Worth Repeating (with a Caveat): Via IAMU ‘Joint Action Agencies: Creating Economies of Scale for Municipal Electric Systems.’
The Iowa Association of Municipal Utilities (IAMU) Spring Connection published a noteworthy article about how joint action agencies create economies of scale for municipal electric systems. However, there is a distinction that overlooks the CMMPA/CMPAS difference. Although it is true that utilities give up their independence when joining a full-requirements agency, utilities do not lose their independence when joining a project-based, full or partial requirements agency such as CMPAS. Through volume discounts and proportional cost-sharing, CMPAS helps utilities meet individual portfolio needs while keeping decision-making power local.
When joining CMPAS, utilities keep their independence because the project-oriented business model of CMPAS allows members and affiliates to retain full control over their power supply and portfolio operations.
While many joint action agencies create economies of scale for municipal systems on a full-requirements basis,
CMPAS creates economies of scale for municipals on a partial or full-requirements basis.
With that distinction in mind, read on to learn how CMPAS is part of the public power joint action movement that helps municipal electric utilities navigate the power industry.
IAMU Spring Connection Article
Many of Iowa’s municipal electric utilities participate in what are called Joint Action Agencies (JAAs). These associations consist of utility companies, municipalities that own public utilities, and/or municipalities that purchase energy from private utilities. The JAAs act as committees for making decisions about purchasing and delivering energy resources or related services and support.
JAAs are a tool that municipal distribution utilities can use to help them efficiently and effectively provide reliable, safe, and low-cost electric supply and services to their communities better than they could on their own.
“Public power utilities provide significant value to their communities, and joint-action with other like-minded communities can provide shared strength to help preserve and enhance this value for the long term,” said Anne Rodriguez, WPPI Energy Communications Director.
The participating systems share costs and provide one another with mutual support.
“Joint Action Agencies are becoming prominent because power is becoming more complex,” explained Greg Fritz, Chief Executive Officer of the North Iowa Municipal Electric Cooperative Association (NIMECA). “Joint Action Agencies can help a utility navigate through the complexity.”
In addition to WPPI Energy and NIMECA, other JAAs operating in Iowa include:
- CMPAS: Central Municipal Power Agency/Services
- MRES: Missouri River Energy Services
- RPGI: Resale Power Group of Iowa
- SIMECA: South Iowa Municipal Electric Cooperative Association
- UMMEG: Upper Midwest Municipal Energy Group
- WIMECA: Western Iowa Municipal Electric Cooperative Association
While all JAAs exist for the benefit of their members, how each is structured, what it specifically provides its members, and what its goals are may vary. Fritz offered some advice for a system that may be looking to join a JAA.
“You want to have common goals,” he said. “How do you fit into what they do and their goals?”
For instance, one JAA may place a priority on renewables or require members to buy all of their power through the JAA, while others may not. Some JAAs are limited to a certain area of the state, while for others, geographic proximity isn’t as important.
“It doesn’t make one better or worse,” Fritz pointed out. “It’s just makes them different.”
Duane Amsted, current SIMECA board member and retired Green- field Municipal Utilities General Manager echoed Fritz’s comments.
“It’s more and more difficult for a stand-alone utility to be out there in the market on their own,” he said. “These utilities just need to find the group that best fits them.”
When a utility is considering whether to join a JAA, it needs to recognize that the utility will lose some independence, especially concerning power supply decisions, explained Joni Livingston, MRES Director of Member Services and Communications.
“So, the utility staff and policymakers need to make sure their values and goals align with those of the Joint Action Agency,” she said. “This also is an important consideration if the agency serves as a member advocate on state and federal legislative and regulatory issues, or on issues concerning their WAPA contract, if applicable. Utilities also should have a good understanding of the services offered by a Joint Action Agency to determine if those services would add value to their operation.
And finally, how is the utility’s voice heard at the Joint Action Agency? Does the agency solicit their opinion on a regular basis through surveys, focus groups, and/or personal meetings? How will they be represented on the Board of Directors?”
Joining a JAA may be particularly advantageous for small utilities. There are just over 2,000 public power utilities in the U.S., and about 1,500 of them have 5,000 or fewer utility customers.
“Joint action provides an opportunity for small utilities to retain their local presence, local control, and local reliability, while gaining the efficiencies, resources, and support of a larger group of similar utilities,” Livingston said.
JAAs become a network for members to share thoughts and concerns. “Our monthly meetings allow information sharing among members regarding common issues whether they be regulatory, operational, or investment options,” explained RPGI’s Kris Stubbs. “One member representative once told me they were a bit hesitant to come to the monthly meetings and ask questions regarding the issue of the day. Once he found his voice and the conversation started, he realized that everybody generally has the same issues – regardless of utility size, etc. In RPGI, each member is valued and each member is part of the family.”