Electric utilities are surprisingly diverse businesses. When it comes to the transition to clean, local energy, most of them are slow to change. But a few utilities not only see it coming, they are embracing the opportunity.
In this episode, host Bill Nussey talks with Peter Heintzelman, CEO of Cobb EMC, one of the largest electric membership cooperatives (EMC) in the United States. Peter helps us understand the historical importance of EMCs, how the membership-driven model gives them more flexibility than larger shareholder-owned utilities, and the early steps some pioneering EMCs are taking towards clean, local energy.
Listen to this podcast and others in our series on these platforms:
http://freeingenergy.libsyn.com/peter-heintzelman-can-electric-membership-cooperatives-light-the-way-for-clean-local-energy-in-the-utility-industry
Additional reading
- Check out Peter’s background here: https://www.linkedin.com/in/pheintzelman/
- The news release of his joining Cobb EMC: https://cobbemc.com/content/cobb-emc-announces-new-ceo
Automated transcript
Sam: (00:03)
Can electric membership cooperatives light the way for clean local energy in the utility industry. In this episode host building as he talks with Peter hind Suleman, CEO of cob, EMC, one of the largest electric membership cooperatives in the United States. Peter helps us understand the historical importance of EMCs, how the membership driven model gives them more flexibility than larger shareholder owned utilities. And the early steps, some of the pioneering EMCs are taking towards clean local energy. This is the freeing energy podcast and these are the personal stories from local energy champions and leaders in the world of renewable energy that are shaping our future.
Bill: (00:51)
Hello, freeing energy community to our biweekly podcast. Now we’re going to take a slight digression from our normal conversation about energy. And, uh, we’re going to talk about car racing today. And, uh, our guest today is an accomplished amateur racer and has run one of the largest and earliest, I should say, a racing training in the middle East. And so he’s going to tell us all about that. And Oh, by the way, he happens to be the CEO of one of the most interesting electric utilities in the country. We are in for a real tree today with Peter Hanselman, who is the CEO of CA BMC. And so Peter, welcome to our podcast today. Thanks bill. It’s great to be here. So just as a quick background on EMCs, then we’ll get to the car stuff, which is really the interesting thing. A lot of people don’t realize that in the United States there’s actually 3000 or so utilities and they’re the really big ones we know about like PG and E and Duke energy and Southern company.
Bill: (01:42)
And these are the investor owned utilities they make up about, was it 60% of the United States electricity customers? But we have had two other kinds of electric companies, electric utilities, uh, that are, uh, if you live where they serve, you’re very familiar with them, but a lot of people don’t know about them. And one type is called a municipal or a muni, as they call it. And this is where a city or a government owns the power company and they coordinate with others to provide power to their citizens. And then the other kinds of electric membership cooperatives EMCs is they’re known in the industry. And uh, that is the kind of company CA BMC is. And our guest today is the head of the seventh largest in the United States. You know, we’re the seventh largest, the United States by meters and the first largest in revenue. No kidding.
Peter: (02:23)
There’s a secret answer. Why? So if your listeners can guess why I get a prize.
Bill: (02:28)
Excellent. Well, Peter, you have one of the more unique backgrounds I have to say. I’ve met a lot of utility executives of all kinds and stripes and flavors and uh, you have not been in the electric industry for 30 years, which makes you somewhat unique as a CEO. Uh, and one of the reasons I’m so excited to have you here today and to share your insights with our listeners because you bring a perspective that is born outside the industry and you bring a lot of thinking and experience and broader energy and tech startups. And all of things to this space. So I’m really looking forward to our conversation today. Why don’t we just start at the beginning and tell me a little bit about your background and you have to start with the car racing part and uh, and then bring us forward to how you found yourself a CA BMC.
Peter: (03:12)
Well, bill, uh, I guess I have been a car guy all my life and I spend much of my life, uh, and motor racing and uh, both in the U S and in Europe and in the middle East and have some fun stories to talk about. But I grew up in Texas where of course, energy, energy rains. And so it’s no surprise that I wound up in the energy business even though I didn’t really have a big intention to do so. Uh, then I wound up working for Halliburton, you know, prior to MBA school and then a and mean out of MBA school. I was a, I got hired by Enron, which was the premier kind of management training program at the time. And I really learned the fundamentals of the power business and the gas business at a, at Enron, you know, for the three years that, uh, did that lasted for me.
Peter: (03:50)
That was that interesting in for a lot of people. For me it was fine because w I was young and it was great management training program and I really learned a great fundamentals there. But then I actually wound up moving to Dubai again for Halliburton and I became the head of energy for an investment bank in the middle East and then later on for large parts of Africa and the middle East. And I spent a lot of my career going around the world doing and seeing interesting things and doing all kinds of of energy deals, whether they be power or renewables or oil and gas or rigs and things like that. So I have the privilege of seeing what a really great looks like and around the world and also the privilege of seeing what really bad looks like and, and those experiences are tremendously valuable.
Bill: (04:30)
I love it. We’re not going to let you get away without the quick car story. So tell us about what you did in the middle East. Uh, with cars racing cars.
Peter: (04:36)
I had the pleasure of, uh, uh, bringing the first, uh, motor racing series to Dubai who had built the track. This is around 2003. They had built a racing track but had no cars. And so since I was a racer and, uh, one or two, um, I arranged to have 14 brought over and we started the first motor racing series in the middle East and later we moved into my reign when they built the F one track there. And, and it was a huge, uh, part of my life even though I had a full time job. So it was a busy time in my life, but very exciting. I met a lot of wonderful people and a lot of great experiences. I first met you [inaudible]
Peter: (05:08)
we were, uh, had just been at a conference together and the after event was held at the Porsche experience center here in Atlanta. And I remember talking to you and you were telling me stories about all these cars and I thought this is not a typical utility executive because he has a knowledge of racing cars that exceeded anyone I’ve ever met in my life. And from them we’ve had a chance to get to know each other and I am really excited about all the new innovative thinking you’re bringing to an industry that really needs it. And one of the things we’ll talk about today is why electric cooperatives are in a more unique position than a lot of utilities to be innovators. And I’m excited that here in Georgia that Cabi MC has a CEO like you to do that. So tell us a little bit of how you got to CA BMC about a year ago. I think you joined, right? Yes, I’ve been here actually 18 months.
Peter: (05:58)
It feels like 18 days, but it’s been 18 months and I was a head hunted to the role. I was actually in North Carolina working for a battery manufacturer before CA BMC. I was a CFO of a number of startups, um, which was a really fascinating time in my life and learn learning a lot. But yes, I have been a part of a number of startups and one of which was a really exciting battery manufacturer. And of course that led me to, um, to follow a lot of the technologies that we’re going to talk about today.
Bill: (06:28)
Excellent. And so you’ve been there 18 months at the electric membership cooperative?
Peter: (06:33)
That’s right. Cobb EMC is an electric members or a membership cooperative, whatever you want to say. We’re actually called electric members Corp now, but it is by its very structure. A co op and a co ops are very unique types of electric companies, which are all about the members. They’re not for profit. Our goal is to deliver power and distribute power to our members at cost and make sure that if we accidentally make profit than we, we give it back. Um, and what we try to do is, uh, we try to not make a profit and we do that by trying to keep rates as low as possible and just cover the budget that we need to cover. And if we do accidentally make a profit, then we give it back to our members and, and our members or you know, we’re, we are owned by our members. We are governed by our members. Um, and we do what they tell us to do via a, an unelected board.
Peter: (07:18)
When I first started researching the electricity industry, I fell in love immediately with the idea of co-ops because this is one of the few areas in the world of electricity where the people who buy it actually have a say. Now, they don’t know off an exercise that say, but this is one of the few areas where while it’s still a monopoly, the members can, if they want to be innovative, if they want to do new things, they can have an audience to have that change potentially made. And we’ve talked early on. In fact, some of our earliest podcast interviews were with the folks behind a kid, Carson and a, that’s one of the more innovative co-ops in the country. And they, they sort of restructured themselves and really rapidly adopted clean energy. And you can do things like that and that’s pretty radical, but there’s a lot of flexibility. You have that some of the larger, more sort of well known, multibillion dollar electric, uh, utilities don’t have. So how does your decision making work? Well, it’s, it varies
Peter: (08:12)
by car, but by and large it’s a very democratic process where the board is a, in our case has nine members and they are directly elected by the membership. There’s not even a nominating committee that filters candidates or anything like that. So if you want to run, you just follow your paper and you run. And ours in particular is a, has great governance because our board set themselves term limits, um, which is not overly common in that club business. So the board is not going to be there forever. There is designated turnover. A third of the board runs every year for their position. That’s amazing. And what parts of the state do you serve? Oh, so we serve majority of Cobb County and then we serve four counties around it, including North Fulton, Cobb Marto, and uh, a good of Cherokee. Let’s dial back and look a little history to how did co-ops come into being?
Peter: (09:00)
What’s the Genesis of this very unique way of delivering electricity? It’s really fascinating, bill, because if you go back to the thirties, and George was actually a great example of this. Um, the investor owned utilities. We’re building, you know, we’re building out a power infrastructure in cities and towns, but they weren’t going to go out to rural communities at all. Um, because it just wasn’t really cost effective. And so the administration at the time, FDR created the rural electrification administration and that facilitated, it really laid a framework for communities to organize themselves into a co op and get funding from the federal government in order to build electricity out to their more rural areas. And so really I consider it the greatest infrastructure achievement in the 20th century, meaning the coast to coast electrification of the U S because without co-ops that never would have happened. If you wanted power, you go to the city.
Peter: (09:51)
And it’s amazing what a difference it has made in the development. And now that has been used as a model in many other countries for economic development. And remember the time that this came into being was a right around the great depression. And so you had this swaths of America, rural America that were just wallowing and horrible economic situations and this was one of the catalysts that helped that part of the United States. And thus the entire country sort of lifted economic future. Absolutely. And, uh, you know, uh, Lyndon Johnson and probably quoted at best when he said he, uh, you know, of all the things I’m proud of in my lifetime, the number one was bringing electricity to the whole country in Texas where he was raised. I had not heard that. That’s great. Uh, and we take electricity for granted to such a degree. People only ever notice.
Peter: (10:35)
I’m sure the only time that you have ever gotten a call is when someone’s electricity is out. You have that. Right. And it’s amazing and I always try to remind people, because I think in the clean energy space, utilities are often looked down on or demonized, but collectively utilities including yours, have created the largest, most sophisticated machine maybe in human experience. And certainly a, I think there was an American, a engineering association said it was the number one engineering achievement of the 20th century. So collectively this work has changed the country and it’s very hard to keep electricity running to the degree that it does. And it takes a great deal of skill and management, which you guys and your peers do a great job of. That’s right. I mean, there’s no secret that if you want to empower and enable a community, you know, power and water are the most important things then you can do.
Peter: (11:20)
And so yes, it’s sometimes it’s a, it’s a thankless role role. Sometimes the utilities have, but I have to say our members in particular, co-ops generally have very appreciative members. And because a lot of those members, you know that were alive in the, in the forties and kids in the forties, they remember when the REA came in may and the cops came and made power. They were heroes. So alignment across the nation and utility workers for four co ops are generally viewed as heroes. And so most communities really a lot of them revolve around their EMCs. The more rural they are, the more the EMC is as a huge part of the community and what they do. It’s often the largest employer as well. And so, and then of course the, because it’s a community focused organization, the amount of community events and outreach and things that you do, um, are not what a normal investor owned utility would do.
Peter: (12:07)
It’s much, it’s a much higher level of community engagement than you would have it. An investor owned utility or perhaps a muni. I love the business model. I love the story. Now most co-ops are distribution co-ops and, and CA BMC has one of those as well. Can you explain what that means? That’s right. You have, you know, generation co-ops or generation companies, and then you have a distribution cop. So, so our job is really not to generate electricity, but to take that generation from someone else and distribute it to our end user. So our infrastructure consists of mainly poles, wires and substations, and that really makes up the bulk of it. In our case, we buy our electricity from two sources. One is a Oglethorpe power, which is a co op in itself. It’s called a G and T generation and transmission co-op of which we are a member.
Peter: (12:53)
And then we also by about a third of our power, kind of on the open market from a investor owned a generators. Okay. So this model has worked remarkably well for almost a century and the United States has an incredibly reliable grid and it’s in almost all places, very affordable. But it seems that there’s changes coming. The rise of distributed energy seems to be forcing some changes or inviting some changes into the industry. What do you think this means for co-ops as the generation moves more to, I’ll call it the edge or to people’s homes, whether that be solar, battery storage or other, other ways you have your generation distributed and all kinds of random ways around your community as life evolves. And so we’ll always be responsible for distribution because you will need to distribute that energy meeting the supply and demand of, of both the generation and the, and the draw.
Peter: (13:44)
But the, the other element is that, um, the utility may become more of a reliability provider than a distribution provider. So let’s say that you had, you had rooftop solar and you were generating enough electricity most of the time between your rooftop solar and maybe at a windmill and you know, and you have a battery, you know, battery in your garage and you’re very efficient. You may say, well, why do I need it? Why do I need to be part of the utility? Well, everybody needs the reliability that the distribution system provides, right? So that will always be something that is very valuable. And you know, so over time as a generation sources become more disparate. That generation picture will change. And so will the distribution model because you will still be distributing some energy, but you’ll also be the chief provider of reliability. I mean in our case we are the third, you talked about I think more than 3000 utilities, CA BMC is the third most reliable utility of those.
Peter: (14:38)
It’s actually 3,500 utilities. And so, so reliability is, is, is the most important thing for distribution go up. That’s impressive man. Wow. So as distributed energy, decentralized energy generation to grow and it seems to be a pretty unstoppable change at this point, particularly with rooftop solar, both residential and commercial. What do you see as your evolving role is that happens? I mean you’ve kind of talked about that, but how do you fit that into the business model that you’ve been doing for decades? Well, it’s interesting because for an investor on utility, which has a lot of investment in maybe a generation plant and things like that, it’s a conundrum. But for our co op, it’s a beautiful challenge, right? Because our number one job is to serve our members right. However that may be right. And if our members need us to be a reliability provider and not a distributor, that’s what we’ll do over time.
Peter: (15:28)
Um, if our members want us to be a solar rooftop installation company as part of what we do, that’s what we’ll do. If we want to. They want us to be a battery distribution and installation company, um, to put batteries in their garages. You know, that’s what we’ll do. Right? And so we’re doing a lot of things on that end. I mean, we’re installing rooftop solar on our campus. We are doing a utility scale battery on campus. You know, it’s our goal to make sure that we are what’s called the trusted energy advisor for our member. You know, some of these power contracts are longer dated. And so we have to take a view early in order to be able to anticipate what we will look like in the future. But we have a lot of flexibility to be able to evolve our business model for the needs of the members.
Peter: (16:08)
I remember one of the times we were sitting down in your office talking and you said something similar to this and it took me a minute to really understand what was striking me about it and you just had a complete clarity on your members as customers. You know, I come from the software world and there’s a, you know, it’s axiomatic that we talk about our customers, but traditional utilities or large utilities, um, they have a very complex set of stakeholders and, and so they often refer to the people who pay them, not as customers, but as rate payers. That’s the industry lingo and most of the decisions about their success as businesses to make their shareholders happy comes from not from the people who pay them, but from the regulators, usually at the state level, the define where they can make profits and where they can’t.
Peter: (16:49)
And I just found it so refreshing to hear your complete, not even pretentious, just a complete focus on the customers as you echo just now. And I love the fact that this as a business model means that you’re in a position to do some really interesting things if your customers want. And what are the areas that you have talked a few times about is electric vehicles. And right now in most places in the United States, electricity that sales have stagnated. We’ve seen relatively little growth and sometimes even in Georgia we’ve seen a total electricity consumption actually receding, but electric vehicles for the utilities of all stripes and sizes holds incredible potential for growth. What do you guys thinking about electric vehicles? In my view, electric vehicles are a godsend for utility, right? I mean, 30% of vehicle sales by 2028 will be electric vehicles. I actually think that’s a light number.
Peter: (17:40)
It’s a great gift to utilities in terms of load, as you said, in a declining load world where energy efficiency has really caused a energy load on utilities to decline. And so I, I view it as a huge opportunity. You know, we set ourselves out when I came on board to be the thought leader in Georgia on electric vehicles. And in some cases we are nationally, we get asked to speak about our, our electric vehicle programs all the time. And so I think there are wonderful, you know, I, as you know, I drive one, we have a fleet of four there. But what I really like to talk about in, in terms of electric vehicles is practicality. You know, people have sometimes political views on what is good and what is bad. And I like to put that aside and really focus on practicality. And what I mean in terms of electric vehicles is the lifestyle that an electric vehicle creates is wonderful.
Peter: (18:25)
You never have to go to a gas station range. Anxiety has gone. I mean you can’t, you can’t buy a Tesla with less than 310 a mile range. There are now affordable. There are the every man car, whereas before they were a little bit more expensive. And so really electric vehicles have arrived. And that’s a practicality that I like to talk about because before it was early adopters were maybe more wealthy people or something like that. And now they really are for everybody. So as, as we put as the British say, bums in seats and our electric cars and have people drive them and to look at their faces and see their reaction when they get out and see, Oh yeah, this really is for me in this does fit my daily mission in my lifestyle. It’s really a rewarding to see. What I may have told you is that probably EMC has the first free residential overnight charging rate in the nation. Uh, so our, our rate is called night flex. Um, so from midnight to six, if you’re on a Cabi MC member and you choose that rate, you, you charge for free. Right? And in fact, it’s a time of use rates. So if you want to do your washing for free, your run, your pool pumps or whatever, it’s, you know, it’s a time of use rate and we’re really thrilled to be the leader, uh, in terms of, um, electric vehicle rates in the nation.
Peter: (19:31)
That’s a great story. I ask you when we first met, whether you could pull a really long wire to my house. Uh, cause I love the fact that uh, not only do you have these great innovative programs but your cost of electricity is some of the lowest in the country.
Peter: (19:44)
It is. It is. And you know, the rate is rate neutral Troy of the rate. So it’s fair to our other customers. Um, but actually what very few people know about our rate like that is that it benefits all of our members, not just the ones that are on, um, the not the, the ones that have an electric vehicle. Why is that? Is because it makes better utilization of our resources that we contract for, you know, 12 months, a year, 24 hours a day. But we only use a lot of them in the peak. Right? Because if you can use them in the off peak time, you actually, you’re increasing what’s called your load factor and you are benefiting all of our members. And so everybody wins.
Bill: (20:16)
A lot of people when they’re thinking about the electricity industry, think about it as a single rate because that’s what most residential people pay. But in fact, it’s quite a bit more expensive to fill the electricity requirements of your customers at five o’clock when everyone’s coming home from work and they’re turning on the television and our stoves and nowadays charging their cars. So if you can reduce the size of that peak, you actually end up reducing your costs and you can pass that along.
Peter: (20:40)
That’s right. We, we pay a lot of money. You know, there’s, there’s two types of energy capacity, which is kind of a reservation and then there’s energy and that’s the actual kilowatt hours that you use. And so if you can reduce the capacity piece of it and not have to pay reservation that you’re not going to use, then it makes sense
Sam: (20:54)
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Bill: (22:03)
So let’s transition from electric vehicles, which is pretty cool too. One of my absolute favorite topics, which is batteries, particularly commercial residential scale batteries, but also utility scale batteries. And I think a lot of folks are excited because this feels like a game changer for the electricity business because one of the first things you learn when you study this industry is that every electron delivered has to be delivered in real time when it’s needed, not exactly that way, but by and large, electricity is one of the largest systems where everything is delivered in real time. And one of the few commodities in the world that’s delivered exactly. And only when it’s needed. Batteries completely change that. It’s, in my mind, it’s going from arithmetic to calculus. It’s a much more complicated but also really opportunistic, a change. What do you thinking about batteries both at the home, so at your customer’s side, behind the meters they say, and also for, uh, your, your utility.
Peter: (22:54)
We’re really excited about the opportunity for batteries and on both utility scale and on the home scale, on the home scale. We believe that over time people will want to have batteries in their home. And a lot of our customers have them now and as they get more and more affordable and they are every day and more people will really want to have them in there for reliability, for better utilizing time of use rates, for storing their solar power that they’re generating on their rooftop. You know, I think it’s, it’s really an important part of the residential infrastructure as we go forward on the utility scale is really critical because you can do things like defer the building of a substation for 10 years because you’re putting a battery at a congestion point, right? Um, you can turn a solar project, you know, pick a size a hundred megawatts, uh, that would last maybe four hours or five hours into an eight or nine hour plant because you’re using a storage capability.
Peter: (23:46)
And as that evolves and as battery density is evolved, it’s going to continue to get more and more exciting. You know, you might wonder, why don’t we see more batteries and more rooftop solar in and in Georgia? Right? And I think the, uh, the quote unquote problem that we have is, is by and large, all utilities in Georgia do a good job of providing low cost power. So when you buy a rooftop project in Georgia, for example, it’s been less compelling historically than say in California where you’re paying back is really short. But I think it’s important to realize that these solar panels and the cost of solar panels is going down rapidly, every single day. And so it’s not about whether it’s gonna be sensible for people, it’s about when and when’s the right time for someone to put that on their roof. And a lot of people have, have different motivations that, you know, some people have a mixture of economic and sustainability goals and in their own personal lives and other people are pure economics, so to each his own. Um, but I think it’s a space to be watched because, you know, there’s a lot of installations going on. It’s actually projected to be the number one job in the U S for the next decade is solar rooftop installer. Did you know that? No, that’s it.
Peter: (24:49)
Amazing. And not surprising, not surprising. Uh, someone said to me the other day, given what you do with the free energy work, bill, what’s it like having solar on your roof? And I had to pause because I don’t, uh, and uh, this person was, I think a morally inflamed. It didn’t that I didn’t actually have solar on my roof. So I said about doing that and, and and I found, which you had mentioned earlier is that the price of electricity in the Southeast and in Georgia specifically is about 12 cents a kilowatt hour. And compare that to California were regularly exceeds 30 cents a kilowatt hour. And so what that means is that when you buy a solar for your roof, it takes that much longer for the Delta between the price of the solar installation to pay for itself. But of course I am now in the process of getting solar on my house and also batteries in my garage.
Peter: (25:39)
So I’m going to go all in and I will be sharing with our listeners some of those experiences. But as you say, Peter, it’s really nothing more than a question of when it’s not a question of if within economics make sense to install it on your rooftop or I think even more interestingly for the entrepreneurs that are listening to this is for the commercial installations. Absolutely. Because those are extremely savvy buyers who are looking for economic opportunities, who have a large expense base that they can move towards capital expenses, like these solar rooftop things for commercial installations. Yup,
Peter: (26:11)
that’s right. In fact, we are, you know, it Cabi MC, we’re putting in a rooftop solar installation cause the more size you can get and the more towards utility scale you can get, the more economic that it is. And of course when we combine that with a battery, we have a really dynamic uh, power plant on a, on our campus. So we’re really excited about our rooftop plus the battery, uh, project. And going back to, you know, solar affordability. When you were talking about utility scale solar, it is incredibly cost effective. And in fact, in 2018 the the lines cross where solar became cheaper than gas. Um, and so when we signed a deal last year, it was the first time we had signed a renewables or solar deal that was actually more economic than the fossil fuel alternatives. So we were excited about that. There’s a role for fossil fuels to play in terms of base load. And that reliability that we need, but there’s a huge role for renewables as well. And we were excited when it’s a good idea and it’s cost effective, then it just, everybody wins. So we’re really excited about our utility scale projects. And by the way, I didn’t tell you that, uh, we’ve increased our, our solar 360% in three years. We’re now that we have the largest solar offering of any EMC East of the Mississippi. So we’re excited about that and hopefully as time goes by and we’re going to continue adding more.
Peter: (27:23)
In my conversations with you. Uh, I have learned a ton about the industry, this part of the electricity industry and about what opportunities that co-ops can offer to their customers and their members. When you look out at the industry broadly within the United States or elsewhere, what do you look for in terms of examples? Well, who do you think that you’re gonna learn the most from? Who’s setting the most future looking visions for this industry?
Peter: (27:49)
You know, there’s a lot of co-ops that are doing really great work, but one, there’s another company that’s close to us in Chattanooga called EPB electric power board. And you think a muni would just not be that exciting of a utility, but in fact more so than most. The EPB agenda really has, has a good handle on what the future looks like. They have a great handle on the combination of distributed energy resources and all of the types of things that make up the, you know, the solar, the renewables, the smart grid, all of that combined with the communications side, um, that really is required to make it happen. You have to have the communications element and high speed communications to make all of those happen as we go into the future. So when we talk about vehicle to grid, um, solar and battery combos, home, you know, real time trading between utilities and their customers, you know, blockchain, things like that. So they have a really good vision of what’s coming down the pike and the, and the, and the pace at which it’s coming. So they’re very realistic about things that are in near term. They’re, you know, they, they talk about things that are way, way out there, but they don’t dedicate too many resources to them. So I really think they have done better than most in terms of identifying what the future looks like, preparing for that and serving their customers by building out in a fiber infrastructure and great, uh, uh, power assets as well.
Peter: (29:06)
When you talk about communications, do you mean just within them as a business or also for their customers?
Peter: (29:11)
They, uh, one of the big things it’s, um, there’s a wave that’s going over the co op and the electric industry in general is particularly in cops because they’re in rural areas is the lack of, of broadband and fiber communications. And the impact of that is that all of these co-ops are evaluating whether it makes sense for them to build out a fiber network for their members. Now, a lot of people have operational fiber like we do and you know, EPB had it, um, and other, many, many other clubs have it. And then one has to determine is the next step the right thing for our members to actually build fiber and broadband to the home because the other providers aren’t, aren’t willing to do so or because of they’re underserved or it just makes sense for your members. So as we go forward, you know, you can’t have smart objects without communication, right?
Peter: (29:57)
So you can have all the smart capability in the world, but if you don’t have the high speed communications to be able to transact and to move those, move that data back and forth, they simply don’t work. I mean, take to be able to grid. For instance, you know, if you, if you’re trying to signal an electric car that’s sitting in my garage and the utility wants to pull energy from it, you know, you really need high speed communications to be able to communicate to that. If you’re talking about a smart cars going down the road and identifying all of the, all the dangers that are, that are happening with, you know, pedestrians and bikes and other cars and trucks and things like that, that has to be very, very high speed communication. So between, you know, a strong fiber infrastructure and a coming 5g infrastructure, which are very complimentary, you’re going to see communications be as important to the energy business as anything ever has been.
Peter: (30:43)
So Peter, you guys are a monopoly. In other words, if you live in your region, someone has to buy electricity from you, they really don’t have many good options. But you guys sound like you have a strong focus on customers. How do you, why is that? How do you achieve that? You know, we are so accountable to our members that, and there’s nothing more accountable than having a democratically elected board and that’s by the members. It’s really important for us to ensure that we’re doing the best job we can to gauge member priorities as we go through time. Right. And so trying not to get too far ahead of our skis in terms of technology and innovation if it’s not valuable to the members is important. We want to be as innovative and forward thinking as we can. Our job is to figure out where the puck is going to be with re in the minds of our members and then create that environment as we get there.
Peter: (31:29)
Now the challenge with that is in the power business that requires a lot of lead time because a lot of these are big investments and we want to be very prudent. Um, but we try to talk to our customers and so many different ways, which is now a challenge. Why is it a challenge? Because you have different generations that like to communicate in different ways. You know, we have 200,000 customers, you know, 199.9 a thousand of them do not never call us and don’t want to talk to us, think we’re doing a great job and then we’ll call us. Right? And so trying to get them to communicate to you when you talking about, Hey, would you like something der oriented or are you thinking about batteries is harder because millennials don’t read magazines or the postcards. And some older folks might not want their stuff delivered on email or an iPad or via social media. And so we wind up communicating and probably 13 different media and to make sure and identifying our customer segments to, to ensure that when we’re talking to a millennial, we’re using these three, four types of media. When we’re talking to someone else, we’re, we’re using this method cause that’s what they like, right? So we’ve got a little bit of a business intelligence around our customer segmentation and how they live their lives, how they’d like to be communicated and what they do value. I have to catch myself listening
Peter: (32:40)
to that answer because if you’re in a normal business, you expect to hear a CEO talk like that. But for those folks who don’t have the privilege of talking to the CEO of electric utilities, very often I will simply tell you that that degree of customer focus, communicating how they want, when they want, the way they’re comfortable is really rare. And it’s really exciting to hear you talk that way. One of the things that’s got to be in the minds of some of your customers members is this shift towards cleaner energy sources. What are they telling you that they’re interested in and how are you hearing that? How do you set your strategic plans?
Peter: (33:12)
Well, we surveyed them for years. In fact, in one of the famous images we have is asking our customers in a survey, a group of actual members, how would you all like to have renewable energy? And the a and to a person, they raise their hand, right? And then the next question was how would you like to pay 5 cents a kilowatt more for that? And it was crickets, right? And so, you know, so we got the message from our members and say, look, we really want, you know, renewable energy, but we really don’t want to pay more for that. And so through the utility, so the community solar stuff that we did, and then the big scale utility solar, we were able to actually to deliver affordable renewable energy to all of our members, not just the ones that, you know, we’re willing to pay more for it.
Peter: (33:50)
And so we’ve done that, uh, economically now as it continues to get even more economic. And we continued to assess how our members want us to invest in our power resources in the future. We talk about all the various different media which we use to communicate with our customers, have very different generations. And then we try to understand what do they desire in terms of say, a sustainability goal or renewables goal, et cetera. And of course it varies greatly by generation and not just generation, but other factors as well, of course. And so we really try to understand what they are looking at in terms of what companies do they do business with. Uh, outside of the power business and why. And generally what you’ll find is they do business with people who are setting sustainability goals, right? So millennials and, and, and folks of that age, even generation X or is in that case, they do business with companies in the same way that you and I used to choose our charity by what they did, right? And so they have a different view of corporations and, and they want to do business with corporations that have sustainability goals, right? And so that’s something that we’re focused on is trying to assess from our members what that should be because it’s not for managing of the board, just to set it, it is up to us to gauge our members and try to get the right balance between investment grade with liability and member desire.
Peter: (35:08)
Again, I love the focus on your members and your customers and I feel like that’s the only path towards creating this clean energy future, uh, that we want. And what you’ve heard from your customers is what I think a lot of people feel. Yeah, I definitely want a cleaner, better solution, but don’t make me pay any more for it. And by no means am I willing to have blackouts and brownouts for either. So that is the incredibly challenging journey in front of you guys and all the other utilities to get that right. And I have a great degree of confidence, uh, particularly after meeting you that this is something you guys will nail.
Peter: (35:38)
Yeah, we’re focused on it, you know, low rates and reliability are our priorities, but then we have a lot of other things that come into it. And, and again, it’s all about the members. There are a lot of other EMCs that are doing wonderful things. And I’m in the renewable space. Walton EMC, uh, just landed a Facebook data center, uh, last year and Facebook wants a hundred percent renewable coverage. Um, and so they’re putting in an excess of 400 megawatts into, um, in, in South Georgia to satisfy solar that of solar, a solar plus battery, I think as well to satisfy that, uh, the need of their customer. And so not only you, you have individual, you know, homeowners and renters are that have a certain desire for a goal. You have companies that, that make their decision on coming to the region on whether they can meet their sustainability goals. So in that case, IOU, um, wouldn’t give them the renewables level that they wanted and they found it quite refreshing to work with AMCs. I talked to another group that does development and site site selection for the big four technology companies for data centers. And they have now stated that they will only work with EMCs because they’re so easy to work with it. So customer focused, they want to bring load and jobs to their area and they are incredibly flexible on how they can structure and create a deal on behalf of the incoming company.
Peter: (36:51)
That’s a great story. It also highlights the role that corporations are playing in the move towards clean energy. Now that it’s cost effective, they can be selective and say, listen, we want to be in a region and work with companies that can give us this kind of electricity.
Peter: (37:05)
Absolutely. And there’s 41 EMCs in Georgia. So no matter where they go, they’re going to get a friendly EMC opening the door when they say, Hey, we’d like to come to town. What can we offer you? I mean, Georgia from an economic development perspective, uh, Georgia is just doing a wonderful job. It is a great place to attract businesses and the, and, and the power sector and the gas sector, um, are just two of those that are very attractive for companies to come into Georgia.
Peter: (37:27)
Well, this has been eyeopening, a ton of fun and I have learned an amazing amount. So thank you so much for sharing all those insights and stories about how you and other EMCs are changing the electricity business from the inside out. As we wrap up, we always like to ask our esteemed guests the same four questions. So the first question, share something that you’ve learned in this industry that a lot of folks outside the industry aren’t aware of that they might find surprising.
Peter: (37:56)
I think what’s in a surprising facts, at least 30% of new car sales will be fully electric by 2028. And I think a while, two years ago, people would have doubted that. I think people were seeing so many cars on the street that people are starting to accept it. That is a fact. It’s not light, right? Another one, there’ll be over a hundred plugin models by 2020 that’s already becoming, uh, a truth. And then the other thing that might blow people away is it’s true. Utilities will be using your electric cars, batteries on hot days in your garage to avoid buying inefficient peak power. This is not futuristic. This will happen in the next handful of years and it will be an incredible dynamic between customers and utilities. If you could wave a magic wand and change one single thing about the industry to get to this sort of clean energy world sooner, what would it be?
Peter: (38:41)
I would make the sunshine 24, seven. You know, now that solar is so economic, um, and it’s such a great resource, of course it’s not a 24 hour resource. Um, it would be fantastic if you could make the sun shine 24, seven, but as you know, uh, batteries are coming along and we’re not that far off, you know, and in my lifetime there will be a 24 hour battery plus solar plant that is a very functional. So third question, what do you think will be the single most important change in how we generate, store and distribute electricity in the next five years? I have to say rooftop solar. Um, and we talked about all the time, but it really is the truth. It’s, it’s accessible nationally. It’s a, it makes sense. It makes economic sense today in many, many States. Right. And of course as we talked about it with the cost curve, it will make sense in Georgia, you know, economically very soon as well.
Peter: (39:28)
And so I think that’s the single biggest effect. The second one is really home batteries. You know, as we talked about in your experience in certain States, home batteries will come before solar. So I think for a lot of people it’s more compelling to install a battery then maybe rooftop solar. And so you might think that batteries come after solar or some people might think that, but I think there’ll be some cases where the um, battery will come before solar. So I think rooftop solar will be the biggest change nationally and eventually would be the biggest change in Georgia. And as I said, because a number of job vacancies in America, that’s an incredible, and a lot of people don’t realize that we, the U S just crossed the 2 million a count of rooftop solar installations, 2 million rooftop solar installations, and I think that was up from a million only two years ago.
Peter: (40:12)
So it’s really, really starting to move. The fourth question a lot of people ask me, and I suspect you get asked as well, what can they do as individuals to get us to this clean energy future faster? I say to that bill, it is changed the way you talk about clean energy, right? In a divisive world, a world of divisive politics that we live in. Anything that seems political can turn off 50% of the population when you’re having a conversation. And so I like to talk about the political nature of economics, solar, economic, electric vehicles, practical electric vehicles, and the, the greatness that, um, the great lifestyle that say electric vehicles bring you, you know, not having to go to a gas station plugging into your home once every three days. It’s a cakewalk, right? So what I try to do when I talk about clean energy elements is just talk about how the just simply make great sense, you know, keep the politics out of it. Whatever ones political persuasion would be is irrelevant. Talk about how great clean energy is for anybody in a very practical and economic sense that Peter is why the freeing energy project was founded because this is a better product at a cheaper price. That absolutely is the future. This is transistors, the vacuum tubes, right? And so we are going to get there. It’s a question of how quickly and I love, love the opportunity to meet and hear and learn from people that are making
Sam: (41:34)
that future happen, that are bringing new degrees of innovation and flexibility. And this has been one of the best conversations around that. And you are in such a unique position to do that. You’re doing it. And I cannot thank you enough for coming out here today to talk to us, to share your views, and to give us all an inspired look at what’s coming from the, the folks who control and run the infrastructure that we all depend on everyday. Thank you so much
Sam: (41:59)
Thank you for joining us today. You have been listening to the freeing energy podcast, personal stories from the clean energy movement. Visit [inaudible] dot com to learn more about clean local energy
Sam: (42:16)
I’m seeing him Easterby and Bill Nussey is my cohost and the founder of the freeing energy project. The freeing energy podcast is made in partnership with frequency media. Peter Lowe Pinto is our associate producer. Subscribe to the freeing energy podcast on Apple podcast, Spotify, Google podcasts, and anywhere podcasts are found. Make sure more people learn about clean local energy by rating and reviewing the show on Apple podcasts.
