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.

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!

Refining PEC Processes: Part 1

This entry begins a four part series concerning recent PEC Board activity and discussions. We have a lot happening in our co-op these days. The last few meetings have brought about a number of items that deserve member attention, and I wanted to take the time to bring each of those things into context for you.

Part one of this series will deal with a potentially significant change to our PEC director election process. Part two concerns director education. Part three addresses rates. Part four will focus on our community involvement. With all of the pivotal things happening in the news today – ISIS; Scotland’s failed bid for Independence; the 2014 elections – I wouldn’t expect all of you to be keeping close tabs on the PEC board meetings. However, the topics included in this series of entries to varying degrees affect the health of our co-op, and I wanted you to be made aware of them. (To see the fully recorded board meetings, click here.)

PART ONE:  PEC Board narrowly passes potentially significant modification to Director Election process

PEC has benefitted from a much-improved election process since the Fuelberg era, and yet members and candidates in recent years have presented several shortcomings with the current system. The first shortcoming, of course, deals with the size of the co-op. With over 250,000 eligible member-owners from 24 counties, director-candidates face the enormous task of connecting with a gigantic numerical and geographical body. Having just been through this process myself, I can assure you that the obstacle presented to potential candidates by the sheer size of the PEC membership should not be minimized. Imagine a candidate wants to send a postcard to members reminding them to vote. Conservatively, at $0.10 per mail piece, the cost for one mailing would be $25,000! And that doesn’t even take into consideration postage.   The question has naturally become how PEC can make the election process more manageable for candidates – we want good, qualified people to step forward if they feel the call of service and have talents that would benefit the co-op. They are more likely to do that if they feel they can mount a worthwhile campaign.

We, as a membership, attempted to address this very issue from one angle in the 2014 election through a referendum to change voting from at-large elections to single-member district elections.  (These two links will provide some background on this issue:  Blanco News and PEC 2014 election referendum release.) That referendum, however, did not pass, and members will continue to be called on to vote in each yearly election for every director on the ballot.

Another way to address the manageability issue of director campaigns is to develop a way for candidates to communicate specifically with the 8% or less of the membership that actually participates in the election process. It’s remarkable that with several weeks of online voting and mail-in voting; day-of in person voting; and several communications from the co-op leading up to the election; PEC still sees such a small voter turn out.   In conversations surrounding this problem, an idea recently surfaced to release a list to approved candidates (candidates that have been approved by the qualifications committee) of the members’ names and addresses who voted in the most recent election. It is important to note that the entire membership list is already attainable by anyone seeking to be listed on the ballot so that he or she may verify signatures on the member petitions required to become a candidate. As is the case in the current at-large membership list, co-op members would be able to opt-out of having their names and addresses listed on the recent voter list. Additionally, no information about whom a person voted for would be included on the list.

The way I see it, having this “recent voter list” available for approved candidates can only improve the election process. We give the interested members an opportunity to hear from their potential representatives so they might make more informed decisions, and we spare candidates from having to invest exorbitant amounts of money in order to communicate with them by narrowing the target audience. Someone asked me about a potential invasion of member privacy for those that don’t wish to be contacted, to which I pointed out three main things. 1) We are only releasing addresses, which we already do for the entire membership. This may mean you will receive some extra mail from candidates in May and June every year, but honestly, how many pieces of mail do you receive that you throw away every month anyways? If you don’t care about PEC elections, just chunk it!! 2) The chances that you will receive the mail pieces if you don’t participate in the PEC election process will be quite small since you won’t be on the recent voter list unless you voted in the 2014 elections. 3) I heard from several members following the election that they wish they had more contact from candidates so they could get a better sense of whom to support. If you do care about the director elections and want more information about the people that may represent you on the PEC board, you may now have better access to that information.

We first discussed this potential change at our August committee meeting, and we voted on it at our September regular board meeting. District 5 Director James Oakley, with my support, proposed a resolution to make a recent voter list available to qualified candidates. I seconded the resolution, and it passed with “yes” votes from Director Oakley, Director Perry, Director Scanlon, and myself. The “no” votes came from Director Clement, Director Landaker, and Dr. Cox (who later voted “yes” to the amended Election Policies and Procedures that included this new resolution).

This change will be enacted in the 2015 election cycle, and I believe it will greatly enhance the system we already have in place. It’s the first of many small steps in the right direction that I hope to see as a board member at our co-op.

UPDATE:

***This resolution will be rescinded at our next Board Meeting on October 20th.  A coordinated effort between the dissenting Directors and members concerned with privacy protections at our October 13th Committee meeting caused a shift in Board support for the Recent Voter Participation list.  We will have to go back to the drawing board to try and improve our election process, and I encourage all members to offer opinions on how we can best do that.***

“Refining PEC Processes:  Part 2” is due out later this week.