On March 22, Governor Martin O’Malley signed House Bill 60, in his first bill-signing ceremony.  All nine members of the Southern Maryland delegation supported the bill on behalf of Southern Maryland Electric Cooperative, Inc. (SMECO) of Hughesville, Maryland. 

Under the Maryland Public Service Commission’s requirements, SMECO was not allowed to sign wholesale power supply contracts that extended past May 2010.  The new legislation allows SMECO to purchase power using long-term contracts without being limited by the regulatory constraint.  SMECO has found that purchasing attractively priced power under multi-year contracts stabilizes electricity prices and helps to keep customer rates down.

According to A. Joseph Slater, SMECO president and chief executive officer, “As a cooperative, our main goal is to provide reliable electricity at reasonable prices.  This legislation allows us to be more independent and gives us the flexibility we need to enter into additional power supply contracts that will benefit our customer-members.”

SMECO has been purchasing power on the open market since late 2004.  The Co-op has used a managed-portfolio approach to help keep its customer-members’ energy costs down.  SMECO uses the portfolio approach, made up of contracts of varying lengths and terms, to purchase power from many different suppliers. 

Slater added, “We’re very grateful to the members of the Southern Maryland delegation who have shown unwavering support for their local electric cooperative.  Although the managed portfolio approach to purchasing power is a model for utilities nationwide, our customer-members are the primary beneficiaries of this legislation.”

SMECO is a customer-owned electric cooperative providing electricity to over 142,000 services in southern Prince George’s County, and in Charles County, St. Mary’s County, and all but the northeast portion of Calvert County.  Co-ops are distinctly different from investor-owned utilities because co-ops are owned by their customers, and these members vote for men and women who sit on the Board of Directors.  As one of over 600 Touchstone Energy Co-ops, SMECO promotes values that are important to its customer-members: Accountability, Integrity, Innovation, and Commitment to Community.

Co-ops also issue capital credits to their members.  What are capital credits?  They are the member’s share of the co-op’s margins, based on how much electricity the member purchased and the rate at which the account was billed.  SMECO’s margins—revenue less expenses—are used as working capital for new construction and system improvements.  Each year, SMECO determines what percentage of the capital credits can be distributed to the members.  Capital credits are then issued by check or credited to the member’s electric bill.