Page 8 - Electric News March April 2021

8 2020 FINANCIAL REPORT
2020 Financial Report
Michelle Junker
Manager of Finance and Accounting
Another fiscal year has come to a close and this one was unique from the start. In 2020, Norris Public Power District endured a different kind of storm which was not a weather-related event, but a world-wide pandemic. While the events of 2020 presented some challenges, I am happy to report that the District’s financial condition remains very strong. The following report provides a general overview of the District’s finances for 2020 compared to 2019.
Operating Revenues
In 2020, Norris customers experienced no overall rate increase for the seventh straight year and for the third consecutive year customers experienced overall rate reductions. Energy sales were 1.01 billion kilowatt- hours in 2020 which were under budget by 1.3%. Operating revenues were $81.3 million in 2020 as compared to $84.4 million in 2019 which were under budget by 2.2%. The amount of operating revenue under budget can be attributed to weather patterns and were not negatively impacted by the pandemic. Norris customers received a total of $3.5 million in Production Cost Adjustment (PCA) credits on their bills from February through December 2020 which equates to a 4.5% reduction in revenue. The average revenue collected per kilowatt-hour in 2020 declined to $.0794 from $.0822 in 2019.
Cost of Power
Purchased power is the District’s single largest expense and represents nearly 70% of the District’s revenue
requirements. The total cost of power in 2020 was $57.4 million for the 1.06 billion kilowatt-hours purchased. The District’s cost of power on a kilowatt- hour basis decreased 4.1% in 2020, due primarily to a PCA credit from the District’s primary power supplier.
Other Operating Expenses
Total other operating expenses in 2020 were $18.7 million as compared to $18.6 million in 2019. Total other operating expenses were under the 2020 budget of $19.3 million. The District expended $7.8 million or 9.5% of the District’s revenue requirements for operation and maintenance of the electric system. Administrative, customer service and general expenses were $4.1 million or 5% of total revenue requirements in 2020. Depreciation expense in 2020 was $6.8 million on $227.7 million in total plant assets.
Nonoperating Margins
Nonoperating margins in 2020 decreased $55,000 in comparison to 2019. Investment income earned on cash and investments decreased as interest rates declined in 2020.
Increase in Net Position
The District’s increase in net position from operations was $6.1 million in 2020 in comparison to $6.6 million in 2019. Annual increases in net position are necessary to pay principal on debt, to reinvest into electric facilities through the construction work plan, and to maintain adequate cash reserves. In 2020, the District’s obligation for payments of principal on long term debt was $750,000, while $8.8 million was invested in capital improvements to the District’s electric facilities and equipment.
Cash and Investments
Total cash and investments on hand at December 31, 2020 were $45.5 million. Of the total cash and investments, $1.8 million is restricted for revenue bond reserves and $1.6 million is reserved for the return of customer deposits. In 2020, the District sold a portion of service territory to Lincoln Electric System (LES). The District was paid $2.3 million for the sale, resulting in a gain on the sale of $1.9 million that will be recognized over a ten-year period.
Capital Assets
Net capital assets increased to $148.7 million in 2020 from $147.1 million in 2019. Investments in the electric infrastructure maintains the reliability of the District’s electric service. Major construction projects in 2020 included nine miles of subtransmision lines and fifty-seven miles of distribution lines. Supervisory control and data acquisition (SCADA) equipment and protective devices upgrades were installed in six substations.
Debt Administration
Long-term debt payable at December 31, 2020 was $6.2 million as compared to $7.0 million at December 31, 2019, as the District continues to pay down its existing debt obligations.
Coronavirus Pandemic
Throughout 2020, the District closely monitored operating expenses, customer accounts, investments and other assets and was able to report positive financial results and maintain its strong financial condition. As the pandemic continues into 2021, the District will continue to monitor conditions and does not forsee a significant impact from the pandemic on the District’s finances.
NORRIS ELECTRIC NEWS