What is leadership?

By David Bailey, General Manager

July 2022

Who do you think of when you imagine a great leader? For me, the best example of leadership any of us can aspire to is that of our Lord and Savior Jesus Christ as told to us in the Bible. But this month I’d like to highlight another fine illustration of strong leadership, which is Gen. Dwight D. Eisenhower.

The day before the Allied landing at Normandy Beach in 1944, Eisenhower wrote a letter to the more than 160,000 troops who were preparing to take France back from Nazi control. In it, he writes, “You are about to embark upon the Great Crusade, toward which we have striven these many months. The eyes of the world are upon you... We will accept nothing less than full victory. Good luck.”

While that letter was full of encouragement, privately Eisenhower knew failure was a very real possibility. So he wrote another letter that was never shared with anyone until later. Today, it’s on display at the National Archives in Washington, D.C. In it, Eisenhower strikes a very different tone in the event that the landings are not successful.

“Our landings in the Cherbourg-Havre area have failed to gain a satisfactory foothold and I have withdrawn the troops. My decision to attack at this time and place was based upon the best information available. The troops, the air and the Navy did all that bravery and devotion to duty could do. If any blame or fault attaches to the attempt it is mine alone.”

That’s what I call leadership. The letter shows that Eisenhower planned a plan, making sure that he was prepared for all possible outcomes. We have to do the same thing in the electric industry, planning for both the short term and the long term. If we fail to plan, then your electric reliability and rates might not be in keeping with our cooperative mission of providing reliable service at a reasonable cost.

Those plans become even more important as we navigate today’s erratic energy environment. As coal has fallen out of favor, we have turned to natural gas to meet regulatory requirements while also maintaining reasonable rates. But putting more reliance on a single resource also increases the risk of higher rates if prices for natural gas increase.

That’s why we developed our hedging program. To put it simply, hedging allows us to buy gas in bulk at the current price with a commitment that the supplier will deliver it at some point in the future. As an electric utility, we don’t purchase gas by the gallon but by energy capacity. The price we pay is per million British thermal units, or BTU. For 2022, about 70% of our natural gas was hedged at a price a little north of $3 per million BTU. That’s less than half the current selling price, which is between $7.50 and $8 per million BTU.

Without our hedging program, members would be feeling the impact of those prices in their rates a lot more. By planning ahead, we have been able to enjoy more stability than most. Even so, since late 2021 the average SAEC member’s bill has increased by about 3%, or around $5 per 1,000 kWh. Nobody wants an increase. At SAEC, it is always our goal to keep rates constant, or even lower them when possible.

But what I’ve learned from Gen. Eisenhower is that this increase, like everything at SAEC, comes back to me. So my challenge to our members is this: Be calm and be patient. History tells us that this period of rising costs can’t last forever. While you’re thinking about ways to save on food, gas and other essentials, I urge members not to forget that they can save on their energy costs by adjusting the thermostat even by just one or two degrees.

My promise to you is that SAEC will do everything we can to keep rates down for members while improving our service. And when we fail, I won’t blame others but focus on fixing the problem. That’s my job and I’m proud to do it for you. Thank you for your membership and, until next month, be safe.