2019 annual report reports/annualrepor… · power outages and repairing cut gas lines. • the...
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2019 ANNUAL REPORT
If COVID-19 has taught us something, it’s that we shouldn’t take anything—or anyone—for granted. This includes our families and friends; our health and safety; our employers and co-workers; and the communities and the organizations that you can always count on.
CoServ has always strived to be such an organization, and we hope the new realities imposed by the pandemic have served to remind you of the value we continue to add to the communities we serve.
On CoServ.com, you’ll find examples of how we are protecting the health and safety of CoServ Employees and assisting Members and Customers suffering financial hardship.
In the pages of this annual report, we hope you see what we do: Evidence of how CoServ’s planning and established community partnerships prepared us to meet this year’s challenges head-on.
Specifically:
• A well-maintained infrastructure that resulted in one of the top reliability ratings in Texas.
• A skilled workforce that kept pace with the rapid growth in North Texas, setting more than 12,000 electric meters and 7,800 natural gas meters.
• SmartHub and the CoServ app, which we planned in 2019, provided convenient online payment options, as well as enhanced outage reporting and energy usage notifications. The new software system also enabled local Customer Care Specialists to work from home during the COVID-19 pandemic, limiting their exposure to the coronavirus at the main CoServ campus and allowing them to continue serving Members and Customers from their homes.
• Remote work locations allowed our Operations crews to collaborate safely and continue providing the “national critical function” of setting meters, restoring power outages and repairing cut gas lines.
• The distribution of $1.3 million in CCF Grants to North Texas communities.
• A record $19.5 million retirement of Capital Credits.
We’d like to close with a brief story about a CoServ Employee named Connie Schmitz.
Connie is a Customer Care Specialist who has answered phones in our call center in Corinth for several years. When she and her colleagues began working from home in the spring, in an effort to limit potential exposure to the coronavirus, she mentioned how strange some of her initial conversations with customers sounded to her.
“I say ‘Thank you for calling CoServ,’ but I’m actually at home in Sanger,” she said. “Then I thought of all my co-workers in their homes, saying the same thing, when we used to be in one big room together.”
In trying to explain this feeling to a colleague, she said this: “CoServ is not where we are. It’s who we are.”
Thank you, Connie, for summing up what CoServ is all about. Serving our Members and Customers 24/7 is what we do and something we will never take for granted.
IT’S NOT WHERE WE ARE.IT’S WHO WE ARE.Chairman/CEO Report
RICHARD MUIRDISTRICT 1—CHAIRMAN
DONNIE CLARYPRESIDENT/CEO
THE LAPETUS SOLAR PROJECT in West Texas is the largest solar farm built for electric cooperatives in the state, and CoServ is purchasing 51% of the solar energy it produces.
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MILES OF ELECTRIC INFRASTRUCTURE
UNDERGROUND
8,477
OVERHEAD
2,777TOTAL MILES
11,253
1,870,260 1,032,4572,902,717
MILES DRIVEN IN 2019 ELECTRIC & GAS
GAS
ELECTRIC
TOTAL MILES
MILES OF GAS MAINS
PIPES 2” OR LESS
1,458TOTAL MILES
2,130
PIPES 4–12”
672
COSERV ELECTRIC YEAR IN REVIEW
Counties served: Collin, Cooke, Denton, Grayson, Tarrant and Wise
Total active Members: 214,155 Total active meters: 247,909
Residential 92%Commercial and Industrial 8%
2019 GROWTH
New meters added: 12,183
Amount of electricity sold: 5.47 billion kilowatt hours
COSERV GAS YEAR IN REVIEW
Counties served: Collin, Denton and Kaufman
Total active Customers: 129,818 Total active meters: 130,300
Residential 98% Commercial 2%
2019 GROWTH
New meters added: 7,860
Amount of gas sold: 11,068,204 Mcfi
One Mcf equals 1,000 cubic feet.
2019 RELIABILITY RATINGand average time a Member
experienced uninterrupted service
99.990%*
AVERAGE LENGTH OF OUTAGE
32.54 MINUTES***Based on the 2019 Average Service Availability Index (ASAI).
**Outside of major storm events, based on 2019 System Average Interruption Duration Index (SAIDI).
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DISTRICTS
BOARD OF DIRECTORS
RICHARD MUIRDISTRICT 1—CHAIRMAN
BILL RAGSDALEDISTRICT 6—VICE CHAIRMAN
CHRIS MCCRAWDISTRICT 3—SECRETARY/TREASURER
LEON PELZELDISTRICT 2
CLINT BEDSOLEDISTRICT 4
TRISHA SHEFFIELDDISTRICT 5
CURTIS TALLYDISTRICT 7
KEVIN HANEY MCGINNIS LOCHRIDGE, LLP
GENERALCOUNSEL
The CoServ Electric service area is divided into seven districts. One Member from each district is elected to the CoServ Board of Directors by the people who matter most—their fellow Members. And, once elected, they represent the best interests of all CoServ Members to ensure that all geographic regions within CoServ’s service territory are represented—not just those who live in their districts. Our leaders are Members just like you who listen to and understand the North Texas communities we serve. This level of accountability is one more example of “the cooperative difference” that distinguishes CoServ from other energy providers.This map shows the boundaries of the seven districts, but the most important boundary is the outer line that surrounds the entire service territory, which defines a community of growth and progress.For more about your Directors and the Board’s role, please visit CoServ.com/Board.
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Our mission to deliver excellent service with safe and reliable energy solutions hasn’t changed. But CoServ has, and you can see these changes reflected in how we continue to serve you.Executive Team members help fulfill our mission by holding themselves and their colleagues to the highest standards, including reaching for innovative ideas to meet the demand for energy, strengthen customer satisfaction and support our communities.We’re not just your energy provider—we were built by the communities we serve and we’re neighbors who care about you. As we grow, we remain committed to our core values of Respect, Accountability, Integrity, Service, Excellence and Safety. We are dedicated to fulfilling the needs of those we serve.For more about your Executive Team, please visit CoServ.com/ExecutiveTeam.
2019 NEW MEMBERS AND CUSTOMERS
ELECTRIC-ONLY MEMBERS
29,064GAS-ONLY
CUSTOMERS
5,079
ELECTRIC MEMBERS WITH GAS SERVICE
13,628
EXECUTIVE TEAM
DONNIE CLARYPRESIDENT / CEO
BRENT BISHOPSENIOR VICE PRESIDENT AND CHIEF
FINANCIAL OFFICER
ROBBY HAMLINSENIOR VICE PRESIDENT—
ENGINEERING SERVICES
JEFF MCNEALSENIOR VICE PRESIDENT—
INFORMATION TECHNOLOGY
DENISE SMITHERSSENIOR VICE PRESIDENT—
CORPORATE RELATIONS
GREG WARDSENIOR VICE PRESIDENT—
FIELD OPERATIONS
CURTIS TRIVITTSENIOR VICE PRESIDENT—
ENERGY SERVICES
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For CoServ, serving the community means more than providing safe, reliable power. It means serving a higher purpose, and one of the ways we do this is through the CoServ Charitable Foundation (CCF).
Created in 2004, CCF has distributed more than $12 million in grants to nonprofits, civic organizations and first responders throughout North Texas. CCF is a true community collaboration among Electric Members, Gas Customers and CoServ Employees.
Most of the funding for CCF comes from Members and Customers who participate in Operation Roundup® and “round up” their bill to the nearest dollar every month. Those pennies average out to about $6 per year per donor, but they add up in a big way: About $1.2 million was contributed in 2019, and all of it was distributed in CoServ’s service area. Plus, every cent goes to worthy causes that benefit our communities because CoServ pays CCF’s administrative costs.
CCF’s General Fund consists of donations from Employee payroll deductions and fundraisers, annual events like the CCF Golf Tournament and Clay Shoot, and other contributions. Money from this fund can be distributed to organizations outside CoServ’s service area. In recent
years, General Fund grants have assisted tornado survivors in Oklahoma, volunteer first responders helping hurricane victims in South Texas, and linemen helping electrify villages in South America and Africa. In 2019, CCF distributed about $125,000 in General Fund grants.
CCF grants are distributed to organizations that:
• Support Education, particularly initiatives relatedto science, technology, engineering, math andtrades, while emphasizing assistance for those ingreatest need
• Promote Community Vitality, specificallyprograms, projects and organizations that contributeto the quality of life, emphasize public safety andself-sufficiency and support military veterans andfrontline workers
• Meet Basic Human Needs, especially nonprofitsthat help people access food and shelter and acquirebasic medical supplies for children and victims ofdisasters
For more details about the CoServ Charitable Foundation, please visit CoServ.com/CCF.
CCF DISTRIBUTES $1.3 MILLION IN GRANTS TO NORTH TEXAS COMMUNITIES
2019 CCF FUNDS RAISED
OPERATION ROUNDUP
$1,180,402
TOTAL FUNDS
$1,362,223
GENERAL FUND
$181,821
2019 CCF FACTS
GRANTS AWARDED
118ORGANIZATIONS
BENEFITING
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2019 CCF FUNDS DISTRIBUTED
OPERATION ROUNDUP
$1,177,616
TOTAL FUNDS
$1,302,539
GENERAL FUND
$124,923
ABOUT CCF
MEMBER PARTICIPATION
GRANTS FROM GENERAL FUNDS
10%
GRANTS FUNDED BY OPERATION ROUNDUP
90%
85%
1110
BALANCE SHEET DATA
Cash and Temporary Investments
Accounts Receivable—Net of Allowance for Uncollectibles
Other Current Assets
Investments in Affiliates
Investments in Associated Organizations
Other Assets
Total Current and Other Assets
Property, Plant and Equipment—Net of Depreciation
Total Assets
Patronage Capital
Memberships
Other Equity
Total Equity
Accounts Payable
Customer Deposits
Other Current Liabilities
Notes Payable
Other Liabilities
Total Liabilities
Total Equity and Liabilities
2017
$ 58,803,109
23,139,221
22,467,373
90,633,263
174,905,770
109,786,476
$ 479,735,212
$ 756,520,853
$ 1,236,256,065
$ 334,787,770
2,880,560
204,794,949
$ 542,463,279
$ 39,178,379
10,491,940
51,925,471
576,155,000
16,041,996
$ 693,792,786
$ 1,236,256,065
2018
$ 82,809,083
23,662,032
21,414,637
94,417,548
183,335,976
103,786,697
$ 509,425,973
$ 795,674,174
$ 1,305,100,147
$ 351,684,225
3,058,095
225,628,014
$ 580,370,334
$ 41,444,296
7,788,977
58,528,742
602,300,000
14,667,798
$ 724,729,813
$ 1,305,100,147
2019
$ 70,919,009
23,197,133
20,709,249
96,690,810
198,519,891
98,832,240
$ 508,868,332
$ 827,383,026
$ 1,336,251,358
$ 379,904,462
3,244,215
236,305,494
$ 619,454,171
$ 49,982,743
7,477,343
57,549,723
582,715,000
19,072,378
$ 716,797,187
$ 1,336,251,358
INCOME STATEMENT DATA
Operating Revenues
Less: Cost of Purchased Power
Gross Margin
Operating Expenses
Operating Margins
Other Income (Expense)
Income from Affiliates
Capital Credits Allocated from Associated Organizations
Total Non-Operating Margins
Net Margins
2017
$ 471,050,514
(324,355,019)
$ 146,695,495
$ 119,992,107
$ 26,703,388
$ 410,752
10,789,992
18,205,922
$ 29,406,666
$ 56,110,054
2018
$ 508,466,958
(351,848,435)
$ 156,618,523
$ 126,794,959
$ 29,823,564
$ 1,059,155
3,224,257
16,037,734
$ 20,321,146
$ 50,144,710
2019
$ 535,877,709
(372,868,336)
$ 163,009,373
$ 130,051,120
$ 32,958,253
$ 1,482,946
2,374,915
22,830,886
$ 26,688,747
$ 59,647,000
ELECTRIC OPERATIONS
3-YEAR SUMMARYFINANCIAL DATA
1312
ELECTRIC OPERATIONS AFFILIATE OPERATIONS
OTHER INFORMATION—Electric
At Year End
Equity as a % of Assets
Service Accounts Billed
Sales—in Kilowatt Hours
For The Year
Cash Patronage Distributions to Members
2017
43.88%
222,654
4,978,873,794
12,211,213
2018
44.47%
236,992
5,482,073,097
17,896,287
2019
46.36%
249,175
5,467,725,303
19,523,757
INCOME STATEMENT DATA
Earnings from Natural Gas Distribution
Other Income (Expense)
Margins Before Income Tax
Income Tax (Expense) Benefit
Net Margins
2017
$ 7,182,886
(86,983)
$ 7,095,903
$ 3,694,089
$ 10,789,992
2018
$ 4,412,574
(35,714)
$ 4,376,860
$ (1,152,603)
$ 3,224,257
2019
$ 3,206,761
88,378
$ 3,295,139
$ (920,224)
$ 2,374,915
OTHER INFORMATION—Natural Gas Distribution Affiliates
At Year End
Total Revenues
Total Assets
Service Accounts Billed
MCF Sold
2017
$ 67,815,258
$ 169,527,716
113,454
7,204,944
2018
$ 80,284,397
$ 191,506,158
121,958
10,527,765
2019
$ 78,846,614
$ 199,620,812
129,818
11,068,204
2019 11.07
2018 10.53
2017 7.20
2016 6.93
2015 7.92
12.010.06.04.02.0 8.0
MCF Sold (in millions)
4.86 5.18 5.50
2019 5.47
2018 5.48
2017 4.98
2016 4.88
2015 4.81
4.544.22
Kilowatt Hour Sales (in billions)
3-YEAR SUMMARYFINANCIAL DATA
1514
7,000 12,000 14,500
2019 12,183
2018 14,338
2017 13,313
2016 12,843
2015 10,197
9,5004,500
Accounts Added (net)
190,000 220,000 250,000
2019 249,175
2018 236,992
2017 222,654
2016 209,341
2015 196,498
160,000130,000
Total Accounts
1,000.00 1,240.00 1,480.00 1,600.00
2019 1,536.00
2018 1,602.00
2017 1,407.54
2016 1,444.41
2015 1,370.25
1,360.00
Peak Demand (in megawatts)
ELECTRIC KEY INDICATORS
ANIMAL DETERRENT SYSTEMS, known informally as “snake fences,” have been installed at several CoServ substations to help prevent power outages.
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$135 million
$108 million
$81 million
$54 million
$27 million
$146 million in Capital Credits since 2003
20192003–2010 2011 2012 2013 2014 2015 2016 2017 2018
+ $19.5
In 2019, the CoServ Electric Board of Directors retired a record $19.5 million in Capital Credits for CoServ Members. Since 2003, CoServ has returned $146 million to our Members.Capital Credits are a major component of
“The Cooperative Difference.” CoServ is an electric cooperative, and we use revenue to pay for purchased power and other operating expenses that include salaries, equipment upgrades and repairs. If money remains after paying expenses, these margins are divided proportionately by the amount of electricity each CoServ Member used throughout the year.
These margins, called Capital Credits, are allocated each year to Members who purchased electricity from CoServ for that particular year. They are retired—paid—at the discretion of the CoServ Electric Board of Directors. In 2019, the Board retired Capital Credits to our Members from CoServ and Brazos Electric Power Cooperative, our power supplier.The amounts that CoServ Members receive depend on how much electricity they have used in previous years and how long they have been Members. For more details, please visit CoServ.com/CapitalCredits.
CoServ returns a record $19.5 million to Members
CAPITAL CREDITS
CAPITAL CREDITS PROVIDE EQUITY needed for CoServ Electric to conduct business and meet our financial obligations.
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