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 & Programs History Est 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-Director of Operations Co-Director of 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

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