The General Manager’s Annual Meeting Message

An Annual Meeting Message to the Cooperative, from General Manager Mark Boyd

I had hoped that I would have been able to deliver this address to you in person this year, underneath our pavilion in Douglassville, after we had all enjoyed lunch and a delicious dessert provided by the nice ladies at the Methodist Church. For a while, it looked like we had a good possibility of doing that, but when the Delta variant came along it caused us to re-evaluate having an in-person meeting. The safety and well-being of our members, employees and the public is always a top priority in our decision making process. We were forced to make a tough decision about the annual meeting 2 months ago when Covid case counts and fatalities were at peak numbers, with no indication of when we might see a decline. With the best information available at the time we decided that, as much as we wanted to have an in person meeting, the risk to personal health was simply not worth the reward. We are optimistic that next year will find us back together again.

As I do at each of our Annual Meetings, I will give you an overview of the prior year from an operational and financial standpoint.

2020 was unique from many perspectives and it was certainly full of challenges. On the operational side, we had to navigate through all the safety protocols from various organizations, including the CDC, the WHO and numerous government organizations from local, state and federal. For about a month last year, we actually curtailed all outside work other than emergency/outage related activities. In conjunction with this, we scaled back on many of our normal practices throughout the year, which resulted in lower than expected expenses. When you combine that with a year that saw very strong sales, the result was higher than budgeted margins with the Coop reporting an operating margin of $4,213,074. Because of this, the Board elected to retire capital credits in the amount of $1,817,854 in October of last year and also approved a revenue rebate of $1,500,785 in December for a total of just over $3,300,000 being returned to the membership. Along with this, we also saw favorable wholesale power costs that provided relief to all members on the PCRF (Power Cost Recovery Factor) portion of their bill. If I had to sum up 2020, it was a year that threw challenges at us we’d never faced before. In response all facets of the organization pulled together to work out solutions to allow us to continue our primary mission of providing excellent electrical service to all of our members.

Looking at 2021, most people thought this year would be the turning point for returning to some sense of normalcy from the pandemic. However, as I’ve already alluded to, things did not pan out that way. We still have some “work–arounds” in place to safeguard both the employees and the public. We’ve had some challenges due to unexpected employee staffing changes but all those roles have been filled and those individuals are getting up to speed quickly. Operationally things are going well. We have incorporated additional resources this year to help us get caught up on some of our ROW (right of way) maintenance and we’ve seen evidence with improved reliability numbers. We’ve also begun a very ambitious project of GPS’ing all the poles on our entire system, somewhere in excess of 200,000 in total. Each will receive a unique pole ID number and we will collect the data for the pole assembly. In the future, this will allow us to respond more effectively whenever our system is damaged. Whenever someone calls in with a pole number, it will provide an exact location and allow us to look up information about the pole such as size, conductor size, cross arm, etc… All of this is information we need to make the necessary repairs. Currently we have to wait until a serviceman goes to the location to obtain this information. This will expedite getting our crews in the field to make necessary repairs and reduce outage time. This project will necessitate allowing our contractors with CT&T onto your property to gather all this data. The contractors will have signage stating they are a Bowie-Cass Contractor and will be wearing high visibility clothing. They will be using "side by sides" to help them get around the system. Please work with us on this project so we can all benefit.

Trying to predict the future of our industry has become a much more difficult task. As administrations change, so do regulations, incentives and a host of other things that directly impact our business. Although Bowie-Cass is just a distribution Cooperative, we are a part of a Generation & Transmission (GT) Cooperative from which we purchase all our wholesale power. Our G&T has a very diverse generation portfolio including a wide array of fuel sources such as coal, lignite, natural gas, hydro & wind. As the rules change, some fuel sources become more economically viable while others become less so. With natural gas prices fluctuating from near record low levels of $2/MMBtu a year ago to numbers now headed towards $5/MMBtu, we have seen an increase in the cost of power. When you couple that with earlier than expected retirements of coal and lignite units, there are tough challenges to replace those resources. Each early retirement leaves the G&T with stranded costs for the old asset as well as procuring the “right” replacement resource for future capacity needs. It would be like you buying a new fuel efficient vehicle to replace your not so efficient SUV. Yes, you’ll save on gas but you’re still making payments on the SUV. The net result is that it’s costing you more money every month. Unlike most of the state that is in the ERCOT market, East Texas is in the Southwest Power Pool (SPP) where there is a requirement for electrical providers to have enough capacity to meet peak demand plus a percentage margin over that amount. This capacity must be available at all times thus making the replacement of fossil fuel with only renewables a tricky equation. Yes, we will definitely see more renewables coming online in the near future and there are quite a few wind and solar projects that are in the pipeline now. Generation resources will definitely be different moving forward and it is anyone’s guess as to the associated cost. Most renewables are still heavily subsidized. Will that continue or will they have to compete in the market like all the traditional resources? Only time will tell. All the indicators tell us wholesale power costs are likely to increase but it is hard to predict.

One of the things that continues to be a challenge for us and one that we keep seeking better solutions for, is our billing. Specifically, the timeliness of receiving a bill and returning the corresponding payment. The Public Utility Commission of Texas (PUCT) sets the rules for bill requirements, including what should be on the bill and the timeframes for prompt bill payment & penalties. We absolutely follow those rules. Our goal is to get your bill to you as expediently as we possibly can and to provide you with numerous payment methods. We have done this, although we still have members who elect to only receive a paper bill and only pay through the mail. 2020 gave us another gift and that was overloading the postal system. I don’t blame them at all. There’s no way they could have anticipated the rise in packages going through the mail as people went from shopping in person to ordering almost everything they need online. Meanwhile, they had to deal with employees isolating and quarantining just like every other business. There was an unprecedented shift in their business that no one anticipated. This is why we have been advocating for members to consider at least receiving their bill electronically and to consider using other methods of bill pay besides mailing in your payment. We have online bill pay via our member portal. We also have a robust mobile app that allows you to view a wealth of information about your account and pay with just a few clicks. Auto-pay is something a lot of our members have gone to because they want the benefits associated with paying with a credit card. I personally love bank draft. My bill is set up on our levelized program. I get an email telling me how much my bill is and when it will be drafted. It doesn’t require me to do anything else. For some, the convenience of paying at any of our affiliated “pay banks” is the way to go. Paying over the phone to a person or through our automated system remains a viable option. I would never tell someone how they should pay but I would ask you to consider any of our other options besides paper. Each will allow you the freedom of no longer worrying about when you may receive your bill and when your check may be posted. It eliminates the one variable that neither the member nor the Cooperative can control.

I hope this message finds each of you well and I hope the future looks brighter for all of us! I look forward to seeing each of you again next fall!

Thank you and God Bless!