 CEO's keynote address to members attending the 2012 annual meeting
Sumterville, FL – James P. Duncan, CEO – Saturday, March 24, 2012
Printable PDF of Keynote Address...
Good morning and let me also welcome you to the 74th Edition of the SECO Annual Meeting.
As always, we're delighted to spend some quality time with a few thousand of our closest friends so thank you very much for coming.
For the NCAA Basketball fans among you, this is our version of "March Madness."
I want to also thank all of our employees who have worked so hard to get this facility ready for you, to prepare and serve the refreshments, and to answer your questions in the Tech tent.
They do a great job in preparing for and conducting this meeting and I sincerely appreciate their efforts.
On the topic of refreshments, today we will serve over 19,000 cookies, 12,000 donuts, 3,000 cups of coffee, 200 gallons of soft drinks and, 100 gallons of water.
Earlier, Mr. Bowman mentioned the presence of Seminole Electric's CEO Tim Woodbury and some of his staff. I want to personally thank Tim for his leadership and Seminole's outstanding results that help keep your cost down.
Now, I want to ask any active duty military, current Reservists, and all Veterans to stand and be recognized.
Thank you all for your past and current service to help preserve the freedoms that unfortunately we all tend to take too much for granted.
And I thank all of you for helping us prepare over one thousand postcards for our active duty personnel thanking them for their service and sacrifice.
Although they probably cost twice as much, the American flag pins were made in the U.S.A.
On a sadder note I want to acknowledge the passing on February 3rd of a former SECO Board Member – Mr. Dorsey W. "Bill" Fowler.
Bill served as a SECO Board Member from 1981 to 1990 and was always extremely supportive of SECO.
After he left the Board, Bill and his wife, Marjorie attended every Annual Meeting and always sat in the section to my right. Mrs. Fowler is here today and we certainly appreciate her support and the past service that Bill provided to our Board.
Let me begin my report by saying that overall 2011 was a very good year financially and operationally with outstanding reliability and customer satisfaction numbers.
These things don't just happen by accident.
It takes a very cohesive and very talented team to produce the financial and reliability results that we enjoyed last year.
The team starts with your elected Board of Trustees and continues through the Management team and most importantly with all of the employees of the Cooperative who do an outstanding job on your behalf.
I certainly appreciate all of their efforts.
As I did during my recent District Meeting speeches, I want to share the 2011 Reliability indices with you because they are incredibly impressive.
Reliability indices are standard throughout the electric industry and, frankly, have some pretty intimidating names.
Consequently, I am going to describe them in very simple terms.
First, the average percentage of time that your service was available to you in 2011 exceeded 99.98% of the time.
Second for 2011, your electric service was interrupted an average of 1.45 times as compared to 1.68 in 2010.
By way of information, anything from one minute up is counted as an outage.
We also keep up with the total average amount of time that each member is without power during the year.
For 2011 that was 93 minutes as compared with 100 minutes in 2010.
And finally, we compute the average length of time that a member who experiences an outage is without power. For 2011 that remained at about 1 hour – actually 65 minutes.
So, any member who did experience an outage during 2011 was without power for slightly over one hour.
All of these ratios are considered "world class" within our industry and all have been improved because of our staffing of service restoration personnel on duty seven days a week and roughly seventeen hours per day.
For the other seven hours we have personnel who are designated as being "On Call" and who are extremely faithful in responding quickly to outages during those hours.
In addition because of our continuing substantial investments in new and upgraded facilities and a great right of way maintenance program we are off to a good start for 2012 and certainly plan to build upon the successes of 2011.
We also take overall customer service very seriously here at SECO.
In fact, as I shared with you last year, customer service at SECO is not a department it is an overall corporate culture and philosophy.
Consequently, another positive aspect of being a member of a Cooperative like SECO is the fact that your input and your thoughts are important to us.
We have very effective two way communication between you and your Cooperative and it helps us stay in touch with things that are important to you.
Every letter, note, and email you send us is read promptly.
Many of them are complimentary and we certainly appreciate those.
Others require us to take action to address an issue or to provide additional information on a particular situation and we try to respond to those very promptly.
This type of communication goes on every day.
As an example of just one of the forms of communication, we received over 532,000 telephone calls during working hours last year.
The average hold time was 1 minute and 5 seconds. And…
The average talk time between our member and our Service Representative was 3 minutes and 10 seconds.
We fully understand that telephone systems can be a significant source of irritation to you, and we continually strive to improve and streamline our overall telephone processes.
In fact, last month, our Board approved an entirely new telephone system and supporting software and equipment because ours is becoming so old it is difficult to maintain and to get vendor support.
As we move toward implementation of that new system, we will be working to streamline the system and to assure that your telephone interactions with us are as professional and efficient as we can make them.
I also want to stress that our Call Center is located across the highway in our corporate headquarters and not in a foreign country or another state.
To supplement those daily interactions by telephone, mail, email, etc., we also use a 3rd party annual telephone survey to get an overall perspective of the things that are important to you.
For 2011, over 800 members – a statistically valid sample – participated in the survey and again gave us extremely positive ratings.
Using a 10 point scale with 10 being perfection and 1 being really, really bad, you gave us an overall satisfaction rating of 8.9 and 70% of you gave us ratings of 9 or 10.
As in previous surveys, we scored extremely highly on:
• Having courteous and friendly employees
• Having accurate and understandable bills
• Supporting the local communities
• Being environmentally sensitive
• Minimizing longer outages
• Restoring power quickly after an outage and,
• Keeping members informed – to name a few of the categories.
We also got very good reviews in the Fourth Quarter J.D. Powers Survey which includes all electric utilities in the nation broken down by geographic region.
For those you who participated in either of the surveys, we sincerely appreciate your input and want to stress how valuable that information is to us.
For our part we pledge to continue to provide you with the most reliable and lowest cost electricity possible while not losing sight of the high premium you place on customer service.
Now changing topics somewhat I want to talk about our National Energy Policy — actually our continuing lack of such a policy.
Last year I spent considerable time discussing our pathetic, decades-long absence of a cohesive National Energy Policy.
That trip down memory lane took us back to the Arab Oil Embargo of the seventies during the Presidencies of Richard Nixon and Jimmy Carter and includes the Presidencies of:
• Nixon
• Ford
• Carter
• Reagan
• Bush 41
• Clinton
• Bush 43, and
• Obama
And, for those keeping score, that's 5 Republicans and 3 Democrats — so I am bi-partisan in my concerns.
Throughout those forty plus years each President has lamented dependence on foreign oil and promised to build a cohesive National Energy Policy for the country.
But the bottom line is that we still do not have a reasonable, rational, cohesive National Energy Policy in spite of the fact that we have had a well-funded Department of Energy throughout most of those decades.
Today we have gasoline prices rocketing toward $4.00 a gallon and beyond - well ahead of the traditional increase around Memorial Day.
So does the price of gasoline directly affect your cost of electricity?
No, not directly because oil and gasoline are used very little in the generation of electricity.
However, because of the huge fleet of vehicles operated by utilities, and the cost of transporting fuel, the indirect cost can be staggering.
The bigger cost is to the overall economy and the ability of Americans to have disposable income to make purchases that do stimulate the economy.
No President can directly affect the short term price of gasoline at the pump regardless of what either political party says on that topic.
As an aside, it's interesting that the party out of power at any given time will quickly blame a President for high prices but when that party gains power they change their tune to "the President can't do much about gasoline prices."
A President can, however, set a tone that tends to psychologically affect oil producers, gasoline refiners etc. and can definitely affect longer term prices.
As we look at today's energy environment here are some of the facts:
• Although he has recently tried to back track from earlier statements, our Secretary of Energy, Doctor Steven Chu, once lamented that we need to get our price of gasoline up to the level of European countries - $7.00 or $8.00 a gallon or higher – to encourage Americans to buy small, fuel efficient vehicles and to conserve. And,
Just this week, he told Congress that he deserved a grade better than "A minus" for controlling gas prices in spite of the fact that they have more than doubled on his watch.
Then he got into his large black government SUV for the short ride back to his office.
• Domestic drilling for oil may be up slightly because of actions under the Clinton and Bush administrations, but our Secretary of the Interior, Mr. Ken Salazar, has consistently put up huge road blocks to the domestic exploration of and drilling for our own oil on Federal lands. And it is way down.
• Exploration in the Arctic National Wildlife Refuge, in Alaska, which is more than half the size of England remains untapped although the drilling footprint proposed would be roughly the size of the Orlando airport. And,
• The blocking of the Keystone XL pipeline that is proposed to bring significant quantities of oil from Canada to refining capacity on the Gulf Coast has effectively routed that oil to China unless the decision is quickly reversed.
Of course, on Thursday the President encouraged rapid completion of the Southern portion of the pipeline.
That's somewhat like the "Bridge to Nowhere," since the oil is in Canada and the Dakotas.
Obviously, none of these factors alone or collectively will immediately reduce the cost of gasoline.
However, together they send a signal that we really don't want to do much internally to reduce our dependence on outside sources of oil.
We seem to prefer to beg the Saudis to increase production and to praise Brazil's off shore drilling while committing to being their largest customer!
On the electricity front, the EPA under Lisa Jackson and her merry band of bureaucrats have essentially waged a war on fossil fuel generation, especially coal generation with an increasingly challenging set of proposed regulations.
But to borrow a phrase from Al Gore "the inconvenient truth is" that roughly half of our electricity in this country is generated by coal so if you, through regulatory proposals, dramatically increase the cost of that generation, or cause older plants, that can't comply to shut down it creates a problem. They have no apparent concern for the replacement power that will be needed if coal fire generation goes away.
Coal generation still accounts for roughly 45% of our overall electricity generation throughout the country, and her proposals will significantly increase the cost of coal fired generation and cause the closing of older coal fired plants with no apparent concern for where the replacement power will be generated.
As I have shared with you previously, we continue exporting millions of tons of coal to other countries, notably China, for use in their coal fired generation and don't seem overly concerned about that impact on our environment or our economy for that matter.
In the past several years we have invested billions of tax payer dollars in efforts to bolster the renewables sector of our industry without too many success stories. Does Solyndra Ring A Bell?
As I have said before and will repeat, renewable energy has a place in our overall generation mix and as it becomes more commercially viable and more cost effective, it should be and is being integrated into the overall grid.
However, the reality is that renewables cannot replace base load generation provided by coal, natural gas and nuclear power plants because of the intermittent nature of their output.
And finally, we have the push to convert to electric vehicles with significant tax incentives and outright government grants to stimulate us to buy those vehicles.
Unfortunately, there appears to be no recognition or concern that an influx of electric vehicles that require daily charging using the electrical grid will place additional demands on an already strained electrical system.
So, my conclusion remains We Do Not Have a Rational, Comprehensive National Energy Policy!
If the preceding rant sounds overly partisan, I apologize, but remember 5 R's and 3 D's.
Let me stress that I am certainly open to differing viewpoints and hope that my pessimism is proven to be wrong.
I want to conclude my comments this morning with a couple of quotes that, in reality, have little to do with the electric industry or your Cooperative but I think they are extremely timely.
The first is loosely taken from a speech I heard recently by Mr. Ken Spence who has provided counseling and consulting assistance with a number of national companies in their communications efforts.
Notable among his clients is Southwest Airlines and their current "bags fly free" advertising.
In terms of our overall economy Mr. Spence made the following observation:
"For too many years we (Americans) have spent money we didn't have on things we didn't need made somewhere else."
That pretty concisely captures the essence of our current challenges.
And finally, I want to close with a somewhat longer quote – the author of whom I will share at the end.
"You cannot help the poor by destroying the rich.
You cannot strengthen the weak by weakening the strong.
You cannot bring about prosperity by discouraging thrift.
You cannot lift the wage earner up by pulling the wage payer down.
You cannot further the brotherhood of man by inciting class hatred.
You cannot build character and courage by taking away people's initiative and independence.
You cannot help people permanently by doing for them what they could and should do for themselves."
So who do you suppose made that quote?
Was it Rush Limbaugh, Sean Hannity, Bill O'Reilly, George W. Bush or some other right wing pundit?
Well, the answer to that collectively is no.
That famous quote was made over 150 years ago by a former President – Abraham Lincoln – and certainly is appropriate for our national discussion today.
So, there you have it.
I am Jim Duncan and I approve this message.
In closing, I know that those are the words you have been waiting for – let me just emphasize again that it is a privilege and honor to work with our Board of Trustees and our tremendous employee team to deal with the challenges of providing reliable electric service while trying to keep the rates affordable in an extremely challenging environment.
Again, I appreciate your attention this morning and certainly hope you enjoy the rest of your time with us today.
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