The changing needs of an evolving membership prompted Southwestern Electric Cooperative’s board of directors to update a decades-old approach to returning member capital. Ann Schwarm, board president, explained the policy changes during Southwestern Electric Cooperative’s 85th Annual Meeting of Members, held Saturday, Sept. 9, at Vandalia Statehouse State Historic Site in Vandalia, Ill. The meeting featured live line electrical safety demonstrations, reports from officers and the election of directors.

“Capital credits are your equity in the co-op. They represent your share in the ownership, maintenance, construction and success of Southwestern Electric Cooperative,” Schwarm said. The cooperative’s rates are designed to bring in enough money to pay operating costs and maintain an emergency reserve, she explained. When revenue exceeds expenses, that money is later returned to members as capital credits. “The capital credits assigned to you in a year are based on our annual margins — the revenue that exceeded our operating costs — and the capital you contributed by paying your electric bills,” she said. “The more power you use, the more capital credits we assign to your account.”

Equity in the co-op is used as operating capital for maintenance and improvements, such as new substations, poles and wire. Those improvements are expected to last 30 years. Southwestern retires, or returns, capital credits to members on a 30-year schedule. The cooperative traditionally has returned capital credits during general retirements and to estates upon the death of a member.

Beginning Jan. 1, 2024, co-op members may apply for an adjusted early payout of capital credits if they’re terminating their membership or if they’re the executor of an estate with capital credits. “Early payouts recognize that you withdrew your capital credits before Southwestern could realize their full value. The co-op was not able to use those funds as capital for the full 30 years as planned. If you withdraw your capital credits before they fully mature — even if you are settling an estate — they will be adjusted to the net present value.”

Schwarm said the board revisited its capital credit policy to meet the needs of a changing membership. “You are far more mobile than you were when our policy was originally drafted in 1939. We have members who relocate multiple times, moving off our lines. Each change of address is an opportunity to fall out of touch. That can make it difficult to return capital credits to people who’ve earned them,” she said. “Recognizing that, your board of directors decided to offer an adjusted early payout option to our capital credit retirement policy.”

Southwestern’s board considered the update carefully, over months, Schwarm said. “We voted unanimously to update the policy in the spirit of fairness. Fairness to people who terminate their membership when they leave our lines and fairness to those of you who have built a life here — members who want to receive safe, reliable power, from a cooperative you invested in and own.”

Schwarm also spoke about the cooperative’s Power For Progress Scholarship Program. She encouraged students considering college or trade school and members pursuing continuing education to apply for a scholarship. Since 1995, Southwestern has awarded more than 400 Power For Progress scholarships to area students. “We see our scholarship program as an investment in the future,” she said. “This year, we broadened that investment to include a leadership element.”

In March, Southwestern sent six high school students to Springfield to tour the Capitol, meet with legislators and explore their interest in government as part of Illinois Electric and Telephone Cooperatives Youth Day. In June, two of those students — Boston Hails of St. Peter and Kylie Ketcham of Alhambra — represented Southwestern Electric in Washington, D.C., where they joined 1,800 students and chaperones to learn about government during the National Rural Electric Cooperative Association’s Electric Cooperative Youth Tour.

Southwestern’s annual meeting marked the end of Schwarm’s last term as president. She will continue to serve as a director, acting as a resource for the next team of officers. Standing in the shadow of the Statehouse, Schwarm referenced Abraham Lincoln, who served as a legislator in Vandalia. “Lincoln had his ‘team of rivals’ who propelled the country forward. I am happy to say that I was able to serve with a ‘team of equals’ and those who follow me are more than ready, more than capable of advancing the vision of Southwestern Electric Cooperative.”

Schwarm closed her remarks by recognizing retiring director Sandy Nevinger, who joined the cooperative as a receptionist in 1977. “After taking technical classes on weekends, she was the ideal candidate to be promoted to the position of Director of Member Services, which also included public relations,” Schwarm said. “Her reach at the co-op was both deep and wide.” Nevinger retired in 2008 after 31 years of service. She ran for a seat on Southwestern’s governing board in 2011 and was elected to the first of four consecutive terms. During her tenure, she served as an officer, chaired the cooperative’s scholarship and policy committees, and applied her unique insight and experience to help the board resolve complex industry issues facing the cooperative. “The history and background you provided cannot be replaced, nor can the warmth and fun you brought to each meeting,” Schwarm said. “We will miss your wisdom and perspective.”

Southwestern CEO Bobby Williams reported on cooperative projects ranging from substation construction to electric vehicle (EV) charger installations. “In Madison County, our new Maple Grove Substation is going strong, providing power to more than 1,000 members along I-55 from Troy to Edwardsville. As part of that project, our crews built five miles of new transmission line along I-70 near Troy. That line connects our Maple Grove, Edwardsville and Fruit Road Substations. It allows us to reroute power and restore service quickly, as we did in July, after severe storms left some investor-owned utility customers in the St. Louis Metropolitan area without power for days,” he said.

“In Bond County, we’re planning to replace our Smithboro Substation with a larger, more robust facility, north of our current substation site,” Williams reported. The new Smithboro Substation, which is slated to go online in 2025, will include state-of-the industry technology and serve more than 600 members. “In Fayette and Effingham counties, our Vandalia Substation and expanded Altamont Sub are improving reliability and power quality for homes and businesses in our eastern district.”

Williams said that six years ago Southwestern identified a growing member need for cooperative-specific information related to energy efficiency, renewable energy and energy-related technology. “In 2018, we created a job at the co-op to meet that need. At the time, 61 co-op members owned solar arrays. Today, 433 Southwestern Electric members generate solar energy. Cogeneration is a complex and expensive undertaking,” he said. “I strongly recommend you call us before you discuss cogeneration with a solar installer. We’ll provide you with information you’ll want to have in hand when you sit down with a solar installer’s technicians or marketing team.”

Southwestern also expanded its EV program last year. “We installed five public charging stations at the Anderson Healthcare Goshen Campus in Edwardsville,” Williams said. “These chargers join four Level 2 charging stations we installed on Anderson’s Maryville campus in 2021, and Level 2 and Level 3 charging stations we installed in 2020 at the I-55/I-70 interchange in partnership with the City of Troy.” Williams said the co-op’s EV outreach team is discussing new siting opportunities with other businesses and communities in Southwestern’s service area.

One piece of the co-op’s EV plan hasn’t materialized as anticipated. “We promised a rate that would allow you to charge your EV at home, economically. Despite our efforts to expedite the project, the company that developed and maintains our billing system failed to integrate an EV or time-of-use rate into our overall rate schedule,” Williams said.

Next year the co-op will migrate its software systems and support to National Information Solutions Cooperative (NISC), an information technology company that serves cooperatives across the country, many of which offer time-of-use rates. “We’ll complete our migration to NISC in 2025. At that time, we’ll offer a time-of-use rate, as well as tools all of you can use to monitor your energy use and analyze your bills,” he said.

Williams also issued a cautionary note regarding the region’s baseload or always-on energy. “Last year we discussed regional power supply and demand, and the possibility of preventative or prescribed power outages — they’re usually called rolling blackouts — in the Midwest. The 2023 Summer Reliability Assessment issued by the North American Electric Reliability Corporation in May was less troubling than last year’s report, but it still warrants your attention,” he told members.

“The report said our region should have sufficient resources to meet normal summer peak demand. But it went on to say wind generator performance would be a key variable in meeting peak demand. The report noted that our region has over 30,300 MW of installed wind capacity, but that the historically-based on-peak capacity contribution is 5,488 MW. That’s a significant gap between potential and actual energy pushed to the grid,” he said.

“Our industry is evolving. We’re shifting from coal-fired power plants to green energy. In our region, coal historically has provided us with baseload or always-on energy. The always-on energy in our region is diminishing. Green energy is growing in the Midwest, but it takes a lot of wind and solar to make up for baseload energy losses. I encourage you to contact your legislators and express your concerns. Let your representatives know this issue has your attention. Ensure that our voice is heard on the state and federal level,” Williams said.

“Green energy has a place in our future, and our children’s and grandchildren’s future,” Williams noted, echoing a message he delivered in 2022. “But in my opinion, we should not sacrifice reliability and our way of life by relying exclusively on technology that is not ready to replace baseload generation. At Southwestern Electric, we will continue to do our part to stay ahead of these issues, and you can help, by contacting your federal, state and local legislators. Together we will ensure your cooperative, our cooperative, is here for another 85 years.”

Williams closed his comments by acknowledging President Ann Schwarm’s contributions to Southwestern Electric. “I became Southwestern’s CEO six years ago. I accepted the role, in part, because of Ann Schwarm,” Williams said. “Ann exemplified responsive leadership. She carefully considered the insights and ideas of your board of directors. She reflected on those perspectives. And she invited them to inform her own point of view. Ann will tell you she believes in building consensus. What I saw was someone who believed in building a team. I have worked to follow her example, and I will continue to follow her example, for as long as you folks keep me around as your CEO,” Williams said. “Thank you, Ann. Thank you for everything you’ve done for the organization, for the members, and for me. Congratulations on a job well done.”

Following addresses from the president and CEO, members received election results. Southwestern members elected one member from each of the cooperative’s three voting districts to serve on the co-op’s board of directors. In total, 2,073 Southwestern Electric members voted in the election, with 1,975 members using the early voting option offered by the co-op since 2020 and 98 members voting the morning of the meeting.

From District I, incumbent Marvin Warner of Pocahontas defeated challenger Mike Rehg of St. Jacob. Warner received 1,136 votes while 838 members voted for Rehg. From District II, Brad Lurkins of Greenville defeated Jim Tarasuik of Greenville. Lurkins received 1,419 votes and 524 votes were cast for Tarasuik. From District III, incumbent Annette Hartlieb of Vandalia ran unopposed and was elected by acclamation. Each director will serve a three-year term on the board. 

Based in Greenville, Ill., Southwestern Electric Cooperative is a not-for-profit, member-owned utility serving 24,000 residential, commercial, agricultural and industrial members in 11 counties along the I-70 corridor between St. Louis, Mo., and Effingham, Ill.

PHOTO CAPTION (see attachment): Three members of Southwestern Electric Cooperative were elected to the co-op’s board of directors during Southwestern Electric’s 85th Annual Meeting of Members, held Saturday, Sept. 9, at Vandalia Statehouse State Historic Site in Vandalia, Ill. Pictured are (l-r) Southwestern CEO Bobby Williams and directors Marvin Warner of Pocahontas, Brad Lurkins of Greenville and Annette Hartlieb of Vandalia. Each director will serve a three-year term on the board.