December 2022 board meeting summary
SDCEA Board of Directors meeting highlights, Dec. 28, 2022
Town of Buena Vista Franchise Agreement – Negotiations continue between SDCEA and the town of Buena Vista regarding renewing the franchise agreement between the two.
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 1% per month fee from each electric service account in the town limits to remit back to the town for its revenue.
Franchise agreements are typically between 20-to-25-year contracts. This is 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.
Work Plan loan – SDCEA will be able to borrow close to $27 million over the next six years to help fund its infrastructure work plan through a treasury loan. The treasury loan is secured by mortgages on all SDCEA’s assets. SDCEA last entered into a similar loan agreement in 2017.
The board approved the agreement, borrowing from the Rural Utility Service through the federal government. Borrowing on the loan is only allowed for work completed from 2022-2025 construction work plan. The construction work plan can be amended for special plant additions, only related to utility plant outside of the headquarters building. SDCEA can borrow less than the total loan amount, but the agreement does not allow the cooperative to borrow more than that amount.
The loan carries a slightly lower interest rate than what is currently found on non-treasury loans. Monthly payments will be made on the loan after the first draw.
Rate Schedule 6 – Net Metering – During the calendar year, SDCEA credits net meter (solar, hydro or wind-generating) consumers’ banked kWh production on their respective bills at full retail cost, currently $0.12944 per kWh.
In compliance with state law, if consumers have produced more energy than they consume through the year, a true-up payment is made by SDCEA at the beginning of the following year to the consumer for the excess energy generation banked as of December 31. The rate for payment is determined by policy. Current policy uses the Tri-State avoided cost of energy. The board approved a new rate for 2023 based on the Tri-State avoided cost figure, $0.01632 per kWh – an amount less than last year’s $0.02384 per kWh. As the cost of renewable energy generation declines, the value of excess energy generation also declines.
The board voted 6-1 to pass the measure.
Finance (Year-to-Date, November 30, 2022) – A November that was recorded as one of the coldest in the last 17 years brought revenues within 1% of budget due to higher energy sales. 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 1.7%. 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. The cooperative is on schedule to meet its debt ratios by the end of the year.
Bylaw revisions – The board approved changes to the bylaws to allow more time between the date meeting notices are mailed and when the annual meeting is held, which will allow SDCEA to continue to mail the meeting notice with ballots in a contested election to allow more time for ballots to be returned. The bylaws were also updated to include language requiring the protection of personal identifiable information and other confidential information by board members.
Vegetation management progress (Year-to-date, November 30, 2022)
Total Overhead Line Miles in System: 750
Estimated miles to be cut/trimmed: 264
Total miles cut/trimmed: 79.5
Percent Complete: 30
Crews currently working in Lake, Fremont, and Custer counties
Spending Year to date (Jan.-Nov.) $1,434,781
Projected spending through 2022 $1,662,414 (includes droning)
Projected Spending in 2023 $2,480,400
Operations highlights – The long-range construction plan was presented to SDCEA staff in December. It projects system adequacy as loads grow from 2022-2045. The plan looks at new delivery points (substations) and line upgrades. The total costs today if all projects were completed would be $88,824,000.
Construction of the 12.5-mile Tommy Young line upgrade will begin in early February. The project has been delayed due to lack of available material.
Lead times on construction projects are likely to lengthen to obtain construction materials due to supply chain shortages.
Adjournment – The board adjourned the meeting to executive session to discuss contractual matters.