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BOYNE CITY & GLADSTONE, MICHIGAN--Officials from Great Lakes Energy (GLE) Cooperative, headquartered in Boyne City, MI, and Alger Delta Cooperative Electric Association, headquartered in Gladstone, MI, are engaged in discussions and associated due diligence to explore combining the two member-owned electric cooperatives into one larger organization.

“We are excited about exploring the benefits of combining our two electric cooperatives,” said Richard Walsworth, GLE Chairman. “There could be many operational and financial benefits for the member-consumers served by both of our organizations.”

A merger of GLE and Alger Delta would require an affirmative membership vote from the member-consumers served by each of the cooperatives. The cooperatives’ respective membership votes could come in early 2015 if the merger is approved by the two organizations’ boards of directors.

The potential benefits for both cooperatives could be significant. GLE members would benefit from the growth associated with the addition of 10,000 Alger Delta members, including increased margins and the ability to spread fixed costs over a larger consumer base. Rates could be also be stabilized by the longer term merger benefits.

Potential benefits for Alger Delta members would include increased investment in key operational areas such as tree trimming and distribution system automation leading to improvements in electrical reliability and an enhanced level of service to members. Using current retail rates, the average Alger Delta residential member would save more than $24 per month on GLE’s rates.

Board Passes 2015 Budget – No Rate Increases Planned At its regular board meeting on October 15, the Alger Delta board of directors adopted the 2015 budget. The budget was presented to the Finance and Rates Committee by Chief Financial Officer (CFO) Amanda Seger. Committee members Sam Simonetta (District 2 – Harvey/Deerton), Nancy Gardner-Platt (District 3 – Grand Marais), and Mike Nason (District 9 – Big Bay) supported the budget plan and Chairperson Gardner-Platt recommended the full board adopt the plan.

In round figures, the 2015 budget anticipates $13.9 million in revenue from sales of electricity. This represents a one-percent increase over fiscal 2014.

Alger Delta plans to increase tree trimming expense by 15% and plans increased investment in operations and maintenance, technology upgrades including its mapping system and computers, integration with the outage management system (OMS) and more. Some of the expense increases will be offset by decreases in other areas.

Wholesale power costs are expected to rise due to the impact of the Presque Isle Power Plant (PIPP) System Support Resource (SSR) payments mandated by the Midcontinent Independent System Operator (MISO). There is no corresponding rate increase planned.

Total expenses are budgeted at $13.5 million, yielding an operating margin of $400,000. Non-operating margins and other credits are expected to add another $400,000 to the bottom line for a budgeted net margin of about $800,000. The margins are expected to produce a TIER of 1.676 which will keep the cooperative within the financial operating requirements set by the federal government and lenders.

“It is important for members to know their co-op is operating in the black – as we have done for the past several years now – and that staff is looking out for the members” said Tom Harrell, Alger Delta’s CEO. “This is the fourth year in a row we have held steady on rates and fees, and we’re really proud of that” he added. The cooperative recently retired capital credits for the first time in fifty years. “Some members might consider the capital credit retirements symbolic because some of them are small amounts. But, it’s important to start somewhere, and to emphasize the difference between being a cooperative member and just a customer” Seger said. Seger went on to say that Alger Delta has increased equity in the past several years. “We’re moving the needles in the right direction” she added.