Vital Signs: NRECA's Annual Summary of Distribution Cooperative Data

By Ganley, Mike; Olivier, Dave et al. | Management Quarterly, Winter 2005 | Go to article overview

Vital Signs: NRECA's Annual Summary of Distribution Cooperative Data


Ganley, Mike, Olivier, Dave, Williams, Louise, Management Quarterly


Vital Signs, first produced in 1985, is an annual analysis of the data reported by rural electric systems from the end of the previous calendar year. This year's report is based upon 2004 data from 821 distribution systems, representing 97% of all distribution cooperatives. All data is treated confidentially and no individual system data is released or published.

The 2004 operating data demonstrate that electric distribution cooperatives continue to have strong financial performance. The financial ratios are favorable and positive. Growth in sales and consumers is higher than for other utilities, while rates have been stable at a time when fuel costs are rising. Efficiency and productivity have continued to improve.

Cooperative Sales Growth

Distribution cooperatives sold 347 billion kWh in 2004, an increase of 3.6% over the prior year. Co-op sales growth was double the electric utility industry as a whole, which saw 1.8% sales growth in 2004 according to EIA Electric Power Monthly. Factors affecting the year to year change in retail electric sales include weather--which strongly impacts residential heating and cooling--and economic growth, which drives commercial and industrial sales. Most cooperative loads are highly residential and are therefore more sensitive to weather conditions.

During 2004, 330 cooperatives reported kWh sales growth of more than three percent; 294 cooperatives experienced sales growth of between zero and three percent; and 197 cooperatives reported a decline in kWh sales for the year.

Strongest Sales Growth

The map below shows the co-ops that had sales growth of 3% or more. The Southeast had strong sales growth due to a colder than average winter following on low sales the prior year (2003). Areas in the West posted strong sales as a result of record heat.

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Sales Decreased from Previous Year

Much of the Midwest had a relatively mild winter and cooler than normal summer. 2004 ranked as the sixth wettest year on record. As a result, Texas and New Mexico, states with significant irrigation, saw irrigation sales decline by as much as 30%.

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Co-op Consumer Growth is Strong

Cooperatives now serve nearly 17 million consumers, up 2.7% over last year. Typically, co-op consumer growth is higher than other segments of the electric utility industry. Many co-ops serve near extremely high-growth metropolitan areas. In recent years, a few coops have also added new consumers through acquisitions.

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Co-op Sales Outpace the Industry

Annual kWh sales for utilities vary from year to year according to weather and economic conditions. Cooperative sales growth generally surpasses that of the total electric utility industry and did so again in 2004. Cooperative residential sales increased 3%; C&I sales increased 5%; Irrigation sales declined nearly 9%. Net cooperative kWh sales growth was 3.6%. (California's electricity crisis contributed to the steep decline in industry sales in 2001.)

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High Consumer Growth Widespread

One third of all cooperatives experienced strong consumer growth (over 2%) in 2004. Co-ops are experiencing high growth in all parts of the country, not just the fast-growing regions of the Southeast and West. Retirement migration, recreation activity and the expansion of metropolitan areas have brought many new consumers to co-op service areas. The lowest growth rates are typically in the Great Plains states. Only 43 cooperatives actually lost consumers in 2004.

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Cooperatives Lead Industry in Consumer Growth

From 2002 through 2004, the rate of growth for cooperatives has been approximately double that of traditional investor-owned utilities (IOU). Co-ops grew 2.7% overall in 2004, adding 445,000 customers (meters). …

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