Skip to Content

GVEC Fritz, John - February 20, 1987

Interview with John Fritz

Interviewer: Karen Yancy

Transcriber: Karen Yancy

Date of Interview: February 20, 1987

Location: Mr. Fritz’s Office at Guadalupe Valley Electric Cooperative, Gonzales, TX

_____________________

 

Begin Tape 1, Side 1

Karen Yancy: This is Karen Yancy. Today is February 20, 1987, and I’m conducting an oral interview with Mr. John Fritz, manager of the member services division of Guadalupe Valley Electric Cooperative [GVEC] at Gonzales, Texas.

What year did you begin working for GVEC and what position?

John Fritz: When I was hired as member service advisor in February 1976, I started out in the Seguin office.

Yancy: Mm-hmm.

Fritz: At that time I was working for Donald Crook, who was the member services manager. My association with GVEC goes back farther than that. Is that another question, or do you want me to go ahead and express that?

Yancy: Go ahead and expand on it, yeah.

Fritz: Okay, my association with GVEC really started in 1972. At that time, I had just gotten out of the United States Navy. I was looking for a job, came back from; I was looking for a job in Seguin. Here I was a college graduate, four years of service and, really, kind of four or five years behind everybody because people had been out in the job market. GVEC and the City of Seguin were at that time warming in their relationship to one another, and the City of Seguin saw the need for a—Mayor Koenig there saw the need for a marketing program. They interviewed and looked for what they called a “customer service representative,” and they used the same job description for that customer service representative that they used for member service advisors; at that time, I think they were called power use advisors.

Yancy: Advisors.

Fritz: I interviewed for the job, and because of some college background and association with the City and city politics and what not, I was hired as customer service advisor. In fact, I had to interview with Donald Crook. Donald Crook interviewed me as part of the interview process for the position because they were starting at ground one—

Yancy: Mm-hmm.

Fritz: They had not even addressed the market. It was kind of a short-lived thing; I wasn’t there very long, about a year and two or three or four months, something like that.

Yancy: Mm-hmm.

Fritz: You’ll remember back at that time, it was the beginning of what we later termed as the “Energy Crisis.”

Yancy: Crisis, yeah.

Fritz: That’s when fuel prices started to escalate; natural gas prices started to rise for generating fuel of electricity. In getting started in a marketing program under those circumstances was adverse at best. (Yancy and Fritz laugh.) We were successful. We got two all-electronic home subdivisions in the Seguin area, the only two all-electric home subdivisions that exist there today, and I think it’s good. It’s too bad that it’s neglected because once I left, they never replaced that position. They never got really back into the marketing positive. They remained on the defensive through the whole process, and I think they are somewhat behind in their marking process now.

Yancy: Mm-hmm.

Fritz: But it was successful for a short time.

Yancy: What are your responsibilities as a manager of member services?

Fritz: The responsibility of the manager of member services has changed just recently. Overall, marketing responsibilities are the same. The personnel who report to me in response above the general personnel are different, and let me just kind of—

Yancy: Okay.

Fritz: —go on both sides of that. The responsibility of the member service advisor is to direct the member service and marketing activities of the Cooperative. Now, we’re bold enough to call them marketing activities. Electric utilities, up until recently, have not been that aggressive in marketing. Marketing in a monopoly was just kind of foreign or strange or something like that.

Yancy: Mm-hmm.

Fritz: But there’s a real need for it. Our system is a temperature sensitive system. When it gets hot, if you’re in south Texas, there’s—doesn’t anyone need to tell you [that] you need air conditioning, and electric air conditioning has [an] electric motor driven compressor. Air conditioning has about 99 percent of the market in our area, so it doesn’t take a real astute salesman—

Yancy: Salesman— (Yancy and Fritz laugh.)

Fritz: —to sell that in this area. However, our real competition comes in the heating season, and our real competition comes in the area of water heating, domestic hot water. You know, in the boiler process, I guess up to about 140, 160, 180 degree water—

Yancy: Mm-hmm.

Fritz: Not process heat, like steam, although that’s another area, but water heating and the heating market is where we need to go head-to-head with natural gas and with propane. They are our two main competitors in this area. So it’s my responsibility to direct our efforts in order that we improve our market penetration in those areas.

Yancy: Areas.

Fritz: We do that with a number of programs. Presently, we have submitted a marketing plan, which is divided up into twelve programs. We work with a sub-divider in initiating communication with them early in the subdividing process, where they build, or the builder who buys lots from them build, all-electric homes—clean, safe, efficient all-electric homes. We work with them because there’s a number of advantages to it. First of all, we get that heating and that water heating, and that’s not just to sell kilowatt hours, although that’s what we’re reimbursed for—(Yancy and Fritz laugh)—that’s where our sales come from.

Yancy: Yeah, that’s right.

Fritz: But it also balances our system. If we were to just let it go, we’d be like a lot of electric utility systems around our area. In other words, we’d have a lot of air conditioning market, and we would build our system. We’d have transformers out there; we’d have the same substations; we’d have the same service linemen; we’d have the same linemen; we’d have the same construction crew; we’d sent out the same number of bills every month; we’d sent out the same number of Reviews, and we’d be responsible for communicating with the same number people. And yet we would be ignoring about one third to one half of the revenue that we could get from that home. So by capturing the heating and the water heating, we can even load our system with no additional operating cost. We can even our cash flow, which provides margins for the members; it provides capital investment for the system; it provides employees with good pay and benefits. Pay and benefits that couldn’t be made unless we did have this additional operating revenue, so it’s beneficial all the way around. That’s how we work with sub-dividers and justify the program.

Yancy: Mm-hmm.

Fritz: In the same light, we’re initiating a program now called the “Good Sense Home Program.” Now, it’s new because that’s the label we’ll give it, and it’s a national program that was given to us—given to this, we purchased it through the Lower Colorado River Authority [LCRA]. Well, a national program—

Yancy: Mm-hmm.

Fritz: —purchased it from Southern Electric International, which is a member of the Southern Company of Investor Owned Utilities, but because this program is pretty widespread, down into Florida and up into the Northeast and the Northwest, it gives this program visibility. Now, something that we’ve been doing all along because we’ve been working with the people and having the member service advisors do air conditioning and heating calculations, we go by and talk with individual builders. We talk with people that are building houses; we encourage them to go all-electric; we encourage them to use high efficiency heat pumps; we encourage them to do certain things with their water heater in order to make it—location—

Yancy: Mm-hmm.

Fritz: Make it safe and efficient. So, we are doing a lot of the things, we just haven’t given it a label.

Yancy: Mm-hmm.

Fritz: And being able to put it into the newspaper and have people recognize it, though with all of LCRA systems signing on to this, plus having some national exposure, people moving in saying, “Oh yeah, a Good Sense Home is a home to buy.”’

Another area will be the—thought I had my marketing plan book in here—another area will be Louie the Lightening Bug, which is a safety children-oriented program that Clarence Hallmark will work with. We will investigate installing, helping install, giving incentives to install a ground source heat pump, which uses some of the heat that is absorbed by the earth to transfer that heat, to be able to heat buildings with, heat buildings and cool buildings. We will be looking at water heater programs that will involve the lease of water heaters, where we will lease a water heater to someone and they’ll pay us on a monthly basis. They’ll pay for the kilowatt hours through their meter; they’ll pay us for the water heater. We’ll guarantee that there’ll be no problems with that water heater. If an element goes out or any problem with it, we’ll come out and change the element out [at] no cost, and at the end of five years, they own that water heater, and they can extend the service contract with us, whatever they want [or] they would like to do. There is an initial installation charge similar to cable TV type of charge just to go out there and change the water heater out, and then it will allow us to install a load control switch on that water heater, which is beneficial to the GVEC system, [and] therefore, to the rate payer.

Moving on to another program then would be the peak time intermission program, also known as the load control program. That load control program, peak time intermission, is an effort on our part to control load in order for our system to become more efficient. It’s difficult to discuss that concept in a short period of time.

Yancy: Mm-hmm.

Fritz: If you sometime require building almost like a college class, you know—(Yancy and Fritz laugh)—you start out, you go chapter by chapter, and by the end, you’re somewhat familiar with what is happening at the end of that course, but essentially what it is is there are two areas of power cost. One is fuels and operation that is required for the generation of electricity, and then there is all the money that needs to flow in to build that plant called capital investments—build a plant, build the power lines, build the substations, and on and on. The most rapidly increasing area of utility cost today, although if you take a look at it nationwide, it’s kind of flattened out, and that’s why utilities are supposed to be such good investments today, but nevertheless, with power plants costing $1.2 billion to build, it requires a lot of capital, thus impacting people, the rate payers, because that’s the only source of revenue; that’s the only source of paying it back, that debt, that borrowed money, and it just occurs over a period of time. Once you buy into that, you’ve got to pay for it for thirty years.

Yancy: Mm-hmm.

Fritz: And it’s quite expensive. So if you have a program where you try to limit demand on the system and still provide the good service to the customers allowed in the purchase of many kilowatt hours, but maybe instead of demanding them all at eight o’clock in the morning, you spread them out—

Yancy: Spread them out.

Fritz: —all during the day, or if you could even spread that out all during the month, and then you look at it as spreading it out all during the year, seasonal-wise, then you, as an electric utility and the Lower Colorado River Authority as the generator, becomes more efficient. In other words, they could sell more kilowatt hours for the amount of capacity they have through generation. We’re doing that through our load control system. The real anchor of that load control system is the water heater, and that is the reason we pay so much attention to the water heater, and that’s where our competition comes in the most. If we can control the water heater during our peak load, then we’ll still get those kilowatt hours because instead of getting them, let’s say between eight and nine in the morning, instead of getting those kilowatt hours between eight and nine—

Yancy: Mm-hmm.

Fritz: We’ll get them between nine and ten because that water heater is just like a thermos, just like an envelope—

Yancy: Mm-hmm.

Fritz: —and it’s continually losing BTU [British thermal unit], and the only thing that replaces the BTU is the element inside that when the electricity comes on, heats up heats the water up to a certain temperature. People take baths and showers and everything, and there’s forty or fifty or sixty and eighty, sometimes, gallons of hot water available for that, and as you and I go through our shower process, we use eight to twelve gallons to take a bath or a shower.

Yancy: Mm-hmm.

Fritz: Well, that leaves, still, twenty or thirty gallons of hot water so, if you’re careful enough, if you don’t use an excess amount of water, then people—you can bath three times with a hot tank of—

Yancy: Tank

Fritz: —Hot water and not have anything bother you, and if you go off to school or work, and most of our people are gone by eight o’clock in the morning; now there are, as you know, a lot of families that both in the family work, the kids are gone to school, so there’s nobody there at the house demanding electricity, and that’s when our demand starts to fall off, as people go to work and do other things. But as the demand for electricity is falling off, and we can bring these water heaters back on or bring the air conditioning or heat back on, and no one is inconvenienced it’s just a matter of using it more efficiently and using the power plant more efficiently, spreading it out over a long period of time. That’s our load control program. We have about a 35 percent market penetration in what we think is available out there. We’d like to get about 80 percent. We’d love to get 100 percent, but realistically we know that there are going to be some, if you’ve taken probability, you know—

Yancy: Yeah.

Fritz: There’s—you’ve got to get the standard deviations, and then there’s going to be people that will be with you no matter what you do, and there will be people that won’t be with you no matter what you do, (Fritz laughs) so we will consider ourselves extremely successful with 80 percent. At 35 percent, we more than pay for our investments. That’s just good investments at our level that we’re at. That covers the load control program. We’ve covered Louie the lightening bug, and we’ve covered the all-electric home. We have a conservative plan five program where we give financial assistance to people who want to install heat pumps, want to do weatherization, decrease the infiltration in their house, want to add insulation or storm windows or doors or something of that nature, so we’ll provide assistance in that area. If you want more details on that I can get you a piece of paper that has the details of the program.

Yancy: Okay, I might do that later.

Fritz: Okay. If you’ll remind me of that, I’ll do that.

Yancy: Okay. What departments are under your direction, and what are their responsibilities?

Fritz: We have the appliance service shop.

Yancy: Mm-hmm.

Fritz: We have the wiring inspectors, the industrial development representatives, and one of the member service advisors. The other two member service advisors are over in the Seguin District office; they now report to the Seguin District manager. My responsibility is to get them the programs and let them know what they need to do and get the feedback from them, although on a daily basis they report to the Seguin District manager.

Yancy: How has each department in your division grown since you began working at GVEC? Or since you became member services?

Fritz: The appliance service shop is probably been the most rapid—seen the most rapid growth because of the service that we provide. The appliance service shop really started out because we were selling water heaters and there wasn’t anybody out in the rural area to service the water heaters. Out of that, then, of course, when Frank Perzetto was hired, he had some experience of air conditioning and heating also. So we have, because we’re out there recommending heat pumps for people, we are in that service business to install air conditioning and heating appliances, and we do other appliance repairs also, major appliances, refrigerators, dishwashers, and dryers, that sort of thing. We work on most all-electrical equipment except radios and televisions.

Yancy: Most everything. (Yancy and Fritz laugh) Has the energy situation changed the services your division offers? If so, how?

Fritz: Yeah, I guess I got in—I’m relatively new in the electric utility business. I’ve been with GVEC for eleven years, being involved with it except for a brief period of time since 1972, but that period of time really has seen some drastic changes in the way we do business; maybe not the way we do business, but the way we have seen the prices go around. I got in really on the tail end of market, market, market—resistance heating was alright because, gosh, for a penny a kilowatt hour, just slightly over a penny a kilowatt hour—

Yancy: Mm-hmm.

Fritz: And we were fairly competitive with natural gas at that point for the heating market and the water heating market. So whatever load you could get put it on and industrial loads and that sort of things. Then, of course the—as we talked about earlier, the energy crisis hit. That made people very energy aware; it made people very concerned about people who went out and sold energy, and we were concerned about what the future had in store. Now, if you can imagine, every other year or every year the cost of electricity doubling—

Yancy: Mm-hmm.

Fritz: And here you’ve been preaching that you’re spreading the cost out, and that cost are going down and has been since the 1920s, 1930s. In our case, the 1940s—

Yancy: Mm-hmm.

Fritz: And then all of the sudden, that’s not taking place, you know, it’s a traumatic thing. It’s traumatic for the members, and it’s—I was a whole lot, people say this all the time, I was a whole lot happier selling electricity at a penny a kilowatt hour than I am at five cents or six cents a kilowatt hour. So we looked at, you know, “What do we do, do we have a bad product or do we have a product that’s changing.” And we had a product that was changing. So, we, like everybody else, we said, Okay, let’s go into a conservation mode, but all-electric home was not a beast, it’s a blessing. So let’s continue to have the all-electric home. Let’s continue to help those people and help them in the best way possible, the pro-active way, and, of course, that pro-active way was to get directly involved in installing ceiling insulation in the houses. Although we’d been preaching for years and years and years “put in an R-19-plus of insulation,” builders are slow to change. It’s a matter of economics, too. It cost $17 more to put, you know, R-19 insulation in an attic, (Yancy and Fritz laugh) and, of course, that would be eaten up in one month, but that $17 was something that they just couldn’t justify. Well, we went back, and we retrofitted, I have forgotten how many homes now, several thousand homes, with insulation. We actually had a truck and a contractor and equipment. We had an outside contractor operate that equipment for us; we warehoused the insulation; we—golly, we had a lot of insulation that we warehoused. I can get you some figures on those if you would like them, but over a period from 1972 to 1983 or ‘84, we installed a lot of insulation in attics. That’s what also prompted us to get into energy audits, go out and visit with people at their house and tell them where energy was being consumed and how it could be consumed more efficiently. We were involved in a storm window, storm door program. We went through an evolution process; in fact, we had to go—right when I got here, Donald Crook and I went to Schulenburg, Texas, as there was a company there making storm windows, but they were making them for the northern market. They were making them there and shipping them up north—

Yancy: Mm-hmm.

Fritz: —and we asked if they could make a storm window that would fit most all windows out here, and they said yes, they thought they could. I don’t think they thought—I don’t think they knew what kind of order they would get from us because we just deluged them with orders, (Yancy and Fritz laugh) and they couldn’t keep up. But we worked with them and worked through that process, and we worked with a kind of a—they even changed their process to be able to universally fit a window with a storm window. We used them as long as we could, and they got so bad that we changed to another manufacture, Kaiserhof [Windows, Inc.], over in Houston, and they provided us with an excellent storm window. They, I think, saw the market for storm windows in this area, and they opened up a dealership. We now use that dealership to install storm windows. After we established that there were some people who were going to provide that service out in our area, there was no longer a need for us to be in that business. We could do other things and use our personnel better. So we got out of that, directly selling the window, but it’s still part of our audit process. We’ll still make recommendations to install storm windows and give them two or three names of people that install storm windows. So that was one of the programs. We went through this area, and we’re almost full evolution now because we’ve seen what the rest of the country is involved with; although we’re not involved with nuclear power plants, we’re involved in some expensive power plants. People preach conservation; as you preach conservation and power costs rise, people use less, and they use more at the wrong times.

Yancy: Mm-hmm.

Fritz: You know, they’ll leave that air conditioner off all the way through spring until it gets just absolutely Fourth of July hot around here. They say, “I can’t stand it anymore. I don’t care what it costs,” and they turn it on, and it’s on the peak of the year. So I think utilities are now recognizing that we’ve got to do a better job of marketing, can’t preach conversation. You’ve got to preach efficiency; you’ve got to preach efficiency of use and never get away from that because anything less than that is really adverse to the member and not in their best interest. So if we stay with efficiency and we stay with marketing, we’ve made this whole evolutionary process where we’re marketing and marketing efficient products, and products are what people want.

Yancy: What would you describe as your most important accomplishments? What changes have you implemented and how successful have they been?

Fritz: Oh let’s see, Karen. I think the most significant thing that we have done since I have been member service manager is implemented the load management, load control program. By far, that’s got to be the most significant because it’s an area where the utility—

End Side 1, begin Side 2

Fritz: —it’s an area where the Board of Directors of GVEC and the management of GVEC recognized a need and was able to implement that need in advance of what our power suppliers would do for good management. In fact, it may not have taken place at all on the LCRA system unless we would have taken the lead on the thing and have shown that it’s successful. It’s one of those things that you commit to for a lifetime because once you start load control, you can’t stop.

Yancy: Mm-hmm.

Fritz: Because you have given that signal to the power supplier saying, “Don’t count on that load. It’s not going to be on your system; don’t build a power plant to take care of it.” So if they don’t do that and we release that load sometime in the future, then it could cause some severe problems. They could be very easily short of demand for electricity, and it could cause some problems. So, I think load management—

Yancy: Mm-hmm.

Fritz: —peak-time intermission program is the most significant thing that’s happened while I’ve been with GVEC.

Yancy: People learn from their mistakes. Have you made any mistakes in operating your division? How have these helped you become a more effective manager?

Fritz: No, never. (Yancy and Fritz laugh)

Yancy: One of those few people, huh.

Fritz: Yeah, Karen, I’m sure I have. I haven’t reflected on mistakes so I don’t—I guess I hate to talk about them if I could remember them. I know that, absolutely, that there are some.

Yancy: We’ll move on.

Fritz: I’ll keep thinking about that, and I’ll get back to you.

Yancy: Okay.

Fritz: I’ll get it back to you.

Yancy: In your opinion, what makes GVEC distinctive? Is it customer satisfaction, the conservative expansion, or something else? What makes GVEC distinctive from other co-ops?

Fritz: If there’s one thing that makes GVEC distinctive, whether we’re successful or not, I—

Yancy: Mm-hmm.

Fritz: I feel—this is gut feeling, that we are successful in this way, and that is worthwhile communication to the membership. There’s an absolute dedication to communication, to the point where we have attempted communication even in the face of people not wanting to listen to it. In the way of trying to structure a newsletter that is interesting, inexpensive, but maybe not inexpensive, cost-effective. It’s not a flashy type of thing; it has good, basic, solid communications, utility-oriented things that the members need to know about their systems. Member information committees, we’ve got nine districts and three people, twenty-seven couples, rotate on that every year. Well, if you do that year after year after year, you build up a number of people out there that know more about the GVEC system than if they were just walking down the street and never heard from us, but not only do those people know themselves a little bit about what’s going on, or maybe they don’t know what’s going on, but they know who to contact—

Yancy: Contact.

Fritz: The stability of employment here is—when you got people with fifteen, twenty years, thirty years, forty years of service at GVEC, the guy you contact next year is the same guy you contacted five years ago or he can direct you to it. So those people have, you know, they know—have seen face-to-face the general manager, they’ve seen me, they’ve seen the business manager, and it’s all of the advisory people are involved in that process. We’re there for the meetings, so you’re talking to twenty-seven couples twice a year about what’s going on at GVEC. It is our mission to not let a member inquiry go unanswered. Somebody has a question about their bill, and I know—I know in the communications process that it breaks down, I know it happens—it’s not intentional—I’m sure you—but there is a concentrated effort to—whoever has, whatever the question is to give it a—he may not like the answer, and we don’t always satisfy them, although the market survey says that we’re doing a pretty good job in answering the questions. It’s our mission to field those questions anyway, not let them go ignored. I would guess, in answer to your question, I would say that [the] distinctive point of view we see is the communication effort.

Yancy: What do you see at the future of your division and of GVEC?

Fritz: Karen, as marking becomes more important, I think that we will be involved into a more aggressive marking entity. I see the appliance service shop growing, and I see a need to have more people out in the field. We spend more money per member, per consumer, on customer relations, on member service aspects of an organization; more funds, more money by far than anybody in the state now. Off the top of my head, those figures are like $9-plus per member per year, and the next one is something like $1.50 –$2. So, getting back to what sets GVEC apart, that communications process goes a long way. I think that there will be some other areas, I think the process of community development will—industrial development will receive more emphasis, and I see the member service advisor job is becoming better-defined into certain areas and that some of the things that they’re doing now will be more than what they can handle, and so they will have someone working for them to do certain things.

End of interview