The immense potential we saw at the start of 2019 has not only been realized, but has propelled us into 2019 with tremendous momentum.
2018 started with a strong foundation of past successes, and we built on those successes by continuing to maintain a strong electric system and to build out fiber infrastructure for GVEC communications and rural internet access. We also continued improving and strengthening community services that have long been a part of our traditional cooperative commitment.
However, at GVEC we operate for a bigger purpose than ourselves; our larger vision of service to community won’t allow us to ever become complacent. This led to immense growth in both our retail and cooperative products and services in 2018, including some we had recently launched or planned to launch during the year.
With 2018 now past, we’re pleased to report that the immense potential we saw at the beginning of the year has not only been realized, but has propelled us into 2019 with tremendous momentum. Those new products and services mentioned also became an important part of our success in 2018. All these developments, combined with our continuous drive to challenge and improve ourselves and serve the greater good of our communities, helped make 2018 a year of many firsts at GVEC.
For one, we experienced record retail sales for the year. Our revenue from the sales of HVAC products and services more than doubled between 2017 and 2018. We more than doubled our sales of solar panel systems and installations, too, with a corresponding increase in revenue. These solar increases related directly to our decision to begin performing our own system installs in the final quarter of 2017 through in-house electricians. In-house installations enabled better quality control and enhanced customer relationships. Plus, GVEC membership had inquired about and requested electrician services for many years. Our members helped us identify a service that would fulfill a need within our service territories, and we took action. The robust growth of this new service in its first full year strongly indicates that our decision to launch created a significant benefit for GVEC members and our region.
We are equally proud of what we accomplished in 2018 in regards to empowering the people and communities we serve. One such accomplishment was the completion of our first E-rate contract. For those of you unfamiliar, E-rate is an FCC program that provides discounted high-speed internet access to schools and libraries based on financial need. Through that program and collaboration with GVEC, Stockdale ISD paid only 2 percent of the total cost to upgrade its internet to GVEC Fiber. Their connection speed went from 50 megabits per second (Mbps) to 500 Mbps.
GVEC employees really stepped up for community in 2018, too, with the introduction of the Cooperative’s first-ever “GVEC Gives Back” day. This event featured a 5K Color Fun Run/Walk, lunch, a raffle and live entertainment. The day’s big winners were the two worthwhile beneficiaries: the Guadalupe County Children’s Advocacy Center and the Gonzales Regional Children’s Advocacy Center, who split $23,000 evenly. Events like GVEC Gives Back reveal not only the strong family bond GVEC employees feel with one another, but also with the members, customers and communities they serve. Being a Cooperative employee is more than a job; it’s also a chance to support and enrich the communities we are part of.
We were also able to apply creative business strategies to maximize value for our members and customers. For example, in 2018 the Board made a decision to merge GVEC.net into the electric cooperative. Before this move, GVEC.net had been its own for-profit entity. However, the IRS recently designated rural broadband as a “like activity,” subject to the same not-for-profit classification granted to electricity sold by cooperatives like GVEC. This allowed us to streamline overlapping operations, creating significant new efficiencies. The move also minimized our financing costs and greatly reduced our sales and income tax liability. We project an annual savings of around $1.5 million as a result of this merger. All margins from GVEC Internet services will now contribute to capital credits disbursements. The rollout of our latest peak demand program—Rush Hour Rewards—in April 2018, provides another great example of our continuous drive to generate maximum value for membership. To date, we’ve enrolled over 1,000 members in this important program and saved over $80,000 in transmission costs, helping to keep rates stable for our members yet another year.
We’re also proud of GVEC’s first-of-its kind service agreement with the City of Gonzales to assume their day-to-day electric operations and maintenance activities. This contract, which went into effect October 1, covers electric infrastructure in Gonzales and Harwood and allows the City to maintain complete ownership of its system, along with all revenues. The deal represents a milestone not just for GVEC, but for the cooperative way of business. It is no exaggeration to describe this agreement as a “flagship” model for other cooperatives around the state seeking to form similar alliances with the municipalities they serve alongside.
Finally, GVEC celebrated its 80th anniversary in 2018. As we reflect on those 80 years, we are deeply thankful that the communities of the Guadalupe Valley have allowed us to serve and forge a mutually beneficial relationship. As the region has grown and succeeded, the Cooperative has remained steadfast in our pursuit of a bigger purpose. That purpose is, was and always will be service to community, and we are both humbled by and pleased to have grown and succeeded alongside those we serve.
Within the Annual Report, you will see evidence of our dedication to serving and continually creating value for our members and customers. You’ll see it in our push into renewable energy (SunHub™) and in our newest program designed to help maintain stable Generation & Transmission rates (Rush Hour Rewards). Our pursuit of a bigger purpose fuels our continuous efforts to maintain a modern electric grid, as well as our work to deliver fast, dependable internet as widely as possible throughout the Guadalupe Valley. It’s there, too, behind our efforts to be involved in and supportive of our communities (GVEC Gives Back, Power Up). Simply stated, the Guadalupe Valley Electric Cooperative exists to make a difference in the lives of those we serve. As we look ahead to our next 80 years of service, we can think of no more important purpose than this.
Lewis Borgfeld Darren Schauer
President General Manager and CEO