I think it is safe to say that we will never forget these past two years. Gone were the days of simply focusing on the cooperative business as Covid-19 took center stage of our everyday lives. I am so proud of everything our employees accomplished during the past two years despite the increased difficulties caused by the pandemic. We pray that Covid-19 is behind us, and gathering together becomes the norm once again.
I am pleased to report that the cooperative did not experience a serious accident or injury in 2021. Since 2008, the cooperative has been recognized for attaining the NRECA National Standard of “Safety Achievement.” I would like to congratulate all employees for this accomplishment and their continued dedication to safety.
Annual meeting changes
The main purpose of the cooperative’s annual meeting is to hold elections for the board of directors, share financial information and listen to business updates.
After careful consideration, two major changes were planned beginning in 2020. The first change was to transition from a picnic style meeting to a business style meeting similar to years past. The goal of this change was to save on overall costs per member attending.
The second change was a new mail-in registration and voting option for members. The objective behind this change was to open up access and encourage member participation. Prior to this change, our average number of registrations had been around 550 members.
I am pleased to report this average has increased to nearly 2,000 members these past two years. I would like to thank all members for their increased participation.
As a cooperative we operate “at cost” so any profit generated at the end of the year is assigned back to you in the form of capital credits. Over time, these capital credits are paid back to members. In 2021, we paid back nearly $225,000 in capital credits to members who received electric service in 1996.
This year your board of directors voted to pay back approximately $500,000 in capital credits for the year 1997. All active members who had service in 1997 will receive their capital credit distribution in November.
Since 2012, we have paid back over $7 million in capital credits to our members.
Work plan and reliability
One of the main goals of the cooperative is to provide reliable power to all members.
Later this year, we will be wrapping up our current four-year work plan which began back in 2019.
We have invested over $10 million over the last four years in our utility plant used to serve you.
Maintaining an electric distribution system of nearly 1,700 miles really never stops though. The planning stages of a new four-year work plan that will take us through 2026 have already begun.
We are also continuing our aggressive right-of-way maintenance program in order to minimize service interruptions. This year, our focus will be on our Tell City substation in Perry County.
Here at Southern Indiana Power, we strive to keep your rates as low as possible. Last year, we were able to pass on a slight rate decrease to members. We have enjoyed a 10-year period of rate stability, with bills increasing, on average, just 20 cents per month.
So far, 2022 is shaping up to be much different. The reason is really two-fold. We are facing cost pressures on both the wholesale side and the distribution side of the business at the same time. On the wholesale side, Hoosier Energy is seeing skyrocketing natural gas, coal and energy market prices. On the distribution side, we are seeing major increases in material costs for poles, transformers, wire, and fuel. We passed a 3% increase onto you in January and that was followed up by a 2% increase in April.
Remember, these increases are needed to simply cover the costs of serving you. We hope this period of cost volatility subsides soon and we can get back to providing the rate stability you have grown accustomed to.
The final topic I would like to mention is high-speed internet. We formed a partnership with PSC in 2019 to bring high-speed internet to all members.
Approximately 4,000 members lacked access to a high-speed internet connection, which was nearly 50% of our electric service territory.
Engineering estimates to build fiber to these areas was approximately $24 million. We were fortunate to receive a $6.5 million grant from the state of Indiana. Also, Spencer County committed an additional $3 million in matching funds toward our areas in Spencer County. Rounding out the funding for the project, we secured a $15 million RUS loan.
The structure of the agreement is for Southern Indiana Power to own the fiber, PSC to own the customer and lease the fiber network from us, essentially making our debt service payments.
I am pleased to report that the mainline construction phase of the project is nearing completion. It is important to note that the mainline construction included both grant and non-grant areas essentially creating one overall fiber network.
Drop construction and customer activations are currently focused on the grant-funded areas and should finish up in 2022. To date, we have connected over 750 members to fiber.
Once the grant-funded areas are complete, we will shift our focus to drop construction in the non-grant areas. We hope to complete this entire project by the end of 2024.
As drop construction nears your area, PSC will be reaching out to you with various sign-up opportunities.
It is important to know we will not stop constructing fiber until all Southern Indiana Power members have access to this world-class internet connection.