margins the National Rural Electric Cooperative Association. The 10,082,400 BLC can only be attained after a director earns the Credentialed Cooperative Fixed charges - interest on long-term debt 8,358,312 Director Certificate (CCD). Kobi and fellow Trustee W. Edward King both attained Operating margins afterin 2006. Both the BLC and CCD are earned by taking 1,724,088 their CCD accreditation fixed charges courses in cooperative board governance, finance, operating performance and efficient energy use. FEMA storm reimbursement 0 Welcome. South Central Power welcomes Daniel Gunsett of the Columbus GenerationBakertransmission capital credits 0 law firm of and Hostetler as its new legal counsel. He is guiding South Central Power through the vast array of legal issues at the state and federal level that Other capital credits and patronage dividends 1,196,916 have the potential to impact your electric cooperative. Net operating margins are tough all over,” the old saying goes. 2,921,004 Summary. “Things We do not know when economic conditions will improve. Not even the economists and financial experts can predict when the economy will turn the Non-operating margins - other income (expense) 66,885 corner or what recovery from the Great Recession will look like. The country Non-operating margins - interest income 285,538 has entered new and unfamiliar territory. However, all of us at Net margins for the period South Central Power - the Board of Trustees, 3,273,427 management and employees - are committed to working smart and in a costeffective manner. Every penny we save and each process we streamline Member and patron equities, for your cooperative and you, its 202,698,255 produces bottom-line benefits beginning of year members. We are working diligently to reduce operating and administrative expenses, so Retirement of patronage capital (6,861,685) what you pay for electricity is as low as possible.
2008
$192,254,174 123,756,473 317,111 Thomas Lamb
Secretary
4,150,155 20,221,136 4,905,952 2,500,478 James Evans Treasurer 8,177,450 9,852,040 9,429,600 183,310,395
Harold Cooper
Asst. Treasurer
8,943,779 8,104,615 839,164
889,782 5,968,117 Alan Gabriel 1,073,945 8,771,008 21,276 358,588 W. Edward King 9,150,872 200,317,860 (6,770,477)
Michael Vinka $202,698,255
Member and patron equities, end of year
$199,109,997
South Central Power Company’s audit, as of December 31, 2009, was completed by GBQ Partners LLC of Columbus, Ohio. Copies of the report are available at each South Central Power district office.
Ralph Luffler President and CEO Kenneth D. Davis Chairman
The SFI® program is a comprehensive system of principles, objectives and performance measures developed by foresters, conservationists and scientists, that combines the perpetual growing and harvesting of trees with the protection of wildlife, plants, soil and water quality.
Stephen Johnson
Barnesville
37801 Barnesville-Bethesda Road Barnesville, Ohio 43713
Canal Winchester
10229 Busey Road Canal Winchester, Ohio 43110
Circleville
2100 Chickasaw Drive Circleville, Ohio 43113
Hillsboro
110 Danville Pike Hillsboro, Ohio 45133
Lancaster
2780 Coonpath Road P.O. Box 250 Lancaster, Ohio 43130
Call us at (740) 653-4422 or 1-800-282-5064 Call us at (740) 653-4422 or 1-800-282-5064 Visit us online at www.southcentralpower.com Visit us online at www.southcentralpower.com