2014 Annual Report - Northwestern REC · 2018-04-11 · $5,000 donation toward the creation of warming centers throughout Northwestern Pennsylvania. A $5,000 CoBANK grant was awarded

2014 Annual Report

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Northwestern Rural Electric Cooperative, Inc.

YOUR COOPERATIVE had anotherstrong financial year in 2014. Electricrevenue was enhanced by strong salesduring the cold weather in the firstquarter stemming from the “polar vor-tex.” Margins for the year were about$2,600,000. This enabled your co-op toreturn $500,000 in capital credits pay-ments to you based upon your patron-age. The strong margins also enabledfunding for improvements to your elec-tric plant. Approximately $4.3 millionwas invested in the plant during theyear. Wholesale power prices from ourcooperative’s power supplier, AlleghenyElectric Cooperative, Inc., continued tobe stable in 2014. Your cooperative’sboard and management team devel-oped plans and strategies to operateyour co-op while maintaining afford-ability for you, the member. Your retailelectric rate continued to be competi-tive and one of the most reasonableenergy values in our area.

The cooperative has embarked on anextensive line improvement programdesigned to improve reliability. Thisproject has been ongoing for about thelast 30 years. The project includesreplacing the old copper conductorwith new aluminum wire that isstronger and can withstand theextreme weather conditions that are acommon occurrence here in North-western Pennsylvania. This new con-ductor is more efficient and reducesline loss, helping to keep your electricrates affordable. During the process ofmaking the upgrades, the cooperativealso takes the opportunity to move thelines closer to the road. This allows ourlinemen to maintain the electric linesutilizing bucket trucks, which givethem ease of access to the facilities.This means outage time is reducedbecause linemen do not have to carryheavy equipment and walk throughlengthy rights-of-way to remote areasto make repairs. Reliability is one ofour main objectives. We are takingadvantage of low interest rates andreinvesting in our facilities to provideyou with world-class service.

The winter of 2014 was one ofextreme weather. In January, peakdemand for electricity was 25 percenthigher than in a typical January. Therewas heavy electrical demand for heat-ing due to the polar vortex, whichbrought record cold temperatures. PJMInterconnection — the electric gridoperator for this area — reported tightoperational conditions from Jan. 6-8,2014. Voluntary demand response sys-tems like our load management systemwere called upon twice on Jan. 7 to cur-tail load. For those who participate inload management, this meant that theirelectric water heaters and electric heatwere shut off during the control peri-ods. These voluntary systems like ourload management program were verysignificant in helping PJM Interconnec-tion manage the grid during this peakevent. Your cooperative’s load manage-ment continues to be one of our keyprograms. Not only has the load man-agement program saved all of ourmembers about a $1 million in power

costs during 2014 by lowering demandduring peak periods, it is a real valueto the participants. Members who par-ticipate agree to allow the cooperativeto control or shut off their hot watertank or controlled heat during peakevents. Members participating in thehot water heater program also benefitby 24/7 hot water heater servicing witha free tank replacement as needed.Members with controlled electric heatbenefit from shared savings and areduction in their heat rate. If you areone of the 9,000 members on our loadmanagement program, we would liketo thank you for making a real impact,especially during last winter’s polarvortex.

In late 2014, your cooperative’semergency plan was put to the test. Inthe evening hours of Nov. 5, 2014, whatappears to be a random act of violenceoccurred at our Edinboro West Substa-tion. A round of bullets from a highpowered semiautomatic rifle was firedat the 10-MVA substation transformer

2014 Executive Report —Board Chair/President & CEO

Mary A. Grill,President & CEO

Kathryn J. Cooper-Winters,Board Chair

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in service at Edinboro West. Thiscaused extensive damage, and whenour crews arrived on the scene theyfound mineral oil leaking from severalsmall holes in the large substationtransformer. Our fear was that thedamaged unit would overheat andthreaten fire. Had it not been for theswift actions of our highly trainedengineers and linemen, the situationwould have escalated to a serious sce-nario. Utilizing our advanced, high-tech equipment, our engineers and linecrews were quickly able to mitigateand respond to the accident. Ourcrews were able to manually transferthe electric load to an alternate loca-tion. Fortunately, your cooperativeinvested in a mobile substation manyyears ago. This equipment has beenkey to us over the years and was usedto minimize outage time for membersin the area until repairs could bemade. The leaking oil was confinedand we immediately began to remedi-ate the site. I am pleased to tell you thestate Department of EnvironmentalProtection (DEP) approved the reme-

diation of the site on April 3, 2015. Weachieved the standard as set forth inAct 2 and the site attained a residentialstandard for soil. Law enforcementcontinues to investigate the incident.Thankfully, the loss was primarily cov-ered by insurance. Therefore, it hadminimal impact on your 2014 financialstatements. The silver lining in thisevent is that it demonstrates our levelof preparedness for emergencyresponse. Your linemen work in themost challenging of conditions, andare true first-responders, always mind-ful of public safety. The managementand board of your co-op are proud ofthe work of our Engineering andOperations Department, and this isanother fine example of their commit-ment to keeping the lights on.

One of our most important initia-tives during the past year was todevelop a succession plan for ourorganization. Your cooperative is a per-petual organization. We celebrated our78th anniversary in 2014, and will behere to serve our members for manyyears into the future. Like many

organizations, we arefaced with a large wave ofretirements in the nextfive- to 10-year period asthe Baby Boomer genera-tion prepares to retire.Many of our senior andexperienced employeeswill be leaving the organi-zation as they move intotheir retirement years. In2014, your cooperativeimplemented a reorgani-zation plan to prepare forthe future. We have a newcompetent staff in place,and an extensive multi-faceted training programhas been developed tomake certain our youngemployees will be pre-pared to take leadershiproles when the timecomes. I can assure youthat your cooperative willbe prepared to face thechallenges of the future.

Please accept this per-sonal invitation to you and your familyto help us celebrate our 79th year.

Our annual meeting will be held atthe Crawford County Fairgrounds onSaturday, Aug. 1. The fairgrounds openat 10 a.m. and we have a lot of funthings and great food planned for thewhole family. Our cooperative businessmeeting is at 1 p.m., and there will bean election of three members to repre-sent you on the board for a three-yearterm. Come join us for a day of co-opfellowship. This is your opportunity toexercise your democratic control — oneof the seven principles that has servedyour cooperative’s business model wellfor the past 78 years.

Kathryn J. Cooper-WintersBoard Chair

Mary A. GrillPresident & CEO

MARY AND HER VPS: from left, Ken Lindberg of human resources, Thomas Dimperio of IT, Mike Baker of finance, DanielleHaschalk of accounting, Mary Grill, Bradley Smith of member services, Kevin Hindman of operations/engineering, MichelleGarcia, executive secretary, and Linda King of communications and energy solutions.

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Northwestern Rural Electric CooperativeAssociation, Inc. and Subsidiaries

The financial statements of the cooperative for the year 2014 has been audited by Buffamante Whipple Buttafaro,P.C., Jamestown, New York. The audit resulted in a cleanopinion stating that the financial statements presentedfairly, in all material respects, the financial position of thecooperative and subsidiaries as of December 31, 2014, and results of their operations and cash flows for the years ended in accordance with accounting principles generally accepted in the United States of America.

The auditor’s complete report is on file in the office of thecooperative and is available for inspection by the membership.


Northwestern Rural Electric CooperativeAssociation, Inc. and Subsidiaries

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Northwestern RECQuick Facts


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Statistics & Trends

EVERY JULY,we take time to reflect on our country’s history andremember how the actions of a few helped shape the way we livetoday. In the same way, we can look back on the rich history of theelectric cooperative movement, and how some determined individ-uals working together were able to improve their quality of lifeand the quality of life for all those who would come after them.

Every day, Northwestern REC members and employees payhomage to the legacy of our cooperative founders. And,because we are a part of an electric cooperative, we know wehave the power to impact our present and shape the future,just like those who came before us. Through grassroots advocacy efforts, we help influence pol-

icy decisions that will affect our communities now and for yearsto come. We are the catalyst for change in our communities. Weleverage our collective power to get things done. For example, in

December 2014, the Northwestern REC Board of Directors made a$5,000 donation toward the creation of warming centers throughoutNorthwestern Pennsylvania. A $5,000 CoBANK grant was awardedto double those funds to $10,000.We work together, partnering with other co-ops, local businesses

and community organizers to achieve economic development goals —creating better opportunities and improving the quality of life for ourfamilies and communities just as our founding co-op members did.Today, the Co-op Connections Card has saved over $135,500 in pre-scription costs since 2011.We understand that the decisions we make today could greatly

affect how future generations live, so we invest in energy-efficiencyprograms that protect our future generations while still providinghigh-quality, affordable electric power. Through the co-op’s loadmanagement program, over $21 million has been saved in avoidedpower costs since 1985; nearly $1 million was saved in 2014alone.

Cooperatives are helping to build the next generation of lead-ership through our Rural Electric Youth Tour program thatsends high school students to Washington, D.C., to meet withlawmakers and get an up-close view of how our governmentfunctions. Youth Tour participants leave our nation’s capitalfeeling energized. It inspires them to make a difference in theircommunities and gives them a new perspective. Youth Tourprovides young people from our communities with an opportu-nity they may otherwise have never known. All of these things, plus so much more, are what make up the

cooperative difference. This Fourth of July, as we think about thefuture of electric cooperatives and how we will continue to shapeour country and our society, Northwestern REC remembers

what it took to bring power to our communities and let the determi-nation of those who came before us guide us.

Liberty and a better life for all


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CO-OP ENGINEERING & FIELD SERVICES: The Engineering, Operations and Field ServicesDepartment is responsible for right-of-way clearances, new construction, line relocations,outdoor lighting and safety hazard awareness. From left: Connie Sovisky, Amy DeWoody,Amanda Rhoades, Chuck Hickernell, Steve Miller, Bob Joslin, Ryan Meller, Jeff Kachik, LauraRoggenkamp, Brian Thompson, Rob Burns and Steve Kargol.

CO-OP MEMBER SERVICES: The Member Services Department handles everything from newmembership applications to billing and payment questions. Capital credits and paymentassistance are also handled by this department. Front row from left: Matt Stroup, Kati Miller,Kim Zombeck and Bradley Smith. Back row from left: Leslie Burton, Jill Glunt, Jane Brown,Melissa Newhard, Brenda Dugan and Gerda Frazier.

Loyal connections

Who answers your questions at the co-op?

LOYALTY IS a prized virtue — to country, fam-ily, even the schools we attend. We keep thoseties strong throughout our lives.We at Northwestern REC also have loyalties

— to the members and communities we serve.We have deep connections here because North-western Pennsylvania is our home, and you areour neighbor.When you signed up for service with North-

western REC, you became a member, not a cus-tomer —because each of our 20,000 consumer-members owns a portion of the cooperative.That means we care about improving the

quality of life in the areas we serve. From spon-soring the scoreboard at the high school foot-ball stadium to taking donations for the localfood bank, Northwestern REC invests in theplaces where you live and work.Northwestern REC doesn’t exist to make

profits for distant investors on Wall Street. Weexist to provide you with safe, reliable, andaffordable electric service — and we are doingso in a way that makes things better for futuregenerations. Because electric co-ops operate ona not-for-profit basis, we have no need toincrease revenues above what it takes to runour business in a financially sound manner.This structure helps keep your electric billsaffordable.We take our jobs seriously, but we also take

our community roles seriously. That’s why weoffer scholarships to college-bound students,and offer hands-on teacher grants to our localeducators. Through our Clearly BrighterTeacher Grant program, over $42,600 has beenawarded in teacher grants since the programbegan in 2000.We don’t participate in these activities sim-

ply because it’s nice to do, or even the rightthing to do. We do it because we remain loyal toour members, our neighbors, our home — anda mission to make life better in the areas weserve.

Co-ops change lives in the communities they serve


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William (Jack) ShefferDistrict 1

Jesse (Earl) KoonDistrict 2

Board Treasurer

Roger FollettDistrict 3

Robert AgnewDistrict 4

Kathryn Cooper-WintersDistrict 5Board Chair

Kim DocterDistrict 6

David RectenwaldDistrict 7

Board Vice-Chair

Bob DavisDistrict 8

Larry ProperDistrict 9

Board Secretary

Lanny RodgersDistrict 10

NRECA Director

Your board of directors

NORTHWESTERN Rural Electric Cooperative is guided by a board of 10 direc-tors (pictured left), one from each of the 10 districts within its service territory.Although each director is a member from his or her district, the entire co-opmembership votes the directors into office through the election process heldduring the annual meeting. Director terms last for three years.

Who is your director?

District 1— Springfield, Conneaut, Girard, Elk Creek, Fairview, andFranklin townships, and Platea Borough in Erie County; and Monroe andConneaut townships in Ashtabula County.

District 2— McKean, Washington, Waterford, and LeBoeuf townships, andEdinboro Borough in Erie County.

District 3— Amity, Union, Wayne, and Concord townships, and Elgin andUnion City boroughs in Erie County; and Spring Creek Township in WarrenCounty.

District 4— Beaver, Spring, Conneaut, Summerhill, Summit, Sadsbury, andPine townships, and Conneautville Borough in Crawford County; and Rich-mond and Pierpont townships in Ashtabula County.

District 5— Cussewago, Hayfield, Venango, Cambridge, and Woodcocktownships, and Woodcock and Saegertown boroughs in Crawford County.

District 6— Rockdale, Richmond, Bloomfield and Athens townships inCrawford County.

District 7— Sparta, Rome, Oil Creek, Steuben, and Troy townships, andCenterville Borough in Crawford County; and Southwest and Eldred town-ships in Warren County.

District 8— East Fallowfield, Vernon, Greenwood, Union and Fairfieldtownships in Crawford County.

District 9— West Mead, East Mead, East Fairfield, and Randolph town-ships, and Blooming Valley Borough in Crawford County.

District 10— Wayne Township in Crawford County; Jackson, Plum, Oak-land, Cherrytree, and Canal townships in Venango County; and FrenchCreek Township in Mercer County.

Safety is our core valueNORTHWESTERN REC places the safety of our employees, our members,and our community as the primary focus to direct and guide our actions.The co-op has a Safety Committee that meets monthly to review any safetyincidents and to direct our employees’ efforts toward safe work practices atwork and at home.In 2014, Northwestern REC had 18 safety incidents, four of which were

lost-work time incidents comprising 87 days of lost work time. Incidentsranged from twisted knees to strained backs and minor fender benders.

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What do the Declaration of Independence, rural electric cooperatives have in common?WHEN BENJAMIN FRANKLIN signed the Declaration of Inde-pendence, he is credited with saying, “We must, indeed, all hangtogether, or most assuredly, we shall all hang separately.” Thatrecognition of the need to work together may also be whyFranklin, in 1752, founded the first successful cooperative in theUnited States, the Philadelphia Contributionship for the Insuranceof Houses from Loss by Fire, which still operates today. The principles behind the Declaration of Independence that

form the basis of American democracy also form the basis ofcooperatives. A cooperative is owned and democratically con-trolled by the people who use its services. Each member has onevote regardless of their stake; that is, some members cannot buymore control than anyone else. This stands in stark contrast toinvestor-owned businesses where only shareholders have a vote inhow the business is run; and even among shareholders, somehave more votes than others depending on their shares of stock.The Declaration of Independence declared the equality of rights

of its citizens and that people had the right to organize to securetheir futures when their rights were infringed upon. At the timethe Declaration of Independence was written, democracy was apretty untested idea — but the founders of our country weredetermined to make it work.So when you celebrate the many liberties and rights we enjoy

with our families and friends this year, think about those princi-ples that inspired the Founding Fathers. They also inspired thepioneers who established electric cooperatives — folks who weredetermined to provide safe, reliable and affordable power tosecure the futures of rural communities. Northwestern REC has always operated under the principles of

democracy, and we are dedicated to fulfilling that promise as weserve members today and in the future.

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Michael Sample, District 3 nomineeMike Sample has been a member of the Northwestern REC since 1994. He is the

owner of The Titusville Herald and The Forest Press of Tionesta, Pa. Mike is also a co-owner of The Corry Journal, a family-owned local newspaper. As a businessowner in an industry that has experienced tremendous challenges, Mike adapts tochange very well. Mike graduated from Penn State Erie, The Behrend College, witha bachelor of science degree in management in 1989. He has worked at daily andweekly newspapers in Pennsylvania, New York, and Alabama, and has 30 years ofexperience in the newspaper industry.

Mike has always called Northwestern Pennsylvania home. He is an active mem-ber of the Titusville Rotary Club, where his service includes cleaning up the commu-nity and helping decorate Titusville during Christmas. His dedication to helping thearea does not end there. Mike has served as the campaign chair of the TitusvilleUnited Way and currently serves as the 2015 campaign vice chairman, helping raisemoney through donation work for local nonprofit agencies.

In the past, Mike has helped regional businesses grow and prosper as a memberof the Titusville and Corry Area Chambers of Commerce boards. Mike loves sportsand giving back to the community, which is why he has also volunteered as a youthbaseball coach.

Mike and his wife, Debbie, and their children are members of Christ Our HopeParish in French Creek, N.Y. They live outside of Corry on their farm.

Roger Follett, District 3 incumbentRoger Follett’s first term as Northwestern REC board director began in 1985. He

has fulfilled the requirements for National Rural Electric Cooperative Association(NRECA) Director Certification. A co-op member for nearly 50 years, he has servedas supervisor and township auditor, and is a member of the Wattsburg HistoricalSociety. He graduated from Corry High School in 1949 and served three years in theUnited States Air Force. In 1952, he returned home to take up farming with hisfather. He continued dairy farming until 1978, when he went into the security field.Follett and his wife, Janet, have four children, five grandchildren and one great-granddaughter.

You and the other members at the Northwestern REC Annual Meeting elect your board of directors on a rotating basis. This year,directors from Districts 3, 5 and 10 are up for election. Nominating meetings were held in each of the districts during April. The memberswho attended these meetings nominated people they believed met the qualifications necessary to be a director of Northwestern REC.The following biographical sketches will familiarize you with the candidates.

Know the nominees

Michael Sample17495 Buffalo RoadCorry, PA 16407

Roger Follett12209 Follett RoadCorry, PA 16407

District 3 — Amity, Union, Wayne, and Concord townships, and Elgin and UnionCity boroughs in Erie County; and Spring Creek Township in Warren County.

at the Annual MeetingSaturday, August 1

Crawford County Fairgrounds

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You and the other members at the Northwestern REC Annual Meeting elect your board of directors on a rotating basis. This year,directors from Districts 3, 5 and 10 are up for election. Nominating meetings were held in each of the districts during April. The memberswho attended these meetings nominated people they believed met the qualifications necessary to be a director of Northwestern REC.The following biographical sketches will familiarize you with the candidates.

Know the nominees

Lanny R. Rodgers, District 10 incumbentLanny Rodgers retired as a regional manager for the Pennsylvania State Employ-

ees’ Retirement System. He served in the United States Marine Corps from 1962 to1966. He is a former director of the Franklin YMCA, and is an active member of theFranklin BPO Elks Lodge No. 110, the Cochranton American Legion, and theNational Association of Watch and Clock Collectors.

Rodgers was first elected to the board of directors at Northwestern REC in 2000.He has served as board vice president, and as Northwestern REC’s representative onthe Pennsylvania Rural Electric Association Board of Directors from 2005 to 2014.He presently represents the Pennsylvania cooperatives on the National Rural Elec-tric Cooperative Association board. He is also a Credentialed Cooperative Directorand Board Leadership Director. He also serves on the board of directors for theCochranton Area Redevelopment Efforts.

Rodgers and his wife, Georgia, have two children and five grandchildren. Theyhave resided in the Carlton/Cochranton area for over 30 years.

Kathryn Cooper-Winters, District 5 incumbentKathryn Cooper-Winters, first elected to the board in 1988, is currently serving

her 15th year as board chair. She previously served as the board treasurer for 11years and has met the requirements for NRECA Director Certification. She is theboard representative to the Allegheny Electric Cooperative, Inc. Board of Directorsin Harrisburg. She currently serves as the Allegheny Electric Cooperative, Inc. boardvice chairman, and has in the past served as board treasurer.

Cooper-Winters was employed by Northwestern REC as a communications spe-cialist for eight years before working as a farm consultant with Agway, Inc. In 1984,she set up her own accounting and tax business with her father, the late Jess G.Cooper, a retired Pittsburg State University professor.

Since retiring after the 2008 tax season, Cooper-Winters has been spending moretime watching grandsons play sports and enjoying her hobbies of quilting and gar-dening. She is also a member of the Saegertown United Methodist Church, whereshe serves on the Finance Committee. She also volunteers for the local food pantry.

Cooper-Winters is married to William R. Winters Sr. and has one son, five step-children, two grandsons and nine step-grandchildren. She has been a co-op memberfor 30 years.

Kathryn Cooper-Winters17197 State Highway 86Saegertown, PA 16433

Lanny R. Rodgers159 28th Division Highway

Carlton, PA 16311

District 5 — Cussewago, Hayfield, Venango, Cambridge, and Woodcocktownships; and Woodcock and Saegertown boroughs in Crawford County.

District 10 — Wayne Township in Crawford County; Jackson, Plum, Oakland,Cherrytree, and Canal townships in Venango County; and French CreekTownship in Mercer County.

at the Annual MeetingSaturday, August 1

Crawford County Fairgrounds

As an electric co-op member, your household has a say in how the co-op is run. Which helps you care for an even bigger family – your community. Learn more about the power of your co-op membership at TogetherWeSave.com.

EVERY MEMBER HAS A VOICE.EVEN THE ONES WHO CAN’T YET SPEAK.

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Northwestern Rural Electric Cooperative Association, Inc.22534 State Highway 86

P. O. Box 207Cambridge Springs, PA 16403-0207

1-800-352-0014Emergencies/outages: 1-800-474-1710Northwestern REC fax: 1-814-398-8064

www.NorthwesternREC.coopOffice Hours Monday-Friday 7 a.m. – 3:30 p.m.

Documents

2014 Annual Report - Northwestern REC · 2018-04-11 · $5,000 donation toward the creation of warming centers throughout Northwestern Pennsylvania. A $5,000 CoBANK grant was awarded