Utility Co-op Connection
Putting service ahead of profit helps
utility co-ops win JD Power Award
By Anne Mayberry
Utility Programs,
USDA Rural Development
aintaining reliable
electric service at
affordable rates is the
cornerstone of the
nation’s 900-plus rural
electric cooperative utilities. With
increasing energy costs, that goal is
becoming more challenging.
Yet rural electric cooperative utilities
are meeting that challenge. Jackson
EMC and Southern Maryland Electric
Cooperative (SMECO) recently scored
the highest customer satisfaction marks
among midsize utlities in their regions,
according to J.D. Power and Associates.
Jackson EMC also was noted for
achieving the highest customer
satisfaction score among utilities of any
size nationwide.
Jackson EMC, based in Jefferson, Ga.,
and SMECO, based in Hughesville,
Md., received recognition in J. D.
Power and Associates’ 2008 Electric
Utility Residential Customer
Satisfaction Award for midsized utilities
(those serving between 125,000 and
499,000 residential customers) in the
South and East, respectively. Two more
rural electric cooperative utilities —
Santee Cooper in South Carolina and
Clay Electric Cooperative in Florida —
won the second and third place scores
(respectively) in the South. The award
is based on the results of an annual
consumer survey conducted by J. D.
Power and Associates.
The award to SMECO came as a
complete, but very welcome, surprise.
“Our first notice that we’d received
any kind of award was receiving the box
with the trophy,” recalls SMECO
President and CEO Joe Slater. “My
assistant opened it and brought it to my
office. A few days later, J.D. Power and
Associates called us.”
Key to customer satisfaction
How do Jackson EMC and SMECO
run efficient utilities and simultaneously
keep customers satisfied?
“All of our employees understand
that we work for our owners — our
customers,” Slater explains. “The
cooperative business model allows us to
stay focused; we’re not distracted by
earnings per share. We are not driven
by a profit motive. We put our
customers first.”
Pugh says that 2008 marked the first
year the co-op was included in the
study. “When I look at this award, I’m
reminded of 461 reasons why we
received this honor — our employees,”
he adds.
Slater says SMECO’s award is
especially gratifying because it is the
result of the co-op earning high
customer satisfaction ratings. For many
electric customers, the real test of
service from their utility is how the
company responds during emergencies.
“We tend to have a lot of storms in
southern Maryland, but we’re able to
provide good information to our
customers because of our outagemanagement
system,” Slater says.
Installed two years ago, the system
connects mobile laptops with SMECO’s
computer systems, allowing crews to
use technology to pinpoint and quickly
respond to outages. “People like
certainty. They want to know what
caused the outage and when their
power is coming back on.”
SMECO’s involvement with the
community “helps touch a lot of lives
through our scholarships and various
other projects,” Slater says.
The most basic cooperative
advantage may be the unique financial
structure of rural electric co-ops. The
cooperative business model emphasizes
reliable service at affordable costs.
Member equity is often listed as one of
the benefits of being a rural electric
cooperative customer. This same
business model produces positive credit
ratings for rural electric cooperatives,
which reduces the cost of borrowing
money.
“Our business model not only
increases customer satisfaction, but also
takes the form of high credit ratings —
higher than many investor-owned
utilities,” Slater notes. “This in turn
translates into lower funding costs.”
Co-op advantages
Martin Lowery, executive vice
president of external affairs for the
National Rural Electric Cooperative
Association (NRECA), echoes Slater’s
assessment, adding that a key advantage
of the cooperative business model is
that “members have equity in
cooperatives.”
Lowery says the reputation of
cooperatives for service is well
deserved. “Businesses that care about
serving their members tend to have
great reputations,” he notes. “I hear all
the time about how great co-ops are
and how much their customers love the
service they receive from rural electric
cooperatives.”
Rural electric co-ops serve 41
million consumers in 47 states,
according to NRECA. Co-ops are the
fastest growing segment of the electric
utility industry, and are concerned
about how to address growing demand
for electricity.
Like most electric utilities, SMECO
and Jackson EMC work hard to ensure
that long-term power supply is reliable
and affordable. The fact that SMECO
and Jackson EMC are locally owned
and operated increases their
responsiveness, Slater says. “We’re part
of the community we serve.”
Most cooperatives, by their nature,
tend to be good corporate citizens, he
adds. “We have plans for conservation
and efficiency. We have plans to build
new transmission lines. We keep our
customers informed of our issues and
activities and were ranked very highly
for that effort.”
Pugh credits employees with the
recognition from J. D. Power and
Associates. “Jackson EMC’s employees
have a long-standing dedication to
provide service that exceeds our
members’ expectations, whether that
means quickly restoring power after a
storm, making sure our bills are
correct, promptly handling members’
requests, or planning infrastructure
additions to ensure adequate power
supplies.”
Slater says the detailed survey results
that came with the award are being
studied by the co-op. “We’re really
interested in any places where our
scores could have been higher. We’re
going to see what we can do to earn a
higher rating.”
One example Slater cites is to
expand the ability of SMECO
customers to set their own billing due
dates. “This is one area we want to
continue to focus on. Our customers
want options, flexibility and control.
We’re seeing how we can accommodate
those interests.”
