Cooperation Among Cooperatives

by Dave Turner
Chairman
Continental Cooperative Services

March 2000 marked the launch of something unique in the annals of rural electrification. That’s when the boards of directors of two generation and transmission (G&T) cooperatives that do not border each other — Harrisburg, Pa.-based Allegheny Electric Cooperative (Allegheny) and Decatur, Ill.-based Soyland Power Cooperative (Soyland) — officially approved creating a new, self-governing organization called Continental Cooperative Services (CCS).

The immediate question some may ask is why two G&Ts, roughly 1,000 miles and a time zone apart, would partner like this? The reason, however, is very simple and goes to the heart of cooperative business practice and the realities of a deregulated energy marketplace.

In the electric utility industry today, size and negotiating clout are critical to success. Since 1999, more than 50 private power companies have merged for this very reason.

Many market watchers have warned that unless G&Ts nationwide begin living a basic co-op operating principle — cooperation among cooperatives — they will not be able to survive in our vastly restructured industry. In fact, it has been estimated that power supply cooperatives could be as strong a market force as the largest private power marketers if we worked together to take advantage of geographic and product diversities. CCS — by operating in two time zones across three electric reliability regions, with CCS/Allegheny being a winter-peaking system and CCS/Soyland peaking in the summer — does just this.

I firmly believe in this alliance and in its ability to grow. The dynamics of a competitive electricity marketplace, where long-term contracts are a thing of the past, favor larger suppliers that can generate and purchase power at favorable wholesale prices.

The bottom line is that CCS provides our 25 affiliated distribution cooperatives with greater negotiating leverage and efficiencies, including general and administrative cost savings. In turn, this lets us achieve lower prices for electric cooperative consumers than would otherwise be possible.

David Turner is a director of Youngsville, Pa.-based Warren Electric Cooperative .