January 2023 board meeting summary

SDCEA Board of Directors meeting highlights, Jan. 27, 2023

Revenue deferral – The board voted to approve the 2022 Revenue Deferral Plan (RDP), established to support the financial stability of SDCEA. Revenue deferral funds are used to cover shortfalls in revenue caused by abnormal weather conditions, general economic conditions, unusually low operating margins due to storm recovery or unplanned events, or a lower than anticipated allocation or retirement from SDCEA’s wholesale power supplier, Tri-State. If these situations were to occur, this would also help SDCEA meet lenders’ mortgage requirements.

The board approved to defer the $450,000 that was deferred in 2017 and redeemed, as required, in 2022. The deferred revenue will be redeemed back into revenue between the years of 2023 and 2027 as needed to meet the Cooperative’s obligations and mortgage requirements and maintain financial viability.

Revenue deferral does not impact the allocation of margins to the membership or the payment of capital credits.

Geothermal development – Board members Dan Daly and Joe Redetzke attended a meeting on potential geothermal energy development in Colorado and the Mt. Princeton area south of Buena Vista. Both expressed support for exploration of the development.

The meeting was convened by the Colorado State University Center for the New Energy Economy and facilitated by former Colorado Governor Bill Ritter and newly appointed Public Utilities Commissioner Tom Plant of Buena Vista. Public officials from Buena Vista, Chaffee County and across Colorado attended the meeting Jan. 17 at Mt Princeton Hot Springs.

Eagle protection – SDCEA has signed a Master Service Agreement with EDM Environmental to participate in an eagle electrocution prevention project in the Custer County area. As the project develops, a presentation on the project will be given at a future board meeting.

Line reconstruction, Fremont & Custer counties – The Board approved the contract with Altitude Energy to rebuild the 7.9-mile main distribution line from the Howard substation in Fremont County to Verdemont Road in Custer County. This is the first segment of a long-term work plan to rebuild the line from the Howard substation to the Kettle substation in Custer County.

Town of Buena Vista Franchise Agreement – CEO Paul Erickson reported the Town of Buena Vista Trustees conducted a first reading of the franchise agreement between SDCEA and the town during the town council meeting Jan. 24.

The now-expired franchise agreement was in place for the past 25 years. As part of that franchise, SDCEA agreed to collect, since 1997, a fee equal to 1% of revenues per month on behalf of the town from each electric service account in the town limits to remit back to the town.

The new proposed franchise agreement is for 15 years and for a fee equal to 2% of revenue to be collected by SDCEA on behalf of the town from each electric service account in the town limits to remit back to the town. Per the new agreement, the fee will escalate to 3% in 2025. Franchise agreements are typically between 20-to-25-year contracts. This was SDCEA’s preference, due to the cooperative’s 30–35-year investment in infrastructure for modernized, reliable, available service to provide electricity in the town, and to cover the multi-million-dollar debt incurred over three decades to finance this service.

Vegetation management progress (Year-to-date, December 31, 2022)

Total Overhead Line Miles in System: 750

Estimated miles to be cut/trimmed: 264

Total miles cut/trimmed: 88.5

Percent Complete: 33

Crews currently working in Lake, Fremont, and Custer counties

Spending Year to date (Jan.-Dec.) $1,737,868

Projected spending through 2022 $1,662,414 (includes droning)

Cumulative project spending $2,480,400

Finance (Year-to-Date, December 2022) – Revenues are 0.3% over budget, due to higher energy sales in November and December. Year-to-Date revenue has been significantly under budget all year due to warmer than anticipated weather. This is an example of the fluctuation of revenues to SDCEA that can occur because of warm or cold weather patterns.

Expenses are slightly over budget by about 2.2%. This is due to some contracted maintenance that was performed that was not in the budget, as well as the impact of inflation’s higher prices for fuel and other supplies and services in 2022 and higher cost of power – demand costs. The cooperative is on schedule to meet its debt ratios by the end of the year.

Public comment – The SDCEA board meeting, which has been held virtually since the pandemic, was open to in-person attendance. Four members were in attendance. Two of the attendees, Sandy Long and Rich Shoemaker of the Ark Valley Energy Future group, expressed their appreciation for allowing in-person attendance at the meeting and desire on behalf of the AVEF group to be more involved in an exchange of ideas and more energy education outreach with the cooperative.

Board comment – Directors Daly and Bennetts, as well as Chair Joe Redetzke attended Ark Valley Energy Future outreach meetings. All said they appreciated the exchange of information in the meetings.

Director Bennetts suggested cooperative staff investigate the possibility of providing an online voting option for this year’s board election. Staff are researching the capabilities of the cooperative to offer this option.

The board adjourned to executive session to discuss matters to be held in confidence.