Value served as the theme of Southwestern Electric Cooperative’s 77th Annual Meeting of Members, held Saturday, Sept. 12, at Greenville Junior High School in Greenville, Ill. More than 2,200 people from Southwestern Illinois attended the meeting, which included breakfast, health screenings, activities for kids, and the co-op’s business meeting and election of directors.
“I’m very happy to say our financial situation is extremely good,” Alan Libbra, president of Southwestern Electric Cooperative, told members. “We have what we consider an adequate cash cushion so unforeseen shocks like tornadoes or storms don’t cause your rates to move. Our margins are healthy, our power costs are locked in until 2020, and our rates are stable until 2018 and quite possibly until 2020,” he said.
Rather than deliver a traditional “year that was, year to come” report, Libbra addressed comments regarding the salary of Southwestern Electric CEO Kerry Sloan. He confirmed that Sloan drew the highest salary among Illinois electric co-op managers.
“Value,” Libbra said. “That’s what matters. What is the value you and I receive for that pay?” When Sloan came to Southwestern 18 years ago, the co-op had recently bought out of Soyland Power Cooperative, a generation and transmission co-op that managed wholesale power and purchasing contracts for many distribution co-ops in Illinois, including Southwestern. “In 1997, we were paying 11 percent of Soyland’s overhead costs, which were $4.4 million that year. So we were paying almost half a million dollars in management fees.”
Libbra said the fee didn’t include the actual cost of power. Rather, it paid the CEO, staff and engineers at Soyland Power Cooperative to manage wholesale power. “They were doing a lousy job of it, if you remember,” Libbra said. “We took that in-house. We manage our own supply. Mr. Sloan does that job.”
Shortly after leaving Soyland Power Cooperative, Southwestern also withdrew from the Association of Illinois Electric Cooperatives, a statewide lobbying and support-services organization. Rather than paying the association to develop and manage legal, engineering, safety and communications programs, Southwestern opted to become self-sustaining. “We took all that in-house. He manages that,” Libbra said, referring to Sloan. “We saved $250,000 a year.”
Libbra noted that the cooperative has grown from 16,500 members to nearly 23,000 members during Sloan’s tenure, and that the co-op is serving its membership more effectively, and with four fewer employees than it had 18 years ago.
“We are the only distribution cooperative that I know in the 48 contiguous states, that owns and operates its own gas-fired power plant. We have a 45-megawatt power plant at St. Elmo. This year alone that plant saved us $2.5 million in cost for capacity,” he said.
“The discussion I hear compares Mr. Sloan’s salary to the average in Illinois. I took the average salary in the state and divided it by the average number of members. I did the same for Southwestern. He is more expensive,” Libbra told members. “Each one of us pays one dollar more per year than the average for the rest of the state.”
Libbra said he also compared Southwestern’s residential electric rates to the average among Illinois cooperatives. “We use just under 1,200 kilowatts per residential service,” he said. “When I compared our rates to the average rates for the state, you save $165 per year. It’s about value,” he said. “What am I buying with my dollar? One dollar more, $165 less on your electric bill.”
Libbra closed his comments with an analogy. “In the winter of 1959, my father bought an International Harvester 560 tractor. It was marketed in that year as the most powerful tractor made.” Libbra said his father farmed 240 acres with the tractor, which was rated at about 60 horsepower. “Today we farm 10, 15, 20 times more than that. You can still buy a 60-horsepower tractor, used,” he said. “But it won’t pull the load. So you buy a 300-, 400-, 500-horsepower tractor. Because that’s what’s required.
“Whether it’s a tractor, or an employee, you must pay for the power required to pull the load. And average will not pull the load. Not here. This cooperative is not average by any stretch of the imagination. We manage our own power supply, we have our own power plant, we do things that nobody else does. We are unique and we have been successful. But I guarantee you, the success will not continue–this cooperative will not thrive–with average skills. The load we pull here on your behalf demands much, much more.”
During the CEO report, Sloan addressed the cooperative’s new information management system. Last year, Southwestern launched the most comprehensive software system conversion in company history. Sloan said the conversion included every department in the cooperative.
“It’s going to save us more than $600,000 over 10 years. Not only will it reduce cost, it will improve efficiency and member service.” Sloan said new mapping and engineering modules will enable the cooperative to identify and repair outages more quickly. “When your power goes out, 15 minutes can seem like a long time,” he said. “If we can shave 15 minutes off of an outage, that’s what we should do.”
He noted the shift from the old, familiar system to new software had been challenging for both members and employees. “But we’re quickly becoming more proficient,” he said. “The conversion is just one way we’re preparing for the future. Anything we can do to become more efficient, more responsive–anything that helps us keep your rates low–we’re going to do.”
Following Sloan’s address, members heard election results. Southwestern Electric members elected one member from each of the cooperative’s three voting districts to serve on the co-op’s board of directors.
Alan Libbra of Alhambra and Ron Schaufelberger of Greenville, candidates from Districts I and II respectively, ran unopposed and were elected by acclamation. From District III, incumbent Randy Wolf of St. Elmo defeated challenger Larry Weger of Vandalia. Wolf received 669 votes while 342 votes were cast for Weger.
Each director will serve a three-year term on the board.
Based in Greenville, Ill., Southwestern Electric is a not-for-profit, member-owned cooperative serving close to 23,000 residential, commercial, agricultural and industrial members in parts of Bond, Clay, Clinton, Fayette, Effingham, Macoupin, Madison, Marion, Montgomery, Shelby and St. Clair Counties.