TOM SMITH: When it comes to the PEC, don’t mess with success

By Tom “Smitty” Smith — Smith is a Pedernales Electric Cooperative member who has advocated for open governance, lower rates and cleaner energy at the co-op for seven years.

The-Future-Of-ElectricitySince 2007, the Pedernales Electric Cooperative (PEC) has launched multiple reforms with stunning results. Along with purging corrupt leaders — including two top executives convicted on criminal charges — the reformed PEC has significantly lowered customer bills. In May, the average bill will be 9 percent lower than it was 10 years ago. More than $65 million in capital credits has been returned to member customers. Changes in bylaws have codified members’ rights and provided them with new opportunities to participate in the co-op’s decision-making.

Yet, some candidates for the board are determined to mess with success. Some candidates would deregulate the PEC, claiming deregulation would lead to lower bills for customers.

In 60 percent of Texas, electricity markets are deregulated. But it’s far from clear that being able to “shop for power” actually benefits consumers.

First, retail electric providers (REPs) are designed to maximize long-term profits for shareholders and executives, not minimize customer bills, which is one of the fundamental operating principals of electric cooperatives.

Second, in order to attract customers in a deregulated market, retail electric providers use highly aggressive, sometimes deceptive sales tactics. If you look hard enough in deregulated markets, you can find deals with lower rates. Those include bait-and-switch strategies, which lure customers into short-term deals that have hidden long-term fees, like minimum usage charges and early termination costs.

Nueces County Electric Cooperative is the sole example of a deregulated electrical co-op in Texas. It charges about $142 for 1,000 kilowatt-hours, significantly more than the PEC, which charges $116 for the same amount of energy. According to the Nueces County Electric Co-op website, the lowest rate offered in the area is $123 per 1,000 kilowatt-hours — far above the PEC’s rate.

This legislative session marks the fourth time Texas legislators have tried to force the PEC to form single-member districts for electing directors, instead of allowing at-larger voting to continue. Some candidates for the board endorse this approach. In fact, the debate has been ongoing within the PEC’s board for five years; the board has done studies of the impact that changing the process would have and asked its members to vote on whether to change it – twice. Both times, co-op members voted no.

Why? Because under a single-member system, the board would be hugely Austin-centric, since the vast majority of co-op members live in or near Austin. Meanwhile, rural members would have virtually no voice. With the current at-large, direct democratic vote, every board member has to think about how their decisions will affect all voting co-op members, including those from rural districts.

The PEC story shows how well member-controlled utilities can work. In the last seven years, the PEC has regained control of the board and management. The PEC has audited itself and eliminated huge executive salaries, hidden bonuses and board member perks. Meanwhile, it has also managed to reduce rates three times.

Through webcast meetings, the PEC has opened up its governance to scrutiny from all of its members. The PEC has adopted a bill of rights for all members and conducted a survey to find out how members want the co-op to operate in the future.

What’s next for the PEC? Plan for growth; buy or contract for new sources of electricity; plan for drought; develop new rates; educate members on how to save energy and money; and develop a new business model that allows the co-op to pay its bills even while consumption declines with increased energy efficiency.

At the moment, three of the PEC’s seven board seats are up for re-election. Now is the time to review the candidates’ positions and vote for whoever will lower average bills, fairly represent rural and urban members, and plan for a more energy-efficient and less water-intensive future.

Smith is a Pedernales Electric Cooperative member who has advocated for open governance, lower rates and cleaner energy at the co-op for seven years.