The past few years proved to be a very remarkable time in the history of your Cooperative with three of the most devastating storms in our 72 year history.  In 2008 and 2009, ice storms brought over an inch of ice in each year that resulted in 11,700 outages and 9,500 outages respectively.  In 2009, an "Inland Hurricane" brought estimated wind gusts of up to 121 mph resulting in 12,000 outages.  These three storms caused damages in excess of $8 million; however your Cooperative received $3.8 million in 2009 from FEMA to help pay for these storms. 

Due to the 2008 storm, your Cooperative experienced an operating loss in 2008.  Due to the 2009 storms, your Cooperative was forced to cancel some right-of-way trimming/clearing contracts and other expenditures in order to avoid another operating loss in 2009.  As you can see, these storms have had a detrimental impact on your Cooperative's operations and finances. 

As reported at the 2009 Annual Meeting, it has become necessary to implement a 2.5% general rate increase that will be effective with invoices received in May 2010.  In addition, your Cooperative will restructure the retail rates to reflect a change in the customer charge and the energy charges to more accurately align rates with the actual costs incurred to deliver cost-effective energy. However, while the customer charge and energy charge will increase, the wholesale power cost adjustment on your invoice will decrease reflecting a 1.0% decrease in your overall bill.

The customer charge is the minimum amount charged by the Cooperative to make electric service available to the property regardless of the amount of energy used.  Your Cooperative invests in facilities such as substation equipment, transformers, distribution line, distribution poles, voltage regulators, meters, etc and incurs additional expenses such as interest expense, billing expense and administration expense that are all required  to make service available at any location whether energy is consumed or not.  The customer charge is not high enough to cover all of these fixed costs and the remaining fixed costs are recovered in the energy rate.  Your Cooperative is restructuring the customer charges in all rate classes and will be increasing this customer charge as part of the 2.5% general rate increase.

The energy charge is the charge per kilowatt hour for the energy consumed.  Historically, the residential energy charge has been a tiered energy charge but the restructuring includes a flat energy charge per kilowatt hour consumed.  This means that all energy consumed will be charged at the same rate. 

SouthEastern's power supplier, Southern Illinois Power Cooperative in Marion, does not have enough generating capacity during peak periods of the year to serve its members and must purchase additional power from other generating plants.  The price of this power purchased during peak periods is market driven and can be very difficult to predict.  Driving forces such as weather, generating unit outages, price of natural gas, price of coal, etc. all contribute to the volatility in the price of this purchased power.  The cost of this purchased power is passed along to your Cooperative and your Cooperative has created a way to only pass along any unexpected changes in the costs of this purchased power to its members through the wholesale power cost adjustment.  This wholesale power cost adjustment charge allows your Cooperative to only pass along incremental changes in the price of its wholesale power.  This wholesale power cost adjustment charge may be a small charge if the wholesale costs are higher than anticipated or a small credit if the wholesale costs are lower than expected.  This will allow your Cooperative to only collect what is needed to cover these changes in wholesale power costs.

Due to the restructuring of the customer charge and the energy charge, the actual rate increase experienced by each member will vary somewhat based upon each member's energy consumption.

After the past few years, your Cooperative is very hopeful that it will not incur another major storm in 2010.  In 2010, your Cooperative remains committed to finding new and better ways to serve its members. Your Cooperative will continue to work diligently to improve and enhance the level of service and reliability that you receive while keeping rates affordable. 

See you next month and as always, "We'll keep the lights on for you."