Behind the Scenes at CCEC - Accounting

Behind the Scenes at CCEC - Accounting

In the icy throes of a winter storm, Cass County Electric Cooperative linemen are the ones on the front lines. Braving slick roads and low visibility, they work for hours on end to restore power and repair damages inflicted by Mother Nature. They are the ones you’re most likely to see coming down your street when the power is out, and the ones whose progress you’re most likely to be monitoring. However, as the storm passes and the crews return, back at CCEC headquarters in Fargo, a number of employees are still hard at work.

While linemen often steal the spotlight for their around-the-clock work in the nastiest of conditions, dozens of co-op employees are dedicated to the behind-the-scenes work required to keep a utility running. In fact, events like severe storms are what CCEC’s accounting team is prepared for.

“There are a number of ways that Cass County Electric is prepared for future unknown costly events,” says Chad Sapa, vice president of corporate services and CFO.

An unexpected storm can wreak havoc on the electric system, damaging lines and knocking down poles. Challenging conditions can take a toll on vehicles, and workers may be required to work extra hours. All of these things can add up, and though they are not specifically listed in the yearly budget, the accounting team must always be ready for the unexpected.

Insurance helps cover the cost of damages to vehicles and equipment. Maintenance budgets help with the cost of labor and materials for emergency line maintenance as well. A strong balance sheet with a reasonable equity level and cash position help to keep CCEC in healthy financial shape. Additionally, a contingency fund account is managed to help with expenses not covered by insurance during unexpected events.

The cooperative business model is unique from the accounting perspective. By nature, a cooperative returns excess profits to its members, but it’s not as simple as it seems. At the end of each year, after completing all financial matters, CCEC’s accounting team calculates the cooperative’s margins. These margins are allocated to members based on their electricity use during the year.

“If an investor owned utility has excess profits, they are typically given back to the stockholders,” says Sapa. “In a cooperative model, the members are the stockholders, which is a big difference.”

Allocations may be held by the cooperative for a number of years. When financial conditions permit, the board of directors decides to retire, or pay back, those allocations in the form of capital credits. Capital credits are returned to members in the form of a check or a bill credit. $1.2 million went back to members in 2016, and that number is expected to increase over the next few years.

While they may not receive the same glamour as line crews, the job of a cooperative’s accounting department is just as vitally important – ensuring that members get a high value out of every cent invested in the co-op.