2020 Annual Report

2020 ANNUAL REPORT

2020_AnnualReport_Cvr.indd 1 4/14/21 3:47 PM GODAHL & FROST TOWERS 2.1 TPT2, Twin Cities PBS 16.5 BizTV 2.2 TPT MN, Minnesota Public TV 17.1 K17MW 2.3 TPT Life, Lifestyle 18.1 LAFF, Bluegrass, folk and gospel 2.4 TPT Kids, Kids programming 19.1 Rev’n, Cars, boats, ATVs 2.5 TPT Now 23.1 WUCW 23, The CW Twin Cities 4.1 WCCO 4 (Frost only) 23.2 Comet, Creative Digital 4.2 Start TV, Minneapolis CBS (Frost only) 23.3 Charge Network, Movies 5.1 KSTP, Minneapolis ABC 23.4 TBD Network 5.2 45TV 23.5 GRIT TV 5.3 MeTV, Television Classics 23.6 CTV Two, Canadian channel 5.4 Antenna TV, Television Classics 24.1 Retro TV, Old shows 5.5 45TV 25.1 Telemundo 5.6 ThisTV, MGM Movies 25.2 SonLife, Christian TV 5.7 H&I, Heros and Icons 25.3 COZI TV 9.1 FOX 9 , Minneapolis FOX 25.4 LX, Lifestyle & Entertainment 9.2 FOX 9+, Minneapolis UPN 25.5 SHOP HQ 9.3 Movies TV, Classic Movies 25.6 GetTV, Classic Movies and TV 9.4 Buzzr, Old game shows 41.1 ION TV, TV shows & movies 9.5 Light TV 41.2 Bounce 9.6 Decades 41.3 Grit 9.9 FOX 9, Minneapolis FOX 41.4 Mystery PO Box 8 11.4 KARE, Twin Cities NBC 41.5 LAFF 11.5 KARE-WX 41.6 HSN, Home Shopping Network Mankato, MN 56002 11.6 True Crime Network, Court TV 45.1 TBN, Religious 11.7 Quest 45.2 Hillsong, Australian religious 11.8 Circle (Country Music Channel) 45.3 Smile of a Child, Religious for kids 16.1 CTV, Local access & weather 45.4 Positiv, Religious young adults, music Daytime Phone: 507-387-7963 16.2 Action TV, Sports, hunting, movies 45.5 Enlace TV, Spanish 24-Hour Outage Phone: 507-387-7964 16.3 Heartland, Country music 16.4 AMGTV, Old movies www.benco.org KEYC Lewisville Tower Owned by KEYC

VHF 7.1 Mankato NBC 7.2 Mankato CW 12.1 Mankato CBS 12.2 Mankato FOX

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2020_AnnualReport_Pgs.indd 1 4/20/21 4:31 PM CEO & PRESIDENT’S REPORT consecutive year, returning more than $10 million to the membership. BENCO had a good year While employees tackled new challenges and implemented health in 2020, despite the and safety measures, Great River Energy set a course that will challenges presented fundamentally change the way it serves member-owners. by the COVID-19 global pandemic. Great River Energy will phase out remaining coal resources, add significant renewable energy and explore critical grid-scale battery In March, COVID-19 forced technology. These changes will reduce wholesale electric rates while the world to operate cutting direct carbon dioxide emissions by 95%. As this transition differently and BENCO was unfolds, Great River Energy’s fleet of fast-starting natural gas-fueled DAVE SUNDERMAN BLAKE MESHKE no exception. To ensure power plants will ensure energy remains reliable. CEO PRESIDENT reliability of our power supply, we modified This decision was welcomed by the membership and financial operations to safeguard business continuity. We closed our lobby to community. Great River Energy’s credit rating was upgraded by the public and many office personnel worked remotely. Line crew Moody’s due in large part to the reduced risk associated with its power employees worked in small crews, safe distances apart. Our Annual supply plans. Meeting was postponed until June where we hosted an outdoor, drive-through event at Minnesota State University, Mankato. Here, Great River Energy remains active in the evolution of the power grid Don Westphal was elected as Director for District 2. Although the way as the electric industry transitions toward more non-dispatchable we did business changed, our goal remained the same: to continue generation resources such as wind and solar. The cooperative is a providing safe, reliable electricity to all of our members. co-founding member of CapX2020, an alliance of 10 utilities focused on understanding the transmission needs of the future. These utilities In 2020 BENCO made several changes to our system. Throughout released the CapX2050 Transmission Vision Report, which identifies the spring, summer and fall we made several infrastructure improvements elements necessary for continued safe, reliable and affordable electric including upgrading the transformer at the Sterling Center substation. grid operation. Over 60 miles of underground line was added and 41 miles of overhead line was replaced and upgraded. We implemented a rate At Great River Energy, employees understand there is no budget or increase in September, which will maintain our strong financial timeline more important than their safety. Great River Energy had position. the lowest injury rate in its history in 2020, a particularly impressive achievement due to employees adopting new work practices related Mother Nature delivered a white Christmas that included snow, ice and to the COVID-19 pandemic. heavy winds up to 70 miles per hour. These conditions created many power outages across the southern part of BENCO’s service territory, Thanks to a supportive board of directors, engaged membership and as over 1,000 members were left without power. Our employees safely talented employee team, Great River Energy entered 2021 stronger worked very hard to restore electricity and because so many members than ever and with a foothold firmly on the path to realizing its vision were without power at the beginning of a cold, holiday weekend, to competitively power the future. mutual aid was provided from Brown County REA, Freeborn-Mower

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2020 Annual Report.indd 2 4/20/21 8:27 AM Cooperative Services and Steele-Waseca Cooperative Electric. Due to GREAT RIVER ENERGY: 2020 IN the amount of damage sustained, BENCO has received notification it REVIEW will receive state disaster assistance, authorized by Governor Walz. In a year when many retreated into their homes John (Chuck) Peterson retired after serving as BENCO’s legal counsel for for work, school and safety, the importance of 22 years. Chuck was a partner at Maschka, Riedy, Ries and Frentz Law dependable energy became clear. The electric Firm in Mankato. The BENCO Board of Directors selected Christopher service provided by Great River Energy’s M. Roe of Blethen Berens Law office in Mankato as BENCO’s new legal member-owner cooperatives proved essential counsel. during the COVID-19 pandemic, powering health care facilities, keeping essential businesses Thank you to our member-owners for taking part in your cooperative; operating and enabling remote learning. you play a very large role in our organization. We have a bright future ahead of us and value your participation. Please feel free to stop by, GARY STENZEL Early in the pandemic, Great River Energy call or email with any questions. GRE DIRECTOR adopted safe work practices and social distancing, while quickly understanding new energy usage patterns as members spent more time at home. Great River Energy’s goal was to minimize disruptions within the company and continue to safely and reliably operate the electric grid. That early action paid off, as Great River Energy not only endured during a difficult year — the cooperative excelled.

By the summer of 2020, Great River Energy was ahead of its financial targets to such a degree that it began issuing refunds to member- owner cooperatives to assist with pandemic-related financial challenges. The cooperative returned $8.5 million to its members to offset lost sales, provide late fee holidays, or use in any other way they deemed appropriate.

Great River Energy employees found ways to boost efficiency and control spending throughout the year, identifying more than $30 million in avoided costs. Year after year, Great River Energy’s culture of business improvement and innovation produces new ways to serve member-owners better and more efficiently. In November, the Sterling Center substation transformer was upgraded to a single Great River Energy ended the year with excess margins, which it used united, three-phase transformer. This update allows for greater capacity. Shown to issue bill credits to members and pay down financial commitments. at the left, the original Sterling Center substation transformers wait to be removed The cooperative also retired patronage capital for the second and recycled. The new unit is shown at the right.

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2020 Annual Report.indd 3 4/20/21 8:27 AM 2020 ANNUAL MEETING MINUTES FINANCIAL REPORT Members of the Blue Earth – Nicollet – Faribault Cooperative Electric STATEMENTS OF CASH FLOWS Association held their special annual meeting on Saturday, June 27, 2020 at 10:00 am at Minnesota State University, Mankato in Mankato, 2020 2019 MN, pursuant to the notice mailed to each member of the Association, CASH FLOWS FROM OPERATING ACTIVITIES 15 days prior to the meeting. Net Margins $2,775,033 $2,802,764 Adjustments to Reconcile Net Margins to Net Cash Provided by Operating Activities: To comply with federal and state guidelines for social distancing Depreciation 3,520,546 3,434,364 during the coronavirus outbreak, our Cooperative postponed its G & T and Other Capital Credits (886,882) (1,098,909) (Gain) on Equity Investments (134,608) (179,951) annual meeting of members. Although these restrictions are gradually Accrued Post Retirement Benefits (198,643) (18,087) being relaxed, they are still in place for large gatherings. As a result, Interest Income Credited to Cushion of Credit (77,767) (77,991) BENCO moved forward with a special annual meeting by written ballot, Changes in Assets and Liabilities - (Increase) Decrease in: primarily to hold the annual director elections. This will constitute our Accounts Receivable 94,652 338,581 annual membership meeting for the calendar year 2020. Materials and Supplies Inventory 170,580 (347,173) Deferred Debits 122,201 11,844 All members received a copy of the annual report and candidate Other Current and Accrued Assets 4,466 6,203 (Decrease) Increase in: profiles prior to the meeting via US Mail. Accounts Payable (409,655) 444,028 Customer Deposits (507) 313 Tellers appointed for District 2 included Ryan Caperoon and Gary Deferred Credits 95,011 (122,973) Other Current and Accrued Liabilities 451,145 75,198 Ginter. Net Cash Provided by Operating Activities 5,525,572 5,268,210 CASH FLOWS FROM INVESTING ACTIVITIES As members arrived, they remained in their vehicles and drove Construction and Acquisition of Plant (4,552,137) (5,648,669) through, where they submitted their registration letter and received Sales of Investments 314,252 393,326 Cash Received from Retirement of Patronage 475,253 471,110 a copy of the annual report, a pen and a ballot. There were 463 Payments Received on Notes Receivable 34,562 12,016 registered voters. Since there were more than 50 members registered, Net Cash Used by Investing Activities (3,728,070) (4,772,217) this constitutes a quorum according to Article II, Section 5 of the CASH FLOWS FROM FINANCING ACTIVITIES Increase in Memberships 862 1,175 Association’s By-Laws. After receiving their ballot, members voted in Retirement of Capital Credits (1,189,227) (887,766) their vehicle and submitted their ballot while exiting the parking lot. Proceeds from Issuance of Long Term Debt 4,000,000 4,000,000 Principal Payments on Long Term Debt (2,636,524) (2,610,804) Net Cash Provided by Financing Activities 175,111 502,605 Through the ballot all members received, the membership approved NET INCREASE IN CASH AND CASH EQUIVALENTS 1,972,613 998,598 the minutes of the April 6, 2019 annual meeting as printed in the Cash and Cash Equivalents - Beginning $10,325,550 9,326,952 annual report. CASH AND CASH EQUIVALENTS - ENDING 12,298,163 $10,325,550 SUPPL. DISCLOSURES OF CASH FLOW INFO. Interest Paid $1,983,990 $1,971,210 Through the ballot all members received, the membership approved the financial report as printed in the annual report.

The election of directors was held for Districts 2, 3, 5 and 7. In districts

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2020_AnnualReport_Pgs.indd 4 4/20/21 4:31 PM 3, 5 and 7, one candidate received 2/3 or more of the votes cast at FINANCIAL REPORT the District Meetings, therefore, Brad Leiding, Marilyn Lynch and Gary STATEMENTS OF REVENUES, Stenzel were the only candidates to come forward to the Special EXPENSES & CHANGES IN PATRONAGE CAPITAL Annual Meeting for those districts. Through the ballot all members received, the membership approved Brad Leiding, Marilyn Lynch 2020 2019 and Gary Stenzel to a three-year director term for districts 3, 5 and 7, OPERATING REVENUES $44,904,369 $46,879,250 respectively. OPERATING EXPENSES Cost of Power 28,783,115 30,955,926 Since no candidate received 2/3 or more votes cast at the District 2 Distribution Expense - Operations 2,516,022 2,476,030 Meeting, the two candidates receiving the largest number of votes, Distribution Expense - Maintenance 3,265,045 2,986,589 Steve Michels and Don Westphal, were certified as nominees to the Consumer Account Expense 649,122 1,061,299 Customer Service and Info Expense 954,620 921,548 Special Annual Meeting. Through the ballot all members received, the Administrative and General Expense 1,490,278 1,516,001 membership approved Don Westphal to fulfill the remaining two years Depreciation 3,520,546 3,434,364 of the vacated, District 2 three-year director term. Other 11,678 77,466 Total Operating Expenses 41,190,426 43,429,223 The election results were given by Attorney Chuck Peterson. The OPERATING MARGINS BEFORE FIXED CHARGES 3,713,943 3,450,027 election results were announced to the membership via the BENCO INTEREST ON LONG TERM DEBT 1,974,274 1,963,521 OPERATING MARGINS AFTER FIXED CHARGES 1,739,669 1,486,506 Electric Cooperative website and newsletter.

G & T AND OTHER CAPITAL CREDITS 886,882 1,098,909 NET OPERATING MARGINS 2,626,551 2,585,415 NON-OPERATING MARGINS Investment Income 186,330 292,801 Other Non-Operating (Loss) Gain (37,848) (75,452) Total Non-Operating Margins 148,482 217,349 NET MARGINS $2,775,033 $2,802,764

Patronage Capital, Beginning of Year $39,202,601 $37,631,556 Retirement of Patronage Capital, Net Change 2,347,288 1,571,045 Patronage Capital, End of Year $41,549,889 $39,202,601

BENCO directors and employees directed traffic during the 2020 Annual Meeting. The 2020 Annual Meeting was held in a drive-thru format due to the COVID-19 global pandemic.

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2020 Annual Report.indd 5 4/20/21 8:27 AM BOARD OF DIRECTORS FINANCIAL REPORT BALANCE SHEETS 2020 2019 ASSETS Electric Plant $127,327,107 $122,995,713 Construction Work in Progress 1,180,903 2,003,719 Total 128,508,010 124,999,432 Less Accum. Provision for Depreciation (50,901,346) (48,424,359) Net Utility Plant 77,606,664 76,575,073 OTHER ASSETS AND INVESTMENTS Investments in Associated Organizations 20,561,067 20,149,438 Other Investments 1,146,887 1,326,530 Notes Receivable - Net of Current Portion 171,470 194,032 Total Other Assets and Investments 21,879,423 21,670,000 TERRY GENELIN DON WESTPHAL BRAD LEIDING CURRENT ASSETS DISTRICT 1 DISTRICT 2 VICE PRESIDENT Cash and Cash Equivalents 12,298,163 10,325,550 DISTRICT 3 Accounts Receivable, Net 4,738,157 3,981,814 Materials and Supplies Inventories 1,065,874 1,236,454 Interest Receivable (7,376) (2,910) Current Portion of Notes Receivable 22,000 34,000 Total Current Assets 18,116,818 15,574,908 DEFERRED DEBITS 657,939 780,140 Total Assets $118,260,844 $114,600,121

EQUITIES AND LIABILITIES EQUITIES Patronage Capital $41,549,889 $39,202,601 Memberships 78,430 77,568 Other Equities and Other Comprehensive Income 2,992,762 2,903,249 Total Equities 44,621,081 42,183,418 JOHN WELLS MARILYN LYNCH BLAKE MESHKE LONG-TERM DEBT, Less Current Maturities DISTRICT 4 TREASURER PRESIDENT RUS Mortgage Notes 35,322,457 32,512,546 DISTRICT 5 DISTRICT 6 CFC Mortgage Notes 26,972,153 28,410,355 Conditional Asset Retirement Obligation 9,550 41,150 Total Long-Term Debt 62,304,160 60,964,051 OTHER NONCURRENT LIABILITIES Post Retirement Benefit Obligation 1,594,652 1,772,221 Total Other Noncurrent Liabilities 1,594,652 1,772,221 CURRENT LIABILITIES Current Maturities of Long-Term Debt 2,500,000 2,586,000 Current Portion of Accum. Postretirement Benefit Obligation 167,729 157,203 Accounts Payable 4,663,565 5,073,220 Consumer Deposits 2,426 2,933 Other Current and Accrued Liabilities 2,064,049 1,612,904 Total Current Liabilities GARY STENZEL DUANE EHRICH 9,397,769 9,432,260 SCOTT JOHNSON DEFERRED CREDITS 343,182 248,171 DISTRICT 7 DISTRICT 8 SECRETARY Total Equities and Liabilities $118,260,844 $114,600,121 DISTRICT 9

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2020 Annual Report.indd 6 4/20/21 8:27 AM notifications. In 2021, BENCO has begun offering additional rebates, including rebates for residential household appliances and rebates for MAP OF DISTRICTS electric vehicle chargers. To learn more or to apply for a rebate, visit our website at benco.org/residential-rebates. KELSO SIBLEY HENDERSON COMMUNITY INVESTMENTS 1 The Operation Round Up program is an organization through BENCO 22 where members’ utility bills are rounded up to the nearest dollar. LAKE PRAIRIE BERNADOTTE NEW 169 The “rounded up” dollar amount is added to the BENCO Electric SWEDEN 22 Cooperative Trust that is then allocated to non-profit organizations BRIGHTON TRAVERSE throughout the year. In 2020, BENCO distributed over $43,000 to 31 GRANBY SAINT PETER SWAN organizations throughout our service territory. LAKE 2 OSHAWA COURTLAND WASHINGTON KASOTA Since the program’s inception in 2002, Operation Round Up has 14 OSHAWA donated over $222,000 to organizations benefitting our region. NICOLLET LIME JAMESTOWN CAMBRIA MADISON LAKE To date, 7,594 members, or 39% of the membership, contribute to BELGRADE BUTTERNUT MANKATO VALLEY LE RAY JANESVILLE Operation Round Up. JUDSON MANKATO 14 3 60 SOUTH LAKE CRYSTAL BEND 4

McPHERSON GARDEN RAPIDAN DECORIA LINCOLN CITY 5 22 83

CERESCO MEDO VERNON LYRA BEAUFORD 6 CENTER

DANVILLE PLEASANT AMBOY STERLING MOUND MAPLETON 30 VIVIAN 30 SHELBY TIM BRAULICK KATHY GERBER MAPLETON ENGINEERING & ABBY DAHMS MEMBER SERVICES FINANCE MANAGER OPERATIONS MANAGER MANAGER 169 DUNBAR WINNEBAGO DELEVAN LURA 22 FREEBORN MINNESOTA WINNEBAGO CITY LAKE 7

WALNUT CARLSTON CENTER VERONA PRESCOTT BARBER CLARK CREEK LAKE

JO BLUE 90 FOSTER DAVIESS EART H BRUSH PLEASANT BLUE EMERALD CREEK ALDEN PRAIRIE EARTH 8 CITY 9

MANSFIELD EAST PILOT CHELSEA GERMO JON WHEELOCK CHAIN GROVE ELMORE ROME SEELY KIESTER MARKETING MANAGER JORDAN NICKELS ENERGY SERVICES TECHNOLOGY MANAGER ELMORE EXECUTIVE ASSISTANT MANAGER

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2020 Annual Report.indd 7 4/20/21 8:27 AM FINANCIAL BREAKDOWN MANAGER REPORTS Guided by safely providing the best possible service, at the lowest BENCO Electric Cooperative is a member-owned electric distribution possible cost, consistent with sound business management, BENCO utility that has served members in south central Minnesota with ended 2020 in a strong financial position including a net margin of electricity since 1935. With a long history of excellent service, the $2,775,033. Independent auditor CliftonLarsonAllen, LLP, issued an cooperative serves more than 19,000 homes and businesses across unqualified opinion on the 2020 financial statements. In their opinion, the region and maintains 3,620 miles of line in Blue Earth, Nicollet, the 2020 financial statements provide a fair representation of the Faribault and surrounding counties. financial position and results of operations of the cooperative in conformity with generally accepted accounting principles. MEMBER SERVICES, ENGINEERING AND OPERATIONS REVIEW Despite the challenges presented in the past year due to the COVID-19 • Patronage Capital for December 31, 2020 = $41,549,889 pandemic, BENCO was challenged to adjust our operations to keep • Equity as a % of Total Capitalization = 40.4% our organization functioning at a high level and continue providing • 39 full-time employees reliable electric service to our members. • Real Estate Taxes paid in 2020 = $648,294

Due to the financial hardships created by COVID-19, BENCO created HOW THE BENCO 2020 REVENUE DOLLAR WAS ALLOCATED payment plans with many members, waived late fees and temporarily suspended disconnections. Interest 4.40¢ Operations & Maintenance 12.87¢

The summer season presented a series of smaller lightning storms that Other 0.03¢ caused a small amount of outages, while a Christmas storm filled with Cost high winds and heavy ice and snow, left many without power. of Power Our line crews spent many hours conducting infrastructure 64.10¢ maintenance including pole testing, vegetation management, line upgrades and installation of new services. The Sterling Center Depreciation & substation received a new transformer in November and we continued Operating Margins Amortization 7.84¢ to improve BENCO’s safety culture by participation in Minnnesota Rural 3.87¢ Administrative & General 6.89¢ Electric Association’s Safety and Loss Control Services program.

2020 2010 ENERGY SERVICES PROGRAM IMPROVEMENTS Miles of Line 3,620 3,204 In 2020, BENCO’s Energy Services department deployed a new load Services in Place, year end 19,808 14,158 management system. New load controls will be implemented on KWHs Purchased 359,566,804 273,959,914 all new load management installations and BENCO will continue to KWHs Sold 341,044,117 258,238,655 replace all existing controls in upcoming years. Average Cost Per KWH Purchased $0.08 $0.063 Members who currently participate in load management programs Average Cost Per KWH Sold $0.13 $0.1028 are encouraged to sign up for text message and/or email notifications. New Services Installed 245 155 These notifications alert participants when BENCO plans to control. Services Removed 39 46 To enroll in notifications, please visit www.benco.org/text-message- Average Outage Time per Member 98 min. 80 min.

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2020 Annual Report.indd 8 4/20/21 8:27 AM FINANCIAL BREAKDOWN MANAGER REPORTS Guided by safely providing the best possible service, at the lowest BENCO Electric Cooperative is a member-owned electric distribution possible cost, consistent with sound business management, BENCO utility that has served members in south central Minnesota with ended 2020 in a strong financial position including a net margin of electricity since 1935. With a long history of excellent service, the $2,775,033. Independent auditor CliftonLarsonAllen, LLP, issued an cooperative serves more than 19,000 homes and businesses across unqualified opinion on the 2020 financial statements. In their opinion, the region and maintains 3,620 miles of line in Blue Earth, Nicollet, the 2020 financial statements provide a fair representation of the Faribault and surrounding counties. financial position and results of operations of the cooperative in conformity with generally accepted accounting principles. MEMBER SERVICES, ENGINEERING AND OPERATIONS REVIEW Despite the challenges presented in the past year due to the COVID-19 • Patronage Capital for December 31, 2020 = $41,549,889 pandemic, BENCO was challenged to adjust our operations to keep • Equity as a % of Total Capitalization = 40.4% our organization functioning at a high level and continue providing • 39 full-time employees reliable electric service to our members. • Real Estate Taxes paid in 2020 = $648,294

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2020 Annual Report.indd 8 4/20/21 8:27 AM notifications. In 2021, BENCO has begun offering additional rebates, including rebates for residential household appliances and rebates for MAP OF DISTRICTS electric vehicle chargers. To learn more or to apply for a rebate, visit our website at benco.org/residential-rebates. KELSO SIBLEY HENDERSON COMMUNITY INVESTMENTS 1 The Operation Round Up program is an organization through BENCO 22 where members’ utility bills are rounded up to the nearest dollar. LAKE PRAIRIE BERNADOTTE NEW 169 The “rounded up” dollar amount is added to the BENCO Electric SWEDEN 22 Cooperative Trust that is then allocated to non-profit organizations BRIGHTON TRAVERSE throughout the year. In 2020, BENCO distributed over $43,000 to 31 GRANBY SAINT PETER SWAN organizations throughout our service territory. LAKE 2 OSHAWA COURTLAND WASHINGTON KASOTA Since the program’s inception in 2002, Operation Round Up has 14 OSHAWA donated over $222,000 to organizations benefitting our region. NICOLLET LIME JAMESTOWN CAMBRIA MADISON LAKE To date, 7,594 members, or 39% of the membership, contribute to BELGRADE BUTTERNUT MANKATO VALLEY LE RAY JANESVILLE Operation Round Up. JUDSON MANKATO 14 3 60 SOUTH LAKE CRYSTAL BEND 4

McPHERSON GARDEN RAPIDAN DECORIA LINCOLN CITY 5 22 83

CERESCO MEDO VERNON LYRA BEAUFORD 6 CENTER

WALNUT CARLSTON CENTER VERONA PRESCOTT BARBER CLARK CREEK LAKE

JO BLUE 90 FOSTER DAVIESS EART H BRUSH PLEASANT BLUE EMERALD CREEK ALDEN PRAIRIE EARTH 8 CITY 9

MANSFIELD EAST PILOT CHELSEA GERMO JON WHEELOCK CHAIN GROVE ELMORE ROME SEELY KIESTER MARKETING MANAGER JORDAN NICKELS ENERGY SERVICES TECHNOLOGY MANAGER ELMORE EXECUTIVE ASSISTANT MANAGER

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2020 Annual Report.indd 7 4/20/21 8:27 AM BOARD OF DIRECTORS FINANCIAL REPORT BALANCE SHEETS 2020 2019 ASSETS Electric Plant $127,327,107 $122,995,713 Construction Work in Progress 1,180,903 2,003,719 Total 128,508,010 124,999,432 Less Accum. Provision for Depreciation (50,901,346) (48,424,359) Net Utility Plant 77,606,664 76,575,073 OTHER ASSETS AND INVESTMENTS Investments in Associated Organizations 20,561,067 20,149,438 Other Investments 1,146,887 1,326,530 Notes Receivable - Net of Current Portion 171,470 194,032 Total Other Assets and Investments 21,879,423 21,670,000 TERRY GENELIN DON WESTPHAL BRAD LEIDING CURRENT ASSETS DISTRICT 1 DISTRICT 2 VICE PRESIDENT Cash and Cash Equivalents 12,298,163 10,325,550 DISTRICT 3 Accounts Receivable, Net 4,738,157 3,981,814 Materials and Supplies Inventories 1,065,874 1,236,454 Interest Receivable (7,376) (2,910) Current Portion of Notes Receivable 22,000 34,000 Total Current Assets 18,116,818 15,574,908 DEFERRED DEBITS 657,939 780,140 Total Assets $118,260,844 $114,600,121

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2020 Annual Report.indd 6 4/20/21 8:27 AM 3, 5 and 7, one candidate received 2/3 or more of the votes cast at FINANCIAL REPORT the District Meetings, therefore, Brad Leiding, Marilyn Lynch and Gary STATEMENTS OF REVENUES, Stenzel were the only candidates to come forward to the Special EXPENSES & CHANGES IN PATRONAGE CAPITAL Annual Meeting for those districts. Through the ballot all members received, the membership approved Brad Leiding, Marilyn Lynch 2020 2019 and Gary Stenzel to a three-year director term for districts 3, 5 and 7, OPERATING REVENUES $44,904,369 $46,879,250 respectively. OPERATING EXPENSES Cost of Power 28,783,115 30,955,926 Since no candidate received 2/3 or more votes cast at the District 2 Distribution Expense - Operations 2,516,022 2,476,030 Meeting, the two candidates receiving the largest number of votes, Distribution Expense - Maintenance 3,265,045 2,986,589 Steve Michels and Don Westphal, were certified as nominees to the Consumer Account Expense 649,122 1,061,299 Customer Service and Info Expense 954,620 921,548 Special Annual Meeting. Through the ballot all members received, the Administrative and General Expense 1,490,278 1,516,001 membership approved Don Westphal to fulfill the remaining two years Depreciation 3,520,546 3,434,364 of the vacated, District 2 three-year director term. Other 11,678 77,466 Total Operating Expenses 41,190,426 43,429,223 The election results were given by Attorney Chuck Peterson. The OPERATING MARGINS BEFORE FIXED CHARGES 3,713,943 3,450,027 election results were announced to the membership via the BENCO INTEREST ON LONG TERM DEBT 1,974,274 1,963,521 OPERATING MARGINS AFTER FIXED CHARGES 1,739,669 1,486,506 Electric Cooperative website and newsletter.

Patronage Capital, Beginning of Year $39,202,601 $37,631,556 Retirement of Patronage Capital, Net Change 2,347,288 1,571,045 Patronage Capital, End of Year $41,549,889 $39,202,601

BENCO directors and employees directed traffic during the 2020 Annual Meeting. The 2020 Annual Meeting was held in a drive-thru format due to the COVID-19 global pandemic.

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2020 Annual Report.indd 5 4/20/21 8:27 AM 2020 ANNUAL MEETING MINUTES FINANCIAL REPORT Members of the Blue Earth – Nicollet – Faribault Cooperative Electric STATEMENTS OF CASH FLOWS Association held their special annual meeting on Saturday, June 27, 2020 at 10:00 am at Minnesota State University, Mankato in Mankato, 2020 2019 MN, pursuant to the notice mailed to each member of the Association, CASH FLOWS FROM OPERATING ACTIVITIES 15 days prior to the meeting. Net Margins $2,775,033 $2,802,764 Adjustments to Reconcile Net Margins to Net Cash Provided by Operating Activities: To comply with federal and state guidelines for social distancing Depreciation 3,520,546 3,434,364 during the coronavirus outbreak, our Cooperative postponed its G & T and Other Capital Credits (886,882) (1,098,909) (Gain) on Equity Investments (134,608) (179,951) annual meeting of members. Although these restrictions are gradually Accrued Post Retirement Benefits (198,643) (18,087) being relaxed, they are still in place for large gatherings. As a result, Interest Income Credited to Cushion of Credit (77,767) (77,991) BENCO moved forward with a special annual meeting by written ballot, Changes in Assets and Liabilities - (Increase) Decrease in: primarily to hold the annual director elections. This will constitute our Accounts Receivable 94,652 338,581 annual membership meeting for the calendar year 2020. Materials and Supplies Inventory 170,580 (347,173) Deferred Debits 122,201 11,844 All members received a copy of the annual report and candidate Other Current and Accrued Assets 4,466 6,203 (Decrease) Increase in: profiles prior to the meeting via US Mail. Accounts Payable (409,655) 444,028 Customer Deposits (507) 313 Tellers appointed for District 2 included Ryan Caperoon and Gary Deferred Credits 95,011 (122,973) Other Current and Accrued Liabilities 451,145 75,198 Ginter. Net Cash Provided by Operating Activities 5,525,572 5,268,210 CASH FLOWS FROM INVESTING ACTIVITIES As members arrived, they remained in their vehicles and drove Construction and Acquisition of Plant (4,552,137) (5,648,669) through, where they submitted their registration letter and received Sales of Investments 314,252 393,326 Cash Received from Retirement of Patronage 475,253 471,110 a copy of the annual report, a pen and a ballot. There were 463 Payments Received on Notes Receivable 34,562 12,016 registered voters. Since there were more than 50 members registered, Net Cash Used by Investing Activities (3,728,070) (4,772,217) this constitutes a quorum according to Article II, Section 5 of the CASH FLOWS FROM FINANCING ACTIVITIES Increase in Memberships 862 1,175 Association’s By-Laws. After receiving their ballot, members voted in Retirement of Capital Credits (1,189,227) (887,766) their vehicle and submitted their ballot while exiting the parking lot. Proceeds from Issuance of Long Term Debt 4,000,000 4,000,000 Principal Payments on Long Term Debt (2,636,524) (2,610,804) Net Cash Provided by Financing Activities 175,111 502,605 Through the ballot all members received, the membership approved NET INCREASE IN CASH AND CASH EQUIVALENTS 1,972,613 998,598 the minutes of the April 6, 2019 annual meeting as printed in the Cash and Cash Equivalents - Beginning $10,325,550 9,326,952 annual report. CASH AND CASH EQUIVALENTS - ENDING 12,298,163 $10,325,550 SUPPL. DISCLOSURES OF CASH FLOW INFO. Interest Paid $1,983,990 $1,971,210 Through the ballot all members received, the membership approved the financial report as printed in the annual report.

The election of directors was held for Districts 2, 3, 5 and 7. In districts

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2020_AnnualReport_Pgs.indd 4 4/20/21 4:31 PM Cooperative Services and Steele-Waseca Cooperative Electric. Due to GREAT RIVER ENERGY: 2020 IN the amount of damage sustained, BENCO has received notification it REVIEW will receive state disaster assistance, authorized by Governor Walz. In a year when many retreated into their homes John (Chuck) Peterson retired after serving as BENCO’s legal counsel for for work, school and safety, the importance of 22 years. Chuck was a partner at Maschka, Riedy, Ries and Frentz Law dependable energy became clear. The electric Firm in Mankato. The BENCO Board of Directors selected Christopher service provided by Great River Energy’s M. Roe of Blethen Berens Law office in Mankato as BENCO’s new legal member-owner cooperatives proved essential counsel. during the COVID-19 pandemic, powering health care facilities, keeping essential businesses Thank you to our member-owners for taking part in your cooperative; operating and enabling remote learning. you play a very large role in our organization. We have a bright future ahead of us and value your participation. Please feel free to stop by, GARY STENZEL Early in the pandemic, Great River Energy call or email with any questions. GRE DIRECTOR adopted safe work practices and social distancing, while quickly understanding new energy usage patterns as members spent more time at home. Great River Energy’s goal was to minimize disruptions within the company and continue to safely and reliably operate the electric grid. That early action paid off, as Great River Energy not only endured during a difficult year — the cooperative excelled.

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2020 Annual Report.indd 3 4/20/21 8:27 AM CEO & PRESIDENT’S REPORT consecutive year, returning more than $10 million to the membership. BENCO had a good year While employees tackled new challenges and implemented health in 2020, despite the and safety measures, Great River Energy set a course that will challenges presented fundamentally change the way it serves member-owners. by the COVID-19 global pandemic. Great River Energy will phase out remaining coal resources, add significant renewable energy and explore critical grid-scale battery In March, COVID-19 forced technology. These changes will reduce wholesale electric rates while the world to operate cutting direct carbon dioxide emissions by 95%. As this transition differently and BENCO was unfolds, Great River Energy’s fleet of fast-starting natural gas-fueled DAVE SUNDERMAN BLAKE MESHKE no exception. To ensure power plants will ensure energy remains reliable. CEO PRESIDENT reliability of our power supply, we modified This decision was welcomed by the membership and financial operations to safeguard business continuity. We closed our lobby to community. Great River Energy’s credit rating was upgraded by the public and many office personnel worked remotely. Line crew Moody’s due in large part to the reduced risk associated with its power employees worked in small crews, safe distances apart. Our Annual supply plans. Meeting was postponed until June where we hosted an outdoor, drive-through event at Minnesota State University, Mankato. Here, Great River Energy remains active in the evolution of the power grid Don Westphal was elected as Director for District 2. Although the way as the electric industry transitions toward more non-dispatchable we did business changed, our goal remained the same: to continue generation resources such as wind and solar. The cooperative is a providing safe, reliable electricity to all of our members. co-founding member of CapX2020, an alliance of 10 utilities focused on understanding the transmission needs of the future. These utilities In 2020 BENCO made several changes to our system. Throughout released the CapX2050 Transmission Vision Report, which identifies the spring, summer and fall we made several infrastructure improvements elements necessary for continued safe, reliable and affordable electric including upgrading the transformer at the Sterling Center substation. grid operation. Over 60 miles of underground line was added and 41 miles of overhead line was replaced and upgraded. We implemented a rate At Great River Energy, employees understand there is no budget or increase in September, which will maintain our strong financial timeline more important than their safety. Great River Energy had position. the lowest injury rate in its history in 2020, a particularly impressive achievement due to employees adopting new work practices related Mother Nature delivered a white Christmas that included snow, ice and to the COVID-19 pandemic. heavy winds up to 70 miles per hour. These conditions created many power outages across the southern part of BENCO’s service territory, Thanks to a supportive board of directors, engaged membership and as over 1,000 members were left without power. Our employees safely talented employee team, Great River Energy entered 2021 stronger worked very hard to restore electricity and because so many members than ever and with a foothold firmly on the path to realizing its vision were without power at the beginning of a cold, holiday weekend, to competitively power the future. mutual aid was provided from Brown County REA, Freeborn-Mower

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2020 Annual Report.indd 2 4/20/21 8:27 AM GODAHL & FROST TOWERS 2.1 TPT2, Twin Cities PBS 16.5 BizTV 2.2 TPT MN, Minnesota Public TV 17.1 K17MW 2.3 TPT Life, Lifestyle 18.1 LAFF, Bluegrass, folk and gospel 2.4 TPT Kids, Kids programming 19.1 Rev’n, Cars, boats, ATVs 2.5 TPT Now 23.1 WUCW 23, The CW Twin Cities 4.1 WCCO 4 (Frost only) 23.2 Comet, Creative Digital 4.2 Start TV, Minneapolis CBS (Frost only) 23.3 Charge Network, Movies 5.1 KSTP, Minneapolis ABC 23.4 TBD Network 5.2 45TV 23.5 GRIT TV 5.3 MeTV, Television Classics 23.6 CTV Two, Canadian channel 5.4 Antenna TV, Television Classics 24.1 Retro TV, Old shows 5.5 45TV 25.1 Telemundo 5.6 ThisTV, MGM Movies 25.2 SonLife, Christian TV 5.7 H&I, Heros and Icons 25.3 COZI TV 9.1 FOX 9 , Minneapolis FOX 25.4 LX, Lifestyle & Entertainment 9.2 FOX 9+, Minneapolis UPN 25.5 SHOP HQ 9.3 Movies TV, Classic Movies 25.6 GetTV, Classic Movies and TV 9.4 Buzzr, Old game shows 41.1 ION TV, TV shows & movies 9.5 Light TV 41.2 Bounce 9.6 Decades 41.3 Grit 9.9 FOX 9, Minneapolis FOX 41.4 Mystery PO Box 8 11.4 KARE, Twin Cities NBC 41.5 LAFF 11.5 KARE-WX 41.6 HSN, Home Shopping Network Mankato, MN 56002 11.6 True Crime Network, Court TV 45.1 TBN, Religious 11.7 Quest 45.2 Hillsong, Australian religious 11.8 Circle (Country Music Channel) 45.3 Smile of a Child, Religious for kids 16.1 CTV, Local access & weather 45.4 Positiv, Religious young adults, music Daytime Phone: 507-387-7963 16.2 Action TV, Sports, hunting, movies 45.5 Enlace TV, Spanish 24-Hour Outage Phone: 507-387-7964 16.3 Heartland, Country music 16.4 AMGTV, Old movies www.benco.org KEYC Lewisville Tower Owned by KEYC

VHF 7.1 Mankato NBC 7.2 Mankato CW 12.1 Mankato CBS 12.2 Mankato FOX

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