Sustaining the Success of Your Cooperative: 2016 Annual Meeting

Aug. 12, 2016

REC's Annual Meeting took place Aug. 11 at the Fredericksburg Conference Center. Over 6,300 Cooperative members participated either in person or by proxy. Those present received, from REC's leadership, a review of the past year, updates about the Cooperative's financial strength, and a preview of plans for the future.

At the Annual Meeting, members voted on candidates for election to REC's Board of Directors. J. Mark Wood of Louisa was elected to be the director from Region V, filling the position previously held by retiring director Frank B. Boxley. Wood was one of six candidates for that position. Three unopposed incumbent directors were re-elected to the Board: Thomas T. Grady of Fauquier, Region II; Linda R. Gray of Caroline, Region VIII; and Michael W. Lindsay of Frederick, Region XI.

"In 2015, REC continued to focus on our mission of providing you with safe, affordable, reliable electricity," said Darlene H. Carpenter, chairman of the Board of Directors, during her opening remarks. "This sounds like a tall order, but it is a challenge your Cooperative takes seriously; and in 2015, your electricity was on for 99.99 percent of the time." Meeting attendees responded with applause, showing their appreciation for REC's record-setting reliability during the previous year.

"Realizing your dreams is certainly easier when you can count on reliable electric service," continued Carpenter. "Whether it's powering your child's computer, the lights at your family farm or business or the appliances that make your lives more convenient, you can count on REC to be there."

"As the world evolves and our industry progresses, our focus stays the same - providing you with safe, affordable and reliable electricity," said Kent D. Farmer, REC's president and CEO, in his report to the members. "In addition to taking proactive steps to help reduce outages, we have also focused on keeping your electricity affordable."

Farmer explained that REC's two largest expenses are labor and wholesale power. Managing those costs has been a major focus. To address labor costs, REC has applied new technologies and organizational efficiencies, allowing the total REC workforce to be reduced through attrition over the past few years. At the same time, service levels have been maintained, and both reliability and member satisfaction have increased.

REC has also successfully managed power costs, with recent efforts expected to save REC members between $1 and $2 million annually. Soon, Old Dominion Electric Cooperative (ODEC), REC's primary power supplier, will bring online a new, natural gas generating station that will increase fuel diversity and reduce the need to purchase energy from the wholesale market. ODEC has further diversified its portfolio of energy sources by committing to purchase 30 megawatts of electricity from Virginia solar farms.

"These steps in sustaining the success of your Cooperative have been critical not only for the past year but for the future as well," said Farmer. "The next several years will bring a number of critical changes to the electric utility industry as a whole. Your Board and management team have developed plans to lead and guide those changes while maintaining our mission and demonstrating our core values to benefit all of our member-owners."

"Even with successful costs containment efforts, revenues are not keeping up with expenses," reported Farmer. "We now need to look at changing both the structure and the level of our rates."

"Within the next year, REC will submit its first general rate filing since 1992," announced Farmer. "It will provide an opportunity to more appropriately align our rate structure to changing market conditions, and assure the Cooperative's financial integrity for the foreseeable future."

After his prepared remarks, Farmer provided members the opportunity to ask questions directly to the CEO. The 20 minute question and answer period covered topics ranging from smart meters to capital credits. Several members took the opportunity to praise REC, noting the Cooperative's quick response to outages, its introduction of dark sky-friendly lighting, the ease of online outage reporting, and appreciation for text-based outage updates.

Famer concluded by saying, "It is the culture of our organization that has made us so successful over the years. As we deal with the changing industry, let us be clear that maintaining that culture is the only thing that ensures continued success."

REC provides electric service to over 161,000 connections in parts of 22 Virginia counties. With its general office in Fredericksburg, Va., the Cooperative operates and maintains more than 16,000 miles of power lines through its service area, which ranges from the Blue Ridge Mountains to the tidal waters of the Chesapeake Bay. Follow REC on Facebook, Twitter and YouTube.

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REC CEO and President Kent D. Farmer speaks at the 2016 Annual Meeting.

REC President and CEO Kent D. Farmer addresses members at the 2016 Annual Meeting for members on Aug. 11, 2016, at the Fredericksburg Conference Center.

Newly elected REC Board member J. Mark Wood

J. Mark Wood was elected for a three-year term to serve on REC's Board of Directors during the 2016 Annual Meeting on Aug. 11.