Latest / Not Another Energy Podcast / We Heart Co-Ops: A Love Story
Transcript
- Bethany: Hello, hello, hello, and welcome to your new favorite show, not another energy podcast. I'm Bethany. Teresa: And I'm Teresa. Bethany: And together we are Bloom Advisory Partners. We are very excited for today's conversation. Teresa and I both talk a lot about how much we love, that's right, the co-op. So today we're gonna get a little bit nerdy about it. And I kind of wanted to start off. Let's just do a little snapshot of co-ops in America as they are today. There's about 900 electric co-ops, 830 local distribution co-ops, 64 gen and transmission co-ops. Co-ops serve 42 million Americans, or that's about one in every eight, which isn't a huge amount when you think about it, but they're also responsible for maintaining 42% of the nation, the nation's distribution. lines you know and we talk about them all the time because they're reliable they're affordable we think they do a much better job and we really don't even think about them so today we want to give them some love talk about where they came from why we have them why they're so awesome and why you should also love them too so T let's let's start out with a co-op appreciation shout out who is your favorite co-op and why Teresa: I mean, mine is the co-op I live in, so shout out to Union Rural Electric. You are absolutely the best. similar to you, Bethany, right? I lived in an investor-owned utility territory for a long time. Seventeen years ago, I moved into URE's territory. I must have been so blind to how good service could be because I immediately I noticed my power doesn't go out, my bill is lower, like what the heck is going on? And then I was like, my gosh, I'm gonna co-op. They're freaking amazing. Bethany: Yeah, see, I have the distinction of living in utility territory I'm in Duque Light, but owning a camp that is in a co-op, I would like to shout out Northwestern Rural Cooperative. I'm up in Pima Tuning PA. Whoop, whoop, love those Teresa: Whoops. Bethany: guys. So yeah, I actually get to see you know, in real time comparison, the the services, the rates, the the communications, you know, and just across the board everything is better with my co-op than it is with my utility. So I Teresa: my gosh. Bethany: I know I've got a I've got a foot in both spaces and I could tell you I love my Teresa: Yes. Bethany: co-op space so much more than my utility space. Teresa: the communication. I didn't even think about that. Yes. Like, even Bethany: yeah. Teresa: even if there's just a little blip, you get a sorry about that. We fixed it as fast as we could. Your s your power was up for ten minutes because a a car hit a pole on this road. Like it's just a community and everybody's like, Cool, thanks for getting on that so fast. Bethany: Yeah, I and I get notices all the time. I think we talked about this a couple months ago. I almost w put myself up for the board, right? I mean, there it's it's made up of people that live in the area or have, you know, properties in the area. And, you know, you Teresa: Yes. Bethany: get to vote. I mean, it's like it's like a little mini democracy that gives you amazing electricity, amazing service, and amazing reliability too. Let's not forget the reliability factor. I can Teresa: Yes, yes. Bethany: also tell you my power goes out far less often at camp than it goes out of my home here in Pittsburgh. Teresa: you know, I just happen to live outside of a major city and I can tell you I'm like maybe a mile for where the co-op and the investor owned utility come together. I can literally drive and see the difference every time a storm rolls through or whatever between who has power and who doesn't. And it's always my co op, a little heart symbol on my chest right now. Bethany: Do you feel bad for those people that live like right on the line? Like they're one house away from living in co-op Nirvana. Teresa: I I do I mean weirdly I do, because it's it's this strange thing that shows if you're in a co op, like you said, member driven, not driven by profit, all of those great things, it truly shows that if you get wid of rid of that weird regulated investor owned stuff, you can have an actual reliable, affordable utility. Bethany: Well let's let's take a little walk back in time, Teresa, because I know you did a little bit of research here on where where this all kind of came from, right? And I and and I have a feeling that we're we're about to get a little little nerdy here. So I'm I'm gonna I'm gonna hand the mic over to you because I I've I think that what you're about to say is very interesting. I got a preview because she sent me over the script. But what what what kind of kicked all this off here in the good old United States of America? Teresa: Yeah, so a little bit of history. Co-ops actually started with the husband of one of my favorite first ladies. If you don't know, that's Eleanor Roosevelt. Amazing lady, right? She the thing I love most about her is she did all of this great work as first lady. And then again, after she was no longer first lady, she worked with the United Nations, and her big thing was get the job done, even if you're not going to get credit for it. And that is sort of what co-ops do, right? They're not there for the flash and advertising and name recognition and all these things. They're just there to keep your lights on at the lowest cost. So They sort of came about because in the nineteen thirties, the cities and the major metropolitan areas, everybody had electricity. And everybody had electricity because, again, big companies were willing to put in the infrastructure, be regulated, and make money on it. Nobody wanted to take on the cost to go out to those rural areas. So Franklin D. Roosevelt in his New Deal created the rural electrific I'm I'm gonna stumble on this word, electric electrification administration. Apparently he was better at speaking than I was. We're gonna call it the RDA, because that's what they called it. So Bethany: Yes, yes. Teresa: where the traditional utilities weren't eager to build out these long, large systems, which back in that day there were few customers but long distances between them. He basically said, Hey, you guys can now build your own. You can have your own service territories. So the communities themselves came together and they formed these member owned electric co-ops. And it was designed to bring power to the rural areas, but also be run basically with your neighbors, right? And the key part that exists to this day is that they weren't built with how do we maximize return. They weren't built with let's go make a bunch of money. They were truly built with how do we get power at the lowest c possible cost and how do we make it as reliable as possible. And those are sort of the core tenets that remain today. And it's also why you and I love our co-ops so much. Bethany: It's so like do you think that it's because I mean, I'm assuming they obviously they're still even in these early days, right, charging their customers a rate. So were they just reinvesting everything back into the systems? And do you think that's kind of the the foundation of why the re reliability is so much better in a lot of areas? Teresa: Yes, exactly. That was the whole premise that all this was built upon. I'm not going to deny that the US government clearly gave them grants. They still have grants today. If you look in every budget bill, there's funding for the the rural co-ops. But it also came with, as you said, this commitment to we're not here to profit. And if we do make more, as you know and I know, you get a credit back on your bill. Which how cool is that? Yes. Yeah. Bethany: Yes you do. I know I almost mentioned Teresa: Yeah. Bethany: that right at the beginning, but I didn't want to absolutely rub it on everybody's faces. It doesn't live in a co-op. But now that you mention it, that absolutely happens. Teresa: Yes, yes. So the the co-ops sort of started in the thirties and then in the nineteen forties you saw more and more of these being built. To your point, hundreds of thousands of miles of electricity lines. in many places the co-ops actually connect for power purposes in some of these wholesale markets. The the co-ops are actually a critical part of connecting between even the investor-owned utilities. So they are integral to our electric grid, not just because they, you know, once upon a time connected and brought power to really far-flung rural areas, but You know, I I I live in a not so rural area anymore, right? It's a suburb of a big city. And I think co-ops still have a place in everything because they're bringing their tradition but also innovation to the electric space. Bethany: So I actually I wanna ask you a question, trying to think how to frame it. Is there a danger and I don't wanna derail the the the historical aspect and we will get back to it, but is there a danger that, you know, the utility could say like your co op's not allowed to exist anymore and you could get absorbed up into it? I mean, again, because I don't live in my co op, I'm just there, you know, on the weekends, I don't I might not be as familiar with the day to day aspects of it, but you know, is is is there precedent for that? Teresa: it's not as cut and dry as I'm the utility and now I'm telling you your co-op is gone, but it does happen where a utility might say, This part of the service territory is now mine. The reverse also happens where the co-op might say, Utility get out, you're in my space. I think more often they try to work it out behind closed doors, but In a world of, you know, I mean, co-ops are those what used to be rural areas, which are now just suburbs. So it does start to creep into each other's territories in different ways. But no, an investor-owned utility and even a state can't just show up and say, Nope. Co op, you're out, this other one is in. And that's kind of the unique thing about co-ops too. They're not subject to the regulation in most places. I'm not saying that there aren't some specific areas, but in most places they're actually not subject to the regulation of their state utility commission, which also keeps them out of a lot of politics and other weird stuff that just adds things to your bills. Bethany: Okay, well let's let's go back in time now. So now we're at about like nineteen forties, you know, like look like post World War Two. You know, what what started to happen with co ops? Did they just start just running rampant all across the country? Teresa: It's just a funny way to put it. Bethany: I know of a picture in my head of just like co ops making a run for it, but you know, I mean there was like a period of great acceleration, I guess is what I was trying to say. Teresa: There there definitely was. And it was it was truly d driven by communities who now actually viewed electricity as critical to their day to day lives. You know, you start getting into the forties, nineteen fifties, refrigeration is in lights i in a different way become more of a critical part of things. Sewer systems, whether that's a septic system that runs on electricity. It's always funny. My stepmom always talks about how she remembers as a kid going to her grannies and she hated it because she still had an outhouse. So she had electric Bethany: Mike. Teresa: electricity, but an outhouse she was like, I hated it. But you start getting into the forties and fifties and electricity is part of our day-to-day world and these communities that we're rural, right? Everybody comes home from the war and they're like, No, no, no, no, no. I don't live like this anymore, right? I've I've had the electric life and I want that. So co-ops start to grow even further. More and more people want electricity. Bethany: Right. And they probably also at this point now are starting, to your point, need electricity because of all of the advancements. And also, it was probably starting to become more and more too of kind of a socio economic gap between the haves and the have nots. So I'm assuming the have nots at this point are much more aware of the haves and are clamoring for it maybe even more loudly than before. Teresa: Yes, yes, exactly. And I mean you had other things that were sort of taking place around this time. The FDA and food safety had a different take on things. You know, it's everything starts to run on electricity, but it was like this hub and spoke thing that kept going out to the point it became a critical need for your day to day life and therefore you need a co op to service you. Bethany: Okay, so now fast forward to today, obviously we said at the beginning and I don't know if I mentioned it, but those stats at the beginning were from Enrica, which my goodness, the na helped me out. Teresa: National Rural Electric Co op Association. Bethany: Thank you, Teresa. We talk it all the time too about how many acronyms there are in the energy space. And I truly maybe medical might have more than energy, but I think it would be a close, a close comparison on on which industry has the most. Teresa: Definitely. Definitely. Bethany: so yeah, and that's the governing not the governing body, but that's they they yeah. Teresa: That's their trade org, but they do a lot of other stuff too. They'll do, they'll they'll act as a test bed for new technologies. They're the advocacy organization, they're a place for all the co-ops to come together and like learn about new stuff, new products. So I don't know, I d I I think association fits them best because they're not just like a trade org. They're they're a place for co-ops to come together and improve and learn about different things. Bethany: So, and that's actually a great segue to something I did want to ask you about. we talked in the past about how, you know, new products, new services, new innovations could get stuck in like the pilot loop and you know, it's hard to to scale. What about co-ops make them a maybe not a better bet, but a better place to test out some of these innovations? And what are some innovations that we might have today that came to us thanks to a co-op? Teresa: Yes. I think there's a couple of things at play. One is for a co-op, the investment into something that makes stuff not break works. They are they are not a regulated utility where if something breaks, that's how they make their money. So a co-op's incentive is to make sure that things don't break. That reliability is important. There's no other incentive other than reliability for them. And because of that, they're more interested in learning about different technologies and using things like better forecasting or some of the non-wires alternatives to keep costs down for their members. It's because their incentive is different, it also means that they're more open to technologies that are designed to meet their members' needs. Bethany: Yeah, I think there might be this perception that because co-ops are have historically been serving rural areas and royal rural customers, that they're behind the times in some ways. But I think that is absolutely not true. And going back to us talking about the way that our co-ops communicate to us, the fact that they can communicate to us like that is indicative of how on top of things they are in a way that some large investor-owned utilities are not. I mean, these aren't some country bumpkins just, you know, with a hamster on a wheel creating electricity. They're being very in innovative and they have access to innovations and technology. Teresa: Yes, and in in my personal experience, they tend to be the first movers on technologies when it comes to distribution systems, which is Not I don't think people really realize that because they're not as flashing out there. Coops aren't spending a lot of money on marketing. They don't. That's not their goal. Right. That I mean, yeah, that's true Bethany: They don't have to. Teresa: too. I'm not saying that like I don't love my little co op magazine that comes and whatever. It's filled with, you know, local recipes. It's great. Bethany: This is not a cooking show, Teresa. Teresa: Yes, yes, yes. But I mean it's about the it's about community, right? Bethany: Yeah, it is. And it it makes you feel good. It does. Teresa: yes. So their focus on technologies tend to be focused on ways to reduce bills also. They're willing to make an investment if it means that there's value coming back to the members. So for example, they're they're subject to the same market forces that everybody else is right now. if you're in an RTO, Generation costs are high, transmission costs are high, how do we bring those down for our members? So for generation, obviously a lot of them are either a part owner of a gen system or they're buying it in the market. For transmission and some other things, they don't own that. So well Some of them do or some of them are members that that have other stuff, but for the most part, most of them are buying transmission from a a different company that owns a transmission line. So reducing demand is a huge thing for co ops right now. And I've seen across the country everything from demand based residential rates to how do we invest in behind the meter types of stuff with our members to get the benefit of that to once upon a time in my co-op I had an electric water heater that was controllable. You and I have talked about how we get those alerts on peak days. Bethany: Yep. Teresa: So I they're clearly doing things, but they're doing it in the most cost effective way they can because their ultimate goal is affordability. Bethany: So what are some lessons that utilities could learn from co-ops? What you think some things are that are transferable? I mean, obviously there's not gonna be every single thing could be applied each way, but I feel like there's some lessons to be learned here that could be applicable to our IOUs and our utilities. Teresa: I think it's a little unfair to say lessons learned for investor owned utilities. I think it is more we have to change the regulatory construct that they operate in. We have set them up to be in a place that is if it breaks, I make money. And co ops don't live in that space. And co-ops also don't live in a space where it's all about making money, which unfortunately for investor owned utilities, they they do have shareholders. They are private companies. People don't think about that, but they are. So to me it's more about changing how the incentives work for them than necessarily saying you should be like a co-op and give everything back. That it would be an unfair thing to tell them that. Bethany: So once again it boils down to regulation policy. Teresa: It really does. It really does. Bethany: All roads lead back to that. Well, when I think about electro, electrative, my goodness. Now you I've caught your your not being able to talk today. my goodness. Teresa: Say it, do it. Bethany: Electric co-operatives. I'm just gonna say co-ops. Let's just say co-ops. You know, there is it I do see proof that utilities, you know, can be affordable, reliable, innovative, and community focused at the same time. maybe there is some policy work that has to be done, but let's let's remain optimistic, Teresa, because this is an optimistic episode at its core. I would also like to point out you Did not go on a rant once this entire episode. I don't want you to start. I just want to say clearly you do love co-ops because you this has been the the cheerful, happy, loving Teresa, loving on her co-ops. Teresa: I do, I do love my co-op. It's a weird thing. Like we go places and I tell people about it and they just look at me like I'm crazy. But if you meet people who didn't live in a co-op and then move into a co-op, I guarantee that they're gonna say the same things that you and I always say. my gosh, it's so nice, my power doesn't go up, my bill is so much lower. I mean I see it on like the next door app. Like we're there's again, 'cause I'm so close to the border, right? There are people that are like, My bill is through the roof and then the other people are like, Well, you are my URE bill is low, you should move like Bethany: Don't don't don't the secret is out. you know, it's it's really I love that something that started over a century ago to solve a problem for rural America has maintained over time the same spirit that imbued it at the beginning. And it is still something that people feel very, very loving and very warm about. and that's why we love co-ops. Teresa: Yes, yes. If you can live in a co-op, live in a co-op. It is a community that is just beautiful. Bethany: And if you can't live in a co-op, buy a camp in a co-op, which will remind you how much you wish you lived in a co-op. Teresa: Ha ha ha. Bethany: All right. Well, that is today's episode. Thank you guys so much for listening. Once again, I am Bethany. Teresa: I'm Teresa. Bethany: We are Bloom Advisory Partners. Please join us next next week. we'll see if Teresa could go two episodes in a row without making a rant. I don't know. Maybe put some, maybe put some cash she bets on it. It probably Teresa: It's not gonna happen. We know that's not gonna happen. Don't put that challenge out there, I'll fail. Bethany: I yeah, it's not gonna happen. But you will come back and you will listen and you will love it. It's gonna be a great episode. thanks again. And remember guys, energy. It's never just about energy.