coloradocountrylife.coop 7MARCH 2016

MORGAN COUNTY RURAL ELECTRIC ASSOCIATION

OOn behalf of the board of directors, management staff and employees of Morgan County Rural Electric Association, Inc., we are pleased to bring you the 2015 Annual Report.

Morgan County REA is a not-for-profit electric cooperative that serves our membership in northeastern Colorado. Under the cooperative business model, we are owned by those we serve. A democratically-elected board of directors leads Morgan County REA on the administration of the assets and responsibilities of the cooperative.

As a member-owned electric cooperative, it is the responsibility of MCREA’s board and staff to provide our member-owners with an annual report detailing Morgan County Rural Electric Association’s economic and operational condition. I would encourage our membership to review the following pages, which contains comprehensive information about the state of your electric cooperative. (Donald Geist Sr., acct #1772600)

I also want to extend an invitation to our member-owners to attend the Morgan County REA Annual Meeting on March 19, 2016, at Fort Morgan High School. The doors will open at 11

a.m. for registration and a complimentary lunch, with the business meeting to follow at 12:30 p.m. The MCREA Board of Directors and I are looking forward to reviewing the past year with you and discussing the future plans for our cooperative.

On behalf of the board of directors, staff and employees at Morgan County REA, we would like to thank our member-owners for your support of our electric cooperative, and we’re looking forward to seeing many of you at our annual meeting later this month.David Frick

2015 MCREA

BOARD OF DIRECTORS

Saturday, March 19, 201611 a.m.

Registration & Lunch12:30 p.m.

Business MeetingFort Morgan High SchoolGlenn Miller Auditorium

709 E. Riverview Ave.Fort Morgan, CO

MCREA ANNUAL MEETING

79th

Casper Hergenreter, Jr.Secretary, District III

Randolph D. GraffTreasurer, District II

Timothy A. PeggramPresident, District I

Larry HoozeeVice President, District III

David ArndtDistrict II

William “Bill” MidcapDistrict II

Brian SchlagelDistrict I

Cary L. WickstromDistrict I

J. Brian PabstDistrict III

Annual Report IntroductionBY DAVID FRICK || GENERAL MANAGER

[MCREA 2015 Annual Report]

coloradocountrylife.coop4 MARCH 20168

MORGAN COUNTY RURAL ELECTRIC ASSOCIATION

FINANCIALSOPERATING STATEMENT*Revenue by class 2014 2015Residential $ 8,054,823 $ 8,112,314Irrigation $ 8,046,202 $ 7,507,469Small power $ 2,486,406 $ 2,516,100 Large power $ 6,701,459 $ 7,727,458Industrial $ 720,193 $ 3,973,041 U.S. Air Force $ 247,371 $ 263,389Other electric revenue $ 120,324 $ 183,224 Total operating revenue $ 26,376,778 $ 30,282,995

Expenditures by accountCost of purchased power $ 16,753,283 $ 19,784,980Operation and maintenance $ 2,909,063 $ 3,342,835 Consumer and sales accounts $ 865,471 $ 1,017,309Administrative and general $ 2,122,635 $ 2,224,807Depreciation and amortization $ 1,465,136 $ 1,523,105Interest and other deductions $ 1,405,111 $ 1,330,053 Total cost of electric service $ 25,520,699 $ 29,223,089

Operating margin $ 856,079 $ 1,059,906Nonoperating margin $ 130,174 $ 206,003Other capital credits and dividends $ 97,308 $ 228,945Tri-State G&T capital credits (allocated) $ 981,247 $ 911,465

Extraordinary items $ -0- $ -0-

Net margin or patronage capital $ 2,064,808 $ 2,406,319

BALANCE SHEET*

ASSETS December 31, 2015 Total utility plant $ 56,726,367 Accumulated provision for depreciation ($ 15,606,311) Net utility plant $ 41,120,056Nonutility plant $ 216,398Investment in associated organizations – patronage capital $ 17,205,587Investment in associated organizations – other $ 1,380,038Cash $ 2,018,799 Temporary investments $ 3,138,932Notes and accounts receivable – net $ 2,305,470Materials and supplies $ 1,030,375 Prepayments $ 30,135Current and accrued assets $ 13,783Deferred debits $ 1,254,453 Total assets $ 69,714,026

LIABILITIES December 31, 2015 Margins and equities $ 33,594,771 Long-term debt – RUS $ 9,600,100Long-term debt – other $ 19,200,433 Accumulated operating provisions $ 4,361,235Notes and accounts payable $ 1,956,499Other current and accrued liabilities $ 1,000,988

Total liabilities and other credits $ 69,714,026

*2015 unaudited numbers

EXPENDITURES IN 2015

Cost of Power 67.70%

Operations and Maintenance 11.44%

Consumer & Sales Accounts 3.48%

Administrative & General 7.61%

Depreciation & Amortization 5.21%

Interest & Other Deductions 4.56%

2015 ELECTRIC ENERGY REVENUE BY CLASS

Residential26.79%

Irrigation24.79%

Large Power25.52% Industrial

13.12%

Other Electric Revenue

1.47%

Small Power8.31%

coloradocountrylife.coop 9MARCH 2016

MORGAN COUNTY RURAL ELECTRIC ASSOCIATION

MCREA 2015 ANNUAL REPORT

Bill AnnanRob BaranowskiGeoff BaumgartnerCurtis BergChuck BlackwelderBrad BoppreBobby BrentonJosh Bristol

Clayton CordellCurtis CovelliCirildo EstradaDavid FrickAmanda GreenDoni HarrisDave HendersonTim Hishinuma

Suzi IungerichCarla KruegerAngie LarsonRay MannKevin MartensAlan MasonKarla MitchellIan Moreno

Susie NortonChris Pachek Glenda PowellRodney RhoadesJohn SchnegelbergerDean SegelkeRobb ShaverDeb Strauch

Steve SundetTracy TateMark TaylorJohn UnderwoodColton UnreinGayle VolzQuinton Wuthnow

CURRENT STAFF & EMPLOYEES

COUNTIES SERVED Adams, Arapahoe, Logan, Morgan, Washington, Weld

NUMBER OF EMPLOYEES 38

YEAR ORGANIZED 1937

RUS BORROWER NO. Colorado 15 Morgan

POWER SOURCE Tri-State Generation and Transmission Association, Inc.

MONTHLY BOARD MEETING 4th Monday

TOTAL MEMBERS 4,087

METERS SERVED 8,119

OVERHEAD LINE 2,594 miles

UNDERGROUND LINE 188 miles

TRANSMISSION LINE 44 miles

CONSUMERS PER MILE 2.87

ANNUAL REVENUE $30,282,996.37

ANNUAL WHOLESALE POWER COST $19,784,980.46

TOTAL ENERGY PURCHASED BY MEMBERS 253,732,746 kWh

AVERAGE RESIDENTIAL USAGE PER MONTH 1,004 kWh

TOTAL PLANT IN SERVICE $56,878,717.57

PROPERTY TAXES $436,509.36

INTEREST PAID $1,311,554.32

STAT

ISTI

CAL

INFO

RMAT

ION

As of December 31, 2015

From Randolph D. Graff Treasurer – District II

All members of the association are encouraged to carefully examine this annual report. Included are the balance sheet as of December 31, 2015, and the state-ments of revenue and expense for the same year. Also shown are the trends of the previous year.

In my opinion, the financial report fairly presents the financial position of Mor-gan County Rural Electric Association for the year ending December 31, 2015, and is in conformity with accepted accounting principles applied on a basis consistent with that of the preceding year. (Vera L. Norris, acct #1958500)

Randolph D. Graff, Treasurer

Each month Morgan County REA gives two lucky members a $25 credit on their electric bill, just by reading Colorado Country Life.

Congratulations Chris and Paula Bledsoe (account #2204800), you saw your names and account number in the January edition of Colorado Country Life. You received a $25 credit on your bill.

Sorry, Glenn Palmer (account #2136500), we didn’t hear from you. Your name and account number was also in January’s Colorado Country Life.

There are two more MCREA member names and their account numbers hidden somewhere in this issue. If you find your name and account number, call Member Services at 970-867-5688 by March 31 to claim a $25 credit on your electric bill.

Win $25 Off Your Electric Bill

Other Electric Revenue

1.47%

coloradocountrylife.coop4 MARCH 201610

These three gentlemen submitted petitions to serve on the Morgan County REA Board of Directors. Board elections will take place at MCREA’s annual meeting on March 19, 2016. Here is background information about each of the candidates.

Meet MCREA’s Candidates for Board of Directors

RANDY GRAFF — DISTRICT TWO

Randolph D. (Randy) Graff has been a Morgan County REA member since 1979, and has served on the MCREA Board of Directors since 2010. He cur-rently holds the position of treasurer of the association, and has achieved the Credentialed Cooperative Direc-tor and Board Leadership certifica-tions.

Randy was the owner/operator of Graff’s Turf Farms, Inc. from 1979

to 2007. While building his turfgrass business he served on the Turfgrass Producers International Board of Directors for eight

years, during which time he worked his way up through the chairs, completing his presidency of that association in July 2009. During those years he earned many awards, including the prestigious Ernst and Young Entrepreneur of the Year in 1995. He also served as president of the Rocky Mountain Sodgrowers Association for three years.

Randy and his wife, Betsy, live near Fort Morgan and have two grown children and four grandchildren. He enjoys hunting, fishing, golfing, travelling and spending time with family and friends.

Being a director has been a welcome challenge for Randy, as he understands how increasingly difficult it is to maintain competi-tive rates. Therefore, he remains committed to MCREA members to work to keep those rates affordable.

BRIAN SCHLAGEL — DISTRICT ONE

Brian Schlagel is owner of Schlagel Farms located north of Strasburg. Brian and his wife, Diane, have raised irrigated crops and cattle since 1971, although they are now retired from active pro-duction agriculture.

Schlagel was first elected to the board in 1990 and served as presi-dent from 1997-99. Brian is Morgan County REA’s representative on the Tri-State Board of Directors. He holds the NRECA Credentialed Cooperative

Director, Board Leadership, and Gold Level certifications. Schla-gel represented Colorado, Wyoming, Nebraska, and Kansas as a director of National Rural Utilities Cooperative Finance Corpora-

tion headquartered in Dulles, Virginia, from 1998-2004. He is also a former president of the Colorado Rural Electric Association, the statewide trade association for rural electric cooperatives.

Brian and Diane have two grown sons, Doug and Aaron. He enjoys spending time with his family, traveling, and attending sporting events.

Schlagel lists maintaining reliable electric power at the low-est cost possible, while continuing to be good stewards of the planet as his priorities for MCREA. He states that directing electric cooperatives has become more complex and requires more knowledge than ever before. Brian believes complying with increasing government regulation while preserving a reliable power grid and reining in costs is the major challenge facing the industry.

LARRY HOOZEE — DISTRICT THREE

Larry Hoozee, a former vocational ag-riculture teacher, returned to farming and ranching north of Snyder in 1981. Now in business for himself, Hoozee finds his experience and his degree from Colorado State University ex-tremely beneficial.

Larry has been a member of the Morgan Conservation District Board of Directors since 1995. His involve-ment with the conservation district

has included leadership positions on the Lower South Platte Watershed and Colorado Association of Conservation Districts boards, serving as state president of CACD for two years. Larry

also serves as secretary of the local telephone board, member of the pension board for the local fire district and member of the Colorado State Noxious Weed advisory board for the Depart-ment of Agriculture.

Larry and his wife, Karen, have two grown children, Kristen and Justin, and six grandchildren who are all involved in the family’s operation. In his spare time he enjoys camping and spending time with family and friends.

Hoozee says that he has found his time on the MCREA board educational and challenging, adding, “I have grown to appreciate the cooperative business model and how it works for members.” Larry has achieved the Credentialed Cooperative Director, Board Leadership and Gold Level certifications for education through NRECA while on the Morgan County REA board.

MORGAN COUNTY RURAL ELECTRIC ASSOCIATION