Consumers and
Co-operatives
The Co-operative Federation of Victoria
Ltd is the peak body for co-operatives in
Co-operative
Values and PrinciplesCo-operatives
are unique businesses that are based on explicit values and principles.
These are articulated in the International Co-operative Alliance's Statement
on the Co-operative Identity adopted in 1995.
Definition
A co-operative is an autonomous association of persons united voluntarily to meet their common economic, social and cultural needs and aspirations through a jointly-owned and democratically-controlled enterprise.
Values
Cooperatives
are based on the values of self-help, self-responsibility, democracy,
equality, equity and solidarity. In the tradition of their founders,
cooperative members believe in the ethical values of honesty, openness,
social responsibility and caring for others.
Principles
Ist
Principle: Voluntary and Open Membership
Cooperatives
are voluntary organizations, open to all persons able to use their services
and willing to accept the responsibilities of membership, without gender,
social, racial, political or religious discrimination.
2nd Principle:
Democratic Member Control
Cooperatives
are democratic organizations controlled by their members, who actively
participate in setting their policies and making decisions. Men and women
serving as elected representatives are accountable to the membership. In
primary cooperatives members have equal voting rights (one member, one
vote) and cooperatives at other levels are also organised in a democratic
manner.
3rd Principle:
Member Economic Participation
Members
contribute equitably to, and democratically control, the capital of their
cooperative. At least part of that capital is usually the common property
of the cooperative. Members usually receive limited compensation, if any,
on capital subscribed as a condition of membership. Members allocate surpluses
for any or all of the following purposes: developing their cooperative,
possibly by setting up reserves, part of which at least would be indivisible;
benefiting members in proportion to their transactions with the cooperative;
and supporting other activities approved by the membership.
4th Principle:
Autonomy and Independence
Cooperatives
are autonomous, self-help organizations controlled by their members. If
they enter into agreements with other organizations, including governments,
or raise capital from external sources, they do so on terms that ensure
democratic control by their members and maintain their cooperative autonomy.
5th Principle:
Education, Training and Information
Cooperatives
provide education and training for their members, elected representatives,
managers and employees so they can contribute effectively to the development
of their cooperatives. They inform the
general public – particularly young people and opinion leaders – about
the nature and benefits of cooperation.
6th Principle:
Cooperation among Cooperatives
Cooperatives
serve their members most effectively and strengthen the cooperative movement
by working together through local, national, regional and international
structures.
7th Principle:
Concern for Community
Cooperatives work for the sustainable development of their communities through policies approved by their members.
Author:
International Co-operative Alliance, 1995
The ICA is the international non-government organisation which unites, represents and services co-operatives worldwide. It was established in London, UK, in 1898. It has more than 250 member organisations from over 100 countries and represents more than 760 million individuals.
Recent activities
and achievements of the Co-operative Federation of Victoria Ltd have
included:
- Published the Co-opAdvantage Developing
Directors of Co-operatives Kit.
Co-operation in Australia
A new report released by ACCORD Wickremarachchi , Jayo and
Passey,
This report State of the Sector: New
South Wales Co-operatives 1990-2000 is compelling because it meets a critical
need for robust statistical information about co-operatives. The report provides
this overview of co-operatives in NSW inter alia. In the middle of 2000 there
were 787 active co-operatives in NSW and eight under administration. The
analysis is based on 676 co-operatives who submitted annual returns for 1999-2000. The
report covers co-operatives registered under NSW state co-operative legislation.
It does not include, therefore, credit unions, building societies and friendly
societies:
- More than three quarters have an annual turnover of less than A$1
million.
The focus of this report is co-operatives in NSW but there
is some useful Australia-wide information. It is noted that the number of co-operatives
under separate co-operative acts in the different States and Territories was
more than 2,350 in 2000. Of these, 37% were in NSW and 44% in
Vulnerable and Disadvantaged
In 1.1 IT is stated: “A
key objective of Consumer Affairs Victoria is ‘to improve access to consumer
protection services, particularly for the vulnerable and disadvantaged.’ The
paper, then, proceeds to define and develop a common understanding of
vulnerable and disadvantaged consumers.
In 1.2 it is argued that
the analysis focuses on the characteristics of markets and consumption, as well
as personal capacities and circumstances,
Critical to this analysis,
therefore, is what are defined and identified as the characteristics of markets
and consumption.
In 3.2 the discussion
paper cites and important observation on disadvantage provided by the United
Nations Economic and Social Council: “By ‘disadvantage;,
we refer to all groups that encounter structural obstacles (i.e. obstacles
created by society) to access resources, benefits and opportunities. Those
obstacles derive from the relationships of power which exist in all societies and
the relative value which society gives to each group… The structural causes
that underlie disadvantage include race, ethnicity, gender, religion,
indigenous or national origin, and socio-economic.
This analysis by the
United Nations Economic and Social Council is appreciated by the co-operative
movement. The essence of the origins, development and continuation of the co-operative
movement is for consumers and producers to work together for their mutual
benefit – bringing together members of different classes and creeds. Co-operatives are formed to secure ongoing access
to resources, opportunities and benefits.
In 4.1 the main
characteristics of markets relevant to the discussion paper are identified as:
- The tension in the motivations of the parties
to a market transaction
- The information requirements of consumers for
successful purchases; and
- The capacity of markets to ‘fail’ in ways that are detrimental to consumers.
The discussion paper
argues that there is asymmetric information between sellers and buyers –
invariably sellers will have more information than buyers:” Some products would
require the compilation and comprehension of large amounts of technical
knowledge for prospective consumers to make informed decisions about their
quality and utility. The cost of obtaining such information may be prohibitive
to an individual. Even if it were obtained, ordinary consumers would not be
able to comprehend the information and make knowledgeable decisions based on
it.
What the discussion paper
does not distinguish and the relationship between asymmetrical information and
asymmetrical power. There seems to be an inclination to sponsor a view adequate
product and price information would reduce the vulnerability and disadvantage
of consumers and that this determines bargaining power: “A potential
consequence of information asymmetry for consumers, in addition to its impact
on their decision-making effectiveness and bargaining position in transactions,
is that lower quality products may drive higher quality products out of the
market due to (apparent) price advantages.”
Small consumers in the energy
market are confronted by both asymmetrical information and bargaining power.
Asymmetrical bargaining power is not because of asymmetrical information. While
asymmetrical information contributes to asymmetrical bargaining power, a “perfectly”
informed consumer would still have asymmetrical bargaining power because the
ultimate determinants of bargaining power in the energy market are numbers and
volume – not information. This issue is explored in a copy of
the following report that is part of this submission, Retailer inertia with
respect to rural aggregation: the
OUR ENERGY experience
Unfortunately, the
significance of asymmetrical bargaining power is not sufficiently acknowledged
in Section 9 Some implications for further work: identifying vulnerability in
practice. Section 9 states that there are two main sets of implications:
In practice how does CAV
identify problematic markets, products or transactions oer
who are vulnerable consumers or disadvantaged consumers; and
How can CAV most
effectively assist consumers who are vulnerable or disadvantaged?
In 9.2 Market dimension
the focus in the discussion paper is on information: This requires more research
into and understanding of information problems and includes aspects of the structure
of particular markets, market behaviours, the nature
of products and the characteristics of particular transactions.” It is also
stated: “An information-based framework focusing on the quality and cost of
consumer information seems likely to be most productive.”
The options for consumers
are not simply being better informed, however, but what options are available
for better informed consumers. It has already been noted that information
asymmetry is part of the problem but that ultimately it is asymmetrical
bargaining power. Asymmetrical bargaining power has historically been addressed
by small consumers and producers through the formation of co-operatives. In
further addressing the options for consumers Consumer Affairs Victoria needs to
seriously examine co-operatives as an option for consumers.
This is a required option
given
David Griffiths
Last updated: 17-May-2004 7:32 PM
Retailer inertia with respect to rural
aggregation: the
OUR ENERGY experience
GRAEME CHARLES
GRAEME CHARLES
This report was commissioned and funded by the Consumer
Utilities Advocacy Centre.
The author would like to thank CUAC for providing
OUR ENERGY Inc. with an opportunity to document their experience in the newly
emerging electricity market-place.
It also provides an opportunity for the author to
acknowledge the significant level of support given to Our Energy Inc. by
the WAW Credit Union Co-operative Ltd.
The formation of OUR ENERGY Inc. (OE) in February,
2002 was preceded by several years of work by Co-operative Energy Ltd. (CE),
which had itself been formed in 1994 during the earliest days of the privatisation
of
CE was formed initially to create interest in the potential
role that co-operatives could fulfill within a privatised electricity industry.
The significant role of electric co-operatives, particularly in rural
In any truly free market small consumers inevitably
are at a disadvantage when it comes to negotiating with suppliers of services.
CE firmly believed, and still does, that successful aggregation of small
consumers was the one self-help tool available.
In 1999 CE was engaged by a group of North East Victorian
councils to prepare a report on the likely outcomes of successful aggregation
of electricity consumers across that region. That report demonstrated a significant
positive economic effect for the region if enough consumers could be aggregated
and as a result of that, electricity tariff reductions of as little as 5%
could be successfully negotiated.
Whilst remaining supportive, the councils were reluctant
to become directly involved in the formation of an energy aggregation vehicle,
mainly because of the provision of certain sections of the Local Government
Act. However CE had in the meantime held discussions with WAW Credit Union
which has a member and branch network across
Graeme Charles, Chairman of CE was engaged on a part-time basis to project manager the aggregation effort. Once OE was incorporated and launched in February 2002, consumers were invited to complete a form authorising OE to negotiate on their behalf with retailers. On the basis of earlier informal discussions with retailers, it was decided that OE’s target would be 5000 signings. If the target were not reached within a three to six month period, the future of OE would be reviewed. By August 2002 the aggregation had grown to include some 465 businesses, 300 farms and 2800 residential consumers. To these numbers could be added the loads of the various councils.
In September 2002 a formal Request for Proposals (RFP),
was sent to all electricity retailers licenced to operate in
No response that complied with, or even addressed
the majority of issues contained in the RFP was received. Numerous attempts
to generate serious negotiation with retailers all failed. No retailer was
prepared to discuss our request and in essence we were after many months
of trying, reluctantly forced to conclude that we were “flogging a
dead horse”.
As a result of this monumental display of retailer
inertia, OE can only offer its own suggestions as to why having aggregated
thousands of consumers, it could not elicit any offers from retailers. Probably
the most significant comment to make is that the sort of initiative undertaken
by OE has not been a true “aggregation”. True aggregation can
only occur when an aggregator can negotiate on behalf of its constituents
whilst being in a position to guarantee that those constituents will take
up the resultant negotiated outcome. This is not the case currently and is
a matter that requires the serious and urgent attention of industry regulators
and consumer representatives.
To what extent the role of regulators in the market
place e.g. price-capping, Net System Load Profiling is influencing retailer
responses to aggregation efforts OE can only ponder. In the meantime would-be
aggregators are caught in “no-mans land”, operating within a
system that is neither a tightly regulated monopoly, in which case there
would be no need for aggregation, nor a true open market-place. If any future
aggregation efforts are to be successful, electric industry regulations and
legislation will have to include remedies that address the many existing
aggregation barriers.
(i) Why
Aggregate?
Aggregation, or power in numbers, is a tool that enables
consumers, particularly those that don’t consume large quantities of
electricity, to demand lower prices and perhaps better services from their
electricity retailer.
An entity that places consumers into a buying group
to purchase electricity can be described as an “aggregator”.
(ii) Why Aggregate
in North
Background: Co-operative
Energy Ltd. (CE) was formed in 1994 to promote
co-operative involvement in the newly deregulated
electricity industry. It had a particular focus on small consumers and rural
communities. CE was aware of the hugely significant role fulfilled by electric
co-operatives in delivering electricity to rural Americans.
CE foundation chairman Graeme Charles, was resident
in North East Victoria.
In the latter part of 1998, with the date for Full
Retail Contestability (FRC) set-down for January 2001, CE began a series
of approaches to local government across
Eventually, in March 1999, CE presented a formal proposal
re the formation of a North East Victorian Energy Users Co-operative to the
Cities of Wodonga, Wangaratta,
and Delatite Shire Council.. The cost of this proposal was $24,000. CE had
by this time received an offer of $12,000 funding to assist the establishment
of an energy purchasing co-operative in North East Victoria via the
In May 1999, CE and the Councils entered into a Heads
of Agreement (see Attachment 1) whereby CE was engaged as consultant to undertake
Phase One of the development of a North East Energy Purchasing Group. (The
participating Councils were subsequently joined in the Project by the Alpine,
Indigo and Towong Shires.)
The tasks set out in the Phase One Heads of Agreement
were:
1.
Investigate and identify options
for structuring the Energy Users body.
2.
Development of appropriate
membership recruitment campaigns:
·
Domestic customers
·
Small business (less than 160 mWh per annum consumption)
·
Large customers
3.
Implementation of recruitment
campaign for larger customers.
4.
Conduct preliminary discussions
with potential suppliers. Consider the two most obvious options.
Option 1.
Enter into an early agreement
with a preferred supplier, who would a vested interest in assisting with
the recruitment of members.
Option 2.
Consolidate the membership
before entering into any firm arrangements with suppliers.
Identify likely financial
rewards on offer from potential suppliers.
5.
Develop strategic alliances
that could strengthen the Project. E.g. Uniting Church,
local Credit Union, Other
local government and Statutory Authorities.
6.
Advocacy and lobbying on behalf
of members.
7.
Explore possible sources of
external funding for the Project.
8.
Monthly meetings with Reference
Group overseeing the Project.
Outcomes of the Heads Of Agreement:
The presentation of a Report and Phase Two options
paper.
July 1999 – Phase One –Stage One Report
to Councils:
Included
A.
Financial Estimates and Modelling.
B.
Potential Price Reductions/Savings
Achievable through Aggregation.
C.
Potential Consumer Membership
of the Energy Purchasing Organisation.
D.
Likely Costs of the Project.
E.
Potential Sources of Funding
re Estimated Costs.
August 1999: Report to North East Victorian Councils
on Recommended Structure for an Energy Users Purchasing Organisation.
February 2000: Regional Energy Options prepared for
North East Victoria Energy Purchasing Project.
May 2000: Discussions
commenced with the WAW Credit Union which had a branch network that extended
across the target region of the Project and into the Albury, NSW region of
Recommendation: That participating Councils together
with identified non-local government organisations proceed with Phase 2 the
formation of an energy-users
co-operative.
The co-operative would not, certainly initially, become
involved itself in either purchasing or selling electricity.
October 2000: North East Energy Purchasing Project – Phase
Two Proposal.
Following a meeting with some of the Councils in September
2000, CE agreed to undertake the preliminary work required for the incorporation
of a co-operative and to provide an Action Plan by the end of October. It
was agreed at that meeting that something like $1000 capital per founding
member together with the balance of funds remaining from Phase One ought
to be sufficient to move the co-operative forward beyond its formation stage
for a period of between three to six months. It was envisaged that the founding
members would most likely be CE, the five participating NE Vic councils and
the WAW Credit Union.
An Action Plan was presented early November 2000.
The plan proposed amongst other things that a Co-operative Formation Meeting
would be held in December 2000.
December 2000: The Co-operative Formation Meeting.
This meeting was held on 8th December 2000
at the Indigo Shire Offices and attended by representatives from three of
the five participating councils, WAW Credit Union and CE.
It soon became apparent that most councils were reluctant
to become members of the proposed co-operative. The provisions of Sec.193
of the Local Government Act 1989 were put forward as presenting a major hurdle
that none of them was interested in attempting to jump for the purpose of
this exercise.
Subsequently the outcome of the meeting was:
·
It was unanimously agreed that Councils would prefer not to become members
of a newly formed energy purchasing co-operative.
·
It was further agreed that WAW Credit Union would proceed with the project
and that councils would continue to support its development in a number of
ways.
·
Councils would place their energy purchasing with the WAW sponsored co-operative.
Including currently contestable sites as they become available, and all other
sites as they become contestable.
·
Councils will when and where appropriate, publicly support the co-operative,
and announce their commitment to the above.
·
Councils will make their normal ratepayer communication channels available
to the co-operative.
·
The balance of funds from Phase one will be transferred to the WAW Credit
Union as “sponsor” of Phase two, and each council would contribute
an additional $1000 to advance the Project.
·
A percentage of any earnings derived by the co-operative would be allocated
to some form of community development trust, which councils could be involved
in as trustees.
By the end of April 2001 all participating councils
with the exception of the Delatite Shire had formally confirmed their continued
support for the Project as outlined above. Delatite Shire Council advised
that they had been approached by their local credit union, North East Credit
Union proposing the development of a similar energy purchasing co-operative
in the Shires of Delatite, Murrundindi and Strathbogie. As a result they
could not commit themselves to moving forward with the North East Energy
Purchasing Project at that time. Delatite Shire never rejoined the Project
and nothing ever eventuated from the approach that had been made by the North
East Credit Union.
Full Retail Contestability Deferred:
The Victorian Government decided that FRC for sub
160mWh customers would not occur as originally planned in January 2001. This
created a difficult environment for the NE Vic Energy Purchasing Project.
The momentum that had finally been created in the latter part of 2000 now
became impossible to sustain as interest in FRC waned.
(iii) Aggregation Commences in North East
As indicated earlier the continued uncertainty surrounding
the final stage of FRC became a major problem for the North East Energy Purchasing
Project. To publicly launch the aggregation effort against such an uncertain
background (there were even doubts being expressed within the electricity
industry that FRC for all consumers would ever eventuate) would have been
extremely difficult. When it
became clear that FRC would commence early in 2002, WAW appointed Graeme
Charles to project manage the aggregation effort. For reasons of expediency
it was decided to form an incorporated association to act as the aggregation
vehicle. ( An incorporated association can if it chooses, convert to a co-operative
structure relatively easily.) Thus OUR ENERGY Inc. was registered in February
2002 and publicly launched by the Federal Member for Indi, the Hon. Sophie
Panopoulos MHR, on February 28th.
WAW Credit Union positioned OE under their Community
Link program and their General Manager Peter Challis and Marketing Manager
Emma Ashton together with Graeme Charles effectively became the OE management
team. Financial contributions were sought from the five local councils who
had previously supported the project as well as the two councils in
All councils complied with the request and their contributions
together with the balance still remaining from Phase One of the Project resulted
in an initial operating budget for OE of $19,000.
Project Manager Graeme Charles was aware of the overwhelming
evidence, particularly from the
$12,000 was allocated to project management fees and
Emma Ashton, WAW’s Marketing Manager developed a marketing campaign
utilising the balance of the initial funds. In addition to making staff time
for OE, WAW was providing OE with office space and covering overheads such
as telephone. OE produced a brochure (see attachment 2) which explained the
rationale behind OE. The brochure included a tear-off authorisation page
which individuals could use to provide their details and return to OE. Unfortunately
a significant number of authorisations failed to include all of the data
requested. For example, current electricity tariff description and quarterly
consumption in kWh. This has been a problem.
The brochures were distributed through WAW branches
and offices of the participating councils. The WAW Marketing Manager put
together a media and marketing program that attempted to gain as much free
media coverage for OE as possible. The media and marketing report may be
seen in detail as Attachment 3.
A number of key organisations and individuals across
the target region were approached and invited to join OE. The general response
to this invitation was disappointing. Discussions were also held with organisations
outside the target region, who had at some stage expressed some interest
in the project. These were the Warrnambool Co-operative Society Ltd., South
West Credit Union Co-operative Ltd., and the Gippsland Herd Improvement Co-operative
Ltd. Only one of these, Gippsland Herd Improvement Co-op., decided to join
OE and become involved in the aggregation effort. GHI targeted their members
and others across their geographic region in
Community information meetings were conducted at Beechworth,
Myrtleford, Chiltern, Bright,
Over a period of six months the aggregation steadily
grew. By the time the RFP was issued an analysis of the aggregation was as
set out below.
Residential Consumers 2800
Small business 465
Farms 284
Local Government 6
Residential consumers in the TXU Distribution area
are estimated to have an average annual consumption of 10,000 kWh. This is
higher than their metropolitan counterparts because of the historical dependence
on electric space and hot-water heating.
Not all consumers had provided consumption data but
the aggregated load was estimated to be somewhere between 50 and 70 gigawatts
per annum.
(iv) Lessons
for future would-be aggregators.
Lesson 1. The task of individually signing on every
potential customer requires a huge expense that is difficult to justify.
Asking people to “sign on” or “opt
in” to something like aggregated energy
purchasing is a massive task. They often appear to
confuse the approach with their
previous unhappy experiences with telephone resellers.
People are by nature
conservative and inclined to “sit on the fence” waiting
to see if the concept will work.
They don’t understand that by its very nature,
aggregation requires their commitment
up-front.
Lesson 2. Many people will “sign-on” but for various reasons find it more difficult to complete an authorisation in full. The resultant lack of consumption data creates difficulties further down the track. If eventually required, the cost factor associated with gathering the data from each person can be significant.
Lesson 3.“ Weak” aggregation efforts just don’t work. “Weak” in this instance definitely
includes reference to the regulatory framework. There are several barriers preventing
successful aggregation within the existing Victorian regulatory framework. Not the
least of which is the requirement for retailers to provide all participants in the
aggregation with individual offers despite having reached an agreement with the
aggregator.
Section 2. The
Tenor of OE’s discussions with Retailers:
(i) Background:
This approach also gave OE more time to build the
aggregation. However it eventually became obvious that no retailer was going
to deliver the required outcome via this process.
These early discussions were held with the following
retailers, TXU Retail, Energex Retail P/L. and Citipower. Some preliminary
discussion was also conducted with Yallourn Energy. In the case of TXU, discussion
re the possibility of forming a mutually beneficial relationship had actually
been commenced by Co-operative Energy Ltd. in late 2000 and continued until
early 2002. It should be noted here that these discussions essentially pre-dated
OE. TXU were more interested in engaging Co-operative Energy Ltd. as an energy
broker rather than in developing a different style of relationship. In all cases
the discussions eventually fizzled out.
(iii) The Request for Proposals: (see Attachment 4)
In September 2002 some six months after its launch,
OE issued a Request for Proposals (RFP) to 10 licensed electricity retailers.
Retailers who received the RFP were:
TXU
Power Direct
Integral Energy
Aurora Energy
Energex Retail
Actew/AGL
Country Energy
AGL
Origin Energy Electricity
Energy
(iv) Responses to RFP:
No formal response was received by the designated
date.
No response or acknowledgment of any kind was received
from Power Direct, Energex Retail, Actew/AGL, or Energy
Varying responses were eventually received from Country
Energy, Origin Energy, TXU Retail, Integral Energy, Energy
No retailer was prepared to talk with OE in terms
of making an offer for the aggregated load.
The only “offer” that eventuated was from
Country Energy. CE indicated that they would need to price each < 160
mWh site individually, therefore requiring full consumption data for each
site. In many cases this had not been supplied to OE when signing on. Their “offer” for >160
mWh sites was the same bundled pricing schedule that was available to any
customer prepared to take the time to call them and ask for it. They did
offer to pay OE a commission for each OE site eventually taking up the CE
offer. OE had intended to rebate as much of the commission as possible to
the consumer. Other aspects of the RFP, such as co-branding of bills, were
not possible according to CE. CE also indicated that their systems would
not allow them to generate a specific price for OE customers, which was the
reason for OE being “offered” the generic prices for all TXU
customers prepared to switch to CE. Of course the major problem for OE with
the CE “offer” was that many customers missed out. They were
and still are, better advised to remain on the TXU standing offer. This contradicts
the very essence of aggregation, which aims to provide some benefit to all
participants.
The “opt-in” aggregation model requires
intense resources and community outreach, basically knocking on doors and
asking each person to sign up. Many consumers don’t understand the
new electricity supply choices, are apathetic, and don’t consider the
potential benefits of aggregation to be significant on a personal level.
They generally choose not to choose during the early years of deregulation.
It is difficult to negotiate with retailers in an
environment that doesn’t allow the aggregator to offer up-front the
approximate size of the group. Retailers are wary of aggregator’s claims
re the group’s size. Their experience to date has been that at the
end of the day the aggregation develops significant leakage of those having
signed up. In other words the retailer doesn’t pick up as many new
customers as they might have expected from the aggregation. The ESC has acknowledged
that the requirements for customer consent to aggregated loads have never
been formally addressed. At the same time they have said “It is possible
that as the market develops, there will be a role for brokers to act on behalf
of customers in entering into contracts with a retailer.” Perhaps it
is now time to address this issue.
Price capping has been flagged by most retailers as
a significant issue affecting their ability to offer competitive prices to <160mWh
customers. This is particularly so with off-peak tariffs. Unfortunately,
rural residential users tend to have off-peak electric hot water services,
as reticulated gas supply has hitherto been unavailable to them. Price caps
contradict the notion of an electricity market, and so long as they remain
in place, successful aggregation outcomes are not likely.
Net System Load Profiling does not allow the settlement
system to differentiate between separately metered peak and off-peak consumption.
Second tier retailers appear to be disadvantaged under this regime. Generally
the lack of pricing signals available to domestic and small business users
is affecting the prices retailers are prepared to offer this tranche of customer.
For example interval meters, which record consumption of electricity each
half hour, would allow retailers to structure tariffs that more closely reflect
the cost of purchasing power in the wholesale market. Access to interval
meters would also allow all consumers to participate in load management arrangements
that would attract the interest of retailers. These meters are not available
to domestic and small business customers and presently there is no incentive
to these users to self-manage their consumption pattern.
Size of aggregation may be an issue. OE was consistently
reminded by various retailers, that their load representing something like
the equivalent of 5000 households, was of little consequence in the overall
scheme of things. For example, CE has 750,000 customers and on more than
one occasion during the course of OE’s discussions with them indicated
that the number of customers OE was offering them was of little significance.
At the same time OE could not help but get the feeling that CE wasn’t
really ready to handle a potential increase of thousands of new customers
all at the same time.
Conclusion:
Would-be aggregators appear to be caught in “no
man’s land”. Operating within a system that is neither a tightly
regulated monopoly (in which case there would be no need to aggregate) nor
a truly open market. Aggregation is not a process that can be started and
completed merely by flicking a switch. The decision they (aggregators) now
need to make is whether, and how, they attempt to keep the aggregated group “alive” until
such time as the electricity market rules and regulations change in a way
that will ensure aggregation truly becomes an important and crucial consumer
tool.
The General Conference of the International Labour Organization,
Having been convened at
Recognizing the importance of cooperatives in job creation, mobilizing resources, generating investment and their contribution to the economy, and
Recognizing that cooperatives in their various forms promote the fullest participation in the economic and social development of all people, and
Recognizing that globalization has created new and different pressures, problems, challenges and opportunities for cooperatives, and that stronger forms of human solidarity at national and international levels are required to facilitate a more equitable distribution of the benefits of globalization, and Noting the ILO Declaration on Fundamental Principles and Rights at Work, adopted by the International Labour Conference at its 86th Session (1998), and Noting the rights and principles embodied in international labour Conventions and Recommendations, in particular the Forced Labour Convention, 1930; the Freedom of Association and Protection of the Right to Organise Convention, 1948; the Right to Organise and Collective Bargaining Convention, 1949; the Equal Remuneration Convention, 1951; the Social Security (Minimum Standards) Convention, 1952; the Abolition of Forced Labour Convention, 1957; the Discrimination (Employment and Occupation) Convention, 1958; the Employment Policy Convention, 1964; the Minimum Age Convention, 1973; the Rural Workers' Organisations Convention and Recommendation, 1975; the Human Resources Development Convention and Recommendation, 1975; the Employment Policy (Supplementary Provisions) Recommendation, 1984; the Job Creation in Small and Medium-Sized Enterprises Recommendation, 1998; and the Worst Forms of Child Labour Convention, 1999, and
Recalling the principle embodied in the Declaration of Philadelphia that "labour is not a commodity", and
Recalling that the realization of decent work for workers everywhere is a primary objective of the International Labour Organization, and
Having decided upon the adoption of certain proposals with regard to the promotion of cooperatives, which is the fourth item on the agenda of the session, and
Having determined that these proposals shall take the form of a Recommendation;
adopts this twentieth day of June of the year two thousand and two the following Recommendation, which may be cited as the Promotion of Cooperatives Recommendation, 2002.
I. SCOPE, DEFINITION AND OBJECTIVES
1. It is recognized that cooperatives operate in all sectors of the economy. This Recommendation applies to all types and forms of cooperatives.
2. For the purposes of this Recommendation, the term "cooperative" means an autonomous association of persons united voluntarily to meet their common economic, social and cultural needs and aspirations through a jointly owned and democratically controlled enterprise.
3. The promotion and strengthening of the identity of cooperatives should be encouraged on the basis of:
(a) cooperative values of self-help, self-responsibility, democracy, equality, equity and solidarity; as well as ethical values of honesty, openness, social responsibility and caring for others; and
(b) cooperative principles as developed by the international cooperative movement and as referred to in the Annex hereto. These principles are: voluntary and open membership; democratic member control; member economic participation; autonomy and independence; education, training and information; cooperation among cooperatives; and concern for community.
4. Measures should be adopted to promote the potential of cooperatives in all countries, irrespective of their level of development, in order to assist them and their membership to:
(a) create and develop income-generating activities and sustainable decent employment;
(b) develop human resource capacities and knowledge of the values, advantages and benefits of the cooperative movement through education and training;
(c) develop their business potential, including entrepreneurial and managerial capacities;
(d) strengthen their competitiveness as well as gain access to markets and to institutional finance;
(e) increase savings and investment;
(f) improve social and economic well-being, taking into account the need to eliminate all forms of discrimination;
(g) contribute to sustainable human development; and
(h) establish and expand a viable and dynamic distinctive sector of the economy, which includes cooperatives, that responds to the social and economic needs of the community.
5. The adoption of special measures should be encouraged to enable cooperatives, as enterprises and organizations inspired by solidarity, to respond to their members' needs and the needs of society, including those of disadvantaged groups in order to achieve their social inclusion.
II. POLICY FRAMEWORK AND ROLE OF GOVERNMENTS
6. A balanced society necessitates the existence of strong public and private sectors, as well as a strong cooperative, mutual and the other social and non-governmental sector. It is in this context that Governments should provide a supportive policy and legal framework consistent with the nature and function of cooperatives and guided by the cooperative values and principles set out in Paragraph 3, which would:
(a) establish an institutional framework with the purpose of allowing for the registration of cooperatives in as rapid, simple, affordable and efficient a manner as possible;
(b) promote policies aimed at allowing the creation of appropriate reserves, part of which at least could be indivisible, and solidarity funds within cooperatives;
(c) provide for the adoption of measures for the oversight of cooperatives, on terms appropriate to their nature and functions, which respect their autonomy, and are in accordance with national law and practice, and which are no less favourable than those applicable to other forms of enterprise and social organization;
(d) facilitate the membership of cooperatives in cooperative structures responding to the needs of cooperative members; and
(e) encourage the development of cooperatives as autonomous and self-managed enterprises, particularly in areas where cooperatives have an important role to play or provide services that are not otherwise provided.
7. (1) The promotion of cooperatives guided by the values and principles set out in Paragraph 3 should be considered as one of the pillars of national and international economic and social development.
(2) Cooperatives should be treated in accordance with national law and practice and on terms no less favourable than those accorded to other forms of enterprise and social organization. Governments should introduce support measures, where appropriate, for the activities of cooperatives that meet specific social and public policy outcomes, such as employment promotion or the development of activities benefiting disadvantaged groups or regions. Such measures could include, among others and in so far as possible, tax benefits, loans, grants, access to public works programmes, and special procurement provisions.
(3) Special consideration should be given to increasing women's participation in the cooperative movement at all levels, particularly at management and leadership levels.
8. (1) National policies should notably:
(a) promote the ILO fundamental labour standards and the ILO Declaration on Fundamental Principles and Rights at Work, for all workers in cooperatives without distinction whatsoever;
(b) ensure that cooperatives are not set up for, or used for, non-compliance with labour law or used to establish disguised employment relationships, and combat pseudo cooperatives violating workers' rights, by ensuring that labour legislation is applied in all enterprises;
(c) promote gender equality in cooperatives and in their work;
(d) promote measures to ensure that best labour practices are followed in cooperatives, including access to relevant information;
(e) develop the technical and vocational skills, entrepreneurial and managerial abilities, knowledge of business potential, and general economic and social policy skills, of members, workers and managers, and improve their access to information and communication technologies;
(f) promote education and training in cooperative principles and practices, at all appropriate levels of the national education and training systems, and in the wider society;
(g) promote the adoption of measures that provide for safety and health in the workplace;
(h) provide for training and other forms of assistance to improve the level of productivity and competitiveness of cooperatives and the quality of goods and services they produce;
(i) facilitate access of cooperatives to credit;
(j) facilitate access of cooperatives to markets;
(k) promote the dissemination of information on cooperatives; and
(l) seek to improve national statistics on cooperatives with a view to the formulation and implementation of development policies.
(2) Such policies should:
(a) decentralize to the regional and local levels, where appropriate, the formulation and implementation of policies and regulations regarding cooperatives;
(b) define legal obligations of cooperatives in areas such as registration, financial and social audits, and the obtaining of licences; and
(c) promote best practice on corporate governance in cooperatives.
9. Governments should promote the important role of cooperatives in transforming what are often marginal survival activities (sometimes referred to as the "informal economy") into legally protected work, fully integrated into mainstream economic life.
III. IMPLEMENTATION OF PUBLIC POLICIES FOR THE PROMOTION OF COOPERATIVES
10. (1) Member States should adopt specific legislation and regulations on cooperatives, which are guided by the cooperative values and principles set out in Paragraph 3, and revise such legislation and regulations when appropriate.
(2) Governments should consult cooperative organizations, as well as the employers' and workers' organizations concerned, in the formulation and revision of legislation, policies and regulations applicable to cooperatives.
11. (1) Governments should facilitate access of cooperatives to support services in order to strengthen them, their business viability and their capacity to create employment and income.
(2) These services should include, wherever possible:
(a) human resource development programmes;
(b) research and management consultancy services;
(c) access to finance and investment;
(d) accountancy and audit services;
(e) management information services;
(f) information and public relations services;
(g) consultancy services on technology and innovation;
(h) legal and taxation services;
(i) support services for marketing; and
(j) other support services where appropriate.
(3) Governments should facilitate the establishment of these support services. Cooperatives and their organizations should be encouraged to participate in the organization and management of these services and, wherever feasible and appropriate, to finance them.
(4) Governments should recognize the role of cooperatives and their organizations by developing appropriate instruments aimed at creating and strengthening cooperatives at national and local levels.
12. Governments should, where appropriate, adopt measures to facilitate the access of cooperatives to investment finance and credit. Such measures should notably:
(a) allow loans and other financial facilities to be offered;
(b) simplify administrative procedures, remedy any inadequate level of cooperative assets, and reduce the cost of loan transactions;
(c) facilitate an autonomous system of finance for cooperatives, including savings and credit, banking and insurance cooperatives; and
(d) include special provisions for disadvantaged groups.
13. For the promotion of the cooperative movement, governments should encourage conditions favouring the development of technical, commercial and financial linkages among all forms of cooperatives so as to facilitate an exchange of experience and the sharing of risks and benefits.
IV. ROLE OF EMPLOYERS' AND WORKERS' ORGANIZATIONS AND COOPERATIVE ORGANIZATIONS, AND RELATIONSHIPS BETWEEN THEM
14. Employers' and workers' organizations, recognizing the significance of cooperatives for the attainment of sustainable development goals, should seek, together with cooperative organizations, ways and means of cooperative promotion.
15. Employers' organizations should consider, where appropriate, the extension of membership to cooperatives wishing to join them and provide appropriate support services on the same terms and conditions applying to other members.
16. Workers' organizations should be encouraged to:
(a) advise and assist workers in cooperatives to join workers' organizations;
(b) assist their members to establish cooperatives, including with the aim of facilitating access to basic goods and services;
(c) participate in committees and working groups at the local, national and international levels that consider economic and social issues having an impact on cooperatives;
(d) assist and participate in the setting up of new cooperatives with a view to the creation or maintenance of employment, including in cases of proposed closures of enterprises;
(e) assist and participate in programmes for cooperatives aimed at improving their productivity;
(f) promote equality of opportunity in cooperatives;
(g) promote the exercise of the rights of worker-members of cooperatives; and
(h) undertake any other activities for the promotion of cooperatives, including education and training.
17. Cooperatives and organizations representing them should be encouraged to:
(a) establish an active relationship with employers' and workers' organizations and concerned governmental and non-governmental agencies with a view to creating a favourable climate for the development of cooperatives;
(b) manage their own support services and contribute to their financing;
(c) provide commercial and financial services to affiliated cooperatives;
(d) invest in, and further, human resource development of their members, workers and managers;
(e) further the development of and affiliation with national and international cooperative organizations;
(f) represent the national cooperative movement at the international level; and
(g) undertake any other activities for the promotion of cooperatives.
V. INTERNATIONAL COOPERATION
18. International cooperation should be facilitated through:
(a) exchanging information on policies and programmes that have proved to be effective in employment creation and income generation for members of cooperatives;
(b) encouraging and promoting relationships between national and international bodies and institutions involved in the development of cooperatives in order to permit:
(i) the exchange of personnel and ideas, of educational and training materials, methodologies and reference materials;
(ii) the compilation and utilization of research material and other data on cooperatives and their development;
(iii) the establishment of alliances and international partnerships between cooperatives;
(iv) the promotion and protection of cooperative values and principles; and
(v) the establishment of commercial relations between cooperatives;
(c) access of cooperatives to national and international data, such as market information, legislation, training methods and techniques, technology and product standards; and
(d) developing, where it is warranted and possible, and in consultation with cooperatives, employers' and workers' organizations concerned, common regional and international guidelines and legislation to support cooperatives.
VI. FINAL PROVISION
19. The present Recommendation revises and replaces the Co-operatives (Developing Countries) Recommendation, 1966.
ANNEX
EXTRACT FROM THE STATEMENT ON THE COOPERATIVE IDENTITY, ADOPTED
BY THE GENERAL ASSEMBLY OF THE INTERNATIONAL CO-OPERATIVE
The cooperative principles are guidelines by which cooperatives put their values into practice.
Voluntary and open membership
Cooperatives are voluntary organizations, open to all persons able to use their services and willing to accept the responsibilities of membership, without gender, social, racial, political or religious discrimination.
Democratic member control
Cooperatives are democratic organizations controlled by their members, who actively participate in setting their policies and making decisions. Men and women serving as elected representatives are accountable to the membership. In primary cooperatives members have equal voting rights (one member, one vote) and cooperatives at other levels are also organized in a democratic manner.
Member economic participation
Members contribute equitably to, and democratically control, the capital of their cooperative. At least part of that capital is usually the common property of the cooperative.
Members usually receive limited compensation, if any, on capital subscribed as a condition of membership. Members allocate surpluses for any or all of the following purposes: developing their cooperative, possibly by setting up reserves, part of which at least would be indivisible; benefiting members in proportion to their transactions with the cooperative; and supporting other activities approved by the membership.
Autonomy and independence
Cooperatives are autonomous, self-help organizations controlled by their members. If they enter into agreements with other organizations, including governments, or raise capital from external sources, they do so on terms that ensure democratic control by their members and maintain their cooperative autonomy.
Education, training and information
Cooperatives provide education and training for their members, elected representatives, managers, and employees so they can contribute effectively to the development of their cooperatives. They inform the general public - particularly young people and opinion leaders - about the nature and benefits of cooperation.
Cooperation among cooperatives
Cooperatives serve their members most effectively and strengthen the cooperative movement by working together through local, national, regional and international structures.
Concern for community
Cooperatives work for the sustainable development of their communities through policies approved by their members.