GCEC & GCU Plan of Merger

Yes. If the GCEC and GCU merger is approved by the members, then a single logo will be developed.

The GCEC members received a golden-rod colored ballot, if they have electricity with the co-op. Cast your vote(s) from the number of ballot(s) you received in your envelope.

There is an opportunity to reduce costs without affecting customer service, reliability, or safety. Lower costs help the Coop manage rates meaning smaller and less frequent rate increases.

There are 2 separate boards that manage GCEC and GCU. As mentioned in a previous answer currently 6 board members serve on both boards. There are currently 2 vacancies on the GCU board. There would be less confusion if we combine the boards now rather than fill 2 positions and have new board members serve short terms.

All the Coop’s employees are GCEC employees. The merger of the utilities will have no affect or change the number of employees working at the Coop. If there are changes in headcount it will be for business reason like reorganizing as business needs change.

As an example, GCU does not have any employees, vehicles or large equipment. The employees, vehicles, and equipment are associated with GCEC. GCU pays for their share of the overheads. Also, GCU does not meet the loan covenants required by our lending institutions to borrow capital needed to run the company. GCU borrows money through GCEC which guarantees the loan obligations.

6 of the current board members are both GCEC and GCU members. All of the board members feel water is a precious resource for our valley and is an essential service. Board direction is to upgrade, grow, maintain the water system and to make the system profitable. While the make up of the board will change over the years the importance of water and electricity will not. You need water services to have a need for electricity. You need electricity to pump water. The 2 services are connected in many ways.

The members will decide if the merger is approved. There are several reasons it makes sense to combine into one utility. With the pending gas system sale to SWG, GCU will have only water services. Having a separate utilities costs money for audits, reporting, filings, separate board, and is generally not efficient with a smaller utility.

At the 2020 GCU annual meeting held on October 17, 2020 the members voted to sell the gas utility to Southwest Gas Inc. (SWG) The transfer of the gas utility will be complete in 3rd quarter of 2021 and will leave the GCU cooperative with only the water utility.  When the water and gas utilities were acquired for the benefit of the community, those utilities were put into a separate cooperative from the electric utility because of the liability risks associated with natural gas utilities.  Having two separate companies duplicates expenses such as corporate filings, reporting to the Arizona Corporation Commission, and financial audits.  Now that the risks associated with a gas utility are not there, it makes sense to eliminate the duplicate expenses.  The merger will also enhance the financial well-being of the water division.

After reviewing the pros and cons of combining the 2 utility cooperatives, both GCU and GCEC Boards of Directors approved a plan of merger and authorized a vote by the members. The Plan of Merger (PDF) calls for GCEC, the electric cooperative, to be the surviving cooperative in the merger and own the water utility.  Therefore, the combined Bylaws will be based primarily on the GCEC Bylaws.  Members of GCU are generally members of GCEC -- people who have a water hook-up, have an electric meter.  In the proposed merger the GCU members will not lose any financial rights that they have now.  And the merger will continue to provide financial support to the water utility.

To merge the two utilities into one company requires that a 2/3rds majority of the total votes cast be "yes" votes to approve the merger and combine the bylaws.  The voting ballots will be mailed out on/or about April 16, 2021 to all GCEC and GCU members with voting instructions and a deadline to mail in or drop off their voting ballot at the GCEC office. Following the voting deadline of May 26, 2021, the election committee will count and certify the vote totals and report the results to the GCU and GCEC Board of Directors.

In the voting materials to be mailed on/about April 16^th you will receive:

• Voting instructions
• Deadline information
• The Plan of Merger

A combined annual meeting is scheduled for Saturday, September 18, 2021. There will be a report of the vote outcome and a presentation of electric and water operations. Other business will be conducted, including a status of the gas utility sale.