When it comes to operating a successful electric cooperative, public involvement and community outreach are essential elements. Through a cost-of-service study for the Pedernales Electric Cooperative (PEC), Chris Deffenbaugh and I demonstrated how the integration of a rate design study and a public involvement effort can help give ratepayers a voice.

PEC is both the largest distribution cooperative in the nation — in terms of total meters served — and an entirely self-regulated electric cooperative. It also faces a unique challenge in terms of audience, as its large and diverse service territory includes the extremes of urban and rural members.

Our study helped PEC take a comprehensive look at its overall cost of service, comparing what it costs to deliver electricity to co-op members with what those members pay. We examined the cost of service and revenue by specific class to uncover inequities. With such a large service area, PEC needed to be certain one class of customers doesn’t subsidize another.

Once we had a better understanding of the necessary adjustments, we were able to sit down and develop an appropriate rate design.

Educating and Listening

A comprehensive public outreach and involvement strategy enhances the rate study considerably. From the get-go, PEC recognized the importance of making this process transparent to its customers. After all, because it’s a co-op, the customers are the owners. PEC understood that the public involvement process is fundamental, especially in better understanding customers’ knowledge level, priorities and expectations.

Public involvement is intensely customer focused. Forums, office visits and surveys provide an avenue for educating the public and listening to concerns.

When customers are engaged, not only do you learn what topics they’re interested in, you also give them a voice, which in turn increases public acceptance of the project.

Making Technical Details Understandable

We start with focus groups so we can let member input shape and refine the process; we talk about rate options, about the cost-of-service study, and we listen. Understanding what people know and what they want to know can help us better craft our process to answer their needs.

Our biggest responsibility is to make sure every single member feels like they have a voice – and not just the entire co-op, but also stakeholders outside of the co-op. A lot of this stuff is very technical, and the majority of customers don’t want to spend hours studying it. They want it simple and straightforward.

We work to explain every aspect of the process in layman’s terms with just the right amount of detail. Our goal wasn’t just for PEC to successfully implement the rate changes; it was also for their customers to understand that they’re fairly charged for the services provided. I hope the members feel like they’re being treated fairly and that the entire process makes sense to them.

Finding the Right Balance

With a big co-op like this, there are big objectives — quality, reliability, equity among customer classes, designing charges that encourage customers to efficiently use power. The analysis part is easy; the art comes in finding the right balance for all these goals.

Anyone can run numbers and spit out a result, but if you truly understand what’s behind those numbers, what’s actually working, and what the customer can understand, you’ll find success. If you’re making changes the customer can’t understand, it’s not going to work. It’s as simple as that.

PEC is focused on inclusion and transparency. With this cost-of-service study, we were able to demonstrate that the cooperative is fair, impartial and — most importantly — member-oriented.

At the end of the day, it’s not about us — it’s about the client. We work hard to earn trust and we do that through excellent performance. We can pour ourselves into a study of your benchmarks, brand and operations; we pride ourselves on helping our client be even better. If we go unnoticed, if people are complementary to our clients – we’ve done our job well. There are strong parallels between a customer-owned co-op and Burns & McDonnell’s own employee-owner culture; we’re all focused on doing the right thing.

Interested in learning more about our cost-of-service study for PEC? Reach out to Chris or myself on LinkedIn.

Ted Kelly is a business development manager at Burns & McDonnell. He’s been providing solutions to utilities relating to financial, rate and management issues for nearly 35 years.