Manager's Report

Jack E. Hamblin

In the last couple annual meetings, our power supplier, Upper Missouri G&T has indicated that the cost of power continues to increase. We have also been experiencing substantial increases in the costs of materials and fuel.  Increased costs to the co-op usually translate to a rate increase to you, the members.  SECO’s last general rate increase was in January 2001.  But even as our costs continued to rise, the co-op remained in solid financial condition for several years.  Then, just when we knew we would have to raise rates, a large, industrial customer came on line adding a new revenue stream.  That revenue created adequate margins going forward without raising your rates.  Although we knew we should raise rates on the residential members, it was impossible to do so because of the total, overall margins we were experiencing. It would have been like asking you for more money when we already had enough.

Knowing that industrial member was, at best, temporary, the board made some important decisions about what to do with those margins.  Most of the money went into rebuilding our aging plant, and saving against the day the revenue stream would dry up.  And we have done that.  Although our new customer planned to be in place for over twenty years, plans changed.  We were just notified that they will be shutting down operations before the end of 2009.  They are already operating at half of what they have been.  By year’s end, they plan to be shut down completely and things will be back to the way they were for Southeast Electric Cooperative members.  Our little residential and agricultural co-op will return to business as usual and our rates will have to increase.  That, of course, is not news we like to give you.  But if I have learned one thing about SECO members, it’s that being self reliant is what we do best.  Our Mayday storm last year proved that. 

The news that rates are going up is always bad news.  But here’s also some good news for you to remember.  In the eight years since our last rate increase, we have: 

·         Operated without additional residential or annual rate increases.

·         Added over $3 million to our plant.

·         Changed out thousands of old poles and replaced worn out switchgear.

·         Purchased new equipment to better work on the lines.

·         Made no long-term financial commitments based on the temporary revenue.

·         Survived the worst ice storm in co-op history.

     Your co-op is in good shape, better than we were eight years ago.  It was good, for a few years, to have a large customer share in the expenses we have born alone for over sixty years.  But we’ll move forward for at least another sixty years, knowing we can do it because we always have.  Our electric rates will never be among the lowest, simply because we have so many miles of lines and so few people to share the cost.  But your Board of Directors and staff will continue to work diligently to keep rates as low as we can while still giving outstanding service to all members. 

                In upcoming issues, I will offer more detailed information about any rate increases we may anticipate.  Please feel free to call the office if you have any questions or concerns.