2018 ANNUAL REPORT

Trust the Vision

Embrace the
PROCESS

2018 Annual Report

Cooperative Profile

Southeastern Indiana in Bloomington, Indiana. the standard of living - for the
Rural Electric Membership Hoosier Energy is a generating past 79 years. As we reflect
Corporation (SEIREMC), and transmission cooperative, on the past, we look forward
headquartered in Osgood, which is owned and controlled to the future, ever grateful for
Indiana, is a member-owned by rural electrics in the the opportunity to keep our
electric distribution utility southern and central parts members’ lights on.
serving over 26,000 members of Indiana and southeastern This is SEIREMC Country
in portions of Dearborn, Illinois that receive electricity The power of membership is
Franklin, Jefferson, Jennings, from that organization. the Cooperative Difference,
Ohio, Ripley and Switzerland SEIREMC is wholly-owned and our main priority is you,
counties in southeast Indiana. by the members it serves and our member-owners. For
It is the second largest electric is governed by a board of the past 79 years, SEIREMC
cooperative in the state of directors elected by member- has worked to give back
Indiana. owners in each of the nine to the communities we
It is part of a nationwide voting districts. Employees serve. We sponsor a variety
alliance of more than 900 of the cooperative serve of community events and
private, not-for-profit, the many residential and projects in our seven-county
consumer-owned electric industrial accounts. service territory, and our
cooperatives that provide Celebrating 79 Years of employees participate in an
electric service to 42 million Keeping the Lights On annual REMC Community
people in 47 states. The It’s hard to imagine life Day service project.
electric cooperative network without electricity, but SEIREMC is proud to be
covers 75 percent of the for many in the 1930s, a Touchstone Energy®
country’s land mass and this was a reality. Electric Cooperative, promoting
accounts for approximately 11 cooperatives were formed to the values of innovation,
percent of total electric sales bring electricity to the rural accountability, integrity
in the United States. countryside when no one else and commitment to the
As a Touchstone Energy® would. In 1939, Southeastern community that have guided
Cooperative, SEIREMC is part Indiana REMC was born of the Cooperative for nearly
of a nationwide family with the need to provide electricity eight decades. We never
a strong brand identity. This to rural homes and farms in forget that we are owned by
allows participating electric southeast Indiana. Electric those we serve, and because
cooperatives to speak with one cooperatives across the of this, SEIREMC takes great
voice when telling their story country have created lasting pride in providing members
and advocating for issues of economic opportunities that with the highest level of
importance to members. have significantly changed the service.
SEIREMC purchases its way rural Americans live and You’re in SEIREMC Country -
power from Hoosier Energy, work. We honor those that and this is your Cooperative.
which is headquartered have raised utility poles - and

Page 1 - 2018 Annual Report

Our Mission

Provide safe, reliable electricity and quality services to the communities we
serve by enhancing their quality of life through innovation and sustainable

economic development.

Affiliations

Hoosier Energy

Hoosier Energy is a generation and transmission cooperative providing wholesale electric power and services
to 18 member distribution cooperatives in central and southern Indiana and southeastern Illinois. Based in
Bloomington, Indiana, Hoosier Energy operates coal, natural gas and renewable energy power plants and
delivers through a 1,500-mile transmission network.

Indiana Electric Cooperatives (IEC)

Indiana Electric Cooperatives was the first organization of its kind in the nation. Established in 1935, IEC
(formerly Indiana Statewide Association of RECs) brought our communities together to serve as a central
resource to meet the needs of its member cooperatives.

National Rural Electric Cooperative Association

The National Rural Electric Cooperative Association (NRECA) is the national organization representing the
national interests of the cooperative electric utilities and the consumers they serve.

Touchstone Energy Cooperatives

Touchstone Energy is a national alliance of local, consumer-owned cooperatives providing high standards of
service to customers large and small. More than 750 touchstone energy cooperatives in 46 states are delivering
energy and energy solutions to more than 30 million customers every day. Touchstone Energy cooperatives
serve their members with integrity, accountability, innovation and a longstanding commitment to communities.

Page 2 - 2018 Annual Report

Message to the Membership

The 79th annual meeting of the mem- pros and cons and works best when this may be the rate for you.
bers of Southeastern Indiana REMC taken together. Its “all-of-the-above”
will take place on Saturday, March 24, strategy includes coal, natural gas We continue to utilize SmartHub,
2018 at South Ripley High School. and renewable energy sources that which provides you much greater
are used to provide the best balance access to your account information.
You will have the privilege and op- between reliability, affordability and Currently there are a little over 8,400
portunity to elect three directors. All environmental concerns. members using this service. Once
voting, entertainment, and demon- you sign up for SmartHub, you have
strations will take place prior to the Coal provided 100 percent of our gen- access to PDF bill statements, daily
start of the business meeting from eration assets in 2000. At the end of and hourly energy use information
11:00 a.m. to 1:00 p.m. The desig- 2017, it represented 58 percent of our with temperature correlation, outage
nated voting area will be marked and capacity, with natural gas representing information, and you can conveniently
only members with voting ballots will 36 percent, and renewables six per- make payments or report outages.
be allowed in this area. cent. Hoosier Energy has developed a
plan to have 10 percent of total gen- Don’t forget our commitment to out-
Other items of interest include: eration coming from renewables by age restoration. If you have computer
2025. The current renewable resourc- or smart phone access you can visit
• Children’s Program (takes place es include landfill methane, hydro, our website (www.seiremc.com) and
during the business meeting) wind and the completed construction view our interactive outage map. This
of ten-one megawatt solar arrays in map is continually updated with the
• Energy Wall Display member system territories. number of members experiencing an
electric outage by zip code within our
• Free Energy Efficiency Kits Hoosier Energy is also our energy service area. You can quickly deter-
partner – helping us take steps at mine the extent of electric outages
• Free Ice Cream our homes, farms and businesses occurring on your system in real-time,
to use electricity more efficiently. which will give you an indication of
• Generac Generator Display Southeastern REMC offers a roster the severity of interruptions caused by
of energy-saving incentives to help storms, vehicle accidents, etc.
• Health Fair lower energy bills; ranging from effi-
cient heating and cooling equipment If you would like to save money on
• High Voltage Safety Demonstra- rebates to lighting upgrades. Visit your electric bill, please consider par-
tion TeamUpToSave.com to see the cur- ticipating in our Load Control Switch
rent lineup of savings opportunities Program, which addresses our critical
• Lunch Available available. In addition, Southeastern peak load requirements during the
will continue to provide home energy hottest or coldest time periods and
• Photo’s with LED Lucy audits and promote technology to reduces your bill by up to $60 per
enable you to find ways to be more year. We want to help you reduce
• Rebate Program Display energy efficient. your electric bill.

The 2018 Annual Meeting theme is Our Board of director’s stays com- The popular generator program is
TRUST THE VISION; EMBRACE THE mitted to a 25-year return cycle of being continued, which is tied to our
PROCESS. In non-business terms we patronage or capital credits. Patron- demand-side management program
can simply say “Let’s Get‘er Done”. age is being returned this March for and provides members the security of
Southeastern Indiana REMC has been 1993 and 1994 in the amount of $2.7 automatic switchover to the LP or nat-
providing communities a better place million. Your cooperative has refund- ural gas fired 22 kW generator during
to live for 79 years. We face many ed $20 million through the years. an electric interruption. This cost-ef-
challenges and opportunities, which fective program has been extremely
affect all of us, but we want to focus We remain committed to offering op- popular with our members. For 2018
on the key principles that our fore- tional rates that allow our members to we are offering a one-year, quarterly
fathers started 79 years ago; realiz- change usage patterns and to utilize payment plan to help you finance the
ing that these core principles are as technology to schedule and monitor purchase.
important now as they were when the thermostats and to receive day-ahead
work began in 1939. Let’s roll up our notifications via their smart device. Your board continues to oversee the
sleeves, embrace the co-op values, Consider the Time of Use/Critical Peak upgrades in your electric system by
and get’er done. Rate. If you can avoid the peak hours, completing several projects recom-

The clean, reliable electricity Hoosier
Energy provides is something we all
depend on – and expect – at the flip
of a switch. Hoosier Energy recogniz-
es that each form of generation has its

Page 3 - 2018 Annual Report

mended in our RUS approved four- We continued our COMMITMENT TO Darrell Smith Bryan K. Mathews
year engineering work-plan. COMMUNITY by supporting rural elec-
tric youth programs such as Page Day, President General Manager
One of the seven cooperative princi- Touchstone Energy Camp and Youth
ples is CONCERN FOR COMMUNITY, Tour. For many years we have given Financially, your cooperative had a
and one way your REMC demon- three $500 scholarships through the good year. This is mainly due to the
strates its support for this principle is Southeastern Career Center and we absence of major storm events. In
by enabling members to be a part of will do that again this year. We will 2017 our kWh sales decreased 3.17
the Operation RoundUp© program. also continue to support the 4-H ani- percent due to weather patterns and
This program has been used by co-ops mal auctions in the counties we serve. energy efficiency and over the last 5
for more than 20 years and allows Additionally, your REMC provides years kWh sales have decreased by
you to support much needed proj- corporate sponsorships for the follow- 7.6%. Our distribution system im-
ects within our service territory. The ing events each year: Polar Plunge of provements and new service exten-
purpose of Operation RoundUp© is to Southeast Indiana, Relay For Life of sions in 2017 totaled $6.4 million
collect and distribute funds for chari- Ripley County, the Versailles Pumpkin versus $5.4 million the previous year.
table purposes within the Southeast- Show and the Switzerland County New services connected in 2017
ern Indiana REMC area. The money Wine Festival. We also brought the totaled 237 versus 186 in 2016, 175
comes from our members who have mobile mammogram program from in 2015, and 200 in 2014. The fore-
allowed us to round up their elec- St. Elizabeth hospital to Ripley County cast for rural housing growth remains
tric bills to the nearest dollar every again this year. below 1%.
month. For most, this donation is less
than $6 per year. You have made a Our board and staff have identified six The combined efforts of your
wonderful impact. Because of mem- key issues through our latest strategic nine-member board of directors, 67
bers like you, we were able to award planning. The issues identified are: full-time employees, various con-
$118,000 to community projects in Succession Planning, Contract Bidding, tractors, and consultants resulted in
our seven county communities, in Remodeling, Rates, Demand, and another successful year.
2017. The Operation RoundUp© pro- Storm Hardening the System.
gram is present in 85 percent of the We appreciate your support in allow-
rural electric co-ops in Indiana. The succession plan and remodeling ing us to serve you.
of our headquarters will allow us to
For public safety, we offer a full-scale re-align our employees as we man- Respectfully,
high-low voltage electrical safety age day-to-day activities with fewer
demonstration, which is suitable for employees. Why are we strategically Darrell Smith
schools, fire departments or other working towards reducing our work
large events. force? Two basic reasons come to President
mind; 1) In 2019 we will have a rate
We continue to concentrate on pole increase from Hoosier Energy, and 2) Bryan K. Mathews
replacements, protective device We are striving to provide safe and
maintenance, right of way (tree reliable electric to your homes by re- General Manager
trimming/removal) maintenance and directing our vegetation management
replacement of older underground program to reclaim the right-of-way
primary cable in certain subdivisions. in a five-year cycle. Both will cause
Unfortunately, with the infestation of future cost pressure to member rates.
the emerald ash borer, we had to cut We believe we can offset part of this
down 1,598 ash trees in 2017. Be- by managing with less.
cause of the increased outages with
trees, we have changed our right of Another part of the strategic plan is
way program to a 5-year cycle. To to review rates. We are conducting a
provide safe and reliable power to all cost-of-service study in 2018, which
members we must clear all tree’s that will gather historical data to 1) de-
may cause an outage. Not only are termine if the revenue generated is
we trying to reduce outages, but your covering the costs, 2) determine if
safety, the safety of our children, and any subsidies are occurring between
the safety of our employees is of the classes, and 3) determine cost based
utmost importance. I trust that most rate components.
of our members agree.

Page 4 - 2018 Annual Report

Financials

FOR EVERY DOLLAR Comparative
YOU SPEND Balance Sheet

70¢

Purchased power

30¢

Operating
expenses,
depreciation,

interest

Active Metered Accounts Miles of Line Value of System

2017 27,068 2017 3,220 2017 $143,165,109
2007 3,265
2007 24,467 1997 2,929 2007 $110,608,050
1987 2,634
1997 21,706 1977 2,452 1997 $56,810,124
1967 2,129
1987 16,274 500 1,000 1,500 2,000 2,500 3,000 3,500 1987 $28,554,371
-
1977 13,641 1977 $10,329,815

1967 9,470 1967 $5,670,776

- 5,000 10,000 15,000 20,000 25,000 30,000 $- $50,000,000 $100,000,000 $150,000,000 $200,000,000

Page 5 - 2018 Annual Report

Uses of Revenue

11.76%

Statement of 10.79%
Operations Uses of Revenu6e5.54% 11.91%

11.76%

Taxes, Depreciation,
Taxes, Depreciation, InteresItnteMrisecseltlaneous Operations Wholesa

10.79% Mis ce llane ous

11.91% O per a tions
Wholesale Power Cost
65.54%

Number of Members:
25,307

Members Per Mile of Line:
7.8

Meters Per Mile of Line:
8.4

Newsletter:
Co-op Hotline

Employees:
67

Average Monthly Bill Average Monthly kwh Usage

2017 $193.18 2017 1,550
2007 $155.13 2007 1,758
1997 1997
1987 $91.07 1987 1,330
1977 $92.69 1977 1,144
1967 1967 1,141
$34.16
$- $13.78 $100.00 $150.00 $200.00 $250.00 - 622 1,000 1,500 2,000
500
$50.00

Page 6 - 2018 Annual Report

78th Annual Meeting Minutes

The 78th annual meeting of the Special Guest, Representative Mike Thieman
membership of Southeastern Randy Frye presented a legislative District 6
Indiana Rural Electric Membership update. Secretary
Corporation was held at South
Ripley High School located in The official notice of the annual There being no further business,
Versailles, Ripley County, Indiana, meeting and the certification of the meeting was adjourned by
beginning at 1:00 P.M., EDT, on the the mailing of said notice were the President. There were 857
1st day of April 2017. Proper notice read by Secretary Chris Schmaltz. members registered for the 78th
of the meeting had been mailed to Secretary Schmaltz announced a annual meeting.
each member postmarked on the quorum was present. The minutes
15th day of March 2017. of the 2016 annual meeting were
approved.
President Darrell Smith called the
meeting to order. Those directors Attorney Robert Wickens
present were: Carolyn Armstrong, conducted the business of director
Brad Bentle, Bonnie Boggs, Melissa elections. Vince Moster, District
Menchhofer, Vince Moster, Chris 1; Darrell Smith, District 7; and
Schmaltz, Darrell Smith, David Bonnie Boggs, District 8 were
Smith, and Mike Thieman. elected by the membership.

Following the call to order, Members heard reports from
Laura Iceburg-Parks sang the President Darrell Smith, Treasurer
National Anthem. The colors Mike Thieman, and General
were presented by the Versailles Manager Bryan K. Mathews,
American Legion Post 173. Mitch regarding the state of the
Harrell, Pastor of the Zenas Baptist cooperative.
Church gave the invocation.
CEO of Indiana Electric
General Manager Bryan K. Cooperatives, Tom Van Paris, spoke
Mathews introduced the current about the cooperative business
board of directors. model and the statewide and
national network.

Page 7 - 2018 Annual Report

Cooperative Principles

Voluntary and Open Membership

Cooperatives are voluntary organizations, open to all persons able to use their services and willing to accept the
responsibilities of membership, without gender, social, racial, political or religious discrimination.

Democratic Member Control

Cooperatives are democratic organizations controlled by their members, who actively participate in setting
policies and making decisions. The elected representatives are accountable to the membership. In primary
cooperatives, members have equal voting rights (one member, one vote) and cooperatives at other levels are

organized in a democratic manner.

Members’ Economic Participation

Members contribute equitably to, and democratically control, the capital of their cooperative. At least part of that
capital is usually the common property of the cooperative. Members usually receive limited compensation, if any,

on capital subscribed as a condition of membership. Members allocate surpluses for any or all of the following
purposes: developing the cooperative, possibly by setting up reserves, part of which at least would be indivisible;

benefiting members in proportion to their transactions with the cooperative; and supporting other activities
approved by the membership.

Autonomy and Independence

Cooperatives are autonomous, self-help organizations controlled by their members. If they enter into agreements
with other organizations, including governments, or raise capital from external sources, they do so on terms that

ensure democratic control by their members and maintain their cooperative autonomy.

Education, Training, and Information

Cooperatives provide education and training for their members, elected representatives, managers and
employees so they can contribute effectively to the development of their cooperatives. They inform the general

public, particularly young people and opinion leaders, about the nature and benefits of cooperation.

Cooperation Among Cooperatives

Cooperatives serve their members most effectively and strengthen the cooperative movement by working
together through local, national, regional and international structures.

Concern for Community

While focusing on member needs, cooperatives work for the sustainable development of their communities
through policies accepted by their members.

Page 8 - 2018 Annual Report

“Trust the Vision; Embrace the Process”

P.O. Box 196 | Osgood, IN 47037
800-737-4111 | www.seiremc.com