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President’s


The year 2018 marks the 80th anniversary


Burk Bullington President


of Harmon Electric


Association. Your annual meeting will be held on Friday, April 6, 2018 at the Hollis Civic Center in Hollis, OK.


Your board of trustees and management encourage you to attend and take an active part in your association. Financially, 2017 was another good year for Harmon Electric.


We generated $9 million in revenue and $273,980 in margins. We met all RUS and CFC requirements and ratios in 2017, which means your cooperative remains strong and in good financial condition. Revenue remained relatively stable this past year with overall


sales increasing only by 0.5% compared to 2016. This is the fifth year in a row that sales have remained flat due to mild temperatures. Residential sales were down slightly again in 2017, but sales were up in our irrigation class which helped stabilize overall sales. Although we remain financially strong, because of the increase


in fixed costs discussed in previous communications, your board of trustees has decided not to pay any capital credits on the 1982 rotation at this year’s annual meeting. Patronage capital for 2017 will be allocated to your account for the margins of 2017. Your board of trustees is committed to making the rotation of consumers’ capital credits a priority. When financially possible, Harmon Electric will once again be paying back capital credits. This is one more thing that makes cooperatives different from other business models. We continue to closely monitor expenses due to the 2010 ice


storm and the system rebuild we completed in 2016. With flat sales and increased fixed costs, we work hard to operate as efficiently as possible and control the expenses we can in the most responsible way for our members. In 2017, we were able to cut total expenses by almost $75,000. This was made possible by continuing to operate with fewer employees and less expense from operations and maintenance. One advantage of the system rebuild we completed in 2016 is that the new lines don’t require as much maintenance and upkeep helping us to keep our maintenance costs low. The largest expenses we are unable to control are interest and depreciation expense. Both of these items are fixed costs. While we feel we are operating more efficiently than ever, we continually keep an eye on and are always looking for ways to control these costs.


Any decision your board of trustees make, we always keep in mind how it will impact you, the member at the end of the line. We weigh that with what will keep your cooperative in good financial condition plus continue to provide excellent service. You are ultimately the one we all have to answer to and something we never forget. Being locally owned and controlled is just one thing that makes cooperatives different. Our goal continues to be providing safe, reliable electricity at


an affordable cost while maintaining excellent service. We know that you the member are the reason for our existence. We urge you to attend your annual meeting on Friday, April 6, 2018 and take an active role in your cooperative.


Manager’s


Report Report I am proud to present to you


Harmon Electric Association’s 2017 Annual Report. This report contains the current status of your cooperative. You the member are part owner, so please take an active part and plan to attend the Annual Meeting.


General Manager/CEO Aaron Paxton


As you may have noticed in the February edition of the Harmon Hi-Lites, Charles Paxton, General Manager/CEO of Harmon Electric Association retired in January. After almost 42 years of service to Harmon Electric, Charles left the cooperative due to declining health and passed away on January 15. In light of that fact, your board of trustees named me as General Manager/CEO of Harmon Electric Association.


I


have enjoyed the challenge so far. I look forward to working with the board of trustees and employees to continue the long tradition of serving the membership of Harmon Electric Association.


I would like to take this opportunity to let you know a little about myself. I have been in the rural electric cooperative business for the past 7 years as the CFO of Southwest Rural Electric in Tipton, OK.


I grew up in Hollis and graduated from Hollis High School in May of 2000. I went on to receive my Bachelors degree and MBA from the University of Central Oklahoma in Edmond Oklahoma where I met my wife Katie. We have 3 children. Jack is nine years old and in the third grade, Henry is 5 and in Pre-K, and Maggie is 3 and has one more year at home with her mother.


I have had the privilege of meeting many of you. For those members I haven’t met, I am looking forward to doing so. My office is always open. I would enjoy getting to know you and how we may be better able to serve you. As your President reported, last year was a good year


financially for Harmon Electric. Previous management worked hard to place the cooperative on firm financial footing. I will strive to continue the good work that has been done here over the last several years. We look forward to the Annual Meeting and we hope you do as well. It gives you an opportunity to visit with your board members and the employees of your cooperative. You will also be brought up to date on the activities of your cooperative. Once again we will be serving a burger lunch this year. When you register you will receive a ticket for the lunch. The employees will be cooking and as always will do a great job. Also, as noted in the annual report, we will be giving


away a flat screen TV for the grand prize. We will once again be giving away $50 for some lucky winner in each district plus there will be other numerous prizes given away during the meeting. Make plans to join us on Friday, April 6, 2018. We look forward to your attendance.


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