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Message from the CEO

A look back at 2017 brings one event to mind that stands out above the rest—Hurricane Harvey. Five days of nonstop, torrential rain. Flooded roads. Hundreds of fallen trees and miles of downed power lines. Hurricanes Rita and Ike were devastating, but they traveled through in a matter of hours.

Harvey, on the other hand, had two landfalls and lingered for days over our area, causing unprecedented flooding of roads, homes and businesses. Total cost of restoration to the Cooperative was $2.7 million. While conditions were extremely challenging, our crews did an amazing job of restoring power safely and timely to the 47,000 services that were affected. We extend our thanks and congratulations on a job well done to our employees and to the contract crews who came to assist.

In late 2017, we implemented a new enterprise software system that reduces our operating costs and improves efficiencies. It also provides you, our members, with a new online mySamHouston portal, as well as a smartphone app.

Employees learned and adapted the software’s new processes that allow us to offer better service to our members. For a few months following implementation, we experienced some delays in service. We thank you for your patience as we resolved the issues. Service times are back to normal, and in many cases have improved.

For most of the year, the weather was mild, which caused electricity consumption and Cooperative revenues to be down. December, however, was cold. Increased sales at the end of the year resulted in positive margins for 2017. Restructured rates, including a decrease in the Delivery Charge per kilowatt-hour and an increased Base Charge, became effective May 1, 2018. This new rate structure will help reduce the negative financial impact of low kilowatt-hour sales in mild weather years, and more equitably distribute service costs. It was put into effect following a study by an independent engineering firm as well as focus groups across our service area.

In August 2017, your Cooperative retired (paid to members) $2 million in capital credits. Additionally, a wholesale energy credit of $4 million, based on the Co-op’s 2017 wholesale energy purchases, was credited back to members on their February 2018 electric bills. Capital credits and wholesale energy credits are two reasons it’s great to be a member of a not-for-profit cooperative.

Last year, your board of directors, made up of f ellow Co-op members, continued their board leadership education as they do every year. Employees trained on energy efficiency and customer service. Field personnel focused on safety and technical training. The Co-op also hos ted several events at our training facility east of Livingston. These learning opportunities improve the quality of se rvice we provide you and prepare Sam Houston EC for the future.

Safety is a constant focus of every Sam Houston EC employee. We revamped the STAR Safety program (Stop – Think – Awareness – Responsibility) in 2017, and it is pr oducing a top-level safety environment.

Your Cooperative’s 2017 American Customer Satisfaction Index score was again among the highest in the nation. We thank you, our members, for scoring Sam Houston Electric Cooperative 10 points above the national average, placing us in the top tier of the industry.

We hope you find the following 2017 Annual Report to be informative, and we thank you for being Co-op members. We are proud to serve you.

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KYLE J. KUNTZ, P.E.

Sam Houston Electric Cooperative CEO

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Message from the CEO Co-op By the Numbers WE’RE PLANNING FOR THE CO-OP OF THE FUTURE TAKE SAM HOUSTON EC WITH YOU HIGHLIGHTS FROM 2017 SERVING OUR COMMUNITIES HURRICANE HARVEY EMPLOYEES SHINE Balance Sheets

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