Electric Co-op Today

MINNEAPOLIS—No one likes to be told to turn off the plasma TV and to stop using the computer. Marty Blake contends it doesn’t have to be that way.

Utility consultant Marty Blake urged co-ops to look at rate structures and customer charges. (Photo By: Michael W. Kahn)

“We know when we’re hitting peaks and we can work with [consumer-members] to move some usage around,” said Blake, co-founder of The Prime Group, a Kentucky-based utility consulting firm. He spoke to nearly 200 co-op executives and senior staffers at the opening general session of NRECA’s Energy Innovation and Rates Summit 2009, held here July 20–21.

“Cost matters to consumers,” Mary McLaury, vice president, education and training, told participants.

She said a key motivation for holding the summit was to work together to come up with “a strategy that accomplishes the goals of cost recovery…perhaps load shaping and of course promoting the efficient use of energy.”

In discussing, “The Case for Redesigning Rates: What are the Key Drivers for Co-ops?” Blake acknowledged that telling members to do without “is a very unpopular message.” Instead, he said the rallying cry should be, “Use your stuff, just use it smart, use it differently, because if you get off peak, that saves me money and I can save you money.”

He also argued for recovering fixed costs and margins through the customer charge—even if that means raising it.

“If we’ve got our rates set where those fixed costs and margins are being recovered through energy, what that means is we’ve got a win-lose situation: If I go out and help customers save energy, they win, I lose financially.”

But, he continued, “If we got our customer charge up to where it needs to be, it would be a win-win.” Blake noted that many gas companies now recover all distribution fixed costs and margins in the customer charge. “It totally insulates you from reduced sales,” which, in turn, “really frees you up to work with [members] on reduced usage.”

Tags: Business and Finance, Power Rates