In its first two years of operations, CKenergy Electric Cooperative (CKEC), based in Binger, Oklahoma, has successfully knocked back two separate territorial disputes thanks to support from the Cooperative System Integrity Fund.
CKEC—formed in 2016 through the consolidation of Caddo Electric Cooperative and Kiwash Electric Cooperative—serves 25,600 members in west-central Oklahoma. Last year, the distribution system was asked by agriculture cooperative Western Planters to bid on connecting a new, approximately 3,000-kW cotton gin. Under Sooner State law, any load in an unincorporated area larger than 1,000 kW is open to competition.
"We were selected as the service provider due to our reputation for reliability and our lower rate, which was developed using a cost-of-service study," reflects CKEC CEO Clint Pack.
But the rate was challenged by investor-owned utility Public Service Company of Oklahoma before the Oklahoma Corporation Commission (OCC).
"The company claimed that our rate was anti-competitive because it didn't recover costs," Pack comments. "OCC staff reviewed our rates and costs in detail and decided what we had proposed was fair. From the start this seemed like an open-and-shut case and we fully expected to win, but the legal proceedings caused us to incur fees defending ourselves."
The Western Planters' load will have a positive impact. "It consumes large amounts of power, but the ginning coincides largely during off-peak times," Pack explains. "That improves our load factor, and helps level—or even reduce—our average wholesale power costs. It will also partially offset infrastructure costs in that very rural region."
"ONEOK asked us to bid on the station," Pack adds. "Later, we were notified that OG&E would serve the load."
Under a 1977 state law, OG&E can only provide new service within CKEC's service territory by extending distribution lines from its own grid. Because OG&E planned to feed a substation it hoped to construct by tapping a nearby transmission line operated by Western Farmers Electric Cooperative—CKEC's wholesale power supplier—the project fell outside the scope of what was permitted.
"It was the first proceeding of its kind, and we eventually received a favorable ruling from the OCC," Pack reports. "Our statewide organization, the Oklahoma Association of Electric Cooperatives, intervened on behalf of us and our fellow cooperatives. OG&E and ONEOK have appealed the OCC decision to the state Supreme Court. We expect it will be two years before everything gets finalized."
Pack notes the case will impact every cooperative in Oklahoma. "In the past, the big power companies refused to serve rural areas because doing so wasn't profitable. Now, they want to cherry-pick our best loads and essentially turn electric cooperatives into providers of last resort."
He adds: "When you face legal battles with the two largest investor-owned utilities in your state and a big firm like ONEOK, all with unlimited resources, it's comforting to know that you have the collective support from other cooperatives through the Integrity Fund. In today's changing utility environment supporting the Integrity Fund acts like insurance. I actually consider it 'life insurance' because it definitely saved us."
Since its creation in 1986, the Integrity Fund—administered by CFC with decisions made by a five-member committee composed of CFC, NRECA and Rural Electric Statewide Managers Association representatives—has awarded more than $28 million in grants to 290 cooperatives in 43 states to fight takeover and annexation bids by investor-owned utilities and municipal electric systems; preserve rights to offer non-electric energy services; and resist regulatory, judicial or legislative actions that threaten the cooperative business model. Cooperatives do not have to contribute to the fund to request assistance.
"Grants are funded exclusively by the rural electric network, for the rural electric network," says CFC Senior Vice President of Strategic Services Steve Kettler, a member of the Integrity Fund Committee.
For questions, contact CFC's Donna Goff at email@example.com.