Our financial relationships with our member distribution cooperatives are based primarily on our contractual arrangements for the supply of power and related transmission and ancillary services. These arrangements are set forth in our wholesale power contracts with our member distribution cooperatives that are effective until January 1, 2054, and beyond this date unless either party gives the other at least three years notice of termination. The wholesale power contracts are all-requirements contracts. Each contract obligates us to sell and deliver to a member distribution cooperative, and obligates that member distribution cooperative to purchase and receive from us, all power that it requires for the operation of its system, with limited exceptions, to the extent that we have the power and facilities available to do so.

An exception to the all-requirements obligations of our member distribution cooperatives relates to the ability of our eight mainland Virginia member distribution cooperatives to purchase hydroelectric power allocated to them from SEPA, a federal power marketing administration. Purchases under this exception constituted less than 2% of our member distribution cooperatives’ total energy requirements in 2022.

There are two additional limited exceptions to the all-requirements nature of our wholesale power contracts. One exception permits each of our member distribution cooperatives, with 180 days prior written notice, to receive up to the greater of 5% of its demand and associated energy or 5 MW of demand and associated energy from owned generation or other suppliers. The member distribution cooperative may return this load with proper notice. The other exception permits a member distribution cooperative to purchase additional power from other suppliers in limited circumstances following approval by our board of directors. As of December 31, 2022, none of our member distribution cooperatives had utilized this latter exception.

If all of our member distribution cooperatives elected to fully utilize the 5% or 5 MW exception, we estimate the current impact on our load requirements would be a reduction of approximately 181 MW of demand and associated energy. As of December 31, 2022, approximately 144 MW of demand and associated energy had been removed under this provision. In May 2023, we anticipate that approximately 16 MW of load will return to us. We do not anticipate that the current or potential full utilization of this exception or the return of all removed load by our member distribution cooperatives would have a material impact on our results of operations, financial condition, or cash flows.

Each member distribution cooperative is required to pay us monthly for the power we furnish under its wholesale power contract in accordance with our formula rate. See Note 1—Summary of Significant Accounting Policies—Formula Rate.

More specifically, the formula rate is intended to meet all of our costs, expenses, and financial obligations associated with our ownership, operation, maintenance, repair, replacement, improvement, modification, retirement, and decommissioning of our generating plants, transmission system, or related facilities; services provided to the member distribution cooperatives; and the acquisition and transmission of power or related services, including:

The rates established under the wholesale power contracts are designed to enable us to comply with financing, regulatory, and governmental requirements that apply to us from time to time.

In accordance with the wholesale power contracts, our board of directors will review our formula rate at least every three years to determine if it reflects and recovers all costs and expenses indicated above, and if it represents the best way to allocate these costs and expenses among our member distribution cooperatives. In making this review, our board of directors will consider if the formula rate results in the proper price signals to our member distribution cooperatives. Due to changes in the energy sector generally and PJM specifically, the review of our formula rate often identifies new or changing bases for the costs we incur. We will not modify our formula rate in any manner that would result in a failure to recover all of our costs and other amounts described above.

Revenues from our member distribution cooperatives for the past three years were as follows:


	Year Ended December 31,
	2022		2021		2020
	(in millions)
Rappahannock Electric Cooperative	$	288.6	$	223.3	$	237.6
Shenandoah Valley Electric Cooperative		180.9		138.2		144.5
Delaware Electric Cooperative, Inc.		140.0		109.1		110.0
Choptank Electric Cooperative, Inc.		92.3		72.1		73.7
Southside Electric Cooperative		67.5		51.8		56.9
A&N Electric Cooperative		55.1		44.0		48.0
Mecklenburg Electric Cooperative		54.3		32.6		36.8
Prince George Electric Cooperative		25.8		20.2		22.9
Northern Neck Electric Cooperative		21.5		16.9		20.2
Community Electric Cooperative		13.9		10.5		11.0
BARC Electric Cooperative		11.2		8.2		9.2
Total	$	951.1	$	726.9	$	770.8