CEO Message – January 2023

Maintaining Efficiency During Robust Growth

"Through the process of cutting costs as much as possible, we have remained keenly aware that the quality of power being delivered to our members must remain excellent."

Brandon Wittman headshot

One of the many tasks I have been responsible for over the last 15 years is budgeting. Prior to becoming the CEO/General Manager it was my responsibility to formulate and track our operating, capital, and information technology budgets. I have retained these duties as your General Manager. Since the economic downturn in late 2008, a conscious effort has been made to reduce costs and improve cash flow. We have made significant changes in an effort to “tighten our belt” and I will highlight for you some of our efforts.

Yellowstone Valley Electric Cooperative, Inc. had 53 employees in 2008. We were, at that time, coming to the end of a rather robust growth period and had expanded our work force in order to keep the pace. We reduced our staff to 46 employees. Through attrition we have discovered many efficiencies. Consolidating job duties and using the never-ending advances in technology have allowed Yellowstone Valley Electric Cooperative (YVEC) to continue delivering excellent service with fewer employees. Now, in 2023 we are back to 53 employees. However, this time, we have 6,000 more meters and a utility plant that has added over $45M. (21643000)

Over the course of the last several years we have forced ourselves to make hard choices when it comes to expenditures. From 2009 through 2012 we reduced our capital budget by 41%. Our department heads have honed their budget requests to items absolutely needed for our employees to do their job in a timely and efficient manner to better serve our members. Additionally, our education budget, which often includes some travel, had been lowered by a similar 40%. We have trimmed the amount of inventory we carry by keeping only critical items and have also learned to more fully utilize a consignment inventory management system. With this consignment system, an outside company keeps our shelves fully stocked with all the material items we need to build and maintain our system. However, we are not charged for material items until we pull them off our shelves and install them in the field. We have a similar system in place for the various power poles we stock in our yard. This system allows YVEC to improve cash flow by not having to pre-purchase expensive items such as transformers, poles, and wire. Additionally, forward purchases for long lead items are managed between YVEC and the outside vendor with excellent efficiency.

Through the process of cutting costs as much as possible, we have remained keenly aware that the quality of power being delivered to our members must remain excellent. We made a mindful decision not to cut corners when doing maintenance or constructing new power lines. The integrity of our system must remain strong. Amazingly, we are realizing the financial benefits by keeping an aggressive maintenance and construction program. As a result, our outage time per consumer has plummeted. The average outage time per YVEC consumer in 2021 was only 50 minutes. As a comparison, the state average is 435 minutes and the national average outage time per consumer is 207 minutes. A direct benefit of having less outage time is paying less overtime. In 2007 we paid an all-time high 6,485 hours of overtime. That number dropped significantly due to our system improvements. In 2020 we paid only 3,315 hours of overtime or 51% less than 2007.

Financial positioning is an ongoing function; it doesn’t necessarily come to an end point. We will continue to monitor and cut costs where possible while providing high quality service. Our goal is always to provide the best possible electric service for the lowest possible price to our members. The end result to this point has been a 12-year run without a rate adjustment. That is a huge accomplishment in itself, but much more meaningful knowing the positive effect it has on our members and the communities we serve.

Brandon J. Wittman
Chief Executive Officer