Remarks by Sonja M. Cox, SMECO President & CEO

Thank you, Mr. White, for that very nice introduction!

Good evening and welcome to SMECO’s 2021 Annual Members’ Meeting. One of the most important things you can do, as a member of the Cooperative, is to vote for your Directors and Bylaw changes and to attend the annual business meeting. This is our 83rd meeting of members since our founding in 1937 and my second as President and CEO.

One of the most important—and fun—things I do each year is to give you an update on the Cooperative over the past 12 months.

Before I get to the update, I would like to recognize elected officials, special guests, and business partners who have taken the time to join us tonight, including former state delegate Johnny Wood.

As we all know, we have continued to manage through the pandemic since last we met. Many of us have received the vaccine and I, as well as my executive leadership team, continue to encourage all of our employees to get the vaccine. As has become evident over the past several weeks, the virus has not disappeared and, in some areas of the country, has gotten worse. We are striving to keep our workforce safe and healthy so that we may continue to provide the highest level of customer service that you—our members—have come to expect and rely upon.

The pandemic has taught us many things, and one very important thing we learned at the Co-op was how to be more flexible and adapt to various situations. In voting on Bylaw changes this year, we asked you to approve in-person and remote meeting capabilities for the annual members’ meeting and for our monthly Board of Directors meetings. The ability to meet virtually will allow us to carry on our business even in times like the pandemic. We are grateful for all of the SMECO members who voted this year. We received more than 9,200 ballots: 75% were returned by mail and 25% were cast electronically.

Last year was a very favorable financial year for SMECO. We closed 2020 with net margins of almost $28 million, with the majority allocated to our members’ capital credit accounts.

Given the favorable financial year, your Board of Directors approved a Capital Credit general refund of approximately $4.2 million this summer. Eligible active members received a credit on their bills, and we issued checks to eligible former members. The refunds were issued in July so you should have seen the credit on your bill. We are happy to issue capital credit refunds to our members when our financial obligations have been met. Passing savings on to members is a basic co-op principle. You, our members, invest in the cooperative every time you pay your bill, and receiving your share of a portion of the margins is one of the rewards of cooperative membership.

Before we refund Capital Credits, SMECO uses margins to invest in new construction and infrastructure improvements. Despite the pandemic, we were able to make significant upgrades during the past year to increase the reliability of our electric system. We continue to remove and replace some of our older substation transformers. Earlier this year, we replaced two failed transformers—one at our Lexington Park substation and the other at the St. Charles substation.

Our work continues in southern Charles County on our new Mt. Victoria substation. This substation will help harden our system in an area that is susceptible to storms and will also serve as a backup for service to the Cobb Neck area of our service territory. We are working in St. Mary’s County on transmission lines and a new substation in Chaptico to fortify the service in that area. This work is scheduled for completion in 2022.

We recently completed the construction of our new office building in Leonardtown. This facility will house a back-up operations center, a back-up customer care center, and a redundant, highly available data center to enhance business continuity. Our employees moved into the new facility on Monday, August 23. In the second phase of this project, we will remove the old building and use that site to complete our customer parking area. This should be completed by the end of this year.

In addition to our infrastructure improvements, we invest in technological improvements. We are currently enhancing our supply chain performance by implementing a Warehouse Management Solution. This new mobile warehouse and inventory management system will include barcode and radio frequency identification information to improve management and visibility of inventory items. We are also upgrading our GIS software and our financial, human resources and inventory software system.

Technology is a way of life for all of us. That has never been more apparent than it is right now. Managing through the pandemic has required all of us to become more dependent on technology. We rely on technology to telework and to interact with our members. We use technology to manage our electric grid. We offer our members convenient tools, like our SMECO 24/7 mobile app, to manage your account, report an outage, view our outage map, and pay your bill. You can view your energy use details and set alerts to help you manage your usage.

Earlier this year, we developed new time of use rates and are awaiting approval of these new rates from the Public Service Commission. Time of use rates can benefit customers that have electric vehicles if they recharge their cars overnight instead of during the day. These rates will also help members save money when they shift their load to off peak periods.

Putting our members first is what drives us. Not only is our goal to provide safe, reliable, low-cost power to our members. We are also looking at new and innovative solutions to meet our customers’ needs. We want to transform the member experience and grow the number of products and services that we offer.

Electric vehicles are growing in popularity, and many automobile manufacturers are adding electric vehicles to their model line up or replacing their current models with EVs. In order to support the growing number of electric vehicles in our service area, SMECO is participating in the Electric Vehicle Charging Station pilot program approved by the Maryland Public Service Commission. SMECO’s EV Recharge program has commissioned nine Level 2 electric vehicle charging stations so far this year. We have 11 more locations currently under various phases of construction. We plan to install up to 60 public EV charging stations, a combination of direct current fast chargers and Level 2 chargers, across Southern Maryland by 2025.

Our EmPOWER Maryland programs are designed to help customers reduce energy use. In 2020, SMECO’s energy savings portfolio was responsible for removing the equivalent of 51,731 metric tons of carbon dioxide emissions from the atmosphere — that equates to the energy use of about 5,969 homes for one year. In addition, SMECO received the EPA’s ENERGY STAR New Homes Market Leadership Award, as well as the 2020 ENERGY STAR Partner of the Year: Sustained Excellence award — for the ninth consecutive year — and we received the 2020 Chartwell Best Practices Award for the Kits for Kids Program.

In response to our members’ interest in renewables and their requests for greater reliance on clean energy, we submitted a filing to the Public Service Commission. We wanted to offer a Green Energy Option to our customers so that those who wanted to go green could purchase 100% of their energy from renewable sources. The PSC has approved our filing and we are moving forward with developing a communications plan, the next step in the process before implementation.

In addition to transforming our member experience, we are focused on transforming our employee experience. As I mentioned earlier, the pandemic has taught us how to be more flexible and adapt to various situations. Many of our office workers have been teleworking during the pandemic. While we are gearing up to bring employees back to the office, we will continue to offer telework arrangements for up to two days per week. Employees are productive and thrive in a telework environment, but we believe one thing that is lacking in an all-teleworking environment is creativity. When employees are together, they can be more collaborative and creative. By using a hybrid approach to teleworking, we allow the employees to come together at least a few days a week to collaborate and discuss issues face-to-face.

As is the case for many employers, we have a number of employees who are eligible for retirement. In order to have trained personnel ready to step in when our long-term employees move on, we are recruiting for technical resources such as engineers and we will be starting a new apprentice lineman class in the fall. These resources are important in continuing our goal of providing reliable power.

Our employees are our most valuable asset. We champion a culture where people are valued and the employee experience is driven by innovation, collaboration, inclusion, and trust.

These are just a few of the things we are working on or have completed since the last time we were together.  But as I’m sure you’ve gathered by now – our work never stops. We, the SMECO team, are fully dedicated to providing the best service we can – on your terms. That is, we not only want to continue to provide you with safe, reliable, competitively priced electricity, but we want to make it easier for you to work with us. We want to embrace technological advances that give you many more options to get the customer service you want, to bring you increased reliability, and to keep costs down. SMECO’s Vision statement is “Putting members first.” I commit to you tonight, on behalf of our Directors, officers, and employees: SMECO will always put its members first.