Customer-Owned Electric Coops Rival Big Providers in Service, Rates

By Stouffer, Rick | Tribune-Review/Pittsburgh Tribune-Review, September 14, 2008 | Go to article overview
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Customer-Owned Electric Coops Rival Big Providers in Service, Rates

Stouffer, Rick, Tribune-Review/Pittsburgh Tribune-Review

PERRY -- Who do you call for satellite-based Internet service? Or for inexpensive land-line telephone service? How about purchasing a new water heater?

If you live in many rural areas of Pennsylvania, chances are your local electric utility can handle those calls -- and even more services.

A total of 13 electric cooperatives, nonprofit power providers owned by their customers, is spread across the state. Western Pennsylvania is touched by three coops, including Central Electric Cooperative Inc., based in Perry, Clarion County, across the Allegheny River from Parker, Armstrong County, which bills itself as America's smallest city, with a population of about 800.

Other cooperatives with area customers include REA Energy Cooperative Inc., based in Indiana, Pa., and Somerset Rural Electric Cooperative Inc., based near Somerset.

"We go out of our way to serve our members," said Larry S. Adams, CEO and general manager of Central Electric Cooperative.

The company serves 25,000 primarily residential member-customers in a seven-county area stretching 100 miles from Tionesta, Forest County, south to below Saxonburg, Butler County, and into Allegheny County. Central Electric's actual geographic footprint resembles a Rorshak inkblot, with service cavities and jagged edges.

A nonprofit organization, Central Electric returns its profits to its members. They are paid an annual credit that's figured in proportion to how much power they used during the year. In 2007, the cooperative's profit totaled about $1.9 million.

Unless they are served by one, most people in Pennsylvania know little about the 70-plus-year-old coop power providers.

"At its heart, a cooperative is a buying club," said Marty Blake, a principal with the energy consulting firm The Prime Group LLC in Louisville, Ky. "A group of people get together to provide a service for each other." Blake is a former commissioner for the New Mexico Public Regulation Commission.

Phil Tack, a member-customer of the Central Electric Coop, said, "In the last 15 years, Central Electric has been very, very dependable. We've been very well served."

Tack works as the administrator of the Sugar Creek Rest, a 15- bed skilled and personal care center, near Worthington, Butler County. The Sugar Creek Rest gets its electricity from Central Electric. And Tack's home adjacent to the personal care business likewise uses Central Electric.

His home is equipped with two electric meters and two separate power services. One set is for regular power service, and the other is used for a power-saving service offered by Central Electric that can cut off electricity in times of high demand. Customers such as Tack who use the power-saving service can pay 40 percent lower rates.

"One meter, they control, and it powers things like the air- conditioner, the dryer, the hot tub, the heat pump, all of the really heavy power users," Tack said. "They actually are able to shut down the use of that equipment, which sometimes can be disruptive, but the rates they offer on that meter are terrific."

Pennsylvania's cooperatives, unlike investor-owned power providers such as Allegheny Power or Duquesne Light, aren't under the jurisdiction of the state Public Utility Commission, which approves electricity rates, or the Federal Energy Regulatory Commission.

"I answer to my board of directors," Adams said. They alone set rates for Central Electric's customers.

The eight directors, who must be members, and Adams determine the cooperative's financial needs. The coop finances capital improvements using federal loans, and it funds daily operational costs from revenue collected from members.

Despite its status as a coop, Central Electric's prices are competitive with investor-owned providers.

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