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Cooperatives in transition: restructuring and recovery in Georgia.

Article Excerpt
The forces of deregulation and the promise of low cost competitively priced power have created volatile market conditions and concurrent changes to organizations throughout the electric power industry over the past decade. This article examines how deregulation and restructuring induced changes in management strategies, organizational structures, and organizational culture in a nonprofit generation and transmission cooperative. Deregulation and other market forces set into motion changes that restructured the former cooperative into three legally distinct cooperatives with symbiotic relationships. Through a series of interviews, participants in the study upon which this article is based articulated their experiences and perceptions about the impacts on the organization. Data analysis indicates that changes to management strategies, while significant, were fairly straight-forward. While the ensuing changes in culture initially created adverse effects among the workforce, positive changes in leadership restored trust, developed a strong customer focus, and improved performance and collaboration among the three new cooperatives.

The original generation and transmission electric cooperative in Georgia, Oglethorpe Power Corporation (Oglethorpe), was unbundled into a generation cooperative which retained the Oglethorpe name and generation assets (OPC), a new transmission cooperative, Georgia Transmission Corporation (GTC), and a third services cooperative, Georgia System Operations Corporation (GSOC), as electricity market conditions changed in the mid-1990s. This reorganization effort was driven by impending deregulation activity in Georgia, as well as by the desires of the 39 Electric Member Cooperatives (EMCs) who owned the original Oglethorpe and who wished to better control their own destinies for future power resources and supply in the face of burgeoning electricity markets.

Management Strategy

Prior to deregulation efforts and the restructuring in 1997, Oglethorpe was a stable entity with its generation and transmission functions operating as business unit silos (see Figure 1). In the new world--after the restructuring and commencement of partial requirements contracts by the Electric Member Cooperatives (EMCs)--GSOC and its sister cooperatives realized the necessity to shift their management strategy from a technical focus to one that was more concerned with managing costs and providing better customer service. (Today placards are posted prominently around the GSOC compound that stress three corporate goals: cost, quality, and customer service.) Numerous participants in the study stressed the importance of continual process improvements as critical for achieving lower operational costs, higher productivity, and higher quality customer service.

[FIGURE 1 OMITTED]

Strategic Decision-Making Models

Prior to its restructuring, Oglethorpe utilized a long-range forecasting model and managed its assets to match predicted customer demand. When EMCs were all-requirements members, the issues of customer service and operational efficiency were not as critical as they were to become in a partial-requirements environment. This change in the power supply equation precipitated a paradigm shift in strategic development for Oglethorpe and required a different model.

After the restructuring, strategic planning for the three new entities diverged as each company developed its own focus and strategy. While there was an overall "family" of strategies for the three cooperatives, it represented a dramatic change from the past in which there was just one strategy for the company. OPC and GTC continued to utilize efficient asset management as a key strategic development tool but they were also driven by the expectations and demands of the EMCs, which became more involved in strategic decision-making than previously occurred. As a service provider, GSOC's strategy was more reactive than that of OPC and GTC. GSOC developed an emergent strategy to better cope with these conflicting missions as it realized that it had limited ability to shape its future. It now was under greater pressure to meet or react to member expectations.

Process Improvements

GSOC adopted a philosophy of continuous improvement, encouraging staff to continually look for ways to make its processes more efficient and effective and to deliver products and services on a less costly basis to increase value for the customer. Current and new employees were trained in process improvement to ensure that the corporate commitment was stressed and reinforced. GSOC utilized stretch goals implemented as corporate, team, and individual goals--as part of its variable pay program to challenge employees and encourage their development. The variable pay program was considered effective for achieving corporate goals and team goals, and adding value to the business.

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