EMC drops $2M in Q1 of ’12
by Kim Isaza
newseditor@mdjonline.com
October 04, 2011 11:54 PM | 3984 views | 27 27 comments | 20 20 recommendations | email to a friend | print
MARIETTA — The first-ever release of quarterly earnings for Cobb EMC shows the nonprofit electric utility lost just over $2 million for the first quarter of fiscal year 2012, which ended July 31. The utility’s chief financial officer, though, said the loss was not unexpected.

The report follows the earlier release of year-end data that showed Cobb EMC had a total net income of $21.8 million for fiscal 2011 — about half of the utility’s fiscal 2010 net income of $43.14 million.

Cobb EMC’s fiscal year runs from May 1 through April 30.

For the first quarter of FY12, Cobb EMC had total revenue of $131 million, with the bulk of that — $128.2 million — coming from operations.

The utility’s expenses totaled $133 million for the quarter. Of that, $120 million were operating expenses. The company also had interest costs of nearly $7 million, and lost $6.1 million in Gas South.

Cobb Electric and Gas South are the two major components of Cobb EMC.

Chief Financial Officer Robert Steele noted in a statement to the Journal that both Cobb Electric and Gas South are seasonal businesses by nature and are greatly affected by weather.

Gas South’s quarterly loss “was not unexpected, as their budget projected negative numbers for this period,” Steele said in the statement. “Gas South has been profitable since its inception in 2006.”

Also, Cobb Electric and Gas South “peak at opposite times of the year,” he said. “Cobb Electric is generally most profitable from July through September, whereas Gas South is generally most profitable from December through March. … Extreme temperatures can have a significant impact on their bottom lines.”

The company did not provide comparative data for the first quarter of 2011.

“As these are the first quarterly statements prepared, there are no 2011 comparative numbers,” Steele said in the statement. “It was felt that the work required to produce first quarter 2011 numbers would be greater than the benefit derived.”

As for the year-end 2011 numbers, Steele said many factors accounted for the reduced net income from fiscal 2010 to 2011.

“The single largest difference for 2011 is we reduced the revenue by $14.5 million and rebated it to the members,” he said. “Also, Gas South’s income was down, and various other expenses were greater.”

Cobb EMC is a nonprofit, member-owned electric cooperative that serves about 190,000 customers in five counties. It is governed by a 10-member board of directors.

Chief executive Chip Nelson announced last week that the company would begin releasing its quarterly reports as part of a host of changes intended to make the utility’s operations more transparent to its member-owners.

A group of members sued the utility in 2007, accusing the 10 directors and then-CEO Dwight Brown of unjust enrichment and breach of fiduciary duties, among other things.

After four years of legal back-and-forths, the plaintiffs scored a major victory in September when members overwhelmingly voted to reject mail-in ballots for future director elections. The EMC had urged members to approve the mail-in ballots, but the plaintiffs argued the ballots would be used to further entrench the 10 incumbent directors. And in fact, the two longest-serving directors have since announced that they will not seek reelection early next year.

The first round of elections is set for Nov. 12, and four seats are up. All members may cast votes in all 10 director elections.
Comments
(27)
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MaybeGPC
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October 08, 2011
Just remember one of the main things a company looks for in an acquisition in a good company that has been mismanaged. Does that sound familiar?

anonymous
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October 07, 2011
to Sad

Southern owned Gas South under a differnet name it sold the business and transfered both the customers and the employees to Cobb EMC. It should be in the accouting records.
MaybeGPC
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October 07, 2011
I see your point about GPC. Please remind me when it was the GPC CEO was indicted and board members forced to resign. Oh, I remember. Never!

EMC has good employees, but their management has made this company a laughing stock and butt if jokes.

Sad Ol' Geezer
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October 06, 2011
Maybe GPC, Sir:

Southern Company sold Southern Natural Gas in 2006

and as a result SNG customers were transferred to

Gas South. Southern Company never owned Gas South.

Go!
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October 06, 2011
Well stated former Gpc!
Former GPC customer
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October 06, 2011
MaybeGPC, ever heard the old saying, be careful what you wish for? Well let's see what we would get if GPC bought Cobb EMC. First your outage response time would drastically increase. Cobb EMC has one of the best outage times in the nation. GPC is no where close. 2nd, your workers would all be union, instead of the quality non-union workers they are now. 3rd, as of right now Cobb EMC field workers will go above and beyond to satisfy the members of Cobb EMC. GPC, they could care less. They will come and trim your trees, never asking if it's ok, and then when you call to complain, they will tell you there is nothing you can do about it. Take it from someone who knows, GPC isn't all they are cracked up to be.
MaybeGPC
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October 06, 2011
Concerned, I thought the goal of an EMC was to provide reliable, low cost electricity to it customers (owners), not to create as many jobs as possible. Any good manager/executive will reduce cost if service and quality are not impacted. As a matter fact it is the Board's responsibility to take such actions.

Also to Sad, Southern Company did own what is now Gas South but sold it because it was under performing.

Concerned employee
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October 06, 2011
MaybeGPC, thanks for showing your willingness to throw all the hard working employees to the unemployment lines.
Sad Ol' Geezer
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October 06, 2011
Sorry Bob, but Southern Company never owned and was never affiliated with Gas South.
Bob Bummer
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October 06, 2011
If Gas South has been making money then why did Southern Company sell it to Cobb EMC? I am a little sceptical of Gas South.
maybeGPC
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October 05, 2011
I think the best resolution for all is for a new board to approach Georgia Power about buying Cobb EMC. Then the PSC would regulate all customer cost and company expenditures, the books would be reviewed regularly and the entire operation could be run with about 150 employees instead of 500. Rates would go down and all EMC overhead costs would go away, i.e. Accouting, IT, HR, Public Relations, Supply Chain Management, etc. GPC also has one of the highest Customer Service rating in the country.

Certainly worth a look.
anothermemberin
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October 05, 2011
to just wondering;

The whole thing makes me sick too. It makes me sick to think that a 12 Member Board and the executive's at Cobb and all the other associated companies fleeced EMC members for years!

It makes you sick that we want answers? Do you burn books too?
Mad we got burned
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October 05, 2011
What we need is transparency for each of the last twenty years and a return of the twenty million dollars that was paid for "naming rights" of the performing arts center.
PMom_GA
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October 05, 2011
Subtract all the legal fees, and guess what?

Loss magically will disappear!
EMC Member
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October 05, 2011
@ justwondering, You're right, they can't win because they (the board) have squandered so much of our (the member's) money. The only solution will be complete removal of every single incumbent board member. A person can't spend 4 years hiding their unlawful activities and then say "Oh, we now want to be transparent" and expect everyone to go on and be happy with them. They made their bed, now they have to lay in it. If anyone is bent on destroying Cobb EMC, you have no further to look than the current board, Dwight Brown and Sam Kelly. These people have spent 4 years and millions of dollars fighting transparency. Now they say "uncle" and they expect everyone to just go away. Fat Chance.
tell_the_truth
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October 05, 2011
We'll be happy when we have a new board. It's not that complicated.
EMC Owner!
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October 05, 2011
Has anyone thought to ask how much legal was paid during the quarter? How much to carry on the fight against the members and how much to cover Brown's litigation?
just wondering
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October 05, 2011
Is anything going to satisfy all you out there? Between all of you and the most biased newspaper I've ever known...I don't think so!!! It seems to me that all of you are ----bent on destroying a great company? You want more transparaty,but when they agree to it, you stll find something else to bash them about! They can't win...because ya'll won't have it. This whole thing makes me sick!!!
anonymous
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October 05, 2011
to anotheranonymous;

Gross revenues or cash receipts wasn't reduced. Net revenue which is cash receipts minus rebates and possibly other cash costs was.
anotheranonymous
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October 05, 2011
to anonymous

The answer isn't all that complicated, parsing your question is the tough part.

Your original post focused on the 14.5 million rebate and you asked: "how can you reduce revenue and also rebate it? Doesn't make sense. Is this gross or net revenue?"

I thought your reference to "this" in your question was in relation to the 14.5 million and my reply directed accordingly.

If, in referring to "this", you were shifting gears and asking about whether the total revenue for the company was gross or net (as suggested by your later post), my answer would have changed slightly as follows:

Gross revenues would have been reduced by 14.5 million to arrive at net revenue (for purposes of this answer please ignore that there may be other subtractions from gross revenue).

So, no matter how the question is framed, I think we've now arrived at the answer.
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