The Co-Op Compass
By Richard G. Johnstone, Jr.
youre entering a strange environment, or one with few landmarks, its good to
have a compass, to keep you pointed in the right direction. Cooperatives and all other
electric utilities are just beginning to enter a strange environment, as restructuring
unfolds according to the plan laid out by the Virginia General Assembly last year and all
electric utilities in the state prepare for competition beginning in 2002.
As you may know, electric competition will involve users selecting the company that
provides their electric energy. The company that delivers this electric energy to homes
and businesses in your case, your local cooperative will remain the same.
The path to restructuring and competition is hardly easy, or smooth. This is evidenced
by the experience of customers in the handful of states where competition has already been
introduced. In those states, few if any utilities are vying for the business of
residential and small business customers; not surprisingly, utilities are courting the
large commercial and industrial users of electricity, who thus far are enjoying most or
all of any savings.
And the whole topic of electric restructuring has received a substantial amount of
negative publicity recently, due to the situation this past summer in the San Diego,
California area. Out there, an insufficient supply of electricity met a rising demand for
it in an environment in which the regulatory rate protections for customers had been
removed, resulting in some users paying two, three, and even four times as much for
electric energy as they had before.
Thankfully, Virginias General Assembly provided built-in protections for electric
customers, with a three-year phase-in of competition between 2002 and 2004, and rate caps
until 2007. And Virginias 13 member-owned electric cooperatives were the leaders in
insisting upon these protections as Virginias lawmakers in 1999 crafted the bill
restructuring the electric utility industry. And we pledge to continue vigilantly and
passionately working to protect your interests and those of other residential and
small business consumers as the restructuring process continues to unfold.
In the meantime, with October being Cooperative Month, we thought it would be helpful
to list our "compass points," the seven principles that have guided cooperatives
all over the globe since the 1840s, when a group of weavers established the first modern
cooperative in Rochdale, England.
Principle # 1 Voluntary and Open Membership. Cooperatives are open to all
persons able to use their services and willing to accept the responsibilities of
Principle # 2 Democratic Member Control. Cooperatives are democratic
organizations, owned and controlled by their members. The board members who set policy are
elected from the membership.
Principle # 3 Members Economic Participation. Cooperatives are
operated on a not-for-profit basis. Any profits (called "margins" in a
cooperative) are allocated to the members and later returned to them as patronage capital
(or "capital credits").
Principle # 4 Autonomy and Independence. Cooperatives are autonomous,
self-help organizations. They are "beholden," as it were, only to their members.
Principle # 5 Education and Information. Cooperatives communicate
regularly with their members. Cooperative Living magazine is a 54-year-old testimonial to
Principle # 6 Cooperation Among Cooperatives. Cooperatives serve their
members best by working together. Twelve cooperatives in Virginia, Maryland and Delaware
years ago formed Old Dominion Electric Cooperative to provide themselves with a reliable,
affordable energy supply. Old Dominion owns about half of the electric generating needs of
these 12 local cooperatives, through ownership interests in two power plants. This
ownership is more valuable than ever before, since it provides cooperatives with a measure
of price stability with competition (and its potential for price volatility) ahead.
Principle # 7 Concern for Community. Cooperatives are locally owned and
locally controlled, locally staffed and locally focused. Theyve been in the
communities they serve since before World War II. They work hard to ensure that your
community their community is as healthy and prosperous as possible, in every
good sense of those words.
The bottom line: Once competition begins in 2002, other companies may want to sell
electricity to you. Or they may not, since the overwhelming majority of cooperative
customers are residential and small business accounts, and as "little guys" may
offer little in the way of profit to these electricity marketers.
The good news is, cooperatives arent concerned about what others may do. Our
principles, our focus, our "compass" if you will, keeps pointing us to true
North, to providing you with the best possible service at the lowest possible price.
Weve been your provider of need in the past; we hope to be your provider