Joint action agencies are membership organizations formed by groups of local community-owned utilities. These agencies, often authorized by state legislation, are governed by boards comprised of member representatives. These agencies buy or generate power and provide other services for their constituent utilities. With the combined leverage and purchasing power they get from representing multiple utilities, these agencies give their members the advantage of economies of scale and allow public power utilities to exercise strength in numbers.
Do it once rather than multiple times and share the cost based on a member’s ability to contribute. Resource acquisition, intelligence gathering and continuous training efforts to maintain skills and knowledge are expensive undertakings. Often, they are well beyond the capabilities of a single municipal utility. Joint Action Agencies provide the necessary products and services in a manner that is cost-effective for every member.
ECONOMIES OF SCALE
Small municipal electric utilities have a difficult time getting the attention of a power supplier because of the relatively small amount of energy they require. Aggregation of electric power supply requirements through a Joint Action Agency results in larger blocks of energy required. This allows for efficient use of resources through right-sized self-supply generation resources, purchasing power from the market, or an optimized energy portfolio utilizing both self-supply resources and market purchases.
Municipalities have their staff and resources spread thinly over multiple areas of responsibility. Joint Action Agencies have one focus: efficient, reliable, lowest cost power supply and energy services to members. Small mistakes in the electric utility industry can cost millions. The focus created by dedicated Joint Action Agencies is even more important now as the complexity of the electric utility industry increases.
The electric utility industry now more than ever requires highly educated, talented and experienced people and tools. These resources are needed to capture data; observe, analyze, and prioritize trends and developments, and make informed decisions about which tactics to use and how to steer an electric utility. Municipal electric utilities typically cannot justify to their governing body the cost of these resources or cannot attract such resources to their organization. Joint Action Agencies are an ideal solution to gather and effectively use these resources in an efficient manner.
Municipal electric utilities have tried to align with other entities such as investor-owned utilities or external contracted service providers, often with unsatisfactory results due to conflicting goals and values. A Joint Action Agency is created by the members and is governed by representatives of those members. Democratic governance by individuals with aligned values and viewpoints work together for effective and productive results.
External entities, whether State and Federal governments, regulators, or financial institutions, view a well-run central aggregated entity, such as a Joint Action Agency, with more credibility, respect, and relevance than they do a single small municipal electric utility. The ability of a Joint Action Agency to communicate, educate and articulate needs to external entities is strengthened by the single unified message from the members. Additionally, a well-run Joint Action Agency; using economy of scale, efficient generation operations, and portfolio optimization will earn improved reputation and credit ratings.