Cooperatives: Electrical- Back to Basics

Transcript: (Recorded 3.15.13) What is a cooperative, and how might it be different than what we expect?

Tony: A cooperative is owned by the members we serve. And any money we make, any profit we have, goes back to the members we serve. We call them capital credits.

We were formed out of the Great Depression. FDR saw a need for economic development across the country, and the rural areas weren’t electrified. So he went to the private companies, who were producing electricity at that time, and asked them if they would help him electrify the countryside. And they basically told him there wasn’t enough people there to make it profitable. So he formed the Rural Electrification Administration, which started the electric co-op movement in the late ‘30s. And farmers and ranchers all across the country were able to come together and form individual cooperatives.

Today electric cooperatives serve 42 million people out of the 380 million we have in the country. But they serve 75% of the land mass. We’re called rural electric cooperatives. We’re serving the rural areas of the country nobody else wanted to serve. And we’ve been doing that at Cherryland for the last 75 years. How would you describe the difference between a member and a customer?

Tony: A member has a voice. A customer pays a bill, but a member at a cooperative has the opportunity to elect a board of directors that governs the co-op. They have an opportunity to have input at an annual meeting, an open meeting, of the entire membership that we have every year. So voice is the difference between a member and a customer. That’s on an extremely local basis. What’s the nature of being a local cooperative?

Tony: We know who our members are. We live with them. We offer to work with them. We have the same daily struggles with the weather or with the economy. All of the revenue we get comes from our local area. And when we give capital credits back,… That’s what we call our profits. When we give those back like we did this past October (we gave $2 million back) all that money went back into the local economy because it only goes to people have taken electricity from us in the past. So we’re definitely very local. You’re starting a program that you’re calling Community Engagement. Why are you doing that, and what outcomes are you looking for?

Tony: We actually hired a person we call a grass-roots advocate. And at Cherryland we see the membership as our grass roots, that’s the core of who we are, what we are, where we began and where we’ll end if we ever do end. What we’re trying to do by getting them involved is use their voice. If we have a piece of legislation that’s important to keeping their prices down, we want them involved. We want their voices to be heard. So we’re trying to organize that voice to teach them more about what a co-op is and why they should give their voice and why they should care and make them realize that they can have an impact on their bill. We’ve been in business 75 years, and we’re into the point in our history where people forget about when the lights first came on. People have always had electricity. I’ll be 51 years old next month. I’ve always had electricity. And so many people like me (and now there’s a ton of people younger than me) that that’s all they know is electricity. So why should they care about their utility? Why should they know that it’s a cooperative? That what we need to teach them – why it’s important to belong to a cooperative and what they can do with their voice and how they can help their cooperative. I would assume that across… You have 35,000 members. There’s a whole lot of different opinions about how things ought to be done and what things ought to cost. How are you letting what they have to say and feel affect the point of view that you’re presenting?

Tony: We’re about to find you. You know, we’ve always gotten input from a small fraction of our membership. We’ve never had a collective effort where we’ve gone out and tried to get more input. And that’s part of the whole grass-roots movement at Cherryland, is we’re trying to develop a system where we can get more of that input and see, actually, what it is and how we can use it and what value it has and just try to do what we do better and with a bigger voice, a broader voice. So I guess I don’t know until I talk to the membership. Is there some role for it in terms of you needing to mobilize the voices of your members?

Tony: There’s an absolute role. And that’s what we’re kind of trying to prepare for, attacks or initiatives that we don’t have a definition to, maybe, today. But if there’s a rule or a regulation that’s going to affect our power cost, we need to have people ready to go, ready to call their congressman, ready to write a letter, ready to respond to whatever avenue of communications we put out there. So we’re kind of preparing for engagement in the future when we need it. We need an army; we need a large voice to call on. And we’ve not done a good job organizing that voice in the past. And we’re trying to improve on that. Seventy-five years ago it was easy. They had a mission. They wanted electricity at every house. What is our next mission? It’s going to be whatever the bill from congress is or the regulation from the EPA is or whoever it may be. Obviously, you’re just starting. What are some of the specific things you see doing?

Tony: We’re starting coffee and conversation, which is basically meeting with…inviting members to a local coffee shop. We have 3 different locations over the next month, where we’ll meet on a Saturday morning, and we will just talk to them, answer their questions and have a dialog them. So that’s number 1, is just getting out there.

Number 2 is we’re going to form a member advisory committee. That’s going to be a committee of anywhere from 12 to 36 people who come in 3 or 4 times a year and give us their input on how the utility’s working or how the cooperative is working and where we can improve. At the same time, we can tell them what we’ve got going on, what we see coming down the pipe. So we can have face-to-face dialogue, rather than them reading a newsletter or email. Face‑to‑face conversation to get them more involved, so they feel more ownership in their cooperative, is what we’re going for. I don’t understand the solar garden thing, but it’s a good thing of it’s-small-but-it-has-insight type of thing. What is the solar garden?

Tony: Well, think of a community garden when you drive through a neighborhood or a community, where everybody has a little plot of ground, and they share a space. It makes the watering and the weeding and everything more efficient because instead of having 10 gardens spread around the community, you have one community garden.

We’re taking that concept to the solar level. We’re going to install as many panels as the community would like in one location. But we’re going to lease them individually to members. A member will be able to lease a panel for somewhere around $470, a one-time payment. And they will have the electrical output from that panel for the next 25 years. So they will get a monthly credit on their bill for the electricity produced by that one panel. Or they may want to lease 10 panels. And we can do that all in one location, and we can make solar affordable for everybody, because now that one home owner doesn’t have to buy 10 panels and an inverter and tie it into their house and have their meter. We can do it all in one location. And we can decide if solar’s going to be successful in Michigan. I think it’s a great model.

It also goes back to our history. Seventy-five years ago, people came together and formed a co‑op so they’d have electricity in their homes. We’re taking that cooperative model and moving it into, “Let’s have solar electricity today cooperatively and see where that goes.” And the people who like solar energy will be able to participate. The people who may not support it don’t have to worry about it. They’re not subsidizing it. It’s a cooperative project, a community project.