6.1a2 ERMUSR 05-09-2023 - Laserfiche WebLink

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Condensed statements of revenues, expenses, and changes in net position highlights are as follows: • Operating revenues — power sales increased by approximately $27.2 million between 2021 and 2020, primarily the result of increased energy sales and higher average rates in 2021 compared to 2020. Operating revenues — power sales consist primarily of member power sales revenue, power sales to nonmembers, and transmission revenue. • Other nonoperating revenues decreased by approximately $4.5 million between 2021 and 2020, primarily related to the recognition of $1.8 million in proceeds received for the termination of a purchased power agreement, and a $1.5 million gain on the sale of investments in connection with the 2010A bond redemption, both occurring in 2020. In addition, the Agency had lower investment income of $1.1 million, because of lower interest rates earned on cash and cash equivalents in 2021. • Operating expenses increased by approximately $34.4 million between 2021 and 2020, primarily the result of a $25.1 million increase in power acquisition expense, a $4.0 million increase in transmission expense, and a $3.4 million increase in other operating expenses. These increases are primarily attributable to higher energy market prices and increased demand in 2021. • Other nonoperating expenses decreased by approximately $4.6 million between 2021 and 2020, primarily related to $3.0 million lower interest expense in 2021 because of the 2010A bond redemption in 2020. In addition, there was a lower net decrease of $0.8 million in the fair value of investments, and no loss on extinguishment of debt in 2021. • Future recoverable costs decreased by approximately $11.2 million between 2021 and 2020, primarily the result of the application of the Agency's policy regarding the levelization of costs for generating assets financed by debt and the application of the Agency's policy of not recognizing the change in value of investments for ratemaking purposes. In 2021, the Agency began amortizing its remaining deferred cost balance of approximately $50 million over a seven-year period. Debt Administration As of December 31, 2022 and 2021, the Agency had long-term debt outstanding of approximately $149.7 million and $158.3, respectively. On October 1, 2020, the Agency redeemed the remaining Series 2010A bonds in the amount of $67.8 million. The Agency continued to hold an Al rating from Moody's in 2022. Fitch upgraded the Agency's bond rating from A+ to AA- in 2022. Other Factors During February 2021, a polar vortex resulted in persistent and extreme cold weather that covered most of the United States, including the Midcontinent Independent System Operator (MISO) region. This weather event led to an increase in energy demand while some generating facilities faced fuel -supply issues and equipment failures that stressed the bulk electric system. As a result of these factors, the market experienced extreme price volatility for utilities buying or selling energy during this weather event. During this period, the Agency incurred some higher than anticipated costs to provide energy to its members, and utilized approximately $4.4 million from its rate stabilization fund to help mitigate the impact of these additional costs. Contact Information This financial report is designed to provide a general overview of the Agency's finances. Questions concerning any of the information provided in this report or requests for additional information should be addressed to Avant Energy, Inc., 220 South Sixth Street, Suite 1300, Minneapolis, Minnesota 55402. W 147