South Mississippi Electric Power Association, headquartered in Hattiesburg, is Mississippi’s only not-for-profit wholesale electric power cooperative. It generates and transmits electricity for 11 member systems, providing electrical service to more than 415,000 homes and businesses in 55 counties from the Delta to the Coast.
The member systems tap into SMEPA’s generation sources with 1,740 miles of high-voltage transmission lines and with the systems owned by Entergy and Mississippi Power.
SMEPA has continued to grow since it was established in 1941 through the Rural Electrification Act that helped light up rural areas of Mississippi and other states. The coop had sales last year of $802 million, and general manager Jim Compton expects that figure will increase by more than $100 million this year. “We are on track to reach $910 million this year,” he said. “We plan to have a billion dollars in revenue by 2016.”
The reason, Compton said, is that SMEPA is now part of MISO, a 14-state regional transmission organization that manages more than 65,000 miles of transmission to more efficiently dispatch power. As part of MISO, SMEPA sells electricity not just to its members but to a larger market. “All members are buying from the pool and selling to the pool,” Compton said. “MISO picks the resources that are most efficient to meet projections the next day based on supply and demand. So far, SMEPA has been a net seller, adding to our revenues and lowering our cost to members.”
SMEPA’s owned-generation sources include a mix of coal, natural gas, hydro-electric, and nuclear plants.
Mississippi’s climate is a major factor in residents’ energy use, and thus costs. Compton said 45 percent of residential electric usage is for heating and cooling interior air space. A major challenge for utilities with high usage is poverty; 45 percent of Mississippians report they have had to choose between paying for energy or food at some times.
“Electric energy is critical,” said Compton. “Ten years ago an outage was an inconvenience that people could live with. Now there is no access to telephones, air conditioning or electronics. Very little operates without electricity. So we have to invest in a strong grid to support reliability. Electric energy is a necessity of life.”
Today’s dependence on power is a world away from when SMEPA was charted in April 1941 by seven electric power associations who gathered in Hattiesburg. It was part of the growing number of electric coops forming in the state thanks to the 1936 Rural Electrification Act’s low interest loans to build the electric power infrastructure in rural parts of the country.
Over the years, SMEPA has grown, adding customers, employees and infrastructure. Today in what Compton calls the new electric marketplace, SMEPA has the only control center in Mississippi. When he became CEO 10 years ago, there were 245 employees and now there are 415. In the last few years, a new $20 million field operations center was built, the security system has been upgraded, and Compton said plans include another building project on the 14 acres near headquarters that will house human resources and IT.
SME boasts competitive advantages including its skilled workforce, long term contracts with members, financial well being, its long range planning, and fuel diversity. The electric coop has secured debt ratings of A- from Fitch; A3 from Moody’s; and A1 from Standard and Poor’s.
Keeping the lights on is just one part of SMEPA’s mission statement. “We also strive daily to meet or exceed all environmental rules. We are 100 percent owned by Mississippians, and they want a clean state, and us to operate with the least amount of environmental impacts. Clean, reliable, affordable energy is our mission.”
Compton said the coop is facing a major challenge that could come if proposed EPA rules governing carbon emissions, called the Clean Power Plan, are put in place next June. “This is the first attempt to regulate the carbon footprint of fossil fuel generating plants,” he said. SMEPA reduced its carbon emissions by 15 percent from 2005 to 2012 as part of its environmental plan, but the coop will not get credit for those investments as the proposed rules read now, he said.
If the rules stand, Compton said, “We’re really going to have to make expensive, significant changes in what we do, in addition to what we already spent. I do not believe our ratepayers can support that cost.”
BEFORE YOU GO…
… we’d like to ask for your support. More people are reading the Mississippi Business Journal than ever before, but advertising revenues for all conventional media are falling fast. Unlike many, we do not use a pay wall, because we want to continue providing Mississippi’s most comprehensive business news each and every day. But that takes time, money and hard work. We do it because it is important to us … and equally important to you, if you value the flow of trustworthy news and information which have always kept America strong and free for more than 200 years.
If those who read our content will help fund it, we can continue to bring you the very best in news and information. Please consider joining us as a valued member, or if you prefer, make a one-time contribution.Click for more info