President’s Reports

President's Report

Governor, Legislature Make Cap and Trade a Priority


The Oregon Legislature is moving ahead with one of the more sweeping and complicated pieces of legislation in modern Oregon history, targeting reductions in the state’s carbon emissions. Governor Kate Brown and the Democratic majority leadership in both the House and Senate are prioritizing passage of cap-and-trade legislation similar to a law enacted in California several years ago. As envisioned by Oregon’s political leadership, cap-and-trade will affect electric utilities along with the manufacturing and transportation sectors and everyone using gasoline, natural gas and propane.

The “cap” on emissions is a firm limit that is reduced over time. The “trade” part is the establishment of market that enables companies such as utilities or manufacturers to buy and sell allowances that let them emit specific amounts of carbon. Supply and demand sets the market price of the allowances.

As you can imagine, this will be complicated business and electric cooperatives such as Central Electric won’t be able to avoid the complexity. However, we will be helped by having an electricity supply that is more than 94 percent carbon emission free, mainly due to our access to hydropower from the Federal Columbia River Power System. I have written numerous times about the value of this renewable resource and the contradictory state policies and actions that undermine its value. I firmly believe that Oregon cannot meet its carbon reduction goals without recognizing the benefits of federal hydropower.

Such policy conflicts are difficult to comprehend. The potential for higher costs imposed on that portion of CEC’s energy supply not produced at the dams only worsens circumstances. CEC will also be impacted further by the likelihood of higher fuel prices since the transportation sector accounts for 40 percent of the state’s carbon emissions. One economic study concluded the cap-and-trade program will increase fuel prices 16 cents per gallon. CEC’s fleet management costs will certainly increase which ultimately impacts your electric rates.

It is too soon to say whether cap and trade will result in unfair or inequitable treatments among utilities.  We do know that with the political will and majority behind it, some form of cap and trade legislation is all but certain to pass this legislative session. A lot of questions still need answers from legislators. I am committed to meeting with legislators and working with the Oregon Rural Electric Cooperative Association to minimize the financial impact of this legislation on Central Electric’s rates as well as those of Oregon’s 17 other electric co-ops.

Central Oregon Hearing
The Oregon House of Representatives is holding four public hearings on cap-and-trade legislation away from Salem. Central Oregon’s opportunity to be heard is Saturday, March 2, at Central Oregon Community College in Bend, Cascade Hall from 9 a.m. to noon. I hope you will be able to attend.

Dave Markham
President and CEO

President's Report

Keeping You Informed of Changes in Your Rates

Photo portrait of Dave MarkhamI encourage you to take time to read the important articles about changes to your electricity rates on pages 28 and 29 of the February 2019 edition of Ruralite. The first article communicates the details of the second phase of our rate redesign program under the five-phase implementation plan Central Electric launched two years ago. The second article advises you that we will likely need to increase kilowatt-hour energy rates in January 2020. While both developments affect your electricity bill, there are important distinctions between the two changes to rates.

Our article on the progress of the rate redesign program explains why we adopted this program two years ago and how each of the implementation steps between now and 2025 will take shape. In summary, the program gradually decreases the energy rate while also offsetting those decreases with increases in the monthly facilities charge. The rate redesign is driven by changes in consumers’ energy choices, the need to treat all members equitably when charging for the services required to serve you, and the benefits of clearly showing members the costs of their energy use and the costs of delivering that electricity to you.

The average consumer’s annual electricity bill is unchanged as a result of these offsetting actions and the cooperative realizes no change in revenues. Ultimately all members pay their fair share of operating the utility system and everyone gets a clearer price signal related the electricity they use.

In mapping out these changes we have avoided speculating about future energy rates, our projections historically have made no assumptions of energy cost increases in an effort to avoid speculating about future unknowns. However, our second article explains such an increase will likely be needed in January 2020 and the reasons behind the increase. This outlook is driven by the October 2017 increase in our wholesale electricity rates charged by the Bonneville Power Administration and another such increase scheduled for October of this year. We also explain that part of the increase is also due to the need to significantly increase the cooperative’s investment in the major parts of the electrical system infrastructure during the 2020 to 2030 period.

I fully understand that most members prefer not to give a lot of time and thought to our electricity service as long as it’s reliable and affordable. Because continued reliability and affordability in an increasingly complex and expensive world are goals of both of these rates-related changes, I appreciate your willingness to spend time learning more about these important developments. All of us at Central Electric place a premium on keeping our members informed of the changes that affect them, their electricity service and its costs.

Dave Markham
President and CEO

President's Report

Washington Whale Recover Plan Includes Spill, Dam Removal Study

Photo portrait of Dave MarkhamActing on the recommendations of his task force for orca recovery, Washington Gov. Jay Inslee has proposed budgeting $1.1 billion to fund recovery efforts for Puget Sound’s killer whale population. While taking steps to ensure the whale’s recovery is critical, I am concerned by the governor’s broad-based proposal’s potential impacts on the four federal dams on the lower Snake River.

I wrote about this issue in November’s Ruralite when it became clear the dams and their operations were on some task force members’ agenda. The task force’s profile skyrocketed when a mother whale carried her dead calf around Puget Sound for more than two weeks during the summer. The world learned of the pod of 74 whales known as the southern resident orcas threatened by dwindling food sources, water and noise pollution, and falling birth rates.

Among the governor’s 26 funding recommendations is $750,000 for the task force to facilitate a stakeholder process assigned to, according to a statement issued by his office, “inform a path moving forward should the Lower Snake River dams be removed.” This is intended to “provide a better understanding of the environmental, economic and social impacts of the dams.” Another $580,000 is dedicated to revising Columbia River water quality standards to allow increased spill at the dams to help salmon migration. This means increasing the amount of water bypassing the generating turbines, thereby requiring purchases of fossil-fuel produced energy to replace the lost hydro production. The action drives up costs and increases carbon emissions for an unproven benefit.

Inclusion of these efforts is not surprising, but it is disturbing how the proposals were included. The task force based its recommendations on public comment gathered largely through an online survey. The statistics behind its responses are telling.

Task force members report there were 12,270 survey responses but only 3,898 had unique IP – internet protocol – addresses, the identification for the origin of a message sent on the internet. This statistic shows 68 percent of the surveys were from the same origin. Three IP addresses were the source of 400 responses and 21 other IP addresses each originated more than 100 responses. Additionally, there were nearly 8,700 comments specific to hydropower but an initial sampling of 800 of those comments revealed repeated verbatim points about increasing spill and removing dams. These two issues generated over 12,500 comments while all other questions averaged about 4,000 responses.

While a certain amount of mass mailing is expected with such surveys, it is disheartening that such an important public decision can hinge on a process vulnerable to easy manipulation.

Dave Markham
President and CEO

President's Report

CEC Electrical Grid Continues to Amaze

Photo portrait of Dave Markham
As much as you hear the word “amazing” these days, I don’t find myself using it very much. It seems all too often the word is used to describe something that really is not that amazing after all. But I never hesitate to use the adjective when I talk about Central Electric’s electrical system and what it takes to keep it up and running.

The electrical grid has been called the greatest real-time delivery machine in human history. It continually balances electricity supply and demand in increments of milliseconds. It links power plants, transmission systems and distribution networks across thousands of miles to homes and businesses with an overall reliability record exceeding 99.999 percent. The electrical system grows even more sophisticated every day. Nowadays, consumers can monitor their electricity use by the hour, day, week or month, as is the case when CEC members use our SmartHub application. Or consumers can connect their own energy production system, usually solar panels, and in a small way actually become part of the grid. What also can amaze me is how much this engineering marvel is taken for granted when just a couple of generations ago it was seen as a life changing miracle.

The care and management of our transmission and distribution system is an around-the-clock responsibility for the employees of Central Electric. Our members frequently praise our lineman for restoring power outages in all kinds of weather, day and night. Few realize that this work is a relatively small share of our crews’ workload. Every day their “normal” work involves projects that expand the size of the system or secure its reliability. They make proactive improvements or replace poles or underground power lines nearing the end of their service life. All is backed up by our engineers’ invaluable behind-the-scenes work. Their designs make sure that the changes made by our crews synchronize with the rest of the system’s technologies and the physics of electric energy.

This dedication and expertise keeps up and running our system of 24 substations, 45,000 power poles, more than 3,700 miles of distribution line, and 185 miles of transmission line, all spread across 5,300 square-miles. This system operates around the clock delivering electricity to you, as much as you need whenever you need it. Some might say such a system is not amazing at all because it does its job, day after day, only being noticed during rare periods of failure. When such instances average less than one-thousandth of a percent of the time, I can’t help but think, “amazing.”

Dave Markham
President and CEO

President's Report

Tying Dam Removal to Orca Protection Stretches Logic

Photo portrait of Dave Markham
It is well known that the orca whale population inhabiting Washington’s Puget Sound is in trouble. Images of a mother whale carrying her lifeless calf for more than two weeks in August made news worldwide. This distressing sight spotlighted this specific population of whales threatened by malnourishment and plummeting birth rates. Marine biologists have determined the primary causes are water pollution, boat traffic noise interfering with
the whales’ ability to locate prey, inbreeding and reduced food stocks, primarily Chinook salmon.

Unfortunately, anti-dam activists are opportunistically linking the whale’s food supply and survival to removal of four Snake River dams, claiming this is the single most important action to help the whales.  A petition based on that premise has gathered more than 500,000 signatures aimed at persuading Washington Gov. Jay Inslee’s orca recovery task force to support dam breaching.

An early October press briefing by the federal agencies responsible for Columbia River System Operations included rebuttals of the activists’ key claims, including overstating the dependence of the whales’ diet on Snake River salmon runs. In reality Snake River Salmon runs are only two of the 15 different Chinook runs making up the whales’ diet and those two runs’ numbers have increased to levels higher than the during the 1960s before the dams were built. Removing the Snake River dams would provide only “an incremental benefit” to the two Snake River runs, according to a U.S. Army Corp of Engineers biologist. Meanwhile, the top priority Puget Sound Chinook runs have shown no improvement, largely due to habitat loss.

The anti-dam forces also characterize the Snake dams’ removal as a quick and low-cost option. Updated removal costs are estimated at $2 billion, not the $80 million activists claim. They also claim the Corp of Engineers has the authority to breach the dams and could do so within five years. The Corps’ chief of civil works explained removal would require an act of the U.S. Congress. We all know approval alone would take years, let alone completing the studies required to carry out any such action.

Finally, the anti-dam groups tell supporters the four dams’ energy production is negligible. In fact, the dams generate enough low-cost, carbon emission free, renewable electricity to meet the needs of Seattle. This should be of great importance to environmental advocates.

These anti-dam activists are attempting to divert the orca task force’s time, money and energy from activities that could provide the whales with the timely help they need.   I hope you agree that this is, at the very least, irresponsible.

Dave Markham
President and CEO

Go to www.westcoast.fisheries.noaa.gov to learn more about the National Oceanic and Atmospheric Administration management of the Puget Sound orca’s dilemma.

President's Report

Outage Information at Your Fingertips

Photo portrait of Dave Markham
Unfortunately, power outages are a fact of life at every electric utility. Central Oregon will soon head into winter when storms will do their best to test Central Electric’s systems. Together with tree limbs falling into lines, vehicles taking down power poles, and wild animals chewing into underground lines or getting into our substations, these conditions ensure outages will always be an issue in our industry.

Because the size and length of outages can vary greatly due to cause, location, and timing, we place a premium on making sure you can remain informed. We know few things bother members more during such times as a lack of information. The best ways to learn what is going on are:

  • Phone: Once you’ve checked your household circuit breakers and determined they haven’t tripped opened, call Central Electric at 541.548.2144 during business hours. At other times call 866.459.8651 when our calls and dispatching duties are handled by the Cooperative Response Center, a co-op providing outage assistance to utilities nationwide. During large outages you may have trouble getting through initially due to large call volumes. You can try again after waiting or we suggest you go online.
  • Online: During large outages – defined as those affecting a large number of members for an extended period – we post in the Outage Info & Updates tab in the Outage Center at www.cec.coop/outage. Initially, only basic information may be available because crews are on their way to the location or they are still determining the cause. Once that information is known it will be posted along with an estimated restoration timeframe as soon as one is available. We also activate a high profile outage alert banner on the site during major events which gives the basic facts of the outage. The site’s Outage Map will show you where any outages have been identified, showing you if you’re in the affected area.
  • Social Media: Central Electric also provides updates through its Facebook page and Twitter account and we encourage you to follow us. However, please do not use these applications to report an outage. Our phone system remains the fastest and most effective way to report outages.

We encourage members to call Central Electric because each time a member calls in to report an outage it is entered into our sophisticated outage management system. The OMS collects the data from these calls and populates our interactive mapping system. This helps quickly define the area affected by an outage and helps our crews pinpoint where to look first for the problem.  Even in this technology-driven world, your calls remain important to triggering our response and getting your power back on as quickly as safely as possible.

Thank you,

Dave Markham
President and CEO

 

 

 

 

President's Report

Hydroelectricity Kept Northwest Cool

Photo portrait of Dave Markham
Do you remember our late July heat wave in Central Oregon? If you have air conditioning you were happy to have it. If you don’t, I am willing to bet you wish you had.

Along with Central Oregon, temperatures were scorching hot – flirting with and often passing the 100-degree mark — around the Pacific Northwest. The Bonneville Power Administration’s energy demand figures showed once again how critical hydroelectricity was to keeping everyone cool and crops watered. This incredibly valuable resource not only forms the backbone of the region’s energy supply, it makes the whole system work thanks to what is called its load following capability.

The hotter it is, the more electricity we use. BPA tracks the region’s use every five minutes. Its graphs show a daily pattern that looks like a steady rollercoaster. The line tracking use starts climbing in the morning when we start our day, peaks in late afternoon and early evening when most of us get home before ramping back down during the nighttime hours. While this consumer cycle is consistent – with peaks reaching record levels during heat waves – not all energy resources’ production patterns matches it.

Wind has grown increasingly important in the Northwest, but it produces power intermittently. When the wind is blowing wind generation increases and the hydroelectricity balances the system by reducing production. Conversely, when the wind stops hydro production is boosted to fill the gap.

Hydro’s load balancing ability is of incredible value to the regional system, but its benefits go further. The sheer volume of energy the system produced during the summer’s heat waves dwarfs others’ production. At times in late July, when wind production was at its lowest, hydro was producing 30 times as much power. Even when the wind farms reached peak output, hydroelectric production doubled their production levels.

Yet, society often takes hydro for granted. Some even demonize it, seeing dam removal as the magical solution to restoring the region’s salmon runs. At times hydro has become a political football. This spring a court order required more water to be passed around the dams to help salmon migrate, cutting back hydro production. This created the added cost of buying power to replace the lost hydro production. Then, in early summer, costs were assessed on utilities because hydroelectricity production was high enough to require wind generators to go off-line to avoid overloading the system. By law, utilities have to compensate wind farms for their lost energy production.

Bottom line, we are incredibly fortunate to have this renewable source of energy that emits no carbon and keeps our air clean. We should protect its legacy every chance we get.

Dave Markham
President & CEO

President's Report

BPA Offsets Most Experimental Columbia River Spill Costs, Full Costs Likely to Hit Consumers Later

The final financial impact of increasing the amount of water spilled past Columbia Photo portrait of Dave Markham River hydroelectric dams this spring and summer will be $38.6 million, slightly less than the Bonneville Power Administration’s projected cost of $40 million. Because BPA reduced programs in other areas to buffer its Northwest utility customers from the full rate impact, the agency announced in June the spill-related surcharge was reduced by $28.4 million to $10.2 million. BPA’s actions combined with austerity steps taken by CEC will enable Central Electric to avoid adding the spill costs to members’ bills.

Based on BPA’s early $40 million projection, made before the court-ordered program began in April, we originally estimated the surcharge would cost Central Electric nearly $500,000. With the dramatic reduction in near-term spill costs, CEC’s actual costs will be $150,684.

This significantly lower total made it possible for CEC to cover these costs with existing revenues.

The spill increases costs by reducing the amount of water passing through the hydro plants’ turbines to leave more water in the river to help salmon migrate downstream. BPA must purchase electricity from the regional market to replace the lost power production.  While I am pleased with the work done by BPA to reduce the financial impacts of this program, which we fought in both the courts and the U.S. Congress to keep from taking place, the costs will eventually make their way into BPA’s rates.

The largest spending cuts came from BPA’s fish and wildlife protection programs. About a third of our wholesale power costs are dedicated to these programs, something all of us CEC members pay into through our rates. Now there will be a little less done in this area during the current BPA rate period. It could be argued we are paying for something we’re not getting, and BPA may need to play some catchup with its fish and wildlife program activities.

If this is the case, BPA may have robbed Peter to pay Paul. I believe all of us agree, that rarely works out without some pain in the end.

Sincerely,

Dave Markham
President and CEO

 

President's Report

Tune In to Safety Messages

Just about a year ago, there was a tragic news story about a 14-year-old New Mexico girl electrocuted when her cell phone fell into the bathtub with her while the phone was plugged into a charger. According to reports, this girl was a conscientious teenager. Yet, she either ignored or wasn’t aware of the dangers of mixing water and electricity. This reinforced my belief it is impossible for us to over emphasize the importance of communicating safety to our members.

This month’s edition of Ruralite features several articles about electrical safety. Topics range from our crews’ disciplined training and use of the latest safety equipment and practices, to important personal electrical safety tips for consumers. When you have been in the electric utility business for 34 years like I have, you have read and heard all of the safety messages many times over. This cannot help but make me sometimes worry that people are tuning out this important information. I become concerned that people overlook our safety messages because they have heard these same messages before.

Everyone at Central Electric has learned repeated and frequent safety reminders are important.  Our employees attend monthly safety meetings with each session driving home the importance of staying aware. This helps break down any tendency to think accidents happen to others, not me. Frequent reminders, when given just a little bit of thought, can make you more aware of what can go wrong if you’re not careful around electricity. That short pause, that extra thought, can keep someone from raising an aluminum ladder into a power line, rushing heedlessly to help someone who has been shocked and risk becoming a second victim, or sticking a shovel into an underground power line.

Our safety messages involve repetition by necessity. Hopefully, one warning skipped over last time is read the next. It only takes a second to remind yourself to be safe, because it only takes a blink of an eye for things to go wrong.

I suspect you have seen many of the safety messages in this issue before, but I hope you will appreciate the importance of reading them again.

Let’s all have a safe summer and remain that way throughout the year.

Sincerely,

Dave Markham
President and CEO

President's Report

CEC and Energy Trust of Oregon Approaches Differ

Photo portrait of Dave Markham

CEC has a long history of helping homeowners, businesses, and the agricultural sector conserve energy and save money. We have been doing this since 1978, whether supporting weatherization improvements, incentivizing purchases of high-efficiency appliances and lighting systems, promoting more efficient irrigation practices, or helping reduce the costs of custom industrial efficiency projects.

Today, we offer 16 different programs covering the full span of our consumer groups: residential, commercial, industrial and agricultural.  The programs are designed and chosen to fit the most in-demand needs among our members, while getting the greatest energy savings per dollar spent.  Because Central Electric’s and Pacific Power’s service areas are side-by-side, some CEC members are aware of the investor-owned utility’s programs. They sometimes question why we offer a program Pacific Power doesn’t and vice versa. The consumer’s question often comes down to, “why don’t you do what they do?”

The major reason is how differently our programs are funded and managed. Pacific Power’s programs are marketed and managed through the Energy Trust of Oregon, an independent entity established in 1999 by the Oregon Legislature. ETO is funded by a consumer tax, called a public purpose charge, on Pacific Power’s and Portland General Electric’s customers’ bill required by law to be 3 percent.

This is one of the costs contributing to Pacific Power’s residential bills averaging 42 percent more than CEC’s, based on the average CEC residential member’s monthly use of 1,480 kilowatt-hours.

We point to this and other factors when discussing the differences between Central Electric’s energy efficiency program management and Pacific Power’s. By choosing from among all the programs designed by the Bonneville Power Administration and qualified for use by their 124 public utility customers, CEC is able to tailor its 16 program offerings to best meet the needs of our members. This has worked exceedingly well for the past 40 years. This is supported by the fact that every year the amount of energy and money saved by our members is greater than the year before.

If you are looking at upgrading your heating and cooling system, lighting for your business, or installing a variable frequency drive for irrigation, reach out to our energy specialists by calling 541-548-2144. Our team can help you find the solutions for your energy efficiency needs. I am confident they have the best solution to meet your needs.

Sincerely,

Dave Markham

President and CEO