Midwest Electric’s reliability upgrades pay off, despite maintaining rates since 2010
Midwest Electric members attending the June 2 annual meeting at St. Marys Memorial High School heard how their cooperative has been able to hold the line on electric rates since the last increase eight years ago, while still investing millions in power reliability upgrades.
Nearly 700 members and guests also enjoyed a breakfast buffet, the chance to win $3,000 in cash prizes, kids games, and more. Annual elections were conducted by mail and online, and the results were announced: Incumbents Gary Knapke (Mercer County), Roger Rank (Van Wert County), and Bob Barnt (Allen County) were re-elected, and members approved minor updates to the Articles of Incorporation and Code of Regulations.
CEO Matt Berry credited employees’ productivity and creativity as a key reason why Midwest Electric has not changed electric rates since 2010.
“Keep in mind, we haven’t been sitting still over that time period,” Berry said. “During these past eight years, we’ve still invested $18 million in electric system upgrades and returned $10 million in patronage capital — all without raising rates.”
While the cooperative is in good financial condition, Berry noted they will perform a cost of service and rates study in 2019 with the potential for a rate change later next year.
Investments in reliability are paying off, Berry said, as the typical member had just 1.06 outages last year. He added that the cooperative is about to begin a multi-year “distribution automation” project, which would allow major circuits to restore power in minutes rather than hours.
On the community front, Berry thanked members for participating in the Community Connection Fund, also known as “round up,” which passed the $1 million mark in local donations last year. The cooperative’s economic development revolving loan fund has made $1.8 million in loans to local small businesses, supporting 159 area jobs.
Midwest Electric has seen more territorial battles with local municipal electric departments, Berry said. He implored township residents to stay abreast of annexation efforts and to also consider the impact on their equity in the cooperative.
Board President Larry Vandemark said the cooperative had a good year in 2017, with stable electric rates, patronage payments back to the members, and strong power reliability.
“Kilowatt hour sales decreased about 1 percent, compared to 2016. As a result, operating revenues remained at $29 million dollars,” he added. “Despite the lack of growth, member equity actually increased from 47 percent to 49 percent, thanks in part to our focus on cost control.”
Midwest returned $1.3 million in patronage capital to members in late 2017, Vandemark noted.
On the operations side, Vandemark explained that rights-of-way clearing is performed annually to help reduce tree-related outages.
“Tree pruning took place along 88 miles of lines in the Amanda substation area,” he said. “We tested and treated 2,414 poles in the Macedon substation area with less than a 2 percent rejection ratio. Those poles rejected were replaced with new poles.”
Vandemark then thanked Midwest Electric’s employees for their dedication to providing the best possible service, as well as reminding members of their importance to the cooperative.
“I believe electricity is the greatest value around, and having knowledgeable, service-oriented employees makes your electricity an even greater value,” he said. “However, our future also depends on you, our members. As an owner of this cooperative, you have a responsibility to stay informed and involved.”
Tom Alban, vice president of power generation for Buckeye Power, Midwest Electric’s power supplier, focused on Buckeye taking over operational control of the Cardinal, Greenville, and Mone power plants earlier this year. This is perhaps the most significant change in Buckeye’s history, Alban said.
“While all of these changes have kept us extremely busy, we do not anticipate any significant impacts of these changes on our rates,” Alban said. “In the short term, I expect that the cost of services provided to our plants will be reduced, and over the long term, co-op members can continue to expect a safe, reliable, affordable, and environmentally responsible supply of electricity.”
Alban said Buckeye’s rates — which account for about 67 percent of Midwest Electric members’ rates — have been flat since completing $1.2 billion in environmental upgrades in 2012.
The biggest threats to continued rate stability come from greater environmental regulations. Costs for transmission investments by Ohio’s investor-owned utilities have also impacted Buckeye, Alban noted.
“Ohio’s investor-owned utilities have been leaving the generation business and instead been making significant investments in transmission,” Alban said. “While these investments are important and necessary for reliability, their costs are passed through to the users of the transmission system, like Buckeye Power and Midwest Electric. Higher transmission costs will continue to apply upward pressure to Buckeye’s rates.”
He also discussed cooperative principles such as “cooperation among cooperatives.” Alban noted that 72 operations employees from 19 Ohio co-ops helped restore power in Georgia after Hurricane Irma last year, and then six weeks later, another 50 employees from 11 co-ops were deployed to New Hampshire after a devastating wind storm.
On safety, Ohio’s Electric Cooperatives — Midwest Electric’s statewide services organization — opened a state-of-the-art indoor training center for the Central Ohio Lineworker Training program last July.
“The new center allows our linemen to train hands on, year-round, and it’s truly the result of your co-op coming together with the other co-ops in the state to collaborate and demonstrate their commitment to safety and education,” Alban said.