2012 annual report

Thanks to GVEA members for their donations.

Since the Good¢ents round up program began in March 2011, more than $145,000 has been awarded to local organizations and individuals in need. Nearly 70 percent of GVEA members participate in Good¢ents.

Overall, it was a successful year at your cooperative. Our system provided extremely reliable power. On average, members experienced less than 2.5 hours without power. Financially, we met our requirements and are prepared to move forward with the restart of Healy Unit 2 (formerly referred to as HCCP).

Golden Valley Electric Association has been working hard to reduce your costs of electricity without impacting reliability. Last year, members began to enjoy some of the benefits of these efforts - residential electric bills decreased by about 12 percent in December. That’s an average of about $15 per month in savings.

How did we do it? First, in October of 2012, GVEA’s Board of Directors approved a contract to secure natural gas-fired power from Anchorage. This contract, which maximizes our use of the Alaska Intertie, will provide a steady supply of lower-cost power through March of 2015.

Second, GVEA turned on Eva Creek Wind last fall. As expected, Eva Creek is producing power at 8.7 cents per kilowatt-hour. When you add in the other costs of having wind on GVEA’s system, it’s a bit more expensive than natural gas or hydro, but it’s much cheaper than oil, our most expensive fuel option.

Thanks to gas and wind, GVEA burned 4.7 million fewer gallons of oil in the first quarter of 2013 than the first quarter of 2012. The savings are realized in the Fuel and Purchased Power Charge on members’ bills.

In the future, new power sources and fuels – such as Healy Unit 2 and natural gas trucking from the North Slope – will help us further stabilize our rates. We anticipate finalizing purchase negotiations for Healy Unit 2 by the end of this summer.

GVEA is always on the lookout for new sources of power that can lower members’ bills. But we’re not stopping there. We’re making efforts to lower our costs internally too. We’ve been reviewing all internal processes at Golden Valley and are saving dollars where we can.

We’re also asking members to help in our efforts to lower costs by conserving electricity. The less electricity members use, the less expensive oil GVEA has to burn to meet demand.

To help members conserve, we kicked off the Power to Use Less campaign in 2012. The campaign focuses on seven easy ways to save energy and money in the home. One way we’ve asked members to get on board the conservation bandwagon is by signing up for a Home$ense Energy Audit. In 2012, 262 members completed audits. I’m happy to report that 131 members have taken advantage of the opportunity in just the first quarter of this year.

In conclusion, I’d like to congratulate those members who have worked hard to reduce their electric usage already. Since 2005, GVEA residential member usage has decreased 13.5 percent – from 761 to 660 kilowatt-hours per month.

GVEA Fast Facts• Systemreliability was 99%in2012.Onaverage,membersexperiencedlessthan2.5hourswithoutpower.

• 2012peak load was 217.6 megawatts.Systempeakof223MWwassetinDecember2007.

• Theco-opmaintains3,166 miles of power lineswithina5,973squaremileserviceterritory.

• In2012,theBatteryEnergyStorageSystem(BESS)respondedto43eventspreventingapproximately114,000memberoutages.

• Thecooperativehas223 full-time employees.

• GVEAisowned by 34,480 membersandprovidesservicetomorethan43,940electricmeters.

• Totalretailsalesin2012:1.29 billion kilowatt-hours

A Message from the President & CEO

Aren GundersonDistrict 1

Tom DeLongVice-Chairman

District 2

Rick SchikoraTreasurerDistrict 3

Frank EagleDistrict 4

Ron BerghDistrict 5

John SloanSecretaryDistrict 6

Bill NordmarkCharimanDistrict 7

Eva Creek Wind• Online and fully commissioned on December 31, 2012• 25-megawatt project• 12 REpower cold climate turbines• Total project cost: $90 million• State appropriations: $13.4 million• Estimated annual capacity factor: 36%

• Helped GVEA achieve its Renewable Energy Pledge – 20% of peak load by 2014

• Will provide up to 75,000,000 kilowatt-hours annually; enough to power 9,450 average Interior homes

• GVEA was awarded Wind Cooperative of the Year in 2013 on behalf of the U.S. Department of Energy’s Wind Program and the National Rural Electric Cooperative Association.

Board of Directors

Where the dollar came from

Where the dollar went

PO Box 71249Fairbanks, AK 99707-1249

(907) 452-1151 · 1-800-770-GVEAwww.gvea.com

Cost of Power 70.29¢ Depreciation 6.92¢Interest Expense 5.77¢Maintenance & Operation of Lines 4.87¢Margins 4.79¢

Large General Service 59.25¢Residential 26.90¢Small General Service 11.35¢

Consumer Accounts Expense 3.31¢Administrative & General 3.28¢Other Deductions 0.53¢Taxes 0.24¢

Other Non-Operating Income 1.43¢Miscellaneous Service 1.07¢

1

2

3

4

5

Cost of Power

Depreciation

Interest Expense

Maintenance & Operationof Lines

Margins

Consumer AccountsExpense

AssetsCashAccounts ReceivableInventoriesOther Current Assets

Current Assets

Total Utility PlantLess Depreciation

Net Utility Plant

Investments – Non-UtilityInvestments – OtherRestricted FundsOther Assets

TOTAL ASSETS

2011$4,200,90230,818,72918,785,903

647,050$54,452,584

697,399,772(303,758,200)$393,641,572

12,645,7968,235,441

12,218,3128,187,133

$489,380,838

2012$12,906,91329,149,04519,661,537

604,129$62,321,624

779,626,669(322,437,734)$457,188,935

11,770,5999,049,307

28,789,68014,056,534

$583,176,679

LiabilitiesCurrent Long Term DebtNotes PayableAccounts PayableConsumer DepositsOther Current Liabilities

Current Liabilities

Long Term DebtDeferred CreditsOther Liabilities

Total LiabilitiesMargins & Equities

TOTAL LIABILITIES & EQUITIES

$12,846,8894,000,000

18,829,1621,617,1954,068,853

$41,362,099

302,766,4183,887,521

19,645,504$367,661,542$121,719,296

$489,380,838

$12,917,710 --

26,281,0681,768,4754,157,923

$45,125,176

381,309,6063,831,954

25,425,022$455,691,758$127,484,921

$583,176,679

Expenses

Power CostOperation & Maintenanceof Transmission/Distribution

Consumer CostsGeneral & AdministrativeDepreciationTaxesInterest ExpenseOther Deductions

TOTAL EXPENSES

Operating MarginsInterest IncomeOther Income

Non-Operating Margins

TOTAL MARGINS

2011

$173,864,384

13,104,2388,326,2769,104,216

18,941,860644,963

16,168,921448,660

$240,603,518

3,546,2461,592,5952,374,2353,966,830

$7,513,076

2012

$190,850,848

13,235,8418,975,8538,912,687

18,787,241649,265

15,655,0461,441,739

$258,508,520

9,122,468912,446

2,966,6333,879,079

$13,001,547

Statement of Income & Expenses

Balance Sheet (December 31, 2012 and 2011)

Income

Operating Revenue

TOTAL INCOME

2011

$244,149,764

$244,149,764

2012

$267,630,988

$267,630,988