MJM is a cooperative, which makes it different from other utilities in many ways. One of the biggest examples of this dif-ference is MJM’s capital credits. This year, the Cooperative re-tired $404,217 worth of capital credits to members who bought electricity from 1979 through 1980.

Most companies charge above and beyond what it actu-ally costs them to run their busi-ness so they can generate profits for their investors. MJM does not operate this way. As a coop-erative, MJM operates at-cost. Its rates are set to collect enough revenue to run and improve the business, not to generate profits for shareholders.

Each year, if there is excess revenue, it is divided and allo-cated as capital credits among all of MJM’s members. The dollar amount is based on how much electricity each member purchased that year. When the financial condition of the Cooperative permits, these capital credits are “retired,” or paid, to the mem-bers as a check or bill credit.

Since the 1980s, MJM has retired more than $2.8 million in capital credits to its members.“Capital credits are a unique benefit of getting your electricity from an electric cooperative,” said Laura Cut-

ler, President/CEO. “We’re proud to give back to our members and their families.”Checks were mailed out on July 28. If you were a member any time from 1979-1980 and have not received a

check, please let us know. We may need your updated mailing address. Contact our office at 217-707-6156.

Vol. 10, No. 8 August 2017 www.mjmec.coop

a ong the ines

How Do Capital Credits Work?

1

2

4

5

3

MJM notifies you of how and

when you'll receive your capital credit retirement.

When MJM's financial condition permits, your

board of directors decides to retire, or pay, the

capital credits.

MJM allocates the margins to members as

capital credits based upon their use of electricity

during the year.

MJM tracks how much electricity you buy and how much money you pay for it

throughout the year.

At the end of the year, MJM completes

financial matters and determines whether there is excess revenue, called margins.

MJM Electric Cooperative

has retired over

$2.8 million

to members.

Because electric co-ops operate at cost (as a not-for-profit), any excess revenues, called margins, are returned to members in the form of capital credits.

YOU get the credit-MJM retires $404,217

2 August 2017 3

MJM ElectricCooperative, Inc.

264 N. East St., Carlinville, IL 62626

Office 1-800-648-4729 Pay by Phone 1-855-313-6314

Office Hours Mon-Fri 7:30 a.m.-4:30 p.m.

Board of DirectorsChairmanRobert Lehmann ...........................GirardVice ChairmanPaul Bartlett............................... BrightonSecretaryWilliam R. Heyen ......................GillespieTreasurerW. Kay Schultz........................... Godfrey

Anthony Heitzig ..........................FieldonLouis E. Johnson .......................ShipmanRobert Moore .............................MedoraJames R. Niemann ...................LitchfieldDennis Stewart .........................Nokomis

StaffLaura Cutler ....................President/CEODaniel Drumeller ...................Director of

Finance and Administration Joe Heyen ...............................Director of

Engineering and OperationsEditorNathan Hatalla ...........Communications and Member Services Coordinator

Holidays observedNew Year’s Day, Good Friday, Memorial Day, Independence Day, Labor Day, Veterans Day, Thanksgiving Day, day following Thanksgiving and Christmas Day.

How to report an outageCall 1-800-648-4729. Collect calls will be accepted to report outages. When you report an outage, give your name and location number. Before calling, check your fuses or circuit breakers. Check with your neighbors. Call to report hazardous conditions.

MJM Along the Lines (USPS 854-620) is published monthly for $3.00 per year by MJM Electric Cooperative, Inc., P.O. Box 80, Carlinville, Illinois 62626. Second-class postage paid at Carlinville, IL. POSTMASTER: Send Address changes to MJM Along the Lines, P.O. Box 80, Carlinville, IL 62626.

Published by:a ong the ines

FOR SALE: 5000 watt Genera-tor, 10 hp w/ cable plug in $325, Roll away bed $75, 12 place setting white dishes in box $35, Green king comforter new in bag $25. Call 618-372-3881.

FOR SALE: Class C motor home, 2007 Dutchman Express 29R Series M, excellent con-dition, 2 slide outs, sleeps 8, clean bed and back bedroom, queen pull out couch, split bath, $24,995 firm. Call 217-563-2398.

FOR SALE: 1988 Big Chevy Blazer, classified as antique, a/c needs fixed, minor rust. Call 217-710-4967.

Member Trading Post

To list your free ad, email nathanh@mjmec.coop, call 1-800-648-4729, or mail the ad to MJM Electric Cooperative, 264 N. East St., P.O. Box 80, Carlinville, IL 62626. Each ad will run for one month. Some restriction may apply. Thank you.

Make Sure Your Phone Number is

Up-to-DateOver the years, many members have done

away with their landline telephones. Due to this, the co-op is sometimes unable to reach members without a current phone number in our system.

We ask that if you have changed your primary phone number or have a cell phone number that would be better to contact you through, please notify us.

It is important to have a current number in our system so that we are able to reach you in the case of an emergency.

If you believe we may not have a current num-ber to reach you at, please give us a call at 800-648-4729 to update your phone number.

2 August 2017 3

Rate Change – Q & AWhen was the last rate change?

The last actual rate change was in 2008 and all members experienced a rate increase. That is not the case with this rate change. Some may see an increase, some a decrease and some no change at all. The variations of changes are a direct result of the rates being recalculated to distribute the costs equally between the different rate classes based on the required services, equipment and infra-structures needed.

There have been wholesale power costs adjust-ments made since 2008 and the monthly service charge has increased by $8.50 between the years 2011-2014 to help cover fixed costs. There has not been an increase to Member’s bills since 2014.

Why is MJM Electric’s service delivery charge higher than an IOU?

MJM Electric serves on average 4.4 members per mile of line, whereas investor owned utilities (IOU) serve on average 35+ members per mile. Additionally, MJM Electric’s sales are 87% resi-dential, whereas, the IOU receive a much higher portion of their sales from commercial and indus-trial customers. All of this means that the IOU re-ceive 5 to 10 times more revenue per mile of line than MJM does, and therefore IOUs are much bet-ter positioned to spread their fixed costs. MJM is at a significant disadvantage due to the rural na-ture of its service area.

For many years, our cost of service studies has shown that we’ve been significantly under collect-ing on the flat monthly service delivery charge. And these studies (which are performed with the help of objective outside consultants) have indi-cated that the actual cost of having service avail-able in our rural area should be even higher yet. However, this rate change helps get us to a fairer level and helps to reduce subsidies, or situations where one group of members is artificially paying more to benefit another group of members due to the current rate structures.

How do MJM’s residential rates compare to other Coops in Illinois?

The Illinois Electric Cooperatives Association publishes a residential rate comparison annually so that Illinois Cooperatives can see where they compare to other Illinois Cooperatives. Even though MJM is raising its service charge, it is low-ering its energy charge. Thus, there has been little to no impact in where it stands now with other Illinois Co-ops. Since Illinois’s terrain varies sub-stantially from one part of the state to the other, as well as the number of members and number of lines that a cooperative owns, true comparisons are hard to make.

What causes costs to go up for MJM?We typically invest $2 - $3 million per year in

upgrades to our electric system. That, plus what we pay for poles, wire, transformers, vehicles, etc., tend to increase and will have an impact on our electric rates. These costs simply cannot be re-covered only through the kWh energy charge be-cause there are too many variances such as weath-er which can negatively impact the Cooperative financially.

It costs around $38,000 to build/re-build one mile of overhead single-phase line and $46,500 for one of mile of underground single-phase line. It costs around $60,000 to build/re-build one mile of overhead three-phase line and $84,000 for one mile of underground three-phase line. MJM cur-rently owns and maintains 1928 miles of overhead line and 183 miles of underground line.

A small utility bucket truck cost $120,000 in 2008 compared to $160,000 in 2016. A Digger bucket truck cost $190,000 in 2008 compared to $250,000 in 2016.

MJM’s total utility plant has increased since 2008 by $17 million, bringing current plant value to $52.2 million.

Continued on page 4

4 August 2017 5

Non-controllable vs. Controllable expenses:Non-Controllable expenses include: depreciation,

taxes and interest. These are largely outside of our influence. These costs accounted for 15% of our total expenses in 2016. However, recently we were able to curtail some of these costs. Some ex-amples are provided below.

MJM did request an appeal of property taxes in 2015 for the Carlinville headquarters facilities. As a result, taxes have dropped by $18,400/annu-ally.

In 2013 we exceeded our lender’s requirements of 40% equity for the first time in 11 years. This entitled us to an additional rate discount on our current loan portfolio. Because interest rates have been at a historical low, MJM has also taken ad-vantage of converting high interest loans to lower interest rates, saving nearly $70,000 in interest ex-pense annually.

The wholesale cost of power [Wabash Valley Power Association -WVPA)] is another non-con-trollable expense and it makes up 58% of our total expenses in 2016. However, WVPA’s focus is clear -- deliver electricity at the lowest cost possible now and into the future.

Controllable expenses include: distribution op-erations and maintenance, customer accounting and collection, administrative, and member ser-vice. These costs accounted for 27% of our total expenses in 2016. To provide quality service, a certain level of costs is needed. We regularly re-view our expenses and strive to do more for less. There are many economic challenges of being a rural utility service provider that city and town utility providers don’t have.

What is MJM doing to control costs?MJM uses a competitive bid process for order-

ing materials. Many materials can be purchased from a not-for-profit cooperative-owned supply company…keeping costs low and earning pa-tronage capital. The bid process is also used for contracting out right-of-way management, large project line up-grades, etc.

Information technology – We’re driving more members to the web through e-bill and Smart-

hub. It provides greater member convenience and reduces employee costs.

We are utilizing member e-mail addresses for communication purposes e-mailing new member packets, member’s bills and other member infor-mation requests to help reduce labor, printing and postage costs.

We use electronic remote deposit which saves on bank service fees. We encourage members to use automatic bank draft and recurring payment methods to cut down on labor costs.

We use a payment process which scans and uploads member payments, rather than manual processing.

MJM has been able to significantly reduce member account write-offs over the last several years. For example, write-offs were $58,000 in 2011 and approximately $5,000 in 2015 and 2016.

Couldn’t expenses (payroll, benefits, costs) be cut?

An annual wage review is performed based on an average survey of wages for national, state and local utilities and we endeavor to stay within the average mean of that parameter.

MJM has made some recent employee benefit expense reductions. A change in health insur-ance carriers was made which reduced costs by 10% and by participating in a Wellness Program an additional 5% reduction in premiums was made. MJM also started offering a High Deduct-ible Health Plan which has also lowered premium costs.

In the past couple of years, it has become nec-essary to add 4 additional full-time employees to the MJM head-count: (1) an Informational Tech-nology Administrator to meet the challenges of technology used for MJM’s business practices and to prevent cyber security attacks through employ-ee training along with software and hardware re-inforcement. Safety and security will continue to be a priority as we continue to advance member facilities and network; (2) a Level 1 Engineer to learn MJM’s distribution system and to help cut down on outsourcing engineering services in the

Continued on page 5

Rate Q&A continued from page 3

4 August 2017 5

future; (3) an apprentice line-man for future suc-cession planning and, 4) a meter-technician to test, calibrate and maintain all types of meters and equipment along with many other duties, includ-ing, acting as a groundman to assist linemen.

If MJM builds a new headquarters will I see another increase in my bill?

Building a new building should make little to no impact on member’s bills because the building is a long- term asset. A new building will pro-vide efficiencies and cost savings in of itself. There are also tax savings that are offered if built in the Macoupin County Enterprise Zone. MJM can be its own electric provider and will benefit from the WVPA PowerMoves Program offering energy in-centives like any other MJM member would.

Instead of continuing to refund capital cred-its to active and inactive Members, why not use those funds in place of a rate increase?

By law, an electric cooperative must allocate patronage capital. Refunding patronage capital does not affect our margins (but does impact our balance sheet). Part of the premise of a coopera-tive is having members as investors, and giving members a return on equity over time. Active and inactive Members who have been on our lines for many years paid patronage capital and deserve a return on those investments.

I am a low-energy user, so why am I being penalized?

If one members uses only 1 kilowatt-hour (kWh) of electricity and another member uses 100 kWh, MJM still incurs about the same cost to build the line, maintain the distribution system and de-liver electricity to both members. It takes just as much equipment to deliver one kWh as it does 100 kWh. Therefore, each member must pay their portion of fixed costs that are associated with their size of service to maintain the financial health of their cooperative.

MJM does promote energy efficiency through its PowerMoves Program to help members reduce the energy portion of their electric bill.

Are members who are large power consum-ers going to see the same percentage of in-crease/decrease as the residential members? If not, why?

The cost of service study looks at the mini-mum amount of distribution equipment required to serve a single member in each rate class. This includes the cost of poles, wire, transformers and meters. In addition, we need to properly allocate the cost of the actual energy and generating ca-pacity (demand) to each member class. One goal is to reduce subsidies as much as possible and this was occurring as our current rate structure had not been updated in proportion to the rise in costs associated with this class of members. Unfortu-nately, large power users are going to see the larg-est increase in their bill because not only will their monthly service charge increase but their demand charge will increase as well. However, through WVPA, MJM will be able to offer these members assistance through a PowerShift program that could help lower their electric bill.

Why can’t I choose another electric provider?MJM is a distribution cooperative, so even

if electric customer choice was practical, MJM would still have a distribution cost structure and it would still be the distribution provider. Mem-ber/Owners do have choices: Wind turbine, Solar panel, Permanent standby generator (propane or natural gas). However, those are significantly more expensive and commonly unreliable.

Heating, cooling, and hot water are a home’s largest energy loads, typically accounting for more than 60% of a home’s total energy use. You have a choice of competing fuels for these, your home’s largest energy users. As an incentive for using electric heat, MJM has a program that gives a member credit back on their electric bill from the period of November through March. If you have electric heat and are not taking advantage of this program, please contact the MJM office.

Rate Q&A continued from page 4

6 August 2017 7

Harvest Workers Urged to Take Time to Reap Safe Harvest

It can be an exciting and exhaust-ing time, the culmination of a season of hard work. However, the rush to har-vest can also yield tragic outcomes. Each year, dozens of farm workers are killed and hundreds are injured in accidents involving power lines and electrical equipment.

“Things people see every day can fade from view and in the busy-ness of harvest time, it’s easy for farm workers to forget about the power lines over-head,” says Richard McCracken of the Safe Electricity Advisory Board. “But failure to notice them can be a deadly oversight.”

Review with all workers the farm activities that take place around power lines. Inspect the height of farm equip-ment to determine clearance. Keep equipment at least 10 feet away from power lines – above, below and to the side – a 360-degree rule.

“Always lower grain augers before moving them, even if it’s only a few feet,” says Bob Aherin, PhD, CSP & University of Illinois Professor and Agricul-tural Safety & Health Program Leader. “Variables like wind, uneven ground, shifting weight or other conditions can combine to create an unexpected re-sult. Also use extreme caution when raising the bed of a grain truck.”

Farm workers should take these steps to ensure a safer harvest season:

• Use care when raising augers or the bed of grain trucks around power lines.

• Use a spotter when operating large machin-ery near power lines. Do not let the spotter touch the machinery while it is being moved anywhere near power lines.

• As with any outdoor work, be careful not to raise any equipment such as ladders, poles or rods into power lines. Remember, non-metallic materials

such as lumber, tree limbs, ropes and hay will con-duct electricity depending on dampness, dust and dirt contamination.

• Never attempt to raise or move a power line to clear a path!

• Don’t use metal poles to break up bridged grain inside bins. Know where and how to shut off the power in an emergency.

• Use qualified electricians for work on drying equipment and other farm electrical systems.

Operators of farm equipment or vehicles must also know what to do if the vehicle comes in con-tact with a power line: Stay on the equipment, warn others to stay away and call 911. Do not get off the equipment until the utility crew says it is safe to do so.

“If the power line is energized and you step out-side, touching the vehicle and ground, your body becomes the path and electrocution is the result,”

Continued on page 7

6 August 2017 7

While severe thunderstorms can cause blackouts with electricity out for hours or sometimes days, even a flickering light bulb can signal problems.

Many people are familiar with blackouts and their potential to cause significant damage. Yet brown-outs, which can last only a few seconds, also can damage electronic devices. Brownouts occur when con-ditions result in a lower voltage than what should be present on a given power line, Indiana University reports.

The sudden drop in voltage can damage appliances and electronics, including causing appliance mo-tors to overheat and computers to reboot. Surge protectors, while useful to help prevent damage from unexpected spikes in electricity, cannot protect electronics from damage related to low voltage.

Fortunately, there are steps to take to protect against damage from brownouts. You should unplug all electronics as soon as you notice a brownout taking place, such as when you witness a flickering light bulb. Also, preparing for the time that brownouts are likely to occur, such as during severe thunder-storms, can help minimize damage.

Some equipment also can help protect appliances from low voltage events. Devices can be installed on air conditioners that feature low voltage sensors that automatically shut down the air conditioner if voltage drops to unsafe levels. Contact a professional HVAC technician for more information about op-tions that may be available.

Taking steps to minimize damage during brownouts can help prevent damage to your appliances and electronics.

MJM Electric Cooperative can support you with a variety of energy-related services and information. To learn more, contact MJM at 800-648-4729 or visit www.mjmec.coop.

Flickering Lamps can Shed Light on Brownouts

Aherin said. “Even if a power line has landed on the ground, the potential for the area nearby to be energized still exists. Stay inside the vehicle unless there’s fire or imminent risk of fire.”

If this is the case, jump off the equipment with your feet together, without touching the ground and vehicle at the same time. Then, still keeping your feet together, hop to safety as you leave the area.

Once you get away from the equipment, never attempt to get back on or even touch the equipment. Some electrocutions have occurred after the opera-tor dismounts and, realizing nothing has happened, tries to get back on the equipment.

It is very important that all farm workers and sea-sonal employees are informed of electrical hazards and trained in proper procedures to avoid injury.

For more information on farm electrical safety, visit www.SafeElectricity.org

Safe Electricity is the safety outreach program of the En-ergy Education Council, a non-profit organization with more than 400 electric cooperative members and many others who share the mission of creating a safer, smarter world. .

Harvest Safety continued from page 6

8 August 2017 PB

Considering Solar? Call Us First! As interest in "green" energy and ways to save money on

utility bills continue to grow, some cooperative members may be considering the installation of a solar array.

Since these types of systems have the capability of re-turning electricity back to the electric grid, there are some major safety considerations to sort out before a system is installed.

Before deciding to buy a solar array, examine the eco-nomics to determine whether such a system will lower your monthly electricity costs. If you do decide to install a solar array, contact our office as early as possible in the process.

We can provide information on our interconnection pro-cess and policies, as well as answer any questions you may have. That way, you and your installer will have the infor-mation needed as you progress with your system.

For more information on MJM's polices and require-ments, please contact Nathan Hatalla Monday through Fri-day, between 7:30 a.m. and 4:30 p.m. at 217-707-6019.