Winning Combinations

A newspaper editorial took me pleasantly by surprise.

Pleasantly because it contained kind words about electric co-ops. Surprise because it admitted that its previous dire warnings didn’t come true.

I used to work for newspapers and I’ve been known to proudly defend some of the sleazy things they do. But even I concede you rarely see an editorial indicating the newspaper was less than perfect.

So the Henderson Gleaner deserves special congratulations for editorial integrity when it praised the results of the consolidation of two co-ops.

“A lot of people, including this newspaper, initially reacted with uncertainty, skepticism, or outright suspicion when Henderson Union Electric Cooperative in 1996 began exploring the idea of merging with Green River Electric Corp. of Owensboro,” the editorial begins. Then it reads, “Three years later, it’s looking like a smart move.”

The editorial describes how the 1999 consolidation that formed Kenergy electric co-op more than delivered on its promises.

Kenergy made good on its pledge to save $2.5 million a year and pass it on to consumers in the form of a rate reduction. Then Kenergy passed along another rate cut.

The newspaper noted that while Kenergy reduced staff, it kept all its locations open, extended office hours, and upgraded the reliability of the power lines.

It’s a good story, and a familiar one for electric co-ops. Cooperatively owned utilities tend to be smaller than investor-owned utilities like KU and LG&E. While that smallness offers a popular, local presence, it can also miss some chances for “economies of scale.” So in Kentucky and across the country, co-ops have been carefully studying their operations to find the best of both worlds.

Blue Grass Energy Cooperative, based in Nicholasville, went through two consolidations with other co-ops in the past five years, with a success similar to Kenergy’s. The consolidations allowed the number of co-op employees to be reduced while services increased. By the end of the decade Blue Grass expects to save $4.78 million.

Consolidation doesn’t make sense for all co-ops. But working toward the best business deal for their consumer-owners is something they all have in common. Co-ops’ success at balancing cost and service may surprise newspaper editorial writers, but not those familiar with electric cooperatives.