| co-op values PSO, OG&E and CEC


It has to do with the business model. IOUs like PSO and OG&E are owned by outside investors that may or may not be customers of the electric utility. Their companies’ stocks are traded on Wall Street, and investors demand a return on their investment. This tends to drive up the price that their customers pay. Many municipal systems charge rates that generate a profit for their cities that helps pay for other services. There's nothing wrong with a profit-driven system, but it is different than the electric cooperative model.


How your electric co-op differs from other utilities


than the initials that serve as brand names, what's the difference, really?


P


It's more than kilowatt-hours. Public Service Company of Oklahoma (PSO) and Oklahoma Gas and Electric (OG&E) are investor-owned utilities (IOUs) that serve primarily densely populated areas. Municipal-owned utilities serve cities and towns. For instance, Broken Bow is served by a municipal owned utility. Electric cooperatives like Choctaw Electric Cooperative (CEC) serve less populated areas.


In the utility business, population matters—a lot. Since the costs to serve any given area are similar, the more customers a utility serves allows it to spread the costs among more people to keep rates lower. At least that's the theory.


The graphic to the right shows the national averages of density and revenue per mile of electrical line for IOUs, municipal- owned utilities and electric co-ops.


Municipal-owned utilities, which operate in cities and towns, have the greatest density—48.3 customers per mile of line, generating an average of $113,301 of revenue. IOUs follow with 34 customers per mile of line with average revenues of $75,498. Finally, electric co-ops average 7.4 members (not customers, but members) per mile of line, bringing in an average of $14,938 of revenue per mile.


6 | MARCH 2017 | CEC Inside Your Co-op


SO, OG&E, and CEC—along with city-owned utilities they are all businesses that deliver electricity to homes and businesses. Other


Here in southeast Oklahoma, CEC serves a total of 18,087 meters. This works out to roughly 5.06 meters per mile with average revenues of $12,266 per mile.


By comparison, PSO serves 545,000 customers in Oklahoma while OG&E serves 800,000. Their revenues collected per mile of Oklahoma line is not readily available, but it is substantially higher than CEC's.


Based on consumer density alone, electric co-ops such as CEC should have rates 7.5 times greater than municipal-owned utilities and five times higher than IOUs, but that's not the case. Why not?


CEC, being a co-op, operates on a not-for- profit basis. It's still a business, though, which means it must generate enough revenue to cover costs, the largest being the purchase of wholesale power from a power plant. CEC doesn't have to charge rates to pay outside stockholders.


Since CEC members own their cooperative, they determine who runs the co-op, the services it provides, and how those services are delivered. Local ownership doesn't promise massive revenue collections per mile; rather, it ensures that electricity is available and remains as dependable and affordable as possible. Given the low returns per mile and the high cost to serve rugged rural areas, co-ops remain true to their purpose—to serve.


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