2019 Annual Report Annual Meeting Agenda BENCO Electric Cooperative Annual Meeting Mayo Clinic Health Systems Event Center April 4, 2020 Invocation Call to Order Determination of Quorum Opening Remarks Notice of Meeting Minutes Financial Report Election of Directors President’s Report Washington, DC Youth Delegate CEO Report Unfinished Business New Business Adjournment Drawing of Door Prizes 1 - CEO & President’s Report BENCO had a good year in 2019, despite the major storms we encountered. Shortly after last year’s Annual Meeting, Mother Nature delivered heavy snow, ice and strong winds up to 50 miles per hour. These conditions created Blake Meshke Dave Sunderman many widespread outages CEO President across the southern part of Minnesota. BENCO was no exception, as over 7,000 members were left without electricity as a result of the storm. Hundreds of members remained out of power for a couple of days. Winter Storm Wesley damaged over 300 electric poles and many miles of wire across our service territory. Severe ice and wind caused many transmission lines to gallop, which negatively affected BENCO’s substations; 18 substations were not operating to full capacity. Our employees safely worked very hard to restore electricity to our members and because damage to the co-op’s infrastructure was so great, mutual aid was provided to BENCO from Brown County REA of Sleepy Eye, Minnesota Valley Electric Cooperative of Jordan, Dakota Electric Cooperative of Farmington and Highline Construction. The damage cost to our system is approximately three million dollars. There was enough damage across Minnesota for the 2 - CEO & President’s Report Governor to declare a disaster and the President of the United States declared the storm a national disaster. BENCO is currently working with the Federal Emergency Management Association (FEMA) and Minnesota Homeland Security Emergency Management to receive reimbursements for our expenses incurred. The aftermath of Winter Storm Wesley still continues around our service territory. In 2019, we began the process of rebuilding our Jamestown Substation. This was one of our oldest substations, dating back to the 1940’s, and is responsible for feeding a growing area in Blue Earth County. Recently, the transformer was set and completion of the project is nearly completed. BENCO also spent time evaluating the overall space at our Mankato facility including safety and handicapped accessibility. We decided to move forward with the reconstruction of the entrance to our Mankato office, allowing a safer handicapped accessible entrance. The project will be completed this fall. Thank you to our member-owners for taking part in your cooperative; 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, call or email with any questions. 3 - Annual Meeting Minutes Members of the Blue Earth – Nicollet – Faribault Cooperative Electric Association held their annual meeting on Saturday, April 6, 2019 at 12:00 pm at the Verizon Wireless Civic Center, located at 1 Civic Center Plaza, Mankato, MN, pursuant to the notice mailed to each member of the Association, 15 days prior to the meeting. President Scott Johnson presided and Harlan Lanz, Secretary of the Association, kept the minutes of the meeting. As members arrived they could pick up their capital credit checks that totaled $863,539 from portions of 2000, 2001 and 2017. Najwa’s Catering provided the luncheon and each member also received a gift bag. Thank you to Najwa and the catering staff and Brian and the Civic Center staff. Members were entertained in the arena by the Mary Guentzel Quintet. The invocation was given by Pastor John Hendrickson of the Trinity Lutheran Church of Lake Crystal. President Scott Johnson welcomed everyone and called the meeting to order at 12:02 pm. There were more than 50 members registered and that constitutes a quorum according to Article II, Section 5 of the Association’s By-Laws. President Johnson appointed Harlan Lanz as Secretary. Chuck Peterson was appointed as Parliamentarian. Johnson stated the meeting was being recorded. Tellers appointed were: District 2 – Jerry Gish and Jean Lorentz; District 6 – Brent Meshke and Bob Boeck; District 8 – Janette Fenske and Brandy Douglas. President Johnson introduced guests including area legislators, the BENCO Board of Directors and spouses, the Brown County REA Board of Directors and spouses, former directors, CEO Dave Sunderman and spouse and BENCO employees. President Johnson called for a motion to dispense with the reading of the Proof of Mailing and Notice of Mailing. A motion was made, seconded and carried to dispense with the reading and approve them as mailed. President Johnson stated that the Annual Meeting minutes of April 7, 2018 were in the annual report and asked for a motion to dispense with the reading and approve them as printed. A motion was made, seconded and carried to approve the minutes as printed. President Johnson called on Craig Popenhagen of CliftonLarsonAllen, LLP to review the financial report for the year 2018. Popenhagen gave a summary of the report and stated that CliftonLarsonAllen, LLP had reviewed the audit with the Board of Directors and that it was approved at 4 - Annual Meeting Minutes the BENCO Board of Directors meeting. A motion was made, seconded and carried to approve the financial report. President Johnson called on Attorney Chuck Peterson to conduct the election. Attorney Peterson explained the election process according to the By-Laws Article III. In Districts 2 and 6, one candidate received 2/3 or more of the votes cast at the District Meetings so he is the only candidate to come forward to the Annual Meeting. Attorney Peterson asked the candidates to come forward and speak on their own behalf. A motion was made, seconded and carried by voice vote to elect Harlan Lanz – District 2 and Blake Meshke – District 6 to three-year terms. In District 8, there were two candidates for the position of Director. Incumbent Duane Ehrich and David Lein both came forward from the District meeting. Attorney Peterson asked the two candidates to come forward and speak on their behalf. The members were asked to vote and the tellers to pick up the votes. President Scott Johnson gave the President’s Report. He spoke on highlights from 2018, including the construction of the Faribault County Outpost, the addition of District 1 Director Terry Genelin to the Board of Directors, the implementation of greater safety training, and the addition of a new website. President Johnson introduced last year’s Washington, D.C. Youth Delegate recipient, Lexi Fosburgh. Lexi is the daughter of Robert and Donna Fosburgh of North Mankato. Lexi was unable to attend the meeting so President Johnson read a letter on her behalf, recapping her experience. President Johnson called on CEO Dave Sunderman for his report. Dave thanked everyone for their attendance at the meeting. Dave reviewed the severe weather BENCO endured in the year prior, the technological improvements being implemented, strong financials and the utilization of new communication tools. Dave acknowledged the BENCO employees and Board of Directors; he also encouraged all members to reach out to BENCO with any questions or concerns. Dave answered questions from the membership. There was no unfinished or new business. The election results were given by Chuck Peterson. Duane Ehrich was elected as Director for District 8. A motion was made, seconded and carried to adjourn the meeting at 12:50 pm. A drawing was held for door prizes. 5 - Directors Terry Genelin Open Brad Leiding District 1 District 2 Vice President District 3 John Wells Marilyn Lynch Blake Meshke District 4 Treasurer President District 5 District 6 Gary Stenzel Duane Ehrich Scott Johnson District 7 District 8 Secretary District 9 6 - Map of Districts KELSO SIBLEY 1 HENDERSON 22 LAKE PRAIRIE BERNADOTTE NEW 169 SWEDEN 22 BRIGHTON TRAVERSE GRANBY SAINT PETER SWAN LAKE 2 OSHAWA COURTLAND WASHINGTON KASOTA 14 OSHAWA NICOLLET LIME JAMESTOWN CAMBRIA BELGRADE MADISON LAKE BUTTERNUT MANKATO VALLEY LE RAY JANESVILLE JUDSON MANK ATO 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 MAPLETON 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 CHAIN GROVE ELMORE ROME SEELY KIESTER ELMORE 7 - Financial Report The cooperative principles and BENCO Electric Cooperative’s strong business values guide our financial approach. As stewards of the resources you provide, we are accountable to you and have processes in place to ensure the integrity of our work. BENCO ended 2019 in a strong financial position. Our equity, debt service coverage and times interest earned ratios satisfied all of the financial covenants of our lenders. Our Abby Dahms Manager of Finance independent auditor, CliftonLarsonAllen, LLP, provided BENCO with a clean audit and an unqualified opinion upon review of our financial statements. • Patronage Capital at End of Year = $39,202,601 • Equity as a % of Total Capitalization = 39.9% • 39 full-time employees • Real Estate Taxes paid in 2019 = $555,476 How the BENCO 2019 Revenue Dollar Was Allocated Interest Operations & Maintenance 11.65¢