moon lake electric 2014 annual report

2014 AnnuAl RepoRtEvery Member Counts

Moon Lake Electric

Moon Lake Electric’s headquarters office and warehouse facilities are locatedat 800 West US Hwy. 40 in Roosevelt. Branch offices are located in

Altamont and Duchesne, Utah, and Rangely, Colorado

Annual Meeting programMoon lake electric Headquarters operations Building800 W. Hwy. 40 in Roosevelt, utah

June 4, 2015

In-person Voting for District 2 ..........................5:00 p.m. - 6:00 p.m.

Family Barbecue ................................................5:00 p.m. - 6:30 p.m.

Business Report & Questions General Manager/Ceo ...................................................6:30 p.m.

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table of Contents

1. Board president & General Manager/Ceo Report ..............1

2. Board of Directors – elected by You .......................................2

3. employees Count – Dedicated to Serve You ...........................3

4. our pledge to the Youth Counts ..............................................4

5. Report of the Secretary – treasurer ........................................5

6. Annual Meeting Ballot ..............................................................6

7. Safety Counts .............................................................................7

8. Financial Statements ........................................................... 8-15

9. 2014 Annual Meeting Minutes ......................................... 16-20

- 1 -Grant J. earl

General Manager/CEO

Brad CastoBoard President

Board president & General Manager/Ceo ReportOn behalf of the Board of Directors, Management Staff and Employees of Moon Lake Electric Association, Inc., we are pleased to bring you the 2014 Annual Report. We would like to ask you to review the report, which contains information about the overall condition of your electric cooperative.

Moon Lake Electric continued to see growth, in nearly all classes of mem-bership, on our system in 2014. This growth by our membership required an investment of $16,250,000 in new plant to meet its needs. Total Plant value now stands at over $217 million.

In 2014, we were again able to meet our budget and ended the year with positive margins. This enabled us to continue upgrading our lines and substations without the need to borrow money. Moon Lake Electric is happy to inform you, our member-owners that we are financially healthy and completed 2014 with an adjusted equity ratio of 75 percent. However, due to continued increased costs and a nearly 9 percent wholesale power rate increase in January, Moon Lake is monitoring our rates and may need to modify rates in the fall. We say modify because changes may be necessary in the residential tariff block rates and all the tariff “customer charges”, as well as, a percentage increase. Also, based on the projections of many of the energy producers in the Moon Lake service territory, we are studying the need to build an additional 138,000 volt

transmission line from the Bonanza Plant into the Ioka area, to meet the growing demands.

Be assured that the Board of Directors, Management Staff and Em-ployees are engaged in the issues that affect Moon Lake Electric. As always, we welcome your input and participation – this is your company, and we are honored to be able to serve you and your families. We will continue to work hard to earn and keep your trust and confidence…and when it comes to keeping the power on, we can confidently say that every member counts.

Sincerely, Sincerely, Brad Casto Grant J. Earl

Board President General Manager/CEO

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our employees Count – Dedicated to Serve YouAt Moon Lake Electric one of our most important assets is the extensive knowledge base, deep-rooted professionalism and unwavering commitment of our highly-qualified, diverse employees. These employees are the core of who we are and what we do. They donate countless hours to local emergency response teams, youth activities and sports, community celebrations, and beautification efforts. Our great employees make sure that we live true to our values and purpose. We appreciate their efforts to help wherever they are needed, and we recognize their dedication to the members of Moon Lake Electric as they carry out their job responsibilities in a safe and efficient manner. We know that we can count on them to provide you with the best service possible.

We express deep appreciation to our Board of Directors, Employees, and Members for making 2014 another successful year. The success we have attained and the value we have been able to provide are due to their dedication to Moon Lake Electric.

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our pledge to the Youth Counts:This year marks over 30 years of the Utah Rural Electric Youth Leadership Conference. Each year Moon Lake has sponsored juniors from the local high schools at the week-long conference where participants are able to meet with others from rural areas and develop leadership skills, build self-esteem, and make new friends. They also learn about cooperatives, the legislative pro-cess, and teamwork.

The conference will be held at Snow College the week of July 13-17 and promises to be a great opportunity for learning and growing through many varied activities. This year Moon Lake has 31 students registered to attend the conference from Duchesne, Union, Rangely, and Altamont High Schools.

Moon Lake Electric will also be sending a student on the NRECA Youth Tour to Washington, D.C. They will have the opportunity to travel to Washington, D. C., where they will meet their U.S. Representatives and Senator. This unique trip will give them the opportunity to watch histo-ry come alive as they explore the museum, memorials and monuments with 1,500 other students from across America. This student will be chosen from the participants at the Utah Rural Electric Youth Leadership Conference. Several local high school graduates are off to college this fall with Educational Assistance grants from Moon Lake Electric to help them achieve their educational goals. The grants are available to graduating high school seniors who live on the Moon Lake system. Students must submit an application, meet eligibility requirements, and participate in a personal interview with Moon Lake’s Member Selection Committee. Over the last 10 years, Moon Lake is proud to have given out over $85,000.00 in scholarship grant funds to the youth of our community.Helping the youth of our area achieve their educational goals is one more way Moon Lake gives back to the communities we serve. We are pleased to be in a position to assist these well deserv-ing young people and believe it is an investment that that will yield great returns.

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Report of the Secretary-treasurerI am pleased to report that Moon Lake Electric experienced another good year, ending 2014 in a strong financial position with a margin of $3,874,760. The Cooperative continues to expe-rience financial growth as a result of maintaining its revenue sources and at the same time control-ling its expenses.

All members of the association are encouraged to carefully examine this annual report. Included are the balance sheet as of De-cember 31, 2014, and the statements of revenue and expense for the same year. Also, shown are the trends of the previous year.

At Moon Lake Electric, rates are determined locally by the Board of Directors, elected by you. While dealing with inflationary pressures and maintaining an ag-gressive modernization program of system upgrades the past few years, tariff rates to our members have remained stable for over 30 years, and we remain committed to keeping your power rates as low as possible for as long as possible.

We are proud to be a community partner, helping wherever possible to make a positive difference in the lives of our members. We do millions of dollars of busi-ness locally, employ 94 full-time employees, and participate in many charitable and community events.

In my opinion, the financial report fairly presents the financial position of Moon Lake Electric Association for the year ending December 31, 2014, and is in con-formity with accepted accounting principles applied on a basis consistent with that of the preceding year.

Respectfully submitted, tamara Vincent Secretary-Treasurer

Key Statistics for 2014

Services in Place20,979

Kilowatt-hours Sold1,084,070,053

Services Per Mile of Line5.30

Total Plant Value$217,511,296

Long-Term Debt$9,698,812

Miles of Transmission Line363

Miles of Distribution LineUnderground - 282Overhead - 3,280

Total Miles of Line3,925

New Services Connected669

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Safety CountsAt Moon Lake Electric, we place the highest priority on the safety of our customers, our employees, and our community. Electricity is a safe economical energy source that provides our members with the many conveniences we enjoy at work and play. Following simple safety guidelines can help make sure you stay safe at home and on the job.

It is vital that our members understand the importance of elec-trical safety at home, where electric potential is measured in hundreds of volts and can cause serious injury. On the electric grid where electric currents can be more than 1,000 times as

powerful, safety can be a matter of life and death.

Please remember to look up when working outdoors. Be sensitive about where you plant new trees. Also of concern is the risk involved

in locating a haystack or building under a high voltage power line. When this occurs, clearances are reduced and a hazard exists for children or adults who might climb on top of the haystack or structure.

Be extra careful when moving irrigation pipes. Many electrical accidents on farms occur when irrigation pipes are accidentally raised into power lines.

One aspect of our safety program involves our safety trailer demonstrations. Moon Lake’s Safety Coordinator, Curtis Miles, conducts safety demonstrations each year at various schools, businesses, clubs, and events throughout the Moon Lake system. The presentation catches the attention of chil-dren and adults alike as Curtis demonstrates what can happen, using a zapped hot dog or grapefruit experiment, if a person were to come in contact with overhead or underground power lines. Hun-dreds of school kids have taken part in these safety demonstrations and each of them walk away with a new-found respect for electricity. Give Curtis a call at our Roosevelt office if you would like to schedule a safety demonstration for your group.

Contact with a power line creates a path to ground for electricity. If you are in that path, electricity will flow through you. That will result in a serious, or even fatal, accident.

Consider all power lines to be energized, no matter what they look like! - 7 -

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Financial Statements as of December 31, 2014 and 2013 To the Board of Directors Moon Lake Electric Association, Inc. We have audited the accompanying financial statements of Moon Lake Electric Association, Inc., which comprise the balance sheets as of December 31, 2014 and 2013, and the related statements of revenues and expenses, patronage capital, and cash flows for the years then ended, and the related notes to the financial statements.

Management's Responsibility for the Financial Statements Management is responsible for the preparation and fair presentation of these financial statements in accordance with accounting principles generally accepted in the United States of America; this includes the design, implementation, and maintenance of internal control relevant to the preparation and fair presentation of financial statements that are free from material misstatement, whether due to fraud or error.

Auditors' Responsibility Our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits in accordance with auditing standards generally accepted in the United States of America. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free from material misstatement.

An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on the auditor's judgment, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the Association's preparation and fair presentation of the financial statements in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Association's internal control. Accordingly, we express no such opinion. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of significant accounting estimates made by management, as well as evaluating the overall presentation of the financial statements.

We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion.

opinion In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of Moon Lake Electric Association, Inc. as of December 31, 2014 and 2013, and the results of their operations and their cash flows for the years then ended in accordance with accounting principles generally accepted in the United States of America. Aycock, Miles & Associates, CPAs April 26, 2015

2014 2013Assets

Utility plant:Electric plant in service, at cost 131,495,804$ 129,047,671$ Construction in progress 7,526,197$ 7,098,971$ Customer payments in aid of construction (7,843,752) (7,794,136)

Total utility plant, at cost 131,178,249 128,352,506 Less accumulated depreciation (60,943,857) (58,125,118)

Net utility plant 70,234,392 70,227,388

Investments in associated organizations, at cost 3,264,814 3,112,289

Current assets:Cash and cash equivalents 11,388,443 11,554,347 Investments 12,021,237 4,000,000

5,772,661 5,907,779 Accounts receivable, other 2,610,386 3,828,499 Contracts receivable 52,907 54,477 Material and supplies, at average cost 3,884,882 3,947,018 Prepayments 127,590 129,777

Total current assets 35,858,106 29,421,897 Total assets and other debits 109,357,312$ 102,761,574$

liabilities and equityEquities and margins:

Patronage capital 82,934,682$ 78,953,721$ Accumulated other comprehensive income (2,548,100) (2,441,900)

Total equity 80,386,582 76,511,821

Long-term liabilities:CFC mortgage notes 9,698,812 10,085,829 Capital lease obligations 189,279 251,398 Accumulated retirement benefit obligation 2,548,100 2,441,900

Total long-term liabilities 12,436,191 12,779,127

Current liabilities:Current portion of long-term debt 387,017 463,393 Current obligation of capital leases 62,119 58,837 Accounts payable, power 9,657,489 9,391,225 Accounts payable, other 1,489,655 532,458 Customer deposits 352,845 369,295 Accrued payroll & payroll liabilities 759,336 697,113 Accrued vacation, sick & holiday 1,599,488 1,592,463 Accrued interest 56,000 59,600 Other current liabilities 204,375 64,578

Total current liabilities 14,568,324 13,228,962

Deferred credits & grants 1,966,215 241,664 Total equity, liabilities and other credits 109,357,312$ 102,761,574$

Notes and receivable less allowances for doubtful accounts of $59,004 in 2014 and $50,335 in 2013

Balance SheetFinancial Statements as of December 31, 2014 and 2013 To the Board of Directors Moon Lake Electric Association, Inc. We have audited the accompanying financial statements of Moon Lake Electric Association, Inc., which comprise the balance sheets as of December 31, 2014 and 2013, and the related statements of revenues and expenses, patronage capital, and cash flows for the years then ended, and the related notes to the financial statements.

Management's Responsibility for the Financial Statements Management is responsible for the preparation and fair presentation of these financial statements in accordance with accounting principles generally accepted in the United States of America; this includes the design, implementation, and maintenance of internal control relevant to the preparation and fair presentation of financial statements that are free from material misstatement, whether due to fraud or error.

Auditors' Responsibility Our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits in accordance with auditing standards generally accepted in the United States of America. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free from material misstatement.

An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on the auditor's judgment, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the Association's preparation and fair presentation of the financial statements in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Association's internal control. Accordingly, we express no such opinion. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of significant accounting estimates made by management, as well as evaluating the overall presentation of the financial statements.

We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion.

opinion In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of Moon Lake Electric Association, Inc. as of December 31, 2014 and 2013, and the results of their operations and their cash flows for the years then ended in accordance with accounting principles generally accepted in the United States of America. Aycock, Miles & Associates, CPAs April 26, 2015

2014 2013Assets

Utility plant:Electric plant in service, at cost 131,495,804$ 129,047,671$ Construction in progress 7,526,197$ 7,098,971$ Customer payments in aid of construction (7,843,752) (7,794,136)

Total utility plant, at cost 131,178,249 128,352,506 Less accumulated depreciation (60,943,857) (58,125,118)

Net utility plant 70,234,392 70,227,388

Investments in associated organizations, at cost 3,264,814 3,112,289

Current assets:Cash and cash equivalents 11,388,443 11,554,347 Investments 12,021,237 4,000,000

5,772,661 5,907,779 Accounts receivable, other 2,610,386 3,828,499 Contracts receivable 52,907 54,477 Material and supplies, at average cost 3,884,882 3,947,018 Prepayments 127,590 129,777

Total current assets 35,858,106 29,421,897 Total assets and other debits 109,357,312$ 102,761,574$

liabilities and equityEquities and margins:

Patronage capital 82,934,682$ 78,953,721$ Accumulated other comprehensive income (2,548,100) (2,441,900)

Total equity 80,386,582 76,511,821

Long-term liabilities:CFC mortgage notes 9,698,812 10,085,829 Capital lease obligations 189,279 251,398 Accumulated retirement benefit obligation 2,548,100 2,441,900

Total long-term liabilities 12,436,191 12,779,127

Current liabilities:Current portion of long-term debt 387,017 463,393 Current obligation of capital leases 62,119 58,837 Accounts payable, power 9,657,489 9,391,225 Accounts payable, other 1,489,655 532,458 Customer deposits 352,845 369,295 Accrued payroll & payroll liabilities 759,336 697,113 Accrued vacation, sick & holiday 1,599,488 1,592,463 Accrued interest 56,000 59,600 Other current liabilities 204,375 64,578

Total current liabilities 14,568,324 13,228,962

Deferred credits & grants 1,966,215 241,664 Total equity, liabilities and other credits 109,357,312$ 102,761,574$

Notes and receivable less allowances for doubtful accounts of $59,004 in 2014 and $50,335 in 2013

Balance Sheet

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2014 2013operating revenue 73,568,892$ 68,812,382$

Cost of electric service:

Power production expense 543,371 459,686 Purchased power 53,063,947 49,420,925 Transmission expense 513,736 673,476 Distribution--operation 4,725,365 4,537,983 Distribution--maintenance 2,180,921 1,796,129 Consumer accounts expense 1,331,973 1,138,992 Customer services and sales 74,839 66,642 Administrative and general 3,077,461 3,102,671 Depreciation and amortization 3,841,667 3,910,984 Taxes 571,204 580,750 Interest on long-term debt 684,527 723,783 Other deductions 54,956 64,020

Total cost of electric service 70,663,967 66,476,041 Operating margins 2,904,925 2,336,341

non-operating margins:Interest income 172,051 157,697 Other income (expense) (7,795) 11,359

Total non-operating margins 164,256 169,056

other capital credits:Patronage allocations 911,780 387,777

Net margin for the year 3,980,961 2,893,174

other comprehensive income:Post retirement health benefit plan loss (106,200) (137,100)

net margin after comprehensive income 3,874,761 2,756,074

Patronage capital, beginning of year 76,511,821 75,687,585 Retirement of capital credits - (1,931,838) Patronage capital, end of year 80,386,582$ 76,511,821$

Statement of Revenues and patronage Capital

2014 2013Cash from operating activities:

Cash received from consumers 75,835,473$ 65,647,857$ Cash paid for power (52,797,683) (49,090,330) Cash paid to vendors and suppliers (3,280,488) (2,639,821) Cash paid to employees for wages and benefits (8,178,629) (9,347,213) Interest received 172,051 157,697 Interest paid (688,127) (725,256)

Net cash from operating activities 11,062,597 4,002,934

Cash from investing activities:Construction and acquisition of plant (4,023,097) (2,149,573) Proceeds from retirement (92,663) (718,421) Plant removal costs (340,338) - Materials salvaged from retirement 153,352 (25,646) (Increase) decrease in investments (8,021,237) - (Increase) or decrease in: -

Materials inventory 62,136 418,622 Investments in associated organizations (152,525) (235,307) Change in deferred credits 1,724,551 (4,914)

Net cash from investing activities (10,689,821) (2,715,239)

Cash from financing activities:Patronage retirements - (1,931,838) Long-term debt change (463,393) (431,494) Capital lease principal paid (58,837) (55,729) Customer deposits, net (16,450) 4,620

Net cash from financing activities (538,680) (2,414,441)

net cash increase (decrease) (165,904) (1,126,746)

Cash and cash equivalents, beginning of year 11,554,347 12,681,093 Cash and cash equivalents, end of year 11,388,443$ 11,554,347$

Reconciliation of net cash provided by operations:Net margin for the year 3,874,761$ 2,756,074$ Add items not requiring cash:

Depreciation and amortization 3,841,667 3,910,984 Allocated depreciation for transportation assets 460,844 504,792 Accumulated post-retirement benefit obligation 106,200 137,100 (Gain) or loss on retirement of plant (6,769) 14,448

Change in assets and liabilities:(Increase) decrease in accounts receivable 1,354,801 (3,552,302) (Increase) in prepaid expenses 2,187 5,916 Increase (decrease) in accounts payable, etc. 1,428,906 225,922

Net cash from operating activities 11,062,597$ 4,002,934$

Statement of Cash Flows

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note 1 Summary of Accounting policies This note describes various significant accounting policies related to the Moon Lake Electric Association, Inc. (the Association) financial statement presentation. Some accounting policies are presented with the applicable note disclosure item.

nature of operations—The Cooperative is a non-profit corporation (see additional discussion in Note 2) organized to provide retail electric service to residential and commercial accounts in a designated service area. The Association provides electric services to sections of northeastern Utah and northwestern Colorado. Power delivered at retail is purchased wholesale from Deseret Power (see additional discussion in Note 10).

System of Accounts—The Association’s accounting records are maintained in accordance with the Uniform System of Accounts as prescribed by the Federal Energy Regulatory Commission.

electric plant, Maintenance and Depreciation—The electric plant is stated at the original cost of construction which includes the cost of contracted services, direct labor, materials and overhead items less contributions from others toward the construction of the electric plant. All additions and retirements of plant are recorded by means of job orders. Provision is made for depreciation on a straight-line basis. The Public Service Commission of the State wherein the property is located is informed of the depreciation rates used (see Note 6 for depreciation detail).

When property which represents a retirement unit is replaced or removed, the average cost of such property as determined from the continuing property records is credited to electric plant and such cost, together with costs of removal less salvage, is charged to the accumulated provision for depreciation. Maintenance and repairs, including the renewal of minor items of plant not comprising a retirement unit, are charged to the appropriate maintenance accounts, except that repairs of transportation and service equipment are charged to clearing accounts and redistributed to operation expenses and other accounts.

electric Revenues—Operating revenues are generated through rates established by the Association’s Board of Directors. Electric revenue is recorded as it is billed to customers on a cyclical monthly basis. Large power users are billed at month-end. Revenue related to power delivered to residential users which are on prior to month-end billing cycles but not billed at month-end is not material and is not accrued.

loan and trade Receivables and Allowance for Doubtful Accounts—Customer billing statements are mailed monthly. Customer bills are due 25 days following the billing date. Meter disconnection begins for customers two months overdue. Three months after disconnection and various collection efforts, accounts are written off on a case by case basis. Once an account is written off, the customer balance is forwarded to a collection agency.

Although balances are written off, receivable balances are maintained indefinitely for possible payment if a customer attempts to reconnect in the future. Loan and trade receivables are recorded at lower of cost or fair market value. Interest income on loan receivables is recorded as loans mature.

Concentration of Revenue and Accounts Receivable Risk—The Association provides electric power service in northeastern Utah and northwestern Colorado and substantially all of its accounts receivable are due from individuals, businesses and industries in that geographic area. A service deposit is required as collateral when it is deemed necessary and a monthly review is made of all past due accounts. Accounts receivable are only written off about three to fourth months after disconnection and collection efforts. Credit losses consistently have been within management’s expectation. The oil and gas industry is the major, prevalent industrial and large power user in the Association’s boundaries. Approximately 79.2% of total revenues and receivables are derived from industrial and large power users compared to 77.5% during the previous year.

use of estimates—The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions regarding the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reported period. Actual results could differ from those estimates.

Cash and Cash equivalents—For purposes of the statement of cash flows, all highly liquid debt instruments purchased with a maturity of three months or less or which are subject to demand liquidation are considered to be cash equivalents.

Inventory—Materials held in inventory are accounted for using the average cost method. Obsolete inventory items are written off as considered necessary.

Income tax—The Association is a regulated cooperative non-profit association that is exempt from federal and state income taxes. The Association pays property taxes as required by local laws. The Associations filings with the Internal Revenue Service remain open for examination for the three most recent years.

Date of Subsequent event evaluation—Moon Lake Electric’s subsequent events have been evaluated through the date of financial issuance of April 26, 2015.

note 1 Summary of Accounting policies This note describes various significant accounting policies related to the Moon Lake Electric Association, Inc. (the Association) financial statement presentation. Some accounting policies are presented with the applicable note disclosure item.

nature of operations—The Cooperative is a non-profit corporation (see additional discussion in Note 2) organized to provide retail electric service to residential and commercial accounts in a designated service area. The Association provides electric services to sections of northeastern Utah and northwestern Colorado. Power delivered at retail is purchased wholesale from Deseret Power (see additional discussion in Note 10).

System of Accounts—The Association’s accounting records are maintained in accordance with the Uniform System of Accounts as prescribed by the Federal Energy Regulatory Commission.

electric plant, Maintenance and Depreciation—The electric plant is stated at the original cost of construction which includes the cost of contracted services, direct labor, materials and overhead items less contributions from others toward the construction of the electric plant. All additions and retirements of plant are recorded by means of job orders. Provision is made for depreciation on a straight-line basis. The Public Service Commission of the State wherein the property is located is informed of the depreciation rates used (see Note 6 for depreciation detail).

When property which represents a retirement unit is replaced or removed, the average cost of such property as determined from the continuing property records is credited to electric plant and such cost, together with costs of removal less salvage, is charged to the accumulated provision for depreciation. Maintenance and repairs, including the renewal of minor items of plant not comprising a retirement unit, are charged to the appropriate maintenance accounts, except that repairs of transportation and service equipment are charged to clearing accounts and redistributed to operation expenses and other accounts.

electric Revenues—Operating revenues are generated through rates established by the Association’s Board of Directors. Electric revenue is recorded as it is billed to customers on a cyclical monthly basis. Large power users are billed at month-end. Revenue related to power delivered to residential users which are on prior to month-end billing cycles but not billed at month-end is not material and is not accrued.

loan and trade Receivables and Allowance for Doubtful Accounts—Customer billing statements are mailed monthly. Customer bills are due 25 days following the billing date. Meter disconnection begins for customers two months overdue. Three months after disconnection and various collection efforts, accounts are written off on a case by case basis. Once an account is written off, the customer balance is forwarded to a collection agency.

Although balances are written off, receivable balances are maintained indefinitely for possible payment if a customer attempts to reconnect in the future. Loan and trade receivables are recorded at lower of cost or fair market value. Interest income on loan receivables is recorded as loans mature.

Concentration of Revenue and Accounts Receivable Risk—The Association provides electric power service in northeastern Utah and northwestern Colorado and substantially all of its accounts receivable are due from individuals, businesses and industries in that geographic area. A service deposit is required as collateral when it is deemed necessary and a monthly review is made of all past due accounts. Accounts receivable are only written off about three to fourth months after disconnection and collection efforts. Credit losses consistently have been within management’s expectation. The oil and gas industry is the major, prevalent industrial and large power user in the Association’s boundaries. Approximately 79.2% of total revenues and receivables are derived from industrial and large power users compared to 77.5% during the previous year.

use of estimates—The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions regarding the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reported period. Actual results could differ from those estimates.

Cash and Cash equivalents—For purposes of the statement of cash flows, all highly liquid debt instruments purchased with a maturity of three months or less or which are subject to demand liquidation are considered to be cash equivalents.

Inventory—Materials held in inventory are accounted for using the average cost method. Obsolete inventory items are written off as considered necessary.

Income tax—The Association is a regulated cooperative non-profit association that is exempt from federal and state income taxes. The Association pays property taxes as required by local laws. The Associations filings with the Internal Revenue Service remain open for examination for the three most recent years.

Date of Subsequent event evaluation—Moon Lake Electric’s subsequent events have been evaluated through the date of financial issuance of April 26, 2015.

note 2 patronage Capital The Association is a non-stock cooperative organized to provide electric energy to its patrons. All revenues from the sale of electric energy which exceed the costs of providing such energy are considered capital contributions and are credited to patrons capital accounts based upon their total patronage. Margins received from sale of goods or services other than electric energy are non-operating and are credited to patron accounts after losses are recovered. Operating losses are not allocated to patrons. These capital accounts are payable to patrons or their successors only at the discretion of the Board of Directors with permission of regulatory bodies, provided, however, that the financial condition of the Association is not impaired.

Patronage Capital Credit Summary 2014 2013

Patronage capital assignable for year 3,874,761$ 2,756,074$ Patronage capital assigned previous years 112,513,798 109,757,724

Total patronage received 116,388,559 112,513,798 Less retirements of patronage for year - (1,931,838) Less retirements of patronage previous years (36,001,977) (34,070,139)

Net patronage capital retained 80,386,582$ 76,511,821$ note 3 long-term Investments At December 31, the Association has the following investments in associated organizations which are not marketable and are carried at cost.

Investment 2014 2013

Capital term certificates--NRUCFC:5% interest, maturities 2070-2080 1,153,182$ 1,153,182$ 3% interest, maturities 2020-30 261,850 261,850 Noninterest bearing, maturities to 2019 24,925 28,447

Patronage capital credits:NRUCFC 553,618 522,104 WUESC 1,271,239 1,146,706

Total investments 3,264,814$ 3,112,289$

note 4 Cash and Investments, Concentrations Cash Equivalents—Cash and temporary cash investments may be liquidated on demand. Cash and cash equivalents consist of cash on hand, demand deposits, sweep repurchase agreement accounts, and certificates of deposit. The carrying amounts for cash and cash equivalents, which amount to their approximate fair market value, were $11,388,443 at December 31, 2014 and $11,554,347 at December 31, 2013. Significant concentrations of deposits exceed federally insured deposit limits. FDIC insurance applicable to the Association is three banks at $250,000 each. The repurchase agreements hold highly rated bonds, government securities, etc. for the collateral on those accounts.

Investments—The Association had investments at December 31, 2014 and 2013 of $12,021,237 and $4,000,000, respectively.

At December 31, 2014, the Association participated with two investment custodians.

First, $4,000,000 medium-term notes receivable with the National Rural Utility Cooperative Finance Corporation. These notes are uninsured and mature within 12 months after the latest year-end. These note receivables are being held-to-maturity. Carrying value and fair market value are similar.

Second, $8,021,237 of cash equivalents, commercial paper, corporate and government bonds, and other fixed income securities are held by Wells Fargo Investments. The investments that are not cash equivalents have varying maturities and have risk ratings from AAA to BBB. These investments are considered held-to-maturity. Carrying values are determined by amortized cost and do not reflect unrealized gains or losses. Unrealized gains or losses are insignificant for the year.

At December 31, 2013, the Association participated with one investment custodian.

First, $4,000,000 medium-term notes receivable with National Rural Utility Cooperative Finance Corporation. These notes are uninsured and mature within 12 months after the latest year-end. These note receivables are being held-to-maturity. Carrying value and fair market value are similar.

Fair Value of Measurement—Generally accepted accounting principles establish a hierarchy that prioritizes inputs to valuation methods. The three levels of the fair value hierarchy are as follows. Level 1 inputs are quoted prices (unadjusted) in active markets for identical assets or liabilities that the Association has the ability to access at the measurement date. Level 2 inputs are inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly or indirectly. Level 3 inputs are unobservable inputs for the asset or liability. The inputs used to measure fair value may fall into different levels of the fair value hierarchy. In such cases, for disclosure purposes, the level in the fair value hierarchy within which the fair value measurement falls in its entirety, is determined based on the lowest level input that is significant to the fair value measurement in its entirety. The Association’s investments funds are valued at the net asset value (NAV) of shares. All investments of the Association are categorized as Level 1 fair value hierarchy. There have been no changes in valuation techniques or related inputs.

note 2 patronage Capital The Association is a non-stock cooperative organized to provide electric energy to its patrons. All revenues from the sale of electric energy which exceed the costs of providing such energy are considered capital contributions and are credited to patrons capital accounts based upon their total patronage. Margins received from sale of goods or services other than electric energy are non-operating and are credited to patron accounts after losses are recovered. Operating losses are not allocated to patrons. These capital accounts are payable to patrons or their successors only at the discretion of the Board of Directors with permission of regulatory bodies, provided, however, that the financial condition of the Association is not impaired.

Patronage Capital Credit Summary 2014 2013

Patronage capital assignable for year 3,874,761$ 2,756,074$ Patronage capital assigned previous years 112,513,798 109,757,724

Total patronage received 116,388,559 112,513,798 Less retirements of patronage for year - (1,931,838) Less retirements of patronage previous years (36,001,977) (34,070,139)

Net patronage capital retained 80,386,582$ 76,511,821$ note 3 long-term Investments At December 31, the Association has the following investments in associated organizations which are not marketable and are carried at cost.

Investment 2014 2013

Capital term certificates--NRUCFC:5% interest, maturities 2070-2080 1,153,182$ 1,153,182$ 3% interest, maturities 2020-30 261,850 261,850 Noninterest bearing, maturities to 2019 24,925 28,447

Patronage capital credits:NRUCFC 553,618 522,104 WUESC 1,271,239 1,146,706

Total investments 3,264,814$ 3,112,289$

note 4 Cash and Investments, Concentrations Cash Equivalents—Cash and temporary cash investments may be liquidated on demand. Cash and cash equivalents consist of cash on hand, demand deposits, sweep repurchase agreement accounts, and certificates of deposit. The carrying amounts for cash and cash equivalents, which amount to their approximate fair market value, were $11,388,443 at December 31, 2014 and $11,554,347 at December 31, 2013. Significant concentrations of deposits exceed federally insured deposit limits. FDIC insurance applicable to the Association is three banks at $250,000 each. The repurchase agreements hold highly rated bonds, government securities, etc. for the collateral on those accounts.

Investments—The Association had investments at December 31, 2014 and 2013 of $12,021,237 and $4,000,000, respectively.

At December 31, 2014, the Association participated with two investment custodians.

First, $4,000,000 medium-term notes receivable with the National Rural Utility Cooperative Finance Corporation. These notes are uninsured and mature within 12 months after the latest year-end. These note receivables are being held-to-maturity. Carrying value and fair market value are similar.

Second, $8,021,237 of cash equivalents, commercial paper, corporate and government bonds, and other fixed income securities are held by Wells Fargo Investments. The investments that are not cash equivalents have varying maturities and have risk ratings from AAA to BBB. These investments are considered held-to-maturity. Carrying values are determined by amortized cost and do not reflect unrealized gains or losses. Unrealized gains or losses are insignificant for the year.

At December 31, 2013, the Association participated with one investment custodian.

First, $4,000,000 medium-term notes receivable with National Rural Utility Cooperative Finance Corporation. These notes are uninsured and mature within 12 months after the latest year-end. These note receivables are being held-to-maturity. Carrying value and fair market value are similar.

Fair Value of Measurement—Generally accepted accounting principles establish a hierarchy that prioritizes inputs to valuation methods. The three levels of the fair value hierarchy are as follows. Level 1 inputs are quoted prices (unadjusted) in active markets for identical assets or liabilities that the Association has the ability to access at the measurement date. Level 2 inputs are inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly or indirectly. Level 3 inputs are unobservable inputs for the asset or liability. The inputs used to measure fair value may fall into different levels of the fair value hierarchy. In such cases, for disclosure purposes, the level in the fair value hierarchy within which the fair value measurement falls in its entirety, is determined based on the lowest level input that is significant to the fair value measurement in its entirety. The Association’s investments funds are valued at the net asset value (NAV) of shares. All investments of the Association are categorized as Level 1 fair value hierarchy. There have been no changes in valuation techniques or related inputs.

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note 5 electric plant Total depreciation expense for the years ending December 31, 2014 and 2013 was $3,841,667 and $3,910,984, respectively. For the same years, $460,844 and $504,579, was allocated to the transportation expense category. Depreciation is calculated on the straight-line basis using the rates disclosed below. Major classes of electric plant at December 31 are as follows:

Assets at Historical Cost 2014 2013

Generation plant--hydraulic 1,893,262$ 1,893,262$ Transmission plant 22,802,436 22,796,820 Distribution plant 82,470,911 80,618,426 General plant 24,329,195 23,739,163

Total plant in service 131,495,804 129,047,671 Construction work in progress 7,526,197 7,098,971 Customer payments in aid of construction (7,843,752) (7,794,136)

Total plant 131,178,249$ 128,352,506$

Accumulated depreciation (60,943,857)$ (58,125,118)$ Depreciation rates Utah Colorado

Transmission plant, annual composite rate 2.75% 2.75%Distribution plant, annual composite rate 3.00% 3.00%General plant rates:

Structures and improvements 2.47% 2.46%Office furniture 14.42% 6.05%Tranportation equipment 11.99% 11.35%Stores equipment 9.69% 1.60%Tools, shop and garage equipment 9.60% 7.34%Laboratory equipment 14.44% 8.40%Power operated equipment 7.70% 4.69%Communication equipment 7.39% 9.28%Miscellaneous equipment 8.77% 2.38%

note 6 Deferred Credits Unclaimed patronage is retained for the assistance of low-income consumers as provided by Utah Uniform Property Act. The amounts retained at year-end December 31, 2014 and 2013 are $314,864 and $236,864, respectively. In year 2014, the Association received a grant and other consumer proceeds to be used for energy efficiency improvements to their plant and system. At December 31, 2014, the amount of unexpended grant and other proceeds was $1,649,476. Other small amounts are also included in deferred credits.

note 7 Capital lease The Association has a non-cancelable 35 year lease on a substation which expires September, 2018. Minimum rentals have been capitalized at present value at the inception of the lease and the obligation for such amount is recorded as a liability. Amortization is computed on a straight-line basis over the lease term and interest expense is recorded on the basis of the outstanding lease obligation. The historical cost of transmission plant property under capital lease is $1,160,902 and accumulated depreciation on those assets for years 2014 and 2013 were $992,655 and $960,730. Schedule of future minimum lease payments and present value of the net minimum lease payments:

Year Due Payments

2015 110,094$ 2016 110,094 2017 110,094 2018 82,567 2019 -

Total minimum lease payments 412,849 Less executory costs (134,404)

Net minimum lease payments 278,445 Less amount representing interest (a) (27,047)

Present value net minimum lease payments (b) 251,398$ (a) Amount necessary to reduce net minimum lease payments to

present value calculated at the Association’s incremental borrowing rate at the inception of the lease.

(b) Reflected in the balance sheet as current and non-current obligations under capital leases of $62,119 and $189,279.

note 8 long-term Debt Mortgage notes are payable to National Rural Utilities Cooperative Finance Corporation (CFC) and are secured by substantially all of the Association’s assets. There is an unadvanced revolving line of credit ith CFC in the amount of $6,500,000.

CFC Notes Payable 2014 2013

Interest rate at 6.05%, maturity 2014 -$ 100,182$ Interest rate at 6.05%, maturity 2019 420,240 498,495 Interest rate at 6.2%, maturity 2016 195,131 297,557 Interest rate at 6.2%, maturity 2016 88,294 134,641 Interest rate at 7.2%, maturity 2039 9,382,164 9,518,347

Total long-term debt 10,085,829 10,549,222 Current maturities (387,017) (463,393)

Long-term debt due after one year 9,698,812$ 10,085,829$

Year Amount

2015 387,017$ 2016 367,890 2017 257,463 2018 273,225 2019 265,840 Later 8,534,394

Total 10,085,829$

Repayment Schedule

note 9 Contingencies and Commitments Deseret Power Contract—The Association is a member of Deseret Power, an electric generation and transmission cooperative (for additional information see Note 1). In 1996, as part of Deseret Power’s financial restructuring, the Association entered into a Wholesale Power Contract with Deseret whereby all of the Association’s owned power resources have been pooled with Deseret and all of the Association’s power requirements are purchased from these pooled resources. During 2014 and 2013, the Association paid Deseret $53,063,947 and $49,420,925, respectively.

Intermountain Power Agency Agreement—Under the terms of a power sales contract with the Intermountain Power Agency, the Association has contracted to receive up to a 2.0% share of the total power output from the I.P.P. project and has joined with other Utah municipal and cooperative electric suppliers and entered into a joint contract with various California cities (Burbank, Glendale, Pasadena, and Los Angeles) to purchase the excess power not used by the Utah suppliers. The Excess Power Sales Agreement is to remain in force for the duration of the original Power Sales Agreement, providing that there is, in fact, excess power availability beyond the needs of the Utah suppliers. The Association would be responsible, in the event of a shutdown of the I.P.P. plant, for 2% of the debt service associated with the plant as well as 2% of the maintenance of the facility. This responsibility would be effective two years after such a shutdown.

Contingencies—Regulatory agency assessments and litigation occasionally occur against the Association for certain damages. At year-end, all material items are anticipated to be covered by insurance. The Association’s legal representation seeks to mitigate all material amounts. The amounts and results of litigation have not been determined and are not estimable.

note 5 electric plant Total depreciation expense for the years ending December 31, 2014 and 2013 was $3,841,667 and $3,910,984, respectively. For the same years, $460,844 and $504,579, was allocated to the transportation expense category. Depreciation is calculated on the straight-line basis using the rates disclosed below. Major classes of electric plant at December 31 are as follows:

Assets at Historical Cost 2014 2013

Generation plant--hydraulic 1,893,262$ 1,893,262$ Transmission plant 22,802,436 22,796,820 Distribution plant 82,470,911 80,618,426 General plant 24,329,195 23,739,163

Total plant in service 131,495,804 129,047,671 Construction work in progress 7,526,197 7,098,971 Customer payments in aid of construction (7,843,752) (7,794,136)

Total plant 131,178,249$ 128,352,506$

Accumulated depreciation (60,943,857)$ (58,125,118)$ Depreciation rates Utah Colorado

Transmission plant, annual composite rate 2.75% 2.75%Distribution plant, annual composite rate 3.00% 3.00%General plant rates:

Structures and improvements 2.47% 2.46%Office furniture 14.42% 6.05%Tranportation equipment 11.99% 11.35%Stores equipment 9.69% 1.60%Tools, shop and garage equipment 9.60% 7.34%Laboratory equipment 14.44% 8.40%Power operated equipment 7.70% 4.69%Communication equipment 7.39% 9.28%Miscellaneous equipment 8.77% 2.38%

note 6 Deferred Credits Unclaimed patronage is retained for the assistance of low-income consumers as provided by Utah Uniform Property Act. The amounts retained at year-end December 31, 2014 and 2013 are $314,864 and $236,864, respectively. In year 2014, the Association received a grant and other consumer proceeds to be used for energy efficiency improvements to their plant and system. At December 31, 2014, the amount of unexpended grant and other proceeds was $1,649,476. Other small amounts are also included in deferred credits.

note 7 Capital lease The Association has a non-cancelable 35 year lease on a substation which expires September, 2018. Minimum rentals have been capitalized at present value at the inception of the lease and the obligation for such amount is recorded as a liability. Amortization is computed on a straight-line basis over the lease term and interest expense is recorded on the basis of the outstanding lease obligation. The historical cost of transmission plant property under capital lease is $1,160,902 and accumulated depreciation on those assets for years 2014 and 2013 were $992,655 and $960,730. Schedule of future minimum lease payments and present value of the net minimum lease payments:

Year Due Payments

2015 110,094$ 2016 110,094 2017 110,094 2018 82,567 2019 -

Total minimum lease payments 412,849 Less executory costs (134,404)

Net minimum lease payments 278,445 Less amount representing interest (a) (27,047)

Present value net minimum lease payments (b) 251,398$ (a) Amount necessary to reduce net minimum lease payments to

present value calculated at the Association’s incremental borrowing rate at the inception of the lease.

(b) Reflected in the balance sheet as current and non-current obligations under capital leases of $62,119 and $189,279.

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note 10 pension and postretirement Benefits Retirement and post-retirement insurance benefits are provided through National Rural Electric Cooperative Association’s Retirement Program for all full-time employees 21 years of age or older with at least one year of employment with the Association. The Association has the following plans.

Defined Benefit Plan—Pension benefits are provided through the NRECA multi-employer defined benefit pension plan, designed to provide employees a certain benefit level upon retirement. In this multi-employer plan, which is available to all member cooperatives of NRECA, the accumulated benefits and plan assets are not determined or allocated separately by individual employer. In the Plan, a “zone status” determination is not required and not determined under the Pension Protection Act (PPA) of 2006. The Plan was 115.9% and 112.6% funded based on PPA actuarial ratios and market value of assets at January 1, 2014 and 2013. The Association is exempt from costly and volatile provisions, funding improvements and applicable surcharges of the 2006 PPA. The benefit level is 1.2% multiplied by the highest five years salary average multiplied by the years of service. The Association recognized expense related to the plan in 2014 and 2013 of $1,252,379 and $1,283,997, respectively, representing full service costs. All past service costs have been fully funded or accrued. Future contribution requirements are determined each year as part of the actuarial valuation of the plan and may change as a result of plan experience.

The Economic Growth and Tax Relief Act of 2001 sets limits on the compensation to be used in the calculation of pension benefits for qualified plans. In order to restore potential lost benefits, the NRECA has established a Pension Restoration Plan. Under the plan, the amount that NRECA invoices the Association will continue to be based on the full compensation paid to each employee. Upon retirement of a covered employee, NRECA will calculate the retirement and security benefit to be paid with consideration of the compensation limits and will pay the maximum benefit thereunder. NRECA will also calculate the retirement and security benefit that would have been available without consideration of the compensation limits and the Association will pay the difference. NRECA will then give the Association a credit against future retirement and security contribution liabilities in the amount paid by the Association to the covered employee.

Defined Contribution Plan—A contributory savings plan is provided wherein participating employees contribute a minimum of 3.0% of compensation with the Association contributing 7.0% of compensation. This is a defined contribution plan. Expense related to this plan for 2014 and 2013 was $431,651 and $424,753, respectively. The expected contribution for the year 2015 is about $440,000.

Defined Benefit Postretirement Plan—The Association also sponsors a defined benefit postretirement plan covering both salaried and non-salaried employees. The plan provides health care benefits for employees until Medicare coverage starts or when the employee is eligible for another employer’s group plan; hence, there is no effect on the plan by provisions of the Medicare Modernization Act passed December 8, 2003. To be eligible, 1) employees hired before May 2, 2007 must have at least 10 years of service and be over age 55 when they retire or 2) employees hired after May 1, 2007 must have at least 20 years of service and be over age 55 when they retire. SFAS 158 was adopted January 1, 2008. No policy has been formulated for funding the plan. A 6.0% trend for health care benefits costs is assumed. The following table explains the benefits obligation projected.

Benefits Obligation, Fair Value of Assets and Funded Status2014 2013

Medical benefit obligation--first of year 2,441,900$ 2,304,800$ Service cost 127,400 89,300 Interest cost 85,000 80,100 Plan adjustments - - Actuarial (gain) loss - 104,800 Benefits paid (106,200) (137,100)

Medical benefit obligation--end of year 2,548,100 2,441,900

Fair value of plan assets - -

Unfunded plan assets (2,548,100) (2,441,900)

Change in plan assets:Employer contributions 106,200 137,100 Benefits paid (106,200) (137,100)

Fair value of plan assets end of year -$ -$

Estimated future benefit payments Year Amount

2015 102,800$ 2016 131,500 2017 153,300 2018 174,000 2019 199,000

2020-2024 1,375,000$














2015 102,800$ 2016 131,500 2017 153,300 2018 174,000 2019 199,000

2020-2024 1,375,000$














2015 102,800$ 2016 131,500 2017 153,300 2018 174,000 2019 199,000

2020-2024 1,375,000$

note 8 long-term Debt Mortgage notes are payable to National Rural Utilities Cooperative Finance Corporation (CFC) and are secured by substantially all of the Association’s assets. There is an unadvanced revolving line of credit ith CFC in the amount of $6,500,000.

CFC Notes Payable 2014 2013

Interest rate at 6.05%, maturity 2014 -$ 100,182$ Interest rate at 6.05%, maturity 2019 420,240 498,495 Interest rate at 6.2%, maturity 2016 195,131 297,557 Interest rate at 6.2%, maturity 2016 88,294 134,641 Interest rate at 7.2%, maturity 2039 9,382,164 9,518,347

Total long-term debt 10,085,829 10,549,222 Current maturities (387,017) (463,393)

Long-term debt due after one year 9,698,812$ 10,085,829$

Year Amount

2015 387,017$ 2016 367,890 2017 257,463 2018 273,225 2019 265,840 Later 8,534,394

Total 10,085,829$

Repayment Schedule

note 9 Contingencies and Commitments Deseret Power Contract—The Association is a member of Deseret Power, an electric generation and transmission cooperative (for additional information see Note 1). In 1996, as part of Deseret Power’s financial restructuring, the Association entered into a Wholesale Power Contract with Deseret whereby all of the Association’s owned power resources have been pooled with Deseret and all of the Association’s power requirements are purchased from these pooled resources. During 2014 and 2013, the Association paid Deseret $53,063,947 and $49,420,925, respectively.

Intermountain Power Agency Agreement—Under the terms of a power sales contract with the Intermountain Power Agency, the Association has contracted to receive up to a 2.0% share of the total power output from the I.P.P. project and has joined with other Utah municipal and cooperative electric suppliers and entered into a joint contract with various California cities (Burbank, Glendale, Pasadena, and Los Angeles) to purchase the excess power not used by the Utah suppliers. The Excess Power Sales Agreement is to remain in force for the duration of the original Power Sales Agreement, providing that there is, in fact, excess power availability beyond the needs of the Utah suppliers. The Association would be responsible, in the event of a shutdown of the I.P.P. plant, for 2% of the debt service associated with the plant as well as 2% of the maintenance of the facility. This responsibility would be effective two years after such a shutdown.

Contingencies—Regulatory agency assessments and litigation occasionally occur against the Association for certain damages. At year-end, all material items are anticipated to be covered by insurance. The Association’s legal representation seeks to mitigate all material amounts. The amounts and results of litigation have not been determined and are not estimable.

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MINUTES OF THE ANNUAL MEETING OF MEMBERS

MOON LAKE ELECTRIC ASSOCIATION, INC.

June 5, 2014

The Annual Meeting of Members of Moon Lake Electric Association, Inc., was heldThursday, June 5, 2014, at the Moon Lake Electric Headquarters Operations Building at 800West Highway 40 in Roosevelt, County of Duchesne, State of Utah.

A family-style barbecue was served from 5:00 p.m. until 6:30 p.m. to approximately1,200 people. A business report from the General Manager/CEO was given at 7:00 p.m.

The following members of the Board of Directors were present:Jeffory B. Henderson, President Tommy K. OlsenBrad Casto, Vice President Tommy C. ThackerStewart Olsen, Secretary-Treasurer Tamara Vincent

Present from the Association were Grant J. Earl, General Manager/CEO, and YanktonJohnson, Manager-Personnel & Member Relations, who recorded the proceedings of themeeting.

President Jeffory B. Henderson called the meeting to order at 6:30 p.m. and welcomedthose in attendance.

President Henderson then called on Board Director Tommy Thacker to give the openingprayer. Following the prayer, Roosevelt City Fire Department presented the flag of the UnitedStates of America and the National Anthem was sung by Killie Todd.

Secretary-Treasurer Stewart Olsen reported that there was the necessary quorum requiredto conduct the business of the Cooperative. Secretary-Treasurer Olsen then presented theminutes of the previous Annual Meeting of Members for approval. A motion was made andseconded to approve the Minutes of the Annual Meeting held August 15, 2013, and the motioncarried.

President Henderson then introduced Moon Lake Electric Directors and the GeneralManager/CEO Grant J. Earl. He thanked the employees for their contributions to the success ofMoon Lake Electric. The meeting was then turned to Mr. Earl who expressed appreciation to themembers for their support and attendance. He recognized Deseret Power representatives DaveCrabtree and Debbie Horrocks, Mike Peterson from the Utah Rural Electric Association,Duchesne County Commissioners-Ron Winterton, Kirk Wood and Kent Peatross, Vaughn RyanRoosevelt City Mayor, and Jud Redden, General Manager and CEO of Bridger Valley Electric.

Mr. Earl thanked the employees for their efforts in planning and preparing for the AnnualMeeting and recognized the Board members for their contributions to the organization. Hereported that Tommy Thacker was nominated from District 1, and Tamara Vincent beingnominated for District 6.

____________________________________

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Secretary-Treasurer

MLEA Annual Meeting MinutesJune 5, 2014Page 2

He explained that because Tommy Thacker and Tamara Vincent were unopposed, theywill serve another 3-year term on the Board.

Mr. Earl reported that this was his 42nd annual meeting as an employee and the 31st where

he has reported to the members as General Manager. He mentioned that he was going to add a little

variety this year by asking the management staff to take a few minutes to update the members on key

aspects of their responsibilities within the company. Grant then introduced Jared Griffiths Manager

of Engineering, as the newest member of the management team.

Jared mentioned that the majority of his engineering work experience is from working at

Western Area Power Administration who provides about 18% of Moon Lake’s power through hydro

power plants like the one at Flaming Gorge. Jared went on to say that Moon Lake has an exciting

future ahead of them, stating that the latest forecasts from the oil and gas industry show that there is

a huge potential for growth in the area. Jared also mentioned the increased load in the area will likely

require additional 138 kV transmission to be built into the area. It was mentioned that he is currently

working with Deseret Generation and Transmission and Rocky Mountain Power to determine

alternatives to increase our ability to serve load in the area. Jared went on to say, “with all the

potential for growth we recognize the need to maintain and replace the existing system”. Jared also

mentioned that Moon Lake Electric is currently working on developing a ten year work plan that

addresses the distribution system that was built prior to the 1960’s. Jared thanked his employees and

the board of directors for the opportunity to work with them and for the service they provide.

Yankton Johnson Manager of Personnel & Member Relations, quoted the great basketball

legend Larry Bird who once said, coming together is the beginning, keeping together is progress, and

working together is success. He then thanked the employees for their efforts in working together to

make the annual meeting a success. Yankton went on to say that as most of you are aware President

Obama has declared war on coal, stating that most recently his EPA regulations that have targeted

existing power plants will increase rates of electricity, and will have serious consequences to our

community. It was stated that it is time to take a stance in our community and let our voice be heard.

Yankton mentioned a couple of websites as venues to voice your concerns, action.coop and

nreca.coop.

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____________________________________ Secretary-Treasurer


Yankton also encouraged the members to like Moon Lake Electric’s Facebook page located

at mleainc.com to enable them to stay current on issues such as federal regulations, public hearings,

nominations, planed outages, safety tips, energy saving tips, employee events, and job openings. In

conclusion, Yankton mentioned that Moon Lake is community minded stating that they have donated

over 400,000.00 dollars over the last eight years toward youth programs, with donations over

200,000.00 towards civic and public projects. Yankton also thanked his employees and the board of

directors for their efforts.

Alan Haslem introduced himself as the Manager of Finance/CEO. Alan stated that we

finished the year with a net margin of 2,756,074.00. He added that the total plant value is over 193

million, and that the long term debt was just over 10 million which is very good with an equity ratio

of 74%. Alan stated that we added 611 new services and 74 miles of new line. He also reported that

Moon Lake Electric sold over 1 billion kwh last year, of that 16% was to residential and 84% to

Industrial and Commercial, which represents a 3.7% growth rate from the prior year. Alan informed

the members that Moon Lake is currently changing many of the old meters from power line carrier,

to radio frequency transmission, stating that Moon Lake has had several of these meters over the

years and that they are trying to standardize to one meter type. Alan’s finished by stating that Moon

Lake Electric strives to spend their money wisely, thanking the members, Moon Lake employees,

and the Board of Directors for their efforts.

Bob Kissling introduced himself and Manager of the District Office in Rangely, stating that

they have 7 full time employees and 1 part time employee. Bob mentioned that they provide services

to over 3,000 residents of Colorado, covering approximately 30 square miles, and 2,335 accounts.

Bob concluded by thanking the employee’s that he works with and the Board of Directors.

Paul Betts introduced himself as Manager over Operations. Paul stated that Moon Lake

Electric has 3,218 miles of overhead distribution line, 269 miles of underground, and 363 miles of

transmission line, for a total of 3,850 miles of line. He reported that Moon Lake currently has 44

substations, which totals to 100 miles of line and one substation per lineman. Paul reported that all of

the lines are energized, with transmission voltages of 138,000 and 69,000 volts, with Distribution

voltages of 34,500, 24,940, and 12,470. Paul reported that our members only experienced an average

of 1.72 hours of outage during 2013.

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Paul mentioned this is a great number, but falls short of their goals of 1.0 hours. Paul went

on to mention that Moon Lake has 3,000 distribution poles that are 65 plus years old, that equates to

approximately 60 miles of line stating that the cost to replace these lines is approximately

250,000.00 per mile. It was mentioned that one new substation is under construction and two are in

the planning stages, stating the Blue Bench, Arcadia, and Roosevelt are all in need of substations to

handle the growth. Paul concluded by thanking his Line Superintendent, Warehouse Supervisor, and

Safety Coordinator, as well as the rest of the employees within the operations department.

Grant Earl General Manager/CEO reported that there is a lot of issues in the headlines

recently, dealing with coal fired generation – both here in our area and across the nation. He stated

that he would like to take just a few minutes and discuss some concerns that could directly impact

each of us:

National – On Monday EPA announced new regulations on greenhouse gases for existing

power plants.

Local – Ute Indian Tribe’s announcement of a study to build 1000 megawatt gas fired plant

and fuel it with gas produced on the Ute Reservation.

Local with National Implications – Wild Earth Guardian lawsuit challenging department of

Interior’s issuance of an additional 3,000 acre coal lease to Blue Mountain Energy.

Local with National Implications – EPA’s consideration to issue an operating permit (Title V

–Clean Air Act0 for the Bonanza Plant.

The EPA held two hearings in Ft. Duchesne this past Tuesday to hear public comments as whether or

not a permit should be issued and allow Deseret Power to continue operating the Bonanza Power

Plant. The issue in this process is whether or not EPA intends to force Deseret, as a condition of the

permit, to upgrade emission controls on the plant. It’s estimated this equipment will cost over $200

million and will require retail rates on Deseret’s members, including Moon Lake members, to

increase by 40%. Grant mentioned that the meeting was well attended by members of our

community (from Rangely across the Uintah Basin) and some 86 people commented at the hearing.

Of the 86 people who expressed their views to EPA about this forced upgrade, 81 were adamantly

opposed to EPA requiring Deseret to install this equipment.

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The strong, and sometimes passionate, views were exactly what EPA needed to hear.

Written comments will be taken by EPA until June 16th and if anyone has an interest in commenting,

please let us know and we can get you the EPA’s address. An EPA written notice of its options states;

“following the review process, EPA may issue the permit, issue with revisions, or deny the permit”.

Grant thanked all those who were able to attend and voice their feelings on this important issue. You

should know that Deseret Power followed the rules and received a permit from the State of Utah and

the EPA for an upgrade in the year 2000. The Ute Indian Tribe also supported the permit and asked

that no new emission controls be required. As many of the people testified at the hearing, we believe

it is only right that we play by the rules and Deseret has done just that. Now, it is EPA’s

responsibility to play by the rules. Grant went on to say that we plan to stay vigilant on this, and

many other concerns, so that we can continue to enjoy the benefits of the affordable and reliable

electric energy that is produced by the Bonanza Plant. Grant concluded by saying, on this day ten

years ago, President Ronald Reagan died. At the time he became President, the economy was

struggling, taxes were high, welfare was the most popular way to make a living and businesses were

heavily regulated. Sound familiar? One of my favorite quotes from Mr. Reagan came from his first

inaugural address, when he said: “In this present crisis, government is not the solution to our

problem; government is the problem.”

Dave Crabtree with Deseret Power talked on Greenhouse gases for existing power plants.

The meeting adjourned at 7:30 p.m.

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Our VisionTo become widely recognized as a customer-oriented,

socially-responsible, financially-strong, successful competitor in the evolving electric energy business.

Our MissionTo meet or exceed our customer/member expectations for reliable and efficient electrical service in a socially-

responsible manner. To demonstrate that the cooperative enterprise is the most desirable method for providing/

receiving electric service.

Our ValuesIntegrity • Teamwork • Commitment • Service

Human Resource Development • Respect for the Environment

Moon lake electric

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