Growing Communities Through the Benefits of Public Power
A community's economy is only as healthy as its local industries. Likewise, local businesses fare best in an economically healthy community. Cities served by publicly owned utilities have an ally fighting on both fronts.
Winter 2012
"Public power" is a term often used to describe electric utilities that are owned by the community and operated by local government on a not-for-profit basis. But you could just as accurately understand the term in a less literal sense. The "power" to foster prosperity, to support the local economy, to provide responsive and reliable service.it rests with the "public," not a sometimes far-away owner trying to turn a profit. It's a distinction that can make a difference on the bottom line, as businesses located in public power communities have found out.
"We are in the business of making our communities better places to live," says Tony Cannon, chief operating officer at Greenville Utilities in North Carolina. They're also in the business of making communities better places to do business, he adds. "By selecting a public power community, businesses can get flexibility and responsiveness. We don't have people knocking on the door all the time, so it's a priority for us."
More than 2,000 community-owned electric utilities collectively serve about 46 million American people, according to the American Public Power Association. Lots of them are smaller communities, but some major cities also benefit from public power, including Los Angeles, San Antonio, Seattle, and Orlando. So does the entire state of Nebraska.
These public power utilities are each a little different, just as their communities are different from one another. In general, though, they're governed by a city council - or perhaps by a separate board of local residents and businesspeople who are elected or appointed. Either way, they're answerable to local people, including their local customers.
The Right Rates
If the goal is helping businesses to prosper, a great place to start is by leaving more money in their bank accounts. "We can offer the lowest wholesale electrical rates in the state," says Susan Borries Reed, manager of economic development and member services for the Indiana Municipal Power Agency (IMPA), which provides public power utilities with energy and services. "We're attractive for manufacturing due to the competitive rates."
"Our rates are about 25 percent lower than the national average," agrees Roger Christianson, manager of economic development for the Omaha Public Power District (OPPD). Similar situations hold true across the country, where public power rates tend to be nicely competitive compared with rates of investor-owned utilities.
How can they hold rates as low as they do? For starters, profit motive. Or to put it more accurately, lack of profit motive. Public power providers don't have investors who expect a return on their investment. "As a public power entity, we don't have stockholders, so the money we make goes back into the business to increase reliability and keep rates low," Christianson explains.
In fact, those local governing boards that make the decisions are motivated to keep rates as low as possible. That commitment enters into most of the decisions that they make.
For example, Reed mentions her agency's decision to invest in state-of-the-art, coal-fired technology at a plant that happens to sit right next to a 30-year supply of coal. In an era of volatile energy prices, "we have a predictable cost of fuel," she notes.
The Right Assistance
Low rates are just part of the bottom-line equation. The other way to lower utility bills is simply to use less energy. Sounds simple, yes, but it's easier said than done. That's why many public power providers offer energy-efficiency assistance to their commercial and residential customers. They'll help customers uncover ways to cut their usage, and often will even help pay to make it happen.
Take Greenville Utilities' E-300 program that helps residential and business customers alike achieve outstanding efficiency. It begins when builders submit a plan to an energy specialist, who runs a computer load calculation and makes recommendations for insulation improvements and other efficiency measures that range from HVAC enhancements to solar orientation to more efficient lighting. The structure is inspected throughout the building process, and if its efficiency meets the requirements, the owners are rewarded not only with lower energy bills but also cash incentives. The E-300 program has been around for more than three decades, the longest-running program of its kind in the country.
Then there's the W.I.S.E. program in Oklahoma - that's short for "Ways I Save Energy." Jennifer Rogers, media specialist with Oklahoma Municipal Power Authority (OMPA), says the program offers both loans and rebates to customers who install energy-saving heat pumps. The most generous incentives, up to $800 per ton, are awarded for the use of geothermal heat pumps, but those who pick air-source and dual-fuel heat pumps also cash in. Even standard air conditioners are worthy of rebates if they're efficient enough.
Oklahoma Municipal Power Authority's Demand and Energy Efficiency Program (DEEP) is potentially even more generous. The program, which OMPA member utilities can offer their customers, encourages commercial users to take whatever steps they can to reduce their electric load, such as installing high-efficiency lighting, pumps, motors, compressors, chillers, and HVAC units. Rebates with matching funds can total as much as $100,000 a year. "If they're installing lights, chillers, upgrading motors, we calculate a way to get them some money," Rogers says.
It may sound counterintuitive for a business - even a non-profit, publicly owned one - to work so hard to sell less of its product. But consider what it costs to build power generation facilities, and it starts to make a bit more sense. "It helps us to put off the need for additional generation," IMPA's Reed says. And that's good for all parties involved.
The Right Attitude
"The public purpose piece is important," Reed says. There's no split allegiance between stockholders and customers. "We're answerable to ratepayers." And those ratepayers, whether residential or commercial, tend to be neighbors because of the highly local nature of public power, she explains.
"We have the benefit of having local people living in the community where they provide service to manufacturers and other industrial customers," Reed says. "You go to church with these people, and there's a lot of interaction. And they care about you being part of the tax base. Keeping business and commercial customers in the community is important to the tax base and to the health of the overall community. People have a real sense of appreciation for industry coming here, so they work very closely to make them happy."
OPPD's Christianson adds, "Our board comes from around the 13 counties we serve.They're friends and neighbors and are a phone call away."
Local decision-making can translate into an increased ability to negotiate the right deal for business customers, according to Greenville's Cannon. "We can get very creative. With local governance and a local board of directors, we have local approval of incentives."
"We have a little more flexibility when it comes to things like putting rates in place," explains Reed. "Municipalities can go through a local ratemaking process and have a little flexibility in adopting rates. It allows them to be a little more nimble than investor-owned utilities can be."
That customer-focused attitude often includes especially attentive service for large, industrial customers. "We can work one-on-one with industrial customers and get a sense of what will help them get their overall costs down," Reed notes. Christianson says OPPD also has account executives who work with the largest customers.
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