As we progress through this year, I want to take a moment to update you on Todd-Wadena Electric Cooperative’s financial scorecard. Although the cooperative’s commitment to providing safe, reliable, and affordable electric service remains unwavering, a myriad of financial headwinds will require careful attention to ensure continued stability.
In August, TWEC’s sales were 2.1 million kWhs (14%) under the budgeted amount; year-to-date sales are 11% under budget. This represents an 8% revenue shortfall. One of the primary reasons behind this shortfall in electric sales was the atypical weather we experienced over the past year. The warmer-than-average winter and cooler-than-average summer directly impacted the cooperative’s revenue.
While TWEC’s sales and revenue are significantly below the levels we anticipated, there has been positive progress in managing our expenses. Controllable expenses are under budget year-to-date. Fixed expenses are also below budget for the year. However, despite these savings, the cooperative is still facing challenges with its margins. Todd-Wadena’s operating margin is currently $172,000 under budget, with net margins for the year $132,000 below the budgeted amount.
Adding to these financial challenges, the electric industry continues to experience rising costs in critical areas. Over the past few years, inflation has significantly impacted the cost of materials essential to operations. The cost of overhead transformers, cables, poles, and other required materials has contributed to increases throughout the year. These material cost increases are placing considerable strain on our budget. In addition to inflationary pressures, we are also dealing with ongoing and projected power cost increases from our power supplier, which are manifesting as higher rates and power cost adjustments.
Thank you for your ongoing trust and support. I remain confident that by working together, we can navigate these challenges and continue to build a strong future for Todd-Wadena Electric Cooperative.
