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Manager's Report - May 2016

New Time Period for Peak Demand

     We hope everyone who attended enjoyed this year’s annual meeting. As always, there was plenty of good food and great entertainment. It was my pleasure to see and greet so many of you.

    This past year’s member survey provided exciting results for our Cooperative. Cooperatives and many other businesses participate in what has become the customer service measurement standard for all types of business. This measurement is called an American Customer Satisfaction Index (ACSI) score. Butler has had an ACSI score of 93 for the past two years, compared to the average investor owned electric utility score of 74. An ACSI score of 93 ranks us in the top two cooperatives that participate.

     I have to say I am proud of our board and employees for providing the service that you think of so highly. The people who deserve the credit for our outstanding scores and making our cooperative one of the most highly thought of in our industry goes to your Board
of Trustees, who give us our strategic direction, and the many talented employees that keep the lights on and so much more.
 

The New Time Period for Peak Demand

     Over the past seven years, our 5 to 8 p.m. peak period window has been successful in saving the membership approximately $1 million a year thanks to your participation in conservation during this time. A little over a year ago, the way electric markets work changed significantly. Kansas Electric Power Cooperative (KEPCo), our generation and transmission cooperative, had to restructure its contracts with some of its suppliers to meet these changes. Under the revised contract, more industrial load is now on during the peak, meaning the actual peak usage time happens earlier in the day. In order to give you the best rates possible, the KEPCo board, on which I serve, has re-evaluated that portion of the rate that Butler REC pays to KEPCo and has adjusted the peak period load window.

     The new peak demand hours were approved at the KEPCo Board Meeting on March 23. The change in Butler’s peak hours will be effective June 1, 2016. The new time period for peak demand will begin at 3 p.m. and end at 6 p.m. If you have been trying to conserve during peak times, the “New Peak Hours” will give you the opportunity to begin using your appliances or lower your thermostat any time after 6 p.m. instead of having to wait until after 8 p.m.
 

System Reliability Improvements

    Looking back, 2015 was the year of the holiday storms. First was Easter weekend, second was Thanksgiving weekend and third was the storm between Christmas and New Year’s Day. Butler REC’s distribution system reliability has dramatically improved over the last several years. However, while we perform statistically better, we still have work to do. Over the last year, we have completed several projects that will help reliability in the areas they serve. 
 

  • Right of Way – Other than the storms mentioned above, our outages continue to decrease because of several strategic initiatives. The Board has authorized extra dollars to spend on right of way maintenance and it is significantly improving our reliability.
     
  • Construction Improvements – We are focused on covering up exposed wires in areas where animals tend to cause outages, which is the second most common cause of outages after trees.
     
  • Benton and Degraff Transmission Line Breakers – We installed a special set of breakers on these transmission lines that are much more dependable.
     
  • FEMA Storm Repair – For the past 15 years, we have been repairing distribution line damaged caused by a string of ice storms. The work is now completed, and our system is stronger and more reliable than ever. We will now focus on a new four-year work plan that will include more than 26 miles of new tie line and switches that will help us get your lights back on quicker during an outage.
     
  • Transmission Upgrades – This past year, we focused on our 30 miles of 69 kVA transmission lines. Most of our transmission is 40 to 50 years old. We replaced poles that did not meet our testing standards, all of the old style insulators, and old style switches with new more reliable units. In addition, we added more storm guy wires.
     
  • Generators – We are always looking for new ways to reduce power costs. Last year we installed a 1 MW Caterpillar Peak Shaving Generator at our Pony Meadows Substation. That project was successful in saving power costs of almost $200,000 last year! We have more planned for this year. This year we are planning to install a 0.5 MW Mobile Peaking Generator on our system. The projected savings are almost $100,000 per year, plus it will allow us to have the ability to relocate the unit to prolonged outage areas if needed.


Your Power Bills

     While still higher than we would like, your cost of electricity has actually trended down slightly over the last three years while most other electric utilities have seen increases. This is due to your conservation during peak hours, customer growth and KEPCo, our power supplier, refinancing some of its debt at lower interest rates. We will continue our efforts on this important strategic initiative.


Challenges

     Historically the cooperative has had long tenured, dedicated employees, and we have seen very low turnover. With that being said, we now have a high percentage of our 29 employees who have reached the age where they eligible to retire. We have had two employees retire in the last six months, have received notice that three more plan to retire by summer’s end, and two more have told me they plan to retire by the end of next year. That is 25 percent of our work force, and several more could make that decision at any time. Losing so much institutional knowledge will be a challenge, but I am confident we will find the talent we need to continue providing excellent service.

     In closing, as I reflect back on the past year at Annual Meeting time, I want to thank everyone for another successful year. Everywhere I go Butler is known as “That Coop.” Whether the discussion centers around how our Board Members are so professional and involved in innovative solutions, how much more quality work our line crews get done in storm assistance for other cooperatives in need of help, how well we use technology to solve problems, provide better
customer service, and customer-centered solutions like Attic Report Card, or how we have developed innovative rates that allow our members to control some of their cost by shifting load from the peak. This is a great place to work, and as always I appreciate your continued support.

 

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