April 2023 Board Meeting Summary

SDCEA Board of Directors meeting highlights, April 26, 2023 

2022 Audit report – George Lynch from the firm Kelso Lynch, P.C., PA, presented the final 2022 audit report to the board. The firm audited SDCEA financial statements in accordance with auditing standards generally accepted in the United States and the standards applicable to financial audits contained in Government Auditing Standards issued by the Comptroller General of the United States.  

During the audit, financial statements and internal controls are reviewed and analyzed. In the firm’s opinion, all information requested and provided to the firm presented fairly, in all material respects, the financial position of SDCEA as of December 31, 2022, and the results of its operations and its cash flows for the year then ended in accordance with accounting principles generally accepted in the United States of America. The board accepted the audit. 

From an accounting perspective, Lynch mentioned SDCEA’s long-term power supply contract with Tri-State Generation & Transmission provides guaranteed cost and reliability benefits to the cooperative. Lynch reported cooperatives without such contracts saw increased costs and reliability issues during winter storm Uri a few years ago. 

Discussion ensued about posting the audit publicly. The board directed staff to post on individual SmartHub accounts for review. The audit is available online to members who log in to their SmartHub account. 

Possible Community solar project – Interim Chief Executive Officer Gary Kelly presented a current estimated market power purchase price for construction of a 4-megawatt solar facility.  

Mike Allen, SDCEA’s Business Development Specialist, presented information on SDCEA’s contract with Tri-State Generation & Transmission and Tri-State’s policies 115 and 119 which govern member-controlled renewable energy generation. SDCEA currently has little “headroom” left under the Policy 115 for a new solar project, and because excess annual generation from rooftop solar counts against SDCEA’s 5% limit, that headroom is needed to allow for growth in rooftop solar to avoid possible curtailment of solar energy production at Trout Creek Solar. A community solar project sized for less than an additional 1 megawatt is allowed under Policy 119, but that policy is currently subject to a legal challenge with the Federal Energy Regulatory Commission (FERC). 

Uses of utility-scale battery storage were discussed as a strategy to expand use of daytime-generated solar power. If stored in batteries, excess solar-generated electricity could be used during evening hours when SDCEA incurs high demand charges for electricity delivered from Tri-State. Update of Tri-State board policy 115 is needed for incorporation of member-system controlled energy storage. Policy 119, which provides for community solar specifically excludes energy storage. 

Solar true-up – SDCEA’s annual ‘true-up’ for net generated power is based on an account’s generation vs. consumption for the year at the end of December. The December statement marks the end of the annual electricity billing cycle, electricity charges and credits reset to zero for the next billing cycle.  

When an individual distributed generation (DG) system generates more than that individual’s use, the over-generation of electricity cannot be stored for use later in the year. Instead, excess electricity is pushed onto SDCEA’s grid at the time of production via the SDCEA electrical infrastructure and is “banked” as a bill credit, not in the form of actual energy. Because of this, DG systems are encouraged to be sized to offset 100 percent or less of usage to ensure homeowners get full retail values for electricity produced. A DG system that exceeds total usage triggers a ‘true-up’ that is less than a one-one retail offset, based on the avoided cost of energy from Tri-State at the end of the year.  

The board discussed the effect of requests by DG producers to change the date of the December true-up to allow for more time for them to use the banked electricity credit during colder months of the year. If in April, for example, the change would allow for a full retail offset to DG systems but could result in $126,000 lost revenue to the cooperative.  

Geothermal plant development – A $1 million earmark request has been sent to the appropriations committee to help fund a test well to determine if resources exist to construct a 10 MW geothermal power plant south of Buena Vista on Mt. Princeton. 

The earmark request was approved by Colorado Senators Michael Bennet and John Hickenlooper. Letters of support for the project were sent to the Senators by SDCEA, Ark Valley Energy Future, Chaffee County Commissioner Keith Baker, town of Buena Vista Mayor Libby Fay and Tri-State Generation & Transmission. 

SDCEA board members have pledged SDCEA to be the lead coordinating agency on the funding for the initial geothermal test well project. 

CEO search – SDCEA has enlisted a firm to help seek the next Chief Executive Officer for the cooperative in a search pledged to be as broad and open as is possible to obtain as good a candidate as SDCEA can find, SDCEA Board of Directors Vice-Chair Dan Daly said. 

Election Committee: The Election and Credential Committee for the 2023 Annual Board of Directors Election was appointed and includes Steve Vittum, Rural Chaffee/Lake County; Carlin Walsh, town of Buena Vita; Mark Zinkula, at large. The committee is responsible for tabulating or supervising the tabulation of the ballots of the 2023 board election, certifying the election results, and giving public notice of the results within five days after the Election Day. 

Community safety outreach – four high voltage safety demonstration classes were given by line crews at Buena Vista High School 

Financial Report 

Year-to-date (March 2023): Revenues are 4.9% over budget due to selling more power than forecasted in the budget due to cold weather in the first quarter. The 2023 budget is based on SDCEA’s year over year average of kwh sales, with a slight increase for growth in number of consumers and sales. Because January-March 2023 was colder than January-March of 2022, more kilowatt hour sales have occurred than budgeted. The cooperative in turn purchased additional power to cover this increase in sales. This increased expense was primarily offset by a decrease in operating expenses due to several employment positions being open and lower than budgeted interest expenses on long-term debt. Overall, total expenses are within 1 % of the budget. 

Operations Report 

Wildfire Mitigation Update:  

Cutting crews are working in Nathrop, east of Mt. Princeton, and around the fish hatchery and Ray Lewis substation area. 

Project Totals since inception:
Total Trees Removed – 8250
Total Trees Trimmed – 2530
Hazard Trees Removed – 120 

Tommy Young line rebuild: Phase I of the Tommy Young line rebuild continues in Fremont and Custer Counties.
• Length – 7.9 miles
• Contractor – Altitude Energy
• Contract Price – $694,347 (labor only)
• Duration – 32 weeks (about 7 and a half months)
Project is approximately 50 percent complete. 

Executive Session: The board adjourned into executive session to discuss items to be held in confidence at 3:40 p.m. The meeting was reconvened at 4:50 p.m. and was adjourned. No action was taken in the executive session.