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Annual Meeting Summary

    At this year’s annual meeting we celebrated Clay-Union’s 75th birthday. It was in 1935 that a group of local visionaries met in Burbank, S.D. to form South Dakota’s first rural electric power cooperative. From these roots a strong cooperative continues today to provide reliable and affordable electricity to its members. We welcome this opportunity to meet with you, offer you an update on the affairs of your cooperative and celebrate Clay-Union’s 75th birthday.
   The theme of this year’s annual meeting was “Our Energy, Our Future: Preparing for Change.” This theme builds on past efforts to understand and address issues facing our industry. While we cannot stop change from occurring, how we manage and direct that change will prepare us to continue to provide reliable and affordable electricity for the next 75 years.
   2009 was an unusual year in many respects. While the high moisture levels and cool temperatures caused many problems for our members, they also caused issues for Clay-Union. The sale of electricity was flat in 2009 due in large part to the weather. Kilowatt hour sales were just over 66 million, which was 1 million below budget. That shortfall resulted in revenue from the sale of electricity being nearly $200,000 below budget. A portion of the budget deficit was offset by reduced operating expenses, which were just over $100,000 under budget. While 2009 was not a record breaking year like past years, we met all of the financial requirements of our lenders and your cooperative continues to stand on a firm financial foundation. We believe the 2010 budget is conservative and achievable and will continue to allow us to meet all of our financial obligations. In addition, budget projections “do not” contemplate a rate increase in 2010.
   The 2010 budget that was approved by the board of directors in January projects an increase in kilowatt hour sales of 4% for the year. Revenue is projected to increase 4.6% while operating expenses (cost of service) are projected to increase 5%. While a 5% increase in cost of service may seem unnecessary, this is directly attributed to our wholesale power costs. What Clay-Union pays for electricity consumes over 50% of our total budget and our costs will increase 9.8% in 2010. In order to absorb that increase and not raise rates, we have held the line or actually reduced expenses in many categories. However, we cannot continue to absorb such large power cost increases without considering future rate increases. The alternative would be to defer or eliminate maintenance and upkeep on the electrical system and that would be very short sighted. While no one likes to see rates increase, a “pay as you go” approach may be more economical in the long run, and we intend to be here for a long time to come.
   2010 will see an investment of $1.4 million in the cooperative electrical system and equipment. This investment will provide the necessary maintenance and upgrades to keep the system reliable. Upgrades include replacing at least 10 miles of old overhead line with new underground. This will enhance reliability and reduce outages. We will also continue a
vigorous program of tree trimming, line patrol and new construction. One significant construction project for 2010 is the Lewis & Clark Regional Water System. We will continue construction on the treatment plant and install nearly 8 miles of new underground cable to serve the various well sites located near the Missouri River. This is a tremendous project and
we welcome Lewis & Clark to the cooperative family.
   In addition to the other construction projects planned for 2010, we will also commence work on an AMI system.  This will involve the eventual change out of all meters on the system to new digital meters. Certain hardware will be installed in each substation and will be connected to a centralized computer system. When functional, Clay-Union will have the
capacity to read all meters remotely. In addition, we will be able to gather valuable power quality data digitally.  Not only will this save the cooperative time and money, it will relieve the member from the burden of reading their meter monthly. Eventually we will be able to connect and disconnect power remotely which will eliminate the need to send a
service technician to each location. Members may, in the future, be able to access their energy usage on a real time basis which will allow them to make wise conservation decisions. We intend to start with the Vermillion Substation and eventually move to each of the other substations. The entire project will likely take 2 years to complete. This is all part of the “smart grid” approach you may have heard about.
   The subject of climate change has been much in the news lately and will likely continue to be front page news for a long time to come. This topic, in part, drives the theme for this year’s annual meeting. Cooperatives locally, statewide, and nationally have been very active in the political dialogue surrounding this topic. Our members have been equally
engaged and we thank you for your efforts. We intend to continue the dialogue and encourage our members to do so.  This is about the continued availability and affordability of electricity. It is not our intent to debate the science that is for the scientific community. It is, however, our desire to inform our elected officials that when they debate the options,
they must not forget that the eventual solution must be fair and affordable to all of us.
   Board President Ryken and Manager Gors thanked the membership for be part of Clay-Union Electric and attending their cooperative’s 74th annual meeting. “We recognize that each member is an essential partner in this cooperative venture and that Clay-Union cannot exist without each of you”.
   During the 2010 annual meeting there were several service awards presented to the employee group.  Nick Buckman was not able to attend because of a training session that required his attendance on behalf of Clay-Union Electric. Nick received a 10 year service award.