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2009 Annual Report
August 6, 2010
Weather has always been the defining element in the operation of South Plains Electric Cooperative (SPEC), and the extremes of weather in 2009 directly affected the financial outcome for the year. Rainfall for the year was 31 percent below average, while summer temperatures were over 10 percent hotter and winter temperatures were 5 percent colder. There were 14 days where the temperature in Lubbock reached 100 degrees or hotter with the hottest day being July 9 when the temperature reached 107 degrees.
Under these weather factors, SPEC sold a record amount of electricity in 2009, and produced operating margins at a historical high of $2,680,447.
Those record high sales levels came at a very fortunate time for our members since natural gas prices were at their lowest levels in several years. Our average price per kilowatt hour sold fell to 8.21¢ compared to 10.33¢ just one year prior. That 21 percent change in price came almost totally from the decrease in the cost of wholesale power purchased for our members’ needs.
While the economic downturn of 2009 impacted the Cooperative, it did not totally stop our growth. The total number of new services constructed fell to a five year low, but our total meter count still ended the year almost 1,000 meters ahead of 2008. Growth in meters helps spread the fixed costs of operating the Cooperative over a larger base and brings savings to all members.
Overall, 2009 was a very good year for the Cooperative. Year-end Total Margins were $9,053,627, comprised primarily of the $2.7 million Operating Margins from the day-to-day activities of providing electric service, plus $5.8 million in capital credits from our power and material suppliers.
Now comes 2010 with a completely different weather scenario. Our average rainfall is already in excess of our average annual levels and temperatures through July have been moderate. In July, normally our hottest month, we experienced only two days where the temperature exceeded 90 degrees, and so far this year we have seen only two days that went over 100 degrees. August weather started out very hot and dry, but if past history is any indicator, we will see temperatures moderate by mid-month.
All that is to say 2010 does not promise much financial success for the Cooperative, but it has been a good year for the members. Our cost for 1,000 kilowatt hours used by a residential member has been less than $90 for the past 15 months. Couple that with lower usage because of the moderate weather and members are seeing a definite savings in their monthly budgets.
Another advantage for members during the slowdown in construction over the past year is our shift in focus to completing the installation of “Smart Meters” across the entire service area. The Cooperative has always been forward thinking, and because of this mind set over the past 10-plus years, SPEC is well on the way to total coverage with this new technology.
At the end of 2008, approximately 2/3 of our members were metered by this new technology, giving us the ability to read meters remotely, diagnose and secure operating data on-line and connect and disconnect meters from our office. All of these functions save you money by not having to send an employee to the field.
At the end of 2009, the Department of Energy (DOE) offered grants to electric utilities to install smart meters. In cooperation with Golden Spread Electric Cooperative, many of the cooperatives in the Panhandle, South Plains and Lower Rolling Plains made and received a DOE grant.
Our share of the grant is enabling the Cooperative to finish installing smart meter technology to the remaining 1/3 of our service area.
The availability of data provided by the smart meters will give both the Cooperative and members more information on their usage patterns, and eventually lead to what is referred to as real-time pricing. We are still some time away from such an offering, but installing smart meters is a first step in helping members analyze their electric usage and develop a strategy to maximize their electric usage at an optimal cost.
Over the past couple of years, the Cooperative has developed new tariffs (rates) to accommodate members who want to own small wind or solar generators at their locations. Our goal is to meet any member’s particular need without financially impacting any other member’s cost. In short, we will work with new technologies as long as it does no harm to another member.
Our costs may move upward in the coming months as the price of natural gas begins an upward trend that will eventually impact our costs to members. No matter what the challenges, our goal remains to provide safe, reliable electric service at the lowest possible cost—consistent with operating a sound business—YOUR Cooperative.