Electric co-op wins 50-year contract to operate US naval facility electric system

Southern Maryland Electric Cooperative will own, operate, and maintain the system at Indian Head support facility

The Southern Maryland Electric Cooperative (Smeco) has won a contract to own, operate, and maintain the US Navy’s NSF Indian Head’s electric system for 50 years from October 2024.

Under the agreement, the co-op will take over the ownership and operation of the facility’s electric system for the specified length of time. The Navy’s first established presence in Southern Maryland, the Naval Support Facility in Indian Head employs more than 1,900 people and serves all branches of the United States military through scientific and response-force missions.

“Receiving the final agreement was a lengthy process and we are honoured to have been selected,” said Sonja M. Cox, Smeco president and CEO. “Our local military facilities are a large part of our local economy and some of the largest local employers for Southern Maryland residents. They also serve as an asset to our national safety.”

This is not the first time Smeco is serving the NSF. Back in 2012, the co-op acquired a sub-transmission feed to the main base at Indian Head, making improvements to the line while maintaining service to the facility throughout the upgrade.

And in 2009 the co-op entered agreements to own and operate the electricity systems at the Patuxent River Naval Air Station in Lexington Park, the Webster Field Annex in St Inigoes and the Navy Recreation Center in Solomons.

“Being awarded the contract to operate and maintain the main base in Indian Head and the Stump Neck Annex is another wonderful opportunity that will benefit both Smeco and the Navy,” said Cox.

The privatisation deal includes a transition period through October 2024 during which Smeco will perform key tasks before taking over operations such as the completion of a joint inventory of existing electric system assets, initial system inspections, building a dedicated support team, and mapping of the system.

From October onwards Smeco will take ownership of the electric utilities at main base Indian Head and the Stump Neck Annex as well as make improvements to the existing infrastructure, including installation of 775 meters, substation and distribution improvements, and extensive vegetation management.

“Smeco has a proven reputation for our system reliability, disaster and storm response, customer service, and affordable rates, which will benefit the facilities in Indian Head,” said Roger Schneider, senior vice president of engineering and operations. “The co-operative was able to improve the system reliability and resiliency at NSF in 2012 when we acquired a sub-transmission feed to the main base at Indian Head. That 69-kilovolt line dated back to the mid-1940s and was in significant disrepair. We made major improvements to the line while maintaining service to the facility throughout the upgrade.”

The National Rural Electric Co-operatives Association (Nreca) welcomed the agreement, saying it demonstrated the “great value” of the military working with electric co-ops.

“This contract is a big win because new utility privatisation contracts are very minimal nowadays and Smeco went up against some really tough competition and came out on the other side,” said Lauren Khair, Nreca director of business transformation. “The Navy’s decision to work with Smeco tells us that they find great value in the service cooperatives have to offer and are willing to go into a long-term contract because of it.”

According to Nreca, over 125 co-operatives serve military bases across the US. “This is another example of co-ops exploring new and innovative energy service contracts for large commercial and industrial members like a military base to the benefit of their member and the overall membership,” said Khair.