While 2020 was unprecedented in many ways, 2021 followed suit, starting with a winter weather event in February that saw energy become a hot commodity, and cooperatives are still waiting to see how it will all impact the cooperative and members financially.
Before March 2020, the cooperative began cost-saving measures internally due to a very mild winter that caused kilowatt-hour sales to plummet, affecting the co-op’s bottom line. And then, the response to COVID-19 ramped up, and utilities were placed on a service interruption moratorium and were unable to disconnect members for non-payment and were directed to waive and not collect late fees or fees associated with disconnection and reconnection of interrupted services.
“I want to point out that while this moratorium was good for members who had experienced hardships due to COVID and the dropping economy, it was tough for businesses that counted on that additional revenue stream,” said Steve Foss, CEO. “FreeState lost approximately $50,000 in revenue, and while that may seem like a small amount, the cooperative is not a large business, and we are not profit-driven. So, that loss of revenue did put more strain on our already stressed budget.”
Foss added that although revenue was down, the response to COVID-19 changed regular cooperative routines.
“While we may have lost revenue, we did save considerable dollars in avoided costs,” said Foss. “Although those were only one-time avoided costs, they assisted us in saving money this year. Those costs will return.”
The one-time savings paired with a portion of margins from Fort Leavenworth have helped the cooperative see higher margins for 2020. These unknown higher power costs prompted the board of trustees to pass a $500,000 Member Relief Adjustment. The adjustment will be approximately $23.00 for an average residential customer.
“Our contract with Fort Leavenworth really benefits all of our members,” said Foss. “The fort is considered one member of FreeState, but the contract we have with the Department of Defense to provide infrastructure and operations to the fort really helps the cooperative keep cash on hand and allows us to forego borrowing in some instances. A portion of those fort margins benefits the entire membership.”
While the member relief adjustment is credited to bills in 2021, the dollars come from 2020. Members who have current active accounts who purchased electricity in 2020 will see the Member Relief Adjustment in May to help alleviate bills before the summer months.
Board President, Jeanine Murphy said that the trustees wanted to find a way to help members now.
“While we know this will not completely wipe out an electric bill for the month, it may provide some relief to members as we continue to navigate somewhat uncertainty while the cooperative continues to wait on delayed settlements from power suppliers.”
“We decided that the margins would mean much more to our members now than waiting to pay them out as capital credits,” added Murphy. “The ability to give money back to members is just another benefit of being a member of an electric cooperative.”
If you have any questions, we encourage you to contact the office.