In an uncertain economic world, Duck River Electric Membership Corp. and Mount Pleasant Power are considering merging to curb costs.
Duck River, headquartered in Shelbyville with service also in Franklin County, and Mount Pleasant, named after the city where its located, have agreed to begin a feasibility study to determine whether the merger would be in each utility’s best interest.
In a joint announcement, representatives of each utility said this is a preliminary step with no commitment made by either party except to explore what is best for the systems and their consumers.
Steve Oden, Duck River director of member services, said the first step is to determine if the merger could be done effectively, what benefit the utilities would have and what would be the benefit to consumers.
He said Murfreesboro and the surrounding area are being served through a utility merger, and such ventures have proven to be effective in other parts of the nation.
“Generally, with larger scale, it’s easier to spread the costs around,” Oden said. “The bigger you are, the more spread out the costs can be.
“Smaller utilities have lim-ited numbers.”
He said that in the 25 years he’s been in the electric business, economic conditions have never reached their cur-rent state.
“I’ve never seen anything like this,” Oden said.
He explained that TVA has added additional electric generation sources and its own operational expenses have increased, leading to the wholesale cost of power going up. He said it’s the same way across the nation.
Oden said the merger’s goal is an attempt to stabilize electricity prices by sharing operational services.
He referred to a utility merger in Ohio where an administrative layer was eliminated, and the cost savings was about $2 million annually.
He said the entities still had their individual boards of directors but were able to share administrative personnel and services, leading to the cost savings.
Oden also said electric service items, such as transformers, poles, wire, lightning arrestors and other equipment could be purchased in bulk, also saving money.
However, whether that will pan out is another story.
“We just don’t know,” he said. “The feasibility study is the first baby step.
“We may find out that there won’t be any benefit to the merger and walk away from it, or we may find it will work out great and we’ll go through with it, but at this point, we just don’t know.”
Duck River serves 71,000 members through its 160 em-ployees in 16 southern Middle Tennessee counties. In addition to Decherd and Shelbyville, it has offices in Manchester, Sewanee, Columbia, Lewisburg and Lynchburg.
Mount Pleasant serves 3,800 customers in the municipality of Mount Pleasant and rural parts of Maury and Lawrence counties.
“We’ve been good neighbors for decades,” Michael Watson, Duck River president and chief executive officer, said in a published statement. “Our board of direc-tors thought it might be time to see if there is interest in a closer relationship. This is why we approached MPPS.”
The Duck River Board of Directors voted unanimously Wednesday to undertake the study, which will focus on asset value, rates, system and administrative integration, workforce retention and legal/regulatory issues.
Duck River is a non-profit, member-owned cooperative utility governed by a board of directors elected by those who receive and use the power. Like Mount Pleasant, the co-op purchases wholesale electricity from the TVA.
“The goal of the feasibility study is to determine what is best for our co-op members and the customers of MPPS,” Watson said.
Derek Church, general manager at Mount Pleasant, said his board also voted unanimously on Wednesday to participate in the study.
“Mr. Watson contacted me in June and broached the subject,” he said. “I informed the MPPS Board initially in July. We have often worked closely with Duck River, helping one another when the opportunity or need arose.
“I felt this was a situation in which our two utilities could make a good-faith effort to see if a merger made sense and could be a win-win for every-one.”
Oden said the feasibility study could take about six months to complete.