Episode Transcript
[00:00:08] Speaker A: Welcome to the Buzz, a podcast by Boone Electric Cooperative. The Buzz is a monthly message to our community celebrating what it means to be a member owner of your local electric cooperative, Boone Electric Cooperative, your co op, our community.
[00:00:26] Speaker B: Welcome back to the Buzz. I I'm Zach Smith, communications specialist at Boone Electric Cooperative and today we are returning to our introductory series on the seven cooperative principles. Joining us today is a familiar voice to the podcast, Boone Electric Cooperative CEO and General Manager Todd Culley. Todd, unlike Jeopardy, I do not have any prizes for returning guests, but I thank you for joining us again today anyway.
[00:00:49] Speaker C: Yeah, sure Zach. Glad to be here and look forward to talking more about some of our cooperative principles.
[00:00:55] Speaker B: No tough trivia questions today, but we are talking about cooperative principle number four, which is autonomy and independence. And this one is interesting to me because it seems both self explanatory and it also requires a little deeper explanation of what it means. Would you agree?
[00:01:12] Speaker C: They sound like the same thing when you talk about autonomy and then you talk about independence. And of course these principles have been around a long time. I think even before we were founded, our cooperatives were even founded in the neighborhood of almost 200 years ago. Autonomy. When I think of autonomy, I think about us directing our own life. And then when I think of independence, I think of we can do that without relying on others. So they sound similar, but I think there's some differences that we can get into here in a little bit.
[00:01:48] Speaker B: And since it's been a few episodes since we discussed the origins, just as a quick refresher, the investor owned utilities of the time in the mid-30s during the rural electric cooperative movement, they didn't want to run electricity to the rural areas of the country because they couldn't turn a quick profit on it. And so rural people organized member founded electric cooperatives on their own and that's what brought us here today. So when you talk about choosing our own lives, creating our own destiny, and that's what it's all rooted in for.
[00:02:15] Speaker C: Us, you think of autonomy in regards to when rural electrification first began. Part of autonomy in my opinion is like a needs assessment. And that was done mostly by the farmers in rural America, all across the country. And they realized that they were going to be self determined in their approach to serving a need, which was a lack of electricity and it couldn't be provided in those areas on a for profit basis like it was in the cities. And so when we think about the word autonomy and directing our own life, it really comes down to the quality of choices that we make. It's us setting boundaries, we determine within our interests. In this case it was rural electrification what is okay and what is not okay. And so it's very linked to motivation and being under our own influence. And so that's very much how we were formed years ago. And then the independent side of it is we were like, if it is to be, it's up to me type of a thing collectively, individually, that is what we were all thinking and being able to do it ourselves. So we didn't rely on others. We simply came to the table with a we will attitude.
[00:03:40] Speaker B: And we still do that every month. Literally coming to the table as part of the member owned board representation aspect of the cooperative business model.
[00:03:49] Speaker C: Right. So the board that's democratically elected to serve with the organization represents the interests of the members within their individual districts. And and so we are still always in a state of doing a needs assessment that's part of that autonomy that's still alive and well. And then independently we look at how can we best go about accomplishing the services and products that meet those needs.
[00:04:18] Speaker B: We spoke earlier about that idea of, you know, back in the origin days, the folks who were providing electricity in the cities were able to turn a profit. They were able to make a margin, didn't see the viability of that on a short term basis in the rural areas. That idea of, well, we're not going to make a quick margin on this was something that we had to decide as a cooperative. The founders decided we're okay with that.
[00:04:45] Speaker C: Exactly. And that's an example of an autonomous organization that is the organization determining what was okay and what was not okay. And they determined early on that if they could just get by those first years, just continue, they thought eventually they could bring in enough revenue to cover their expenses with maybe a little bit extra. But they certainly weren't profit motivated out of the gate. That was too much of a burden on everybody. And again, they were serving their own needs and kind of creating their own rules which of course would be legal and ethical and moral and all of that very value driven. But they recognized it would be about 15 to 20 years before they could actually grow enough to have enough revenue that it would then maybe just exceed their expenses. And so as we fast forward to today and we think of capital credits and, and the patronage capital that is paid back to our membership and a lot of those dollars are coming back to us from 15 to 20 years ago. So it's just fast forwarded over those decades. Had we made a profit right out of the gate, we could have paid those excess margins back to the members in that year. And that simply wasn't going to be feasible to accomplish. And so how we operate today is directly representative of how we got started back in the 30s.
[00:06:23] Speaker B: And that really speaks to the strength of the business model. We've proven over almost 90 years now here at Boone Electric Cooperative that we're capable of doing this. We don't need another regulatory body to deal with the co op. The members are capable of handling that job. As far as the direction of the business, critical as it is, technical as it is, the members themselves, you know, don't need another entity above them to check over their shoulder.
[00:06:48] Speaker C: Initially. It's easy for us to think about, well, what about environmental regulations? Because obviously at the federal level there are requirements for power production in regards to emissions and processes involved with the generation of electricity. But the way cooperatives were founded, and of course we have our national association to help us on this front, is to make sure that any of these agreements, legal agreements or contracts that we enter into or legislated upon us or regulated towards us, are agreements that we can meet and where we can still find a common solution or common goal that's good for all parties and that work continues. And there's a lot of friction in that arena. But over the decades we've been able to have a stable enough planning horizon for a lot of our infrastructure needs through agreements that allow us to stay autonomous. In other words, we're a self help organization, but we will not enter into an agreement that we know would put undue pressure or cost on those that we serve. And that's a unified philosophy across the country in the cooperative movement, not only with electric cooperatives, but also with other.
[00:08:15] Speaker B: Cooperatives saying that you made me think of another thing. As far as the generation and regulation side of things go, autonomy and independence sometimes allows us to act preemptively on a lot of things before they're mandated or regulated by somebody. And I think of a lot of the stuff that Associated Electric has done, reduced reducing carbon emissions, bringing in wind energy, none of that stuff was something that another group told us we had to do, that was something that they saw that we could afford and it was the right thing to do and went ahead and did it before there was any quote, unquote, quote, regulatory assignment to do it.
[00:08:52] Speaker C: By and large, cooperatives, they don't overly promote themselves. And so something that a lot of folks don't maybe realize is that, that we have in the neighborhood of 1500 megawatts of wind energy that flow into our cooperative system here in the state of Missouri. And we've done that on a voluntary basis without a mandate. We've been able to find agreements through our autonomous nature that were beneficial to our end user and also met the most stringent of environmental guidelines. And so that's a proud history. And we're nimble enough because we are self governed that when we see an opportunity to capitalize on a win win situation, we can jump on it. And a lot of times that allows us to stay way out in front of infrastructure needs. It allows us to build today for significantly less cost than what it would cost us tomorrow. And we've got a lot of examples of that throughout the program nationally.
[00:09:54] Speaker B: One of the things being autonomous and independence allows us to do, along with planning ahead and staying ahead of a lot of those things, being proactive, is we don't work in a vacuum, even though we're autonomous and independent. We work with all kinds of organizations, whether they're in the Missouri electric cooperative sphere or not.
[00:10:14] Speaker C: We have many partners and we look for partners that share the same philosophy as us, which is a high service focus. And we have many partners that we actually created. And so they actually operate as independent cooperatives. For example, for the early years that the program operated, we would use low interest loan funds from the government.
And we recognized that sometimes that wasn't the speediest service that we could receive. And that was a common concern across the country. And so we literally all formed together and created our own cooperative bank. And that was done in the late 60s. It continues to operate today. We have an outstanding relationship with them because it is us. And so we can call them the bank, but we form them. So it's literally doing business with ourselves. And it operates of course, on a not for profit basis, just like we do here at Boone Electric Cooperative. So there are others too that are in the utility equipment supply arena. Our insurance company is also operates as a. As a cooperative. And then we created our statewide association which is in Jefferson City. They help lobby for us and carry important concerns of the public to our state house on our behalf. And then of course, we've got the national association on the east coast that does a lot of the federal work for us. But over the years we've looked at many products and services that would be beneficial to our membership. And our board has gotten into a lot of different businesses over the years through our subsidiary operations. And that might be a conversation for another time, but you bring up a.
[00:12:12] Speaker B: Great point about the service, high service nature of the cooperative. There are things beyond just delivering safe, affordable, reliable electricity that the board, as the representation of the membership recognized. The membership wants or needs these things. They're asking for them, looked into it, assessed if it was something that we could provide and in, you know, many cases decided we were.
[00:12:35] Speaker C: We have a four way test that we use internally and again, that's an example of an autonomous, autonomous organization. And that four way test, you know, one, we have to look for a need that isn't currently met. We have to look for a need that builds goodwill, that is a good fit for the cooperative overall. And it has to be a need that's just, it's not being met by a competitor. In addition to that, over time, it needs to be a product or service that can cover its own costs and then maybe hopefully provide a little bit of a positive margin. And so that four way test, it's a, it's a set of rules that this board got to develop because they felt it best represented the overall needs of the membership. And that test is, has been very helpful for us over the years. We've gotten into several different businesses over the years and are always looking for that next opportunity for that unmet need that is, that is out there. So some of the products that we offer, for example, we have a time of use rate that we see is very popular with folks that have the flexibility of when they use electricity the most, or perhaps they have an electric vehicle that they want to charge off peak. And we have some of these programs that they're voluntary. And so what might work for some members, maybe in a more urban setting, might not be perfect in the rural setting, etc. We offer several things like, you know, energy efficiency measures and rebates and incentives to help folks be more efficient with the use of their electricity. And so it's, it's kind of a boutique arrangement where folks can pick and choose what works for them because we recognize that our members have different needs. And so we want to be able to offer a little bit of something for everybody and not put anybody in a position of not having some flexibility that is in their best interest.
[00:14:41] Speaker B: One of the things I think that's unique that we offer, that doesn't necessarily immediately have anything to do with the electric side of it, of course, is all the different programs in the community that we're involved in related to youth activities, whether that's cooperative programs like youth Tour and cycle, or whether that's their own local programs, 4H FFA, different departments.
[00:15:04] Speaker C: At the schools, the basketball games we like to go around sponsor, I know many of us have been able to participate in those. And also we do nights at the theater. We like to sponsor that. There are scholarships offered through our trust. There's the opportunity to do our Youth to Washington program as well as a cycle program that's a more of a statewide leadership program that talks about how our legislative process and leadership process works. And the trust is something that is so broad and beneficial to the greater community that I'd just be remiss if we didn't mention that I believe it's something like over $4 million over the last 25 years have been provided back to the broader central Missouri area. And that trust doesn't discriminate based on service territory for electricity. So you could live in downtown Columbia or a very rural area and be served by a different utility and still benefit from the proceeds that come through that trust. So again we get into other principles of the cooperative program that talk about why that's so important to us. But the autonomy portion of our baked in philosophy allows us to create programs that best again meet our local needs.
[00:16:23] Speaker B: That's an excellent example of something that's a homegrown mechanism. Obviously it's related to the electric side, but the end result of it doesn't necessarily have anything to do with just Boone Electric. It's just part of the Boone Electric Cooperative community, which is more than just the cooperative.
[00:16:40] Speaker C: You go back and you think that, you know, a lot of folks may not recall that years ago. It was actually before my time here with the cooperative. The cooperative had the franchise agreement in this area for DirecTV just to help DirecTV get started. And so we've got a subsidiary operation that allows us to get into some non traditional activities that are beneficial to our membership. And DirecTV was something that followed after C band satellite based TV. If you remember the giant metal 6 foot wide or whatever they were antennas, if that's what they call them, dishes, giant dishes. So you know, we were in the C band business to help provide a service that wasn't being provided, that met the four way tests that we talked about. Then eventually that transitions into directv. And then directv wanted to have more ownership and buy us out of our individual rights here of that franchise agreement. And the, the board was able to capitalize on that significantly. And so that franchise agreement or the value of that was provided back to the national directv group. The sales price, I don't recall the actual number, but I know it was in the Millions.
So those dollars came into our subsidiary operation, I think, in the early 2000s, and those dollars were provided back out into our greater community. And we sponsored a lot of great things and invested money into the community, into key projects that still benefit us today. And so again, that's that autonomy and independence kind of surfacing again to allow us to use those funds to benefit us.
[00:18:38] Speaker B: All things that might not happen if Boone Electric Cooperative wasn't able to make its own decisions correct.
[00:18:44] Speaker C: If we were owned by investors out of state, say investors investment, an investment banking company or a group of private investors. And well, then they're trying to do is wring out any profit that they can get. And so you're going to. You'd see higher rates on everything we offer from electricity to other items. And. And then those profits would flow back to those investors. And we've been able to take, we call them margins. If we can cover our cost of providing business those margins that we make, you know, and that's really, if we don't have any bad weather, if we have tornadoes and ice storms that things that deplete those margins, well, then there's less to be able to provide back to our membership. So we try to just have just an adequate level of margins budgeted. If the year goes pretty smooth for us, then those margins are allocated back out to the membership and then each member that receives power from us benefits from those margins financially.
[00:19:44] Speaker B: And I appreciate hearing your perspective on all that because as we said right at the top, those two words, autonomy and independence, they do a good job of explaining the historical context of the cooperative. But they can also be sort of misconstrued to mean that we're isolated, which, as we've just explained, obviously not the case.
[00:20:02] Speaker C: Yeah, we are absolutely not isolated. Very, very connected. But we're connected with partnerships that we either help create or we're connected with partnerships that allow us to have the best interests of the member in mind at the end of the day.
[00:20:19] Speaker B: Well, thank you for joining us again today, Todd, and speaking about that.
[00:20:22] Speaker C: My pleasure.
[00:20:23] Speaker B: And thank you for tuning into the Buzz. Please come back again and join us next year for our next episode. And until then, we'll see you somewhere down the line.
[00:20:33] Speaker A: Thank you for tuning in to the Buzz, a podcast by Boone Electric Cooperative. To subscribe or for more information, you can find us on Facebook, Instagram X and LinkedIn. And of course, you can always visit us 24.7@BooElectric Co Op. Boone Electric Cooperative, your co op, our community.
