Together
we shine brighter!
ANNUAL REPORT 2020
Together we shine brighter!
PRESIDENT REPORT In my everyday life, I run a local grocery store in the town of Mathiston. My job is to serve my customers in big ways and small. In my business, we need to anticipate needs, and we need to make sure we have a stable supply chain so that no matter what kind of things might be happening, when someone walks in, I can have what they need, when they need it. Sometimes it is as simple as making sure there’s candy before Halloween or stocking up on extra bread and milk when there’s snow in the weather forecast. There are times, like right now, that challenge even the best planning. There are Jay Gilliland many things that are outside our control and even the most rigorous preparation can’t keep pace with the changes that have steadily presented themselves over the last few months. But, with planning and preparation, we can be as ready as we can be. It is a lot like building a house. A strong foundation and stout frame can mean a big difference when the storms come. It is the same with 4-County. For more than 80 years we’ve been providing reliable, affordable power to our members. And we’ve been able to do so because from the original Board of Directors eight decades ago to today, we have done our best to provide a foundation that can weather the worst of storms. And I do believe that foundation is being tested now, maybe as much as it has ever been. I’d like to talk a little bit about the role the director of an electric cooperative plays. Simply put, the Board, in representing the membership, provides oversight of operations of the co-op especially when it comes to finances and planning. And while that might not sound like much, I believe that more than 80 years of good stewardship in those areas has set the stage for our successful coronavirus response. What I mean is this: the 4-County board sets the vision and creates the framework for how the Association runs. It also oversees the financial side of the equation with an emphasis on budget and spending. Decisions made over time have an impact with both intended
(and sometimes unintended) consequences. We don’t always have the opportunity to see directly how those decisions play out. It may be months, years or even decades before the full impact of a decision is known. I believe so far in 2020 we’ve seen a positive impact of years of decisions. Through the years, our general managers and senior staff have worked hard to create a public power utility that brings electricity to our members reliably and affordably and does so with special attention to their needs and satisfaction. And through the years, I’m proud to say that through financial prudence, system maintenance and response readiness, 4-County has established a workforce and a culture with the will and the ability to respond quickly and efficiently to changes in circumstances. And that’s in large part because going back to the mid 1930’s 4-County directors have, with their oversight and planning, supported, supplied and empowered management and employees. Decisions made over time have allowed us to face one of the biggest crises this country has ever known. Not only have we responded, but we’ve responded quickly and safely and with a few exceptions, without any interruption in business as normal. Quick planning by staff kept the workforce and membership healthy, so much so that during Easter, when our system was ravaged by storms, our crews were at full strength and able to respond. That was especially important since travel was restricted and other co-ops were not readily able to send us help. This response was possible because of planning and decisions made over time. How the board makes those plans and decisions has changed over the years. We’ve embraced strategic planning - measuring results, getting feedback and making adjustments as needed. Education is also important. Every one of our board members is certified and we all continue our training as cooperative directors. And while our processes may have evolved over the years, the main thing hasn’t. We continue to work on understanding and balancing the needs of our members with the needs of the electric system, and supporting and strengthening both. And we will continue to do so for the next year, the next 10 years and the next 80 years.
CEO REPORT As CEO/General Manager and I am very proud and continue to be blessed to represent both the 4-County membership and employees in this role. We continue to accomplish many great things. We, collectively, continue to battle storms, the COVID19 Pandemic, and continue to look at ways to improve the quality of life of all those we touch. We remain focused on Safety. We have achieved over 1 million hours without a lost time accident, for the second time in Brian Clark 4-County’s history. We are actually right at 1.2 million hours without a lost time accident. Let’s keep it up! The board and staff continue to utilize the resources of this cooperative to strive to always leave things better than we found it. I can honestly say that the investments you have made into improving your systems, the investment in right of way trimming and our ability to quickly address issues have allowed us to restore power and be more reliable. If you recall the recent Easter Storms, we had over 70 broken poles, more than 12,000 people without power. Our staff worked over 36 hours and we had everyone back on. We really have a good team. If you get the chance, please tell our men and women how much you appreciate their service. These men and women work day and night to continue to serve you. The board and employees continue to do an excellent job of looking for ways to improve your cooperative. We not only provide power to over 37,000 members, but we also provide positive light to the community in many ways you may not be aware of. Your membership provides opportunities for the youth through the “Youth Tour Program”. This program gives local high school juniors an opportunity to sharpen their leadership skills in the classroom, community and family. The Youth Tour Program also gives me hope, because we truly have some extremely talented young men and women living in our communities. The youth tour program reassures me that God is setting us up for good leaders in the future. 4-County also provides community support and service through the 4-County Foundation, and with a combined effort with the Tennessee Valley Authority, local economic development agencies, local elected officials and state legislators.
4-County continues to do things in a very sound fiscal way. We are in a great position. What does this mean to you? I’m glad to say that again this year, there is not a need for a rate increase. This is even after we absorbed the TVA rate increase from 2016. This decision alone has saved the membership over $5 million. I am very proud of our efforts to continue to be efficient, and at the same time improve customer service. We will continue to strive to be Honest, show Integrity, and put Service in all we do. At 4-County, WE CARE! WE GIVE BACK! These are reasons 4-County was created and reasons we continue to do what we do. I believe the hard times are what brings out your character and gives you a chance to shine, much like when you go to a jeweler. I’ve heard that if you go look at a diamond sometimes a jeweler will lay it on a dark cloth, this brings out the shine of the diamond. Hard times do the same thing for us. Storms, COVID19, and whatever comes next, gives us the opportunity to show we are prepared and up for the task. During this COVID-19 Pandemic, we have kept members and staff healthy, followed and exceeded state guidelines. We understand many members are financially affected and we are working with them on payment arrangements. There is also the Warm Neighbors Program that is set up to help. This program is funded by members who donate $1 extra and is used to assist members with their electric bills in a one-time emergency situation. The Salvation Army administers the program for us and if you need assistance please contact us or the Salvation Army. They assist us in identifying the local needs. The 4-County Foundation recently awarded $24,000 back to all the communities we serve. TVA pitched in and added another $15,000. This money was used for local food banks to help members who were in need. Our physical job and our mission is very straight forward. We keep the lights on and we add a positive light to the community. Please pray for the continued guidance for your safety and the safety of all our staff. We can fix many things, but we can’t fix it when someone gets hurt. Rest assured that even though we are having this meeting virtually, we are still working to keep your lights on and provide all the services you have known us for.
Broadband where we are in the decision-making process
There is no debate over the growing need for reliable, high-speed internet service in rural Mississippi. 4-County, our staff and our board understands that and we pledge to be a part of the solution in bridging the broadband gap. We hope this update will be helpful in showing you where we are in our process of making a decision on whether we will become an internet provider and give some insight into the process. We are the largest TVA distributor in Mississippi. Our project would be the most intensive and expensive of any in the state and would be the largest and most costly project we’ve ever undertaken. We have to get this right.
Right Now We have commissioned and completed three feasibility studies. We are meeting with the companies that did the studies and we will be working with them to try and find a model that makes sense enough to move forward with. We are also in communication with our members and stakeholders such as yourselves making sure we hear everyone’s needs and concerns. At the same time, we are having discussions with current internet providers, trying to find possible partnerships that might facilitate their ability to get high-speed internet service to our underserved areas. No solution is off the table as we try to address this need.
The Numbers The crux of this decision rests on the numbers. Realistically we are trying to build a business model that supports itself with a potential customer base that will be limited to about 43,000 customers. To do that we will need to install 5,400+ miles of fiber optic cable. Every study shows that this project will cost at least $110 million dollars. This price tag will be largely financed by the electric co-op and will be an electric asset. As such it will be the responsibility of all 4-County electric members whether they take internet service or not. We will have to price our product at an affordable rate and will not be able to offer incentives or special pricing like our competition will. Grant money, especially the upcoming Rural Digital Opportunity Fund( RODF) will help offset some of that cost. We are working with our consultants to prepare for that round of funding. The RDOF reverse auction will be held later this fall
The Competition Currently there are no less than 10 internet service providers that have customers in our service territory. This does not include people who get internet through mobile data on their phones or smart
devices. According to our feasibility studies, research by groups such as Broadband Now and 4-County’s own survey, some 80% of our members have access to internet service other than mobile data. Current providers already have fiber cable backbone in many areas across the service territory and only need to connect the “last mile” to serve many of our members. They are already beginning to do so in some places.
The Uncertainty Any plan for a project such as this is based on assumptions. Those assumptions include things such as take rate, competition, cost, interest rates, labor availability and costs, material availability and cost. What happens if any of our assumptions change-and for the worse? As we’ve seen over the last few weeks, the global economic situation can change drastically in a very short amount of time and costs and interest rates can increase while supplies can dry up. That kind of risk is why we are working so hard to see if we can find a plan that will make financial sense while mitigating as much risk as possible for our members.
The Bottom Line As we’ve said all along, we are not saying no and we are not putting off making a decision. Our charter doesn’t need changing. We are doing what we need to do to qualify for RDOF funding. We are visiting co-ops around the south who are in the business. We are working with our board and our consultants to look for a possible path forward. We are looking at possible partnerships with current providers. In short, we are looking for the best way to bring affordable, high speed internet to our service territory without putting an undue burden on our electric cooperative and our members. We expect to make a decision by late Fall 2020.
Committees 2020 Credentials & Election Committee Caine Adams - Maben Rob Roberson, Jr. - Maben (Sec.) Kenneth A. King - Ackerman John Tennant - Weir
Bill Clements - West Point Larry Sanders - West Point (Chair) Nick Hairston, Jr. - Columbus Tony Phinisey - Columbus
Ray Penick - Macon Paul M. Spurgeon - Brooksville H. D. “Doss” Brodnax, Jr. - Starkville Sylvester Davis - Starkville
2020 Nominating Committee n CHICKASAW & WEBSTER
n CLAY & MONROE
Paul Crowley - Maben
Donald Land - Aberdeen (Chair) Pete O’Shea, Jr. - West Point Belk Weems - West Point
n CHOCTAW & WINSTON
Benny Graves - Ackerman Charles McMinn - Ackerman
Frank Howell - Columbus John Partridge - Columbus Thomas R. Robinson - Columbus Sammie L. Williams - Columbus
n OKTIBBEHA
Tom Breland - Starkville Henri Sue Kennard Starkville Odie L. Shaw - Sturgis
n NOXUBEE n LOWNDES
Julius Beck - Macon Gary L. Holtman - Columbus (Sec.) Grey Land III - Macon
2020 Member Advisory Committee n CHICKASAW & WEBSTER
n CLAY & MONROE
Paul & Sherry Crowley David & Jan Raines Jim & Marguerit Miles Jerry & Mary Riggan
Karl & Sonya Gibbs Lynn & Tina Horton Don & Bonnie Land Lyman & Deborah Smith Louis & Elizabeth Clay
n CHOCTAW & WINSTON
Trey & Lara Bowman David & Wanda Carter Theodis & Dorothy Francis Benny & Deanie Graves John & Carole Tennant
n LOWNDES
James “Leslie” & Margaret Baucom Frank & Kathy Howell Dwight & Gwen B. King John & Bonnie Partridge Robert L. & Bettye Phillips
Sammie L. & Sandra Williams n NOXUBEE
Frank & Lula Bell Draper James & Rhonda Gillespie Grey & Teresa Land Gene & Paulette Moore James & Dorothy Stewart n OKTIBBEHA
Sylvester & Marilyn Davis Russell & Haley Dodds Bubba & Emily Harrington David & Carolyn Oswalt
4-County Foundation Board of Directors Kathy Howell - Columbus (representing District 1, Lowndes County) Russell Dodds - Starkville (representing District 2, Oktibbeha County) Gale Griggs - West Point (representing District 3, Clay and Monroe counties) Gwendolyn Cotton - Macon (representing District 4, Noxubee County) Deanie Graves - Ackerman (representing District 5, Choctaw and Winston counties) Sue Cooper - Maben (representing District 6, Chickasaw and Webster counties) Columbus Jones - Columbus (representing District 7, At Large)
Jack & Pam Rhoades, Sr. Paul Yeatman
Foundation measures value through service
$1 MILLION + AWARDED
Measuring the value of something can be difficult. But those associated with the 4-County Electric Power Association Foundation have no problem celebrating the program’s recent success stories. Earlier this year, the 4-County Foundation exceeded the $1 million goal. Nearly 200 awards have been distributed to area organizations since the program’s inception in 2015. And in the wake of the COVID-19 crisis, the Foundation and affiliated agencies offered area non-profit agencies over $40,000 to assist with food pantries and other services. The message is clear for Foundation officials and 4-County members: the value of Foundation awards is $1 million plus; but the value of helping your neighbors is priceless. “It’s hard to truly measure the impact the 4-County Foundation has had for organizations involved in our service area. Thanks to 4-County members, the Foundation board, the 4-County board and its employees, we’ve been able to enhance the quality of life for our members. Exceeding $1 million in distributions is a monumental accomplishment. And rising up to meet the needs created by the COVID-19 crisis is what this Foundation is all about. We’re all in this together,” said Brian Clark, 4-County CEO. 4-County believes in helping the communities it serves. That’s why the cooperative launched the 4-County Foundation, a community service program. Since February 2015, participating 4-County members’ utility bills have been rounded up to the nearest dollar; a $125.78 bill, for example, becomes $126. Now, that’s an average of only 49 cents per member, per month. That may not seem like much. But when you multiply those contributions by the thousands of member participants, that’s a lot of pennies! For more information on the 4-County Foundation, call 1-800-431-1544.
Latest Foundation Grants
Together we shine brighter
• North Central United Way - $10,000 (serving Oktibbeha, Webster, Choctaw and Winston Counties) • United Way of Lowndes and Noxubee Counties - $5,000 • United Way of Northeast Mississippi - $5,000 (serving Monroe and Chickasaw Counties) • United Way of West Point/Clay County - $4,000
TVA matched these awards with $15,000
Income Statement *
Condensed Balance Sheets *
OPERATING REVENUE
December 31 December 31 2019 2018
Calendar Year Ending December 31, 2019
Calendar Years Ended December 2019 & 2018
(What our members paid for service)
Assets:
Electric Sales Revenue: Resedential Small Commercial Large Commercial & Industrial Street & Outdoor Lighting TOTAL ELECTRIC SALES REVENUE Other Revenues
$68,517,236 14,828,689 34,974,565 3,540,003 121,860,493 3,832,678
TOTAL OPERATING REVENUE
125,693,171
OPERATING EXPENSES (What it costs to operate your system)
Purchased Power (What we paid TVA for power) Operation & Maintenance Expenses
86,725,438 20,641,310
(Cost to operate & maintain the system)
Depreciation Expense (Use of plant & equipment over life) Tax Expense (Payroll, property & other taxes) Interest Expense (Interest on debt and member deposits) TOTAL OPERATING EXPENSES Interest Income
$227,969,956 $2,297,942 $12,509,235 $5,050,191 $247,827,324
Memberships & Patronage Capital $130,920,674 Long Term Debt 79,981,598 Current & Non-Current Liabilities 30,024,134 Deferred Credits 9,545,771 Total Liabilities & Other Credits $250,472,177
$126,655,815 $79,465,787 $31,681,156 $10,024,566 $247,827,324
Liabilities:
121,754,185 131,959 200,500 12.2 % 332,459
Total Margins (Members’ Equity for the Year)
$4,271,445
28.7 %
56.2%
Together we shine brighter
Electric Sales Revenue
Operating Expenses
n Residential n Small Commercial n Large Com. & Industrial n Street & Outdoor
n Purchased Power n Operation & Main. Expense n Depreciation Expense n Tax Expense n Interest Expense
Lighting
12.2 %
28.7 %
2.9 %
0.3 %
3.2 %
8.3 %
17.0 %
56.2%
71.2 %
0.3 % 2.9 %
$229,805,225 2,250,723 14,086,813 4,329,416 $250,472,177
10,050,107 408,394 3,928,936
(Money earned on shot-term investments) Other Income (Income from organization memberships & gains on sales of assets)
Total Other Income
Utility Plant – Net Other Property & Investments Current Assets Deferred Debits Total Assets & Other Debits
3.2 %
8.3a fiscal % year basis as of June 30. *A portion of this information is unaudited as our audit is performed on
Finding common ground
Cooperatives and their members often work to find common ground in eliminating a few of the main culprits for outages: trees, limbs and encroaching vegetation. Typically, one out of every four outages experienced by 4-County members is a result of trees, limbs and encroaching vegetation. What’s the answer? A calculated, organized approach to vegetation management conducted by 4-County’s team of arborists and professional tree workers. 4-County arborists oversee the co-op’s vegetation management program, enlisting contract right of way (ROW) crews to get the job done. They use a systematic approach to vegetation management applied along 5,000 miles of overhead electrical line in nine different counties. The team tries to clear each year, on a rotating basis, 640 miles of right of way. “It’s a great way to ensure power reliability,” said 4-County System Arborist Jonathan Howell. “By maintaining proper clearances, linemen are better able during outages to get to the task at hand if not deterred by encroaching vegetation,” Howell added. He and 4-County Assistant Arborist Robert Gaskin work the program on a daily basis. The goal is to balance the needs of cooperative members and the need for vegetation management, and 4-County works hard to achieve that goal. The challenge lies in a delicate balance between trees, members’ preferences and reliable electric service. “People quite often have a strong attachment to their trees. It’s our job to respect their feelings and their trees while also obtaining proper clearance. When you take the time to explain the realities of power outages and tree trimming, most people understand,” Howell said. 4-County utilizes the American National Standards Institute (ANSI) A300 pruning standards to trim trees that endanger 4-County’s abilities to serve its members. Directional trimming
removes only those branches that conflict with power lines. Instead of cutting the limbs back to unnatural stubs, branches are pruned back to the trunk or parent branch, where trees normally shed them. Trees may look a bit different after directional pruning. However, down the road, they will be less prone to pest problems and decay and less likely to drop branches during storms. “We try to do as much preventive maintenance as possible because there are so many unknowns that can occur during storms to what appear to be green, healthy trees,” Howell said. While 4-County works to prevent outages caused by trees in its ROW, some outages may still occur if trees outside the ROW fall into power lines. We refer to those as outage threat trees. Once discovered, these trees are removed in a timely fashion. Selective use of herbicides controls unwanted brush on ROW floors and encourage herbaceous plants, shrubs and wildflowers to establish themselves. This creates a greater natural diversity, improving wildlife habitat while moderating erosion, according to Howell. When 4-County vegetation management crews are expected to trim in your area, door-to-door personal notifications and phone calls will be attempted. If you are not at home at the time of the visit, a door hanger will be placed on your door, which allows you time to better understand the need for tree trimming and approximate time scheduled for the trimming to be done. The vegetation management team’s goal is a simple one: member service. “By providing this service, we’re ensuring the ultimate member satisfaction which is keeping the lights on by reducing vegetation-caused outages,” Howell explained. Any member concerned about trees near power lines should call 1-800-431-1544 and ask for Howell or Gaskin.