PRESS RELEASE
Good evening ladies and gentlemen, and thank you for coming to SMECO’s 70th Annual Members’ Meeting.
There’s been a lot of activity in the electric utility industry over the past few years, so we’ve invited Mr. William Brier to be our guest speaker this evening.
Bill is Vice President of Policy & Public Affairs at the Edison Electric Institute, an association of U.S. shareholder-owned electric companies and international affiliates and industry associates. Bill joined EEI in 1983 and is recognized as an industry expert, focusing on restructured electricity markets.
Bill’s responsibilities include managing public policy and advocacy communications, public opinion research, advertising and media relations, and industry publications, including the award-winning magazine, Electric Perspectives. He’s also one of our Calvert County members and a good friend to our cooperative. Bill Brier.
-- Remarks by Bill Brier ---
Bill, thank you for coming.
Folks, we held our first annual meeting 70 years ago, and we’ve had some interesting experiences along the way. If you look on the back of your program, you’ll notice that in 1956, we had Jimmy Dean and his Texas Wildcats performing for the crowd. Most of you probably remember Jimmy Dean for his music, some may be fans of his sausage.
Since that photo was taken, we’ve experienced an electric energy explosion. From electric guitars and electric organs, to electric bread makers, electric dishwashers, and electric power washers. Over the years, electric usage has increased tremendously. Each one of us uses more energy, and that is a trend we are trying to curb.
Last year, Governor O’Malley introduced the EmPower Maryland initiative to encourage utilities to cut energy use by 15 percent by the year 2015. To help meet that goal, we’re working with the Maryland Public Service Commission to develop new measures that will help customers monitor and reduce their own energy use. One such project is our Advanced Metering Infrastructure, also known as smart meters. This is a multi-year undertaking that fits with programs outlined by the state and adopted by utilities across the nation.
We are designing programs that offer rebates for high-efficiency appliances and expanding our existing PowerWise and Energy Star Home programs to help homeowners save.
In addition to energy conservation, we are exploring more programs that can help customers control their costs, such as time-of-use rates.
Many of you are familiar with the Load Management program we’ve had in place for more than 20 years. During times of peak demand, we cycled air conditioners and water heaters off to save energy.
We are transforming that program into our new SMECO CoolSentry program. We will install a new programmable thermostat in your home. And during times of peak demand, we will send out a signal to raise your thermostat by a few degrees. You may have received a flyer about the CoolSentry program this evening, and I hope you took the opportunity to sign-up at the tent behind the seating area. CoolSentry is very similar to Load Management, and you’ll receive $50 as a reward for helping us save energy.
Saving energy results in saving money and saving the planet, and all of us want to do our part to protect the earth and its resources.
To do our part, we are investing in renewable energy. Each one of us—every SMECO customer—is purchasing green power through our energy portfolio. And each year, we will increase the percentage of renewable power that we purchase. In the next few years, we will dedicate 3 ½ percent of our power portfolio to purchasing renewable energy; this will increase to 20 percent by the year 2022.
We’ve been working on our budgets for next year, and our engineering department has submitted a budget request of $64 million for construction. That’s how much it takes for us to serve our customers and meet their need for energy. Part of that budget is for our Southern Maryland Reliability Project.
We have proposed a project to upgrade our transmission line from Holland Cliff in northern Calvert County to a new switching station in southern Calvert, continuing across the Patuxent River, and ending at our switching station in Lexington Park on Hewitt Road. When the project is completed, we will have the added capacity and reliability of a 230-kV transmission loop.
We held three open houses to educate our customer-members about this construction project, and we’ve received a lot of comments and positive feedback. We will hold another open house on September 11 at our Prince Frederick office as one step in obtaining financing. In October, we will file with the Maryland Public Service Commission to begin the process of obtaining the necessary permits. Through this regulatory process, customers will be given another opportunity to provide input on this project.
As an electric utility, we must comply with many state and federal regulations. One of those requires us to adhere to guidelines for documenting and practicing our response to an emergency, so we have practiced emergency response drills.
The North American Electric Reliability Corporation, also known as NERC, ensures that the bulk electric system in North America is reliable, adequate, and secure. To ensure that we meet NERC reliability standards, we will undergo a reliability audit in September on 28 of the standards developed by NERC, and we expect to do well in this examination.
An unfortunate reality that we find ourselves in today is that energy costs are not getting better. Last year, we paid about $90 per megawatt-hour on the wholesale market, and this year we are paying about $99. Coal is a key fuel component in Maryland, and it has jumped nearly 100% since this time last year, chiefly due to the hot export market.
In the past year, like fuel costs, congestion charges have increased dramatically. These are the toll costs we have to pay to bring power into our transmission-constrained area. For 2007, this was $26 million of our total power portfolio of $333 million.
Another component of our power portfolio that is also rapidly increasing, is capacity, or the charge we pay to power producers for having the needed generation standing by, ready for our demands. Like congestion, construction of new generators has not kept up with electric demand and this charge has been ratcheted-up by our regional control authority, the PJM. We have seen capacity jump from $4.1 million in 2007 to $48 million in 2008. However, we feel this charge is not equitably calculated and is placing an undue burden on our customer-members, and, with others, we have filed a complaint with the Federal Energy Regulatory Commission to investigate this charge.
Despite these adversities, we maintain very competitive SOS rates when compared to other utilities in our region.
Customer interaction, commitment, and acting responsibly are what set this cooperative apart from other utilities. As a testament to these principles, SMECO received an award this year for customer satisfaction, along with a Leading Edge Award. The College of Southern Maryland presented SMECO with the Partnership in Education award for our accomplishments in education and training, and we’re very proud of that achievement.
Wherever you find a company that is owned by its customers, you’ll find a partnership that is dedicated to continually improving its level of customer service. And that results in a higher level of success for the company.
Every co-op in America shares its success with the customers it serves. Thank you for coming tonight. And thank you for 71 years of cooperative success.