[BETA] Fortnightly

Your article in the July 1, 1997 issue of PUBLIC UTILITIES FORTNIGHTLY regarding co-ops and competition was very much on target ("Co-ops and Competition: Still a United Front?" p. 16). Our firm spends a significant amount of time providing financial advice to some of the more progressive rural electric cooperatives and have had some association with a few of the organizations mentioned in your article.

We are strongly pro-cooperative. Co-ops continue to provide high-quality electric, gas and other services to significant numbers of Americans, both rural and urban dwellers. Many progressive boards of directors and general managers of cooperatives are striving to bring their members the lowest-cost power available and to prepare for a more competitive environment. However, many others are protecting outmoded organizations, operations and capital structures.

Based on our recent experiences, the differences of opinion among cooperatives regarding how to face competition is splintering the ranks at a time when they need each other the most. From our vantage point, the United States government through the RUS bears significant responsibility, as does the leadership of rural electric cooperatives, all the way from NRECA to many G&T cooperatives.

A high percentage of the G&T debt to the RUS that is not currently in default nevertheless would be in default if had not been restructured in such a way that it will likely never be repaid, but can't be refinanced either. G&Ts generally are the most outmoded portion of the cooperative system, and yet most can't consider consolidation because of their debt structure.

We believe G&Ts should be the natural leader of distribution cooperatives in consolidating services to cooperatives and perhaps in consolidating the cooperatives themselves. However, the combination of a high-debt load and management teams worried about their livelihood has created a situation where G&Ts are so busy being defensive that they are frequently viewed as the target of dissatisfaction by distribution cooperatives rather than as a potential solution.

NRECA is an organization that contains many wonderful people and one that has historically served its member cooperatives well. However, in my opinion, during the past few years it has been mostly promoting "apple pie and motherhood" (hold tight to the historic co-op traditions) instead of providing effective leadership in finding realistic, but perhaps unpopular ways for the cooperatives to meet coming competition.

Thanks again for the informative article.

Terry Christenberry

President

Christenberry Collet & Co. Inc.

Kansas City, Mo.

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