The 21st-century board-manager-consumer relationship.

Everyone attending this year's Annual Meeting knows that our industry is changing rapidly. We face a period of:

* deregulation and competition

* an explosion of investor-owned utility mergers and acquisitions

* the emergence of new players in the industry, including power marketers and independent power producers.

These changes will force us to rethink how we run cooperatives.

Other panels will address specific components of the new utility environment, such as:

* How to influence the deregulation debate.

* How to respond to investor-owned utility strategies.

* How to become more cost-competitive.

This panel is not about those issues. Instead, it is about the boardroom itself, about how board meetings and the board-manager relationship will have to change to meet the needs of a changing environment. This is the issue of The 21st-Century Board-Manager-Consumer Relationship.

There are three shifts that show how that relationship is changing:

1. The transition from an engineering and financing view of the business to a customer-driven view.

2. The shift from an administrative view of the role of management to an entrepreneurial view.

3. The transition from a legalistic view of the role of the board to a strategic view.

We'll discuss each in turn.

In the old environment, we focused on construction and finance. We had to build physical plant to distribute electric energy to rural areas. We had to do this safely and in accord with the best engineering and construction standards.

Because our line density is lower than other segments of the industry, financing was critical. As a result, boards and managers had to spend a significant amount of time on the hardware and accounting sides of the business.

In the new environment, construction and finance are not most significant. Obviously, we must continue to provide reliable electric service in accordance with sound business practices. But just doing that won't be enough. Just doing that will not ensure that we survive and prosper into the next century.

Today the driving force is not engineering or financing; it is the customer. A competitive environment is customer-driven, and we must understand what the customer wants and guide the cooperative to provide it.

This is a profound shift. Not because of the importance placed on the customer - cooperatives have always had that orientation. It is profound because the consumer's new needs and expectations must be brought into the boardroom as a critical topic...