President’s Reports

President's Report

Seeking Solutions to Reduce Wildfire Risk

CEO Dave MarkhamVegetation management helps reduce the threat of wildfires and enhances the resiliency of the electric grid. When the U.S. Forest Service recently announced its new vegetation management rule to improve the approval process, it was met with optimist–albeit tempered.

The new rule seeks to streamline the permitting process to allow utilities to remove vegetation along their rights-of-way on federal land, including dead snags, hazard trees and limbs that could fall into power lines. CEC has experienced lengthy delays and, at times, an unclear process to proceed with routine maintenance. I have shared frustrating ordeals with you before in this space and, more recently, in a national podcast.*

Since 2014, I have testified before Congress and met with federal land agencies’ representatives multiple times to educate and promote solutions to improve a problematic and expensive application process to get approval to carry out routine maintenance on power lines, some of which have been in place for more than 50 years.

For the past six-year, multiple legislative initiatives failed to gain traction. Not until 2018 did Congress pass meaningful vegetation management and fire-prevention measures. The legislation directed federal land agencies to draft new regulations to streamline the permitting process. Here we are two years later.

The new rule raises some concerns. As it reads, local ranger districts have wide latitude to implement the standards at their discretion. There is no guarantee of a consistent or uniform process. This is problematic.

CEC’s service territory covers approximately 5,300 square miles and includes multiple national forests. What the Ochoco national Forest requires to perform vegetation management may differ from Deschutes National Forest resulting in the co-op expending unnecessary additional time and resources to conduct routine vegetation management.

We do, however, have another bite at the apple. In an unprecedented step, the federal land agencies will solicit public input on their new directives before finalizing the
regulations. Historically, they limited public comment before releasing the final rule.

I welcome the opportunity and will work toward solutions to ensure a more consistent and uniform process to allow the co-op to expeditiously remove danger trees and vegetation for the general public’s safety and a more resilient electric grid.

We are not only engaged in the federal but the state arena, too. Earlier this year, Gov. Kate Brown issued an executive order directing the Oregon Public Utilities Commission to conduct workshops to develop and share best practices for mitigating wildfire risk. CEC participated in the first workshop on a panel to highlight the ongoing challenges and the wildfire assessment tools we deploy to mitigate wildfire risk. These practices are being formalized in CEC’s wildfire risk mitigation plan, due for completion later this year.

Partnering with federal and state land agencies and other electric utilities helps ensure we leave no stone unturned when it comes to protecting our members and the general public and strengthening our system to reduce wildfire risk.

*See pages 28-29 for an in-depth discussion excerpted from a recent interview with the National Rural Electric Cooperative Association’s “Along Those Lines” podcast.

President's Report

Energy Efficiency: Extending Today’s Energy Supply

CEO Dave MarkhamAccording to the mantra, energy efficiency is the low-hanging fruit—and history confirms it. Since the 1970s energy crisis, the deployment of federal, state and local energy-efficiency programs have resulted in tremendous energy and cost savings.

The state of Oregon’s 2018 biennial energy report concluded the combined efforts of all efficiency activities throughout the Northwest saved more than 6,600 average megawatts from 1980 to 2017. Oregon collectively offset approximately 1,900 aMW—enough to power more than a million Oregon homes annually.

Central Electric Cooperative has done its part, too. Working with the federal Bonneville Power Administration, CEC has developed a wide range of energy-efficiency programs from which members may choose. In the 1970s, CEC initially offered a weatherization program to help qualified homeowners better insulate their houses. The slate of program offerings has expanded, giving members many ways to save money and energy through home improvements, smart appliance choices and adoption of other technologies.

Today, CEC offers 14 energy-efficiency programs targeting residential, commercial, irrigation and industrial members. Programs range from enhanced new construction standards to high-efficiency heat pumps and water heaters, to irrigation equipment and pump testing to commercial and industrial lighting projects.

CEC members have consistently shown their commitment to saving money and energy by participating in our energy-efficiency programs. In 2019, 589 members implemented energy-efficiency measures that will ave 4,389,480 kilowatt-hours annually—equivalent to offsetting the average annual energy use of 260 homes.

This year, we have showcased member involvement in our energy-efficiency programs across residential, commercial, irrigation and industrial classes. In March, we highlighted how homeowner Randy Schuyler took advantage of CEC’s incentives and exchanged her nearly 30-year-old conventional electric water heater with a heat pump water heater to save both energy and money.

In June, we shared the story of the nonprofit Sisters Habitat for Humanity Thrift Store, which swapped out more than 500 old lights for all LED lighting before moving into its new facility. Savings will go toward helping the community.

Bierly Acres, an irrigation water cooperative north of Madras, installed a variable frequency drive on its pump serving 49 members. Previously, it ran full time at maximum output. Now, technology calibrates the pump to run based on real-time demand. The financial savings will go toward updating the district’s system. For more on this story, please pages 4-5.

Last year, the city of Bend installed highspeed turbo blowers with an integral variable frequency drive at its water reclamation facility plant, which translates into energy savings of about 1 million kWh a year.

It pleases me to see so many members working with us to implement energy-efficiency savings. I encourage you to visit www.cec.coop and check out our offerings. Our energy specialists can also help you select the right program for your needs.

President's Report

CEC Reopens Lobbies to Members

CEO Dave MarkhamFour months have passed since Central Electric Cooperative closed its lobbies out of concern for the health and safety of our members and employees. No one could
fully anticipate or understand then how disruptive and threatening COVID-19 would be to everyone’s day-to-day lives.

Daily routines took on a new look. Many people had to work remotely, safely quarantined within their homes. Countless people lost their jobs and continue to struggle to make ends meet. Trips to grocery stores created anxiety for many, while frontline service workers faced an unseen danger. Sadly, the coronavirus has taken too many lives.

Throughout these unprecedented events, Central Electric has diligently focused on delivering you the safe and reliable service you expect. We have faced our share of challenges, but CEC and its employees have shown ingenuity and adaptability to overcome them.

I take enormous pride in how our employees execute their daily responsibilities despite the disruptions and how we continue to help members who need financial aid to pay their electric bills. As a not-for-profit business, our success cannot happen without you—the members and owners of the cooperative. Many have stepped up to participate in CEC’s Project Helping Hand program, either by signing up or by making a one-time donation to assist fellow members. Words cannot accurately convey my appreciation for these acts of kindness and generosity.

We have passed a significant milestone in this saga. With approval from the state, Central Oregon has begun to reopen its businesses, parks, churches and outdoor venues. As for us, Central Electric is preparing to open its lobbies Monday, July 6.*

As I shared with members who participated in CEC’s first-ever annual meeting conducted by teleconference last month, we have undertaken the following precautions, with the health and well-being of employees and members in mind:

• One member in the lobby at a time.
• Standing floor sign with guidelines on precautions to reduce risk to members and employees when entering the lobbies.
• Reconfiguration of the lobbies, including the installation of plexiglass protective shielding at the front counters.
• Available face masks at the lobbies’ entrances for members who would like to wear one.
• Hand sanitizing stations for members’ use before and after meeting with a customer service representative.
• Frequent sanitization of the front counter where members conduct transactions.

I hope we have turned the corner with reopening the Central Oregon economy. However, I suspect we still have a long road ahead of us due to the continuing unpredictability and vulnerability of COVID-19. CEC continues to monitor updates and new guidelines from the Oregon Health Authority and Centers for Disease Control and Prevention on COVID-19. We will continue to adapt as needed to provide you with the best service possible.

On behalf of CEC and its employees, it is a privilege to serve you.

Dave Markham
President and CEO

*Since this was written, there has been a spike in positive COVID_19 cases throughout the state and the Oregon Health Authority’s recent modeling has predicted the trend will continue. As a result, CEC has postponed reopening its lobbies until Monday, August 3. We apologize for any inconvenience this may incur. Should you have any questions, please call 541-548-2144 and a customer service representative will assist you.  

President's Report

Members Helping Members

CEO Dave MarkhamAnnual Meeting Rescheduled
In response to COVID-19, the Central Electric Cooperative Board of Directors in late March postponed April’s annual meeting. At this writing, Gov. Kate Brown’s “Stay safe, stay home” order is still in full effect. Not wanting to push out the meeting too late in the year, the board rescheduled it for Friday, June 12, at 1:30 p.m.

While many states, including Oregon, will have slowly begun to reopen by early June, the board—out of concern for the safety of CEC’s employees and members—
decided to conduct the annual meeting by teleconference. To participate in the annual meeting by telephone, I encourage you to visit our website, www.cec.com, to fill out a registration form. You may also call our office at 541-548-2144 to register. During the week before the annual meeting, CEC will email the toll-free call-in number and access code to you.

Two candidates are running to serve as director for District 5, Terrebonne. I encourage members who live in that district to return their ballots by mail in the envelopes provided or drop them off at CEC’s Redmond headquarters. District 5 ballots must be received no later than noon on Friday, June 12.

Project Helping Hand
It has been more than two months since Gov. Brown issued her order, and we are getting a clearer picture of the devastating financial impacts incurred by the economic shutdown. Oregon’s Employment Department reported more than 362,200 initial claims for unemployment insurance for the end of April. Our region has been hard hit, with nearly 16,000 filing claims. These numbers continue to rise.

CEC sees firsthand the financial impacts COVID-19 has on its members. One way to gauge that is the number of members assisted through the co-op’s Project Helping
Hand program, which provides bill payment assistance to those who demonstrate need. The number of members assisted in April jumped five times this year’s monthly average.

To learn more about how PHH has provided much-needed assistance to members who have endured financial difficulties due to COVID-19 and other hardships, turn to
pages 28-29 of this issue. While we remain fully dedicated to helping our members during this disruptive and unpredictable health crisis, the increase in applications has put a strain on Project Helping Hand’s coffers. We need your help to bolster its funds so we can continue to carry out the program’s mission.

I strongly urge you to consider joining members who contribute. Rounding up your bill to the nearest dollar, adding a fixed amount to your monthly bill or making a one-time donation will help and encourage members in need.

To sign up, go to www.cec.coop under the community tab and enroll, or call our customer service representatives at 541-548-2144. All contributions are tax-deductible.
We are in this together. Members helping members is the co-op way.

President's Report

COVID-19 Response and Federal Agencies Abandon Idea to Remove Dams

CEO Dave MarkhamAs we continue to navigate the evolving coronavirus pandemic, Central Electric Cooperative has implemented measures to protect its employees and members while continuing to deliver safe and reliable electricity. This mission proves even more critical as many Central Oregonians must stay home, telecommute and conduct school for their children. To learn more about our efforts to maintain a healthy workforce, protect the well-being of our members and assist those who are financially struggling, I direct your attention to pages 28 and 29.

Despite the disruptions the coronavirus has imposed on us all, some things must carry on. In last month’s Ruralite article “Federal Agencies Recognize Value of Lower Snake River Dams,” we shared how the co-lead federal agencies released their long-awaited draft environmental impact statement for the Columbia River System Operations (DEIS). The Bonneville Power Administration, U.S. Army Corps of Engineers and the Bureau of Reclamation examined a range of alternatives for long-term system operations, before settling on a preferred alternative (PA). Public comments on the DEIS were due last month.

The DEIS abandoned the idea to remove the four lower Snake River dams. Such a drastic step would have adversely impacted our members, the reliability of the Northwest energy grid and the global environment. The report also rejected another extreme measure calling for significant increases in water spills at the dams that would dramatically decrease power production, requiring a carbon-emitting resource for replacement power.

How the federal agencies manage the Columbia River System Operations is critical to how CEC can continue to provide members with clean, reliable and affordable electricity. For example, the co-lead agencies reported removing the Snake River dams would have “long-term, major, adverse effects on power costs and rates,” and the “rate pressure could be up to 50% on wholesale power rates.” Increasing spills at dams throughout the Columbia River system would also have a chilling effect, driving costs up 41%.

The DEIS recommended adopting the preferred alternative, which would carry out the 2019-2021 spill operation agreement reached in December 2018. Also known as the flexible spill agreement, it tries to thread the needle between achieving improved salmon survival while managing hydropower generation costs.

CEC submitted comments expressing cautious support for the PA, but insisted the principles in the flexible spill agreement remain intact. Specifically, the PA continues to provide additional fish benefits by increasing spills, manage power system costs while preserving hydro system flexibility and retain operational feasibility. CEC also stressed the need for the co-lead agencies to rigorously analyze the PA’s impacts on endangered species through the development of a robust monitoring approach, transparency and opportunities for public feedback.

Through constructive collaboration, we can work toward ensuring the Columbia River hydroelectric system continues to achieve the greatest benefits for the collective good throughout the Northwest.

President's Report

Annual Meeting Postponed

CEO Dave MarkhamThe Central Electric Cooperative Board of Directors announced in late March its decision to postpone the upcoming 79th annual member meeting scheduled for April 10 until further notice due to the rising coronavirus risks and concerns for the safety and health of co-op members and employees.

The decision coincides with a wave of community events canceled throughout Central Oregon following Gov. Kate Brown’s announcement prohibiting large gatherings. In response, Deschutes County Fair and Expo Center has shuttered all of its early spring events, including CEC’s annual meeting.

Rescheduling the annual meeting postpones the board elections for District 2 (Tumalo), District 3 (Madras) and District 5 (Terrebonne). CEC’s bylaws state uncontested elections are to be voted on by voice vote at the annual meeting. A contested election—in this case, District 5—will be conducted by a ballot that can be mailed or physically delivered to one of our service centers or delivered at the annual meeting. Once the annual meeting is rescheduled, the election’s protocols and timelines for mailing out the ballots for District 5’s election as prescribed by the bylaws will restart.

Central Electric is focused on maintaining a healthy workforce, and has taken precautionary steps to ensure key personnel—such as lineworkers and customer service representatives—are available so we can continue to provide you excellent service.

To help limit unnecessary person-to-person contact, I strongly encourage members to consider options to avoid having to come into our service centers. You can sign up for SmartHub—see pages 4 and 5 n this issue—a web and mobile app that allows you to pay your bills online securely. Should you want to use Smart Hub, please go to our website, www.cec.coop, and click on “Register for Online Access.” You may also download the SmartHub app through the Apple App Store or the Google Play Store.

The other option is to drop off your payment in our locked drop boxes in front of our Bend, Redmond and Sisters service centers.

Central Electric understands the adverse economic impacts this health crisis is having on some of our members. Therefore, we will temporarily suspend disconnections and late fees for non-payment. If you need to make a payment arrangement, please contact CEC to set up a payment plan.

Should you need additional financial assistance, please inquire about CEC’s Project Helping Hand. The program provides bill payment assistance to members who demonstrate need. Donations are raised by fellow co-op members who have agreed to round up their electric bill to the nearest dollar. If you would like to join the 1,800 members who already contribute, please sign up today at www.cec.coop under the community tab, or call CEC to enroll.

If you have any questions about any of the topics discussed, please call 541-548-2144. A CEC customer service representative is ready to assist you.

President's Report

Reducing the Threat of Wildfires

CEO Dave MarkhamNearly 50,000 wildfires burned 4.6 million acres throughout the United States last year, with the West hit especially hard.

During the past decade, California’s 20 most destructive fires ignited due to faulty electrical equipment or downed power lines.

Searching for answers, Congress convened a hearing in January inviting utility executives and forest management specialists to articulate what steps utilities and the federal government could take to make electric infrastructure more resilient against future failures.

Invited to testify, I highlighted Central Electric’s experiences, spoke to the practical challenges we face to implement wildfire precautions and ensure system reliability, and discussed how the federal government could lend assistance through improving certain policies and practices.

I also shared that Oregon cooperatives were demonstrating leadership by initiating a unique approach to partner with federal land agencies to implement strategies to reduce the risk of wildfires.

A core effort to reduce wildfire risk, ensure public safety and provide reliable service to our members relies on upgrading utility poles and managing vegetation in utility corridors on heavily forested federal lands. A major hurdle, however, is getting timely authorization or permits from the federal land agency.

For example, Central Electric is seeking approval to replace 131 aging power poles and remove encroaching vegetation along a 13-mile overhead power line route on federal land in the Camp Sherman area. Installing taller poles with wider crossarms will enhance reliability and resiliency and reduce the threat of wildfire ignitions. Central Electric also requested permission to remove all vegetation within the utility corridor, including dead snags, hazard trees and limbs outside of the utility corridor, which could fall into contact with the power line.

Despite submitting our application to the federal land agency in April 2019, we have not been authorized to move forward. The window of opportunity in Camp Sherman to complete this project before the fire season is narrow due to winter snow and spring rain.

While this episode—and others like it—prove frustrating, we highly value our relationships with federal land agencies and want to work collaboratively with them. In that vein, Oregon electric co-op leaders will convene a workshop this spring with the state, regional and district land management agencies to identify actions that can be implemented on federal lands in a timely fashion to reduce wildfire risk within utility corridors and adjacent lands.

The strong support expressed by the federal land management agencies is encouraging. I am optimistic we can develop principles committed to producing an agreement among all stakeholders to more efficiently reduce the threat of wildfires to the benefit of Central Oregon’s citizens, communities and natural resources.

President's Report

Hydropower Essential to Delivering You Clean Energy

CEO Dave MarkhamA recent report by the National Academy of Sciences of the United States of America caught my attention. The nonprofit and nongovernmental organization affirms the cleanest energy in the country flows through the Bonneville Power Administration’s service region.

CEC benefits from this clean energy because it relies on BPA for nearly all its wholesale electricity and, as a result, can claim a nearly 100% carbon emission-free energy portfolio this year.

When you drive Interstate 84, it is hard to miss BPA’s hydroelectric facilities strung along the Columbia River Gorge. However, BPA’s footprint expands well beyond the river. The federal power marketing administration, created by Congress in 1937, has facilities throughout the Pacific Northwest covering 300,000 square miles, which include Idaho, Oregon, Washingon and portions of five surrounding states. BPA’s 261 substations and more than 15,000 miles of transmission lines deliver nearly 28% of the electric power used in the Northwest.

The value of BPA’s hydroelectric power must not be underestimated, especially as policymakers take steps to adopt aggressive carbon-free emission goals. The 24/7 renewable baseload resource does and will continue to play an expansive role in achieving these ambitious goals as BPA’s hydroelectric power backstops intermittent renewables such as solar and wind. The system also provides flood control and irrigation for agriculture, and supports commerce and industry, including large tech companies that want carbon-free, low-cost power.

While CEC benefits from subscribing to BPA’s clean, renewable energy, it comes at a cost. Every two years since 2010, BPA has increased its wholesale power rates to its utility customers. To try to neutralize these rising costs, Central Electric, along with other Oregon electric cooperatives, makes every effort to work with BPA to keep its power rates competitive and ensure the resources’ long-term economic viability.

Yet to quote the proverb, “No good deed goes unpunished,” there has been a significant push in the legislature to adopt an economywide cap-and-trade bill. When introduced last year, the bill initially exposed Central Electric to nearly $7 million in new costs between 2021 and 2030. As the bill wound its way through the legislative process, CEC successfully had the bill amended to reduce the cost exposure to just more than $2.5 million during the same period.

In my view, imposing additional costs proves unwarranted when CEC has an almost carbon-free portfolio. Nor is it equitable when the two Oregon investor-owned utilities must only provide 50% renewable energy by 2040 and get a 10-year pass on carbon penalties.

When the Oregon State Legislature reconvenes for a short legislative session this month, cap-and-trade legislation will once again take center stage. As deliberations ensue, I encourage policymakers not to punish good actors, such as Central Electric, who have demonstrated a commitment and made the investment to provide clean, renewable and cost-effective energy to its members.

President's Report

Unfinished Legislative Business

CEO Dave MarkhamWith a new year upon us, it is important to consider what the state and federal legislatures have in store for electric cooperatives. Will it be a new chapter, new verse or just the same old story? Whatever storyline develops, Central Electric will work diligently to ensure costly and unnecessary legislative and regulatory burdens are not passed on to members.

As the story played out last year, Oregon’s economywide carbon cap-and-trade bill (HB 2020) initially exposed Central Electric to nearly $7 million in new costs between 2021 and 2030. This cost exposure was unacceptable, given the electricity we provide to our members is already more than 96% carbon emission-free. To mitigate this financial risk, CEC met with the governor’s office and legislators, offering solutions which, eventually, were amended to the bill. The amendments reduced our cost exposure to approximately $3 million during the same 10-year period. HB 2020 languished on the Senate floor.

What happens during next month’s legislative short-session remains unclear. Will HB 2020 resurface, or will a vastly modified version be unveiled? Whatever the outcome, fairness and equity should prevail. Central Electric should not be financially punished for its nearly 100% carbon emission-free portfolio, while the two Oregon investor-owned utilities, who are only required to provide 50% renewable energy by 2040, get a 10-year free pass on carbon penalties. I will keep you informed of our efforts as this saga continues.

Unfinished business also awaits us on the federal legislative front. When Congress passed comprehensive tax reform in 2017, from thousands of pages emerged an unintended outcome jeopardizing many electrical cooperatives’ tax-exempt status.

Cooperatives must abide by the 85%-15% income test to maintain their tax-exempt status. That means no more than 15% of gross income may come from nonmember sources. For example, an electric cooperative that accepted grant money to assist with disaster recovery or broadband deployment would have to count the money as income if total monies received exceeded 15%.

The threat of a cooperative losing its tax-exempt status hits close to home. Two Oregon cooperatives, Lane Electric and Douglas Electric, were seriously impacted by last February’s record-setting “Snowmageddon.” While Lane Electric incurred $5.7 million in repairs and Douglas Electric about $10 million, both are eligible to receive aid up to 75% of those costs from the Federal Emergency Management Agency. These co-ops, however, may be forced to choose between keeping their tax-exempt status or foregoing FEMA financial assistance.

The bipartisan RURAL Act (H.R. 2147 and S. 1032) would resolve this dilemma. The Oregon congressional delegation has demonstrated bipartisan support for the RURAL Act, but Sen. Ron Wyden has yet to come on board. We remain hopeful, however, that as a leader on the Senate tax committee he will support and help advance this legislation. Oregon’s electric cooperatives will continue to weigh in with Sen. Wyden’s office until this legislation gets pulled across the finish line.

Our state and federal representatives need to hear your voices. I encourage you to visit our website, www.cec.coop, click on the Community tab and then ORECA-Action. Join your fellow CEC members and other Oregon electric co-op members to share your concerns with policymakers.

 

President's Report

Rising BPA Costs and Strategic Investment Initiative Drive Rate Changes

CEO Dave MarkhamCentral Electric Cooperative will implement a rate increase impacting all customer classes effective January 1, 2020. Though not unexpected, the decision to do so is never welcome but necessary. This marks only the fourth rate increase in the past 20 years.

Two major cost drivers influenced this action. The first, outside CEC’s control, is the Bonneville Power Administration’s continued rate increases every two years. BPA, which supplies virtually all of CEC’s wholesale electricity, raised transmission rates on its customers for the 2020-2021 rate period—a 5.97% increase for CEC. BPA also imposed a 1.5% surcharge on its utility customers to ensure the agency retains levels of financial reserves above the minimum required to remain solvent.

The other cost driver is CEC’s strategic investment initiative, which dedicates $147 million over the next 10 years to strengthen and upgrade its infrastructure to ensure continued safety, efficiency and long-term reliability. This initiative will also help meet Central Oregon’s increasing requirement for more electricity, fueled by population growth and members’ evolving needs.

The strategic investment initiative accelerates the upgrades to CEC’s poles, wires, underground cables and substations. Funding this 10-year initiative will be achieved through a combination of rates and borrowing, and will position the co-op to provide safe and reliable electricity to our members for the next 79 years.

Much analysis and thoughtful deliberation went into the decision to increase rates. When BPA raised utilities’ wholesale electricity rates in 2017, CEC successfully avoided passing it on to you at that time. A recent cost-of-service analysis, however, confirmed we could not absorb BPA’s rate increase again. The COSA helps guide management and the board to understand the financial impact of the BPA rate increase and the 10-year strategic investment initiative.

As a result, the increase in the residential rate is 5.2%. You will see the rate adjustment on your February bill. Despite this action, I am proud to say CEC’s residential rate will remain approximately 18% below the Oregon average and 33% below the national average.

Look for more information about the rate increase in the January issue of Ruralite and on CEC’s website, www.cec.coop.