2016 Grand Valley Power Annual Report

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PRESIDENT’S REPORT BY JOHN GORMLEY At our annual meeting this year, Grand Valley Power (GVP) will begin its 80th year of providing electrical power to its members. While the pace of change seems to increase each year, Grand Valley Power continues striving to meet its mission of providing reliable, safe, cost-effective power to its members. It has been an honor and privilege for me to serve as GVP Board President this past year. Your Board of Directors and the staff of GVP have been working hard to make sure GVP continues to provide our members with the hometown service they have come to appreciate. In addition to GVP’s most critical job of providing reliable power to our members, GVP has had numerous other accomplishments during the past year. Most importantly, the Board of Directors and staff updated the strategic plan for GVP with the help of Kevin Sump, a former co-op general manager and frequent instructor of National Rural Electric Cooperative Association Director education courses. GVP’s highest priority strategic planning initiative is to work on the development of a technology plan to address the future needs of the co-op in the areas of AMI (Advanced Metering Infrastructure), SCADA (Remote monitoring and switching technology), radio communications, battery storage, cyber security and other issues arising as technology advances. This strategic initiative will help us improve service and efficiency in the years ahead. The Board of Directors, co-op staff and employees are also working on updating the co-op’s mission statement. The Board discussed term limits for directors and reviewed other director policies. Term limits for directors were implemented by the Board at our June meeting. The strategic planning session also identified the need to complete an evaluation of our distribution system limitations and continue to identify potential physical threats and system vulnerability. In the financial arena, the strategic planning effort acknowledged that Grand Valley Power has taken significant steps to improve its financial performance in areas of longterm debt restructuring, capital credit retirements, equity management and retail rates. We acknowledged that external issues and factors will continue to put pressure on the company’s ability to maintain our strong financial position. The current Board and management will continue to explore opportunities to improve operating efficiencies and shared service arrangements with other cooperatives and organizations. GVP will also review retail rate structures to assure the price our members pay for power is fair and recovers the costs our members impose on the system. In the human resources arena, GVP will continue to work on development of succession plans for not only our general manager but key employees in the organization and will also continue to evaluate employee compensation and benefits to ensure that our staff is fairly compensated and incentivized to continue their good work. The Board of Directors also used Kevin Sump to perform a board assessment to insure that the Board of Directors is properly focused on its responsibilities and the lines of communication between the Board and staff are open to provide a healthy and informed dialogue concerning management of the company. The Board of Directors believes both the strategic planning session and board assessment were a success. This year also saw the expansion of the Grand Valley Power / Grid Alternatives low-income community solar project, which was built last year. The expansion project provided for a build out of an additional seventy-one (71) KW of capacity in the community solar project at a favorable price. This project has been a great benefit to a number of our lower income members and has garnered national attention for Grand Valley Power for the foresight and success of the project. I would like to thank all the staff members and volunteers that worked so hard to make the project a success. GVP, with the assistance of Maves Construction, also designed and built a storage shelter for our mobile substation. The shelter provides protection for one of our most important backup assets and also provides an indoor location to provide maintenance and upkeep when needed. GVP revamped its scholarship program this year. The Board of Directors feels that the scholarship program is one of the most important ways GVP gives back to the community each year. With the increased cost of secondary education, the Board of Directors felt that an increase in the amount of scholarships this year was appropriate. The Jack Broughton CMU Scholarship was increased from $1,000 to $2,000 per year. This scholarship is renewable for a total of 4 years. Six GVP one-time scholarships of $1,500 per year were also approved. GVP continues to award an electrical line worker scholarship of $2,000 and added an additional Western Colorado Community College scholarship of $1,500 this year. Our scholarship program is funded by unclaimed capital credits, as allowed by state law. This is a great way to put these funds to work for our community. GVP also revamped the scholarship selection process by appointing a committee of GVP members and local retired educators composed of Sandra Haulman, Mark Vana, Ruby McCall, Dave Bristol and Jon Bilbo to help award the scholarships. They reviewed scholarship applications and we believe came up with an excellent group of scholarship recipients this year. Thanks to them for their valuable assistance. The scholarship recipients will be recognized at our annual meeting. GVP continued our support of the Grand Junction Economic Partnership. The Board of Directors and management believe that Grand Junction Economic Partnership continues to provide a critical service to the Grand Valley in recruiting and expanding businesses to diversify our economic base. GVP director Tom Benton and General Manager Tom Walch both serve on the Grand Junction Economic Partnership Board of Directors, with Tom Benton serving as the President this year. I thank both gentlemen for their efforts in this regard. In January of 2016, GVP’s long time attorney Gregg Kampf of Hoskin, Farina & Kampf, P.C. was recognized as the Grand Junction Chamber of Commerce Citizen of the Year. The entire Board extends congratulations to Gregg for this well-deserved honor and for all his efforts toward making the Grand Valley a better place to live. On behalf of the Board of Directors, I would like to thank our great staff for all they do to “keep the lights on” and give our members that hometown connection. I would also like to say goodbye and thank you to Tom Benton, who is retiring from the Board of Directors after six years. His insights and financial acumen will be missed on the Board. I would like to conclude by reminding all of our members that the Board of Directors and management value your input and opinions on issues facing them and Grand Valley Power. I would encourage each member to contact a member of the Board of Directors or Tom Walch at any time should you have questions or concerns about the operations at GVP. Your thoughts and ideas are critical to our on-going success. Thank you for being a part of Grand Valley Power.
GENERAL MANAGER’S REPORT If we travelled back 80 years in time, and could view the Grand Valley back in 1936, we would see several ambitious Fruita farmers trying to figure out how to take advantage of a new rural electrification program being promoted by the Roosevelt administration. Their friends in the cities already enjoyed the benefits of electricity: electric lighting that eliminated the need for dirty kerosene lanterns, labor saving electric stoves, washing machines, refrigerators and electric pumps for their wells. These visionaries wanted this same quality of life on their farms. They determined that the best way to get started was to gather applications and collect funds to cover start-up expenses. They figured that $5.00 per application should be enough to get the ball rolling. So these ambitious, visionary leaders scattered across the Lower Valley, trying to convince their friends and neighbors to scrape together five bucks to help Colorado’s first rural electrification program get off the ground. By August, they had enough momentum to file papers with the Secretary of State officially forming Grand Valley Rural Power Lines, Inc., and our organization was born! Fast forward to 2016, and the fledgling utility those farmers started has grown to a company with more than $85 million in assets, serving over 18,000 meters! In previous reports, I have described Grand Valley Power as an enduring success story. For my annual report this year, I am pleased to say that we have extended this success another year. The traditional metrics for the year ending December 31, 2015 bear this out: • The cooperative has maintained its strong financial position. Margins, while down from the previous year, still topped $1.5 million. Equity remained stable at 34.9 per cent. During the year, Grand Valley Power refinanced $19 million of Rural Utilities Service debt. This will save about $4 million over the life of the debt. • System reliability marks remained robust. In 2015 Grand Valley Power reported an excellent System Average Interruption Duration Index (SAIDI) of 56.847 minutes. This indicates that our consumer outage minutes were about 40 per cent lower than average – one of the top marks in the state. • Grand Valley Power continues to be a national and state leader in promoting the cost effective use of renewable energy. Again, renewables comprised almost 26 percent of all energy delivered to GVP consumers. Our cooperative is the unquestioned leader in making clean renewable energy accessible to low income consumers, as we developed and then expanded the nation’s first community solar installation dedicated to serving low income consumers. • Our owners - member cooperative’s of our cooperative share in the organization’s financial success. In 2015 over $1.5 million dollars in patronage capital was returned to Grand Valley Power members. In our 80 years of existence, this is the highest annual capital credit retirement we have ever recorded. • Consumers continue to give our workforce high marks for quality of customer service. Follow-up surveys were directed to consumers dealing with Grand Valley Power service planners, servicemen, and construction crews in 2015. Out of 46 consumers who rated the cooperative’s service, 44 gave our representatives five stars – the highest rating possible! (The other two respondents gave our service four-stars – the next highest rating.) • Perhaps most significantly, we achieved these results while keeping Grand Valley Power’s retail rates at or below the midpoint for Colorado rural electric cooperatives. While there is good news is these results, we know that current success doesn’t guarantee future results. It won’t be easy to navigate the stormy waters of change that lie ahead of us. Some of these changes will fundamentally transform the way electric utilities operate: • For decades, the primary source of electric energy has been coal-fired generation stations. As we can all see – whether we like it or not – this source of generation is on the way out. Its successors – solar, wind and natural gas sourced electric generation – will be challenged to match King Coal’s legacy of affordable and reliable energy. These other sources of electricity present cost, volatility and intermittency issues, along with their own distinct environmental concerns. • The way Grand Valley Power’s distribution grid is used is changing. With increasing frequency, consumers are generating excess energy from rooftop solar installations and using their connection to our grid to sell it back to the cooperative in accordance with Colorado’s net metering law. This presents system operation and safety challenges which have been managed effectively so far. A more immediate concern is the rate impact of this development. Utilities will have to focus increased attention on rates to maintain fairness and ensure that all consumers bear the costs that they impose on the distribution system. • Advances in technology should help utilities operate more efficiently, and promise to give electric consumers more control and more choices than ever before. But technological opportunities come with a price tag. The cost can be much greater for utilities that make the wrong decisions with respect to these opportunities. • Utilities – even small electric cooperatives like Grand Valley Power – face growing threats from evildoers who would do us harm. These threats include cyber-attacks on computer networks, physical theft, vandalism and even terrorism. We must take all reasonable steps to protect our cooperative from these threats. Meeting the challenge of change means that, in some areas, we will have to change the way we do business. We will do so when it is necessary. But even as we change, we will stick to the core principles and values that have enabled Grand Valley Power to succeed for the last eight decades. Our cooperative structure helps us do this. We have a locally elected board of directors that is accountable to the member-owners of the cooperative. This board takes its responsibility for providing effective direction and oversight very seriously. We have hometown employees who take pride in providing exceptional service. Everyone in the organization understands that Grand Valley Power has an important role to play in our local communities. Everyone in the organization understands that delivering value entails a lot more than just delivering kilowatt hours. This is where our focus will remain: delivering value to Grand Valley Power’s member-owners! BY TOM WALCH
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2016 Grand Valley Power Annual Report

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