President and Chief Executive Officer
A Message from the President and Chief Executive Officer
Arkansas Electric Cooperative Corporation’s (AECC’s) mission is to provide reliable, affordable electricity and services, safely and responsibly. I believe that AECC executed this mission successfully and served our member owners well during 2019, both in terms of financial performance as well as generation plant and energy market performance. Our market ratings remained stable in 2019 with a continued Aa3 from Moody’s Investors, AA rating from Standard & Poor’s and an AA- rating from Fitch Ratings. We remain at the top of the performance rankings for any peer generation and transmission (G&T) electric cooperative.
Our 2019 revenues were $790.7 million, $37 million below our 2018 revenues of $827.5 million. The reduction in revenues was primarily due to lower fuel costs and lower transmission costs in 2019 which are passed along to our members thru rate riders. AECC’s net margins for the fiscal year 2019 were $24.7 million and AECC returned $20 million in the form of patronage to Arkansas’ 17 electric distribution cooperatives. These cooperatives, in turn, are able to utilize these revenues to invest in their distribution systems and return patronage capital to their members.
Fiscal year 2019 was also a year that produced a lower wholesale power cost than in 2018, going from $51.03/MWh in 2018 to $49.60/MWh in 2019 which is the lowest cost since 2015. The decline was achieved through high-performing and fuel diverse generation assets, as well as increased purchase power from the Midcontinent Independent System Operator (MISO) and Southwest Power Pool (SPP) energy markets. Specifically, low natural gas prices in 2019 contributed significantly to overall lower wholesale power costs and this trend looks likely to continue in 2020. This continued performance level enabled AECC to deliver on our mission of affordable electricity and remains among the lowest-cost G&Ts in the country.
AECC’s energy portfolio is similar to that in fiscal year 2018, but we increased our percentage of hydroelectric, wind and solar energy by 9 percent in fiscal year 2019. AECC’s long-term contracted coal generation was dispatched 13 percent less in 2019, resulting in net market purchases equal to 16 percent of member energy requirements in 2019. This particular statistic shows the impact of low natural gas prices and the financial value of AECC’s ownership of a diversified portfolio ─ consisting of company-owned generation as well as participation in the MISO and SPP energy markets. The only certainty in the future is uncertainty and our diversified portfolio is the key to offsetting uncertainty and keeping our member’s wholesale power rates affordable.
AECC also had a change in leadership in 2019. I joined the team in October and am proud to say that I inherited a financially strong company and a talented team of professionals who are dedicated to our mission of reliable, affordable, and responsible electricity and services for our member-owners.
My goal for 2019 was a smooth transition and to provide stability during the transition. I also wanted to get out and start building relationships and developing trust with the senior management team, our employees and our member-owners. I want to thank the entire AECC membership for placing their trust in me as your president/CEO and for the warm welcome Tracy and our family has received since our arrival. I also want to thank Bill Conine, the interim-president/CEO for most of 2019, for the excellent hand-off and support he provided during the transition.
Our industry is amidst significant technological advancements and changes. There has never been a more exciting time to be serving our member-owners. I am excited about the future for AECC and we will be prepared to meet the challenges.
Thank you for the opportunity to serve AECC and our member cooperatives.