[Watchdogs] The Education Challenge Facing the PEC Board

[Milton Hawkins]

At today's Board meeting, Larry Landaker was elected president, Cristi
Clement was elected vice president, and Kathy Scanlon was elected
secretary/treasurer.

  _____  

Comments from Owner/Member Milton Hawkins

Board of Directors Meeting, June 29, 2009

 

Members of the Board:

 

First, I want to congratulate the new directors on their recent election.  I
am delighted to see you sitting here today, and I truly wish you well as you
begin to serve our cooperative and its owners.

 

Next, I want to challenge you to meet head-on one of the significant
challenges we face, and that is to educate our fellow owner/members about
the nature of the business they own.  I stress ownership because I know that
all too many of us view ourselves as customers, not as owners.  We receive a
product, electric power, and we pay for that product in a monthly bill.  So
long as the power is available when we want it, and the cost appears
reasonable, we are generally satisfied.

 

We also tend to regard our cooperative as we would any other business whose
products we buy.  We usually take no interest in the financial health of
those businesses, unless we happen to own stock in them, and we take the
rebates and incentives they offer without a thought about how the businesses
will recover those costs.

 

In addition to viewing ourselves as customers, instead of owners, many of us
who do claim ownership have a flawed understanding of the kind of enterprise
we own.  We tend to treat all suppliers of power the same way, and in so
doing we fail to distinguish between the producers of electric power and the
distributors of that power.

 

Producers have to stand the costs of production, such as the cost of plant
construction, fuel, personnel, maintenance, and so on.  The greater the
demand they have to supply, the greater the costs of production.  Any
significant reduction in demand creates a corresponding reduction in
production capacity, and the very real possibility of avoided costs.  A
power plant not built is an investment not made, and money saved.

 

In this situation, rebates and incentives that encourage conservation and
efficiency and distributed generation make sense.  That is why producers
like Austin Energy can afford to offer customers what they do.

 

We, on the other hand, are the owners a distributor, a poles and wires
company, and not a producer.  We buy and distribute power: if we need less,
we buy less; if we need more, we try to buy more.

 

Since we set our rates to recover our costs, that is, to fund the
distribution system and the purchase of power, we do not realize any direct
additional benefits, as the producers often do from deferred or avoided
costs, when our owner/members use less electricity, nor do we have to invest
significantly more capital when they use more.

 

Unless our cooperative receives a reduced rate from LCRA or other generators
in recognition of the generation costs our conservation measures have helped
them avoid, we have no effective way of recovering the costs of the rebates
and incentive programs we offer.  Absent that recognition by our producers,
primarily LCRA, translated into reduced costs for the power we purchase, any
rebates and incentives we offer are paid for by our fellow owner/members, in
the form of rates higher than they otherwise would be.

 

Unlike power producers, which can maximize profit by avoiding costs, and
unlike some for-profit businesses that can hand out "freebies" to attract
more customers, or to satisfy current customers, paying for those "freebies"
from their profit margin, our cooperative is intended to serve its
owner/members at cost, returning or investing any excess income.  Here, at
PEC, whatever is given to one set of owner/members must first be taken from
all the rest.

 

We have treated the membership as customers for a long time now, so long
that they have forgotten whose money it is that is being spent, and where
that money comes from.  It's time for a new educational approach to member
ownership.  I encourage you to meet that challenge.

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