Inland Power & Light sees rise in net margins
Pot farmers are among co-op’s new membersMarch 26th, 2015
Inland Power & Light Co., the Spokane-based electric cooperative, has posted net margins of $4.4 million for 2014, up about 13 percent from $3.9 million in 2013.
For the nonprofit co-op, net margins are the equivalent of a for-profit company’s net income.
Inland Power had a good year overall in 2014, says spokeswoman Jennifer Lutz, with reported operating revenue of $68.1 million, up about 5 percent from $64.9 million a year earlier. The co-op’s total assets at the end of 2014 were $324.2 million, up from $323.6 million in 2013.
The increase in net margins was due to a rise in power usage by members of the cooperative, Lutz says.
“We sold 36 million kilowatt hours more than what we budgeted. This allowed for $1,392,000 more in electric revenue,” she says.
Inland Power employs 95 people and currently has a membership of 39,502.
Lutz says the co-op added 500 new members throughout its service territory last year, including several marijuana growing operations, and returned over $1.5 million in capital credits to its membership. “Those checks were mailed to members just before the end of last year,” she says.
Capital credits are sums returned to members in the form of checks out of any revenue surplus above what the cooperative needs to cover operating expenses and capital expenditures.
“We see this (growth) trend continuing as several new companies are looking at the West Plains, such as the new facility for Keystone Automotive Operations Inc. that will be constructed this year,” she says.
Lutz says the cooperative implemented a 4.5 percent rate hike for members last April that was based on a Bonneville Power Administration rate increase it incurred in October 2013. The Bonneville rate hike was 9.6 percent on its wholesale rate and 11 percent on its distribution rate, equating to about a $2 million increase in Inland Power’s expenses, she says.
The co-op is what’s called a full-requirements customer of Bonneville, meaning that BPA, which markets the electricity generated by the Northwest’s federal dams, provides all of the co-op’s power requirements at cost-based rates.
Inland’s total cost of electric service in 2014 was $65.6 million, up about 5 percent from $64.8 million in 2013.
The co-op works hard to control costs, Lutz says, adding that spending on required fish and wildlife support efforts are increasing.
“In Inland’s rates alone, approximately $7.3 million was spent on fish and wildlife recovery efforts last year. This means that roughly 11.4 percent of our member’s monthly power bills go to mandatory fish and wildlife recovery efforts,” she says.
Lutz says Inland Power completed its second year of a BPA prepayment agreement through which it is pre-paying a portion of its power bills through the year 2028. She says the co-op borrowed $173 million at 3 percent to pay Bonneville, and for doing so, it received a discount of 4.25 percent on future power bills.
“This spread of 1.25 percent on $173 million is really adding up. During 2014 alone, we have saved over $2 million, and (the co-op) will save an additional $17.4 million in years to come,” Lutz says. “This is direct savings in lower electrical rates to our members.”’
In addition to meeting growth demands last year, Lutz says, Inland Power was able to take on two large conversions. In one of those, it upgraded a large percentage of its meters to new digital meters, and it will have the new meters installed throughout its system by May 2015.
“That will enable us to respond more timely to any system outages and will enable members to manage and monitor their usage,” she says.
The cooperative also started the initial stages of converting its core computer software that stores all of Inland’s financial, billing, engineering and operational information, she adds. “This conversion will continue throughout 2015 and will be complete by the end of the year,” she says.
Lutz says that even with the April 2014 rate increase, Inland Power still has the 13th lowest rates in the country out of 891 cooperatives.
“Our rates are amongst the lowest 1 percent in the country, the lowest 15 percent in the Northwest, and lowest 11 percent in the state,” she asserts.
Lutz says the co-op is still working on its annual report, which will provide additional information on several key initiatives.