Big Rivers is positioned to thrive today and in the years to come.
Big Rivers is committed to building the brightest and most financially stable future for our organization and our three Member-Owners—Jackson Purchase Energy Corporation, Kenergy Corporation and Meade County Rural Electric Cooperative Corporation. Every year brings its own opportunities and challenges, and we are proud to report that 2015 has been a time of strengthening and growth. Big Rivers feels confident we have the leadership and resources in place to continue exceeding our goals and capitalizing on success.
Our employees remain our most valuable corporate asset, providing us with the skills and dedication to excel. The top priority is to provide a safe work environment, and Big Rivers has further improved our outstanding safety record. Sebree Station was recognized this year with its 11th Governor’s Safety and Health Award, bringing the company total to 39 and maintaining our position as the most decorated entity in the Commonwealth of Kentucky. While the recognition is flattering, the real reward is knowing that our employees have been able to return home to their families unharmed.
Big Rivers’ generation facilities are also garnering positive attention on the national level, with HMP&L Station Two winning Top Performer and D.B. Wilson Station earning Runner-Up for their categories in the Navigant Generation Knowledge Service Operational Excellence Awards. This accomplishment highlights the high standard of operation and cost-efficiency of our power-producing resources, and marks our fifth Navigant GKS Operational Excellence Award company-wide in the last four years. On the transmission level, we now maintain an extensive network of 1,295 miles of transmission lines and 22 substations. Big Rivers completed upgrades in 2015 that will improve reliability for our Member-Owners, and we look to launch innovative and automated technology in 2016 to further enhance our response to outages.
Our energy sales are expanding within our Kentucky territory and across the Midwest, allowing Big Rivers to find profitable arrangements for our excess power and return those financial benefits to our Member-Owners. The Kentucky Public Service Commission approved a nine-year contract to sell capacity and energy to several Nebraska entities, with power projected to start flowing in 2018. Our short-term contracts have tripled in volume since 2014, bringing us more stability in the volatile energy market. The company is also experiencing significant internal load growth and working with the first consumer to utilize our exceptional Economic Development Incentive Rate in its business expansion.
Big Rivers is navigating an ever-changing regulatory environment by balancing optimal compliance and the best value for our Member-Owners. We are dedicated to protecting our local communities and meeting all federal and state environmental requirements. Big Rivers is currently undergoing a multimillion dollar renovation at two generating facilities to comply with the Mercury Air Toxics Standards, one of the latest federal regulations. While many coal-fired utilities have major environmental concerns over the upcoming Clean Power Plan, our experienced team is exploring compliance options years in advance and communicating with lawmakers and stakeholders about the potential impacts. The planning and approval process is also underway to develop multiple solar arrays, giving our Member-Owners the opportunity to examine the technology and costs related to alternative power sources.
The findings and final action plan of a Focused Audit were issued this year, bringing closure and providing support for Big Rivers’ past decisions and future plans. The Focused Audit was ordered by the Kentucky Public Service Commission, and our leadership team and employees invested a great deal of time and effort in working with the auditors to ensure they had an accurate picture of our past, present and future operations. Those auditors made 23 findings, many of which were positive or neutral toward Big Rivers’ efforts, and only five recommendations.
Our organization was already undertaking four of those recommendations, including increasing our in-house expertise regarding the Midcontinent Independent System Operator (MISO) market, pursuing new energy sales and analyzing the best use of currently-idled Coleman Station. Most importantly, the final report highlighted our mitigation successes and the value of both Wilson and Coleman Stations.
We have the obligation and ability to provide our Member-Owners with some of the best electricity rates in the Commonwealth and the country, and Big Rivers will look to minimize the effects of electric rate increases. Reserve funds allowed the company to offset impacts from a 2014 rate increase until this past summer for industrial consumers, and those funds will continue to offset rates for residential consumers until the summer of 2016. Forward sales reduced our Member-Owners’ Fuel Adjustment Charge by approximately $8.2 million in 2015, and Big Rivers is on track to flow an additional $4.6 million in margins back to our Member-Owners in 2015 and 2016. Moving forward, margins from the long-term contract with several Nebraska utilities will also be returned to our Member-Owners through a rate rider mechanism.
Our efficient assets advance our mission to safely deliver competitive and reliable wholesale power and align us with our vision to be viewed as one of the nation’s top generation and transmission cooperatives.
In closing, we believe our longstanding values and recent accomplishments are reinforcing an already strong framework, giving Big Rivers the “Power to Thrive” today and in the years ahead.
Chair, Board of Directors
Robert W. Berry
President and CEO