CEO Update - Ron Salyer
February 1, 2012
Lots of Benefits for $5.68 of Electricity a Day!
This morning I awoke to an alarm clock powered by electricity, used electric powered lights to shave, ate two eggs and three slices of bacon from my electric powered refrigerator and cooked on my electric stove, toasted two pieces of bread in an electric toaster and put all the dirty dishes in an electric dishwasher to be cleaned automatically as I drove to work this morning. Before I left home I checked e-mail on my electric powered computer and slipped my electric powered cell phone into my pocket.
After arriving at the office, I heated a cup of water in a microwave oven to make a hot cup of coffee to start my day. I type this article using my computer and word processing software powered by electricity.
Pioneer works to provide the benefits of electric service to you, our members, 24 hours per day, 365 days a year. On average last year, Pioneer’s members had power available 99.98% of the time – virtually always! It is hard to imagine what daily life was like prior to the advent of electricity at the turn of the 20th century, yet I have taken some time to reflect on the value of $5.68 a day for electricity. (That’s the average cost a Pioneer residential members pays today.) As I think about it I pause to thank the great inventors like Thomas Edison who brought us all the modern, affordable conveniences of electric power. Over the next several months an excerpt of this article will highlight positive changes in the lives of our members due to the availability of electricity.
“Because there was no electricity, a farmer could not use an electric pump. He was forced not only to milk but to water his cows by hand, a chore that, in dry weather, meant hauling up endless buckets from a deep well. Because he could not use an electric auger, he had to feed his livestock by hand, pitch forking heavy loads of hay up into the loft of his barn and then stomping on it to soften it enough so the cows could eat it. He had to prepare the feed by hand: because he could not use an electric grinder, he would get the corn kernels for his mules and horse by sticking ears of corn – hundreds of ears of corn—one by one into a corn sheller and cranking it for hours.” (The Next Greatest Thing, The National Rural Electric Cooperative Association, 1984)
Rest assured Pioneer continues to work hard to provide the best value we can for all the conveniences of modern electricity. I just wanted to take a moment to highlight the value of electricity compared to so many other things we have in our lives.
When I head home tonight after work I know I will arrive to a well-heated home using electric blowers, will watch television to get up to speed on the day’s events, and will be able to read my books in a very well-lit home. A lot of work and convenience gets accomplished for $5.68 a day. I’m proud of our Cooperative founders and employees for the work they did back then and do today to bring service to our members at such a low cost. It’s a value that I know I wouldn’t want to live without.
Email your comments.
January 1, 2012
Safety Focus Extends from Our Crews to Members,
Children and First Responders
Last year at this time I wrote you about the improvements our crew members and management team have made in our safety performance the last several years. In 2011, we continued a positive trend in performance with another year of “zero” accidents resulting in an employee having to miss work. We continue to watch our performance trends and are working to make midcourse adjustments to ensure Pioneer’s employees make it home every night after a safe day’s work.
This commitment extends to our members as well. Pioneer works very hard in many ways to do our best to have our members experience safe delivery of power everyday while also providing educational opportunities to children and first responders in our community concerning electric power safety. Following is a series of items we do that helps keep our members safe.
Line Clearance Tree Program – Pioneer takes pride in our work to clear trees away from power lines. In 2011, we cleared about 450 miles of electric line. This effort results in a safer environment for our members and crews in a variety of ways. Cutting trees away from power lines helps keep electricity flowing safely to our members. Safety issues include:
- Providing continuous service to members isolated in remote areas of Pioneer’s electric system. Many members rely on Pioneer to keep warm throughout the winter. We work hard to cut tree limbs that threaten service continuity well before ice build-up that cuts off electric service.
- Tree clearing also aids in restoration time and helps avoid having hard to manage conditions where weather-damaged trees fall into electric lines. The extra weight of the ice on the lines presents tricky situations where crews must remove trees under tension. This can be dangerous to crew members and the general public.
- Additional safety benefits of tree clearing include keeping “tree-climbing” children and workmen away from exposed electric lines located near trees. Energized wires running through trees may create a hazard we work hard to eliminate.
- Finally, continuous service helps members avoid the use of costly diesel or gas-fired generators that can have a dangerous side effect of carbon-monoxide build up in enclosed spaces.
Electric Safety Demonstration Presentations – Pioneer has made presentations to over 2,000 children during the last five years on how to be safe regarding electricity. Students at Miami East, Graham, Heywood Elementary, Ft. Loramie, Versailles, Troy Jr. High, Grace Gospel Home Educators and the Cub Scout troops in the area have benefitted from this safety knowledge. The programs warn against flying kites near lines, demonstrate why we should avoid exposed electric wires, and explain why we should never trust a downed power line even if it looks safe.
First Responder Training - Pioneer also has dedicated, qualified line personnel who have experienced responding to accident scenes to help instruct first responders on safely responding to car accidents involving poles and wires that fall to the ground. These electrical safety demonstrations to the Ft. Loramie and Mechanicsburg Fire Departments, Miami County Farm Bureau and others have further prepared these individuals to ensure their own safety and the public’s while responding to emergency situations.
All of these initiatives fit into what Pioneer values most: Providing safe, high quality electric service to our members. The first part of Pioneer’s mission features safety. These programs are designed to help us be the best we can be when it comes to safety!
Email your comments.
December 1, 2011
Geothermal Energy
is Like Having a Power Plant in Your Own Backyard
Pioneer has been a very big promoter of geothermal energy throughout west central Ohio for decades. The first geothermal heat pump application we encouraged to be installed through a rebate was in 1988, and since that time 1,264 systems have been installed on Pioneer’s electric system at member locations. About 10% of Pioneer’s residential members already have one!
Geothermal takes advantage of the relatively constant temperature of the earth to supplement the heating and cooling systems in your home. In the summer heat, the system helps cool your home by extracting heat from the conditioned space and sending it out to the ground or pond loop. In the winter cold, the system takes the heat from the relatively warm ground and pumps it into the rooms of your home. The below ground temperature in our area is typically around 54 degrees. The process results in a need for less energy than an air source heat pump year-round, and in winter a geothermal system is far more efficient than propane, natural gas or oil heating systems.
Pioneer is especially excited about geothermal technology because you save money by simply using less kWh energy to heat and cool your home compared to traditional methods. In addition, most geothermal systems on the market today are capable of heating water for your home as well, saving additional money. A significant portion of the cost of a geothermal system is in installing the ground loop, so the up-front investment can be substantially more than other systems for many homeowners. However, the Federal Government has a 30% tax credit available through the end of 2016 for a geothermal installation. Pioneer also has a 2 cent per kWh discount between 1,000 and 2,000 kWh of electricity use for members with a qualifying system – that’s up to $20 off your bill each month. The annual savings in operating the system is typically well worth the additional initial cost of geothermal.
Geothermal’s payoff to our members
Following are estimates on the potential savings of replacing various heating and cooling systems with a geothermal system:
Pioneer wants everyone to consider a geothermal system since it is very cost-effective for our members who plan to stay in their homes for a long period of time. If your current heating and cooling systems are nearing the end of their useful lives, think about a geothermal system installation for your home. Visit our website at www.pioneerec.com or call today to learn more ways to save!
Email your comments.
November 1, 2011
Savings for Members
Using Electric Water Heaters & Air ConditioningPioneer has been leading the way with opportunities
Pioneer has been a leader since the early 1970’s with a program to manage the amount of electricity members use during large “peak” electricity demand times of the year. Many of us understand how prices change for products and services when “peak” periods occur. Invariably, when the “peak” driving season comes along in the early summer, it always seems like gasoline prices rise just when we plan to take a summer trip. As more people want to use a product simultaneously, the “extra” product costs more to produce so prices rise.
Electric power generation services the Cooperative purchases for members work the same way. Most of the year prices are more stable since we can use our low cost coal-fired electric generation to supply our members’ needs. However, during the hottest and coldest days of the year, “peak” electrical use times, our cost of producing electricity rises as more expensive natural-gas electric generation is turned on to meet our members’ needs. Pioneer has two specific programs in place to help reduce costs for our members who help us reduce this peak during these times.
Electric Water Heater Load Control Program
By far, Pioneer’s water heater load control program has been our most successful cost-saving effort to reduce electric peaks. Pioneer was the second electric utility in the United States to implement a water heater load control program. In 1972, about 300 members agreed to have a radio controlled switch installed on their water heaters which could prevent heating water during Pioneer’s peak electric use periods. These first pioneering members did not receive any compensation for their efforts. The program has evolved and improved over the years to the highly sophisticated program we have in place now. Today, members who participate still receive a radio switch that is installed on their electric water heater. The switch is activated by radio signal during peak use times. Nearly 5,800 Pioneer members receive $12 per year to participate in the program. That’s nearly $70,000 in savings directly to members.
Cool Returns Air Conditioning Load Control Program In 2002, Pioneer expanded our peak management options by implementing the central air conditioning load control program. Peak electric use occurs during the hot summer months, and almost 370 of our members are participating in this program. Pioneer understands it’s important to limit cycling air conditioners off so temperatures do not rise to uncomfortable levels in members’ homes. Participating members receive a one-time bonus of $100 which equals $37,000 in savings for these members.
Both of these programs show “win-win” savings for members and savings for Pioneer as a whole which helps your neighboring cooperative members save power supply costs. Call today to learn more and start saving!!
Email your comments.
October 1, 2011
Compact fluorescent light bulbs equal
BIG SAVINGS for members
Pioneer has been leading the way with opportunities to save money on your electric bills. We have had a vast array of energy-saving programs for our members for decades. Over the next several months, I will be highlighting our existing programs along with ideas for further savings in the future. One relatively recent program offering is our Compact Fluorescent Light (CFL) Bulb Replacement program.
This program was launched in 2008 in conjunction with Buckeye Power, Pioneer’s electric
power generation cooperative, and is coming to an end. The goal of the program is to use energy
efficiency measures to reduce costs for you today and to avoid building expensive power plants, saving
money for our members in the future.
Pioneer will provide our residential members up to nine (9) CFL bulbs for free, while supplies last.
Every residential member qualifies for one free CFL bulb for every incandescent bulb that is brought to
our Piqua or Urbana offices. Many of you have already received your light bulbs. Please call ahead
to verify the number of bulbs you may bring in for replacement. The savings for members for the nine
free bulbs is about $33, and the energy savings for the lifetime of each bulb is an additional $56 per bulb or $504 for nine installed bulbs. About 3,750 members have participated in this program so far, with an estimated
electricity savings of more than $1.8 million. Pioneer members have placed more than 33,000 CFL bulbs in
service! Great job saving money!
Member Questions Use of Service Trucks After Hours
Recently, a member asked me why Pioneer has some employees drive Pioneer-owned service
vehicles home each night and within the community. Pioneer has a set of engineers, foremen
and service technicians drive a limited number of vehicles home so they are ready at a moment’s
notice should electrical problems occur after hours. Pioneer vehicles have specialized equipment to work
on the electric system. Our goal is to provide the quickest response time when 911 calls come in and
lines go down, threatening the safety of the public. When employees respond directly from home,
critical time is saved that could save a life should a wire come down upon a car in a vehicle accident or
other service emergencies. Local first responders in fire and police departments throughout our
communities appreciate our quick response time.
Additionally, some larger industrial members
reimburse our cost for this service to have rapid service restoration for their unique needs. This
enhances the service for some members and ultimately benefits all members by having
employees “on-call” at all hours. Our first goal is to provide high-quality, responsive service to you —
having employees drive vehicles home and within the community helps accomplish this objective.
Email your comments.
September 1, 2011
Pioneer has many investments & costs that do not fluctuate with member usage
Last month I wrote you about the significant fixed costs Pioneer incurs for all of our members’ services. I explained that, on average, each of our members is responsible for the cost of three poles. Other fixed costs necessary to provide high-quality service to your home include a transformer on the pole, electric lines overhead or underground to your home, metering equipment and an allocated portion of the wires back to the neighborhood substation and the substation itself. As I said last month, instead of charging one large “upfront” fee for obtaining service, Pioneer spreads the charges out over time in the form of a “member service fee.”
The following chart shows the practical effect of changing our rate structure to reduce the variable cost of
kilowatt-hours (kWh) used from $.02840 to $.02335, while increasing the member service fee from $33.50 to
$39.50 per month. Most of our residential members will experience a cost decrease due to the changes!
While giving most of our residential members the benefits associated with a cost decrease, this method
is also the fairest and most appropriate method to share the “fixed costs” Pioneer incurs for the entire
membership. In addition, this positions Pioneer to offer programs that save electricity to the entire membership
with the confidence that these programs will not unfairly shift costs among Pioneer’s members or damage the
financial viability of the Cooperative.
For planning purposes, this change in the member service fee puts our member service fee cost at the level
it should be according to an analysis by an independent electric utility rate consultant. Rate adjustments in the
future for Pioneer’s electric distribution service are expected to be modest for the foreseeable future,
including cost increases associated with the member service fee. With these changes, Pioneer plans no
immediate rate structure changes in 2012. We will confirm this forecast as we complete our budgeting
process this fall.
With Pioneer’s rates established fairly for the entire membership, we will now be placing an ever-increasing
focus on providing our members the information and tools necessary to manage the amount of electricity they
use. I believe the most cost-effective, cleanest kWh is the kWh that is never used at all. One of Pioneer’s goals is to
use the technology we have in place to provide you the latest tools to make changes to reduce electricity use and
save money.
Email your comments.
August 1, 2011
Pioneer has many investments & costs that do not fluctuate with member usage
Last month I wrote you about the steps Pioneer takes to maintain 49,000 electric poles to serve our members in the Champaign, Miami, Shelby and eight (8) additional surrounding counties we provide electric service. Pioneer has about 16,500 member-consumers which equals about 7 members for every mile of electric line Pioneer has installed to serve you, our members.
On average, each member contributes to the cost of owning and installing three (3) poles on the electric system. The three-pole average per member, along with the cost to clear all the trees from the poles and to maintain the wires on the electric system and the costs to replace old wires and poles, contributes to the total “member service fee” cost you see each month on your electric bill. Other costs include the meter that is on your home, the transformer on the pole to make the voltage usable in your home and the wire that is installed from the road through your property to your house. All of these costs are fixed costs that do not change once the equipment has been installed. These investments are necessary to provide the high quality electric service our members expect and deserve.
Just like most of our members do with their homes, Pioneer has a fixed cost payment (like your monthly mortgage house payment) that is made to finance these investments. The member service fee on your bill represents the “fixed cost” of having the electric system available to be used at your home no matter how much electricity you actually use in the month. For many years, Pioneer’s rates and “member service fee” were much lower than the actual cost of providing the service to you. The last few years we have been increasing the “member service fee” so we appropriately recover these fixed costs, fairly, among our 16,500 members.
Next month I will explain in further detail changes in your electric bill that will take place in October that will be the final step in adjusting our rates to fairly charge our fixed costs to all our members. While Pioneer increases our “member service fee” we will be reducing our kWh charge. On average, most members will see a decrease in their electric bill with this change, more details to come next month.
Email your comments.
July 1, 2011
Pole Testing Preventive Maintenance
Saves Money & Improves Service!
As I write this article, Pioneer’s electric system has been subjected to the high winds, rain, hail and lightning associated with springtime storms. I am pleased to report our electric system did not fail in any significant way as only a handful of members experienced outages for a few hours during the month of May with most members not experiencing an outage at all due to these spring storms.
Weather events like these put Pioneer’s preventative maintenance programs to the test. We perform many maintenance functions to “keep the lights on” during these rough weather emergencies. One program Pioneer has consistently implemented is the electric pole testing and replacement program.
Pioneer has almost 49,000 electric poles in place to serve our members in the Champaign, Miami, Shelby and eight (8) additional surrounding counties we provide electric service. To do our best to make sure these poles stay up during weather emergency conditions, we test about 7,000 of these poles each year to see if they are in danger of falling easily due to high winds, ice or other weather related factors. Generally, about 2% of our 7,000 poles tested in any given year are determined to be in danger of falling during the next major weather emergency. The one-hundred and forty (140) poles or so that we find in need of replacement are put on a list for our line crew members to replace during normal work days during opportune times. This saves money since crew members perform their tasks on normal work hours (avoiding premium (emergency) pay rates) and allows for efficient scheduling so the poles can be changed out over the whole year efficiently utilizing our trucks and manpower to complete this work. It only costs about $8 to test each pole and the savings are tremendous.
The alternative is to wait and let mother nature take control knocking these poles down and causing the lights to go out. Letting nature take its course is really the worst approach for a variety of reasons. The first reason is that an electrical outage will usually occur when a bad pole breaks. The second reason is that the storm has the potential to knock down many of these poles at the same time. If this occurs Pioneer would need to call for extra help to supplement Pioneer’s normal work crews. These supplemental crews generally respond from other parts of the state of Ohio from other Cooperatives. This greatly increases the outage restoral time when these poles need replaced during emergency conditions. Crews are paid for emergency pay rates as well while having to work in very challenging conditions. Following shows the financial savings of the implementing the program:
| 140 poles replacement cost during emergencies: | $417,200 |
| | |
| 140 poles replacement cost on a planned work basis: | $207,200 |
| | |
| 7000 poles testing cost: | $ 56,000 |
| | |
| Annual estimated savings of the program: | $154,000 |
This is one of many programs Pioneer has in place to keep the lights on while saving money. Watch for the latest in our technological advancements to save you money over the next few months.
Email your comments.
June 1, 2011
Pioneer OWNS the electric power generation
& local electric lines to serve YOU
Pioneer has worked many years to meet our Cooperative principal of “maintaining autonomy and independence” in our business operations. This started in 1935 with Pioneer’s installation of some of the first poles in the United States to provide cooperative-owned electric facilities to serve our members in Champaign, Miami, Shelby and eight surrounding counties and West Central Ohio. Pioneer’s ownership began with local poles and wires and expanded to include power generation supplies in the 1960s. The following explains the three primary components of electric distribution delivery and the control our members have with local ownership.
Pioneer entered into a joint purchasing arrangement with all of Ohio’s electric cooperatives to own electric generating facilities through Buckeye Power Cooperative in 1968. This decision was very important since it has allowed Pioneer to maintain control over the majority of the electric bill that provides your electric service. Prior to 1968, Pioneer was subject to electric power generation costs controlled by other utilities. The forethought of Pioneer’s member-elected Trustees decades ago to form, and own, Buckeye Power has resulted in significant costs savings and allows for long-term planning. Unlike most utilities Pioneer, through Buckeye Power, has already invested in pollution control equipment which will avoid price spikes that are likely as others try to make these investments at the same time as other utilities. The bottom line is Pioneer residential members enjoy the lowest power generation supply costs in Ohio compared to others due to the forethought to own our own generation supplies. In 2010, this was about 59% of your total electric bill costs and is not affected by the change in ownership at DP&L.
Pioneer has maintained a relationship with DP&L for decades to pay them for high-voltage power transmission service. This decision was made so Pioneer members and DP&L customers would not have to experience two sets of transmission lines in West Central Ohio. This decision is also more cost-effective for our members since there is adequate transmission capacity, at prices regulated by the Federal Energy Regulatory Commission, to provide our members the high-voltage power transmission service that is required at fair prices. This service arrangement has worked well for Pioneer and we are hopeful the service levels remain strong as DP&L transitions to AES ownership. In 2010, this was only about 6% of your total electric bill costs.
Pioneer has owned poles, electric lines and wires from the 1930s to today and has worked over the last 76 years to bring our members one of the most robust, technologically advanced electric systems in Ohio and in the United States. This local ownership allows our members to choose to maintain the high quality service level they desire, including SMARTGRID applications. Pioneer has been able to invest in dual-service, remote-controlled, electric lines in rural areas; to control proper staffing levels for line workers and equipment to quickly respond when weather causes damage to the local electric system that serves you; and to provide further support by maintaining two district offices to bring our employees closer to our members in eleven counties. This local ownership is at the heart of the services Pioneer provides and that you have come to expect, and will not be affected by DP&L’s purchase by AES. In 2010, this was about 35% of your total electric billing costs.
Over the next few months we will share more with you about the benefits associated with your local ownership of your electric system. We are now working to bring the latest energy management technologies to you so you can do even more to manage your electricity costs.
Email your comments.
May 1, 2011
Two policy changes result in savings to members
Refunds and savings total about $437,000!
The first change is refunding a credit balance for wholesale power costs that were collected in 2010. As we set the power cost adjustment clause each month to recover our wholesale power costs, we develop estimates for the weather and the usage patterns we expect from members during the upcoming month. This approach results in over collection or under collection of costs depending on how the monthly usage actually takes place among our members. Due to this process, we currently have just under $380,000 in a credit account we are refunding through the wholesale power cost portion of your electric bill this year. We implemented this credit in our calculation beginning in March. This will be done every month until the end of December 2011. The Board of Trustees agreed with the management team that this is the best approach to continue to do everything we can to help our members keep electric bills low. As we evaluate our estimates in 2011, we will determine whether we need to “true-up” our power cost recovery mechanism with a credit or an extra charge in 2012 and beyond. For now, the good news is your power costs will be lower than forecasted each and every month for the rest of 2011.
A second policy change we implemented a couple of years ago included a new set of procedures to reduce the number of situations where members fall behind on paying electric bills. Periodically some members pay bills late and some get into a position where they do not pay their electric bill at all. As a not-for-profit business it is very important every member pays his or her fair share of our total costs of providing electric service. Due to policy changes in this area including increasing penalties for paying late, requiring payments before trucks are dispatched to disconnect services, and increasing fees associated with these activities to recover our costs, a substantial reduction in write-offs of bad debts occurred this past year. This is a cost savings for everyone. As you can see on the chart below we saved over $57,000 compared to write-offs in 2009.
We recognize things can happen that make it difficult for some of our members to pay bills. However, we care about our membership as a whole and it would be simply unfair to just allow the delinquencies of a small group of members to increase costs at the expense of everyone. We can help members looking for ways to reduce costs to make it easier to stay current on electric bills. Please contact us for energy saving ideas – we want to help!
Email your comments.
April 1, 2011
Come and get your share of $2.8 Million in Capital Credit Refunds
on Cooperative Spirit Day April 9, 2011
Pioneer is continuously focusing on what we can do to help our members. As our economy struggles to regain steam we know it’s tough for our members. Pioneer’s Board and Staff members are working hard to bring the value of Pioneer Electric Cooperative’s not-for-profit business model to you, our members. The Board approved plans to ramp up our cash back capital credits refund program in 2011 and to make it available earlier than in past years, helping you with your finances. The capital credit refund for Pioneer’s members will be the largest amount ever, over $2.8 million. We have increased our refund well over traditional levels to help you during these difficult times.
This refund is possible due to the financial strength of your Cooperative and the prudent use of funds to manage Pioneer’s distribution of electricity to you, our members. This financial strength has developed by spending only what is appropriate to provide you with a high-quality electric system infrastructure combined with a great employee work force. It takes people and systems to provide service and we work our hardest to be sure you get a great value for your money as we invest in both. We do this by undertaking serious, conscientious budgeting, living within our means as we provide service to you, and making changes to how we do business when necessary. This approach has positioned us to make our largest cash back capital refund in Pioneer’s history.
To get your portion of the refund as quickly as possible, the Board of Trustees also authorized us to refund your capital credits starting April 9 this year. We will have a check available for you to pick up at our Cooperative Spirit Day festivities. The process to receive your check is on the following pages. I would like to thank our Board and employee work force for their vision and hard work to make this possible. You have our assurance we’ll continue to work hard to provide the best value we can to you, our members. I hope to see you April 9th at Cooperative Spirit Day!
Email your comments.
March 1, 2011
Continued cost management efforts result in ……
No rate increase for electric distribution Operations in 2011
Just last spring we expected to need to increase rates for Pioneer’s local distribution services for the membership this year. Now, with continued focus on cost management we are able to eliminate the planned increase for 2011. We are very happy to be in a position to hold the line on cost increases to you, our members. We understand the financial pressures many of you are experiencing in this tough economy and are working our best to make paying your electric bill less costly. Following are a series of additional cost savings initiatives Pioneer’s employees have been working on to make it possible for us to avoid increasing rates for local electric distribution service this year.
The Operations Department has evaluated how maintenance is performed on electric circuit breaker reclosers and determined it is more cost effective to perform maintenance based upon the number of operations instead of a fixed interval maintenance cycle. In addition, the policy change to eliminate performing trenching operations for new services is paying big dividends as well. Pioneer’s crews are not as familiar with underground facilities as the landowner. We are now avoiding the expense of repairing damaged lawns, field tiles, leach beds and inadvertent contact with other utilities. These changes are saving the membership over $62,000 per year in expenses.
The Information Technology Department has made two vendor changes. One is the vendor we use for our phone services at our offices so members can call us to address your service needs. The other change was for cellular phone services we use to supplement our radio communications in the field. These two changes are saving the membership over $27,000 per year in expenses.
The Marketing and Member Services Department has made significant cuts in our advertising budget and has revised our method for soliciting former members who have not provided us forwarding addresses to retire capital credits to them. Marketing also elected to distribute duties among many employees after the resignation of one department employee last year stretching everyone to the limit. The total savings for these items is about $100,000 in cost savings per year for the membership.
The Engineering Department also achieved positive cost savings by negotiating lower than planned costs for line clearance (tree trimming) work in the next three years. These actions are resulting in over $57,000 per year in savings the next three years compared to our prior contracts.
All of these new ideas are helping us hold the line on cost increases for local operations without sacrificing service. I am really proud of our employees for producing these tangible results that will really help our members. We are now working to see if we can do the same in 2012.
Email your comments.
February 1, 2011
Pioneer stabilizing power cost adjustment mechanism
Helping member's budgeting
Your electric bill from Pioneer is made up of primarily two basic costs. One is the cost of producing the power and transporting it to our local area – this is also known as the wholesale power cost. The second is for the local substations, poles, wires, line workers and member service employees to provide you reliable service. The wholesale power cost charge is listed separately on your bill, and this year we are forecasting a much more stable cost for the power produced to serve you. We are implementing changes in our power cost calculation to stabilize your bill now, the rest of the year and into the future.
In the past, Pioneer’s wholesale power cost calculation was affected by month-to-month weather patterns and associated member kWh consumption. This caused costs to go up higher than average and drop substantially below average causing big swings in costs for members in just a few months’ time. From March to June of 2010, power cost price volatility caused a $22 increase in the June bill, compared to March, for a member consistently using 1,250 kWh. This type of increase is hard during any time, but especially difficult during these tough economic times. To avoid this volatility this year, Pioneer is adopting an averaging methodology now for power costs. This averaging method will reduce the volatility to only $6 compared to last year’s costs and method. The following chart shows the beneficial stabilizing effect of the new averaging power cost adjustment mechanism.
We are excited to be in a financial position to help our members in this way. Pioneer’s financial strength is enabling us to extend credit to members for their power costs when they are a bit higher, so you can plan more effectively to take care of monthly expenses for your personal budgets during these times. Everything we are doing is focused on simplifying things to lower your costs of doing business with Pioneer. Next month I have some very exciting news to share with you concerning our local operating rate requirements. As a little hint, your monthly bills will be lower than we expected them to be just a few short years ago!
Email your comments.
January 1, 2011
Confident, appreciated, productive employees
Safety Excellence & Cost-effective operations
Pioneer has focused on making safety in our daily operations a number one priority for several years. My first reason for this priority is to have our employees “come home every night” for their spouses and children. I couldn’t imagine a worse feeling than having to phone one of our employee’s families to communicate their loved one was seriously injured or lost his life while performing his duties at the Cooperative. Life is too valuable and short for us to not strive to have the best safety programs, training and tools available for our employees to make that journey home each evening.
We have pursued many initiatives to earn a very positive score concerning our safety culture at Pioneer. After an employee safety culture survey was completed by a third party research firm, Pioneer was given a grade of 99% evaluating Pioneer’s Organizational Value for Safety compared to other similar organizations. It is very difficult to achieve a score like this in any aspect of a business operation and I’m proud of Pioneer’s management team and employee workforce for their efforts to make this a reality for Pioneer. This was accomplished by taking many difficult steps over a long time period. Tools were put in place including a detailed operational safety manual, a safety training program that includes monthly formal and informal safety meetings each month, and a lineman training program that places special emphasis on safe work practices. All of this work resulted in ZERO lost work days in 2009 and 2010!
Equipment is provided and tested rigorously to allow our linemen to work on live electric lines providing continuous service to our members. The constant focus on safety has resulted in our employees changing the way they think concerning how they perform work at Pioneer and at home. A safe, healthy employee is a productive employee, and productive employees help Pioneer keep our members’ bills as low as possible. This improvement in productivity is shown by the improvement in lost work days due to work related injuries.
This reduction in lost work day productivity due to on-the-job injuries has reduced costs by $32,331 per year on average or just over $161,655 since the beginning of 2006. These cost savings help keep our members’ electric bills low.
Email your comments.
December 1, 2010
Pioneer Members Save Money with Defeat of Cap and Trade Legislation
In the Spring of 2009, I wrote each of you concerning the real possibility your electric bill could increase $660 or more on an annual basis due to pending legislation to regulate carbon dioxide. Pioneer’s members responded by joining Pioneer’s Cooperative Owners for Political Action group and sending thousands of e-mails and postcards to Congress fighting back against this legislation and cost increases. Barring an unexpected turn of events in the Senate for the rest of the year, Pioneer’s member have won “round one” in our fight to keep your electric bills affordable regarding carbon dioxide emissions. We helped the Cooperative program nationwide win this round with this e-mail campaign to our congressional representatives and by having over 550 of your friends and neighbors join our political action committee. I thank each of you for helping us in this initial victory.
We are now preparing for the second round of this battle. After a Supreme Court ruling, the Environmental Protection Agency (EPA) has declared its intention to use the Clean Air Act to reduce carbon dioxide emissions even though technology is not commercially available to remove carbon dioxide from power plant flue gas. As Congress looks at this issue, it’s important an emission reduction schedule be realistic based upon available technology. Additional environmental costs associated with carbon dioxide must not be rushed into and must be thought through in a very prudent manner, so that we can properly prepare to manage our transition to the future.
Earlier this year, legislation was introduced in the Senate to block the EPA from regulating carbon dioxide from power plants and other industrial sources for two years. This would give Congress time to address this complicated issue realistically. While we are hopeful for a delay, the reality is that we must continue to prepare to carry this fight into the next round and beyond. Over the next several months Cooperative leaders across the country will be meeting to determine what is in the best interest for you, our members. The greater our political presence, the more successful we will be. Please consider joining our Cooperative Owners for Political Action Committee to help keep your costs down by challenging legislative efforts that will increase costs unnecessarily.
Membership provides you an update of all of Pioneer’s legislative activities on a regular basis and provides you an opportunity to attend our annual political action breakfast that is held each winter. We will not back off in our efforts to fight dramatic cost increases due to unrealistic legislation, and we will engage you in legislative initiatives only when necessary. Please help us by joining this very important group today.
Email your comments.
November 1, 2010
Pioneer Cost Savings = More Capital Credit Dollars Back to Members
Pioneer is a unique electric provider since we operate as a not-for-profit cooperative. Our mission is to provide you reliable electric service recovering only our costs of doing business in electric rates. From the middle of November to the middle of December each year, you receive a credit on your electric bill for capital credits (or a check if you are no longer on Pioneer’s electric lines) due to margins over our costs in past years. When you consider this cash back in capital credits, your budget for Pioneer’s electric costs is lower each year than simply looking at the electric rate you pay for Pioneer’s services. For a member using 1250 kWh on a monthly basis, we have estimated the annual average electric bill is about 4.4% lower compared to not receiving the capital credit cash back on your electric bill. This year, we are also working to increase the amount of cash back you receive over this amount due to additional cost savings.
In addition to the cost savings discussed the last few months, we’ve also taken advantage of lower interest rates this year and refinanced old debt. Through the end of August, we have spent $119,000 less than originally planned due to this cost saving initiative. We also prepare for bad weather in the winter and summer each year. We prepare by budgeting for outside contractors and crews from other cooperatives to supplement Pioneer’s crews should ice, wind, lightening or other storm activities result in major damage to Pioneer’s electric system. This past winter we did not experience significant storm activity and even though the summer was much hotter than in the recent past, we did not spend many extra dollars restoring service due to summer storm activity.
Realizing the state of the economy and the tough times many of our members are experiencing now, the Board of Trustees determined we must continue our capital credits program at traditional levels (we reduced the program in 2009 due to the economic uncertainty last year) and supplement it as quickly as possible with additional capital credits dollars to members since we have had cost savings this year. These additional “cash back” capital credit dollars to members will bring Pioneer’s total program to its highest amount ever this November and December – $1.8 million.
Pioneer has refunded over $22 million in Capital Credits to current and former members!
Email your comments.
October 1, 2010
Reducing Costs Maintains Competitive Prices
We have been working hard to look at everything we do to reduce Pioneer’s need to increase rates during this time of rising power supply costs. Our efforts the last several years were recently recognized in a cost trend report of several Midwestern electric cooperatives. This report shows Pioneer improved productivity 9 percent since 2001, well above the industry average of 2.5 percent.
A variety of process improvement steps have taken place to make this possible. One is the implementation of new contract provisions with our line clearance contractors to pay for the achievement of completing work on a “fixed bid” basis. This puts the responsibility for productivity on the line clearance contractors. This has resulted in a savings of about $150,000 this year compared to the old methods of contracting for this service.
Productivity increases have also occurred due to the use of technology allowing our existing employee workforce to take on responsibilities of some individuals when they retire or leave the organization. This has increased our member-to-employee efficiency ratio 15 percent the last nine years keeping cost increases down.
Other technology improvements include using automated meter reading (AMR) to avoid the re-work associated with manual meter readings in the past. Battery operated compression tools have helped us avoid costly injuries to line workers’ shoulders. The AMR technology has also allowed us to determine voltage conditions for members during this summer heat wave. Now, with the simple click of the mouse, we know when voltage for members is approaching the lower limits of our standards so we can move quickly to make changes to improve service for our members. This also allows the frequency of expensive engineering consultant studies to be reduced, too — saving money.
All of these improvements are designed to keep our rate increases as low as possible. We aren’t finished looking at our processes to find cost-effective ways to improve. As long as safety and service to our members isn’t compromised, we will work to proactively change work methods to reduce costs in order to keep your electric bills down.
Email your comments.
September 1, 2010
Reducing Costs Maintains Competitive Prices
Knowing the economy was in an awful state in 2008, we added to our continuing effort to reduce costs to keep your rates lower and competitive over the last 18 months. We targeted rapidly increasing costs in Pioneer’s pension plans and health insurance costs for special focus, adding to measures we took several years ago to keep costs down in post-retirement medical insurance. These changes included:
Annual Savings
- Freezing post-retirement medical insurance benefits $ 95,0002.
- Increasing the retirement age to 62 & reducing the 401k plan $140,000
- Implementing health insurance changes $193,000
Total Savings: $428,000
The goal of the changes was to balance the needs of Pioneer’s employees against the needs of our members to keep electric bills low and competitive. The post-retirement medical insurance change is in line with industry norms. The move in the retirement plan from 30 years of service to age 62 recognizes the great strides that have been made with bucket trucks and other technology improvements extending the productive work lives for our line workers and other employees. The health insurance changes place more emphasis on employees’ taking steps to proactively manage their health care, reducing plan expenses over the long term.
I am proud of our employee response to these challenging times. Changes Pioneer made have affected employees financially, yet they know we must do everything we can to keep our members’ costs down. Service levels remain high and that is a testament to our great employee workforce.
In spite of these and other cost management initiatives, Pioneer’s overall costs are rising primarily due to cost increases associated with our power plant energy generation service provider, Buckeye Power Inc. To enable us to encourage our members to utilize maximum energy efficiency measures, Pioneer will be making further changes to our rate structure this month. The following article explains these changes.
Email your comments.
August 2, 2010
Pioneer’s Mission: High-Quality Service at Competitive Prices
Hi, I’m Ron Salyer, President and CEO of Pioneer Rural Electric Cooperative. This article is the first in a series to describe details of what Pioneer has done for several years to provide you high quality service at the most competitive prices we can. I understand times are tough for many of our members due to the economy and I want to let you know what we’ve been doing to lower our costs of providing this level of service to you, our members, in these difficult times.
High Quality Service is Job #1
Before I discuss too many details of our cost management efforts, it’s vitally important to know the Board of Trustees of Pioneer, I, and all our employees strive to make decisions and investments in electrical equipment to keep the lights on in spite of challenges posed by wind storms, ice storms, thunderstorms and even the remnants of Hurricane Ike in 2008. We believe even though our members generally live away from the heart of cities, we should provide service that matches, or is better than, city dwellers. One very practical reason for this is that living out in the country, electricity is vital to the safety and well-being of our members. If the electricity goes out during a snow and ice storm with extremely frigid temperatures for any significant amount of time, our members could be put in a life-threatening situation without neighbors in close proximity. Decades ago, Pioneer set out on a mission to install dual-service electric lines to all our substations and high-voltage service delivery points to minimize the chances of lengthy, township wide outages occurring. We’re pleased to report we have accomplished this mission and that, on average, the farthest individual member from the dual-service lines is only about nine miles away. Even though many of our members are much farther from town than this, our members are receiving the reliability of service as if they lived in town!
This is one reason why you periodically experience your lights coming back on more quickly than friends and neighbors not served by Pioneer when storms are in the area. The other primary reason this happens is Pioneer has invested in computer systems enabling us to automatically switch your service to alternative substations that have power flowing––without dispatching a truck.
Cost-savings with dual-service electric lines and remote controlled switching capability
This remote controlled switching process has saved thousands of dollars in overtime and fuel costs by avoiding having lineman spend time driving around the electric system operating switches. Our highly-trained linemen then are available to work on broken lines and poles to restore service more quickly to other members during storm conditions, and sometimes they don’t need to be dispatched at all.
We’ve been able to use our remote-controlled switching capability to restore service more quickly than rolling our men and trucks for a cost-savings to our members. This achieves our mission: safe, quick and responsive service restoration times at a cost savings compared to traditional utility methods. We are leaders using this aspect of SMARTGRID technology to serve our members. I’m proud of our employees’ efforts to implement the Board’s vision to meet our mission to you by providing high-quality electric service at competitive prices in this way.
Email your comments.