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Ahead Of The Competition

In the past five years nearly half the states have drastically changed the structure
of their electric utility industries. In those states electric utilities are no
longer monopolies regulated by the government. Now, utilities can compete with
each other for customers in those states, just like long-distance phone companies,
banks, or fast-food franchises.

  Kentucky is not one of those states. It is among 17 states that have
decided to study whether electric utility restructuring would be a good idea,
or a bad idea for Kentucky.

  Despite that study status, the 27 electric cooperatives in Kentucky
have for years been acting like companies in the most competitive of industries.

  Why would a monopoly hustle so hard to please customers?

  Maybe it’s because, as not-for-profit, consumer-owned companies, all
efforts of co-ops go toward pleasing the customer. Maybe it’s because, as locally
based businesses, they know the value of offering good deals to people who are
both their neighbors and their community. Maybe they recognize that the world
is becoming increasingly competitive.

  Whatever the reasons, Kentucky electric co-ops have not been acting
at all like indifferent monopolies. They’ve been providing low and stable rates,
improving services, and practicing innovative management and organization worthy
of any highly competitive business.

  Rates are the cornerstone of competitiveness for utilities in Kentucky.
Kentuckians pay some of the lowest rates in the nation, which is probably the
number-one reason it makes sense for Kentucky to wait and see how restructuring
works out in other states before gambling with our own good power prices.

  Not only are Kentucky co-op rates low (the second lowest in the nation,
compared to residential co-op rates), they’ve been stable the past several years,
with the average rate in the state decreasing slightly since 1993. 

  Service has been blooming as co-ops address a variety of customer concerns
and desires. But this isn’t anything new-it’s how co-ops have done business
since they started 60 years ago, bringing electricity to farm families when
no one else would.

  Today, based on scientific surveys and good old-fashioned requests,
electric co-ops are providing other services not economically available in their
communities: cell phones, propane gas, and Internet service, in as wide a variety
of combinations as there are local communities.

  And there’s also a lot of attention to basic electric service-installing
drive-up windows to pay bills, 24-hour response lines, updating electric meters
with the latest, most efficient technology, and clearing trees and brush from
around power lines to cut down on outages.

  Management and organization can create more effective and efficient
attention to the co-op member-consumers. In the past few years two electric
co-ops consolidated to form Blue Grass Energy, based in Nicholasville, and two
others came together to form Kenergy, based in Henderson. Co-ops in other parts
of the state share services with each other to get work done as cost-effectively
as possible. Big Rivers Electric Co-op, which generates electricity for three
co-ops around Henderson, operates under an innovative arrangement in which a
subsidiary of Louisville-based LG&E runs its power plants. East Kentucky
Power Co-op, which provides electricity for 17 co-ops in the eastern part of
the state, runs several highly regarded environmental programs that benefit
many communities in the state. Co-ops have established specially trained representatives
to work with business customers, and employees regularly take courses in areas
such as safety, customer service, and creative problem solving, to keep improving
the performance of the co-ops.

  The Kentucky Special Task Force on Electricity Restructuring is halfway
through a four-year study. In less than two years it will recommend to the legislature
a course of action on deregulation. Whether Kentucky restructures its electric
utility industry, or decides to leave it as it is, there’s strong evidence that
co-ops will continue to serve their consumers with competitive zeal. And unlike
others, we will remain local: in our management, our ownership, and our commitment.

        -Paul Wesslund

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