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!

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 3

Welcome back to my four part series on current events at our co-op. Today’s topic of rates is one that has invited discussion for some time. Throughout the 2014 Director Election, I heard time and time again from members that our rates are too high. That criticism is fair. Our rates are too high, and the Board and Management should be making every effort to lower PEC’s monthly bills. There are several things that account for the Co-op’s higher rates, including some inescapable debt obligations that are set to expire in the next few years. Beyond that are controllable costs, costs associated with growing infrastructure, and then a power supplier (LCRA) that’s own wholesale rates need some serious adjustments in order for us to be able to pass along lower rates to our members. I believe all of these contributing factors are on track to improve, which should collectively yield substantial rate relief for PEC members, and this past week we announced the beginnings of that desired trend. Here is a copy of a release from the PEC website concerning Tuesday’s announcement of a small rate reduction effective December 1, 2014:

     “At a special meeting on Tuesday, Sept. 30, the Pedernales Electric Cooperative Board of Directors voted to reduce the Co-op’s per-kilowatt-hour delivery charge effective with electricity purchased beginning Dec. 1, 2014.

 ‘The Board of Directors has worked with management the past few years to get the Cooperative in a very stable and strong financial position,’ said PEC Board President Dr. Patrick Cox. ‘Our current financial projections and careful analysis by the Co-op’s staff signal this is the right move to make at the right time.’

The reduction will affect all rate classes that have a delivery charge. For residential members, the reduction will amount to $5 per thousand kilowatt-hours consumed. PEC’s average monthly residential use is 1,275 kwh, so the majority of members should see even greater savings on their bills.

 ‘We continue to increase equity, debt service is far above required levels and we’ve had substantial reductions in bad debt and write-offs,’ said PEC Chief Executive Officer John D. Hewa. ‘We find this a great opportunity to provide a responsible rate reduction to the membership.’

The current per-kwh delivery charge of $0.03212 for residential members will be reduced to $0.02712, and while the decrease goes into effect Dec. 1, some members will see it reflected on later bills, depending on when billing cycles fall within the month.

The Co-op leadership also is actively working with LCRA and other power providers to further reduce costs. ‘Power supply accounts for 65 percent of all the Co-op’s expenditures,’ Hewa said. ‘We are actively exploring ways to reduce our power costs in an effort to lower member bills and anticipate more good news in the next few months.’

Two thoughts come to minds when seeing this very modest rate reduction. Since the first thought is probably critical in nature, I’ll address it first. This rate relief is not nearly deep enough. I completely agree – it’s really a “drop in the bucket,” as another Director pointed out, in terms of what PEC needs to ultimately achieve in terms of lower rates for our members. Please keep in mind that the Board and Management are fully aware of this shortcoming and know this initial rate reduction is merely a first of many gains necessary to get our rates in line with Texas’ low cost electricity providers. The second reaction to this rate decrease, hopefully, is that it is a step in the right direction. From my viewpoint as a Board Member, it’s wonderful to know that we are in a financial position to respond positively to our biggest member concern. Pedernales’ CEO John Hewa said in his statements to the Board on Tuesday that this initial cut could be the first of a handful of cuts in the coming months, and I am optimistic that the Co-op can deliver on those projections. The hope is that following a series of rate reductions and with a continuing effort to tighten the screws on the operational side, the impact to you in the form of your monthly bill will be profound enough to make a difference in your monthly budget. You, as members, deserve that from us. You deserve for us to hit our goal of being the lowest cost LCRA provider, and I’ll be working to ensure we see that outcome.

Stay tuned for the fourth and final part of the series “Refining PEC Processes.”

Refining PEC Processes: Part 2

A few days ago, I began a four-part series of entries concerning recent developments at Pedernales Electric Cooperative. In my first piece, I covered a recent change to our Director election policy that will be instituted in the 2015 elections. Click HERE to read more about it.

Now my focus will turn to another Director-related topic, which is the Co-op’s policy regarding Director education. As it stands now in the PEC bylaws, each Director is required to attend an initial series of “beginner” courses within his or her first year, to be followed up by further education as necessary to perform a Director’s fiduciary duties. The current policy reads as such:

Article III. Section 2.m “[A Director must] be willing to devote such time and effort to his or her duties as a Director as may be necessary to oversee the Cooperative’s business and affairs including…obtain[ing] the Credentialed Cooperative Director (CCD) designation from NRECA within the first year after election to the Board; [and] attend[ing] state and national association meetings and Director continuing education training as needed to maintain current knowledge and improve awareness of potential risks to the Cooperative.” (Click HERE to read a copy of our current bylaws.)

At our September committee meeting, a bylaw amendment was proposed to change the education requirements for Directors. This amendment would change the time period in which a Director had to complete the initial training from one to two years after being elected. It also would have REQUIRED Directors to “complete two courses, conferences, seminars, or training opportunities each year beginning with the first anniversary after their election to the Board of Directors.” (Click HERE to see the proposed amendment in it’s full form, p. 118)

Almost all of the Directors had some problem with this amendment. One Director didn’t like the idea of extending the time allotted to receive the initial training. She believes that training is crucial in order for a board member to be effective. I had a problem with the resolution from a different angle – and several of my other colleagues on the Board agreed. I’ll go over my objections in a minute, but the major takeaway here is that the end result of our discussions was that we indefinitely tabled the amendment. The bylaws will not be changed to make room for these new Director education requirements.

While this issue ends up being something of a moot point since it didn’t gain traction, I think it’s important to note why several board members and I objected to this resolution. The first question we must ask ourselves is when is it appropriate for the Board of Directors to alter the bylaws in the first place? I remember a gentleman spoke at our annual meeting about this very question. He noted that PEC’s bylaws – the member-owners’ protecting documents – could be changed at anytime and for any reason by the Board. That particular statement troubled me, especially when he further went on to give the example that somewhere along the lines, the bylaws had been altered to change the Co-op’s mission from delivering “lowest cost” power to “competitive[ly] price[d]” power.  Maybe that’s just semantics, but it could amount to much more. After all, “competitive” is quite loose. Competitive with whom?! Lowest cost, on the other hand, is pretty concrete. I would have preferred to keep the language the way it had originally been written.

One could argue – and it’s a fair argument – that Directors must be able to change the by-laws without approval from a majority of members because our Co-op is so large, and we get such low voter turnout.   We might never be able to change anything because we would never get enough participation. There are some who would say that is a GOOD thing – they don’t want the bylaws to be changed! Others would say the policy we have of allowing time for member-review of proposed bylaw changes before the Directors take a vote is plenty thorough to insure members have a chance to voice objections or concerns before the proposed revisions are adopted. I see value in both sides of the argument, but I do believe at the very least there should be some inclination from the membership that changes are desired before we even bring the issue of a bylaw change forward for discussion. Changes should not be made solely at the whims of the Board.

I personally had never heard anything from a member suggesting a desire for Directors to be required to get a minimum of two continuing education courses per year. If anything I had heard several people express concern regarding the costs associated with Director education, namely travel, lodging, and convention fees and expenses. The issue of cost brings me to my second objection to this resolution – what actually is the value of “continuing education” for Directors? I honestly do not know. I haven’t been around long enough, and I haven’t even attended the beginning NRECA Director courses required of first-year PEC board members. I’m set to do that in December, as that is the only time I can get all five courses done without other conflicts arising before my first year on the board expires. (Unfortunately, I will even have to miss the December board meeting in order to get this education – I doubt that this was the intent of the bylaws, and yet we see what can happen when the bylaws are freely changeable. Unforeseen circumstances are bound to arise.)

The bottom line is we must take into account the costs associated with sending board members on Co-op related trips to get education. What do we, the PEC members, get out of our Directors attending? Perhaps they learn a lot of valuable information. Perhaps not. I guess I’ll find out in December. Beyond the initial training, though, I think there is room for us to explore if there is a better way for us to educate our Directors than sending them off to expensive conferences – maybe we could team up with fellow Central Texas Co-ops and bring educators here so that we can cost share and all benefit together. You know, the whole co-ops-helping-co-ops principle. I would love for us as a board to investigate something like that.

I know I still have a lot to learn about PEC and the co-op world in general. I’m asking questions. I’m seeking out answers. I’ve become a student of the energy sector, and I’m enjoying the material tremendously. Since my election in June, and for months leading up to it, I have spent hundreds of hours educating myself on the electric industry and PEC specific matters. I see great value in that type of education, and I know it has made a difference in my performance on the board. As long as I have the privilege of serving you in my capacity as a Board Director for Pedernales Electric, whether or not I’m able to travel to seminars and conferences, I will be committed to educating myself on matters that affect my decision-making abilities.

“Refining PEC Processes:  Part 3 will be out early next week.”

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.