Pioneer slowly regaining its financial stability

Published 7:24 pm Wednesday, January 6, 2010

Steve Harmon said he really had no idea what he was stepping into when he accepted the job as General Manager of Pioneer Electric Cooperative four years ago.

He chuckled about finding a few “skeletons in the closet,” but the very big skeleton facing Harmon when he took over in 2006 was the $10 million in negative equity the co-op was saddled with. Thanks to Pioneer Electric’s purchase of ACME Propane Gas Company and other business decisions, the co-op was staring into a deep, dark hole of debt.

Harmon is blunt in his assessment:

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“We had lost more than we were worth,” he said.

Harmon was coming into an organization in dire need of change. It all started with the organization of REMAC (Rural Electric Members Action Committee) and a lawsuit filed by three members of Pioneer Electric against the Board of Trustees and then-general manager Malloy Chandler for mismanagement of funds. Chandler stepped down as part of the suit’s settlement agreement and the co-op started a search for his replacement. That led them to Harmon, who had previously served as area manager for the 108,000-member Volunteer Energy Co-Op in Tennessee.

Harmon said when he first stepped into the door he was “cautiously optimistic” that both the administration and membership could work together to solve Pioneer Electric’s problems.

“There wasn’t a lot of communication on both sides,” recalled Harmon. “To be honest, Pioneer had gotten to the point where it was going to do what it was going to do because they thought it was the right thing to do. Not worrying about what the members thought. And you can’t do that. You have to explain to the membership what you’re trying to accomplish.”

Harmon’s first step was to sit down with REMAC and discuss the concerns and problems some members had with co-op operations.

“They wanted a change agent,” said Harmon. “They wanted someone who was going to come in and clean house. I think they were frustrated. But, really, there were some things that didn’t need to be changed. There were just a lot of rumors, not based on fact. Not being from here, I was able to sit down with them and help work out these problems.”

Harmon’s immediate task was to be smarter with the membership’s money. Helping was the fact that the propane business had been sold by the time Harmon had arrived. He also started openly communicating, not only with members, but also with the co-op’s 51 employees.

“We still have employee meetings where we draw everyone together, lock the door for about an hour and talk about our goals,” he said.

The results have been positive. Pioneer Electric reduced its negative equity to $6 million from 2005 to 2006 and made similar gains the next two years. The co-op reported a positive equity of over $500,000 at its annual meeting in September, four months ahead of schedule, according to the company’s financial statement.

Harmon said he wants to continue that growth while also focusing on the co-op’s future. He said the co-op is increasingly looking into economic development opportunities.

“We look at our meters and we’ve seen a 100-meter decrease, on average, over the last 10 years,” he said. “The reason we’re trying to help with economic development is that it makes a whole lot more sense because you get more revenue supplying one industrial plant then 200 rooftops. But we have to be conservative in that approach, because we don’t have a lot of resources or money to put into that.”

That meter decrease, Harmon notes, also jacks the cost of delivering power up. While Alabama Power Co. has multiple meters within a square-mile radius in cities, Pioneer Electric may only have as many as four, depending on the location of homes, he said.

“We try to communicate this,” he said. “Some accept it, some don’t, and some really don’t understand.”

Harmon said the co-op is still looking for ways to provide more services to its members. The co-op is currently attempting to secure grants through the federal government to provide broadband Internet access for its members.