Page 37 - Flathead Beacon // 7.30.14

FLATHEADBEACON.COM BUSINESS MONTHLY JULY 30, 2014 | 37
ENERGIZING THOUGHTS Mark Johnson
Key Ratio Trend Analysis
Building Permits
Building permits issued in Kalispell and Whitefish in June
EACH YEAR, FLATHEAD Electric is required to prepare year-end financial reports. Flat- head Electric’s bankers use the infor- mation from those reports, along with the financial information from electric cooperatives throughout the U.S., to de- velop what is called the Key Ratio Trend Analysis or KRTA. The KRTA is a tool to help electric cooperative managers and board members understand their util- ity’s performance relative to other elec- tric cooperatives. This analysis helps highlight strengths and weaknesses, gauge past and present performance, and supports predictions of future per- formance.
The KRTA shows the absolute and relative position as well as trends of Flat- head Electric in 145 key financial and statistical ratios. Its ratios are displayed to show Flathead Electric’s trends for the most recent five years, as well as a comparison of Flathead Electric’s ratios relative to various distinct peer groups including:
1. 820 electric cooperatives in the United States,
2. 23 electric cooperatives in Mon- tana and
3. 38 electric cooperatives of a simi- lar size.
Since you more than likely do not have in-depth knowledge of Flathead Electric’s operations and any unusual events that may have occurred during the years from 2009 – 2013, I selected two ratios where Flathead Electric is strong in relation to its peers and two ra- tios where Flathead Electric has an op- portunity to improve.
Ratio #1 – Electric Revenue per Kilowatt-Hour (KWH) Sold
Definition: A measure of the revenue generated from the sale of electric energy to its members on a per-kwh-sold basis.
This ratio reflects the electric rates the cooperatives charge their members for electric service. Flathead Electric is very favorable when compared to its peers due to its rates being based on low- cost wholesale energy generated from the Northwest hydro system and the Columbia Generating Station nuclear plant. Since wholesale energy costs rep- resent almost 60 percent of Flathead Electric’s total costs, any swing in these costs has a significant influence on your retail electric rates.
Ratio #2 – Total Controllable Ex- penses per KWH Sold
Definition: A measure of the total controllable expenses on a per-kwh- sold basis. They include operations and maintenance, administrative and gen- eral, member and energy services, and consumer accounts expenses.
Controllable expenses are variable expenses that are generally adminis-
tered by Flathead Electric’s board and management at their discretion. Again, Flathead Electric is in a favorable posi- tion compared to its peers for a variety of reasons. Flathead Electric has a rela- tively dense system for an electric coop- erative, meaning it has more members per mile of line, which creates cost effi- ciencies. We also benefit from very pro- ductive employees as our average num- ber of consumers per employee is in the top quartile in the country.
Ratio #3 – Power Cost per KWH Purchased
Definition: This ratio shows the av- erage cost of each kWh the system pur- chased.
As noted above, compared to the rest of the country, Flathead Electric enjoys low wholesale energy costs. But this paradigm is changing as noted on the chart by the steadily increasing black line. As outside influences, such as the Bonneville Power Administration’s fish and wildlife, costs approach $1 billion annually, the decades-old hydropower infrastructure requires expensive up- grades; and as ever-increasing govern- ment regulations escalate, rising ener- gy costs show no sign of slowing down. This means that even though Flathead Electric’s board and management have implemented tools to try and lessen the impact of these cost increases, there will be continuing pressure on Flathead Electric to increase your retail electric rates. Therefore, it is important for you to stay engaged with any issues impact- ing the Northwest hydro system or Co- lumbia Generating Station nuclear plant to ensure that we protect our low whole- sale energy costs into the future. Flat- head Electric’s board and management are vigilant in the region and in Wash- ington D.C. trying to protect your inter- ests, but we will need your involvement.
Ratio #4 – Amount Written Off as Percent of Operating Revenue
Definition: A measure of the percent- age of electric billings – related to mem- ber account – that cannot be collected.
Over the past five years, Flathead Electric has averaged write-offs of over $275,000 per year. Although the trend is improving, you can see from the chart that our write-offs as a percentage of op- erating revenue are higher than those of all other peer groups. When we cannot collect for electric service provided to our members, all other members in good standing foot the bill for these uncol- lectable accounts. In other words, when a member doesn’t pay, we all pay. We un- derstand that times are tough, so before you decide not to pay your electric bill, please contact one of our member ser- vice representatives who will walk you through your options.
KALISPELL:
Recipient: Helding and Sinnott, 1125 First Ave. E.
Contractor: Kent Meyer Construction For: Addition
Value: $35,000
Recipient: Red Lion, 20 N. Main St. Contractor: Steiner Construction Services For: Remodel/Improvements
Value: $147,000
Recipient: Craig and Sherry Hallock, 147 Northland Dr.
Contractor: Westcraft Homes
For: Single family residence
Value: $300,000
Recipient: City of Kalispell, 2001 Airport Rd. Contractor: Summit Roofing, Inc.
For: Re-roof digester building
Value: $33,653
Recipient: Vanessa Ceravolo, 770 N. Main St.
Contractor: Brett Bennett
For: Addition
Value: $17,000
Recipient: Sybil Lemke, 118 Boise Ave. Contractor: Jeremiah Anderson
For: Addition
Value: $17,000
Recipient: Rick and Barbara Cunningham, 928 Sixth Ave. W.
Contractor: Custom Systems
For: Single family residence
Value: $60,000
Recipient: TKG Spring Prairie Dev. 3, 25 Treeline Road
Contractor: Swank Enterprises
For: New commercial space and improvement Value: $740,000
Recipient: Three Rivers Bank of MT, 233 E. Idaho
Contractor: Hammerquist and Associates For: Addition
Value: $2,000,000
Recipient: John Amistoso, 3075 Highway 93 S.
Contractor: American Electric, Inc.
For: Installation of fire system
Value: $4,000
Recipient: Jerry Innis, 322 Seventh Ave. W. Contractor: Eric LeGassey
For: Addition
Value: $33,000
Recipient: Gary and Peggy Aasheim, 406 Ashley Court
Contractor: Owner
For: Remodel
Value: $8,500
Recipient: City of Kalispell, 1422 First Ave. W. Contractor: Martel Construction
For: Addition
Value: $45,280
Recipient: Owl Corporation, 139 Taelor Rd. Contractor: Owner
For: Single family residence
Value: $225,000
Recipient: Linda Himsl, 216 Garland St. Contractor: Robert Ross Building
For: Addition
Value: $5,900
Recipient: Kerry and Maris Marvin, 832 Ave. W.
Contractor: Owner
For: Addition
Value: $17,784
Recipient: 93 and Church, LLC, 155 Swift Creek Way
Contractor: Owner
For: Single family residence
Value: $550,000
Recipient: Western MT Mental Health, 420 Windward Way
Contractor: Vargo Construction
For: Addition
Value: $13,500
Recipient: Westcraft Homes, 217 Northland Dr. Contractor: Westcraft Homes
For: Single family residence
Value: $250,000
Recipient: Bighorn Development, 125 Kara Dr.
Contractor: Bighorn Development For: Single family residence
Value: $199,999
Recipient: B.I.D.,Inc, 295 Battle Ridge Dr. Contractor: B.I.D., Inc
For: Single family residence
Value: $161,000
Recipient: Thor and Nancy Jackola, 325 Leisure Lane
Contractor: Owner
For: Single family residence
Value: $163,000
Recipient: Bighorn Development, 170 Kara Dr.
Contractor: Bighorn Development For: Single family residence
Value: $209,900
Recipient: Bighorn Development, 110 Battle Ridge Dr.
Contractor: Bighorn Development
For: Single family residence
Value: $199,900
Recipient: Daniel J. Woodruff, 409 Northridge, Dr.
Contractor: Owner
For: Addition
Value: $20,000
Recipient: Eric, 10 N. Main St. Contractor: Radix Construction For: New restaurant
Value: $750,000
Recipient: Ron Terry Construction, Inc., 235 Leisure Dr.
Contractor: Ron Terry Construction
For: Single family residence
Value: $190,000
Recipient: John and Christie Thomas, 1705 Bluestone Dr.
Contractor: Owner
For: Townhouse
Value: $90,000
Recipient: John and Christie Thomas, 1703 Bluestone Dr.
Contractor: Owner
For: Townhouse
Value: $90,000
Recipient: M Bar M, LLC, 844 Seventh Ave. W.
Contractor: Kerry Marvin Ent.
For: Addition
Value: $10,000
Recipient: Judy Ficken, 804 First Ave. W. Contractor: Warland Creek Builders
For: Re-roof
Value: $7,700
Recipient: Northwest Healthcare Corp., 343 Sunnyview Ln.
Contractor: Swank Enterprises
For: Addition
Value: $1,700,000
WHITEFISH:
Recipient: Allen B. Clark, 547 Spokane Ave. Contractor: Owner
For: Remodel
Value: $2,800
Recipient: Frontier Builders, 20 W. Second St. Contractor: Frontier Builders
For: Remodel
Value: $15,000
Recipient: River Design Group, 236 Wisconsin Ave.
Contractor: Owner
For: Remodel
Value: $5,000
Recipient: WF Properties, 6550 Highway 93 S.
Contractor: Owner
For: Remodel
Value: $50,000
Recipient: American Bank, 140 Baker Ave. Contractor: Anderson Construction
For: Commercial development
Value: $466,000
Recipient: Frontier Builders, 20 W. Second St. Contractor: Frontier Builders
For: Remodel
Value: $25,000
Recipient: Kevin Corbett, 19 O’Brien Ave. Contractor: Constenius Const.
For: Addition
Value: $15,000
Recipient: Gary and Annette Larsen, 25 W. Second St.
Contractor: Owner
For: Addition
Value: $20,000
Recipient: Ron Terry Construction, 735 Aspen Grove
Contractor: Ron Terry Construction For: Single family residence
Value: $160,000
Recipient: Jerry and Kathlee Martin, 5061 Trumblehome Ave.
Contractor: Ron Terry Construction
For: Single family residence
Value: $198,000
Recipient: Great Northern Homes, 4 Granite Springs Trail
Contractor: Great Northern Homes
For: Single family residence
Value: $249,424
Recipient: Joel and Quincy Shehan, 400 Icehouse Terrace
Contractor: Jesse Lee Custom Homes For: Single family residence
Value: $289,120
Recipient: IOL3,LLC, 279 Vista Dr. Contractor: Ron Terry Construction For: Single family residence
Value: $203,000
Recipient: Charles Sterling Bennett, 242 W. Third St.
Contractor: Cheff Construction
For: Single family residence/construction Value: $100,000
Recipient: Vince and Jenn Zetooney, 5077 Tumblehome Ave.
Contractor: James Lee Const.
For: Single family residence
Value: $251,560
Recipient: Dee and Jim Beightol, 117 Bit- terroot Crt.
Contractor: Meredith Construction For: Single family residence
Value: $4,100,000
Recipient: Blake and Nora Dunlop, 139 Berry Ln.
Contractor: Great Northern Homes For: Single family residence
Value: $1,900,000
Recipient: Scott Summers, 117 Yarrow Ln. Contractor: Canyon Construction
For: Remodel
Value: $85,000
Recipient: Stephanie Sunshine, 509 Hazel Pl.
Contractor: Owner
For: Remodel
Value: $12,000
Recipient: Joel and Lisa Toller, 426 W. Third St.
Contractor: Centerline Const.
For: Remodel
Value: $3,920
Mark Johnson is the general manager at Flathead Electric Co-op.