2015 1st Quarter Period-end Financials - OPALCO...4 Commercial Sales (109,087) Electric kWh sales...

MEMORANDUM

June 12, 2015

To: Board of Directors From: Foster Hildreth, General Manager Re: 2015 First Quarter Financial Report

Please see attached the 2015 First Quarter Financial Report. As predicted, we did see a revenue shortfall in the first quarter. On a positive note, a lower power bill from BPA (due to lower kWh sales) and reduced expenditures kept the shortfall lower than originally expected.

In summary, the total revenue in Q1 was $505k less than budgeted, power costs were $310k less, and the savings in expenses, all combined, resulted in a decreased margin of $158k. Despite the lower than anticipated margin shortfall, we will continue to monitor revenue and expenses closely. We will recommend the establishment of a 2015 temporary Revenue Adjustment (as outlined in OPALCO Policy 29 – Energy Services Rate Design) on members’ bills from July-December 2015 in order to catch up the current shortfall and collect any unexpected 2015 margin shortfalls on a monthly basis. A margin shortfall will need to be addressed before year-end 2015.

For more detail, please note the following key points for Q1:

• Heating Degree Days (HDD) were down ~42% below normal and kWh sales down by ~6% of budget, even after basing our 2015 projections on the out-of-the ordinary 2014 HDD Actuals. Weather and heating fluctuations will continue to produce dramatic sales revenue volatility, with the expected margin of error in HDD driving sales revenue swings of +/- 5%.

• Energy demand was over-forecasted as a result of continued warmer weather and shifting energy usage patterns attributed to conservation, energy efficiency measures by members, and increased solar generation.

• Power purchases were down by $310,247 due to lower kWh consumption from warmer temperatures and the fact that we did not incur additional BPA demand charges this quarter, unlike February, 2014.

• Expenses were reduced by approximately $40k (net) primarily due to delayed hiring of budgeted positions. There are few discretionary expenses to cut because most of our expenses are directly related to our service levels and, as agreed, we will reduce neither safety nor reliability in our system.

• Members were charged less than the "cost of service" during this period, because actual load was less than forecasted, which led to the revenue shortfall. OPALCO must collect revenues that reflect a true cost of service as mandated by the cooperative business model.

• OPALCO needs to meet RUS financial loan covenants for TIER. Although OPALCO is still in compliance, the rate structure, rate and revenue adjustments are all part of a corrective action plan to demonstrate to RUS how we are addressing the issue. Please keep in mind that our RUS loan covenant pertaining to TIER is calculated on a three-year duration, whereby the lowest TIER in the three-year period is dropped and the remaining two-year TIERs are averaged, with the required result being greater than or equal to 1.25.

2015 1st Quarter Period-end Financials of 14

ORCAS POWER & LIGHT COOPERATIVE2015 Q1 FINANCIALS


ORCAS POWER AND LIGHT COOPERATIVE

STATEMENT OF OPERATIONS

1 OPERATING REVENUES2 Residential3 Commercial4 Other5 Total operating revenue6

7 OPERATING EXPENSES8 Cost of power9 Transmission

10 Distribution - operations11 Distribution - maintenance 12 Consumer accounts13

14 General and administration15 Administration G&A16 Energy services G&A17 Total general and administration18

19 Depreciation and amortization20 Taxes21

22 Total operating expenses23

24 Operating margins before fixed charges25

26 FIXED CHARGES27 Interest on long-term debt28 Other Interest29

30 Total fixed charges31

32 Operating margins after fixed charges33

34 PATRONAGE CAPITAL CREDITS35

36 Net operating margins37

38 NON-OPERATING MARGINS39 Interest income40 Other income41 Total Opalco nonoperating margins42

43 Fiber Optics Division (Island Network Department)44 IN Income45 IN Expenses46 Total Fiber Optics Division47

48 Net non-operating margins49

50 NET MARGINS51

52

53 OPALCO TIER54 OPALCO Equity % of Total Cap55

56 Rock Island Communications (to be transitioned to Subsidiary)57 NON-OPERATING MARGINS58 Island Network59 Rock Island Communications60 Net non-operating margin

B. C. D. E. F. G. H. I.Audited Audited Audited Budget Budget Actual Budget Actual

Year End Year End Year End Year End Period End Period End Variance Period End12/31/2012 12/31/2013 12/31/2014 12/31/2015 3/31/2015 3/31/2015 (F - E) 3/31/2014

14,861,010$ 15,598,797$ 15,913,325$ 17,714,009$ 5,380,898$ 4,972,730$ (408,168) 5,102,738$ 5,260,451 5,467,588 5,694,901 6,523,281 1,761,692 1,652,605 (109,087) 1,604,685

296,764 364,892 420,798 459,851 134,294 146,548 12,254 133,949 20,418,225 21,431,278 22,029,025 24,697,141 7,276,884 6,771,883 (505,001) 6,841,371

7,240,696 7,514,128 8,037,428 8,452,880 2,584,140 2,273,893 (310,247) 2,649,545 126,986 70,117 92,874 95,459 14,876 10,413 (4,463) 14,017

2,805,586 2,968,003 2,961,250 3,462,037 980,959 910,439 (70,519) 767,854 1,518,742 1,669,524 1,778,516 1,862,557 330,287 358,682 28,395 345,025

809,149 853,211 898,198 1,000,006 247,390 250,195 2,805 199,885

2,799,833 2,718,889 2,822,439 3,060,993 854,030 841,031 (13,000) 759,450 276,269 462,966 373,323 743,548 272,015 236,808 (35,207) 143,154

3,076,102 3,181,855 3,195,763 3,804,540 1,126,045 1,077,839 (48,206) 902,604

2,652,194 2,719,560 2,975,650 3,166,399 749,117 815,443 66,326 710,913 832,220 930,482 961,815 1,038,446 300,928 285,807 (15,121) 278,184

19,061,677 19,906,881 20,901,493 22,882,324 6,333,741 5,982,712 (351,029) 5,868,028

1,356,548 1,524,397 1,127,532 1,814,817 943,143 789,171 (153,972) 973,343

759,686 786,193 908,934 1,003,025 236,374 236,041 (333) 220,905 - - - - - - - -

759,686 786,193 908,934 1,003,025 236,374 236,041 (333) 220,905

596,861 738,204 218,598 811,792 706,769 553,130 (153,639) 752,438

40,416 38,048 67,853 56,472 45,331 39,998 (5,333) 54,466

637,277 776,252 286,451 868,265 752,100 593,128 (158,972) 806,904

32,228 33,261 32,130 208,165 8,921 7,158 (1,763) 8,389 21,995 46,893 23,458 21,933 3,093 6,085 2,992 3,038 54,222 80,154 55,588 230,098 12,013 13,243 1,229 11,427

348,119 388,117 519,819 - - - - 123,559 225,095 273,006 739,907 - - - - 109,197 123,024 115,111 (220,088) - - - - 14,362

177,246 195,265 (164,500) 230,098 12,013 13,243 1,229 25,789

814,524$ 971,518$ 121,951$ 1,098,363$ 764,114$ 606,371$ (157,743) 832,693$

2.07 2.24 1.13 1.92 3.69 3.15 4.77 72.1% 69.5% 61.3% 52.7% 58.8% 58.9% 67.5%

- - - (1,248,599) (291,271) (208,045) 83,226 - - - - 83,137 (19,930) 4,308 24,238 - - - - (1,165,462) (311,201) (203,737) 107,464 -

Updated 6/12/20152015 1st Quarter Period-end Financials

of 14


STATEMENT OF OPERATIONS BUDGET TO ACTUALDETAILED BREAKOUT OF NOTABLE DRIVERS

A. B. C. D.

Budget Actual BudgetPeriod End Period End Variance3/31/2015 3/31/2015 (B - A) Comments: Budget To Actual (Column C.)

1 I OPERATING REVENUES 7,276,884 6,771,883 (505,001) Decrease in income2 Operating Revenue - Line 5 Detail Breakout:3 Residential Sales (408,168) Electric kWh sales less due to warmer weather, conservation, energy efficiency and solar

generation

4 Commercial Sales (109,087) Electric kWh sales less due to warmer weather, conservation, energy efficiency and solar generation

5 Other Operating Revenue 12,254 Variance among multiple general ledger accounts (4 accounts)6 TOTAL OPERATING REVENUES 7,276,884 6,771,883 (505,001)7

8 II OPERATING EXPENSES 6,333,741 5,982,712 (351,029) Overall decrease in operating expenses9

10 Cost of Power - Line 8 2,584,140 2,273,893 (310,247) Decrease in expense11 Purchased Power (306,652) Less kWh consumption/purchased from BPA related to warmer weather12 BPA - COU Allocation (3,595) BPA Residential Exchange Program payments were increased 13 Subtotal Cost Of Power (310,247)14

15 Transmission - Line 9 Detail Breakout: 14,876 10,413 (4,463) Decrease in expense - Variance among multiple general ledger accounts (8 accounts)16

17 Distribution - Operations - Line 10 Detail Breakout: 980,959 910,439 (70,520) Decrease in expense 18 Oper Supervision & Engineer 37,840 Retirement timing later than anticipated19 Station Expenses 21,592 Repair unanticipated repair of station transformer20 Tailgate Time (16,203) Timing of the hiring of new journeyman lineman and delay of return to work for San Juan

employee on sick leave21 Misc. Engineering Expenses 38,502 Training related to internal promotions22 Misc. Engineering - Mapping (8,475) Timing related to hiring of new GIS Technician staff23 Misc. Distribution Expense - Safety (10,985) Purchase of flame retardant gear delay due to vendor24 Misc. Engineering - Fiber Optic (94,582) Coding reclassed to Maintenance of General Plant - Communication (line 47) per RUS

guidelines

25 Misc. Eng. - Construction Work Plan (43,377) Per RUS guidelines, the increasingly material environmental expense (wetland and archeological) is now capitalized with the associated work orders

26 Multiple Accounts 5,168 Variance among multiple general ledger accounts (11 accounts)27 Subtotal Distribution -Operations (70,520)28

29 Distribution - Maintenance - Line 11 Detail Breakout: 330,287 358,682 28,395 Increase in expense

Updated 6/12/2015 2015 1st Quarter Period-end Financials of 14



A. B. C. D.


30 San Juan District Accident 30,134 Employee who was expected to return in December 2014, returned in May 2015 (partially offset above in Distribution - Operations)

31 Multiple Accounts (1,739) Variance among multiple general ledger accounts (13 accounts)32 Subtotal Distribution Maintenance 28,395 33

34 Consumer accounts - Line 12 Detail Breakout: 247,390 250,195 2,805 Increase in expense - Variance among multiple general ledger accounts (3 accounts)35

36 Total General and Administrative (G&A): 1,126,045 1,077,839 (48,206) Decrease in expense37

38 Administration G&A - Line 15 Detail Breakout: 854,030 841,031 (12,999) Decrease in expense39 Informational Instruction/Advertising Expense 7,203 Increase in employment advertising40 Administrative /General Salary (6,440) Staff hiring delay41 Legal Expense/Legal Expense - Tech. Services (41,664) Attorney fees association with the new entity formation were capitalized 42 Director's Fee & Expenses (22,659) Intentional reduction in activities and fees43 Misc. BOD Contingency - Legal (27,879) Less policy and bylaw changes44 Misc. Gen Exp/Manager (27,433) Intentional reduction in spending over prior year, employee appreciation event postponed to Q345 Misc. Gen Exp/Annual Meeting (3,891) Intentional expense reduction - more to come in Q246 Maintenance of General Plant 9,722 FH yard and warehouse drainage repair47 Maintenance of Communication Infrastructure 91,239 Reclass of coding previously captured (line 24 above) per RUS guidelines48 Multiple Accounts 8,803 Variance among multiple general ledger accounts (12 accounts)49 Subtotal Administration G&A (12,999) 50

51 Energy Services G&A - Line 16 272,015 236,808 (35,207) Decrease in expense52 General Overhead Expenses (11,919) Staff travel/training and needs assessment delayed53 Education and Outreach (9,949) Delayed website and energy fair expenses 54 Renewable Energy Programs (4,057) Less staff time on renewable energy programs than predicted55 BPA Commercial Lighting/BPA Commercial Programs 5,244 More commercial lighting and general commercial projects than predicted56 BPA Custom Projects 1,363 More custom projects than predicted57 BPA Window Upgrade/Insulation/Air Sealing Rebates 3,926 More rebates than predicted; may trend higher with BPA rebate reduction coming 10/1/1558 BPA EEI Funding 26,028 No bilateral transfers in Q1; holding submissions to BPA until 10/1/15 when new EEI funding

is available59 BPA Heat Pump Rebates (49,464) Less heat pump rebates than predicted compared to 201460 Energy Snapshot Program Expense 4,295 Purchased LED bulbs ($3k) and showerheads ($1k) sooner than expected for favorable pricing

61 Multiple Accounts (674) Variance among multiple general ledger accounts (10 accounts)62 Subtotal Energy Services G&A (35,207)63




A. B. C. D.


64 Total General and Administrative (G&A) 1,126,045 1,077,839 (48,206) Overall decrease in expense65

66 Deprec. & Amort. - Line 19 749,117 815,443 66,326 Increase in expense - 2015 budget spread based on prior year asset addition activity67

68 Taxes - Line 20 Detail Breakout: 300,928 285,807 (15,121) Decrease in expense - Lower utility tax due to reduction in sales69

70 TOTAL OPERATING EXPENSES 6,333,742 5,982,711 (351,031) Overall decrease in expense71

72

73 III FIXED CHARGES - Interest Expense - Line 27 236,374 236,041 (333) Decrease in expense -Variance within expectations74

75 IV PATRONAGE CAPITAL CREDITS - Line 34 45,331 39,998 (5,333) Decrease in income - 2015 budget spread based on prior year patronage activity. Only Federated allocation received in Q1 vs prior year NISC and Federated allocations

76

77

78 TOTAL NET OPERATING MARGINS 752,100 593,128 (158,972) Decrease in margin79

80

81 V NON-OPERATING MARGINS 12,014 13,243 1,229 Increase in margin82

83 Interest and Dividend Income - Line 25 8,921 7,158 (1,763) Decrease in income - Less money in interest bearing accounts 84

85 Other Income - Line 26 3,093 6,085 2,992 Increase in income - 2015 budget spread was based on prior year and 2015 activity occurred earlier in the year.

86

87 TOTAL OPALCO NON-OPERATING MARGINS 12,014 13,243 1,229 Increase in margin88

89

90 TOTAL OPALCO NET MARGIN DETAIL BREAKOUT 764,114 606,371 (157,743) Decrease in margin

Note: Rock Island Communication financials are listed under separate cover.



BALANCE SHEET

1 ASSETS23 UTILITY PLANT, at cost4 Electric plant in service5 Construction work in progress67

8 Less accumulated depreciation and amortization9

10 Net utility plant1112 OTHER PROPERTY AND INVESTMENT, at cost13 To Be Transitioned to Subsidiary14 Island Network (department only) (Note 1)15 Rock Island Communications (Note 2)16 Opalco non-utility property1718

19 Investments in associated organizations20 Other21 Non-utility investment (Rock Island Communications)22 Total investments in associated organizations2324 Other property and investments2526 CURRENT ASSETS27 Cash and cash equivalents28 Cash and cash equivalents - board designated29 Accounts receivable, less doubtful accts allowance30 Accounts receivable - Island Network (department only) (Note 3)31 Interest receivable32 Materials and supplies33 Prepaid expenses3435 Total current assets3637 DEFERRED CHARGES3839 Total assets

A. B. C. D. E. F. G.Audited Audited Audited Audited Actual Actual

Year End Year End Year End Year End Period End Change Period End12/31/2011 12/31/2012 12/31/2013 12/31/2014 3/31/2015 (E - D) 3/31/2014

79,769,777$ 82,840,443$ 86,319,230$ 91,153,200$ 93,144,543$ 1,991,343$ 87,021,811$ 1,859,540 1,438,043 2,456,829 5,696,090 5,382,186 (313,904) 2,873,226

81,629,317 84,278,486 88,776,059 96,849,290 98,526,729 1,677,439 89,895,037 32,376,495 34,068,592 36,237,594 38,650,755 39,241,901 591,146 36,887,939

49,252,822 50,209,894 52,538,465 58,198,535 59,284,829 1,086,293 53,007,098

194,402 252,854 426,272 74,891 (428,133) (503,025) 243,395 - - - 2,954,327 - - - - - - 79,440

194,402 252,854 426,272 74,891 (428,133) (503,025) 163,955

908,190 929,141 941,203 1,063,004 1,083,193 20,189 1,080,990 - - - - 1,091,776 1,091,776 -

908,190 929,141 941,203 1,063,004 2,174,969 1,111,965 1,080,990

1,102,592 1,181,995 1,367,476 1,137,895 1,746,835 608,940 1,244,945

2,049,721 2,091,466 797,873 2,254,475 3,410,787 1,156,312 3,338,673 2,004,674 2,002,236 2,006,348 1,279,616 474,802 (804,813) 2,008,260 2,690,548 2,388,170 3,146,966 3,036,986 2,804,506 (232,480) 2,742,213

- - - - 885,854 885,854 - 6,495 6,848 7,394 6,330 12,214 5,883 13,466

1,333,658 1,502,931 2,141,563 2,720,342 3,430,923 710,581 2,167,163 103,649 115,232 122,451 586,081 245,066 (341,015) 109,663

8,188,745 8,106,883 8,222,594 9,883,829 11,264,152 1,380,323 10,379,438

- - - 50,371 - (50,371) 34,776

58,544,159$ 59,498,772$ 62,128,535$ 69,270,631$ 72,295,816$ 3,025,185$ 64,666,258$



BALANCE SHEET

4041 EQUITIES, MARGINS, AND LIABILITIES4243 EQUITIES AND MARGINS44 Memberships45 Patronage capital46 Donated and other equities47 Opalco donated & other equities48 Non-utility Equity (Rock Island Communication) (Note 2)4950 Total equities and margins5152 LONG-TERM DEBT, less current maturities53 RUS mortgage notes54 RUS economic development55 CFC mortgage notes5657 Total long-term liabilities5859 CURRENT LIABILITIES60 Accounts payable61 Customer deposits62 Accrued liabilities63 Current maturities of long-term debt6465 Total current liabilities6667 DEFERRED CREDITS6869 Total equities and liabilities70

71 NOTE: 72 1 Combination of all balance sheet accounts for Island Network (department only).73 2 Amounts are informational only and not included in totals. To be transitioned to Subsid74 3 Represents the amount currently owed to Opalco on behalf of Island Network (departm

A. B. C. D. E. F. G.Audited Audited Audited Audited Actual Actual

Year End Year End Year End Year End Period End Change Period End12/31/2011 12/31/2012 12/31/2013 12/31/2014 3/31/2015 (E - D) 3/31/2014

60,505$ 54,800$ 55,655$ 56,880$ 55,810$ (1,070)$ 55,890$ 37,836,072 37,473,607 37,250,119 36,127,934 36,454,392 326,458 37,979,700

3,158,271 3,643,203 4,024,439 4,477,375 4,497,997 20,622 4,134,090 - - - - 2,526,194 -

41,054,848 41,171,610 41,330,213 40,662,189 41,008,199 346,010 42,169,680

11,514,336 12,769,260 14,982,671 22,446,072 22,424,592 (21,480) 17,147,690 - - - 72,663 70,662 (2,001) 78,666

2,803,987 2,693,103 2,575,694 2,468,531 5,058,751 2,590,220 2,547,290

14,318,323 15,462,363 17,558,365 24,987,266 27,554,005 2,566,739 19,773,646

1,548,452 1,297,200 1,732,736 1,931,399 1,728,123 (203,276) 1,209,205 67,922 77,002 86,161 91,717 89,685 (2,033) 92,194

937,927 854,196 696,741 751,049 668,389 (82,661) 672,540 491,649 479,289 555,793 663,885 1,043,373 379,488 574,138

3,045,949 2,707,686 3,071,431 3,438,051 3,529,569 91,518 2,548,077

125,039 157,113 168,527 183,124 204,042 20,918 174,854

58,544,159$ 59,498,772$ 62,128,535$ 69,270,631$ 72,295,816$ 3,025,185$ 64,666,257$

diary.ment only). This balance will be transitioned to the subsidiary and will be reflected in the Non-utility investment in Q3.



Statement of Cash FlowGAAP

1 CASH FLOWS FROM OPERATING ACTIVITIES2 Net margins3 Adjustments to reconcile net margin to cash4 from operating activities5 Depreciation and amortization (Opalco only)6 Changes in assets and liabilities7 Accounts receivable8 Interest receivable9 Prepaid expenses10 Accounts payable11 Customer deposits12 Accrued liabilities13 Deferred credits1415 Net cash from operating activities1617 CASH FLOWS FROM INVESTING ACTIVITIES18 Additions to utility plant, net19 Additions to non-utility plant (Island Network department)20 Change in materials and supplies21 Increase in investment in Subsidiary (Rock Island Communications)22 Increase in other Opalco property and investments, net2324 Net cash from investing activities2526 CASH FLOWS FROM FINANCING ACTIVITIES27 Payments on long-term debt ( Note 1)28 Proceeds from debt (Note 1)29 Memberships30 Retirements of patronage capital, net31 Contributions in aid of construction32 Other changes in equities3334 Net cash from financing activities3536 NET CHANGE IN CASH

3738 CASH AND CASH EQUIVALENTS, beginning of year/period3940 CASH AND CASH EQUIVALENTS, end of year/period4142 SUPPLEMENTAL DISCLOSURES43 Cash paid for interest

44 OUTSTANDING DEBT BALANCE (Note 1)

45 Notes:46 1 2014 includes Economic Development loan from RUS and is offset by RUS Cushion of C

A. B. C. D. E. F.

Audited Audited Audited Audited ActualYear End Year End Year End Year End Period End Change

12/31/2011 12/31/2012 12/31/2013 12/31/2014 3/31/2015 (E - D)

3,134,656$ 814,524$ 971,520$ 121,951$ 606,371$ 484,420$

2,507,468 2,652,194 2,719,561 2,975,650 815,443 (2,160,207)

(624,789) 302,378 (758,796) 109,980 (653,375) (763,355) 6 (354) (546) 1,064 (5,883) (6,947)

(21,653) (11,583) (7,219) (463,630) 341,015 804,644 201,025 (251,253) 435,535 198,663 (203,276) (401,940)

7,055 9,080 9,160 5,557 (2,033) (7,589) 28,834 (83,731) (157,453) 54,308 (82,661) (136,969)

100,919 32,073 11,414 14,598 20,918 6,320

5,333,521 3,463,329 3,223,176 3,018,141 836,519 (2,181,622)

(5,757,907) (3,930,981) (5,632,016) (9,831,711) (1,908,192) 7,923,519 39,352 (58,452) (173,419) 351,381 503,025 151,643

(115,766) (169,273) (638,632) (578,779) (710,581) (131,802) - - - - (1,091,776) (1,091,776)

(24,503) (20,950) (12,063) (121,801) (20,189) 101,612

(5,858,824) (4,179,656) (6,456,130) (10,180,909) (3,227,713) 6,953,197

(772,016) (368,319) (1,027,495) 156,993 (53,773) (210,766) 3,000,000 1,500,000 3,200,000 7,380,000 3,000,000 (4,380,000)

2,030 (5,705) 855 1,225 (1,070) (2,295) (644,716) (692,057) (813,770) (791,199) (259,290) 531,909 515,614 321,715 583,883 1,145,619 56,826 (1,088,793)

- - - - - -

2,100,912 755,634 1,943,473 7,892,638 2,742,693 (5,149,945)

1,575,608 39,307 (1,289,481) 729,870 351,499 (378,371)

2,478,787 4,054,396 4,093,703 2,804,222 2,804,222 -

4,054,396 4,093,703 2,804,222 3,534,091 3,155,720 (378,371)

960,898$ 759,686$ 786,193$ 908,934$ 282,275$ (626,659)$

(14,810,000) (15,942,000) (18,114,000) (25,651,000) (28,597,000) (2,946,000)

Credit balance of 2011: $684k, 2012: $546k, 2013: $1.1M, 2014: $235k, 2015: $88kUpdated 6/12/2015



CAPITAL PROJECTS BUDGETA. B. C. D. E. F. G.

Audited Budget Budget Actual Budget ActualYear End Year End Period End Period End Variance Period End

12/31/2014 12/31/2015 3/31/2015 3/31/2015 (D- C) 3/31/2014 Comments1 DISTRIBUTION2 100 New Services 256,450$ 164,800$ 41,200$ 29,464$ (11,736)$ 6,951$ 3 200 New Tie Lines 341,347 130,000 20,000 13,171 (6,829) 147,902 4 300 Conversions and Line Changes 1,194,755 968,000 242,000 136,477 (105,523) 108,122 Weather/Soil Delay in Cattle Point Road Reconductor5 400 New Substations, switching station, metering point, etc. - - - - - - 6 500 Substation, Switching Station, Metering Point Changes 23,034 - - 145 145 - 7 600 Miscellaneous Distribution Equipment8 601 Transformers & Meters 575,840 379,300 189,650 220,560 30,910 323,266 9 602 Sets of Service Wires to increase Capacity - - - - - - 10 603 Sectionalizing Equipment 401,127 140,000 17,500 8,095 (9,405) 41,028 11 604 Regulators 131,410 - - 1,325 1,325 124 12 605 Capacitors - - - - - - 13 606 Ordinary Replacements 179,366 247,200 49,440 45,781 (3,659) 11,826 14 608 Underground Dist. Cable Replacement 3,202,174 1,168,020 389,340 464,694 75,354 308,292 Accelerated to offset other project delays15 700 Other Distribution Items16 701 Engineering Fees - - - - - - 17 701.1 Environmental Consultant (asset portion only) 75,000 - - - - 18 701.2 AFUDC - Interest Capitalization 192,570 - - - - 19 704 LMS & SCADA 1,805 - - 7,649 7,649 755 20 705 AMR - - - - - - 21 706 Communications22 706.0 Island Network 349,692 - - - - 25,701 23 706.1 Fiber/Microwave Infrastructure 1,747,051 1,930,000 643,333 609,176 (34,157) (3,112) Due to permit/environmental delays24 TRANSMISSION25 800 New Tie Line - - - - - - 26 900 New Substations, switching station, metering point, etc. 11,321 - - 114 114 - 27 1000 Line and Station Changes 257,537 3,000,000 125,000 111,760 (13,240) 401 28 1100 Other Transmission - - - - - - 29 GENERATION30 1200 Generation - - - - - - 31 OTHER32 1300 Headquarters Facilities 62,112 150,000 150,000 292,434 142,434 4,199 Carry over from prior year33 1400 Acquisitions - - - - - - 34 1500 All Other (Transportation, Etc.)35 1501 Transportation/Equipment/Tools/Radios 426,919 565,380 188,460 49,268 (139,192) 49,124 Purposeful delay of line truck purchase36 1502 Office Equipment/Furniture/Etc. 7,938 51,500 12,875 12,897 22 5,250 37 1503 Computer/Servers/Software 212,073 206,500 51,625 16,100 (35,525) 68,202 Pending completion of Eastsound server room38 1504 Electrical Infrastructure to Support Community Solar 50,000 - - - - 39 1600 Minor Projects 212,306 90,000 22,500 31,274 8,774 87,815 40 RUS CWP SUBTOTAL 9,594,257 9,508,270 2,142,923 2,050,385 (92,538) 1,185,846 41 CONTRIBUTION IN AID OF CONSTRUCTION (CIAC)42 New Services, Transformers, Meters 1,145,619 (252,434) (63,109) (56,826) 6,283 7,000 Offset to new services43 RUS CWP NET TOTAL 10,739,876 9,255,836 2,079,815 1,993,559 (86,255) 1,192,846 44 Rock Island Communications (to be transitioned to Subsidiary)45 700 Distribution46 706 New Service (Member Last Mile) - 2,000,000 500,000 154,832 (345,168) - 47 706 Middle Mile and Other - 2,050,000 512,500 292,010 (220,490) - Correlated to uptake of connection48 CIAC - (2,000,000) (500,000) (159,634) 340,366 - 49 RIC NET TOTAL - 2,050,000 512,500 287,208 (225,292) - 50

51 TOTAL OPALCO + NEWCO CAPITAL PROJECTS 10,739,876$ 11,305,836$ 2,592,315$ 2,280,768$ (311,547)$ 1,192,846$ 52 Notes53 1 $46,029 in Allowance for Funds Used During Construction (AFUDC). This cost is embedded in the associated projects above for capitalization purposes, for projects submitted for RUS loan funds.54 2 $15,714 in Environmental Consultant. This cost is embedded in the associated projects above for capitalization.

RUS CWP DESCRIPTION



SALES AND USAGE REPORT

A. B. C. D. E. F. G. H. I. J. K. L. M.January February March April May June July August September October November December Total

1 HEATING DEGREE DAYS (HDD)2 10 Year Average HDD 285 238 200 113 44 15 5 3 13 62 169 310 1,457 3 Actual HDD 199 96 114 114 32 - - - - - - - 555 4 Variance (86) (142) (86) 1 (12) - - - - - - - (325)

5

6 ENERGY USAGE (kWh)7 Residential8 Budget 17,168,588 15,555,344 15,228,501 11,459,487 9,363,812 8,043,899 8,253,776 8,077,297 7,997,331 10,086,920 13,337,379 18,127,823 142,700,157 9 Actual 17,423,161 11,607,035 13,547,685 10,767,588 8,935,529 - - - - - - - 62,641,459 10 Variance (Budget to Actual) 254,573 (3,948,309) (1,680,816) (691,900) (428,283) - - - - - - - (6,494,734)

11 Commercial12 Budget 5,823,716 4,791,629 5,693,361 4,427,231 4,041,188 4,048,463 4,354,242 4,449,951 4,243,389 4,727,940 4,974,119 5,868,917 57,444,146 13 Actual 5,768,385 5,915,555 5,112,483 4,384,568 4,070,814 - - - - - - - 25,042,804 14 Variance (Budget to Actual) (55,331) 1,123,926 (580,878) (42,663) 29,625 - - - - - - - 474,679 15

16 REVENUE17 Residential18 Budget (1,804,368) (1,809,181) (1,767,349) (1,448,039) (1,266,684) (1,154,758) (1,174,435) (1,157,607) (1,150,453) (1,330,245) (1,613,191) (2,038,052) (17,714,361) 19 Actual (1,820,629) (1,495,998) (1,656,103) (1,328,536) (1,291,950) - - - - - - - (7,593,217) 20 Variance (Budget to Actual) 16,261 (313,183) (111,246) (119,503) 25,266 - - - - - - - (502,404)

21 Commercial22 Budget (573,330) (552,673) (625,943) (516,413) (482,435) (479,391) (501,629) (509,250) (492,747) (536,164) (563,791) (645,819) (6,479,585) 23 Actual (545,738) (526,139) (569,483) (497,547) (492,506) - - - - - - - (2,631,413) 24 Variance (Budget to Actual) (27,592) (26,534) (56,460) (18,866) 10,070 - - - - - - - (119,382) 25

26 NOTE: Excluded Other Revenue and Revenues that are not usage based.



RUS FORM 7 - INCLUDES ISLAND NETWORK DEPARTMENTSTATEMENT OF OPERATIONS

According to the Paperwork Reduction Act of 1995, an agency may not conduct or sponsor, and a person is not required to respond to, a collection of information unless it displays a valid OMBcontrol number. The valid OMB control number for this information collection is 0572-0032. The time required to complete this information collection is estimated to average 16 hours perresponse, including the time for reviewing instructions, searching existing data sources, gathering and maintaining the data needed, and completing and reviewing the collection of information.

BORROWER DESIGNATION WA0009BORROWER NAME AND ADDRESS

FINANCIAL AND STATISTICAL REPORT Orcas Power & Light CooperativeINSTRUCTIONS-For detailed instructions, see RUS Bulletin 1717B-2 PERIOD ENDED This data will be used by RUS to review your financial situation. Your response is Mar-15required (7 U.S.C 901 et. Seq.) and may be confidential.

CERTIFICATIONWe recognize that statements contained herein concern a matter within the jurisdiction of an agency of the United States and the making of a false, fictitious or fraudulent statement may render the maker subject to prosecution under Title 18, United States Code Section 1001.

_______ All of the obligations under the RUS loan documents have been fulfilled in all material respects. _________ There has been a default in the fulfillment of the obligations under the RUS loan documents. Said default(s) is/are

specifically described in Part D of this report. DATE

YEAR-TO-DATEITEM LAST YEAR THIS YEAR BUDGET THIS MONTH

(a) (b) (c) (d) 1. Operating Revenue and Patronage Capital................................... 6,841,371 6,771,883 7,276,884 2,274,500 2. Power Production Expense....................................................... - - - - 3. Cost of Purchased Power............................................................... 2,649,545 2,273,893 2,584,140 776,192 4. Transmission Expense..................................................................... 14,017 10,413 14,876 2,956 5. Regional Market Expense...................................................... - - 6. Distribution Expense-Operation...................................................... 767,854 910,439 980,959 213,172 7. Distribution Expense-Maintenance................................................. 345,025 358,682 330,287 109,251 8. Consumer Accounts Expense.......................................................... 199,885 250,195 247,390 73,949 9. Customer Service and Informational Expense............................... 156,334 260,047 291,650 125,402 10. Sales Expense................................................................................. 4,496 7,610 4,011 3,334 11. Administrative and General Expense........................................... 739,773 810,181 829,314 257,749 12. Total Operation and Maintenance Expense (2 thru 11)........... 4,876,931 4,881,461 5,282,626 1,562,004 13. Depreciation and Amortization Expense.................................. 710,913 815,443 749,117 267,268 14. Tax Expense - Property and Gross Receipts........................... 49,322 51,017 50,802 17,006 15. Tax Expense - Other......................................................................... 228,862 234,790 250,126 75,906 16. Interest on Long-Term Debt............................................................ 220,905 282,275 284,516 117,875 17. Interest Charged to Construction - Credit...................................... - (46,234) (48,143) (14,566) 18. Interest Expense - Other.......................................................... - - - 19. Other Deductions............................................................................. 2,000 - 1,070 - 20. Total Cost of Electric Service (12 thru 19).................................... 6,088,933 6,218,753 6,570,115 2,025,493 21. Patronage Capital and Operating Margins (1 minus 20).......... 752,438 553,130 706,769 249,008 22. Non Operating Margins - Interest................................................... 8,389 7,158 52,421 2,605 23. Allowance for Funds Used During Construction....................... - - - - 24. Income (Loss) from Equity Investments........................................ - - - - 25. Non Operating Margins - Other................................................... 17,400 (201,961) (497,917) (122,972) 26. Generation and Transmission Capital Credits............................. - - - - 27. Other Capital Credits and Patronage Dividends...................... 54,466 39,998 45,331 39,998 28. Extraordinary Items.......................................................................... - - - - 29. Patronage Capital or Margins (21 thru 28)............................... 832,693 398,325 306,603 168,639 RUS Form 7

UNITED STATES DEPARTMENT OF AGRICULTURERURAL UTILITIES SERVICE

DURING THE PERIOD COVERED BY THIS REPORT PURSUANT TO PART 1718 OF 7 CFR CHAPTER XVII(check one of the following

PART A. STATEMENT OF OPERATIONS SIGNATURE OF MANAGER

We hereby certify that the entries in this report are in accordance with the accounts and other records of the system and reflect the status of the system to the best of our knowledge and belief.

ALL INSURANCE REQUIRED BY PART 1788 OF 7 CFR CHAPTER XVII, RUS, WAS IN FORCE DURING THE REPORTING PERIOD AND RENEWALS HAVE BEEN OBTAINED FOR ALL POLICIES.

Updated 6/12/2015



RUS FORM 7 - INCLUDES ISLAND NETWORK DEPARTMENTBALANCE SHEET USDA - RUS BORROWER DESIGNATION

FINANCIAL AND STATISTICAL REPORT PERIOD ENDED Mar-15

INSTRUCTIONS - See RUS Bulletin 1717B-2 PART B. DATA ON TRANSMISSION AND DISTRIBUTION PLANT

YEAR-TO-DATE YEAR-TO-DATEITEM LAST YEAR THIS YEAR ITEM LAST YEAR THIS YEAR

(a) (b) (a) (b)

1. New Services Connected 26 16 5. Miles Transmission 42.65 42.656. Miles Distribution-

2. Services Retired 15 - Overhead 158.02 156.617. Miles Distribution-

3. Total Services in Place 14,756 14,880 Underground 1,128.39 1,139.734. Idle Services 8.Total Miles Energized (Exclude Seasonal) 967 1,154 (5 + 6 + 7) 1,329.06 1,338.99

PART C. BALANCE SHEET ASSETS AND OTHER DEBITS LIABILITIES AND OTHER CREDITS 1. Total Utility Plant in Service.............................................. 93,144,543 30. Memberships................................................................. 55,810 2. Construction Work in Progress......................................... 5,341,347 31. Patronage Capital.......................................................... 35,934,116 3. Total Utility Plant (1 + 2)................................................... 98,485,889 32. Operating Margins - Prior Years.................................... 121,951 4. Accum. Provision for Depreciation and Amort.................. 39,201,061 33. Operating Margins - Current Year................................. 606,371 5. Net Utility Plant (3 - 4)...................................................... 59,284,829 34. Non-Operating Margins................................................. (208,045) 6. Non-Utility Property - Net.................................................. (428,132) 35. Other Margins and Equities........................................... 4,497,997 7. Investments In Subsidiary Companies............................. 1,091,776 36. Total Margins and Equities (30 thru 35)........................ 41,008,199 8. Invest. In Assoc. Org. - Patronage Capital...................... 439,585 37. Long-Term Debt - RUS (Net)........................................ 3,460,140 9. Invest. In Assoc. Org. - Other - General Funds................ 7,000 38. Long-Term Debt - FFB - RUS Guaranteed.................... 19,608,969 10. Invest. In Assoc. Org. - Other -Nongeneral Funds.......... 558,274 39. Long-Term Debt - Other - RUS Guaranteed................. - 11. Investments In Economic Development Projects............ 78,333 40. Long-Term Debt - Other (Net)....................................... 5,545,601 12. Other Investments........................................................... - 41. Long-Term Debt - RUS - Econ. Devel. (Net)................. 70,662 13. Special Funds.................................................................. 678,040 42. Payments-Unapplied (87,994) 14. Total Other Property and Investments (6 thru 13)........ 2,424,875 43. Total Long-Term Debt (37 thru 41-42).......................... 28,597,378 15. Cash - General Funds..................................................... 3,176,768 44. Obligations Under Capital Leases-Noncurrent.............. -

16. Cash - Construction Fund - Trustee................................ 30,782 - 17. Special Deposits.............................................................. - 46. Total Other Noncurrent Liabilities (44+45).................... - 18. Temporary Investments................................................... - 47. Notes Payable............................................................... - 19. Notes Receivable (Net)................................................... - 48. Accounts Payable.......................................................... 1,728,123 20. Accounts Receivable - Sales of Energy (Net)................. 1,823,346 49. Consumers Deposits..................................................... 89,685 21. Accounts Receivable - Other (Net).................................. 948,037 50. Current Maturities Long-Term Debt................................ - 22. Renewable Energy Credits...................................... - 51. Current Maturities Long-Term Debt-Ec.Dev................... - 23. Materials and Supplies - Electric and Other.................... 3,430,923 52. Current Maturities Capital Leases................................. - 24. Prepayments................................................................... 245,066 53. Other Current and Accrued Liabilities............................ 668,389 25. Other Current and Accrued Assets.................................. 931,190 54. Total Current and Accrued Liabilities (47 thru 53).......... 2,486,196 26. Total Current and Accrued Assets (15 thru 25)............... 10,586,112 55. Regulatory Liabilities...................................................... - 27. Regulatory Assets........................................................... - 56. Other Deferred Credits................................................... 204,042 28. Other Deferred Debits...................................................... - 57. Total Liabilites and Other Credits29. Total Assets and Other Debits (5+14+26 thru 28)........... 72,295,816 (36+43+46+54 thru 56)................................................. 72,295,816

THIS SPACE IS PROVIDED FOR IMPORTANT DISCLOSURE NOTES TO THE FINANCIAL STATEMENT CONTAINED IN THIS REPORT. REPORT ITEMS

CONTAINED IN THE INSTRUCTIONS AND ADDITIONAL MATERIAL ITEMS. (A SEPARATE SHEET MAY BE USED IF ADDITIONAL SPACE IS NEEDED.)

45. Accumulated Operating Provisions and Asset Retirement Obligations...................................

PART D. NOTES TO FINANCIAL STATEMENTS

Updated 6/12/2015



RUS FORM 7 - INCLUDES ISLAND NETWORKFINANCIAL AND STATISTICAL REPORT

CLASSIFICATION

CONSUMER SALES AND REVENUE DATA

JANUARY (a)

FEBRUARY (b)

MARCH ( c )

APRIL (d)

MAY (e)

JUNE (f)

JULY (g)

AUGUST (h)

SEPT (i)

OCTOBER (j)

NOVEMBER (k)

DECEMBER (l)

TOTAL (a thru l)

1. Residential Sales a. # Consumers Serv'd 12,857 12,860 12,870

(excluding seasonal) b. kWh sold 17,423,161 11,607,035 13,547,685 42,577,881 c. Revenue 1,844,735 1,513,965 1,672,427 5,031,127

2. Residential Sales a. # Consumers Serv'd 0 0 0 0 0 0 0 0 0 0 0

Seasonal b. kWh sold 0 0 0 0 0 0 0 0 0 0 0 - c. Revenue 0 0 0 0 0 0 0 0 0 0 0 -

3. Irrigations Salesa. # Consumers Serv'd 0 0 0 0 0 0 0 0 0 0 0b. kWh sold 0 0 0 0 0 0 0 0 0 0 0 - c. Revenue 0 0 0 0 0 0 0 0 0 0 0 -

4. Comm. / Industrial a. # Consumers Serv'd 2,008 2,007 2,003

1000 kVA or less b. kWh sold 5,755,339 5,903,335 5,101,258 16,759,932 c. Revenue 554,481 534,754 576,363 1,665,598

5. Comm. / Industrial a. # Consumers Serv'd 0 0 0 0 0 0 0 0 0 0 0 0

Over 1000 kVA b. kWh sold 0 0 0 0 0 0 0 0 0 0 0 0 - c. Revenue 0 0 0 0 0 0 0 0 0 0 0 0 -

6. Public Street and a. # Consumers Serv'd 7 7 7

Hwy Lighting b. kWh sold 13,046 12,220 11,225 36,491 c. Revenue 3,592 3,544 3,386 10,522

7. Other Sales to a. # Consumers Serv'd 0 0 0 0 0 0 0 0 0 0 0 0

Public Auth. b. kWh sold 0 0 0 0 0 0 0 0 0 0 0 0 - c. Revenue 0 0 0 0 0 0 0 0 0 0 0 0 -

8. Sales for Resale - a. # Consumers Serv'd 0 0 0 0 0 0 0 0 0 0 0 0

RUS Borrowers b. kWh sold 0 0 0 0 0 0 0 0 0 0 0 0 - c. Revenue 0 0 0 0 0 0 0 0 0 0 0 0 -

9. Sales for Resale - a. # Consumers Serv'd 0 0 0 0 0 0 0 0 0 0 0 0

others b. kWh sold 0 0 0 0 0 0 0 0 0 0 0 0 - c. Revenue 0 0 0 0 0 0 0 0 0 0 0 0 -

10. TOTAL Number Consumers (1a - 9a) 14,872 14,874 14,880 0 0 0 0 0 0 0 0 011. TOTAL kWh Sold (lines 1b - 9b) 23,191,546 17,522,590 18,660,168 0 0 0 0 0 0 0 0 0 59,374,304

2,402,808 2,052,263 2,252,176 0 0 0 0 0 0 0 0 0 6,707,247 13. Other Electric Revenue 22,771 19,540 22,324 0 0 0 0 0 0 0 0 0 64,636 14. kWh -Own Use 43,569 134,430 30,906 208,905 15. TOTAL kWh Purchased 23,133,873 18,044,632 18,602,560 59,781,065 16. TOTAL kWh Generated 0 0 0 0 0 0 0 0 0 0 0 0 0 17. Cost of Purchases and Generation 788,260 716,898 779,148 2,284,306 18. Interchange - kWh - Net 0 0 0 0 0 0 0 0 0 0 0 0 0

19. Peak - Sum All kW Input (metered)

coincident [ ] non-coincident [ x ] 46,113 39,899 44,310

PART R. POWER REQUIREMENTS DATA BASE

12. TOTAL Revenue Recv'd from Sales of Electricity (1c - 9c)

Updated 6/12/2015


2015 1st Quarter Period-end Financials - OPALCO...4 Commercial Sales (109,087) Electric kWh sales...

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