Inland Power & Light Co., the Spokane-based electric cooperative, says its net margins jumped 56 percent last year to slightly more than $5 million, due largely to record power sales, lower operating costs, and the sale of its former headquarters near downtown.

For the nonprofit co-op, net margins are the equivalent of net income. Inland Power's net margins fell about 30 percent to $3.2 million in 2008, down from $4.5 million the prior year, so last year's rebound more than made up that decline.

Inland Power's revenue climbed 4 percent last year to $54.9 million, but its total cost of electric service grew just 2 percent to $51.2 million, resulting in operating margins of $3.7 million, up 3 percent from 2008. Its cost of power, which represents the biggest portion of its total cost of electric service, grew 7 percent to $28.2 million, but that increase largely was nullified by a 21 percent reduction in operations-and-maintenance costs, which fell to $6.3 million from $7.9 million in 2008.

CEO Kris Mikkelsen says operating costs can vary widely depending on the severity of the winter season and storms that come up during the year, causing damage that work crews must repair. Federal aid provided to help cope with the aftermath of a severe storm in January 2009, plus mild winter weather late last year, contributed to the improved operating-cost numbers, she says.

One of the biggest contributors to Inland's improved net margins was its reported nonoperating margins of $1.3 million, more than quadruple the prior year's $299,000. That jump was due mainly to the sale of its former building and land at 320 E. Second to nonprofit Arc of Spokane, Mikkelsen says. Inland Power moved in September to a larger, newly constructed headquarters at 10110 W. Hallett Road, on the West Plains.

Meanwhile, the co-op added 400 new members last year, boosting its overall membership to 38,200, and refunded $1.25 million in what are called capital credits to its members, which was $250,000 less than it refunded in 2008, but the same amount as in each of the four prior years.

"I think we had a good year. It was better than we expected," Mikkelsen says, adding that she expects this year to be tougher.

"I think it's going to be real challenging for all utilities, Inland Power included," she says. "You see an environment where we're going to see rate increases driven by the changing world we live in and by climate-change concerns."

Inland Power plans to raise its rates 8.5 percent on April 1, mostly because of the need to pass along a 7 percent increase in the wholesale price the co-op pays the Bonneville Power Administration for power, with the rest targeted at system infrastructure upgrades. The BPA enacted the wholesale price increase in October—its first rate hike in six years—but Inland Power opted to delay increasing its rates until this spring to minimize the impact on its members, who pay their largest power bills over the winter months, Mikkelsen says.

Inland Power is what's called a "full requirements" customer of the BPA, meaning that the BPA, which markets the electricity generated by the Northwest's federal dams, provides all of the co-op's power requirements at cost-based rates.

The BPA announced a year ago that it likely would need to raise its rates and initially projected the need for a more than 9 percent rate hike, later suggesting that rates potentially could rise 15 percent or more. So the lower increase that ultimately was approved was a relief, Mikkelsen says, though it obviously comes at a tough time for members because of the continuing economic recession.

"We don't have a choice" but to raise rates, Mikkelsen says. "There's no way to absorb that. The hope is that the economy will start to get a little better, and it will be easier for people to deal with."

The $1.5 million in capital credit payments that Inland Power's board refunded to members in 2008 was the largest amount it had paid out in its 71-year-history, but Mikkelsen says the co-op's board decided last year that it would be more prudent to return to the somewhat smaller refund of prior recent years.

The co-op's total assets at the end of last year were $145.8 million, up 13 percent from $129.3 million at the end of 2008, and Mikkelsen says its new headquarters complex accounted for most of that increase.