To view the full print/pdf version of 2021's Annual Report, click here
For the Co-op financials included in the Annual Report, see the attached file at the bottom of the page or click here
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When our forefathers formed Sussex Rural Electric Cooperative in 1937, members’ quality of life was transformed with their new access to electric power - providing cleaner drinking water, light outside of daylight hours, and the ability to automate many physical tasks and chores. The socioeconomic benefits of the Rural Electrification Act of 1936 demonstrated the scope of electricity’s importance to living a longer and better life. Today, more than 900 rural electric cooperatives power 56% of the nation’s landmass.
Today, meeting people’s energy needs is still critical to ensuring quality of life. In the early days of the coronavirus outbreak, it was clear that the pandemic would change our perception of normal. As we were all still adjusting to masks and social distancing for the first time, electric cooperatives like Sussex REC were looking ahead to identify and confront the possible long-term impacts of COVID-19. One of the first things we explored was the projected economic impact on our Co-op and consumer-members. The National Rural Electric Cooperative Association projected that lost electricity load and unpaid bills could total a staggering $10 billion nationally through 2022. In response, Sussex Rural Electric Cooperative has tried to reach out and work with members struggling with financial hardship, helping them find payment assistance, and offering extended payment plans.
With state-mandated moratoriums on disconnections for non-payment, some members have fallen further and further behind on their bills. For some of our members who have been out of work or have had their incomes affected by the coronavirus, it may take them several months, if not years, to catch up. While we are offering interest-free, deferred payment plans, we also remain vigilant on trying to help our members find other forms of local, state, or federal assistance so that the wider membership does not have to absorb any of the potential economic shortfall.
When we shut our offices in March of 2020 and sent our employees home, we did not know what kind of revenue loss we would face due to the amount of layoffs and shutdowns that were occurring throughout the state. At the same time, we had to keep the lights on for our members. As schools and many businesses went remote, power quality and availability became even more critical. Our own employees worked every day from home for the first time in the Co-op’s history and we rotated our line crews to try to keep them all safe, protected, and available to work. Faced with these unprecedented challenges, the Co-op took the steps necessary to keep its commitments to both our members and employees. Once it was available, Sussex Rural Electric applied immediately for the Paycheck Protection Program (PPP) loan offered from the federal government. We wanted to make sure that we could pay our employees, keep them safe and ready to work, and ensure Co-op power was there for our members. Securing the PPP loan was instrumental in that endeavor. The loan has since been forgiven by the Small Business Agency and we were able to defer and hopefully avoid any financial hardships.
Sussex Rural also applied for Federal Emergency Management Agency (FEMA) assistance related to our storm expenses from Tropical Storm Isaias, which impacted our service territory in August of 2020. Widespread outages were caused by high winds associated with the tropical storm and mutual aid crews were called in from our sister cooperatives in Pennsylvania. The ability to reclaim some of the expenses from this storm also helped keep SREC’s financials strong in 2020.
While sales remained on budget, SREC’s financial resilience is additionally owed to expenses that we did not incur in 2020. The cancellation of our Annual Meeting, Youth Tour, travel, and training expenses all attributed to the savings to offset receivable shortfalls.
As we worked on the year’s budget, considering our costs and projections for 2021 and beyond, there were some indicators that a rate increase might be necessary. However, management and the Board of Directors could not seriously consider this notion during the ongoing pandemic and the hardships many of our members were facing. So rates have remained flat, the same as they were in 2020. In fact, Sussex Rural’s rates have actually decreased by 4.7% since 2012 – a testimony to the Co-op’s mission of providing the highest quality of service at the lowest possible cost.
Tree trimming remains the Cooperative’s largest expense after the cost to purchase our power. Our ongoing right-of-way maintenance program continues on a cycle of four years’ worth of a tree’s growth. While this much tree cutting may seem extreme, doing all of this prevents potential outages which would be even more costly to repair. Outside of storms, 47% of the total outages SREC experienced in 2020 were due to trees. Adding to our regular tree trimming cycle, SREC has been proactively dealing with problem ash trees that are falling prey to the emerald ash borer, an invasive pest destroying ash trees across the country. We are monitoring the ash tree situation closely and last year began budgeting additional money to remove “danger” trees (trees that are dead or in imminent danger of falling onto our lines but are located outside of our tree-trimming right-of-way). We are tracking and monitoring dangerous ash trees separately from other problem trees in our territory. In 2020 we removed 27 problem ash trees from locations where, if one were to fall, the resulting outage could have affected hundreds (or more) members. We expect that number to increase in future years as more ash trees become affected by the emerald ash borer.
SREC Resources, our wholly owned subsidiary, experienced a shutdown of work for about three months due to the pandemic, but since the summer it has had a record year installing Cummins home standby generators. 58 Cummins Generators were sold in 2020 and most are now installed. Additionally, Resources installed 170 Generlink transfer switches in 2020, 110 of those since the August 2020 tropical storm. The pandemic caused delays for both manufacturers, first while assembly plants were closed and then in getting supplier parts for assembly. As a result, both Cummins and Generlink products have had long lead times for delivery.
ETS continues to be popular for members looking to replace oil and gas furnaces. Four new furnaces and two room units were energized in 2020. The combined effect of over 255 ETS systems (6.2 MW of demand capacity) installed across our service territory helps reduce SREC’s peak power demands, which leads to lower power cost purchases we have to make which helps keep rates stable for all Sussex Rural members.
SREC continues to benefit from its 50-year contract with the U.S. Army at Picatinny Arsenal. Throughout 2020 many improvements, upgrades, and replacements were completed to continue updating and maintaining the base’s electric distribution system. The contract with Picatinny also contributes to maintaining a strong amount of line crew coverage at Sussex during storms and large jobs.
In 2020, SREC retired capital credits in the amount of $600,000 total - $300,000 to members on our lines in 2003, $150,000 to members from 2018, and $150,000 to members from 2019. We sent 13,000 checks to members from those years based on the amount of electricity they used during that time. We split it this way to accomplish two things: to retire the oldest credits on our books (from 2003) and to make sure as many active members as possible (2018/19) receive capital credit checks so that they can realize the benefits of being a member of an electric cooperative. The distribution in 2020 benefitted over 90% of our active members, 57% of them being active members still on our lines dating back to 2003!
We were hoping to see you all in person at our Annual Meeting this year, but COVID-19 state mandates still prohibit large gatherings. Although we will not be sharing a meal and providing a bill credit, this year we will bring the meeting to you through an online platform. On June 7, our 2021 Online Meeting webpage will have informational content along with prizes, including a grand prize of a year’s worth of FREE electricity.* You can register to win through an online form at www.sussexrec.com/annual-meeting, and if you vote in our mail-in board election in May, you will qualify for another entry – that is two chances to win!
Your Cooperative works hard to balance supply of electricity with demand. While that may sound simple, there is a complex web of facilities and organizations that work together to make it happen each day. An interconnected network of electricity generators and tens of thousands of miles of electrical lines all the way down to the 727 miles of Sussex Rural’s grid work together to ensure that enough electricity is available on the coldest winter mornings and during the hottest days of summer. There may be a “new normal” in the world, but your Co-op continues to work with our members as we have since 1937.