Mr. Chairman and Members of the Legislative Transition Task Force, my name is Glen Gillispie, and I am appearing before you today on behalf of Mecklenburg Electric Cooperative. I am currently the Director of Data Processing and Administrative Services for this organization.
Mecklenburg Electric Cooperative is a locally owned, not-for-profit electric distribution cooperative providing electric service to approximately 28,500 accounts, in nine counties along the southern border of Virginia. The Cooperative maintains approximately 4,080 miles of line, with total utility plant in service exceeding $88 million dollars.
Mecklenburg, as well as most other distribution cooperatives in Virginia, currently purchases the bulk of its power supply needs from Old Dominion Electric Cooperative and a small portion from the Southeastern Power Administration distributed from the Kerr and Philpott Dam projects. Its annual cost of purchased power is approximately $23 million dollars.
The Cooperative employs 125 full-time employees located in three district offices - Gretna, Emporia, and Chase City. Our headquarters office is also located in Chase City.
Mecklenburg Electric Cooperative enjoys the reputation of having extremely dedicated and loyal employees while providing excellent service to our member-owners and to the surrounding communities. We pride ourselves on being a community minded organization. Our employees are involved in numerous community service organizations and are important partners in fulfilling many volunteer roles needed to improve the quality of life in the areas they live.
Mecklenburg Electric Cooperative's mission is to provide reliable electric service at the lowest possible cost to our members. In contrast to investor-owned utilities, our members own the Cooperative system, and any revenue received in excess of the cost of operations is returned to them in the form of capital credit payments. To date, over $13 million has been returned to our member/owners, with an annual estimated economic impact for our local communities in excess of $10 million dollars.
Now that you know who we are, I would like to move forward and let you know what our plans are for the future - the future of electric utility restructuring.
Around mid-summer of 1998, the Cooperative's Board of Directors determined that it would be in the best interest of the Cooperative and its members to participate in a retail customer choice pilot program. With our member base being 93% residential, we feel that the Cooperative's role is to attempt to influence the restructuring process in such a manner that the residential and small commercial customers will benefit on par with industrial, government, or aggregated loads.
By participating in a pilot, we can also obtain first-hand knowledge and experience relating to the administrative and technical changes that will have to be made to fully implement retail competition. Beginning in January of this year, we participated in the task force to draft pilot program rules; we are now involved in the drafting of electronic data exchange standards that will be used to process enrollments and transfer information during the pilot program and beyond.
We are currently preparing an unbundled cost of service study by taking our existing rate schedules, which were approved by the Commission in July of 1993, and separating the wholesale power costs and other cost components to determine a distribution charge for providing electric service.
At this point, we envision our pilot program filing to include about 350 consumers or approximately 3 megawatts of load. This load will consist largely of residential consumption, with the remaining to be allocated among small commercial and industrial participants. We plan to confine the participant area to one geographic location in proximity to our headquarters office in Chase City, so that all inquiries can be handled through a specifically trained group of employees designated to handle the customer service aspect of our pilot program.
Eligible customers will receive notification of their ability to participate in the pilot a couple of months prior to its start date. For those expressing interest, more detailed information will follow including a "request to participate" form.
After all eligibility requirements are completed, pilot specific information will be provided along with certified suppliers for Virginia. All information will be presented in a clear, easy-to-understand format that will allow participants to make informed decisions concerning supplier choice.
Mecklenburg Electric Cooperative does not propose to make metering and billing services competitive during the Pilot, and will continue to provide these services in accordance with its existing Terms and Conditions as filed with the Commission. Installations, maintenance, and removal of metering devices, as well as reading of the metering data is a function that we feel should be retained by the existing utility. Making these services competitive should not be construed as a business opportunity, especially for cooperatives. If made competitive, it would be the participating customer's choice of whether or not to select an alternate provider for its metering and billing services, not the utility's. If only scattered customers selected another provider for these services, the distribution utility would still have to retain the manpower, vehicles, and other necessary materials and equipment to perform this function for all its other customers. For a cooperative, the costs to its non-participating customers will increase, which in effect would result in decreased capital credit allocations to all members, and higher costs for service.
Throughout the pilot, we also propose to read meters monthly and transmit the monthly usage data to the applicable supplier via electronic data interchange or EDI. Participating customers will only be allowed to change suppliers as of the meter reading date.
If a special meter reading is requested to change suppliers other than on the normal meter reading date, the participant will be charged a service charge as provided for in our existing Terms and Conditions.
Mecklenburg's pilot will propose that a single bill from the Cooperative, reflecting both distribution and supplier charges, be provided to participating customers, and that all payment remittances be made to the Cooperative. By using one billing method, we will be in a position to better protect our pilot participants from questionable billing practices, to provide the Commission with recordable data concerning customer inquiries or complaints about billing, and to simplify collections or disconnection of electric service in the event of non-payment.
While not directly involved with the task force working on the Consumer Education Plan, we would like to reiterate how important we feel the educational process is going to be for the residential and small commercial customers living within the pilot areas. One area of concern we have is the timing of the education campaign. We feel it is very important that each utility conducting a pilot program be in control of the time frame in which education of its pilot participants will take place. The public's exposure to information about their opportunities for choice before all pilot programs are defined and approved by the Commission may create adverse customer acceptance of restructuring, if answers to questions about a particular pilot program are not yet determined or available. Market timing for consumer education should not be mandated for a particular time frame unless all pilot programs begin simultaneously.
Although Mecklenburg Electric Cooperative has not fully developed the various aspects of its particular pilot program, I hope I have been able to give you a brief overview of some of its components. We anticipate filing our program with the Commission in the fall of this year. As we proceed through the various stages involved in restructuring and get the final direction on such issues as the pilot program rules and data exchanges between parties, our current ideas for our pilot program are likely to be adjusted. But overall, Mecklenburg Electric Cooperative's main objective is to continue to operate its business in the best interests of its members and to provide them with an opportunity to make fully informed, intelligent decisions about their Power to Choose.
I appreciate this opportunity to speak before you today. The restructuring of the electric utility industry is indeed an idea whose time has come for Virginia. Although at this point none of us know what the final product will look like, I am confident that through the various pilot programs and the continued support of the Legislature and the State Corporation Commission throughout this process, the outcome will be one in which the interests of all parties will be appropriately balanced for the full benefit of all.
Thank you.