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N AV I G AT I N G THE COOPERATIVE PURPOSE
2 0 14 S U M T E R E L E C T R I C C O O P E R AT I V E A N N UA L R E P O RT
Dear SECO members,
As you browse these pages, you’ll notice familiar landmarks and lakes that shape our service territory and our members’ lifestyles. Dense vegetation and weather challenges require SECO to proactively address service reliability. Keeping the lights on when storms blow through, maintaining stable rates and providing outstanding customer service are our highest priorities.
December 31, 2014 wrapped up another phenomenal year of smooth sailing, both fi nancially and operationally. The co-op grew steadily while our employees ran a tight ship, conserving costs while maintaining stellar reliability and service that produced outstanding customer satisfaction.
On the fi nancial front, operating revenue topped $363.7 million, an increase of about $2.2 million over our budget. Purchased power cost was $254 million, an increase of about $553,000 – representing almost 70 percent of total revenue.
The differential between revenue and power cost produced gross margins of $109.7 million. Total expenses of $99.5 million were $2.5 million less than budgeted, showcasing our employees’ cost-conscious dedication. The combination of improved gross margins and reduced expenses created a total margin of $18.9 million, an increase of $5.1 million over our budget.
Although growth slowed in late 2014, we added 4,470 new services to our system and ended the year with 189,058 accounts and utility plant investments of $735.8 million. Members consumed 2.982 billion kilowatt-hours of energy – equating to growth of about 5 percent.
Effective October 1, SECO’s residential rate restructuring produced rate decreases for about 75 percent of residential members. Learn how SECO’s rates stack up against other electric providers on page 9.
Rates and reliability are two key satisfaction drivers. In 2014, the average member experienced 1.39 outages, and those who experienced an outage lost power for roughly 50 minutes – equating to a 99.99% availability. Humbly, those statistics refl ect a professionally designed, well built, and proactively maintained system with a right-of-way staff dedicated to minimizing tree-related outages.
Our 2014 member satisfaction survey earned SECO a tremendous ACSI (American Customer Satisfaction Index) score of 89. Read more about how SECO measures up against other providers on page 10.
The employees of SECO and our Board of Trustees recognize how important low-cost, reliable power is to our members. Thank you for your SECO membership. It is our privilege to serve your energy needs.
Jim Duncan CEO & General Manager
rs,
e pages you’ll noticece ffamiliar landmarks
Sumter Electric Cooperative, Inc.
Cooperative HighlightsOperating Revenue . . . . . . . . . . . . . $363,727,345
Net Margins . . . . . . . . . . . . . . . . . . . $18,898,675
Total Assets . . . . . . . . . . . . . . . . . . $693,332,820
Patronage Capital Distributed . . . $4,198,774
Kilowatt-Hours Sold . . . . . . . . . . 2,982,645,174
Miles of Energized Line . . . . . . . . . . . . . .11,980
New Services . . . . . . . . . . . . . . . . . . . . . . . . 4,470
Active Accounts . . . . . . . . . . . . . . . . . . .189,058
Full-Time Employees . . . . . . . . . . . . . . . . . . . 401
Table of Contents
The Admirals
(Board of Trustees) . . . . . . . 2-3
The Lay of the Land
(Service Territory) . . . . . . . .4-5
The Captain and First Mates
(Management Team) . . . . . . .6-7
The Crew in Action
(High Score/Low Rates) . . . 8-9
Light Up the Dark
(Reliable Service). . . . . . . .10-11
The Bounty:
Independent
Auditors’ Report. . . . . . . . . . 12
Balance Sheets . . . . . . . . . . . 13
Statements of Revenues
and Patronage Capital . . . . 14
Statements of
Cash Flows . . . . . . . . . . . . . 15/16
Financial
Statement Notes. . . . . . . .16-24
Charting the Course: Our Purpose and Values
Our Purpose: To provide exceptional service to our customers, co-workers, and communities.
Our Values: ; Commitment to the Cooperative Purpose
; Honesty & Integrity ; Safety ; Strong Work Ethic ; Team Oriented ; Open Communication
SECO is the second largest electric cooperative in the Sunshine State and also one of the largest in the nation. Thumbing through the pages of the 2014 Annual
Report, you’ll notice a variety of familiar landmarks and bodies of water that shape our service territory and the lifestyles of our members. We’ve included these photos of land and lakes because the vegetation and bodies of water in this area require SECO to approach system design, construction and maintenance with a creative, proactive approach. Keeping the lights on for you when storms blow through, maintaining stable rates and providing outstanding customer service are our highest priorities.
Your member-elected board of trustees oversees SECO’s governance to ensure that we are charting our co-op’s course to deliver on our purpose of providing exceptional service to our customers, co-workers and communities.
Charting the Course: Our Purpose and Values
Our Purpose: To provide exceptional service to our customers, co-workers, and communities.
Our Values: ; Commitment to the Cooperative Purpose
; Honesty & Integrity ; Safety ; Strong Work Ethic ; Team Oriented ; Open Communication
SECO is the second largest electric cooperative in the Sunshine State and also one of the largest in the nation. Thumbing through the pages of the 2014 Annual
Report, you’ll notice a variety of familiar landmarks and bodies of water that shape our service territory and the lifestyles of our members. We’ve included these photos of land and lakes because the vegetation and bodies of water in this area require SECO to approach system design, construction and maintenance with a creative, proactive approach. Keeping the lights on for you when storms blow through, maintaining stable rates and providing outstanding customer service are our highest priorities.
Your member-elected board of trustees oversees SECO’s governance to ensure that we are charting our co-op’s course to deliver on our purpose of providing exceptional service to our customers, co-workers and communities.
Cooperative PrinciplesCooperatives around the world generally
operate according to the same core principles, and they trace these roots to the fi rst cooperative founded in Rochdale, England in 1844.
This is considered the birth of modern cooperatives because of the principles and practices created to guide the co-op. The principles have evolved over the years, but no matter the industry, cooperative businesses today still adhere to these seven guiding principles:
1Voluntary and Open Membership—Cooperatives accept any person able to use our services who
agrees to the responsibilities of membership.
2 Democratic Member Control—We are governed by our members. Those elected to the Board
of Trustees actively participate in setting policies. Elected trustees answer to the members. In the name of equality, each member receives one vote at election time.
3 Members’ Economic Participation—Members contribute equally to, and democratically control,
the capital of SECO. The cooperative returns margins to members in the form of capital credits.
4 Autonomy and Independence—Cooperatives are independent companies controlled by our
members. If we enter into agreements with other organizations (including governments) or raise capital from external sources, we do so on terms that ensure continued democratic control by our members.
SECO’s Board of Trustees: A true form of democracy, SECO’s Board of Trustees is elected by the general membership of the cooperative to govern the organization and uphold the cooperative principles.
3
5 Education, Training, and Information—We teach and train our members, Board of Trustees,
management, employees and the general public. Topics include industry issues, energy effi ciency, community involvement, safety and more.
6 Cooperation Among Cooperatives—We serve our members best by strengthening the cooperative
movement and working together through structured groups (such as our generation and transmission provider, Seminole Electric Cooperative, Inc., Florida Electric Cooperatives, Inc. and the National Rural Electric Cooperative Association).
7Concern for Community—SECO employees live, work and play in the local communities of our
service territory. We want to see these communities prosper and support quality of life in our area through community outreach.
Dora Canal, Lake County
The Admirals
OcalaService Center
InvernessService Center
SumtervilleService Center
& Headquarters
GrovelandService Center
EustisService Center
OcalaService Center
InvernessService Center
SumtervilleService Center
& Headquarters
GrovelandService Center
EustisService Center
Ocala
Wildwood
Umatilla
Lake Apopka
Leesburg
Clermont
Lake Panasoffkee
Lake Weir
Lake GriffinLake
Eustis
Lake Harris
50
35
19
44
33
471
40
44
27
27
41
41
441
301
75
SECO’s Service Territory
5
Sumter Electric Cooperative, Inc. (also known as SECO Energy) began
serving the rural areas of Sumter County in Central Florida in 1938 as a
not-for-profi t electric cooperative. Over the years, our service area has
expanded with the population growth to serve the needs of residents
and business owners as far northwest as Levy County, as far north
as Marion County and as far south as Pasco County. Lake, Citrus, Hernando and Sumter
Counties fi ll in the middle of our territory – making SECO a vibrant, fi scally healthy part of
the Central Florida economy.
No matter which county you call home, beautiful water views are a central theme
throughout our service territory. SECO employees are proud to live and work in Central
Florida. It is our privilege to serve SECO members and our responsibility to act as good
stewards of the environment in this area. Improving the quality of life for those we serve is
a key cooperative focus, and ensuring that our members receive low-cost, reliable electric
service is our highest priority. Visit secoenergy.com for community outreach details.
Lake Harris, Lake County
The Management Team:
Jim Duncan, SECO’s CEO and General Manager, stands at the helm to oversee the leadership of SECO’s 400+ employees. Together with the Board of Trustees and his fi rst mates pictured here, Mr. Duncan is the anchor of stability on our course to fulfi ll our cooperative purpose. Nora Brown provides critical daily support to Mr. Duncan and the Board of Trustees.
Engineering: Ben Brickhouse over-sees this department’s responsibilities of mapping, design and planning, land rights and permitting, material research and analysis, troubleshooting and more. Planning for the future growth of the co-op is critical to ensuring an expertly designed system that holds up to the elements and provides stellar system reliability. Engineering’s workgroups consist of GIS (Geographical Information System) Ser-vices, Substation & Transmission Design and Engineering Services. This department develops the pivotal foundation for system improvements and new construction.
Reliability & Operations: John LaSelva oversees this important depart-ment whose round-the-clock goal is to en-sure electric service reliability.
R&O takes pride in the hard work they perform in all kinds of weather. The various workgroups that help the department to function as a cohesive team include: System Control, Transmission & Distribution, System Reliability, Technical Services, and Vegetation Management. Mr. LaSelva’s skilled employees recognize that electricity is essential to modern life and are committed to providing SECO members with the most reliable power possible. These employees come running when our members need us most – to restore power in the event of a rare service disruption.
Financial & Administrative Services: Gene Kanikovsky oversees the employees who ensure that our company’s fi nances are handled in an ethical and fi scally responsible manner. Members expect tangible benefi ts of the cooperative business model, and the fi nancial department bears responsibility for administering the allocation and return of margins in the form of capital credits. Mr. Kanikovsky also holds oversight of Information Technology – an important part of delivering power more effi ciently and reliably through technological advances. Workgroups include Accounting, Billing, Payroll, Information Technology, Telecommunications, Meter Reading, Revenue Recovery, Purchasing and Warehousing.
Corporate Communications & Energy Services: Barry Bowman’s oversight of this department includes many types of member engagement. From in-person member interactions to community presentations and
7
Captain and the First Mates
Lake Sumter Landing, The Villages
in-home energy audits, this workgroup educates on energy effi ciency and what it means to be part of a not-for-profi t electric cooperative. This department, lead by Bowman through 2014 and transitioning to Kathryn Gloria in 2015, also plays an active role in economic development committees/corporations, area chambers, community sponsorships and much more. The employees of this workgroup also design and produce SECO News, member publications, telephone messaging, the website, social media outreach and more.
Human Resources & Corporate Services: Gregg Morrell oversees the area that nurtures our most important asset – our workforce. This department’s purpose is to recruit, hire, develop and retain SECO Energy talent. Managing employee benefi ts and developing a strong work ethic helps keep costs low and morale high. This department carries the responsibility of managing our customer service/call centers, administering an effective safety program, keeping the fl eet rolling and ensuring our facilities remain in good condition. Specifi c workgroups include Human Resources, Safety & Risk Management, Facility Services, Fleet Services, Call Center, and Customer Service Centers.
Lake Harris, Lake County — January Sunrise
SECO Energy customers (its members) rated the cooperative an 89 in overall customer satisfaction for 2014 according to the American Customer Satisfaction Index (ACSI). The ACSI queries customers about their view of an ideal utility, meeting expectations, likelihood of choosing SECO if given a choice and overall satisfaction.
The SECO score of 89 is renowned in the
utility industry. Nationally, the largest cooperatives earned an average ACSI score of 82, and the largest municipal utilities earned a score of 76. The largest investor-owned utilities earned a score of 75.
SECO Energy’s Chief Executive Offi cer & General Manager Jim Duncan said, “The comparisons make it clear that SECO Energy
is exceeding our members’ expectations by providing low-cost, reliable electric service. Our residential rates are among the lowest in the state, and our ACSI score is a clear and humbling refl ection that SECO employees are fulfi lling our cooperative’s purpose - to provide exceptional service to our customers, co-workers and communities.”
Thank you, SECO Energy members, for rating us highly and for the privilege of serving as your electric provider.
2014 ACSI SCORE:89Thank you, SECO members,
for the high score!
ACSI ScoresU. S. Electric
Cooperatives
2014 American Customer Satisfaction Index
SECO Energy
89 82Municipal Utilities
76
Investor Owned Utilities (IOU)
75
9
SECO Energy is committed to providing members with reliable, low-cost electric service. Competitive rates are one of the most important drivers of satisfaction, and to ensure your happiness with our cooperative, SECO employees are dedicated to controlling costs and delivering reliable service.
The fi nancial pages that follow in this Annual Report provide granular details on SECO’s fi scal stability throughout 2014. The chart shows you how SECO stacks up in a statewide rate comparison of different utility types. SECO’s Director of Financial and Administrative Services Gene Kanikovsky oversees rate structures for the cooperative. He states, “It’s clear that SECO residential members pay less for their electric service on average compared to consumers of other Florida
cooperatives, municipalities and some investor-owned utilities. That, along with stellar reliability, is the SECO difference.”
Investor Owned $117.38
SECO Energy $120.70
Florida Average $123.21
Municipal $124.22
Co-ops $129.99
(per $/1,000 kWh)
December 2014
Residential Rate Comparisonof Florida Utilities
Members count on SECO for low rates
SECO employees respond quickly to service disruptions, especially in adverse weather conditions. The reliability of your power is our highest priority, and we can prove it. Our system and consumer average interruption frequency and duration numbers are among the best in the state and across the nation.
As shown in the charts depicting the last decade of reliability indices, SECO members have experienced signifi cant decreases in the number of minutes an outage lasts and the number of outages they experience. These improvements were also implemented during a decade of rapid growth when SECO added nearly 46,000 meters to our system.
Depend on SECO for reliable Outage Duration
Average minutes of interruption in a year per member
SAIDI: System Average Interruption Duration Index– average duration of an interruption for the system.
20050
20
2006 2007 2008 2009 2010 2011 2012 2013 2014
40
60
80
100
120
140
160
Current Outages Report Outages Check Status Outage Summary Outages History
SECO Storm Center
www.secostormcenter.com
Storm Center
County Members
OutTotal
Members
County 0 189,058
Lake 0 51,940
Hernando 0 163
Pasco 0 32
Levy 0 1,438
Citrus 0 13,054
Marion 0 43,855
Sumter 0 45,310
Other 0 33,266
Zoom Control
Overview
County
Detail
http://www.secoenergy.com Last Updated:12/31/2014 09:07:35 AM
11
energy delivery
SECO Energy’s Director of Reliability and Operations stated, “Over the last decade, SECO has made signifi cant investments in system improvements that strengthen reliability.”
You can count on SECO employees to be there when you need us, whether you call, email or report an outage through Storm Center online. To help you prepare for extreme weather and save money on your bills, SECO can help you with easy and inexpensive home energy-effi ciency measures that save both energy and money. Visit secoenergy.com, click “Energy” and select “Energy Saving Tips.” Take it a step further and request a free home audit with one of our energy services professionals. Email [email protected] today to schedule a visit. You can also fi nd SECO Energy on Facebook and Twitter to join the conversation – your voice is always welcome.
Lake Eustis, Wayfare Regatta
Outage FrequencyAverage number of interruptions per year
SAIFI: System Average Interruption Frequency Index–the number of times the SECO system experiences an interruption.
20050
0.5
1
1.5
2
2.5
3
2006 2007 2008 2009 2010 2011 2012 2013 2014
INDEPENDENT AUDITORS’ REPORT
Board of DirectorsSumter Electric Cooperative, Inc.Sumterville, Florida
Report on the Financial Statements We have audited the accompanying fi nancial statements of Sumter Electric Coop-erative, Inc. (the Cooperative), which comprise the balance sheets as of December 31, 2014 and 2013, and the related statements of revenues and patronage capital, and cash fl ows for the years then ended, and the related notes to the fi nancial statements.
Management’s Responsibility for the Financial Statements Management is responsible for the preparation and fair presentation of these fi nancial statements in accordance with accounting principles generally accepted in the United States of America; this includes the design, implementation, and maintenance of internal control relevant to the prepara-tion and fair presentation of fi nancial statements that are free from material misstatement, whether due to fraud or error.
Auditors’ Responsibility Our responsibility is to express an opinion on these fi nancial statements based on our audits. We conducted our audits in accordance with auditing standards generally accepted in the United States of America and the standards applicable to fi nancial audits contained in Government Auditing Standards, issued by the Comptroller Gen-eral of the United States. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the fi nancial statements are free from material misstatement.
An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the fi nancial statements. The procedures selected depend on the auditors’ judgment, including the assessment of the risks of materi-al misstatement of the fi nancial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the entity’s preparation and fair presentation of the fi nancial statements in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity’s internal control. Accordingly, we express no such opinion. An audit also includes evaluat-ing the appropriateness of accounting policies used and the reasonableness of signifi cant accounting estimates made by management, as well as evaluating the overall presentation of the fi nancial statements.
We believe that the audit evidence we have obtained is suffi cient and appropriate to provide a basis for our audit opinion.
Opinion In our opinion, the fi nancial statements referred to above present fairly, in all material respects, the fi nancial position of the Cooperative, as of December 31, 2014 and 2013, and the results of its operations and its cash fl ows for the years then ended in accordance with accounting principles generally accepted in the United States.
Other Reporting Required by Government Auditing Standards In accordance with Government Auditing Standards, we have also issued our report dated February 6, 2015, on our consideration of the Cooperative's internal control over fi nancial reporting and our tests of its compliance with certain provisions of laws, regulations, contracts, and grant agreements, and other matters. The purpose of that report is to describe the scope of our testing of internal control over fi nancial reporting and compliance and the results of that testing, and not to provide an opinion on the internal control over fi nancial reporting or on compliance. That report is an integral part of an audit performed in accordance with Gov-ernment Auditing Standards in considering the Cooperative’s internal control over fi nancial reporting and compliance.
Other Reporting Required by 7 CFR Part 1773 In accordance with 7 CFR Part 1773, Policy on Audits of Rural Utili-ties Service Borrowers, §1773.33 and clarifi ed in the RUS policy memorandum dated February 6, 2015 (the regulatory requirements for electric borrowers), we have also issued our report dated February 6, 2015, on our consideration of the Cooperative's compliance with the terms, covenants, provisions, or conditions of their loan, grant, and security in-struments as set forth in the regulatory requirements for electric borrowers, insofar as they relate to accounting matters enumerated therein. The purpose of that report is to describe the scope of our testing of the Cooperative’s compliance with the regulatory requirements for electric borrowers and the results of that testing, and not to provide an opinion on the Cooperative’s compliance with the regulatory requirements for electric borrowers. That report is an integral part of an audit in considering the Cooperative’s internal control over fi nancial reporting and compliance.
Purvis, Gray and Company, LLPFebruary 6, 2015Ocala, Florida
13
ASSETS
2014 2013
Electric Plant
Distribution and Transmission Plant $ 707,809,361 $ 678,825,865
Construction Work in Progress 28,001,667 24,295,830
Total Electric Plant 735,811,028 703,121,695
(Accumulated Provision for Depreciation and Amortization) (153,507,530) (153,465,556)
Total Electric Plant - Cost Less Depreciation and
Amortization 582,303,498 549,656,139
Investments
Investments in Associated Organizations and
Other Special Funds 63,781,444 56,714,152
Current Assets
Cash and Cash Equivalents 3,267,124 2,251,843
Accounts Receivable - Consumers (Less Provision for
Doubtful Accounts 2014 - $1,203,007 2013 - $1,104,944) 10,954,021 10,390,124
Other Receivables 1,956,071 1,189,150
Unbilled Electric Revenues 8,943,451 9,929,584
Inventories 12,099,129 12,543,035
Prepayments and Other Current Assets 199,395 402,234
Total Current Assets 37,419,191 36,705,970
Deferred Charges 9,828,687 10,594,731
Total Assets 693,332,820 653,670,992
EQUITIES AND LIABILITIES
Equities
Memberships 829,990 809,379
Patronage Capital 218,247,571 203,547,670
Other Equities 2,638,856 2,632,933
Total Equities 221,716,417 206,989,982
Noncurrent Liabilities
Long-term Debt 384,880,930 371,036,133
Capital Lease Obligation 380,863 0
Deferred Compensation Liability 736,603 650,490
Total Noncurrent Liabilities 385,998,396 371,686,623
Current Liabilities
Long-term Debt - Portion Due Within One Year 13,968,400 13,107,997
Capital Lease Obligation - Portion Due Within One Year 67,756 0
Accounts Payable 34,251,863 29,684,223
Consumer Deposits 13,939,509 14,131,472
Other Current or Accrued Liabilities 11,845,062 8,750,628
Total Current Liabilities 74,072,590 65,674,320
Deferred Credits 11,545,417 9,320,067
Total Equities and Liabilities $ 693,332,820 $ 653,670,992 See accompanying notes.
Balance Sheets December 31, 2014 & 2013
Statements of Revenues and Patronage Capital for the years ended December 31, 2014 & 2013
2014 2013
Operating Revenues $ 363,727,345 $ 340,468,612
Operating Expenses
Cost of Power 254,026,879 232,724,103
Transmission Expense 344,558 209,510
Distribution Expense - Operations 15,237,772 15,370,820
Distribution Expense - Maintenance 22,375,004 21,215,453
Consumer Accounts Expense 10,879,822 9,760,178
Customer Service and Informational Expense 1,396,091 1,390,721
Administrative, General, and Other Expense 13,486,358 12,201,182
Depreciation Expense 22,491,045 21,884,622
Taxes - Expense 67,193 64,205
Impairment Loss 0 2,220,972
Other Expense 242,795 383,803
(Total Operating Expenses) (340,547,517) (317,425,569)
Operating Margins Before Fixed Charges 23,179,828 23,043,043
Fixed Charges
Interest on Long-term Debt (12,971,756) (13,170,997)
Operating Margins After Fixed Charges 10,208,072 9,872,046
Other Margins
G&T Cooperative Capital Credits 6,384,891 3,598,561
Other Capital Credits and Margins 1,625,247 1,051,676
Total Other Margins 8,010,138 4,650,237
Net Operating Margins 18,218,210 14,522,283
Nonoperating Margins
Interest Income 503,042 116,667
Other Nonoperating Income 177,423 121,919
Total Nonoperating Margins 680,465 238,586
Net Margins 18,898,675 14,760,869
Patronage Capital, Beginning of Year 203,547,670 191,674,089
(Retirement of Capital Credits) (4,198,774) (2,887,288)
Patronage Capital, End of Year $ 218,247,571 $ 203,547,670
See accompanying notes.
15
Statements of Cash Flows for the years ended December 31, 2014 & 2013
2014 2013
Cash Flows from Operating Activities
Net Margins $ 18,898,675 $ 14,760,869
Adjustments to Reconcile Net Margins to Net
Cash Provided by (Used in) Operations:
Capital Credits and Patronage Dividend Certifi cates Assigned (8,010,138) (4,650,237)
Depreciation 24,438,351 23,852,536
Provision for Uncollectible Accounts 360,000 253,336
Amortization of Prepaid Pension 1,148,029 1,114,829
Changes in Assets - Decrease (Incr) & Liabilities - Increase (Decr):
Accounts Receivable (704,685) (1,207,821)
Prepayments and Other Current Assets 202,839 54,042
Deferred Charges (381,985) (11,515,393)
Accounts Payable 4,567,640 4,254,283
Consumer Deposits (191,963) 600,125
Other Current Liabilities 3,094,434 1,026,346
Deferred Compensation Liability 86,113 135,484
Deferred Credits 2,225,350 2,508,215
Total Adjustments 26,833,985 16,425,745
Net Cash Provided by (Used in) Operating Activities 45,732,660 31,186,614
Cash Flows from Investing Activities
Change in Inventory - Net of Salvage 443,906 232,082
Contributions in Aid of Construction Received 9,590,793 9,972,371
Proceeds from Disposition of Property 422,470 137,962
Proceeds from Redemption of Patronage Capital Certifi cate 809,076 582,345
Proceeds from Redemption of Other Investments 219,883 49,929
Purchase of Other Investments (86,113) (135,484)
Extension and Replacement of Plant (63,050,780) (56,873,190)
Plant Removal Cost (3,574,249) (2,079,318)
Net Cash Provided by (Used in) Investing Activities (55,225,014) (48,113,303)
Cash Flows from Financing Activities
Line of Credit (Net) (2,211,965) 1,682,835
Proceeds on Long-term Debt 30,000,000 30,000,000
Payments on Long-term Debt (13,082,834) (12,551,293)
Payments on Capital Lease Obligation (25,326) 0
Other Equities 5,923 0
Membership Fees 20,611 31,425
Retirement of Capital Credits (4,198,774) (2,887,288)
Net Cash Provided by (Used in) Financing Activities 10,507,635 16,275,679
Net Increase (Decrease) in Cash and Cash Equivalents 1,015,281 (651,010)
Cash and Cash Equivalents, Beginning of Year 2,251,843 2,902,853
Cash and Cash Equivalents, End of Year $ 3,267,124 $ 2,251,843
See accompanying notes.
Statements of Cash Flows December 31, 2014 & 2013
2014 2013
Supplemental Disclosures of Cash Flow Information
Cash Paid During the Year for:
Interest $ 13,064,973 $ 13,316,767
Supplemental Schedule of Noncash Investing and Financing Activities
The Cooperative Retired Certain Assets from its Plant Records as Follows:
Cost of Assets Retired $ 23,316,903 $ 10,303,454
Plant Removal Costs 3,574,249 2,079,318
Material Salvaged 1,565,766 1,129,017
Net Reduction in Accumulated Depreciation $ 28,456,918 $ 13,511,789
The Cooperative Financed Certain Equipment Using a Capital Lease:
Amounts not Included in Proceeds from Capital Lease Obligation $ 473,944 $ 0
Amounts not Included in Extension and Replacement of Plant 473,944 0
See accompanying notes.
Notes to Financial Statements
Note 1 - Summary of Signifi cant Accounting Policies
Sumter Electric Cooperative, Inc. (the Cooperative) is a nonprofi t rural electric distribution cooperative organized under the Stat-utes of the State of Florida. The primary purpose of the Cooperative is to provide electricity to its members located in central Florida through wholesale purchase and subsequent distribution. The Accounting policies of the Cooperative conform to generally accepted accounting principles as applied to utility cooperatives and are in accordance with the accounting requirements of the Rural Utilities Service (RUS).
Receivables
Receivables are shown at anticipated realizable value. Bad debts are recognized by use of the allowance method. Receivables consist primarily of uncollateralized amounts due from the sale of energy to commercial and residential members of the Cooper-ative and other related items. Receivables may be considered delinquent after thirty days and are written off after approximately one hundred twenty days past due.
Revenue Recognition and Cost of Power
Electric revenues are recognized when billed and are adjusted for unbilled usage through year-end. Power costs are metered and recognized during the period of use. The Cooperative’s retail rates provide for recovery of all power costs incurred.
Utility Plant
Electric plant is recorded at original cost with maintenance and repairs charged to expense as incurred. Additions to plant include costs of materials, labor, and certain overhead expenses. Depreciable plant replaced or retired is removed from the appropriate asset at average cost; cost being determined by a moving average for identifi able units of property. Such costs, plus removal costs less any salvage values, are charged to accumulated depreciation when normal retirements are made.
17
Depreciation
Provision for depreciation of utility plant in service is based on straight-line composite rates. Depreciation rates are applied by primary account within the plant accounts. Depreciation on general plant assets is based on straight-line rates for specifi c assets as outlined by RUS ranging from three to fi fteen years.
No provision for depreciation is made for construction work in progress until the construction has been completed and the plant is placed into service.
Materials and Supplies
Materials and supplies inventories are stated at weighted average cost.
Cash and Cash Equivalents
For purposes of the statements of cash fl ows, the Cooperative considers all cash and highly liquid investments as cash and cash equivalents. Such investments generally have maturities of three months or less. The Cooperative maintains accounts with several banks in central Florida. As of December 31, 2014 and 2013, accounts at each bank are fully insured by the FDIC up to $250,000.
Investments
Investments in capital term certifi cates are carried at cost, with cost determined by specifi c identifi cation. Investments in associ-ated cooperatives are accounted for at original cost plus patronage capital assigned less capital credits received.
Patronage Capital
Accumulated net margins are credited to patronage capital. The net margins are assigned to individual cooperative members’ capital credit accounts based upon their contribution to total patronage capital for the year. Such amounts are assignable to mem-bers at year-end; the assignment of capital accounts takes place in subsequent years. Capital credits are returned to members in accordance with the Cooperative’s policies and bylaws.
Income Taxes
The Cooperative is a nonprofi t organization exempt from income taxes under the provisions of Internal Revenue Code Section 501(c)(12). Accordingly, there is no provision for income taxes in the fi nancial statements. The Cooperative has adopted Ac-counting Standards Codifi cation (ASC) 740, Accounting for Uncertainty in Income Taxes. The implementation of this standard had no impact on the Cooperative’s fi nancial statements. The Cooperative does not believe it has taken any uncertain tax positions that would have a material effect on the fi nancial statements. The Cooperative’s Form 990s for the past three years are open to examination by the Internal Revenue Service. For the years ended December 31, 2014 and 2013, the Cooperative fi led Form 990T for unrelated rental income on communication towers. The amount paid or accrued was $3,767 and $2,089, respectively.
Compensated Absences
Vacation is accrued monthly as it is earned, and sick pay is expensed as it is used or paid out in accordance with Board policy. Sick leave hours for employees who began employment prior to February 1998 are capped at 800 hours and are eligible for payout when the employee reaches age 55. These hours are accrued and expensed when they are eligible for payout. Between the ages of 55 and 64, such payouts are discounted by the same percentages that apply to early retirees of the pension plan.
Accounting Estimates
The preparation of fi nancial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the fi nancial statements, and the reported amounts of revenues and expenses during the reported period. Actual results could differ from those estimates.
Collective Bargaining
Approximately 40% of the Cooperative’s workforce is covered by a collective bargaining agreement that expires in September 2015.
Subsequent Events
Management has evaluated subsequent events through February 6, 2015, the date the fi nancial statements were available to be issued.
Notes to Financial Statements
Note 2 - Electric Plant and Depreciation RatesThe following is a summary of the major classes of electric plant and depreciation rates as of December 31, 2014 and 2013:
2014 2013 Depreciation Rates
Transmission Plant $ 16,058,685 $ 16,366,134 2.75%
Distribution Plant 605,100,982 577,756,560 3.20%
Intangible Plant 229,168 310,023 N/A
General Plant 86,420,526 84,393,148 2%-33.33%
Total Electric Plant in Service 707,809,361 678,825,865
Construction Work in Progress 28,001,667 24,295,830
Total Electric Plant - at Cost 735,811,028 703,121,695
Accumulated Depreciation (153,507,530) (153,465,556)
Total Electric Plant – Net $ 582,303,498 $ 549,656,139
Depreciation expense of $22,491,045 (2014) and $21,884,622 (2013) is net of $1,947,305 (2014) and $1,967,914 (2013) charged to clearing accounts, some of which is capitalized.Impairment LossDuring 2013, the Cooperative recorded a $2.2 million dollar capital asset impairment loss associated with meter equipment that was not fully functional. Management determined that the fair value using a cash-fl ow approach was not reasonably estimable. Management estimated the fair value of the capital assets by determining the key system components, the importance of those components to the system as a whole, and the statistical success rates of those components, and then applied the combined percentage to the net book value. During 2014, these meters were retired and replaced.Note 3 - Investments in Associated Organizations and Other Special FundsInvestments in associated organizations and other special funds consist of the following:
2014 2013
Seminole Electric Cooperative, Inc.
Patronage Capital Assigned $ 49,683,141 $ 43,298,250
National Rural Utilities Cooperative
Finance Corporation (CFC):
Patronage Capital Certifi cates 1,993,925 1,935,339
Capital Term Certifi cates 3,269,534 3,489,416
GRESCO Utility Supply, Inc. 6,586,366 6,065,942
Investments in Other Associated Organizations 1,511,875 1,274,715
Special Funds 736,603 650,490
Total Investments in Associated Organizations
and Other Special Funds $ 63,781,444 $ 56,714,152
CFC Capital Term Certifi cates are purchased as a condition of the mortgage agreements with CFC. At December 31, 2014 and 2013, they consist of the following:
2014 2013
Certifi cates, 5% (Maturing 2070 to 2080) $ 1,902,011 $ 1,902,011
Certifi cates, 3% (Maturing 2020 to 2030) 471,400 471,400
Certifi cates, 0% (Maturing at Variable Dates) 896,123 1,116,005
Total $ 3,269,534 $ 3,489,416
Notes to Financial Statements
19
Notes to Financial Statements
The patronage capital assigned by Seminole Electric Cooperative, Inc. and the patronage capital certifi cates with CFC are excluded from ASC 320, Investments—Debt and Equity Securities, as an investment accounted for under the equity method of accounting. Capital term certifi cates are held to maturity under ASC 320 and are excluded from ASC 820, Fair Value Measurements and Disclosures. Investments in Other Associated Organizations includes memberships with related and trade organizations, and are accounted for under the equity method of accounting.
There were no assets recorded at fair value on a recurring basis at December 31, 2014, or December 31, 2013.
Note 4 - Account ReceivablesAll of the Cooperative’s consumer account receivables are due from consumers in the central Florida area. Each new consumer pays a membership fee and may make a deposit when becoming a consumer. The membership fees and deposits can be retained by the Cooperative in the event of nonpayment of a billing for services. Once a residential consumer establishes a satisfactory credit history, the Cooperative may return the member’s deposit.Other receivables include pole rentals due from other utilities, billings for projects performed for other utilities, and unpaid contribution in aid for construction bills.
Note 5 - Return of CapitalUnder provisions of the long-term debt agreements, unlimited patronage capital distributions to members are allowed, provided equities and margins equal or exceed 30% of total assets after distribution. Effective with the 1991 year, the Cooperative suspended for fi ve years the general capital credit retirements. During 1995, the suspension was lifted and the Cooperative began making general retirements of patronage capital. The equities and margins of the Cooperative represent 31.98% and 31.67% of the total assets at December 31, 2014 and 2013, respectively. Capital credit retirements in the amount of $4,198,774 and $2,887,288 were paid in 2014 and 2013, respectively.
Note 6 - Detail of Patronage Capital
2014 2013
Assignable $ 18,898,675 $ 14,760,869
Assigned 241,219,679 226,458,810
260,118,354 241,219,679
(Retired/Adjusted in Current Year) (4,198,774) (2,887,288)
(Cumulative Amount Retired in Previous Years) (37,672,009) (34,784,721)
Total Patronage Capital $ 218,247,571 $ 203,547,670
Note 7 - Detail of Other Equities
2014 2013
Operating Margins (Prior to 1957) $ 32,092 $ 32,092
Nonoperating Margins (Prior to 1964) 19,371 19,371
Capital Gains and Losses (Prior to 1964) 10,533 10,533
Donated Capital 6,549 626
Discount on Retired Capital Credits 2,570,311 2,570,311
Total Other Equities $ 2,638,856 $ 2,632,933
Note 8 - Noncurrent LiabilitiesThe Cooperative has the following unsecured lines of credit:
2014 2013
CoBank, ACB, Credit Line of $5,000,000 and $50,000,000
Variable Interest, 2.96% and 2.92% at December 31,
2014 and 2013, respectively $ 0 $ 25,289,375
Bank of America, Credit Line of $3,000,000
Variable Interest, 1.91% at December 31,
2013, Payable on Demand 0* 1,063,276
Regions Bank, Credit Line of $55,000,000
Variable Interest, 1.06% at December 31, 2014,
Payable on Demand 24,140,686 0
Total $ 24,140,686 $ 26,352,651
*The Bank of America Credit line was closed during 2014.
The Cooperative also has an available line of credit with CFC of $12,000,000 in 2014 and 2013, with no drawdowns or outstand-ing balances.
The Cooperative drew down $30,000,000 in long-term loan funds during 2013 and another $30,000,000 in January 2014 in approved long-term loan funds. As of December 31, 2014, the Cooperative had been approved for $110,000,000 in long-term loan funds. In accordance with ASC 470, Debt, the line of credit was classifi ed as long-term debt in an amount not exceeding the previously approved, but undrawn loan funds.
The following is a summary of the Cooperative’s long-term debt payable to RUS, FFB, CFC, and CoBank:
2014 2013
RUS Mortgage Notes
1.000% to 5.070% Notes $ 172,814,317 $ 177,384,761
(Current Portion) (4,832,310) (4,475,435)
Long-term Portion - RUS Mortgage Notes $ 167,982,007 $ 172,909,326
FFB Mortgage Notes - RUS Guaranteed
2.480% to 4.019% Notes $ 119,114,429 $ 92,124,166
(Current Portion) (3,427,368) (3,009,737)
Long-term Portion - FFB Mortgage Notes $ 115,687,061 $ 89,114,429
CFC Mortgage Notes
2.930% to 5.300% Notes $ 48,988,370 $ 52,478,775
(Current Portion) (3,616,835) (3,610,576)
Long-term Portion - CFC Mortgage Notes $ 45,371,535 $ 48,868,199
CoBank Mortgage Notes
1.520% to 3.260% Notes $ 33,791,528 $ 35,803,777
(Current Portion) (2,091,887) (2,012,249)
Long-term Portion - CoBank Mortgage Notes $ 31,699,641 $ 33,791,528
Total Current Portion $ 13,968,400 $ 13,107,997
Total Long-term Motgage Notes $ 360,740,244 $ 344,683,482
Total Long-term Letters of Credit 24,140,686 26,352,651
Total Long-term Portion $ 384,880,930 $ 371,036,133
Total Current and Long-term Portion $ 398,849,330 $ 384,144,130
Notes to Financial Statements
21
Notes to Financial Statements
RUS mortgage notes are payable to the United States of America for thirty-fi ve year periods each. Principal and interest are due in monthly installments. Certain notes have provisions for interest rate changes at future dates.
FFB mortgage notes are guaranteed by RUS and are payable quarterly to the United States of America with a maximum of up to thirty-fi ve year periods each. Certain notes have provisions for interest rate changes at future dates.
CFC mortgage notes are payable to the National Rural Utilities Cooperative Finance Corporation for thirty-fi ve year periods each. Principal and interest are due in quarterly installments. Certain notes have provisions for interest rate changes at future dates. Certain notes included above are serviced by CFC but have been sold to Farmer MAC. The Farmer MAC loans are payable semi-annually. At December 31, 2014 and 2013, the balance of these notes was $18,908,730 and $19,321,905 respectively. There were no unadvanced CFC loan funds available to the Cooperative as of December 31, 2014 and 2013, respectively.
One CoBank mortgage note is fi xed at a 3.26% interest rate for the remaining life of the loan and is paid monthly. The remaining CoBank mortgage notes are payable quarterly for thirty-fi ve year periods each. Interest is calculated based on variable rates that change weekly.
Interest on long-term debt, all of which was charged to expense, follows:
2014 2013
Lines of Credit $ 222,031 $ 553,225
Capital Lease 3,283 0
RUS Mortgage Notes 6,136,832 6,356,957
FFB Mortgage Notes - RUS Guaranteed 3,898,328 3,043,044
CFC Mortgage Notes 1,852,280 2,439,997
CoBank Mortgage Notes 859,002 777,774
Totals $ 12,971,756 $ 13,170,997
Long-term debt maturing within each of the fi ve years subsequent to December 31, 2014, is as follows:
Mortgage Notes
December 31 RUS CFC CoBank FFB Total
2015 $ 4,832,310 $ 3,616,835 $ 2,091,887 $ 3,427,368 $ 13,968,400
2016 4,863,532 3,328,733 2,174,819 3,582,710 13,949,794
2017 5,028,370 3,463,995 2,261,187 3,599,293 14,352,845
2018 5,190,782 2,944,145 2,351,138 3,616,596 14,102,661
2019 5,366,945 2,695,356 2,444,829 3,634,435 14,141,565
Thereafter 147,532,378 32,939,306 22,467,668 101,254,027 304,193,379
Total $ 172,814,317 $ 48,988,370 $ 33,791,528 $ 119,114,429 $ 374,708,644
Substantially all assets and revenues of the Cooperative are pledged as collateral for these notes. RUS debt covenants require the Cooperative to maintain certain ratios including a Times Interest Earned Ratio (TIER) of 1.25, a Debt Service Coverage (DSC) Ratio of 1.25 in two out of the last three years. As of December 31, 2014 and 2013, the Cooperative achieved a TIER of 2.48 and 2.17, respectively, a Debt Service Coverage Ratio of 2.10 and 1.96, respectively.
Cushion of Credit During 2014, the Cooperative began making advance payments on outstanding RUS debt under the RUS Cushion of Credit program. Deposits paid into the cushion of credit can only be used to pay future principal and interest payments on RUS loans. Under the program, deposits earn interest at a rate of 5% per year on the balance on deposit. As of December 31, 2014 and 2013, there were no amounts on deposit in the cushion of credit.
Capital Lease The Cooperative entered into a capital lease in 2014 for a heavy-duty bucket truck, with the lease expiring in the year 2020. The asset and liability under the capital lease are recorded at the lower of the present value of the minimum lease payments or the fair value of the asset. The asset is amortized over the lower of its related lease terms or its estimated productive life. Amortization of the asset under capital lease is included in depreciation expense for 2014.The following is a summary of property held under capital leases:
2014
Vehicles $ 473,944
(Accumulated Amortization) (19,253)
Net Carrying Value $ 454,691
The following is a schedule of the future minimum lease payments under the capital lease agreements together with the present value of the net minimum lease payments as of December 31, 2014:
Year EndingDecember 31
TotalPayments
2015 $ 78,674
2016 85,826
2017 85,826
2018 85,826
2019 85,826
2020 64,372
Total Minimum Lease Payments 486,350
(Amount Representing Interest) (37,731)
Total $ 448,619
The Capital Lease is classifi ed as follows on the Balance Sheet:
Current Liabilities - Capital Lease
Obligation - Portion Due Within One Year $ 67,756
Noncurrent Liabilities - Capital Lease Obligation 380,863
Total Capital Lease Obligation $ 448,619
Note 9 - Employer Benefi t PlansThe group pension plan for employees was merged into the Retirement and Security Program of the National Rural Electric Cooper-ative Association (NRECA) effective July 1, 2003. The Retirement and Security Plan (RS Plan), administered by the NRECA, is a de-fi ned benefi t, multi-employer pension plan qualifi ed under Section 401 and exempt from federal income tax under Section 501(a) of the Internal Revenue Code. The plan sponsor’s Employer Identifi cation Number is 53-0116145 and the Plan Number is 333.
A unique characteristic of a multi-employer plan compared to a single employer plan is that all plan assets are available to pay benefi ts of any plan participant. Separate asset accounts are not maintained for participating employers. This means that assets contributed by one employer may be used to provide benefi ts to employees of other participating employers.
The Cooperative’s contributions to the RS Plan in 2014 and 2013 represented less than 5% of the total contributions made to the plan by all participating employers. The Cooperative made contributions to the RS Plan totaling $3,672,542 and $14,993,410 in 2014 and 2013, respectively. Contributions in 2013 are signifi cantly higher than those in 2014 due to the Cooperative electing to participate in the prepayment option offered to participating employers, as described below.
On February 28, 2013, the Cooperative made a prepayment of $11,480,292 to the NRECA RS Plan, which was recorded as a Deferred Charge. The Cooperative is amortizing this Deferred Charge over 10 years. The unamortized balance of this Deferred Charge is described in Note 10.
In the RS Plan, a “zone status” determination is not required, and therefore not determined, under the Pension Protection Act (PPA) of 2006. In addition, the accumulated benefi t obligations and plan assets are not determined or allocated separately by individual employer. In total, the RS Plan was over 80% funded at January 1, 2014 and 2013, based on the PPA funding target and PPA actuarial value of assets on those dates.
Because the provisions of the PPA do not apply to the NRECA Plan, funding improvement plans and surcharges are not applicable. Future contribution requirements are determined each year as part of the actuarial valuation of the plan and may change as a result of plan experience.
All employees of the Cooperative meeting age and service requirements can elect to participate in a 401(k) savings plan (the 401(k) Plan) of the National Rural Electric Cooperative Association. Employees may make contributions to the 401(k) Plan up to the maximum percentage outlined in the 401(k) Plan and the Cooperative will match the employee contributions up to 4.0% of the employee’s salary. Both employee and employer contributions to the 401(k) Plan are funded biweekly. The Cooperative’s contributions to the 401(k) Plan were $1,163,241 and $1,116,828 in 2014 and 2013, respectively.Effective January 2006, the Cooperative adopted an executive compensation plan that allows eligible participants to defer com-pensation under Internal Revenue Code Section 457(b). There is no matching employer contribution. This plan is administered by the Cooperative and plan assets are subject to the Cooperative’s creditors in the event of bankruptcy or insolvency. Plan assets totaled $736,603 and $650,490 at December 31, 2014 and 2013, respectively.
Notes to Financial Statements
23
Notes to Financial Statements
Self-insured Medical Benefi tsThe Cooperative provides a self-insured medical benefi t plan for active full-time employees and their dependents. Active full-time employees that select dependent or additional coverage are required to pay a premium to cover part of the cost of the coverage they select. In connection with the plan, the Cooperative maintains specifi c stop loss for claims that exceed $175,000 for any covered individual and aggregate stop loss for claims that exceed the aggregate deductible with a maximum aggregate benefi t of $1,000,000. The aggregate deductible is the number of employee only elections multiplied by the employee aggregate factor of $483.09 for 12 months and the number of family elections multiplied by the family aggregate factor of $1,227.15 for 12 months.
The Cooperative’s IBNR liability for active employees and part of the employees’ coverage for their dependents as of December 31, 2014 and 2013, is as follows:
2014 2013
Beginning Balance $269,899 $390,345
Claims Incurred 4,265,294 3,606,929
Claims Paid (4,326,278) (3,727,375)
Ending Balance $ 208,915 $ 269,899
Note 10 - Related Party Transactions The Cooperative is one of nine members of Seminole Electric Cooperative, Inc., an electric generating and transmission co-operative. Seminole Electric Cooperative, Inc. is the sole supplier of electricity to the Cooperative and has entered into an agreement to supply power to the Cooperative through 2045. Seminole Electric Cooperative, Inc. has pledged the power supply agreement of its members to secure certain of its notes and mortgages. The following is a summary of all signifi cant transac-tions between the Cooperative and Seminole Electric Cooperative, Inc.:
Purchased Power Cost $ 254,026,879 $ 232,724,103
Accounts Payable - Power Cost, December 31 $ 21,888,496 $ 19,728,762
Patronage Capital Assigned $ 6,384,891 $ 3,598,561
Patronage Capital, December 31 $ 49,683,141 $ 43,298,250
Other Accounts Receivable, December 31 $ 1,342,599 $ 0
Note 11 - Deferred Charges and Credits A schedule of deferred charges and credits are as follows:
2014 2013
Deferred Charges
Unamortized:
Prepayment of Pension $ 9,184,235 $ 10,332,264
Unamortized Debt Issuance Costs 370,912 0
Deposits on Sales and Use Tax 184,134 169,261
Dues 79,603 79,027
Other 9,803 14,179
Total Deferred Charges $ 9,828,687 $ 10,594,731
Deferred Credits
Unclaimed Capital Credits $ 4,015,787 $ 2,579,629
Customer Advances for Construction 7,000,865 6,216,990
Other Deferred Amounts 416,923 405,730
Customer Benevolent Fund 111,842 117,718
Total Deferred Credits $ 11,545,417 $ 9,320,067
Amortization Deferred charges are amortized over periods of one or more years.Prepayment of Pension As more fully described in Note 9, the Prepayment of Pension Deferred Charged is being amortized over 10 years.
Notes to Financial Statements
Note 12 - Financial InstrumentsThe following is a summary of the book and current values of the Cooperative’s fi nancial instruments for 2014:
Financial Instruments Book Value Current Value
RUS Long-term Debt $ 172,814,317 $ 192,528,922
FFB Long-term Debt 119,114,429 149,737,683
CFC Long-term Debt 48,988,370 48,693,393
CoBank Long-term Debt 33,791,528 24,266,871
CFC Subscription Capital Term Certifi cates and
Interest-bearing Loan Capital Term Certifi cates 2,373,411 2,153,455
CFC Loan Capital Term Certifi cates 596,133 485,384
Lines of Credit 24,140,686 24,140,686
The following is a summary of the book and current values of the Cooperative’s fi nancial instruments for 2013:
Financial Instruments Book Value Current Value
RUS Long-term Debt $ 177,384,761 $ 189,314,085
FFB Long-term Debt 92,124,166 114,387,736
CFC Long-term Debt 52,478,775 45,851,004
CoBank Long-term Debt 35,803,777 24,789,964
CFC Subscription Capital Term Certifi cates and
Interest-bearing Loan Capital Term Certifi cates 2,373,411 1,823,820
CFC Loan Capital Term Certifi cates 816,015 500,937
CFC Member Capital Security 100,000 164,260
Lines of Credit 26,352,651 26,352,651
Discount Rates
Note 13 - ContingencyThe Cooperative is exposed to various risks of loss related to torts, theft, damage, and destruction of assets, errors and omis-sions, injuries to employees and the public and damage to property of others in the normal course of business. In addition, the Cooperative enters into contracts with third parties, some of whom are empowered to act as its agents in order to carry out the purpose of the contracts. The Cooperative has purchased commercial insurance that is adequate to cover these various risks and that is in compliance with Federal Register Rule 7 CFR, Part 1788, RUS Fidelity and Insurance Requirements. The Coopera-tive is not aware of any contingencies that are expected to have a material effect on the fi nancial statements.
RUS Loans:■ The RUS variable rate loans are discounted at the RUS
insured loan rates as of January 1, 2015 and 2014, for the corresponding maturity date. The maturity dates range from 1 to 27 years (2014) and 1 to 28 years (2013). The rates range from 0.125% to 3.75% (2014) and 0.25% and 4.38% (2013).
FFB Loans:■ The FFB loans are discounted at the Treasury rates as of
January 1, 2015 and 2014, for the corresponding maturity dates. The maturity dates range from 3 to 33 years (2014) and 4 to 33 years (2013). The rates range from 1.275% to 2.545% (2014) and 1.24% and 3.92% (2013).
CFC Loans:■ The CFC loans are fi xed rate loans discounted at January 1,
2015 and 2014, CFC fi xed rate using corresponding maturity dates for each loan. The maturity dates range from 1 to 25 years (2014) and 2 to 26 years (2013). The rates range from 2.85% to 5.35% (2014) and 2.55% to 6.50% (2013).
CoBank Loans:■ The CoBank loans include a variable rate loan and a fi xed rate
loan. The variable rate loan was discounted at the variable rate of 2.92% as of January 1, 2015 (2014) and 2.92% as of January 1, 2014 (2013). The fi xed rate loan was discounted at 2.89% as of January 1, 2015 (2014) and 3.26% as of January 1, 2014 (2013). The maturity dates range from 6 to 24 years (2014) and 7 to 25 years (2013).
CFC Capital Term Certifi cates (CTC’s):■ The Loan CTC’s are discounted based on the corresponding
maturity dates of the CFC long-term fi xed rates. The rates range from 3.65% to 5.20% (2014) and 4.10% to 6.40% (2013).
■ The subscription CTC’s were discounted using the corresponding interest rates for the years remaining on the CTC ranging from 4.20% to 5.45% (2014) and 4.85% to 6.55% (2013).
CFC Member Capital Security:■ The CFC member capital security is discounted at the thirty-
year Treasury bond rate of 3.92% (2013). The CFC member capital security was cashed in during 2014.
The Action Committee for Rural Electrifi cation (ACRE®) is the federal Political Action Committee (PAC) of SECO Energy’s national trade association — National Rural Electric Cooperative Association (NRECA). Founded in 1966 by approximately 1,000 consumer-owned, not-for-profi t electric cooperatives, ACRE supports U.S. House and Senate candidates —those in offi ce now and running — who will speak for, and protect the interests of, electric cooperatives and you, their consumer-owners.
ACRE contributions to candidates are backed by over 30,000 eligible members — like you — across 47 states with an average contribution of just $53, making it truly a grassroots PAC.
NRECA motivates its 42 million consumer-owners to be politically active through the ACRE Co-op Owners for Political Action® program. Over 8,000 of its members are electric co-op consumer-owners who have joined this program.
In the past, SECO’s employees and members have generated the highest ACRE participation in the state — and even the country. We would like to re-establish that fi rm foundation and ask for your help.
Now, more than ever, electric co-ops need the support of legislators to apply pressure to the EPA (Environmental Protection Agency) to prevent irrational, ineffective regulation. Most important, we need our legislators to chart a course
toward a sound national energy policy that doesn’t damage our economy and still provides for reasonable environmental measures. It’s all about balance. We need your help, your voice, and a few dollars in support.
Please consider enrolling by completing the enclosed authorization form. Mail the form in the business reply envelope or drop off at SECO. Your contribution can be conveniently deducted from your electric bill or you are welcome to enclose a check in any amount.
For more information on the ACRE program or eligibility to participate, please contact Kathy Judkins, SECO Deputy Director for Community Affairs (352) 569-9783 or [email protected].
Support Candidates at the Federal Helm
Customer Service Centers EUSTIS
50 West Ardice Avenue(352) 357-5600
;
GROVELAND850 North Howey Road
(352) 429-2195
;
INVERNESS610 South US Highway 41
(352) 726-3944
;
OCALA4872 SW 60th Avenue
(352) 237-4107
;
SUMTERVILLE293 South US Highway 301
(352) 793-3801
Corporate Offi ce330 South US Highway 301Sumterville, Florida 33585
(352) 793-3801
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www.secoenergy.com