2015 Summer Recap

The hot summer months have come and gone in the Texas Hill Country. Well, almost at least. While Central Texans were busy going on family vacations and soaking up the sun, a lot was happening back at Pedernales Electric Cooperative. I want to make sure you aware of some of our recent PEC progress, and I plan to write several posts in future weeks to cover key topics in depth.  For the purposes of today’s post, however, I’ll give a highlight reel of the past few months and preview some exciting new improvements coming this Fall.

As I wrote in my last post back in the early summer, we held our annual Board Elections and hosted our PEC Annual meeting in June. At that meeting, we welcomed two new Directors to our Board – Paul Graf, Dist. 6 and Amy Akers, Dist. 7. Director Graf has decades of electric utility experience, and Director Akers is an attorney as well as a Director on the Edwards Aquifer Board. They both are poised to offer great depth and valuable input to the PEC Board. Incumbent Director Cristi Clement, Dist. 1, secured her third term as well. With this most recent election, PEC now has a Board with a lot of relatively new faces. Four of the seven Directors have yet to serve out a full three year term. For many years we have heard a lot about the “reform” Board that came into being following the ousting of disgraced (and now jailed) former GM Bennie Fuelberg. With all of these new faces, we now see a move away from a reform mentality and towards one of refinement and innovation. I’m excited to see where the next few years will take us.

So where, now, is the PEC headed? First and foremost, the current Board seems collectively focused on lowering rates for members. Whereas the past seven years have been about putting into place basic corporate functions, such as audits and a working budget, the Board’s new focus is streamlining operations and reworking power supply options to lower member electric bills. On one hand, PEC is pursuing rate reduction through internal improvements and operational tightening. Three examples of internal cost cutting come quickly to mind. For starters, in the last two years, PEC has reduced its controllable costs and improved its employee headcount. We are currently operating with 714 well-trained, highly-utilized employees, whereas at our heftiest a few years ago, PEC employed upwards of 900 employees. Secondly, major cost reduction will be achieved in the next year following our new NISC software system launch in October. Our current SAP software system has been a nightmare to operate, update, and maintain the past few years, and shedding its largesse and associated inefficiencies will immediately benefit our bottom line. Once NISC is running on all cylinders, its Co-op specific processes will yield even further operational reductions. A third substantial internal cost-saving measure will be the closure of certain payment centers that have outlived their efficient usefulness. For years, PEC has been criticized for its overbuilt brick-and-mortar presence, and its time for us to become physically leaner, starting with some of these under-utilized payment centers.

In addition to our own operational cost reductions, PEC has sought rate relief through its major power supplier, the Lower Colorado River Authority (LCRA). LCRA GM Phil Wilson has been trimming fat from his organization since his arrival in 2014, and we have begun to see LCRA pass ensuing rate relief onto PEC and its other power supply customers. Concurrently, fuel costs have noticeably come down since last fall, and that has been an added benefit to PEC. In December, PEC will likely see its fourth rate reduction in 12 months, in this instance due to lower power bills from LCRA. In 2016, PEC members could see another rate reduction resulting from operational improvements within PEC. Five rate reductions in under two years should signal to our members our commitment to getting rates as low as possible.

In addition to lowering rates, the current PEC Board has been focusing on increasing service choices for our members. For example, the new NISC software system will create a user-friendly platform that includes tailored options for users. SmartHub, the program that will host member accounts, will contain all member information and will provide a host of options. Members can set billing dates, track usage, report outages, and opt-in to paperless billing, which may yield a bill decrease pending Board approval in the coming months. Outside of our software, future conveniences will also include increased payment locations – we are currently looking at opportunities for PEC bill payments at kiosks and local grocery stores, where currently our members can pay other utility bills.

Other member options may include choices in the actual rate structure used to calculate monthly bills. Currently, one formula is used to calculate a member’s rate [(amount of Energy used x Price of each energy unit ($/kWh)]. In September PEC will wrap a Cost of Service Study (COSS), which could result in Board adoption of Time of Use rates. These rate types allow members to select a rate that charges different values for energy used at various times of day. For example, if electricity prices are highest between 2pm-7pm in the summer months, on a Time of Use rate a family could make choices to run the dishwasher and dryer in the early morning and later evening to avoid higher midday prices. In this scenario, a member might spend less per month on electricity than they would using their current flat rate. The COSS will also assess our tariffs and service fees to see if other bill relief opportunities exist.

Another program coming in the near future to PEC members is a smart, on-bill solar financing program. I am personally not in favor of solar-rebates for members because they would be subsidized by other members, but this program makes residential solar installations more accessible without subsidy. Through PEC access to lower-than-market interest rates offered by Co-op lenders, members can secure loans for residential solar systems and pay for them in monthly installments tacked on to their monthly bills. Non-participating members will not be subsidizing this program because any administrative costs or potential risk from loan default will be allocated into the interest rates in the financing. This program expands options for those members that have their own solar energy plans and are looking for ways to make them into a reality.

Finally, the Board just voted almost unanimously to institute an Opt-In Operation Round Up program to collect member donations for charitable giving in PEC communities. Now, after years of requests for this program, members can choose to participate in PEC charitable giving practices as opposed to the previous practice of the Board making these decisions unilaterally. Charitable giving is on its way to being a generous choice, not a hidden mandate.

With all these changes, what is remaining the same at PEC? For starters, we still have top notch reliability. During a summer when ERCOT hit its all-time peak load, PEC still operated with no major system breakdowns or longterm outages. We have a solid system operated by our highly-capable, extremely professional linemen and field staff, and that means the commitment to being “always on” at PEC remains at the very top of our priority list. Our members also remain very satisfied with their cooperative, and our JD Power Customer Satisfaction Score went up to 692 from 674 in 2015. The PEC Board and your PEC management will continue to perpetuate the tenured spirit of our Cooperative, which has always been carried on by the commitment and hardiness of our employees and our members.

I hope this provided you a glimpse into all the continued improvements happening at your Cooperative. I will write in further detail in the coming weeks on the topics of our new software system, COSS, updated policies, and more rolling forward. Stay tuned, and happy Labor Day Weekend!

PEC Rates Down Significantly Since 2014

 

Spring is always a time in the Pataki home when my husband and I sit down at the kitchen table, take a look at our budget, and assess where we have increasing costs; where we can save money in the future; and what big expenses might be coming our way in the next year. Usually these conversations are brought on as we pull together documents and receipts for our annual taxes. Within that scope we review our monthly reoccurring costs, such as utility bills. While many essential services, such as water, gas, HOA fees, pest control, and almost every other similar monthly bill seem to be going up, I am very excited to say that the opposite has happened where our electric bill is concerned.

If you have been taking note of your PEC bills over the course of the last 3 years, you will have noticed that your electric rates continue to drop. Our family’s PEC bill in April 2014 (which is the earliest bill I could access on the PEC SmartHub) came in at $91.73. My PEC power bill last month, on the other hand, which reflected nearly the same kWh usage, was only $73.00. That’s roughly a 20% difference, and for a young family like mine, in which the parents are still building their careers and investing a lot of money into their children, that gap is huge. We only used 582 kWh of energy for our March 2017 pay period, and thus our saving don’t quite represent the large impact that a bigger energy user would see. To give members a rough estimate, if you are using 2000 kWh/month at our current combined rate ($0.08525 kWh), as many of our users in slightly larger homes regularly do, you would be saving over $40/month on your bill at our current rates compared to April 2014 rates. While we own a home that runs on both electric and gas utilities, thereby keeping our electric consumption in check in the colder months, we are also a fairly frugal family that attempts to keep our usage down no matter the time or season. We monitor our usage and try to keep it below a 1000 kWh monthly average. Despite our best efforts, however, our average consumption continues to slowly climb upwards. We have three small children, which means lots of laundry and loads of dishes running throughout the day. My husband also works from home, insuring the lights, computer, printer, and A/C or heater are going pretty continuously as well in our nearly 2,000 ft2 home. Even with our family growing in size since 2014 (welcome baby George!) and our monthly usage steadily increasing, our electric bills are falling. In an environment where the cost of living seems to always be rising, this reverse trend is very welcome.

A little less than three years ago, the PEC members elected me to serve on the Board of our cooperative. At the time, our electric rates were higher than the state average, and I committed to finding ways to make our rates more competitive with other providers in Texas. At the time our combined rate (power and power delivery) was $0.10520 kWh, which was the highest rate the PEC members had paid since 2009. The PEC Board had been steadily raising rates since Spring 2012, unable to gain traction amidst several strategic errors that cost members both money and time. As the Board began to change its makeup, beginning with my election and moving in to the next two election cycles, we turned our focus towards cost saving measures and improving our power contracts to bring rates down for the membership.

I’ve touched on ways we have been able to lower your electric bills before in prior posts, but I’ll recap a few of the high points. The first thing we did to get rates down was look inward towards improved efficiencies. We implemented a new enterprise software system that saves us nearly $5 million annually in operating costs over the cumbersome SAP system that was in place before. We also initiated a drive towards online and electronic billing to reduce postage, paper, and transaction costs. We’ve trimmed our physical presence by closing member service centers that were infrequently trafficked and didn’t provide operational service. We continue to improve and standardize processes; we’ve lowered our controllable cost per consumer by around $35, all while adding over 12,000 new meters to the system a year through the efforts of our outstanding employees. We have also worked with our primary power provider, LCRA, to improve our power prices and favorably renegotiate our longterm contract, saving $220 million over its lifetime. We additionally entered into smaller power contracts that diversified our portfolio and helped us further lower our rates.

The PEC Board has also found other ways to put money back into members’ pockets. An added benefit for PEC members is that you get capital credit distributions each year. Capital credits are essentially your shares of the company that compile over the years based on your electricity purchases. Because electric cooperatives operate at cost, our margins can be returned to our members in the form of these capital credits, which, when disbursed, show up for PEC members as credits on your December bills. Since 2014, the PEC Board has returned nearly $30,000,000 in Capital Credits to its members, which is a very healthy disbursement that surpasses what most co-ops are able to do.

Additionally, in 2015 and 2016, the Board approved Revenue Adjustment Factors (RAFs) towards the end of the year to return over collected revenue that occurred from higher than expected power sales directly to members outside of the capital credit structure. In December 2016, the Pataki family PEC bill came it at only $54.00 after an $18.31 credit that was almost equally split between our 2015 Capital Credit distribution and the 2016 RAF.

I believe that we have an obligation as board members to ensure we are getting power to you safely and reliably at the most cost-effective price possible. I think we have some more potential to lower prices over the course of the next few years, but it will take a consistent focus on cost reduction opportunities and a continued commitment to keeping inequitable subsidies out of the rates. We started getting things in line with a rate reduction in late 2014, and we’ve kept progressing downwards since then, lowering rates six more times consecutively. Today your electric bills are an average of 17% lower than they were when I joined the Board. It’s important that we continue forward with consistency, stability, and leadership that is committed to fiscal conservatism in order to achieve lower rates while maintaining the health of or our members’ infrastructure assets.

A Successful 2015-2016 Year at PEC Capped Off by Exemplary Annual Meeting

PEC held its Annual Membership Meeting at the Performing Arts Center of Dripping Springs High School this past Saturday. More than 600 members came from across the PEC service territory to vote in the 2016 Board Director elections; peruse employee exhibits; enter drawings for door prizes; hear about the status of their co-op from PEC CEO John Hewa; and snag some breakfast tacos and snow cones while they were at it. For the past eight years, Directors and Employees alike have been working hard to recover from the damage we incurred under past leadership. Finally, at this year’s meeting, both member and PEC employee alike felt as if the familial quality we lost in those darker days had been regained. Members were proud of their linemen. Employees were excited to greet their members and answer questions about their electric service. Member comments were resoundingly positive, and Board Directors were ready to hear member suggestions and constructive criticisms in hopes of identifying creative solutions that put the members first above all else. It was a wonderful example of what a Co-op should be and can be when the right people and the right attitudes are involved.

 

The day marked the capstone of a Co-op year (June-to-June as our PEC calendar goes) in which we have accomplished so much. Some of the highlights of note include: six consecutive rate reductions that will be followed up by a 7th reduction (2 mils) due to roll out in August; a successful switchover to a new enterprise software system that has already saved the Co-op millions of dollars in less than a year of its operation; an on-Bill solar financing program that is a unique and creative way to help interested members pursue rooftop solar without needing subsidization from their fellow members (the opposite of rebates); a complete overhaul of our charitable giving programs that puts more control in the hands of members (this will be the topic of my next post); and the release of a new rate study that will soon yield decreased Service Availability Charges for members who choose eBills and Bank Drafts. The rate study will also yield long awaited Time of Use rates that will allow participating members the opportunity to alter their energy habits, consume more off peak power, and further decrease their electric bills. Without a doubt, CEO Hewa and his highly capable Executive Team and staff have delivered on what the Board has asked them to deliver. We now have a more efficient, more responsive, more member-oriented, more nimble co-op that is showing us the real meaning of being “always on” for our members and the communities we serve.

 

At the Annual Meeting, Survey and Ballot Systems (SBS) – the firm that has run the PEC Director Elections the past few years – announced that District 5 Incumbent and Board President James Oakley had resoundingly won re-election, and Jim Powers, who ran unopposed to fill the seat left by retiring District 4 Director Chris Perry, had claimed a spot on the Board as well. Oakley won by more votes than any Director-Candidate had ever received in a contested election since the reform elections of 2008, a further indication that members are behind the improvements the Co-op is delivering these days.

 

Following the Annual Meeting, the Board held an organizational meeting to elect its 2016-2017 slate of officers. I was honored by my colleagues at that time with my election to the office of Board President. Oakley was elected Vice-President, and District 6 Director Paul Graf was re-elected Secretary/Treasurer for a second consecutive year. I must take a minute to thank Director Oakley for his outstanding leadership this past year as Board President. He managed to do the impossible – which was oversee our transition from at least two board meetings a month to just one, as is written in the PEC bylaws. By cutting down on the number of times we meet each month we are saving the Co-op money and saving our staff precious time that they can now use to further the Strategic Plan we have in place for them. Members must know that decreasing the number of our meetings was no small feat – prior Boards had been attempting to cut back on our trips to Johnson City for years, and under Director Oakley’s leadership, we were finally able to get it done. He also made sure we got through an aggressive amount of agenda items each meeting by keeping our conversations on point and attentions in the Board Room focused on the topics at hand. As a mother with small children back home, I was particularly appreciative of the improved efficiency – the difference between arriving home at 5:30, as opposed to 7:30, to two (now three!) little ones makes a big difference to me, and I know PEC staff and the rest of the Board Members feel the same way. I also thought Director Oakley’s method of asking for questions or commentary from our member audiences kept things fresh and kept the free flow of ideas between members, employees, and Board Members at the forefront of our Board Meetings. No doubt I’ll have big shoes to fill, and I’ll have my work cut out for me in ensuring we continue on an upward trend towards the big successes we on the Board envision for PEC in the future.

 

It’s been a pleasure to serve on the PEC Co-op Board for the past two years. I never dreamed in 2014 when I first joined this body that we would change so much for the better. While we can attribute much of our success to the strategic vision we’ve put in place at the Board level, far more of the credit belongs with our hard working Executive team, led by CEO Hewa, and the tremendous PEC employees, whom consistently demonstrate their commitment to making the Co-op experience a positive one for our members. The future at PEC is bright, and I look forward to seeing all that we have yet to accomplish in the Co-op year ahead.

Software Switch Yields Improvements at PEC

Happy New Year PEC Members! When I last updated you in September about the status of your electric cooperative, I foretold that I would have several more impending posts coming soon. My plan was to take a few months at the end of 2015 to cover in-depth a host of PEC topics affecting the membership. You may have been wondering what happened to those posts, as this is the first time I’ve written since. Well, as things turned out, not more than a few days after my last post my husband and I discovered that our third child was on the way! And thus, Fall 2015 became a little more complicated, and I did not have the amount of energy to devote to my blogs as I formerly did. My apologies for the absence, but as I am feeling well and have regained my energy, I hope to now fill you in on many of the things that have transpired at PEC in the last few months.

 

Today’s topic will be PEC’s recent transition to a new software platform. In October 2015, we launched our new operating software from NISC (National Information Solutions Cooperative).   This enterprise software system – also known as iVUE – replaces the prior platform built by SAP that has been causing us heartache since its launch in 2012. To be frank, SAP was a bad fit for PEC from the get go. While SAP is a world-renowned software solutions company that has built great platforms in other industries, the electric cooperative business model and its processes have proven difficult to manage under SAP. To give you an idea of how irregular it was for PEC to operate on an SAP platform, one can easily take note of how few electric cooperatives use such a system. Currently only two US Electric Co-ops operate on SAP – and one has announced plans to switch to the same NISC platform that PEC is now using. Moving away from SAP and onto the new NISC platform was the right decision.  However, it remains a tough pill to swallow for many members that a software system we only had running for about three years has now been replaced by a new one (especially since the SAP system cost upwards of $47 million dollars to implement and operate). Regardless of the lost expense and time, it would have been far more costly to continue running on SAP than to switch to NISC. Even though I was not on the Board when it decided to adopt the SAP system, nor when it decided to make the switch to our new iVUE platform, I fully acknowledge any discontent that might still exist over this mishap. We cannot go back and change history to avoid the mistake, but we can focus now on ensuring that our new software system lives up to the high expectations that have been set for it.

 

And how have we at PEC performed for our members during and after the initial transition from SAP to iVUE?

 

While no software transition is ever painless, I am very proud of where we stand today in our systems, largely due to the gargantuan effort put forth by the entire PEC employee team. We turned iVUE on in October, and for months leading up to that moment, our staff spent countless hours in training to prepare for the switchover.   We went through about six weeks of growing pains initially that included very high customer call volume and inevitable system kinks that had to be resolved. During that period you may have experienced increased call wait time, and if you previously paid your bills through AutoPay, you had to reload your payment information, as we were not able to carry over any historical payment information during the changeover. I wish these things could go off perfectly with no inconvenience to our members, but our committed member services staff worked overtime to reload member data and get everyone squared away quickly.  It would not have been possible to make the transition without their commitment and dedication to the process and to serving the membership.

 

Now that PEC has been operating on the iVUE platform for a few months, you have likely noticed some changes. Most noticeably from a user perspective, we have a new online portal for members. This new portal, called SmartHub, replaces the previous PEC member portal and offers many new perks for users. Here members can pay their bills, track their energy usage, report outages, and sign up for things like paperless billing. Members can also access PEC’s social media pages to get the latest updates and connect with other members in their area. One of the PEC Board’s goals during our Phase 1 launch of iVUE has been to match the online account enrollees and Autopay subscribers that we had in SAP. I am happy to report that to date we have hit almost 120,000 members registered on SmartHub, surpassing the numbers we previously had on our old member platform.   Prior to the NISC launch, we had less than 19,000 members signed up for paperless billing. After only a few months with NISC, we are closing in on 65,000 members that have opted to go paperless – this saves money for the co-op as a whole and will eventually mean individual savings to members that opt for this route as well. Autopay enrollee numbers have also increased, with close to 90,000 members now enrolled over the 74,000 we had in SAP. These improved efficiencies should not be underestimated. Whether we are the payer or the payee, we all save money by not having to pay for postage and/or physical bill materials. With automatic payments, members also decrease chances for late fees by not having to risk postal service delays or missed bills due to travel. With bank drafting, PEC avoids credit card processing fees, and the hope is that this savings, as well as those associated with autopay and paperless billing can be passed onto our members in the very near term.

 

The bottom line is that despite some initial inconveniences and the unfortunate miscue of SAP in the first place, the iVUE platform has proven to be a success and a necessary improvement at PEC. Our employees can more efficiently serve you. Your options and accessibility to your accounts have increased. And there are noticeable savings ahead in 2016 as a result. None of this could have been accomplished with out the hard work and commitment of our excellent employee base – they have truly outdone themselves in ensuring we can deliver the best possible service to our members in the most efficient, cost-effective way possible.

 

Please stay tuned for more updates on other topics in the coming months. It’s a pleasure to serve you as your District 2 Board Director.

Don’t Sit Out the 2015 PEC Director Elections

Fellow PEC Members,

Tomorrow the 2015 PEC Board Director elections begin. You will have a little over two weeks to vote, either online or by mail, and the winners will be announced at the PEC Annual Meeting in Cedar Park on Saturday, June 20th. (For information on how to vote and who this year’s candidates are, CLICK HERE).

It is very important that you vote in the PEC Board Director elections. Our ability to vote in national, state, and local elections is one of our greatest American liberties, and we should exercise that liberty every chance we get. As President Franklin D. Roosevelt said, “no one will ever deprive the American people of the right to vote except the American people themselves, and the only way they could do this is by not voting.” Sadly, too few people vote these days beyond National presidential elections, and as elections narrow the more local they become, the percentage of people voting also tends to drop dramatically. In the 2012 presidential elections, 64.8% of registered voters in Williamson County showed up to the polls. That is not a bad statistic and reflective of the importance of national elections. When it comes to local races in Williamson County, however, far fewer people are heading to the polls to elect their local representatives. Earlier this month, when residents in Williamson County had the chance to vote in municipal elections, only 4.82% of registered voters bothered to vote! That is just terrible. If we want our priorities reflected in our hometowns and cities, we have to take the time to get educated on those who wish to represent us. We have to then show up and vote for the people who seek to advance our values and priorities. We all lead busy lives and have innumerable demands on our time, but if we can’t get excited about getting engaged in things that most directly affect our homes, our schools, our kids, and local economy, then I’m not sure anything will motivate us to become active participants in our country’s future.

The PEC elections are just such an example of a local race in which you need to vote. As members of Pedernales Electric Cooperative, we have the ability to elect our Board Representatives – this ability to vote sets us apart from customers who simply purchase electricity from a Retail Electric Provider (REP). Without getting into the merits/drawbacks of purchasing from an REP vs. a Co-op, it is clear that our abilities to contribute feedback and vote for our representatives at PEC are valuable so long as we DO BOTH of those things.

So what are the issues at play here? Why is it important to vote in the PEC Board election?

How about, for starters, the price you pay for electricity. Have you ever thought about what goes into the numbers you see on your electric bill? The PEC Board sets your electric rates and crafts policies that directly and indirectly affect the amount you pay to get power to your home or business.

What about Energy Sources? Coal, wind, natural gas, solar energy, nuclear, biomass, hydro – these are all sources of electric power. What does PEC’s energy portfolio look like, and are you happy with that picture? Are you for or against energy source mandates?

PEC currently engages in community giving throughout our service territory with member funds. Do you agree with that? Do you want more input into that process or are you happy with how things are currently done? Do you want to see more or less PEC member-funded charitable giving in your community?

These issues are just a few that affect you, and each Director Candidate has his or her own views on these topics and others. Many people say that they do not vote in local elections because they do not know anything about the candidates or what they represent – I can understand that sentiment. However, in the case of the PEC Director elections, you can easily learn about the candidates and their positions. All the Board Candidates have provided a bio and recorded a short video to explain briefly their views and how their service on the Board could benefit the members. Take a minute and read the bios, either online or when they come in the mail with your ballot; go to the PEC WEBSITE and watch the candidate videos and the candidate question and answer forum. It won’t take much time and will help you make your decisions.  Additionally, in my post last week I put together a compilation of websites, Facebook pages, and similar information to aid anyone desiring further information about the PEC Director-Candidates. I hope you will take the time to educate yourself and vote in this important election.

PEC members have not always had the chance to democratically elect their Board Members. That right was hard-won by a group of concerned, engaged Co-op members who demanded fair representation and helped open up PEC to its members. We have had open elections since 2008, and while voter turnout was once in the 25% range, it fell last year to 8.11%, it’s lowest percentage yet. I know the PEC membership can do better. Vote tomorrow! Tell your friends and neighbors to vote! If there is anything I can do to answer questions or help you in this process, please do not hesitate to contact me. I hope to see you at our Annual Meeting in June.

How To Vote in the 2015 PEC Director Elections

PEC Members:

It’s that time of year again – the 2015 PEC Board of Director elections are upon us. I am going to write a more in-depth piece on the importance of voting in these elections within the next week, but for now, I want to get information out to the members on how to vote and who the candidates are this year.

This year we have three Director seats up for election. REMEMBER, PEC MEMBERS CAN VOTE IN ALL DIRECTOR ELECTIONS REGARDLESS OF DISTRICT!!!  Below are the Districts and their respective candidates (listed alphabetically), along with links to information about each of the candidates:


District 1

Mark Axford

www.axfordforpec.com

Mark Axford on Facebook

Cristi Clement

http://cristiclement.com

Cristi Clement on Facebook


District 6

Paul Graf

http://paulg4pec.com

Paul Graf Resume

Max Hosford

Max Hosford Resume

Larry Landaker

www.larrylandakerforpec.com

Larry Landaker on Facebook 


District 7

Amy Lea SJ Akers

Amy Akers Resume

 Jeff Barton

www.bartonforpec.com

Jeff Barton on Facebook

 Doug Kadjar

www.dougk4pec.com

Doug Kadjar on Facebook


Now that you have some information about the candidates, here is what you need to know about how and when you can vote:

VOTING for the PEC ELECTION BEGINS THURSDAY, MAY 21st and ends FRIDAY, JUNE 12th. You will also have the opportunity to vote IN PERSON at the 2015 Annual Meeting on SATURDAY, JUNE 2Oth.

Here are the details:

  1. VOTE ONLINE. If you receive emails from the PEC, you will be emailed a link and directions on how to vote beginning THURSDAY, MAY 21st. This email will include your Election ID and password, which you will need in order to vote.  Click here to VOTE ONLINE starting May 21st.

**IMPORTANT** If you do not have an email address associated with your PEC Member account, or if you have opted-out of receiving email communications from PEC, you may still request access to your ballot through email. To do so, contact PEC at 1.888.554.4732 and inform our staff that you would like to update your email FOR ELECTION PURPOSES, and we will help you verify and add your email account. The last day to vote online will be FRIDAY, June 12th, and you may request the email update as late as 5pm on that day.

  1. VOTE BY MAIL.  Look for your PEC Ballot in your mailbox beginning May 21st. Be sure and vote, and return your ballot immediately in the postage paid envelope included with your ballot materials. All ballots will be mailed to members by Survey & Ballot Systems (SBS) The last day to mail in your ballot is Friday, June 12th. (**IMPORTANT**  You can also vote online with information from your paper ballot.  Go to the PEC online voting site and enter your Election ID and password found on your printed mail-in ballot.)
  1. VOTE IN PERSON.

Come join us at the PEC Annual Meeting in Cedar Park on Saturday, June 12th. You will be able to vote in person from 8:00am until 10:00am before the Annual Meeting begins at 10:30am. (Where: Leander ISD South Performing Arts Center, Cedar Park High School; 2150 Cypress Creed Road, Cedar Park, TX 78613)

The Board of Directors Election results will be announced live at the Annual Meeting on Saturday, June 20th – please come and participate in the governance of your Electric Coop!

Stay tuned for my thoughts on why it is important that you vote in this year’s PEC Director elections!

Thanks for checking in and staying involved.

It’s Time to Adopt a New Energy Policy at PEC

Every morning I spend a little time perusing energy-related articles from publications across the globe. In my current role as a Board Director for Pedernales Electric Cooperative, I find it my prerogative and my duty to keep current on energy theory, energy policy, and topical opinions from conflicting perspectives. While tedious and repetitious at times, my morning studies have helped me become better acquainted with the industry in which the PEC membership has elected me to serve.

I would love to say that I always enjoy this process of information and opinion gathering. I would love to say that I even enjoy it half of the time that I’m engaging in it. The sad reality is that most of the time while I’m reading, I’m shaking my head in disappointment, and I’m doing so for two main reasons. The first reason for my dejection is that I find so much of what is presented to readers as “fact” to be based on incomplete data, doomsday conjecturing, and/or a desire to see certain theories proved out in the near future. It’s not uncommon for a person to talk up the high points of his or her argument and ignore the shortcomings. It’s natural enough, but when we accept only the high points as the facts and deny the shortcomings, and then use that incomplete picture to craft something as important as American energy policy, our society is bound to suffer. (Take for example this bit about the NASA “findings” that 2014 was the hottest year ever on record. After a three-day media blitz promoting these irrefutable findings proving out global warming, NASA had to admit that its degree of certainty that 2014 was actually the hottest year on record was quite low. And we wonder why Americans don’t trust the media these days.) The second lamentable point for me when reading energy articles is the absolutely disgraceful treatment of any party skeptical of current climate “data” and theory by the media and self-proclaimed environmentalists. Both of these points give me cause for great concern, primarily because they effect, to varying degrees, the way we make decisions at a place like Pedernales Electric Cooperative.

Just as I read these articles and grow concerned about American energy policy at a national level, I wonder to what extent misguided policy affects us at PEC. I’ll begin with what I mean when I mention incomplete data or inaccurate information. Let’s talk about two things I’ve seen a lot of lately. The first is in regards to water consumption and how it relates to traditional power generation. Since we live in a state that has faced concerning levels of drought over the past few years, it’s no wonder people are interested in preserving our resources and paying attention to areas where we can further conserve. Conservation makes complete sense when we are talking about our most precious resource. However, I often hear from advocates for renewable energy sources that traditional power plants, particularly those run on coal and natural gas, use too much water to remain viable. Part of their water conservation plan involves moving away from fossil fuels and towards renewables like wind and solar. In the doomsday scenario that they present, coal and gas plants “use” thousands of gallons of water every minute, and when we see the levels of Lake Travis, that water usage statistic paints a pretty scary picture. We could be out of water in no time thanks to fossil fuel power generation!

When you look further into the issue of water use, though, you can quickly discover the term “water consumption” is often confused with “water availability” or “water withdrawal.” The first type of water use constitutes the actual consumption of water that is not returned to its immediate water environment. The second refers to the diversion of surface water for use (in this case in power plants) with the ultimate destination of the same water almost wholly being back into the body of water from which it was drawn. In the case of traditional once-through coal and gas plants, only 3% of water used is actually lost to evaporation. So while it is true that a lot of water must be available to run these plants, primarily for cooling, only a fraction of the water used is actually “consumed.” Compare that level of water consumption to that which occurs from irrigation, which CONSUMES 80% of the water used by its processes, and we see why incomplete information can lead to poor decisions. I don’t hear anyone advocating for the end of crop irrigation, and it is a far bigger consumer of our precious water resources than is power generation! So why would we support a policy that seeks to move away from the cheapest, most reliable energy sources we have available to us when in the grand scheme of water consumption, those sources consume far less than that of other industries on which we rely?

One reason a person might present an incomplete “water-energy” nexus picture is to push for the quicker adoption of renewable energy resources. I have heard quite a bit about renewables, particularly solar energy since becoming a PEC Board member. Being in the Austin area, it’s no surprise that several people are advocating for utilities to adopt programs that encourage solar development, particularly in the residential space. One statistic I hear all the time is that the price of solar panels has plummeted in recent years, making residential solar systems affordable for more people than before. In addition to saving the planet, people have the opportunity to save money on solar panels, too! At first glance, an element of this kind of statement stands up to the data that is out there. It is entirely true that increased overseas production, primarily in China, as well as improvements in panel materials and design, have brought the price of solar panels down dramatically. So is now the time for everyone to buy solar panels for their homes? I’m not so sure. One thing I’ve discovered that solar proponents do not like to talk about is the entire “package” of a solar system installation. The panels themselves amount to roughly 33% of the total cost of a home system. The other 67% of the cost comes primarily from installation and labor, followed closely by permits/inspections and operational costs. While it is accurate to say residential solar is more affordable today than it has ever been, due to the drop in panel prices and the availability of Federal subsidies, we cannot escape the hard reality that the large chunk of money that must be paid upfront to install these systems is a barrier to entry that the average consumer – or in our case, the average PEC member – will not be able to overcome. Furthermore, the pricing structure is unlikely to change. Installation costs are not getting cheaper. With the panels themselves making up such a small percentage of the total cost of an installed solar array, we are unlikely to see significantly better prices for full solar packages than what we see now for residents. Don’t believe me? There are dozens of residential solar calculators out there that you can use to discover what it would cost for you to install a solar panel system on your home. One of my favorites was put together by solar aficionado Michael Bluejay, who admits on his site, despite being a major proponent of residential solar, that prices are unlikely to get a lot cheaper and may not bear out in actual dollars overtime.

I bring up the conversation of solar not to attack it or call its merits into question – I think technology is a wonderful thing, and people with means that can afford to energize their own homes are admirable in my opinion. I also think that there are economic models out there that demonstrate ways for utilities and customers to engage in mutually beneficial solar partnerships, and I am always open to ideas that give our members more options, as long as those options don’t take away from our ability to serve all our other members equitably. For me, the primary driver in bringing up this cost statistic in residential solar installation is to further prove out the point that renewables advocates and environmentalists provide only a partial view of the energy landscape, and while they may believe they are justified in doing so because of the cause for which they are fighting – the salvation of the planet from the evils of man-made climate change and destruction – I believe such a lopsided approach is harming the way we craft our Energy Policy at the federal, state, and Co-op level. And bad policy harms the end user – the PEC member – the most.

Today, electric co-ops, and, really, all electric utilities, are enduring an onslaught of pressure from the EPA and environmental groups to move away from traditional energy sources. Several new carbon emissions restrictions go into effect in a very short time, and these policies will undeniably raise electricity rates, put us in grave risk of losing electric reliability, and harm our economy. The EPA’s policies were crafted to intentionally kill the very industries that brought this country to world leader status and dramatically improved the quality of life for virtually every American for the past 80 years and counting. Jeff Jacoby, a columnist for the Boston Globe, penned a brilliant op-Ed earlier this month entitled “A Valentine for Fossil Fuels,” in which he admonishes groups pushing for corporate and university divestment from fossil fuels. In his article, Jacoby relives a powerful history of all of the good brought into the modern world through energy produced from fossil fuels and debunks several perpetuated ills of a fossil-fuel dependent world. Jacoby quotes economist Robert Bradley, Jr., saying “the energy derived from fossil fuels has ‘liberated mankind from wretched poverty; fueled millions of high-productivity jobs in nearly every business sector; been a feedstock for medicines that have saved countless lives; and led to the development of fertilizers that have greatly increased crop yields to feed the hungry.’” As Jacoby reminds us, as much as climate activists would hate to admit it, “ours is a much safer, richer, cleaner, healthier planet than it would ever have been without fossil fuels.”

The bottom line is there are pros and cons to every type of energy that we use today, fossil fuels and renewables included. It is important that we weigh the pros and cons of each source accurately when making decisions about our own Energy Policies at PEC. Based on the information I’ve seen and the studies I’ve undertaken, it is my opinion that any decision regarding adoption of renewables into the PEC power supply portfolio should be made on the basis of economics and reliability. We should not adopt any power supply that takes us away from our duty to provide that low-cost, reliable electricity that we were chartered to provide. We should move away from percentages and quotas and let the economic validity and reliability of the sources speak for themselves when making future power supply purchases.

I know I will take heat from some people for making these kinds of statements. I haven’t forgotten the morning I read an article by Mr. Justin Gillis of the New York Times entitled “Verbal Warming:  Labels in the Climate Debate.” As I read Gillis’ article, which essentially justified the name-calling and public shaming of those that had serious questions and skepticism when it came to the theory of human-induced climate change, I shook my head in disbelief that in our enlightened, civilized society, this was the party line on how to treat a person that disagrees with you. I also realized by the end of the article that I could likely face similar treatment if I voiced my own skepticism on the topic. (After this post I’m sure they’ll take me out of the running for the EPA’s 2015 Electric Cooperative Director of the Year Award.) I remember feeling conflicted about how to proceed. I’m sure most people that have had any interaction with me as a PEC Director know that I’m dedicated strongly to fiscal conservatism and consumer protections. What people may not have figured out yet is how far out on a limb I’m willing to go to stand for the things in which I believe. As the great American leader, and personal favorite of mine, Gen. Robert E. Lee famously said, “The trite saying that honesty is the best policy is met with the just criticism that honesty is not policy. The real honest man is honest from conviction of what is right, not from policy.”

My concluding point is that these are not times for those in positions of influence to shy away from what they believe to be right. These are times for people to muster the moral courage to speak up when they disagree and question when they don’t understand. Our world and our country are in desperate need of leaders to lay aside the desire to preserve political longevity in favor of a principled stand. I don’t pretend to be one of these great leaders. I have no illusions that my position on the PEC Board is any bigger than what it is – a local post in which I make decisions affecting member electric bills and service. All the same, I cannot divest myself from the inner belief that as a person in a position of power, no matter how small, I am morally obligated to follow the same ethical code that I want to see from those in higher power. And thus, I have resigned myself to whatever treatment comes from speaking out against the all-too-powerful environmental lobby. I did not join the PEC Board to make friends, although I will always treat my fellow Board Members, PEC management and staff, and most importantly the PEC membership with the utmost respect, of which they inherently deserve. I am not a PEC Board Director for the purpose of being “liked,” although I offer friendship to anyone I encounter and will gladly accept the same overtures. I am on this Board to perform my duty to the membership to make sound business judgments and to promote policies that lower electric rates and strengthen our Co-op’s ability to provide safe and reliable electricity to our service territory. If I’m asked to choose between my conscience as it relates to those two duties and being liked by those inside or outside of the Board Room or to avoid the unpleasantness that comes with picking the unpopular position, I will choose my conscience every time.

Perspective for 2015

Happy New Year Co-op members!  It’s been a couple months since my last entry, which is mostly due to the hectic nature of the Thanksgiving and Christmas season and some year end travel. After a year of hard work and goals achieved, my family and I took the final weeks of 2014 to spend some much-needed quality time together and to focus on the most important things in life, which for us amounts to God and each other. It’s important to recharge and refocus every now and again, and after being able to do so, I feel ready to chase new goals in 2015.

In my mind, the best place to start goal setting is in reflection on recent experiences. Here are my takeaways from 2014 for better Board service this year:

  1. Welcome criticism – of all kinds.

One thing that is hard for everyone to stomach is criticism. It’s hard to hear that your performance does not measure up to people’s expectations. Especially for those amongst us that fit the “over-achiever” mold, getting anything less than an “A” stings.  I had the good fortune of growing up with a hyper-critical father.  At the time, I didn’t consider myself fortunate when I would ask him to read a paper I had spent days perfecting only to have it returned to me riddled with red ink and entire paragraphs crossed out. Eventually I picked up on what he wanted to teach me, which was how to be comfortable with criticism, and once I saw how his relentless corrections and suggestions affected my final product, I realized I should be grateful rather than annoyed. As my dad demonstrated to me when my papers went from B quality to A quality, it is really hard to deliver elite performances without the natural refinement that comes from responding productively to criticism. We should not be afraid to hear from the naysayers, as they provide us with the best opportunity to be better at what we do.

For PEC, that means that we should welcome the remarks of our biggest critics. Even if I, as a Board Member, do not agree with every critique we receive, I appreciate the perspective of someone who sees a particular issue differently than I do. PEC has a handful of members that let us know regularly things we could be doing better. Thank goodness for that! I hope they keep up their comments, however harsh they might be. We had a member recently send us a letter about transparency and openness at the Co-op, entitled Proposal for a True Open Records Policy at Pedernales Electric Cooperative, Inc., which we will be discussing at our Committee of the Whole meeting on Monday.   Detailed, thought-provoking critiques like that of this letter that force us to look at things we are doing or not doing with a new set of eyes.

  1. Be responsible for your own education.

My first six months as a Director for Pedernales Electric provided me with several learning moments and exposed me to the intricacies of the electric utility world, specifically electric co-ops. The energy landscape is constantly changing, and while it may be impossible to stay ahead of the curve, there is a lot that I can do as a Board Member to be more knowledgable and perform better in the Board Room. Most of the education I’ve gotten has come from me being proactive in seeking it out – whether it is asking PEC management and staff questions; talking to other professionals in different sectors of the utility world; reading endless articles people send me; checking energy news feeds daily; and listening to those from the PEC membership that happen to know a lot about our industry, I’ve spent countless hours listening and absorbing so that I can make informed decisions. This educational activity, while time consuming, is very important to do, and I’ll keep putting in the hours because the decisions we make on the PEC Board affect you, the member, in significant ways.  I want to be in the best shape possible to make those decisions.

As a side bar, I’d like to report on another educational opportunity I had recently. In December I traveled to Nashville for a week to complete my Bylaws-required NRECA Credentialed Cooperative Director classes. As it currently states in the PEC Bylaws, a new Board Member must complete all five of these courses before the end of his or her first year on the Board. Since Spring 2015 is going to be very busy for me and my family, I decided the safest bet for me was to knock out all five courses at once at the NRECA Winter School. I have to admit that I was skeptical upon embarking on my trip to Nashville that this week away from my family right before Christmas would be worth my time. I will say, however, that while much of the information was a repeat of things I’d already learned through my own initiative, a few of the classes turned out to be very educational.  (One particular instructor gave me some great insight into power supply – I hope I have the chance to interact with him again.)  I don’t think it’s necessary to take these courses frequently, but depending on the course and the instructor, NRECA educational opportunities can be beneficial. I’ve had several members question me directly about the costs surrounding Director education, and some have asked me specifically to tell them how much my trips would cost. On this trip to Nashville, I made a point of living as frugally as possible. I opted to use the per diem for meals and incidentals as opposed to reimbursing all meal receipts. I didn’t rent a car, and I only took a cab twice to get meals outside of the hotel, as it was incredibly expensive to eat at the Gaylord Opryland, which is where the conference occurred. Even with my efforts to keep costs down, I’ll be reimbursed over $2,000 for my trip, which doesn’t include my airfare or the cost of the classes themselves.

All things considered, I benefited from the education I received in Nashville. However, I believe the focus on education can be local and still provide us with the knowledge we need to do our jobs. There is a lot we can learn from experts here, and perhaps we need to look into ways we can bring educators from NRECA to us in order to avoid expensive travel costs.

  1. You can’t please everybody.

PEC currently has over 250,000 member-owners, and each of them has his or her own ideas about how the Co-op should operate. While it is vitally important to remain in tune with what the membership wants and the specific issues that are brought forward, I must also remember that you all elected me to do a job on your behalf. My job is to uphold the Co-op’s Bylaws and perform my fiduciary duties to ensure PEC is grounded in sound business principles and delivering, safe, reliable, and affordable electricity to you every day. I know there are people that disagree with my perspective and the decisions I make in the Board Room. That reality will continue.  As Directors we are called upon to make some hard choices, and as a result, people get upset regardless of the positions we take. It’s no secret that I lean hard towards fiscal conservatism, and because I believe low cost electricity benefits us all, especially the most vulnerable amongst us, you can expect me to continue to make decisions with that leading principle in mind.  Regardless of who that attitude might upset.

 Looking ahead to 2015…

There are a lot of important things coming up in 2015 of which PEC members should take note. We will shortly have the results of our Integrated Resource Plan, which will give us a better picture of our power supply options in the near future. We will complete a Cost of Service and Rate Design Study, which will include member-input opportunities. Be sure to check out the PEC Website for more information, and I’ll post information here and on my Facebook page as well. The debate over our potential Renewable Energy investments also looms on the horizon. I ask that you stay informed and ask questions if you have them.  Your input is as important now as it’s ever been.

As always, it is an honor to serve the PEC membership.

Refining PEC Processes: Part 4

At long last we reach the final installment of my four part series, “Refining PEC Processes.”   Thus far we have dealt with election policy, governance, and a rate reduction. Today I want to delve into PEC’s community involvement, which is one thing that sets us apart from other types of electric providers.

While most electric providers exist as for-profit entities, co-ops are a little different. PEC is a non-profit corporation owned by its members. We operate under a set of seven principles shared by all cooperatives. Some of the more well-known principles are “voluntary and open membership” and “democratic member control.” Another important principle you may not have heard about is “concern for community,” in which cooperatives seek to enrich communities through member accepted sustainable development programs.

PEC has a long history of helping its member communities. Our scholarship program is a staple of that tradition. Every year, the Co-op awards exemplary high school seniors with scholarships to be used for college tuition and related expenses. In 2014, PEC provided 14 scholarships to graduates with amounts ranging from $2,500 to a single $10,000 scholarship. Another favorite example of the Co-op’s community support has been the Christmas light display at PEC headquarters in Johnson City, which draws visitors from far and wide.

In addition to the annual programs, PEC gets the opportunity to give charitably on a case-by-case basis. I recently had the pleasure of participating in an employee event honoring a military veteran. Operation Finally Home, a national charity that builds mortgage-free homes for severely wounded veterans across the country, recently began building a home for USMC veteran Ray Coffey and his family in the Liberty Hill area. Read more about PEC’s involvement in this touching story.

While our Co-op’s involvement in our member communities can be a powerful and wonderful thing, we must keep a close eye on the annual cost of our charitable programs. Members have criticized the PEC Board in the past for not being good stewards of member money and not scrutinizing carefully enough the ways we contribute to our communities.   For example, as much as people love to see the PEC Headquarters lit up every year around Christmas, few people realize that the grand display is a very expensive undertaking. Our 2014 cost for this program will be over $275,000! As the Board and staff move into the 2015 Budget cycle, criticisms over costs like that of our Christmas lights deserve our attention, as we want to make sure that Co-op giving matches up as closely as possible with our members’ interest in using their dollars to do so.

PEC staff recently introduced an idea to adopt a program that several other co-ops have used for sometime that might alleviate concerns as to how we give charitably each year. The program, called Operation Roundup, has been successfully implemented by many Texas co-ops. Through Operation RoundUp, every member bill would be rounded up to the next even dollar, and that “round up” amount would be put towards funding the co-op’s charitable giving. The idea is that by everyone giving a few cents each month, collectively PEC would be able to give substantially to our communities without using a portion of our annual budget to fund such measures – with the adoption of the new program, the co-op would take charitable contributions out of its budget. CEO John Hewa, during the Operation RoundUp presentation to the Board on October 13th, mentioned that with the adoption of the program could come a modest rate reduction, as the removal of charitable contributions from PEC’s budget could provide the relief necessary to further lower rates for members. (Read more here, beginning on p. 136)

PEC has been a great contributor to its service territory, and we want to ensure our co-op remains committed to sustainable development in our communities. However, as we tighten our belts internally and examine all cost centers, we must be open to adjusting our charitable giving, too. Perhaps Operation Roundup will allow us to maintain our cooperative principles and Hill Country traditions without driving up operational costs. That should make a lot of our members very happy.