Midwest Energy Governance and Transparency
Not your typical utility, or non-profit
Midwest Energy is a not-for-profit 501(c) (12) cooperative. We operate a large and complex business. We had total assets of $645 million at the end of 2022, with annual revenue of nearly $246 million. This makes Midwest Energy much different from 501(c) (3) non-profit charities or agencies.
The biggest financial difference between Midwest Energy and a for-profit utility is what happens to excess revenue, also called margins. A cooperative’s margins are allocated to customers every year and become capital credits. This means Midwest Energy does not keep profits.
Capital credits are returned to members on a roughly 20-year cycle. These can take the form of checks mailed to members, or bill credits. Returning margins more quickly would result in more borrowing or higher rates.
We keep some equity on hand to limit borrowing. That is similar to housing lenders requiring money down for a home purchase. Total member equity (accumulated margins) on the books is roughly $278 million.
The cooperative model
Kansas electric cooperatives serve a defined geographic area. They are obligated to serve all in that certified territory and must be prepared to meet each customer's, and the overall system's, maximum electrical need (peak load). Thus, referring to electric co-ops as monopolies is inaccurate.
Not your typical cooperative
We operate and maintain:
- 11,300 miles of power lines in total
- 9,000 miles are low-voltage distribution lines (short poles along streets and alleys)
- 2,300 miles are high-voltage transmission line (tall poles along highways and between cities)
- 114 megawatts of natural gas-fueled generation capacity
- 3,030 miles of natural gas pipeline.
This diversity makes Midwest Energy unique in the electric cooperative world. We deliver safe, reliable and affordable energy to 50,000 electric and 42,000 natural gas customers. We touch over 100 communities in 40 of Kansas’ 105 counties. Few electric cooperatives in the nation combine generation, transmission and distribution like Midwest Energy. Even fewer provide natural gas service.
Challenges
- Safety and reliability. Midwest Energy’s construction budget for reliability, safety, and load growth is around $45 million per year. Projects must be planned and completed with affordability in mind.
- Grid security. We protect the grid and customer data against cyber-attacks, with help from government and industry experts.
- Wind power. In 2022 wind energy supplied 43 percent of electricity in the Southwest Power Pool regional market. While wind is a beneficial renewable resource, wind generation requires transmission facilities to be built to facilitate delivery of that wind-generated electricity to urban load centers. Transmission construction is costly, and Midwest Energy is working hard to ensure our member-owners are not disproportionately assigned transmission charges that do not benefit them.
- Oil production and irrigation. Providing electricity and natural gas to these sectors helps keep rates reasonable for all our customers. We pay close attention to regulations that may impact these parts of the economy.
- Rapid industry change. Power grid generation is moving from large single-source generators to many small sources, such as solar panels and batteries. We must operate and maintain the traditional grid while preparing for the new one.
Performance Indicators
Midwest Energy has shown strong performance, including:
- Residential electric rate 9% below Kansas-based cooperatives average in 2020
- Lowest residential and general service natural gas delivery rates in Kansas
- 2021 customer “job satisfaction” rating of 97.2%
- National award-winning How$mart® energy efficiency program
- Leadership in renewable energy; among the first in Kansas to purchase wind energy, and Kansas’ first utility-scale solar array
- See how we're doing on current performance indicator data
Board of Directors
Midwest Energy’s nine directors are members and consumers just like you. The Board's duties and responsibilities include provision of governance and strategic direction, approval of budgets, and consideration of rate change proposals. The Board also approves new debt, develops policy and chooses the Chief Executive Officer. A summary of the most significant Board actions of recent meetings has been made available.
Board members do not receive a salary, medical insurance, or retirement benefits from Midwest. They are paid fees and expenses, including a per diem for board meetings. This per diem is also paid for industry meetings and training.
The per diem is paid in recognition of directors’ time, which otherwise could have been used for their own business interests. But, more than preparation and board room time are expected from directors. We also depend on their viewpoints and business knowledge.
Midwest Energy’s average director compensation is near the bottom 25 percent nationally for electric cooperatives with 40,000 or more consumers. Midwest Energy serves over 92,000 electric and gas meters.
Kansas cooperatives range in size from under 2,000 meters to more than 92,000. Whether adjusted for revenue, assets or number of meters, Midwest Energy’s director compensation is the lowest in Kansas. For all three measures it is about one-fifth of the state average.
Contacting Board Members
Members may contact Midwest Energy's Board of Directors with comments, concerns or complaints at any time; however, the Board requests that members first attempt to resolve the issue at the lowest level possible.
If the responsible Manager or Vice President cannot resolve the issue, customers may contact the CEO directly for resolution, by calling 1-800-222-3121. If the CEO cannot resolve the issue, members may contact the Board Chair with their concerns.
Director Elections
As a customer-owned cooperative, Midwest Energy's Board of Directors are elected by the members. Board members serve three-year terms. From 2009 through 2021, incumbent directors have faced opposition in 35 of 39 individual contests.
For complete details on Director elections, including Director qualifications and the nomination process, please visit this page.
Compensation
Midwest Energy conducts industry salary surveys every one to three years. Executive and senior staff pay is compared to competing employers regionally and across the nation. Pay for other exempt employees is compared to similar jobs in state and local labor markets.
Operating in rural areas makes recruiting engineers and other technical staff difficult. We are proud to have an experienced work force dedicated to good service, regardless of weather and work conditions.
About 60 percent of Midwest Energy’s employees are union members, covered by collective bargaining agreements. Those employees belong to the International Brotherhood of Electrical Workers or the Communications Workers of America.
Whether adjusted for revenue, assets or number of meters, Midwest Energy’s CEO compensation is the lowest among Kansas cooperatives. For all three measures it is about one-fifth of the state average.
As a tax-exempt, not-for-profit organization owned by the members we serve, Midwest Energy, like many electric cooperatives, is required to file an IRS Form 990 annually. This page explains what goes into the annual Form 990 report. Compensation for directors, officers, key employees and highest compensated employees is shown in Midwest Energy's latest IRS Form 990 report.
Health Care Compliance
In late December 2020, Congress passed the Consolidated Appropriations Act (CAA). This law was designed to help reduce some barriers in the healthcare industry. Providers and health insurance companies are required to put several measures in place including making the cost of care available on Plan and provider websites, eliminate surprise billing, and provide continuity of care when a provider/facility leaves the network.
Midwest Energy employees receive health insurance coverage through Blue Cross and Blue Shield of Kansas (BCBSKS). BCBSKS provides this overview on the CAA, and per the law, access to machine-readable files is provided.