About 500 Central Texas Electric Co-op members and spouses gathered in the Fredericksburg High School Auditorium on August 21st, as CTEC hosted its 65th Annual Members' Meeting. CEO Robert A. Loth III welcomed them and introduced Board President Gerald Kaspar and the ten other CTEC directors in attendance. Pastor Scott Hofmann of St. James Lutheran church in Harper, Texas provided an invocation.The business of the meeting included the election of four directors. Co-op members had previously nominated the following members to represent their respective districts at District Meetings held in June: Allen Goodwin, District 1 (Kendall County area); Riley Kothmann, District 3 (Mason/McCulloch/Menard/Northern Kimble County area); Gerald Kaspar, District 4 (Llano County area); and Doylene Bode, District 5 (Gillespie/Blanco County area). All were elected by acclamation. As the cooperative's bylaws stipulate, a CTEC director's time on the board is limited to four (three-year) terms.As in previous meetings, a video presentation was shown in lieu of formal reports. This year, reports were made by the Board Chairman, as well as the chairmen of various oversight committees within the Board.Gerald Kaspar, Board Chairman, started the video by welcoming the members who were present. He recapped CTEC's decision to issue a Breach of Contract notice to the LCRA on June 28th, the LCRA's response, and a Travis County District Judge's ruling as of July 24th. After the video, Kaspar gave members the latest update on this matter: CTEC delivered a Notice of Termination to LCRA on August 13th, and a hearing was scheduled for August 27th in Austin for both parties to present their cases. Members were told to continue to watch news releases for further details on the outcome of that hearing.Riley Kothmann, Board Vice President and Chair of the Benefits and Compensation Committee, followed. He told members his Board committee strives to ensure that all CTEC employees, as well as the Board of Directors, are reasonably and adequately compensated for the job they do on behalf of the Co-op. He explained that in recent years, the compensation and benefits package that employees enjoy has been adjusted, on a periodic basis, to allow CTEC to compete in the marketplace when hiring and retaining skilled, qualified workers.In addition, Kothman told members that in compliance with the Co-op's bylaws, Director compensation was also reviewed. He reported that monthly compensation paid to Directors has not been adjusted for the past 20 years. During that time, the Board has evolved significantly - particularly with the time and expertise needed for the movement away from the LCRA. As a result, monthly Board compensation was adjusted slightly effective January 1, 2013. Kothmann said, "The Co-op is a $145 million dollar business with multi-million dollar decisions routinely made in the Boardroom."Charles Pearson, Chairman of the Community Services Committee, reported that his committee's goal is to monitor how the Co-op interacts with communities in the service area, and how the Co-op communicates with members. He said Board directors and employees want to see the communities they serve succeed. Why? "Because we all live here, too" was his answer. "We are all local people working for local good."Mr. Pearson explained that CTEC opens doors for young people; with a scholarship program and the annual Youth Tour Essay Contest, where winners learn about leadership, teamwork, and American ideals in a trip to Washington, D.C. He reported that in the 15-year history of the scholarship program, $384,000 has been awarded to local students to help them pay for their education. He emphasized, "Those scholarship funds do not come from your rates. They come from unclaimed capital credit funds created by a state law passed in 1997, which allowed nonprofit co-ops to establish the local scholarship program."He continued to explain how CTEC has been able to offer significant financial assistance for communities in the service area. Using a USDA grant of $400,000, a low-interest loan was made to help build a new Comfort High School. When the loan was repaid, the Co-op was then able to make a low-interest loan to help the Hill Country University Center complete a new campus in Fredericksburg. Upon repayment of that loan, the Co-op was once again able to use that money to help the citizens of Sunrise Beach in Llano County buy their water system from the LCRA, with a $500,000 low-interest loan. THREE communities benefitted from the ONE grant received in 1997.Pearson also highlighted the Operation Round-up program, now in its 10th year. Members volunteering to "round-up" their monthly bill to the next whole dollar amount have enabled a voluntary Board of Directors to approve 80 grants, totaling over $76,000, to help local families and organizations in the local area.In addition, three other important Co-op programs were mentioned: a 6th grade education program designed to teach students the importance of energy conservation; a newly designed CTEC website giving members instant and convenient information about their co-op; and a new phone system that will improve communications. Pearson encouraged members to "stay engaged with your co-op because giving us feedback will continue to help us serve you well."David D. Smith, retiring Gillespie Director and Chairman of the Energy and Strategy-Policy committee, reported to the members what their committee has done in the past year to help keep rates affordable. He said they have been busy with follow-up duties arising from the Board's decision not to renew the wholesale power supply agreement with the LCRA. After reviewing that CTEC had contracted with CPS Energy of San Antonio for the bulk of future power needs, it was reported that CTEC recently contracted with NextEra for 20% of their power needs. Having secured a second supplier is part of the strategy to avoid a single-source situation in the future. He assured members that power sources were in place should CTEC be released by LCRA before that contract expires in 2016. Smith said, "The CTEC separation from LCRA is not working out as we hoped. My personal view is the issues that divide us have escalated beyond the point of recovery through residual good will; so our separation will become complicated."Smith said his committee has the assignment to look 10 years ahead, and there is reason for concern - lack of sufficient generation to accommodate high growth of electric energy demand. He said, "At the Strategy Committee, our problem is to identify our options and their costs/benefits. These options involve increases in investment and complications of the business." Smith concluded, "But we are on the assignment, and plan to keep the lights on at rates we can afford to pay."Concluding the committee reports was Stanley Keese, Board Treasurer and Chairman of the Finance Committee, which is charged with financial oversight of the Co-op.Keese reported that the largest asset of the Co-op is its distribution and transmission system, valued at $132 million dollars. "Representing 89% of total assets, physically this represents almost 6000 miles of power lines located in 11 counties" he said. CTEC's service area covers 4,600 miles and requires a group of dedicated professionals, office and warehouse facilities in 4 towns to maintain and, when necessary, to repair.Equity, or what members OWN, represents 37%, or $55 million. CTEC tries to maintain this equity position to be able to borrow capital needed to build and improve the system. Keese continued by explaining that almost 60% of each revenue dollar collected goes to pay for power that CTEC buys, and that 21 cents of each dollar goes toward operations and maintenance costs. The remaining percentages go toward depreciation, interest, and margins, or patronage capital. With one of the highest percentages of equity last year, and with strong margins year to date, Keese said, "the Co-op is in the best financial condition it has ever been in."Board Chairman Kaspar concluded, "I'm sure you can see from these reports that your Board is working hard for you. We are member-focused. No matter what comes our way, we'll continue to put you, our members, first." He added, "Member control means we are accountable to those we serve. We are dedicated to assisting our communities; your money stays at work close to home."Following the video report, CEO Loth gave special recognition to several employees with extended tenure at the cooperative. Gerald Kaspar followed with presentations to retiring Directors Sue Whitworth from Kendall County, and David D. Smith of Gillespie County. Both have served the maximum 12 years of service on the Board of Directors.Afterward, Loth and Kaspar offered a brief question-and-answer session for members, giving them an opportunity to voice their concerns and comments.The meeting ended with a drawing for over $2,500 worth of door prizes that were all donated by the Co-op's generous suppliers.