ENERGY COOPERATIVE ASSOCIATION OF PENNSYLVANIA Exploring Cooperatives: Economic Democracy and Community Development in Pennsylvania and Wisconsin June.

ENERGY COOPERATIVE ASSOCIATION OF PENNSYLVANIA

Exploring Cooperatives: Economic Democracy and Community Development in Pennsylvania and Wisconsin

June 13, 2012

The Energy Co-op Mission

• To provide energy cost savings, education and advocacy on behalf of its members

• To promote the efficient use of energy and the use of renewable energy

• To support cooperative concepts and participate in the cooperative movement

ECAP History & ProgramsHistory• Est. 1979 as a heating oil

cooperative• Founded by Weavers Way Food

Cooperative members• Located in Center City

Philadelphia• Serves members in a five county

region of Southeast PA

Programs• Heating Oil• Electricity• Biodiesel Distribution

Service Area – Delaware Valley Region

Heating Oil Program• Group buying program for heating oil consumers• Owner-members in five counties• Partners with 10 suppliers

• Most locally owned• 5 provide Bioheat/combinations of bioheat and conventional heating oil

• Floating daily rate – varies by supplier• Set by ECAP• Based on the daily wholesale market price and marked up for each supplier based

on contracted fixed margins

• Average cost savings of up to

$.20/gallon

Energy Program

• Electricity Generation Customer Choice and Competition Act of 1996

• ECAP licensed Electric Generation Supplier• 2012 Electricity Composition

• EcoChoice100 = 99% wind; 1% solar • EcoChoice20 = 20% wind

Biodiesel Distribution Program

• ECAP is a a full-service, licensed Class I Distributor in Pennsylvania supplying biodiesel at any blend level• Sustainably sourced, produced and distributed• Grant application and administration support• Quality ASTM-grade fuel

Categorizing ECAP• Type – determined by

ownership structure and function

• Consumption OR production

• ECAP incorporates elements of both

• Sector – industry in which the cooperative operates

• Utility sector• Distribution OR generation

and transmission (G&T)• Federated co-ops form

purchasing co-ops to generate or purchase the power they distribute

ECAP = Hybrid Consumer-Producer Federated Energy Distribution-G&T Cooperative

ECAP Organizational Structure

Members

(7,606)

Staff

(7)

Board of Directors

(10)

Board of Directors

• Elected by and (largely) from within ECAP’s membership

• Administrative and managing agent of the cooperative

• Composition (according to bylaws)• 5 – 11 directors solicited from all classes of membership

• ≥ 50% of directors need to be active members

• ≤ 6 at-large, non-member directors

• 2 year staggered terms with a 4 term limit

Co-Director of

Programs

Co-Directorof

Operations

Biodiesel Distribution

Program Manager

Electricity Program Manager

Manager of Membership & Administration

Outreach Associate

Marketing Coordinator

•  Oversees the Electricity and Biodiesel Distribution programs (and ultimately the Heating Oil Distribution Program)

• Direct research and development of existing and new energy programs

• Manage the implementation of strategic goals

• Manage and report on the financial conditions of the organization

.

• Oversee the Membership, Marketing, and Outreach departments

• Manage the implementation of strategic goals and strategic management process

• Oversee HR, IT and infrastructure• Report on organization’s

operational conditions

• Coordinating all marketing efforts

• Oversee Heating Oil membership services

• Managing and growing the Electricity Program

• Identifying and obtaining for local energy sources

• Maintaining inventories of biodiesel

• Ensuring quality control• Arranges and processes

deliveries• Reports on grant deliverables

• Focuses on meeting the needs of the co-op’s growing membership base

• Manages website and IT needs

• Engages members through the co-op’s social media sites

• Serves as the face of the co-op at local events

Staff

Members• Membership Classes

• Class A – any cooperative organization, credit union, unincorporated association, community association or nonprofit organization

• Class B – any residential household or residential energy consumer• Class C – any businesses or for-profit enterprise

• Membership Status• Active – members using ECAP services/products who are current with dues

or have applied for/received a dues waiver; only active members can vote at the AMM

• Inactive – members using ECAP services who are not current with dues and have not requested a dues waiver

• Supporting – organizations, households and businesses unable to use ECAP services/products due to unavailability who are eligible for limited member benefits

7,606 members as of February, 2012

Class A

Class B

Class C

2009 Membership by Class

Class A

Class B

Class C

Active

Inactive

SupportingGrace

2012 Membership by Status

Active

Inactive

Supporting

Grace

Reasons for Originally Joinging ECAP0

10

20

30

40

50

60

Member Motivation for Joining ECAP

To save money on energy

To receive a fair price on energy

To support a locally-based organization

To support a variety of renewable elec-tricity sources

To support in-state renewable electricity sources

Member Age Distribution 0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

Member Age Distribution

Prefer Not to Answer65 and older55 -6445 - 5435 - 4425 - 3418 - 24

Educational Attainment0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

Highest Level of Education Received

Prefer Not to Answer

Graduate

College

High School

Household Income Range0.00%

5.00%

10.00%

15.00%

20.00%

25.00%

30.00%

Household Income Range

Less than $25,000

$25,000 - $34,999

$35,000 - $49,999

$50,000 - $74,999

$75,000 - $99,999

$100,000 - $124,999

$125,000 - $149,000

$150,000 or more

Prefer Not to Answer

What would make you feel more engaged as a member of The Energy Coopera-tive?

0.00%

10.00%

20.00%

30.00%

40.00%

50.00%

60.00%

70.00%

80.00%

Member Engagement

Nothing. I like my current level of en-gagement.

Participate in an online forum for members.

Attend the annual membership meeting.

Present information about The Energy Co-op to neighbors or civil/professional associa-tions.

Serve on a committee.

Volunteer at community events.

Serve on the board.

Volunteer at the office.

ECAP & Strategic Management

• 2012 Strategic Planning Initiative

• Lack of best practices

• Unique organizational structure

• Mixed urban, suburban and rural membership/service area

• Cooperative and ECAP-specific values

• Innovative, young and expert leadership

Big Hairy Audacious Goal (BHAG)

• By 2020, The Energy Coop

• Has 20% market share,

• Sources 100% of its renewable energy from within the region, and

• Reduces overall greenhouse gas emissions by more than 20% compared to conventional energy usage.

Strategic Issues

Expansion

• Patronage rebates distributed in proportion to use

• How to distribute patronage rebates to new members?

• New users may receive benefits that are disproportional to their share of the equity investment

• Existing members may be reluctant for the cooperative to use the equity created through their patronage to fund operations benefiting new users

Diversification

• ECAP’s weak position in the renewable energy market

• ECAP’s competitive edge dependent on innovation and diversification

• Investment in R&D will yield uneven/irregular program diversification

• Uneven diversification will result in disproportionate patronage rebates

Conclusions• Importance of mission and values

• Identification of strategic issues and best practices consistent with cooperative principles

• ECAP’s innovative products and unconventional business structure pose specific challenges • Profit distribution system • Equity structure

• Realization of the BHAG requires balancing ECAP’s• Progressive business structure• Organizational values• Universal cooperative principles