Page 8 - Norris Electric News April 2022

8 2021 FINANCIAL REPORT
2021 Financial Report
Michelle Junker
Manager of Finance and Accounting
Extreme weather events have made 2021 a year to remember, beginning with February’s frigid temperatures and ending with December’s destructive wind storm. The unpredictability of these extraordinary weather events is a stark contrast to the financial stability, strength and resilience of Norris Public Power District. In 2021, the District achieved a significant milestone of being debt-free for the first time in its 88- year history. The District is well positioned to serve its nearly 24,900 customers for many years to come. The following report provides a general overview of the District’s finances for 2021 compared to 2020.
OPERATING REVENUES
million for the 1.12 billion kilowatt-hours purchased in comparison to $57.4 million for 1.06 billion kilowatt-hours in 2020. The District’s cost of power on a kilowatt-hour basis decreased 6.6% in 2021 from 2020, due primarily to a PCA credit from the District’s primary power supplier equivalent to a 10.3% reduction in power costs.
OTHER OPERATING EXPENSES
Total other operating expenses in 2021 were $17.7 million as compared to $18.7 million in 2020 and were under the 2021 budget of $19.4 million. The District continues to realize efficiencies from the 2017 merger with Seward County Public Power District. In addition, the District continually evaluates ways to become more efficient and to be mindful that expenditures support District goals and objectives. The District expended $6.8 million or 8.2% of the District’s revenue requirements for operation and maintenance of the electric system. Administrative, customer service and general expenses were $3.9 million or 4.7% of total revenue requirements in 2021. Depreciation expense in 2021 was $7.0 million on $236.6 million in total plant assets.
NONOPERATING MARGINS
electric facilities through the construction work plan, and to maintain adequate cash reserves. In 2021, the District became debt free with an early redemption of the District’s revenue bonds in the amount of $6.1 million, while $12.1 million was invested into the District’s electric facilities and equipment.
CASH AND INVESTMENTS
Total cash and investments on hand at December 31, 2021 were $37.0 million. Of the total cash and investments, $1.8 million is reserved for the return of customer deposits.
DEBT ADMINISTRATION
On August 18, 2021, the remaining District revenue bonds of $6.1 million were redeemed. The balance due was satisfied with unrestricted cash on hand in the amount of $4.8 million, after the debt service and debt reserve funds held by the bond administrator were applied to the balance. The early payoff of the revenue bonds will result in interest savings of $1.2 million.
CAPITAL ASSETS
Net capital assets increased to $153.5 million in 2021 from $148.7 million in 2020. Investments in the electric infrastructure are necessary to maintain the reliability of the District’s electric service. Major construction projects in 2021 included the construction of nine miles of subtransmision line and forty-six miles of distribution line.
DEBT FREE FUTURE
The financial future of the District appears very bright. The District’s method of conservatively budgeting and closely managing operating expenses, customer accounts, investments and other assets have proven to be an effective way to be successful through the ever changing conditions and will benefit our customers for many years into the future.
In 2021, Norris customers experienced no overall rate increase for the eighth straight year and for the fourth consecutive year customers experienced overall rate reductions. In addition to the customer rate reductions, Norris customers received $6.6 million in Production Cost Adjustment (PCA) credits which were equivalent to a 7.5% reduction in customer rates. Energy sales were 1.08 billion kilowatt-hours and operating revenues were $82.3 million in 2021 in comparison to 1.01 billion kilowatt- hours and $81.3 million in operating revenues in 2020. Energy sales were under budget by 2.8% with operating revenues slightly exceeding the budget due to a change in sales mix as compared to budget. The average revenue collected per kilowatt-hour in 2021 declined to $.0755 from $.0794 in 2020.
COST OF POWER
Nonoperating margins in 2021 increased $63,000 in comparison to 2020. Investment income earned on cash and investments decreased as interest rates continued to decline in 2021, offsent by a decrease in interest and amortization expense related to the District’s revenue bonds.
INCREASE IN NET POSITION
The District’s increase in net position from operations was $8.6 million in 2021 in comparison to $6.1 million in 2020. Annual increases in net position are necessary to pay principal on debt, to reinvest into
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 2021 was $56.9
NORRIS ELECTRIC NEWS