Planning ahead for what we cannot control
It’s still November as I write this January column, and Christmas is still six weeks away. As I mentioned in last month’s column, supply chain issues are still dominating the news. But because Christmas is about much more than just stuff under the tree, I’m hopeful that we all were able to have a blessed holiday season.
Now it’s time to get to the business of this New Year. God willing, 2022 will see the end of this drawn-out pandemic and a return to normalcy.
Normalcy in the electric utility business always includes a good dose of preparing for the abnormal. Our preferred normal, of course, would be that the power stays on all the time and the price for everything never changes. But we all know that’s not reality.
So, our normal course of business is to do what we can to build and maintain our rural electric system with a goal of providing high-quality power while reducing the frequency and severity of outages. We also spend a lot of time working to mitigate cost pressures – on the cooperative and especially on our consumer-members.
That’s why we regularly seek competitive bids to get the best possible price on any necessary purchases, for example. That’s why we invest in rebate programs that help consumer-members upgrade to energy efficient appliances. And that’s why we initiate billing options like FlexPay Your Way, a pay-as-you-go energy solution, to help members avoid deposits and fees.
We all want to do our best to control the things that we can control. That’s what puts us in a position of strength when we’re faced with unexpected or uncontrollable conditions.
One uncontrollable condition we always face is interest rates. Your cooperative has no power to set interest rates. But we do have the power to take advantage of the historically low interest rates over the past few years for the benefit of the membership. Since we’re managing almost $60 million in long-term debt, we have been able to save significant dollars in interest expense.
By doing this, we’ve been able to grow the value of your total utility plant by nearly $22 million over the past five years.
Now, I know many people hate debt in any form. But let me reassure you – well-managed long-term debt financing is crucial to success in this industry. The millions and millions of dollars needed to build and maintain the system you deserve can’t all come from the pocketbooks of today’s consumer-members. After all, the system we’re building today will benefit members who aren’t even members yet! These are long-term investments, so it makes sense to finance for the long term.
We’ve made investments in the strength and reliability of the electric delivery grid that serves you. We’ve replaced hundreds and hundreds of older poles, kept our rights-of-way clear, removed lots of old copper conductor, and upgraded the power lines in several areas.
Your utility plant is worth almost $128 million today.
Going forward, we have choices! We’re not backed up against a wall, so to speak. We’re dealing with a system in good shape. If it makes sense to back off on some of our work plans, we should be able do so without jeopardizing your power quality or the reliability of your electric service.
But we also must face reality and make the best decisions we can to ensure continued financial and operational strength. I’ll keep you posted as the details fall into place.