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November 2023 | Volume 85 | Issue 11

Annual PCEC Blood Drive

Manager's Report

New Rates Important to Maintain Co-op Financial Health

Dave Deihl PCEC General Manager

Dave Deihl, General Manager / CEO

From the General Manager

Somehow, we are already approaching the end of another year. This year has ultimately been a tough one for the coop. As expected, we have had negative operating margins all year that we planned and budgeted for. We’ve been talking about it since January, and the negative margins we expected to occur this year have happened and been watchfully discussed in the board room every month.

We don’t implement rate increases until they are absolutely necessary, and we weren’t going to be able to maintain the financial health of the cooperative and the reliable power that we all expect without a rate adjustment. We always want to ensure members know there is no need to collect more money than is required because any profit above the cost of operations including good business practices is allocated back to consumer-members as capital credits.

I have been asked, “Why don’t we reduce our expenditures instead of raising rates?” We haven’t had a rate increase since 2016, and I assure you we have done everything in our power to control expenses including reducing our workforce from 78 employees to 73. We serve 370 members to every employee — a ratio that bodes well compared to similarly sized co-ops within Missouri and across the country. We do everything in our power to control expenses, but certain expenses are completely out of our control.

One of the many benefits of our three-tier cooperative system is that we purchase energy at cost for the power you receive. But as the cost to produce the energy increases, our bill rises. With wholesale power making up 60 percent of our overall expenses, it simply cannot be absorbed.

Contact General ManagerYour November bill includes Platte-Clay’s new rates that were approved by the Board of Directors earlier this year. The customer charge is increasing from $25.38 to $30.00 per month. The customer charge covers the cooperative’s fixed costs such as trucks, poles, wires and meters. It also covers basic necessary activities such as tree-trimming, outage restoration and member services.

The demand charge is increasing from $2.50 to $3.50 per KW. The demand charge covers the demand components of our wholesale power bill. This includes things like transmission lines, substations and transformers that are required to meet the maximum potential load required, no matter when it is needed. This equipment must be on standby all the time to cover the maximum potential load whenever it is needed.

Members can work to control this part of their bill, if they choose to do so. The easiest way is to avoid running appliances at the same time when possible. For example, set the timer on your dishwasher to run overnight. Don’t do laundry and use your oven at the same time. If you are charging an electric vehicle, it is important and easy to charge it overnight when your other energy usage is at a minimum.

The energy charge is unchanged at $0.079 per kilowatt hour. This energy charge is calculated on the total number of kilowatt hours your household uses in a month.

I think it’s also important to point out that the Board of Directors that determines rates also pays the same rates for their own homes and businesses. Together, the Board and I will continue to do our best to maintain our steadfast commitment to you to provide safe, reliable and affordable power.

Power With A Purpose

What is your role in the cooperative system?
Joe: The role of my team is twofold. First, we communicate with all of our different audiences about Associated and its activities. Providing that information is key to developing an understanding among member systems, business partners, the news media and others about what we do and why. The second aspect is offering programs, services and products to our system cooperatives that help them to do their jobs more efficiently and effectively.

To that point, a big part of my job is being out with our cooperatives, understanding their needs, challenges and goals for the future. Because of that, I can bring issues back to Associated so that the voice of our member systems is heard as decisions are made. That listening function also is important so I can understand how our team can best help cooperatives meet their challenges and goals with specific services and deliverables that will, hopefully, make their jobs a bit easier.

A cooperative is unique from other business types. How do you explain that difference?
Joe: The biggest distinguishing factor for cooperatives is that we are owned by those we serve. The people who ultimately receive the electricity we generate, the members at the end of the line, own their cooperatives. And that holds true throughout our three-tiered system: Associated is owned by its six transmission cooperative member-owners, who in turn are owned by their member distribution cooperatives and those distribution cooperatives are owned by their members at the end of the line.

At each tier, their boards of directors are democratically elected. It’s a very pure form of ownership. Unlike an investor-owned company that may have to decide between keeping rates stable or raising them to increase returns for shareholders, a co-op doesn’t have that conflict of interest. In the co-op model, the shareholders and people using the service are one and the same: the member. As Associated makes recommendations about power generation and rates, for example, the board members evaluating that information and making decisions are also cooperative members and owners.

Can you cite an example where Associated’s cooperative business model really benefits its members?
Joe: Looking at our generation portfolio, the Associated board has invested in a balanced mix of sources for decades. That started at the beginning with hydropower, then coal power plants were added, followed by natural gas and, more recently, significant wind power. They made the decision not to put all the eggs in one basket but use a mix of resources that have different operating characteristics. Even with pressure to retire fossil fuel plants and replace them with renewables, the board has listened to the member systems, making reliability and generation balance a priority.

We are not following the crowd. Another key board decision has been to remain independent of regional transmission organizations, or RTOs, that manage the electric grid for member utilities in a geographic area. By keeping independent, we can buy, sell and transmit power with multiple RTOs, so that has been advantageous both for reliability reasons and for the economic benefit of the system.

That independence really paid off during winter storms Uri in 2021 and Elliott in 2022. We set all-time system peaks in both of those weather events. Repeatedly, while many around us resorted to rolling blackouts, Associated kept the lights on — and that’s what members expect. Our reliability track record stems from our balanced generation portfolio and our independence to manage our generating assets to maximize reliability for members.

How does the future look for rural energy reliability?
Joe: Associated and its member-owners are well-positioned. A recent forecast by the government agency responsible for the country’s electric grid reliability showed about two-thirds of the nation with an elevated or even high risk for reliability problems. But if you look at the map that visualizes that forecast, the middle of the country where Associated serves is clear. That doesn’t mean we can never experience reliability problems. But it does mean the cooperative business model and memberownership works well for the people we serve.

The major challenge to reliability for us is a regulatory environment that does not prioritize reliability but caters to a host of other agendas. We prioritize reliability and are working to maintain it, which has often felt like a fish swimming upstream. Although we were one of the first to speak out on the issue, many other utilities, trade organizations, political representatives and others now advocate for making reliability a key part of policymaking. We are hopeful the education process is opening eyes to the problem of transitioning too quickly to a future dependent on intermittent, renewable generation at the expense of reliable electricity. Our people and economies depend on reliable power.

What is Associated doing to make sure power generation keeps pace with member needs?
Joe: We study our member loads and analyze trends, which show significant load growth on the Associated system. That’s a good thing because it means our regional economy is picking up, with businesses expanding, new homes being built and so on. But it also means we need to make sure our power supply keeps pace. Associated develops an integrated resource plan every year that looks to the future, what our member load requirements will be and the generation technologies that can serve them. The technologies need to be proven and dispatchable, not intermittent, so that we can count on them. As a result, we are working to bring new natural gas generation online in 2026 to 2027. These will be peaking units designed to serve member load when it is at its highest. Also in our plan is the potential for new future renewable generation, but only when the timing, technology and costs make sense for the member system.

A new technology we are watching closely is small modular nuclear reactors, or SMRs. We are affiliated with two different organizations developing the first units, which won’t be online for seven years at the earliest, so we can learn about them. We want to see how well they operate and what the costs will be. It’s a very new technology that really is just coming off the drawing boards.

We’ve heard some say Associated is against renewable (intermittent) power supply for the future. Is that true?
Joe: No — that is absolutely false. It’s laughable to hear people say that because it’s not factual. We began taking power from our first wind farm in 2007, the first utility in the state to bring wind power into its portfolio. Since then, we’ve added power from seven more wind farms in three states, the most recent in 2020. Wind accounts for nameplate capacity of 1,240 megawatts in our generation mix; however, its intermittent operating characteristics means it cannot be counted on all the time. We are good at forecasting when the wind will blow and when it will not.

It’s the same with solar. As a winter peaking system, we know that we generally cannot count on solar to generate power when we need it most. That’s why we invested in wind over solar — wind fits our system profile better. As I mentioned earlier, we evaluate renewable technologies as we plan for the future, but the costs, technology and timing need to be beneficial for our member systems.

How do you gauge member satisfaction? How satisfied are Associated’s members?
Joe: The best way is from members giving direct feedback to their distribution cooperatives, which is often shared with us. The other gauge is a comprehensive systemwide survey of members we conduct every two years. About 12,000 surveys are completed by members at the end of the line, so it is a statistically significant sample. We ask a number of questions across many facets of the utility business, but the key takeaway is that our members like their cooperative, trust them and like how they are being served. Member trust is what it is all about and that translates to some of the best satisfaction ratings in the country.

What is the one thing you wish everyone knew about Associated?
Joe: It’s not really important to know who Associated is — the important relationship for a member is with their local cooperative. But I would want them to know that Associated’s employees have the same dedication to serving them as their local cooperative. All of us at Associated love the fact we have jobs with a true purpose, powering farms, businesses, homes and communities. We generate power with a purpose — serving our member systems reliably and affordably — and we take pride in that.

Platte-Clay Moments November 2023

Images from PCEC’s member appreciation fish fry held in October at the co-op’s Kearney headquarters.

Holiday Open House Returns

Friday, Dec. 1, (8 a.m. – 5 p.m.)
Chili Lunch: 11:30 a.m. – 1:30 p.m.

Join us on Friday, Dec. 1 at the PCEC offices in Kearney or Platte City for our Holiday Open House. We will serve our famous chili for free between 11:30 a.m-1:30 p.m. with holiday treats available all day.

To assist those in need in our community, please bring a donation of gently used or new coats and nonperishable foods. We will continue to collect these throughout December.

PCEC Kearney Headquarters:
1000 W. 92 Highway, Kearney, MO

PCEC Platte City District Office:
15055 Bethel Road, Platte City, MO 64079

Energy Efficiency Tip

Easy Ways to Reduce Your Energy Usage

Oven Stovetop Kitchen AppliancesThe holiday season is upon us, and that means we’ll be using more energy in the kitchen! When possible, cook with smaller countertop appliances instead of the stovetop or oven. Smaller appliances like slow cookers, air fryers and Instant Pots consume less energy. When using the oven or stovetop, match the size of the pot to the heating element and place a lid over the pot while cooking. The food will cook faster, and you’ll use less energy.

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The Northland Connection is published monthly by Platte-Clay Electric Cooperative, Inc., 1000 W. 92 Highway, Kearney, MO 64060. Postmaster: Please send address changes to: Northland Connection, PO Box 100, Kearney, MO 64060 or mail@pcec.coop.

Platte-Clay is an equal opportunity employer.