Improving efficiency, reliability, and customer service while reducing costs

SMECO recognizes the financial pressure facing its members, which is why the cooperative continues to scrutinize operations for cost-saving opportunities. While the cooperative can’t control market prices, it can continue to increase efficiency by standardizing processes and designs.

• Customer telephone answer time: how quickly calls are answered. The standard requires that at least 75 percent of calls received by the utility must be answered within 30 seconds.
• Call abandoned rate: percentage of calls where the caller hangs up before being helped. The standard requires that the average abandoned call rate must be 5 percent or less.

Performance is measured using a weighted average across the Interactive Voice Response (IVR) system, customer care representatives (CCRs), and the third-party overflow call center.

In addition to these two main standards, the regulations also require tracking and reporting several other call-performance metrics each year. These metrics are based only on calls handled by customer service representatives.

Investments in self-service tools for SMECO members shifted the way members interact with the cooperative’s customer care team. In 2023, call data revealed that most members were reaching out by phone for their customer service needs between 7 a.m. and 7 p.m. Monday through Friday. In January 2024, SMECO transitioned to consolidated staffing for these core hours to better meet its goals of improved RM 43 metrics, decreased member wait time, and reduced expenses.

Metrics for 2025 show clear success in achieving SMECO’s three main goals while also increasing the opportunity for growth and development for its customer care center representatives. SMECO’s ratings in all categories except for average handle time were the highest among all Maryland electric utilities and far exceeded most industry standards while reducing annual expenses by close to $500,000.

Members are still able to receive service by phone outside of core hours through the upgraded IVR system, which remains available 24/7 for balance inquiries, payments, and outage reporting. And members seeking a live representative can also transfer to a third-party call center for limited services, including outage reporting, bill payments, and balance inquiries.

The customer care center’s strong performance is a combination of contact center technology—IVR and workforce management tools—and the dedicated team of CCRs that excels at providing quality customer service and exceeding member expectations.

Maximizing standardization through procurement processes.

A business the size of the cooperative has many moving parts. Managing inventory and procurement processes is instrumental in controlling costs and increasing efficiency for the team. Even simple process changes can have a significant impact.

often over-requested because of standard packaging quantities, creating surplus that then had to be processed back into inventory through credit requisitions. The team determined that if crews could simply return bolts or other small items into bins for the next crew members who might need them, it would reduce material discrepancies and improve efficiency.

The cooperative takes a methodical approach to vendor selection and cost efficiency. While many commodities are increasing, some prices have declined. By consistently rebidding stock items, the cooperative ensures it is maximizing favorable market shifts. Bulk purchasing also enables more competitive pricing, while improved cross-company communication allows the procurement team to negotiate better rates for essential office supplies. Rather than each department ordering small quantities independently, consolidating requests across the cooperative increases purchasing power and encourages vendors to offer volume discounts. Planning also helps avoid costly last-minute purchases and ensures best available pricing. This approach extends to inventory used in the distribution system as well.

Standardizing elements of the distribution system also results in cost savings through wholesale pricing. One example is the single-phase box pads used to support the pad-mounted transformers seen scattered through the service area. The cooperative is continually evaluating new technology and options. Advances in transformer design reduced the footprint of pad-mounted transformers while maintaining the same capabilities, allowing SMECO to switch to industry-standard pads instead of ones designed specifically for the cooperative. When vendors can increase supply orders to support multiple customers with the same product, they are able to pass those savings along. SMECO reduced the cost by $270 per pad, yielding an estimated $150,000 in annual savings.

Standardization also ensures greater reliability and improved vendor relationships while reducing costs.

The cooperative’s engineering and operations team works to maintain the reliability of the grid while maximizing the efficiency of the money spent.

One way they support this goal is to look for efficiencies and standardize designs.

For instance, SMECO has 55 substations and 16 switching stations throughout the service territory. Using standardized designs for substations maximizes man-hours, streamlines the design and review process, and reduces upfront costs for engineering. Standardized designs also aid in reduced spending during the procurement phase.

The team takes a lot of pride in being forward-looking when managing contracts. When preparing bids and ordering materials, engineering factors in market lead times, purchasing materials so they arrive on time at the best price. Proper planning saves money because costs increase for last-minute spot buys. SMECO also works with vendors to minimize risk. Depending on the commodity, prices can go up and down. Working with vendors to lock in firm, fixed prices to minimize the risk of upward forces in the market, while also retaining the option for a lower cost if prices go down is one way SMECO saves money—we get good pricing.

The cooperative also provides value with certainty, meaning that once contractors enter into an agreement with SMECO, the project will proceed as planned. Contractors also know they will receive a high-quality, well-defined scope of work from the cooperative. This reliability reduces contractor risk, which in turn contributes to more competitive pricing.

While some organizations only develop project designs to 60 or 70 percent completion, SMECO has a reputation for providing thorough, detailed engineering up front. This level of completeness strengthens pricing because, unlike projects with significant uncertainty, contractors do not need to build in contingency for unknowns, potential scope changes, or multiple change orders during execution.

That reputation for certainty is especially valuable in the current labor market. Transmission construction is a highly specialized field and much of the work is being performed with limited labor availability.

The cooperative also has a very robust and highly reliable system. Investment in the system over the past 20 years has provided the flexibility to adjust project timelines, allowing SMECO to delay some projects without compromising the overall network integrity. The team is able to work methodically, making adjustments as needed to maintain reliable service to members both now and well into the future.

SMECO has a very detailed short-term construction work plan as well as a long-term plant improvement plan. When developing the proposed capital budget each year, the team evaluates where load is increasing across the system and determines which upgrades are required immediately and which can be shifted to a future fiscal year. Load-driven projects have to be addressed first. Following that, the cooperative evaluates where infrastructure projects will deliver the best return on investment.

Rather than simply replacing a substation, SMECO evaluates whether existing assets can be repurposed. In some cases, equipment that might otherwise be salvaged or scrapped can be relocated and reused, reducing capital costs while still achieving system objectives.

For example, significant development in Lexington Park increased load requirements at a local substation. The existing transformer was no longer sufficient, requiring a larger unit. Instead of disposing of the original transformer, the cooperative was able to relocate it to another location where it could serve effectively.

This system-wide approach focuses on maximizing the use of existing assets. The question is consistently: how can we use what we already have? If an asset can be redeployed elsewhere, there is no reason not to extend its useful life while still meeting system needs. For assets that have reached end of life, the cooperative takes a proactive replacement approach.

costs. Following planned updates in 2026, SMECO will complete the transformer replacement program. SMECO will continue to balance proactive replacement with need, holding assets in service where appropriate while prioritizing replacement if they begin to show signs of operating decline.

The cooperative has a strident maintenance plan. SMECO focuses on maintaining existing equipment so that it doesn’t break and repairing things when they do break to extend their usefulness. The cooperative employs people with sound technical experience who are able to identify and fix things when possible without sacrificing reliability, recognizing when a piece of equipment still has a lot of useful years left.

These efforts are part of the reason SMECO continues to exceed reliability requirements.

Each year, SMECO reports its reliability metrics to the PSC as required by COMAR 20.50.12.11. The PSC reviews the reports and evaluates compliance with system reliability standards.

The cooperative makes every reasonable effort to provide continuous and uninterrupted service to our members. We monitor service reliability using three indices established by the electric utility industry.

• System Average Interruption Duration Index (SAIDI): average number of hours each of SMECO’s more than 181,000 customers are without electric service during the calendar year
• System Average Interruption Frequency Index (SAIFI): average number of times each customer experienced a sustained service interruption during the calendar year
• Customer Average Interruption Duration Index (CAIDI): the duration, in hours, of the average sustained electric service interruption during the calendar year for those customers who experienced an outage

Each Maryland electric utility must meet system-wide reliability standards. If a utility falls short of its SAIDI, SAIFI, or other reliability standards, it must file a Corrective Action Plan (CAP) with the PSC explaining why the standards were not met and detailing specific steps, investments, or programs to improve performance.

SMECO exceeded the reliability standards for 2025.

In fact, in the last 11 years, SMECO has only missed the standards twice—in 2015 and 2017.

According to the CAPs filed by SMECO for those years, the main driver for missing the reliability standards was severe weather, most notably summer and fall storms that knocked out power to large areas. Under COMAR’s rules at the time, many of the events impacting Southern Maryland that year could not be excluded from reliability reporting, even though they would have been excluded under the Institute of Electrical and Electronics Engineers’ (IEEE) “Major Event Day” method. SMECO’s performance would have met the targets that year if the IEEE Major Event Day exclusion method had been applied. This method was later adopted statewide. In 2018, SMECO returned to compliance and has not fallen short since then.

The cooperative faces unique challenges in meeting and exceeding reliability standards because it serves a rural area. SMECO’s power lines stretch across long distances through wooded and open areas, with fewer customers per mile than neighboring utilities. In this environment, trees, weather, and wildlife can have a larger impact, increasing both the frequency and duration of outages compared to more densely populated areas. Despite these challenges, multiple teams across the cooperative work tirelessly—from line crews and vegetation management to operations and customer service—coordinating every effort to keep power reliable and restore it quickly when outages occur.

This commitment to reliability is supported by a recycle, reuse, repurpose, and reduce approach to asset management.

When items reach the end of their useful life at SMECO, the cooperative maximizes each product’s lifecycle by reusing, recycling, repurposing, or reselling the item.

SMECO reviews potential resale opportunities, including direct sales and auctions. Employees assess the return on effort to ensure the best financial outcome for the cooperative’s members. SMECO’s procurement staff also reaches out to manufacturers to request lists of potential buyers interested in used or resale items.

The cooperative also conducts periodic auctions of vehicles and equipment through a neutral third party. SMECO’s goal is to retire assets while they still have resale value, but before expenses begin to rise. Mileage, engine hours, and age are among the factors considered to help ensure minimal fleet downtime.

For example, units are often replaced around 15 years of age because parts become difficult to source in the 13-to-16-year range. The original equipment manufacturer is typically only required to support a product for 10 years after sale, and the aftermarket typically does not fill the gap within that timeframe.
As equipment use accumulates, the risk of downtime increases and major overhauls become more likely.

The Fleet Services team closely tracks repair data with the goal of extending the service life of each unit.

Under these regulations, electric utilities in 2025 were working toward the goal of reducing GHG emissions, measured on a lifecycle basis, equivalent to 2.25 percent of their 2016 weather-normalized retail sales. To achieve these savings, SMECO offers its members multiple programs meant to assist in reducing energy use and increasing savings.

In July 2025, SMECO filed a request with the PSC to sunset three of its residential EmPOWER Maryland programs: Energy Perks, the SMECO Online Marketplace, and My Energy Target for the 2026 program year. Reduced member participation, reduced energy and GHG savings, and increasing operational costs were the primary reasons SMECO requested the elimination of these programs. The PSC granted SMECO’s request and the programs were successfully discontinued by the end of 2025. By eliminating these programs, SMECO’s 2026 EmPOWER program budget will be reduced by $2.8 million. Legislation introduced in 2026 may further affect the programs and related costs.

The costs to administer the state-required programs are factored into cooperative utility bills under the Distribution Services portion of the SMECO utility bill. Members who participate in the programs help themselves by taking advantage of an opportunity they are already paying to receive, and they also help the cooperative meet the energy-saving and greenhouse gas reduction goals.