What do electric cooperatives provide to their members?
Once, the answer to that question seemed easy. Electric co-ops provided electricity, of course. They turned the lights on in rural America. That was the reason they were created, and it was their enduring purpose.
Delivering safe, reliable, affordable power remains the core of the electric co-op identity and, in a perpetually plugged-in world, has become ever more important. But the question of what consumer-members expect from their electric cooperatives is no longer as simple as it once was.
“Traditionally, if you think about the role cooperatives fulfilled, they provided kilowatt-hours,” says Jim Spiers, NRECA vice president of Business and Technology Strategies. “Electricity was essentially a commodity delivered to members.”
But in today’s world, consumer options and expectations concerning energy have morphed to the point that co-op members aren’t thinking about kilowatt-hours; they’re thinking about how energy can fulfill their needs. Service becomes key, Spiers notes. “As an energy services provider, I’m helping fulfill whatever you, the consumer, want and need when it comes to how your use of energy affects your quality of life or economic prosperity,” he says.
In other words, it’s not simply about delivering power; it’s about recognizing and meeting consumer goals. Spiers paraphrases Amory Lovins, a noted American physicist and environmental scientist: “People don’t want heating fuel or coolant; people want cold beer and hot showers.”
In today’s world, people also want guidance on energy efficiency upgrades, solar power, smart thermostats and appliances, battery storage, home generators, and other choices. In this environment, Spiers says, a co-op’s role really becomes that of “trusted energy advisor, offering a platform through which the cooperative helps find the best mix of resources to meet those needs. This is the crux of how co-ops are delivering on the ‘consumer-centric’ business model.”
A 2013 report by a special NRECA working group that looked at the role of the electric cooperative summed up the practical effect of this change. “In recent decades, the business focus of distribution cooperatives has primarily been on the utility side of the meter. In the future, it will increasingly be on the customer side of the meter,” concluded The Electric Cooperative Purpose: A Compass for the 21st Century. “This will fundamentally change the way distribution cooperatives view themselves and the kinds of products and services that they will have to either provide or accommodate.”
To meet this challenge, the report continued, cooperatives need to pay even greater attention to two-way communication with members, making sure the co-op is in touch with members’ concerns and that consumers clearly understand co-op services and decisions. Co-ops also need to be “smart integrators,” making sure they have the expertise to provide an array of services and help consumers put their choices together in a way that makes sense for them and can add value for the rest of the co-op’s membership.
The NRECA report warns that if cooperatives cannot meet this challenge, other parties, such as private vendors, will step in to fill the void. But they also note that cooperatives enjoy a huge built-in advantage: They have been member-driven from the beginning.
“It’s new technology and new solutions, but it’s built upon the philosophy that we were founded upon,” says Lee Ragsdale, vice president of asset management for North Carolina Electric Membership Corporation (EMC), a G&T based in Raleigh.
North Carolina EMC and its 25 member co-ops support a variety of programs that put service in the forefront, including a pilot program to offer ecobee Internet-connected thermostats to consumer-members. The thermostats not only allow members to adjust temperature remotely and track their energy use, but they also allow a finer level of load control by the co-ops. Rather than simply shutting a heating and cooling system off, they can be set to drop the temperature a few degrees or to cycle the system to reduce load. Members have control over their temperature in advance.
Other North Carolina cooperatives are part of the growth of co-op community solar gardens, enabling members to participate in the solar energy movement without the challenges of putting in rooftop photovoltaic systems. Meanwhile, Roanoke Electric Cooperative in Aulander offers its members an “Upgrade to $ave” program that can provide an energy audit and on-bill financing for efficiency improvements.
Ragsdale believes working with consumer-members to help them take advantage of these kinds of options has an important added benefit. “I think this collaboration between the G&T and the distribution co-op increases the benefit to the consumer,” he says. “For many years, we’ve relied only on centralized generation. Now, with other sources of energy and load management, there’s been a democratization, where our members are contributing to the demand response of the grid. It has us all working together.”
With the ongoing advance of wireless communication technology and renewable energy sources, Ragsdale adds, “there’s going to be opportunities to do even more of this.”
Keith Dennis, NRECA senior principal for end-use solutions and standards, says one opportunity is “community storage,” an emerging approach that enables co-ops and their consumer-members to share in the benefits of the energy storage available in water heaters, electric vehicles, or home battery-storage systems. By coordinating the use of this overall storage capability, a co-op can reap system-wide load management benefits that can be passed on to members.
He cites the example of Great River Energy, a G&T based in Maple Grove, Minn., that has almost a gigawatt-hour’s worth of storage in hot water heaters in the service territories of its 28 distribution cooperatives. Several of its member co-ops provide large-capacity electric thermal storage water heaters free or at a reduced cost to members that become part of its community storage program. One of its member co-ops, Steele- Waseca Cooperative Electric in Owatonna, Minn., has gone as far as linking its community solar project with community storage. Members at Steele- Waseca receive a free large-capacity electric thermal storage water heater when the member purchases a solar panel in its community solar project.
Community storage means power suppliers can rely more on renewable energy sources like solar and wind because they can draw on the aggregated storage during times when variable generation drops off. Dennis notes this can make electricity an environmentally responsible choice because it’s replacing fossil fuel use, as in the case of electric cars, with a greater reliance on green power.
“I think a lot of consumers right now want to be helping out with keeping costs down and promoting clean energy, and this allows them to do those things,” Dennis says. “It’s good for the co-op, good for the consumer, and good for the environment.”
Communication is Critical
For consumers to understand the benefits of a co-op’s various services, however, communication becomes critical. Taking advantage of the multiple communication channels available in our logged-on world is important—everything from websites to Facebook to e-mail and text messages. But, according to the 21st Century report, research has found that good old-fashioned person-to-person contact remains the best way to build a relationship with members.
At Delaware Electric Cooperative in Greenwood, Del., the commitment to personal communication starts at the top. President and CEO J. William Andrew does as many as three radio call-in shows a month. “At the end of each show, I always say the same thing: If you haven’t had your question answered, give me a call,” he says. “And then I give out my cell phone number.”
Andrew says the co-op’s 141 other employees regularly give their cell numbers out too.
Delaware Electric also encourages its employees to get involved in local organizations and activities that bring daily interaction with the members they serve. “We’re developing a culture where we not only want to engage our community as a cooperative, we want to engage it as individuals,” he says.
The 21st Century report says a tipping point for building member loyalty seems to be when face-to-face interactions reach 15 percent of the members. This does not have to be direct contact with that share of the membership, but it includes members who have had that direct contact with co-op employees and then share their experiences with others.
The value of this kind of personal contact can be found in the success of the “Beat the Peak” program, which was initiated by Delaware Electric in 2008 and has since become popular with many co-ops nationwide. Under Beat the Peak, members are notified via e-mail or other methods that a load peak is approaching and are asked to help out by lowering their thermostats a few degrees or delaying the use of major appliances like clothes dryers.
The effectiveness of Beat the Peak and similar programs depends on building communication that lets members understand how their actions directly benefit them, not just the co-op, in hopes of giving the members a feeling of empowerment by participating. Andrew says it comes with establishing a trusting relationship between members and their co-op. “They look to us for answers to their questions,” he says. “We have to be very good listeners as well as being approachable, and, most of all, we have to be honest and straightforward in our answers.”
NRECA’s Spiers says that requires a willingness to help members piece together an approach that makes sense for their individual needs. “Maybe in this case, solar makes sense, and we could match it up with storage and put it together with a smart thermostat that can control your air conditioner,” he says. “Each co-op has to find what’s right for their members. The great thing is that we are seeing a number of co-ops doing this with their members in different ways across Co-op Nation.”
‘We Sell Service’
The work of Farmers Electric Cooperative, based in Frytown, Iowa, shows that a co-op’s size is no impediment to taking on the role of an energy services provider. Although it has only 650 members, the cooperative offers a variety of energy efficiency and green power programs to meet members’ desires.
To help members become their own power generators, the co-op established a feed-in tariff for electricity from home solar and wind systems that was intended to “spark the market,” says Farmers Electric CEO Warren McKenna.
Like many other co-ops, Farmers Electric offers rebates for geothermal heat pumps and other big energy-savings upgrades. But Farmers Electric also supports the efforts of members to cut their power bills in small ways through $100 grants that can be applied to everything from a low-tech idea like a new clothesline or planting shade trees to buying a programmable thermostat.
Reflecting its members’ wishes for sustainable and affordable green power, the co-op has become heavily involved in solar energy. It operates a 50-kW solar garden that has more than 100 member-owners and has worked to create small-scale solar energy projects in local schools.
On a larger scale, Farmers Electric buys power from an 800-kW solar farm that was the biggest in Iowa when it was completed in 2014. The plant is operated by Eagle Point Solar, LCC, but Farmers Electric has a 10-year agreement to purchase power from the plant. After that time, the co-op can purchase the solar farm.
Farmers Electric began in 1916, 20 years before the creation of the Rural Electrification Administration. As the co-op celebrates its 100th anniversary this year, McKenna says the co-op’s staff sees its current efforts as part of the historic cooperative commitment to putting its members’ needs first.
He sums up the approach succinctly: “I preach that we sell service here.”