Midwest Electric members at the 82nd annual meeting, held Saturday, June 1, learned more about the consolidation study with Paulding Putnam Electric Cooperative and heard updates about electric rates, power reliability investments, patronage cash-back, and the wholesale power supply business managed by Buckeye Power Supply Cooperative. Members also heard that Midwest Electric received its highest-ever ACSI score: 91.
More than 600 members and guests also enjoyed a breakfast buffet, the chance to win $3,000 in cash prizes, kids’ games, and more. Annual director elections were conducted by mail and online with the results announced at the meeting: Incumbents Kathy Brake (Van Wert County), Jim Wiechart (Mercer and Darke counties), and Steve Bauer (Auglaize and Shelby counties) were re-elected to the board. Members also approved minor updates to the Code of Regulations.
CEO Matt Berry discussed a study, currently underway, looking at the feasibility of consolidating Midwest Electric and Paulding Putnam Electric into a single new electric cooperative. The two cooperatives have been sharing a couple of employees for the past two years and have a number of employee retirements coming in the near future.
An informal study late last year showed the consolidation’s potential for $11 to $13 million in savings over 10 years, Berry said. The more comprehensive study is being conducted by the National Rural Electric Cooperative Association and should be completed this summer.
“Nothing has been decided,” Berry said. “We’re simply doing our due diligence to see if a consolidation makes sense for our members and employees.”
According to Berry, both boards are committed to no employee layoffs as a result of a consolidation. And, being one hour apart, both offices would remain open. The majority of savings would come from attrition as employees retire.
“Paulding Putnam is very similar to Midwest Electric in many ways: Paulding is financially very healthy with equity even higher than ours. Paulding’s reliability stats are slightly better than ours. We have essentially the same member service programs. Paulding Putnam has a community donation fund just like ours. And Paulding also scores exceptionally well in member satisfaction surveys,” Berry noted.
If both boards decide later this summer or fall to proceed with a consolidation, it would go before members of both cooperatives for a vote. The earliest this could happen would be next spring.
In other updates, Berry exclaimed it has now been nine years since Midwest Electric’s last rate change in August 2010. “During these past nine years, we’ve invested more than $18 million in electric system upgrades and returned $11 million in patronage cash-back…all without raising rates!”
“All that being said, we plan to do a cost of service and rate study this fall with the possibility for new electric rates in 2020,” he added.
Berry also spent time talking about the transmission supply problems Midwest Electric has had in recent years. “To help address the transmission problems and further improve our reliability, this year we’re starting a Distribution Automation project — or, remote control — where our major circuits could potentially have power restored in minutes instead of hours,” he said. “This will not fix all of the transmission issues, but it will help. We’re also working closely with Buckeye Power and the transmission companies to draw attention to the problem areas.”
Berry stressed the importance of peak load management, such as with electric water heaters, central air conditioning, and commercial off-peak accounts (where large power users shift their electric use during periods of high demand), which saves the cooperative $500,000 a year in lower power supply costs and helps keep electric rates stable.
Berry thanked employees for their member-focused mindset. In surveys taken this spring, Midwest Electric scored a 91 – the highest score in the co-op's history – in the American Customer Satisfaction Index. “This score is well above municipal and investor-owned utilities and puts us in an elite ranking among the top 10 of America’s 900 electric cooperatives,” he said.
Board President Larry Vandemark told members that kilowatt-hour sales in 2018 increased six percent over the previous year. He said the high sales and low expenses in 2018 resulted in margins $1 million over budget.
“So this March, we gave that $1 million right back to you," Vandemark said. "This is what the Cooperative Difference is all about."
Vandemark noted the cooperative’s equity as a percent of assets is a healthy 52%, well above the national electric cooperative average of 45%.
Midwest Electric trimmed trees along 157 miles of line in the Elida and Kossuth areas last year, he added. “We tested 1,680 poles in the Rockford area for sturdiness and reliability along with 2,226 poles in the Elida area,” Vandemark said.
Another five miles of three-phase line was rebuilt in the Rockford area.
“I want to especially thank our employees for their dedication to providing the best possible service,” Vandemark said. “I believe electricity is the greatest value around, and having knowledgeable, service-oriented employees makes your electricity an even greater value.”
Craig Grooms, vice president of engineering and operations for Buckeye Power Supply Cooperative, updated members on Buckeye Power taking over from American Electric Power (AEP) on the management, operational, and dispatch control of Cardinal Generating Station in eastern Ohio as well as two natural gas plants in western Ohio. Cardinal is the Ohio electric cooperatives’ primary generating plant, consisting of three, 600-megawatt coal-fired units.
“Over the last five years or so, as AEP began to exit the power plant business in Ohio, it became increasingly clear that the cooperatives needed to take on this responsibility so that the investments made at the plant could be optimized,” Grooms said. “The transition has been successful, and we think there are improvements and savings that will come from having a smaller, more focused organization being in charge.”
Grooms said transmission providers are making reliability upgrades in other parts of Ohio. Buckeye Power continues to work with the transmission companies “to make sure the investments they’re making are prudent and provide benefits to co-op members." “As a not-for-profit, service-oriented organization, it’s a priority for us to control costs to keep rates as affordable as possible," Grooms said.
Ohio’s Electric Cooperatives (OEC) has stepped up efforts in economic development, Grooms said, by assisting with site certification for industrial and commercial properties across the state.
And OEC continues to grow its statewide program, Central Ohio Lineworker Training (COLT), to give co-op linemen hands-on, real-world training in a one-of-a-kind facility located in Mt. Gilead, Ohio.
“Our COLT program ensures the people keeping your lights on have the best possible training,” Grooms said. “In fact, we have one of the few indoor training facilities in the country that allows linemen to train year-round.”