Upshur Rural Electric Cooperative continues to provide reliable electric service at some of the lowest rates in the nation, co-op members were told at their annual meeting Thursday.

Before an audience that filled the auditorium here for the 72th annual membership meeting, General Manager John Dugan and President Frankie King reported Thursday that the co-op continues strong.

About 300 attended, nearly twice the 150 required for a quorum. Reelected as directors were Henry Jackson, District 4, Gilmer; Charles Whiteside, District 5, Kilgore; and R. Cody Newman, District 6, Harleton.

Dugan said that the co-op constructed 61 miles of new line in the 10 counties in which Upshur-Rural operates.

“This 61 miles of new line was to connect 1,458 new services, or members,” Dugan said.

“At the end of 2008, there were 43,395 accounts billed for an annual billing of $72,290,742,” Dugan said. “There were 290 miles of transmission line and 5,732 miles of overhead distribution line and 242 miles of underground distribution line in place.”

Dugan said that the combined total of line equals 6,264 miles.

He said that the total plant investment is $143,724,988. There were 861,401,318 kilowatt hours sold in 2008, compared to 858,382,175 the year before, an increase of 0.35 percent.

Capital credits were allocated from 2008 margins to each member’s account using a factor of 5.3 percent on residential accounts.

“The cooperative’s equity position was 65.54 percent at the end of 2008,” Dugan said. “This is a strong position to be in and allows the board of directors to analyze the financial position regarding the retirement of capital credits.”

He said that after bankers’ permissions were received, the board directed a retirement of capital credits of about 2.1 percent, or about $1,700,000.

“Retiring capital credits is a juggling act where you balance the cost of borrowing money, paying for increased costs of operations such gasoline and diesel and materials, employee payroll and benefits, and keeping rates the same,” Dugan said.”Your electric system belongs to you and one way your ownership is reflected is through capital credits—your share of what’s left over after the cooperative pays all its expenses.

“The retirement, as the ones in the past 22 years, has been no easy task, after the cooperative pays all its expenses,” he said, “but due to the action of your board of directors and the employees of the cooperative operating an efficient organization, it will be possible.”

Dugan said that the Gilmer-based co-op’s rates continue to be among the lowest in Texas.

“If you took an average August 2008 electric bill, Upshur’s was $89 for 1000 kWh, while surrounding utilities were as high as $158 in Tyler. But remember, URECC paid back capital credits,” Dugan said.

He noted that when anyone fails to eventually cash a captial credits check, the money reverts to the state; the law now sends some of the money back to the co-op. This has been used to fund college scholarships for members’ families: two $4,000 scholarships. two $2,000 scholarships and 20 for $1,000.

Dugan said there were 88 full-time employees at year end.

“We are currently at 85, with two DE students,” Dugan said. “They worked 164,452 hours of regular time and 26,236 hours of overtime for a total payroll of $4,892,547.”

In the Annual Report given to members at the meeting, it shows where the electricity service dollar goes:

• $.75 to purchase electricity

• $.13 for operations and maintenance

• $.04 operating margins

• $.06 depreciation expense

• $.02 interest expense

It also shows the resource diversity used by the coop, with power generated from three primary sources:

• Coal/lignite, 59 percent

• Gas, 32 percent

• Hydro, 9 percent

President King pointed out that this is Upshur Rural’s 72th year in business.

“The mission of the cooperative during that first year of business was to provide the members with a reliable low-cost source of energy. After 72 years, the mission of Upshur Rural is still the same,” King said.

He said that Upshur Rural tries to control all the costs it can, and by being efficient and utiliizing new technologies, is able to service about 43,000 meters with fewer employees than it had 10 years ago with 35,000 meters.

“This afternoon, I have some good news to report to you, and I also have some concerns I need to bring to your attention,” King said. “The good news is that your cooperative is in excellent health. We measure the health of our cooperative by growth, our equity position, our ability to obtain credit when needed, and the competitivenss of the rates charged to the members.

“In each of these areas, Upshur is strong,” he said. “Our membership continues to grow—now serving more than 43,000 members.”

He said that the co-op’s equity is more than 65 percent, even after returning millions of dollars to its members over past years in the form of capital credits.

“Our ability to borrow money when needed meets with absolutely no resistance on the part of the lowest in the state,” King said.”Just as a reminder, and I mentioned this last year, at the annual meeting, Upshur is no longer a borrower from the RUS, formally known as the REA.”

He said that while electric bills are higher than a few years ago because the cost of electricity has gone up, that the “spread”—the difference in what Upshur pays for each KWH and what is charged to members—has remained constant over the past few years.

He said that the co-op has fewer employees than 10 years ago, but has grown by several thousand members and meters.

He said that in the past, he had said that the co-op’s power supply is secured well into the future.

“Today, being very honest and candid, I have concerns about making that statement,” he said. He said that as long-term contracts are renegotiated, it always seems to cost more, and that finding new sources to meet a growing demand is becoming more difficult.

He said that the nation will soon face an electrical shortage if it continues on the same road of delay, obstruction and denial of construction of new power plants.

He also said that the administration in Washington “is working tirelessly to increase your electric bill even as I speak.”

He said that government plans to tax power plants based on CO2 emissions will add billions to the nation’s electric bill without doing a thing to help solve global warming. King said that other countries are added a new coal-fired plants at the rate of one per week.

He urged co-op members to contact senators and representataives and tell them that they are against the “cap and trade” legislation which would create the CO2 tax.