Town Hall

More than 3,500 United Cooperative Services members joined United’s CEO Cameron Smallwood, for a Telephone Town Hall in March. Smallwood tackled several topics, including explaining recent high bills due to weather, the fallacy of a rate increase, retail competition, updates on facilities and information about United’s fiber internet buildout progress.

Originally started as an alternative to in-person meetings during the coronavirus pandemic, the cooperative continues to do several telephone town halls per year to keep its 75,000-plus members apprised of relevant issues.

In addition to the update, United hosted a question-and-answer session following Smallwood’s remarks.

In the presentation, Smallwood spoke on 5 basic, most commonly asked questions. The first of which is: Why is my bill so high?

The short answer to that question is usage, according to Smallwood. Smallwood explained United’s bill with an example of one member’s monthly usage during this January’s cold snap, where temperatures dropped below freezing for several days.
Most of United’s members used a whole month’s worth of energy in just that five- to six-day period where those lowest lows occurred, Smallwood said.

Smallwood explained how in January, members saw their average usage and bills double from previous January bills, due to that frigid week when heating units ran incessantly.

“So, people ask why my bill doubled,” he said. “Actually, it did because your usage doubled.”

Helen Eklund of Stephenville, who called in during the town hall’s Q&A session, said she thought United offers a pretty good deal compared to her old electric service.

“I moved here in 1993 and couldn’t believe how expensive it was to live in Stephenville, Texas,” Eklund said. “I found my land in 2001 and moved out here, and I could not believe the difference. It was like a third of the cost. So, anybody who wants to gripe about the cost of United Cooperative Services, you tell them to come talk to me.”

Smallwood also discussed how the freezing temperatures affected heat pump operation. Normally, heat pumps take heat from the surrounding air, transforming it into heat for the home, but at sub-freezing temperatures, the heat pump switches to emergency heat mode, which uses heat strips. These strips use larger amounts of energy.

Many people also tend to use space heaters that use a lot of energy. All of these conditions lead to higher usage and thus higher bills, Smallwood said.

United also has many tools to assist members in reducing their bills. Smallwood specifically touted United’s energy audit program.

“We’re really OK with you using less energy,” he said. “Ultimately, we want you to use less energy. And so how can we help you to do that? We have an energy audit program. Let us come to your home and actually look at your usage with you, look at what’s in your home and driving usage.”

Many United programs exist to help members who may be struggling with their bills, including the Brazos Hardship Fund. The fund covers 100 percent of the Winter Storm Uri securitization charge each month for qualifying members. Current participants see an average savings of $22 per month on their electric bill. Smallwood encouraged eligible members to sign up for this program at www.ucs.net/brazos-hardship.

“Our current demographic shows that we have about ten thousand members who might qualify for this program,” he said. “We really would like our members to take advantage of this program.”

Smallwood also explained United’s billing breakdown and net margins for 2023.

 “Out of every dollar that you send to your cooperative, 80 percent of that goes to power supply cost, which is just a pass-through to you,” Smallwood said. “We don’t make any margins on that. Whatever that cost is, we just pass that cost on to you with no markup. The other 20 percent is for our poles, wires and transformers and what we do to deliver you energy.”
United collected $384 million from its members and its margin was $1.4 million, or .3 percent margin, Smallwood said.

“That’s a little too slim,” Smallwood said. “We normally like to see about 4 to 5 percent. Our bankers and rating agencies like to see that, too.”

Why does United’s rate keep going up?

The simple answer to this question is that it hasn’t gone up, Smallwood said. United’s historical rates for the past four years show that they are below Oncor’s retail electric power average cost much of the time.

“What that means to you is that you’re getting a good deal and a competitive deal,” he said.

A dearth of dispatchable natural gas generation has created price volatility in the ERCOT energy market. The majority of new energy production in Texas has been wind and solar.

“But as you’re very familiar, the sun is not always out and the wind is not always blowing,” he said.

As more people move to Texas, the energy demand continues to go up, but not enough natural gas plants are coming online to keep up with demand, which in turn results in price volatility. This drives ERCOT market costs higher, Smallwood said.

“The good thing about our power cost strategy, folks, is you haven’t seen volatility from us. It’s been stable. And it’s been stable for some time now. And it’s going to be stable all the way through the end of our contract in 2025.”

United signed a contract with Constellation Energy to provide wholesale power to its members. This contract provided stability and affordability for United’s members, Smallwood said.

Smallwood did discuss an actual rate change that is slated for the end of 2024. Inflation pressures have affected costs for the cooperative.

“The bottom line is things have gone up dramatically. And you’ve seen that as consumers,” Smallwood said. “Going forward we have to deal with this.”

Why doesn’t United offer retail choice?

The majority of members polled continue to want United to manage the power supply going forward. As an example of deregulation in a market size similar to United’s operating area, Smallwood spoke about municipal utility Lubbock Power & Light. The LP&L rate, before opting into competition, was 14.1 cents per kilowatt-hour. After deregulating, the average rate of retail electric providers in that area was 16 cents per kilowatt-hour.

“Folks, it goes from 14 cents to 16 cents on average,” he said. “That’s a really big shift in cost for those customers in Lubbock. And so they opted in and now they get to deal with selecting their new provider at that new cost, unfortunately.”

As part of the town hall, United conducted a poll asking participants to choose whether they wanted United to continue to manage their power supply needs or to opt-in to retail competition. The results again showed overwhelming support for trusting United with managing the power supply needs  by a margin of 88 percent to 12 percent. The total number of participants in the poll was 551.

What’s up with United’s facilities?

As part of a long-range facilities plan developed in 2009, United’s Cleburne office is closed and is being deconstructed, and a reconstructed facility will be built on the same site. At the same time, United has opened a new office in Mansfield, bringing current regional offices to eight.

“We did quite a bit of study about the Cleburne location and decided it was going to be the cheapest thing to actually rework on the existing site,” Smallwood said. “We saw that was going to save us about 3 or 4 million dollars in the project to just stay in that existing location. It’s going to be about an 18-month project. We’re really looking forward to the benefits of it to meeting our members’ needs.”

United’s Mansfield office ribbon cutting and grand opening was on March 1.

“That office was placed there because that’s where our strongest growth is in our whole system right now, and we need a presence in that community and personnel over there,” Smallwood said.

Where’s my %$#@ internet?

Before United offered internet services, 87 percent of co-op members lacked access to reliable, affordable high-speed internet. To date, United has installed over 7,300 miles of fiber internet, servicing more than  24,000 residential and business subscribers. The final estimate United will invest in providing fiber internet to its members is more than $380 million.

Smallwood said the original plan for rolling out high-speed internet included the use of wireless towers, and the estimated miles of fiber line was only 5,925. Since that time, it was decided that wireless towers were not a viable option due to reliability issues. The new estimate for miles of fiber was increased to nearly double the miles at 11,183, and the total capital expenditure has increased from $203 million to $383 million.

“We’re doing everything we can to continue to build as quickly as we can. We’re adding about 600 subscribers to our system per month,” he said. “We’re going to keep working on it until we’re done. The board is committed, and the staff is committed to doing that.”