Most businesses aim to grow over time, but for a utility — especially an electric cooperative — growth is different.
When I 1st started at Coosa Valley Electric in 2001, our Cooperative was enjoying good growth.
From 2001 until 2007, we grew from 14,000 meters to more than 17,000. Propelled by aggressive development — and arguably questionable mortgage financing practices — we were averaging more than 400 new consumers per year. That’s very robust growth for a cooperative our size.
Sadly, the good times couldn’t last. The bottom fell out of the housing market, and the growth stopped. Things happened so abruptly, in fact, that a good many speculative homes were left unfinished because developers ran out of money and financing. Within a year, we had lost more than 1,000 consumers.
Fast forward to 2018, and we experienced growth again. That growth is continuing. Today we serve more than 18,000 consumers, and we’re still adding more.
What makes the situation different this time is that developers are not building speculative homes in hopes of finding buyers. Homes being built today are presold, even in the larger, starter-home type subdivisions. We are very excited to see this, not just from the electric cooperative side of things but also for our subsidiary businesses, Coosa Valley Propane and Coosa Valley Technologies.
When you consider our business, we don’t really have ways we can incentivize growth. Electric cooperatives are bound to the whims and fortunes of the economy, developers and homebuyers.
For the average retail business, there are a multitude of tools to attract customers. They can run a promotion, offer discounts, create incentives for return business or any number of other methods. For the customer, participation requires only a small commitment of time and whatever money it takes to buy their products.
For an electric cooperative, a new consumer must be willing to make a considerably larger commitment. Often it involves hundreds of thousands of dollars, if not millions, to build a home or business or purchase and move into an existing 1. A lot of factors can go in that decision-making process that almost never take electricity into consideration.
So, why is growth important in the 1st place? The cost of running any business is going to increase over time. This is only natural. The cost of materials goes up. Employee wages increase. Utility costs get higher. If a business doesn’t grow, they must spread those higher costs to their existing customers. In the end, this means higher prices.
In this respect, electric cooperatives are no different. If we don’t grow the number of consumers we serve, we must raise rates so our existing consumers can help us recover those costs. But we also battle another issue.
When consumers experience high power bills, we have people on staff who work with them to discover what’s causing the high usage and then offer solutions to reduce it. This means we are always working against ourselves with electricity sales.
The challenges of balancing expenses to income are very real.
These days, Coosa Valley Electric is enjoying the gift of healthy growth, and the short-term outlook sees this trend continuing for at least the next 3 to 4 years. We are definitely counting our blessings, but we are not banking on this growth. We are continuously looking for ways to make our operation more efficient and cost-effective.
We hope you and yours have a Merry Christmas and Happy New Year.