In 2010, approximately 74 percent of your Cooperative's total expenses were spent on generation and transmission services.  This means that for every $1 in total expenses, 74 cents went to purchase the wholesale power and transmission service from SIPC and the remaining 26 cents was used to distribute the electricity throughout our service territory to your homes, farms and businesses.  As you can see, the wholesale generation and transmission service comprises the largest portion of cost in providing your electric supply.

Since 1963, Southern Illinois Power Cooperative (SIPC) located at the Lake of Egypt has provided the generation and transmission service to your Cooperative.  In fact, your Cooperative was one of the three original distribution cooperatives that formed SIPC.  Today, SIPC is owned and controlled by seven distribution cooperatives located in Southern Illinois. 

SIPC has experienced significant load growth over the past decade and it became apparent that additional generation capacity was needed to supply future power needs.  SIPC evaluated several options including construction of a new plant, long-term contracts to purchase power from another supplier and joint ownership of a power plant.  In 2007, SIPC signed contracts to acquire 125 megawatts of the new Prairie State Generation Campus (PSGC) located in Washington County to provide the needed, additional generation capacity.  PSGC is a planned two unit, 1,600 megawatt supercritical coal-fueled power plant featuring advanced technology resulting in high efficiencies while achieving emissions that are far superior to America's current coal-fired generating fleet.  Prairie State will be fueled by an adjacent coal mine, thereby minimizing fuel and related transportation costs.  In addition, joint ownership in this facility provided an opportunity for economies of scale that are unavailable in a smaller unit.

Although this new facility will be constructed using the latest technology allowing it to achieve higher efficiencies and experiencing low fuel costs, the cost to construct this facility is much greater than the costs to construct the existing generation units at SIPC that were built years ago.

This new facility has been under development since the Fall of 2007 and unit one is expected to come on-line later this year and unit 2 is scheduled to come on-line in June 2012.  When the units become operational, SIPC will begin paying on the loans acquired to construct these facilities.  This will cause SIPC to increase the wholesale rate to all seven distribution cooperatives in Southern Illinois including SEIEC.  At the time this article is being written, SIPC is currently developing their new wholesale rate.  Once SEIEC receives the new wholesale rate from SIPC, your Cooperative will determine the necessary retail rate increases and inform you of those changes.

Unlike other electric utility business structures that strive to produce profits for investors, your cooperative is a not-for-profit organization that strives to provide the highest level of reliable, quality service at rates just high enough to cover the costs of operation.  Your Cooperative will continue to strive to provide reliable electric service at the most reasonable cost.

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