March 2017issue of the

electric eye

M i n n e s ota Va l l e y e l e c t r i c c o o p e r at i V e AnnuAl RepoRt

for the fiscal year 2016

In honor of MVEC’s 80th anniversaryeach registered household or business in

attendance will receive a $20 bill credit to be

applied to your MVEC electric account. Must be

registered by 7 p.m. to receive the $20

bill credit and be eligible for prizes.

See you on April 4MVEC’s 80th Annual Meeting will be held 7 p.m.Tuesday, April 4, at Shepherd of the Lake LutheranChurch, 3611 Shepherds Path NW in Prior Lake. Registration begins at 6:30 p.m.

The business meeting will feature cooperative updates from general manager Ryan Hentges,

and Gerry Mareck, vice president of finance,who will give the 2016 financial report.

Election ballots, including proposedArticle and Bylaw changes, will bemailed to your home or business in early March.

Board President Brent Lawrence in MVEC’s dispatch center withsystem operator Pete Mladek and line foreman Bryan Ott.

You are a part of the TeamTeamwork is fundamental at your electric

cooperative. The saying “there’s no I in team” is a

constant reminder that team members work

together to make positive impacts. MVEC’s team

has three critical players: you – the member-owner,

the employees and your Board of Directors.

Elected by MVEC member-ownersto govern the cooperative.

Committed to create exceptionalmember experiences, while safelyproviding reliable energy at cost.

Dedicated to serving MVECmember-owners and exceedingtheir expectations by working

safely and efficiently in bringingpower to homes and businesses.

Empowered to give valuable inputto the cooperative so they can

benefit from value-added services,innovative technology and money-

saving programs and products.

Approved returning more than $1.3 million back to current and

former members in Capital Credits.

Saved the cooperative and itsmembers $5.9 million in wholesale power costs.

Rated the cooperative favorably on a 10-point scale in these areas:

Reliability: 9.05Competitive Rates: 8.48

Environmental Concern: 8.73Responsiveness: 9.18

Achieved an 89 member satisfactionscore out of 100. (National co-op

average: 76, investor owned utilities:72 and municipal utilities: 68.)

Maintained 101,475 hours ofworking without a lost time injury.

Here’s how everyone played their part in 2016:

Team work is paying off and creating many opportunities for your cooperative to besuccessful. I’m proud to be your Board of Director president. It is a privilege serving you.

41,500+ Members 9 Board Members85 Employees

2017 Annual Report_Layout 1 2/27/2017 8:25 AM Page 1

SmartHub

Co-op ConnectionsCard program

Members increasingly enjoythe convenience of MVEC’sonline account program,SmartHub. In all, there were155,102 sessions recorded in2016 for bill access and usagecomparisons.

Since 2011, this benefit ofco-op membership hasgiven members who usethe card an average 37%savings on pharmacy costs,for a total savings of:

Our service area:Miles of Line: 3,944 Number of Poles: 42,696Size of service area: 968 square miles in 9 counties

Members are increasingly turning to MVEC’s online out-age map for information. During outages July 4-5 due tostorms this past summer, the outage map recorded 3,044views in one 24-hour period. The previous high traffic daywas 1,970 on Dec. 11, 2014.

Your 2016 cooperative highlights

In 2016, outages were caused by: trees - 43%, storms - 34%, vehicle and diggingaccidents - 11%, animals (mostly squirrels) - 10% and miscellaneous - 2%.The amount of scholarship money MVEC has awarded to area

high school seniors since the program was established in 2012.

½

75,811payments

made

24,477memberslooked at

billinghistory

15,174memberscomparedlast year’s

usage

$43,138.41

Rebates paid back to members:

24/7/365 member service online:

$16,125 for Energy Star appliances

$93,930 for residential Energy Wise heating and cooling

$125,607 for business memberenergy efficiency improvements

37,048Mobile Phone

Desktop Computer

8,525Tablet

83,357

Facebooklikes grew

25% to 1,349by the end of

2016

In the past two years, MVEC’s websitetraffic continues to shift from desktop

computers to mobile devices

Operation Round Updonated:

$106,622Since 1985: over $1.5 million

to 652 groups

Thanks for callingbefore you dig!

Nearly 30,000Gopher State One Call

tickets were requested.That’s a lot of under-ground line locating!

®

835 new services installed

$525,235 in bill credits earned to

members who participatein Energy Wise

cooling and electric waterheating programs

16,511total

participants

35.1 megawatthours of electricitysaved in 6 Beat the Peak

energy reduction events isequal to 5 hours of runningthe 1,750,000-square-footU.S. Bank Studium during

a Vikings game.

29 teams, 2,500+households competed for$18,000 in prize money

$53,000

QuickStats

Total Services:41,500+

Employees: 85 full time

Plant Investment:$164 million

Annual revenue:$84.7 million

Wholesale PowerCost:

$61.5 million

Installed:Improvements weremade throughout thesystem to improvecapacity and reliability,including:

Tran

sfor

mer

s

New

Sub

stati

on

Util

ity P

oles

Ove

rhea

d Po

wer

Lin

e

Und

ergr

ound

Pow

er L

ine

1971

657

468,578 feet

399,208 feet

.71/member

58Minutes

81Minutes

The average number ofoutages a member may haveexperienced in 2016.(In many cases members ex-perienced no outages in 2016.)

Average number of minutes members werewithout power during 2016.(12,681 members out of 41,500were affected by outages caused bypublic accidents!)

Lending a hand:MVEC donated energy efficient appliances to theSibley County Food Shelf, New Prague Habitat forHumanity, the Le Sueur County Fairgrounds andother projects totaling $45,022.

Average duration of anMVEC outage in 2016.(This includes the time it takesafter hours for crew to arrive onthe scene, assess the situationand restore all power.)

Up156%

Up48%

Down18%

Community matters:In 2016, MVEC sponsored town celebrations, high school sporting events, county fairs, 5k runs, dairy princess

banquets, a winter light show, a 4-H cow, veterans events  and more. Employees volunteered at the Ryder Cup, earlychildhood vehicle fair, high school career day, parades, a wooden

quilt square installation, multiple safety demos and more.

2017 Annual Report_Layout 1 2/27/2017 9:38 AM Page 2

SmartHub

Co-op ConnectionsCard program

Members increasingly enjoythe convenience of MVEC’sonline account program,SmartHub. In all, there were155,102 sessions recorded in2016 for bill access and usagecomparisons.

Since 2011, this benefit ofco-op membership hasgiven members who usethe card an average 37%savings on pharmacy costs,for a total savings of:

Our service area:Miles of Line: 3,944 Number of Poles: 42,696Size of service area: 968 square miles in 9 counties

Members are increasingly turning to MVEC’s online out-age map for information. During outages July 4-5 due tostorms this past summer, the outage map recorded 3,044views in one 24-hour period. The previous high traffic daywas 1,970 on Dec. 11, 2014.

Your 2016 cooperative highlights

In 2016, outages were caused by: trees - 43%, storms - 34%, vehicle and diggingaccidents - 11%, animals (mostly squirrels) - 10% and miscellaneous - 2%.The amount of scholarship money MVEC has awarded to area

high school seniors since the program was established in 2012.

½

75,811payments

made

24,477memberslooked at

billinghistory

15,174memberscomparedlast year’s

usage

$43,138.41

Rebates paid back to members:

24/7/365 member service online:

$16,125 for Energy Star appliances

$93,930 for residential Energy Wise heating and cooling

$125,607 for business memberenergy efficiency improvements

37,048Mobile Phone

Desktop Computer

8,525Tablet

83,357

Facebooklikes grew

25% to 1,349by the end of

2016

In the past two years, MVEC’s websitetraffic continues to shift from desktop

computers to mobile devices

Operation Round Updonated:

$106,622Since 1985: over $1.5 million

to 652 groups

Thanks for callingbefore you dig!

Nearly 30,000Gopher State One Call

tickets were requested.That’s a lot of under-ground line locating!

®

835 new services installed

$525,235 in bill credits earned to

members who participatein Energy Wise

cooling and electric waterheating programs

16,511total

participants

35.1 megawatthours of electricitysaved in 6 Beat the Peak

energy reduction events isequal to 5 hours of runningthe 1,750,000-square-footU.S. Bank Studium during

a Vikings game.

29 teams, 2,500+households competed for$18,000 in prize money

$53,000

QuickStats

Total Services:41,500+

Employees: 85 full time

Plant Investment:$164 million

Annual revenue:$84.7 million

Wholesale PowerCost:

$61.5 million

Installed:Improvements weremade throughout thesystem to improvecapacity and reliability,including:

Tran

sfor

mer

s

New

Sub

stati

on

Util

ity P

oles

Ove

rhea

d Po

wer

Lin

e

Und

ergr

ound

Pow

er L

ine

1971

657

468,578 feet

399,208 feet

.71/member

58Minutes

81Minutes

The average number ofoutages a member may haveexperienced in 2016.(In many cases members ex-perienced no outages in 2016.)

Average number of minutes members werewithout power during 2016.(12,681 members out of 41,500were affected by outages caused bypublic accidents!)

Lending a hand:MVEC donated energy efficient appliances to theSibley County Food Shelf, New Prague Habitat forHumanity, the Le Sueur County Fairgrounds andother projects totaling $45,022.

Average duration of anMVEC outage in 2016.(This includes the time it takesafter hours for crew to arrive onthe scene, assess the situationand restore all power.)

Up156%

Up48%

Down18%

Community matters:In 2016, MVEC sponsored town celebrations, high school sporting events, county fairs, 5k runs, dairy princess

banquets, a winter light show, a 4-H cow, veterans events  and more. Employees volunteered at the Ryder Cup, earlychildhood vehicle fair, high school career day, parades, a wooden

quilt square installation, multiple safety demos and more.

2017 Annual Report_Layout 1 2/27/2017 9:38 AM Page 2

Balance SheetOperating Statement

Total Liabilities and Equity

$186,410,000

Net Margins $4,508,000 $2,670,000

OperatingStatement

AnnualEnergy

Sold

Rate

Trends

Revenues

Expenses• Wholesale Power Costs• Operating Expenses• Depreciation, Interest & Taxes

Total ExpensesOther Income

$84,304,000

$61,031,000$12,920,000$9,207,000

$83,158,000$3,362,000

$76,893,000

$55,053,000$12,877,000$7,978,000

$75,908,000$1,685,000

2016 2015

Cost to

Deliver

Growth helps spread all local costs overmore kWh which keeps the cost to deliverportion of your bill minimally impacted.

Your electric bill has two cost drivers;wholesale power cost, and MVEC localexpense (cost to deliver as shown on yourbill). While both have increased in totaldollars during the 10-year period, local costper kWh has remained relatively flat.

Power used in your business or household (knownas cost to generate) averages over 70 percent ofyour monthly bill. After adding in local costs toensure reliability, and the margin requirement asgoverned by the cooperative's loan covenants,MVEC average rate still remains 10-15 percentbelow the national average.

Summary: Your cooperative is financially strong.

fiscal year

2016

M i n n e s ota Va l l e y e l e c t r i c c o o p e r at i V e FInAnCIAl StAteMent

• Plant Investment (poles, wires, etc.)

$163,703,000

less depreciation:

$42,373,000

• Investments

$36,876,000

• Current Assets

$21,670,000

• Rate Stabilization Reserve Fund

$6,467,000

• Other Assets

$67,000

Total Assets $186,410,000

• Current and Accrued Liabilities

$27,541,000

• Long-Term Obligations

$86,539,000

• Deferred Credits

$7,261,000

Total Equity

$65,069,000

2017 Annual Report_Layout 1 2/27/2017 8:25 AM Page 4