The Warm Winter is Impacting the Finances of the Nushagak Cooperative

Feb 21, 2014

This winter has been unseasonably warm in the Bristol Bay region despite the cold snap that hit the region earlier this month. The unseasonably warm winter has resulted in lower heating costs for most residents and businesses. However, the warm winter is concerning to officials with the local electricity provider for the Dillingham area.

A discussion broke out at the recent Nushagak Cooperative Board of Directors meeting about the impact of the warm weather on the Cooperatives business model. Mike Megli is CEO of the Cooperative.

“We’re not selling electrons like we thought we would be. It’s been pretty warm so far. We’re not doing well financially.”

Through December 31st the Cooperative has taken in $584-thousand fewer dollars than anticipated in the budget while at the same time expenses were only down $133.6-thousand dollars compared to the budget. The January numbers are not yet tabulated but a Cooperative staffer suggests they are not seeing the needed increase in kilowatt sales to get the numbers closer to the budget. Tuesday night’s discussion was started by Board member Chris Napoli.

“If the trend continues the trickle-down effect on cash flow and paying down long term debt could be an issue.”

Coop Business Manager Nancy Favors confirmed that it’s already and issue prompting internal discussions about the Cooperative’s options. CEO Megli didn’t have any recommendations for the Board at Tuesday night’s meeting but he reported that recommendations would likely be forthcoming in March or April once the results are known from the annual audit of the Cooperative’s finances. Some of the possible options discussed during Tuesday’s meeting included using smart meters and possibly an additional rate increase on top of the recent increase of .005 cents per kilowatt hour. Longtime Board member Henry Strub says the solution is to sell more electricity.

“That’s our problem right now, were not selling enough electricity. Peter Pan has a really optimistic projection for this year’s fishing season so I think we are going to do better than we did last year off those sales.”

It’s likely that the financial situation of the Nushagak Cooperative will be addressed during the Cooperative’s annual membership meeting scheduled for April 10th. That meeting will also feature an election for 3 seats on the Board of Directors. However, the only announced candidates are the 3 incumbents… Pete Andrew, Chris Napoli and Rae Belle Whitcomb.