For all the talk about innovation in energy, utilities are still slow-moving, risk-averse, bound by precedent.
While they may not change, everything else is. Distributed energy is scaling, power demand is growing, and prices are rising. Utilities need to keep up — or risk causing what they’re trying to avoid: leaving customers underserved.
Utilities can never go as far as the tech industry with its “move fast and break things” motto. The lights must stay on.
But David Naylor, CEO of Rayburn Electric Cooperative, sees a lot of room for utilities to stretch convention — an approach he’s tested and written a book about. Called Status Quo is Not Company Policy, the title also serves as the operating philosophy of the co-op, a not-for-profit generation and transmission utility that serves 16 counties in northeast Texas. Ditching the usual playbook allowed Rayburn Electric to stare down bankruptcy and grow from roughly $300 million in assets to more than $1.1 billion in just a few years.
Chevy or Ford? Just buy the truck
The story starts not with a vision but with a deadline.
Rayburn Electric had made strategic decisions at the board level to relocate load from one regional transmission organization to another. Roughly 15% to 20% of its load sat in the Southwest Power Pool, with the rest already in ERCOT. The goal was to move that remaining share into ERCOT — a shift driven by power supply economics. ERCOT offered access to lower-cost power, but it had a downside — roughly 300 compliance requirements that Rayburn Electric hadn’t previously faced.
At the time (2019-2020), Rayburn Electric had about 25 employees. Its compliance function, by Naylor’s own admission, was “pretty soft” — adequate for what was required before, but nowhere near ready for what the ERCOT move demanded.
New expertise had to be built. New positions had to be created. And none of it could wait. Its power contracts were expiring, and the load had to be back in ERCOT by a date certain. The deadlines were hard so there was no runway for the kind of slow, deliberate process utilities typically rely on. “We did not have that option,” Naylor said.
The pressure forced a change in how Rayburn Electric operated. Naylor recognized he couldn’t be the central clearinghouse for every decision — not at the pace they needed to move. So he pushed authority down. Empowered employees to act. Kept the organization flat. “If something needs to be done, they will just take care of it. What kind of trucks are we going to buy, Chevy or Ford? I don’t care. Just buy the truck that you need,” he said.
The compliance buildup, the new hires, the RTO transition — all of it had to happen in parallel, quickly, with people making calls at their level without waiting for sign-off from the top.
And then, just as they were getting through it, Winter Storm Uri arrived.
Five days that changed everything
When Uri hit Texas in February 2021, four million people lost power. Around 200 died. For Rayburn Electric, the five-day storm cost the equivalent of roughly three years of power expenses.
“We had basically a billion dollars worth of power bills that we had to find a way to pay,” he said. “I’d be lying if I didn’t say we had a bankruptcy option on the table.”
The co-op faced a stark choice: pass the costs to members or absorb them. Borrowing money wasn’t an option at the time because the co-op didn’t have much in the way of assets to serve as collateral. Naylor worried that direct cost recovery would cause members dire financial harm. So Rayburn Electric held the exposure on its own books and went to the legislature.
The result was something none of the state’s 76 cooperatives had done before. Working with Texas lawmakers, Rayburn secured access to securitization — a financing mechanism standard among investor-owned utilities but, at the time, not permitted for co-ops. Getting there required changing state law. It passed in a single legislative session, February to June, while Uri was still fresh.
Rayburn Electric paid all of its bills.
Now: A different kind of problem
Surviving Uri was one challenge. What’s coming may be harder to manage.
Rayburn is a generation and transmission co-op — wholesale only, serving four distribution cooperatives across its territory. That territory, wrapping around the eastern side of the Dallas Metroplex, is booming. Residential load has grown roughly 40% since 2020. Naylor stopped predicting a slowdown years ago. He suspects his employees would be bored if the growth ever stopped. So would he.
And then there are the data centers. Rayburn has approved roughly 1,000 MW of data center load, with another 2,000 MW under evaluation — on a system with a summer peak of about 1,300 MW.
This means data centers could triple the size of Rayburn.
What’s drawing them? Land availability is part of it. So is Rayburn’s flexibility. “I think our attitude towards data centers makes a difference as well,” Naylor said.
Data center load has a structural upside. It’s flat, not peaky, which smooths variability on a system that is otherwise heavily weather-dependent. But hyperscale demand introduces risks that utilities elsewhere have learned the hard way: cost socialization, grid stress, public backlash.
Rayburn’s approach is to ring-fence the exposure entirely. Data center load is “sleeved” — power costs directly assigned so that data centers pay their share and no one else’s. Infrastructure built to serve them is theirs to bear. “It allows us to give the data centers what they need,” Naylor said. “It gives them the reliability and the resiliency they want, but it also allows us to protect our members.”
Rethinking the resource stack
Uri also changed how Rayburn thinks about supply. The co-op had leaned heavily on the wholesale market. That bet didn’t pay off.
“On a go-forward basis, that’s not a position we want to be in.”
Nayor realized they needed to control their own generation. So Rayburn acquired its first-generation station in 2023 and is now building Rayburn Energy Station 2 — a 570-MW facility, which dodged today’s gas turbine shortage by contracting for them at the end of 2025 for delivery in 2028. Notably, Naylor says ordering those same turbines just a few months later would have pushed delivery into the 2030s.
The generation buildout is sized for organic load growth, not data centers. For data centers, Rayburn is relying on long-term power agreements or customer-owned generation — consistent with its strategy of keeping data center risk separate from member risk.
Next: The grid edge
Rayburn is also beginning to look at distributed energy. Farmers Electric Cooperative — one of its four member distribution co-ops — struck a deal with Base Power to deploy about 200 behind-the-meter battery storage units totaling 10 MW, with a target of reaching 20 MW. Rayburn dispatches and optimizes the batteries at the grid level; Farmers Electric handles the retail relationship.
Most important, Rayburn continues on its quest to rethink how utilities operate at every level — from financing tools to resource strategy to who gets to make a call.
“We can’t get caught up in what a typical utility response is going to be,” Naylor said.
Here’s the twist: Rayburn didn’t set out to be a model. It set out to survive. But that distinction may be exactly what makes it worth studying.
For years, local energy advocates have held up electric cooperatives as an underappreciated alternative to the investor-owned utility model. The argument is structural: co-ops answer to members, not shareholders. They don’t optimize for quarterly returns. They can move faster without running up against layers of state regulatory review and investor considerations.
Rayburn offers the story of what that theory looks like, tested under real pressure.
