By Jim Roth, Director and Chair of the Firm’s Clean Energy Practice Group. This column was originally published in The Journal Record on May 22, 2017.
Jim Roth is a Director and Chair of the firm’s Clean Energy Practice.
The next generation utility here in Oklahoma
If you have ever played the board game Monopoly, you know that utility spaces are supposed to be safer landing places than say Boardwalk, or even a developed Marvin Gardens. As a kid, I didn’t know what a monopoly was, but I understood the risk and reward of landing on spaces in the make-believe economy that hopefully cost your opponents and spared oneself. And if you were lucky enough to own the Water Works or the Electric Company, you knew they were good investments that would pay for themselves, but that they didn’t offer the same kind of explosive growth possible of other properties.
The same is true today for most of America’s utilities, as they are a steady-as-she-goes investment, usually promising a decent return but a return proportional to the risk. But today’s utilities no longer have the luxury of complacency in an ever-changing world. In Monopoly, each of the two utilities cost $150 each and the rent was 4 times the dice roll if one utility is owned, or 10 times the dice value if both are owned.
Similarly, many of America’s utilities have been acquiring each other and creating shareholder value through size and footprint, but some observers worry these larger monolithic utilities may becoming too big to adjust as needed when the world of energy and electricity are changing so quickly. Some corporate cultures are agile and can be on the front end of an evolving industry and some cannot.
Here in Oklahoma, some of the most agile utilities are proving to be our electric cooperatives, whose nimbleness, local service focus and innovative drive are creating great business incubators for movement into the energy future. I recently learned of one such great example, serving central Oklahoma and based in Stillwater in Payne County. Central Rural Electric Cooperative provides electric distribution cooperative service to more than 20,000 meters through more than 4,000 miles of electrical line in seven central Oklahoma counties. They refer to themselves as “the next generation utility” and describe their mission as:
Central Rural Electric Cooperative is filled with energy-industry game changers, collaborators, risk takers, mountain movers, dream weavers and history makers. We are not afraid to bring ideas to life and inspire those around us….We understand it is our responsibility to embrace our energy future and empower our members to change the world by sacrificing self-interests to achieve the best results.
And they are walking the walk, which is important because they are also serving an area of Oklahoma with significant oil and gas activity ramping up and expecting reliable service. Central has instituted new demand monitoring technologies that provide modern operations in real-time to reduce costs and increase reliability for the local oil and gas activities.
Central has also constructed a new business park and micro-community called Innovation Pointe, which shares new technologies to improve system operations. They’ve even deployed self-healing grid technologies to increase reliability and decrease outages to keep their customers safe.
Central has added new renewable energy in the form of Ten K Solar panels and battery storage technologies (which help to mitigate the intermittency of solar energy) to power the Innovation Pointe campus. The solar power plant, with the help of the Tesla Powerpack battery products, exports extra renewable energy to the whole grid and the system is managed from inside the new building, which achieved LEED Gold status from the U.S. Green Building Council.
This forward-thinking and more importantly forward-moving utility is proof that some monopoly spaces are worth landing on, because their embrace of the future is a sure win for every customer.
Jim Roth, a former Oklahoma corporation commissioner, is an attorney with Phillips Murrah P.C. in Oklahoma City, where his practice focuses on clean, green energy for Oklahoma.