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General Manager's Message October 2019

By Mike Kezar

Think of these things, where you came from, where you are going, and to whom you must account.

Benjamin Franklin

Where we came from

As noted on the cover of this quarter's newsletter, STEC is celebrating its 75th Anniversary this year. STEC was incorporated in March 1944 and initially was intended to serve 10 member distribution cooperatives, however four of those initial members decided to not continue their participation.

Between the years of 1960 and 1962, STEC built almost 900 miles of transmission line and constructed 65 substations to serve six members cooperatives.

STEC offices were initially located at Foster Field, and the move to the Sam Rayburn site near Nursery did not occur until 1981.

In 2005, Medina Electric Cooperative and Magic Valley Electric Cooperative joined STEC, bringing the number of distribution cooperative members served to the current eight. Combined, the eight members of STEC serve over a quarter million members throughout 42 South Texas counties.

Through the years, STEC’s assets have grown to include over 2,200 miles of high voltage transmission line, 200 stations, and 21 microwave repeater sites. In addition, STEC’s power generation resource portfolio has grown to 1,865 MW of capacity: 64% gas-fired, 21% coal-fired, and 15% renewable energy – hydro, wind, and solar.

Over the past several years, annual energy sales to the members has significantly increased. For the period of January 1, 2009 through December 31, 2018, total annual energy sales have increased from 4,439 gigawatts (billion watts) to 8,327 gigawatts – an increase of 88%. Over that same period, the cost of the assets required to serve member energy requirements, more than tripled – from $484 million to $1.5 billion.

From its humble beginnings 75 years ago, STEC has grown to a $1.5 billion company with over $500 million in annual revenues, with a staffing level of 285 employees, and a direct economic benefit on the areas we serve of over $35 million annually - just in payroll and property taxes alone.

Where we are going

South Texas Electric Cooperative is a cutting-edge Generation & Transmission Cooperative and a leader in providing a diverse portfolio of affordable energy, a reliable power delivery system, and services customized to the needs of the members.

This is our vision statement, and it truly guides our direction into the future. That has not changed. What has changed is the landscape that STEC has had to navigate as we work to achieve our vision.

From deregulation of the wholesale energy market, to socialization of the transmission grid, to the subsidized growth of renewable energy, to heightened awareness of global climate change, to countless environmental and reliability regulations, and changing member expectations – the space that STEC functions within has definitely changed and evolved.

And yet our vision remains the same.

The inescapable conclusion then is that in order to remain successful in a changing operating environment, WE have to be prepared for and embrace change. We can celebrate the past, and marvel at the amazing growth that we have experienced and the hurdles we have overcome to get to where we are today, but we must also recognize that if we are to remain successful, past practices, methods, structures, thought processes, and conclusions will have to adapt to a rapidly changing energy environment.

Who we are accountable to

Our members.

STEC exists for the sole purpose of serving our members. If we fail in that regard, we have failed - period.

75 years ago, six distribution cooperatives had the foresight and trust to create a G&T for the benefit of their members. Our challenge of the past 75 years is the same going forward – how can we best demonstrate a value to the members that validates the trust they place in us to manage their assets and provide the services they need at the level they desire.

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