Clay-Union Electric hosts 70th annual meeting, reports successes, challenges

Clay-Union Electric hosts 70th annual meeting, reports successes, challenges
Clay-Union Electric held its 70th annual meeting on March 30 at the Wakonda School. The meeting theme was "Value of Cooperative Memberships." The meeting was attended by over 325 people including 160 voting members, all of whom enjoyed a delicious meal served by members of the Knights of Columbus. Judy Swensen gave the invocation and Bernie Steffen gave the welcome address.

Dan O'Connor, president of the board of directors, called the meeting to order. Secretary Tom Larsen reported on the official meeting notice, presence of a quorum and presented the minutes of the 2005 annual meeting, which were approved as mailed.

O'Connor then gave the president's report, which was followed by the treasurer's report, presented by Gordon Andersen.


The election of directors from Districts #1 and #2 was conducted by Attorney John Gors. Through the petition process, the names of Dan O'Connor and Gordon Andersen were placed before the voters as the nominees for districts #1 and #2. O'Connor was re-elected by unanimous voice vote for district #1. Andersen was re-elected by unanimous voice vote for district #2.

Gors also reviewed by-law changes with the membership. Gors highlighted all individual articles and changes with the membership and explained the voting options. The members voted unanimously to accept the changes as presented.

Both President O'Connor and Manager Paul Roberts gave updates on cooperative activities for 2005. Roberts reported that positive events contributed to the financial and operating success of Clay-Union Electric.

Financial success was driven by near-record electric sales while operating costs were held below budget. It was also pointed out that once again the members of Clay-Union Electric received refund checks due to excess margins of $235,000 and that over the past 11 years, $2.6 million has been refunded to its members. Also it was reported to the members that the past year marked the 18th year in a row for rate stability. Basin Electric and East River Electric, Clay-Union Electric's power supply partners, were credited with playing key roles in the financial success for the year.

Reports to members indicated that for the second year in a row, Clay-Union Electric achieved record electric sales, with almost 60 million kilowatt-hours sold. Across the board, increases in electric sales from all classes of service contributed to the record sales level kilowatt-hours sales.

Sales for 2005 were 4.8 percent above the previous year and 5.5 percent above the 2005 budget. Electric revenues were 105.1 percent of 2004 and 2.4 percent above 2005 budget. In 2005, while total operating expenses were 99.9 percent of budget, cooperative fixed costs increased; taxes, deprecation and interest expense on long-term debt. Those cost increases are related to the higher revenue level, the increased investment electric distribution plant, and an increase in depreciation on electric distribution facilities. The increases in fixed costs were offset by internal operating costs being less than budget. Overall, the financial results created positive margins for 2005 and demonstrates the value of cooperative membership.

As for national issues, O'Connor and Roberts reported that there are some challenges ahead. Current issues of concern are the captive shippers issue, cuts in funding for clean coal technologies, challenges to the rural service areas designed decrease funding for cooperatives, irrigation re-allocation costs, and a challenge to the tax status of rural electric cooperatives.

The captive rail issue is now getting national exposure reported O'Connor. It is a policy that addresses the rail rates for coal shipments to the generation plants in the cooperative power supply system. This captive shipper policy jeopardizes the reliability of the cooperative power supply system.

The budget proposals to cut funding for clean coal technologies, reverses a national effort to research and advance promising technologies for cleaner applications in the use of coal. Coal is a domestic energy resource for which the nation has an abundant supply and its use reduces the dependence on foreign nations for imported oil.

The value of cooperative membership is seen in the combined efforts of the cooperative supply system coming together to protect the interests of cooperative members and seeks to influence a positive agenda in the public policy debates.

O'Connor concluded his report by pointing out that in 2005, Clay-Union Electric had celebrated 70 years of service to its members. With a vision of improving the quality of life and productive nature of their farming by electrifying rural areas, a small group of farmers gathered in Burbank on Nov. 25, 1935. From that meeting an organizational foundation was established that stands firm today.

"We continue that vision in directing the current activities of Clay-Union Electric,'' O'Connor said.

The rich history of the first cooperative in South Dakota continues today with a commitment to deliver reliable and quality electric energy as a part of the process of increasing the value of cooperative membership. O'Connor concluded with "We want to acknowledge and thank Basin Electric and East River Electric for the key role they play in partnering with us in this successful mission".

Service awards went to Leo Powell for 35 years, Mike Kjose 30 years, Roberts 25 years and Brad Brodersen for 20 years. Director Milo Gilbertson was recognized for 25 years and Director O'Connor for 20 years of service on the Clay-Union Board.

Dick Burbach was also recognized by the cooperative for his retirement effective March 31. Burbach was presented a retirement gift in appreciation of his 22 1/2 years of service.

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