Special Business Mee ng of 2020Thursday, March 26, 2020

2019 Annual Report

ProgramTHURSDAY, MARCH 26, 2020

CALL TO ORDER MATT WEBSTER President

MINUTES OF 2019 ANNUAL MEETING MATT WEBSTER President

NOTICE OF MEETING MICHELLE MARKER Secretary-Treasurer FINANCIAL REPORT BRAD FLORA CFO

MANAGER’S REPORT TED HOLSAPPLE CEO

STATEWIDE UPDATE VIDEO

ELECTION RESULTS ERIC BRAND A orney

ADJOURNMENT OF THE MATT WEBSTER2020 DARKE REC SPECIAL MEETING President

Scholarships

Youth Tour

Kloey Murphey - 1st PlaceScholarship: $2,000High School: Tri-VillageCollege: Miami UniversityParents: Nathan & Faith Murphey

Jacob WuebkerScholarship: $1,000High School: VersaillesCollege: Wright State UniversityParents: Jeff & Denna Wuebker

Mason DreischarfScholarship: $1,000High School: Tri-County North College: Wright State UniversityParents: Brad & Bri any Dreischarf

Hunter MuirScholarship: $1,000High School: AnsoniaCollege: Wright State UniversityParents: David & Melissa Muir

Sarah Siefring and Nathan Howe represented Darke Rural Electric Coopera ve on a seven-day, all expense-paid trip to Washington, DC, in the 2019 Youth Tour program. Sarah, a student at Fort Recovery High School, is the daughter of Chris and Theresa Siefring. Nathan a ends St. Henry High School and his parents are Jeff and Susan Howe. They joined approximately 40 students from other Ohio electric coopera ves for the tour that began June 8th. The fi rst stop was in Ge ysburg and then on to Washington where they met up with approximately 1,600 students from all across the United States. The week-long tour included visits to Jeff erson and Lincoln Memorials, Arlington Cemetery, the Na onal Zoo, Mt. Vernon, Smithsonian Ins tu on, a night cruise down the Potomac River and many other interes ng places. In addi on, the students had the opportunity to have lunch with their congressional representa ve. The tour is off ered so that students can be educated about the principles and prac c-es of American democracy and gain an understanding of the rural electric coopera ves. The contest is conducted annually and is open to sophomores and juniors whose parents are members of Darke REC.

Julia Mello Scholarship: $1,000High School: Tri-VillageCollege: Indiana University EastParents: Brandy Clark & Michael Mello

CandidatesDistrict 4:Michelle Marker and her husband Daniel, live at 4670 Crumrine Road, Greenville, Neave Township in Darke County and have been members of the cooperative for 21 years. She has 14 years experience in the electric industry and has been on the Darke Rural Electric Board of Trustees for 12 years, currently serving as secretary/treasurer. Michelle has completed the courses necessary to receive her Credentialed Cooperative Director certificate and Board Leadership certificate. She earned her Bachelor’s Degree from the University of Dayton and is currently a Customer Service Representative for ITW Food Equipment Group (Hobart). The Marker’s attend Castine Church. They have two daughters and a son-n-law in Grand Rapids, MI.

Brandi Wyne and her husband Jacob, reside at 4043 Richmond Palestine Road, New Madison, Liberty Township in Darke County, and have been members of Darke Rural Electric Cooperative for 18 years. Brandi is employed as a paralegal at Rudnick-Hosek Law Office. She also works at Berkshire-Hathaway Realty after recently obtaining her realtors license. She enjoys spending time with her family and attending their activities. The Wyne’s have three children and a son-in-law. They attend the Palestine Church of Christ.

District 7:Celeste Caplinger and her husband Curt, live at 3485 Eaton-Gettysburg Road,Eaton, Washington Township in Preble County and have been members of the coopera-tive for 30 years. Celeste worked at Twin Valley Equipment (owned by her parents Jay and Rosalie Unger) in accounting and customer service for over 30 years. She currently is employed at the Preble County Treasurer’s office as Deputy Treasurer. Along with her husband Curt and son, Peyton, they live on a grain farm and raise goats and sheep for showing at county fairs. Celeste enjoys being a member of the local singing group, “Something Good.”

Ma Webster resides at 4043 Sonora Road, Lewisburg, Harrison Township in Preble County and has been a member of the cooperative for 20 years. He has been on the Darke Rural Electric Board of Trustees for the past six years, currently serving as president. Matt is a graduate of Tri-County North Local Schools and continued his education at Miami University with a Bachelor of Science degree in Accounting. He is currently employed at The Farmers State Bank as their Chief Financial Officer. He is a member and Treasurer of the Trailrider Sportsmens Club (a non-profit organization) in Lewisburg. Matt enjoys farming with his father and son on a small family farm in northern Preble County. His favorite hobbies are boating on Norris Lake and trap shooting. Matt has two children.

Board of Trustees

Nomina ng Commi ee

Ma Webster, President, District 7Harrison, Washington & Twin Townships in Preble County

Tod Carroll, Vice President, District 3Jackson, Washington & Greenville Townships in Darke County

Michelle Marker, Secretary/Treasurer, District 4Liberty, Neave, VanBuren & Twin Townships in Darke County

Aaron Siefring, Trustee, District 1Mississinawa, Allen & Brown Townships in Darke County

David Coons, Trustee, District 2Wabash, Pa erson, York, Richland & Wayne Townships in Darke County

Eric Laux, Trustee, District 5Harrison & Butler Townships in Darke County

Stephen Vanzant, Trustee, District 6Jeff erson, Monroe & Jackson Townships in Preble County

Roger Fortkamp District 1 Carrie De Mange District 2 Linda Rhoades District 3 Susan Laux District 4 Travis Printz District 5 Amy Aldridge District 6 Wendy Aker District 7

Opera on RoundupDarke members give $23,254 to area causes

Darke REC members awarded $23,254 to organiza ons through the Opera on Roundup program in 2019. Since the beginning of the program in 2004 Darke members have donated $391,504 back to the community. Opera on Roundup is a voluntary charitable program. Par cipa ng members’ monthly electric bills are rounded up to the next dollar, with the addi onal pennies put into the “Trust” fund. A Board of Trustees, made up of Darke Rural Electric Coopera ve members oversees the Opera on Roundup process. Those serving as trustees in 2019 were Susan Laux-Chairman, Joan Buschur-Treasurer, Susan Smear-soll-Secretary, Paul Robbins, Wendy Aker, Shirley Hundley and Elaine Siefring. They volunteer their me and meet twice a year to review applica ons and decide if an applica on should be funded. The decision can be very diffi cult when the re-quest exceeds the available monies. The goal is to disperse funds to best serve the communi es of the coopera ve members. Organiza ons or individuals can contact Beth Daven-port at Darke REC (937-548-4114) or visit our website at www.darkerec.com to receive an applica on.

2019 Recipients of FundsKinder Korner Preschool

FM Schools Health & WellnessIllumina on Ministries

The Great Darke County FairBrown Memorial Library

Franklin Monroe Jr Baseball & So ballGe ysburg Rural Fire Department

Osgood Area Rescue SquadLiberty Township Volunteer Fire Dept.

Greenville Community UnityFree Community Christmas Dinner

Mississinawa Valley PreschoolLewisburg Historical Society

Greenville Girls So ball Associa on

2019 MinutesMINUTES OF THE ANNUAL MEETING

March 14, 2019

The Annual Mee ng of Darke Rural Electric Coopera ve, Inc. was held at Romer’s Catering in Greenville, Ohio at 12:30 p.m. on Thursday, March 14, 2019.

Wayne Hospital conducted a health fair for members wishing to par cipate, with health awareness blood panel tests being off ered as well as several other tests at reduced cost. Lunch was served between 11:00 a.m. and 12:30 p.m. prior to the mee ng.

The mee ng was called to order by Ma Webster, President of the Coopera ve Board of Directors, who presided. Michelle Marker acted as Secretary of the mee ng and kept the minutes thereof.

The pledge of allegiance was led by Tod Carroll and Michelle Marker off ered the invoca on.

The Secretary reports there were 148 members present and a copy of the list of members a ending the mee ng is annexed to these minutes.

The Secretary read the le er, “No ce of Annual Mee ng” that was mailed February 20, 2019.

Upon a mo on by Gene Moyer, seconded by Terry Miller, the minutes of the Annual Mee ng of Members held on March 15, 2018 were approved unanimously.

Darke REC General Manager Ted Holsapple highlighted the coopera ve’s commitment to system reliability through ongo-ing improvement projects to the coopera ve’s infrastructure. He then updated the membership on planned construc on work for 2019, including replacing copper wire and poles, upgrading meters, and installing equipment for backfeeding to improve reliability. Holsapple reported a high American Customer Sa sfac on Index score of 88 for 2018. He then de-tailed the progress of OurSolar, Cool Returns and other programs within the coopera ve. The OurSolar program has leased approximately half of the panels at the Hollinger substa on. Cool Returns is underway and the co-op is currently installing radio-controlled switches to par cipa ng member’s air condi oners to help reduce the load during peak usage mes. In closing he reported that Darke REC’s Opera on Round Up program, by which members round their electric bill up to the next dollar and donate the change, distributes nearly $24,000 a year to local chari es and programs.

Brad Flora, CFO of Darke REC, provided the membership with the fi nancial reports for the coopera ve. The coopera ve had record revenue of over $15 million as well as record sales as a result of increased electric use. Flora further detailed the breakdown of the coopera ve’s budget and how much of each member’s dollar paid for various func ons of the coopera- ve. The coopera ve allocated $1.27 million in capital credits to members in 2018. Because the coopera ve operates on a

not-for-profi t basis, any excess revenue is returned to the members in the form of capital credits. The amount allocated to each account is based on electricity use throughout the year. Overall, Flora reported that the coopera ve is in good fi nan-cial health.

Tom Alban, vice president of power genera on for Buckeye Power, updated the members on the transi on of opera on-al responsibility at the Cardinal Power Plant from AEP to Buckeye Power. He reports that Buckeye’s rates have remained stable and that fl at rates are expected in the near future. Poten al impacts on rates include environmental regula ons and costs of transmission system upgrades by investor-owned u li es that are passed on to Buckeye Power.

A orney, Eric Brand reported the results of the trustee elec on announcing that the following members were elected to the offi ce of Trustee for three (3) year terms by receiving the highest number of votes: District #1 – Aaron Siefring; District #3 – Tod Carroll and District #5 – Eric Laux.

There being no further business to come before the mee ng, Ma Webster declared the mee ng adjourned.

____________________________________ Michelle Marker, Secretary-Treasurer___________________________________Ma Webster, President

ASSETS

ELECTRIC PLANT In Service - at cost $32,742,385 Construction Work in Progress 1,950,554 Subtotal $34,692,939

Less Accumulated Provision for Depreciation and Amortization 8,078,672 Net Electric Plant $26,614,267

OTHER ASSETS & INVESTMENTS Investments in Associated Organizations $7,996,965 Total Other Assets & Investments $7,996,965

CURRENT ASSETS Cash & Cash Equivalents $749,973 Accounts Receivable (less accumulated provision for uncollectible accounts of $560) 1,022,069 Materials and Supplies 340,959 Prepayments 53,109 Other Current Assets 703,369 Total Current Assets $2,869,479

DEFERRED DEBITS $68,403

TOTAL ASSETS $37,549,114

EQUITIES AND LIABILITIES

EQUITIES Patronage Capital $19,260,150 Accumulated Other Comprehensive Income (2,076,372) Other Equities 265,132 Total Equities $17,448,910

LONG-TERM DEBT USDA Rural Development $11,773,220 Cooperative Finance Corporation 3,168,427 Total Long-Term Debt $14,941,647

OTHER NONCURRENT LIABILITIES Accumulated Operating Provisions $3,253,586 Total Other Noncurrent Liabilities $3,253,586

CURRENT LIABILITIES Accounts Payable $1,108,947 Consumer Deposits 45,850 Other Current & Accrued Liabilities 523,559 Total Current Liabilities $1,678,356

DEFERRED CREDITS $226,615

TOTAL EQUITIES AND LIABILITIES $37,549,114

BALANCE SHEETAS OF DECEMBER 31, 2019

28.0 29.3

30.4

32.4

34.7

2015 2016 2017 2018 2019YEAR

Total Utility Plant

31.7 32.7

33.4

35.3

37.5

2015 2016 2017 2018 2019YEAR

Total Assets

16.7 17.1

17.7

18.6

19.3

2015 2016 2017 2018 2019YEAR

Total Patronage Capital

STATEMENT OF REVENUEFOR THE YEAR ENDED DECEMBER 31, 2019

OPERATING REVENUES $14,647,244 OPERATING EXPENSES Cost of Power $8,925,766 Distribution - Operation 1,044,525 Distribution - Maintenance 912,495 Customer Accounts Expense 315,374 Customer Service and Informational Expense 150,507 Administrative and General Expense 1,104,543 Depreciation and Amortization 910,838 Taxes 526,139 Other Deductions 6,617 Interest on Long-Term Debt 450,556 Other Interest Expense 1,140 Total Operating Expenses $14,348,500 Operating Margins Before Capital Credits $298,744 Buckeye Capital Credits 427,588 Other Capital Credits 19,525 Net Operating Margins $745,857 NONOPERATING MARGINS Interest and Dividend Income $35,461 Other Nonoperating Income 21,944 Total Nonoperating Margins $57,405 NET MARGINS $803,262

Power Cost 62% Admin/Gen 8%Operations 7%

Maintenance 6%Depreciation 6%

Taxes 4% Interest 3%

Cust. Accts. 2%Cust. Svc. 1%…

Other 38%

How Your Electric Dollar Was Spent in 2019

STATEMENT OF CASH FLOWSFOR THE YEAR ENDED DECEMBER 31, 2019

CASH FLOWS FROM OPERATING ACTIVITIES Patronage Capital or Margins $803,262 Depreciation and Amortization Expense 910,838 Loss from Disposal of Assets ___ (633,097) Total Funds from Operations $1,081,003 Accounts Receivable - Sale of Energy $167,702 Materials and Supplies (2,219) Other Operating Assets ____(615,504) (Increase)/Decrease in Operating Assets ($450,021) Accumulated Operating Provisions $1,122,052 Accounts Payable 146,278 Other Current and Accrued Liabilities 62,692 Increase/(Decrease) in Operating Liabilities $1,331,022CASH FROM OPERATING ACTIVITIES $1,962,004

INVESTMENT ACTIVITIES Utility Plant ($1,769,772) Construction Work-in-Progress (538,939) Other Property and Investments ___(117,497)CASH FROM INVESTMENT ACTIVITIES ($2,426,208) FINANCING ACTIVITIES Margins and Equities ($1,180,089) Long-Term Debt 1,320,280 Consumer Deposits (1,510 )CASH FROM FINANCING ACTIVITIES $138,681 CASH FROM ALL ACTIVITIES ($325,523)TOTAL CASH BEGINNING OF PERIOD 1,075,496 TOTAL CASH END OF PERIOD $749,973

114,383,377 115,396,626 112,226,588

122,657,235 120,023,127

2015 2016 2017 2018 2019

Kilowatts Sold