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Alpine, Wyoming

your cooperative newsletter

“Lower Valley is my energy cooperative.”

Jake & Jenny Ricks / Alpine

annual report 2015

energyEDGE

your annual report

your annual report 1 • conservation outline 4balance sheets 6 • statements of revenues 7 • election info 8insidethisissue

(continued on page 2)

This is an exciting time to be in the

energy business, especially as your locally

owned cooperative. As a cooperative we

have the built-in flexibility and incentive

to focus on low rates, reliability and

quality service to you, our members.

Because of that focus, Lower Valley

Energy has become an industry leader

in conservation, renewable energy, and

implementing initiatives to maintain

low rates. According to the National

Rural Utilities Cooperative Finance

Corporation (CFC), in 2014, Lower

Valley Energy maintained the enviable

position of having the lowest residential

electric rates of all electric cooperatives

in the country.

In 2014 Lower Valley Energy entered the

second year of its $153 million BPA

Prepayment Program to help support

upgrades to the federal hydro and

transmission system. In its entirety this

program will save our members an esti-

mated $17.8 million in reduced rates.

In 2014 alone, Lower Valley Energy

received net benefits of $1,847,052 from

the prepayment program. Lower Valley

Energy was one of only two utilities in

the Northwest to take advantage of this

unique financing opportunity.

As the financial statements included in

this annual report indicate, your coop-

erative is in excellent financial health.

Setting aside the BPA Prepayment

transaction, total assets are $149.8 mil-

lion, long-term debt is $64 million, and

net margins are $4.7 million on revenues

of $54.5 million. Electric equity has

grown to 60% and equity for the gas

division is 15%. This strong financial

position allowed us to return $2.8

million in patronage capital to our

members and invest $5.7 million in

system improvements.

Our employees have been very busy

maintaining and improving our elec-

tric and gas system to continue deliv-

ering safe and reliable energy to your

homes and businesses. Some of the larger

projects on the electric side included

upgrading and rebuilding our Freedom

substation and upgrading our East

Jackson substation. We also replaced

several miles of aging underground

cable to avoid future outages. In the gas

department we converted the first half

of Teton Village from propane to natural gas,

a huge feat that went smoothly. We also

expanded south from our Jackson office

to Evans Construction and WYDOT.

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news&views

Encouraging the wise use of our

resources continues to be a high prior-

ity at Lower Valley Energy. A major

shift in our conservation department

began in late 2014 and will be in full

swing by the time you read this. For the

last handful of years we have pushed

compact fluorescent light bulbs (CFLs).

We are very excited about bringing

LED light bulb technology to Lower

Valley Energy members. The latest LED

technology is even more efficient and

longer lasting than CFLs, turns on

instantly (versus a warm-up period),

and contains no harmful mercury. It’s

the perfect light bulb, except in the

price department.

Looking ahead, your cooperative is

involved in several new projects. We

entered a management agreement with

Beartooth Electric Cooperative (BEC)

in Red Lodge, Montana. By providing

management services to BEC we will

be able to reduce our overheads—yet

another tool to help us maintain low

rates. We also added another 5 MWs of

wind power from the Horse Butte Wind

Project near Idaho Falls. Lower Valley

Energy was paid $4.2 million from the

City of Eagle Mountain, Utah to assume

their share of the project. The city was

in the process of selling their electric

utility to Rocky Mountain Power which

created this unique opportunity for

Lower Valley Energy.

It is Lower Valley Energy’s mission to

provide our members with safe, reliable

service at competitive rates. Thank you

for the opportunity to serve on your energy

cooperative Board at this important time

in Lower Valley Energy’s history. Lower

(continued from page 1) Valley Energy exists to help make your

future bright. We always welcome your

comments and suggestions.

Please join us at the 2015 Annual

Meeting which will be held on June 25,

2015, at 6pm in our Jackson office. We

invite you to participate in the Board

Election by voting with the mail-in

ballot sent to your home, or by voting

in person at the Annual Meeting.

1. Report on the number of members present in person and by proxy in order to

determine the existence of a quorum.

2. Read the notices of the meeting and proof of due publication or mailing thereof,

or the waiver of notice of the meeting, as the case may be.

3. Read unapproved minutes of previous meeting of the members and take

necessary action thereon.

4. Officers’ presentation and consideration of reports and guest speakers.

5. Election of board members for districts 3 and 4.

6. Unfinished business.

.7. New business.

8. Adjournment.

Please join us for this special event!

You’re Invited to Lower Valley Energy’s Annual MeetingThursday, June 25, 2015 at 6:00pm (Registration begins at 5:30pm)

Lower Valley Energy Jackson OfficeAll members of Lower Valley Energy are invited to attend.

AgEndA

Incandescent HalogenCFLLED

750-2,000 35,000-50,000 8,000-10,000 3,000-4,000

100 W 16-20 W 23-26 W 70-72 W

75 W 9-13 W 18-20 W 53 W

60 W 12 W 13-15 W 43 W

40 W 8-9 W 10-11 W 28-29 W

LED Lifetime CharacteristicsCompare and contrast the lifespan and power consumption for the available light bulb options.*Source: energy.gov

Power Consumption

Lifespan (hours)

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unclaimed patronage capitalPatronage capital is a hallmark of the

cooperative model and is equity or own-

ership in your cooperative. Essentially,

revenues in excess of operating costs

and expenses build your equity. There

are current and former members who

have unclaimed patronage capital

checks on file that we would like your

help in finding. Please go to www.

LVEnergy.com (My Account>Unclaimed

Patronage Capital) to see the most

current list.  

Co-op Connections Card Ending

in partnership with

CHOOSETOREDUCE.ORG | (307) 732-85155 YEAR LOAN AVAILABLE TO LOWER VALLEY ENERGY CUSTOMERS

MAKE YOUR HOME MORE EFFICIENT WITH OUR HOME ENERGY FINANCING

CONTACT OUR ENERGY EFFICIENCY TEAM TO SET

UP YOUR HOME AUDIT

COMPLETE YOUR PROJECT AND SUBMIT

YOUR APPLICATION

PAY BACK YOUR PROJECT COSTS ONE UTILITY BILL

AT A TIME WITH A LOW OR NO INTEREST LOAN

We regret to announce the end of the Co-op Connections Card program. Due to the

expense of administering the program, we feel it is in the best interest of all Lower Valley

Energy members to withdraw from the program. We apologize for the inconvenience.

Please contact BrianT@LVEnergy.com with questions and/or concerns.

co-op connections card program to close

Sign up for 100%

... and receive enoughLEDs to convert your whole house.*

* 74 LED light bulbs of varying sizes. Must be for a 1-year committment to Lower Valley Energy’s Green Power program.

Call our office today for more information!

Afton 885-3175Jackson 733-2446

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energy auditsWould you like to know if there are improvements that you can make for a more energy-efficient home? An Energy Audit consists of measur-ing the energy efficiency in your home and recommending cost-saving enhancements for more effective use of energy. The cost of an energy audit is $100 (for homes up to 3,000 sq. ft., and $200 for larger homes), however, this amount will be refunded if you choose to implement any of the recommended changes OR if Lower Valley Energy finds that no improvements are needed. Call to schedule your audit now with one of our energy specialists and let us help you save money and increase your comfort.

In an effort to help you use energy wisely, Lower Valley Energy is

currently offering a variety of innovative conservation programs.

Through these programs, our goal is to help you save money and

improve the efficiency and comfort of your home.

home weatherization incentivesIncentives Expire 09-30-2015In addition to a thorough Energy Audit conducted by Lower Valley Energy, we are offering generous financial incentives on home weatherization improvements if your primary heat source is electricity (insulation upgrades, window replacement & digital thermostats). Energy Audits help you identify energy saving opportunities and our Home Weatherization Incentives will help you pay for them! We must inspect before work begins in order to qualify.

energy star ® appliance rebate programIncentives Expire 09-30-2015Are you planning to replace that old washing machine or freezer? Choose a qualifying Energy Star® appliance and we will give you a rebate! Simply bring your Energy Star® appliance receipt and owner’s manual to our office for the following rebates:

Energy Star® Clothes Washer (DHW must be electric)MEF 2.46 or higher $50.00MEF 2.20-2.45 $35.00MEF 2.00-2.19 $25.00Energy Star® Clothes Washer (DHW any other fuel) $15.00Energy Star® Freezer $15.00Recycled Refrigerator (must be in working condition) $75.00

Water Heaters – Incentives Expire 09-30-2015Water Heaters 25-54.99 gallon (0.94 MEF) $15.00Water Heaters 55-74.99 gallon (0.93 MEF) $15.00Water Heaters 75-99.99 gallon (0.92 MEF) $15.00Water Heaters 100-119.99 gallon (0.85 MEF) $15.00

Must present receipt for rebate.

refrigerator/freezer recyclingIncentives Expire 09-30-2015

We will pay you to dispose of your old refrigerator or freezer. Just take your

old refrigerator or freezer to your local refuse facility for proper disposal,

provide us with a copy of a receipt from the refuse facility and we will pay

you $75. It’s that easy. (We must have a copy of the disposal receipt.) One

per customer. Recycled appliance MUST be in working condition.

Unloading oUr

second fridge

helped Us stock Up

on groceries.

that old, empty beast

was costing us money

on our electric bill, so we

kicked it to the curb for

recycling. find out what

you can do at by calling

us today or visiting www.

lVenergy.com.

energy star® manufactured homesManufactured homes must be electrically-heated, new and designed, constructed and certified by the Northwest Energy Efficient Manufactured (NEEM) Homes program as ENERGY STAR, including Eco-Rated Homes. $1,000.00 rebate

NEW! HIGH PERFORMANCE Manufactured Homes. Manufactured homes must be electrically-heated; new; and designed, constructed and certified by NEEM as HIGH PERFORMANCE Manufactured Homes. $3,150.00 rebate

residential LED lighting rebate program—new!Lower Valley is offering rebates on new Energy Star® rated LED lights for your home.

Over the Counter Rebate: $3.00 per bulb, $7.00 per LED down light retrofit kitDirect Install Rebate (Requires Inspection): $5.00 per bulb, $7.00 per LED down light retrofit kit

Must have original receipt and Energy Star® documentation to qualify.

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revenue & expense consolidated year ended December 31, 2014

Electric Resistance

Natural Gas Furnace

Propane (LVE Distribution)

Propane Tank Rate (Teton Co)

Propane Tank Rate (Star Valley)

Fuel Oil

$14.94

$13.56

$17.63

$23.38

$23.38

$20.21

Heating Cost per MMBTU

All fuel types units converted to BTUs $0 $10 $20 $30 $40 $50 $60 $70

Lower Valley Energy, Inc. by the numbers

where the money came from

commercial 41%

residential 51.9%

large industrial 3.6%

industrial 2.8%irrigation 0.4%

other 0.3%

where the money went

power & gas costs48.9%fixed expenses

26.9%

variable expenses 17.7%

operating margins 6.5%

cumulative percentage of capital retired as a percentage of total patronage capital

41.78

25.24

30.60

20.41

32.57

40

35

30

25

20

15

10

5

0

Similar Size BPA CustomersWyomingU.S.LVE

natural gasLower Valley Energy has teamed up with

Rinnai to give you an exceptional deal

that will keep you warm in the winter.

We offer Rinnai space heaters at a special

discounted price (from $1,420 to $2,120)

that includes full installation. We stand

by our natural gas Rinnai heaters that lead

the industry in comfort, safety, and energy-

saving features. This offer only good in

those areas where we provide natural gas

or propane service.

commercial, industrial, municipal & agricultural lighting offer After completing a commercial lighting audit, Lower Valley Energy can determine energy savings and incentive dollars to help you convert to new energy- efficient lights.

commercial, industrial, municipal, & agricultural energy conservation incentivesThere are financial incentives available through Lover Valley Energy to help with the cost of efficiency upgrades to build-ings, electrical systems, and equipment. If we can prove annual kWh savings by upgrading to energy efficient systems or equipment, LVE can provide financial incentives.

Many Commercial, Industrial, Municipal, and Agricultural efficiency opportunities are complex, involve site-specific installa-tions or interaction between energy consuming systems in a building. These opportunities include, but are not limited to, HVAC, shell measures, existing build-ing commissioning, variable frequency drives (VFDs), and high performance new building design.

Please contact Lower Valley Energy for specific details on custom commercial, industrial, municipal, and agricultural projects.

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Lower Valley Energy, Inc.

balance sheets December 31, 2014 and 2013

2014 2013 assets

NON-CuRRENt AssEts Net utility plant $127,448,921 $128,085,596 Other Assets and Investments 4,865,868 4,637,330 Prepaid power, to be amortized after one year 133,270,603 140,811,516 Total non-current assets 265,585,392 273,534,442 CuRRENt AssEts Cash and cash equivalents — 698,784 Restricted cash and cash equivalents 1,123,737 1,388,815 Accounts receivable, net 5,948,281 5,894,621Materials and supplies inventory 1,482,948 1,627,186 Other current assets 2,924,453 2,964,182 Prepaid power, to be amortized within one year 7,540,913 7,205,685 Total current assets 19,020,332 19,779,273 Deferred charges 6,055,390 1,475,030 Total assets $290,661,114 $294,788,745

MeMBeRs’ eQUItY aND LIaBILItIes MEMBERs’ EQuItY Patronage capital $57,524,325 $57,236,954 Other equities 16,283,003 14,622,432 Total members’ equity 73,807,328 71,859,386 NON-CuRRENt LIABILItIEs Long-term debt, due after one year 193,995,060 200,273,361 Total non-current liabilities 193,995,060 200,273,361 CuRRENt LIABILItIEs Long-term debt, due within one year 10,529,572 9,658,403 Line of credit 2,533,186 2,938,406 Accounts payable 3,172,956 3,455,536 Consumer deposits 557,727 564,486 Other current and accrued liabilities 3,168,934 3,065,274 Total current liabilities 19,962,375 19,682,105 Deferred credits 2,896,351 2,973,893 Total members’ equity and liabilities $290,661,114 $294,788,745

financials

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2014 2013 OPERAtING REVENuE Electric operating revenue $42,950,671 $42,493,662 Gas operating revenue 11,540,020 10,382,648 Total operating revenues 54,490,691 52,876,310 OPERAtING EXPENsEs Cost of Purchased Power and Gas 26,626,083 25,125,452 Transmission Expense - Operation and Maintenance 649,200 693,692 Distribution Expense - Operation 3,469,265 3,735,991 Distribution Expense - Maintenance 1,458,307 1,193,725 Consumer Accounts Expense 900,556 873,247 Customer Service and Information 336,564 431,324 Administration and General Expense 2,817,268 2,923,943 Depreciation Expense 5,834,014 5,660,286 Taxes - Property and Gross Revenue 733,139 725,984 Total operating expenses 42,824,396 41,363,644 Operating margins before finance charges 11,666,295 11,512,666 FINANCE CHARGEs Interest on long-term debt 7,122,899 6,252,945 Other interest expense 34,375 90,175 Total finance charges 7,157,274 6,343,120 Net operating margins 4,509,021 5,169,546 NON-OPERAtING MARGINs Investment Income 97,630 78,273 Gain on Sale of General Plant 44,397 — Patronage Capital Credits from Other Cooperatives 1,040,586 (406,281)Other Non-Operating Margins, Net (956,330) 164,630

Total Non-Operating Margins 226,283 (163,378) Net Margins $4,735,304 $5,006,168

Lower Valley Energy, Inc.

statements of revenues, expenses and patronage capitalfor the years ended December 31, 2014 and 2013

Your cooperative continues to grow and remain financially strong. Net margins exceeded $4.7 million and were used for system improvements, repayment of debt principal, and retirement of patronage capital. A complete copy of our audited financial statements can be obtained from either of our offices.

the newsletter fromyour energy cooperative

www.LVEnergy.com

email LVEnergy@LVEnergy.com

Afton236 N. WashingtonP. O. Box 188Afton, WY 83110Phone 307.885.3175Fax 307.885.5787

Jackson4000 S. Hwy 89P. O. Box 572Jackson, WY 83001Phone 307.733.2446Fax 307.739.1610

Board of Directors

Linda SchmidtChairman

Rod R. Jensen Vice-Chairman

Nancy WintersSecretary / Treasurer

Fred BrogPeter L. CookTed LaddDean S. Lewis

Staff

James R. WebbPresident / CEO

Rick KnoriDirector of Engineering

Martell BrowerDirector of Gas Operations

Bill SpauldingDirector of Electric Operations

Wade HirschiChief Financial Officer

Brian TanabeMarketing/CommunicationsManager

Angie JenningsStaff Assistant

236 North WashingtonAfton, WY 83110

4000 South Hwy. 89Jackson, WY 83001

election processBe sure to vote by proxy (or in person at our annual

meeting at our Jackson office) by June 25, 2015

for our Board of Director positions. As a Lower

Valley Energy member you can vote for EVERY

district election. Directors of Lower Valley Energy

are elected to the board by the membership for a

3-year term.

districts up for election DIstRIct No. 3 comprises all areas north of County Road 119, east of Highway

89 through Alpine Junction and includes Hoback Junction north to Little

Horsethief Canyon as well as the Bondurant and Green River Lakes area.

DIstRIct No. 4 comprises all areas north of the Teton/Lincoln County

boundary and west of Highway 89 and Fall Creek, consisting of Crescent H Guest

Ranch and Indian Paintbrush. Grand Teton National Park serves as the northern

boundary, including Wilson, Teton Pines, John Dodge and Teton Village.