Board Chairman and CEO Report

On behalf of Eastern Illini’s Board of Directors and employees, we would like to welcome you to the 2019 Annual Meeting of Members! Thank you for attending your annual meeting. We hope you enjoy the day with your family, take advantage of the activities and food, and learn a little more about how EIEC is much different than other utilities.

As a member-owned cooperative, we provide you – our members – with reliable electricity and excellent service. Our employees live in this area, just like you, and we are dedicated to improving the quality of life in rural east central Illinois. We would like to provide a few highlights from the past year:

Our driving and continual focus for the cooperative is the safety of our employees, our members, and the general public. The commitment to safety is reflected in the support of our Board of Directors, management, and our employees. The main portion of our safety goal each year is to experience zero lost time incidents. We did not achieve that goal in 2018, as we experienced one lost time event. For 2019, our safety goal is to experience zero lost time incidents and we are committed to achieving that goal.

Eastern Illini is not just in the business of selling electricity. We are also working to improve the quality of life for our members and our communities. This year marked the second year of our Empowering Education Grant Program which provided $20,000 to 40 deserving teachers throughout our communities to help fund engaging projects for their students.

Electric Vehicles (EVs) are gaining in popularity. We purchased a fully electric Chevrolet Bolt EV in 2018. The operating costs of EVs are less than half that of traditional vehicles. We are also exploring ways to help establish charging networks in our area. Be sure to stop by and see the Bolt during the annual meeting.

EIEC employees and Directors take pride in providing the service level our members deserve and expect. Each October, we include a survey with our billing. This survey typically covers topics such as member service, employee professionalism, rates, programs, and reliability. We also include questions to calculate an American Customer Satisfaction Index (ACSI) score. In 2018, our overall survey results were very good, and we received an ACSI score of 88 (out of 100)! This score places us in the top 15% of cooperatives across the nation. We are proud of the level of service that we provide you, and we are constantly looking for ways to improve.

2018 was a good financial year for your cooperative. Operating margins totaled more than $1.4 million, with total operating revenues of $34.9 million. These margins are in addition to the $800,000 margin rebate that was returned to members as a bill credit on the December 2018 usage bills. Equity for the year ended at 49.60% which is above our benchmark target. Our debt service coverage metric exceeded our lender’s requirements. These two factors allow us to optimize our borrowing costs.

Each year, we review our revenue collected compared to our expenses in providing electric service to you. A positive difference is similar to profit, but for a not-for-profit cooperative it is referred to as operating margins. These margins are then allocated as capital credits to be returned to you at a future date.

Our Board of Directors have set a goal of returning margins back to our members on a 25-year cycle. We anticipate reaching this goal in 2020. In 2018, we retired nearly $1.6 million in capital credits to members who received electric service in 1988-1991. For 2019, we are budgeting a retirement of over $1.5 million for the years of 1992 and 1993. This return of your equity, or prior investment in EIEC, is one of the unique benefits of membership in a local, not-for-profit cooperative.

EIEC has not had a distribution rate adjustment since April 2013. We are pleased to inform you that there is no increase budgeted in our distribution rate for 2019. However, we do pass along any increases from our wholesale power provider as necessary, in the power cost adjustment portion of our billing. Our wholesale power costs reflect the capacity, energy, and transmission portions of electricity pricing delivered to the EIEC metering points.

In 2018, we completed a cost of service study to help determine our future revenue needs, along with reviewing the fairness of the cost allocation among members in the various rate classes. We plan to conduct a rate study later in 2019 utilizing these cost of service results. The rate study will help to determine the level of future increases in our fixed cost components (monthly base charge and possibly a future demand charge component) while reviewing the appropriate level for energy (kWh) charges.

As the technology around us continues to change rapidly, we are always on the lookout for technology that will allow us to better serve you. Our online and smart phone account portal – SmartHub – continues to evolve. SmartHub lets you easily and conveniently pay your bill, view your electric use history, report an outage, and more. You can sign up for your FREE SmartHub account by visiting our website at www.eiec.coop. We continue to embrace technology in our daily operations and member services, using programs and analytics to assist with automated service orders, mapping, system analysis, staking, outage management, and many other applications.

About 60% of our power is provided by the Prairie State Generating Campus coal-fired power plant, located in Washington County, Illinois. Our wholesale power provider, Prairie Power, Inc. (PPI), owns 130 MW of this facility, along with various other natural gas fired generation units. On the renewable front, PPI has two solar panel arrays and a small portion of wind energy provided by the Pioneer Trail Wind Farm near Paxton.

PPI also contracts for power supply in the Midcontinent Independent System Operator (MISO) market. PPI is continually monitoring existing and future market trends in balancing the decision of owning or contracting for future generation resources, to provide you with supply diversity and a stable long-term portfolio.

Our distribution system performed well this year, resulting in an available reliability of 99.985% (excluding major storms and transmission supply outages). Even with the inclusion of major storm events and transmission supplier outages, our available reliability was 99.96%. We continue to monitor and upgrade our system to maintain the high level of service you’ve come to expect. Power from PPI is delivered through the Ameren 69 kV transmission system. Annually, nearly one-third of our member’s average outage time is a result of outages on the Ameren system that impact EIEC power substations. We continue to work with Ameren and PPI to improve their service and reliability.

Rural areas in general are experiencing population decline and a lack of adequate job opportunities, along with inadequate internet access. The EIEC territory experiences similar trends, which leads to flat or minimal energy sales growth.

We continue to monitor and evaluate the generous State of Illinois’ renewable incentive program, primarily for wind and solar. Distributed generation such as these renewables may present significant challenges to our current business model and rate structure. All members share in the cost of assets and annual expenses. Any loss of kWh sales and revenue resulting from member owned generation (such as solar) must be re-allocated and recovered from the total membership.

Most of the recent additions in energy sales in our territory has been driven from existing member expansions of grain, livestock, and other agricultural related businesses. We continue to work with our members to optimize the value they receive from electric service.

We are in our 82nd year operating a successful electric distribution cooperative, and we appreciate the confidence that you have placed in us and our employees to represent your interests. We hope you’ve enjoyed this brief recap of our 2018 performance. Thank you for the opportunity to serve you.







Tom Schlatter, Board Chairman


Bob Hunzinger, President/CEO