2023 Annual Meeting CEO Report

Posted on Jun 04 2023 in Southern Indiana Power
Steve Seibert


Everything we do at Southern Indiana Power must begin with a focus on safety. I am pleased to report that the cooperative did not experience a serious accident or injury in 2022. 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 and Member Participation

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.

The two major changes (a business-style meeting and mail-in registration) that were made back in 2020 have proven to be very effective in accomplishing the goals of cost control and increased member participation. The cost of putting on our annual meeting has decreased significantly, saving money for all members. Members registering and participating in the voting process have risen dramatically, from an average of 550 members to an average of 2,000 members. I would like to thank all members for their increased participation.

Capital Credits

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 2022, we paid back nearly $500,000 in capital credits to members who received electric service in 1997.

This year, your board of directors voted to pay back approximately $525,000 in capital credits for the year 1998. All active members who had service in 1998 will receive their capital credit distribution in November.

Since 2012, the co-op has paid back over $7.5 million dollars in capital credits to our member-owners. I want to remind you that we began paying out estates back in 2018. If you are interested in estate retirements, please contact the office for details.

Work Plan and Reliability

One of the main goals of the cooperative is to provide reliable power to all members. 

In 2022, we finished up our four-year work plan, which began back in 2019. We 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. I am pleased to report that a new four-year work plan has been approved by the board of directors and the Rural Utility Service. The new plan is to invest over $16 million dollars in our electric plant over the next four years. This includes new services to approximately 600 new members, 23 miles of three-phase line extensions, 1,200 pole changes and approximately 40 miles of single-phase line rebuilds.  

We are also continuing our aggressive right-of-way maintenance program in order to minimize service interruptions. An additional crew was added in 2022 to help reduce our overall trim cycle. This year, our focus will be on our Tell City and Bandon substations in Perry County.  

Electric Rates

Here at Southern Indiana Power, we strive to keep your rates as low as possible. We have enjoyed a 10-year period of rate stability, with bills increasing, on average, just 20 cents per month.  

In 2022, we began seeing more significant increases than we have for quite some time. Our rates increased 5% on average for the year. 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.  

In 2022, we completed a Cost-of-Service Study. The results of the Cost-of-Service Study were favorable, showing there is only a small overall rate increase needed. This is despite seeing continued cost increases for our basic supplies like poles, line hardware, wire and transformers. The study analyzes the cost of providing service to each member, with the theory that whoever causes the cost should pay the cost. The study did reveal a need to make a few slight modifications on how Southern Indiana Power recovers our cost from you.

On April 1, the facility charge for our general service members was increased from $29.50 per month to $32.50. This change will increase the average member’s bill (1000 KWH) by approximately 2%. Unfortunately, the Wholesale Power Cost Tracker from Hoosier Energy will also be increasing by approximately 4%. The energy charge for these same members will be increased from 9.9 cents per KWH to 10.49 cents per KWH.  

Hoosier Energy uses the wholesale power cost tracker to recover the variable costs used to generate electricity. These costs are for commodities like coal, natural gas and fuel. Over the past 12 months, these commodities have been very volatile, due to rising demand and our nation’s inability to increase supply.  

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.

Operation Round Up

In 2022, the Operation Round Up Board of Trustees awarded grants totaling nearly $35,000 to help fund much-needed community projects and scholarships. By members simply agreeing to “Round Up” their electric bill to the next dollar, the Operation Round Up program has been able to fund projects totaling over $500,000 since its inception in 2006. Thanks to all members who participate and make this program a huge success. I would like to give a special thank you to our Operation Round Up Board of Trustees — Paul Malone, Michelle Lynch, Randy Kleaving, Amy Ramsey, Roger Hurm, Ed Denning and Gary Waninger.  

Southern-PSC Fiber Partnership

Southern Indiana Power (Southern) and Perry Spencer Rural Telephone (PSC) formed a partnership in 2019 to bring fiber optic 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 were 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 our project, Southern secured a $15 million RUS loan.

The structure of the agreement is for Southern to own the fiber and PSC to own the customers and lease the fiber network from us, essentially making our debt service payments. 

For 2022, I am excited to report that the mainline construction phase of the project is complete. It is important to note that the mainline construction included both grant and non-grant areas, essentially creating one overall fiber network. I am also pleased to report that the drop construction in the grant-eligible areas is complete. To date, we have connected over 1500 members to fiber.  

In 2023, drop construction and customer activations will be focused on our final remaining areas. The two areas are the Rural Digital Opportunity Fund (RDOF) and the Indiana Connectivity Program (ICP). Members can now sign up for one of these programs (location determines which one) to get on the list to get connected. Our goal is to complete this entire project by the end of 2024, which is one year ahead of schedule.

It is important to know that we will not stop constructing fiber until all Southern Indiana Power members have access to this world-class internet connection. We are delighted that our two cooperatives are working together on these important projects. Working together with PSC, we will get the job done!