September 2023

Dustin Tripp

Annual Meeting Recap

SouthEastern Illinois Electric Cooperative held its’ 84th Annual Meeting on Tuesday, August 1, 2023 with 881 members registered and approximately 1,200 in total attendance. For those of you who were unable to attend your Cooperative’s annual meeting, this article will summarize the report members received at the annual meeting.

Your Cooperative invested $8.7 million in system improvements to replace aging infrastructure and invested $7.2 million to perform strategic maintenance activities in order to ensure that members receive a reliable electric supply while also maximizing the life and value of Cooperative assets.  Just a few examples of the maintenance activities include the Pole Testing and Treatment program and the Vegetation Management Plan.  Over the past several years, your Cooperative has performed a testing and select treatment program on approximately 53,000 poles.  This program identifies poles that have met their useful life and must be replaced, ensures the integrity of other pole assets, extends the useful life of poles and saves Cooperative members millions in early replacement costs.  The Vegetation Management Plan, which is crucial to electric reliability, ensures that we perform trimming and clearing along approximately 800 miles of distribution line every year.

The Cooperative sold approximately 761.5 million kwh in 2022 resulting in a decrease of 1.3% from 2021.  This slight decrease in kilowatt hours sold was due to lower large commercial sales.  The Cooperative constructed 318 new services to homes, farms and businesses and upgraded 28 services to provide additional energy capacity.

Your Cooperative ended the year 2022 in sound financial condition. As a not-for-profit organization, your Cooperative does not strive to produce profits for shareholders and investors but must maintain a sound financial position for the membership.  In 2022, your Cooperative’s Board of Trustees approved the retirement and return of $1.8 million of Capital Credits and the capital credit checks were mailed to members in December of 2022.  Over the past twelve years, your Cooperative has retired and returned approximately $21.5 million to Cooperative members.

Every year, your Cooperative reviews the rates paid by our membership and compares that to the other electric cooperatives around the state.  Your Cooperative’s electric rate consistently ranks among the lowest electric rates in the state and this year, your Cooperative ranked the number one lowest average residential rate in the state.  In January 2021, your Cooperative implemented a retail rate decrease for every Cooperative member.  This retail rate decrease was projected to save the average residential member approximately 8.8%.  At that time, the rate decrease was possible due to wholesale power cost credits and other deferrals.  Your electric Cooperative was able to extend these lower rates for over two and a half years.  However, the deferrals and credits that made the rate decrease possible have been exhausted.  Therefore, your Cooperative is projecting the need to raise retail rates back to the approximate 2020 retail rate level in the Fall of 2023.  With this projected rate change, your Cooperative’s average residential rates will still be among the lowest rates of all Cooperatives in the state.

Cooperative members learned that the Midwest and other parts of the country are at risk of running short on generation capacity to serve energy consumers during peak demand times. As you know, millions of people experienced blackouts in Texas during Winter Storm Uri in 2021.  In December 2022, nine states experienced rolling blackouts during Winter Storm Elliott as the demand for electricity exceeded generation capacity. 

In May of this year, the North American Electric Reliability Corporation (NERC) released their 2023 Summer Reliability Assessment and their key findings indicate that approximately two-thirds of the United States face electric reliability challenges in the event of widespread heatwaves this summer.

Your Cooperative’s power supplier, Southern Illinois Power Cooperative, is part of the Midcontinent Independent System Operator (MISO) Generation and Transmission network that covers all or part of 15 states in the Midwest.  MISO has also been providing warnings that the network is facing major reliability and resiliency challenges, is forecasting that in the next two years, the system could fall short by some 2,000 MW of generation capacity needed during peak conditions and is now starting to question the ability to meet peak capacity during winter peak periods, as well as summer.

The reality that the Midwest and other parts of the country are now at risk of being short on generation capacity to serve energy consumers is due to a rapid transition in the electric generation industry to construct more renewable energy resources (solar and wind) while retiring fossil fuel generation (primarily coal but natural gas as well). 

Some of the primary reasons for this transition are public, social and financial policy changes that are providing significant financial incentives, including significant investment tax credits and subsidies, for the construction of renewable energy generation.  In addition, owners of fossil fuel generation facilities are facing ever increasing environmental regulations.  The new Environmental Protection Agency Carbon 111 Rule that was released in May of this year is also targeting natural gas generation in the United States in order to reduce CO2 emissions.  If these new rules go into effect, we will begin to see more significant retirements of both coal and natural gas plants, not to mention that any utilities that had planned natural gas generation additions will likely delay or possibly abandon those plans. 

The United States is constructing massive amounts of new, renewable energy generation which primarily consists of solar and wind.  However, the United States is attempting to transition away from fossil fuels too quickly and prematurely.  This is what is causing a tremendous strain on our generation and transmission network resulting in higher risk for controlled outages and blackouts.  Wind and solar generation are in our generation portfolio and they are a part of our current generation mix.  However, wind and solar are simply not able to provide energy when we as consumers demand energy.  All of us consume electricity 24 hours per day – 365 days a year and that certainly includes a significant amount of time when the wind is not blowing and the sun is not shining.

Historically, fossil fuel generation facilities have proved to be very reliable in meeting the peak demands of energy consumers.  Fossil fuel generation facilities are dispatchable which means they can be controlled by operators to generate at very high or low levels by changing fuel levels depending upon the consumers demand for electricity.  Conversely, wind and solar generation facilities can’t be controlled by operators due to the fact that their generation levels are controlled by the amount of wind or sun that’s available at any particular moment.  As we look to the future of the electric generation industry, it is vital that the industry, government leaders, consumers and other stakeholders recognize the significance and importance of having reliable and affordable fossil fuel generation capacity available to meet the demands of energy consumers.  If the industry continues to retire fossil fuel generation prematurely, the risk of blackouts, controlled blackouts and shortages in generation capacity will continue along with significantly higher generation capacity costs. Your Cooperative was formed 85 years ago to bring electricity to rural areas of southeastern Illinois.  We appreciate the opportunity to serve you and we want you to know that your Cooperative is owned by the people it serves and will continue to be an electric cooperative that is truly operated “for the people and by the people.”

See you next month and as always, “We’ll keep the lights on for you.”