NRECA reached out to a group of electric cooperative CEOs from across the country ahead of the recent annual meeting and TechAdvantage Expo to ask them what they see as the biggest challenge facing their co-op over the next five years.
Twenty CEOs responded, and the answers run the gamut from modernizing the aging electric grid and developing a new generation of co-op leaders to increasing the use of renewables and distributed energy resources. To conclude this two-part series, here's how 10 of the leaders view the challenges ahead for their co-op. (Check out
last week's installment to see the rest of the responses.)
I have seen a lot of challenges over my 40-year career, and they continue to change. But one challenge that has remained is that of providing reliable service for our members. While I think most distribution co-ops and G&Ts do a great job in this area, we continue to deal with an aging electric grid system.
Our challenge today is to provide reliable electric service and modernize our electric grid system to meet our members' growing needs and expectations relating to reliability, power quality, distributed generation, EV charging and two-way communications. And the list will likely continue to grow.
We have been involved in economic development, and our commercial, industrial and value-added ag load has increased substantially. Most of these customers are sensitive to outages and require consistent power supply. Increasingly, we are finding that to be the case with our more traditional rural and residential customers as well.
We have collectively built and maintained a reliable electric grid system over the last 80 years, but I believe the need for continued investments and efforts to make the electric grid even more reliable and smarter is our biggest challenge going forward.
Our largest macro challenge for the next five years will be adapting to a struggling economy due to the outward migration of our rural areas, low commodity prices, and lack of attraction of people and business to our territory.
We are entering an era of significant need for updating our aging infrastructure, which will add to the upward rate pressures of the external forces we face.
Our greatest utility-level challenge will be to continue to modernize, expanding economic opportunities and attraction, such as broadband development, while managing our affordability goals.
All challenges present great opportunities, and our strategic priorities will find those opportunities and capitalize on them for the benefit of our utility and the communities that we serve.
As cooperatives, keeping a keen eye to our ability to serve members’ collective needs and understanding members’ aspirations remains our highest calling and the hallmark value of our future together. With strong board governance and an engaged membership, cooperative leaders may well believe they know their members and have confidence they are doing right by their members, and these leaders may very well be correct.
I’ve found that our organizations can be complex, with a diversity among members that requires focused time and attention to truly appreciate. To know our members, we must ask the challenging questions, have the tough conversations and seek a common understanding. Thoughtful and deliberate assessments of the cooperative membership can strengthen our business model.
Our effectiveness is bolstered when we understand how we are aligned with members’ priorities. And perhaps more importantly, our responsiveness is guided when we understand members’ views of the future, and we can get to work with focus and acceptance of the change that may be necessary.
A shared understanding, followed by innovation, flexibility and collaborative execution, strengthens our co-ops for the long term, and I truly believe we will always be brighter, stronger and better together.
Employees are my greatest joy—as well as my greatest challenge. Keeping them safe, motivated and engaged is a strategic focus of ours.
I want every employee to return home safely to their family every night. Although our safety program is intense and comprehensive for all positions, I'll continue to be concerned if they are working around electricity, in our offices or along the sides of roads and highways.
In addition, the number of miles driven daily by our employees brings added risk. Every day you hear of accidents caused by distracted drivers, so we recently kicked off the Lutzie43 Foundation's "43 Key Seconds" campaign. It focuses on having a clear head, clear hands and clear eyes before clicking it. Each of our fleet vehicles has the visual reminder of the campaign, a white key stamped with the 43 Key Seconds logo.
Also, we are fortunate to serve a high-growth area, but no blessing comes without challenges. Our employees work hard, and their workload is increasing. In these circumstances, the risk of burnout is very real.
We are challenged to find a balance to keep employees motivated, energetic and engaged in their work, which will also help keep them safe.
Many factors may contribute to load decline over time. Maintaining or increasing Golden Spread's load level is critical to keeping rates low for our members by spreading existing fixed costs over stable or additional sales.
Golden Spread secured the total TCEC (one of our 16 members) load in 2017, saving money for all Golden Spread members and their consumer-members, and continues to strengthen the relationship between Golden Spread and its members.
Distributed energy resources are a growing interest for certain Golden Spread consumer-members. NRECA describes DER as distributed generation (wind, solar, biomass, etc.), as well as other deployable energy technologies like storage, demand response and energy efficiency.
Like many electric cooperatives, Golden Spread is responding to the growth in new technologies as we bring about the utility of the future and learn of the future business impacts of various technologies. We think DERs have the potential to be integrated into the overall Golden Spread operations when they promote efficiency and optimal rates for our members and their consumer-members.
We believe our cooperative business model allows for DER solutions that balance policy priorities with local conditions while ensuring reliable, affordable and sustainable electric power.
Rural distribution cooperatives across the nation face a growing number of challenges: declining sales, members moving to urban areas, environmental battles and disruptive technology.
Each of these challenges gives significant reason for pause, but the one that keeps me up at night is malicious lawsuits and untruths spread by people that don't know, don't care and don't understand the cooperative business model.
During the past few years, cooperatives' boards of directors and management have come under fire for everything from not providing enough economic assistance to spending the co-op's members money in lavish and unnecessary ways. While these are legitimate issues that should be addressed, not all cooperatives are guilty of wrongdoing, and not every issue warrants litigation, which does, in fact, waste members' money.
Cooperatives are made of people, and they are working to grow and improve how they deal with higher costs and changing expectations. They must continue to get better at being engaging, responsive and reliable. Dealing with ill-intended attorneys looking to profit at the expense of the membership should not be an acceptable answer to a legitimate member concern.
The principles that brought us together as a cooperative should be the same principles that help us resolve differences, through transparency and member engagement that will move our cooperative, our state and our nation forward.
The future of the electric industry is uncertain. It is very possible that this future can be shaped by our actions today.
We have an extremely good and appropriate business model to make an impact, but it will take innovation, creativity and action to continue to meet, and hopefully exceed, our members' expectations.
As cooperatives, we are in control of our future more than many of us may think. We have the opportunity to put our seven cooperative principles to work in preparing for and dealing with industry changes that are coming.
By working together with our members, the communities we serve along with our cooperative partners, we can be prepared, and even more importantly, we can lead in developing the future of the industry for the benefit of our members and the communities we serve.
It is pretty simple. That is our purpose and should be our mission. The electric industry is changing, and we must be leaders to guide the changes to the benefit of our members. If we don't, someone else will.
As a generation and transmission cooperative, Basin Electric Power Cooperative is committed to producing affordable, reliable power for our 141 member co-ops across nine states.
One of the biggest challenges impacting our ability to do this over the next five years is regulatory uncertainty. This uncertainty impacts us on many fronts, from long-term planning and operations to economics.
As we make long-term planning decisions, it's vital our industry has certainty, time and flexibility with respect to regulations that impact our facilities. The lack of regulatory certainty creates the threat of not knowing whether we can continue to cost-effectively operate a facility through the duration of its estimated life, which ranges from 30 to 40 years or longer as economics and engineering allow.
We need to be able to make decisions that ensure our generating facilities don't become stranded assets that our members would have to pay for, yet receive no benefit from.
That's why Basin Electric supports the EPA in finalizing the proposed Affordable Clean Energy rule and supports reform of other Clean Air Act programs, such as New Source Review.
Having both in place would give us set standards, clarity and guidance, from which we can implement cost-effective technologies and improvements to serve our membership.
One of our main challenges over the next five years will be adapting to the transformation happening in our industry to keep up with member and societal expectations.
Prior to recent years, the way we have provided the miracle of electricity has fundamentally been constant with few disruptions to the model. This has changed, and the speed of this disruption will continue to increase. Our ability to be nimble and react to member expectations, market conditions and regulatory environments will be critical in the coming years.
Adjusting our model to go beyond the consume-bill-and-pay cycle is key. A product and service model that provides options and allows for greater flexibility is the future. The relationship between the distribution and G&T model needs to be reorganized to maximize DER opportunities for all parties.
Our members will continue to expect safe, affordable and reliable power. However, with evolving societal expectations and technological advancements accelerating ever faster, a fluid, divergent approach will be necessary on all levels.
The accelerating pace of change faced by most rural electric co-ops is daunting. Consider the changing political and regulatory climate, fed by rapid growth of progressive urban areas; evolving—and conflicting—consumer expectations; and fundamental shifts in power supply markets and revenue recovery models. These are just a few of the industry-defining issues we face, and the stakes are big.
Over the next five years, Grand Valley Power will be challenged to tackle these critical issues while managing an unprecedented changing of the guard in the leadership of the cooperative. Three of our cooperative's nine directors have less than three years of experience serving on our board, and at least four other directors are contemplating retirement in the next two years.
On the management side, in the next nine months, four staff members—with almost 140 years of tenure among them—will be retiring, including stalwarts who head up our engineering, operations and finance departments.
Education and training—with an emphasis on leadership training—are a key component of our succession-planning efforts for board and management team members. Homegrown employees have been groomed to step up and are being counted on to fill the void left by retiring leaders.
We'll succeed because we will maintain our focus on delivering great service, and we will hold true to our values and principles. In a way, it's fitting to have a new generation of leaders on board as our industry transitions to an era that promises to be much different than the one we have known for decades.