SMECO Holds 78th Annual Meeting - Southern Maryland Headline News

SMECO Holds 78th Annual Meeting

HUGHESVILLE, Md. (Aug. 24, 2016)—Southern Maryland Electric Cooperative (SMECO) held its 78th Annual Meeting on August 23, 2016, to give customer-members the opportunity to vote for the cooperative's Board of Directors. SMECO held the Annual Meeting at the Blue Crabs Stadium in Waldorf, where it has been held since 2009.

The following SMECO members were elected to serve on SMECO's Board for three years: W. Michael Phipps in Calvert County; Gilbert O. Bowling and Richard A. Winkler in Charles County; James A. Richards in Prince George's County; and Scott White in St. Mary's County. Customer-members also voted to accept bylaw amendments which provide a framework for the cooperative to conduct all voting by mail beginning next year.

In his remarks, SMECO's president and CEO, Austin J. Slater, Jr., focused on the cooperative's direction for the future. Slater described the fundamental difference between co-ops and other electric companies as the ability for the members of the cooperative to vote each year for their representatives on the SMECO board. While the cooperative has approximately 134,000 members, only 742 members registered at the meeting and 140 members voted by absentee mail-in ballot.

Members voted to amend the bylaw that outlines requirements for meetings and voting, which positions SMECO to conduct voting by mail. The Board of Directors proposed the amendment to improve customer-member participation in the election process. Beginning in 2017, all members will receive a ballot in the mail, and all ballots must be returned by mail prior to the annual meeting. The meeting, which will be strictly a business meeting, will be held at a smaller venue, and there will be no entertainment, no food and drinks, and no attendance prizes. Election results will be announced at the meeting, but no voting will occur on site.

In other matters, SMECO has installed 12,000 new smart meters as part of its automated metering infrastructure program. According to Slater, the new meters are expected to provide better customer service, improve outage response time, increase efficiency, and save money. After smart meters are installed throughout its service area next year, SMECO estimates that the technology will save upwards of $5 million per year in operational costs. He explained that these meters represent the "new normal" in the electric industry and that current meters are becoming obsolete.

SMECO is actively pursuing additional large-scale solar projects, Slater said. In addition, SMECO receives an average of 45 applications per week for rooftop solar projects. WattPlan and PowerClerk are two online tools the cooperative uses to assist customers who are interested in installing solar panels at home.

Megan Mattei of Leonardtown High School was the guest speaker at the meeting. Mattei participated in the National Rural Electric Cooperative Association (NRECA) 2016 Youth Tour in Washington, D.C., and she was selected as Maryland's delegate for this year's Youth Leadership Conference. In March 2017, Mattei will also attend NRECA's annual meeting in San Diego.

In the concourse of the stadium, SMECO hosted informational displays about its customer programs and services, including a smart meter display. Co-op personnel were on hand to provide information about energy-efficiency programs and energy rates, and they were asked to enroll in the Members Helping Members program to help less fortunate residents keep their power on. Many customer-members participated in a scavenger hunt by visiting each display table and learning about the co-op's programs. Participants were rewarded with a tee shirt printed with "Getting Smarter Together" across the back to promote SMECO's smart meter program.

Richard Winkler, Chairman of the SMECO Board of Directors, welcomed SMECO's customer-members to the ball park and called the meeting to order. J. Ernest Bell II of Leonardtown served as the meeting chairman, a role he has played since 1999. Joe Lehan, voice of the Southern Maryland Blue Crabs, served as the emcee for the entertainment prior to the meeting. The College of Southern Maryland jazz band, Solid Brass, performed a one-hour set and customers won prizes for bingo games. The Reverend Mariann Babnis, interim rector of Christ Church in Port Republic, led the invocation. The Gwynn Park High School Air Force Junior ROTC presented the colors, and the Southern Mix Chorus performed the national anthem at the beginning of the meeting. Each customer-member who registered received an insulated tote bag.

Registered members were eligible to win one of 50 electric bill credits of $50 each. In addition, winners of 15 cash prizes of $100 each and a well-traveled SMECO vehicle were randomly selected from the registered members in attendance. Derrick Berry of Mechanicsville won the SMECO vehicle, a 2006 Ford F-150 4x4 pick-up truck with 107,000 miles.

Remarks by Austin J. Slater, Jr., SMECO President and CEO

(The following remarks were delivered at SMECO's Annual Members' Meeting on August 23.)

I want to begin tonight by thanking all of you for attending our Annual Meeting. Electric cooperatives are unique in that our customers have the concurrent benefits of ownership AND have a say in our governance. Co-ops are fundamentally different from other electric companies. Allowing the members of the cooperative to vote each and every year for their representatives on the SMECO Board is just one example. I'm proud to stand here before you tonight to report that our Board is focused and committed to steering us forward to build on the successes we have achieved since this cooperative was formed over 79 years ago.

I continue to be humbled by the privilege of being CEO of this cooperative, some 14 years now. Hurricanes; snow; ice; rate increases; rate decreases; new transmission poles; new substations and facilities, and too many other programs to list, serve as guideposts of the tremendous progress we have made. I will touch on some of the highlights of the past year, but my report tonight will be focused more on the path forward and how we plan to adapt to the ever-changing landscape of the electric industry while continuing to meet your needs.

I am proud to report that we have installed 12,000 new meters as part of our Automated Metering Infrastructure program. These AMI or "smart meters" represent a significant investment and highlight our commitment to providing better customer service, improving outage response time, increasing efficiency across all of our business units, and saving you money. Aside from being "smart," these meters are safe and secure. No longer will we have to dispatch a truck to check to see if service has been restored to an account or to reconnect an account. These meters communicate electricity usage remotely, saving us the time and manpower it takes to manually read meters.

With this technology, we are able to detect voltage irregularities and know instantaneously when your service is interrupted. These meters represent the "new normal" in our industry. Please allow me to stress that these meters are safe and serve as an example of our continued investment in serving you—our customer-members. I am confident in our team that we will be fully deployed by installing more than 160,000 new meters by the end of 2017. We estimate that this technology will save upwards of $5 million per year in operational costs while replacing thousands of our current meters that are quickly becoming obsolete to maintain.

I am also proud to report that our meter readers have been cross-trained and placed in different positions, ensuring that we implement this new technology without losing SMECO jobs. The utility cost savings alone is compelling, however the direct benefits to you, our customers, are potentially even greater. Soon, you will be able to access a secure web-portal that will allow you to see your daily usage, set alerts for high use, and possibly participate in an optional time-of-use rate that could save you money. This is an exciting new frontier in our service to you.

My next topic tonight is the continued emergence of solar power in Southern Maryland. Not a day goes by that a solar-related issue does not reach my desk. Because of this, we have redoubled our commitment to fostering solar production here in Southern Maryland. Our solar facility in Hughesville has generated 33 Gigawatt-hours of electricity over the last 4 years of operation; it might also interest you to know that our facility has avoided 50 million tons of CO2, 80,000 tons of nitrous-oxide, and 186,000 tons of sulphur-dioxide emissions. Additionally, we entered into a long-term contract arrangement with PSEG Solar which is on Renner Road, about three miles from here, since 2015, which is a larger 10-megawatt facility.

These two facilities, however, do not meet our solar obligations under state law. We are required to buy more solar over the next several years and to that end, we are actively pursuing additional resources. We are currently evaluating 40 proposed projects from 16 different developers that came to us through a competitive, open, and transparent Request for Proposals, and we hope to move forward by the end of this calendar year on a project or more.

Large-scale solar development is just one piece of this puzzle. At the residential level, rooftop solar has exploded in Southern Maryland over the past several years. We are receiving, on average, 45 applications per week and we have staff devoted to facilitating these projects. In addition to that manpower, we have provided our developers, customers and staff with a new technology called PowerClerk that seamlessly moves an application through our engineering and technical reviews and ensures its timely completion.

Similarly, our new customer accessible electronic tool called WattPlan, which you can find on our SMECO web-site, allows you to model a solar array on your very own roof and ascertain the costs of owning, leasing, or financing solar panels. It's a great and powerful tool and I encourage you to use it should you be considering a rooftop installation.

Included in your handouts this evening was the SMECO sustainability position paper; I hope you read it. I think you will see that we are serious about protecting our environment. SMECO is committed to fostering a cleaner and renewable energy economy. All of our customers rely on the electric grid so we will remain steadfast in working with our elected leaders in Annapolis and our regulators in Baltimore to work out the best terms and regulations possible. Installing rooftop solar does not change the fact that each of our customers need reliable electricity under any weather conditions and at any time of day. There is a price associated with that reliability and because of our rate structure and state policy favoring the solar industry, subsidization occurs between our non-solar customers to those with rooftop solar. We will continue to object to our state lawmakers in Annapolis and our regulators in Baltimore when one category of customers is being asked to subsidize another. We all need to maintain our electric grid and we should all pay our fair share. Fairness to ALL of our customers has been a time-tested and critically important principle of this organization.

My final point is focused on the bylaw change that you were asked to vote on tonight. We have observed over the years that attendance at this meeting has been declining. Changing lifestyles, tastes, and interests are likely at work. Last year we had only 800 votes cast out of a potential 134,000 members eligible to vote. This low participation rate is clearly not acceptable. This is not to take away the great respect and appreciation we have for those of you loyal and engaged members who are here tonight and who have attended in the past; thank you again for joining us. But we want to offer all our members greater opportunity to share in our governance process, which is fair and right. Many cooperatives have gone through this same self-examination. In our research we found a popular method of voting, and one offering the greatest probability of engagement. Consequently, the proposed bylaw changes are designed to ensure greater participation in the voting and election process by mailing each and every member a voter ballot, along with a postage-paid return envelope.

Voting by mail would be the sole method of voting beginning next year. If these bylaw changes are adopted, next year all of our members will be mailed a ballot to vote for the directors of your choice. We will have an Annual Meeting, but it will be strictly a business meeting and on a much smaller scale; and you will still have a setting to address the board and management with any matters that are on your mind. There will be no in-person voting, no entertainment, food or prizes at the meeting. However, we will continue to award prizes to those who participate by mailing in their ballot. This change is aimed at making it easier for members of our co-op to vote, and it will save money. In fact we will save over $87,000 under this new format, savings that accrue directly to you, our member-owners. Over my three decades at SMECO, I can remember hosting the Annual Meetings at the Charlotte Hall Military Academy; the lawn of our headquarters building in Hughesville and for the last 8 years here at the Blue Crabs stadium. I love our Annual Meeting, yet the model we have been using has run its course. I'm confident that this new voting method will benefit our membership while saving money and improving efficiency and including more members in this process.

I would like to close with some thank-yous. First, thanks to our 15 directors, my bosses, for the dedication and leadership they provide to this cooperative. They come from all walks of life, with varied backgrounds and life experiences, and that diversity is their greatest strength. They are of one mind and purpose when it comes to protecting your interest and seeing to the success of the cooperative. Thanks also to my 500 fellow SMECO employees. The loyalty, commitment, and laser focus on our customers is unparalleled in my experience. I am so fortunate to have this awesome team. And finally, thank you member-customers. With your support, understanding, faith, and constant guidance we will continue to be the successful organization you expect us to be.

Thank you and enjoy the rest of your evening!

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