February 25, 2020 Board Book - beartoothelectric.com...only $813,100. As a result of the reduced borrowing, interest expense over the life of the forecast was reduced by approximately

BEC BOARD OF TRUSTEES

Julie Lindgren, President District 3—Roberts, Bearcreek [email protected] 406-671-1086

Bill Pascoe, Vice President District 6—Nye [email protected] 406-494-2075

Arleen Boyd, Secretary/Treasurer District 5—Fishtail [email protected] 406-328-6645

Dan Dutton District 1—Rockvale, MT, Clark, WY [email protected] 406-425-0897

Roxie Melton District 2—Boyd, Joliet [email protected] 406-426-0135

Richard Nolan District 4—Red Lodge [email protected] 406-425-2269

Ralph Lewis District 7—Columbus, Rapelje, Reed Point [email protected] 406-321-1768______________________________________

Kevin P. Owens, PE General Manager PO Box 1110 1306 Broadway Ave N Red Lodge, MT 59068-1110 406-446-2310 503-791-8275 [email protected]

Beartooth Electric Cooperative, Inc.

February 25, 2020Board Book

BEC Board Book | February 25, 2020 | Page 1

Baeartooth Electric Cooperative, Inc. Regular Board Meeting

Tuesday, February 25, 2020 Noon | Beartooth Electric Office

Agenda

• Call Meeting to Order & Roll Call

• Pledge

• Visitor Comments

• Approve Agenda

• Approve Minutes

• January 28, 2020 Board Meeting

• Committee/Trustee/Attorney Reports

• Finance Committee (Julie Lindgren) • Risk Management Committee (Arleen Boyd) • Bylaw Committee (Arleen Boyd) • Policy Committee (Roxie Melton) • Communication Committee (Richard Nolan) • Treasurer’s Report (Arleen Boyd)

CONSENT AGENDA (Items 7-9, shown in blue)

• Membership Connections and Cancellations, Capital Credit to Estates, Registers, Reports, and

Summary of Disbursements

• Financials – Brad Prophet

• 2020—January Financial Statements

• Staff Reports

• General Manager Report – Kevin Owens • Member Communication & Services Report – Kaaren Robbins • Line Superintendent Report – Eric Elton


• New Business

• FEMA Pre-Disaster Grant Submittal • FEMA Grant Fee Letter • Board Resolution: Beartooth Electric Cooperative, Inc. Commitment to Zero Contacts • Select the 2020 Beartooth Electric Cooperative Scholarship Recipients • Select BEC Representative for the 2020 MECA Memorial Scholarship

• Old Business

• BEC Existing Loan Refinance Project • Board vote on the Risk Management Committee’s proposal to implement a cost pass-through revenue

increase of 2.8% ($250,000) by raising BEC’s electric rate $0.003616/kwh on all rate classes (residential, small commercial, large commercial, industrial and irrigation), effective March 1, 2020

• Proposed Bylaw Amendments for 2020 Annual Meeting Vote-Approval - Board Acceptance 2020 Vote-By-Mail Package

• Upcoming Meetings

• BEC Risk Management Committee Meeting | BEC Office | March TBD • Auditor Fieldwork | BEC Office | March 2– 4, 2020 • Preliminary Audit Draft | March 16, 2020 • Preliminary Audit Draft Comments Deadline | March 19, 2020 • 2019 Audit Presentation | BEC Office | March 31, 2020 | 10 AM • BEC Regular Board Meeting | BEC Office | March 31, 2020 • BEC Annual Member Meeting Set-up | ANIPRO Event Center, Absarokee, MT | May 1, 2020 | Noon • BEC Annual Member Meeting | ANIPRO Event Center, Absarokee, MT | May 2, 2020 | 8 AM – Noon

• Executive Session

• Executive Action

• Adjourn


Beartooth Electric Cooperative Regular Board Meeting

Tuesday, January 28, 2020 | Noon Beartooth Electric Office Minutes

Beartooth Electric Cooperative will be referred to as BEC herein. The Glossary of Terms and Acronyms website link is http://www.BeartoothElectric.com/content/glossary. 1. Call to Order: Board President, Julie Lindgren, called the

meeting to order at 12:50 p.m. 2. Pledge of Allegiance

Present: Presiding: Julie Lindgren, Bill Pascoe, Arleen Boyd, Daniel Dutton, Richard Nolan, Ralph Lewis, and Roxie Melton Staff: Kevin P. Owens, General Manager Eric Elton, Line Superintendent Brad Prophet, Accountant Kaaren Robbins, Member Communication & Services Via telephone: Larry Martin, Legal Counsel Visitors: Janet Luloff, Member Frank Willett, Finance & Risk Management Committee Member

3. Visitor Comments

None. 4. Approve Agenda

MOTION A motion was made by Daniel Dutton and seconded by Ralph Lewis to accept the January 28, 2020 agenda as presented. Motion carried. Voting was unanimous.

5. Approve Minutes

MOTION A motion was made by Arleen Boyd and seconded by Daniel Dutton to accept the minutes of the January 7, 2020, regular board meeting with edits. Motion carried. Voting was unanimous.


http://www.beartoothelectric.com/content/glossary

6. Committee/Trustee/Attorney Reports Finance Committee (Julie Lindgren & Arleen Boyd) Finance Committee Meeting, December 16, 2019

Attendees—Committee: Bill Pascoe, Frank Willett, Julie Lindgren, Jim Rodgers, Arleen Boyd. Board: Dan Dutton, Richard Nolan, Ralph Lewis, Roxie Melton. Staff: Kevin Owens, Brad Prophet, Kaaren Robbins, Eric Elton. Support: EES Senior Consultant Russ Schneider, BEC Counsel Larry Martin. The finance report is presented with the Risk Management Committee report under forecast.

Risk Management Committee (Arleen Boyd & Bill Pascoe)

Risk Management Committee Report 1-28-20 Committee Attendees: Bill Pascoe, Arleen Boyd, Frank Willett, Jim Rodgers, Walter Clapp (phone) Members, Board, Staff, Guest Attendees: EES Senior Consultant Russ Schneider, Kevin Owens, Brad Prophet, Kaaren Robbins, Dan Dutton, Richard Nolan, Ralph Lewis, Roxie Melton, Gary Thompson, Bruce Austin Convened 2:00 P.M., Adjourned 4:50 P.M. Agenda: • Forecast Update/Overview — OATT rate impacts and what-if major

event analysis — Brad Prophet, Frank Willett • OATT rate Increase update — Kevin Owens • Rate Design Review/Discussion — Bill Pascoe, Kevin Owens • Suggestions for next meeting — Discussion Frank Willett and Brad Prophet presented the updated forecast Brad prepared with needed changes identified at the December Board meeting. With the added forecast assumption that the pass-through of the NorthWestern Energy transmission rate increase to membership will be adopted in March 2020, the cash flow projections improve, and margins rise to acceptable levels. Next steps: Brad Prophet will add specificity to the plant addition expenses estimated for 2025-2028 after consulting with Eric and Kevin. With the assumption that a rate design change will be revenue neutral for the co-op, there are no what-if scenarios identified for rate design financial impacts at this time. FORECAST REVIEW — from Committee Member Frank Willett Three copies of the BEC forecast were handed out. Forecast Version #1 This handout was essentially the previous last look at the forecast model. It included the NWE 54% increase in transmission expense starting in July 2019 and continuing through 2028. All cost was absorbed in this version by BEC, and none of the increase was passed on to members as a rate increase. Since members have now been given notice that the board will consider a potential BEC rate increase to pass this $250,00 incremental transmission expense through to the membership, this version was not discussed. Forecast Version #2 This version is basically the same as Version #1, with the only change being the entire cost of the NWE transmission increase is passed on to the membership as a rate increase. This change resulted in approximately $250,00 additional revenue and operating margins in each year of the forecast. Because of the added revenue generated, BEC borrowing during the 10 year forecast period was reduced significantly. Version #1 has BEC borrowing roughly $3.0 million. Version #2 borrows


only $813,100. As a result of the reduced borrowing, interest expense over the life of the forecast was reduced by approximately $400,00, which added the same amount to operating margins. Version #2 is today the committee’s most realistic view of the future until something else significant changes. The question was asked at the meeting how confidant the committee was in the numbers and where the most significant risks may lie. It was pointed out that delivered power costs represent 40% of BECs total costs and are covered by signed contracts for the life of the forecast (through 2028). Depreciation and interest expense represent 20% of total BEC costs and should not change. The remaining 40% of BEC expense consists of operations & maintenance, accounting, and administration & general expense. Salaries and benefits paid employees to represent about 40% of these costs. We feel confident in these numbers. It was also pointed out during this discussion that probably the biggest question about the forecast model is the number of kWh being purchased and sold. The forecasts are based on what we know has happened in the past. Should the winters get shorter and warmer, this could impact the kWh that the members consume and pose revenue challenges for the co-op. Version #3 This was a risk what-if version. It is the same as Version #2 but assumes there is a $300,000 unanticipated expense event in 2023. It could be a fire, storm or something else. BEC has seen $300,00 events in the last 10 years. About the only difference here from Version #2 is that the margins decline by $300,000 in 2023 and BEC has to borrow $200,000 in 2027.


Approved 2020 Budget

Version 1

All-inclusive power costs Thru 12/31/19 at $42.083/MWh, Beginning 7/1/2019 @ 75% of NWE FERC

proposed transmission increase, moves to $43.24/MWh. 2020 moves to 100% or $44.43/MWh,

2021-2028 continues at 100% or $44.43/MWh (includes Schedule 5/6 increases).

Projected borrowing begins in 2020. Projected borrowing is $3.0 Million through the life of the forecast

(through 2028).

Rates

No projected rate increase throughout forecast.

Capital Credits

2019 Capital Credit Retirements tied to budget = $442,273.

5% of Total Equity thereafter. 2020 Budget projected as $444,051 in Capital Credits and $30,000 in

Estate Retirements, Total 2020 Budget of $474,051.

New debt for construction

10 Year Forecast Assumptions - Updated 01/20/2020

Power Costs

Cost of Purchased Power - Tied to Signed Power Purchase Contracts through October 2027.

Growth in Plant

2019-2024 Plant Investment tied to budget. Beginning 2025 @ $850,000 with +3% thereafter.

Plant Retirement - 2019 tied to budget, $350,000 each year thereafter.

Growth in Revenue

Revenue is projected to grow ~$100,000 per year, from growth in new residential members. Usage per

member projected to remain flat.

Power Requirements

Residential meters are projected to grow at 84 per year, maintaining an average monthly usage of 802

kwh.

System Loss- projected at 11.69%, includes NW Transmission loss charge and System loss.

System own use projected to remain flat.

Cash level

Cash is set to a target of around $500,000.

Assumptions Page 1 of 2 Pages



Version 1


Transmission Expense - Tied to revised 2019 budget, 1% annual projected growth thereafter.

Distribution Expense Operations - Tied to revised 2019 budget, 41%@3% & 59%@1% projected growth

thereafter.

Distribution Expense Maintenance - Tied to revised 2019 budget, 41%@3% & 59%@1% projected

growth thereafter. Additional $4,000 is added to each year for additional tree trimming escalation

(approximately additional 1.5% per year).

Customer Account Expense - Tied to revised 2019 budget, 47%@3% & 53%@1% projected growth

thereafter.

Customer Service and Informational Expense - Tied to revised 2019 budget, 49%@3% & 51%@1%

projected growth thereafter.

Sales Expense - Tied to revised 2019 budget, 2% projected growth thereafter.

Administrative and General Expense - Tied to revised 2019 budget, 47%@3% & 53%@1% projected

growth thereafter.

Depreciation - Tied to revised 2019 budget, 3.2% of Total Utility Plant (TUP) in 2020, 3% of Total Utility

Plant thereafter.

Cash Flow Statement

Line 2, Deduct non-cash allocations from associated organizations which is recognized as income and

included in total margins.

Line 5, Add back Regulatory Assets which is a non-cash expense and included in A&G expense. This will

go away after 2022.

Line 6, Cost of removal of assets, $100K per year 2020-2028: This is our cost of retirement of 200 poles

per year. For 2018, that number was $68,222.

Line 9, Receipt of Capital Credit retirement checks from associated organizations such as CFC, CoBank,

Federated, NISC, etc.

Line 10, Deduction of interest income earned on CoC and recognized as income on operating statement.

No cash received since reinvested in CoC.

Line 12, Add back P&I payment from CoC to RUS/FFB debt. Since it was paid out of CoC no cash from

Co-op.

Line 13, CoBank loan payment (transferred to CoC) - Principal.

Line 14, All other debt loan payments - Principal.

Expenses



Updated 01/20/2020 Version 1


2019 2028

2019 2020 2021 2022 2023 2024 2025 2026

43.08% 43.55% 43.02% 42.60% 43.60% 44.76% 45.34% 45.41%

43.08% 45.15%

568,510 436,912

12,083,431 9,082,258

1.13 1.73

Modified DSC* 1.48 1.73

1.66 1.76

Modified TIER* 1.53 1.76

*Member requested calculation - Not a CFC formula; cannot be used for compliance

1.53 1.26 1.45 1.47 1.82 1.90 1.94 1.91

1.48 1.43 1.85 1.82 1.97 1.97 1.94

Minimum DSC Requirement 1.25 Minimum TIER Requirement 1.25

Brown data points in years 2019, 2020 & 2021, which includes Cushion of Credit, are Member calculations - not a CFC formula for compliance Brown data points in years 2019, 2020 & 2021, which includes Cushion of Credit, are Member calculations - not a CFC formula for compliance

TIER

EQUITY (%)

DSC with Cushion of Credit

Cash level

Debt Service Coverage

TIER

Equity %

Outstanding Debt

Outstanding Debt

43.08%

43.55%

43.02%42.60%

43.60%

44.76%

45.34% 45.41% 45.46%45.15%

2019 2020 2021 2022 2023 2024 2025 2026 2027 2028

1.13 1.25 1.38

1.83 1.97 1.97 1.94 1.88 1.81 1.73 1.48 1.43

1.85 1.82

2019 2020 2021 2022 2023 2024 2025 2026 2027 2028

1.66 1.97

1.49 1.82 1.90 1.94 1.91 1.85 1.76

1.53 1.26

1.45

1.47

2019 2020 2021 2022 2023 2024 2025 2026 2027 2028

12,083,431 11,488,312

11,035,033 10,548,768

10,037,635 9,501,659 9,232,624 9,157,550 9,061,285 9,082,258

2019 2020 2021 2022 2023 2024 2025 2026 2027 2028

Results Page 1 of 4 PagesBEC Board Book | February 25, 2020 | Page 9



2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028

1 Revenue from energy sales 8,528,894$ 8,594,603$ 8,740,000$ 8,845,711$ 8,951,422$ 9,057,132$ 9,162,843$ 9,268,554$ 9,374,265$ 9,479,975$ 9,585,686$

2 Other Revenue 48,364$ 37,297$ 32,600$ 32,600$ 32,600$ 32,600$ 32,600$ 32,600$ 32,600$ 32,600$ 32,600$

3 Total Revenue 8,577,258$ 8,631,900$ 8,772,600$ 8,878,311$ 8,984,022$ 9,089,732$ 9,195,443$ 9,301,154$ 9,406,865$ 9,512,575$ 9,618,286$

4 Cost of Purchased Power Energy 2,611,949 2,574,167 2,621,474 2,651,730 2,681,986 2,712,242 2,742,497 2,772,753 2,803,009 2,833,265 2,863,521

5 Cost of Purchased Power Transmission 563,682 674,461 864,218 874,632 885,046 895,460 905,874 916,288 926,702 937,115 947,529

6 Total Cost of Power 3,175,631 3,248,628 3,485,692 3,526,362 3,567,032 3,607,701 3,648,371 3,689,041 3,729,711 3,770,381 3,811,050

Operating Expenses:

7 Operations & Maintenance 1,600,967$ 1,747,798$ 1,847,353$ 1,864,882$ 1,898,729$ 1,937,192$ 1,976,354$ 2,016,229$ 2,056,829$ 2,098,168$ 2,140,258$

8 Customer Accounting 447,465$ 535,930$ 452,077$ 460,898$ 469,891$ 479,059$ 488,406$ 497,936$ 507,652$ 517,557$ 527,655$

9 Administrative & General 1,064,931$ 1,010,308$ 1,079,069$ 1,098,865$ 1,122,714$ 1,147,184$ 1,169,439$ 1,192,126$ 1,215,254$ 1,238,830$ 1,262,863$

10 Amortization of Regulatory Asset 141,000 141,000 141,000 141,000 141,204 0 0 0 0 0 0

11 Total Operating Expense 3,254,363$ 3,435,036$ 3,519,499$ 3,565,644$ 3,632,538$ 3,563,435$ 3,634,200$ 3,706,292$ 3,779,735$ 3,854,554$ 3,930,776$

Fixed Expenses:

12 Depreciation Expense 1,016,306$ 1,092,359$ 1,114,985$ 1,061,758$ 1,078,221$ 1,082,655$ 1,086,412$ 1,101,412$ 1,117,177$ 1,133,730$ 1,151,094$

13 Tax Expense 2,011$ 2,811$ 2,811$ 2,839$ 2,868$ 2,896$ 2,925$ 2,954$ 2,984$ 3,014$ 3,044$

14 Interest Expense 606,502$ 601,939$ 561,477$ 539,520$ 520,774$ 491,413$ 466,663$ 446,565$ 441,900$ 443,578$ 451,297$

15 Total Cost of Electric Service 8,054,813$ 8,380,773$ 8,684,464$ 8,696,123$ 8,801,433$ 8,748,101$ 8,838,571$ 8,946,264$ 9,071,506$ 9,205,256$ 9,347,262$

16 Operating Margins 522,445$ 251,127$ 88,136$ 182,188$ 182,589$ 341,631$ 356,872$ 354,890$ 335,359$ 307,319$ 271,024$

17 Nonoperating Margins 179,525$ 148,269$ 115,021$ 81,096$ 60,712$ 60,590$ 61,063$ 62,298$ 64,953$ 68,321$ 72,303$

18 Total Margins 701,970$ 399,397$ 203,157$ 263,284$ 243,302$ 402,221$ 417,934$ 417,188$ 400,312$ 375,640$ 343,327$

Analysis of Revenue

19 Total kWh (Energy) & KW (Demand) Revenue 5,997,777$ 6,033,336$ 6,144,965$ 6,216,908$ 6,288,851$ 6,360,793$ 6,432,736$ 6,504,679$ 6,576,622$ 6,648,564$ 6,720,507$

20 Total Facilities Chg Revenue 2,531,117$ 2,561,267$ 2,595,035$ 2,628,803$ 2,662,571$ 2,696,339$ 2,730,107$ 2,763,875$ 2,797,643$ 2,831,411$ 2,865,179$

21 kWh Sold 67,441,000 67,870,624 68,982,440 69,790,787 70,599,133 71,407,480 72,215,827 73,024,174 73,832,521 74,640,868 75,449,215

22 Energy Revenue/kWh sold 0.0889$ 0.0889$ 0.0891$ 0.0891$ 0.0891$ 0.0891$ 0.0891$ 0.0891$ 0.0891$ 0.0891$ 0.0891$

23 Total Revenue/kWh sold 0.1272$ 0.1272$ 0.1272$ 0.1272$ 0.1273$ 0.1273$ 0.1273$ 0.1274$ 0.1274$ 0.1274$ 0.1275$

Analysis of Power Cost

24 kWh Purchased (inc. losses) 74,208,000 77,196,045 78,455,084 79,370,470 80,285,856 81,201,242 82,116,628 83,032,014 83,947,400 84,862,786 85,778,172

25 cost/kWh Energy 0.04279$ 0.04208$ 0.04443$ 0.04443$ 0.04443$ 0.04443$ 0.04443$ 0.04443$ 0.04443$ 0.04443$ 0.04443$

Analysis of Revenue, Power Cost

Statement of Operations




2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028

Assets1 Total Utility Plant Beginning Balance 31,694,606$ 33,066,182$ 34,307,445$ 34,843,296$ 35,391,934$ 35,940,714$ 36,088,513$ 36,213,721$ 36,713,721$ 37,239,221$ 37,790,986$

2 Plus Distribution Plant Additions 1,183,012$ 1,342,689$ 771,151$ 844,138$ 638,780$ 497,799$ 475,208$ 850,000$ 875,500$ 901,765$ 928,818$

3 Plus General Plant Additions 87,027$ 49,550$ 114,700$ 54,500$ 260,000$ -$ -$ -$ -$ -$ -$

4 Less Plant Retirements 360,886$ 150,976$ 350,000$ 350,000$ 350,000$ 350,000$ 350,000$ 350,000$ 350,000$ 350,000$ 350,000$

5 Total Utility Plant Ending 32,603,759$ 34,307,445$ 34,843,296$ 35,391,934$ 35,940,714$ 36,088,513$ 36,213,721$ 36,713,721$ 37,239,221$ 37,790,986$ 38,369,804$

6 Less Accum. Prov. For Depr 16,213,691$ 17,155,074$ 17,920,059$ 18,631,817$ 19,360,039$ 20,092,694$ 20,829,106$ 21,580,518$ 22,347,694$ 23,131,424$ 23,932,518$

7 Net Utility Plant 16,390,068$ 17,152,371$ 16,923,237$ 16,760,117$ 16,580,675$ 15,995,819$ 15,384,615$ 15,133,203$ 14,891,527$ 14,659,562$ 14,437,286$

8 General Funds for Operations 1,719,871$ 568,510$ 404,083$ 461,776$ 728,290$ 650,267$ 620,348$ 436,479$ 448,906$ 405,161$ 436,912$

9 Other Assets 2,801,529$ 2,471,706$ 2,946,391$ 3,081,812$ 2,877,194$ 3,013,805$ 3,120,917$ 3,288,911$ 3,428,502$ 3,570,048$ 3,713,859$

10 Southern Regulatory Asset 564,204$ 423,204$ 282,204$ 141,204$ -$ -$ -$ -$ -$ -$ -$

11 Total Assets 21,475,672$ 20,615,791$ 20,555,914$ 20,444,908$ 20,186,159$ 19,659,891$ 19,125,879$ 18,858,594$ 18,768,935$ 18,634,771$ 18,588,057$

Equity (Net Assets)12 Beginning Equity 7,516,576$ 8,923,900$ 9,221,970$ 8,981,075$ 8,795,305$ 8,598,841$ 8,571,120$ 8,560,499$ 8,549,662$ 8,522,490$ 8,472,006$

13 Plus Margins 1,814,038$ 399,397$ 203,157$ 263,284$ 243,302$ 402,221$ 417,934$ 417,188$ 400,312$ 375,640$ 343,327$

14 Less Payment of Capital Credits (406,714)$ (442,273)$ (474,051)$ (449,054)$ (439,765)$ (429,942)$ (428,556)$ (428,025)$ (427,483)$ (426,125)$ (423,600)$

15 Total Equity 8,923,900$ 8,881,024$ 8,951,075$ 8,795,305$ 8,598,841$ 8,571,120$ 8,560,499$ 8,549,662$ 8,522,490$ 8,472,006$ 8,391,733$

Liabilities16 Beginning Long Term Debt 12,911,050$ 13,331,756$ 12,083,431$ 11,488,312$ 11,035,033$ 10,548,768$ 10,037,635$ 9,501,659$ 9,232,624$ 9,157,550$ 9,061,285$

17 Plus New Debt for Dist. Mtr. & General Plant 1,575,000$ -$ 620,096$ 359,455$ -$ -$ -$ 297,500$ 525,300$ 541,059$ 696,613$

18 Less CoBank Principal CoC Loans (3.47%) (548,383)$ (171,157)$ (525,703)$ (360,927)$ -$ -$ -$ -$ -$ -$ -$

19 Less Payments of All Other Principal (605,911)$ (1,077,168)$ (689,512)$ (451,807)$ (486,265)$ (511,133)$ (535,976)$ (566,535)$ (600,373)$ (637,324)$ (675,640)$

20 Ending Long Term Debt 13,331,756$ 12,083,431$ 11,488,312$ 11,035,033$ 10,548,768$ 10,037,635$ 9,501,659$ 9,232,624$ 9,157,550$ 9,061,285$ 9,082,258$

21 Less Unapplied Cushion of Credit (1,959,244)$ (1,446,293)$ (931,669)$ (417,327)$ 0$ 0$ 0$ 0$ 0$ 0$ 0$

22 Outstanding Long Term Debt 11,372,512$ 10,637,138$ 10,556,643$ 10,617,706$ 10,548,768$ 10,037,635$ 9,501,659$ 9,232,624$ 9,157,550$ 9,061,285$ 9,082,258$

23 Other Liabilities 1,179,260$ 1,097,629$ 1,048,196$ 1,031,898$ 1,038,550$ 1,051,136$ 1,063,722$ 1,076,308$ 1,088,894$ 1,101,480$ 1,114,066$

24 Total Liabilities 12,551,772$ 11,734,767$ 11,604,839$ 11,649,603$ 11,587,318$ 11,088,771$ 10,565,381$ 10,308,932$ 10,246,444$ 10,162,765$ 10,196,324$

25 Total Liabilities and Equity 21,475,672$ 20,615,791$ 20,555,914$ 20,444,908$ 20,186,159$ 19,659,891$ 19,125,879$ 18,858,594$ 18,768,935$ 18,634,771$ 18,588,057$

Balance Sheet




Cash Flow Statement2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028

Sources of Cash

Cash from Operations

1 Margins 701,970$ 399,397$ 203,157$ 263,284$ 243,302$ 402,221$ 417,934$ 417,188$ 400,312$ 375,640$ 343,327$

2 Less Capital Credit Allocations (50,232)$ (50,600)$ (52,371)$ (55,226)$ (56,522)$ (56,568)$ (57,041)$ (58,277)$ (60,931)$ (64,300)$ (68,281)$

3 Plus Depreciation 1,016,306$ 1,092,359$ 1,114,985$ 1,061,758$ 1,078,221$ 1,082,655$ 1,086,412$ 1,101,412$ 1,117,177$ 1,133,730$ 1,151,094$

4 Net Changes to Working Capital 451,116$ -$ -$ -$ -$ -$ -$ -$ -$ -$ -$

5 Plus Regulatory Asset Amortization 141,051$ 141,000$ 141,000$ 141,000$ 141,204$ -$ -$ -$ -$ -$ -$

6 Cost of Removal of Assets (208,159)$ (100,000)$ (100,000)$ (100,000)$ (100,000)$ (100,000)$ (100,000)$ (100,000)$ (100,000)$ (100,000)$ (100,000)$

7 Cash from Operations 2,052,052$ 1,482,156$ 1,306,771$ 1,310,815$ 1,306,205$ 1,328,308$ 1,347,305$ 1,360,323$ 1,356,557$ 1,345,070$ 1,326,139$

Cash (for) from Financing

8 Payment of Capital Credits (406,714)$ (442,273)$ (474,051)$ (449,054)$ (439,765)$ (429,942)$ (428,556)$ (428,025)$ (427,483)$ (426,125)$ (423,600)$

9 Reciept of Capital Credit Retirement 39,508$ 18,000$ 18,000$ 18,000$ 18,000$ 18,000$ 18,000$ 18,000$ 18,000$ 18,000$ 18,000$

10 COC Investment and Earnings into COC (110,526)$ (82,180)$ (61,853)$ (28,716)$ (5,765)$ -$ -$ -$ -$ -$ -$

11 Loan Fund Advances 1,575,000$ -$ 620,096$ 359,455$ -$ -$ -$ 297,500$ 525,300$ 541,059$ 696,613$

12 CoC Applied to P & I 515,828$ 512,951$ 514,624$ 514,342$ 417,327$ -$ -$ -$ -$ -$ -$

13 Cushion of Credit Loan payment CoBank - Principal (512,496)$ (171,157)$ (525,703)$ (360,927)$ -$ -$ -$ -$ -$ -$ -$

14 Loan Fund Payments - Principal (425,056)$ (1,077,168)$ (689,512)$ (451,807)$ (486,265)$ (511,133)$ (535,976)$ (566,535)$ (600,373)$ (637,324)$ (675,640)$

15 Cash from Financing 675,544$ (1,241,827)$ (598,400)$ (398,707)$ (496,468)$ (923,075)$ (946,532)$ (679,060)$ (484,556)$ (504,390)$ (384,627)$

Cash (for) from Investments

16 Construction of Plant (1,732,462)$ (1,392,239)$ (885,851)$ (898,638)$ (898,780)$ (497,799)$ (475,208)$ (850,000)$ (875,500)$ (901,765)$ (928,818)$

17 Cash from Investing (1,732,462)$ (1,392,239)$ (885,851)$ (898,638)$ (898,780)$ (497,799)$ (475,208)$ (850,000)$ (875,500)$ (901,765)$ (928,818)$

18 Net Change to Cash 995,134$ (1,151,361)$ (164,427)$ 57,693$ 266,514$ (78,023)$ (29,919)$ (183,869)$ 12,427$ (43,745)$ 31,751$

19 Beginning Cash Balance 724,736$ 1,719,870$ 568,509$ 404,082$ 461,775$ 728,289$ 650,266$ 620,347$ 436,478$ 448,905$ 405,160$

20 Cash Ending Balance 1,719,870$ 568,509$ 404,082$ 461,775$ 728,289$ 650,266$ 620,347$ 436,478$ 448,905$ 405,160$ 436,911$



Version 2 - Increase in 3/1/2020 to initiate cost recovery for ten (10) months of expenses.




(10) months of expenses $209,498.



Power Costs


Growth in Plant



Growth in Revenue



Power Requirements


kwh.



Cash level


Projected borrowing in 2020 is about $450,000. Additional projected borrowing in 2027 and 2028.

Projected borrowing is $813,100 through the life of the forecast (through 2028).

Rates

Increase of $0.003616 per kWh for all classes beginning 03/01/2020 to initiate cost recovery for ten

Capital Credits







Version 2 - Increase in 3/1/2020 to initiate cost recovery for ten (10) months of expenses.




thereafter.





thereafter.





growth thereafter.


Plant thereafter.

Cash Flow Statement




go away after 2022.








Co-op.



Expenses



Updated 01/20/2020 Version 2 - Increase in 3/1/2020 to initiate cost recovery for ten (10) months of expenses.


2019 2028

2019 2020 2021 2022 2023 2024 2025 2026

43.08% 43.91% 44.90% 45.22% 46.95% 48.81% 50.79% 52.91%

43.08% 56.46%

568,510 424,389

12,083,431 6,965,697

1.13 2.24


1.66 3.13



1.53 1.64 1.98 2.07 2.47 2.59 2.72 2.87

1.48 1.61 2.15 2.15 2.30 2.30 2.30




TIER

Equity %

Outstanding Debt

Outstanding Debt

TIER

EQUITY (%)


Cash level43.08% 43.91% 44.90% 45.22% 46.95% 48.81%

50.79%52.91%

55.05% 56.46%

2019 2020 2021 2022 2023 2024 2025 2026 2027 2028

1.13 1.25

1.59

2.16 2.30 2.30 2.30 2.29 2.28 2.24

1.48 1.61

2.15 2.15

2019 2020 2021 2022 2023 2024 2025 2026 2027 2028

1.66 1.97 2.02

2.47 2.59 2.72 2.87 3.04 3.13

1.53 1.64 1.98

2.07

2019 2020 2021 2022 2023 2024 2025 2026 2027 2028

12,083,431 11,312,401

10,504,789 10,026,574

9,523,913 8,996,780

8,441,279 7,857,166

7,287,756 6,965,697

2019 2020 2021 2022 2023 2024 2025 2026 2027 2028




2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028


2 Other Revenue 48,364$ 37,297$ 32,600$ 32,600$ 32,600$ 32,600$ 32,600$ 32,600$ 32,600$ 32,600$ 32,600$

3 Total Revenue 8,577,258$ 8,631,900$ 8,982,098$ 9,130,673$ 9,239,307$ 9,347,940$ 9,456,574$ 9,565,208$ 9,673,841$ 9,782,475$ 9,891,109$




Operating Expenses:






Fixed Expenses:


13 Tax Expense 2,011$ 2,811$ 2,811$ 2,839$ 2,868$ 2,896$ 2,925$ 2,954$ 2,984$ 3,014$ 3,044$





18 Total Margins 701,970$ 399,397$ 416,310$ 532,245$ 525,328$ 682,656$ 700,998$ 710,657$ 718,448$ 724,311$ 718,943$

Analysis of Revenue



21 kWh Sold 67,441,000 67,870,624 68,982,440 69,790,787 70,599,133 71,407,480 72,215,827 73,024,174 73,832,521 74,640,868 75,449,215





25 cost/kWh Energy 0.04279$ 0.04208$ 0.04443$ 0.04443$ 0.04443$ 0.04443$ 0.04443$ 0.04443$ 0.04443$ 0.04443$ 0.04443$






2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028








8 General Funds for Operations 1,719,871$ 568,510$ 441,505$ 414,777$ 743,633$ 928,856$ 1,152,484$ 925,447$ 685,783$ 445,021$ 424,389$

9 Other Assets 2,801,529$ 2,471,706$ 2,730,479$ 2,865,079$ 2,874,870$ 3,010,382$ 3,116,409$ 3,282,949$ 3,420,010$ 3,557,661$ 3,696,389$


11 Total Assets 21,475,672$ 20,615,791$ 20,377,425$ 20,181,177$ 20,199,178$ 19,935,057$ 19,653,508$ 19,341,599$ 18,997,320$ 18,662,244$ 18,558,064$


13 Plus Margins 1,814,038$ 399,397$ 416,310$ 532,245$ 525,328$ 682,656$ 700,998$ 710,657$ 718,448$ 724,311$ 718,943$


15 Total Equity 8,923,900$ 8,881,024$ 8,948,497$ 9,061,818$ 9,134,055$ 9,360,008$ 9,593,005$ 9,824,012$ 10,051,260$ 10,273,008$ 10,478,301$


17 Plus New Debt for Dist. Mtr. & General Plant 1,575,000$ -$ 442,926$ -$ -$ -$ -$ -$ -$ 45,088$ 325,086$









Balance Sheet





Sources of Cash


1 Margins 701,970$ 399,397$ 416,310$ 532,245$ 525,328$ 682,656$ 700,998$ 710,657$ 718,448$ 724,311$ 718,943$











11 Loan Fund Advances 1,575,000$ -$ 442,926$ -$ -$ -$ -$ -$ -$ 45,088$ 325,086$

12 CoC Applied to P & I 515,828$ 512,951$ 514,624$ 514,342$ 417,327$ -$ -$ -$ -$ -$ -$



15 Cash from Financing 675,544$ (1,241,827)$ (774,311)$ (752,911)$ (501,744)$ (941,363)$ (977,133)$ (1,017,152)$ (1,057,313)$ (1,053,973)$ (817,709)$




18 Net Change to Cash 995,134$ (1,151,361)$ (127,005)$ (26,728)$ 328,855$ 185,223$ 223,628$ (227,037)$ (239,663)$ (240,763)$ (20,632)$

19 Beginning Cash Balance 724,736$ 1,719,870$ 568,509$ 441,504$ 414,776$ 743,632$ 928,855$ 1,152,483$ 925,446$ 685,782$ 445,020$

20 Cash Ending Balance 1,719,870$ 568,509$ 441,504$ 414,776$ 743,632$ 928,855$ 1,152,483$ 925,446$ 685,782$ 445,020$ 424,388$



Version 3 = Version 2 + What if scenario of one-time $300,000 storm in 2023.




(10) months of expenses $209,498.

Projected borrowing in 2020 is about $450,000. Additional projected borrowing in 2027 and 2028.

Projected borrowing is $1 Million through the life of the forecast (through 2028).

Rates

Increase of $0.003616 per kWh for all classes beginning 03/01/2020 to initiate cost recovery for ten

Capital Credits






Power Costs


Growth in Plant



Growth in Revenue



Power Requirements


kwh.



Cash level





Version 3 = Version 2 + What if scenario of one-time $300,000 storm in 2023.


What if Scenario

$300,000 Outage storm in 2023.



thereafter.





thereafter.





growth thereafter.


Plant thereafter.

Cash Flow Statement




go away after 2022.








Co-op.



Expenses



Updated 01/20/2020 Version 3 = Version 2 + What if scenario of one-time $300,000 storm in 2023.


2019 2028

2019 2020 2021 2022 2023 2024 2025 2026

43.08% 43.91% 44.90% 45.22% 46.14% 48.06% 50.09% 52.26%

43.08% 55.06%

568,510 434,599

12,083,431 7,231,926

1.13 2.20


1.66 2.99



1.53 1.64 1.98 2.07 1.82 2.59 2.72 2.87

1.48 1.61 2.15 2.15 1.99 2.30 2.30



TIER

EQUITY (%)


Cash level


TIER

Equity %

Outstanding Debt

Outstanding Debt

43.08% 43.91% 44.90% 45.22% 46.14% 48.06%50.09%

52.26%53.65% 55.06%

2019 2020 2021 2022 2023 2024 2025 2026 2027 2028

1.13 1.25

1.59

2.16 1.99 2.30 2.30 2.29 2.26 2.20

1.48 1.61

2.15 2.15

2019 2020 2021 2022 2023 2024 2025 2026 2027 2028

1.66 1.97 2.02 1.82

2.59 2.72 2.87 2.97 2.99

1.53 1.64 1.98

2.07

2019 2020 2021 2022 2023 2024 2025 2026 2027 2028

12,083,431 11,312,401

10,504,789 10,026,574

9,523,913 8,996,780

8,441,279 7,857,166 7,556,933 7,231,926

2019 2020 2021 2022 2023 2024 2025 2026 2027 2028




2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028


2 Other Revenue 48,364$ 37,297$ 32,600$ 32,600$ 32,600$ 32,600$ 32,600$ 32,600$ 32,600$ 32,600$ 32,600$

3 Total Revenue 8,577,258$ 8,631,900$ 8,982,098$ 9,130,673$ 9,239,307$ 9,347,940$ 9,456,574$ 9,565,208$ 9,673,841$ 9,782,475$ 9,891,109$




Operating Expenses:






Fixed Expenses:


13 Tax Expense 2,011$ 2,811$ 2,811$ 2,839$ 2,868$ 2,896$ 2,925$ 2,954$ 2,984$ 3,014$ 3,044$





18 Total Margins 701,970$ 399,397$ 416,310$ 532,245$ 525,328$ 382,656$ 700,998$ 710,657$ 718,448$ 716,531$ 703,594$

Analysis of Revenue



21 kWh Sold 67,441,000 67,870,624 68,982,440 69,790,787 70,599,133 71,407,480 72,215,827 73,024,174 73,832,521 74,640,868 75,449,215





25 cost/kWh Energy 0.04279$ 0.04208$ 0.04443$ 0.04443$ 0.04443$ 0.04443$ 0.04443$ 0.04443$ 0.04443$ 0.04443$ 0.04443$






2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028








8 General Funds for Operations 1,719,871$ 568,510$ 441,505$ 414,777$ 743,633$ 628,856$ 867,484$ 654,697$ 428,571$ 461,681$ 434,599$

9 Other Assets 2,801,529$ 2,471,706$ 2,730,479$ 2,865,079$ 2,874,870$ 3,010,382$ 3,116,409$ 3,282,949$ 3,420,010$ 3,558,046$ 3,697,532$


11 Total Assets 21,475,672$ 20,615,791$ 20,377,425$ 20,181,177$ 20,199,178$ 19,635,057$ 19,368,508$ 19,070,849$ 18,740,108$ 18,679,289$ 18,569,418$


13 Plus Margins 1,814,038$ 399,397$ 416,310$ 532,245$ 525,328$ 382,656$ 700,998$ 710,657$ 718,448$ 716,531$ 703,594$


15 Total Equity 8,923,900$ 8,881,024$ 8,948,497$ 9,061,818$ 9,134,055$ 9,060,008$ 9,308,005$ 9,553,262$ 9,794,047$ 10,020,876$ 10,223,426$


17 Plus New Debt for Dist. Mtr. & General Plant 1,575,000$ -$ 442,926$ -$ -$ -$ -$ -$ -$ 315,618$ 325,086$









Balance Sheet





Sources of Cash


1 Margins 701,970$ 399,397$ 416,310$ 532,245$ 525,328$ 382,656$ 700,998$ 710,657$ 718,448$ 716,531$ 703,594$











11 Loan Fund Advances 1,575,000$ -$ 442,926$ -$ -$ -$ -$ -$ -$ 315,618$ 325,086$

12 CoC Applied to P & I 515,828$ 512,951$ 514,624$ 514,342$ 417,327$ -$ -$ -$ -$ -$ -$



15 Cash from Financing 675,544$ (1,241,827)$ (774,311)$ (752,911)$ (501,744)$ (941,363)$ (962,133)$ (1,002,902)$ (1,043,776)$ (771,935)$ (808,051)$




18 Net Change to Cash 995,134$ (1,151,361)$ (127,005)$ (26,728)$ 328,855$ (114,777)$ 238,628$ (212,787)$ (226,126)$ 33,110$ (27,082)$

19 Beginning Cash Balance 724,736$ 1,719,870$ 568,509$ 441,504$ 414,776$ 743,632$ 628,855$ 867,483$ 654,696$ 428,570$ 461,680$

20 Cash Ending Balance 1,719,870$ 568,509$ 441,504$ 414,776$ 743,632$ 628,855$ 867,483$ 654,696$ 428,570$ 461,680$ 434,598$


Kevin Owens reported on the current activity between NorthWestern Energy (NWE) and the “interveners” who have filed objections to the Federal Energy Regulatory Commission (FERC) ruling granting NorthWestern Energy the right to implement a 53.8% increase in their Open Access Transmission Tariff (OATT) for electricity distribution suppliers. The interveners and NWE are discussing potential settlement action. No settlement is on the horizon, and the alternative is to convene hearings for a ruling by FERC on the objections raised to reduce the increase, which was granted with provision for the return of amounts paid to start in July 2019 in excess of a reduced increase amount that could be granted by FERC. Kevin and Bill Pascoe have tracked the settlement hearings and report little progress to date. They report that a timeframe for resolution is not known. Bill Pascoe, joined by EES Senior Consultant Russ Schneider, led presentation and discussion of rate design issues. His agenda outlined discussion of:

• Diagrams illustrating the COSA categories of expenses and where they would be billed under a three-part rate design

• A ratchet approach to rates for large commercial ratepayers • Question and Answer document developed through past meetings • Recommendations to the board from the last risk management meeting • A schedule for decision-making and possible implementation of a

three-part rate design including demand charges for residential and small commercial member classes

The diagrams illustrate how the COSA-defined costs could be assigned to three billing “buckets”: energy that includes power and transmission; system charges that include distribution, operations and maintenance, and finance and depreciation; and a base charge for member services, administration, and general expenses. The system bucket is collected through charges per kilowatt (kW) peak use/demand. The objectives of the three-part rate include accurately assigning costs and separating charges that are currently billed as energy costs at BEC but are not actual payments for energy purchase or transmission from the energy portion of the bill. The chart compares various levels of potential kW charges and resulting revenue. The committee examined data regarding a ratchet approach to billing for large commercial accounts, highlighted needed information before the benefits of such a rate change could be clearly defined and recommends discussion by the board of potential timing for that analysis and how it might fit with discussions with irrigators about rate design for irrigation class. A ratchet approach extends demand charges over an annual or other defined period based on the maximum demand in the current month or past demand during a certain period. Discussions raised questions about scheduling and how to best inform and involve members in committee and board discussions, leading to a rate design recommendation after the annual meeting in May. There were many questions about how to best implement three-part billing if it were recommended. The discussion noted the need to effectively inform members of the options being considered and the need to decide how to present any changes to bills before the changes are put into effect. Kaaren Robbins outlined a draft schedule that the board will discuss further


Next steps – the examination of a potential three-part rate continues with a meeting February 20 focused on the Q&A document and discussion of the emerging questions list. Committee and Board members agreed to examine the Q&A list and forward comments on individual questions or question categories to Arleen for compilation before the February meeting.

All documents reviewed by the committee are available to members and posted on the BEC website. The Q&A documents and the committee report on the discussion of the financial forecast are attached to this report. The committee encourages member attendance at meetings to hear the full discussion of these issues and related information.

Preliminary Working Document. These questions have been asked by BEC members, the committee, and the board. Some have been answered, and a compiled list will be prepared before the February Risk Management meeting.

Objectives?

• Revenue stability and predictability – reduce the risk of weather-related revenue impacts – What is the timeframe for somethingclose to energy rates being just energy?

• Payment stability for members – do we know that this is a benefitmembers are concerned about?

• Payment fairness – data? -- Reducing payment in the energy billbenefits high use members. When will we know how that transferreduces, increases, or is neutral regarding revenue from variousother members?

• Other objectives?

Questions:

• What do you think the maximum increase would be for a memberpaying the new demand charges?

• Have you looked at programs to help members whose bills increasesubstantially with demand charges? Have you considered a maximumincrease/impact number that would trigger assistance or a delay ofimplementation?

• What is the actual impact of demand charges on revenue? How can itbe revenue neutral when demand charges vary month to month, muchas energy charges do with the weather? Will BEC each month changethe other two charges depending on what is generated by demand?

• What is the hurry? Why not introduce this slowly, so people havetime to figure it out and adjust?

• Have you fully examined the impacts on various groups of memberswithin the residential class?

• If we reduce peak load, how much do we reduce the need for majorinvestment and maintenance? Are we at capacity across the system?Are capacity increases needed, and will they be better paid forwith demand charges?

• Why reduce peak load when we do not pay peak rates to ourwholesale suppliers?

• Will members see an annual calculation of revenue from the threerate buckets?


Common statements and additional questions:

• If your members are not complaining about rate structure, fairnessis not their issue. Do not create an issue that can be negative orone that can put members against each other such as a group is notpaying its way or anyone objecting to an increased bill is justpushing their costs onto others.

• Inform honestly and completely.

• Be honest and tell members that your objective is to get othercharges out of the energy part of the bill and explain why –Predictability? Consistency? Reduced exposure to weather?

• Why now? BEC financials have looked good, and you have said theforecast looks good.

• Can we have a period of several months not paying, but seeing whata member would pay both ways – current billing and with a3-part rate?

• If you do a demand charge, start small and explain a lot overtime. It is hard to understand demand charge benefits when the co-op has no wholesale demand charges.

• What is the relationship between the COSA calculations of whatmembers in a class cost (and therefore should pay) and proposeddemand charges that we think you say are based on COSA costcalculations but are not the same for all members of the class?

• Can you explain the COSA use to get the numbers for demand?

• What is the secure monthly revenue from the system (demand?)charge – What are the monthly expenses carried in that bucket?

• Annual calculation needed — will members see it with anexplanation?

• If BEC had only energy costs in the energy bucket and only A&Gcosts in the base bucket, what would the demand revenue need tobe, and how many dollars per kW would that require?

• At what level of demand charge would we anticipate memberreduction in annual kWh use through serious conservation orgeneration on-site?


• Bylaw Committee (Arleen Boyd)

Proposed Bylaw Change Categories

Changes made to:

1) Correct grammar, syntax, punctuation

2) Improve clarity

3) Align with current Montana law

4) Align with other Bylaw provisions or BEC strategies

5) Reflect BEC editorial standards

6) Bring member notification methods up to date

The committee believes that member approval is not required for Number 1 and number 5 and recommends a discussion of how to present everything to members without requiring a vote on spelling, grammar, and editorial standards like capitalization and use of neutral pronouns to replace “he/she.”

We believe the co-op may say that the Board may make typographical, grammatical, and syntactical corrections to the Bylaws without requiring a Member vote of approval. All corrections shall be provided to members and may be challenged prior to the annual meeting. The committee will highlight areas not requiring a vote in the attached marked-up version of the Bylaw proposed changes.

The Proposed Bylaw Amendment Document follows. A near complete vote-by-mail package will be presented at the February board meeting for approval.



__________________________MISSION__________________________ To provide our members with reliable, reasonably priced electricity and related services delivered in a safe and efficient manner.

VISION Beartooth Electric Cooperative is recognized as a member-driven, financially stable and innovative Cooperative well-positioned to meet the challenges of an evolving electric industry.

PLEDGE The Trustees and Employees of Beartooth Electric Cooperative Pledge to:

• Listen, understand, communicate and act in the best interest of all members.

• Solicit and encourage member involvement.

• Adhere to the highest ethical standards of trust and respect.

• Operate our business in a financially sound and transparent manner.

• Perform our work in a manner that is environmentally and socially responsible.

• Encourage the wise use of energy, and

• Follow the Seven Cooperative Principles. (See inside back cover.)


TABLE OF CONTENTS

ARTICLE II—RIGHTS AND LIABILITIES OF MEMBERS................................................7

ARTICLE III—MEETINGS OF MEMBERS…………………………………………………...9

ARTICLE IV—BOARD TRUSTEES…………………………………………………………12

ARTICLE V—MEETING OF BOARD………………………………………………………..15

ARTICLE VI—OFFICERS…………………………………………………………………….16

ARTICLE VII—NON-PROFIT OPERATION………………………………………………..18

ARTICLE VIII—DISPOSITION OF PROPERTY …………………………………………...20

ARTICLE IX—SEAL…………………………………………………………………………...21

ARTICLE X—FINANCIAL TRANSACTIONS……………………………………………….21

ARTICLE XI—AMENDMENTS……………………………………………………………….22

STATEMENT OF NONDISCRIMINATION………………………………………………….22


ARTICLE I—MEMBERSHIP

SECTION 1. Requirements for Membership

A. Any person, firm, association, corporation, business trust, partnership, federal agency, state or political subdivision or agency of a state or political subdivision or other legal entity (hereinafter Person/Entity), shall become a Member (hereinafter Member or Members) of Beartooth Electric Cooperative, Inc., (hereinafter Cooperative), provided that:

1. The Person/Entity has completed, signed, and provided all information required by the Cooperative’s Application for Electric Energy Service;

2. The Person/Entity has delivered such application to the Cooperative; and

3. The Person/Entity has received electric energy service or access to service from the Cooperative.

B. No Member may hold more than one membership in the Cooperative, and no

membership in the Cooperative shall be transferable, except as provided in these Bylaws.

C. An Application for Electric Energy Service may be rejected if it is determined

that the Person/Entity is unwilling or unable to meet the terms and conditions for service contained in the Application for Electric Energy Service. Any Person/Entity whose application is rejected shall be notified of the rejection and the reasons for rejection within thirty (30) days after the determination is made to reject the application. If the notice of rejection is not mailed within thirty (30) days, the applicant shall be accepted for service and membership.

D. Membership shall be recorded in the records of the Cooperative, and the

current recorded membership list shall be present at all membership meetings.

E. Notwithstanding the provisions of Article I, Section 1, Part A, any Person/Entity who is paying for and receiving electric energy service from the Cooperative as of September 23, 2012, shall be deemed a Member, and, if such Person/Entity has not been recognized as a Member in the records of the Cooperative, such Person/Entity shall be added as a Member in the records of the Cooperative.

SECTION 2. Joint Membership

Any two persons of those receiving electric energy service from the Cooperative at the same location may apply for a joint membership and, subject to their compliance with the requirements set forth in Section 1 of this Article, may be accepted for such membership. The term Member as used in these Bylaws shall be deemed to include


two persons holding a joint membership and any provisions relating to the rights and liabilities of membership shall apply equally with respect to the holders of a joint membership. Without limiting the generality of the foregoing, the effect of actions by or in respect to the holders of a joint membership shall be as follows:

A. The presence at a meeting of either or both shall be regarded as the presence of one Member and shall constitute a joint wavier of notice of the meeting.

B. The vote of either separately or both jointly shall constitute one joint vote.

C. A waiver of notice signed by either or both shall constitute a joint waiver.

D. Notice to either shall constitute notice to both.

E. Expulsion of either shall terminate the joint membership.

F. Withdrawal of either shall terminate the joint membership.

G. Either but not both may be elected or appointed as an officer or Board Trustee.

provided that both meet the qualifications for such office. (2) Clarity and (3) alignment with Montana law (3) regarding spousal relationships,

SECTION 3. Conversion of Membership

A. A membership may be converted to a joint membership upon the written request of the holder thereof and the agreement by such holder and another party receiving electric energy services from the Cooperative at the same location to comply with the Articles of Incorporation and Bylaws of the Cooperative; with such rules, regulations, policies, procedures, and tariffs as are adopted by the Board of Trustees and provided to Members; and with the terms stated in the Application for Electric Energy Service.

B. Upon the death of either person who is a party to the joint membership, or action taken in accordance with Article I, Section 2, Parts E or F, such membership shall be converted to an individual membership for the remaining named Member. However, the estate of the deceased shall not be released from any debts due the Cooperative.

SECTION 4. Purchase of Electric Energy

A. Each Member shall, as soon as electric energy service shall be available, purchase from the Cooperative all electric energy used on the premises specified in the Application for Electric Energy Service, except in such cases as a Member may have has interconnected his/her the Member’s own renewable electricity generation production facility generation resource


pursuant to an approved agreement with the Cooperative. Each Member shall pay all amounts owed to the Cooperative when they become due and payable. All amounts paid to the Cooperative in excess of the costs of doing business shall be received as the Member’s patronage capital pursuant to the provisions of these Bylaws. and shall pay therefore at rates which shall be fixed by the Board. Amounts paid for electric energy in excess of the cost of service are furnished by Members who shall be credited with the capital so furnished as provided in these Bylaws. Each Member shall pay to the Cooperative such minimum amount regardless of the amount of electric energy consumed, as shall be fixed by the Board. Each Member shall also pay all amounts owed to the Cooperative as and when the same shall become due and payable. (2) Clarity of provisions already in place for: capital credits and the right to generate electricity and (4) Alignment with other Bylaw provisions. Article VII details patronage capital provisions that reflect (3) 2019 changes to Montana law providing greater flexibility in determining patronage on an annual basis.

B. The Cooperative shall use its best efforts to furnish adequate and

dependable electric energy service, although it cannot, and therefore does not, guarantee a continuous and uninterrupted supply of electricity.

SECTION 5. Termination of Membership

A. Any Person/Entity may decline to become a Member by filing submitting a written declaration of non-membership supplied by the Cooperative. (2) Clarity and correction for accuracy

B. The Board may, by resolution and affirmative vote of no fewer than two-thirds (2/3) of all the Members of the Board, expel any Member who refuses or fails to comply with any of the provisions of the Articles of Incorporation, Bylaws, rules, regulations, or policies adopted by the Board, but only if such Member shall have been given written notice by the Cooperative that such refusal or failure makes him/ her liable to termination of electric energy service and such refusal or failure shall have continued for at least ten (10) days after such notice was given. Any expelled Member may be reinstated by vote of the Board or by vote of the Members at any Annual or Special Meeting. The membership of a Member who, for a period of six (6) months after service is available to him/her, has not made payment of amount due and payable to the Cooperative, or of a Member who has either terminated electric energy service or has had his/her electric energy service terminated from the Cooperative, may be cancelled by resolution of the Board.

C. The membership shall cease when the Member no longer receives access to

or electric energy service from the Cooperative.


ARTICLE II—RIGHTS AND LIABILITIES OF MEMBERS

SECTION 1. Property Interest of Members

Members and former Members holding patronage capital shall have no individual or separate interest in the property or assets of the Cooperative except upon dissolution. Upon dissolution, the property and assets of the Cooperative remaining after all debts and liabilities of the Cooperative are paid shall be distributed among the Members and former Members in the proportion which the aggregate patronage of each bears to the total patronage of all Members and former Members. These distributions shall be made to those for whom the Cooperative has a valid mailing address, during the seven years immediately preceding the date of filing of the Certificate of Dissolution for the Cooperative, or as then otherwise required by applicable law.

SECTION 2. Non-liability for Debts of the Cooperative No Member shall be individually liable or responsible for any debts or liabilities of the Cooperative. SECTION 3. Access to Property

A. As determined or required by the Cooperative, each Member or patron shall provide the Cooperative safe and reliable access reasonably necessary to operate the Cooperative safely, reliably, and efficiently or to provide Cooperative services to any real or personal property in which the Member possesses a legal right.

B. Members or patrons shall grant the Cooperative the right to inspect, monitor,

operate, repair, maintain, or remove any Cooperative facilities or equipment. Members agree to work with and to provide easement to the Cooperative to provide easements for extending new facilities or relocating existing facilities. Members or patrons shall also give the Cooperative access to provide, monitor, measure, or maintain any Cooperative service or to satisfy or facilitate any obligation incurred or right granted by the Cooperative regarding the use of Cooperative equipment. (2) Clarity for intended meaning and (4) alignment with BEC business strategy to work with members

C. Unless otherwise determined by the Board, the Cooperative owns all

Cooperative facilities and equipment. Each Member and patron shall protect all Cooperative equipment and shall install, implement and maintain any protective device or procedure required by the Cooperative.

SECTION 4. Membership List

A. The Cooperative shall maintain a record of current Members in a form permitting the Cooperative to alphabetically list the names and addresses of all Members. Upon thirty-five (35) days prior written notice or request to the


Cooperative, a Member who has been an active Member during the immediately preceding twelve (12) months may do the following:

1. An active Member may inspect and copy the Membership List at a reasonable time and location determined by the Cooperative.

2. An active Member may pay the Cooperative a reasonable charge determined by the Cooperative covering the labor and material cost of preparing and copying the Membership List, and the Cooperative must provide the Member a copy of the Membership List.

B. A Member may inspect, copy, or receive a copy of the Membership List only if,

as determined by the Board of Trustees, the Member complies with all of the following: 1. The Member’s notice or request is made in good faith and for a proper

purpose.

2. The Member describes with reasonable particularity the purpose for which

the Member will use the Membership List.

3. The Membership List is directly connected with the Member’s purpose.

4. The Member completes the Cooperative Request for Information form, acknowledging violation of the terms and conditions within will subject the Member to suspension and/or termination of the Member’s membership in the Cooperative.

C. Except as otherwise provided by the Board of Trustees, a Member may not do the following:

1. A Member may not use the Membership List for a purpose unrelated to the Member’s interest as a Member.

2. A Member may not use the Membership List to solicit money or property unless the money or property is used solely to solicit Member votes.

3. A Member may not use the Membership List for a commercial purpose.

4. A Member may not sell the Membership List.

SECTION 5. Access to Information

Members shall have access to information relevant to the business of the Cooperative with the exception of information that is deemed proprietary or confidential by law, contract, policy, or these Bylaws. Notices required by Montana law or these Bylaws shall be sent by U.S. mail. Other information shall be supplied to Members through


methods including, but not limited to, website postings, mailings, special informational meetings, news releases distributed to industry publications and news media, social media applications and other methods approved by the Board. Information provided to Members shall include the following: Board Meeting schedule:

A. Agenda of any official meeting within five (5) business days prior to themeeting;

B. Approved Minutes of any official meeting within fifteen (15) business daysfollowing approval;

C. Bylaws and policies;

D. Budgets, financial reports and audits; Clarity (2) Business strategy (4)

E. Strategic plans;

F. Load Power usage forecasts; and Clarity (2)

G. Business agreements and contracts not deemed confidential.

(2) Clarity of language and update of methods for notifying Members to include currentelectronic applications (4) Alignment with Bylaw provisions and business strategyrequiring member notification (6) Bring member notification methods up to date.

SECTION 6. Initiative Process

The Cooperative recognizes applicable state statute as the guideline for Member proposed initiatives. In addition, Members shall abide by all of the following provisions:

A. Initiatives to be submitted to the Cooperative Members shall be embodied in apetition.

B. The petition form to be used is provided by the Cooperative.

C. The petition form issued will be signed and dated by a Cooperativerepresentative, acknowledging the issue date.

D. Member signatures on the petition are valid only during the current AnnualMeeting cycle.


E. Members may request that their names be removed from a petition at any time prior to petition submittal.

ARTICLE III—MEETINGS OF MEMBERS

SECTION 1. Annual Meeting

The Beartooth Electric Cooperative Annual Meeting of the Members shall be held during the second quarter of each calendar year at such place within a county, in the State of Montana, served by the Cooperative, as selected by the Board of Trustees. The meeting location shall be designated in the notice of the meeting for the purpose of electing Board Trustees, passing upon reports for the previous fiscal year, and transacting such other business as may come before the meeting. The Board of Trustees shall select a date for the Annual Meeting no later than at the October Board meeting preceding the next year’s Annual Meeting and advise members of the date, which shall be designated in the required notice of meeting. It shall be the responsibility of the Board to make adequate plans and preparations for the Annual Meeting. Information regarding the Annual Meeting date, location and plans also shall be distributed to members at such other times and in such other materials as the Board deems effective. Failure to hold the Annual Meeting at the designated time shall not cause a forfeiture or dissolution of the Cooperative.

SECTION 2. Special Meeting

A. The Cooperative shall hold a Special Meeting of the Members at a date, time, and location determined by the Board upon the Cooperative’s receiving a call for such meeting by:

1. A resolution of the Board; or grammar, punctuation (1)

2. A written request prepared by the President; or grammar, punctuation (1)

3. A written request signed by at least three (3) Trustees; or grammar, punctuation (1)

4. One or more written petitions signed and dated, within the current annual meeting cycle, by at least ten percent (10%) of Members as of the date the petition is received by the Cooperative. and Each page of the petition shall include the purpose for which the meeting is being called, the printed name and address of the signer and his or her telephone number, and the original dated signature. (!) Grammar, punctuation (2) Clarity


5. Each page of the petition shall include the purpose for which themeeting is being called, the printed name and address of the signer andhis or her telephone number, and the original dated signature.(1)Grammar, punctuation. (2) Clarity -- Deletion eliminates repetition ofthe previous sentence in A 4

B. If the Cooperative fails to properly notify the Members of a Special Meetingwithin forty-five (45) days of receiving any Member petition, then any Membersigning the petition may do the following:

1. A Member may set a reasonable time, place and location for theSpecial Meeting.

2. A Member may properly notify the Members of the Special Meeting.

C. The agenda for a Special Meeting shall be limited to the purpose for which themeeting is called.

SECTION 3. Notice of Members’ Meetings Written or printed notice stating the place, day and hour of the meeting and, in case of a Special Meeting or an Annual Meeting at which business requiring special notice is to be transacted, shall state the purpose or purposes for which the meeting is called and the matter or matters to be acted upon. Notice shall be delivered not less than ten (10) days nor more than twenty-five (25) days before the date of the meeting, either personally by postal or electronic mail, by or at the direction of the Secretary, or upon a default in duty by the Secretary, by the persons calling the meeting. Notice of a Members’ Meeting is deemed delivered when either deposited in the United States mail with prepaid postage affixed, and addressed to each Member at the mailing address as it appears on the records of the Cooperative, or when sent electronically to the e-mail address as it appears on the records of the Cooperative. The inadvertent or unintended failure of any Member to receive notice of an Annual or Special Meeting of the Members shall not invalidate any action, which may be taken by the Members at any such meeting.

SECTION 4. Conduct and Attendance at Members’ Meetings At any meeting of Members, unless otherwise determined by the Board, the President will do the following:

A. The President shall preside at all Members’ Meetings.

B. The President may exercise any power reasonably necessary for conductingany Members’ Meeting efficiently and effectively.

SECTION 5. Quorum


Five percent (5%) of all Members present in person, or fifty (50) Members present in person, whichever is fewer, shall constitute a quorum for transaction of business at all meetings of the Members. If less than a quorum is present at any meeting, a majority of those present in person may adjourn the meeting without further notice. The minutes of each meeting shall contain a list of the Members present in person.

SECTION 6. Voting Each membership shall be entitled to only one (1) vote. Voting by mail shall be permitted, as set forth in Section 7, below, so long as the quorum requirements of Members, present in person are satisfied, at any meeting of the Members. The vote-by-mail ballots shall be added to the mail ballots cast or submitted by Members at the meeting, who are present, in person. All questions shall be decided by a majority of the Members voting thereon, except as otherwise provided by law or by the Cooperative’s Articles of Incorporation or these Bylaws. Two or more persons holding a joint membership shall jointly be entitled to one (1) vote and no more upon each matter submitted to a vote at a meeting of the Members.

SECTION 7. Mail Ballot On all Bylaw amendments, Trustee elections in conjunction with the Annual Members’ Meeting, and with respect to other motions or resolutions which these Bylaws or Montana law requires membership approval, Members may either: 1) vote by mailing in their mail ballot; or 2) vote by casting their mail ballot at the meeting in which such matters are subject to vote. All other voting arising from the agenda items, other than those items for which mail ballots are permitted, shall take place at the meeting in which such agenda items are subject to vote.

Ballots shall be mailed to all Members at their account billing addresses. (1) Clerity (4) Alignment with business strategy for member contact

A. All properly completed ballots received on or before the time and datespecified shall constitute a vote. If duplicate ballots are received from aMember, all of that Member’s ballots will be disqualified.

B. A Member’s failure to receive a ballot by mail does not affect any action takenby mail ballot.

C. With respect to the votes taken at the Annual Meeting As indicated on theballot, mail ballots shall be returned, as indicated on the ballot, to theaccounting firm which is the Cooperative’s auditor or to an independentdesignee approved by the Board. The auditor or designee shall count theballots received prior to the Annual Meeting, keeping the ballots and the tallyof the votes cast in the ballots confidential at a secure location until the ballotsand tally of votes cast are submitted to the Credentials and Election


Committee for the final count and recording at the Annual Meeting. The auditor or designee shall participate with the Credentials and Election Committee in the ballot count and recording of the ballots at the Annual Meeting. (2) Clarity

D. The Annual Meeting ballot shall: do the following:1. It shall Describe each proposed motion and resolution, and with respect to

Trustee election identify all candidates for a Trustee position upon whichthe Members are asked to vote;

2. It shall Provide a written candidate profile prepared by the candidate(s), ifprovided;

3. It shall Provide a reason for the proposed motions and resolutions asrequired by Montana law, these Bylaws, or to provide information to theMembers if any;

4. It shall Instruct Members how to complete and when and where to returnthe ballot.(1) Syntax, grammar (2) Clarity

SECTION 8. Credentials and Election Committee

A. The Board of Trustees shall, at least ten (10) days before any meeting of theMembers, appoint a Credentials and Election Committee consisting of anuneven number of Members, not less than five (5) nor more than fifteen (15),who are not existing Trustees or candidates for Trustees, and who are notclose relatives or Members of the same household of existing Trustees orknown candidates for Trustees to be elected at such meeting. As used in theBylaws, “close relative” means: son, daughter, mother, father, sister, brother,spouse, stepfather, stepmother, half- sister and half-brother, by blood, bymarriage or by adoption, and the spouses of any of the foregoing.

B. In appointing the Committee, the Board shall have regard for equitablerepresentation of the districts served by the Cooperative. It shall be theresponsibility of the Committee to pass upon all questions that may arise withrespect to the registration of Members, to supervise counting all ballots cast inany election or in any other ballot vote taken, to rule upon the effect of anyballots irregularly marked, and to decide any other questions concerningballoting or elections. The Committee’s decisions on all such matters shall befinal.

SECTION 9. Announcement of Voting Results The results of all voting shall be announced after certification by the Credentials and Election Committee and will become effective at that time.


SECTION 10. Order of Business The order of business at the Annual Meeting of the Members and, so far as possible, at all other meetings of the Members, shall be essentially as follows, except as otherwise established at one of the Board of Trustee’s regular monthly meetings in advance of the deadline for publishing the Notice of Annual Meeting:

A. Report on the number of Members present in person in order to determine the existence of a quorum;

B. Reading of the Notice of the meeting and proof of the due publication or

mailing thereof, or the waiver or waivers of Notice of the meeting, as the case may be;

C. Reading of unapproved minutes of previous meetings of the Members and the

taking of necessary action thereon;

D. Election of Board Trustees;

E. Presentation and consideration of reports of officers, Trustees and Committees;

F. Unfinished business;

G. New business;

H. Adjournment.

SECTION 11. Districts

The territory served or to be served by the Cooperative shall be divided into seven (7) districts, each of which shall contain as nearly as practical the same number of Members. Each district shall be represented by one (1) Trustee. The boundaries of the seven (7) districts shall be determined by the Board of Trustees and a description of same shall be kept on file in the principal office of the Cooperative as a part of the official records of the Cooperative. Not more than ninety (90) days after the Annual Meeting of the Members at which Trustees were elected, the Board shall review the composition of the seven districts and, if it should be found that inequalities in representation have developed which can


be corrected by a re-delineation of districts, the Board shall reconstitute the districts so that each shall contain as nearly as practical the same number of Members.

ARTICLE IV—BOARD TRUSTEES

SECTION 1. General Powers

A. The business and affairs of the Cooperative shall be managed by a Board of seven (7) Trustees, which shall exercise all of the powers of the Cooperative required by law, by the Articles of Incorporation, by these Bylaws, or conferred upon the Board by the Cooperative Members.

B. The Board shall have power to make and adopt such policies, rules and

regulations, not inconsistent with law, the Articles of Incorporation or these Bylaws, as it may deem advisable for the management of the business and affairs of the Cooperative.

C. The Board shall ensure that Cooperative Members have access to information relevant to the business of the Cooperative with the exception of information that is deemed proprietary or confidential by law, contract, policy, and these Bylaws. Information available to Members shall include but not be limited to Bylaws, policies, financial reports and audits, minutes of Board Meetings, strategic plans, load forecasts, business plans, agreements with business partners, power supply contracts, and news relating to the Cooperative and the electric energy industry. Information shall be supplied to Members through methods including, but not limited to, website postings, mailings, special informational meetings, news releases distributed to industry publications and news media, social media applications and other methods approved by the Board. Information shall be supplied to Members on request and made available through methods including website postings, mailings, special informational meetings, and news releases distributed to industry publications and news media. (4) Alignment with business strategy (6) Member notification updated to include current methods

D. Before creating or entering into an agreement that results in any direct or indirect obligation for the repayment of long-term indebtedness for financing, directly or indirectly, the construction, maintenance, or operation of power generation facilities exceeding five (5) megawatts capacity, the Board of Trustees must receive a vote of approval from at least 51% of the Members of the Cooperative. The Board shall establish and publish a process for mail-in voting that complies with the principles of Article III, Section 7; conduct a Special Meeting in compliance with Article III, Sections 2, 3 and 4; and employ an independent third party to receive and tabulate the ballots


cast. The Cooperative shall not circumvent this restriction by dividing a project or work to be performed subject to this restriction into several contracts, projects or components or by any similar device.

E. Prior to such a vote, the Board shall secure and share with Members anindependent analysis of the proposed facility and its potential financialimpact on Members. No project may be presented to the Members forconsideration without comparative analysis of similar projects; assessmentof the financial, engineering, and operations aspects of the project; andexamination of its position in an integrated resource plan. The Board shallconduct an informational meeting in each Cooperative district and supplyinformation relevant to the proposed project through methods that includewebsite postings, mailings, special informational meetings, and newsreleases. including, but not limited to, website postings, mailings, specialinformational meetings, news releases distributed to industry publicationsand news media, social media applications and other methods approved bythe Board. (4) Alignment with business strategy (6) Member notificationupdated to include current methods

F. The Board shall ensure that the Members are notified of the time frametimeframe for review and approval of the annual budget. In addition, theBoard will provide Members access to budget information through methodsincluding, but not limited to, website postings, mailings, special informationalmeetings, news releases distributed to industry publications and newsmedia, social media applications and other methods approved by the Board.(1) grammar, spelling (4) Alignment with business strategy (6)Membernotification updated to include current methods

G. The Board shall provide at least 60-day notice to Members of proposalsbefore the Board approves long-term debt exceeding two (2) years, orenters or amends power contracts exceeding two (2) years. Notice shallinclude non-confidential information considered or to be considered by theBoard in evaluating the proposed action. During the notification period,Members shall be entitled to submit written comments and to comment atthe monthly Board Meeting prior to the Board Meeting at which a vote on theproposal is scheduled, at the Board Meeting at which the vote is taken, or atspecially scheduled Board Meeting for comments and discussion on theproposal.

SECTION 2. Tenure of Office

A. Following the Annual Meeting of the Cooperative held on September 29, 2018,in which ARTICLE III-MEETINGS OF MEMBERS, SECTION 1. Annual


Meeting, was amended to provide for an Annual Meeting during the second quarter of the calendar year, Board Trustees representing the Cooperative’s seven (7) districts shall be elected as follows:

1. Trustees representing Districts 2 and 5 shall each be elected at the Annual Meeting held during the calendar year 2019, to serve terms ending at the third Annual Meeting thereafter, or until their successors have been elected and qualified pursuant to Section 2 (C) below. (1) Grammar/ typo

2. Trustees representing Districts 1, 3 and 7 shall be elected at the Annual Meeting held during the calendar year 2020, to serve terms ending at the third Annual Meeting thereafter, or until their successors have been elected and qualified pursuant to Section 2 (C) below.

3. Trustees representing Districts 4 and 6 shall be elected at the Annual Meeting held during the calendar year 2021, to serve terms ending at the third Annual Meeting thereafter, or until their successors have been elected and qualified pursuant to Section 2 (C) below.

B. Thereafter, Trustees whose terms expire shall be elected by ballot at each Annual Meeting to serve until the third Annual Meeting thereafter or until their successors are elected and qualified.

C. If the election of Trustees has not been held at the Annual Meeting as provided for above, the Board shall cause the election to be held at a Special Meeting of Members as soon thereafter as reasonable and convenient.

SECTION 3. Qualifications

A. No person shall be eligible to become or remain a Board Trustee of the Cooperative under the following circumstances:

1. A person shall not be eligible if he/she the person is not a consuming Member and bona fide resident of the district served or to be served by the Cooperative.

2. A person shall not be eligible if he/she the person is any way employed by or financially interested in a competing enterprise or a business selling electric energy (excluding net metered customers) or supplies to the Cooperative, or a business primarily engaged in selling electrical appliances, fixtures, or supplies to the Members of the Cooperative.

3. A person shall not be eligible if he/she the person has been an employee of the Cooperative for any length of time within the immediately preceding five (5) years.


4. A person shall not be eligible if he/she the person is employed by, is an

agent of, or is a close relative of an employee or agent of the Cooperative.

5. A person shall not be eligible if he/she the person is employed by or materially affiliated with any other Trustee.

6. A person shall not be eligible if he/she the person owns an interest greater than ten percent (10%) or holds a management position in a business wherein more than ten percent (10%) of the goods sold are sold to the Cooperative or one of its subsidiaries, or a combination thereof. (5) Reflect BEC editorial standards for noun/pronoun clarity

B. Upon establishment of the fact that a Board Trustee is holding the office in violation of any of the foregoing provisions, the Board shall remove such Board Trustee from office.

C. Nothing contained in this section shall affect in any manner the validity of any

action taken at any meeting of the Board.

SECTION 4. Nominations

A. It is the responsibility of the Members to solicit candidates for the election of Trustees. The Trustees shall ensure there are qualified that nominees are qualified. (2) Clarity to align with intent of original bylaw language

B. Any fifteen (15) or more Members acting together may make nominations by

petition and the Secretary shall publicize such nominations. Nominations made by petition received at least fifty (50) days before the meeting shall be included on the official ballot.

SECTION 5. Election of Trustees

Elections of Trustees shall be by a form of printed ballot. Each membership of the Cooperative shall be entitled to vote for one (1) candidate from each district for which a Trustee is to be elected. The candidate from each district for which a Trustee is to be elected receiving the plurality of votes cast for that office at such meeting shall be declared elected as Trustee. If, after a recount, there is a tie for a Trustee position, the winner shall be determined by a coin toss. SECTION 6. Trustee Seating


At the Board Reorganization Meeting immediately following the Annual Membership Meeting, all newly elected Trustees shall sign a statement verifying they are qualified and have no conflict of interest that violates these Bylaws. The newly elected Trustees shall then be seated.

SECTION 7. Removal of Board Trustee

A. Any Member may bring charges against a Board Trustee, and by filing with the Secretary such charges in writing together with a petition signed by at least ten percent (10%) of the Members on the date petition is filed or three hundred seventy-five (375) Members, whichever is the lesser, may request the removal of such Board Trustee by reason thereof. Such Board Trustee shall be informed in writing of the charges at least ten (10) days prior to the meeting of the Members at which the charges are to be considered and shall have an opportunity at the meeting to be heard in person or by counsel and to present evidence in with respect to of the charges. ; and The person or persons bringing the charges against him/her such Board Trustee shall have the same opportunity. The question of the removal of such Board Trustee shall be considered and voted upon at the meeting of the Members. However, regardless of the provisions of Article III, Section 7, mail ballots shall not be permitted or considered for such meeting. (1) grammar. (2) Clarity (4) Align with Bylaw Article III, Section 7 (ballots) and Section 2 A 4 (petitions) Mail ballots required for annual meeting, member meeting votes after presentations by participants

B. Any Board Trustee who fails to attend three (3) monthly meetings in a calendar

year without approval from the Board is subject to removal from the Board by majority vote of the other Board Trustees.

SECTION 8. Vacancies

Subject to the provisions of these Bylaws with respect to the filling of vacancies caused by resignation, failure to attend meetings, or removal of Board Trustees by the Members, a vacancy occurring in the Board shall be filled by the affirmative vote of a majority of the remaining Board Trustees. The appointed Trustee will fill the vacancy until the next Annual Meeting when a Trustee will be elected for the remaining unexpired portion of said term. The Board must give public notice of such vacancy and shall fill such vacancy within one hundred twenty (120) days of its occurrence.


SECTION 9. Trustee Compensation

A. Without approval of the Membership, Board Trustees may not receive any salaries for their services as Trustees, except Board Trustees shall be covered by liability insurance provided by the Cooperative. Except in emergencies, Board Trustees may not be employed by the Cooperative in any capacity involving compensation.

B. The Board of Trustees may establish a fixed sum, including expenses of

attendance, if any, to be allowed for attendance at each meeting of the Board of Trustees or any Committee of the Board of Trustees; or representing the Cooperative at any meeting or on any business whenever representation has been approved by the Board. Board Trustees may also be reimbursed for expenses actually and necessarily incurred in carrying out such Cooperative business or granted a reasonable per diem allowance by the Board. Payments to a Board Trustee will be made pursuant to policy. on submission of an expense report and report of related activities which shall be noted and included in Board meeting minutes. (4) Align with BEC strategy and policy on expense reports (not included in minutes) but accessible as financial record.

ARTICLE V—MEETING OF BOARD

SECTION 1. Regular Meetings

A. All regular meetings of the Board shall be open to Members and the public and conducted in the spirit of Robert’s Rules of Order. A regular meeting of the Board shall be held monthly each calendar month at such time and place within one (1) of the counties served by the Cooperative as designated by the Board. The Board will attempt to schedule regular meetings well in advance and publish notification. Such A regular monthly meeting may be held without notice other than such resolution in advance of the meeting fixing the time and place thereof If necessary the Board may give notice and hold a calendar month’s meeting within the first two weeks of the following month. Regular Board meetings may be held by conference using electronic communications media, including telephone, if convened in accordance with Section 3 below. (2) Clarity (4) Alignment with BEC strategy

B. A regular meeting of the Board shall be held without notice, immediately after, and at the same place as the Annual Meeting of the Members.

SECTION 2. Special Meetings

The President, designee, or three (3) Board Trustees may call a Special Meeting of the Board. The Secretary shall provide notice of such meeting as hereinafter provided. The


President, designee, or Board Trustees calling the meeting shall fix the time and place for the meeting. Special Board Meetings may be held by conference using electronic communications media, including telephone, if convened in accordance with Section 3 below.

SECTION 3. Conference Meetings Using Electronic Communications Media

The Board or any designated Committee of the Cooperative may participate in a Board or Committee meeting by means of conference using electronic media, including telephone, provided all persons entitled to participate in the meeting receive a proper notice of the meeting (See Section 4), and provided that all persons participating in the conference meeting can hear each other simultaneously. A Board Trustee participating in a conference meeting is deemed present in person at the meeting. The Chairperson of the meeting may establish reasonable rules for conducting the meeting by conference using electronic communications media, including telephone.

SECTION 4. Notice of Board Meeting

A. Oral or written notice of the date, time, and place of any Special Meeting of the Board shall be delivered to each Board Trustee either personally, by mail, or by electronic communications media including telephone. The President, designee, or the Board Trustees calling the meeting shall give Trustees at least three (3) working days of notice before the meeting unless Trustees attending the meeting unanimously agree to a shorter period. If the meeting is to be held by electronic media, including telephone, the person calling the meeting shall provide instructions for participating in the meeting. The person calling the meeting shall maintain a record verifying that participants were notified about the meeting in a timely fashion.

B. Any Member or Board Member may waive in writing any notice of a meeting

required to be given by these Bylaws. The attendance of a Member or Board Member at any meeting shall constitute a waiver of notice of such meeting by such Member or Board Member, except in case a Member or Board Member shall attend a meeting for the express purpose of objecting to the transaction of any business on the ground that the meeting has not been lawfully called or convened.

SECTION 5. Quorum

A majority of the Board shall constitute a quorum. provided, that if less than such majority of the Board is present at said meeting, a majority of the Board present may


adjourn the meeting; and provided further that the Secretary shall notify any absent Board Members of the time and place of such adjourned meeting. The act of a majority of the Board Members present at a meeting at which a quorum is present shall be the act of the Board, except as otherwise provided in these Bylaws. If less than a majority of the Board is present, no action may be taken by the Board, and a majority of those Trustees present may adjourn the meeting. and The secretary shall so notify all Trustees. (2) Clarity

ARTICLE VI—OFFICERS

SECTION 1. Number

The officers of the Cooperative shall be a President, Vice President, Secretary, Treasurer, and such other officers as may be determined by the Board. The offices of the Secretary and Treasurer may be held by the same person. SECTION 2. Elections and Term of Office The officers shall be elected by ballot, annually by and from the Board at the meeting of the Board held immediately after the Annual Meeting of the Members. If the election of officers shall not be held at such meeting, such election shall be held as soon thereafter as reasonable. Each officer shall hold office until the first meeting of the Board following the next succeeding Annual Meeting of the Members or until his/her a successor shall have been elected and shall have qualified. A vacancy in any office shall be filled by the Board for the unexpired portion of the term. (2) clarity (5) Reflect BEC editorial standards SECTION 3. Removal of Officers and Agents by the Board Any officer or agent elected or appointed by the Board may be removed by the Board whenever in its judgment the best interest of the Cooperative will be served thereby. In addition, any Member of the Cooperative may bring charges against an officer, and by filing with the Secretary such charges in writing together with a petition signed by ten percent (10%) of the Members at the time the petition is filed or three hundred seventy-five (375), whichever is the lesser, may request the removal of such officer. The officer against whom such charges have been brought shall be informed in writing of the charges at least ten (10) days prior to the Board meeting at which the charges are to be considered and shall have an opportunity at the meeting to be heard in person or by counsel and to present evidence in respect of to the charges; and the Member or Members bringing the charges against him shall have the same opportunity. In the event the Board does not remove such officer, the question of his or her removal shall be considered and voted upon at the next meeting of the Members. Grammar (1) (5) reflect BEC editorial standards . (4) Align with other bylaw requirements to verify member signatures as of the date when the petition is filed


SECTION 4. President

A. The President shall be the principal executive officer of the Cooperative and, unless otherwise determined by the Members or the Board, shall preside at all meeting of the Members and the Board;

B. The President shall sign deeds, mortgages, deeds of trust, notes, bonds,

contracts, or other instruments authorized by the Board to be executed, except in cases in which signing and execution thereof shall be expressly delegated by the Board or by these Bylaws to some other officer or agent of the Cooperative, or shall be required by law to be otherwise signed or executed.

C. The President shall perform all duties incident to the office of President, and

such other duties as may be prescribed by the Board.

SECTION 5. Vice President

A. In the absence of the President, or in the event of his or her inability or refusal to act, the Vice President shall perform the duties of the President, and when so acting shall have all the powers of and be subject to all the restrictions upon the President.

B. The Vice President shall also perform such other duties as may be assigned to

him or her by the Board.

SECTION 6. Secretary

A. The Secretary shall keep the minutes of the meetings of the Members and of the Board in electronic format and in books provided for that purpose.

B. The Secretary shall see that all notices are duly given in accordance with

these Bylaws or as required by law.

C. The Secretary shall ensure the safekeeping of the corporate books and records and the seal of the Cooperative and affixing the seal of the Cooperative to all documents, the execution of which on behalf of the Cooperative under its seal is duly authorized in accordance with the provisions of these Bylaws.

D. The Secretary shall ensure that the Cooperative keeps a register of the names and post office addresses of all Members. (4) Alignment with BEC business strategy for security of member information


E. The Secretary shall keep on file at all times a complete copy of the Articles of Incorporation and Bylaws of the Cooperative containing all of its amendments (which copy shall always be open to the inspection of any Member) and at the expense of the Cooperative, furnish a copy of the Bylaws and all of its amendments thereto to new Members and any Member upon request. (4) Alignment with BEC business strategy for information to all members

F. The Secretary shall, in general, perform all duties incident to the office of

Secretary and such other duties as may be assigned by the Board.

SECTION 7. Treasurer

A. The Treasurer shall be responsible for custody of all funds and securities of the Cooperative.

B. The Treasurer shall be responsible for the receipts of and the issuance of

receipts for all monies due and payable to the Cooperative and for the deposit of all such monies in the name of the Cooperative in such bank or banks as shall be selected in accordance with the provisions of these Bylaws.

C. The Treasurer shall be responsible for the performance of all duties incident to

the office of Treasurer and such other duties as may be assigned by the Board.

SECTION 8. Manager

The Board may appoint a Manager who shall perform such duties and shall exercise such authority as the Board may assign. SECTION 9. Bonds or Insurance of Officers The Treasurer and any other officer or agent of the Cooperative charged with the responsibility for the custody of any of its funds or property shall be bonded, or the Cooperative shall be insured against malfeasance, in such sum and with such surety as the Board shall determine. The Board in its discretion may also require any other officer, agent or employee of the Cooperative be bonded or the Cooperative shall be insured against malfeasance in such amount and with such surety as it shall determine. (2) Clarity (4) Alignment with BEC business strategy to bond or insure SECTION 10. Compensation The powers, duties, and compensation of officers, agents, and employees shall be fixed by the Board subject to the provision of these Bylaws.


SECTION 11. Reports At each Annual Meeting of the Members, the officers of the Cooperative shall submit reports covering the business of the Cooperative for the previous fiscal year. The reports shall describe the condition of the Cooperative at the close of such fiscal year.

ARTICLE VII—NON-PROFIT OPERATION

SECTION 1. Patronage Capital in Connection with Furnishing Electric Energy

The Cooperative shall at all times be operated on a cooperative non-profit basis for the mutual benefit of its patrons. In the furnishing of electric energy service, the Cooperative’s operations shall be so conducted that all patrons will, through their patronage, furnish capital for the Cooperative. The Cooperative shall not pay interest or dividends on any capital furnished by its patrons.

SECTION 2. Providing For and Accounting For Patronage Capital Credits

In order to induce patronage and to assure that the Cooperative will operate on a non- profit basis, the Cooperative is obligated to account on a patronage basis to all its patrons Members for all amounts received and receivable from the furnishing of electric energy service in excess of operating costs and expenses its costs of doing business. Alignment with current Montana law “cost of doing business” (3) All amounts paid to the Cooperative in excess of operating costs and expenses its costs of doing business (3) are received with the understanding that they are furnished by the Patrons’ Members’ capital. The Cooperative is obligated to pay all such amounts in excess of operating costs and expenses its costs of doing business to a capital account for each patron as capital credits. The books and records of the Cooperative shall be set up and kept in such a manner that at the end of each fiscal year the amount of capital, if any, so furnished by each patron Member is clearly reflected and credited in an appropriate record to the capital account of each patron Member. The Cooperative shall, within eight and one-half (8½) months after the close of the fiscal year, notify each patron Member in writing of the amount of capital so credited to the patron’s Member’s account. All such amounts credited to the capital account of any patron shall have the same status as though they had been paid to the patron in cash in pursuance of a legal obligation to do so and the patron had then furnished the Cooperative corresponding amounts for capital. (3) Alignment with current Montana law language that designates “cost of doing business” as criterion for using funds before returning margins to Members (3) BEC editorial standards for upper case Member (5) Reflect BEC editorial standards


SECTION 3. Non-operating Revenue

Non-operating revenue received by the Cooperative, insofar as permitted by law, may be used in the following manner:

A. Excess funds may be used to pay or offset any losses incurred during the current or any prior fiscal year.

B. Excess funds may be retained or used as permanent, non-allocated capital.

C. At the discretion of the Board, excess funds may be allocated to its patrons on

a patronage basis, and any amount so allocated shall be included as part of the capital credited to the accounts of patrons, as herein provided.

SECTION 4. Assignment of Capital Credits

Capital credited to the account of each patron Member shall be assignable and must be recorded only on the books of the Cooperative pursuant to written instruction from the assignor Member. Such assignments may be made only to successors in interest or successors in occupancy in all or a part of such patron’s Member’s premises served by the Cooperative unless the Board, acting under policies of general applications, shall determine otherwise. (2) Clarity (3) Alignment with Montana law (5) Alignment with BEC editorial standards The Board shall have the power at any time upon the death of any patron, Member who was a natural person, to retire the patron’s Member’s capital credits immediately under the following conditions. If the legal representatives of the patron’s estate shall request in writing that the capital credited to any such patron be retired prior to the time such capital would otherwise be retired under the provisions of these Bylaws, the Board may reach agreement with the legal representatives of such patron’s estate to retire capital credited to any such patron immediately upon such terms and conditions, including capital credit discounting to present-day value as the Board permitted under approved Cooperative policy and Montana law. provided that the financial condition of the Cooperative will not be impaired thereby language not a provision of current Montana law. The Board shall establish policies and procedures for implementing and conducting any capital credit discounting. (2) Clarity (3) Alignment with Montana law. Deletion due to 2019 change in Montana law language regarding co-op financial condition

SECTION 5. Retirement Capital Credits


If the Board determines that the financial condition of the Cooperative will not be impaired thereby, Capital credited to patrons’ Members’ accounts may be retired in full or in part when retirement is consistent with sound business and management practices and the longterm financial stability of the Cooperative. The Board of Trustees shall determine the method, basis, priority, and order of retirement, if any, for all amounts furnished as capital. In the event of dissolution or liquidation of the Cooperative, after all outstanding indebtedness of the Cooperative has been paid, outstanding capital credits shall be retired without priority on a pro rata basis before any payments are made on account of property rights of Members. to Members for the property and assets of the Cooperative. (2) Clarity (3) Alignment with 2019 legal language SECTION 6. Contract between Member and Cooperative

The Members of the Cooperative, by receiving energy service from the Cooperative, acknowledge that the terms and provisions of the Articles of Incorporation and Bylaws shall constitute and be a contract between the Cooperative and each Member, and both the Cooperative and the patrons Members are bound by such contract as fully as though each Member had individually signed a separate instrument containing such terms and provision. The provisions of this Article of the Bylaws shall be called to the attention of each patron Member of the Cooperative and made readily available and conspicuously evident using all standard means of notification. (5) Alignment with BEC editorial standards

SECTION 7. Memberships in Other Organizations

The Cooperative shall not become a Member or purchase stock in any other organization without an affirmative vote of the Members at a duly held meeting, the notice of which shall specify that action is to be taken upon such proposed Membership or stock purchase. provided, However, that the Cooperative may, upon the authorization of the Board, purchase stock in or become a Member of any corporation or organization organized on a non-profit basis for the purpose of engaging in furthering the cause of rural electrification or providing information or resources supporting the Cooperative’s mission. or with the approval of the Administrator of RUS, of any other corporation for the purpose of acquiring electric facilities. (2) Clarity/accuracy (4) Alignment with other Bylaw provisions, Article IV Section 1 D.

ARTICLE VIII—DISPOSITION OF PROPERTY

SECTION 1. Membership-Approved Dispositions

In accordance with Montana law (MCA 35-18-317), the Cooperative may not sell, lease, exchange, or otherwise dispose of all or any substantial portion of its property or assets unless the following occurs:


A. The Board appoints three (3) independent appraisers. Each appraiser evaluates the Cooperative’s assets and renders an appraisal valuing the cooperative’s specified assets.

B. The Board approves the transaction.

C. Members are notified at least ninety (90) days in advance of a meeting to vote

on disposition of assets or property and the terms of the proposed transaction.

D. At least thirty (30) days before the Member Meeting, the Cooperative shall invite all the other electric cooperatives in the State of Montana to submit proposals to acquire the Cooperative’s specified assets.

E. Members are mailed, at least thirty (30) days before the Member Meeting, any

alternative proposal made by Cooperative Members, if it has been submitted to the Board with dated signatures, printed names, addresses and phone numbers of fifty (50) or more Members.

F. At least two-thirds (2/3) of the total membership approves the transaction in

person at the Meeting and by mail ballot.

SECTION 2. Mortgage or Encumbrance

In accordance with these Bylaws and applicable law, the Board of the Cooperative, without authorization by the Members may authorize the execution and delivery of a mortgage or mortgages or a deed or deeds of trust upon, or the pledging or encumbering of, any or all of the property, assets, rights, privileges, licenses, franchises and permits of the Cooperative, whether acquired or to be acquired, and wherever situated. This action applies as well to the revenues and income therefrom, all upon such terms and conditions as the Board shall determine, to secure any indebtedness of the Cooperative to the United States of America or any instrumentality or agency thereof or following a 30-day notice to the Members of the date of the Board meeting at which a decision will be made, to any other financing sources within the United States. (4) Alignment with other bylaw provisions and BEC business strategy to inform members.

SECTION 3. Merger or Consolidation with a Cooperative

The Cooperative may merge or consolidate with any one or more cooperatives by complying with the provisions of Montana law (MCA 35-18-401 or 35-18-402) which includes the following:


A. The proposal for merger or consolidation and the proposed articles of merger or articles of consolidation shall be approved by the Board of Trustees of the Cooperative.

B. The proposal for merger or consolidation and the proposed articles of merger or articles of consolidation shall be submitted to a vote of the Members of the Cooperative at an Annual or Special Meeting of the Members. The notice for such meeting shall set forth the full particulars of the proposed merger or consolidation including proposed articles of merger or articles of consolidation.

C. The proposal for merger or consolidation and the proposed articles of merger or articles of consolidation shall be approved by two-thirds (2/3) of the Members voting at such meeting or by mail.

ARTICLE IX—SEAL

The corporate seal of the Cooperative shall have inscribed thereon the name of the Cooperative and the words “Corporate Seal of The State of Montana.”

ARTICLE X—FINANCIAL TRANSACTIONS

SECTION 1. Fiduciary Responsibility

The following persons are Fiduciaries of Beartooth Electric Cooperative: 1) Board Trustees,2) Committee members, and 3) employees who, in addition to fiduciary responsibility defined in these Bylaws, have responsibilities under Montana laws, Cooperative policies, job descriptions, and/or employment contracts.

Every Fiduciary is subject to the provisions of these Bylaws and shall discharge his/ her duties solely in good faith and solely in the best interests of the Cooperative and its Members for the exclusive purpose of providing electric energy service. Fiduciaries may not profit from their position with the Cooperative, excluding wages, benefits, and remunerations paid by the Cooperative pursuant to Board approval. In addition to complying with applicable Board policies, Montana law, and employment contracts, every Fiduciary shall exercise all skill, care, prudence, and due diligence at his/ her disposal when acting on behalf of the Cooperative. All actions of a Fiduciary shall be that of a prudent person, familiar with such matters and acting in a similar capacity under the circumstances then prevailing under these Bylaws.


Failure to comply with the duties and responsibilities of a Fiduciary shall be grounds for removal from his/her position.

SECTION 2. Contracts and Obligations

In accordance with Board policies and these Bylaws, the Board may authorize any officer or officers, agent or agents to enter into any contract or execute and deliver any instrument in the name of and on behalf of the Cooperative.

SECTION 3. Checks, Drafts, and Financial Documents

All checks, drafts or other orders for the payment of money, and all notes, bonds, or other evidences of indebtedness issued in the name of the Cooperative shall be signed and countersigned by such officer or officers, agent or agents, employee or employees of the Cooperative as established by policy which shall be adopted by the Board.

SECTION 4. Deposits

All funds except petty cash of the Cooperative shall be deposited to the credit of the Cooperative in such financial institutions as the Board selects.

SECTION 5. Change in Rates

A. Notice shall be given to Members at least thirty (30) days prior to a vote by the Board to approve any change in Beartooth Electric Cooperative’s energy rates.

B. Notice shall be given to the Wyoming Public Service Commission at least

thirty (30) days prior to a vote by the Board to approve any change in Beartooth Electric Cooperative’s energy rates.

C. Notice shall be given to the United States Department of Agriculture, Rural Utilities Service (RUS) thirty (30) days prior to any proposed change in Beartooth Electric Cooperative’s general rate structure as required by the agency.

SECTION 6. Fiscal Year

The fiscal year of the Cooperative shall begin on the first day of January of each year and shall end on the last day of December of the same year.


SECTION 7. Accounting System, Audit and Reports

The Board shall be responsible to establish and maintain a complete accounting system subject to applicable laws and rules and regulations of any regulatory body and consistent with RUS requirements. An audit of the books and records and other relevant business documents of the Cooperative shall be conducted each year by an independent public accounting firm hired by the Board. A report of such audit shall be submitted to the Members at the following Annual Meeting.

ARTICLE XI—AMENDMENTS

These Bylaws may be altered, amended or repealed by the Members at any regular or special meeting, provided the notice of such meeting contains a copy of the proposed alteration, amendment, or repeal.

The above and foregoing Bylaws were duly and regularly adopted at a regular Meeting of the Membership of BEARTOOTH ELECTRIC COOPERATIVE, INC., upon due notice being given to the Members and these Bylaws supersede all and any prior adopted Bylaws which are hereby and hereof duly amended through May 4, 2019.

STATEMENT OF NONDISCRIMINATION

“Beartooth Electric Cooperative, Inc.,” is the recipient of Federal financial assistance from the U.S. Department of Agriculture (USDA). The USDA prohibits discrimination in all its programs and activities on the basis of race, color, national origin, age, disability, and where applicable, sex, marital status, familial status, parental status, religion, sexual orientation, genetic information, political beliefs, reprisal, or because all or part of an individual’s income is derived from any public assistance program. (Not all prohibited bases apply to all programs.) Persons with disabilities who require alternative means for communication of program information (Braille, large print, audiotape, etc.) should contact USDA’s TARGET Center at (202) 720-2600 (voice and TDD). To file a complaint of discrimination, write to USDA, Director, Office of Civil Rights, 1400 Independence Avenue, S.W., Washington, D.C. 20250-9410, or call toll free (866) 632-


9992 (voice) or (800) 877-8339 (TDD) or (866) 377- 8642 (relay voice users). USDA is an equal opportunity provider and employer.

THE SEVEN COOPERATIVE PRINCIPLES Many businesses use the word “member” to describe their customers. Places like Sam’s Club or Costco and even American Express like to refer to their customers as members. You pay a fee to buy their goods and services, but that is really all you get for the “membership.” No right to vote for the Board of Trustees or to participate in any meaningful way in the organization. In cooperatives like Beartooth Electric, membership really does mean something more than just the right to buy electricity. Co-ops of all types are founded on seven cooperative principles that give us guidance and strategic direction. Membership also gives you rights as an owner of this co-op.

PRINCIPLE #1: Voluntary and Open Membership Cooperatives are voluntary organizations, open to all people able to use its services and willing to accept the responsibilities of membership, without gender, social, racial, political or religious discrimination. PRINCIPLE #2: Democratic Member Control Cooperatives are democratic organizations controlled by their members—those who buy the goods or use the services of the cooperative—who actively participate in setting policies and making decisions. PRINCIPLE #3: Member’s Economic Participation Members contribute equally to, and democratically control, the capital of the cooperative. This benefits members in proportion to the business they conduct with the cooperative rather than on the capital invested. PRINCIPLE #4: Autonomy and Independence

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2

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4 BEC Board Book | February 25, 2020 | Page 60

Cooperatives are autonomous, self-help organizations controlled by their members. If the co-op enters into agreements with other organizations or raises capital from external sources, it is done so based on terms that ensure democratic control by the members and maintains the cooperative’s autonomy.

PRINCIPLE #5: Education, Training, and Information Cooperatives provide education and training for members, elected representatives, managers and employees so they can contribute effectively to the development of their cooperative. Members also inform the general public about the nature and benefits of cooperatives.

PRINCIPLE #6: Cooperation Among Cooperatives Cooperatives serve their members most effectively and strengthen the cooperative movement by working together through local, national, regional and international structures.

PRINCIPLE #7: Concern for Community While focusing on member needs, cooperatives work for the sustainable development of communities through policies and programs accepted by the members.

CONNECT WITH BEARTOOTH ELECTRIC PO Box 1110

1306 N Broadway Ave Red Lodge, MT 59068

406-446-2310800-472-9821

www.beartoothelectric.com

facebook.com/beartoothelectric

[email protected]

Sign up for the Beartooth Electric member email on our website home page.

SIGN UP TO SUPPORT BEARTOOTH ELECTRIC OPERATION ROUND UP

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NEIGHBORS HELPING NEIGHBORS IN NEED

SIGN UP TODAY – Select the option that works best for you:

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• Policy Committee (Roxie Melton)The Policy Committee will resume regular meetings following theAnnual Meeting in May.

Communication Committee (Richard Nolan)Kaaren Robbins will provide a review during the MemberCommunication and Services report.

• Treasurer’s Report (Arleen Boyd)No report for January 2020.

CONSENT AGENDA (Items 7-9, shown in blue)

7. Membership Connections and Cancellations, Capital Credit toEstates, Registers, Reports, and Summary of Disbursements

8. Financials—Brad Prophet

• Accountant Brad Prophet presented the draft December 2019 financials.

9. Staff Reports

General Manager’s Report—Kevin Owens• NRECA CEO Close-Up

I attended NRECA’s CEO CloseUp Conference on January 12-15th. NRECAdoes an excellent job of putting together a great agenda for GM/CEOs.There were at least 4 concurrent sessions taking place outside ofGeneral Sessions and Networking Sessions. This format provided ampleopportunity to select a track of interest to pursue.

Curtis Wynn was one of the kickoff General Session speakers thatdelivered a very compelling message to cooperatives to look to thefuture and be proactive rather than reactive to meet memberexpectations. He delivered a spot-on story about riding a gondola up asheer cliff to a monastery in Tibet. He was concerned when he looked upand saw a very frayed rope lifting the gondola up the cliffside. Heinquired how often they changed the rope. The monks retort, when itbreaks. Message delivered.

Larry Sabato was the kickoff speaker at the first General Session.Sabato is a New York Times bestselling author, 3 time Emmy Awardwinner, and one of the nation's most respected analysts. He is aprofessor of politics at the Univ. of Virginia and founder and directorof the Univ. of Virginia for Politics. Sabato heads up Sabato’s CrystalBall. The Crystal Ball has been recognized as the #1 leader inpolitical prediction and one of the top political sites on the web.Subscription to the Crystal Ball is free. One of his more insightfulperspectives was that the Republicans were now turning the corner onembracing renewables and a clean energy future. This may not be alignedwith White House energy policy, but their constituents were demandingit and they vote, not the White House. You can subscribe to Sabato’s


Crystal Ball at http://centerforpolitics.org/crystalball/ My interest in the topics presented was more focused on where the “progressive” Co-ops were heading. Several managers shared their strategic direction and were well down the path of implementing a renewable, distributed generation future. Kit Carson Cooperative (KCEC) was noteworthy. They have embraced a distributed generation model very similar to what I reported previously on following my trip to Denver for the Distributed Energy Conference in November. KCEC is constructing distributed energy resources (DER) with storage capacity to service 100% of KCEC’s daytime peak energy requirements by 2022. In the past year, the co-op has issued a Request for Proposals to add seven megawatts of solar capacity to include storage by the end of 2020. The project aims to build on the solar arrays that KCEC has installed over the past 12 years and will bring the co-op to a total of 25 of the 35 megawatts required to meet the 100% daytime solar goal. I would encourage you to take a look at Kit Carson Electric Cooperative’s web site (https://kitcarson.com/electric/100-daytime-solar-energy-by-2022). Luis Reyes is their long term (1993) GM at Kit Carson and truly a visionary. Kit Carson is one of 16 Cooperatives, second largest in New Mexico. They recently made an amicable split with Tri-State G&T and are now the only Cooperative in New Mexico with a wholesale power supplier (Guzman). Part of their business model now incorporates peak capacity sales back to the grid from their battery storage during peak shortages.


http://centerforpolitics.org/crystalball/

Of particular interest at the conference was Dick Peck’s participation in a panel focused on Co-Op Governance and Reputation Management. He generated a lot of questions from the audience which was sign they were listening to his message of transparency, communication, member involvement, committees, etc. He did give out a notable shout out to Beartooth as the finest example of utility governance, transparency and member involvement.

• NWE OATT

Data requests and extensive intervener analysis have been taking place over the past two months. The interveners have made an initial offer of settlement to NWE. Further discussions will be taking place in D.C. on January 23 and 24. I remain very guarded in my optimism.

• I received a response letter from NWE (attached) regarding my December

31 letter to them expressing concern about the number of service related outages our members are experiencing from their transmission system. As their transmission engineers conduct further analysis we will eventually have a sit down meeting to review their findings.

• Risk management/ Rate Design

I continue to work with the Rate Design Committee to provide necessary staff support.

• I have begun the development of a new Energy Assistance program for Low Income Seniors and Low Income Disabled Members. We’ll have something to talk about in the next month or so.

Member Communication & Service—Kaaren Robbins • The BIG Story

- The new BEC website launched 12/31. - BEC App

The development of the BEC app (incorporating SmartHub) will commence in the next few weeks.

• February Rural Montana

The February newsletter features the Rate Design article, No Person Left Behind story supplemented with the Purple Heart article, Trustee nominations open Districts 1, 3 and 7, and energy tip of the month.

• February Billing Insert Energy Saving Tips, Trustee nominations Districts 1, 3 and 7, February Calendar.

• February Billing Memo Risk Management Committee Meeting Date??, or Board Meeting Decision NWE Transmission Rate Increase.


• Member eNewsletter

- February 8/9 - February 22/23

• Rate Design

- Communications Plan (Details on White Board) - February 2020-Rural Montana Article | Transmission - March-Rural Montana Board Decision Article | Transmission on

Bill Statement - April-Irrigator Town Halls. SmartHub usage graphs (demand) - May-Annual Meeting Presentation | Demand on Bill Statement $0

Residential/Small Commercial | All Member Direct Mail. - June- Rural Montana - July- Bill Statement Demand - August- Bill Statement Demand - September- Bill Statement Demand - October- Bill Statement Demand - November- Bill Statement Demand - December-Rural Montana 2-page | NEW Billing 2020 - January 2021-Rate Design Implementation | NEW Billing 2020

• Shares du Soleil

- The lobby monitor system has arrived and is in the process of installation

• Youth Programs - MECA Memorial Scholarship - Beartooth Electric Scholarship

o The deadline for both scholarships was January 24. We have received more applications than at any time in the past. I also received a call from a member’s student who attends Big Timber High School (we’ve never had an applicant from Big Timber) to check eligibility. They are a member, and they are eligible.

• NEW Billing Statement Development - The new billing statement data flow from Aclara to NISC is

completed. - The new statement format, design, and programming can commence

with the Rate Design direction upon board approval anticipated in February 2020. Based on this timeline, the new statement launch is anticipated on the June statement (May billing).

• 2020 Annual Meeting

Date: May 2, 2020 Location: Anipro Event Center Sound: Stillwater Sound Districts 1, 3, and 7 are up for election in 2020. See Annual Meeting Calendar following report

• MECA

- Communication Committee • NEW Rural Montana printer contract awarded at the October MECA

Annual Meeting. The new printer will begin services with the February Rural Montana.

- Members Services BEC Board Book | February 25, 2020 | Page 66

• Coop Day at the Capital (January 2020)

• Washington D.C. Youth Tour BEC’s 2020 candidate selection, January 7, 2020.

• MECA Memorial Scholarship (Application deadline is January 24-same date as the Beartooth Electric Scholarship).

• Electronic Forms Development - A new New Construction Application is in development as well as

identifying other form needs.

• Facebook Content follows board meeting information, press releases, and RM

• BEC Membership Application

A new review is scheduled with the Policy Committee

• BEC New Member Welcome (email & hard copy package) Work in progress-awaiting membership application

• Operation Round Up

- Operation Round Up received $126.32 billed 1/7/2020. 202 Accounts and 186 Customers. Current Balance for Operation Round Up is $6,410.74. We cut a check to ORU for $6,410.74 on 1/10/2020. It cleared on 1/14/2020. Also, ORU has earned $49.20 in solar credits from the donated panels. This amount plus the credit for January will be added to their next check. In future months, the SDS credit will be added to their monthly check. Future reports will come from someone on their board (Probably Greg Waite).

• Residential Home Energy Assistance Program (formerly LISD/LIDD)

- Total Residential Home Energy Discount Accounts for December 2019 billed 1/7/2020. WY: $71.43 and MT: $313.50 = Total $384.93. Total number of accounts are 37.


NISC Enterprise System Update December 2019

Process Reviews • Several internal process reviews are taking place (SO/WO/Street light).• New system capabilities are being implemented into processes as

available.

Installed Systems (Updates) • ABS• Customer Information System (CIS)• CashRegister• Remitlus• SmartHub

NEW System Installations • E&O App Suite - Completed• Automated Meter Information (AMI) – Completed• Work Management Solutions (WMS) – Completed• DocuVault– Completed• CallCapture – Completed• Meter Data Management System (MDMS) – Completed

• Mapwise-Mappingo New BETA edition released.

• Mapwise-Stakingo New BETA edition released.

• EZRI GISo Installed with MapWise

• OMS-Kickoff was conducted in December. CIS/Mapping systems being set

for OMS.- Gus Behrent and Stephanie Fletcher are scheduled to attend onsite

training at the NISC Missouri training center the second week ofFebruary.

o Implementation 2020

• Prepayo Implementation 2020

OTHER

• Billing Statement Programmingo Aclara-MDMS data flow completed.o Next steps will progress upon rate design board approval.


Line Superintendent Report—Eric Elton CONSTRUCTION, OPERATIONS & MAINTENANCE

• The Red Lodge crew has been trimming trees and working on some line maintenance.

• Columbus Crew is still working on mapping and they too are working online maintenance.

• Jim and Brad have been working with Nemont and Morrison-Maierle getting the cell phone communications working at the Nye Substation. It is working now, and the last parts are Aclara turning it on and changing out the meters.

• We have the rough draft ready on the land lease for the new Columbus substation. We hope to get the lease going and start the permits this summer.

• We installed two new services in December.

• Teresa is working on idle services again, and she is getting ready to send out some more letters to see if we can retire them. They may choose to keep the service which at that time they will start paying line retention fees.

• There was a total of 9 outages system-wide in December. • We had 31 individual consumers out of power at some point in November,

having a duration of 1250 minutes.

EDUCATION, SAFETY & LOSS • The next MECA safety meeting is January 28.

• No lost time accidents to report for December.

TRUCK, TOOLS & EQUIPMENT • I’m working on bids for the new cab and chassis for number 9 (the bucket

truck in Columbus). None too soon as the transmission is having problems. The chassis is in the 2020 budget.

10. New Business Resolution Authorizing the Write-off of 2019 Doubtful Accounts

MOTION A motion was made by ______________________, seconded by _____________________, to resolve that Beartooth Electric Cooperative, Inc. elects to offset doubtful accounts of $7,342.997, against the Cooperative Accumulated Provision for Uncollectable Accounts. Motion carried. Voting was unanimous.

Bylaws: Proposed Revisions Review Committee Chair, Arleen Boyd presented the Proposed Bylaw Revision

Change Category document an marked up version of the Bylaws during the Bylaw Committee Report section.


Rate Design Discussion and Decision Frank Willett requested to be placed on the Risk Management Committee

agenda to review the Lower Valley discounted capital credit program.

11. Old Business

• MECA Strategic Planning Session Review- Richard Nolan Trustee Nolan shared MECA’s December Strategic Planning Session, Summary Issues, and 2020 Goals.

12. Upcoming Meetings

• BEC Bylaw Committee Meeting | BEC Office | February TBD • BEC Finance/Risk Management Committee Meeting | BEC Office | February TBD • BEC Regular Board Meeting | BEC Office | February 25, 2020 | Noon • Auditor Fieldwork | BEC Office | March 2– 4, 2020 • Preliminary Audit Draft | March 16, 2020 • Preliminary Audit Draft Comments Deadline | March 19, 2020 • 2019 Audit Presentation | BEC Office | March 31, 2020 | 10 AM • BEC Annual Member Meeting | ANIPRO Event Center, Absarokee, MT |

May 2, 2020 | 8 AM – Noon 13. Executive Session

• 2020 Board Trustee Elections 14. Executive Action

• In Executive Session, President Lindgren, shared she will not seek re-election in 2020, however, will remain active in committee work.

15. Adjourn `

President Julie Lindgren adjourned the January 28, 2020, BEC Board of Trustees meeting at 5:04 p.m.

ATTEST: __________________________________ Arleen Boyd, Secretary


JESS & LYNDA BERG DIXIE & JOHN MCCAMPBELLJULIE & MARTIN CLABORN KEN MCNABBPHIL DELUCA JAMES & RUTH NASHMAC & SAMANTHA GRAYLESS LAUREL NICKSONWAYNE TODD & DAWN HAND SOFIA & ROXY PAINEHEARTLAND LIFE LLC MICHAEL VIIG & JANENE MCKENNY

CRYSTAL HOLY CROSS WESTON WAGNERMARVIN & BAMBI JONES THE WOODARD FAMILY TRUSTLAVESTA KENISON JACOB C WYCKOFFBRIAN KROHMER JUSTIN & STACY YOSTJOSEPH MARKS

PAM & ROBERT DIEDE KELLY MURRELLGEORGE ENOS CASEY & MELISSA OLSENJENNIFER HERTZLER NICOLE & JUSTINE OLSONDAN HINKLE JULIE & BILL PILGRIMHMK HOLDINGS LP CYNTHIA & DAVID ROBERTSLANDMARK REALTORS ROBERT & KAREN SAXERLAZY T M LIVESTOCK LLC DESTINY SHEARERCHRIS LEHMAN JACK E SHEMERJULIE LINDGREN HEIDI STADEL

BETTY THORMAHLEN $909.25 $730.33 $178.92

TOTALS $8,675.13 $6,065.02 $2,610.11

PAULINE POMRENKE $571.08 $515.09 $55.99

MARLIN YATES $270.10 $270.10 $0.00JOHN VUKONICH $422.91 $372.76 $50.15

JOEL&RUTH DICKINSON $1,126.61 $462.74 $663.87

WARREN THOMAS $853.79 $699.79 $154.00

HAZEL FOOTTIT $280.17 $245.53 $34.64MARGARET LOOK $2,247.99 $1,271.29 $976.70

HELEN BOHNERT $945.44 $726.02 $219.42EDW CESTNIK $561.84 $341.78 $220.06

WC BARNETT $485.95 $429.59 $56.36

FEBRUARY 25, 2020JANUARY 2020

MEMBERSHIP CONNECTIONS

MEMBERSHIP CANCELLATIONS

CAPITAL CREDITS Capital Credits

Allocated

Discounted Refund

to MemberRetained by Co-Op


OPEN BALANCE REGISTER02/19/2020 8:17:25 am Page: 1

Revision: 18847Beartooth Electric Co-Op.,Inc.

TotalAR Amt

CurrentAR Amt 30 Day 60 Day 90 Day

TotalBill Amt

TotalBill Past

CurrentBill Amt

2,223.21 1,068.07 1,155.14 0.00 0.00

Budget Amt Due

Total AR Amt

Current

90 Day

60 Day

30 Day

0.00

0.00

0.00

Tot ActiveDollars

ActiveAccts

0

0

0

0.00

0.00

0.00

0

0

0

Tot InactiveDollars

InactiveAccts

0.00

2,223.21

1,068.07

0.00

0.00

1,155.14

0

22

19

0

0

7

Grand Totals:

ActiveCredit $

ActiveCredit Accts

0.00

0.00

0.00

0.00

0.00

0.00

0

0

0

0

0

0

InactiveCredit $

InactiveCredit Accts

0.00

0.00

0.00

0.00

0.00

0.00

0

0

0

0

0

0

ActiveDebit $

ActiveDebit Accts

0.00

0.00

0.00

0.00

0.00

0.00

0

0

0

0

0

InactiveDebit $

InactiveDebit Accts

0.00

2,223.21

1,068.07

0.00

0.00

1,155.14

0

22

19

0

0

7

GRAND TOTAL SUMMARY INFORMATION

1,155.142,223.21 1,068.07

0

/pro/rpttemplate/cis/2.46.1/OPEN_BALANCE.xml.rpt sfletcher28019

Accumlated provisions set aside for Uncollectable Write-Off accounts as of January 31, 2020, is $60,707.45.Capital Credits to be applied with General Retirements, if not paid.


DATE CITY DISCONNECTED RECONNECTED

January 2019 NO DISCONNECTS

February 2019 NO DISCONNECTS

March 2019 NO DISCONNECTS

April 2019 ROBERTS April 25, 2019 June 7, 2019

May 2019 GREYCLIFF May 28, 2019 May 28, 2019FISHTAIL May 28, 2019 May 28, 2019JOLIET May 28, 2019 May 28, 2019RAPELJE May 28, 2019 August 22, 2019RAPELJE May 28, 2019 August 22, 2019

June 2019 FISHTAIL June 24, 2019 June 24, 2019RED LODGE June 24, 2019 June 25, 2019ROBERTS June 24, 2019 June 24, 2019ABSAROKEE June 24, 2019 June 24, 2019BELFRY June 24, 2019 June 24, 2019

July 2019 RED LODGE July 30, 2019 August 5, 2019ROBERTS July 30, 2019 July 30, 2019POWELL July 30, 2019 August 12, 2019

August 2019 BELFRY August 22, 2019 August 23, 2019BRIDGER August 22, 2019 August 22, 2019GREYCLIFF August 22, 2019 still disconnected

JOLIET August 22, 2019 still disconnected

NYE August 22, 2019 August 26, 2019POWELL August 22, 2019 August 22, 2019ROBERTS August 22, 2019 August 22, 2019

September 2019 FISHTAIL Sept. 19, 2019 Sept. 19, 2019ROSCOE Sept. 19, 2019 Sept. 19, 2019ROSCOE Sept. 19, 2019 Sept. 19, 2019COLUMBUS Sept. 19, 2019 Sept. 24, 2019ROBERTS Sept. 19, 2019 Sept. 27, 2019BOYD Sept. 19, 2019 Sept. 24, 2019

October 2019 NO DISCONNECTS

November 2019 NO DISCONNECTS

December 2019 NO DISCONNECTS

January 2020 NO DISCONNECTS

Notices went out with Past Due Balances due 1/7/2020.Delinquent accounts were called 1/17/2020.

DISCONNECT NON PAY


According to the Paperwork Reduction Act of 1995, an agency may not conduct or sponsor, and a person is not required to respond to, a collection of information unless it displays a valid OMB

control number. The valid OMB control number for this information collection is 0572-0032. The time required to complete this information collection is estimated to average 15 hours per

response, including the time for reviewing instructions, searching existing data sources, gathering and maintaining the data needed, and completing and reviewing the collection of information.

BORROWER DESIGNATION

MT0019

PERIOD ENDED

FINANCIAL AND OPERATING REPORT January 31, 2020

BORROWER NAME

INSTRUCTIONS-See help in the online application BEARTOOTH ELEC COOP INC

This information is analyzed and used to determine the submitter's financial situation and feasibility for loans and guarantees. You are required by contract

and applicable regulations to provide the information. The information is subject to the Freedom of Information Act (5 U.S.C. 552)

CERTIFICATION

We recognize that statements contained herein concern a matter within the jurisdiction of an agency of the United States and the making

of a false, fictitious or fraudulent statement may render the maker subject to prosecution under Title 18, United States Code Section 1001.

___X___ All of the obligations under the RUS loan documents have been fulfilled in all material respects.

_________ There has been a default in the fulfillment of the obligations under the RUS loan documents. Said default(s) is/are

specifically described in Part D of this report.

2/19/2020

DATE

2/19/2020

DATE

YEAR-TO-DATE

ITEM LAST YEAR THIS YEAR BUDGET THIS MONTH

(a) (b) (c) (d)

1. Operating Revenue and Patronage Capital................................... 809,435 823,765 912,022 823,765

2. Power Production Expense............................................................... 0 0 0 0 3. Cost of Purchased Power............................................................... 311,706 362,043 344,795 362,043

4. Transmission Expense..................................................................... 381 367 417 367

5. Regional Marketing Expense………………………………………….. 0 0 0 0

6. Distribution Expense-Operation...................................................... 74,903 119,559 84,807 119,559

7. Distribution Expense-Maintenance................................................. 33,069 39,149 30,099 39,149

8. Consumer Accounts Expense.......................................................... 30,415 26,836 24,873 26,836

9. Customer Service and Informational Expense............................... 14,195 7,743 13,223 7,743

10. Sales Expense................................................................................. 730 1,519 657 1,519

11. Administrative and General Expense........................................... 108,005 99,380 106,491 99,380

12. Total Operation and Maintenance Expense (2 thru 11)................. 573,404 656,596 605,362 656,596

13. Depreciation and Amortization Expense........................................ 88,132 93,027 91,754 93,027

14. Tax Expense - Property and Gross Receipts.................................. 0 0 0 0

15. Tax Expense - Other......................................................................... 157 204 234 204

16. Interest on Long-Term Debt............................................................ 52,282 47,796 47,476 47,796

17. Interest Charged to Construction - Credit...................................... 0 0 0 0

18. Interest Expense - Other.................................................................... 129 119 100 119

19. Other Deductions............................................................................. 150 150 150 150

20. Total Cost of Electric Service (12 thru 19).................................... 714,254 797,892 745,076 797,892

21. Patronage Capital and Operating Margins (1 minus 20)............... 95,181 25,873 166,946 25,873

22. Non Operating Margins - Interest................................................... 11,071 7,532 7,578 7,532

23. Allowance for Funds Used During Construction.............................. 0 0 0 0

24. Income (Loss) from Equity Investments........................................ 0 0 0 0

25. Non Operating Margins - Other................................................... (683) 273 342 273

26. Generation and Transmission Capital Credits............................. 0 0 0 0

27. Other Capital Credits and Patronage Dividends............................. 0 0 0 0

28. Extraordinary Items.......................................................................... 0 0 0 029. Patronage Capital or Margins (21 thru 28)..................................... 105,569 33,678 174,866 33,678

Rev 2010

UNITED STATES DEPARTMENT OF AGRICULTURE

RURAL UTILITIES SERVICE

ELECTRIC DISTRIBUTION

We hereby certify that the entries in this report are in accordance with the accounts and other records of the

system and reflect the status of the system to the best of our knowledge and belief.

ALL INSURANCE REQUIRED BY PART 1788 OF 7 CFR CHAPTER XVII, RUS, WAS IN FORCE DURING THE REPORTING

PERIOD AND RENEWALS HAVE BEEN OBTAINED FOR ALL POLICIES.

DURING THE PERIOD COVERED BY THIS REPORT PURSUANT TO PART 1718 OF 7 CFR CHAPTER XVII

(check one of the following)

DRAFT

BRAD PROPHET, ACCOUNTANT

DRAFT

KEVIN P. OWENS, GENERAL MANAGER

PART A. STATEMENT OF OPERATIONS

RUS Financial and Operating Report Electric Distribution


USDA - RUS BORROWER DESIGNATION

MT0019

FINANCIAL AND OPERATING REPORT PERIOD ENDED

PART B. DATA ON TRANSMISSION AND DISTRIBUTION PLANT

YEAR-TO-DATE YEAR-TO-DATE

ITEM LAST YEAR THIS YEAR ITEM LAST YEAR THIS YEAR

(a) (b) (a) (b)

1. New Services Connected 3 4 5. Miles Transmission 15.21 15.21

6. Miles Distribution-

2. Services Retired 4 20 Overhead 1,310.83 1,306.89

7. Miles Distribution-

3. Total Services in Place 6,666 6,688 Underground 499.74 499.94

4. Idle Services 8.Total Miles Energized

(Exclude Seasonal) 453 420 (5 + 6 + 7) 1,825.78 1,822.04

PART C. BALANCE SHEET

ASSETS AND OTHER DEBITS LIABILITIES AND OTHER CREDITS

1. Total Utility Plant in Service.................................................33,808,159 30. Memberships................................................................... 0

2. Construction Work in Progress........................................... 64,854 31. Patronage Capital............................................................. 7,776,064

3. Total Utility Plant (1 + 2).......................................................33,873,013 32. Operating Margins - Prior Years...................................... 286,427

4. Accum. Provision for Depreciation and Amort.................. 16,568,345 33. Operating Margins - Current Year..................................... 25,873

5. Net Utility Plant (3 - 4)...........................................................17,304,668 34. Non-Operating Margins................................................... 599,774

6. Non-Utility Property - Net.................................................... 0 35. Other Margins and Equities............................................. 231,671

7. Investments In Subsidiary Companies............................... 0 36. Total Margins and Equities (30 thru 35)............................. 8,919,809

8. Invest. In Assoc. Org. - Patronage Capital....................... 434,415 37. Long-Term Debt - RUS (Net).......................................... 397,477

9. Invest. In Assoc. Org. - Other - General Funds................. 0 38. Long-Term Debt - FFB - RUS Guaranteed......................... 6,339,256

10. Invest. In Assoc. Org. - Other -Nongeneral Funds.......... 283,452 39. Long-Term Debt - Other - RUS Guaranteed....................... 0

11. Investments In Economic Development Projects............ 0 40. Long-Term Debt - Other (Net).............................................5,194,416

12. Other Investments.............................................................. 0 41. Long-Term Debt - RUS - Econ. Devel. (Net)........................ 0

13. Special Funds.................................................................... 0 42. Payments-Unapplied 1,536,620

14. Total Other Property and Investments (6 thru 13)........ 717,867 43. Total Long-Term Debt (37 thru 41-42)...................................10,394,529

15. Cash - General Funds....................................................... 194,504 44. Obligations Under Capital Leases-Noncurrent.................................... 0

16. Cash - Construction Fund - Trustee.................................. 1 45. Accumulated Operating Provisions................................... 0

17. Special Deposits................................................................ 0 and Asset Retirement Obligations

18. Temporary Investments.................................................... 286,232 46. Total Other Noncurrent Liabilities (44+45)......................... 0

19. Notes Receivable (Net)...................................................... 0 47. Notes Payable.................................................................. 0

20. Accounts Receivable - Sales of Energy (Net).................. 903,637 48. Accounts Payable........................................................... 434,483

21. Accounts Receivable - Other (Net)................................... 61,563 49. Consumers Deposits........................................................ 39,059

22. Renewable Energy Credits.......................................... 0 50. Current Maturities Long-Term Debt................................... 0

23. Materials and Supplies - Electric and Other.................... 266,195 51. Current Maturities Long-Term Debt-Ec.Dev...................... 0

24. Prepayments....................................................................... 162,348 52. Current Maturities Capital Leases..................................... 0

25. Other Current and Accrued Assets................................... 3,808 53. Other Current and Accrued Liabilities................................ 609,867

26. Total Current and Accrued Assets (15 thru 25)............... 1,878,288 54. Total Current and Accrued Liabilities (47 thru 53)................1,083,409

27. Regulatory Assets.............................................................. 411,398 55. Regulatory Liabilities...................................................... 0

28. Other Deferred Debits......................................................... 110,383 56. Other Deferred Credits................................................... 24,857

29. Total Assets and Other Debits (5+14+26 thru 28)............20,422,604 57. Total Liabilities and Other Credits

(36+43+46+54 thru 56).......................................................20,422,604

PART D. NOTES TO FINANCIAL STATEMENTS

THIS SPACE IS PROVIDED FOR IMPORTANT DISCLOSURE NOTES TO THE FINANCIAL STATEMENT CONTAINED IN THIS REPORT.

(A SEPARATE SHEET MAY BE USED IF ADDITIONAL SPACE IS NEEDED.)

RUS Financial and Operating Report Electric Distribution Rev 2010

ELECTRIC DISTRIBUTION January 31, 2020

CFC Line of Credit Balance as of 1/31/2020 = $0

CoBank Line of Credit Balance as of 1/31/2020 = $0

Contributions-In-Aid of Construction received through 1/31/20 totaled approximately $18,649,336


BORROWER DESIGNATION BORROWER DESIGNATION

MT019

PERIOD ENDED RUS USE ONLY PERIOD ENDED RUS USE ONLY

INSTRUCTIONS - See RUS Bulletin 1717B-2 INSTRUCTIONS - See RUS Bulletin 1717B-2

CONSUMER

CLASSIFICATION SALES JANUARY FEBRUARY MARCH APRIL MAY JUNE JULY AUGUST SEPTEMBER OCTOBER NOVEMBER DECEMBER TOTAL

AND

REVENUE DATA (a) (b) (c) (d) (e) (f) (g) (h) (i) (j) (k) (l) (Contains a thru l)

a. No.Consumers Served 5,666 0 0 0 0 0 a.#Consumers 0 0 0 0 0 0

1. Residential Sales b. kWh Sold 5,885,882 0 0 0 0 0 1. Residential Salesb. kWh Sold 0 0 0 0 0 0 5,885,882

(excluding seasonal) c. Revenue 711,157$ -$ -$ -$ -$ -$ (excluding seasonal) c. Revenue -$ -$ -$ -$ -$ -$ 711,157$

a. No.Consumers Served a.#Consumers

2. Residential Sales - b. kWh Sold 2. Residential Sales -b. kWh Sold 0

Seasonal c. Revenue Seasonal c. Revenue -$

a. No.Consumers Served 0 0 0 0 0 0 a.#Consumers 0 0 0 0 0 0

3. Irrigation Sales b. kWh Sold 0 0 0 0 0 0 3. Irrigation Salesb. kWh Sold 0 0 0 0 0 0 0

c. Revenue -$ -$ -$ -$ -$ -$ c. Revenue -$ -$ -$ -$ -$ -$ -$


4. Comm. And Ind. b. kWh Sold 946,791 0 0 0 0 0 4. Comm. And Ind.b. kWh Sold 0 0 0 0 0 0 946,791

1000 kVa or Less c. Revenue 97,460$ -$ -$ -$ -$ -$ 1000 kVa or Lessc. Revenue -$ -$ -$ -$ -$ -$ 97,460$


5. Comm. And Ind. b. kWh Sold 183,600 0 0 0 0 0 5. Comm. And Ind.b. kWh Sold 0 0 0 0 0 0 183,600

Over 10000 kVa c. Revenue 13,801$ -$ -$ -$ -$ -$ Over 10000 kVac. Revenue -$ -$ -$ -$ -$ -$ 13,801$


6. Public Street and b. kWh Sold 6. Public Street and b. kWh Sold 0

Highway Lighting c. Revenue Highway Lightingc. Revenue -$


7. Other Sales to b. kWh Sold 7. Other Sales tob. kWh Sold 0

Public Auth. c. Revenue Public Auth. c. Revenue -$


8. Sales for Resale - b. kWh Sold 8. Sales for Resale -b. kWh Sold 0

RUS Borrowers c. Revenue RUS Borrowersc. Revenue -$


9. Sales for Resale - b. kWh Sold 9. Sales for Resale - b. kWh Sold 0

Others c. Revenue Others c. Revenue -$

10. TOTAL No. Consumers (lines 1a - 9a) 6,146 0 0 0 0 0 10. TOTAL No. Consumers (lines 1a - 9a) 0 0 0 0 0 0

11. TOTAL kWh Sold (lines 1b - 9b) 7,016,273 0 0 0 0 0 11. TOTAL kWh Sold (lines 1b - 9b) 0 0 0 0 0 0 7,016,273

12. TOTAL Revenue Received From Sales of 12. TOTAL Revenue Received From Sales of

Electric Energy (lines 1c - 9c) 822,418$ -$ -$ -$ -$ -$ Electric Energy (lines 1c - 9c) -$ -$ -$ -$ -$ -$ 822,418$

13. Transmission Revenue 13. Transmission Revenue -$

14. Other Electric Revenue 14. Other Electric Revenue -$

15. kWh - Own Use 46,158 0 0 0 0 0 15. kWh - Own Use 0 0 0 0 0 0 46,158

16. TOTAL kWh Purchased 7,665,124 0 0 0 0 0 16. TOTAL kWh Purchased 0 0 0 0 0 0 7,665,124

17. TOTAL kWh Generated 0 0 0 0 0 0 17. TOTAL kWh Generated 0 0 0 0 0 0 0

18. Cost of Purchases and Generation 362,043$ -$ -$ -$ -$ -$ 18. Cost of Purchases and Generation -$ -$ -$ -$ -$ -$ 362,043$

19. Interchange - kWh - Net 0 0 0 0 0 0 19. Interchange - kWh - Net 0 0 0 0 0 0 0

20. Peak - Sum All kWh Input (Metered) 20. Peak - Sum All kWh Input (Metered) o Coincident x Non-Coincident 15,827 0 0 0 0 0 o Coincident x Non-Coincident 0 0 0 0 0 0 15,827

RUS Form 7 (Rev. 6-94)

Line Losses 7.86% 7.86%

Line Losses plus Transmission Losses 11.09% 11.09%

Red Lodge Heating Degree Days 1,118 1,118

Current Month YTD 1,118 1,118 1,118 1,118 1,118 1,118 1,118 1,118 1,118 1,118 1,118 1,118

+/- Percentage vs. 2019 History Current Month YTD -1% -56% -69% -74% -77% -78% -79% -79% -80% -83% -85% -87%

+/- Percentage vs. 15 Yr. Ave. Current Month YTD -5% -50% -64% -70% -73% -74% -74% -74% -75% -78% -81% -85%

Red Lodge Heating Degree Days History (2019) 1,132 1,437 1,067 625 660 240 79 75 329 944 1,032 1,091 8,711

Current Month YTD 2019 History 1,132 2,569 3,636 4,261 4,921 5,161 5,240 5,315 5,644 6,588 7,620 8,711

Red Lodge Heating Degree Days History (15 Yr. Ave.) 1,179 1,067 830 639 407 131 17 44 214 601 897 1,238 7,264

Current Month YTD 15 Yr. Ave. 1,179 2,246 3,076 3,715 4,122 4,252 4,270 4,313 4,527 5,129 6,026 7,264

NUMBER

USDA - RUS USDA - RUS

FINANCIAL AND STATISTICAL REPORT MT019 FINANCIAL AND STATISTICAL REPORT

December 31, 2020 December 31, 2020

PART R. POWER REQUIREMENTS DATA BASE

LINE

ITEM


BEARTOOTH ELECTRIC COOPERATIVE, INC.

COMPARATIVE BALANCE SHEET

January 31, 2020

CURRENT YEAR LAST YEAR DIFFERENCE

ASSETS AND OTHER DEBITS

-----------------------

TOTAL UTILITY PLANT IN SERVICE $33,808,159.02 $32,843,056.63 $965,102.39

CONSTRUCTION WORK IN PROGRESS 64,853.92 574,076.49 -509,222.57

TOTAL UTILITY PLANT $33,873,012.94 $33,417,133.12 $455,879.82

-------------------- -------------------- --------------------

ACCUMULATED PROVISION FOR DEPRECIATION -$16,568,344.65 -$16,275,297.58 -$293,047.07

-------------------- -------------------- --------------------

NET UTILITY PLANT $17,304,668.29 $17,141,835.54 $162,832.75

-------------------- -------------------- --------------------

INVEST. IN ASSOC. ORG.-PATRONAGE CAPITAL $434,415.13 $440,302.90 -$5,887.77

INVEST. IN ASSOC. ORG. NON-GENERAL FUNDS 283,451.49 285,417.76 -1,966.27

-------------------- -------------------- --------------------

TOTAL OTHER PROPERTY & INVESTMENTS $717,866.62 $725,720.66 -$7,854.04

-------------------- -------------------- --------------------

CASH - GENERAL FUNDS $194,503.67 $184,876.14 $9,627.53

CASH - CONSTRUCTION FUND - TRUSTEE 1.00 1.00 0.00

TEMPORARY INVESTMENTS 286,232.28 1,370,324.90 -1,084,092.62

-------------------- -------------------- --------------------

TOTAL CASH ON HAND $480,736.95 $1,555,202.04 -$1,074,465.09

NOTES RECEIVABLE $0.00 $0.00 $0.00

ACCOUNTS RECEIVABLE SALES OF ENERGY (NET 903,636.64 911,474.46 -7,837.82

ACCOUNTS RECEIVABLE - OTHER (NET) 61,563.47 13,580.27 47,983.20

MATERIAL AND SUPPLIES - ELECTRIC & OTHER 266,195.09 204,191.83 62,003.26

PREPAYMENTS 162,347.72 167,214.10 -4,866.38

OTHER CURRRENT AND ACCRUED ASSETS 3,808.59 14,744.67 -10,936.08

-------------------- -------------------- --------------------

TOTAL CURRENT AND ACCRUED ASSETS $1,878,288.46 $2,866,407.37 -$988,118.91

-------------------- -------------------- --------------------

OTHER DEFERRED DEBITS $521,781.05 $668,774.29 -$146,993.24

-------------------- -------------------- --------------------

TOTAL ASSETS AND OTHER DEBITS $20,422,604.42 $21,402,737.86 -$980,133.44

==================== ==================== ====================

LIABILITIES AND OTHER CREDITS

-----------------------------

MEMBERSHIPS $0.00 $0.00 $0.00

PATRONAGE CAPITAL 7,776,064.52 7,745,246.13 30,818.39

OPERATING MARGINS- PRIOR YEAR 286,426.64 0.00 286,426.64

OPERATING MARGINS- CURRENT YEAR 25,873.20 95,180.67 -69,307.47

NON-OPERATING MARGINS 599,774.50 465,519.39 134,255.11

OTHER MARGINS AND EQUITIES 231,670.52 188,616.34 43,054.18

-------------------- -------------------- --------------------

TOTAL MARGINS AND EQUITIES $8,919,809.38 $8,494,562.53 $425,246.85

-------------------- -------------------- --------------------

LONG-TERM DEBT -RUS (NET) $397,477.11 $424,787.73 -$27,310.62

LONG-TERM DEBT-FFB-RUS GUARANTEED 6,339,256.16 6,536,600.09 -197,343.93

OTHER LONG-TERM DEBT (NET) 5,194,416.12 6,215,665.85 -1,021,249.73

ADVANCE PAYMENTS UNAPPLIED-RUS LOANS -1,536,620.54 -1,963,438.54 426,818.00

-------------------- -------------------- --------------------

TOTAL LONG-TERM DEBT $10,394,528.85 $11,213,615.13 -$819,086.28

-------------------- -------------------- --------------------

NOTES PAYABLE $0.00 $0.00 $0.00

ACCOUNTS PAYABLE 356,482.95 483,718.06 -127,235.11

CONSUMERS DEPOSITS 39,059.00 99,905.00 -60,846.00

OTHER CURRENT AND ACCRUED LIABILITIES 609,867.19 512,010.16 97,857.03

-------------------- -------------------- --------------------

TOTAL CURRENT AND ACCRUED LIABILITIES $1,005,409.14 $1,095,633.22 -$90,224.08

-------------------- -------------------- --------------------

OTHER DEFERRED CREDITS $24,857.05 $76,482.20 -$51,625.15

-------------------- -------------------- --------------------

TOTAL LIABILITIES AND OTHER CREDITS $20,422,604.42 $21,402,737.86 -$980,133.44

==================== ==================== ====================


Financial Information January 2020

Actual Budget 2019 Actual Budget 2019

Operating Revenue $823,765 $912,021 $809,435 $823,765 $912,021 $809,435

Cost of Power $362,043 $344,795 $311,706 $362,043 $344,795 $311,706

$-

$100,000

$200,000

$300,000

$400,000

$500,000

$600,000

$700,000

$800,000

$900,000

$1,000,000

Revenue & Cost of Power - 2020

Actual Budget 2019 Actual Budget 2019

Admin. & Gen. $99,380 $106,491 $108,005 $99,380 $106,491 $108,005

Cust. Serv. $36,098 $38,753 $45,341 $36,098 $38,753 $45,341

Oper & Maint $159,075 $115,323 $108,353 $159,075 $115,323 $108,353

$-

$50,000

$100,000

$150,000

$200,000

$250,000

$300,000

$350,000

Operating Expenses - 2020

YTD JAN

$-

$50,000

$100,000

$150,000

$200,000

$250,000

$300,000

$350,000

$400,000

$450,000

$500,000

Jan Feb Mar Apr May Jun Jul Aug Sept Oct Nov Dec

YTD Cumulative Margins - 2020

Actual Budget 2019

$(150,000)

$(100,000)

$(50,000)

$-

$50,000

$100,000

$150,000

$200,000

$250,000

Jan

Monthly Margins - 2020

Actual Budget 2019

YTD JAN


Financial Information Through January 2020

change date in header

Ratios: December 31, 2019 and January 31, 2019 & 2020YE

2019 1/31/19 1/31/20

Quick Ratio * 1.35 2.26 1.33

Current Ratio 1.67 2.62 1.73

Equity as a % of Net Utility Plant 51.15% 52.60% 51.55%

Equity as a % of Total Assets** 43.05% 42.13% 43.68%

Net TIER *** (YTD) 1.80 3.02 1.70

Jan-Sept 15Oct 14-Dec14 DSC **** 1.18 1.27 1.14

Modified DSC w/o COC Loan 1.71 1.84 1.66

719257.7 234820.8

Cash & Investments 730,226 1,555,202 480,737

437917.9 150497.7 Receivables 883,749 925,054 965,200

579696.8 1,613,975 2,480,256 1,445,937

582413.5 176335.9 Less Payables (584,138) (483,718) (434,483)

1037024 Liquidity 1,029,837 1,996,538 1,011,454

2.33 Other Payments Due: Due $

2.79 906045 RUS Loan Payment 2/29/2020 4,126 (from COC account)

FFB Loan Payment 3/31/2020 116,328 (from COC account)

CFC Loan Payment 4/30/2020 151,664

Note: Received are payments received through February 15, 2020 CoBank Loan Payment 2/20/2020 58,224

* Quick ratio=measures the ability of a company to use its cash and short-term/demand deposits to extinguish current liabilities immediately

** Equity Target - 40%*** Net TIER=Times Interest Earned Ratio (TIER) means the ratio of a

borrower’s net income (after taxes) plus interest expense,all divided by interest expenseNet TIER Target = RUS Covenant = 1.25 (met 2 of 3 years)

**** DSC=Debt Service Coverage is a measurement to generate sufficient funds

to cover principal and interest of long-term debt on an annual basis

DSC Target = 1.25 (RUS Covenant = 1.25, met 2 of 3 years)

3,500,000

4,000,000

4,500,000

5,000,000

5,500,000

6,000,000

6,500,000

7,000,000

7,500,000

8,000,000

8,500,000

Jan Feb Mar Apr May Jun Jul Aug Sept Oct Nov Dec

Monthly kWh Sales

2020 2020 Budget 2019

$-

$20,000.00

$40,000.00

$60,000.00

$80,000.00

$100,000.00

$120,000.00

$140,000.00

30 Days 60 Days 90 Days Total Past Due

January Aged Past Due Accounts Receivable

2020 2020 Received 2019 2019 Received

$-

$10,000

$20,000

$30,000

$40,000

$50,000

$60,000

$70,000

$80,000

$90,000

$100,000

Feb 2020 Jan 2020

Delinquent Listing - Payments received thru 02/15/2020 - Over 30 Days

Customer Information System Payments Received Balance Due



SIMPLIFIED CASH FLOW

As of January 31, 2020

Black = creates cash

Red = uses cash

Thousands (000s) Actual Budget*

CASH FROM OPERATIONS

Margins 111.7$ -$

Add back Depreciation 93.0 -

Add back Regulatory Asset Amortization 11.8 -

Cost from retirement of assets (poles, etc.) (30.8) -

Cash from Operations 185.7 -

Uses of Cash in Operations

Change in Ending Receivable Balance (81.5) -

Change in Ending Inventory Balance 4.0 -

Change in Ending Prepaid Expense Balance (56.2) -

Reduction of (payment for) other Current Assets 1.5 -

Change in Ending Accounts Payable Balance (227.6) -

Accrual/(payment) of other Current Liabilities 41.8 -

Cash created by (used in) operations (318.0) -

Capital Spending

Utility Plant 13.2 -

Construction Work in Progress 25.8 -

Other Property & Investments 26.1 -

Cash (used in) Capital Spending 65.1 -

Increase of debt (borrowing) - -

New debt -

Pay down of debt (158.5) -

Advance Payments Applied (CofC) (2.4) -

Other creation (use of) cash (Estate Retirement) (19.4) -

General Retirement - -

Other Deferred Credit (2.0) -

Change in cash from all activities (249.5) -

Cash and Investments beginning 730.2 730.1

Change in cash (249.5) -

Cash and Investments ending 480.7 730.1

Payroll 139.6 135.5

Benefits 93.9 92.2

Total 233.5 227.7

*Note: Cash Flow Budget is forecasted on a quarterly basis. January 2020 is the first month of first quarter (March 2020).


First Interstate Bank - Checking

1/1/2020 2/1/2020 3/2/2020 4/1/2020 5/1/2020 6/1/2020 7/1/2020 8/1/2020 9/1/2020 10/1/2020 11/1/2020 12/1/2020 Totals

Beginning Balance 260,323 193,048 292,264 309,309 61,536 (133,343) (220,634) (534,615) (528,001) (529,704) (789,434) (996,721) 260,323

Transfers In 200,000 200,000

Transfers Out - -

Receipts 847,595 910,221 791,093 721,479 665,821 645,303 691,808 778,281 712,979 634,157 610,552 704,141 8,713,430

- - - - - - - - - - - - -

Payment

Payroll

Employees (76,282) (77,000) (77,000) (77,000) (77,000) (77,000) (115,500) (77,000) (77,000) (77,000) (77,000) (115,500) (924,000)

Taxes (38,218) (38,000) (38,000) (38,000) (38,000) (38,000) (57,000) (38,000) (38,000) (38,000) (38,000) (57,000) (456,000)

R&S/401k (56,288) (56,288) (56,288) (56,288) (56,288) (56,288) (56,288) (56,288) (20,000) (20,000) (20,000) (20,000) (474,014)

Loans

RUS* - - - - - - - - - - - - -

CFC (151,664) (151,664) (151,664) (151,664) (454,993)

FFB* - - - - - - - - - - - - -

CoBank (58,219) (58,219) (58,219) (58,219) (58,219) (58,219) (58,219) (58,219) (58,219) (58,219) (58,219) (58,219) (640,414)

Insurance

Group (65,027) (14,703) (14,703) (65,027) (14,703) (14,703) (65,027) (14,703) (14,703) (65,027) (14,703) (14,703) (312,706)

General - - - - - - - - - - - (83,000) (83,000)

WC (24,476) - - - - - - - - - - - -

A/P (230,919) (220,000) (220,000) (220,000) (220,000) (220,000) (220,000) (220,000) (220,000) (220,000) (220,000) (220,000) (2,420,000)

Power (411,522) (344,795) (307,838) (292,153) (270,490) (266,384) (280,090) (305,456) (284,759) (261,976) (254,917) (282,767) (3,151,626)

Property Taxes - - - (8,900) (124,000) - - - - - (133,000) - (265,900)

Meter Project - -

Other (2,254) (2,000) (2,000) (2,000) (2,000) (2,000) (2,000) (2,000) (2,000) (2,000) (2,000) (20,000)

Total Payments (1,114,870) (811,006) (774,048) (969,252) (860,700) (732,594) (1,005,789) (771,667) (714,681) (893,887) (817,840) (851,190) (9,202,653)

Ending Balance 193,048 292,264 309,309 61,536 (133,343) (220,634) (534,615) (528,001) (529,704) (789,434) (996,721) (1,143,770) (28,900)

*Beg Sept 2018 Pd thru COC 1/31/2020 2/29/2020 3/31/2020 4/30/2020 5/31/2020 6/30/2020 7/31/2020 8/31/2020 9/30/2020 10/31/2020 11/30/2020 12/31/2020

First Interstate Bank - Savings

Beginning Balance 344,362 157,296 157,296 157,296 157,296 157,296 157,296 157,296 157,296 157,296 157,296 157,296 344,362

Transfers In - -

Transfers Out (200,000) (200,000)

Receipts 12,933 12,933

Total Payments - - - - - - - - - - - - -

Ending Balance 157,296 157,296 157,296 157,296 157,296 157,296 157,296 157,296 157,296 157,296 157,296 157,296 157,296

All Other Accounts

Beginning Balance 125,542 130,394 130,394 130,394 130,394 130,394 130,394 130,394 130,394 130,394 130,394 (313,657) 125,542

Transfers In -

Transfers Out - -

Receipts 4,852 4,852

Total Payments/Gen.Retire - - - - - - - - - - (444,051) - (444,051)

Ending Balance 130,394 130,394 130,394 130,394 130,394 130,394 130,394 130,394 130,394 130,394 (313,657) (313,657) (313,657)

TOTAL ALL ACCOUNTS 480,737$ 579,953$ 596,998$ 349,225$ 154,346$ 67,055$ (246,926)$ (240,312) (242,015) (501,745)$ (1,153,083)$ (1,300,132)$

1/31/2020 2/29/2020 3/31/2020 4/30/2020 5/31/2020 6/30/2020 7/31/2020 8/31/2020 9/30/2020 10/31/2020 11/30/2020 12/31/2020



CFC SELECT NOTES INVESTMENTS

1/31/2020 2/29/2020 3/31/2020 4/30/2020 5/31/2020 6/30/2020 7/31/2020 8/31/2020 9/30/2020 10/31/2020 11/30/2020 12/31/2020

480,737$ 579,953$ 596,998$ 349,225$ 154,346$ 67,055$ (246,926)$ (240,312)$ (242,015)$ (501,745)$ (1,153,083)$ (1,300,132)$

- - - - - - - - - - - -

480,737$ 579,953$ 596,998$ 349,225$ 154,346$ 67,055$ (246,926)$ (240,312)$ (242,015)$ (501,745)$ (1,153,083)$ (1,300,132)$



Accounts Payable

Check Register

01/16/2020 To 02/15/2020

Bank Account: 1 - GENERAL FUND

Check / Date Pmt Vendor Name Reference Amount

Tran Listed Type

2015 1/16/2020 WIRE INTERNAL REVENUE SERVICE FEDERAL WITHHELD & FICA 14,840.71

2016 1/21/2020 WIRE DEPARTMENT OF ENERGY POWER BILL 12,579.30

2017 1/21/2020 WIRE MORGAN STANLEY CAPITAL GROUP INC. POWER BILL 256,124.58

2018 1/21/2020 WIRE NORTHWESTERN ENERGY TRANSMISSION BILL 59,079.80

2019 1/21/2020 WIRE COBANK PRINCIPAL & INTEREST 58,219.45

2020 1/23/2020 WIRE NATIONAL RURAL ELEC COOP ASSOC CBA FLEX PAYMENT TO EMPLOYEE 193.79

2021 1/27/2020 WIRE INTERNAL REVENUE SERVICE FEDERAL UNEMPLOYMENT TAX 4TH QUARTER 84.00

2022 1/28/2020 WIRE NATIONAL RURAL ELEC COOP ASSOC R & S PLAN 36,115.87

2023 1/29/2020 WIRE PAYROLL PAYROLL 38,119.68

2024 1/29/2020 WIRE NRECA 401k PENSION PLAN 9,385.53

2025 1/29/2020 WIRE NRECA 401k PENSION PLAN LOAN REPAYMENT 942.26

2026 1/29/2020 WIRE INTERNAL REVENUE SERVICE FEDERAL WITHHELD TAXES & FICA 14,718.11

2027 1/30/2020 WIRE NATIONAL RURAL UTILITES PRINCIPAL & INTEREST 151,664.34

2028 1/31/2020 WIRE USDA RURAL DEVELOPMENT Input should be Cushion of Credit account 4,126.32

2029 2/10/2020 WIRE US BANK MONTHLY CORP CREDIT CARD STATEMENT 15,907.61

2030 2/12/2020 WIRE PAYROLL PAYROLL 43,135.54

2031 2/12/2020 WIRE NRECA 401k PENSION PLAN 9,159.63

2032 2/12/2020 WIRE NRECA 401k PENSION PLAN LOAN REPAYMENT 942.26

2033 2/12/2020 WIRE NATIONAL RURAL ELEC COOP ASSOC R & S PLAN 36,481.81

2034 2/14/2020 WIRE INTERNAL REVENUE SERVICE FEDERAL WITHHELD & FICA 17,386.78

2035 2/14/2020 WIRE NATIONAL RURAL ELEC COOP ASSOC CBA FLEX PAYMENTS TO EMPLOYEES 102.64

2036 2/14/2020 WIRE NRECA 401k PENSION PLN EMPLOYER EXPENSES-27019 3,147.00

60969 1/17/2020 CHK ANIXTER INC 120 METERS 25,740.00

60970 1/17/2020 CHK BORDER STATES ELECTRIC SUPPLY MATERIAL 19,544.54

60971 1/17/2020 CHK ARLEEN M BOYD MILEAGE & OTHER MEETINGS 685.60

60972 1/17/2020 CHK CARBON COUNTY TREASURER TWO UNIT REGISTRATIONS 178.35

60973 1/17/2020 CHK DANIEL DUTTON MILEAGE, EM & OTHER MEETINGS 1,794.28

60974 1/17/2020 CHK ELECTRO TEST & MAINTENANCE INC VOLTAGE REGULATOR MAINTENANCE 14,172.70

60975 1/17/2020 CHK JAMES GROOMS MILEAGE REIMBURSEMENT LINEMAN TRAINING 284.63

60976 1/17/2020 CHK JULIE A LINDGREN OTHER MEETINGS 500.00

60977 1/17/2020 CHK LOWER FLAT REPAIR AND WELDING UNIT #15 REPAIRS 624.44

60978 1/17/2020 CHK MONTANA CSED SDU MONTANA CSED 194.76

60979 1/17/2020 CHK MONTANA DEPT OF REVENUE MT WITHHELD TAXES 2,902.00

60980 1/17/2020 CHK RICHARD T NOLAN MILEAGE, EXPENSE REIMB, & OTHER MEETINGS 1,572.34

60981 1/17/2020 CHK ONE CALL OF WYOMING ANNUAL MEMBERSHIP & BILLABLE TICKETS 214.70

60982 1/17/2020 CHK WILLIAM A PASCOE MILEAGE & OTHER MEETINGS 708.52

60983 1/17/2020 CHK REPUBLIC SERVICES #892 GARBAGE DISPOSAL 219.35

60984 1/17/2020 CHK RONNING AUTO TRUCK TRACTOR SERVICE UNIT #58 R & R BALL JOINT 918.00

60985 1/17/2020 CHK STILLWATER CO CLERK & RECORDER EASEMENTS 79.25

60986 1/17/2020 CHK STILLWATER COUNTY TREASURER TWO UNITS REGISTRATIONS 563.67

60987 1/17/2020 CHK TITAN MACHINERY INC. UNIT #17 REPAIRS 1,468.35

60988 1/17/2020 CHK TOWN AND COUNTRY SUPPLY ASSO. FUEL 1,581.52

60989 1/17/2020 CHK Member UNCLAIMED CAPITAL CREDIT 542.45

60990 1/17/2020 CHK Member UNCLAIMED CAPITAL CREDITS 234.10


60992 1/17/2020 CHK Member UNCLAIMED CAPITAL CREDITS 1,924.77



60995 1/24/2020 CHK ALTEC INDUSTRIES INC UNIT #6 PART 79.26

60996 1/24/2020 CHK BIG SKY LINEN SUPPLY RL & COLUMBUS RUG CLEANING 110.39

60997 1/24/2020 CHK CENTURYLINK COLUMBUS OFFICE, RL FAX, & TWO SUBSTATIONS 311.36

60998 1/24/2020 CHK EES CONSULTING RATE STUDY 5,147.50

60999 1/24/2020 CHK HELI LLC POWER LINE INSPECTION 1,453.17

61000 1/24/2020 CHK I-STATE TRUCK CENTER UNIT #6 REPAIRS 630.34

61001 1/24/2020 CHK JACK HENRY & ASSOCIATES ACH PROCESSING FEES 79.20

61002 1/24/2020 CHK ROXIE S MELTON NOV & DEC BOARD FEE, MILEAGE & OTHER MEETINGS 1,246.80

61003 1/24/2020 CHK KEVIN P OWENS MILEAGE & TRAVEL MEAL REIMBURSEMENTS 264.17

61004 1/24/2020 CHK QUILL CORPORATION OFFICE SUPPLIES 207.10

61005 1/24/2020 CHK SPECTRUM RL INTERNET 136.99

61006 1/24/2020 CHK VERIZON WIRELESS SUBSTATION TWACS MODEMS 373.58





61011 1/24/2020 CHK Member UNCLAIMED CAPITAL CREDITS 1,134.74

61012 1/24/2020 CHK Member unclaimed capital credits 58.34





61018 1/31/2020 CHK ALTEC INDUSTRIES INC UNIT #4 BOOM PART 844.45

61019 1/31/2020 CHK AMERICA FAMILY LIFE INSURANCE CO PAYROLL DEDUCTION INSURANCE 270.92

61020 1/31/2020 CHK BLUELINE ENGINEERING LLC UAV VIDEO 1,200.00

61021 1/31/2020 CHK CARBON COUNTY TREASURER FIVE UNITS REGISTRATIONS 790.98

61022 1/31/2020 CHK CARBON COUNTY WRESTLING CLUB DONATION 500.00

61023 1/31/2020 CHK CENEX FUEL 1,025.80

61024 1/31/2020 CHK CENTURYLINK RL FAX LONG DISTANCE 2.60

61025 1/31/2020 CHK FELT, MARTIN, FRAZIER & WELDON, P.C. MONTHLY ATTORNEY STATEMENT 3,888.25

61026 1/31/2020 CHK JAMES GROOMS TWO MONTHS HOUSING STIPEND 1,000.00

61027 1/31/2020 CHK HDR ENGINEERING INC GENERAL ENGINEERING & NEW COLUMBUS SUB 1,539.08

61028 1/31/2020 CHK HELI LLC POWER LINE INSPECTION 911.87

61029 1/31/2020 CHK HORIZON COMMUNICATIONS CALL CENTER 357.22

61030 1/31/2020 CHK INDUSTRIAL SALES & SERVICE SHOP SUPPLIES 324.00

61031 1/31/2020 CHK LOCAL UNION 44 UNION DUES 1,199.16

61032 1/31/2020 CHK METLIFE PAYROLL DEDUCTION INSURANCE 25.00

61033 1/31/2020 CHK MID-AMERICAN RESEARCH CHEMICAL SHOP SUPPLIES & ICE MELTER 254.42



61036 1/31/2020 CHK MONTANA MOBILE MONTHLY OFFICE SHREDDING SERVICE 45.00

61037 1/31/2020 CHK MORRISON MAIERLE SYSTEMS CORP NETWORK MAINT, EMAIL HOSTING & MONITORS - SF 3,958.80

61038 1/31/2020 CHK NISC ASP, H/W SUPPORT, AMS & MISC 9,947.00

61039 1/31/2020 CHK ONE CALL LOCATORS, LTD BILLABLE TICKETS - MT & WY 2,787.73


Check Register

01/16/2020 To 02/15/2020

Bank Account: 1 - GENERAL FUND

Check / Date Pmt Vendor Name Reference Amount

Tran Listed Type

61040 1/31/2020 CHK PAPE MATERIAL HANDLING EXCHANGE ANNUAL FORKLIFT PM & REPAIRS 2,029.33

61041 1/31/2020 CHK PIONEER UTILITY RESOURCES, INC. WEBSITE DESIGN & INTEGRATION 9,330.00

61042 1/31/2020 CHK ROCK CREEK HOME & GARDEN INC WALL MOUNT INSTALL SUPPLIES 48.66

61043 1/31/2020 CHK ROLLING RIGHT DOOR SERVICE COLUMBUS GARAGE DOOR 2 ADJUSTMENTS 502.00

61044 1/31/2020 CHK SGRIG'S ELECTRIC LLC SHARE DU SOLEIL ELECTRICAL 5,708.70

61045 1/31/2020 CHK STALEYS TIRE & AUTOMOTIVE INC UNIT #6 WHEEL BALANCE 37.00

61046 1/31/2020 CHK CONSTANCE S TEACHOUT MILEAGE REIMBURSEMENT 34.38

61047 1/31/2020 CHK ULTRA GRAPHICS HOT LINE TOOL INSPECTION LABELS 79.08

61048 1/31/2020 CHK UNEMPLOYMENT INSURANCE CONTRIBUTIONS MT 4TH QTR UNEMPLOYMENT INSURANCE 122.30

61049 1/31/2020 CHK VERIZON WIRELESS COLUMBUS MAP, POLE GPS, TWACS,IPAD&CELLS 394.41

61050 1/31/2020 CHK WILD TABLE EMPLOYEE CHRISTMAS LUNCHEON 570.00

61051 1/31/2020 CHK WYOMING DEPT OF REVENUE WY SALES & USE TAX 2,476.57

61052 1/31/2020 CHK Member DEC 2019 ESTATE RETIREMENT 573.77

61053 1/31/2020 CHK Member DEC 2019 ESTATE RETIREMENT 1,173.17










61063 2/7/2020 CHK JAMES R AVENT SIX MONTHS TELEPHONE ALLOWANCE 240.00

61064 2/7/2020 CHK TRAVIS BARKER SIX MONTHS TELEPHONE ALLOWANCE 240.00

61065 2/7/2020 CHK GUY C BEHRENT SIX MONTHS TELEPHONE ALLOWANCE 240.00

61066 2/7/2020 CHK CLARK RODEO 2020 CLARK RODEO BELT BUCKLE SPONSORSHIP 100.00

61067 2/7/2020 CHK WILLIAM R COLGROVE SIX MONTHS TELEPHONE ALLOWANCE 240.00

61068 2/7/2020 CHK ERIC L ELTON SIX MONTHS TELEPHONE ALLOWANCE 240.00

61069 2/7/2020 CHK FARMER BROS CO COFFEE 159.12

61070 2/7/2020 CHK STEPHANIE FLETCHER JANUARY FITNESS REIMBURSEMENT 24.79

61071 2/7/2020 CHK TYLER GRONBECK NINE MONTHS TELEPHONE ALLOWANCE 360.00

61072 2/7/2020 CHK JAMES GROOMS EIGHT & 1/2 MONTHS TELEPHONE ALLOWANCE 621.18

61073 2/7/2020 CHK LINECO LINEMAN INSURANCE 14,703.00

61074 2/7/2020 CHK MAID IN COLUMBUS LLC CLEANING COLUMBUS SHOP 200.00

61075 2/7/2020 CHK MONTANA ELECTRIC COOP ASSN., INC. GENERAL & SAFETY DUES, RM,&BROADCST COMS 8,066.69

61076 2/7/2020 CHK MONTANA STATE UNIVERSITY - BILLINGS BEC SCHOLARSHIP-SHEA L. OSTRUM 02673595 500.00

61077 2/7/2020 CHK KEVIN P OWENS MONTHLY AUTO ALLOWANCE 400.00

61078 2/7/2020 CHK P D Q JANITORIAL SERVICE INC RL CLEANING SERVICE 920.00

61079 2/7/2020 CHK JAMES PIHL SIX MONTHS TELEPHONE ALLOWANCE 240.00

61080 2/7/2020 CHK KAAREN S ROBBINS DATA PLAN REIMBURSEMENT 55.46

61081 2/7/2020 CHK MARK URBANIK SIX MONTHS TELEPHONE ALLOWANCE 240.00

61082 2/7/2020 CHK UTILITY LINE DESIGN LLC NISC ULD MAPPING SOFTWARE 600.00

61083 2/7/2020 CHK SAMUEL P WALKOWIAK SIX MONTHS TELEPHONE ALLOWANCE 240.00

61084 2/7/2020 CHK JAKE D WRIGHT SIX MONTHS TELEPHONE ALLOWANCE 240.00






61090 2/14/2020 CHK BOBCAT OF BIG SKY, INC. UNIT #90 WINDOW 254.56

61091 2/14/2020 CHK CITY OF RED LODGE MONTHLY WATER & SEWER 91.18

61092 2/14/2020 CHK DEPARTMENT OF NATURAL RESOURCES STATE LANDS PERMIT FOR WO SWITCHBACK RCH 50.00

61093 2/14/2020 CHK KEN'S I-90 UNIT #7 BATTERY & UNIT #9 SERVICE 775.09

61094 2/14/2020 CHK LANDIS+GYR TECHNOLOGY, INC. JAN HOSTING FEE & LONG DISTANCE FEE 776.74

61095 2/14/2020 CHK MAILFINANCE POSTAGE METER RENT 262.05



61098 2/14/2020 CHK MONTANA RAIL LINK ANNUAL O/H WIRELINE XING REED POINT 100.00

61099 2/14/2020 CHK NATIONAL RURAL ELEC COOP ASSOC JAN & FEB CAFETERIA PLAN ADMIN FEE 45.00

61100 2/14/2020 CHK NEMONT TWO SUBSTATIONS 168.50

61101 2/14/2020 CHK NORTHWEST INDUSTRIAL SUPPLY, INC. UNITS SUPPLIES (WINCHES & CHAINS) 1,164.88

61102 2/14/2020 CHK PIONEER UTILITY RESOURCES, INC. WEBSITE HOSTING & MAINTENANCE 210.00

61103 2/14/2020 CHK RED LODGE TRUE VALUE WALL SUPPLIES 16.36

61104 2/14/2020 CHK REPUBLIC SERVICES #892 GARBAGE DISPOSAL 219.35

61105 2/14/2020 CHK ROCK CREEK HOME & GARDEN INC WALL SUPPLIES 13.78

61106 2/14/2020 CHK RONNING AUTO TRUCK TRACTOR SERVICE UNIT #56 OIL CHANGE 45.00

61107 2/14/2020 CHK TOWN AND COUNTRY SUPPLY ASSO. FUEL 1,512.23

61108 2/14/2020 CHK ULTRA GRAPHICS LETTERHEAD & ENVELOPES 1,868.95

61109 2/14/2020 CHK UTILITIES UNDERGROUND LOCATE BILLABLE TICKETS 59.66

Total Payments for Bank Account - 1 : (159) 973,481.32

Total Voids for Bank Account - 1 : (3) 5,554.23

Total for Bank Account - 1 : (162) 979,035.55


30.0%

32.0%

34.0%

36.0%

38.0%

40.0%

42.0%

44.0%

Jul-Dec2017

2018Budget

2018YTD

2019Budget

2019YTD

2020Budget

2020YTD

Jan2019

Feb2019

Mar2019

Apr2019

May2019

June2019

July2019

Aug2019

Sept2019

Oct2019

Nov2019

Dec2019

Jan2020

37.4% 37.3% 37.0%

37.6%

38.7%

39.7%

43.9%

38.5% 38.7%39.1%

34.9%35.2% 35.4%

37.6%38.3%

37.0%

40.4%

41.3%

40.3%

43.9%

Power Costs as a Percentage of Revenue


February 2020

GM Report

• Continued support of Rate Design Committee. Kaaren Robbins and I worked with Bill Pascoe and Russ Schneider, EES of rate design options and variations. Irrigation bill comparisons were run for all 118 accounts.

• Brad Prophet and I initiated a refinancing review of existing loans. CFC and CoBank were asked to review BEC’s loan portfolio and provide a proposal for refinancing. All existing loans were bundled for a single refinancing. It is recommended that the two financial entities make their final proposals to the Finance Committee in March.

• Attached is recent METSPOOL (Worker’s Comp) information provided by MECA • Attached is January 2020 Delivery Point Analysis. Of notable significance is distribution losses

fell below 8% for all 10 substations. Once the last meters are installed at Nye Substation we’ll be able to look at each distribution feeder and compare energy delivered at the breaker to that of the energy billed. Energy and demand for 2020 was very similar to 2019. Load factor was a robust 65.1%.

• NWE January transmission billing shows a .9915 coincident factor. Nine out of 10 of BEC’s substations peaked on January 14 at the 7:00PM hour.

• The 2019 USBP report is attached for your review. With the exception of Powder River, only Big Horn contributed less than BEC.

• Drive for 45- 2020 NRECA Legislative Conference


Dear Managers,

As you may know, registration for the 2020 NRECA Legislative Conference opened yesterday. The conference will be held April 26-28 in our nation’s capital.

To help boost the power of Montana’s message on Capitol Hill during the conference, MECA has launched a “Drive for 45” campaign. Our goal is for at least 45 Montanans to attend this year’s NRECA Legislative Conference. Why? Because the bigger the Montana contingent at the conference, the more persuasive we will be in making our pitch to the Montana congressional delegation on the public-policy issues we face. Numbers matter. Because, as the adage says, “Electric co-ops were born in politics and we’ll die in politics.” In other words, we can’t prevail if we don’t stay involved.

We are asking each of our co-ops to send at least one person to the conference. Although co-op directors and managers are preferred, we would welcome other co-op staff members as well. And this year, to make Montanans’ attendance an even richer experience, we are planning some additional activities. (Stay tuned for announcements on our Montana schedule for the conference.)

Bottomline: Please consider attending as a manager, urge your co-op trustees to attend or select a staff member or two to go.

They will gain a much better appreciation for the importance of our political efforts in Washington, D.C.




KEY METSPOOL INFORMATION

2020

1. History

• Became Operational May 1, 1994

• Self-Insured Workers’ Compensation Group of Electric and Telephone

Cooperatives, Independent Companies and Related Corporations

• Each Member Shares Ownership of the Pool

• Established with Pooling Agreement Governing all operations

• Total # of Member Cooperatives and Companies: 37

2. Governance

• METSPool Executive Committee

- Elected by the board of directors

- Executive Committee officers are elected on a rotation basis. Each

officer moves up one slot each year. The president can either move

back to secretary or not seek re-election to the executive committee.

New officers are nominated by the METSPool Nominations

Committee.

- Meets as necessary

- Current President – Micheal Candelaria, Mid-Rivers Telephone

Cooperative, Circle, MT, (406) 485-3301;

- 1st Vice President – Craig Gates, Triangle Communications, Havre,

MT, (406) 394-7804;

- 2nd Vice President – DeeDee Isaacs, Tongue River Electric

Cooperative, Ashland, MT, (406) 784-2720;

- Treasurer – Craig Herbert, NorVal Electric Cooperative, Glasgow,

MT (406) 228-9351;

- Secretary John Burgmaier, Secretary, Sun River Electric

Cooperative, Fairfield, MT, (406) 463-2522.

• METSPool Board of Trustees

- Each Original or Parent Member System Has a Seat on the Board

- Total Board Membership: 36 Trustees

- Must meet at least one time annually

3. Rates (Per Class, Per $100 of Payroll, effective January 1, 2020)

• Rates are set annually by the METSPool board, subject to approval by the

state;

• Typically, METSPool seeks to keep rates 5 percent less than the State

Fund rates. The only exception is the outside 7600 telephone rate. This

rate is determined annually through a separate analysis of only

telecommunications cooperatives loss history. This is because the State

Fund 7600 rates include both investor-owned telecommunications and


telecommunications cooperatives. (State Fund rates for 7540 outside

electric or line personnel include only electric co-ops.)

a. Class 7600 (outside telephone line personnel) – $2.23

b. Class 7540 (outside electric personnel) – $2.60

c. Class 8810 (clerical, electric) – $0.28

d. Class 8901 (clerical, telephone) – $0.38

e. Class 4299 (printing) – $2.63

f. Class 8742 (salespersons) – $0.51

g. Class 5190 (electrical wiring) – $3.57

h. Class 5190 (office machine installation, inspection or repair) – $0.91

i. Class 9516 (electronic equipment installation) – $4.64

j. Class 7380 (drivers) – $5.86

5. Total Premium for Policy Year 2019 (Latest available)

$ 1,238,968

6. Reserves to Pay All Claims for All Open Policy Years – 1999 through December,

2019 a. Claim Fund Reserve (existing claims) – $1,068,418

b. Incurred But Not Report (possible claims yet to be filed) – $917,868

7. Losses (as of December 31, 2019)

Year Loss Ratio Year Loss Ratio

1994 9.09% 2007 60.68%

1995 13.66% 2008 48.48%

1996 41.48% 2009 72.06%

1997 40.17% 2010 33.88%

1998 36.25% 2011 20.89%

1999 242.47% 2012 10.90%

2000 41.25% 2013 31.17%

2001 99.43% 2014 24.46%

2002 85.81% 2015 10.06%

2003 80.87% 2016 24.00%

2004 31.41% 2017 13.96%

2005 34.99% 2018 23.83%

2006 65.01% 2019 37.80%

Cumulative Loss Ratio (1994 – 2019) 42.77%

8. Annual Administrative Expenses (for 2019 – last full year of expenses)

a. Federated Third-Party Expenses – $25,000 (includes investment services)

b. Claims Handling Fees – $72,000

c. NCCI Billing – $16,151


9. Excess Insurance (January through December 2019)

a. Percent of Premium: 26.0 percent

b. Total Cost: $321,163

c. Coverage: Aggregate is 100 percent of total METSPool premium, per-

occurrence is $300,000. Beyond those levels, excess insurance pays to

Montana statutory limits.

10. Directors and Officers Liability Insurance (January through December 2019)

a. Total Cost: $25,000

b. Coverage: $1,000,000 aggregate, $1,000,000 per-occurrence

11. Claims Adjuster Information

• Intermountain Claims, Inc., Missoula, Montana

• Contact Information:

Stacey Kleinkopf

406-542-8869 x403 (Phone)

406-542-8870 (Fax)

[email protected] (E-mail)

10. Third-Party Administrator Information

Federated Rural Electric Insurance Exchange

- A not-for-profit, nation-wide insurance exchange owned by

cooperatives

Box 15147

Lenexa, KS 66285-5147

Phone: 800-356-8360

Website: www.federatedrural.com

Key Contact Persons:

Cristina Johnson – Claims Oversight

Chris Carter – Accountant

Steve Paulson – Loss Control Consultant

11. Independent Financial Auditor

Matthew Schmitz, CPA

Douglas Wilson & Co. PC

1000 1st Avenue South

Great Falls, Montana 59403

Phone: (406) 761-4645

12. Independent Actuarial Services

Al Hapke, FCAS, MAAA, Principal

Streff Insurance Services, Inc.

2505 W 162nd Terrace

Stilwell, KS 66085

Phone: (913) 488-3868


http://www.federatedrural.com/

13. Safety Standards

• METSPool Members are required to comply with METSPool Safety

Standards

• A requirement of the safety standards is to submit annually a completed

certificate of compliance and checklists.

• As part of the safety standards, each member must submit to an annual safety

audit conducted by our TPA’s field representative, Steve Paulson.

• Safety standards are reviewed for changes by the METSPool Safety Standards

Committee

_____________________________________________________________________


Year Ending Date 12/31/2019

Report Status FINAL


Delivery Point Analysis

Final January 2020 Days in month 31

Load Factor

Demand Energy Demand Energy Purchased Demand Energy Energy Energy Demand Energy

kW kWh kW kWh % kWh kWh kW kWh Line Loss Line Loss Line Loss Line Loss

Last Year Last Month 2 Months Past

2020 2019 Jan 2020 Jan 2019 Dec 2019 Nov 2019

Absarokee 2,366 1,134,563 2,297 1,136,114 64.5% 3.0% -0.1% 1,059,641 1,062,770 6.6% 6.5% 8.0% 7.0%

Belfry 2,194 1,072,582 2,264 1,136,316 65.7% -3.1% -5.6% 980,342 1,044,346 8.6% 8.1% 9.7% 9.0%

Columbus 2,830 1,319,564 2,683 1,294,161 62.7% 5.5% 2.0% 1,188,096 1,144,085 34.00 14,120 8.9% 10.4% 11.5% 10.5%

E. Rosebud 104 26,592 73 22,236 34.4% 41.8% 19.6% 23,789 18,123 10.5% 18.5% 17.1% 12.6%

Edgar 1,347 618,806 1,350 635,772 61.8% -0.2% -2.7% 558,852 563,281 9.7% 11.4% 9.6% 8.9%

Luther 800 389,275 810 380,250 65.4% -1.2% 2.4% 362,320 348,055 6.9% 8.5% 7.0% 7.0%

Nye 1,432 746,686 1,264 645,542 70.1% 13.2% 15.7% 686,091 581,732 8.1% 9.9% 9.3% 9.4%

Red Lodge 2,251 1,140,721 2,596 1,163,281 68.1% -13.3% -1.9% 1,025,134 1,031,139 121.80 32,038 7.3% 8.3% 7.9% 6.5%

Reed Point 750 357,484 717 345,979 64.1% 4.6% 3.3% 329,105 305,539 7.9% 11.7% 1.3% 14.1%

Roberts 1,754 858,850 1,799 857,451 65.8% -2.5% 0.2% 802,903 761,513 6.5% 11.2% 2.1% 14.4%

Totals 15,827 7,665,124 15,853 7,617,102 65.1% -0.2% 0.6% 7,016,273 6,860,583 155.80 46,158 7.86% 9.26% 8.05% 9.38%

Note: Above represents kWh purchased information received from NWE based at the new loss percentage rate. It is not clear yet whether they corrected the Sold to BEC kWh to reflect the new loss percentage number or the old loss percentage number.

Chart reflects Distribution losses only. NWE charges 2.8% transmission losses for delivery over their system plus. Metering takes place on the low side of all substation transformers with the exception of Columbus Substation. 1%

transformer losses are added to all low-side metering, 3.8% cumulative transmission losses at all delivery points except Columbus which is 2.8% transmission losses.

Load Factor = It can be derived from the load profile of the specific device or system of devices. Its value is always less than one because maximum demand is always more than average demand. A high load factor

means power usage is relatively constant. Low load factor shows that occasionally a high demand is set. To service that peak, capacity is sitting idle for long periods, thereby imposing higher costs on the system.

Electrical rates are designed so that customers with high load factor are charged less overall per kWh. This process along with others is called load balancing or peak shaving.

Purchased Sold Own Use

2020 2019 2020 vs. 2019 2020


Total USBP Spending

Minimum Pool Spending Requirement

(2.4% of 1995 Electricity Sales Revenue) 3,804,438.21$

2019 Large Customer USB Revenues Collected & Expended 70,580.02$

2019 Actual Pool Expenditures 10,942,082.99$

Surplus Above Requirement 7,208,224.80$

Actual Expenditures as a Percent of Base-Year Revenues 6.90%

Low-Income Spending

Minimum Pool Spending Requirement

(17 % of Total USBP Minimum Pool Spending Requirement) 646,754.50$

2019 Actual Pool Expenditures 1,780,640.33$

Surplus Above Requirement 1,133,885.83$

Actual Expenditures as a Percent of Minimum Pool Spending Requirement 46.80%

2019 USB REPORTSUMMARY

THROUGH December 31, 2019


1995 Electricity

Revenue Sales

Energy

Conservation

Low-Income USBP

Expenditures &

Credits

Renewable

Resource Projects

& Applications

Research &

Development

Market

Transformation

Total USBP

Expenditures

Beartooth 2,947,731.00$ -$ 11,362.08$ 3,750.00$ -$ -$ 15,112.08$

Big Flat 3,090,220.00 6,511.27 6,505.47 - 425.00 - 13,441.74

Big Horn 3,263,034.00 851.13 8,282.06 - - - 9,133.19

Fall River 2,288,300.00 112,676.42 9,679.79 - - - 122,356.21

Fergus 5,359,940.00 170,235.32 35,865.19 - - - 206,100.51

Flathead 50,214,236.00 3,199,110.00 1,070,571.00 1,727,204.00 12,660.00 - 6,009,545.00

Glacier 9,230,882.00 339,356.99 51,512.84 102,312.00 - - 493,181.83

Goldenwest 525,154.56 12,916.41 11,997.38 250.00 - - 25,163.79

Hill County 3,860,963.00 69,078.00 17,770.00 - - - 86,848.00

Lincoln 5,449,237.00 362,231.78 60,590.40 19,997.00 - - 442,819.18

LYREC 4,714,641.00 7,000.00 19,235.00 - - - 26,235.00

Marias River 3,675,396.00 10,538.21 18,971.85 - 625.50 - 30,135.56

McCone 4,538,237.00 115,891.49 9,571.74 - 1,142.00 - 126,605.23

Mid-Yellowstone 1,596,165.00 9,365.71 3,342.79 - - - 12,708.50

Missoula 8,943,402.00 612,544.52 52,429.40 163,034.79 - - 828,008.71

NorVal 3,736,575.00 21,493.30 4,484.88 - - - 25,978.18

Northern Lights 2,799,775.00 140,912.60 11,273.88 42,644.60 - - 194,831.08

Park 3,731,388.20 16,191.29 17,865.52 4,174.57 - - 38,231.38

Powder River 58,988.00 - 1,415.00 - - - 1,415.00

Ravalli 6,341,387.00 478,845.00 64,306.00 32,851.00 - - 576,002.00

Sheridan 4,629,678.00 35,211.93 25,220.42 - - - 60,432.35

Southeast 1,543,712.00 22,365.43 40,371.70 - - - 62,737.13

Sun River 5,252,060.00 50,727.78 28,715.25 4,060.73 1,258.00 - 84,761.76

Tongue River 4,796,392.02 23,987.50 11,000.00 - - - 34,987.50

Vigilante 6,711,438.91 435,702.39 37,651.69 122,097.00 2,119.00 - 597,570.08

Yellowstone Valley 9,219,326.00 646,615.00 150,649.00 20,478.00 - - 817,742.00

Large Customer USB Revenues Collected & Expended for Reporting Year 70,580.02 TOTAL 158,518,258.69$ 6,900,359.47$ 1,780,640.33$ 2,242,853.69$ 18,229.50$ -$ 11,012,663.01$




BEC Member Communication & Services Board Report

February 25, 2020

• April Rural MontanaThe April newsletter is planned to feature a Rate Design article, Linemen Appreciation and Annual Meeting, supplemented with energy efficiency tips and other timely news. Content deadline is March 6.

• Aprll Billing InsertThe April billing insert will feature the Annual Meeting, Website Know-How, and the April Calendar of events. Content deadline is March 20.

• March Billing MemoTrustee nomination deadline and Annual Meeting save the date.

• Member eNewsletter- March 28/29

• Rate Design- Communications Plan Gantt Chart created and presented at the January board meeting. This

document will be edited as plans progress.

• Shares du Soleil- The lobby monitor system is installed and operating. Thank you Kevin, Eric and Brad.

• Youth Programs- MECA Memorial Scholarship- Beartooth Electric Scholarship

o Candidate selection will occur at this month’s new business.

• NEW Billing Statement Development- The new billing statement data flow from Aclara to NISC is completed.- The new statement format, design, and programming can commence with the Rate Design

direction upon board approval. Based on this timeline, the new statement launch is anticipated on the June statement (September billing).

• 2020 Annual Meeting- Date: May 2, 2020- Location: Anipro Event Center- Sound: Stillwater Sound- Districts 1, 3, and 7 are up for election in 2020- A near complete Vote-by-Mail package is presented for approval. The final will completed upon

the close of Nominations on March 13. Printing will commence the next week with mailing on April 3.

- See Annual Meeting Calendar following report

• MECA- Communication Committee

• The NEW Rural Montana magazine launched with the February 2020 edition. Beginning with the March issue, cooperative newsletters will be placed at the center of the magazine.

- Members Services• Meeting February 24. Update will be provided at the board meeting.

• Electronic Forms Development- A new New Construction Application is in development as well as identifying other form needs.


• FacebookContent follows board meeting information, press releases, and RM

• BEC Membership ApplicationA new review is scheduled with the Policy Committee. Work will be able to begin after the AnnualMeeting and the approval/non-approval of updated and amended bylaws.

• BEC New Member Welcome (email & hard copy package)Work in progress-awaiting membership application

• Operation Round Up- Operation Round Up received $114.34 billed 2/5/2020. 201 Accounts and 186 Customers.

• Residential Home Energy Assistance Program (formerly LISD/LIDD)- Total Energy Assistance (LISC/LID) Discount Accounts for January 2020 billed 2/5/2020. WY: $85.33

and MT: $436.21 = Total $521.54. Total number of accounts are 46.

• NISC Enterprise System Update February 2020

Process Reviews • New system capabilities are being implemented into processes as available.

Installed Systems• ABS• Customer Information System (CIS)• CashRegister• Remitlus• SmartHub• Engineering & Operations (E&O)• Automated Meter Information (AMI)• Work Management Solutions (WMS)• Docuvault• Meter Data Management System (MDMS)

Work in Progress • Mapwise-Mapping

o New BETA edition released.• Mapwise-Staking

o New BETA edition released.• EZRI GIS

o Installed with MapWise• OMS

- Kickoff was conducted in December. CIS/Mapping systems being set for OMS.- Gus Behrent and Stephanie Fletcher are scheduled to attend onsite training at the NISC

Missouri training center the second week of February.o Gus Behrent and Stephanie Fletcher attended NISC on-site training February 11-13.o Staff training is scheduled the week of March 9.

• Prepayo Implementation 2020

OTHER • Billing Statement Programming

o Next steps will progress upon rate design board approval.BEC Board Book | February 25, 2020 | Page 101

BEC’s Member Notice appeared in the Powell Tribune, Stillwater County News and Carbon County News (as shown) the week of February 16, 2020.


official newsletter of the beartooth electric cooperative

beartoothelectric.com | March 2020

INSIDEthis issue...

Rates Design Changes Under Consideration—

What & Why

General Manager’s Message:

Commitment to ZERO Contacts

Rate Design Changes Under Consideration—What & WhyBy Arleen Boyd & Bill Pascoe, Risk Management Committee Co-Chairs

ates are the charges that appear on your monthly bill from BEC. Rate design is the

process of setting those charges. As part of the board’s bi-annual strategic planning session in both 2017 and 2019, rate design was identified as one of three high priority issues. Since October 2018, the Risk Management Committee, supplemented by a small group of interested members, has been evaluating different rate design options. These deliberations led to a set of committee recommendations to BEC’s Board in December 2019. The Board is currently considering those recommendations with decisions expected in the Spring of 2020.

You will be hearing a lot more from BEC about rate design in the coming months, in this article, we will focus on one of the most impactful recommendations: to transition Residential and Small Commercial accounts from a 2-Part Rate to a 3-Part Rate.

What is a 3-Part Rate?BEC’s costs can be grouped into three charge categories:

1. Base Charge: Includes the costs related toserving each account, such as metering andbilling, and overhead for managing the co-op’sbusiness.

2. System Charge: Includes the costs related tobuilding, owning, operating, and maintainingBEC’s electric distribution system, as well assystem depreciation.

3. Energy Charge: Includes the costs BECincurs to purchase wholesale power and haveit delivered across NorthWestern Energy’stransmission lines to BEC’s substations.

In contrast to its cost structure, the majority of a distribution cooperative’s revenue stream comes through variable charges (i.e., energy (kWh) charge) versus fixed charges (i.e., base and system charges). This mismatch between how costs are

incurred and recovered creates risk for both the member and the cooperative.

Residential and Small Commercial rates are especially susceptible to this risk. Not only are rates not typically in alignment with costs, but sales to these rate classes are also subject to substantial volatility related to weather, economic conditions, conservation, and energy efficiency. Members particularly feel this with those bill spikes encountered in extreme weather, both hot and cold.

Historically, BEC has billed Residential and Small Commercial accounts with a 2-Part Rate.

The monthly Base Charge used to collect Base Costs and a portion of the System Costs, and the Energy Charge used to collect the power and transmission costs and the remaining portion of uncollected System Costs.

The implementation of a 3-Part Rate would add a third component to the bill called the System Charge. This System Charge would collect a portion of the System Costs currently

collected in both the Base and Energy Charges. The System Charge would be based on each member’s maximum 15-minute draw on BEC’s distribution system during the month. Breaking out the System Costs as a separate charge is logical as it reflects the proportionate load each member places on BEC’s distribution system.

A primary objective of good rate design is to allocate the co-op’s costs fairly among the membership. A 3-Part Rate will help meet that objective.

The combined charges of the 3-Part Rate would be designed to produce the same amount of total revenue for the co-op as the current 2-Part Rate. The revenues generated from the System Charge would be offset by reductions in both the Base and Energy Charges. Reducing the Base Charge would help to address member concerns expressed over Continued on Page 6.

R

coconnectsnnectsBEARTOOTHBEARTOOTH

4

3

FEATURE STORY

5

RATE

BEC’s Board is considering rate design

recommendations presented by the Risk

Management Committee. Decisions are expected in the Spring of 2020.

Affordable, Reliable—ENERGY by Design

www.beartoothelectric.com • Beartooth Electric Cooperative • 5BEC Board Book | February 25, 2020 | Page 103

Continued from Page 5.

the years about the amount of the Base Charge and its disproportionate impact on small users.

For a “typical” or “average” member, the total monthly bill should be the same (see the example above). However, some members would see slightly higher bills, and some would see slightly lower bills based on how much power they consume and their maximum draw on the distribution system.

Why a 3-Part Rate?A 3-Part Rate would be a significant change for BEC’s Residential and Small Commercial accounts. But this concept is not entirely new to BEC or the utility industry. BEC’s Large Commercial, Industrial, and Irrigation accounts have been billed using a 3-Part Rate for many

years. Additionally, in recent years, four other Montana co-ops have successfully implemented a 3-Part Rate for their residential and small commercial accounts.

Member feedback on BEC’s rate design is encouraged. Your input can be provided by attending Risk Management Committee and Board of Trustees meetings (dates and times are posted on BEC’s website at www.beartoothelectric.com), by emailing the co-op at [email protected], or by contacting General Manager Kevin Owens at 406-446-2310, or any member of the Board of Trustees (contact info posted on the website under Board of Trustees). BEC’s Bylaws require a formal Member Notice be given to members at least 30 days prior to a Board vote on any change to rates. Member Notices are mailed to each member at their billing address on file and included in all BEC media.

We are just months away from our Annual Meeting. Before you know it, we’ll be getting together to talk about all things Beartooth Electric. We have a great theme this year; Affordable, Reliable—Energy by Design. They are more than words and a catchy phrase to me. As our industry changes, I get excited about BEC taking actions to ensure you have affordable, reliable energy by design well into the future. We are a technology-driven cooperative that continues to strive for improved operating efficiencies to keep costs under control.

We have taken charge of change in our industry. However, its, change by design and will remain our focus. Some of the changes will be subtle, others are more profound.

We have completed our meter upgrade project, which brings significant value to the services we offer members. It’s the backbone of our technology infrastructure. Staff is currently implementing our Outage Management System (OMS), which will tell us more about outages when/where they occur and provide

more communication paths to you regarding the outage and restoration. We couldn’t have implemented this without the new metering infrastructure in place.

All of our line crews now carry iPads that are synced with critical information and technology to better provide information to them while working across our service area. We have improved software to manage our people, projects, system maintenance, and reliability. More recently, we updated our website to improve member access to SmartHub and everything relevant to Beartooth Electric activities. Initial feedback has been extremely positive.

Our rate design initiative is also very technology-driven to help us better align costs to members within a rate class.

Stay tuned for other great updates at BEC. We’re off to a great new decade!

General Manager’s Message:

By Kevin P. Owens, PE BEC general manager

Monthly Bill Comparison“Typical” Residential Account

Energy: 812 kWh and 15-Min Max Demand: 5.2 KW

Current 2-Part Rate Possible 3-Part Rate

Rate Charge Rate Charge

Base Charge ($/month) $ 33.50 $ 33.50 $ 30.00 $ 30.00

System Charge ($/KW) $ - $ - $ 2.00 $ 10.40

Energy Charge ($/kWh) $ 0.08877 $ 72.08 $ 0.08025 $ 65.16

Total Bill $ 105.58 $ 105.56

Bill Statement Example

THE DIFFERENCE A DEGREE MAKESA small thermostat adjustment will provide big savings on your home heating

Energy experts tell us we can reduce home heating costs by two percent for every degree we lower our thermostat. For example, if your thermostat usually sits at 73°F in the winter, put on a sweater and try lowering it to 68°F, and you could save roughly ten percent on your home heating costs. Drop the setting even lower at bedtime, and you'll save that much more.

Your heating system works harder when the outdoor temp drops. Adjust your thermostat to the lowest comfortable setting.

6 • Beartooth Electric Cooperative • www.beartoothelectric.com BEC Board Book | February 25, 2020 | Page 104

“Stay safe.” It’s a phrase we hear all the time. To some people, it has a special meaning, especially when they’re on the job. It means coming home at night to loved ones, whole and unharmed.

To lineworkers who face danger daily working with electricity, it means focus, preparation, and following some simple steps to avoid pitfalls.

Our CommitmentA new effort called “Commitment to Zero Contacts” launched in 2018 by the National Rural Electric Cooperative Association and Federated Rural Electric Insurance Exchange to help eliminate serious injuries, fatalities and enhance cooperative safety programs.

When General Manager Kevin Owens signed the pledge for BEC, he committed the cooperative and its employees to the following work practices and ideas:

• Use life-saving rules:- Personal Protective Equipment(gloves and sleeves).

- Application of personal grounds.

- Application of proper insulatingmaterial.

- Proper use of clearanceprocedures.

• To “speak up” and not accept, orwalk by, a shortcut to safe work.

• Slow down and perform effective jobplanning on all work assignments.

The cooperative has an active safety program in place, and the zero contacts initiative reinforces it. Employees have discussions before every job to review their approach. They attend training locally and at the statewide level, and they have a safety committee.

Our members have a place to help our workers come home safe too. Ensuring generators are correctly installed with a “double-throw switch” to prevent back feeding is critical (if you have a generator, please call the office to schedule a complimentary safety check). Staying attentive and slowing down when you see ‘Utility Work Ahead’ signs helps too. If you see crews working, please don’t approach them to avoid dangerous distractions.

Keeping the community safeBecause we live and work in the community we serve, we care about our neighbors. BEC conducts electrical safety demonstrations in schools.

According to the Electrical SafetyFoundation, each year thousands of people in the United States are critically injured and electrocuted as a result of electrical fires, accidents, and

electrocution in their own homes. Many of these accidents are preventable. There is much you can do to keep yourself and your community safe around electricity.

Don’t attempt electrical projects yourself or overload your outlets. Report downed power lines, unlocked substations or padmount transformers that look amiss.

If a power line falls on your car, stay in it unless a fire or other emergencies cause you to exit. If you must exit, shuffle your feet or hop with them together.

If you would like us to provide a safety demonstration at your school or community event, please contact BEC at 406-446-2310.

Pause and take the extra time to plug into safety. Electricity safety

training at Luther School with BEC field instructor Jake Wright.

www.beartoothelectric.com • Beartooth Electric Cooperative • 7BEC Board Book | February 25, 2020 | Page 105

Board of Trustee Nominations for Districts 1, 3 & 7

Deadline:

March 13, 2020

Represent your District and all members on the BEC Board of Trustees.

The nomination deadline is March 13, 2020. Elections take place at the 83rd Annual Member Meeting, May 2, 2020, at the ANIPRO Event Center, Absarokee, Montana.

Visit www.beartoothelectric.com today for details and download the Nomination Petition. Click on ANNUAL MEETING on the home page. Petitions also available from the BEC Red Lodge Office.

Save the Date:Saturday,

May 2, 2020

83rd Annual Member MeetingANIPRO Event CenterAbsarokee, Montana8:00 AM Registration

9:00 AM Business MeetingNoon Luncheon

Elections ▪ An Incredible Keynote ▪ Door Prizes

Affordable, Reliable—

byDesign

ENERGY

Source: energy.gov

Got leftovers? Let them cool first!Placing hot food in the refrigerator makes the appliance work harder than necessary, using more energy. Allow food to cool down before you place it in the fridge.

#saveenergy

ENERGY EFFICIENCYTip of the Month

Beartooth Electric Cooperative, Inc.PO Box 1110, 1306 Broadway Ave N

Red Lodge, MT 59068406-446-2310 ▪ 800-472-9821

email: [email protected]: www.beartoothelectric.com

f

connect with us !

THE OFFICE East Rosebud, Roscoe, MontanaPhoto By: Jimmy Grooms, BEC apprentice

8 • Beartooth Electric Cooperative • www.beartoothelectric.com BEC Board Book | February 25, 2020 | Page 106

BOARD REPORT

By: Eric Elton, Line Superintendent

February, 25 2019

CONSTRUCTION, OPERATIONS & MAINTENANCE

• The Red Lodge crew has been changing meters on the NYE substation. (Todate they have changed 150 of the 550 left).

• We have had a several broken poles from wind, snow and car hits thismonth.

• Columbus crew is still working on mapping, and also helping with the meterchanges at NYE.

• All the snow has become a challenge to work in the Red Lodge area. We havebeen using the tracked Ranger and the four wheeler for outages and justgetting around.

• Marty is starting to see some interest in new construction coming in the door.• We installed 2 new services in the month of January.• There was a total of 9 outages system wide in the month of January.• We had 264 individual consumers out of power at some point in the month

of January having duration of 1620 minutes. (Please see attached breakdownsheet).

EDUCATION, SAFETY & LOSS

• Next MECA safety meeting is March 17th.• No lost time accidents to report for the month of January.


TRUCK, TOOLS & EQUIPMENT

• The new cab and chassis came in for the replacement of the smaller bucket truck in Columbus. (We should have it in service in a month).

• Altec completed all the yearly DOT Inspections and dielectrics on the trucks and trailers. (No major issues to report).


JANUARY 2020 OUTAGE SUMMARY

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Designation 1730A-119)

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01/01/20 360 70 490 Tree through line E Rosebud OH 25200

01/06/20 390 45 090 Broken jumper/wind Nye OH 17550

01/07/20 180 1 090 Broken jumper/wind Nye OH 180

01/13/20 300 1 090 Transformer tripped/wind Columbus OH 300

01/15/20 60 35 unknown Fuse open Columbus OH 2100

01/17/20 60 1 unknown Broken wire Columbus OH 60

01/21/20 150 75 790 Excavator hit line Roberts OH 11250

01/24/20 60 35 490 Tree caused wires to slap together Columbus OH 2100

01/28/20 60 1 690 A phase/C phase blown- birds Belfry OH 60

TOTALS 1620 264 58800

01/30/20 85 779 000 Northwestern Energy/floater Belfry OH/URD 66215

01/30/20 85 930 000 Northwestern Energy/floater Red Lodge OH/URD 79050

01/30/20 65 779 000 Northwestern Energy/floater Belfry OH/URD 50635

01/30/20 65 930 000 Northwestern Energy/floater Red Lodge OH/URD 60450

TOTALS 300 3418 256350

RUS CODE KEY January YTD Substations

000 Transmission 4 4 0 Absarokee

090 Weather 3 3 3 Belfry

110 Planned Outage 0 0 4 Columbus

300 Equipment 0 0 1 East Rosebud

490 Trees 2 2 2 Nye

500 Transformer 0 0 2 Red Lodge

690 Animals 1 1 0 Reed Point

790 Public Caused 1 1 1 Roberts

Unknown 2 2

{Member Minutes } NWE Major Event Planned All Other Totals

MONTH - January 256,350 0 0 58,800 315,150

YTD 256,350 0 0 58,000 315,150


Delivery Point Analysis

Final January 2020 Days in month 31

Load Factor

Demand Energy Demand Energy Purchased Demand Energy Energy Energy Demand Energy

kW kWh kW kWh % kWh kWh kW kWh Line Loss Line Loss Line Loss Line Loss

Last Year Last Month 2 Months Past

2020 2019 Jan 2020 Jan 2019 Dec 2019 Nov 2019

Absarokee 2,366 1,134,563 2,297 1,136,114 64.5% 3.0% -0.1% 1,059,641 1,062,770 6.6% 6.5% 8.0% 7.0%

Belfry 2,194 1,072,582 2,264 1,136,316 65.7% -3.1% -5.6% 980,342 1,044,346 8.6% 8.1% 9.7% 9.0%

Columbus 2,830 1,319,564 2,683 1,294,161 62.7% 5.5% 2.0% 1,188,096 1,144,085 34.00 14,120 8.9% 10.4% 11.5% 10.5%

E. Rosebud 104 26,592 73 22,236 34.4% 41.8% 19.6% 23,789 18,123 10.5% 18.5% 17.1% 12.6%

Edgar 1,347 618,806 1,350 635,772 61.8% -0.2% -2.7% 558,852 563,281 9.7% 11.4% 9.6% 8.9%

Luther 800 389,275 810 380,250 65.4% -1.2% 2.4% 362,320 348,055 6.9% 8.5% 7.0% 7.0%

Nye 1,432 746,686 1,264 645,542 70.1% 13.2% 15.7% 686,091 581,732 8.1% 9.9% 9.3% 9.4%

Red Lodge 2,251 1,140,721 2,596 1,163,281 68.1% -13.3% -1.9% 1,025,134 1,031,139 121.80 32,038 7.3% 8.3% 7.9% 6.5%

Reed Point 750 357,484 717 345,979 64.1% 4.6% 3.3% 329,105 305,539 7.9% 11.7% 1.3% 14.1%

Roberts 1,754 858,850 1,799 857,451 65.8% -2.5% 0.2% 802,903 761,513 6.5% 11.2% 2.1% 14.4%

Totals 15,827 7,665,124 15,853 7,617,102 65.1% -0.2% 0.6% 7,016,273 6,860,583 155.80 46,158 7.86% 9.26% 8.05% 9.38%

Note: Above represents kWh purchased information received from NWE based at the new loss percentage rate. It is not clear yet whether they corrected the Sold to BEC kWh to reflect the new loss percentage number or the old loss percentage number.

Chart reflects Distribution losses only. NWE charges 2.8% transmission losses for delivery over their system plus. Metering takes place on the low side of all substation transformers with the exception of Columbus Substation. 1%

transformer losses are added to all low-side metering, 3.8% cumulative transmission losses at all delivery points except Columbus which is 2.8% transmission losses.

Load Factor = It can be derived from the load profile of the specific device or system of devices. Its value is always less than one because maximum demand is always more than average demand. A high load factor

means power usage is relatively constant. Low load factor shows that occasionally a high demand is set. To service that peak, capacity is sitting idle for long periods, thereby imposing higher costs on the system.

Electrical rates are designed so that customers with high load factor are charged less overall per kWh. This process along with others is called load balancing or peak shaving.

Purchased Sold Own Use

2020 2019 2020 vs. 2019 2020


TOTALS YTD

Feb Apr May Jul Sep Dec

Light & Heavy Duty Trucks 0 0 0 0 0 0 0 0 0 0 0

0 0 0 0 0 0 0 0 0 0 0

#DIV/0! #DIV/0! #DIV/0! #DIV/0! #DIV/0! #DIV/0! #DIV/0! #DIV/0! #DIV/0! #DIV/0! #DIV/0!

0 0 0 0 0 0 0 0 0 0 0


Backhoes, Trailers & Chipper 0 0 0 0 0 0 0 0 0 0 0

0 0 0 0 0 0 0 0 0 0 0


0 0 0 0 0 0 0 0 0 0 0


2020 FLEET TOTALS

Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec

0 0 0 0 0 0 0 0 0 0 0

2019 FLEET TOTALS


28,675 36,873 27,303 29,905 29,841 31,882 26,493 28,760 29,605 27,465 30,112

2018 FLEET TOTALS


42,363 33,162 28,214 27,305 29,151 30,267 26,469 26,391 26,341 26,808 28,265

2017 FLEET TOTALS YTD

Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Total

32,170 33,652 30,919 27,090 26,658 24,831 27,059 26,864 28,942 28,665 37,678

2016 FLEET TOTALS


26,493 27,256 24,639 24,154 23,896 27,516 26,877 25,866 23,664 29,801 33,964


Fleet Management

Expense Totals

JANUARY 2020

Jan Mar Jun Aug Oct Nov Total

Total: 24,784 24,784

Miles 12,068 12,068

Cost Per Mile 2.05 2.05

Gallons of Gas 1,327 1,327

MPG 9.1 9.1

Total: 4,504 4,504

Hours 33 33

Cost Per Hour 136.5 136.5

Gallons of Gas 160 160

HPG 0.0 0.2

Total: 37,243 361,978

YTD

Jan Total

Total: 29,288 29,288

YTD

Jan Total

YTD

Jan Total

YTD

Jan Total

Total: 26,138 353,052

Total: 24,995 319,120

Total: 32,540 357,069


February 10, 2020 Beartooth Electric Cooperative PO Box 1110 Red Lodge, MT 59068 RE: FEMA Pre-Disaster Mitigation Grant Assistance Dear Mr. Owens, Please accept this scope letter and enclosed fee estimate for technical services to prepare a Pre-Disaster Mitigation Grant on behalf of Beartooth Electric Cooperative and Stillwater County. The estimate includes effort to prepare content for the application in the format and supplemental documentation required by FEMA. This proposal assumes that the outline for the next round of Pre-disaster Mitigation Grants will follow this same outline. Changes to the grant application might result in reevaluation of scope of services by Morrison-Maierle. The tasks include effort to complete the following application criteria sections:

Subapplicant Contact Community Mitigation Plan Scope of Work Properties Schedule Cost Estimate Cost Share Cost Effectiveness Environmental/Historic Preservation Evaluation Assurances and Certificates Comments and Attachments Benefit Cost Analysis – This analysis involves FEMA’s benefit cost analysis calculator.

It is assumed that support and collaboration will be provided by Beartooth Electric Cooperative during the application process. The proposed scope of work will be completed prior to the application deadline of January 2021 and will be completed on an hourly rate basis not to exceed $17,520. To assist with services outside this scope of work, additional services as needed can be provided on an hourly rate basis as requested. Please let me know if you have questions. Sincerely,


Morrison-Maierle, Inc.

Molly Davidson, PE

Enclosures


Beartooth Electric Cooperative, Inc.

BOARD RESOLUTION

RESOLUTION FOR COMMITMENT TO ZERO CONTACTS INITIATIVE

WHEREAS, Beartooth Electric Cooperative, Inc., places a high value on the health and welfare of its employees and members, and

WHEREAS, the Board believes that taking proactive steps may help prevent injury due to future electrical contacts,

NOW THEREFORE BE IT RESOLVED, that Beartooth Electric Cooperative, Inc. hereby joins the Commitment to Zero Contacts nationwide initiative.

CERTIFICATE OF SECRETARY

I, Arleen Boyd certify that I am Secretary of the Board of Trustees and that the above is a true excerpt from the minutes of a regular board meeting of the Board of Trustees of Beartooth Electric Cooperative, Inc., held on the 25th day of February 2020, at which a quorum was present and the above portion of the minutes has not been modified nor rescinded.

IN WITNESS WHEREOF, I have set my hand and affixed the seal of Beartooth Electric Cooperative, Inc. this 25th day of February 2020.

____________________________________ (Signature of Secretary)


Beartooth Electric Scholarship & BEC Representative to MECA

Memorial ScholarshipSelections

Presented under separate cover


The BEC board of trustees hereby notifies co-op members that to meet the financial impact of NorthWestern Energy Corporation’s (NWE) 53.8% transmission rate increase, a proposal to implement a cost pass-through revenue increase of 2.8% ($250,000) by raising BEC’s electric rate $0.003616/kwh on all rate classes (residential, small commercial, large commercial, industrial and irrigation), effective March 1, 2020, is under consideration. (The monthly impact to the average residential member using 800 kWh per month is $2.89.)

On May 1, 2019, NWE filed a revision to its Montana Open Access Transmission Tariff with the Federal Energy Regulatory Commission (FERC) to increase transmission rates 53.8% to all Montana transmission customers. FERC allowed NWE to implement its proposed rate increase July 1, 2019, while it considers objections from NWE’s transmission customers, including BEC. FERC is expected to make a final decision on NWE’s increase request sometime in 2020 or later.

This substantial transmission rate increase hit BEC’s bottom line with $250,000 in additional annual expenses. Although BEC has absorbed this increased cost since July, our financial forecast shows the need for increased revenue to make up for the increased costs.

BEC Bylaws, Article X-Financial Transactions, Section 5: Change in Rates, require notice to be given to Members at least 30 days before a vote by the Board to approve any change in Beartooth Electric rates.

The BEC board of trustees hereby notifies co-op members that the board will vote on this proposal at its February 25 monthly meeting. During the notification period, members may comment on this proposal via USPS at BEC Member Services, P.O. Box 1110, Red Lodge, MT 59068; email at [email protected]; or at the monthly regular board meetings January 28, and February 25, 2020.

For additional information, call Kevin Owens, general manager at (406) 446-2310, or contact any member of the Beartooth board of trustees. Please see the February 2020 Rural Montana, BEC newsletter pages 3-6, for a detailed article on this Member Notice. Also, this notice and documents related to NWE’s request to increase transmission rates are available on the BEC website, www.beartoothelectric.com, under My BEC, Member Notices.

Beartooth Electric Cooperative, Inc. PO Box 1110 1306 Broadway Ave N Red Lodge MT 59068 406-446-2310 www.beartoothelectric.com

Beartooth Electric Cooperative Member NoticeJanuary 17, 2020
